[Senate Hearing 108-645]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-645

       THE IRAQ TRANSITION: OBSTACLES AND OPPORTUNITIES [PART III]

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 22, 2004

                               __________

       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                     COMMITTEE ON FOREIGN RELATIONS

                  RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska                JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island         PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia               CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas                JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming             RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio            BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee           BILL NELSON, Florida
NORM COLEMAN, Minnesota              JOHN D. ROCKEFELLER IV, West 
JOHN E. SUNUNU, New Hampshire            Virginia
                                     JON S. CORZINE, New Jersey

                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director

                                  (ii)

  
?

                            C O N T E N T S

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                                                                   Page

Biden, Hon. Joseph R., Jr., U.S. Senator from Delaware, opening 
  statement......................................................     4

Grossman, Hon. Marc, Under Secretary of State for Political 
  Affairs; accompanied by: Hon. Francis J. Ricciardone, Jr., 
  Coordinator, Iraq Transition Team, U.S. Department of State, 
  Washington, DC.................................................    10
    Prepared statement...........................................    18
    Response to Senator Lugar's request to supply a copy of the 
      Transitional Administrative Law [TAL] and charts displayed 
      during the hearing.........................................    84
    Response to an additional question for the record from 
      Senator Dodd...............................................   107
    Response to an additional question for the record from 
      Senator Feingold...........................................   108
    Responses to additional questions for the record from Senator 
      Corzine....................................................   108

Lugar, Hon. Richard G., U.S. Senator from Indiana, opening 
  statement......................................................     1

Natsios, Hon. Andrew S., Administrator, United States Agency for 
  International Development [USAID], Washington, DC..............    23
    Prepared statement...........................................    25
    ``Iraq Reconstruction and Humanitarian Relief,'' USAID's 
      accomplishments in reconstruction efforts in Iraq..........    27
    Responses to additional questions for the record from Senator 
      Lugar......................................................   102

Rodman, Hon. Peter W., Assistant Secretary of Defense for 
  International Security Affairs; accompanied by: Lt. Gen. Claude 
  M. Kicklighter, U.S. Army (Ret.), Transition Chief, Coalition 
  Provisional Authority, U.S. Department of Defense, Washington, 
  DC.............................................................    47
    Responses to additional questions for the record from Senator 
      Lugar......................................................   104

                                 (iii)

  

 
      THE IRAQ TRANSITION: OBSTACLES AND OPPORTUNITIES [PART III]

                              ----------                              


                        THURSDAY, APRIL 22, 2004

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:40 a.m. in SD-
106, Dirksen Senate Office Building, Hon. Richard G. Lugar 
(chairman of the committee), presiding.
    Present: Senators Lugar, Hagel, Chafee, Brownback, Coleman, 
Biden, Sarbanes, Dodd, Feingold, Boxer, Bill Nelson, and 
Corzine.


        opening statement of senator richard g. lugar, chairman


    The Chairman. This hearing of the Senate Foreign Relations 
Committee is called to order. Today the committee will hold its 
third in our series of three hearings this week on Iraq. This 
hearing is the most important of the three, because we will 
have an opportunity to learn from representatives of the 
administration about their plans for the transition to Iraq 
sovereignty.
    American credibility in the world, progress in the war on 
terrorism, our relationships with our allies, the future of the 
Middle East, and the fate of Iraqis themselves depend on the 
resolve and the wisdom of the U.S. Government and the American 
people in achieving a positive outcome in Iraq. What happens in 
Iraq during the next 18 months almost certainly will determine 
whether we can begin to redirect the Middle East toward a more 
productive and peaceful future beyond the grip of terrorist 
influences.
    Consequently, moving the Iraqi people toward a secure, 
independent state is a vital United States national security 
problem that requires the highest level of national commitment. 
The President and other leaders, including Members of Congress, 
must continue to communicate with the American people on this 
point, because the work that must be done in Iraq will test our 
national fortitude. American lives will continue to be at risk 
in Iraq, and substantial American resources will continue to be 
spent there for the foreseeable future.
    During the last 2 days, we have heard testimony from 10 
expert witnesses representing many perspectives. We have asked 
them whether American and Iraqi authorities are ready for the 
transition to Iraqi sovereignty on June 30, and what steps are 
required to fill out a comprehensive transition plan. Their 
contributions greatly advanced our understanding of the 
situation in Iraq and helped this committee to answer many 
questions.
    However, expert witnesses cannot speak for the U.S. 
Government. That is the duty that falls to our witnesses today. 
Our experiences with inadequate planning and communication 
related to Iraq contribute to the determination of this 
committee to impose a very high standard on the information 
provided about Iraq. Yesterday I noted the lack of information 
about the transition plan in Deputy Secretary Wolfowitz's 
testimony on Tuesday before the Senate Armed Services 
Committee. We're clearly hoping for more details today.
    I would stress that what we are attempting to do here is 
not an academic exercise. Within the substantial bounds of 
Congress' oversight capacity, we're attempting to illuminate 
the United States' plans, actions, and options with respect to 
Iraq, both for the benefit of the American people and to inform 
our own policymaking role. I am convinced that the confidence 
and commitment demonstrated by the pronouncement of a flexible 
but detailed plan for Iraq is necessary for our success in 
Iraq. With lives being lost and billions of dollars being spent 
in Iraq, the American people must be assured that we have 
carefully thought through an Iraq policy that will optimize our 
prospects for success.
    Moreover, a detailed plan is necessary to prove to our 
allies and to Iraqis that we have a strategy and that we are 
committed to making it work. If we cannot provide this clarity, 
we risk the loss of support of the American people, the loss of 
potential contributions from our allies, and the 
disillusionment of Iraqis.
    We may determine after this hearing that more hearings on 
Iraq are required to generate answers and to provide the 
confidence that we seek. At yesterday's hearing, I urged the 
administration to prepare quickly for a hearing on the 
nomination of Ambassador John Negroponte to be our Ambassador 
to Iraq. We would like to hold that hearing next Tuesday. It is 
critical that Ambassador Negroponte and his team be put in 
place at the earliest possible moment.
    During the first 2 days of hearings, I posed a set of six 
questions as a way of fleshing out our plan for Iraq. I believe 
that clear answers to all of these questions would constitute a 
coherent transition strategy for Iraq.
    First, what are the details of Ambassador Lakhdar Brahimi's 
plan for an Interim Iraqi Government to which a transfer of 
sovereignty is planned on June 30, 2004? Specifically, what 
executive and legislative positions will be established in the 
interim government, and how will these positions be filled? Are 
we confident that Iraqis will support the United Nations' 
formula for a new government, and what will the United States 
do if Iraqis reject the Brahimi plan? What is our fallback 
strategy at that point?
    Our expert witnesses expressed confidence in Ambassador 
Brahimi and his ability to find credible Iraqis to serve in the 
interim government. But some concern was voiced that the United 
States must better synchronize its military and diplomatic 
actions to Ambassador Brahimi's efforts to build an interim 
government. We must think creatively about how the Coalition 
and the international community can facilitate the emergence of 
national leaders in Iraq who are viewed as legitimate and 
prepared to govern.
    Second, what should be contained in a status of forces 
agreement so that the United States and Coalition Armed Forces 
will have clear and effective roles in providing internal and 
external security for the new Iraqi Government, and will that 
agreement make clear the chain or chains of command, and the 
relationship of Iraqi police, reserves and Army personnel with 
United States and Coalition forces? We heard yesterday from a 
witness that as many as three chains of command might be 
required.
    All of our expert witnesses agreed that achieving security 
was the key to success in Iraq. They underscored that we have 
to determine who our partner is in the status of forces 
agreement. They also generally believed that the current level 
of U.S. forces could not achieve the degree of security that is 
necessary or a successful political outcome. In the short run, 
this may require more U.S. forces and more patrols that secure 
streets and neighborhoods.
    It will also require us to find other sources of competent 
troops from willing nations.
    Our ability to find these troops will depend on our 
flexibility in including the United Nations in decisionmaking 
and the ability of our own troops to diminish violence in the 
short run. We heard many views on how to establish and improve 
Iraqi security forces, but generally our experts believed that 
an effective Iraqi army and police force would require much 
more time, equipment, and resources than we have thus far 
dedicated to bringing these units to fruition.
    Third, will United Nations Security Council resolutions 
undergird the international legitimacy of the new Iraqi 
Government and all of the security arrangements that it will 
require? How will the United States pursue such resolutions and 
what will they contain? Our experts stress that United Nations 
involvement is necessary if we are to generate greater 
international participation, improve the political legitimacy 
of the Interim Iraqi Government, and take the American face off 
of the occupation of Iraq.
    They also underscored that we know how to operate under the 
auspices of U.N. Security Council resolutions, and we can do so 
without sacrificing command of our troops or the intent of our 
mission.
    Fourth, will elections for the transitional and permanent 
Iraqi Government, scheduled for tentatively January 2005 and 
December 2005, respectively, be held under the auspices of the 
United Nations or under some other authority? How will that 
authority provide security for the elections and assemble a 
registration list or otherwise determine who is eligible to 
vote? How will we deal with elections that are postponed or 
deemed to be fraudulent? Will the Transitional National 
Assembly that is to be elected in January 2005 have full 
authority to write a constitution and construct the framework 
of a permanent government?
    Our experts spoke to the importance of going forward with 
elections in Iraq, even if security and registration procedures 
are imperfect. They noted that elections would force Iraqi 
factions to enunciate policy choices and would stimulate dialog 
between political leaders and the Iraqi populace. In the 
absence of elections, factions will continue to bid for 
influence through violence, cronyism, or anti-American 
demonstrations.
    Fifth, beyond Ambassador Negroponte, what will be the 
composition of the U.S. Embassy in Baghdad, and what is the 
schedule for the arrival of all embassy personnel? Given 
security concerns, our witnesses noted that some system must be 
worked out to allow embassy personnel to travel throughout 
Iraq. They emphasized that we should attempt to get as many 
personnel as possible in place before June 30.
    Sixth, will the costs associated with the new diplomatic 
presence be covered by a transfer of funds under the umbrella 
of the $87 billion appropriation enacted by Congress last year? 
If not, what is the plan for providing necessary funding?
    There was general consensus that some transfer of 
sovereignty will occur on June 30, but that U.S. forces would 
be required to provide security in Iraq for at least several 
more years. We should develop cost estimates that assume an 
extensive United States involvement.
    Another important point generated by yesterday's hearing 
was that the Interim Iraqi Government will require funding as 
well. What part of oil reserves or the $18 billion appropriated 
for reconstruction will be controlled by the interim 
government? What other sources of revenue will be available to 
them?
    The Foreign Relations Committee will be persistent in 
asking these questions and many others because Americans should 
have the opportunity to understand the administration's plan 
and to carefully monitor its progress. We welcome today Mr. 
Marc Grossman, Under Secretary of State for Political Affairs; 
Mr. Peter Rodman, Assistant Secretary of Defense for 
International Security Affairs; Mr. Andrew Natsios, 
Administrator of the United States Agency for International 
Development; Mr. Frank Ricciardone, our Ambassador to the 
Republic of the Philippines and State Department Coordinator 
for the Iraq Transition Team; and Lieutenant General Claude 
Kicklighter, the Transition Chief for the Coalition Provision 
Authority.
    We welcome these witnesses. We thank you for coming to the 
hearing this morning. Before I recognize you, I want to 
recognize first of all my colleague and distinguished ranking 
member, Senator Biden.


           OPENING STATEMENT OF SENATOR JOSEPH R. BIDEN, JR.,
                             RANKING MEMBER


    Senator Biden. Thank you very much, Mr. Chairman, and 
thanks to our witnesses for being here today. We have serious 
and prominent witnesses, and I hope before this hearing process 
ends, we will have their bosses before us as well, the 
Secretary of Defense and the Secretary of State.
    Let me begin by explaining, I noticed a number of people 
looked when I walked in with my new staff person. My new 
foreign policy adviser is my granddaughter. For those of you 
who may not know, today is Bring Your Daughter to Work Day, and 
I brought my granddaughter in the hope that someone may mistake 
her for my daughter, so I just wanted to explain that. I 
realize it's a bit unusual but I can see from the looks on some 
of your faces, it's a serious hearing and what's he bringing a 
fourth-grader in for. This is Bring Your Daughter to Work Day.
    Let me, rather than do my whole statement, Mr. Chairman, 
because I'm anxious to hear the witnesses and because you have 
laid out such a thorough road map here, start by saying, I, as 
we say in our business, associate myself with your remarks. I 
think the questions you asked are the ones that have to be 
answered.
    I would just like to say that it seems to me we really have 
no option but to invest in the success of this undertaking in 
Iraq, but the thing that I hope we keep our eye on is that, to 
oversimplify it in one sense and understate it in another, 
cannot want a representative government for the Iraqis more 
than they want it. We cannot want a representative government 
for the Iraqis more than the Iraqis want it.
    And the premise upon which I continue to support this, 
which hopefully history will judge as a noble undertaking, is 
that I believe that the vast majority of the Iraqi people want 
a representative government. I might note for the record, and 
from the beginning I think my friend from Nebraska shared this 
view as well, and possibly my chairman and my friend from Rhode 
Island--I'm not certain, I don't want to associate them with me 
if I am mistaken--but I have never believed from the outset, do 
not believe now we are going to have a liberal democracy 
established in Iraq in the near term, a liberal democracy in 
the sense that we mean understand the term in this country. But 
I do think it's fully within our capacity to have a 
representative government within the existing borders that the 
vast majority of the people of Iraq feel that they have a voice 
in.
    Now, whatever form that takes, I'm not certain. But if we 
think we're going to have a replication of what we have here in 
the United States or European capitals, I think that is 
somewhat naive. And so I want to make it clear again that 
because we're going to come back and be judged based upon 
whether or not we succeed or fail in this undertaking based on 
what we state our objective is. Mine personally is a 
representative government that is probably a loosely federated 
republic of some nature that has the ability to grow over 
generations into what we call a liberal democracy, but again, 
we can't want that government more than they want it.
    I know all the witnesses well, respect them all, I think I 
probably know Marc better than most with him having to deal 
with me for so long. And I'd say, Secretary Grossman, that one 
of the reasons why we continue to focus so much on the security 
piece of this is we, or I, have come to the conclusion that 
there is no reasonable prospect that the silent majority of 
Iraqis who want a representative government there's no way 
after 30 years of being battered and beaten by a dictator that 
they're going to raise their heads in any environment other 
than a secure environment.
    And I say to Secretary Rodman, we have an inordinately high 
regard for the bravery, the decency, and the idealism, and I 
say idealism, of our troops who are fighting over there. But 
the primary focus, and it should be first and foremost, is 
providing security for our troops, not security for the Iraqi 
people in the way in which we would think about it here. We 
have over 100 missions that go through the neighborhoods every 
day, but they usually go through in a Humvee about 30 to 40 
miles an hour, and I don't blame them. I've thought from the 
beginning we have too few forces on the ground, whether they be 
American or others, to be able to do something more than force 
protection. And the irony is I think we created resentment, 
we've created resentment as the neighbor's daughter is raped or 
kidnaped or the house is looted or they are robbed and there's 
a Humvee going by and no one's seeing it.
    In a sense, we have suffered from expectations that were 
not particularly reasonable, but understandable. After 30 years 
of thinking Saddam was not only a dictator and a brutal thug, 
they also thought he was somewhat omnipotent and incapable of 
being taken down, and along comes the United States and in very 
short order, in an awesome display of power, takes him down. I 
think it raised expectations that we are suffering from as 
well, but somehow we've got to deal with it.
    And so my generic point is this. I think we went with too 
little power and too little legitimacy, and I think the only 
way to rectify this is to figure out how to generate more power 
and more legitimacy, and I think they go hand in hand, and I'll 
ask unanimous consent that my statement be placed in the 
record, Mr. Chairman.
    The Chairman. It will be placed in the record in full.
    Senator Biden. But to summarize, I think it leads me to the 
conclusion that, and please, guys, I love you all, but don't 
tell me how you all agree, OK? None of us will believe it if 
you tell us that State and Defense are in agreement on this. 
Please don't ruin your credibility. We love you. Make your 
statements but don't try to convince us what we know, I know 
for a fact is not true, OK? So please don't do that, because I 
came through the door here and I turned to Tony, I said, Tony, 
I'm going to try to be really, really polite today, I'm going 
to try to be really calm and cool and collected today, so 
please don't do that.
    But one alternative is that we end up with some 
international group involving major powers, not necessarily the 
United Nations, not necessarily the Security Council, but major 
powers that is not unlike the contact group. I call it an 
international board of directors. Call it whatever you want, 
but we need, it seems to me, we need to get the major powers, 
even some of the neighbors of Iraq, maybe even, as heretical as 
it sounds, Iran, Syria, to basically be put in place by some 
umbrella sanctioning of an international organization like the 
U.N. who will come along and bless what the President says he's 
about to bless, Brahimi's proposal, whatever that turns out to 
be exactly, and we think we know, and then maybe go back and 
get some legitimacy for that through the U.N. with no U.N. 
control. As George Will said, paraphrasing, the U.N. maybe 
should come in as a convenient way to mask the fact that we are 
still in power.
    But everybody, even the George Wills of the world 
acknowledge, we need some umbrella of legitimacy here to get a 
number of nations to do what I think they still are willing to 
do, although time is running out, which is to provide some more 
legitimacy and power, a combination of the two. And I think 
that's the only way, based on the testimony we heard yesterday 
and from a lot of people we individually interview, is that we 
get NATO into the deal.
    And by the way, Marc, I have no illusions, or Mr. Secretary 
Rodman, I have no illusions that NATO can send 50,000 troops. I 
don't suggest that at all. But they can send 3,000, 5,000, 
7,000 now, they can take over border patrol now, they can do 
significant things now, they can free up 15,000 to 20,000 
American forces now, they can do a lot. But most of all what 
they can do is convince the American people we're not in this 
alone, because for NATO to be involved means major powers said 
their prestige is at risk as well in the success or failure of 
Iraq.
    There are important questions I hope this hearing will 
address, some of them overlapping. Who's going to decide in the 
future when we set up this embassy how to handle Fallujahs and 
the al-Sadrs? Is it going to be an Iraqi caretaker government? 
Is it going to be the American military? Is it going to be some 
senior international figure?
    When we claim that our commanders on the ground say that 
they have enough forces to carry out their mission, what's 
their mission? Does that include more than force protection? 
Does it include civil protection? Does it include policing? 
Does it include reconstruction? What's the mission? And what 
are the private security contractors, the second largest armed 
group in Iraq after American Armed Forces, estimated 20,000, 
what is our policy toward them? How are they handling morale 
problems there likely to be created for our regular soldiers 
who are paid considerable less, in some cases 10, 12, 15 times 
less? Are they under an effective command and control? Are they 
coordinating with our uniform military? How do we plan to 
reestablish the security? What's the plan for training the 
Iraqi police?
    I know, Secretary Grossman, you know. You're going to tell 
me you don't, but I know you know, that no one that you've 
worked with in the last 10 years thought we could train up an 
Iraqi police force in less than 3 to 5 years, and no one 
thought we could train up an Iraqi military of more than 40,000 
forces in less than about 3 years, and yet we put 200,000 
people in uniform. Why has only $3 billion of the $18.6 billion 
that Congress appropriated last year been obligated on urgent 
requests, the urgent request the President made? Is it 
something you need help from us in breaking through a 
bureaucratic Gordian knot here, because we want to help. And I 
can't speak for anybody else, but if there's a rational way to 
do this, we want to do it, or what's the explanation?
    After June 30, who's going to be in charge in deciding how 
the money is spent? When the Pentagon decides or the State 
Department decides they're going to put a road here or there or 
a project here or take care of this electrical grid, does this 
Iraqi sovereign government have a right to say, hey, no, no, 
no, we don't want the money spent there, we want you to go over 
here and build x, y, or z? Who makes those decisions, and 
what's the current burn rate? I think we were told, I think 
that came out yesterday about $4.6 billion per month for our 
military, and what are the range of the estimates of cost for 
Iraqi stabilization and reconstruction for next year? How are 
we going to pay for it?
    Now, I'll conclude by saying I know that some of these 
figures are, to use the Secretary of Defense's favorite word 
last year, unknowable with any precision. I know some things 
are unknowable. One thing we know, if we're going to have more 
than 100,000 troops or it's going to cost more than $4 billion 
a month if they're just hanging around. So don't we know that 
it's going to cost for fiscal year 2005 somewhere in the 
neighborhood of $50 billion at a minimum? Don't we know that? 
And if we know that, why don't you tell us that, and then come 
back for a supplemental beyond that if you need it?
    So they're the questions I have, along with others, Mr. 
Chairman. I ask unanimous consent that my prepared statement, 
which lays out more clearly some of the points I made, be made 
part of the record at this point.
    The Chairman. It will be made a part of the record in full.
    Senator Biden. And I thank you for your indulgence. I thank 
you gentlemen for being here.
    [The opening statement of Senator Biden follows:]

           Opening Statement of Senator Joseph R. Biden, Jr.

    Mr. Chairman, thank you for calling this hearing. I am pleased that 
the Defense Department finally acceded to your request and has sent 
Assistant Secretary Rodman here today. I am also pleased that Deputy 
Secretary Wolfowitz has agreed to testify before the committee.
    As I said yesterday, I also hope that we will soon hear from 
Secretary Powell and Secretary Rumsfeld.
    The decisions they will make, with the President, in the days and 
weeks ahead will have a profound impact on our national security for 
years to come. With all due respect to the witnesses before us today, 
we need to hear from the ultimate decision makers.
    Mr. Chairman, as complicated and as vexing as the situation in Iraq 
is, the choice before us is actually quite simple.
    We can continue to treat Iraq as if it is some kind of prize that 
we won--and that is not to be shared.
    Or we can recognize Iraq as the immense problem it is, and do 
everything in our power to invest the Iraqi people and the rest of the 
world in the search for solutions.
    Based upon what we've heard in two days of testimony, I am more 
convinced than ever that sticking with option one will lead to 
disaster.
    If we do that, we will continue to provide the majority of the 
resources, nearly 90% of the troops and take nearly 90% of the non-
Iraqi casualties. We will continue to be blamed for everything that 
goes wrong and remain a target for every malcontent in the country.
    And we will make less likely the prospects for success: giving back 
to the Iraqi people a stable country with a representative government 
that can endure after we're gone.
    The other option is to bring more Iraqis into the process and 
invest the world in a successful outcome.
    We cannot want a representative government and a peaceful Iraq more 
than the Iraqi people. And without the major powers, we will continue 
to run a deficit in the troops, money, manpower and legitimacy 
necessary to see this mission to completion.
    I know that many believe it's too late to pursue that option. I 
don't share their cynicism and defeatism. And I have laid out 
repeatedly--including in a speech last week at CSIS--how I think we 
should proceed. I would ask the chairman to place that speech in 
today's record.
    But today is the administration's opportunity to tell us which 
option it has chosen--if, in fact, a choice has been made.
    We have with us representatives of two government agencies with 
strongly divergent opinions on how to proceed.
    Please don't waste our time today by telling us that you are on the 
same page. You are not. And it is a disservice to this committee and 
the American people to try to paper over your differences.
    You are entitled to offer your best advice to the President. The 
problem, as I see it, is not that the President has received 
conflicting advice on how to go forward, but that he has yet to choose 
from among the options before him. Instead, what we have seen is 
vacillation, without a firm commitment to a strategy.
    In last week's press conference, the President said he would 
support Mr. Brahimi's recommendations for a political plan for the June 
30 political handover. I think that's the right move, because a plan 
coming from Brahimi, not the U.S., will have more legitimacy within and 
beyond Iraq.
    And, yet, the President seems unwilling to take the next crucial 
step: to make someone other than us Iraq's main partner after June 30 
to help organize elections, draft a constitution and referee political 
disputes.
    Instead, he still seems intent on replacing Mr. Bremer and the CPA 
with an American ambassador hunkered down in a new super embassy. That 
will perpetuate the perception of an American occupation. And it will 
make it less likely that the Iraqi people and the world will take up 
the challenge of remaking Iraq.
    So, Mr. Chairman, I am looking forward to hearing from our 
witnesses today. Maybe they will convince us that the President has 
chosen--and that he has made the right choice.
    At a minimum, I hope we get answers to a number of basic but 
critical questions:

   Who will be the referee after June 30 to negotiate political 
        disputes so that the country does not slide into civil war--
        will it be a ``super-Ambassador'' or a senior international 
        figure representing the major powers?

   What is the strategy with respect to al-Sadr? What is the 
        fallout of killing or capturing him and are we ready for the 
        possible consequences?

   Who will decide how to handle future Fallujahs and al-Sadrs. 
        The Iraqi caretaker government? The American military? A senior 
        international figure?

   When we claim that our commanders on the ground say they 
        have enough forces to carry out their mission, just what is 
        that mission. Does it include more than force protection? Civil 
        policing? Reconstruction?

   What about the private security contractors--the second 
        largest armed group in Iraq after American forces. What is our 
        policy toward them? How are we handling the morale problems 
        they are likely to create for our regular soldiers, who are 
        paid far less. Are they under effective command and control?

   How do we plan to re-establish security? What is the plan on 
        training Iraqi police? What role will other nations play in 
        that?

   Why has only $3 billion of the $18.6 billion that Congress 
        appropriated last year at the urgent request of the President 
        been spent?

   After June 30, who will be in charge of deciding how that 
        money will be spent: the Pentagon or the State Department? In 
        other words who will we hold accountable?

   What is current burn rate for military expenditures in Iraq? 
        It was estimated at about $4 billion a month last year. What is 
        it now?

   What is the range of estimates for the cost of Iraq 
        stabilization and reconstruction next fiscal year? How will we 
        pay for it?

    I hope our witnesses will address these questions in their 
testimony. If not, I'll come back to them.
    Thank you.

    The Chairman. Well, thank you very much, Senator Biden. I'm 
going to ask Secretary Grossman to testify first. Mr. Natsios 
will be in attendance to support him. I understand that he will 
not have an opening statement. Is that true or do you have one?
    Mr. Natsios. I actually have a short one.
    The Chairman. Very well. Then I will ask you to testify and 
then Secretary Rodman. Let me just indicate in advance that I 
know that Secretary Grossman, because he has already filed a 
very important statement, has considerable detail. I would 
simply invite him to embellish that further. This is not a 
hearing in which the bell is going to ring after 5 minutes or 
10 minutes or what have you. It is a hearing to explore as 
fully as possible the plans of our administration. I know from 
a previous conversation with Secretary Rodman that he has a 
much briefer comment. He has in fact indicated to me, so as to 
not have anybody in the dark about this, that many of the 
decisions on security are in fact the subject of administration 
talks and visits even as we speak, today and in the days ahead. 
He might not be able to give us extensive details today, We 
invite you, Mr. Secretary, as you hear Secretary Grossman, and 
you've heard the questions of Senator Biden and myself to give 
us as much detail as you can, and to be responsive to our 
questions. I would like now to call upon Secretary Grossman for 
his testimony.

 STATEMENT OF HON. MARC GROSSMAN, UNDER SECRETARY OF STATE FOR 
POLITICAL AFFAIRS; ACCOMPANIED BY: HON. FRANCIS J. RICCIARDONE, 
  JR., COORDINATOR, IRAQ TRANSITION TEAM, U.S. DEPARTMENT OF 
                             STATE

    Mr. Grossman. Mr. Chairman, thank you very much, Senator 
Biden, thank you very much. I appreciate the opportunity to be 
here to report to you on progress we are making regarding the 
30th June transition in Iraq. Senator Biden, I also wanted to 
just welcome your granddaughter. It's a good thing to bring 
your daughter to work. My daughter was going to come with me 
but she kept hearing I was such a low-ranking State Department 
official, she said, the hell with it, I'm not coming.
    Senator Biden. If you'd brought her here, we would have 
elevated you, and maybe in one way you could have gotten more 
respect.
    Mr. Grossman. Perhaps. I'll certainly take your invitation 
to the Secretary back, but just for the record, the letter of 
invitation was to me, and I'm very glad to be here.
    Like you, and I think all of us here on this side in the 
committee, let me also start by paying tribute to the men and 
women who are serving the United States of America today, 
military and civilian in Iraq, in Afghanistan, around the 
world. They demonstrate the highest degree of dedication, 
determination, and courage as they try to bring security, 
democracy, and prosperity to Iraq, and I also think it's 
worthwhile to thank our coalition partners, who have also 
sacrificed, both military and civilian. And if I could, as I 
have done on many times before this committee, thank you for 
your support of the State Department, and particularly today as 
I go through some of the details of the new embassy for the 
support of the Diplomatic Readiness Initiative, so we have the 
people and the wherewithal we need to carry out this country's 
diplomacy. And I also appreciate the statements that you have 
made in support of John Negroponte's nomination by the 
President to be our Ambassador to Iraq and we appreciate the 
rapidity that you want to go ahead and get this confirmation 
hearing done and we will work with you to get this done as 
quickly as possible, because I agree with you completely, we 
need that finished so that he also can join us and make sure we 
are going forward as quickly as we possibly can.
    As I said, I read the letter of invitation that you sent to 
me very carefully, I've listened to the questions that you and 
Senator Biden have proposed, not just today, but I looked at 
the ones for the past couple of days, and it seems to me that 
your focus on the preparations that we're doing to get ready 
for 30 June, 1st of July, are the right ones, and that you 
ought to keep asking us these questions, we ought to keep doing 
these hearings, because as you both said, they are absolutely 
crucial to the success of the United States.
    I report to you today on the tremendous amount of work that 
has been done. As you say, we don't have all the issues 
settled, but we look forward to close consultations and further 
hearings or any other way that this committee would like to 
have interaction on these issues. We have, I believe, the 
guidance that we need, the direction that we need, and also I 
hope to convince you that we have a plan for going forward 
between now and the 30th of June.
    Our guidance comes from President Bush and he repeated it 
last week. He said the central commitment is to transfer 
sovereignty back to the Iraqi people on a deadline of June 30, 
and went on to describe that day, and I think it's important to 
put it out, which is to say on June 30 when the flag of a free 
Iraq is raised, Iraqi officials will assume full responsibility 
to the ministries of government. On that day the Transitional 
Administrative Law [TAL], including a bill of rights that is 
unprecedented in the Arab world, will take full effect. The 
United States and all nations of the Coalition will establish 
normal diplomatic relations with an Iraqi Government, an 
American Embassy will open, an American Ambassador, obviously 
subject to the confirmation of the committee and the Senate, 
will be posted.
    The specific direction that we take with this guidance 
comes from Secretary Powell, who says that it is our goal to 
support the President's direction. As I reported to you one 
other time, Senator, after CPA and the Iraqi Governing Council 
signed the November 15 agreement and established the June 30 
transition date, Secretary Powell asked Ambassador Frank 
Ricciardone to come back from Manila to head our transition 
team, and in his first day on the job he went to the Pentagon 
to meet his counterpart, Lieutenant General Kicklighter, and 
they are today one interagency team, and I just would ask them 
both to stand up so that the committee knows who they are and 
what they are accomplishing, and I think they've done a 
tremendous amount in the weeks that they have worked together. 
We thank them.
    We've also established an interagency team in Baghdad under 
the leadership of Ambassador John Holzman. He works on 
transition planning and implementation in immediate 
consultation with Ambassador Bremer and General Sanchez. I can 
tell you that the Secretaries involved in our transition 
planning continues daily. We send to the Secretary each night a 
table of what got accomplished today and what needs to be done 
in the next day, and these notes I think demonstrate the broad 
range of interagency, bilateral, multilateral things that we 
have to get done.
    We're also following the President's guidance and the 
Secretary's direction. We have developed a plan which I have 
put there, and I know it's far away from people, but we will 
leave one for everybody about how to get to and through the 
30th of June. We set ourselves some broad deadlines and some 
specific ones as well, and to execute that plan we have and 
continue to work closely with our interagency colleagues and 
consult regularly with Congress, Coalition partners, Baghdad, 
and Washington.
    Mr. Chairman, among the questions that you asked, and the 
one I'd like to deal with first with your permission, is how to 
transition from the Coalition Provisional Authority to an 
Embassy of the United States of America. The first job that we 
undertook here, a very good idea of General Kicklighter's, was 
to send teams to Iraq, assessment teams, to consider what the 
basic requirements were to make this transition successful, and 
we identified 15 key sectors that we thought were crucial to 
success. We've identified those 15 broad areas and we're 
working now to make sure that each of them, that the 
requirements there are accomplished.
    Each of these sectors is broken down into individual tasks 
and milestones, and again, I'll just show what we've got, which 
is about 500 or 550 of these tasks broken down. Somebody's 
responsible, there's a date for each one of them, and as you 
can see, some are green, some are red, some are yellow. The 
objective is obviously to turn them all to green. And I would 
invite the committee and committee staff to come to the State 
Department at any time where we have this on the Web and it's a 
living document and all of you are certainly welcome to take a 
look at it at any time so that you can get updated as you wish.
    The Chairman. Is the document classified?
    Mr. Grossman. It is not, sir, but it's on our Intranet and 
we want to keep it that way, but you're welcome to come to the 
Department and you or staff and look at it any time, because it 
changes all the time.
    The Chairman. I thank you for that invitation.
    Mr. Grossman. And I think it would be useful as we go 
forward. As I say, each of these are broken down into 
milestones, individual tasks, and our objective obviously is to 
get them all done. As I said, there were 15 of these large 
tasks to accomplish. I won't, even with your invitation to be 
detailed, go into all of them, but I'd like to talk about four 
today if I could. I'd like to talk about people, security, 
buildings, and money, and I think all of those were encompassed 
in questions that you asked.
    The State Department, of course, as you know, and as we 
have talked about from time to time, has been in Iraq from the 
very beginning, from Jay Garner's operation, ORHA, to Jerry 
Bremer's operation, CPA, and we currently have 170 people in 
Iraq of whom we are immensely proud and they come from many 
parts of our Washington operation and around the world, senior 
officers, junior officers, and I say we're proud of them and of 
their service.
    How big will this embassy be? It's not going to be a 3,000 
American person embassy as I have seen places in the press. Our 
planning is for about 1,000 Americans and about 700 Iraqi 
employees. So exactly how do I get to that figure? I get to 
that figure in this way. First, the State Department has 
announced positions of 142 American employees and 155 locally 
engaged staff, Iraqis. In addition, in January of this year, 
Secretary Powell asked his Cabinet colleagues to identify 
contributions that other agencies might make to the mission in 
Iraq, as we have contributions from missions, in missions all 
around the world from other agencies.
    To date, 10 Cabinet agencies have come back to us and 
requested a presence in Embassy Baghdad for a total of 254 
Americans and about 300 locally hired personnel. Long term, 
because we haven't heard back from everybody, we estimate that 
there will be about 350 to 400 Americans other than the State 
Department from some 12 to 15 agencies and then a reasonable 
number also of Foreign Service national staff. A number of CPA 
staff who have specific and very important skills to bring will 
also continue, we believe, to work after July 1 under the Chief 
of Mission and we have put in a reasonable number for them as 
well, and so that's how I come to a number of approximately 
1,000 Americans and about 700 Iraqi employees.
    I will say, and I hope that you will be proud of this as 
well, we have had so many State Department people volunteer for 
these jobs that we have no trouble assigning them to the 142 
positions that we have currently announced. In fact, about 200 
people have requested to be assigned to the new embassy, and of 
those 142 positions that we have announced, we have formally 
assigned 97 people, 32 more assignments are pending, and we do 
believe, Mr. Chairman, as you asked, that they will be in Iraq 
well before the 1st of July. In fact, I guess using a retail 
term, our objective is to have a soft opening of our embassy 
some 3 weeks in advance so that people can get used to what 
they're doing and then on the day there will really be an 
American Embassy there.
    I should also say that we've already begun hiring for local 
staff, and the first people that we have hired are currently in 
Washington undergoing training, and their job is to then go 
back to Iraq and get more locally hired staff. So for those of 
you who have just joined us, it's about 1,000 Americans, about 
700 Iraqi employees.
    The American Ambassador, as we discussed the last time I 
was with the committee, once confirmed by the Senate, will 
carry with him a letter from the President, as all of our 
Ambassadors do, that spells out clearly his authority in Iraq. 
It will say that he as the Chief of Mission and personal 
representative of the President reporting to the Secretary of 
State will have responsibility for the direction, coordination, 
and supervision of all U.S. Government executive branch 
employees in Iraq except for those under the command of the 
U.S. area military commander or on the staff of an 
international organization, and that is exactly how we do it 
everywhere in the world, and we believe that this will work 
successfully in Iraq.
    Of course, the American military commander and the 
Ambassador are going to have to have the closest possible 
relationship, and of course we do this other places in the 
world like in Afghanistan to ensure that their respective 
operations are fully coordinated and best serve the interests 
of the United States.
    There have also been questions about the command and 
control of U.S. forces in Iraq after June 30, and I can tell 
you that U.S. forces in Iraq will report to the U.S. commander 
of the multinational force Iraq, who will report to the 
President through the military chain of command. He'll 
obviously consult closely with the Iraqi Interim Government, 
and as General Myers said earlier this week, we'll be looking 
for a partnership with this Iraqi Government. And I don't know, 
Senator, where the chains of command come from. As I see it, 
those are the chains of command that we look forward to in 
Iraq.
    The President has said, we will turn sovereignty over to 
Iraqis on June 30, July 1. In the security area, obviously 
there's going to have to be an arrangement with that Iraqi 
Government that is based on the Transitional Administrative 
Law, that is based on U.N. Security Council 1511, that's based 
on CPA order 17, but I believe that Iraqis who have this vision 
for their own society recognize that they can't meet that 
vision without security, and they can't create that security 
without the support of the United States of America. And so 
with General Myers' vision of a partnership with the Iraqi 
forces and with Ambassador Negroponte on the ground, I'm 
confident that turning sovereignty over to Iraqis with this 
security arrangement will be successful for us.
    Second area, and that is security. Our top priority 
obviously is to keep people safe. Everybody here should 
understand that this is not just a dangerous mission for our 
military forces and coalition military forces that are out in 
Iraq. This is a dangerous mission for our people as well. We've 
already begun the security upgrade of the planned interim 
embassy buildings and we've selected a site for a future new 
embassy compound based largely on its security features. We 
have 51 armored vehicles already in Iraq, another 98 are on 
order, and I can tell you these vehicles have already saved 
Iraqi and American lives.
    You asked whether we had security agents already on the 
ground. The answer to that question is yes. We have 32 
diplomatic security staff already in Iraq to define the mission 
security requirements and begin to meet them. Difficult 
questions in the security area are left to be answered, but as 
you know, Deputy Secretary Armitage and our Assistant Secretary 
for Diplomatic Security, Frank Taylor, were in Iraq earlier 
this week and now will come back and I think help us define 
further questions in the security area. But I repeat that this 
is going to be for us, as well as for our military colleagues, 
a dangerous place to live and work for some time.
    Facilities. Our director of overseas buildings operations, 
Ambassador Chuck Williams, traveled to Baghdad in February. 
We've identified a building to serve as the embassy from the 
1st of July until a more permanent facility can be established. 
We're referring to that as the temporary chancery. It's already 
under renovation, and, Senator, you asked, we believe will be 
absolutely ready to go on the 1st of July.
    In that temporary chancery will be the Ambassador and a 
limited number of staff. In addition, until we build a new 
embassy compound, we'll continue to use some of the buildings 
that the CPA is currently using, mostly for non-public 
operations, and we'll continue to use the residence that is 
currently used by Ambassador Bremer.
    We've got some housing issues. CPA people are currently 
housed in trailers. That's where our people will be 
temporarily. We've got some more trailers on order, but in the 
facilities area as well, I think we've got a plan in process, 
and again, Rich Armitage, who was in Baghdad on Tuesday, walked 
all of the sites of the temporary facility, walked the site of 
a possible new embassy compound, and reported to me by phone 
yesterday that he was confident that in this area we can get 
this job done.
    Finally, you asked about money, and here, Senator Nelson, 
when I was before the committee the last time, asked me about 
the money, and I have been trying to get him an answer ever 
since, and I am finally able to give you, I hope, Senator, a 
complete answer about where the finances go. And here's how 
this works as far as we're concerned. Our current estimate for 
the resource requirements for the mission for the rest of 
fiscal year 2004 and all of 2005 are between $1.1 billion and 
$1.5 billion, excluding the cost of a new embassy building. 
Obviously, these cost estimates are subject to change. I'm 
giving you a snapshot as they are today, the $1.1 billion to 
$1.5 billion.
    We have so far identified $535 million to pay these bills 
through the end of this calendar year, broken down as follows. 
First, we have $97.3 million for the fiscal year 2003 and 
fiscal year 2004 Iraq supplementals, which will help provide 
for some ongoing renovation and security costs and interim 
facility requirements.
    Second, based on current OMB apportionments, $195.8 million 
will be available in the fourth quarter from CPA operating 
expenses since they will transfer to this embassy, and so that 
will help as well. And third, as a successor to CPA, up to 1 
percent of the Iraq relief and reconstruction fund, and that's 
about $184 million, can be transferred for operating expenses, 
and our fiscal year 2005 budget did include $46 million for 
some State Department operating costs, support costs, and $29 
million for staffing. So that's $523 million that we have 
identified.
    We're also exploring a number of other funding strategies, 
non-reimbursed support from other agencies that will 
participate in this embassy. It's possible also, and the 
lawyers are looking at this, to use a larger percentage of the 
Iraq reconstruction and relief fund for administrative 
expenses. And so there are ways that we are looking to fill 
that gap. What Senator Biden--both Senator Biden and Senator 
Lugar asked about a supplemental, and if you ask me in terms of 
our requirements, we believe a supplemental will ultimately be 
required, obviously the size and timing to be set by the 
President.
    And so that is where we stand on the finances at the 
moment. We'll continue to refine those numbers, but we've got a 
job in front of us, we've identified some money, and we're 
going to continue to work on this as we go forward.
    My report to you as a whole--and I'll say I was very 
encouraged from hearing from Rich Armitage on the phone the 
other day that he believes that the work that has been done by 
General Kicklighter and Ambassador Ricciardone, and the work 
that is being done on the ground means that we will be ready to 
stand up an Embassy of the United States of America on the 1st 
of July.
    The second major question that you have both posed is, what 
about the transition on the political side? What happens in 
Iraq 30 June, 1st of July? And let me take a moment to talk 
about those issues as well. The restoration of Iraqi self 
government on June 30, we have here again clear guidance and 
clear direction. The President has said on a number of 
occasions that we will return sovereignty to Iraqis on the 1st 
of July. The plan for restoring Iraqi sovereignty is 
essentially laid out in the November 15 agreement, and I just 
have a chart,\1\ and again, I would be glad to have some left 
with you so this is not an eye examination--it's the other one, 
thank you very much--is the way forward from the November 15 
agreement. If you don't remember that agreement, it was signed 
by CPA and the Iraqi Governing Council. It called for a 
Transitional Administrative Law encompassing a basic bill of 
rights, and that agreement as it goes along there by dates, 
calls for the selection of an Interim Iraqi Government to 
oversee the preparation of national elections and the transfer 
of governing authority to an interim government by June 30, 
2004.
---------------------------------------------------------------------------
    \1\ Copies of charts exhibited during Mr. Grossman's presentation 
can be found beginning on page 99.
---------------------------------------------------------------------------
    The agreement also established a time line for national 
elections and the drafting and ratification of a new 
constitution and the election of a government under that 
constitution by December 31, 2005. Mr. Chairman, I might 
suggest if it would be all right with you, is I'd like to ask 
that the TAL in its entirety be submitted for the record,\2\ 
because I think it's a very important document and one that 
does lay out the plan as we go forward. I think that would be 
very worthwhile.
---------------------------------------------------------------------------
    \2\ See page 84.
---------------------------------------------------------------------------
    The Chairman. It will be included in the record in full.
    Mr. Grossman. Thank you, sir. Now, there have been some 
changes in the November 15 agreement since that time, but I 
think the basic framework and the time line still holds. The 
first step obviously was the Governing Council's agreement on 
the Transitional Administrative Law now almost 3 months ago. It 
marked an important achievement, equal rights for all Iraqis 
without regard to gender, sex, opinion, belief, nationality, 
religion, or origin. It confirms Iraq is a single state with 
federal structures. It affirms civilian control of the Iraqi 
security services and the independence of the judiciary. And 
finally, the TAL establishes the general framework for national 
elections by January 31, 2005, and the drafting of a permanent 
constitution by August 15, 2005, and then the transition to a 
constitutionally based, post-transition government by December 
31, 2005.
    It talks specifically about the Iraqi Interim Government. 
As you all know, and we've talked about before, following the 
U.N. Secretary General's February 23 report and the signing of 
the Transitional Administrative Law, the Governing Council on 
March 17 asked the United Nations to come to Iraq to help it 
with two jobs. First, to advise it on how to get to this 
interim government, and second, to advise it about how most 
properly to view most elections.
    And so on April 5, Ambassador Brahimi returned to Iraq to 
resume intensive consultations with Iraqis for this purpose, 
and you all have seen, I know, the statement that President 
Bush made last week that we welcome the proposals that 
Ambassador Brahimi presented. He's identified a way forward to 
establishing an interim government that is broadly acceptable 
to the Iraqi people, and the President thanked the United 
Nations and the Secretary General for making Ambassador Brahimi 
ready for this work, and we look forward to working with him 
more closely.
    In our consultations with the United Nations and in our 
talks with Ambassador Brahimi, we've tried to lay out what we 
think this Iraqi Governing Council ought to be about. Let me 
just give you some criteria that I consider to be important. 
First, that this interim government should represent the 
diversity of Iraq. Second, that it should not have a law-making 
body. We don't believe that the period between the 1st of July 
and the end of December should be a time for making new laws. 
The structure of the government should be effective, simple, 
and in order to avoid deadlock, should not be overly large. 
Third, the process of selecting the government should be as 
simple as possible. And fourth, the interim government should 
have all the necessary authorities it needs to lead Iraq into a 
community of nations and especially to undertake agreements 
with economic reconstruction and to prepare the country for 
elections. And as I say, given that criteria, we are pleased 
with the sketch that Ambassador Brahimi provided of his 
proposed way forward and believe his idea fits in our vision.
    Mr. Chairman, you talked a little bit about that vision of 
Ambassador Brahimi's. He believes he can establish by mid-May 
an interim government led by a Prime Minister that also 
includes a President, two Deputy Presidents, a council of 
ministers which will report to the Prime Minister, and then an 
advisory body which would be selected by a national conference 
to be held, as Ambassador Brahimi's foresees it, some time in 
July, which would serve alongside of the executive but not have 
legislative authorities.
    We look forward obviously to discussing this further, and I 
know that Ambassador Brahimi will be reporting to the Security 
Council in more detail, but we look forward to that.
    I also want to highlight Ambassador Brahimi's statement 
regarding the central importance of elections, and that is 
something with which we absolutely agree. And, in fact, for us, 
the call for national elections in early 2005 was a key part of 
the November 15 agreement. In this regard, and I just really 
have to say how much we admire the work that the U.N. election 
team, headed by Ms. Perelli, did while they were in Baghdad. 
They got to Baghdad in late March, they were there for quite a 
number of weeks. They worked very hard with the Iraqi Governing 
Council and other Iraqis to establish an election system, and I 
just want to highlight something that Ms. Perelli said in her 
press conference on the way out, which is that the time line 
for getting these elections going is very tight, and so we need 
to pay close attention to getting the election system in Iraq 
right.
    Finally, on the United Nations Security Council resolution, 
you asked about that, Senator, and both President Bush, 
Secretary Powell, others have talked about the need for a new 
U.N. Security Council on Iraq. And I can tell you today that we 
have not decided in terms of its exact text or when would be 
the best time to get it, either just before the 30th of June, 
after the 30th of June. That is something that we are still 
considering, but what we have done is lay out, and I will lay 
out for you today some of the basic components of that 
resolution when it comes.
    A new resolution should obviously extend a hand to the new 
Iraqi Government and support it, as you said, Senator Lugar, to 
deal with reconstruction activities, including the future of 
the development fund for Iraq, and with the continuing need 
obviously for security for the Iraqi people. It would help the 
Iraqi people complete the political process for themselves. It 
would, as Senator Biden said, encourage other nations to get 
involved in security and reconstruction efforts, and the 
resolution could also structure a role for the United Nations 
in this new political framework, particularly in supporting the 
process toward elections, which was another of your questions, 
who runs these elections.
    So, Senators, I sit before you here on the 22nd of April, I 
have a vision of Iraq on the 1st of July where there will be, 
subject to Senate confirmation, an American Ambassador. There 
will be a large but recognizable American Embassy. The 
Ambassador's team, including a highly experienced Deputy Chief 
of Mission, will include representatives from a broad range of 
U.S. Government agencies. There will still be a very large 
number of American troops on the ground helping to provide 
security and train Iraqi army and police forces, and when the 
Ambassador goes to call on Iraqis in government, he will be 
calling on the President and the Prime Minister of a sovereign 
Iraq, but clearly, the work we have to do will not be complete. 
Iraq will still be in transition, and I think it's important to 
recognize, as the chart does, and as we will do, I'm sure, 
during the question and answer period, that this is an interim 
government that lasts from the 1st of July till December, and 
its job is to get elections going and help us and participate 
as a partner in security.
    Security will still be an issue. Elections will need to be 
held. A permanent constitution will need to be drafted. 
Economic reconstruction will remain unfinished. And the United 
States is committed until we reach our objective, a democratic, 
prosperous Iraq governed by a duly represented government at 
peace with itself and its neighbors.
    I hope, Mr. Chairman, that we've moved this conversation 
along from the last time I was here and we have a lot more 
detail on both ends of this plan. I recognize that we don't 
have every answer, but I believe we have a plan and we are well 
on our way to carrying it out, and I thank you for offering me 
the chance to give this statement in detail and I hope it has 
been of some use to you.
    [The prepared statement of Mr. Grossman follows:]

                Prepared Statement of Hon. Marc Grossman

    Mr. Chairman, Senator Biden, Members of the Committee, I appreciate 
the opportunity to report to you today on the progress we are making 
regarding the June 30 transition in Iraq.
    Before I begin, I would like to pay tribute to the men and women 
who are serving their country and the cause of freedom in Iraq. 
Secretary Powell, Deputy Secretary Armitage and I are immensely proud 
of the Americans--civilian and military--who demonstrate the highest 
degree of dedication, determination and courage as they work to bring 
security, democracy and prosperity to Iraq. I also want to thank our 
many Coalition partners for their steadfast support.
    Thank you also for your support of the State Department.
    I know that you saw the President's announcement on Monday of his 
nomination of Ambassador John Negroponte to be the first Ambassador to 
the new Iraq. We are delighted.
    I read your letter of invitation to me carefully. Your focus on the 
plans and preparation for a successful transition on June 30, our 
coordination with Coalition partners, Iraqis and the United Nations, 
and the importance of a smooth transition from the CPA to a U.S. 
Embassy in Baghdad is the right focus.
    We too are focused on the need to ensure enough resources, the 
right people and the right organizational structure to do the job.
    While I will report to you today on the tremendous amount of work 
we have already done on these issues, we do not yet have all the 
answers. As Secretary Powell said earlier this month to your colleagues 
here in Congress, ``Creating a democratic government in Iraq will be an 
enormous challenge, but Ambassador Bremer--with the Iraqi Governing 
Council, the United Nations and our coalition partners--is committed to 
success.'' And what did the Secretary say next? ``When the State 
Department assumes the lead role this summer in representing and 
managing U.S. interests in Iraq, we will carry on that commitment. 
We're already thoroughly involved, and we will succeed.''
    We have the guidance we need, the direction required, and a plan 
for a successful transition in Iraq.

                       GUIDANCE. DIRECTION, PLAN

    Our guidance comes from President Bush. He repeated it last week. 
``One central commitment'' the President said of our mission to 
liberate Iraq, ``is the transfer of sovereignty back to the Iraqi 
people. We have set a deadline of June 30th. It is important that we 
meet that deadline. As a proud and independent people, Iraqis do not 
support an indefinite occupation--and neither does America.''
    The President went on to describe that day: ``On June 30th, when 
the flag of free Iraq is raised, Iraqi officials will assume full 
responsibility for the ministries of government. On that day, the 
Transitional Administrative Law, including a bill of rights that is 
unprecedented in the Arab world, will take full effect. The United 
States, and all the nations of our coalition, will establish normal 
diplomatic relations with the Iraqi government. An American embassy 
will open, and an American ambassador will be posted.''
    Our specific direction comes from Secretary Powell. The Secretary 
has set the State Department in motion to support the President's goal 
of a smooth transition on June 30.
    After the CPA and the Iraqi Governing Council signed the November 
15 Agreement and established the June 30 transition date, the Secretary 
called Ambassador Francis (Frank) Ricciardone back to Washington to 
head our transition team. In his first day on the job, Ricciardone went 
to the Pentagon to meet with his counterpart as the Iraq Transition 
Team leader for the Department of Defense, LTG (ret.) Mick Kicklighter. 
Ricciardone and Kicklighter head one interagency team.
    Our interagency team has established a cell in Baghdad under 
Ambassador John Holzman. Ambassador Holzman works on transition 
planning and implementation in immediate consultation with CPA 
Administrator Bremer and CJTF-7 Commander General Sanchez.
    The Secretary's involvement in our transition planning continues 
daily. Each evening we send the Secretary a consolidated summary of the 
Department's transition-related activities for the day. The notes 
demonstrate a broad range of interagency, bilateral and multilateral 
requirements, and highlight issues to solve and those resolved. We also 
provide the Secretary a more in-depth weekly report that highlights key 
challenges and the steps we are taking to address them.
    And so, following the President's guidance and Secretary Powell's 
direction, we have developed a plan to get us to--and through--June 30.
    To execute our plan, we have and continue to work closely with our 
interagency colleagues, and we consult regularly with Congress and 
Coalition partners in Baghdad, in Washington, and in capitals.

                     TRANSITION FROM CPA TO EMBASSY

    We are proceeding in close coordination with our interagency 
colleagues and with CPA.
    As an early step, the transition planning team established teams in 
key sectors which we thought critical to ensuring a successful 
transition on June 30. We also sent interagency assessment teams to 
Iraq to examine the situation on the ground and report their findings.
    Each of these sectors is broken down into individual tasks or 
milestones that need to be accomplished. The sectors actually represent 
more than 500 milestones. And behind these milestones are individual 
tasks. Responsibility for each task has been assigned to a particular 
agency or office, and target completion dates have been established.
    In the personnel sector, for example, there are twenty-six 
individual milestones that have been identified to date. All but four 
are ``green,'' indicating that they are either completed or on 
schedule.
    We at the State Department are glad to brief you or your staff on 
any of the tasks we have identified. And let me offer full access to 
our Transition Planning Team intranet Web site to any of your staff 
willing to visit us in the Department of State and use computers with 
access to our intranet.
    Today, I would like to spend a few minutes going into some detail 
on our planning and progress in four key sectors of transition 
planning: people, security, buildings and money.

                                 PEOPLE

    State Department officers have been in Iraq from the beginning, 
alongside Jay Garner and ORHA and under Jerry Bremer and CPA. We have 
more than 170 people in Iraq today. These men and women have come from 
Washington and dozens of missions overseas, Foreign Service and Civil 
Service, from our newest Junior Officers to sitting Ambassadors. We are 
proud of their professionalism and sense of service.
    How big will our new Embassy in Baghdad be?
    The State Department has announced positions for 142 American 
employees and 155 locally engaged staff.
    In addition, in January of this year, the Secretary asked his 
Cabinet colleagues to identify contributions their agencies might offer 
in Iraq. As of April 15, ten agencies have requested a presence in 
Embassy Baghdad for a total of 254 American and 280 locally hired 
personnel for FY 2005. Long term, we estimate a total of 350-400 
permanently assigned Americans from some 12-15 agencies, other than 
State, will serve under the Chief of Mission in Iraq.
    And a number of CPA staff will continue after July 1 in a temporary 
capacity under Chief of Mission authority to ensure the continuity of 
the transition process and to support Iraq reconstruction efforts. The 
transition team, working closely with CPA, is currently identifying the 
number of staff that will carryover.
    Thanks to the eagerness of so many State Department people to 
volunteer for service in Iraq, we have made excellent progress in 
assigning them to the future Embassy. More than 200 people have 
requested to be assigned to the new Embassy. Of the 142 Foreign Service 
positions announced to date for Embassy Baghdad, we have formally 
assigned 97 people. Thirty-two more assignments are pending.
    We have also already begun interviewing for the local hire 
positions, and have hired our first employees. These first hires are 
undergoing training here in Washington in order to prepare to help us 
hire others for service in the Embassy. In the short run, however, 
pending the Embassy's ability to bring on all the direct-hire Iraqi 
personnel that we ultimately will need, the Embassy will rely on Iraqi 
and third country staff now under the U.S. Army's ``Logcap'' contract 
to provide many basic support services.
    We have heard questions about the role of the American ambassador, 
given the large military presence that will remain in Iraq after July 
1.
    The American ambassador, once confirmed by the Senate, will carry 
with him to Iraq a letter from the President--as all our Ambassadors 
do--that spells out clearly his authority in Iraq. It will say that he, 
as the Chief of Mission and personal representative of the President, 
reporting through the Secretary of State, will have full responsibility 
for the direction, coordination, and supervision of all United States 
Government executive branch employees in Iraq, regardless of their 
employment categories or location, except those under command of a U.S. 
area military commander or on the staff of an international 
organization.
    Of course, the Ambassador and the military commander will have to 
work closely together to ensure that their respective operations are 
fully coordinated and best serve the interests of the United States in 
Iraq.
    There are also questions about the command and control of U.S. 
forces in Iraq after June 30. U.S. forces in Iraq will report to the 
U.S. commander of the Multinational Force-Iraq (MNF-I), who will report 
to the President through the military chain of command. We will consult 
closely with the Interim Iraqi Government and, as General Myers said 
earlier this week, we will build a partnership with Iraqi security 
forces.
    One last comment on State personnel. The response from the 
professional men and women in the State Department has been exemplary. 
Many of those who have asked to serve in the new Embassy have already 
served in Iraq over the past year. Without the additional personnel 
made possible through congressional support for the Diplomatic 
Readiness Initiative, we would have been unable to provide this kind of 
support to CPA, or be in such good shape heading for June 30.
    We look for your continued support to ensure that new requirements 
like Iraq are permanently funded to ensure the personnel resources 
remain available to respond to crises.

                                SECURITY

    Our top priority is to keep our people safe. This is a dangerous 
mission. We have already begun the security upgrade of the planned 
interim Embassy buildings, and have selected a site for a future new 
embassy compound based largely on its security features. We have 51 
armored vehicles in Iraq and another 98 are on order. These vehicles 
have already saved American and Iraqi lives.
    Thirty-two Diplomatic Security (DS) staff are already in Iraq to 
define the Mission's security requirements and to begin to meet them--
as well as to help protect CPA officers and visitors.
    There are difficult questions related to security still to be 
answered. Deputy Secretary Armitage and Assistant Secretary for 
Diplomatic Security Frank Taylor were just in Baghdad to keep working 
through these questions in close coordination with people on the 
ground.
    Iraq is, and for some time will remain, a dangerous place to live 
and work. Protecting our people in a wartime environment is difficult 
and expensive, but we must spare no effort or expense to meet this 
challenge.

                               BUILDINGS

    Director of Overseas Building Operations Chuck Williams traveled to 
Baghdad in February to complete plans for interim and potential 
permanent mission facilities. We have identified a building in the 
green zone to serve as the Embassy from July 1 until a more permanent 
facility can be established. This building, which we refer to as the 
temporary Chancery, is already under renovation and will be ready for 
occupancy in advance of the transition.
    The temporary Chancery will serve as the office of the Ambassador 
and a limited number of staff. In addition, until we build a new 
Embassy compound, we will continue to use the former Republican Palace, 
where CPA is currently located, for most non-public operations, and we 
will continue to use the current residence that is being occupied by 
Administrator Bremer.
    Most embassy employees will be housed in trailers currently being 
occupied by CPA personnel. We have already contracted for an additional 
75 trailer units to accommodate 150 personnel to ensure that we have 
adequate and appropriate space to house our staff until permanent 
facilities can be established.
    We also have begun the planning process to develop a new American 
Embassy facility. A site, chosen largely for security reasons, has been 
selected for the new Embassy facility.

                           FINANCIAL OUTLOOK

    Finally, I would like to share our current thinking on the fiscal 
resources needed to ensure a smooth transition to Embassy Baghdad, and 
the continued operation of the mission thereafter.
    I need to emphasize that the costs I report to you today are only a 
snapshot.
    In order to open an Embassy on July 1, we must meet basic security 
needs and must make an investment in technology and communications 
equipment. Congress has provided in FY 2004 $97 million for an interim 
embassy facility and interim operations.
    In addition, we expect to have available the fourth quarter portion 
of the operating expense budget appropriated for the CPA ($195.8 
million), and, pursuant to the FY 2004 Supplemental, up to 1% of the 
Iraq Relief and Reconstruction Fund, available for transfer ($184 
million).
    The State Department must be prepared to cover both its initial 
start-up and operating expenses, as well as follow-on costs from the 
CPA to assure continuity of operations. There are significant 
challenges in the funding demands that we are working are way through, 
and it is clear that we will need to make sure that all agencies cover 
their respective share of joint costs.
    We estimate that those joint mission costs may be in the range of 
$500-$600 million for the balance of FY 2004 and we are working on how 
those costs will be allocated among agencies. In addition, we estimate 
that the costs in FY 2005 to operate the U.S. mission could exceed $1 
billion. We are working closely with CPA, DOD, and OMB to refine these 
estimates and will provide you as much accurate information as quickly 
as we can. We will consult with you and your colleagues before anything 
is finalized.

                    IRAQ'S TRANSITION TO SOVEREIGNTY

    About the political process in Iraq, and the restoration of Iraqi 
self-government on June 30th. Here, too, our guidance and direction is 
clear.
    The President, on the night he announced the start of Operation 
Iraqi Freedom, March 19, 2003 said: ``We come to Iraq with respect for 
its citizens, for their great civilization and for the religious faiths 
they practice. We have no ambition in Iraq, except to remove a threat 
and restore control of that country to its own people.''
    The plan for restoring Iraqi sovereignty is laid out in the 
November 15 agreement. That agreement, signed by CPA and the Iraqi 
Governing Council, called for a Transitional Administrative Law, 
encompassing a basic bill of rights for all Iraqis. The agreement 
called for the selection of an Interim Iraqi Government to oversee the 
preparation of national elections, and the transfer of governing 
authority to the interim government by June 30, 2004. And the agreement 
established a timeline for national elections, the drafting and 
ratification of a new constitution and the election of a government 
under that constitution by December 31, 2005.
    There have been changes since November 15. But the basic framework 
and timeline still holds.

                    TRANSITIONAL ADMINISTRATIVE LAW

    The first step was the Governing Council's unanimous agreement on 
the Transitional Administrative Law, or TAL, nearly two months ago. 
This marked an important achievement. As Secretary Powell said on March 
8, ``Just imagine the impact that this document is going to have, not 
only in Iraq but in that part of the world. The rights of all citizens, 
to include women, committing this Arab nation to democracy; a free and 
independent judiciary; the military firmly under civilian controls.''
    The TAL provides for equal rights for all Iraqis, without regard to 
gender, sect, opinion, belief, nationality, religion or origin. It 
confirms Iraq as a single state with federal structures, affirms 
civilian control of the Iraqi security services and the independence of 
the judiciary. Finally, the TAL establishes the general framework for 
national elections by January 31, 2005, the drafting of a permanent 
constitution by August 15, 2005 and the transition to a 
constitutionally-based post-transition Iraqi government by December 31, 
2005.

                      THE IRAQI INTERIM GOVERNMENT

    Following the UN Secretary General's February 23 report and the 
signing of the TAL on March 8, the Governing Council on March 17 asked 
the UN to return to Iraq to advise and assist on forming the Iraqi 
Interim Government and preparing for elections for the Transitional 
National Assembly. On April 5, Ambassador Brahimi returned to Iraq to 
resume intensive consultations with Iraqis for this purpose.
    As President Bush said last Friday, ``We welcome the proposals 
presented by the U.N. Special Envoy Brahimi. He's identified a way 
forward to establishing an interim government that is broadly 
acceptable to the Iraqi people . . . We thank the U.N. and Secretary 
General Annan for helping Iraqis secure a future of freedom. We're 
grateful that Mr. Brahimi will soon return to Iraq to continue his 
important work.''
    In our consultations with the UN and Iraqis, we have made clear 
that while Ambassador Brahimi and Iraqis will chose the specific 
formula for the interim government, there are fundamental criteria that 
must be met.
    First, the interim government should represent the diversity of 
Iraq.
    Second, it should not have a law-making body. The structure of the 
government should be effective, simple and, in order to avoid deadlock 
in the interim period, should not be overly large.
    Third, the process of selecting the government should be as simple 
as possible.
    And fourth, the interim government should have the necessary 
authorities to lead Iraq into the community of nations, undertake 
agreements to push forward economic reconstruction, and prepare the 
country for elections.
    We were pleased by the sketch Ambassador Brahimi provided of his 
proposed way forward and believe his idea fits well with our vision.
    Ambassador Brahimi envisions establishing by mid-May an interim 
government led by a Prime Minister that also includes a President and 
two Deputy Presidents. A council of ministers would report to the Prime 
Minister. An Advisory Body, selected in July by a National Conference, 
would serve alongside the Executive but have no legislative authority.
    We look forward to further discussions with Iraqis and in New York 
with the Secretary General as we consider the way forward. We also look 
forward to Ambassador Brahimi's return to Iraq in the weeks ahead to 
continue consultations with Iraqis countrywide.
    I would also highlight Ambassador Brahimi's statement regarding the 
central importance of elections. We agree. In fact, the call for 
national elections in early 2005 was a key part of the November 15 
agreement.
    In this regard, we are grateful for the continued work of the UN 
election team, headed by Carina Perelli. The team has been in Baghdad 
since late March and is working closely with our officials and experts 
to accelerate election preparations. As Ms. Perelli has said, the 
timeline for elections by January 2005 is very tight. A top priority 
remains establishing an independent Election Commission as soon as 
possible. We look forward to further discussions with the UN on the way 
ahead.

                                 UNSCR

    President Bush and Secretary Powell have both discussed a new UN 
Security Council resolution on Iraq. We are considering what kind of 
resolution might be appropriate and are looking at possible elements 
that would be in the resolution.
    For example, a new resolution could extend a hand to a new Iraqi 
government. It could deal with reconstruction activities, including the 
future of the Development Fund for Iraq and with the continuing need 
for security to enable the Iraqi people to complete the political 
process. It could encourage other nations to get involved on both the 
security and reconstruction efforts. And a new resolution could 
structure a role for the United Nations in the new political framework, 
particularly in supporting the process towards elections.

                                 JULY 1

    So, as I sit before you on April 22, what do I think Iraq will look 
like on July 1? There will be an American ambassador, running a large 
but recognizable Embassy. His highly experienced deputy chief of 
mission and country team will include representatives from a broad 
range of USG agencies. There will still be more than 100,000 U.S. 
troops on the ground, helping provide security and train Iraqi army and 
police forces. And when the Ambassador drives off to call on Iraqis, he 
will be meeting with the Prime Minister and the President of a 
sovereign Iraq.
    But our work will not be complete. Iraq will still be in 
transition; elections will need to be held; a permanent constitution 
will need to be drafted; economic reconstruction will remain 
unfinished. The United States is committed until we reach our 
objective--a democratic, prosperous Iraq governed by a duly-elected, 
representative government, at peace with itself and its neighbors.
    We have guidance; we have direction; we have a plan. And we are 
already executing that plan.
    Thank you.

    The Chairman. Well, thank you very much, Secretary 
Grossman. Your statement was very comprehensive. It was an 
extraordinary statement that each one of us will want to digest 
carefully, as we respond with questions back and forth.
    Ambassador Natsios.

  STATEMENT OF HON. ANDREW S. NATSIOS, ADMINISTRATOR, UNITED 
      STATES AGENCY FOR INTERNATIONAL DEVELOPMENT [USAID]

    Mr. Natsios. Thank you, Mr. Chairman. USAID has played a 
major role in the reconstruction of Iraq over the past 12 
months. It has been hard at work doing this reconstruction. I 
expect that it will continue to be hard work for quite some 
time, but it has been very rewarding, and I would say the thing 
that surprised us the most in the reconstruction process is the 
high technical competence of the Iraqis in the ministries and 
in local government that we've met and in other public 
institutions. That has made our work much easier, when you have 
competent local partners who can manage things and get things 
done.
    We have programs in every province of the country and we 
intend to keep them going. We have built a solid presence in 
many places. Obviously our headquarters are in Baghdad, but we 
have large offices in Arbil, in al-Hila, and in Basra. We'll 
continue those offices beyond the 30th of June.
    We have worked very closely with the CPA. We report to 
Ambassador Bremer, and on the 30th of June or 1st of July we 
will report to the U.S. Ambassador, my good friend, John 
Negroponte, who by the way was an ambassador in three countries 
where there were USAID missions, so he knows what USAID 
missions do, he works well with them, and our officers actually 
were quite pleased with the choice of John Negroponte for this 
position.
    We work in the following areas: in health care, 
humanitarian assistance for people affected by the war, in 
local governance, in economic growth, in education, in 
infrastructure, electricity, agriculture, civil society and 
civic education, and water and sewage treatment systems. We 
work through 32 partner organizations, 11 contractors, 11 NGOs, 
5 universities, and by the way, our university partnerships are 
quite innovative. They're American universities which have 
partnerships with 5 European universities and 5 Iraqi 
universities. And what we're doing is now having our professors 
go there to teach and then some of the Iraqis come back to the 
United States, because many of them have never been out of the 
country and they want to see what the West is like, they keep 
asking us that.
    We also worked with 5 U.N. agencies, some of them to an 
enormous degree. They have been extraordinary partners for us 
under difficult circumstances. To date, we have been allocated 
$3.8 billion from the first and second supplementals, and we've 
obligated of that $3.3 billion. Let me explain what obligation 
means. It means there is a signed, written contract, grant, or 
cooperative agreement with a partner organization. That 
organization has money transferred to its account and that they 
begin work on the ground.
    Because most of what we're doing was started a long time 
ago, our partner organizations have well established presences 
on the ground. There are about between 70-80 USAID officers in 
Baghdad and these other regional offices, and there are 100 
Iraqis who have been working with us for the last 8 months. 
There are about 755 to 800, depending on the time of year and 
the projects, expatriate contractors who work for our partner 
organizations, and then there are thousands and thousands of 
Iraqis. Last summer we were up to 35,000 Iraqis who were 
working for USAID partner organizations exclusively funded by 
the U.S. Government. It's down now because we were using a lot 
of contractors to do the reconstruction of schools, but it's 
still on the order of 5,000 or 6,000 as of last week.
    I could go through all of the accomplishments of last year. 
I don't think you want to hear that. That is in the record of 
the larger statement, but I just wanted to give you a sense now 
from our perspective. Unless Ambassador Negroponte tells us to 
change course, we will continue to implement our contracts that 
are in place and our programs and projects in the areas that I 
just mentioned on July 1. We will revert to a traditional USAID 
template in terms of how we actually do our operations. This is 
not a normal operation obviously in Iraq. It's a massive 
operation, the most massive USAID's been involved in since the 
Marshall Plan in the late 1940s where we actually got our start 
in reconstruction.
    But up to now we have not had our own strategic plan for 
reconstruction. We're part of the CPA plan. On June 30, we will 
revert to the traditional system. We will have our own 
strategic plan, which is being written now, and we will 
function under what are called strategic objectives. Strategic 
objectives are implemented through contracts, grants, 
cooperative agreements, and our staff, using the budget that's 
given to us by OMB and the embassy, and that's what will happen 
July 1. But we rebid all the contracts. Ten of the 11 contracts 
we started with before the war, we rebid recently and they're 
3-year contracts. So in terms of our time horizon, our planning 
horizon now is 3 years.
    The NGO contracts, I believe, or grants, are about 2 years, 
but they can be annually renewed without any difficulty. They 
don't have to be rebid because of the nature of these 
contracts. We will simply continue these projects.
    If Ambassador Negroponte decides he wants us to undertake 
other activities, we will do that. There are four new 
activities we were given the last few weeks by Ambassador 
Bremer. We're out to bid now on these projects. One of them is 
a very innovative thing in civic education to prepare the 
country for a democratic transition at the national level. In 
any case, we will do as we're asked to do and we will revert to 
our traditional mission structure and reporting relationships 
to the Ambassador. Thank you.
    [The prepared statement of Mr. Natsios follows:]

              Prepared Statement of Hon. Andrew S. Natsios

    Chairman Lugar, Senator Biden, Members of the Committee: I am 
pleased to be here today, with my State and Defense Department 
colleagues, to report on what the U.S. Agency for International 
Development has accomplished since our formal mission began in Iraq May 
2, 2003.
    In February of 2003 we submitted documentation to the Office of 
Management and Budget and to the Congress outlining Agency plans in the 
event of combat in Iraq. We had two jobs to do, as we saw it: 
humanitarian relief and reconstruction. Relief usually follows war at a 
distance, but our goal was to reduce that distance to a minimum. We 
planned carefully, worked the Inter-Agency process, and gathered enough 
food and supplies to ensure no humanitarian crisis took place.
    Thus we moved almost immediately to reconstruction. Our first 
priorities were water, sanitation, public health, essential services 
and infrastructure. Vast swathes of the country--particularly in the 
largely Shi'a south--were destitute. No new infrastructure had been 
built for more than a decade in the south, and very little basic 
maintenance was done. The draining of the southern Marshlands was an 
ecological and human catastrophe, killing and sending hundreds of 
thousands into exile and destroying an immense and unique natural water 
filtration system.
    Every statistical measurement of individual well-being dropped 
sharply during this decade. All the data on infant mortality and 
maternal death rates, in female literacy and family income, in life 
expectancy, caloric intake, all point down. Worse still, may be the 
legacy of Saddam's reign of mass terror. Together, the statistics are 
dramatic. Many hundreds of thousands, it appears, died from the 
deliberate neglect of Iraq's basic infrastructure.
    Traditionally, it takes months to move from the humanitarian to the 
reconstruction phases of an intervention. Our goal was to do the two at 
once. Careful planning and close inter-Agency coordination paid off. 
Among other things, USAID grants enabled the U.N.'s World Food Program 
to carry out the largest mobilization operation in their history. We 
worked closely with the military's civil affairs units and several key 
contractors and NGOs, and the humanitarian crisis that many had 
predicted did not take place.
    That meant we could move to reconstruction in record time. Given 
the conditions on the ground, there were four broad areas of priority 
we worked out with ORHA and the CPA. They were:

   essential infrastructure

   health and education

   economic opportunity

   democracy and governance

    Since May 2 of last year, USAID has obligated approximately $3.3 
billion for our Iraq programs. We have worked with the CPA at every 
step of the way and with 42 different implementing partners: private 
companies, non-profits, NGOs, PVOs, and certain U.N. specialized 
agencies like the WFP. I would like to call the Committee's attention 
to the work these organizations have performed. It has been 
accomplished under difficult--and at times very dangerous--
circumstances, and I cannot say enough about the courage and 
determination that our partners have displayed.
    Now I would like to point to some of USAID's important 
accomplishments in our four sectors.

                        ESSENTIAL INFRASTRUCTURE

    I will start with the most demanding--electricity. It is no secret 
that sabotage continues to undercut effectiveness in this sector, and a 
great deal of work needs to be done just to keep the existing 
infrastructure operating. We are looking toward peak demand of 6,000 
megawatts in the summer and are rehabilitating eight power plants and 
installing 3 new ones to help meet this demand. We are also replacing 
towers, stringing wires, rebuilding the Khor Az Zubayr-Nasariyah 400-kv 
line, and installing new generators in the Kirkuk and South Baghdad 
power plants.
    Elsewhere the results have been more unambiguous. We repaired the 
Baghdad airport and the country's main deep water port, Umm Qasr. We 
have rebuilt the Al Mat, Khazir and Tikrit Bridges, worked with Iraqi 
Republican Railways to improve rail service, and are repairing the 
country's fiber optic network.
    Water and sanitation have been a major concern of ours, given the 
threat to public health from badly polluted river and well water. So we 
are repairing water purification and sewer plants in Baghdad, An Najaf, 
Karbala, Ad Diwaniyah, Hillah, Basrah, Kirkuk, Al Dujayl, Mosul and 
other cities and towns. As most of the country's sewage passes directly 
into the Tigris and Euphrates, we expect child mortality and the 
incidence of water-borne disease to drop sharply as these plants come 
on stream beginning this summer.

                          HEALTH AND EDUCATION

    Not surprisingly, the same neglect evident in Iraq's physical 
infrastructure is a defining feature of public health. Acting on the 
evidence our early assessments teams gathered, we moved quickly in this 
sector, purchasing 30 million doses of vaccine and working with UNICEF 
to vaccinate three million children under the age of five. This we had 
done by June. Since then we are continuing our vaccination work, 
helping the Ministry of Health expand its services, re-equipping 600 
health care clinics, training doctors and nurses, rebuilding the 
National Polio Laboratory, and distributing high-protean supplementary 
food rations to hundreds of thousands of pregnant and nursing mothers.
    At the same time, our education programs have made a solid 
contribution to the rebirth of the country. We rehabilitated 2,358 
schools by the time school opened in September; distributed hundreds of 
thousands of desks and chairs and student kits; printed 8,759,260 
textbooks; trained 860 secondary school Master Trainers and 32,632 
secondary school teachers and staff. We are funding an accelerated 
learning program for students who are so thirsty for the schooling they 
missed that they voted to give up vacations; we set a series of 
partnerships between American and Iraqi universities; and just earlier 
this month, we committed $12.6 million to UNICEF to continue their work 
with the Ministry of Education. Altogether, we calculate that 2.3 
million Iraqi students received direct assistance from USAID over the 
past year.

                          ECONOMIC OPPORTUNITY

    In the economic sector, we worked with the Iraqi Ministry of 
Finance to launch the new dinar. By January 15 the currency exchange 
program ended. There are now trillions of new dinars circulating 
through the country. Iraqis are good businessmen, and economic activity 
is picking up significantly despite the violence. But jobs remain a 
vital issue. USAID grants have put more than 77,000 people to work on 
public programs. We've helped the commercial banks set up a payment 
system, and are working with the ministries to update commercial law.
    We have had an Agricultural Reconstruction and Development program 
in place since October. The Agency is collaborating closely with the 
CPA on a $21 million micro-credit program, the Oil-for-Food Program, 
and in their work with the Iraqi Ministry of Trade. And we have 
embarked on an ambitious program to begin restoring the country's 
shattered wetlands.

                        DEMOCRACY AND GOVERNANCE

    Our challenges in democracy and governance are no less daunting. 
But here, too, we have a right to be optimistic. We have made a lot of 
progress. In city after city throughout the country, unseen and 
unreported by the Western media, our programs and our partners have 
been forming councils, encouraging civic organizations of all kinds, 
training local administrators, furnishing essential equipment through 
our Ministry in a Box work, bringing women's groups together, and 
helping human rights organizations like the Free Prisoners Association 
safeguard the millions of records they've amassed.
    Today, USAID democracy programs operate in every Iraqi governorate. 
We have helped create councils in 16 governorates, 78 districts, 192 
city and sub-districts, and 392 neighborhoods and worked with the CPA 
and the military's civil affairs units to set up many others. These 
councils have become a kind of incubator of Iraqi democracy. Many of 
the men and women who have served on them and have demonstrated their 
abilities are likely to be elected to higher office and serve their 
communities when national elections take place next year.
    Because government decisionmaking was so tightly controlled during 
Saddam's regime, few local officials have had much experience planning, 
budgeting, or making decisions. So we have focused on training local 
authorities and helping them gain the experience they need if they are 
going to provide essential public services.
    Parallel to this, we are actively funding Community Action Groups. 
The men and women who make up these groups have shown an aptitude for 
self-government. Already they agreed upon, funded, and completed some 
845 local and community projects ranging from a youth center in Halabja 
to water systems in Tikrit, to a major roads, sewage, water, schools 
and sports program in An Najaf and Karbala, and water, public health 
and girls education projects in Basrah.
    That is just the briefest of outlines, Mr. Chairman. USAID has been 
so deeply involved in the reconstruction of Iraq that a detailed 
accounting of our work over the past 12 months could take hundreds of 
pages. We recognize that there may be some who wish to know more about 
USAID has done, how we proceeded, and what we hope to accomplish in 
Iraq in these uncertain times. To this end, we have posted hundreds of 
documents on our Web site for any one to see. We are confident that 
those who examine our record closely will find the Agency has been a 
good steward of the public trust.
    This concludes my testimony, Mr. Chairman. I will be happy to 
answer your questions and the Committee's.

                               __________

           UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT

              IRAQ RECONSTRUCTION AND HUMANITARIAN RELIEF

       (April 20, 2004--Weekly Update #28, Fiscal Year (FY) 2004)

This fact sheet highlights overall accomplishments and some weekly 
        activities from USAID's reconstruction efforts in Iraq. For 
        more information on USAID's programs in Iraq please see: 
        www.usaid.gov/iraq

                            Program Overview

    USAID assists Iraqis in reconstructing their country by working 
within the Coalition Provisional Authority (CPA). USAID programs are 
implemented in coordination with the United Nations, World Bank, 
International Monetary Fund (IMF), Coalition country partners, 
nongovernmental organizations (NGOs), and private sector partners. The 
USAID Mission in Iraq carries out programs in education, health care, 
food security, infrastructure reconstruction, airport and seaport 
management, economic growth, community development, local governance, 
and transition initiatives.
    The USAID Mission in Iraq implements programs in four strategic 
areas:

          1. Restoring Essential Infrastructure.

          2. Supporting Essential Health and Education.

          3. Expanding Economic Opportunity.

          4. Improving Efficiency and Accountability of Government.

                Program Descriptions and Accomplishments

                 1. RESTORING ESSENTIAL INFRASTRUCTURE

    Electricity--Objectives include the emergency repair or 
rehabilitation of power, generation facilities and electrical grids. 
Teams of engineers from the Ministry of Electricity, USAID, the U.S. 
Army Corps of Engineers, and the CPA have been working since May to 
restore capacity to Iraq's power system, which was dilapidated from 
decades of neglect, mismanagement, and looting.
Accomplishments to Date:
     Generated 4,518 MW on October 6--surpassing the pre-war 
level of 4,400 MW. Average production over the last seven days was 
3,751 MW.
     Generated 98,917 MW hours on February 14--the highest 
since reconstruction began.
     Installed independent sources of power at Baghdad 
International Airport and Umm Qasr seaport.
     Collaborating with Bechtel, CPA, and Task Force Restore 
Iraqi Electricity on projects to repair thermal units, replace and 
repair turbines, rehabilitate the transmission network, and install and 
restore generators. This collaboration is expected to produce 2,152 MW 
of incremental capacity.
           USAID is adding 827 MW of capacity through 
        maintenance, rehabilitation, and new generation projects.
           USAID's portion of the work includes:
                   Rehabilitating units 5 and 6 at Doura 
                thermal power plant.
                   Rehabilitating units 1, 2, 3, 4, and 6 at 
                Bayji thermal power plant.
                   Continuing reconstruction of the country's 
                400-kv transmission network by rebuilding 220 
                kilometers of Khor Az Zubayr-Nasiriyah 400-kv line.
                   Installing new generating capacity at Kirkuk 
                and South Baghdad power plants.
Highlights this Week:
     Peak generation has been gradually decreasing due to 
scheduled spring maintenance outages. The spring maintenance outages 
began in late March and will continue through May. These planned 
shutdowns will allow power teams to perform substantial maintenance for 
power generation units in preparation for increased generation during 
summer. Regular maintenance is expected to mitigate unscheduled 
outages, the biggest obstacle to dependable generation during the high 
summer-time demand. This is the third round of scheduled maintenance 
being performed by the CPA, USAID, and the U.S. Army Corps of 
Engineers. Similar maintenance outages occurred in the summer and fall 
of 2003.
     Work is progressing at Doura thermal power plant. Iraqi 
subcontractors to USAID partner Bechtel are continuing with the 
disassembly, repair, and restoration of valves. To date, they are 45 
percent complete with the valve work and 8 percent with the pump work.
     The restoration of the Khor az Zubayr-An Nasiriyah 400kv 
transmission line is progressing and the scope of work being 
implemented by USAID partner Bechtel has been expanded to include 
additional conductor and shield wire that was damaged or missing. The 
205 km transmission line runs through southern Iraq from Khor az Zubayr 
power plant in Al Basrah Governorate to An Nasiriyah power plant in Dhi 
Qar Governorate. Once it is completed, it will aid in the provision of 
reliable power from generation plants in southern Iraq to the national 
grid, helping to meet the great demand for power in Baghdad.

    Airports--Objectives include: providing material and personnel for 
the timely repair of damaged airport facilities, rehabilitating airport 
terminals, facilitating humanitarian and commercial flights, and 
preparing the eventual handover of airport operations to the Iraq 
Airport Commission Authority.
Accomplishments to Date:
     Processing an average of 20 non-military arrivals and 
departures a day at Baghdad International Airport.
           More than 5,000 military and NGO flights have 
        arrived and departed at Baghdad International Airport since 
        July 2003.
     Completed infrastructure work to prepare Baghdad 
International Airport for commercial air operations.
           Repaired Terminal C and administration offices.
           Installed three X-ray machines.
           Installed very small aperture terminal (VSAT) 
        communications systems and new diesel powered generators, 
        allowing Iraqi airport control centers to communicate.
           Rehabilitated Iraqi customs office in the arrival 
        hall.
     Rehabilitated Baghdad International Airport's East Fire 
Station; airport fire protection training for a team of more than 80 
Iraqis is ongoing.
     Preparing Al Basrah International Airport for commercial 
operations. Ongoing projects include:
           Repairing runway, taxiway, and apron striping.
           Installing two baggage X-ray units.
           Repairing passenger support facilities.
           Installing VSAT satellite communications.
           Installing security fence.
           Repairing airport water and sewage treatment plants.
     Completed evaluation of reconstruction requirements at 
Mosul Airport.

    Bridges and Railroads--Objectives include: rehabilitating and 
repairing damaged transportation systems, especially the most 
economically critical networks.
Accomplishments to Date:
            Bridges:
     Demolished irreparable sections of three key bridges 
(Khazir, Tikrit, and Al Mat) and started reconstruction.
           Al Mat Bridge: A key link on Highway 10 that carries 
        over 3,000 trucks daily on the main route between Baghdad and 
        Jordan.
                   Work was completed, and the four-lane bridge 
                was reopened to two-way traffic on March 3.
           Khazir Bridge: Critical to the flow of fuel and 
        agricultural products to the north.
                   Repaired the south span of the bridge--two 
                of the bridge's four lanes--and reopened it for two-way 
                traffic on January 16. Complete repairs are expected by 
                late April 2004.
           Tikrit Bridge: An important link for passengers and 
        commerce over the Tigris River between Tikrit and Tuz Khunnatu.
                   On the upstream side of Pier 7, steel beams 
                have been erected and dowels are installed. Work is 
                expected to finish in May 2004.
     Repaired a floating bridge on the Tigris River in Al Kut, 
improving traffic for approximately 50,000 travelers a day.
            Railroads:
     Iraqi Republican Railways (IRR) contributes equipment and 
labor, while USAID contributes project management, material, and parts. 
Work on the railways includes:
           Repairing 16 km of track at the port of Umm Qasr and 
        56 km of track between the port and Shuiaba Junction near 
        Basrah to facilitate cargo shipments, including foodstocks, 
        from the seaport to main rail line.
           Completed explosive ordinance disposal at all 53 
        sites of the rail line project near Shuiaba Junction (Al Basrah 
        Governorate) in preparation for installation of new track.

    Umm Qasr Seaport--Objectives include: managing port administration, 
coordinating transport from the seaport, and facilitating cargo-
handling services such as warehousing, shipment tracking, and storage.
Accomplishments to Date:
     Reopened to commercial traffic June 17; completed first 
passenger vessel test on July 16.
     Offloading cargo from more than 40 cargo ships per month.
     Dredged the port to an average depth of 12.5 meters. 
Previously, the port was 9-10 meters deep, and limited cargo could 
arrive only during high tide.
           An Iraqi dredger, which has been rehabilitated by 
        USAID, will assist in maintaining the harbor.
     Renovated grain-receiving facility, which can process up 
to 600 metric tons of grain an hour.
     Instituted interim port tariffs, which provide a revenue 
stream for financially sustainable port operations.
     Installed generators, energizing all three 11-kv ring 
mains which distribute electricity throughout the port.
     Completed security fencing at the old and new ports and 
grain facility.
     Completed the renovation of the administration building, 
passenger terminal and customs hall building and continuing the 
renovation of the electrical substations.
     Employing 500 Iraqi staff, the majority of which are in 
the Marine Department of the Port Authority.

    Telecommunications--Objectives include: installing switches to 
restore service to 240,000 telephone lines in Baghdad area, and 
repairing the nation's fiber optic network from north of Mosul through 
Baghdad and Nasiriyah to Umm Qasr.
Accomplishments to Date:
     Handed over the Al Mamoun Telecommunications site to the 
Ministry of Communications on February 26. Twelve new telephone 
switches and an International Satellite Gateway have been integrated 
with fourteen Iraqi Telephone and Postal Company (ITPC) switches.
     Purchased tools, equipment, and parts to enable Iraqi 
engineers to restore the network.
           Audited over 1,200 km of the fiber optic backbone 
        network.
           Repairing the national fiber optic network from 
        Mosul to Umm Qasr, connecting 20 cities to Baghdad.
     Reconstituted Baghdad area phone service by installing 
switches with 240,000 lines of capacity. Installed new switches and 
main distribution frames at 12 sites.
           Baghdad's largest exchange, Al Mamoun, opened on 
        December 13. More than 140,000 individual subscriber lines are 
        now active; work to allow final activation for all subscribers 
        is underway.
           Completed installation of a satellite gateway system 
        at Al Mamoun and restored international calling service to Iraq 
        on December 30.
           Al Mamoun was handed over to the Ministry of 
        Communications on February 26.
     Training Iraqi Telephone and Postal Company operators and 
engineers at Al Mamoun on telecommunications site operations, 
maintenance, and repairs.

    Water and Sanitation--Objectives include rehabilitating and 
repairing essential water infrastructure to provide potable water and 
sanitation to communities and improve irrigation.
Accomplishments to Date:
     Nationwide: Rehabilitating sewage and water treatment 
plants that are currently by-passing untreated sewage generated by 
millions of people into the Tigris and Euphrates Rivers.
           Repairing and rehabilitating water systems 
        throughout Iraq.
           Repaired hundreds of breaks in Iraq's critical and 
        long neglected water network, significantly increasing water 
        flow.
     Baghdad: Expanding one water plant and rehabilitating 
three sewage plants.
           Rehabilitating and adding 45 percent capacity to 
        Baghdad's Sharkh Dijlah water plant (previously named Saba 
        Nissan water plant), adding an additional 225,000 cubic meters 
        a day to the water supply by July 2004, mostly in the 
        overpopulated eastern sections.
           Installing back-up electrical generators at 41 
        Baghdad water facilities and pumping stations to ensure 
        continuous water supply.
           Rehabilitating Baghdad's sewage treatment plants--
        Rustimiyah North, Rustimiyah South, and Kerkh to benefit 3.8 
        million people by October 2004.
           Rehabilitated 70 of Baghdad's non-functioning waste 
        lift and pumping stations.
     South Central: Rehabilitating two water plants and four 
sewage plants.
           Rehabilitating An Najaf and Karbala' water treatment 
        plants. The projects will be complete in August and November 
        2004, respectively.
           Rehabilitating Ad Diwaniyah and Karbala' sewage 
        treatment plants, which serve 200,000 residents and currently 
        discharge untreated waste into the Euphrates River. These 
        projects are expected to be complete by August 2004 and October 
        2004, respectively.
           Rehabilitating An Najaf and Al Hillah sewage 
        treatment plants to serve 194,000 residents. These projects are 
        expected to be completed by December 2004 and August 2004, 
        respectively.
     South: Rehabilitating the entire Sweet Water Canal system, 
including the canal and its reservoir, 14 water treatment plants and 
pumping stations, and the Safwan water system.
           The system provides drinking water to 1.75 million 
        residents of Basrah City. It had been operating at less than 
        half capacity.
           Rehabilitated and removed 34,000 cubic meters of 
        sand and silt from the west lobe of the settling reservoir of 
        the Canal, allowing it to be refilled with clean water.
           Began work on Basrah's 14 water treatment plants in 
        January. By summer 2004, water quality and volume will surpass 
        prewar levels.
           Completed the restoration of the Safwan water 
        system. All 40,000 residents now have access to potable 
        drinking water.
     North: Rehabilitating two water plants and one sewage 
plant.
           Rehabilitating Kirkuk and Al Dujayl water treatment 
        facilities and Al Dujayl sewage plant.
           Procuring reconstruction materials for the Ninawa' 
        Sewer and Water Directorate. This Directorate will repair 
        projects in Mosul and the surrounding areas.
           Constructing potable water sources for towns and 
        villages of less than 1,000 residents.
Highlights this Week:
     The rehabilitation of the Sweet Water Canal reservoir in 
Al Basrah Governorate is complete and both halves have been refilled, 
contributing to the supply of water to more than 1.75 million people in 
the area. This accomplishment comes after six months of rehabilitation 
work by USAID partner Bechtel under the Iraq Infrastructure 
Reconstruction contract, The reservoir rehabilitation is part of a 
larger Bechtel project to refurbish the entire Sweet Water system, 
which includes dredging and cleaning the canal and reservoir, 
refurbishing treatment plants and pump stations, providing backup power 
sources, replacing worn and broken parts and repairing canal 
embankments. Work is expected to be completed by July 2004.
     The expansion of the Sharkh Dijlah water treatment plant 
by USAID partner Bechtel is progressing and on schedule for July 
completion. Sharkh Dijlah is one of two main water treatment plants 
that serve 4.7 million Baghdad residents. Current production at the 
plant is estimated at 510 million liters per day, but there is still a 
shortage in Baghdad of 800 million liters per day. Work at the plant 
will increase potable water flow to east Baghdad by 45 percent, 
benefiting 2.5 million people. The expansion will add 250 million 
liters per day to the water supply.

               2. SUPPORT ESSENTIAL HEALTH AND EDUCATION

    Health--Objectives include supporting a reformed Iraqi Ministry of 
Health delivering essential health services, funding vaccines and high 
protein biscuits for pregnant and lactating women and malnourished 
children, establishing a rapid referral and response system for the 
most serious cases providing basic primary health care equipment and 
supplies, training and upgrading health staff providing health 
education and information, and identify the specific needs of the 
health sector and of vulnerable population such as women and children.
Accomplishments to Date:
     Procured more than 30 million doses of vaccines since July 
with support from the Ministry of Health and UNICEF.
     Vaccinated three million children under the age of five 
through the Expanded Immunization Program since June 2003. USAID will 
provide vaccines for a total of 4.2 million children under five and 
700,000 pregnant women.
     Continuing a monthly catch-up immunization campaign with 
UNICEF and the Ministry of Health with 4,000 health workers and 124 
supervisors.
     Awarding $1.8 million in small grants to support Iraqi NGO 
healthcare efforts throughout Iraq.
     Developing a hospital and clinic facility database for the 
Ministry of Health on facility type, location, service distribution, 
cost information, and building condition.
     Renovated 52 primary health care clinics and re-equipping 
over 600 to provide essential primary healthcare services.
     Trained 340 master trainers in 18 governorates who are 
training more than 2,000 primary healthcare providers to treat and 
prevent acute respiratory infections and diarrheal diseases.
     Distributed high-protein supplementary food rations to 
more than 240,000 pregnant and nursing mothers and malnourished 
children.
     Evaluated 18 national and regional public health 
laboratories for equipment needs.
     Rehabilitated the National Polio Laboratory.
     Training more than 1,000 health workers and volunteers to 
identify, treat and monitor the growth of acutely malnourished 
children.
     Working with the Iraqi Ministry of Health to develop a 
strategic plan to reduce child mortality and increase the level of 
preventative care available to the Iraqi people through assistance to 
their nine working groups which address: public health, health care 
delivery, health information systems, pharmaceuticals, medical supplies 
and equipment, health care finance, education and training, human 
resources, legislation and regulation, and licensing and accreditation.
     Distributing 1.4 million liters of clean water each day to 
people in the cities of Al Basrah, Al Muthanna', Kirkuk, and Mosul.
Highlights this Week:
     More than 500,000 bed nets, necessary to prevent malaria 
and leishmaniasis borne by mosquitoes, have been procured for 
distribution throughout Iraq. This initiative was supported by USAID in 
collaboration with the World Health Organization and the Ministry of 
Health. Upon ministry direction, WHO will support distribution to the 
governorates and the production of leaflets and educational material 
specifically designed for Iraq for both users and healthcare 
professionals. This initiative is part of an overall effort by USAID 
and WHO to prevent the spread of tropical diseases, including 
leishmaniasis, zoonosis, schistosomiasis, and malaria in Iraq. In 
addition to the bed net distribution, 40 entomological kits, for 
testing disease-carrying insects, are being procured in Amman and are 
expected to arrive soon.

    Education--Objectives include: increasing enrollment and improving 
the quality of primary and secondary education, ensuring that 
classrooms have sufficient materials, facilitating community 
involvement, training teachers, implementing accelerated learning 
programs, and establishing partnerships between U.S. and Iraqi colleges 
and universities.
Accomplishments to Date:
     Immediately After the Conflict
           Provided technical assistance for the resumption of 
        Ministry of Education functions and salaries.
           Funded 5.5 million examinations for transitional 
        grades, which ensured the smooth continuation of education.
           Surveyed secondary schools in all permissive areas 
        of the country (4,541 participants total).
     Facilities and Supplies
           Awarded 627 grants worth more than $6 million to 
        rehabilitate schools and equip Directorates General.
           Rehabilitated 2,358 schools countrywide for the 
        first term of the 2003/04 school year.
           Provided materials, equipment and supplies:
                   Distributed nearly 1.5 million secondary 
                school kits that include pens, pencils, paper, math 
                equipment, and other supplies.
                   Distributed 159,005 student desks, 26,437 
                teacher desks, 59,940 teacher chairs, 26,050 metal 
                cabinets, 61,500 chalkboards, and 58,500 teacher kits.
                   Delivered 808,000 primary student kits.
                   Delivered 81,735 primary teacher kits.
           In consultation with the Iraqi Ministry of 
        Education, reviewed 48 math and science textbooks for grades 1 
        through 12.
           Printed and distributed 8,759,260 textbooks 
        throughout Iraq.
     Institutional Strengthening
           Trained 860 secondary school Master Trainers during 
        September 2003 to January 2004 nationwide.
           Trained 31,772 secondary school teachers and 
        administration staff.
           Conducting an accelerated learning program in 
        Baghdad, Nasiriyah, Ad Diwaniyah, Karbala', and Arbil. More 
        than 600 students are participating in the program. In February 
        2004, the students completed mid-term exams.
     Higher Education
           USAID participated in the bi-national Fulbright 
        scholarship review committee set up by the CPA. The Fulbright 
        Scholarship Program returned to Iraq after a 14-year absence. 
        The program awarded at least 25 scholarships for Iraqis to 
        study in the United States in 2004.
           Launched the Higher Education and Development 
        Program. Awarded five grants worth an estimated $20.7 million 
        for U.S.-Iraqi university partnerships:
                   A consortium led by Research Foundation of 
                the State University of New York at Stony Brook 
                partnering with Baghdad University, Al Mustansiriyah 
                University/Baghdad, Basrah University, and Mosul 
                University in archaeology and environmental health.
                   The University of Hawaii College of 
                Agriculture and Human Resources partnering with the 
                University of Mosul Hamam Al-Alil and University of 
                Dahuk for strengthening academic, research, and 
                extension programs.
                   The Human Rights Institute at DePaul 
                University College of Law and the International 
                Institute of Higher Studies in Criminal Sciences 
                (Italy) partnering with Universities of Baghdad, 
                Basrah, and Sulaimanyah on legal education refonn.
                   Jackson State University/MCID has partnered 
                with University of Mosul, University of Dahuk, and the 
                Nursing Institute (Dahuk) for public health and 
                sanitation.
                   The University of Oklahoma and consortia has 
                partnered with the Technology University/Baghdad, Al 
                Anbar University, Basrah University, University of 
                Babil, and the University of Salah ad Din in higher 
                education initiatives.
Highlights this Week:
     In support of Iraqi Ministry of Education and Coalition 
Provisional Authority priorities, on March 30, 2004, USAID completed 
the initiatives established as part of its year one education program, 
which began in May 2003. In response to the education sector's urgent, 
post-conflict education needs, one of the most important 
accomplishments during USAID's first year in Iraq was the 
rehabilitation of 2,358 schools through the Emergency School 
Rehabilitation Program. With the objective of ensuring that schools 
were safe and conducive to learning, USAID, the United Nations and 
local Education Director Generals throughout Iraq agreed on basic 
rehabilitation standards in early July 2003. Construction contractors, 
NGOs, and UN agencies were responsible for the rehabilitation which was 
implemented through local Iraqi contractors. Approximately 50,000 
Iraqis were employed during this $70 million program. The project began 
with a goal of rehabilitating 1,000 schools by October 1, 2003, the 
start of the fall school term in Iraq. By the beginning of the school 
year, more than 1,500 schools had been rehabilitated.
     Through USAID's Office of Foreign Disaster Assistance, 
USAID partner CARE has rehabilitated 13 schools for the deaf. Work 
included repairs to latrines, piping, sanitation and sewage systems, 
tiles, floors, sinks, lighting, doors and windows. The first set of 
eight schools was completed in November and the second set of five was 
completed in mid-March. As a result of the repairs, more than 1,200 
deaf children will be able to return to school.

    Economic Growth--Substantive areas include: currency conversion, 
development of economic statistics, rationalizing small business credit 
drafting commercial legislation, supporting a national employment 
program, strengthening micro-finance programs creating a bank-to-bank 
payment system, implementing a computerized financial management 
information system, developing a tax policy and administration budget 
planning, insurance reform, telecommunications reform, and electricity 
reform.

                     3. EXPAND ECONOMIC OPPORTUNITY

Accomplishments to Date:
     With the Ministry of Finance, introduced the new national 
currency, the Iraqi dinar.
           The currency exchange began on October 15, 2003, and 
        was completed on January 15, 2004.
           An estimated 6.36 trillion new Iraqi dinars are now 
        in Iraq, and 4.62 trillion Iraqi dinars are circulating--106 
        percent of the original demand estimate of 4.36 trillion.
     Conducting regular currency auctions for banks to exchange 
dinars and dollars.
     Created more than 77,000 public works jobs through the 
National Employment Program.
     Provided technical assistance on the implementation of a 
bank-to-bank payment system that allows 80 banks to send and receive 
payment instructions.
     In support of the Iraqi Treasury's goal to improve Iraq's 
commercial banking system, USAID is working with the CPA to reconcile 
and close the year-end 2003 financial statements of Iraq's two largest 
banks--the state-owned Rasheed and Rafidain--to ensure that the 
statements are consistent with international accounting standards.
     Assisting in developing, installing, and training staff to 
use the Financial Management Information System, a new accounting and 
reporting system that will eventually be used by all Iraqi treasury 
offices and ministries.
     Assisting CPA in managing a $21-million micro-credit 
program.
     Supporting CPA's Oil for Food (OFF) Program in planning, 
program management, logistics, database applications, and 
communications to support the CPA OFF Coordination Centers in the north 
and south.
     Evaluating and updating commercial laws pertaining to 
private sector and foreign investment; assisted in the development of 
the new company law.
     Assisted in developing the reconstruction levy in 
collaboration with the CPA and the UK Customs Service; this levy 
imposes a five percent tariff on imports to Iraq.
Highlights this Week:
     Twenty-seven loan officers from six Iraqi banks completed 
an intensive training course held April 3-10. The course provided 
instruction on the basics of credit services with a special emphasis on 
cash flow lending, and used case studies of individual lending 
situations. The credit staff also received instruction on using new 
measures for collateral. The bank lending staff participating in this 
training are representatives of private commercial banks throughout 
Iraq who will specialize in lending to small and medium-sized 
enterprises. This was the first of three credit training courses 
conducted by USAID partner BearingPoint.
           USAID trained loan officers at Iraq's two largest 
        state banks--the Rafidain and Rasheed Banks--and is working to 
        improve the operational activities, accounting, management 
        information systems, and auditing practices of the Central Bank 
        of Iraq and local, small-scale commercial banks.
     To reactivate tax administration, the Iraqi Tax Commission 
is developing a wage withholding tax. A monthly income tax table for 
wage withholding has been developed that includes rates for different 
categories of taxpayers. An employer's guide to the tax is undergoing 
revision. The guide will be an important tool in educating employers on 
the new tax and will assist in implementation by allowing them to 
calculate the tax, ensuring consistency.
     Seventeen Central Bank staff members completed a ``Basic 
Bank Supervision Seminar'' that introduced modern supervision 
techniques, international best practices, and basic bank supervision 
concepts and terminology. The course is a prerequisite for a more 
advanced bank supervision course to be conducted at the end of April by 
the International Monetary Fund and the Federal Reserve Bank of New 
York in Amman, Jordan.
     The process of identifying and assessing potential 
companies for participation in the Firm Level Assistance Program has 
begun. The Firm Level Assistance Program is being implemented by USAID 
partner BearingPoint in support of the CPA's goal to increase the 
ability of small business to meet corporate lending requirements.

    Food Security--Objectives include: providing oversight support for 
the countrywide Public Distribution System, which provides basic food 
and non-food commodities to an estimated 25 million Iraqis, 
participating in the design of a monetary assistance program to replace 
the commodity-based distribution system to support local production and 
free-market infrastructure, and promoting comprehensive agriculture 
reform to optimize private participation in production and wholesale 
markets.
Accomplishments to Date:
     Worked with the UN World Food Program (WFP) and Coalition 
Forces to re-establish Iraq's Public Distribution System (PDS) in less 
than 30 days, avoiding a humanitarian food crisis and maintaining food 
security.
     Contributed cash and food aid totaling $425 million to 
WFP's emergency operations immediately following the conflict, making 
the United States the foremost contributor to WFP emergency operations 
in Iraq.
     Placed food specialists in Baghdad, Al Basrah, Al Hillah, 
and Arbil to support food operations immediately after the conflict.
     Provided ongoing support and technical assistance to WFP 
and local Iraqi authorities in the Ministry of Trade and the Kurdish 
Food Departments to ensure the smooth transition of PDS management 
tasks to the Iraqi government. Special attention was given to the 
transition phase in the northern governorates of Dahuk, As 
Sulaymaniyah, and Arbil. The initial handover of responsibilities 
occurred on November 21 without significant problems.
     Played a role in negotiating a memorandum of understanding 
between the CPA, the Ministry of Trade, and the WFP that details areas 
of responsibility including: capacity building and training, 
procurement of food commodities, renegotiation of certain food 
contracts, shipment and overland transport of food commodities, and 
pipeline management. The WFP will continue to assist with supporting 
the public distribution system through June 2004 and will begin work 
immediately to assure continuation of food deliveries.
     Currently providing food aid expertise to CPA and Ministry 
of Trade in Baghdad and assisting with the CPA OFF Coordination Center 
as WFP and CPA and the Ministry continue to distribute food to all 
Iraqis.

    Agriculture--Objectives include: expanding agricultural 
productivity, restoring the capacity of agroenterprises to produce, 
process, and market agricultural goods and services, nurturing access 
to rural financial services, and improving land and water resource 
management.
Accomplishments to Date:
    Since October 2003, USAID partner DAI has been implementing the 
Agricultural Reconstruction and Development Program for Iraq (ARDI) to 
formulate a long-term vision for the sector, while designing activities 
for quick impact including:
     Winter Crop Technology Demonstrations: On 334 hectares in 
15 governorates, 128 farm families are establishing plots with new crop 
varieties for extension field days.
     Kirkuk Veterinary Hospital Renovation: Fifty communities 
will benefit from a $96,000 grant to renovate a hospital that serves 
more than 100,000 livestock in the area.
     Taza and Rashad Veterinary Clinic Rehabilitation: A 
$50,000 grant will be matched by supplies and equipment from the 
Ministry of Agriculture. These rural clinics are the two principal 
sources of vaccines and medicines for animals in 125 local communities.
     Internet Connectivity and Repairs to a Student Union 
Building: The Baghdad University School of Agriculture will receive a 
$75,000 grant that will benefit 4,509 students.
     Seven grants, totaling $394,000, were approved in February 
2004 to build the capacity of Iraq's agriculture sector. The grants' 
emphasis on veterinary programs allows an immediate, highly visible 
response to the challenges that face herders and farmers in the North 
and Central regions.
     The Ministry of Agriculture is establishing 18 date palm 
nurseries throughout Iraq in support of its goal to reestablish Iraq's 
dominant position in the international date market, a position it lost 
under the former regime. Dates are a national treasure for Iraq with 
both symbolic and economic significance. This project, which receives 
support and technical assistance from USAID, will ensure the 
preservation of Iraq's 621 varieties of date palm.

    Marshlands--Objectives include: construct environmental, social and 
economic baselines for the remaining and former marshlands, assist 
marsh dwellers by creating economic opportunities and viable social 
institutions, improve the management of marshlands, and expand 
restoration activities.
Program Goals:
     The $4-million Marshland Restoration and Management 
Program will support wetlands restoration and provide social and 
economic assistance to marsh dwellers. Initiatives include:
           Creating a hydraulic model of the marshes to improve 
        water management.
           Equipping a soil and water quality lab at the new 
        Center for Iraq Marshlands Restoration.
           Implementing pilot projects to improve treatment of 
        waste and drinking water.
           Providing social-economic assistance through job- 
        and income-generating activities in fisheries, aquaculture, 
        livestock production, and date-palm reproduction.
           Monitoring water quality in reflooded sites.
           Extending healthcare services to marsh dwellers.
           Building local capacity by partnering with Iraqi 
        institutions such as the Ministry of Water Resources, the 
        Ministry of the Environment, the University of Basrah College 
        of Agriculture, the AMAR Charitable Trust, and the Iraq 
        Foundation, and the governments of Canada, Italy, the United 
        Kingdom, and Australia.
         4. improve efficiency and accountability of government
    Local Governance--Objectives include: promoting diverse and 
representative citizen participation in provincial municipal and local 
councils, strengthening the management skills of city and provincial 
administrations, local interim representative bodies, and civic 
institutions to improve the delivery of essential municipal services, 
promoting effective advocacy and participation of civil society 
organizations, enhancing leadership skills, and serving as a recruiting 
tool for future leaders.
Accomplishments to Date:
     Implementing local governance activities in 18 
governorates. More than 20 million Iraqis engage in policy discourse 
through local government entities and civil society organizations to:
           Enhance transparency and participation in local 
        decision-making processes.
           Restore basic services.
           Improve the effectiveness of local service delivery.
           Establish, develop, and expand the number of civil 
        society organizations that can interact with local government 
        entities.
     Established 16 governorate councils, 78 district councils, 
192 city or sub-district councils, and 392 neighborhood councils, 
creating local representation for over 80 percent of the Iraqi 
population.
     Awarded $13.4 million to government agencies and civil 
society organizations to enable municipal authorities to deliver core 
municipal services.
     Committed $2.4 million to support the CPA's nationwide 
Civic Education Campaign, which facilitates dialogue and increases 
democracy awareness.
     Supporting preparation of 2004 city council budgets in 
Mosul, Al Hillah, Babil, and An Najaf.
     Recruited more than 400 democracy facilitators to help 
Iraqis prepare for the upcoming transition.
Highlights this Week:
     The Baghdad Mayoralty has completed its 2004 budget and 
re-organized its financial records in an effort to improve financial 
transparency and accountability. As part of the financial re-
organization, Mayoralty staff is also working to computerize personnel 
and salary information. The Mayoralty also developed a new chart of 
accounts system and began work on a computerized property management 
system. USAID's Local Governance Program (LGP) contributed to the 
success of this activity.
     The Najaf Electrical Distribution Department will 
rehabilitate the lighting of the Najaf Cemetery with support from a 
$190,308 grant from USAID's Iraq Transition Initiatives program. The 
project was identified as a priority by citizens of Najaf and will 
support the local government's efforts to respond to community safety 
concerns.
     The Baghdad City Water Authority has developed a new draft 
of the city's Water Law, which governs water use for residences, power 
production, plant operations, and economic and agricultural activities. 
The law will provide legal parameters for the development of waterways, 
the construction of harbors and water plants, fish production for 
economic development, the usage of public water resources in the 
economy and recreation. The Baghdad Water Authority receives assistance 
from USAID's Local Governance Program (LGP).
     The Salah ad Din Governorate Treasury Department is 
working with the LGP to build its capacity to manage Tikrit's financial 
resources, specifically for processing the payrolls of local teachers 
and council members. LGP also met with the Deputy Governor to discuss 
changes to the Finance and Administration Department that would improve 
its financial operations.
     The LGP has helped local government in Najaf rebuild its 
city hall and four major fire stations, rehabilitate the Najaf college 
arts building, repaired two ruptured water mains, helped develop the 
city's Chamber of Commerce and provided security lights and telephones 
for schools within the city. Neighborhood groups, tribal groups, and 
communities in and around Najaf city are now actively participating and 
demand services from their selected governorate officials.
     In support of the Coalition Provisional Authority, USAID 
is facilitating the implementation of the Civic Dialogue Program to 
engage Iraqis in democracy through a variety of events including 
Democracy Dialogue Activities. Ultimately, the program supports greater 
understanding of democratic societies and stimulates civic 
participation by reaching out to all segments of the population to help 
everyone understand, support, and join in the political process. Last 
month, facilitators nationwide held more than 2,600 democracy 
dialogues.
     Iraqi engineers working with USAID's Local Governance 
Program (LGP) are providing technical assistance for infrastructure 
projects being implemented by local governments in Al Basrah 
Governorate. These engineers have assisted with project design, scopes 
of work, and implementation for projects that are then conducted in 
coordination with other organizations.

    Transition Initiatives--Objectives include: building and sustaining 
Iraqi confidence in the transition to a participatory, stable, and 
democratic Iraq and working closely with the CPA, USAID's Iraq 
Transition Initiative assists Iraqi NGOs, national government 
institutions, and local governments to increase Iraqi support for the 
transition to sovereignty through quick-dispersing, high impact small 
grants.
Accomplishments to Date:
     Awarded 675 small grants totaling more than $45 million 
for quick impact activities that support good governance, civil 
society, conflict management and mitigation, and human rights and 
transitional justice.
     Supporting initiatives crucial to the democratic 
transition, including civic education, civil society and media 
development, increased women's participation, conflict mitigation, and 
transitional justice. Groups targeted for assistance include women's 
and youth groups, professional associations, and human rights 
organizations.
     Met critical needs during and immediately after the 
conflict by providing short-term employment, restoring basic government 
and community services, increasing Iraqi access to information and 
communication, and encouraging protection of human rights.
     Awarded two grants worth $475,000 to the Ministry of Human 
Rights for the rehabilitation of buildings to house the National 
Evidence Storage Facility (NESF). The NESF will serve as a venue to 
analyze recovered documents and store forensic evidence of mass graves 
and human rights abuses of the Ba'ath government. The facility is part 
of a larger effort to help build Iraq's capacity to investigate complex 
crimes and implement international law enforcement best practices.
Highlights this Week:
     Iraq's Central Statistics Office will begin a review of 
the Iraqi food public distribution system (a mechanism for distributing 
food to Iraq's 25 million citizens) to determine its suitability as a 
foundation for an interim voter's list. The office will work with the 
International Foundation for Election Systems, an international NGO 
that provides technical assistance in establishing elections, rule of 
law, governance, and civil society whose work in Iraq is funded by the 
CPA. The study is being supported by a $24,100 grant from USAID's Iraq 
Transition Initiative.
     USAID continues to work with city governments to 
rehabilitate their facilities, including a new grant for the 
rehabilitation of the administration building of the Diwaniyah 
Municipality. Poorly maintained under the former regime, the building 
was looted and damaged after the conflict in 2003. Municipal personnel 
are temporarily operating in the central library, but have been unable 
to return to their pre-conflict capacity. This project will 
rehabilitate the administration building and allow municipal government 
civil servants to resume critical services in Ad Diwaniyah Governorate. 
The reactivation of municipal services will help to increase community 
confidence in the city government. The grant was made through USAID's 
Iraq Transition Initiative.
     Local Iraqi human rights organizations are working to 
raise awareness for human rights in their communities. Recent 
activities in support of this effort include:
           The Iraqi Hope Organization in Kirkuk (At' Tamim 
        Governorate) has received a $10,000 grant under the Iraq 
        Transition Initiative to support the procurement of new 
        furniture and equipment for the organization's main office, 
        improving their ability to work to increase human rights 
        awareness.
           The Iraqi Institute for Human Rights received a 
        $45,650 grant under the Iraq Transition Initiative for the 
        design and production of a booklet on human rights to be 
        distributed to citizens of At' Tamim Governorate. As part of 
        this grant, 25 staff members will be trained on public outreach 
        on human rights issues.
           On April 14, twenty representatives of Iraqi Civil 
        Society Organizations (CSO) participated in a three-day 
        training in Kirkuk aimed at developing a stronger relationship 
        between local government and CSOs. Participants were trained on 
        the steps necessary to develop ``social partnerships'' between 
        local governments and CSOs to become more effective advocates 
        for their causes.

    Community Action Program--Objectives include: promoting diverse 
representative citizen participation in and among communities to 
identify, prioritize and satisfy critical community needs, while 
utilizing local resources. CAP is implemented by five U.S. NGOs with 
offices in nine major Iraqi cities. Each concentrates on one region in 
Iraq ACDI/VOCA (North), International Relief and Development--IRD 
(Baghdad) Cooperative Housing Foundation International--CHF (Southwest 
Central), Mercy Corps (Southeast Central), and Save the Children 
(South).
Accomplishments to Date:
     Established more than 650 Community Action Groups in 16 
governorates. The projects undertaken by these groups are part of a 
campaign targeting grassroots democratic development.
     CAP has committed $48.4 million for 1,364 community 
projects across Iraq; 845 projects have already been completed.
     Iraqi communities have contributed $15.3 million to 
community projects. Contributions have included labor, land, buildings, 
and other in-kind assistance.
     ACDI/VOCA focuses on the conflict prone areas of Mosul, 
Kirkuk, the area northwest of Baghdad, and the Iran-Iraq border. Their 
work bringing communities together has resulted in 146 completed 
projects and another 135 are in development. These include establishing 
a youth center in Halabja and establishing a new local water supply in 
Tikrit.
     CHF has established a strong presence in the communities 
of the Shi'a holy cities of Najaf and Karbala, as well as Hillah by 
establishing very active community associations. An emphasis on 
critical infrastructure has provided these communities with access 
roads, sewage and water rehabilitation, school repairs, and swamp 
clean-up in addition to vital social infrastructure such as community 
centers and sports clubs. They have completed 105 projects.
     IRD has completed 234 projects with another 72 projects in 
development. IRD's projects are increasingly focused on income and 
employment generation to address these critical needs around Baghdad.
     Mercy Corps has completed 89 projects and has 93 more in 
development. These projects focus on water, sewage, community clean-up, 
and school rehabilitation.
     Save the Children has completed 271 projects in the south, 
which include about 40 percent female membership. Projects have focused 
primarily on immediate community needs such as sewage clean up, water 
treatment and distribution, public health, and girls' access to 
education.
Highlights this Week:
     USAID's Community Action Program works through 
implementing partners with communities that have come to a consensus 
through action groups on their development priorities. The residents of 
Najaf city held civil reconstruction as a high priority. From September 
to March, residents contributed $23,000 to supplement Cooperative 
Housing Foundation grants worth $1.06 million for the rehabilitation of 
city roads, lighting and rain water drainage and sanitation systems. 
CAP project contributions to the city reached $1.8 million in total 
while residents' contributions reached $44,000.
     Community members of Baghdad'a Karada and 9 Nissan 
districts have rehabilitated sewerage systems and roads in their 
communities with assistance from USAID Community Action Program partner 
International Relief and Development (IRD). In the 9 Nissan district, 
new pipes were supplied to replace damaged pipes. In Karada, the 
project included unclogging the pipelines, paving the street, and 
removing accumulated trash. This project alleviated the problems with 
raw sewage and stagnant water that flooded the streets and deteriorated 
the health and sanitation conditions in those communities. The 
projects, which cost $43,100, will benefit 66,500 people by allowing 
them to live in a healthier environment.




    The Chairman. Well, thank you very much, Administrator 
Natsios. The extent of that work really does need to be 
illuminated. You have done a good job in outlining that today. 
All of your testimony will be a part of the record for each one 
of us to study, to enable us to understand both how much is 
already proceeding, and the relationship with the new 
government.
    Secretary Rodman.

   STATEMENT OF HON. PETER W. RODMAN, ASSISTANT SECRETARY OF 
DEFENSE FOR INTERNATIONAL SECURITY AFFAIRS; ACCOMPANIED BY: LT. 
GEN. CLAUDE M. KICKLIGHTER, U.S. ARMY (RET.), TRANSITION CHIEF, 
  COALITION PROVISIONAL AUTHORITY, U.S. DEPARTMENT OF DEFENSE

    Mr. Rodman. Thank you, Mr. Chairman. I want to commend the 
chairman, the ranking member, and the committee, on the 
timeliness of this hearing and on the importance of the subject 
matter. I also should take the opportunity to commend my 
colleagues at the State Department and my Defense Department 
colleagues for what I do believe is a very smooth transition. 
We're working together. There are always bureaucratic issues to 
resolve, but this is an unusually successful example of 
cooperation. Senator Biden was hoping to stimulate some 
fireworks between State and Defense, and I guess I should try 
to accommodate him. But on this, I have to say it won't be as 
easy to do as he may believe.
    The point I did want to stress, if I may, Mr. Chairman, is 
why the June 30 transfer of sovereign authority is so 
important. First of all, it shows that we're keeping our 
promise. It symbolizes that we came there as liberators, not as 
occupiers. It is important, as I think everyone recognizes, to 
end the occupation as such as soon as possible.
    In addition, it adds to the incentive for the Iraqis to 
step up to their responsibilities. As long as CPA is in charge 
of everything, we see the Iraqis hanging back a little bit. But 
we see the value of this deadline, because it has brought 
Iraqis forward. It has increased our ability to find good 
people and give them responsibility when the day comes.
    But more than that, it's really at the heart of our 
strategy, because our strategy is not just a military strategy, 
it's a political strategy. The collapse of the old regime left 
a vacuum, and the essence of our strategy is to fill that 
vacuum with Iraqi institutions, to help the Iraqis build their 
own new institutions--political, economic, and security 
institutions.
    It empowers the moderates, and getting the Iraqi moderates 
in charge to the maximum degree is precisely the way you 
marginalize the extremists politically while the Coalition is 
out there trying to hunt down the extremists militarily. So it 
really is at the heart of what we're doing.
    And the validity of it I would say is confirmed by the 
famous Zarqawi letter that you're familiar with. This is the 
message sent by Mr. Zarqawi that we intercepted a number of 
weeks ago, a message he was sending to his al-Qaeda colleagues. 
One of the things he dwelt on in that message was how big a 
problem June 30 was for him. He said: ``Once democracy is 
there, we have no pretext. How do we attack their [Iraqis'] own 
sons and cousins once the Americans have stepped back?'' So he 
seems to think this strategy of ours is an effective one, and 
he and his colleagues are doing everything they can to derail 
it. I dare say that so far they have not succeeded in derailing 
it.
    So this political process is crucial to our overall 
strategy. That's why I believe we have to pursue it, which is 
why we have to make that transfer of authority a success. 
That's the one point I wanted to make.
    Thank you.
    The Chairman. Thank you very much, Secretary Rodman. The 
committee will go into questions and answers now. We'll limit 
our first round to 10 minutes each. I'll commence the 
questioning by raising three questions.
    Secretary Grossman, first of all, are we confident that the 
Iraqi Government, the officials that are to be named by 
Ambassador Brahimi after consultation, will accept both the 
transition law that you have pointed out and the time tables? 
You've suggested that not much legislation really is 
contemplated. The group of consultative persons will be just 
that to the President and the Prime Minister, the two Vice 
Presidents. They will have ministries and administrative 
authority.
    Nevertheless, as you point out, we're transferring 
sovereignty. It will be, after all, their government at that 
point. The Governing Council has adopted this transition plan, 
including the bill of rights, the TAL and other aspects that 
we've found very commendable. The new government will inherit 
these measures that it did not adopt itself.
    So my first question regards the degree of certainty about 
the time table and the transition law. Can we count upon them 
being the rules of the game? Will they be the framework during 
this period, as you prepare for the elections?
    Second, to what extent is a status of forces agreement 
required? You pointed to General Myers' testimony from about 
the importance of a partnership between the new Iraqi 
Government and the Armed Forces of the United States and the 
Coalition. You further mentioned that surely common sense would 
dictate that security has to be provided by the United States 
and Coalition forces, even as Iraqis are being trained for the 
police and civil guard and the Iraqi army.
    But, once again, sovereignty comes July 1. We will have a 
President of Iraq, a Prime Minister, and two Vice Presidents, 
and it's conceivable that from time to time that they might 
have different ideas as to how security should be obtained, or 
who ought to do what.
    If there's not a status of forces agreement there could be 
divisions that become extremely injurious and hazardous to all 
the people who are involved in Iraq, as well as our Armed 
Forces, diplomatic forces and civilian contractors who number 
in the thousands. I'm curious once again about how we pin down 
the status of forces situation.
    Third, you mentioned that our government is now thinking 
through, by ourselves and with others, the value of a United 
Nations Security Council resolution that brings recognition, 
legitimacy, some undergirding to these new arrangements. That 
would include security arrangements in the sovereign 
government, arrangements that Ambassador Brahimi and others 
have suggested. Such a process would likewise offer grounds for 
other nations that either have been reticent to participate or 
that want the resolution in order to continue participating. 
Would you explain the timing? You have suggested that the 
resolution has to come after sovereignty occurs. Why might not 
that occur as a prudent preparation during the month of June?
    I was heartened by your testimony Secretary Grossman. I 
think it's a very important fact that you mentioned that by 
mid-May a lot of the ground work is going to be done. A lot of 
Americans, a lot of Iraqis are to be a part of the diplomatic 
presence. Certainly you've suggested that Ambassador Brahimi's 
plan, with the naming of these four important officials, would 
occur by then. How do we know, and when do we know? You're 
saying by mid-May?
    However, at that point, unless Ambassador Brahimi has been 
extraordinarily successful in touching all bases, there may be 
objections by some Iraqis to the people that are suggested, or 
maybe objections by the United States or by Great Britain or by 
whoever.
    How will all that be resolved? One would say, well, after 
all, you have some time. If the nominations have come in May 
and for some reason there's an extraordinary need to reconsult, 
why, you still have a few days to do that. That's far better 
than springing it all on July 1. You've publicly recognized 
that. The point of some of my tedious questioning has been to 
emphasize the need for as much of this as possible to occur in 
May and in June. We hope to expedite this massaging of all the 
players in the new drama, so that when the curtain opens on 
July 1, the participants are not only familiar with each other 
and their plans, but we've undergirded it, if possible, with 
the U.N. resolution, a clarification of the status of forces, 
an acceptance of the new government, and an agreement on this 
time line. That would be very reassuring to Iraqis, to 
Americans, to the United Nations, to anybody else looking in on 
this.
    It appears to me that you've thought of all these subjects. 
You have illuminated some of the plans. There has been very 
detailed planning broken down to over 500 tasks, as you pointed 
out, that's available for the committee to review. That's 
important. It would be helpful to obtain some more precise 
figure on how many Americans will be involved, and how many 
Iraqis, on the diplomatic side.
    Let me ask you to comment on these three questions: the 
time line, the U.N. Security Council, the status of forces.
    Mr. Grossman. Yes, sir. Let me try to do all of those 
things. We certainly agree with you that as much of this as can 
be accomplished as early as possible is obviously a good thing 
for exactly the reason that you say, Mr. Chairman, which is 
that we should not be in a position, we don't want to be in a 
position on the 30th of June of turning on a light switch and 
having all of these things appear. We would much rather be in a 
position in terms of our embassy, in terms of our 
representation, and in terms of what the Iraqis are going to 
move forward with in an interim government to have, as you say, 
to practice this a little bit.
    And that's why I said to you, we will try to have what we 
might call a soft opening of our embassy a few weeks in advance 
so people have a chance to learn their roles and do what 
they're supposed to do. And, you know, Mr. Brahimi in his press 
conference said as clearly as he could that he was confident 
that it will be possible to form such a government in a timely 
manner during the month of May, 2004. And so I have seen 
nothing since he gave this press conference on the 14th of 
April to lead me to believe that that isn't true. So we ought 
to be able, Mr. Chairman, to bring some of these lines together 
in the way that you wish.
    Let me try to answer each of the questions as specifically 
as I can. First, what happens, what about this interim 
government in relationship to the Transitional Administrative 
Law? When Brahimi gave his press conference, he said that he 
had been in Iraq a few weeks, he had consulted widely, and he'd 
come to certain conclusions. And among the conclusions that he 
had come to was that it was possible under the Transitional 
Administrative Law as it calls for was to create an interim 
government.
    So I believe that the answer to your question is yes, is 
that this interim government, which will serve from the 1st of 
July to the end of December of this year, I think there's a 
high degree of confidence that they will accept the 
Transitional Administrative Law. And why do I say that? Because 
I would bet you, and he'll have to speak for himself, that as 
Mr. Brahimi went around to his consultations and starts to make 
his list of people who are going to and that he would recommend 
be on this government, I would imagine among the questions he 
would ask them would be, do you believe in the Transitional 
Administrative Law? Do you believe in the bill of rights? Do 
you believe in this time line? And I think that would be a 
prudent thing for him to do, and we'll see when he reports to 
the Security Council on Tuesday----
    The Chairman. And hopefully Mr. Brahimi will listen to your 
testimony.
    Mr. Grossman. I hope so. But I think of the things that you 
have asked me, I think there's a high degree of confidence that 
that answer is yes.
    Second, when Ambassador Brahimi left Iraq on the 13th of 
April, he left behind some homework, and that homework was to 
Iraqis and to the CPA and to others, which was to start 
generating more lists of people, start talking to people, 
jurists for example, people in the NGOs, people who are working 
with Andrews' people, others, the Iraqi Governing Council, so 
that when he arrives back in Iraq in the first week of May, 
there will have been generated a big conversation about who 
these Iraqis are that will fill these jobs. And again, I think 
it's very interesting to read in his press conference that he 
believes, he's optimistic about getting this job done in May 
for all the reasons that you say.
    Second, in terms of the SOFA, here's where we've come to on 
the SOFA. We believe that for now, and certainly for the period 
until there is a transitional government, three documents 
really serve as a status of forces agreement. First is the 
Transitional Administrative Law, and you've already been good 
enough to put that in the record, but article 59 of the 
transitional law talks about the relationship of the Iraqi 
Armed Forces to our Armed Forces, and says specifically in 
subparagraph C that the elected transitional government shall 
have the authority to conclude a binding international 
agreement regarding the activities of the multinational force. 
And so part of this SOFA question is dealt with in the TAL.
    The second part of the issues that are around the SOFA are 
from U.N. Security Council Resolution 1511, and we believe any 
subsequent U.N. Security Council Resolution. I won't quote you 
from there, but there's a paragraph number 13 out of 1511 which 
we believe helps us in terms of status of forces, and then 
finally is what's called CPA Order 17, which lays out how our 
forces are operating in Iraq, whether their privileges and 
their immunities and their jobs. And we believe that the 
Transitional Administrative Law, Resolution 1511 and any 
subsequent resolutions, and CPA 17 will take us through the 
period until the end of this year.
    You asked me what happens, how do you work with this new 
government. And these are obviously questions that we are 
considering as well. I think I'd go back to a couple of basic 
points, which is that we are going to turn sovereignty over to 
Iraqis on the 1st of July.
    In the security area, there's obviously going to be an 
arrangement that has to be made so that we are able to continue 
to provide security for Iraq. And the reason I say that is that 
Iraqis want to have a certain kind of society and they can't 
get there without security and they can't create that security 
on their own. So all through the Transition Administrative Law 
and all through the other things that were doing is this 
recognition that we are going to have to provide for security 
in Iraq for some time to come for Iraqi success.
    And I believe that with General Myers' view of partnership, 
with Ambassador Negroponte on the ground, with the work that we 
are doing with the new Iraqi army, the security forces, the 
police, the civil defense corps, and the border security 
patrol, and the border security forces, that we are very 
confident that this can work out.
    Now, is it perfect every time? Absolutely not. But we've 
done this before. We did this in Afghanistan, we did it in 
Bosnia, we do it around the world where we're dealing with 
places where there's an arrangement on security. And in a sense 
it comes after the 1st of July to a question of diplomacy 
indeed, which is the Ambassador of the United States of 
America, the commander of U.S. military forces, and the people 
who are in charge of the sovereign Government of Iraq.
    Finally, to the question of the Security Council 
Resolution, I appreciate what you say about the testimony. I've 
tried to lay out some of the elements in there. The reason we 
haven't made a decision about timing, Mr. Chairman, I guess 
part of the reason is, goes back to your first question, which 
is, it seems to me anyway, it makes more sense for a Security 
Council Resolution to come after Ambassador Brahimi has 
finished his consultations and made some kind of decision or 
announcement, and since I don't know what day that is, I can't 
give you a date for the Security Council Resolution.
    But I think you can see, given the kind of elements that I 
said would be in there where it might most logically fall, 
because again, none of us, and certainly I don't, we don't want 
to be running around at midnight in New York on the 30th of 
June trying to get a Security Council Resolution. That's 
something that ought to have been done to support this effort 
well before.
    So we're working on these things, but I think Brahimi's 
effort has to be complete before there can be a Security 
Council Resolution.
    The Chairman. I thank you very much for those responses. 
Let me just say that when Ambassador Negroponte was nominated 
by the President, Secretary Powell asked our committee for help 
in doing our job. I want to acknowledge Senator Biden, as well 
as staff on both sides of the aisle in our committee, for their 
work in preparation for a nomination hearing next Tuesday. 
Likewise, I would like to thank the State Department for moving 
ahead with the paperwork that is required.
    This is clearly an abnormal situation. I think we all 
recognize that. Therefore, routines and processes that we 
always take for granted are accelerated. This seems to most of 
us to be warranted. My prayer is that, with help from my 
distinguished friend from Delaware, we'll have a quorum next 
Thursday for a business meeting. It may be held somewhere in 
the Capitol, wherever we can find a quorum, so that the 
committee might in fact, by the 1st of May, and perhaps even by 
the 29th of April, confirm the nominee.
    Then we will move to the floor of the Senate. And appeal to 
our colleagues in this special instance to confirm this 
Ambassador. I spell all of this out, because we in the Senate 
have some obligations too. We've been calling upon you for 
timetables and so forth, but it's reciprocal, and we are in 
this together. I appreciate your cooperation as well as that of 
the Secretary.
    Mr. Grossman. I appreciate that. We certainly are doing 
everything we can to meet your timetable on Ambassador 
Negroponte's confirmation hearings. Secretary Powell told the 
senior staff today to get this done as quickly as possible, and 
so we want to do our part.
    The Chairman. Thank you.
    Senator Biden.
    Senator Biden. Thank you very much. Let me pick up where 
you left off with the status of forces agreement. And Secretary 
Grossman, I understand the three documents you referred to as 
the basis for this agreement, and you made analogy to 
Afghanistan and Bosnia when there are loose ends. There's a big 
difference. In Afghanistan and Bosnia, we have international 
involvement in a big way. We had U.N. resolutions, we had an 
international legitimacy that hung over, we had an interim 
government there that we, you, helped put together in Germany, 
but it had the major powers all buying into it. There is an 
international security force, NATO is in Afghanistan and in 
Bosnia.
    The situation in Iraq is not even comparable in my humble 
opinion for the following reason. What happens on September 7 
when the Prime Minister and the President and two Vice 
Presidents, et cetera, what happens when there's another Najaf, 
or in Karbala there is another major, major undertaking, one of 
the militias goes off the wall, and our U.S. commander says 
we're going to go in take out Sadr and take out whomever?
    I predict to you what will happen with this government if 
there's any legitimacy, they'll say, do not go in there. Just 
like al-Sistani has said, don't, don't go in and take out al-
Sadr, because he can't afford to be seen as siding with an 
American force. Does the government have the authority to say 
under this new agreement, the United States of America, we do 
not authorize you to use forces inside the city of bang? What's 
the answer to that question?
    Mr. Grossman. Let me try to answer both questions. In terms 
of Bosnia and Afghanistan, the reason I raised those, Senator, 
is that to say that we know how to deal with or have some 
experience in dealing with governments that have sovereignty 
but in which we have an arrangement on security, and I don't 
dispute any of the points that you've made. But my example was 
sort of a more specific one.
    Senator Biden. Well, let me just make sure because I have 
great respect for you. Let's make sure we don't just gloss over 
this. The reason why we were able to have those arrangements is 
because there was an international blessing, international 
responsibility. The governments with which we are dealing were 
able to, with their people, look to, as they negotiated with us 
as to how to proceed diplomatically, the imprimatur of the 
United Nations as well as NATO forces and the European powers. 
So therefore they weren't left hanging out there.
    This time around as a President of this transition 
government is going to be nakedly dealing with one person, 
again, the United States of America, with no international 
imprimatur on this, at least as of now. Maybe you're going to 
have a resolution asking for that.
    Look, it seems to me, Marc, the dilemma is this. Iraq is 
going to need a significant force in place for years to come to 
help them work through democratization and this transition. And 
as the President so eloquently said, he understands why they 
will chafe under occupation. There is no reasonable prospect, 
and I will bet my career on it, of us being able to stand up an 
Iraqi army and police force in the next 6 months, 8 months, or 
a year, that will do anything other than be able to augment and 
work with oversight by a major international force doing the 
bulk of the work.
    So what's going to happen is that for this to work on June 
30, it seems to me in a general sense there has to be two 
things. One, that there has to be a maintenance of this massive 
force in Iraq, and two, there has to be a meaningful change in 
the circumstances that the Iraqi people think they find 
themselves in. But what they're going to find, on July 1 
they're going to wake up and there's going to be 160,000 
American troops and an American Ambassador pulling the strings. 
I love your phraseology. You said when the American 
Ambassador--where's that phrase about getting in the car--when 
the American Ambassador--excuse me for the digression here.
    Mr. Grossman. That's right at the end. I said he would go 
get in his car and go call on the President of a sovereign 
Iraq.
    Senator Biden. And that's exactly what's going to happen. 
The whole world's going to see it. The American Ambassador is 
going to get in the car, they're going to go call on the new 
President. There's going to be 160,000 American forces out 
there, 140,000, whatever the number's going to be, and the 
American Ambassador, when there's a problem, is going to get in 
his car and he's going to go speak to the new transition 
government, whatever that form's going to take.
    Now, how does that translate to the Iraqi people as they 
wake up in the morning thinking there's any transition? How 
does that reflect this notion that there is going to be some 
meaningful change in their circumstances, the average Iraqi? 
How does that take the American face off of this?
    You know what it reminds me of, at least with the CPA we 
had Bremer and we had Greenstock and we had other international 
diplomats in a room and they all played some part. This is kind 
of like going from Clark Kent to Superman, you know? Clark Kent 
at least was dressed in a suit when he was in the CPA. 
Everybody knew Bremer called the shots, but there was 
Greenstock and there were others. Now it's like Clark Kent 
taking off the suit and saying, now I'm the new super 
Ambassador, I'm the pro council. I'm not being facetious. I'm 
very, very concerned about how this changes what the President 
acknowledges is the Iraqis chafing under occupation. What has 
changed in this June 30 arrangement?
    Mr. Grossman. I believe that a lot will change under the 
June 30 arrangement, and maybe we make a mistake, Senator, and 
maybe I make a mistake in focusing solely, although very 
important, but let's just stop focusing for just a moment on 
the security question. I'm not trying to put it aside.
    Senator Biden. No, I agree. Let's do that.
    Mr. Grossman. What will Iraqis see on the 1st of July 
that's different from today? They will see a Minister of 
Health, they will see a Minister of Transportation, they will 
see a Minister of Reconstruction. They will see all of these 
ministries.
    Senator Biden. All of whom will get in their car and drive 
the Ambassador and ask, what can I do?
    Mr. Grossman. Well, no, sir, I don't think--look----
    Senator Biden. Tell me how that's not going to happen.
    Mr. Grossman. I'll give you a good example. We've already 
transferred, CPA has already transferred the Ministry of Health 
over to Iraqis a couple of weeks ago, one of those things it 
doesn't get reported anywhere in the news. Saddam Hussein in 
his last year spent $16 or $17 million on health and they're 
now spending about $1 billion on health. The Iraqi Ministry of 
Health is now run by Iraqis, period, that's all. Jerry Bremer 
doesn't go there and tell them what to do.
    And on the 1st of July, all of those ministries will be run 
by Iraqis. Iraqis will take care of the development fund for 
Iraq. It'll be their money. Iraqis will take control of the oil 
revenues. It'll be their money.
    So I don't debate you in the security area, but what I say 
to you is that in many, many, many other parts of Iraqi life, 
there will be a very important Iraqi face on an Iraqi 
government. And I'd say one more thing, and that is that there 
will also be an Iraqi/U.N. face on elections. One of your 
questions was, who runs the elections? The TAL says that the 
transitional authority will run the elections. They're going to 
need a lot of help from the United Nations. But that's another 
place where I think the Iraqis and the international community 
will do a lot.
    And finally, I know that people say, oh, they're only 
little numbers and they're from odd countries, but I don't 
think we ought to denigrate the contribution that the Coalition 
makes.
    Senator Biden. I wish you guys would stop this. We're not--
no one's denigrating their contribution--just--this always 
happens. We talk about, we say there's no real Coalition, you 
guys always say, well, you're denigrating the Hondurans or 
you're denigrating--I'm not denigrating. They're wonderful, 
brave soldiers. But let's get something straight. They are 
hardly a blip on the screen of security. We have Great Britain 
there with, what, 6,500 troops? The people in my state think 
Great Britain has 20, 30, 40, 50, 60,000 people. They got 6,500 
troops there.
    We got 140,000 Americans, 6,500 Brits, no Spaniards, the 
Polish Minister on the way out says, whether it happens or not, 
we have to consider whether we pull out the Polish division, 
hopefully that will not happen. We have a minor little 
hemorrhage going on right now.
    So come on. I mean, a coalition is a coalition is a 
coalition. That's like me saying I'm going to have a baseball 
team where I'm going to play center field and I've got eight 
other Little Leaguers on the team with me, their average age is 
8 years old. They're wonderful, brave kids, they'll turn out to 
be brave athletes. But my goodness, I'm not denigrating any of 
these other nations.
    But I am putting in perspective the physical contribution 
they provide, and it is de minimis. It is brave, honorable, and 
noble where it is provided, but it is de minimis. It's like 
this little game we play here. It's like when we had the 
hearings before, we're going into Iraq, and Secretary Wolfowitz 
said to me when I said there's going to be no Iraqi civil 
service to stand up. Remember that? We were going to stand up 
this--this Iraqi civil service was going to be stood up. 
Remember that?
    And I was presumptuous enough to say there was no 
possibility of that, and oh no, are you suggesting, Senator, 
the Iraqi people aren't bright and competent and capable? Give 
me a break. All I'm trying to figure out is, how do we get in a 
circumstance where the Iraqi people look out there on a day-to-
day basis and say, you know, something happened on June 30 here 
and this is no longer a U.S. occupation. That's all I'm trying 
to get at.
    Mr. Grossman. And I appreciate that and all I can say is 
that I believe that in ministry after ministry and relationship 
after relationship with this interim government, Iraqis will 
see an Iraqi face. And further, I do hope, as I have testified, 
that there will be a new U.N. Security Council Resolution, and 
as I said in my testimony, that that Security Council 
Resolution will invite other countries to participate.
    Senator Biden. Who's going to be the referee? Who's going 
to be the referee when there is significant internal dispute? 
Right now in Afghanistan what did we do? You under your 
leadership, State Department, got everybody together and said, 
boys, go back to the tent, this ain't going to work. Who's 
going to send them back to the tent? Us? It wasn't us in 
Afghanistan, it was the international community. Who's going to 
say, no, no, no, when Chalabi, if he's still around, cuts a 
deal with al-Sistani, which he will, he's going to eat you guys 
alive, by the way, cuts a deal that women no longer have the 
rights we thought they should have under the transitional 
agreement, who's going to say, hey guys, now wait a minute, you 
got to go back in the tent and work this one out or go back to 
the meeting house? I wasn't being derogatory in saying go back 
to the tent. Literally that's what happened in, you know--who's 
going to say that? The American Ambassador?
    Mr. Grossman. I think it would be some combination of the 
American Ambassador, and as I say, once we have a new U.N. 
Security Council Resolution, which talks about an increasing 
role for the United Nations--I don't mean to stick a name on 
it, because I don't know if it will be Ambassador Brahimi, but 
we hope----
    Senator Biden. So you envision there will be a U.N. figure, 
a prominent U.N. figure, not Brahimi, whoever, a prominent U.N. 
figure that's going to have a prominent, visible role in Iraq? 
Is that what you're thinking?
    Mr. Grossman. I don't know the answer to that question yet, 
because the Iraqis haven't asked for it and Kofi Annan hasn't 
asked for it, as Secretary Powell has said on a couple of 
occasions. I know that in your speech----
    Senator Biden. Kofi Annan didn't ask for anything in 
Bosnia, he didn't ask for anything in Afghanistan. Let's get 
off this, OK? They're not going to ask for anything.
    We're the ones who have suggested it, when we sit down with 
the other major powers and say, how do we work this out?
    I'll end, Mr. Chairman, but the idea we're going to 
invite--I assume Mr. Rodman's going to tell me we're going to 
invite NATO to participate, right? That's what we're going to 
do? We're going to invite them?
    Mr. Rodman. We've already been talking to our allies about 
the future, about the next phase, about the multinational force 
after sovereignty, after the U.N. comes back in.
    Senator Biden. Have we sat down with them and said, look, 
NATO, we need your help and this is what we would propose, 
which we did in Bosnia, we did in Kosovo, we ultimately did in 
Afghanistan? We said this is what we need and this is what we 
propose, because we've been doing this for 50 years with you 
guys and this is how it works, because you all know, but the 
public doesn't know in this little kabuki dance we're having 
here, that's how it gets done.
    The way it gets done is the President of the United States 
authorizes the Secretary of Defense to pick up the phone and 
call General Jones, and say, general, as supreme allied 
commander, we'd like to see if you can put together a NATO 
force. The general sitting behind you knows exactly how this 
works. We'd like you to put together a NATO force according to 
the following lines. Over here at DOD we've figured out this is 
the best way to do this, and it would be best if we had the 
following number of boom boom boom boom boom. We can only 
provide the following nine helicopters because we had a fight 
over Afghanistan in providing four other helicopters and we're 
going to do this, and it's an American who does that.
    And we then go in and we have a plan. Do we have a plan 
like that or are we going to go sit down like Secretary 
Christopher did when I was part of a group convincing the 
President of the United States that we should lift the arms 
embargo in Bosnia. And what did Secretary Christopher do? He 
went over to Europe and he said, you know, I think we should 
lift the arms embargo, what do you guys think? Which was a 
signal, don't worry, don't have to lift the arms embargo. It 
matters how we do this.
    I guess my time's long up. I just hope there's somebody 
sitting there who has made a firm decision we're going to get 
NATO involved, we have a specific game plan that we're going to 
try to sell NATO and work it hard to get it done, and if that's 
happening I'll be overjoyed. And it may be happening and you 
all aren't telling us, but the idea if we're going to wait for 
Kofi to ask us, I spoke to Kofi yesterday for 10 minutes, he's 
not going to ask you. What he's going to do is find out what 
you want, what you're willing to give, what your plan is, and 
then he'll find out whether he's willing to sign on. But he's 
not going to ask you, Marc.
    The Chairman. Thank you, Senator Biden.
    Senator Hagel.
    Senator Hagel. Gentlemen, thank you for coming before the 
committee this morning and express our thanks to your 
colleagues for their service.
    Secretary Grossman, could you explain what we are doing to 
enlist the support and involvement of Iraq's neighbors or Arab 
allies? What roles are we asking them to play as we work toward 
a transition and beyond?
    Mr. Grossman. Yes, sir, Senator Hagel. One of the reasons 
the President sent Rich Armitage to the region last week was to 
do precisely that. He visited a number of Iraq's neighbors and 
his messages were really three. First, it's very important that 
they support this transition and the date of the 30th of June 
and give all the support that they possibly can.
    Second message was that they should, as best they could, 
with the communities that are important to them, either Sunni 
or Shia, that they also send messages to those communities that 
they needed to support the Governing Council now, the 
transitional government, the interim government when it comes 
on the 1st of July. And those were obvious to those that are 
our allies.
    We've also, as you know, Secretary Powell has sent a letter 
to the Syrian Government saying it's very important that they 
pay attention to their border and to do all that they can. And 
with the Iranians we have communicated as well that they have a 
responsibility just like we do to try to make sure that Iraq 
comes out right. And so we've tried to be in contact with 
everybody in the neighborhood.
    Senator Hagel. What additional roles do we foresee these 
Arab allies, Iraqi neighbors playing? I understand what you 
just said, what Rich Armitage is doing. That's important, 
diplomatic outreach. But give us an example if you could where 
you could see more active involvement in Iraq from our Arab 
allies and Iraq's neighbors. I'll come to you in just a minute, 
Secretary. I suspect Secretary Rodman wants to talk about the 
security part of this, and which I'll welcome that. But give me 
some tangible explanation of--beyond what Rich Armitage is 
doing visiting the capitals and that's important. But what 
could we expect will be a follow-on, a tangible follow-on from 
that?
    Mr. Grossman. Well, first, of course, is to make sure that 
countries in the region, especially the near neighbors, meet 
the obligations that they gave at the Madrid conference to 
contribute money. Second would be to speak out, because I think 
it's very important that these countries speak out in favor of 
the Iraqi interim authority once it's established.
    We would also look, as I say, I think quite important, and 
I don't want to put it aside, for them to speak to the various 
communities. For example, if the countries in the region who 
had impact on the Sunni community inside of Iraq were to reach 
out to them and to say, you have a future here and you ought to 
get yourself organized politically and you have to leave aside 
the people who are leading you to violence. All of those things 
would be extremely important.
    So it's sort of physical resources, it's political 
resources, and then I'll leave it to Peter to see whether there 
are any military things that could be done.
    Senator Hagel. Do you expect that in fact Arab allies, 
Iraq's neighbors, will in fact do that, will in fact speak out 
and be helpful in the areas that you just noted?
    Mr. Grossman. Certainly from what I could get from Rich's 
trip, the answer to that question is yes. And there's one other 
point that I did forget to mention, although I mentioned the 
Madrid pledges that were made. Also very importantly is debt 
reduction in those countries that hold a lot of Iraqi debt that 
they respond positively to Secretary Baker's response that that 
debt be dealt with.
    Senator Hagel. Is Secretary Baker still involved in that 
project?
    Mr. Grossman. Yes, sir.
    Senator Hagel. Active?
    Mr. Grossman. Yes.
    Senator Hagel. Thank you.
    Secretary Rodman.
    Mr. Rodman. I just wanted to add that the Jordanians are 
doing police training. The Egyptians want to get into the same 
game and we, of course, encourage that. I endorse everything 
Marc said. In all of our conversations with our foreign 
military colleagues or with Arab governments, we encourage them 
to do anything they can do, including in the political side, 
giving political support to the Iraqi political process that we 
have going. And a lot of them have humanitarian projects or 
economic projects in the country. All of us are working on the 
Arab neighbors to support it.
    Now, obviously there are sensitivities. It's not self-
evident that Iraqis want a lot of other Arab countries there; 
there are some sensitivities within the Arab world, and there 
are delicacies that have to be respected. But we're encouraged 
by the attitude of most of these countries because they feel 
the same stake in the success of Iraq that we do, if not more.
    Senator Hagel. Thank you. Let me ask you each, from 
Armitage's reports, which you're picking up, have our efforts 
that you have each been talking about in response to my 
questions with our Arab allies and Iraqi neighbors been in any 
way impaired or inhibited as a result of Prime Minister 
Sharon's visit here last week and the President's new position 
on the Palestinian-Israeli issues? For example, wasn't the King 
of Jordan supposed to be here this week?
    So you can tell this panel, has that had an impact at all 
on our relationship with the Arab world?
    Secretary Grossman.
    Mr. Grossman. I'm going to answer the specific question you 
asked me, which is, from the reports I'm getting, has it 
impacted on the requests Rich was making to help out in Iraq? I 
think the answer to that question, as near as I can tell, is 
no. For example, you're right, the King of Jordan was supposed 
to be here this week. He decided not to come but he'll be back 
on the 4th of May. But the very important police training 
program that Peter talked about continues in Iraq. And so in 
that sense I think the answer is no.
    Senator Hagel. So there has been no static or no problems 
as a result of this?
    Mr. Grossman. In terms of the requests we've made from them 
on Iraq, no, sir.
    Senator Hagel. Secretary Rodman.
    Mr. Rodman. I agree.
    Senator Hagel. Secretary Grossman, could you explain in 
your opinion, and I would welcome Secretary Rodman's thoughts 
on this as well, if in fact there is a rise of Islamic 
nationalism in both central and southern Iraq, and what then is 
the possibility of an Islamic fundamentalism taking hold in 
these areas? Obviously we have seen some disturbing dynamics 
occur over the last few weeks, and I guess the real political 
question that we get to is, is this leading toward a Shia/Sunni 
domination of the political process in Iraq? So if you would 
unwind that for me, Secretary Grossman, I'd appreciate it.
    Mr. Grossman. I'll do my best. I think the most important 
thing, Senator, is to try to convey to Iraqis through the 
Transitional Administrative Law, through the timetable that we 
have, that Iraq has to stop being a winner-take-all state. It 
was a winner-take-all state in Saddam's time, it was a winner-
take-all state probably before that as well. And somehow we 
have to continue to work to make sure that the Shia, who were, 
of course, dominated by the Sunnis in the past, feel that the 
reverse won't happen to them and that everybody has a stake in 
this new Iraq, and that's why I think the Transitional 
Administrative Law is an important thing, and I also think this 
change on the 30th of June to Iraqi sovereignty is important. 
It's a commitment not just to get sovereignty there but to let 
these Iraqis work some of these things out themselves.
    In terms of Islamic fundamentalism and Islamic nationalism, 
all I can tell you is that from things that I see and reports 
that I get and polls that I see or local elections for local 
councils that we see, this is not something that Iraqis want, 
that Iraqis want a secular society, and like Senator Biden, I 
don't say that they have to have a democracy like ours or like 
anybody else's, but a representative government and a free 
government in a place where they are able to do things on their 
own.
    And so, near as I can tell, this is not a question of 
rising fundamentalism. It is a question of having Iraqis 
understand that this can't be anymore a winner-take-all 
society.
    Senator Hagel. Let me ask this as a followup, and I know 
you wanted to add something as well, Mr. Secretary, which we'll 
get to you. Is the United States prepared to accept whatever 
government the Iraqi people want? I think as we all understand, 
nations are built from the inside out, they're not built from 
the outside in. We've made some dramatic foreign policy 
mistakes in this country, as all countries have, thinking that 
we could do just the opposite.
    So, as the elections stay on track, which we all want that 
to happen in January, and by the way, I strongly support the 
President's position on this handover on June 30 with all the 
questions and all the problems, for all the reasons you 
mentioned it's important we do that, as well as keeping on 
track with that January election timeframe. So we are prepared 
then to accept whatever comes.
    Mr. Grossman. In the end, Iraqis have to govern themselves. 
But what we are trying to do with us, the international 
community, and others through the TAL, through the transition, 
is to try to say to Iraqis, there is a way to live in this 
modern world with representative government and there's a way 
to live in this world with a bill of rights and----
    Senator Hagel. But if they choose another way?
    Mr. Grossman. That is their----
    Senator Hagel. That's their decision?
    Mr. Grossman. Iraqis in the end have to choose their own 
form of government, yes, sir.
    Senator Hagel. And any efforts to impose any kind of 
government aside from that would not be made by this country?
    Mr. Grossman. Well, what we're trying to do through the 
kind of work that Andrew's doing and the Defense Department is 
doing and we're doing is try to open the window for Iraqis on a 
new kind of way of life. Senator Biden said, think of what 
their life must be like after these 35 years that they've had, 
and that we've got to open some windows on the way that they 
can live in the future, windows on a free economic life, 
windows on a rule of law, windows on things that they don't 
have much experience with.
    So what I'm confident of is if we give people a chance here 
and we're patient and we're prepared to help out and we can 
open these windows, that they will choose to become part of the 
modern world and choose some kind of representative government. 
I believe that.
    Senator Hagel. Thank you, Mr. Chairman. May I indulge the 
committee to ask if the other two witnesses wanted to answer 
that? And I apologize, my time's up. Mr. Secretary, Secretary 
Rodman.
    Mr. Rodman. It's a very good question, but we have 
confidence that there will be a moderate outcome. It's really 
the essence of our strategy--to strengthen the moderates, to 
empower the moderates.
    You asked about Islamic fundamentalism, and I would say two 
things. One is, there is a province in southern Iraq called 
Diyala province that has held 17 local elections in the last 
month, and the Islamists lost in almost every single case. The 
Shia in Iraq are not radical. They come out of a secular 
tradition.
    The second point is the al-Sadr rebellion, the al-Sadr 
putsch attempt, was an attempt to tip the balance among the 
Shia in the direction of his brand of radicalism. He was a 
marginal figure among the Shia and he attempted to remedy that 
by radicalizing the community, making himself by intimidation 
the dominant figure. He failed. The moderates among the Shia 
have rolled him back, and particularly when we started rolling 
him back militarily, the moderate leaders of the Shia found the 
courage to put political pressure on him, and he failed at his 
attempt to become the dominant figure among the Shia.
    The Iraqis are a common-sense people. We think the 
overwhelming majority of the people are moderate. They want a 
modern, moderate kind of government, and our influence, as long 
as it's there, can have a great effect in helping the moderates 
who are a majority.
    Senator Hagel. Thank you. Mr. Natsios.
    Mr. Natsios. Just from a ground perspective, a little 
different perspective, to reinforce what both my colleagues 
just mentioned, we've been looking at the structure of Iraqi 
society, the value systems developing, and it's very 
interesting what's going on. Early on last fall, our democracy 
officers were going with one of our contractors to these local 
councils that had been elected, and the agreement is they form 
themselves into a council, we teach them how you run a meeting, 
how you take a vote, how you make decisions, how you have a 
public hearing. And at one of the hearings, one of the first 
early ones, one of our democracy officers was sitting there and 
they were yelling at each other, literally screaming, no fist 
fights, but for 3 hours on how to spend a small grant, because 
we set the thing up and then we say, decide how to spend 
$20,000, we'll help you spend the money, but you decide what 
the project is and where it is and what it is in the village.
    And after this yelling for 3 or 4 hours, our Deputy Mission 
Director Chris Milligan said, I got to go to the next town, you 
can't make a decision here. And the chairman of the council 
said, do not leave, they'll kill us. And Chris said, who is 
going to kill you? He said, the people in the village know 
you're here with this money to do this project, we just can't 
decide what it is. If you leave, they're going to kill us, 
isn't that what democracy is? And Chris started laughing and 
said, no, that is not what democracy is. It means you might get 
defeated in the next election, but we don't kill our public 
officials because we don't like what they do, we just take them 
out of office by an election.
    And we thought he was kidding. They have no conception of 
what this is. I've been there twice. For a week I met with 
delegations of people. One was a delegation of 11 graduate 
students from the best universities in Baghdad. It was 
fascinating to talk with them; they're all in their late 20s or 
early 30s. One of them said to me something extraordinary. He 
said, you started the operation, we're on the table, you opened 
us up, complete the operation, please do not leave until you 
finish. We want you to finish. We were under the psychopath all 
these years. We want you to finish. We just don't understand 
what this means. These are young students now. They said, we 
like democracy because we like America and Western Europe, but 
we don't know what that means.
    So we're about to run a huge public education campaign that 
was designed by Larry Diamond, one of our two greatest 
democracy scholars from the Hoover Institute, a good friend of 
mine from Stanford University. And he went over there for weeks 
interviewing people, and asking, what don't you understand? 
We've designed a curriculum with papers explaining what does 
minority rights mean, what is an election, what's a political 
party supposed to be, what is freedom of the press, what do 
these things mean. It's going to be radio, TV, it's going to be 
interviews, and it will be done on a mass basis. So they will 
understand what this thing is that we talk about, because we're 
all assuming people want democracy when they really don't know 
what that means.
    Another thing that hasn't happened, we were expecting large 
scale atrocities against the people who committed the 
atrocities against the Shia and the Kurds, and it has not 
happened. We had teams sent out last year, a year ago, to stop 
the atrocities. They haven't happened. So I sent an expert of 
human rights in and he went to police station after police 
station, he went to mullahs, he went to imams, and he said, how 
many people have been killed in revenge killings for what 
happened in the 1990s and 1980s by Saddam. Maybe 40 or 50 
people in a year. We couldn't understand why.
    You know why? Because the imams and the mullahs and the 
mosques, every Friday they get up all over the country and they 
say, the Americans have come and the British have come, there's 
a thing called rule of law. If you think someone committed an 
atrocity, we have to go to the courts, we have to prosecute 
them, no revenge killings. And guess what? The people are 
listening to them.
    We had an incident down in Umm Qasr when we first arrived 
where a schoolteacher, an English teacher got up before a crowd 
of men who was going to burn half the Ba'athist party houses 
down and kill all the Ba'athists because of what they had done, 
because it was a Shia city. And the guy got up alone in front 
of 300 men who were saying I'm going to kill them all now, the 
Americans have arrived, I'm going to kill them. He said, the 
Americans have told us, the British have told us, the rule of 
law means you prosecute people through a court. We never had 
courts except to execute people, it was a joke. You have to 
present evidence. We cannot use retribution to run this 
country.
    And guess what happened? They put their torches out and 
they went home and they never burned one house down. So what 
I'm suggesting to support my colleagues here, you know, they 
want a change after what they've been through.
    One last story. An NGO told me this story. It was a sheik 
who supports the more radical fundamentalists but he was 
talking to one of the NGO guys from the United States who's an 
American. And he said, I shouldn't admit this to you in front 
of the other sheiks, but my mother, who's an elderly lady, 
prays for the health of George Bush every night. And he smiled, 
this guy's a Democrat, he's not a Republican, but he told me 
the story, he said, I know why you're going to tell me, but 
tell me why. He said, because he got rid of Saddam, this lunacy 
that has governed this country and he's at least given us some 
hope for the future.
    That's the mother of a sheik who's on the more radical 
side, and he smiled and he said, and we do appreciate it even 
if we're having trouble with this transition. So the impression 
you get in the media is a little different than you get at the 
grassroots level.
    Senator Hagel. Thank you.
    The Chairman. Thank you very much, Senator Hagel. Thank 
you, Senator Dodd, for your patience.
    Senator Dodd. I began to think I was listening to some 
colleagues in the Senate here, a bit of a filibuster.
    Sometimes I wonder if we're living on the same planet, 
however, when you say some of these things, and I appreciate 
your comments. But let me first of all, Mr. Chairman, thank you 
again for these hearings, you and Senator Biden. This is the 
historic and proper role of this committee and you are 
fulfilling it with these hearings. And while it's uncomfortable 
to be witnesses and to have to face a barrage of questions, I 
think it's a tremendously important function you're performing 
here, and I for one deeply appreciate it. I've said that before 
but it's been very, very helpful.
    I'm going to ask unanimous consent that an opening comment 
and statements be included in the record, and I know Senator 
Biden has expressed this, but I said it yesterday, I'll repeat 
it again today, whatever the differences I've had years ago 
with John Negroponte, I happen to feel he's a very fine Foreign 
Service officer, done a tremendous job in many places, and I 
second your comments and hopes that we'll be able to move 
expeditiously through this committee and on the floor of the 
Senate. Whatever else one's feelings may be, I think it's 
critically important that we get an ambassador there. So you 
have my support in trying to get that done. I'm sure my 
colleagues will as well and hopefully it can move along.
    Let me if I can go back, Secretary Grossman and others, and 
I want to follow sort of two lines of questions, and I'll start 
with one I think may be a little easier to address first, and 
that is the role of the U.S. Embassy that's going to emerge 
here and how the lines of authority are going to develop under 
this new embassy. And then I want to quickly get to the June 30 
issue and how we're going to deal with some of these questions.
    It's unclear to me how authority lines are going to develop 
with--putting aside now the June 30 date--but just what is the 
role of the U.S. Ambassador going to be here in the 
reconstruction effort? Will he be head of mission in Iraq with 
all that that means specifically? Will the Department of 
Defense maintain control over the purse strings, or is that 
going to now shift to the U.S. Ambassador in terms of those 
efforts?
    Mr. Grossman. Yes, sir. Senator, in my testimony I said 
that Ambassador Negroponte, if he's confirmed, and I hope he 
will be confirmed, like you, will go to Iraq with a letter from 
the President like all of our Ambassadors has that says that he 
will be responsible for all of the activities in the United 
States of America, the executive branch, except for those that 
are in command of an area military commander. So we certainly 
expect that all of those questions of the money and the 
priorities and the reconstruction will be his responsibility.
    Just to be clear, it's not to say that we won't take 
advantage of the extremely important structures that are in the 
Department of Defense, for example, using Army contracting or 
using some of the other structures that are there. But the 
person responsible will be the Ambassador and then the 
Secretary of State.
    Senator Dodd. But there will be no unique lines that are 
developed here in terms of the purse strings and dollars beyond 
what you've just described? All of that will fall under the 
auspices of the U.S. Ambassador?
    Mr. Grossman. Yes, sir.
    Senator Dodd. So I don't expect any--I won't be looking at 
some different chart here in a few weeks that shows some 
different lines of authority in terms of how that operates?
    Mr. Grossman. That's correct. On the questions you've asked 
me, that's correct.
    Senator Dodd. All right. Let me just, Mr. Natsios, quickly 
point out to you here, in terms of the reconstruction, some of 
the efforts that are going on, there was a very devastating 
report from National Public Radio yesterday about the Iraqi 
Health Ministry selling equipment and medicine for personal 
profits. I don't know if you saw that. Did you see that report?
    Mr. Natsios. I did not see it, Senator.
    Senator Dodd. Well, you ought to take a look at it. It's 
the kind of thing that worries us in terms of these 
transitional issues. I'm also wondering if you have any 
comments to make about the report that GE and Siemens has 
pretty much pulled out of their operations because of the 
security problem.
    Mr. Natsios. Siemens and GE are not our contractors.
    Bechtel is our big infrastructure contractor and they have 
not pulled out.
    Senator Dodd. Do you know about GE and Siemens?
    Mr. Natsios. I read it in the newspaper.
    Senator Dodd. You know nothing more about it than that?
    Mr. Natsios. They report through the Defense Department and 
they do Defense Department contracting.
    Senator Dodd. Mr. Secretary, I apologize then. Secretary 
Rodman, do you have a comment to make on that?
    Mr. Rodman. I am not familiar with it. I can get an answer 
for the record certainly.
    [At the time of publication a response had not been 
received.]
    Senator Dodd. All right. Let me move in time here to this 
issue. We've heard from witnesses including ones yesterday I 
thought were very, very helpful and described two or three 
issues, and there may be more, and you might want to add to 
them, but I think all of them were very different by the way. 
We had witnesses from the political, the military, economic, 
and human rights side I guess you might add. Yet they all had a 
common theme as they talked, and they listed them, and Chairman 
Lugar asked them, I think, to prioritize what the top issues 
were, all of them came back and said security was the No. 1 
issue, and I see a nodding affirmatively that you would agree 
with that, Secretary Grossman, that getting not only the 
security of our own people and forces there, but obviously as 
importantly for the Iraqi people.
    The second issue raised was a stabilization plan in place, 
one that would really offer some clear pattern of how we are 
going to bring some order, so that these ministries we're 
talking about could actually function and operate and at least 
to some degree of success so that civil society would begin to 
function with some degree of normalcy.
    Third, there was the discussion of to what extent can we 
truly internationalize this effort through the reconstruction 
phases, additional security questions. I no longer hear the 
kind of debate that occurred, at least I don't hear it as 
loudly as I did before, about the exclusion of the 
international community, but more importantly, how can we get 
them more involved in all of this.
    Here's my concern, and I know my colleagues and others--and 
I'm not, I understand the significance, having made this 
commitment last, I guess it was November, on a June 30 date. My 
concern is of the bureaucratic rigidity to that date, and 
realizing that if you let it slip you cause problems. And I 
accept that. I'm not suggesting this is not without difficulty 
if you do this. But it seems to me to rigidly hold onto that 
date when the issues of security, stabilization, and 
internationalizing our efforts over there may be put in 
jeopardy if we hold too rigidly to that date is a far greater 
long-term loss in Iraq than whatever short-term problems we may 
face if in fact we allow that date to move, because we don't 
have these issues in place.
    To pick up your point, Secretary Grossman, the idea of 
running around at midnight on the night of June 29, trying to 
get a U.N. resolution adopted, and I'm very worried as I look 
at this. Chairman Lugar raised it, I think at least, if I heard 
him correctly, in talking about, for instance, the security 
forces. What happens if after June 30, if I read this, as I 
think I do, ``the Law of Administration for the State of Iraq, 
the Transitional Period,''and ``The first phase shall begin 
with the formation of a fully sovereign Iraq Interim 
Government,'' a fully sovereign government.
    You've talked about limited sovereignty, Secretary 
Grossman, in some public statements, but if they decide for 
whatever reason that they want some different configuration on 
the security issue after June 30, thus making it far more 
difficult for us to achieve the job we need to get done there, 
whichever one seems to agree must be the case, then don't we 
find ourselves in a situation having embraced that date so 
rigidly that we make it far more difficult to get the security 
job done or the stabilization plan or, in fact, if they make 
decisions that make it far more difficult for us to get 
international cooperation? Haven't we in a sense made it, our 
job, that much more difficult if we hold on?
    That's sort of the question I get, and I want to know in 
that context, by the way, whether or not we're going to see 
some annex that I read in this law. I gather nothing's been 
developed, but that law goes on here, the provisions of the 
transitional period talks about the Governing Council, ``the 
Coalition Provisional Authority and possibly in consultation 
with the United Nations. This government shall exercise 
authority in accordance with this Law, including the 
fundamental principles and rights specified herein, and with an 
annex that shall be agreed upon and issued before the beginning 
of the transitional period and that shall be an integral part 
of this Law.'' Is there an annex? And I want to address that as 
well.
    But get to this question of June 30 if you can and my worry 
is that we're painting ourselves into a corner on this, and 
we're so determined to hold on to that date that we're 
sacrificing some of these other critical issues that will 
determine ultimately whether or not we're able to do exactly 
that which I think all of us want, and that is a stable, 
peaceful Iraq with a chance to determine its own future.
    Mr. Grossman. Senator, thank you very much. If I could just 
go back to the comment you made in your opening comments, I 
just want to be clear, and I hope that people who are watching 
this, and maybe even people who are watching this in Iraq or 
will see it in Iraq, it is not uncomfortable to be a witness. 
This is our democracy. I mean that honestly. We're glad to come 
here because you all are asking the right questions and you 
have the right to ask those questions and we have a 
responsibility to try to answer them, and we've always 
considered, especially the work with this committee, to be a 
very good consultation.
    So as people watch this, this is what democracy's about and 
I appreciate it, I appreciate your saying that.
    In terms of the June 30 deadline, I guess when you say that 
you worry that we're painting ourselves into a corner, I guess 
the way I look at it is through a mirror which says that this 
seems to me on the 30th of June to be way out of that corner, 
because if it is right that we want to put an Iraqi face on 
this, a more Iraqi face on Iraq, then one way to do that is to 
transfer the sovereignty on the 30th of June.
    If we want to step back and not have a Coalition Provision 
Authority administrator occupation and we want to have an 
Ambassador of the United States of America, the way to do that 
is on the 30th of June, and so with respect, I accept your 
point, I take it, and I think it's one way to look at this, but 
we think, and we're working hard to make it real, that this is 
the way out of this corner that we're currently in and that 
corner that we're currently in is called, it's all the United 
States, and so we'd like to move out and put more of an Iraqi 
face on this.
    I'll give you a couple of specific examples in the issues 
that you raise. First, in terms of security, I was nodding my 
head because I agree with you, security is absolutely the first 
priority and I think it's a priority for all of us, including 
our military colleagues and our Defense Department colleagues.
    But one of the things that General Myers has been 
testifying over the past couple of days, which I found 
extremely interesting to listen to is, if in terms of security, 
if on the 30th of June, 1st of July, Iraqis feel that they are 
now fighting for an Iraqi Interim Authority, for Iraqis, for 
their own country rather than a Coalition Provisional 
Authority, that this may actually strengthen their capacity to 
move forward, and I know that our military colleagues, as I 
say, in listening to them for a couple of days, believe that 
this is an important part of increasing the capacity that we 
have to bring security to that country.
    Second, in terms of the stabilization plan, I'd say two 
things. One is, yes, absolutely, there ought to be a 
stabilization plan and it ought to be clear to people----
    Senator Dodd. You've only got 70 days left here though, you 
know.
    Mr. Grossman. Well, that's right. But one of the reasons 
that this embassy is going to be so large is because there's 
going to be a huge amount of work to do before the 30th of June 
after the 30th of June. And the other thing, in terms of 
stabilization plan, and I am the first person to admit that I 
wish this would have gone along a lot faster, is we also have 
to remember that some of the $18.4 billion in reconstruction 
funds that you all provided are now going to start to spend out 
here over the next few weeks, and so as we've got these 70 
days, more and more Iraqis will be employed, more Iraqis will 
be a part of this economy, and I think that will also be part 
of the stabilization plan.
    And finally, in terms of the international effort, again, 
from my perspective, Brahimi says, I'm confident I can do this 
in May. So I have no reason to think anything other than let's 
help him make that true. If he can accomplish that task, and 
then you can have a Security Council Resolution, as Senator 
Lugar said, kind of in advance of the first--to support what 
Brahimi has said, then why wait? Why not take the opportunity 
of that 30th of June date? Because you've got then government, 
you've got people, you've got structure, you've got a plan. And 
as Senator Biden said, let's put a more Iraqi face on this.
    I think that the 30th of June date is an important one, not 
just for us, and maybe even less for us, but it is really 
important for Iraqis.
    Senator Dodd. Would you get to the annex question? I know 
my time is up.
    Mr. Grossman. I apologize. Can I come back to you on the 
record or here in a minute? I don't know the answer to that 
question. I just don't want to get it wrong.
    Senator Dodd. Do you know what I'm talking about though?
    Mr. Grossman. I do.
    Senator Dodd. Because that spells out an awful lot of the 
authorities.
    Mr. Grossman. Right.
    Senator Dodd. And I think it's going to be very, very 
clear, there's that difference between that and obviously the 
Iraqi transitional government, which is 8 months later, and 
this period, this annex, is not an insignificant document, and 
to my understanding, do you have it ready? Is there an annex 
document ready yet?
    Mr. Grossman. Well, I'm told no, there is not one now.
    It's being drafted by the Iraqi Governing Council. But let 
me, so I don't goof this up, let me come back to you with a 
more complete answer.
    Mr. Natsios. Could I just answer your question about civil 
society, which I think is a very important insight into the 
preparation of the country for the transition. We engaged five 
major American NGOs last summer in setting up a set of 
community action programs at the village and neighborhood level 
in the cities across the country, huge programs, and we're now 
in our second phase of that. There were $7 million grants each, 
$50 million, and there's another 50 that's going out to them 
now because it's an extraordinary program.
    I met with many of the local groups that have been formed 
by these NGOs to make decisions. These are not town councils, 
they're just community groups. And they make decisions on shall 
we repair the water system or the electric lights or do we want 
to redo the school, and they have--and we require them to put 
some of their own money--they actually engage the community to 
put some of their resources in in addition to ours. So it's 
their projects, not our projects, which is very important 
because they provide the protection so that the looting that 
took place last year does not happen again. They protect it 
because it's their projects.
    The effect of this is to get a new generation of political 
leaders at the local level who people can look to for 
leadership, and sometimes they don't do it very well and they 
get defeated in the next election.
    Senator Dodd. Well, very good. Mr. Chairman, I'll just 
conclude on that. I, for one, and I believe most of my 
colleagues are anxious to see this work succeed. This is not a 
hostile environment where some people maybe wish to see this 
fail somehow. I don't believe that's the case.
    But I am very, very worried, and I'm not suggesting you 
change the date today at all, obviously 70 days allows a little 
time. But if there isn't some real progress fairly soon on 
this, my simple recommendation is to be careful. I realize 
there's a problem by moving away from a date, but by holding on 
to that date and not having the questions answered about 
security, stabilization, and how we develop the kind of longer 
term international commitment involvement here, putting that at 
risk with an interim government that may have a very different 
set of political calculations than we do.
    My experience sitting on this side of the dais is, 
politicians and politics, it's always local, and they're always 
going to be determining their futures based on what they think 
is in their local best interest. We may find ourselves in 
direct conflict here at a time when we may decide that we need 
more security or we need more international involvement, and it 
may be that much harder for us to achieve it and look back and 
regret deeply that while we knew there was a price to pay by 
moving the date of June 30, we caused ourselves untold problems 
by sticking with it and turning over authority prematurely when 
it was not ripe yet.
    So I urge you during these coming weeks to assess that, 
knowing full well you'll pay a price if you change it. But the 
price you pay may be a lot less than the larger price if you 
hold on to it, and discover we're really all alone in this 
effort, we don't have the security forces we need to protect 
our own troops, let alone the Iraqis, and there's no way in the 
world you're going to get a stabilization plan with chaos 
reigning in that country. So I just urge you to be careful. 
Think carefully about this.
    Thank you.
    The Chairman. Thank you, Senator Dodd.
    Senator Chafee.
    Mr. Grossman. I'm sorry, may I answer the Senator's 
question on the annex?
    The Chairman. Yes.
    Mr. Grossman. And I apologize I didn't know off-hand. I'm 
told that there is a drafting committee for that annex, that 
Adnan Pachachi of the Iraqi Governing Council is chairing that 
committee, that the CPAs involved, and that their objective is 
to try to incorporate into the annex kind of Brahimi's ideas 
for the interim government. And if there's more than that I'd 
be glad to submit it for the record.
    Senator Dodd. That's fine. Mr. Chairman, I would just urge 
that you and Senator Biden could be kept informed as to how 
this is progressing so we know what's in that. It's a very 
important document. A lot of the authorities are going to be in 
that annex.
    Mr. Grossman. I'll be glad to commit to that.
    Senator Dodd. Thanks.
    The Chairman. Good advice and we will attempt to follow 
through.
    Senator Chafee.
    Senator Chafee. Thank you very much, Mr. Chairman. One of 
the things I think we've learned in the last few days and weeks 
is that there's a culture of denial in the administration and 
that certainly in the buildup to the war we're seeing that the 
existence of weapons of mass destruction and the threat of 
Saddam Hussein to us has been pretty much debunked. And even 
Andy Card, I think, was quoted recently as saying ``there's no 
threat there'' when he received a briefing on the weapons of 
mass destruction.
    In fact, I, before voting on the war, went out to Langley, 
to the CIA by myself, had about 15 people there to give me a 
briefing, what do you have. And after that briefing I was 
underwhelmed enough to tell my local paper, the Providence 
Journal, we're not going to find any weapons of mass 
destruction, and that was a year ago.
    But now we're there, we've lost 700 young men and women, or 
nearly 700, we're spending over $1 billion a week, but 
nonetheless, now we're there, but what's very, very alarming to 
me is that this culture of denial now exists on the 
relationship between what we're doing in the Israeli-
Palestinian issue and in Iraq. And President Mubarak was in 
Crawford, Texas, saying to the President, his quote was the 
centrality of the Arab-Israeli conflict to our problems there.
    And from hearing you answer Senator Hagel's question, 
you're saying, no, there's no connection. When I was in Baghdad 
and Mosul in October, the graffiti, the Arab graffiti was all 
about the Palestinian cause, and that's what the Americans were 
telling me. And certainly if you read the Dirijian report, 
which the Bush administration commissioned, their own people, 
who studied the Arab world, the finding was that the Arab world 
looks at U.S. foreign policy through the prism of the Arab-
Israeli conflict.
    And now you're saying here, testifying, no, there's no 
connection between the rise of an Intifada in April and the 
Intifada between the Israelis and Palestinians. And that's 
what's going to get us in trouble. That same denial that we had 
back in the WMD question and now we have here, we're not going 
to win in Iraq. I want to win. I join my colleagues.
    We want to prevail there. We want a stable Iraq. But we're 
not going to do it as long as we continue, in my opinion, to 
inflame the Arab world by not participating more fairly in--
this is a change, what the President did with the Sharon plan 
is a change from six previous administrations. Ever since the 
Six-Day War of 1967, the American administrations, Republicans, 
Democrats, have had a policy. That just changed. And for you to 
say that's not going to adversely affect us in Iraq is why 
we're not going to prevail.
    We have to address some of the Palestinian issues if we're 
going to prevail in Iraq. And I don't really know what kind of 
questions to ask as long as this culture of denial exists. 
Maybe the only question I have is, are you told not to make any 
connection between the two?
    Mr. Grossman. Senator Chafee, I think you put me in a 
position that I'm not in. Senator Hagel asked me whether on 
Rich's trip there were things that Rich asked people to do in 
the region to help in Iraq which they said no to because of 
Prime Minister Sharon's visit. And I said the answer to that 
question was no. And the example I used, and thanks to Peter 
Rodman for reminding me, the Jordanians, I'm sure, the 
Jordanian King didn't come here because of how he felt about 
that visit, but did they stop their training of the Iraqi 
police forces in Jordan? No. And that was the example I used.
    I don't say to you, I'm not sitting here saying to you 
these things are unconnected or that people in the Arab world 
don't see all of the things that we are doing in the Middle 
East. If you ask me that question, then it allows me to remind 
people about the President's speech in June 2 years ago calling 
for a Palestinian state. I think it allows me to talk about the 
kinds of things that the President and Secretary Powell have 
been talking about these past couple of days since Sharon's 
visit about recognizing some realities. It allows me to talk 
about a trip that I took earlier this year in support of our 
support for reform in the Middle East to six or eight countries 
around the region to promote reform and to promote democracy in 
the Middle East.
    So I just ask please, I answered a specific question and I 
answered it to the best of my ability, but I don't want to be 
put in a position saying that I am in some culture of denial 
about how we are looked at in the world. I'm not.
    Senator Chafee. Well, just say that in response to Senator 
Hagel's questions also you mentioned how much we need our Arab 
neighbors.
    Mr. Grossman. Yes, sir.
    Senator Chafee. And you mentioned the Jordanian police, you 
mentioned, I think, Syria border patrols, Egyptian help in 
various areas. We're not going to get it if this continues. I 
think King Abdullah's cancellation of his visit is a fair, fair 
warning and President Mubarak, subsequently after his visit in 
Crawford, had some scathing comments to say on the rise of 
anti-Americanism through the Arab world, and I don't know what 
role Congress is going to play as we see this big change in 
U.S. foreign policy, but I think it puts at great risk our 
success in Iraq.
    The Chairman. Thank you very much, Senator Chafee.
    Senator Feingold.
    Senator Feingold. Thank you, Mr. Chairman, and thank you 
and the ranking member again for all your patience, and for 
making these hearings happen.
    Mr. Rodman, we desperately need a plan to bring stability 
to Iraq that does not depend on the U.S. military and U.S. 
taxpayers to bear as great a portion of the burden as they have 
to date. At the same time, the American people need to hear, as 
much as possible, the hard and honest truth about the nature of 
the U.S. commitment in Iraq.
    Our exit strategy seems to be to train Iraqi security 
forces to take over the roles currently played by the U.S. 
troops and, increasingly and worryingly to many of us, in 
significant part by private security firms. But we have seen 
that slapdash efforts to train and deploy Iraqi security forces 
can lead to dangerous failures and instabilities.
    So I'd like you to tell me how long it will take to 
properly train Iraqis such as they are able to provide for 
their country's security? And as a part of that, for how long 
will security be primarily the responsibility of U.S. forces?
    Mr. Rodman. Thank you, Senator. Let me first of all address 
the point about private security contractors. This is an 
opportunity you've given me to address something which is much 
discussed. I've heard that there's an army of 20,000 private 
security people, which is the second biggest military force in 
the country. Our figures are different, and our figures are 
that there are about 15,000 civilian contractors in Iraq, of 
which no more than 2,000 are armed and doing security 
functions.
    Maybe my figures are wrong, but that's what we've heard, 
and we are at the same time trying to tighten the rules by 
which these people operate. We're developing policy guidance to 
make sure that any people who are fulfilling that role, 
protecting some private company, are accountable to our 
military people so that they limit themselves to what they are 
properly there for, which is the protection function. They 
don't do military operations.
    Senator Feingold. I appreciate that point, but I have 
limited time, so I'll hope you'll get to my question.
    Mr. Rodman. The big point is the performance of the Iraqis, 
and we all admit that the performance in the recent period was 
disappointing. A lot of the units did well; a lot of them 
didn't do well. No one expected that by April 2004 they would 
be substituting for the American military; even by June 30 
they're not expected to substitute for the America military.
    We've learned some lessons from what has just happened. 
We've learned that we've got to work harder to find Iraqi 
leadership, good quality Iraqi commanders. We've got to move 
faster to equip them. Some of the units, as I say, did do well. 
Some of them didn't show up for work, although now they're back 
at work. So we learned something from this.
    But after June 30, the Coalition will still be there. All 
of the Iraqi political leadership knows that. It's reflected in 
the TAL that we will still be there to help continue the job of 
training them to the job of maintaining security.
    Now as for the police, what happened in the last few weeks 
would have overwhelmed any police department, so what we count 
more on is what we call the Iraqi Civil Defense Corps, which is 
a more heavily equipped force, plus the Iraqi army which is 
being trained. This is a work in progress and we have to 
accelerate it. But again, June 30 isn't the deadline.
    You asked how long we're going to be there.
    Senator Feingold. That's what I need to know. I realize 
that the President said we'll stay as long as we need to and 
not a day more, but I tell you, some more reasonable estimate 
about what we're in for in terms of time when they take over 
would be very helpful.
    Mr. Rodman. It's the natural question to ask, but you know 
I can't give a firm prediction. We hope that we've overcome the 
challenges of the last couple of weeks--the al-Sadr rebellion, 
which I think has been pushed back, and the Fallujah problem, 
which we think we have a plan to deal with. We will deal with 
these military problems, and if we can restore a sense of 
stability, then whatever violence is going on will lose its 
strategic significance.
    Senator Feingold. Let me suggest----
    Mr. Rodman. And that over time stability----
    Senator Feingold. My time is limited. I need as specific a 
response as I can get and I know it's hard. But, you know, 
you're on the ground there, people are on the ground there, and 
you have an idea of what the capacities are. We announced to 
the world that we were going to turn over authority on June 30. 
We announced that time not as an estimate, but as a date 
certain. I'm just looking for some kind of a timeframe, just as 
we gave the American people a timeframe in turning over the 
authority, a timeframe that the American people can look at 
that would be a reasonable estimate for turning over the 
security primarily to the Iraqis as opposed to the United 
States. What can I tell them is a reasonable estimate of time?
    Mr. Rodman. Unfortunately, I'm not in a position to give 
you a number of years or months. I think it's going to be a 
gradual process. As security conditions improve, we can reduce 
the number of Americans. We are still hoping to bring in more 
international contributors, particularly after the U.N. comes 
back and sovereignty is turned over.
    Senator Feingold. How about a goal? What's your goal?
    Mr. Rodman. Well, it's not really up to me to set a number 
of years. That's----
    Senator Feingold. Well, I would ask the administration to 
come up with at least a timeframe, a goal that we could point 
to so I could tell my constituents what might happen or what 
might be hoped for.
    Let me turn to Mr. Grossman. At the same time that Congress 
passed an $87 billion supplemental spending bill requested by 
the administration, primarily for Iraq last year, Congress also 
created an Inspector General for the Coalition Provisional 
Authority to ensure that massive sums of U.S. taxpayer dollars 
were not lost to waste or fraud or abuse. As of the end of 
February this year, only $900 million of the $18.4 billion 
appropriated for reconstruction programs in Iraq had been 
obligated, less than 5 percent.
    When Congress created the IG for the CPA, we did so because 
we recognized that the amount of money involved in 
reconstruction was so great that we needed an IG on the ground 
in Baghdad, not an office in Washington that viewed Iraq as one 
operation among hundreds that needed oversight.
    What will become of the CPA IG given the fact that the 
funds he was supposed to oversee have barely begun to be 
obligated? The law says that the IG's office will terminate 6 
months after the authorities and duties of the Coalition 
Provisional Authority cease to exist. It seems to me that the 
authorities and duties in terms of the reconstruction effort 
don't end on June 30, so will the CPA IG be subsumed into the 
State Department's IG office, or is some other arrangement 
under consideration? \3\
---------------------------------------------------------------------------
    \3\ See Response to an Additional Question for the Record on page 
107.
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    Mr. Grossman. I don't know the answer to your question, but 
I'll be glad to get back to you for the record.
    [At the time of publication a response had not been 
received.]
    Senator Feingold. Can you speculate on what's going on?
    Mr. Grossman. No, sir. I truly don't know the answer to 
your question.
    Senator Feingold. Let me ask both Mr. Grossman and Mr. 
Natsios, the Inspector General for the Coalition Provisional 
Authority has indicated that potentially billions of taxpayer 
dollars intended for reconstruction are being spent instead on 
security and insurance. It seems to me that this means that we 
must either resign ourselves to accomplishing less or we must 
spend more. Which is it?
    If we're planning to accomplish less, which priorities 
don't make the cut? If the administration has simply decided to 
ask for more money, when do you plan to make that request and 
how do you suggest the country pay for it? Let me start with 
Mr. Grossman.
    Mr. Grossman. I apologize. I was being talked to over my 
ear.
    Senator Feingold. I do understand. Do you want me to repeat 
the question?
    Mr. Grossman. I apologize. I'm really sorry.
    Senator Feingold. Should I repeat the question?
    Mr. Grossman. Would you be kind enough?
    Senator Feingold. I'd be happy to. I indicated that 
obviously the IG's report shows that the reconstruction money 
is not being spent on just reconstruction. Instead, it's having 
to be spent significantly on security and insurance because of 
the problems that have occurred. And so what I was saying was 
we have to either resign ourselves to accomplishing less or 
spending more. Which is it going to be? If we're planning to 
accomplish less, which priorities will not make the cut? If 
we're going to be spending more, when will you ask for it and 
how much will it be?
    Mr. Natsios. Do you want me to answer?
    Mr. Grossman. Yes, why don't you.
    Mr. Natsios. OK. I can just tell you, Senator, for our 
portion of it, we've been allotted $3.8 billion. We have 
obligated $3.3 billion. I've asked what the average set-aside, 
because we did allow last fall when there was an increase in 
violence where our contractors and NGOs and partners needed 
help, and the average at this point is about 20 percent. It is 
not billions of dollars, but it is hundreds of millions of 
dollars of the amount that we were given. I cannot speak for 
the Defense Department contractors. I only can speak for the 
people who work for us.
    Mr. Grossman. I guess the simple answer I would give you is 
that we'll have to look at all these priorities, and as I 
testified earlier today, if there's a need for--we believe 
there will be a need for a supplemental, and the timing and 
amount of that is obviously up to the President.
    Senator Feingold. Mr. Rodman, did you want to say 
something?
    Mr. Rodman. I just wanted to add that my understanding is 
that DOD contractors are required by law to provide workers' 
compensation insurance for their employees overseas, and that's 
an allowable cost under the contract, so we may not have a lot 
of flexibility.
    Senator Feingold. So it sounds like we're looking at a 
request for more money rather than scaling down the priorities, 
in all likelihood?
    Mr. Grossman. As I said, I happen to be referring to the 
needs for our embassy, but I said that if there was a 
requirement to fill that gap, it seemed to us that there would 
be a requirement for a supplemental. As I said, the timing and 
amount to be determined by the President.
    Senator Feingold. Let me ask one more question, Mr. 
Natsios. What is the standard of legitimacy for an emerging 
Iraqi leadership? From the beginning I've been concerned about 
whether or not our democratization efforts will succeed in 
Iraq, not because I do not believe the Iraqis desire and 
deserve the same basic political and civil rights enjoyed in 
democratic states, but because I wondered about the political 
culture, in which ideas about humiliation are so prominent, and 
whether they could accept any model that is proposed by a 
foreign occupier.
    How likely is it that resistance to the United States' 
presence in Iraq will become, in effect, the new standard of 
legitimacy for Iraqi leaders who seek to appeal to constituents 
on other than the sort of more traditional religious or ethnic 
grounds?
    Mr. Natsios. The polling data does not seem to indicate 
that that sort of rage is manifesting itself at this point, or 
that there is a distorted or sort of predatory value system 
developing as a result of this transition. In fact, the 
opposite is the case, and Oxford Analytica did a very detailed 
analysis with, I think it was reported on ABC or NBC News. We 
study these things, because we did our own polling last fall, 
because it does tell us something about how people see public 
services and if they're improving. Last fall, we didn't have 
good polls in terms of public service. We do now.
    The poll that Oxford did, which we had nothing to do with, 
did not pay for, we were not involved, we didn't know it was 
being done until after it was finished, said 58 percent of the 
people said things have improved since before the war, 19 
percent said they had not, and the rest were undecided. Eighty 
percent though had sort of hope for the future.
    So in a broad sense there is a perception that things are 
improving, which makes it harder--now, this was a month ago 
admittedly--that a demagogue will come by and say nothing's 
happening, nothing's improving. There is a visible sense in the 
polling data, and if you go around the country, that things are 
changing in terms of public services. That's all I'm speaking 
about now, my area.
    In terms of the legitimacy of the government, it will be 
determined by two central issues: can the government deliver 
services, and that's one of our central goals. We're doing 
capacity building in the ministry so they can manage services 
better. There was no central budgeting system. Even Saddam 
didn't know how people spent the money in the ministries. You 
know how they controlled people's behavior? They had a prison 
in each ministry and if the minister got upset at a bureaucrat, 
they simply put them in jail, literally we found jails in all 
the ministries. We thought it very odd.
    We have a contract. I think it's the most important thing 
we're doing, not the infrastructure, not the services, and that 
is our local governments contract. What we're doing is setting 
up councils with the civil affairs officers and our staff 
across the country. Ninety-three percent of all the population 
now is under some elected council.
    Some of the people are doing pretty well. We're training 
them in how you design a project, how you run a personnel 
system, how you run a meeting, how you take a vote, all the 
things that a city council or a town council would learn in the 
United States. Some of them are getting defeated when they run 
for reelection. Some of them are getting much bigger votes 
because they're perceived to be doing well.
    In the United States, as you know, Senator, having been a 
state legislator, most of our senior officials are former state 
or local officials. Two-thirds of the state legislatures are 
former local officials, and half of our Congress are former 
state official. In our experience in USAID around the world, in 
a country with no history of democratic governance, the best 
way to democratize is at the village level, because they will 
choose candidates from those town councils to be their members 
of Parliament under the new government, whatever the structure 
is.
    And you will see emerge--we're going to do a study of it 
when it happens--that a huge portion of the people in the new 
Parliament are likely to be from these town councils. And our 
view, our theory is, which has worked in many other countries, 
is that if we are legitimate in what we're doing locally, then 
that will increase the legitimacy of the national government, 
because they'll have confidence in their local legislators.
    The Chairman. Thank you, Senator Feingold.
    Senator Brownback.
    Senator Brownback. Thank you very much, Mr. Chairman, and 
thank you, gentlemen, for coming before us. Secretary Grossman, 
last time I saw you was on a sad plane ride to Kansas City for 
you, I know for a family member that had died, and my regrets 
to you and your family and your wife for that.
    Mr. Grossman. Thank you for recalling that.
    Senator Brownback. Let me--this may seem odd, because you 
guys are getting pushed a lot--I want to congratulate you on 
some of the things that are taking place. It is, to me, 
remarkable what's happened in Libya. It is past remarkable. 
We've been after Qadhafi for 30 years, and him giving up 
weapons of mass destruction, the move toward democracy that 
we're seeing in the Middle East is something that people have 
wanted for a long time. We've never put any effort into it 
previously and now we are and we're seeing results taking place 
of that democratization move.
    It's no wonder to me that a lot of the countries in the 
region would be--the country leadership in the region would be 
negatively responding, because you're going right at their 
power. When you democratize a monarchy or a dictatorship, 
you're going right at the guys that own the place, but that's 
something we shouldn't be afraid of and we haven't been afraid 
of in other regions of the world. We have been, I think, 
somewhat previous in the Middle East.
    I congratulate you on that, and also for your recent moves 
on peace within the Middle East, the issue of right of return, 
which is very sensitive, but it was a bold move that was taken, 
and I think it also recognizes a reality, along with this is 
the first President to recognize or talk about an independent 
Palestinian state. No previous President has ever mentioned 
that. Those are extraordinary bold moves that I think do 
recognize current realities moving forward.
    I've got a bill in, one that I'm presenting that I think as 
we move forward on that track we ought to recognize realities 
in Jerusalem too, but I realize that's a little ways off.
    I want to implore you, and I know the administration wants 
to stay with this, to stay with the June 30 deadline of handing 
over control, civilian control to an Iraqi governance. I was 
actually on the side of handing over to some form of Iraqi 
governance much earlier than we have even with this deadline, 
recognizing that's difficult, but we just got to get Iraqis in 
control.
    As in Afghanistan, it's not a perfect model of democracy. 
When Karzai arose, it wasn't from a popular election across the 
country, but it was an Afghan running Afghanistan, and so that 
the chain of command, which Secretary Wolfowitz spoke about the 
other day, is important that when Iraqi security officers are 
responding, it's to an Iraqi that's on top of it, not to some 
American officer, and I think that should really help out 
substantially in the view of Iraqis toward their own country 
and getting us out of being an occupier, which they don't like 
and we're not comfortable with. So I applaud you on those moves 
and I urge you forward.
    Two quick suggestions I'd like to make if I could. One, I 
met with soldiers at Fort Riley just last week that had been in 
Iraq and had just gotten back from Iraq 30 days earlier. There 
were about 300 and we did a closed town hall meeting. It was a 
wonderful visit with them. They were very enthusiastic about 
the work that they have done. They think that what they're 
doing is worthwhile and is important and I absolutely agree, 
and we don't ever want to back away from them. Many of them 
will be turning around and going back within less than a year 
and they know that, and that's fine. They believe in this work 
and they know that it's the right thing to do.
    I did ask about the Iraqi military and the Iraqi police. I 
said, how are they? And most of them laughed, the soldiers did. 
And I said, well, what is the issue here? And they almost--
they, the ones that were speaking up on this were talking about 
Iraqi command and commanders and the need to bring back trained 
Iraqi commanders that the military, the Iraqi military people 
won't respond to a U.S. military commander the way they will to 
an Iraqi military commander, and I know you're considering and 
reviewing this issue now, but from the guys on the ground, they 
view it that they need to bring back guys that were trained by 
Iraqis that years were invested as Iraqi commanders, and they 
can't be Ba'athists, and I'm not sure how you ferret out who's 
good and who isn't.
    And I've been pushing for some period of time that we need 
to get security control over to Iraqis, and one of those maybe 
responsible for pushing this too hard, too fast. There is only 
so fast you can ride this horse, even though we all desire it. 
But they were sure pushing the issue of bringing back currently 
trained Iraqi commanders.
    And the question I have for you is about Iran, and maybe 
you've already answered this at one point in time, that what 
are we seeing actually taking place in Iraq sponsored by 
Iranians? Lots of allegations regarding al-Sadr's group being 
sponsored by the Iranians. It looks to me the Iranians are a 
group in the region that are the most directly impacted by us 
establishing democracy in Iraq. I think the whole region is, 
but the Iranians want a theocracy in Iraq too as they have in 
Iran, and it's very threatening to them, to their future 
stability if we're successful and when we're successful.
    What are you directly seeing on the ground of Iranian 
influence, funding, command and control, if you can say, from 
Iran in Iraq? And I want to listen to the first part of your 
comments, and if you need to go further, I'm going to have to 
go over and vote, but I do want to get that out there and ask 
you about it.
    Mr. Grossman. Yes, sir. Let me work backward then if you 
have to leave. First, I appreciate what you say about our 
family again, I appreciate that. On Iran, I think the best 
thing for me to do, the way to give you the most complete 
answer if I could is to give you a classified answer. The 
unclassified part of it is I can tell you that we are concerned 
about Iranian activities. We've sent messages to Iran about 
their activities. We believe that if they think about this in 
the right way, they will recognize, as we do, that a stable and 
sensible Iraq actually is in their interest and that ought to 
be something that they will come to.
    We talk to them through the Swiss, we talk to them in other 
ways, and we've tried to make that clear. But on the specifics 
of kind of where they are, what they do, finances, I hope 
you'll allow me to respond to you in another way on that.
    Senator Brownback. We'll do that. Mr. Chairman, I'm going 
to run over and vote, as I should, but you are doing a very 
difficult thing, but it's very, very important, and I don't 
think the stakes could be any higher. And undoubtedly, things 
could be different and better in some situations, but I think 
your overall push has been really good and I commend you and 
the troops on what's taking place.
    Mr. Grossman. I appreciate that. Thank you.
    The Chairman. Thank you very much, Senator Brownback. My 
understanding is that Senator Corzine is attempting to make his 
way back from the floor and I'd like to honor that. Let me ask 
a couple of things in the interim. First of all, just a 
question for the record. Senator Biden has questions for the 
record of you, and I hope that you'll respond to those. They 
will be part of the record.
    I want to inquire a bit more about the general proposition 
placed before the committee yesterday on security. Again and 
again, our witnesses have stressed, and you've not negated 
today, that security for the country is imperative if this new 
democracy is to work well. Mr. Natsios and our own civil 
officials ought to be able to travel freely. This is clearly in 
the interest of Iraqis themselves. We all awoke this morning to 
headlines of a horrible attack in which children were 
incinerated on a bus and 73 Iraqis lost their lives. It's not 
really clear to me at this point, and maybe this requires an 
additional hearing at the proper time, how security is to be 
obtained.
    How do we come to a point in which the Iraq people believe 
that in fact somebody is in control? I don't seek to go back 
over the traces of what happened the day after hostilities 
started, and how the police function did or did not work and 
the training and so forth, but rather I hope to focus on this 
interim period, the period prior to June 30, or let's even say 
the month after June 30, as the new government is there in 
place. Who will created the secure environment? More U.S. Armed 
Forces? We've heard there are not many troops from other 
countries that might be available, and we hope that those who 
are still there will be retained.
    Can any of you offer any further assurances on the security 
question, which underlays the potential for political success?
    Mr. Rodman. Let me try my hand at that. We expected, and I 
think we're on record saying, that as June 30 approached we may 
well get a spike of people trying to derail it for the reasons 
I mentioned at the very beginning. Zarqawi and company see this 
as a threat. The accomplishment of a turnover to Iraqis is a 
major threat to those who want to derail it.
    But look at it on the other side: That's what our strategy 
has to be, the political strategy of marginalizing the 
extremists, taking some of the wind out of their sails by 
putting an Iraqi face on what's happening.
    Second, let me give you our impression of what happened in 
the last few weeks, I know if you read the press you get a 
sense of everything's going to hell and it's all metastasizing 
into some unified national uprising. Our commanders on the 
ground and CPA people, have a more precise sense of what it is. 
They see it as separable problems. There's a Fallujah problem 
which we've known about. These are the diehards of the old 
regime who represent a narrow, very narrow sliver of the 
population, with an admixture of foreign troublemakers who have 
no base in the population.
    I can tell you one anecdote. There was a town northeast of 
Fallujah where, when the Marines came back in and cleaned out 
or killed a few hundred bad guys, the townspeople came out and 
thanked the Marines. They said, ``We've been held hostage by 
these people.'' So again, we think the Sunni problem is a 
manageable problem, and right now Fallujah is under siege by 
us.
    The Shia problem had the potential to be much more 
significant, because the Shia are the majority, and as I 
mentioned, al-Sadr was attempting to make himself the dominant 
figure among the Shia. But we think he failed, and the other 
Shia leaders who are part of the political process found their 
courage and seem to be back in the driver's seat. So we think, 
as to what we've been through in the last few weeks, the 
strategic significance of that violence is as I described.
    Now, we expect it to be messy for a while, and until we 
train up the Iraqis and give them the capability, we'll have to 
be there. But our strategy is a combination of political moves 
to empower the moderate Iraqis and a military strategy which we 
think has the upper hand; that's our commanders' sense, and I 
trust their judgment. So that's the strategy we're pursuing.
    The Chairman. Are we confident at this point that we're 
going to be able to get supplies to the Iraqi police? Can we 
ensure the provision of arms and various things they need to be 
effective? A great deal has been written in the press about the 
delay of shipments, or difficulties with contracting. That's a 
very serious issue.
    Mr. Rodman. Well, you are right. We need to fix that.
    The Chairman. Are you working to fix that?
    Mr. Rodman. Well, I think we're--I'm sharing a 
responsibility, but Marc, if you want to add something.
    Mr. Grossman. Yes, sir. Again, I've had the benefit of a 
couple of days of listening to my Defense Department JCS 
colleagues, and I think the answer to that question is, there 
is really a problem here, and in many cases, one of the 
challenges for the Iraqi police was they were outgunned, and 
that both General Myers and the Deputy Secretary of Defense 
said this is, as Peter said, something we have to fix and that 
we will fix and that we are fixing. And we certainly have some 
responsibility here as well through the INL programs. In fact, 
the program in Jordan that I was talking to Senator Chafee 
about is a department program. And all of this needs to move 
forward.
    I know that the appointment of General Petraeus who did 
such a very good job up in the north of Iraq to now take over 
the training of Iraqi security forces, police, border patrol, 
we believe is going to help us a lot. But I want to be clear 
here that this didn't go fast enough and we have some 
responsibility here, all of us, and we're committed to fixing 
it.
    The Chairman. As a part of our ongoing oversight, we'll 
continue to raise questions as to how that is coming. Likewise, 
we will examine other elements of the training exercises, and 
the recruitment for the basic force, whether it be the army or 
the police. These are obviously elements of sovereignty and 
security. They involve successive Iraqis as they begin to take 
hold of their own responsibilities.
    Senator Corzine.
    Senator Corzine. Thank you, Mr. Chairman. I think you're 
aware we had to go vote, so I appreciate you holding the 
hearing open and I appreciate the panel's patience. It's always 
great to be the last guy on the line.
    First of all, I share the strong desire I sense from the 
testimony I observed this morning for the success of both the 
transition and the movement forward. I think all of us wish for 
nothing but the best here. And I must say I feel a little bit 
better, because I think some of the plans that I have seen get 
at some of the questions that I think a lot of my colleagues 
have raised. I must tell you I continue to be concerned that we 
seem to have this fixated view on this magic June 30 date and I 
don't really get it, because there's lots of reasons why it 
would really be good, but it might be actually worse if we 
actually don't deliver what was expected on June 30, the 
expectations of the Iraqi public is not met by that, and I 
think it could a very real, long-term setback.
    So I wonder whether we even have the flexibility enough to 
think about that at this stage. We seem to get harder and 
harder in the conversations that I hear and comments from the 
administration. And I must admit that I have some sympathy with 
Senator Chafee's comments. I would frame it a little bit 
different, and on credibility of reading the situation, we 
continue to have administration and high senior officials 
saying such things as, the violence is a symptom of our 
success. I don't understand that. It doesn't relate to the 
reality of what, at least, my common sense tells me when you 
lose 105 or whatever the number of folks are, and I have great 
respect and admiration and want to give the strongest support 
to our troops on the ground, so that is framing.
    Let me ask some specific questions which actually pertain 
to this June 30 date. For instance, Secretary Grossman, you 
said that the interim government should have the necessary 
authorities to lead Iraq into the community of nations. Will 
the Iraqi Government have control over Iraq's foreign policy? 
Will it be free to establish whatever kind of relationships it 
wishes with its neighbors, Iran, Syria, Turkey, Israel?
    Mr. Grossman. Yes.
    Senator Corzine. So if they want to have favorable 
relationships with Iran on most any basis, the transitional 
government will have the ability to do that.
    Mr. Grossman. Step back for a moment. The Transitional 
Administrative Law is governing here. And it does give the 
Iraqis power in terms of foreign relations, and so, yes, but as 
I have testified during the day today, we obviously are there 
and we want to support a sovereign government in Iraq, and that 
this government, don't forget, between the 1st of July and the 
elections in December isn't there to--is there to get their 
elections going and to get moving. But I don't take away their 
sovereign rights to do things.
    Senator Corzine. So if they start doing things that are in 
contradiction to what American foreign policy might be, we're 
more than happy to----
    Mr. Grossman. No, sir. No, sir. I mean, this is what 
diplomacy is about. I mean, we've talked today about why we 
want to have an American Ambassador in Iraq, and that's why we 
want to get him there because that's what we do as diplomacy. 
We do it all around the world and I would expect we'd do it in 
Baghdad.
    Senator Corzine. Will this transfer of sovereignty allow 
for the new Iraqi Government, interim government, to contract 
U.S. funds in economic sphere? Will they be able to decide 
whether Bechtel are put out for bid or select whoever the 
contract will go in expending the reconstruction resources 
authorized by Congress?
    Mr. Natsios. As a general proposition, Senator, we do our 
own contracting worldwide. About 85 percent of the USAID budget 
from all spigots, all the money we spend is contracted for by 
us. About 15 percent goes in budget support to about four or 
five governments where we think stability is critically 
important, but the great bulk of the money we contract 
ourselves.
    Because the Iraqis are in an unusual position, they have 
oil revenues, which are doubling now from last year to this 
year and then they go up substantially next year, they will, I 
presume, want to contract with their own money. We will 
contract with our money, but what we do after June 30 when 
there's a sovereign government is we will work on agreements, 
we call them SOs, strategic objectives, we function in the 
field in all the countries we work in with strategic objectives 
that we sign with the ministries that have oversight, like 
education or health, unless there's a predatory government. In 
Zimbabwe, we do not have government-to-government grants, for 
example.
    But in Iraq we would not want to do anything unless it was 
consistent with the policies of the ministry. We will do 
training programs, which they have requested and we're setting 
up now, in procurement reform and budgeting reform and 
accounting and how you manage these things properly. We'll 
provide training, but they're in charge ultimately. But we're 
not going to put our money through their ministries.
    Senator Corzine. Would this government have the ability, 
this transition government have the ability to contract with, 
for the development of their oil fields, the Russians had 
previously negotiated an agreement for, I think it's in the 
northeast portion, the development of the oil fields, will they 
have the authority to be able to commit to those kinds of 
contracts?
    Mr. Natsios. Oil is out of my bailiwick here.
    Mr. Grossman. With their money, I believe the answer to 
that question is yes.
    Senator Corzine. So with their oil they'll have the ability 
to do that. OK, will the new sovereign have the right of review 
of the just recently announced structure of the war crimes or 
Saddam prosecution team headed by Mr. Chalabi's nephew? Will 
they have a right of review and an ability to endorse or 
change?
    Mr. Grossman. Yes.
    Senator Corzine. They will?
    Mr. Grossman. Yes. I mean, in the sense that they will be 
the government, they will be the sovereign government of Iraq.
    Senator Corzine. It was also said that the interim 
government should not have a--won't have a law-making body. 
Does this not apply to the election law? What constitutes 
acceptable campaigning? What if Iraqi candidates are anti-
American? How are we going to respond to this? What if they 
disseminate untruths? Are we going to have the ability to take 
over newspapers or shut them down? Who's going to make those 
decisions?
    Mr. Grossman. One of the most important things that the 
United Nations did in their--the election team visit to Iraq 
was say that there needed to be as quickly as possible an 
election commission, an independent election commission 
established, and that that independent election commission, 
working with the United Nations would then create the rules and 
regulations for this election.
    And in terms of those candidates that would be anti-
American and others, again, I go back to my first answer, which 
is that's why we're going to have an embassy there, and it's 
going to have a lot of people and an ambassador. We have to 
make our views known in the way that we do around the world.
    Senator Corzine. Then I want to go back to Senator Biden's 
question, which I didn't actually hear an answer to. If al-Sadr 
were to incite the kind of insurgency that we saw over the last 
2 or 3 weeks, in a world where the new sovereign didn't find it 
appropriate to respond to that, and we thought our men and 
women were at risk, we thought that there was a reason to 
respond, what's the deciding force with regard to making a 
decision about those kinds of issues under this new 
arrangement?
    Mr. Grossman. The arrangement would be, I think as we are 
doing today, that we would do our very best to consult with 
that interim government and to take their views into account. 
But if you put the question to me that says, at the point where 
our commanders believe that our men and women are threatened, 
will we have the right and the obligation to protect them, the 
answer to that question is yes.
    Senator Corzine. Let's use the circumstances we have today.
    Mr. Grossman. Well, as you see, what we're doing today is 
we are working with the Iraqi Governing Council on issues of 
Fallujah, on issues of Najaf, but when the question comes to, 
will we have the right and the power and the obligation to 
protect the men and women of the United States Army--I'm sorry, 
of the U.S. Armed Forces, yes is the answer to that question.
    Senator Corzine. Well, I hope that the kind of clarity that 
at least the answers are, your responses are, are the reality, 
because I hope that we sense that public diplomacy, as well as 
state diplomacy, is important in the long-run success of what 
we encourage to happen or support in happening over this 
balance of transition from one point to another. And sometimes, 
I think Spain's a perfect example, sometimes where our public 
diplomacy doesn't match our state diplomacy and we may over 
read these situations, and I think these are the kinds of 
questions that are going to make or break the difference, and I 
think those need to be pretty certainly dominated.
    We might have--I don't want to be totally specific--we 
heard outside authorities say different things about some of 
these issues over the last several days.
    Mr. Grossman. Well, I'll be glad to take all of those 
questions and double check them, but what my message to 
everybody today is the one that we've been trying to get out 
and the President's given out, which is that on the 1st of July 
Iraqis will be in charge of Iraq and that Iraqis will run Iraq, 
and that's what we're trying to do. I will take every one of 
those questions and make sure I've answered them in the right 
way and as specifically as I possibly can.
    Senator Corzine. Good. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Corzine. Can you 
make a comment about the budget of the new Iraqi Government? 
Obviously they will have that responsibility. They will 
formulate budget requirements. They have oil resources, and 
perhaps some transition moneys, although that's really just a 
supposition. Could you fill in the blanks a little bit on the 
budget of the Iraqi Government itself, its sources of revenue, 
and how that will be established?
    Mr. Grossman. They do have revenues, Senator, as you say, 
and as a number of Senators have pointed out, crude oil 
production has gone up, and Iraqis, interestingly enough, have 
now started to make a billion-dollar-a-month contribution to 
their own Development Fund for Iraq.
    In terms of the specifics, I hope you'd allow me to just 
answer that question for the record, both as kind of what is 
coming in and how they'll structure what's going out.
    [At the time of publication a response had not been 
received.]
    The Chairman. I appreciate that. You've offered very 
explicit detail and very helpful detail with regard to our own 
United States finances, identifying sources and transfers that 
take up some $500 million over the period of time you 
suggested. That is precisely the kind of detail that gives us a 
great deal more confidence. The corollary situation is how the 
Iraqis in this new sovereign situation will handle their 
affairs. It's their business. At the same time, we are working 
and will be working for their success, so that they do not have 
a fiscal difficulty there.
    Mr. Grossman. I appreciate what you say about the 
specificity of our testimony. That was certainly what we tried 
to do today, and we'll certainly try to have the same kind of 
specificity on the budgeting process for the Iraqi Interim 
Government.
    The Chairman. The information you've presented today not 
only on the budget that we just touched upon, but also very 
importantly, upon the personnel that will be coming from the 
United States and from employees in Iraq, as well as the timing 
of their arrival and retention of personnel who are experienced 
there now, the specifics of the buildings, and the security for 
these people, are all very, very important issues for the 
American people.
    These issues are equally important for the Iraqi people to 
understand. How can we be more adept at getting this 
information to Iraqis so that they develop the same degree of 
confidence that you are building here in the Senate Foreign 
Relations Committee?
    Mr. Grossman. Well, we certainly need to do everything 
possible to get our message out in Iraq. I believe over the 
past few weeks with the Iraqi media network and other changes 
that have been made in the way forward there with CPA, we've 
got a lot more capacity to do that. We also at the State 
Department are very much ramping up our ability to speak to 
Iraqis, have Iraqis here.
    But you're right. I think we ought to find a way to see 
what we can do, perhaps not in its length, but at least to put 
out this testimony about the embassy and about our support for 
Ambassador Brahimi and have it find a way to Iraqis in a 
positive way. That's a very good suggestion.
    The Chairman. Perhaps in our future hearings, this again 
will be one of the benchmarks we take a look at, that is, how 
the public information system is going? It is critically 
important for our success there. This is very good news. You 
want to make sure that good news is put out there. I thank each 
one of you for your testimony today. Your testimony has been, I 
think, extraordinary in terms of the research that you have 
been involved in, as well as the reporting of good work that so 
many have done, perhaps some behind the scenes, and others more 
apparently. I think that all the members of the committee will 
want to digest the specific charts and reports that you have 
submitted to us, or that you have indicated that we could 
obtain at the State Department or by courier. That's important. 
We were inform members who were not able to attend the hearing 
today of the availability of this material, and of your 
testimony, which they ought to take a look at.
    But I simply express the appreciation of the committee. We 
look forward to our next hearing with Ambassador Negroponte on 
Tuesday. In the meantime, this afternoon we will hold a hearing 
for three ambassadorial nominees. I look forward to conducting 
this afternoon's nomination hearings at about 4 p.m. The 
nominees in this case involve Poland and Saudi Arabia and 
Romania, I believe.
    In any event, in an effort to forward our work of 
diplomacy, I hope that these nominations can then be made a 
part of our business committee agenda for next Thursday, which 
I have already highlighted. I indicated that we will do 
everything we can to obtain a quorum and act favorably on these 
nominees at that time.
    Mr. Grossman. We appreciate that.
    The Chairman. Thank you all. The hearing is adjourned.
    [Whereupon, at 12:49 p.m., the committee adjourned, to 
reconvene subject to the call of the Chair.]

                              ----------                              


            Responses to Additional Questions for the Record


Response of Hon. Marc Grossman to an Additional Question for the Record 
                 Submitted by Senator Richard G. Lugar

    Question. Please provide copies of charts employed during this 
hearing as well as a copy of the Transitional Administrative Law.

    Answer. Please see attached items.

              LAW OF ADMINISTRATION FOR THE STATE OF IRAQ

                       FOR THE TRANSITIONAL PERIOD

                              8 March 2004

                                PREAMBLE

    The people of Iraq, striving to reclaim their freedom, which was 
usurped by the previous tyrannical regime, rejecting violence and 
coercion in all their forms, and particularly when used as instruments 
of governance, have determined that they shall hereafter remain a free 
people governed under the rule of law.
    These people, affirming today their respect for international law, 
especially having been amongst the founders of the United Nations, 
working to reclaim their legitimate place among nations, have 
endeavoured at the same time to preserve the unity of their homeland in 
a spirit of fraternity and solidarity in order to draw the features of 
the future new Iraq, and to establish the mechanisms aiming, amongst 
other aims, to erase the effects of racist and sectarian policies and 
practices.
    This Law is now established to govern the affairs of Iraq during 
the transitional period until a duly elected government, operating 
under a permanent and legitimate constitution achieving full democracy, 
shall come into being.

                  CHAPTER ONE--FUNDAMENTAL PRINCIPLES

Article 1.
          (A) This Law shall be called the ``Law of Administration for 
        the State of Iraq for the Transitional Period,'' and the phrase 
        ``this Law'' wherever it appears in this legislation shall mean 
        the ``Law of Administration for the State of Iraq for the 
        Transitional Period.''

          (B) Gender-specific language shall apply equally to male and 
        female.

          (C) The Preamble to this Law is an integral part of this Law.
Article 2.
          (A) The term ``transitional period'' shall refer to the 
        period beginning on 30 June 2004 and lasting until the 
        formation of an elected Iraqi government pursuant to a 
        permanent constitution as set forth in this Law, which in any 
        case shall be no later than 31 December 2005, unless the 
        provisions of Article 61 are applied.

          (B) The transitional period shall consist of two phases.

                  (1) The first phase shall begin with the formation of 
                a fully sovereign Iraqi Interim Government that takes 
                power on 30 June 2004. This government shall be 
                constituted in accordance with a process of extensive 
                deliberations and consultations with cross-sections of 
                the Iraqi people conducted by the Governing Council and 
                the Coalition Provisional Authority and possibly in 
                consultation with the United Nations. This government 
                shall exercise authority in accordance with this Law, 
                including the fundamental principles and rights 
                specified herein, and with an annex that shall be 
                agreed upon and issued before the beginning of the 
                transitional period and that shall be an integral part 
                of this Law.

                  (2) The second phase shall begin after the formation 
                of the Iraqi Transitional Government, which will take 
                place after elections for the National Assembly have 
                been held as stipulated in this Law, provided that, if 
                possible, these elections are not delayed beyond 31 
                December 2004, and, in any event, beyond 31 January 
                2005. This second phase shall end upon the formation of 
                an Iraqi government pursuant to a permanent 
                constitution.
Article 3.
          (A) This Law is the Supreme Law of the land and shall be 
        binding in all parts of Iraq without exception. No amendment to 
        this Law may be made except by a three-fourths majority of the 
        members of the National Assembly and the unanimous approval of 
        the Presidency Council. Likewise, no amendment may be made that 
        could abridge in any way the rights of the Iraqi people cited 
        in Chapter Two; extend the transitional period beyond the 
        timeframe cited in this Law; delay the holding of elections to 
        a new assembly; reduce the powers of the regions or 
        governorates; or affect Islam, or any other religions or sects 
        and their rites.

          (B) Any legal provision that conflicts with this Law is null 
        and void.

          (C) This Law shall cease to have effect upon the formation of 
        an elected government pursuant to a permanent constitution.
Article 4.
    The system of government in Iraq shall be republican, federal, 
democratic, and pluralistic, and powers shall be shared between the 
federal government and the regional governments, governorates, 
municipalities, and local administrations. The federal system shall be 
based upon geographic and historical realities and the separation of 
powers, and not upon origin, race, ethnicity, nationality, or 
confession.
Article 5.
    The Iraqi Armed Forces shall be subject to the civilian control of 
the Iraqi Transitional Government, in accordance with the contents of 
Chapters Three and Five of this Law.
Article 6.
    The Iraqi Transitional Government shall take effective steps to end 
the vestiges of the oppressive acts of the previous regime arising from 
forced displacement, deprivation of citizenship, expropriation of 
financial assets and property, and dismissal from government employment 
for political, racial, or sectarian reasons.
Article 7.
          (A) Islam is the official religion of the State and is to be 
        considered a source of legislation. No law that contradicts the 
        universally agreed tenets of Islam, the principles of 
        democracy, or the rights cited in Chapter Two of this Law may 
        be enacted during the transitional period. This Law respects 
        the Islamic identity of the majority of the Iraqi people and 
        guarantees the full religious rights of all individuals to 
        freedom of religious belief and practice.

          (B) Iraq is a country of many nationalities, and the Arab 
        people in Iraq are an inseparable part of the Arab nation.
Article 8.
    The flag, anthem, and emblem of the State shall be fixed by law.
Article 9.
    The Arabic language and the Kurdish language are the two official 
languages of Iraq. The right of Iraqis to educate their children in 
their mother tongue, such as Turcoman, Syriac, or Armenian, in 
government educational institutions in accordance with educational 
guidelines, or in any other language in private educational 
institutions, shall be guaranteed. The scope of the term ``official 
language'' and the means of applying the provisions of this Article 
shall be defined by law and shall include:

          (1) Publication of the official gazette, in the two 
        languages;

          (2) Speech and expression in official settings, such as the 
        National Assembly, the Council of Ministers, courts, and 
        official conferences, in either of the two languages;

          (3) Recognition and publication of official documents and 
        correspondence in the two languages;

          (4) Opening schools that teach in the two languages, in 
        accordance with educational guidelines;

          (5) Use of both languages in any other settings enjoined by 
        the principle of equality (such as bank notes, passports, and 
        stamps);

          (6) Use of both languages in the federal institutions and 
        agencies in the Kurdistan region.

                    CHAPTER TWO--FUNDAMENTAL RIGHTS

Article 10.
    As an expression of the free will and sovereignty of the Iraqi 
people, their representatives shall form the governmental structures of 
the State of Iraq. The Iraqi Transitional Government and the 
governments of the regions, governorates, municipalities, and local 
administrations shall respect the rights of the Iraqi people, including 
those rights cited in this Chapter.
Article 11.
          (A) Anyone who carries Iraqi nationality shall be deemed an 
        Iraqi citizen. His citizenship shall grant him all the rights 
        and duties stipulated in this Law and shall be the basis of his 
        relation to the homeland and the State.

          (B) No Iraqi may have his Iraqi citizenship withdrawn or be 
        exiled unless he is a naturalized citizen who, in his 
        application for citizenship, as established in a court of law, 
        made material falsifications on the basis of which citizenship 
        was granted.

          (C) Each Iraqi shall have the right to carry more than one 
        citizenship. Any Iraqi whose citizenship was withdrawn because 
        he acquired another citizenship shall be deemed an Iraqi.

          (D) Any Iraqi whose Iraqi citizenship was withdrawn for 
        political, religious, racial, or sectarian reasons has the 
        right to reclaim his Iraqi citizenship.

          (E) Decision Number 666 (1980) of the dissolved Revolutionary 
        Command Council is annulled, and anyone whose citizenship was 
        withdrawn on the basis of this decree shall be deemed an Iraqi.

          (F) The National Assembly must issue laws pertaining to 
        citizenship and naturalization consistent with the provisions 
        of this Law

          (G) The Courts shall examine all disputes arising from the 
        application of the provisions relating to citizenship.
Article 12.
    All Iraqis are equal in their rights without regard to gender, 
sect, opinion, belief, nationality, religion, or origin, and they are 
equal before the law. Discrimination against an Iraqi citizen on the 
basis of his gender, nationality, religion, or origin is prohibited. 
Everyone has the right to life, liberty, and the security of his 
person. No one may be deprived of his life or liberty, except in 
accordance with legal procedures. All are equal before the courts.
Article 13.
          (A) Public and private freedoms shall be protected.

          (B) The right of free expression shall be protected.

          (C) The right of free peaceable assembly and the right to 
        join associations freely, as well as the right to form and join 
        unions and political parties freely, in accordance with the 
        law, shall be guaranteed.

          (D) Each Iraqi has the right of free movement in all parts of 
        Iraq and the right to travel abroad and return freely.

          (E) Each Iraqi has the right to demonstrate and strike 
        peaceably in accordance with the law.

          (F) Each Iraqi has the right to freedom of thought, 
        conscience, and religious belief and practice. Coercion in such 
        matters shall be prohibited.

          (G) Slavery, the slave trade, forced labor, and involuntary 
        servitude with or without pay, shall be forbidden.

           (H) Each Iraqi has the right to privacy.
Article 14.
    The individual has the right to security, education, health care, 
and social security. The Iraqi State and its governmental units, 
including the federal government, the regions, governorates, 
municipalities, and local administrations, within the limits of their 
resources and with due regard to other vital needs, shall strive to 
provide prosperity and employment opportunities to the people.
Article 15.
          (A) No civil law shall have retroactive effect unless the law 
        so stipulates. There shall be neither a crime, nor punishment, 
        except by law in effect at the time the crime is committed.

          (B) Police, investigators, or other governmental authorities 
        may not violate the sanctity of private residences, whether 
        these authorities belong to the federal or regional 
        governments, governorates, municipalities, or local 
        administrations, unless a judge or investigating magistrate has 
        issued a search warrant in accordance with applicable law on 
        the basis of information provided by a sworn individual who 
        knew that bearing false witness would render him liable to 
        punishment. Extreme exigent circumstances, as determined by a 
        court of competent jurisdiction, may justify a warrantless 
        search, but such exigencies shall be narrowly construed. In the 
        event that a warrantless search is carried out in the absence 
        of an extreme exigent circumstance, the evidence so seized, and 
        any other evidence found derivatively from such search, shall 
        be inadmissible in connection with a criminal charge, unless 
        the court determines that the person who carried out the 
        warrantless search believed reasonably and in good faith that 
        the search was in accordance with the law.

          (C) No one may be unlawfully arrested or detained, and no one 
        may be detained by reason of political or religious beliefs.

          (D) All persons shall be guaranteed the right to a fair and 
        public hearing by an independent and impartial tribunal, 
        regardless of whether the proceeding is civil or criminal. 
        Notice of the proceeding and its legal basis must be provided 
        to the accused without delay.

          (E) The accused is innocent until proven guilty pursuant to 
        law, and he likewise has the right to engage independent and 
        competent counsel, to remain silent in response to questions 
        addressed to him with no compulsion to testify for any reason, 
        to participate in preparing his defense, and to summon and 
        examine witnesses or to ask the judge to do so. At the time a 
        person is arrested, he must be notified of these rights.

          (F) The right to a fair, speedy, and open trial shall be 
        guaranteed.
          (G) Every person deprived of his liberty by arrest or 
        detention shall have the right of recourse to a court to 
        determine the legality of his arrest or detention without delay 
        and to order his release if this occurred in an illegal manner.

          (H) After being found innocent of a charge, an accused may 
        not be tried once again on the same charge.

          (I) Civilians may not be tried before a military tribunal. 
        Special or exceptional courts may not be established.

          (J) Torture in all its forms, physical or mental, shall be 
        prohibited under all circumstances, as shall be cruel, inhuman, 
        or degrading treatment. No confession made under compulsion, 
        torture, or threat thereof shall be relied upon or admitted 
        into evidence for any reason in any proceeding, whether 
        criminal or otherwise.
Article 16.
          (A) Public property is sacrosanct, and its protection is the 
        duty of every citizen.

          (B) The right to private property shall be protected, and no 
        one may be prevented from disposing of his property except 
        within the limits of law. No one shall be deprived of his 
        property except by eminent domain, in circumstances and in the 
        manner set forth in law, and on condition that he is paid just 
        and timely compensation.

          (C) Each Iraqi citizen shall have the full and unfettered 
        right to own real property in all parts of Iraq without 
        restriction.
Article 17.
    It shall not be permitted to possess, bear, buy, or sell arms 
except on licensure issued in accordance with the law.
Article 18.
    There shall be no taxation or fee except by law.
Article 19.
    No political refugee who has been granted asylum pursuant to 
applicable law may be surrendered or returned forcibly to the country 
from which he fled.
Article 20.
          (A) Every Iraqi who fulfills the conditions stipulated in the 
        electoral law has the right to stand for election and cast his 
        ballot secretly in free, open, fair, competitive, and periodic 
        elections.

          (B) No Iraqi may be discriminated against for purposes of 
        voting in elections on the basis of gender, religion, sect, 
        race, belief, ethnic origin, language, wealth, or literacy.
Article 21.
    Neither the Iraqi Transitional Government nor the governments and 
administrations of the regions, governorates, and municipalities, nor 
local administrations may interfere with the right of the Iraqi people 
to develop the institutions of civil society, whether in cooperation 
with international civil society organizations or otherwise.
Article 22.
    If, in the course of his work, an official of any government 
office, whether in the federal government, the regional governments, 
the governorate and municipal administrations, or the local 
administrations, deprives an individual or a group of the rights 
guaranteed by this Law or any other Iraqi laws in force, this 
individual or group shall have the right to maintain a cause of action 
against that employee to seek compensation for the damages caused by 
such deprivation, to vindicate his rights, and to seek any other legal 
measure. If the court decides that the official had acted with a 
sufficient degree of good faith and in the belief that his actions were 
consistent with the law, then he is not required to pay compensation.
Article 23.
    The enumeration of the foregoing rights must not be interpreted to 
mean that they are the only rights enjoyed by the Iraqi people. They 
enjoy all the rights that befit a free people possessed of their human 
dignity, including the rights stipulated in international treaties and 
agreements, other instruments of international law that Iraq has signed 
and to which it has acceded, and others that are deemed binding upon 
it, and in the law of nations. Non-Iraqis within Iraq shall enjoy all 
human rights not inconsistent with their status as non-citizens.

            CHAPTER THREE--THE IRAQI TRANSITIONAL GOVERNMENT

Article 24.
          (A) The Iraqi Transitional Government, which is also referred 
        to in this Law as the federal government, shall consist of the 
        National Assembly; the Presidency Council; the Council of 
        Ministers, including the Prime Minister; and the judicial 
        authority.

          (B) The three authorities, legislative, executive, and 
        judicial, shall be separate and independent of one another.

          (C) No official or employee of the Iraqi Transitional 
        Government shall enjoy immunity for criminal acts committed 
        while in office.
Article 25.
    The Iraqi Transitional Government shall have exclusive competence 
in the following matters:

          (A) Formulating foreign policy and diplomatic representation; 
        negotiating, signing, and ratifying international treaties and 
        agreements; formulating foreign economic and trade policy and 
        sovereign debt policies;

          (B) Formulating and executing national security policy, 
        including creating and maintaining armed forces to secure, 
        protect, and guarantee the security of the country's borders 
        and to defend Iraq;

          (C) Formulating fiscal policy, issuing currency, regulating 
        customs, regulating commercial policy across regional and 
        governorate boundaries in Iraq, drawing up the national budget 
        of the State, formulating monetary policy, and establishing and 
        administering a central bank;

          (D) Regulating weights and measures and formulating a general 
        policy on wages;

          (E) Managing the natural resources of Iraq, which belongs to 
        all the people of all the regions and governorates of Iraq, in 
        consultation with the governments of the regions and the 
        administrations of the governorates, and distributing the 
        revenues resulting from their sale through the national budget 
        in an equitable manner proportional to the distribution of 
        population throughout the country, and with due regard for 
        areas that were unjustly deprived of these revenues by the 
        previous regime, for dealing with their situations in a 
        positive way, for their needs, and for the degree of 
        development of the different areas of the country;

          (F) Regulating Iraqi citizenship, immigration, and asylum; 
        and

          (G) Regulating telecommunications policy.
Article 26.
          (A) Except as otherwise provided in this Law, the laws in 
        force in Iraq on 30 June 2004 shall remain in effect unless and 
        until rescinded or amended by the Iraqi Transitional Government 
        in accordance with this Law.

          (B) Legislation issued by the federal legislative authority 
        shall supersede any other legislation issued by any other 
        legislative authority in the event that they contradict each 
        other, except as provided in Article 54(B).

          (C) The laws, regulations, orders, and directives issued by 
        the Coalition Provisional Authority pursuant to its authority 
        under international law shall remain in force until rescinded 
        or amended by legislation duly enacted and having the force of 
        law.
Article 27.
          (A) The Iraqi Armed Forces shall consist of the active and 
        reserve units, and elements thereof. The purpose of these 
        forces is the defense of Iraq.

          (B) Armed forces and militias not under the command structure 
        of the Iraqi Transitional Government are prohibited, except as 
        provided by federal law.

          (C) The Iraqi Armed Forces and its personnel, including 
        military personnel working in the Ministry of Defense or any 
        offices or organizations subordinate to it, may not stand for 
        election to political office, campaign for candidates, or 
        participate in other activities forbidden by Ministry of 
        Defense regulations. This ban encompasses the activities of the 
        personnel mentioned above acting in their personal or official 
        capacities. Nothing in this Article shall infringe upon the 
        right of these personnel to vote in elections.

          (D) The Iraqi Intelligence Service shall collect information, 
        assess threats to national security, and advise the Iraqi 
        government. This Service shall be under civilian control, shall 
        be subject to legislative oversight, and shall operate pursuant 
        to law and in accordance with recognized principles of human 
        rights.

          (E) The Iraqi Transitional Government shall respect and 
        implement Iraq's international obligations regarding the non-
        proliferation, non-development, non-production, and non-use of 
        nuclear, chemical, and biological weapons, and associated 
        equipment, materiel, technologies, and delivery systems for use 
        in the development, manufacture, production, and use of such 
        weapons.
Article 28.
          (A) Members of the National Assembly; the Presidency Council; 
        the Council of Ministers, including the Prime Minister; and 
        judges and justices of the courts may not be appointed to any 
        other position in or out of government. Any member of the 
        National Assembly who becomes a member of the Presidency 
        Council or Council of Ministers shall be deemed to have 
        resigned his membership in the National Assembly.

          (B) In no event may a member of the armed forces be a member 
        of the National Assembly, minister, Prime Minister, or member 
        of the Presidency Council unless the individual has resigned 
        his commission or rank, or retired from duty at least eighteen 
        months prior to serving.
Article 29.
    Upon the assumption of full authority by the Iraqi Interim 
Government in accordance with Article 2(B)(1), above, the Coalition 
Provisional Authority shall be dissolved and the work of the Governing 
Council shall come to an end.

          CHAPTER FOUR--THE TRANSITIONAL LEGISLATIVE AUTHORITY

Article 30.
          (A) During the transitional period, the State of Iraq shall 
        have a legislative authority known as the National Assembly. 
        Its principal mission shall be to legislate and exercise 
        oversight over the work of the executive authority.

          (B) Laws shall be issued in the name of the people of Iraq. 
        Laws, regulations, and directives related to them shall be 
        published in the official gazette and shall take effect as of 
        the date of their publication, unless they stipulate otherwise.

          (C) The National Assembly shall be elected in accordance with 
        an electoral law and a political parties law. The electoral law 
        shall aim to achieve the goal of having women constitute no 
        less than one-quarter of the members of the National Assembly 
        and of having fair representation for all communities in Iraq, 
        including the Turcomans, ChaldoAssyrians, and others.

          (D) Elections for the National Assembly shall take place by 
        31 December 2004 if possible, and in any case no later than by 
        31 January 2005.
Article 31.
          (A) The National Assembly shall consist of 275 members. It 
        shall enact a law dealing with the replacement of its members 
        in the event of resignation, removal, or death.

          (B) A nominee to the National Assembly must fulfill the 
        following conditions:

                  (1) He shall be an Iraqi no less than 30 years of 
                age.

                  (2) He shall not have been a member of the dissolved 
                Ba'ath Party with the rank of Division Member or 
                higher, unless exempted pursuant to the applicable 
                legal rules.

                  (3) If he was once a member of the dissolved Ba'ath 
                Party with the rank of Full Member, he shall be 
                required to sign a document renouncing the Ba'ath Party 
                and disavowing all of his past links with it before 
                becoming eligible to be a candidate, as well as to 
                swear that he no longer has any dealings or connection 
                with Ba'ath Party organizations. If it is established 
                in court that he lied or fabricated on this score, he 
                shall lose his seat in the National Assembly.

                  (4) He shall not have been a member of the former 
                agencies of repression and shall not have contributed 
                to or participated in the persecution of citizens.

                  (5) He shall not have enriched himself in an 
                illegitimate manner at the expense of the homeland and 
                public finance.

                  (6) He shall not have been convicted of a crime 
                involving moral turpitude and shall have a good 
                reputation.

                  (7) He shall have at least a secondary school 
                diploma, or equivalent

                  (8) He shall not be a member of the armed forces at 
                the time of his nomination.
Article 32.
          (A) The National Assembly shall draw up its own internal 
        procedures, and it shall sit in public session unless 
        circumstances require otherwise, consistent with its internal 
        procedures. The first session of the Assembly shall be chaired 
        by its oldest member.

          (B) The National Assembly shall elect, from its own members, 
        a president and two deputy presidents of the National Assembly. 
        The president of the National Assembly shall be the individual 
        who receives the greatest number of votes for that office; the 
        first deputy president the next highest; and the second deputy 
        president the next. The president of the National Assembly may 
        vote on an issue, but may not participate in the debates, 
        unless he temporarily steps out of the chair immediately prior 
        to addressing the issue.

          (C) A bill shall not be voted upon by the National Assembly 
        unless it has been read twice at a regular session of the 
        Assembly, on condition that at least two days intervene between 
        the two readings, and after the bill has been placed on the 
        agenda of the session at least four days prior to the vote.
Article 33.
          (A) Meetings of the National Assembly shall be public, and 
        transcripts of its meetings shall be recorded and published. 
        The vote of every member of the National Assembly shall be 
        recorded and made public. Decisions in the National Assembly 
        shall be taken by simple majority unless this Law stipulates 
        otherwise.

          (B) The National Assembly must examine bills proposed by the 
        Council of Ministers, including budget bills.

          (C) Only the Council of Ministers shall have the right to 
        present a proposed national budget. The National Assembly has 
        the right to reallocate proposed spending and to reduce the 
        total amounts in the general budget. It also has the right to 
        propose an increase in the overall amount of expenditures to 
        the Council of Ministers if necessary.

          (D) Members of the National Assembly shall have the right to 
        propose bills, consistent with the internal procedures that 
        drawn up by the Assembly.

          (E) The Iraqi Armed Forces may not be dispatched outside Iraq 
        even for the purpose of defending against foreign aggression 
        except with the approval of the National Assembly and upon the 
        request of the Presidency Council.

          (F) Only the National Assembly shall have the power to ratify 
        international treaties and agreements.

          (G) The oversight function performed by the National Assembly 
        and its committees shall include the right of interpellation of 
        executive officials, including members of the Presidency 
        Council, the Council of Ministers, including the Prime 
        Minister, and any less senior official of the executive 
        authority. This shall encompass the right to investigate, 
        request information, and issue subpoenas for persons to appear 
        before them.
Article 34.
    Each member of the National Assembly shall enjoy immunity for 
statements made while the Assembly is in session, and the member may 
not be sued before the courts for such. A member may not be placed 
under arrest during a session of the National Assembly, unless the 
member is accused of a crime and the National Assembly agrees to lift 
his immunity or if he is caught in flagrante delicto in the commission 
of a felony.

           CHAPTER FIVE--THE TRANSITIONAL EXECUTIVE AUTHORITY

Article 35.
    The executive authority during the transitional period shall 
consist of the Presidency Council, the Council of Ministers, and its 
presiding Prime Minister.
Article 36.
          (A) The National Assembly shall elect a President of the 
        State and two Deputies. They shall form the Presidency Council, 
        the function of which will be to represent the sovereignty of 
        Iraq and oversee the higher affairs of the country. The 
        election of the Presidency Council shall take place on the 
        basis of a single list and by a two-thirds majority of the 
        members' votes. The National Assembly has the power to remove 
        any member of the Presidency Council of the State for 
        incompetence or lack of integrity by a three-fourths majority 
        of its members' votes. In the event of a vacancy in the 
        Presidency Council, the National Assembly shall, by a vote of 
        two-thirds of its members, elect a replacement to fill the 
        vacancy.

          (B) It is a prerequisite for a member of the Presidency 
        Council to fulfill the same conditions as the members of the 
        National Assembly, with the following observations:

                  (1) He must be at least forty years of age.

                  (2) He must possess a good reputation, integrity, and 
                rectitude.

                  (3) If he was a member of the dissolved Ba'ath Party, 
                he must have left the dissolved Party at least ten 
                years before its fall.

                  (4) He must not have participated in repressing the 
                intifada of 1991 or the Anfal campaign and must not 
                have committed a crime against the Iraqi people.

          (C) The Presidency Council shall take its decisions 
        unanimously, and its members may not deputize others as 
        proxies.
Article 37.
    The Presidency Council may veto any legislation passed by the 
National Assembly, on condition that this be done within fifteen days 
after the Presidency Council is notified by the president of the 
National Assembly of the passage of such legislation. In the event of a 
veto, the legislation shall be returned to the National Assembly, which 
has the right to pass the legislation again by a two-thirds majority 
not subject to veto within a period not to exceed thirty days.
Article 38.
          (A) The Presidency Council shall name a Prime Minister 
        unanimously, as well as the members of the Council of Ministers 
        upon the recommendation of the Prime Minister. The Prime 
        Minister and Council of Ministers shall then seek to obtain a 
        vote of confidence by simple majority from the National 
        Assembly prior to commencing their work as a government. The 
        Presidency Council must agree on a candidate for the post of 
        Prime Minister within two weeks. In the event that it fails to 
        do so, the responsibility of naming the Prime Minister reverts 
        to the National Assembly. In that event, the National Assembly 
        must confirm the nomination by a two-thirds majority. If the 
        Prime Minister is unable to nominate his Council of Ministers 
        within one month, the Presidency Council shall name another 
        Prime Minister.

          (B) The qualifications for Prime Minister must be the same as 
        for the members of the Presidency Council except that his age 
        must not be less than 35 years upon his taking office.
Article 39.
          (A) The Council of Ministers shall, with the approval of the 
        Presidency Council, appoint representatives to negotiate the 
        conclusion of international treaties and agreements. The 
        Presidency Council shall recommend passage of a law by the 
        National Assembly to ratify such treaties and agreements.

          (B) The Presidency Council shall carry out the function of 
        commander-in-chief of the Iraqi Armed Forces only for 
        ceremonial and protocol purposes. It shall have no command 
        authority. It shall have the right to be briefed, to inquire, 
        and to advise. Operationally, national command authority on 
        military matters shall flow from the Prime Minister to the 
        Minister of Defense to the military chain of command of the 
        Iraqi Armed Forces.

          (C) The Presidency Council shall, as more fully set forth in 
        Chapter Six, below, appoint, upon recommendation of the Higher 
        Juridical Council, the Presiding Judge and members of the 
        Federal Supreme Court.

          (D) The Council of Ministers shall appoint the Director-
        General of the Iraqi National Intelligence Service, as well as 
        officers of the Iraqi Armed Forces at the rank of general or 
        above. Such appointments shall be subject to confirmation by 
        the National Assembly by simple majority of those of its 
        members present.
Article 40.
          (A) The Prime Minister and the ministers shall be responsible 
        before the National Assembly, and this Assembly shall have the 
        right to withdraw its confidence either in the Prime Minister 
        or in the ministers collectively or individually. In the event 
        that confidence in the Prime Minister is withdrawn, the entire 
        Council of Ministers shall be dissolved, and Article 40(B), 
        below, shall become operative.

          (B) In the event of a vote of no confidence with respect to 
        the entire Council of Ministers, the Prime Minister and Council 
        of Ministers shall remain in office to carry out their 
        functions for a period not to exceed thirty days, until the 
        formation of a new Council of Ministers, consistent with 
        Article 38, above.
Article 41.
    The Prime Minister shall have day-to-day responsibility for the 
management of the government, and he may dismiss ministers with the 
approval of an simple majority of the National Assembly. The Presidency 
Council may, upon the recommendation of the Commission on Public 
Integrity after the exercise of due process, dismiss the Prime Minister 
or the ministers.
Article 42.
    The Council of Ministers shall draw up rules of procedure for its 
work and issue the regulations and directives necessary to enforce the 
laws. It also has the right to propose bills to the National Assembly. 
Bach ministry has the right, within its competence, to nominate deputy 
ministers, ambassadors, and other employees of special grade. After the 
Council of Ministers approves these nominations, they shall be 
submitted to the Presidency Council for ratification. All decisions of 
the Council of Ministers shall be taken by simple majority of those of 
its members present.

              CHAPTER SIX--THE FEDERAL JUDICIAL AUTHORITY

Article 43.
          (A) The judiciary is independent, and it shall in no way be 
        administered by the executive authority, including the Ministry 
        of Justice. The judiciary shall enjoy exclusive competence to 
        determine the innocence or guilt of the accused pursuant to 
        law, without interference from the legislative or executive 
        authorities.

          (B) All judges sitting in their respective courts as of 1 
        July 2004 will continue in office thereafter, unless removed 
        from office pursuant to this Law.

          (C) The National Assembly shall establish an independent and 
        adequate budget for the judiciary.

          (D) Federal courts shall adjudicate matters that arise from 
        the application of federal laws. The establishment of these 
        courts shall be within the exclusive competence of the federal 
        government. The establishment of these courts in the regions 
        shall be in consultation with the presidents of the judicial 
        councils in the regions, and priority in appointing or 
        transferring judges to these courts shall be given to judges 
        resident in the region.
Article 44.
          (A) A court called the Federal Supreme Court shall be 
        constituted by law in Iraq.

          (B) The jurisdiction of the Federal Supreme Court shall be as 
        follows:

                  (1) Original and exclusive jurisdiction in legal 
                proceedings between the Iraqi Transitional Government 
                and the regional governments, governorate and municipal 
                administrations, and local administrations.

                  (2) Original and exclusive jurisdiction, on the basis 
                of a complaint from a claimant or a referral from 
                another court, to review claims that a law, regulation, 
                or directive issued by the federal or regional 
                governments, the governorate or municipal 
                administrations, or local administrations is 
                inconsistent with this Law.

                  (3) Ordinary appellate jurisdiction of the Federal 
                Supreme Court shall be defined by federal law.

          (C) Should the Federal Supreme Court rule that a challenged 
        law, regulation, directive, or measure is inconsistent with 
        this Law, it shall be deemed null and void.

          (D) The Federal Supreme Court shall create and publish 
        regulations regarding the procedures required to bring claims 
        and to permit attorneys to practice before it. It shall take 
        its decisions by simple majority, except decisions with regard 
        to the proceedings stipulated in Article 44(B)(1), which must 
        be by a two-thirds majority. Decisions shall be binding. The 
        Court shall have full powers to enforce its decisions, 
        including the power to issue citations for contempt of court 
        and the measures that flow from this.

          (E) The Federal Supreme Court shall consist of nine members. 
        The Higher Juridical Council shall, in consultation with the 
        regional judicial councils, initially nominate no less than 
        eighteen and up to twenty-seven individuals to fill the initial 
        vacancies in the aforementioned Court. It will follow the same 
        procedure thereafter, nominating three members for each 
        subsequent vacancy that occurs by reason of death, resignation, 
        or removal. The Presidency Council shall appoint the members of 
        this Court and name one of them as its Presiding Judge. In the 
        event an appointment is rejected, the Higher Juridical Council 
        shall nominate a new group of three candidates.
Article 45.
    A Higher Juridical Council shall be established and assume the role 
of the Council of Judges. The Higher Juridical Council shall supervise 
the federal judiciary and shall administer its budget. This Council 
shall be composed of the Presiding Judge of the Federal Supreme Court, 
the presiding judge and deputy presiding judges of the federal Court of 
Cassation, the presiding judges of the federal Courts of Appeal, and 
the presiding judge and two deputy presiding judges of each regional 
court of cassation. The Presiding Judge of the Federal Supreme Court 
shall preside over the Higher Juridical Council. In his absence, the 
presiding judge of the federal Court of Cassation shall preside over 
the Council.
Article 46.
          (A) The federal judicial branch shall include existing courts 
        outside the Kurdistan region, including courts of first 
        instance; the Central Criminal Court of Iraq; Courts of Appeal; 
        and the Court of Cassation, which shall be the court of last 
        resort except as provided in Article 44 of this Law. Additional 
        federal courts may be established by law. The appointment of 
        judges for these courts shall be made by the Higher Juridical 
        Council. This Law preserves the qualifications necessary for 
        the appointment of judges, as defined by law.

          (B) The decisions of regional and local courts, including the 
        courts of the Kurdistan region, shall be final, but shall be 
        subject to review by the federal judiciary if they conflict 
        with this Law or any federal law. Procedures for such review 
        shall be defined by law.
Article 47.
    No judge or member of the Higher Juridical Council may be removed 
unless he is convicted of a crime involving moral turpitude or 
corruption or suffers permanent incapacity. Removal shall be on the 
recommendation of the Higher Juridical Council, by a decision of the 
Council of Ministers, and with the approval of the Presidency Council. 
Removal shall be executed immediately after issuance of this approval. 
A judge who has been accused of such a crime as cited above shall be 
suspended from his work in the judiciary until such time as the case 
arising from what is cited in this Article is adjudicated. No judge may 
have his salary reduced or suspended for any reason during his period 
of service.

      CHAPTER SEVEN--THE SPECIAL TRIBUNAL AND NATIONAL COMMISSIONS

Article 48.
          (A) The statute establishing the Iraqi Special Tribunal 
        issued on 10 December 2003 is confirmed. That statute 
        exclusively defines its jurisdiction and procedures, 
        notwithstanding the provisions of this Law.

          (B) No other court shall have jurisdiction to examine cases 
        within the competence of the Iraqi Special Tribunal, except to 
        the extent provided by its founding statute.

          (C) The judges of the Iraqi Special Tribunal shall be 
        appointed in accordance with the provisions of its founding 
        statute.
Article 49.
          (A) The establishment of national commissions such as the 
        Commission on Public Integrity, the Iraqi Property Claims 
        Commission, and the Higher National DeBa'athification 
        Commission is confirmed, as is the establishment of commissions 
        formed after this Law has gone into effect. The members of 
        these national commissions shall continue to serve after this 
        Law has gone into effect, taking into account the contents of 
        Article 51, below.

          (B) The method of appointment to the national commissions 
        shall be in accordance with law.
Article 50.
    The Iraqi Transitional Government shall establish a National 
Commission for Human Rights for the purpose of executing the 
commitments relative to the rights set forth in this Law and to examine 
complaints pertaining to violations of human rights. The Commission 
shall be established in accordance with the Paris Principles issued by 
the United Nations on the responsibilities of national institutions. 
This Commission shall include an Office of the Ombudsman to inquire 
into complaints. This office shall have the power to investigate, on 
its own initiative or on the basis of a complaint submitted to it, any 
allegation that the conduct of the governmental authorities is 
arbitrary or contrary to law.
Article 51.
    No member of the Iraqi Special Tribunal or of any commission 
established by the federal government may be employed in any other 
capacity in or out of government. This prohibition is valid without 
limitation, whether it be within the executive, legislative, or 
judicial authority of the Iraqi Transitional Government. Members of the 
Special Tribunal may, however, suspend their employment in other 
agencies while they serve on the aforementioned Tribunal.

        CHAPTER EIGHT--REGIONS, GOVERNORATES, AND MUNICIPALITIES

Article 52.
    The design of the federal system in Iraq shall be established in 
such a way as to prevent the concentration of power in the federal 
government that allowed the continuation of decades of tyranny and 
oppression under the previous regime. This system shall encourage the 
exercise of local authority by local officials in every region and 
governorate, thereby creating a united Iraq in which every citizen 
actively participates in governmental affairs, secure in his rights and 
free of domination.
Article 53.
          (A) The Kurdistan Regional Government is recognized as the 
        official government of the territories that were administered 
        by the that government on 19 March 2003 in the governorates of 
        Dohuk, Arbil, Sulaimaniya, Kirkuk, Diyala and Neneveh. The term 
        ``Kurdistan Regional Government'' shall refer to the Kurdistan 
        National Assembly, the Kurdistan Council of Ministers, and the 
        regional judicial authority in the Kurdistan region.

          (B) The boundaries of the eighteen governorates shall remain 
        without change during the transitional period.

          (C) Any group of no more than three governorates outside the 
        Kurdistan region, with the exception of Baghdad and Kirkuk, 
        shall have the right to form regions from amongst themselves. 
        The mechanisms for forming such regions may be proposed by the 
        Iraqi Interim Government, and shall be presented and considered 
        by the elected National Assembly for enactment into law. In 
        addition to being approved by the National Assembly, any 
        legislation proposing the formation of a particular region must 
        be approved in a referendum of the people of the relevant 
        governorates.

          (D) This Law shall guarantee the administrative, cultural, 
        and political rights of the Turcomans, ChaldoAssyrians, and all 
        other citizens.
Article 54.
          (A) The Kurdistan Regional Government shall continue to 
        perform its current functions throughout the transitional 
        period, except with regard to those issues which fall within 
        the exclusive competence of the federal government as specified 
        in this Law. Financing for these functions shall come from the 
        federal government, consistent with current practice and in 
        accordance with Article 25(E) of this Law. The Kurdistan 
        Regional Government shall retain regional control over police 
        forces and internal security, and it will have the right to 
        impose taxes and fees within the Kurdistan region.

          (B) With regard to the application of federal laws in the 
        Kurdistan region, the Kurdistan National Assembly shall be 
        permitted to amend the application of any such law within the 
        Kurdistan region, but only to the extent that this relates to 
        matters that are not within the provisions of Articles 25 and 
        43(D) of this Law and that fall within the exclusive competence 
        of the federal government.
Article 55.
          (A) Each governorate shall have the right to form a 
        Governorate Council, name a Governor, and form municipal and 
        local councils. No member of any regional government, governor, 
        or member of any governorate, municipal, or local council may 
        be dismissed by the federal government or any official thereof, 
        except upon conviction of a crime by a court of competent 
        jurisdiction as provided by law. No regional government may 
        dismiss a Governor or member or members of any governorate, 
        municipal, or local council. No Governor or member of any 
        Governorate, municipal, or local council shall be subject to 
        the control of the federal government except to the extent that 
        the matter relates to the competences set forth in Article 25 
        and 43(D), above.

          (B) Each Governor and member of each Governorate Council who 
        holds office as of 1 July 2004, in accordance with the law on 
        local government that shall be issued, shall remain in place 
        until such time as free, direct, and full elections, conducted 
        pursuant to law, are held, or, unless, prior to that time, he 
        voluntarily gives up his position, is removed upon his 
        conviction for a crime involving moral turpitude or related to 
        corruption, or upon being stricken with permanent incapacity, 
        or is dismissed in accordance with the law cited above. When a 
        governor, mayor, or member of a council is dismissed, the 
        relevant council may receive applications from any eligible 
        resident of the governorate to fill the position. Eligibility 
        requirements shall be the same as those set forth in Article 31 
        for membership in the National Assembly. The new candidate must 
        receive a majority vote of the council to assume the vacant 
        seat.
Article 56.
          (A) The Governorate Councils shall assist the federal 
        government in the coordination of federal ministry operations 
        within the governorate, including the review of annual ministry 
        plans and budgets with regard to activities in the governorate. 
        Governorate Councils shall be funded from the general budget of 
        the State, and these Councils shall also have the authority to 
        increase their revenues independently by imposing taxes and 
        fees; to organize the operations of the Governorate 
        administration; to initiate and implement province-level 
        projects alone or in partnership with international, and non-
        governmental organizations; and to conduct other activities 
        insofar as is consistent with federal laws.

          (B) The Qada' and Nahiya councils and other relevant councils 
        shall assist in the performance of federal responsibilities and 
        the delivery of public services by reviewing local ministry 
        plans in the afore-mentioned places; ensuring that they respond 
        properly to local needs and interests; identifying local 
        budgetary requirements through the national budgeting 
        procedures; and collecting and retaining local revenues, taxes, 
        and fees; organizing the operations of the local 
        administration; initiating and implementing local projects 
        alone or in conjunction with international, and non-
        governmental organizations; and conducting other activities 
        consistent with applicable law.

          (C) Where practicable, the federal government shall take 
        measures to devolve additional functions to local, governorate, 
        and regional administrations, in a methodical way. Regional 
        units and governorate administrations, including the Kurdistan 
        Regional Government, shall be organized on the basis of the 
        principle of de-centralization and the devolution of 
        authorities to municipal and local governments.
Article 57.
          (A) All authorities not exclusively reserved to the Iraqi 
        Transitional Government may be exercised by the regional 
        governments and governorates as soon as possible following the 
        establishment of appropriate governmental institutions.

          (B) Elections for governorate councils throughout Iraq and 
        for the Kurdistan National Assembly shall be held at the same 
        time as the elections for the National Assembly, no later than 
        31 January 2005.
Article 58.
          (A) The Iraqi Transitional Government, and especially the 
        Iraqi Property Claims Commission and other relevant bodies, 
        shall act expeditiously to take measures to remedy the 
        injustice caused by the previous regime's practices in altering 
        the demographic character of certain regions, including Kirkuk, 
        by deporting and expelling individuals from their places of 
        residence, forcing migration in and out of the region, settling 
        individuals alien to the region, depriving the inhabitants of 
        work, and correcting nationality. To remedy this injustice, the 
        Iraqi Transitional Government shall take the following steps:

                  (1) With regard to residents who were deported, 
                expelled, or who emigrated; it shall, in accordance 
                with the statute of the Iraqi Property Claims 
                Commission and other measures within the law, within a 
                reasonable period of time, restore the residents to 
                their homes and property, or, where this is unfeasible, 
                shall provide just compensation.

                  (2) With regard to the individuals newly introduced 
                to specific regions and territories, it shall act in 
                accordance with Article 10 of the Iraqi Property Claims 
                Commission statute to ensure that such individuals may 
                be resettled, may receive compensation from the state, 
                may receive new land from the state near their 
                residence in the governorate from which they came, or 
                may receive compensation for the cost of moving to such 
                areas.

                  (3) With regard to persons deprived of employment or 
                other means of support in order to force migration out 
                of their regions and territories, it shall promote new 
                employment opportunities in the regions and 
                territories.

                  (4) With regard to nationality correction, it shall 
                repeal all relevant decrees and shall permit affected 
                persons the right to determine their own national 
                identity and ethnic affiliation free from coercion and 
                duress.

          (B) The previous regime also manipulated and changed 
        administrative boundaries for political ends. The Presidency 
        Council of the Iraqi Transitional Government shall make 
        recommendations to the National Assembly on remedying these 
        unjust changes in the permanent constitution. In the event the 
        Presidency Council is unable to agree unanimously on a set of 
        recommendations, it shall unanimously appoint a neutral 
        arbitrator to examine the issue and make recommendations. In 
        the event the Presidency Council is unable to agree on an 
        arbitrator, it shall request the Secretary General of the 
        United Nations to appoint a distinguished international person 
        to be the arbitrator.

          (C) The permanent resolution of disputed territories, 
        including Kirkuk, shall be deferred until after these measures 
        are completed, a fair and transparent census has been conducted 
        and the permanent constitution has been ratified This 
        resolution shall be consistent with the principle of justice, 
        taking into account the will of the people of those 
        territories.

                 CHAPTER NINE--THE TRANSITIONAL PERIOD

Article 59.
          (A) The permanent constitution shall contain guarantees to 
        ensure that the Iraqi Armed Forces are never again used to 
        terrorize or oppress the people of Iraq.

          (B) Consistent with Iraq's status as a sovereign state, and 
        with its desire to join other nations in helping to maintain 
        peace and security and fight terrorism during the transitional 
        period, the Iraqi Armed Forces will be a principal partner in 
        the multinational force operating in Iraq under unified command 
        pursuant to the provisions of United Nations Security Council 
        Resolution 1511 (2003) and any subsequent relevant resolutions. 
        This arrangement shall last until the ratification of a 
        permanent constitution and the election of a new government 
        pursuant to that new constitution.

          (C) Upon its assumption of authority, and consistent with 
        Iraq's status as a sovereign state, the elected Iraqi 
        Transitional Government shall have the authority to conclude 
        binding international agreements regarding the activities of 
        the multi-national force operating in Iraq under unified 
        command pursuant to the terms of United Nations Security 
        Council Resolution 1511(2003), and any subsequent relevant 
        United Nations Security Council resolutions. Nothing in this 
        Law shall affect rights and obligations under these agreements, 
        or under United Nations Security Council Resolution 1511 
        (2003), and any subsequent relevant United Nations Security 
        Council resolutions, which will govern the multi-national 
        force's activities pending the entry into force of these 
        agreements.
Article 60.
    The National Assembly shall write a draft of the permanent 
constitution of Iraq. This Assembly shall carry out this responsibility 
in part by encouraging debate on the constitution through regular 
general public meetings in all parts of Iraq and through the media, and 
receiving proposals from the citizens of Iraq as it writes the 
constitution.
Article 61.
          (A) The National Assembly shall write the draft of the 
        permanent constitution by no later than 15 August 2005.

          (B) The draft permanent constitution shall be presented to 
        the Iraqi people for approval in a general referendum to be 
        held no later than 15 October 2005. In the period leading up to 
        the referendum, the draft constitution shall be published and 
        widely distributed to encourage a public debate about it among 
        the people.

          (C) The general referendum will be successful and the draft 
        constitution ratified if a majority of the voters in Iraq 
        approve and if two-thirds of the voters in three or more 
        governorates do not reject it.

          (D) If the permanent constitution is approved in the 
        referendum, elections for a permanent government shall be held 
        no later than 15 December 2005 and the new government shall 
        assume office no later than 31 December 2005.

          (E) If the referendum rejects the draft permanent 
        constitution, the National Assembly shall be dissolved. 
        Elections for a new National Assembly shall be held no later 
        than 15 December 2005. The new National Assembly and new Iraqi 
        Transitional Government shall then assume office no later than 
        31 December 2005, and shall continue to operate under this Law, 
        except that the final deadlines for preparing a new draft may 
        be changed to make it possible to draft a permanent 
        constitution within a period not to exceed one year. The new 
        National Assembly shall be entrusted with writing another draft 
        permanent constitution.

          (F) If necessary, the president of the National Assembly, 
        with the agreement of a majority of the members' votes, may 
        certify to the Presidency Council no later than 1 August 2005 
        that there is a need for additional time to complete the 
        writing of the draft constitution. The Presidency Council shall 
        then extend the deadline for writing the draft constitution for 
        only six months. This deadline may not be extended again.

          (G) If the National Assembly does not complete writing the 
        draft permanent constitution by 15 August 2005 and does not 
        request extension of the deadline in Article 61(D) above, the 
        provisions of Article 61(E), above, shall be applied.
Article 62.
    This law shall remain in effect until the permanent constitution is 
issued and the new Iraqi government is formed in accordance with it.



  Responses of Hon. Andrew S. Natsios to Additional Questions for the 
              Record Submitted by Senator Richard G. Lugar

    Question 1. Will the U.N. have the resources to tackle the enormous 
election task or will USAID or its partners take primary 
responsibilities? Can we ask you to speak for IRI and IFES?

    Answer. The United Nations has accepted the lead responsibility for 
assisting the Government of Iraq in establishing the infrastructure 
needed for free, fair, and transparent electoral processes. The first 
step in this process, the formation of the Independent Electoral 
Commission of Iraq (IECI), is reported to have been enormously 
successful with the nomination of 1,878 candidates for 9 positions. The 
IECI has approximately $235 million in Iraqi funds that is supposed to 
be transferred from the Iraqi Ministry of Finance. The International 
Foundation for Electoral Systems (IFES) is currently assisting the IECI 
in establishing its office, hiring a staff and implementing a work plan 
through a grant issued previously by the Coalition Provisional 
Authority (CPA). This grant is set to expire at the end of August. The 
IECI has a huge task in front of it, and it will need substantial help. 
The U.N.'s Electoral Assistance Division has not indicated a shortage 
of U.N. resources for activities through the first election although it 
has indicated a need for election monitoring, civic education, and 
voter education to complement its program.
    USAID plans to award an $18 million grant to a consortium of IFES, 
NDI, and IRI for voter education, training of domestic monitors, and 
election-related conflict mitigation. In addition, following a full and 
open competition, USAID will support civic education as part of its 
broader program of strengthening Iraqi civil society and media. USAID 
has also reserved $9 million to support international election 
monitors.

    Question 2. Can you describe the status of the Oil-for-Food Program 
and the situation with food security for the mid-term? I understand 
many of the OFF contracts will expire in June?

    Answer. The majority of Oil-For-Food Program contracts related to 
food (there are also contracts other than food related) have been 
completed. Beginning in January 2004, the United Nations World Food 
Program was asked to procure and deliver approximately 3 months worth 
of food for the Public Distribution System (PDS) stock piles. The 
majority of this procurement has been delivered and is due to be 
completed by September, 2004. This food was originally earmarked as 
buffer stock; however, WFP reports that the food is actually being 
distributed to meet current PDS requirements. WFP states that there is 
no current buffer stock, and projects that there will be no buffer 
stock by September 1.
    For the short term (1-3 months), the WFP procured deliveries plus 
current PDS supplies should supply most of the food commodities in the 
ration, with predicted shortages of infant formula, weaning cereals, 
pulses (beans) and soap. For the medium term, (4-6 months), WFP 
projects additional shortages in these and other commodities (based on 
their figures and recent delays in Iraq ministry procurements for 
future food supplies). It is unclear at this time whether the Iraqi 
Interim Government concurs with the WFP projections. It is also unclear 
how much the local wheat harvest for 2004 will contribute to the PDS 
flour ration.
    USAID continues to monitor the situation in cooperation with WFP 
and the Iraqis, but difficulties in obtaining complete and accurate 
food information from the Iraqi Interim Government and discrepancies 
between the Iraqi information and the WFP information do not allow us 
to make confident projections on food security for the mid-term at this 
time.

    Question 3. What has been the effect of recent violence on USAID 
staff and your partners' abilities to get the job done?

    Answer. Security concerns have caused USAID contractors to expend 
more resources and time on security management. There have been very 
few instances of staff leaving Iraq, and progress on most projects has 
continued with minimal delays. One potential area where violence may 
impact our work is the recruitment of expatriate and Iraqi employees. 
While there has been no indication to date of any difficulty, USAID is 
tracking this issue as new procurements begin to require heavy 
recruiting.

    Question 4. In the 2207 report, responsibility for several projects 
is listed as ``Department of Defense and/or USAID.'' As we look forward 
to a transition to State, why would we continue to put programs under 
DOD management? Won't this create conflicts down the line?

    Answer. Prior to the transition, the Coalition Provisional 
Authority coordinated all development activities in Iraq. USAID, State 
and DOD have cooperated effectively in the past to establish and run 
programs with relatively clear lines of responsibility. Since the 
establishment of the U.S. Embassy, USAID is continuing to coordinate 
with other implementing agencies, including the Department of Defense, 
but reports to Chief of Mission on USAID activities. In addition, USAID 
works closely with the Iraq Reconstruction Management Office (IRMO), 
which plays a central role in the coordination of reconstruction 
activities in Iraq.
    In this context, USAID will continue to manage its projects and 
follow all appropriate reporting chains within the Embassy.

    Question 5. It still looks like much of the investment we are 
making in Iraq is in construction or public works. Are we investing 
enough in people? (e.g., health clinics versus health care 
professionals).

    Answer. Initial requirements in Iraq meant that a heavy focus on 
infrastructure was critical. It is appropriate at this point in the 
reconstruction process to review the balance of capital and human 
investments in Iraq. Economic activities which create long-term, 
sustainable employment for Iraqis, investments in a democratic 
tradition that will shape Iraq's internal and external relations for 
decades, and the essential services in health and education that 
provide the human building blocks of that future will have an 
increasing weight with critical infrastructure in the future.
    USAID has developed the following critical challenge areas to guide 
its project development:
   Focusing on the next generation in Iraq, their needs and 
        potential;
   Developing the leadership required to shape a new Iraqi 
        democracy;
   Critical components of building a participatory democracy, 
        beyond elections;
   Building capacity for sustainable provision of key economic 
        and social services; and
   Agriculture.

    Question 6. What has been the impact of Coalition and USAID efforts 
on jobs and the economy? Are there any transparent independent measures 
in place?

    Answer. According to the CPA, 350,000 jobs have been generated 
since January 2004. Of this, specific USAID support for employment 
generation includes our role in the National Employment Program that 
generated about 77,000 short-term jobs, and coordination of micro-
lending programs for $21 million. USAID's contractors and grantees, and 
their specific project activities have employed 6,606,776 person-days 
of Iraqis to deliver and manage reconstruction assistance at all levels 
and throughout Iraq. USAID tracks the number of people hired by its 
implementing partners and maintains a data for reporting on program 
activity status and progress (including numbers employed). Although the 
data base has its gaps of information, and we continue to steadily 
improve it, it is by far the most extensive and reliable data and 
information on the entire reconstruction program in Iraq. The 
Information Management Unit of the Projects and Contracting Office 
relies heavily on the USAID data base which composes about 80 percent 
of the total data.
    In addition, USAID support for monetary, fiscal and regulatory 
policy reforms (including electric power and telecommunications) is 
building the foundations for generating sustainable economic growth and 
longer-run employment. Since employment depends on security, these 
USAID-supported commercial, legal and institutional reforms are 
expected to lead to even further increases over time in investment and 
employment.
    With regard to transparent independent measures, the normal 
International Monetary Fund statistics are not available because the 
IMF staff has not been allowed to enter Iraq since September 2003. 
However, USAID has worked closely with the Ministry of Finance to 
provide its Central Statistical Office with technical assistance in 
developing the statistics that the IMF needs to measure economic growth 
and employment. However, much additional support is needed to 
statistically measure the impact of Coalition and USAID efforts on jobs 
and the economy.

    Question 7. What percentage of your Iraq spending is being passed 
through the PMO? Will that continue after the transition? Is this 
required? Is it necessary?

    Answer. Prior to the transition to a U.S. Embassy, all USAID 
funding was coordinated by the PMO. Since the transition, coordination 
of reconstruction is a function of the Iraq Reconstruction Management 
Office (IRMO). USAID reports to the Chief of Mission, as does the 
Projects and Contracting Office (PCO) and the IRMO. There will continue 
to be a need for coordination so long as multiple agencies are required 
to organize and implement the enormously complex reconstruction work in 
Iraq, and USAID will be an integral part of that coordination at all 
levels.
    At the same time, USAID has over 30 years experience in bilateral 
assistance programs and in donor coordination. The transfer of 
sovereignty and the increased presence of international donors means 
that both of these traditional USAID skills will become increasingly 
critical. USAID will retain the flexibility under a traditional 
relationship with the Chief of Mission and its coordination with IRMO 
to capitalize on that experience as it moves the U.S. Government agenda 
for reconstruction forward.

    Question 8. Of the more than $3 billion that USAID has spent on 
Iraq programs thus far, how much has IG audits called into question?

    Answer. The Office of the Inspector General (OIG) has audited the 
contracting procurement process for 11 contracts with a value of $3.3 
billion. Additionally, the OIG has coordinated with the Defense 
Contract Audit Agency (DCAA) in the issuance of 38 audit reports 
covering $193 million in USAID funds.
    These 38 audits reviewed the various internal controls of 
contractors, recommended corrective actions, where appropriate, and 
identified $14 million in questioned costs. Those costs are currently 
being reviewed to see which will ultimately be allowed.

                                 ______
                                 

   Responses of Hon. Peter W. Rodman to Additional Questions for the 
              Record Submitted by Senator Richard G. Lugar

            IRAQ TRANSITION III--OBSTACLES AND OPPORTUNITIES

    Question 1. Troops on the ground, diplomats and private U.S. 
citizens must have clear legal protections to work in any sovereign 
nation. It was indicated that a SOFA is not needed because of existing 
provisions under the TAL, UNSCR 1511 and CPA Order 17. Is this 
satisfactory to the Iraqis?

    Answer. The Iraqis, in developing the Transitional Administrative 
Law, decided they did not want their Interim Government to make long-
term agreements such as SOFAs. However, the Prime Minister of the Iraqi 
Interim Government, Ayad Allawi, has endorsed UNSCR 1546, which 
specifically gives the Multinational Force the mandate ``to take all 
necessary measures to contribute to the maintenance of security and 
stability in Iraq in accordance with the letters annexed to their 
resolution.''
    This indicates that the new Iraqi government believes this 
resolution, in conjunction with the TAL, UNSCR 1511, and CPA Order #17, 
provides an appropriate legal framework for the presence of 
international forces within Iraq after June 30.

                           TRANSITION IN IRAQ

    Question 2. Plans indicate the MNF-I will continue to provide 
security for the Green Zone and other mission activities. How will this 
and troop actions be coordinated with the Embassy? How about the rest 
of the Coalition?

    Answer. The 1st Cavalry Division has the security mission for the 
city of Baghdad. The 3rd Brigade Combat Team is responsible for 
security in the International Zone. The Joint Area Support Group (JASG) 
has the responsibility for U.S. Mission support. The 2-82 Field 
Artillery Battalion provides security for the U.S. Mission. A U.S. 
Marine Company and other U.S. State Department assets (under the 
supervision of the Regional Security Officer) are responsible for the 
physical security of the Mission grounds and the movement of VIPs.
    Any movements that cannot be handled by 2-82 FA are forwarded to 
the JASG. The JASG then requests additional assets from MNC-I. These 
missions are usually outside Baghdad or are complex and require higher 
unit planning and coordination.

    Question 3. Will the MNF-I Headquarters be co-located with the 
Embassy or at a separate facility?

    Answer. Offices of MNF-I are currently split between Camp Victory 
at the Al Faw Palace and the U.S. Embassy Annex. The MNF-I Operations 
Center and the majority of the staff agencies will remain in the U.S. 
Embassy Annex.

    Question 4. General Joulwan suggested yesterday that the troop-to-
task analysis was unclear. The mission of U.S. forces in Iraq needs to 
be clarified to include stabilization, and this will be an enormous 
task. Will the Multi-National Force provide security for elections?

    Answer. Yes, the Multinational Force will provide security for 
elections. The Iraqi Interim Government (IIG) has committed to an 
aggressive plan that calls for the conduct of four iterations of 
national elections over the next 18 months. To implement this plan, the 
IIG has agreed to an Iraqi electoral law and has sanctioned the 
selection of the Independent Electoral Commission of Iraq (IECI). This 
commission is empowered with exclusive authority for the conduct of all 
Iraqi elections and has initiated planning and coordination for the 
conduct of national elections to select the Transitional Legislative 
Assembly (TLA), scheduled to occur no later than 31 January 2005.
    The United Nations Security Council adopted UN Security Council 
Resolution (UNSCR) 1546, 8 June 2004, which affirms the UN mandate set 
out in UNSCR 1483 (2003) and UNSCR 1511 (2003). This resolution further 
mandates that the Special Representative of the Secretary General and 
UN Assistance Mission of Iraq advise and provide technical support to 
the IECI and the IIG on the process for holding initial national 
elections for the selection of the TLA.
    UNSCR 1546 also authorizes the MNF-I commander to take ``al1 
necessary measures'' to contribute to the maintenance of security and 
stability, to include preventing and deterring terrorism.
    Support for the conduct of this initial iteration of national 
elections remains solely an IECI responsibility. In consideration of 
the MNF-I mandate set out in UNSCR 1546, IECI shortfalls may be 
identified and formal requests for support will be made to coalition, 
international, and interagency partners as IECI planning for conducting 
the national election proceeds. IIG requests for technical election 
assistance have already been extended and agreed to by the United 
Nations. MNF-I expects that Iraqi requests for election support will 
materialize as identified. MNF-I is strictly in support of the IECI and 
United Nations for this operation and must remain completely neutral 
with respect to all Iraqi election issues.

    Question 5. Every witness over the past two days of hearings 
indicated establishing security on the street in Iraq was a 
prerequisite for the success of the political transition in Iraq. How 
can we accelerate police training and the delivery of equipment to the 
Iraqi police forces? Have we asked the Germans, the French and others 
to train and equip the police forces? How much of our assistance has 
gone to support police training and equipment? Do we have the right 
programs and experts and enough resources?

    Answer. MNF-I continues to increase not only the number of police 
academies across the provinces of the nation, but also the capacity of 
existing police academies, both in Iraq and at the Jordan International 
Police Training Center.
    MNF-I can currently graduate over 3,000 police officers per month 
and will expand that to 5,550. MNF-I is also conducting a series of 
specialty courses, for police forces, border security forces, emergency 
response units, SWAT teams, and diplomatic protective services.
    Equipment deployment is being carefully prioritized and managed to 
ensure it is delivered as fast as it can be acquired to the right 
organization and location. Some acceleration could be facilitated by 
relaxing some of the applicable strict peacetime acquisition 
regulations. These regulations tend to hinder the ability to rapidly 
procure some police-related items. These items are readily available at 
reasonable prices on the world market.
    The European Union (EU) recently sent a fact-finding team to 
Baghdad to study contributions they might make to police training in 
Iraq. This team has subsequently briefed the EU Council and proposed 
providing some advanced police training geared toward more senior Iraqi 
officers. A decision is pending by the Council. If they elect to go 
forward, training could begin as early as February 2005.
    In addition to the above mentioned academies and special courses 
that have been established, there are currently over 500 international 
police liaison officers and 85 international police trainers serving in 
Iraq, teaching, coaching, mentoring and providing expertise. Programs 
are constantly reviewed to ensure they are providing optimal output and 
relevancy to the constantly evolving security situation. Additional 
resources would certainly allow expansion and, to some degree, 
acceleration of the effort.

    Question 6. According to contracting experts, whom ever signs a 
contract (Army, PMO or USAID) must manage it to the end. Will the Army 
continue to oversee contracts given to USAID? If so, why?

    Answer. The Army has not awarded any contracts to USAID or on 
behalf of USAID. USAID is responsible for the execution and complete 
contract management, including all facets of contract administration, 
for all contracts they award as specified in Federal Acquisition 
Regulations Part 42.

    Question 7. According to the most recent 2207 report, only $2.2 
billion of the $18.4 billion in the Supplemental has been obligated to 
date.
    Question 7a. Have any of these contractors begun work yet?

    Answer 7a. No, the contractors are currently still staffing and 
mobilizing their teams that will be conducting the reconstruction 
effort.

    Question 7b. What has been the hold up?

    Answer 7b. We believe that we have executed the IRRF as fast as 
possible according to U.S. Government laws and regulations. Partial 
funds were released to the Program Management Office starting in 
December 2003, when we completed the first round of requirements needed 
for. Request for Proposals (RFPs) across the Electricity, Public Works 
and Water, Communications and Transportation, Buildings and Health and 
Security and Justice Sectors. We worked to ensure compliance with full 
and open competition procedures and the terms of the IRRF and the 
Federal Acquisition Regulations. Once the solicitation, bidding, and 
the award process was completed (totaling $5 billion in 90 days--an 
unprecedented contracting feat), we committed and obligated to the 
projects identified across the sectors described. Award notifications 
went out to 17 contractors in mid-to-late March and mobilization is 
firmly underway with task orders having already been issued. As 
mentioned above, it is normal for contractors to take 30-60 days to 
mobilize their teams, especially in light of the size and scope of the 
operations they will be conducting.

    Question 7c. Do you have any recommendations so that the remaining 
$16 billion can have the impact that Congress and Ambassador Bremer 
envisioned last fall?

    Answer 7c. Last fall, specifically following the November passage 
of the legislation creating the Iraq Relief and Reconstruction Fund 
(IRRF), the U.S. Government had to address the necessary preliminary 
work to start this contracting effort, e.g., establishing an operation 
with the capacity of overseeing the $18.4 billion in the IRRF funds; 
developing the detailed requirements for contracts, identifying 
eligibility requirements for prime and sub-contractors, and maintaining 
the integrity of full and open competition, as required by Congress. We 
have done this and are executing the plan that was developed following 
the passage of the legislation.

    Question 8. The 2207 report describes a $30 million Rule of Law 
program. $15 million will be handled by USAID and the other $15 million 
by DOD to ``provide grants to the NGO's, the American Bar Association, 
Harvard and law schools'' to do rule of law training. Why is DOD 
involved in this, and not the State Department's INL Bureau?

    Answer. The Rule of Law program is a joint project between USAID 
and Iraqi Ministry of Justice. The Ministry of Justice asked the 
Coalition Provisional Authority (CPA), which as you know is a part of 
the Department of Defense, to administer the $15 million dollar program 
on its behalf.

    Question 9. What will happen with the $4 billion that has not yet 
been programmed from the second Supplemental? Your latest 2207 report 
did not provide any details, simply indicating that this was remaining 
for 2005. Do you plan to reprogram this to meet military needs?

    Answer. The $4 billion in Iraq Relief and Reconstruction Funds will 
be expended against projects that are on the approved CPA project list 
and any new projects that are identified as urgent needs from the field 
and we do not plan to reprogram these funds to meet military needs.

    Question 10. The latest 2207 did not specifically program the 10% 
of the $18.4 that was authorized for the administering the contracts, 
nor did it detail how this was being spent. Is this the funding that is 
being used for the contract management contracts? Can we presume that 
it will come out of the $4 billion for 2005?

    Answer. Public Law 108-106 provides amounts for the operating 
expenses of those agencies that administer the IRRF appropriation. Like 
the operating expenses identified for the Coalition Provisional 
Authority, the legislation permits that up to 10% of the appropriated 
funds that are obligated, managed or administered by a U.S. Government 
agency may be used by that agency to pay its full administrative 
expenses as they relate to the Iraq Reconstruction efforts. When the 
Program Management Office (PMO) was established in April 2004, we 
submitted a proposed operating budget to the Office of Management and 
Budget (OMB). We are working with OMB to determine the amount that the 
Program Management Office (PMO) will be allowed to spend in FY04 on 
administrative costs and that amount will be generated from the portion 
of the $18.4 billion that PMO now manages. As funds have been released, 
a portion has been set aside for this purpose. Therefore, the PMO FY04 
operating budget will not be charged against the $4 billion available 
for projects in FY2005.

    Question 11. How big is the PMO staff? What level of international 
development or reconstruction expertise does the average contracting 
officer or CTO have? In your view, is this sufficient?

    Answer. Current staffing for the Program Management Office (PMO) is 
approximately, 105 persons. This includes military, civilian, and 
contractor support employees. The PMO's Contracting Activity in Iraq 
has approximately 52 persons (25 military of which 14 are borrowed), 6 
GS/3161 civilians, and 21 contractor support personnel).
    The PMO Iraq's Contracting staff is comprised of a wide breadth of 
joint military and civilian contracting expertise from various DOD 
acquisition and contracting offices supporting areas such as, major/
minor construction, major joint service acquisition systems, Program/
Product Management Offices, logistics, commodities/services, and 
government property. Most have significant international contracting 
and acquisition skills as well as previous overseas deployment 
experience.
    The Contracting Activity in Iraq is staffed, partially, under a 
Joint Manning Document that includes representation from all military 
services, civil servants and contract support specialists. In addition, 
civilians assigned to the staff represent several Army or DOD major 
commands and include acquisition experts re-hired under 3161 authority. 
The Contracting Activity also supplements its staff in Iraq with highly 
skilled former government contracting officers and specialists under 
its current support contract.
    Currently, the Head of the Contracting Activity is an Army Program 
Executive Officer (BG) and the Principal Assistant Responsible for 
Contracting (PARC) is an established senior career civil servant and 
former or current PARC. All Contracting Officers and staff are DAWIA 
certified with the majority of Contracting Officers and all senior 
staff being Level III DAWIA certified in Contracting.

    Question 12. How many detainees are being held in Iraq? How many 
are Iraqi citizens? Will these remain under U.S. control after the 
transition? Under what authority will we be holding these Iraqis?

    Answer. According to the National Detainee Reporting Center (NDRC), 
Combined Joint Task Force-7 (CJTF-7) was holding a total of 6,791 
detainees on April 22, 2004. Of those, 6,665 were Iraqi nationals. 
3,841 members of the Mojahedeen-e Khalq (MeK) were also being detained 
by CJTF-7.
    Many of the detainees held by CJTF-7 in Iraq for imperative reasons 
of security will likely remain under Coalition Forces control after the 
transition to Iraqi authority because it is likely that the security 
situation will require their continued detention. We will work, 
however, in partnership with the new Iraqi government not only to 
establish a more secure Iraq but also to develop further effective 
Iraqi criminal justice processes to address the cases of persons who 
have committed criminal offenses. The Iraqi Correction Service, for 
example, already has substantial responsibility for detaining 
individuals charged with crimes under Iraqi law.
    The authority to conduct continued detention operations will derive 
from several sources. UN Security Council Resolution 1511 provides 
authority pursuant to Chapter VII of the UN Charter for the 
Multinational Force ``to take all necessary measures to contribute to 
the maintenance of security and stability in Iraq.'' This authority 
necessarily includes the authority to detain those individuals who 
threaten the security of the Multinational Force and the Iraqi people. 
We also anticipate additional authority will be contained in a follow-
on UN Security Council resolution prior to the transition of governance 
authority to an Iraqi interim government. Further, authority to detain 
persons held for security reasons could derive from agreement with the 
Iraqi government and also exists under the law of war (e.g., the 
ability to hold prisoners of war until the cessation of active 
hostilities). We anticipate sufficient authority to detain persons in 
Iraq after June 30, as necessary for imperative reasons of security.

                                 ______
                                 

Response of Hon. Marc Grossman to an Additional Question for the Record 
                submitted by Senator Christopher J. Dodd

    Question. Provide detailed information on: the intended purpose and 
nature of the Transitional Administrative Law (TAL) Annex; where the 
TAL Annex drafting process stands and who is leading that process; and 
the respective roles therein of the Iraqi Governing Council, the 
Coalition Provisional Authority (CPA), and the United Nations.

    Answer. The TAL provides for an Annex that, together with the TAL 
itself, will set forth the authorities of the Iraqi Interim Government. 
The intent is for both the TAL and the Annex to come into effect on 
June 30.
    The Annex would cover only the duration of the Iraqi Interim 
Government--that is until elections are held no later than January 31, 
2005. The TAL would remain in effect until a government formed pursuant 
to a permanent constitution assumes power.
    As we meet today, the TAL Annex has not yet been drafted. Its 
content will reflect the results of the ongoing Special Envoy Brahimi-
led consultations with Iraqis on forming the Iraqi Interim Government. 
Both the Iraqi Governing Council and the CPA are involved in these 
ongoing consultations.

                                 ______
                                 

Response of Hon. Marc Grossman to an Additional Question for the Record 
                Submitted by Senator Russell D. Feingold

    Question. What will become of the Coalition Provisional Authority's 
Inspector General (CPA/OIG) and it's responsibility for Iraq 
reconstruction funds that have already been appropriated? Will it be 
subsumed into the Department of State's IG or is some other arrangement 
anticipated?

    Answer. As we meet today, we expect the CPA/OIG to remain in place 
for six months following June 30, 2004, focusing on all CPA activities 
and obligations from the Iraq Relief and Reconstruction Fund (IRRF) 
made on or before June 30. We are presently developing a plan for 
tracking any expenditures of those obligated funds after the current 
CPA/OIG's December 31, 2004 sunset date, in accordance with 
Sec. 3001(o) of P.L. 108-106. The Department of State's Inspector 
General (DOS/IG) has detailed six people to the CPA/OIG, both in Iraq 
and Washington. The DOS/IG has planned for its own oversight work to be 
initiated after June 30 in coordination with the CPA/OIG and other 
agency OIGs.
    As to the oversight responsibility for Iraq reconstruction funds 
obligated after June 30, it is our understanding that each Inspector 
General (for the Department of State, U.S. Agency for International 
Development, Department of Defense, and others) will acquire oversight 
responsibility as each parent agency succeeds to responsibility for 
programs previously under the purview of the CPA. From July 1, the 
Secretary of State will assume responsibility for the continuous 
supervision and general direction of assistance for Iraq.

                                 ______
                                 

Responses of Hon. Marc Grossman to Additional Questions for the Record 
                      Submitted by Senator Corzine

    Question 1. Will the Iraqi Interim Government have control over 
Iraq's foreign policy? Will it be free to establish whatever kind of 
relationships it wishes with its neighbors? If it wants to have 
favorable relationships with Iran, on any basis, will it have such an 
ability? What will we do if they start doing things that contradict 
U.S. policies?

    Answer. Iraq will be fully sovereign. Iraqis are discussing now, in 
the context of the Special Envoy Brahimi-led process, what the 
particular powers of the Iraqi Interim Government will be.
    We believe that the Iraqi Interim Government should have the 
authority to conduct foreign relations, including establishing 
diplomatic relations with other countries, and expect that this will be 
reflected in the Transitional Administrative Law (TAL) Annex. The 
United States intends to re-establish diplomatic relations with Iraq 
after June 30. The Iraqi Ministry of Foreign Affairs is already very 
active--for example, successfully pressing for Iraqi participation in a 
number of important multilateral fora (including the United Nations, 
the Arab League, the Gulf Cooperation Council, the Organization of the 
Islamic Conference, and the Organization of Petroleum Exporting 
Countries).
    Ambassador Negroponte and his staff will represent U.S. interests 
to the Iraqi Interim Government, which would include conveying concerns 
we may have about regional political developments. We expect to forge a 
highly cooperative bilateral relationship.

    Question 2. You've said the Iraqi Interim Government will not have 
a lawmaking body. Does this also apply to election law? What 
constitutes acceptable campaigning? What if Iraqi candidates are anti-
American? How are we going to respond to this? What if they disseminate 
untruths? Are we going to have the ability to take over newspapers or 
shut them down? And who is going to make those decisions?

    Answer. A U.N. elections assistance team has been in Iraq since 
early April working with Iraqis and the Coalition Provisional Authority 
(CPA) to establish the legal and regulatory framework needed to hold 
elections. This includes establishing an independent election 
commission and promulgating regulations governing elections, political 
parties, and the media.
    After June 30, it will be the responsibility of the Iraqi Interim 
Government and the election commission to address actions that might 
violate regulations governing elections and campaigns. It is in their 
interest, as much as ours, to ensure that these elections are free, 
fair, and nonviolent. Iraqis are discussing now, in the context of the 
Brahimi-led process, what the particular powers of the Iraqi Interim 
Government will be. While those discussions have not concluded, we 
expect that the Iraqi Interim Government will have the authorities to 
issue binding rules and regulations necessary to carry out elections.
    We cannot speculate further on what actions the Iraqis might take 
since the election commission is still being formed and the regulations 
have yet to be adopted. The United States will have a large Mission and 
an Ambassador who will advocate and defend U.S. interests in Iraq.

    Question 3. If Muqtada al-Sadr were to incite the kind of 
insurgency that we have seen recently in a world where the Iraqi 
Interim Government did not find it appropriate to respond militarily, 
and we thought our men and women were at risk, we thought that there 
was a reason to respond, what's the deciding factor with regard to the 
use of military force?

    Answer. U.S. military forces in Iraq will report to the U.S. 
commander of the Multinational Force. We will develop coordination and 
consultation mechanisms that will appropriately reflect the partnership 
we will have with the Iraqi Interim Government and Iraqi security 
forces.
    We also expect that the Iraqi Interim Government--as the sovereign 
government of Iraq--will have a significant interest in ensuring that 
forcible challenges to the rule of law and central authority are 
appropriately handled.
    The United States has the right, the obligation, and the means to 
protect U.S. military and civilian personnel in Iraq and we will 
exercise this right if they are threatened.

    Question 4. Will the Iraqi Interim Government have the right of 
review of the recently announced structure of the Iraq Special 
Tribunal? What about the Property Claims Commission or the De-
Ba'athification Commission?

    Answer. The Iraqi Special Tribunal is an Iraqi organization, 
established last December with the full support of the Iraqi Governing 
Council. The international community, and the Department of Justice, 
will provide support to ensure a fair and impartial process. We have 
adopted this approach based on the views of Iraqis who want to oversee 
the Iraqi Special Tribunal. We expect that Iraqi lawyers and judges who 
have already been identified to support the Iraqi Special Tribunal will 
continue their work to preserve evidence, conduct investigations, and 
prepare cases.
    The Property Claims Commission and the De-Ba'athification 
Commission are both Iraqi-run and Iraqi-led. With support from the 
Iraqi Governing Council, the CPA established these entities to help 
Iraqis in their process of reconciliation.
    After June 30, the Iraqi Interim Government will have the 
responsibility, consistent with the TAL, to oversee the continuing 
process of addressing the legacy of Saddam Hussein's misrule.

    Question 5. Will this transfer of sovereignty allow for the Iraqi 
Interim Government to contract with U.S. funds in the economic sphere? 
Will they be able to select to whom a contract will go in expending the 
reconstruction resources authorized by Congress.

    Answer. U.S. authorities will continue to control, contract, and 
disburse U.S.-appropriated funds. The Chief of Mission will provide 
policy direction and oversight for all U.S. assistance programs. The 
Iraqis will be consulted at every stage of the process, as is normal 
with a bilateral assistance relationship in a sovereign country.

    Question 6. Would the Iraqi Interim Government have the ability to 
contract for the development of their oil fields? The Russians had 
previously negotiated an agreement for the development of Iraqi oil 
fields. Will they have the authority to be able to commit to those 
kinds of contracts?

    Answer. As we meet today, there has been no decision yet on 
possible limitations on the authority of the Iraqi Interim Government. 
In the context of the consultative process led by Mr. Brahimi, Iraqis 
are considering carefully whether the Iraqi Interim Government should 
be limited in its ability to bind a future elected government by, for 
example, making long-term commitments regarding Iraq's oil reserves. 
Some in Iraq have expressed the view that these types of commitments 
must be reserved for an elected government. Any limitations on the 
authority of the Iraqi Interim Government will be determined by Iraqis 
through the consultative process led by Mr. Brahimi and will be 
codified in the TAL Annex.

    Question 7. Can you make a comment about the budget of the Iraqi 
Interim Government? Could you fill in the blanks about the budget of 
the Iraqi Government itself, its sources of revenue, and how that will 
be established?

    Answer. The Iraqi Interim Government will have the authority to 
disburse and receive funds while it governs Iraq. Oil sales will 
constitute its primary revenue source. Iraqi ministries are developing 
budgets and budgeting processes. Although the Iraqi Interim Government 
will clearly have to consider budget issues, the extent to which it 
will have the authority to make long-term financial commitments will be 
decided through the Brahimi-led consultative process.
    There have been public budgets for Iraq over the past year, 
established by the CPA in coordination with the individual ministries. 
In the 12 ministries that have transitioned to sovereignty, the 
relevant Iraqi minister already has full budgetary authority for funds 
allocated to that ministry.

                                 
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