[Senate Hearing 109-]
[From the U.S. Government Publishing Office]



 
                LEBANON: SECURING A PERMANENT CEASE-FIRE

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

                                HEARING



                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE



                       ONE HUNDRED NINTH CONGRESS



                             SECOND SESSION



                               __________

                           SEPTEMBER 13, 2006

                               __________



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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
NORM COLEMAN, Minnesota              JOHN F. KERRY, Massachusetts
GEORGE V. VOINOVICH, Ohio            RUSSELL D. FEINGOLD, Wisconsin
LAMAR ALEXANDER, Tennessee           BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
LISA MURKOWSKI, Alaska               BARACK OBAMA, Illinois
MEL MARTINEZ, Florida
                 Kenneth A. Myers, Jr., Staff Director
              Antony J. Blinken, Democratic Staff Director

                                  (ii)

 


                            C O N T E N T S

                              ----------                              
                                                                   Page

Biden, Hon. Joseph R., U.S. Senator from Delaware, opening 
  statement......................................................     3


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


Norton, Augustus Richard, Professor of International Relations 
  and Anthropology, Boston University, Boston, Massachusetts.....    59

    Prepared statement...........................................    60


Pascual, Hon. Carlos, Vice President and Director of Foreign 
  Policy Studies, Brookings Institution, Washington, DC..........    34

    Prepared statement...........................................    39


Salem, Paul, Director-Designate, Carnegie Middle East Center, 
  Beirut, Lebanon................................................    46

    Prepared statement...........................................    50


Welch, Hon. C. David, Assistant Secretary of State for Near 
  Eastern Affairs, Department of State, Washington, DC...........     5

    Prepared statement...........................................     9



                               Appendixes

Appendix I: U.S. Government Assistance to Lebanon................    65


Appendix II: Lebanon--Stockholm Donors Meeting, 31 August 2006 
  (New Pledges, Total Pledges, Flash Appeal Pledges, Recovery 
  Appeal Pledges)................................................    66


Appendix III: Responses to Questions for the Record Submitted by 
  Senator Feingold to Assistant Secretary Welch..................    71


                                 (iii)

 


                     LEBANON: SECURING A PERMANENT
                               CEASE-FIRE

                              ----------                              


                     WEDNESDAY, SEPTEMBER 13, 2006

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:38 a.m. in Room 
SD-419, Dirksen Senate Office Building, Hon. Richard G. Lugar, 
chairman of the committee, presiding.
    Present: Senators Lugar, Hagel, Coleman, Sununu, Biden, 
Nelson, and Obama.

          OPENING STATEMENT OF HON. RICHARD G. LUGAR,
                   U.S. SENATOR FROM INDIANA

    The Chairman. This hearing of the Senate Foreign Relations 
Committee is called to order.
    Today, the committee meets to examine the Israeli/Hezbollah 
conflict that erupted in July. Fighting came to an end in 
August after extensive U.N. and U.S. diplomatic engagement, but 
tensions remain high. We will consider what the United States 
and others can do to secure lasting calm on Israel's northern 
border, strengthen the Lebanese Government so that it can fully 
control its territory, and assist in meeting Lebanon's urgent 
humanitarian and reconstruction needs. We will also discuss the 
impact of this conflict on broader United States interests in 
the region, including achieving a peace settlement between 
Israel and the Palestinians.
    The U.N.-brokered cease-fire, based on Security Council 
Resolution 1701, so far appears to be holding.
    The next phase in the process involves Israel withdrawing 
its forces from Lebanon while the Lebanese army and a 
strengthened international peacekeeping force move into 
southern Lebanon. Simultaneously, the Lebanese Government must 
work to prevent the smuggling of arms to Hezbollah, with the 
ultimate goal of disarming Hezbollah and other militias 
operating in Lebanon.
    Some progress has been made toward reestablishing 
stability. Israel has ended its naval and aerial blockade of 
Lebanon, allowing trade and travel to resume. The Lebanese 
Government has announced that it will send 15,000 troops to the 
south, and its Defense Minister has publicly stated that the 
army will take action against anyone who violates the cease-
fire.
    A number of governments in Europe and elsewhere have 
indicated that they would contribute troops to the expanded 
peacekeeping operation. Yet Hezbollah has refused to lay down 
its arms, and Syria has objected to any international force 
guarding Lebanon's border with Syria.
    Meanwhile, the Lebanese Government, with the help of the 
international community, must address the urgent humanitarian 
needs of its citizens and rebuild housing, roads, bridges, and 
other infrastructure damaged in the fighting. It must do so in 
the face of political competition from Hezbollah, which has 
also undertaken a reconstruction campaign funded largely by 
Iran and wealthy Arab supporters.
    The Lebanese Government, which has limited resources, is 
seeking help from the international community. An international 
fundraising conference in Stockholm last month resulted in 
pledges of close to 1 billion for the reconstruction efforts. 
Persian Gulf states reportedly have promised additional 
assistance.
    We look forward to hearing whether our witnesses believe 
that the sums pledged to Lebanon's reconstruction, including 
the approximately $230 million in assistance announced by the 
White House last month, are adequate for the task. We also want 
to know whether sufficient controls are in place to ensure that 
these contributions will have the maximum impact possible and 
will avoid being diverted for corrupt or inefficient purposes.
    If there is a competition underway between the Lebanese 
Government and Hezbollah for the hearts and minds of the 
Lebanese people, then it will be important for the government 
to be seen as in charge of the reconstruction agenda and 
implementing an effective reconstruction strategy.
    We are also concerned by the conflict's political impact on 
the region. We want to assess whether Hezbollah and its 
Secretary General, Hassan Nasrallah, gained popularity in the 
region, notwithstanding the suffering they brought upon the 
Lebanese people.
    Some observers have contended that the extremists preaching 
confrontation and violence against Israel have been 
strengthened in relation to moderate Arabs, such as Palestinian 
President Mahmoud Abbas, who has espoused negotiation and 
coexistence.
    Now, regardless of whether this view is entirely accurate, 
the United States must play an active role in strengthening the 
Lebanese Government and reinvigorating the quest for a 
resolution to the Israeli/Palestinian conflict.
    We're delighted to be joined by two distinguished panels to 
help us assess these issues and evaluate policy options.
    On the first panel, we welcome Mr. David Welch, Assistant 
Secretary of State for Near Eastern Affairs, who will provide 
the administration's views.
    On our second panel, we welcome three experts from the 
private sector: Dr. Paul Salem, director-designate of the 
Carnegie Middle East Center in Beirut, who is an expert on 
Lebanon's complex politics; Ambassador Carlos Pascual, vice 
president and director of foreign policy studies at the 
Brookings Institution, who recently served as director of the 
State Department's Office of Reconstruction and Stabilization, 
and just returned from a visit to Lebanon; and Dr. Augustus 
Norton, professor of international relations and anthropology 
at Boston University, who is an expert on Lebanon's Shi'a 
community and Hezbollah.
    We thank each of our witnesses for coming this morning. We 
look forward to their insights.
    I would like now to call upon our distinguished ranking 
member, Senator Joseph Biden, for his opening statement.

               STATEMENT OF HON. JOSEPH R. BIDEN,
                   U.S. SENATOR FROM DELAWARE

    Senator Biden.  Mr. Chairman, thank you very much.
    And observers of this committee will not be surprised to 
hear me say, once again, I associate myself with your remarks, 
and, but for the fact I should put in a statement, I should 
just leave it at that, because I think you've covered most of 
what I think need be covered.
    Mr. Secretary, welcome. It's delightful to have you here. 
To state the obvious, the shooting has stopped in Lebanon, but 
the ultimate outcome is going to be determined, as we all 
agree, by what happens in the next several months. And if we 
use our diplomatic capability to the extent that I think we're 
capable of we have a chance to shift the balance of power in 
Lebanon away from Hezbollah and toward progressive forces 
within Lebanon. But this isn't going to happen by itself, as we 
all know; and we can't afford to be passive bystanders, as I 
would argue--I don't want to get in an argument with the 
administration--as I believe we were, once Syria pulled out. If 
we repeat that lack of exercise of diplomacy, I think we're in 
real trouble.
    But I think we have a real chance. And the administration 
seems to be seized of that. I would like to compliment the 
Secretary of State for working with her French counterpart to 
actually get us to this point.
    But I think the first-and-foremost responsibility--and it's 
not a ``done deal,'' as they say--is, we have to ensure the 
success of the U.N. peacekeeping force now moving to Lebanon. 
These new troops can't be timid observers, a replica of the 
ineffectual UNIFIL operation that watched helplessly--and I'd 
say haplessly--as Hezbollah built its infrastructure and 
arsenal over the past 6 years.
    On a related point, I look forward to hearing from 
Secretary Welch on what concrete steps the U.S., Lebanon and 
our allies are taking to prevent the resupply of Hezbollah, 
particularly across the border with Syria.
    Second, it seems to me we have to move urgently to 
strengthen Lebanon's army and its internal security forces, 
especially as the Lebanese army deploys in the south. Granted, 
it's 70,000 folks, but, based on British assessments--I'm not 
talking about classified information, I'm just reporting what 
was in the newspaper--based on British military assessments, as 
well as U.S. military assessments, they are not particularly 
effectual now, they need at least $300 million in equipment 
resupply, and that doesn't even count training, as I understand 
it. And so, it's a major undertaking, but I think everybody's 
ready to cooperate in seeing that happening. But it's going to 
require substantial resources and a dedicated training effort, 
in my view. And I've not heard much about what the plan for the 
actual training of the Lebanese army is, and the re-equipping 
of it, or equipping of it, in the first instance.
    Most experts that I've spoken to and that I've read, 
several of whom are here today to testify, believe that 
Hezbollah is actually stronger than the Lebanese army. The 
United States has an indispensable role to play here, it seems 
to me. We've had a decades-long security relationship with 
Lebanon that now we have a chance to build upon, if we're 
smart. The Lebanese army and the internal security forces are 
keen to step up this cooperation. Now, I've had little direct 
interaction with the Lebanese Government since I was in Lebanon 
for the election, after the Syrians had departed, so I'm basing 
this on information that I've been given.
    But I believe that we should prepare to go well beyond the 
$42 million that the administration is proposing to support the 
Lebanese army. As I said earlier, my understanding is, both the 
Brits and us, our military, think that the need is 300 million. 
I'm not suggesting that we have to provide it all, but I'm 
suggesting it has to be provided.
    And finally, it seems to me we have to commit to building 
Lebanese institutions, ensuring the success of a massive 
reconstruction program. And, again, I know I'm repeating what's 
been already said, but it must--must, must, must, must, must--
go through the Lebanese Government in Beirut. It's the same 
argument that the three Senators in the middle here you're 
looking at made with regard to Afghanistan several years ago, 
that it must, should absolutely go through Kabul. A lot of it 
went directly to warlords, a lot of it went directly to 
regions, and it made, in my view, the President of Afghanistan 
the mayor of Kabul, not the president of a country. We can't 
repeat that kind of mistake here, in my view. I think it's less 
likely to happen here. But this is an opportunity to embolden 
and build indirectly by our going through the elected 
government, a government that can actually control.
    We've got to do something. I hope we learned our lesson 
from the way in which we did not, in my view, adequately 
support, at the outset of his first election, the Palestinian 
Prime Minister. So, I hope we don't make those mistakes again.
    While we're preparing position papers and needs assessments 
for Stockholm, the donors conference that occurred at the end 
of August, the commitment of a billion dollars or more, we all 
know that a billion dollars isn't enough. We know that the 
number is well in excess of $3 billion. Although we had to go 
about it the way we did, the mullahs did not bother for a needs 
assessment. Iran understood their opportunities, as that famous 
expression attributed to a Tammany Hall politician, he said, 
``We seen our chances, we seen our opportunities, and we took 
'em.'' Well, they seen their opportunities, and you now have 
Hezbollah walking around handing out $12,000 payments, if that 
information is correct, to those whose homes were destroyed. 
Among many lessons we should learn from the Iraq fiasco is that 
post-conflict institutions require quick, high-visibility 
reconstruction projects that immediately benefit the local 
population. I'm baffled, as I said, that with over a month to 
plan and knowing the war would end roughly when it did, we 
couldn't figure out a way to get money in to the Prime Minister 
quickly so he could be the one to begin to make the 
announcements as how he was going to rebuild.
    I remember a Chairman of this committee saying that, ``What 
we need in Iraq is about 30 mayors with walking-around money.'' 
Well, we need some mayors with walking-around money. And we 
need it now.
    So, that old bad joke, this has the ring of deja vu all 
over again, but it's a real achievement when the Syrian forces 
were withdrawn from Lebanon in the spring of 2005--in the face 
of massive street demonstrations in Beirut, and united calls 
from the international community. But Syria's withdrawal 
fulfilled only one important element of 1559, and the rest, as 
we all know, as they say, is history. I'll not take the time to 
repeat it.
    But, in the meantime, last time out, Iran outspent us by 
more than five to one in Lebanon, after the so-called Cedar 
Revolution, and our failure to follow through, along with our 
allies, to take advantage of Syria's withdrawal, to challenge 
Hezbollah, was, with the benefit of hindsight, seriously 
misguided. This is not Monday morning quarterbacking. A number 
of observers were warning of the risk posed by Hezbollah in the 
south, in the wake of Syria's pullout. But I hope, and seems as 
though, we're not going to repeat that again.
    But the one word I would use to describe my sense of what 
has to be done is urgency. Urgency. Urgency.
    That's why I hope we move quickly.
    And I'm anxious to hear from the Secretary, as well as the 
other witnesses.
    And one last point, Mr. Chairman. I am supposed to 
introduce an amendment on the floor at 10:30 or quarter of 11, 
so if I leave at that time, it'll only be because I have a time 
slot to introduce an amendment on this legislation.
    I thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Biden.
    Secretary Welch, we welcome you, again, to the committee. 
We appreciate your coming this morning to speak on this 
important set of issues.
    Now, your entire statement will be made a part of the 
record, and please proceed as you wish.

STATEMENT OF HON. C. DAVID WELCH, ASSISTANT SECRETARY OF STATE 
FOR NEAR EASTERN AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, D.C.

    Mr. Welch.  Thank you, Senator.
    I apologize for keeping you waiting, sir. Traffic was a 
little more difficult than we expected this morning.
    If I might just highlight a couple of points that are in my 
prepared remarks, and introduce the full text for the record.
    First of all, I appreciate the opportunity to come before 
you on this important subject, because I think I agree with 
what you said, Senator Lugar, and what Senator Biden said, that 
what happens in Lebanon is important, in and of itself, and, of 
course, has an impact more broadly throughout the region.
    The July 12 attack by Hezbollah was a surprise to us and to 
Israel. What was not a surprise was the tactics and strategy of 
Hezbollah, which has had a longstanding policy of attacking 
Israel and attacking us. We've know for some time that this 
political party and militia is a major destabilizing factor 
inside Lebanon, and its connections to Syria, and beyond Syria 
to Iran, are an additional destabilizing factor in Lebanon and 
more broadly. So, those are additional reasons why this 
particular conflict in Lebanon has to be considered in its 
regional context.
    Hezbollah has operated in Lebanon as a state within a state 
for some time, outside the control of the central government. 
The conflict started by Hezbollah on July 12 led to enormous 
suffering and destruction, both in Lebanon and in Israel, and 
it highlighted the risks of this situation being allowed to 
continue. As Senator Biden said, one can't be complacent and 
allow this to recur.
    So, we took the approach, at the outset of the conflict, 
Senators, that what was needed here was not a precipitant rush 
to a cease-fire, but an effort to build a cease-fire on a more 
permanent and sustainable basis, to put in place conditions 
that ideally would reduce the risk, if not eliminate it 
entirely, of a return to the status quo. That was the purpose 
of our diplomatic effort.
    We were not building from nothing. The structure of 
international attention to the situation in Lebanon does date 
back some time. And, of course, before the untimely death of 
Rafik Hariri, the U.N. Security Council had passed Resolution 
1559, which called upon foreign forces to withdraw. The tragedy 
of Rafik Hariri's murder is that it took that to precipitate 
the Syrian pullout.
    But, even further back than 1559, there is a framework for 
establishing Lebanese sovereignty in the Taif Accord and in 
Resolution 425, from 1989 and 1978, respectively. Resolution 
425 established the UNIFIL force that was in existence on July 
12.
    In Resolution 1701, which capped the diplomatic effort led 
by the United States and some of our other partners in the 
Security Council--which, by the way, was approved unanimously 
by the Security Council, a rare thing, when it comes to votes 
on a Middle East issue. This resolution established important 
new instruments for security, which, I would argue, sir, helped 
put in place the conditions for a more permanent and 
sustainable cease-fire.
    First, it called for an immediate cessation of hostilities 
and set the parameters for a permanent cease-fire. We're in 
that period now, between the immediate cessation of hostilities 
and the more permanent cease-fire.
    Second, this resolution established an international 
embargo on any arms to unauthorized groups in Lebanon.
    Third, it created an enhanced international force to 
support the Lebanese army in deploying to the south as Israel 
withdraws and, at the request of Lebanon, to help in securing 
Lebanon's borders from the illegal transport of weapons into 
Lebanon.
    Fourth, this put in place other mechanisms to assist the 
Government of Lebanon to expand its sovereignty throughout the 
country.
    And, more broadly, and finally, it put in place certain 
principles for a more lasting peace.
    If carried out--and our diplomatic effort is intended to 
see that this resolution is carried out--these new rules would 
change the situation in Lebanon and in the region, and, I would 
argue, significantly for the better, and would more than meet 
our standard of no return to the status quo.
    How is implementation of this going? I think, so far, so 
good. We're, as I said, in between the cessation of 
hostilities, which came 2 days after the passage of the 
resolution, and the more permanent cease-fire, which should 
begin once Israel has fully withdrawn from Lebanon. But, in 
this interim period, already, there is an historic deployment 
of the Lebanese army southwards. Of course, members of this 
committee are familiar with it, but perhaps our audience is 
not, but the Lebanese army has not, for many, many years, 
deployed fully throughout Lebanon. And, for almost 40 years, it 
has not been present in any significant way in the southernmost 
parts of Lebanon.
    Second, there are very capable new U.N. UNIFIL forces, or 
forces joining the new UNIFIL. These are more heavily armed, 
and they're more numerous. They have a significantly different 
and robust mandate. And there are additional force commitments 
that are coming into place even as we speak.
    For the first time, also, UNIFIL has a maritime role. 
Previously, there was no international participation in 
protecting the Lebanese coastline, which was vulnerable, also, 
to smuggling.
    As these instruments have come into place, some of the 
measures that were put in effect before by Israel as part of 
its defense have been lifted. For example, the air and sea 
blockades have come off on September 7 and 8, respectively.
    More broadly, the international response, so far, to the 
needs of Lebanon has been impressive. I agree with Senator 
Biden, it's necessary to distinguish between what has been 
delivered and what has been promised, and to emphasize the 
urgency of delivering on the promise.
    But the international community is mobilizing, with 
impressive support, and I think the Lebanese are feeling that, 
because many, many have started returning to their homes. As 
you know, there were significant numbers of Israeli and 
Lebanese citizens displaced throughout this conflict, and that 
was a grievous problem inside Lebanon.
    We announced, in August, about $230 million of American 
taxpayer support for Lebanon, of which we have spent nearly $60 
million so far. We do try--Secretary Rice does try--whenever we 
make an announcement, not to do it merely on the basis of 
promise, but to show some delivery. From the inception of this 
crisis, we were there with medical and other humanitarian 
supplies. And today, we have delivered the first shipments of 
U.S.-supported wheat into Lebanon. So, we're trying to continue 
this effort to back up our promise with what will be visible 
effort.
    Beyond the American contribution, there were very 
significant pledges made by others at the Stockholm conference 
at the end of August. The expectations of the Government of 
Lebanon were exceeded, with nearly a billion dollars, total, of 
pledges.
    As I mentioned, many people displaced in Lebanon have begun 
to return home; however, reconstruction needs are very 
significant for those who are trying to rebuild their lives and 
their livelihoods. There's also a pressing need to deal with 
the problem of unexploded ordnance particularly in the south, 
and we're trying to contribute to that effort, as well.
    We've announced some projects to rebuild vital 
infrastructure. I do think it's important that the people of 
Lebanon see some tangible evidence of this kind of American 
support, because the tangible evidence of the destruction is 
very considerable, and we have been indirectly held to account 
for that.
    We are urging the Lebanese Government to take, also, a 
longer-term look at its reconstruction needs, and we foresee 
that in the middle of this month, when the IMF/World Bank 
meetings occur in Singapore, that we'll begin to address the 
longer-term economic reform and reconstruction requirements in 
Lebanon.
    I listened very carefully to your remarks with respect to 
security assistance to the legitimate Lebanese security 
services. The Lebanese army is modest by Middle East standards. 
It is primarily U.S.-equipped. And we do, in the 
administration, share a sense that the United States should 
continue to contribute to strengthening the Lebanese army.
    The Lebanese Government had decided to undertake these 
deployments, even though they lacked certain kinds of equipment 
that would have made the deployments easier. So, they didn't 
condition it. We're trying to accelerate our assistance to the 
Lebanese army in the area of spare parts; in particular, for 
some of the vehicles and other equipment necessary for these 
deployments. And while we need to go to Congress with some 
notifications with respect to that, we would appreciate your 
support in both houses so that we are able to undertake this.
    I think that demonstration of American support, in the 
security assistance area, is incredibly important in leveraging 
that of other governments, particularly friends of ours in the 
region whose financial wherewithal may be more immediate and 
available.
    We, behind the scenes, worked very closely, as Senator 
Biden mentioned, with the Government of France, but also other 
governments, and with the U.N. Department of Peacekeeping, so 
that the concept of operations and the rules of engagement for 
the new UNIFIL force would be capable ones. And we also worked 
very hard to identify the appropriate troop contributors. We 
are quite conscious that there have not been too many 
peacekeeping operations approved in the Middle East; and so, 
when we do a new and restructured operation like this one, it's 
very important to put the proper architecture in place for its 
success.
    This is the first new peacekeeping operation in my area of 
responsibility since August 1981, when the United States 
approved the Sinai MFO. So, it's very important that we enable 
its success.
    The new UNIFIL is beginning to deploy in considerable 
numbers. I think all of us have seen some of that in the news 
and on television. As of September 6th, there were troop 
commitments of nearly 9,000; and, just in the last week or so, 
there are additional government decisions on participation, 
even in the last day or so. Over 3,000 fresh troops are on the 
ground, and more arriving every day. We expect additional 
combat elements from France to arrive this week. French, Greek, 
and Italian naval vessels are assisting the Lebanese navy now 
in patrolling the coastline. And I expect the German Government 
to address itself very shortly to a German Government decision 
for Germany to play a more permanent role in maritime 
surveillance for UNIFIL.
    Of course, a lot needs to be done, still, despite these 
accomplishments, so far. And, in particular, that needs to be 
done so that we can counter the influence of others and those 
who are not so happy with this success, so far. And we need to 
do so, as Senator Biden said, urgently.
    One aspect of that is to make the land border more secure. 
That responsibility is not Lebanon's alone. As I mentioned, a 
significant achievement in this new resolution is the 
imposition of an arms embargo. Respect for the arms embargo is 
obligatory on all member states of the U.N., including Syria 
and Iran. When Secretary General Kofi Annan visited Damascus 
the other day, he pointed this out publicly. I think that 
statement is important, because it's a public holding- to-
account of governments for their responsibilities.
    We have called upon all member states to act aggressively 
to enforce the embargo. And we have urged Lebanon to deploy 
additional resources to the land border to enable the 
protection of Lebanon's sovereignty against those who 
surreptitiously would try to violate it.
    Disarmament of militias is a continuing challenge inside of 
Lebanon, particularly with respect to Hezbollah. This was 
called for previously in Resolution 1559, and the new 
resolution asks for ideas from the Secretary General on how to 
pursue that. This is a significant challenge internally and 
politically inside of Lebanon, but we believe it's necessary to 
a lasting peace, and it is necessary, also, for Lebanon's 
assertion of its sovereignty under Lebanese law over all of 
Lebanon. Partly, our security assistance and our reconstruction 
effort is designed to help that along politically.
    We'll continue our effort to support moderate governments 
like that of Lebanon, which has been democratically elected, in 
order to help meet the needs of the Lebanese people and allow 
their freedom to take real root inside this country.
    Again, thank you for asking us to appear and to discuss 
these matters with you.


    [The prepared statement of Mr. Welch follows:]


               Prepared Statement of Hon. C. David Welch

          review of the situation in lebanon and the way ahead
    Thank you, Mister Chairman, and other distinguished Members of the 
committee for inviting me here today. I welcome the opportunity to 
discuss the important developments in Lebanon over the past several 
weeks and the ways in which the U.S. and the international community 
can help create the conditions that will ensure a lasting peace.
    The recent conflict in Lebanon was instigated by Hezbollah's 
unprovoked July 12 attack across the Blue Line into Israel--an attack 
in which several Israeli soldiers were killed and two captured. This 
attack was not an isolated incident, but rather reflected a long-
standing policy of Hezbollah to engage in periodic attacks against 
Israel--even after Israel's withdrawal (which was confirmed by the 
United Nations) from Lebanon in 2000. That such terror attacks have 
continued with considerable frequency in the six years since Israel's 
withdrawal is hardly surprising; since its inception in the early 
1980s, Hezbollah has belied its claims to be a movement resisting 
occupation by engaging in terrorism, including its involvement in the 
1983 bombing of the U.S. Embassy in Beirut which killed 63 people, the 
bombing of the Marine barracks in Beirut that same year which killed 
241 U.S. servicemen, the 1984 bombing of the U.S. Embassy annex which 
killed 2 U.S. servicemen, and the 1992 attack on the Israeli Embassy in 
Buenos Aires which killed 29, as well as the 1994 attack on the Jewish 
community center in Buenos Aires which killed 85. As this record shows, 
Hezbollah is a major destabilizing factor in the Middle East, closely 
allied with Syria and Iran. The Lebanon war instigated by Hezbollah 
this summer must therefore be seen in the context of the broader Middle 
East situation which we face.
    Hezbollah has operated as a ``state-within-a-state'' in the 
Lebanese body politic, outside of the control of the central 
government. The events of July 12, which touched off a conflict that 
led to enormous suffering and destruction in both Lebanon and Israel, 
highlighted the risks of allowing this situation to continue. Secretary 
Rice made it clear that while a cease-fire was of the utmost urgency, 
it needed to be lasting and sustainable. U.S. diplomacy aimed at a 
permanent solution that would reduce the risk of a return to the 
``status quo ante.'' We thus led the effort to create a new dynamic in 
Lebanon for greater stability and peace in that country, an effort that 
resulted in the passage of UNSCR 1701.
    The international community had earlier voiced its commitment to 
support the Lebanese people in their goal of a fully sovereign 
democratic state when it passed UNSCR 1559 (September 2, 2004) and 
UNSCR 1680 (May 17, 2006). Security Council Resolution 1559, in 
particular, is premised on supporting a fully sovereign government, and 
called for foreign forces operating in Lebanon without the permission 
of the government of Lebanon to depart. A framework for establishing 
Lebanese sovereignty goes back even further to the Taif Accord of 1989 
and UNSCR 425 (March 19, 1978).
    The brutal assassination of former Lebanese Prime Minister Rafiq 
Hariri and 22 others on February 14, 2005, brought the Lebanese people 
to the streets demanding an end to violence and foreign intervention in 
Lebanon's internal affairs. Two months later, Syria withdrew its 
military forces from Lebanon ending a nearly thirty-year occupation. 
The international community expressed its solidarity with the people of 
Lebanon with the passage of UNSCR 1595 authorizing an international 
investigation into Mr. Hariri's murder. We support the efforts of the 
UN and the Lebanese government to create a tribunal with international 
elements to bring to justice those responsible for this heinous crime.
    With UNSCR 1701, unanimously approved by the UN Security Council on 
August 11, the international community established important new 
instruments for security. The resolution called for an immediate 
cessation of hostilities to the most recent conflict between Hezbollah 
and Israel, imposed an international embargo on arms to unauthorized 
groups in Lebanon, created an enhanced international force to support 
the LAF in deploying to the south as Israel withdraws and at the 
request of Lebanon to secure Lebanon's borders from the illegal 
transport of arms, put in place mechanisms to assist the government of 
Lebanon to expand its sovereign authority throughout the country, and 
laid out the political principles for a lasting peace. If carried out, 
these new rules will change the situation in Lebanon and in the region 
significantly for the better and will more than meet our standard of 
``no return to the status quo ante.''
    We are making good progress. For the first time in almost 40 years, 
the Lebanese Armed Forces have deployed to the south. Capable new 
UNIFIL forces, much more heavily armed and numerous and with an 
expanded and robust mandate, are accompanying them, and force 
commitments are nearing their desired levels. Also for the first time, 
UNIFIL has a maritime role. Reflecting these developments, and as a 
result of significant diplomatic efforts by Secretary Rice with the 
Israelis, Lebanese and the UN, Israel lifted its air blockade on 
September 7 and its maritime blockade on September 8.
    The initial response to the needs in Lebanon has been impressive. 
The international community has mobilized to provide impressive 
quantities of humanitarian aid, and Lebanese citizens are returning to 
their homes. On August 21, President Bush announced more than $230 
million in humanitarian, reconstruction, and security assistance to 
Lebanon--more than $55 million of which has already been provided for 
Lebanon. We will also be leveraging the private sector and other 
economic incentives to support Lebanon.
    Pledges of $940 million made at the August 31 International 
Conference on Early Recovery hosted by Sweden doubled the amount the 
Government of Lebanon was seeking in its appeal document.
    An impressive international relief effort during and just after the 
crisis has produced results. Over 750,000 of the estimated 980,000 
people displaced by the conflict have now returned to their homes. 
However, much more remains to be done to enable these people to rebuild 
their lives and their homes.
    An immediate need will be the removal of the thousands of 
unexploded ordinance in the south left behind after the conflict. The 
U.S. has announced that it will provide an initial $420,000 and will 
request congressional approval in the next fiscal year for an addition 
$2 million to aid in this effort.
    The U.S. has also announced projects to rebuild vital 
infrastructure including roads and bridges, support residential 
reconstruction and provide temporary shelters for families as they 
repair their homes, restore and repair schools that were damaged or 
used as shelters, clean up environmental damage linked to the massive 
oil spill off Lebanon's coast, and restore the livelihoods of thousands 
of fishermen along the coast from Tripoli to Naqoura where recovery 
hinges on getting the fishing industry back up and running.
    Looking ahead to longer-term reconstruction, we have urged the 
government of Lebanon to take a leading role. Lebanon will present its 
initial findings at a meeting of the Economic Core Group to be held on 
the margins of the World Bank/IMF Meetings in Singapore next week. We 
look forward to a larger reconstruction conference to be held in Beirut 
at a later date.
    Our assistance to Lebanon will also include assistance to the 
Lebanese security services and armed forces to fulfill their mandate to 
secure the borders and territory of Lebanon. The LAF has undertaken its 
responsibilities in deploying even before the delivery of essential 
supplies and equipment. We will need to accelerate our assistance to 
the LAF to ensure current deployments are sustainable. An effective and 
well-trained Lebanese Armed Forces is a crucial component to the 
implementation of UNSCR 1701, the sovereignty of government of Lebanon, 
and lasting peace in the region.
    The government of Lebanon has identified key equipment and training 
needs, which we are working with the international community to 
address. President Bush has announced approximately $42 million in FY 
06 security assistance as part of the $230 million assistance package 
to Lebanon.
    We have also worked closely with our international partners in 
establishing the concept of operations and identifying contributing 
countries for the expanded French-led UNIFIL Force. This force is the 
first new peacekeeping operation in the Middle East since August 1981 
when the Protocol to the Treaty of Peace established the Multinational 
Force and Observers (MFO) in the Sinai.
    UNIFIL has begun to deploy, accompanying the LAF as it takes up 
positions along the Blue line. As of September 6, 8,500 troops had been 
committed to UNIFIL and 3,138 troops were already on the ground. Nine 
hundred additional French troops will arrive this week. French, Greek, 
and Italian ships troops are assisting the Lebanese Navy in patrolling 
their coastline; a more permanent fleet of German ships will replace 
them in approximately two weeks. Additional UNIFIL troops are scheduled 
to arrive at the end of the month. We expect complete withdrawal of IDF 
troops from southern Lebanon within the next week.
    However, while progress has been made, much remains to be done. Our 
challenge now is to maintain the momentum towards a lasting peace in 
Lebanon while countering the efforts of Hezbollah, Syria, and Iran to 
repaint the conflict as a victory for Hezbollah. We will need to move 
quickly.
    Moving forward, we must maintain our emphasis on economic and 
security assistance to Lebanon, channeling it in a way that supports 
the government of Lebanon as it works to fulfill its responsibilities 
under UNSCR 1701.
    It is imperative that we continue to assist Lebanon in making its 
land border more secure, but that responsibility is not Lebanon's 
alone. UNSCR 1701 imposes a legally binding obligation on all states to 
ensure that weapons are not supplied to Lebanon without the 
authorization of the Lebanese government or UNIFIL. We have called on 
all UN member states to act aggressively in enforcing this embargo, 
ensuring that their territory and airspace are not used to undercut it.
    The embargo imposes a particular requirement on Syria and Iran, 
both of whom have a long history of interfering in Lebanon and of 
supplying Hezbollah and other regional terrorist groups with weapons 
and funding. They have continually failed to heed international calls 
to stop resupplying these groups with deadly arms.
    The disarmament of all militias, including Hezbollah, as called for 
in UNSCR 1559, will continue to pose a significant challenge. The key 
to Hezbollah's disarmament, and to a lasting peace, will be to ensure 
the conditions necessary to permit the Lebanese government to assert 
its sovereignty across all of Lebanon. Our security and reconstruction 
assistance is designed to do just this.
    While this conflict brought much destruction and heartache, its 
resolution has provided us with opportunities that extend beyond 
Lebanon. The Middle East stands at a critical crossroads, with profound 
implications for America's national security. While there is a trend 
towards democracy, there is also resistance to it. We must continue to 
engage now to ensure that the loudest voices are not those that would 
like to wipe the slate clean and start over with an exclusionary, 
intolerant world view. We must continue to go on the offensive against 
radicals and extremists who exploit conflicts to undermine a non-
violent and liberal order.
    While making progress in Iraq and in the Arab-Israeli conflict 
remain core concerns, the determination of the international community 
and friends in the region to improve the economic and political 
situation in the broader Middle East remains the only way to create 
conditions for real change and lasting stability. To the degree that we 
and they are successful, the ambitions of radicals and extremists will 
fail. Increasing the scope of political freedom, reducing high rates of 
unemployment, creating opportunities for personal economic improvement, 
and raising the standard of living will help address the ``root 
causes'' of terrorism and reduce the appeal of extremist political 
movements.
    We must continue our efforts to support moderate governments like 
the democratically elected government of Lebanon in their efforts to 
meet the needs of their people and to encourage genuine freedom to take 
root. In no place are the risks and opportunities more apparent than in 
the current situation in Lebanon. Our approach must be comprehensive 
and it must seize opportunities when only dangers seem present.
    We are under no illusions. Conflict resolution and reform in the 
region will require a great commitment from the United States. How we 
respond will define our relationship with the region for generations to 
come.
    Thank you for your time. I would be pleased to address your 
questions.


    The Chairman. Thank you very much, Secretary Welch, for 
your testimony.
    I'm going to yield to Senator Biden for his questions, 
because I know he needs to leave for the floor, and then I will 
come after that. And we'll have a 10-minute round.
    Senator Biden. Very gracious of you, Mr. Chairman, thank 
you very much.
    Mr. Secretary, what is your assessment of the immediate 
impact, if any, of Hezbollah announcing to folks, particularly 
in the south, that they will rebuild their homes and allegedly 
supplying them with up to $12,000 in cash or--first of all, is 
that accurate? Are they doing that? And, secondly, how do you 
read the impact of that? I realize it's just beginning.
    Mr. Welch.  Well, I've watched the statements coming from 
those particular quarters very carefully, Senator. At the time 
the Secretary General of the Hezbollah made that pledge, he was 
riding a wave of support throughout the Arab world that 
acclaimed his party as victors in this incident. But I thought 
his statement was interesting for what wasn't, I think, 
sufficiently analyzed at the time, which was, as a politician, 
it seemed me he felt the need to make that statement, and why. 
Some would argue that it was in order to show that they can 
move out smartly and deliver this. I think it was also a 
defensive measure, sir.
    Senator Biden.  Well, I think it clearly was. He went even 
further, as reported in today's press, that had he known what 
the response would be, he would not have taken the action he 
took. I am confident that was not to give solace to the 
Israelis, but to make clear to the Lebanese he didn't mean this 
damage to befall them. But that's not my question. My question 
is, (a) Are they actually delivering cash to Lebanese to 
rebuild? And, (b), If they are, what is the effect of that? Not 
his reason for doing it. The effect.
    Mr. Welch.  I'm, frankly, not sure, so far. I know they 
have delivered some, because there are accounts in the press 
and people attesting to having received these stipends. That 
said, there are other accounts from people who say it hasn't 
shown up yet.
    We've taken an estimate of what would be required. And to 
meet this promise, Senator, very large sums of money would be 
required. I'm not entirely sure they're in a position to 
deliver on that promise.
    And this would bring me to my third point--by promising to 
do something, he is also suggesting that others would not be 
able to do it, and then creating a different frame of reference 
for the Government of Lebanon's own efforts. That, I think, 
gets back to the question of getting others to come forward 
with real reconstruction help.
    Senator Biden. I think it presents a gigantic opportunity. 
I'm not--see, it seems to me that this is wherein the urgency 
comes. I mean, it's a gigantic opportunity here. I think this 
is one of those deals that's like the fish on the dock in the 
sun--the longer it lies there, the worse it's going to smell. 
If we are smart, Hezbollah is going to look very bad when this 
is all over. And it depends upon our--not just us; European, as 
well, and the Gulf States--affirmative action to turn this from 
a negative into a positive. And I think the potential is 
there--I'm optimistic--if we act fairly swiftly.
    Well, now let me shift. My discussions, and others--I'm 
sure I wasn't the only one that has them--with the Gulf state 
leaders, when Hezbollah initiated this effort, was a very, very 
significant concern on the part of most Gulf state oil-
producing states, who are predominantly Sunni, about this being 
an Iranian gambit, and the Shi'a Crescent--and you heard a lot 
of talk about all of that. Now, our friends in Saudi Arabia and 
other Gulf states are swimming in a sea of cash. I mean, they 
are flush, like they have never been. Do you get a sense that 
they're prepared to come in with big numbers. Everyone 
acknowledges--and we'll hear from witnesses today, if my staff 
is correct in what they're going to say--the reconstruction 
costs are going to exceed $3 billion. We're talking about 
pledges of a billion. Do we have any reason to believe that 
there will be a significant commitment, meaning billion-dollar 
commitments, coming from the oil states--Saudis, in particular? 
Can you fill us in on what you know of their thinking right 
now?
    Mr. Welch.  Yes. I think the news is encouraging there. As 
early as the Rome conference, during, really, the peak of the 
crisis, the Saudi and Kuwaiti Governments came forward with 
significant pledges. Those were divided into two parts. One was 
immediate deposits into the Lebanese Central Bank of foreign 
exchange reserves to help the Lebanese currency.
    Senator Biden.  How much did they deposit?
    Mr. Welch.  I think it was in the neighborhood of a billion 
dollars all together, Senator. Then there were reconstruction 
and humanitarian pledges made. Many of the Gulf Arab states 
delivered significant humanitarian assistance during the 
crisis, and have pledged very large amounts. The Saudis, for 
example, $500 million; Kuwaitis, $300 million.
    Senator Biden.  We are cooperating very closely with the 
French and NATO and the European countries, as well as 
encouraging Turkey and other Muslim countries to participate in 
the UNIFIL force. How closely engaged are the Saudis with us in 
detailed discussions about the objectives in Lebanon? Are the 
Saudis, on their own, concluding they have to help; or is it 
because of the fact that, as you pointed out at the beginning 
of your testimony, the Arab street was much more sympathetic to 
Hezbollah at the end of the process than they were at the 
beginning for--quote--giving the Israelis their comeuppance 
here? Do we have to deal at more arms' length with the Saudis, 
in terms of public reception now, because of that? Or are they 
foursquare in the position of joining the international 
community, led by the Europeans and the United States, to 
rebuild Lebanon?
    Mr. Welch.  Let me divide my answer into two parts. There 
are different roles here. The Saudis, for example, have really 
no record of contributions to peacekeeping operations. And, 
furthermore, more broadly, the Gulf States, in general, don't 
have a substantial record in contributing there. So, we didn't 
see them as necessarily logical troop contributors.
    Senator Biden.  No, I'm not suggesting that. Have there 
been actual discussions where we sit down and say, ``Look, 
let--are we on the same page here? This is about Iran. This is 
about Hezbollah. This is not in your interest, Saudi Arabia. 
You know it's not in your interest. Therefore, since it's not 
in your interest, are we''--and then coming up with a coherent 
strategy where we know what they're going to do? For example, 
my staff was, late August, in Lebanon--and, I am embarrassed to 
say maybe the majority staff was, too, I don't know, but my 
staff was there--and had an opportunity to meet with the Prime 
Minister and many others, most of the actors. And the Prime 
Minister, at that time, in late August, which is now 3 weeks 
ago, almost, when the word was that Hezbollah was beginning to 
dispense cash, indicated he was not at all certain, at that 
time, what pledges, financial pledges, were coming from, had 
been made, or likely to come from the Saudis and the Kuwaitis. 
Now, things may have changed since then. I hope they have.
    But that's the context in my asking this question.
    Mr. Welch.  Let me continue and endeavor to answer the 
question you had about larger coordination.
    I think the answer to that is ``pretty good,'' in this 
case. For example, Prime Minister Siniora was just in Saudi 
Arabia this last weekend, and the Saudi Government provided 
important public testimonial of support for him. And I think if 
you were to go back and ask him today how does he feel about 
the political support he and his government have gotten from 
some of our friends in the Arab world, he'd feel pretty good 
about it, sir.
    Although they're not playing a role in contributing to the 
U.N. peacekeeping operation, we do feel that they will make 
important contributions, primarily financial, to security 
assistance support for the Lebanese authorities. We're working 
on that right now.
    In terms of delivering on some of their reconstruction 
pledges, I'd like to get back to you with it, to just be 
certain about the facts of where they are with respect to their 
pledges.


    [The information referred to above follows:]


    Mr. Welch. Although not all donors have specified the amount of 
their contributions, a list of contributions compiled by the UN Office 
for the Coordination of Humanitarian Affairs (OCHA) (attached--Lebanon 
pledge conference final) indicates that 57 countries and several 
regional organizations have announced commitments to Lebanon. These 
publicly stated contributions range from $25,000, donated by Monaco, to 
the Saudi pledge of $500 million in reconstruction assistance, $63 
million of which is already committed. The Department does not have a 
comprehensive list of funds delivered to-date. This process is being 
actively managed by the GOL.
    A breakdown of the top ten donors from the Stockholm Conference, 
provided informally by the Government of Sweden, follows:


          1. Saudi Arabia.--$60 million (our understanding is that this 
        reflects Saudi humanitarian/early recovery assistance; we 
        understand that Saudi Arabia will be looking to spend a large 
        amount of what is left of the $500 million on reconstruction 
        assistance, which we assume will be announced at the Beirut 
        donors' conference).

          2. Qatar.--$300 million.

          3. U.S.--$180 million (this is the $230 million minus the $55 
        million in humanitarian assistance that had been disbursed 
        prior to the conference).

          4. Arab Fund for Economic and Social Development.--$112 
        million.

          5. Spain.--$94 million.

          6. European Commission.--$91 million.

          7. UAE.--$50 million (It is likely this reflects Emirati 
        humanitarian assistance; they are spending $15 million on 
        demining/UXO removal and have made an undefined pledge to 
        support schools and hospitals in the south.

          8. Italy.--$38 million.

          9. Germany.--$28 million.

          10. Sweden.--$20 million.

    Combining the above with other pledges of $20 million or less, the 
Swedish Government has reported that the revised total of support 
pledged at the Stockholm Conference is $973 million.


    [Additional information on the Stockholm Conference can be 
found in Appendix II, page 66, of this hearing print.]


    Senator Biden.  I'd appreciate that.
    Mr. Welch.  But they have indicated to us that they 
understand the political challenge presented by Hezbollah's 
decision on July 12th, they took a very forthright public 
position against that, themselves, not long afterwards, in the 
Arab League and elsewhere. And, more importantly, they have 
signaled that they should emphasize the southern part of 
Lebanon in using their reconstruction assistance, which I think 
would get at your other question, sir.
    Senator Biden.  Well, thank you very much; my time is up. I 
thank the Chairman for his graciousness. I wish you all the 
good luck in the world. This is a real opportunity, and I hope 
we take full advantage of it, and do it expeditiously.
    I thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Biden.
    Let me ask Secretary Welch some questions that are 
stimulated by an article, or a column, by Henry Kissinger in 
the Washington Post today as he analyzes the Lebanon situation.
    Secretary Kissinger indicates that essentially the goal of 
Hezbollah was not one of attempting to bring about a form of 
order in which there are nation-states negotiating with each 
other. In fact, as a political player in Lebanon--as one that 
is armed, and that is prepared to go wherever it wishes to go, 
notwithstanding whatever the government might do--Hezbollah 
will seek to retain its arms, and its ability to play that 
role. The Lebanese government says that the Lebanese people are 
angry at Hezbollah for causing the destruction of their homes, 
bridges, airport facilities, and what have you. But Secretary 
Kissinger indicates that Hezbollah has come out of the conflict 
more popular than the government. And furthermore, at least 
Henry Kissinger would feel, Hezbollah has no intention of 
disarming; it intends to continue to attempt to unify Shi'ites 
and Sunnis in a hatred of Israel and the United States that 
will transcend boundaries; to expand Syria's influence; and to 
enable Iran to play a much larger role in the area. In 
conventional diplomacy, we, in the West, continue to think of 
the established international boundaries around Iraq or Syria 
or Lebanon. These are not necessarily the boundaries involved 
in the transnational conflict that Henry Kissinger is talking 
about. So, our Secretary of State, and you, following 
conventional diplomatic practice, have to go to the Government 
of Lebanon. But, in fact, the real power is Hezbollah, not the 
Government of Lebanon. Our ability to negotiate with 
Hezbollah's backers, Syria and Iran, is severely limited.
    As Kissinger would say, the peacekeeping operation is, if 
not in shambles, at least pretty well trampled over. As a 
result, the hopeful signs, at least, of the cease-fire are 
important. Certainly the reconstruction is important, but 
ambassadors in the area with whom I visited have indicated 
something which is no secret, and that is that anti-American 
feelings, quite apart from anti-Israeli feelings, have risen 
sharply in this process on the basis of a feeling that the 
Israelis, in their retaliation, were so-called ``allowed,'' in 
quotes, by the Americans to proceed to destroy houses, bridges, 
and so forth, in Lebanon. And, therefore, even as we come along 
with assistance to rebuild Lebanon, once again our stock in 
trade, in terms of public support, is diminishing rather than 
growing.
    Now, this is a large list of particulars, but comment, if 
you will, on whether our ability to deal with the Lebanese 
Government makes the major difference here. Our hopes are that 
it somehow will become strong, that its army might, in fact, 
control its own territory, that Lebanon could deal with Israel. 
If I read Henry Kissinger correctly, he would say this is 
interesting as a possibility, but improbable in reality, 
because the real reality is Hezbollah, armed by Iran, perhaps 
aided by Syria, as well as others. And so, try as hard as we 
may to prop up a Lebanese Government and an army that can 
control its territory and its borders, Lebanon's leaders are 
going to be totally incapable of that kind of a mission.
    Now, what sort of a response do you have to that?
    Mr. Welch.  Well, I think it is demonstrably true that 
before July 12th, when Hezbollah launched this attack, that it 
was able to operate autonomously. In fact, that was the 
complaint from our Arab friends as the conflict started, that a 
group would undertake to exercise the most sovereign of state 
acts, an act of war, without any regard to the interests of the 
people or the interests of the state. That statement, on the 
part of Saudi Arabia and then the Arab League, is really an 
extraordinary one. So, I think there's every recognition of the 
reality that Mr. Kissinger describes.
    The Chairman. But it didn't seem to last for long. You 
know, we were so heartened that they said anything. Then, stage 
left, they're out of there.
    Mr. Welch.  Well, you know, it's true, sir, that reaction 
of public opinion, anytime there is violence between Israel and 
any of its neighbors, or the Palestinians, it tends to head in 
only one direction.
    The question that I think former Secretary Kissinger is 
alluding to here is, Are there the measures that are being put 
in place up to the task? It's a valid question. I would argue 
that we have done some things that are important in that 
regard. And I'll come to that in one second. But it is also 
true that those are being tested, and will be tested in the 
future. And they require vigilance and discipline to hold to.
    What are they? First of all, as a result of this 
resolution, there are substantial new protections in place for 
the authority and sovereignty of the central Government of 
Lebanon and for peace and stability in the area.
    Number one, there are to be no armed groups in the area of 
deployment of the new UNIFIL. That is in the south. And that 
was where Hezbollah had its most significant armed presence. 
And it is not to be there in the future. And that's the job of 
UNIFIL and the Lebanese army, to assure that it is not.
    Number two, there's an arms embargo now. There wasn't an 
arms embargo before passage of this resolution. So, it's an 
obligation on other countries not to make the problem worse by 
rearming these people.
    Number three, there is a call--admittedly, over a longer 
term and as part of a Lebanese process--for the disarmament of 
this militia, which is the only significant armed militia left 
in Lebanon. I mean, there are some armed Palestinian 
organizations, but they pale in comparison to the capabilities 
of Hezbollah. That's probably the most difficult of all of the 
tasks to achieve, because it requires political consensus and 
organization within Lebanon.
    But there is, I would argue, a greater evidence of 
international support toward that goal; and, in particular, by 
inviting the role of the Secretary General in, you know, how to 
help the Government of Lebanon exercise it.
    Now, I recognize that--and Mr. Kissinger is right--these 
are things that I would expect the adversaries of peace will 
test, and it's our common obligation to try and best them in 
that endeavor.
    The Chairman. As a practical matter, though, how will the 
Government of Lebanon disarm Hezbollah? Just physically, how 
can this happen? Hezbollah plays a role politically in the 
government, and apparently a fairly popular one, as a matter of 
fact. It's a democracy, and people like Hezbollah, apparently.
    Mr. Welch.  Well, they have been freely elected to the 
parliament, you're right, sir. And the parliamentary elections, 
as by our judgment, were up to an international standard.
    Previous disarmaments in Lebanon have occurred, and they 
have been consensual. After the Taif Accords, other militias 
were disarmed, and they did so willingly. They did it in 
different ways. To the best of my knowledge, almost all of them 
simply sent their fighters home. Their weapons were, in at 
least one case, redistributed to the Lebanese army, and, in 
anther case, sold abroad; and, unfortunately, in that case, 
sold to another conflict area.
    How this will occur in the case of Lebanon is something 
that we don't know yet. That it should occur, I think there's 
greater agreement that it should.
    The Chairman. Thank you very much.
    Senator Nelson?
    Senator Nelson of Florida. Mr. Chairman, I would defer to 
my more senior member, Senator Hagel.
    The Chairman. Very well.
    Senator Hagel?
    Senator Hagel.  Senator Nelson, thank you. Mr. Chairman, 
thank you. Welcome, Mr. Secretary.
    Mr. Secretary, could you describe for us what renewed 
efforts are underway by the United States Government to restart 
negotiations between Israelis and Palestinians on the overall 
issue that we are talking about here this morning, the larger 
context of that conflict?
    Mr. Welch.  Well, this is something we've been seeking to 
do for some time, Senator. It's been a summer of stress and 
hardship. Ever since June 25, when, in an operation from Gaza 
into Israel, an Israeli soldier was taken captive, pretty much 
all efforts to restart any conversation and negotiation between 
Israelis and the Palestinian Authority has been extremely 
difficult and limited. We're pursuing this now on a number of 
fronts.
    First is to support all efforts to obtain the release of 
this IDF trooper, and, for that matter, the others. The 
Government of Egypt has been playing a constructive role in 
that regard, trying to break through the impasse that, I have 
to say, regrettably, still persists on that.
    Second, we have tried to keep the access and movement 
restrictions that have been in place by the Israeli authorities 
around and into Gaza, tried to relax those as much as possible, 
given the security concerns the Israelis have.
    The situation inside Gaza has become quite difficult, 
actually more difficult after June 25th, but we've been able to 
relieve that somewhat by getting the Government of Israel to 
allow humanitarian shipments and provide other humanitarian 
needs into Gaza, including some shipments of American 
assistance.
    More broadly, we still have this continuing problem of a 
division within the Palestinian Government. There's one part of 
the government that accepts to pursue negotiations on the basis 
that all others in the international community would accept, 
and that part of the government is led by the President, 
Mahmoud Abbas. Another part, led by the Prime Minister, Ismail 
Haniyeh, who represents the Hamas majority in the PLC, does not 
subscribe to the same principles for engagement in the peace 
process. They've been unable, so far, to surmount their 
resistance to doing that. There are some discussions underway 
now among the Palestinians, about how to get over that hurdle, 
but I don't see, yet, that they've reached resolution of that 
difficulty.
    We would like to see conversations, even negotiations, 
restart between Israel and the legitimate part of the PA just 
as soon as possible. I think realistically that's going to 
depend on some of these other developments.
    Senator Hagel.  Well, does that mean the United States 
Government is not actively engaged in taking initiatives to 
restart those talks or working with regional powers, not unlike 
the Beirut declaration of 2002, or some initiative to move this 
forward? Is that a fair assessment, based on what you've just 
said, that we are essentially leaving it to the currents to 
take us wherever we're going to go?
    Have you been instructed by the Secretary or the President 
to take any specific initiative in this regard?
    Mr. Welch.  Yes, Senator, but ``initiative''----
    Senator Hagel.  Can you explain that?
    Mr. Welch [continuing]. ----``initiative'' is a big and 
conceivably more exuberant term than I would use.
    Senator Hagel.  Well, you define it for me.
    Mr. Welch.  We have been very active particularly in trying 
to surmount this division among the Palestinians. We would like 
to see a government among the Palestinians that can accept the 
three principles laid out by the Quartet in the early part of 
this year. Those are: a government that would accept that 
Israel is a fact, and exists; that would accept to pursue 
negotiations in an environment free of violence and terror; and 
that would subscribe to the previous agreements signed by the 
Israelis and the Palestinians and such things as the Arab 
League initiative. We've been promoting that privately as one 
way to break through this impasse. We believe President Abbas 
is doing the same thing.
    We've been very actively in touch with them, even during 
the conflict in Lebanon; though, Senator, I would say we were 
careful in how we did that, and did not want to take it beyond 
private diplomacy, because we didn't want to link the two 
conflict areas. That would be rewarding extremists in both, 
were we to do that. We remain very active, until this moment, 
in trying to achieve this, as well. Secretary Rice has done so 
personally in very recent conversations with the Palestinians 
and Israelis. We have the Israeli Foreign Minister visiting us 
today, in fact. I was in touch with President Abbas, myself, 
over the last several days to deal with this question of the 
government crisis that they have. And we have had similar 
conversations with our Arab partners, particularly the 
Egyptians, Jordanians, and Saudis.
    Senator Hagel.  Well, as you know, U.N. Security Council 
Resolution 1701 lays out a set of principles to form a basis of 
a permanent cease-fire and a long-term solution. I think the 
Secretary General is scheduled to give a report on that, mid-
September. And one of the areas, if I understand that 
resolution correctly, is to address the Lebanon/Israeli issue, 
and instructs the Secretary General to help reach some 
agreement there.
    What is the status, as far as you understand it, of the 
progress of the Secretary General in this regard?
    Mr. Welch.  Senator, the Secretary General's report was 
just delivered to us last night. It is very Lebanon-specific, 
derived principally from the requirements presented by 
Resolution 1701, and it's diagramed against each of the broader 
political principles that are in the first part of that 
resolution. It's spare in its comment about the overall 
regional situation, though it is mentioned.
    I would say, on balance, the report is positive, overall, 
because, as I mentioned earlier, in this period following the 
cessation of hostilities, and given the deployment of the new 
UNIFIL elements and the Lebanese army, the news is relatively 
good from Lebanon, so far.
    Now, he does point out in the report a number of areas that 
need further effort, and some of the earlier questions alluded 
to those. That includes the issue of disarmament, and it 
includes the issue of the enforcement of the arms embargo, too.
    Senator Hagel.  Thank you.
    Could you give this committee a general inventory of what 
assistance the United States is providing, and is planning to 
provide, Lebanon in terms of military assistance and economic 
assistance? Generally, frame up the programs and the general 
amount of money that we have pledged.
    Mr. Welch.  I will try to do that, sir. And I will also 
make a detailed submission for the record.


    [The information referred to above can be found in Appendix 
I, page 65 of this hearing print.]


    Senator Hagel.  Thank you.
    Mr. Welch.  We have pledged around $230 million. That 
includes assistance from the current fiscal year and the next 
fiscal year. About $40 million of that is security-related 
assistance. Of that $230 million, between $55 million and $60 
million is humanitarian aid. That is already being expended. 
When we prepared for the Stockholm conference, sir, we tried to 
organize to deliver our aid in such a manner that it was would 
support things that were visible. So, those activities, to give 
you some examples that I have on a list here, are to use 
American taxpayer dollars to repair some of the bridges and 
roads that were damaged in the fighting; to assist with 
rebuilding of homes and other infrastructure; the school year 
is about to begin in Lebanon, so we also wanted to help out on 
rehabilitation of schoolhouses; there was a very significant 
oil spill during the conflict, and we are making a contribution 
there, but also to help the fishermen who have been affected by 
this incident. As you know, Lebanon depends, for its natural 
livelihood, on the ocean; and, finally, as I mentioned earlier, 
helping with unexploded ordnance. These programs total, all 
together, in the neighborhood of nearly $60 million, 
themselves.
    For the details of where this comes from, because it's a 
complicated picture, both moving current and next fiscal-year 
monies, but also reprogramming some other sums, I'd like to 
submit an answer for the record.


    [The information referred to above can be found in Appendix 
I, page 65 of this hearing print.]


    Mr. Welch.  As I said, some part of our ability to deliver 
this, sir, also depends on congressional support, and we would 
hope to have that from, of course, the Senate, but also the 
House.
    Senator Hagel.  Thank you.
    If I could just get one clarification, Mr. Chairman. Of the 
$40 million you noted for security, is that $40 million for the 
Lebanese army?
    Mr. Welch.  Not exclusively, sir. Some part of it would be 
to assist the new peacekeeping operation. A significant part of 
it, $10 million, is in DOD appropriations, under something 
called Section 1206, which is exclusively for the Lebanese 
army. I believe, sir, though I'd have to check, that that 
requires congressional assent. This is spare parts for APCs, 
helicopters, trucks, and other--it's mostly logistical 
equipment, not guns. We are providing other personal-kit items 
for LAF soldiers. We are going to increase our IMET program. 
And then, beyond the army, we're looking at some assistance for 
the internal security forces, which is, sort of, their national 
guard. They have a national police service. That's what that 
is. And that's more modest, but it's important. We haven't had 
much of a relationship to that organization, and we feel it's 
important, in the present context. That would support their 
capabilities, including for airport security, scanning 
equipment, but also training needs. We're looking at some 
modest amounts of money also to support police and judges.
    And I think one of the most important things we're going to 
do is not involved with our money, but using the promise and 
delivery of our money to get that from others, to those 
organizations. In particular, there are some governments in the 
region who can provide weapons, which are, believe it or not--
it's sometimes hard to conceive that weapons are needed in 
Lebanon, but, for the legitimate security authorities, they 
are, and many of the shoulder-fired weapons that the Lebanese 
army and internal security forces have are not operable, so 
they need those, and we hope to get friendly governments in the 
area to provide them, using Gulf assistance money.
    Senator Hagel.  Well, I appreciate it. And I look forward 
to seeing the detailed list, when you are able to bring it up. 
Thank you, Mr. Secretary.
    Mr. Chairman, thank you.
    The Chairman. Thank you, Senator Hagel.
    Senator Nelson?
    Senator Nelson of Florida. Mr. Secretary, at the end of the 
day what we want to do is to stabilize Lebanon. A major part of 
stabilizing Lebanon is to disarm Hezbollah, which one U.N. 
resolution already calls for, and the last one did not. Now 
that the Israeli blockade has been withdrawn, is it not 
realistic to assume that arms are flowing back in to Hezbollah?
    Mr. Welch.  This is the single most important and difficult 
of the chores. There is absolutely no question that the long-
term real sovereignty and authority of Lebanon depends on the 
central government being the sole source of the right to use 
violence. That's what governments do. You can't have armed 
militias that operate according to their own law and their own 
politics. One part of disarming Hezbollah is to provide 
protections so that it is harder for them to rearm. I think 
that there are substantial new protections now available in the 
way the Lebanese army and the new UNIFIL troops are deploying, 
and in the coastal protection. The key question will be, Will 
others from outside Lebanon violate this embargo, perhaps 
through the land border? A lot depends on the ability and will 
of the Government of Lebanon to enforce that, but also a lot 
depends on the will and attention of the international 
community to its enforcement, too. Those rules, Senator, you're 
quite right, didn't exist before. But now we have them, and 
it's up to us to exercise the vigilance and the discipline to 
make sure that they are applied.
    You ask, Is this rearmament occurring? We are watching that 
very, very carefully. And, in this forum, I can say I think 
that our judgment, so far, is, no, that it is not occurring. 
That does not mean that it won't, sir.
    Senator Nelson of Florida. I hope you're right, but I doubt 
it.
    Now, let me ask you about Syria. For example, Syria lost a 
lot of influence after the tragic assassination of Rafik 
Hariri. Is this not a way for Syria to start exercising some 
more influence over Lebanon as being the conduit through which 
those arms will flow to Hezbollah?
    Mr. Welch.  Well, they can try that, but that would be in 
violation of international law. The resolution is very clear in 
this respect, sir. And I think Secretary General Annan did 
everyone a service when he stood up in Damascus and said that 
that's the new rule and Syria is obliged to enforce it.
    Senator Nelson of Florida. So, what are we going to do, and 
what would the United Nations do if we catch Syria red-handed?
    Mr. Welch.  First of all, the trick is to catch anybody 
red-handed. And I don't want to say we want to see it happen so 
that we can catch 'em red-handed. We don't want to see it 
happen.
    But we are working with the Lebanese, with others in the 
international community who want to help Lebanon along that 
border, to make sure that there are measures put in place that 
would avoid this risk. Should it happen, then I think we'll 
bring the matter up in front of the Council and present 
whatever evidence is available so that Syria, or whoever is 
doing it, would be held to account.
    Senator Nelson of Florida. And what would the Council 
require of Syria, at that point?
    Mr. Welch.  Well, those rules are not spelled out yet, sir.
    Senator Nelson of Florida. See, that's the problem. We're 
in this Never-Never Land of head fake and sleight of hand and, 
of course, we know what happened, now. Very sophisticated arms 
got in that nobody knew about. Well, let me ask you--88 
Senators sent a letter to the European Union asking the 
European Union to add Hezbollah to its designated terrorist 
groups list. Give me your opinion why the EU hasn't done this, 
and also, what benefits would come if the EU did designate them 
as a terrorist group?
    Mr. Welch.  Well, hard for me to answer. I don't represent 
the European Union. We've already designated Hezbollah, as you 
know, under U.S. law, and we've urged----
    Senator Nelson of Florida. Well, let me ask you this, then. 
Is it a priority, in our discussions with the EU, to get them 
to designate Hezbollah a terrorist group?
    Mr. Welch.  Yes. Has been, is, and will be.
    Senator Nelson of Florida. All right. If they did, what 
benefit would occur?
    Mr. Welch.  As I understand it, the European laws vary from 
country to country as to how they apply European Union rules. I 
think we would be content to see them registered and then apply 
some rules, because presently they are not. They have 
undertaken some actions against Hezbollah organs. For example, 
their TV station. And they have interdicted, basically under 
law enforcement cooperation, some financing. But I think, more 
broadly speaking, there are few rules that they apply, as the 
EU qua EU.
    Senator Nelson of Florida. Do you have any idea why the EU 
has not designated them?
    Mr. Welch.  Their practice--again, I'm not seeking to 
defend something that they haven't done that we've requested 
them to do--but their practice typically has been that if the 
Security Council designates or passes rules affecting terrorist 
organizations, then they would follow suit and apply those. We 
believe there is sufficient basis for them to exercise that 
prerogative already, regardless. But, for their own reasons, 
they've chosen not to do so, so far, beyond the specific 
examples I mentioned.
    Senator Nelson of Florida. Do you think the unsettled 
nature of Lebanon is going to increase the Syrian influence?
    Mr. Welch.  No, sir, I don't, actually. I think Syria's 
influence has suffered as a result of this conflict. I think we 
may be in that period of time where there's still a bit of the 
euphoria on the street that surrounds this aura of resistance 
that the Hezbollahis had. But I think if you look at how the 
international community has responded, it's responded in ways 
that will make Syria's influence harder to exercise in the 
future. And any Syrian violation of those new rules, I think, 
would present new risks to Syria.
    Senator Nelson of Florida. With regard to the television 
station, you're quite right to point out that France and Spain 
and the Netherlands have imposed bans on the television 
station, but the television station we saw was a major element 
of Hezbollah's communications. And it's looked upon as the 
tenth most watched satellite station in the Arab world. So, 
since the administration designated this a terrorist entity, 
this past spring, what additional measures is the 
administration taking against Al Manar?
    Mr. Welch.  I think the most important target of our 
efforts is to deprive them of the ability to have satellite 
transmissions. They have commercial contracts with the 
satellite carriers, and we have had a significant diplomatic 
effort to try and influence those decisions. So far, it's not 
succeeded, Senator.
    Senator Nelson of Florida. One little success, their sister 
radio station was knocked off the air by a Spanish satellite 
company after the designations. Senator Coleman and I had 
requested this about a year and a half ago, and, once you all 
did make that designation, that was one little success.
    Mr. Welch.  And we've been trying, with the two most 
significant service providers in the area, to get them to back 
away from their business contracts with this organization. But, 
I want to be honest--we haven't succeeded, so far.
    Senator Nelson of Florida. Mr. Chairman, I have 3 seconds 
left, and I will just throw out this question.
    Boy, it concerns me that the Palestinian President is 
forming some kind of cooperation with Hamas. I recognize his 
political reality in front of him. What does the State 
Department think about this?
    Mr. Welch.  Well, we've spoken to that issue as recently as 
yesterday, and I made a statement, myself, about this. We--the 
standards that we have--well, let me step back a second here.
    The United States has certain standards with respect to 
Hamas as a foreign terrorist organization, so our law is pretty 
strict in that respect. We led the international community in 
defining the principles under which we would interact with any 
Palestinian Government. Those are the three I mentioned 
earlier. To the extent we understand it so far, the discussions 
among the Palestinians about a new national unity government do 
not appear to rise to that standard, Senator. And that's been 
communicated to them, both privately and publicly.
    The Chairman. Thank you very much, Senator Nelson.
    Senator Coleman?
    Senator Coleman.  Thank you, Mr. Chairman.
    First, a little bit of history. Resolution 1559, how did it 
deal with the issue of armaments to Hezbollah?
    Mr. Welch.  There were several significant features of that 
resolution, but it's nowhere near as prescriptive, sir, as 
1701. What is suggested first, the most important thing, was 
that foreign troops should not be present in Lebanon. And that 
was the international legal basis for the call for Syria to 
pull out, which didn't really gain force until, unfortunately, 
the murder of Rafik Hariri.
    With respect to disarmament, there was a provision, as I 
recall it, in that resolution that called for the disarmament 
of militias. Hezbollah claimed that that didn't apply to them, 
although all logic wouldn't see it that way, because they were 
not a militia; they claimed to be a national resistance. I 
don't think anybody really bought that argument. I think that 
was contrived in order to justify their retention of arms.
    There are other armed groups present in Lebanon, 
principally Palestinian, and the most significant of those are 
Syrian-supported, so it applied to them, also.
    Senator Coleman.  There's been a lot of criticism on the 
Hill about the failure to enforce 1559. And, if you look at 
history as any kind of indicator of the future, I think there 
is a lot of doubt, a lack of confidence in success of 1701 that 
we want it to succeed. But clearly, the administration's goal 
was not to go back to the status quo--to a situation where, for 
Hezbollah, the situation is not much different today than it 
was before July 12th. It's still there, it's still armed. Can 
you give me some sense of whether Hezbollah was being rearmed 
today, the issue is ``not now,'' but clearly you're not in a 
position to say ``not in the future.'' Help me have some sense 
of optimism that we've got anything more than the status quo 
here, Hezbollah being more popular than it was before, and 
perhaps limited ability, and certainly limited history, in 
terms of enforcement of U.N. resolutions.
    Mr. Welch.  I think Senator Biden had an interesting point, 
Senator Coleman, when he said that when this fish sits on the 
pier for a while and begins to stink, we'll see how deep that 
public support really is.
    But your question is a good one. I would argue that 
Resolution 1559 was important, but kind of spare, in what it 
gave us as tools of enforcement. Resolution 1701 is really 
quite different. It does empower a very substantial new force 
to help the Lebanese army do something it's historically never 
done, which is deploy in the south. And right now all the 
evidence suggests that the Hezbollahi armed presence isn't 
there in the south anymore. That would be a significant change 
in the status quo. And I think the best evidence for that 
Senator, is the fact that Israel is withdrawing, because I 
doubt that they would tolerate the risk, were the Hezbollahis 
still present.
    Second, there's this coastal surveillance capability now, 
which is just starting up. The Lebanese coastline has been 
vulnerable to smuggling before. The land border remains a 
vulnerability, as I described. And we're going to have to do 
further work in that area.
    But the arms embargo itself, there wasn't anything like 
that in 1559, and now it's a matter of international obligation 
that countries can't do this.
    Now, as Senator Nelson pointed out, you need to elaborate, 
What are the penalties if you violate it? But the first is to 
create the presumption, the requirement that it should not be 
violated. So, in addition to the protections inside Lebanon, I 
think you have these significant new instruments outside it, as 
well. Those weren't present with 1559.
    Senator Coleman.  Let me talk a little bit about the land 
border concern that I have, the Syria/Lebanese border. I 
understand that UNIFIL is not going to be enforcing that. The 
Lebanese have said that they'll control that. And yet, you 
know, this is where arms flow from Iran into Lebanon. Are there 
any viable options for addressing that threat to future 
stability and security?
    Mr. Welch.  Well, this is a very good question. The first 
thing that has happened is that the Lebanese army is now moving 
into that area in much more significant numbers than before, 
and they are conducting operations to assure the protection of 
the border.
    Second, we would like to see international support up 
there. And the Lebanese Government has requested that of 
certain European governments. And they are beginning to provide 
that. It's not under a UNIFIL umbrella, that's correct, but 
these are important and significant countries that will come in 
to do this, and I think if that assistance can get established 
on the ground, and these border crossings be more controlled--
in particular, there are four major ones that are involved--
then there's the promise that this will be--that the Lebanese 
Government's border and customs monitoring systems will be much 
better than they have been in the past.
    Senator Coleman.  One of the challenges--and I'd like to 
just ask a little bit about the Syrian influence. I mean, the 
Syrian connection--it's one thing to have a resolution saying 
Syria is out of Lebanon, but, on the other hand, you have 
relationships, particularly with Syria and the Lebanese 
military, that I presume go back, and there's no way to kind of 
cleanse that. Do you have a sense of Syrian influence with the 
Lebanese military, does that continue? Does it have an impact? 
Is there anything that we're doing to deal with that?
    Mr. Welch.  Syria is Lebanon's only other land neighbor, 
and historically socially, economically, these two countries 
are very linked. So, to say that Syria is not going to have 
influence in Lebanon, or, for that matter, sir, that Lebanon 
wouldn't have influence in Syria, is not possible. It's going 
to be there. Now, the question is, Is it going to be a normal 
relationship? It hasn't been a normal relationship in the past. 
You know, you're dealing with a very weird situation, where I 
believe these two countries are the only two members of the 
Arab League that don't have embassies in each other's capitals. 
Even the PLO, with its difficult history in Lebanon, has an 
embassy in Beirut. And Syria doesn't. So, the call, in the 
Secretary General's report, for the restoration of a normal 
diplomatic relationship between the two countries is, I think, 
important. There has to be that kind of mutual and balanced 
respect for each other.
    Now, would that eliminate their influence? No, but it would 
put it on, I think, a tolerable basis, if there were good 
intentions on both sides.
    Senator Coleman.  In reality, Syria didn't need an embassy 
in Lebanon; it had Lebanon.
    Mr. Welch.  It had troops there for many years.
    Senator Coleman.  Let me just touch on the soldiers that 
were kidnaped, the two by Hezbollah and one by Hamas. You've 
touched upon that very, very briefly. But my understanding was, 
when the hostilities ended and 1701 was put in place, one of 
the, you know, principal understandings was the return of the 
two IDF soldiers. Where are we at? And what's the prospect for 
that, kind of, very basic humane understanding and agreement 
that these parties have agreed to? When is that going to be 
enforced?
    Mr. Welch.  Well, it's the position of the United States, 
Senator, that two Israeli soldiers that we believe are still 
being held captive by someone, in someplace within Lebanon, and 
should be returned unharmed. The same applies to the one 
soldier being held captive someplace in Gaza. We're not--we, 
the United States--we're not involved in trying to obtain their 
release. My understanding is that Israel and Lebanon have 
looked to the Secretary General now with respect to the people 
held in Lebanon, and in his report that was just given to us 
last night, he says he is working on that, but he says that, 
given the sensitivity of the task, he is not going to say very 
much about it. That's where that effort stands.
    With respect to the soldier held captive someplace in Gaza 
by someone, we see the most promising effort, continue to be 
the one led by the Egyptian Government. That said, I can't say 
to you that any release or exchange is imminent there. I would 
both have to be spare in my comment about that, but also, I 
don't know that that negotiation is about to produce anything.
    Senator Coleman.  My time's up. I realize that these are 
not our soldiers, but we do have a stake in the normalization 
of relations in the area, and stability in the area. And these 
two would be very simple and basic preconditions of cessation 
of hostilities. It would seem to me we would have an interest, 
a strong interest, in pursuing that as vigorously as possible.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Coleman.
    Senator Obama has graciously ceded for the moment to 
Senator Sununu, so I will call upon the Senator from New 
Hampshire and then the Senator from Illinois.
    Senator Sununu.  Thank you, Mr. Chairman. And thank you, 
Senator Obama. I have to depart immediately after the 
questioning, so I'll try to keep my questions very short. And 
your answers, so far, have been very direct, Secretary Welch.
    You spoke of the pledge of $230 million. And when the 
United States--the administration, the President, or the 
Secretary--makes an announcement that there's $230 million 
going to be made available to deal with the aftermath of this 
crisis, I think the natural assumption is that that 230 million 
is going to be in addition to other funds, other assistance, 
other relationships that have previously existed. But if we 
look at the way this money breaks down, that's simply not the 
case.
    We have $230 million. A hundred million dollars in 
humanitarian relief. You mentioned $60 million in 
reconstruction, but that money is really coming from money that 
was already allocated in our appropriation bills for ESF 
support to Lebanon. You mentioned the security funding, but a 
third of that, over $25 million, is going to go to support 
UNIFIL and U.N. forces, not to the Lebanese army. And so, at 
the end of the day, it appears that there's really very little 
new funding that will be provided to the country or government 
or people of Lebanon to deal with the aftermath of this crisis. 
Wouldn't that seem to be the case?
    Mr. Welch.  Well, one thing I will do when we submit an 
answer for the record on the breakdown of these funds is try 
and separate out that number for you, Senator, so that Congress 
can see it with great clarity.


    [The information referred to above can be found in Appendix 
I, page 65 of this hearing print.]


    Mr. Welch.  Let me assure you that, from where I sit, there 
is no more determined advocate of additional funding to Lebanon 
than myself, and, for that matter, the Secretary of State. But 
then, we're advocating a lot of other budgetary needs, 
including in my region, and that's an intense competition. But 
I believe powerfully in the value of this assistance, and in 
its ability to leverage others to provide assistance.
    Senator Sununu.  And, to be clear, I'm not worried about 
the determination or the intentions or the objectives. What I'm 
worried about is the unintended consequence of making a certain 
international commitment, public commitment, when the actual 
realities of the funds that are made available are much less 
than what was suggested. I'm worried about the effect of 
overpromising and underdelivering. And when, as you rightly 
point out, we emphasize the value of visibility, it's 
counterproductive if, at the end of the day, the visibility 
might be less than--actually be less than it otherwise would 
have been. Let me give an example. Of $37.5 million in EMF 
funding for fiscal year 2007, and $20 million or $30 million 
for fiscal year 2006, a significant portion of those funds are 
for scholarships, for educational support, something we've 
talked about in this committee, I've worked on somewhat over 
the last several years. And then to allocate that entire $37 
million for 2007 to the reconstruction effort suggests that the 
funds then will not be available for those scholarship and 
educational support programs. Now, I don't know what the answer 
is, but you just can't have it both ways.
    And so, if, at the end of the day, we make an announcement 
that there's going to be $37 or $40 million available for 
reconstruction, but the scholarships end up going away, we've 
done a disservice to our own efforts in the region; of course, 
we've done a disservice to the Lebanese people. So, as I look 
at the breakdown that has been provided--and it's probably not 
as detailed as the one you will provide--I see many red flags, 
because we can't claim to provide X amount of support knowing 
that of the $100 million in support that $50 million that we 
already promised has to be reprogrammed.
    To that point, you mention the need to reprogram funds. And 
so, that's a red flag, right there. That means we're taking 
funds away from some area, potentially, in Lebanon, and putting 
it elsewhere. There will be, I hope, a little bit of new money 
here. You mentioned a concern of resistance, resistance in 
Congress. Have you, in making these initial requests for 
reprogramming in four funds, met with any resistance from 
Congress?
    Mr. Welch.  I think what I said, Senator, is, I would like 
congressional support, which is a diplomat's way of saying ``I 
need it.''
    Senator Sununu.  And I hope you get congressional support, 
but, to date, have you met with any resistance in Congress?
    Mr. Welch.  We're still going through the process of 
explaining what we need to both houses.
    Senator Sununu.  Have you made requests to reprogram funds?
    Mr. Welch.  No, we've not submitted those yet.
    Senator Sununu.  You haven't submitted any reprogramming 
requests.
    Mr. Welch.  I think that's the answer. Now, you're talking 
to--you're not talking to the aid side of our house right now. 
However, I----
    Senator Sununu.  I will--I mean, I understand. As much as I 
respect your abilities, you don't know everything.
    [Laughter.]
    Senator Sununu.  But--and so, I--but I would like a 
specific answer to the question. Have you made reprogramming 
requests? And have they been granted or have holds been put on 
those requests? Because, look, you know, people have got to 
stand up and let the public, and certainly let the 
administration, know where they are and whether or not they're 
holding up these reprogramming requests.
    Mr. Welch.  Senator, we have made reprogramming requests. I 
think we are in a position to spell some of those out to you 
separately, if I might. And we do presently have holds on those 
requests.
    Senator Sununu.  I thank you for your candor. And I find 
that extremely problematic. And, to a certain--an example of 
the problem that I am talking about, that--well, certainly I'd 
like to see the funds made available, but it becomes 
counterproductive, actually hurts our effort, hurts our cause, 
certainly hurts the work that you are doing, undermines the 
work that you're doing, when we are making public commitments, 
and we have a hearing that talks about public--our own members 
support it, congressional support for the Siniora government 
and the difficulties that they've been through--public 
commitments have been made, and then, behind the scenes, we are 
either, (a) reprogramming funds that were already there, so 
that the net effect of the funding will be less than it should 
be, and, therefore, fall short of what we're committing to in 
public, and, on top of that, we have a crisis situation, we 
have either committees or members of Congress that are even 
putting holds on the limited reprogramming requests that have 
been made. I think that it's counterproductive, from a 
diplomatic perspective, from a humanitarian perspective, and I 
think, in the long run, it undermines our security goals, 
America's security interests. And you've spoken, I think, very 
directly about how our security interests are intertwined here.
    If you'd like to comment.
    Mr. Welch.  Well, Senator, I hope to be able to do a better 
job at persuading people of the requirement for these monies.
    Senator Sununu.  Finally, on the military assistance, could 
you speak, at least a little bit, about the specific ways in 
which you hope the military assistance will be provided when 
it's provided directly to the Lebanese army. Where do you think 
their shortcomings are, from your discussions with our security 
personnel that are helping with this relationship?
    Mr. Welch.  We've been working with the Lebanese army for 
some time, as you know, and we have done, I won't say, a full-
blown assessment, but a pretty important assessment of what 
their requirements are. And they're significant, but not 
overwhelming. And, I mean, I think with good intention and 
international support, we would be able to meet a large part of 
their needs.
    I think, as I said earlier, this is not a very large army, 
by Middle Eastern standards. It's mostly U.S.-equipped, and its 
mobility needs, communications requirements, and associated 
firepower are important. And I think we ought to have 
initiatives in all those areas.
    Since our assistance monies are rather limited, and, 
historically, we've had to build from a fairly low base in 
helping the Lebanese army, we're going to concentrate on the 
logistical end first. For example, their trucks, Jeeps, APCs, 
the stuff that they're driving into southern Lebanon right now, 
I think, ought to be an important emphasis. That's what they've 
asked us for, also. They presented a long and detailed list of 
other requirements, including lethal requirements--ammunition 
and weapons--which we've seen as perhaps more appropriate--or 
appropriately could be provided, and more immediately, by 
others. And we're doing a bit of fundraising to help them get 
those requirements.
    Senator Sununu.  Thank you very much.
    I want to close with just a couple of brief comments. One, 
I know you agree with, or I think you agree with, or at least 
understand the motives here, but I want to state it for the 
record, that if any of the money commitment, or any of the 
methods we use to get funding to Lebanon in the aftermath of 
this crisis, take resources away from the educational support 
that we have historically been providing and effectively have 
committed in previous appropriation bills, I think it would be 
an absolute tragedy. I think that funding far and away has 
historically supported our diplomatic efforts, our 
communication efforts, our cultural ties, our historic ties, 
our economic ties, whether it's to Lebanese-American 
University, American University in Beirut, or other schools and 
academic institutions. I just want to underscore that. It would 
be a travesty if we had to reprogram funds and, as a result, 
shortchange those programs. It's the definition of penny wise 
and pound foolish.
    And, second, I just want to commend the work of the embassy 
staff and the Ambassador there. Having worked on these issues, 
we were in very close contact with them during the crisis, 
during the evacuation, and they've really done a great job.
    Thank you, Mr. Chairman.
    The Chairman. Well, thank you very much, Senator Sununu.
    Senator Obama?
    Senator Obama.  Thank you very much, Mr. Chairman.
    Secretary Welch, it's good to see you again. Last time we 
saw each other, things were a little more calm in your neck of 
the woods.
    Mr. Welch.  If such a thing is possible.
    Senator Obama.  If such a thing is possible.
    You've already gone over a lot of the ground that I was 
interested in, but since I'm the last questioner before the 
next panel, maybe we can just revisit a couple of points.
    What, at this point, are the prospects of the international 
community, especially in light of the deployment of an 
international force, being able to strengthen the Lebanese 
Government to the extent that it can control its own borders, 
vis-a-vis Hezbollah? What's your expectation here? Is this new 
international force going to have to deploy for the foreseeable 
future in order to maintain a buffer zone there, or do you 
think that there are enough elements in place within the 
Lebanese Government to actually start creating a more effective 
sovereign state in a relatively short period of time?
    Mr. Welch.  Thank you for this question, Senator.
    In my business, you can look backwards and say, ``Well, I'm 
discouraged, because in 1978 we set up something called the 
United Nations Interim Force in Lebanon, and the Interim has 
been there since 1978 and we're in 2006.''
    Senator Obama.  Right.
    Mr. Welch.  If that isn't something that's semipermanent, I 
don't know what is.
    Senator Obama.  Right.
    Mr. Welch.  Or you can look forward, and you can say that. 
It's probably a feature of the Arab/Israeli conflict that even 
in those places where there isn't a peace to keep there is some 
form of international support for the management of peace. This 
border has been one of those, and one of the most difficult.
    I believe, looking forward, that we have substantial new 
tools in our hands. Can I guarantee that these eliminate all 
the risks? No, sir, I can't. But I think this is a 
fundamentally new contribution here.
    The new UNIFIL is nothing like the old UNIFIL. It has 
completely new concept of operations and rules of engagement. 
If you were to take a look at these U.N. documents, sir, they 
provide for a very robust capability. I think the existence of 
combat battalions from NATO member states is a significant new 
addition. And this is not 40 troops, this is in the hundreds. A 
maritime surveillance mission--again, with capable NATO-
affiliated navies--is hugely important.
    But the main game here is political. And it's exactly as 
you describe it: to change this balance of authority and power 
inside of Lebanon.
    I believe that the government, led by Fouad Siniora--beset 
with as many difficulties as it was before and during this 
crisis--has done a truly remarkable job in addressing it. They 
deserve our support. I think the March 14 movement that is at 
the heart of that government stands in opposition to those 
forces of extremism and violence that would start this kind of 
thing again. And we're all called upon to help out in that 
endeavor.
    I think, here also, the United States--and forgive me if I 
sound like I'm tooting our own horn in this respect--I think 
American diplomacy made a good contribution. We were attacked 
publicly at the beginning of the conflict, for appearing not do 
much about it, but the very things that we said at the 
beginning of the conflict that should be done to really truly 
put in place something that was more sustainable, we have 
managed to attain. We need to hold people to those. We need to 
make sure that they operate. But I think we realize the 
importance of this. Beyond Lebanon, too.
    Senator Obama.  Just to follow up, in terms of what we mean 
by ``an effective UNIFIL force,'' how many troops are we 
talking about over a sustained period of time in order to 
create stability in Southern Lebanon?
    Mr. Welch.  Well, the authorization provides for up to 
15,000.
    Senator Obama.  Right. And right now we have around 4,000.
    Mr. Welch.  I can be sure that there are around 4,000 
already deployed. And the significant deployments are picking 
up pace right now. There are additional commitments that--I 
don't believe they get us to 15,000, Senator, but----
    Senator Obama.  Okay. Let's assume we get to 10,000 troops.
    Mr. Welch  [continuing]. ----It's in that neighborhood.
    Senator Obama.  What's your estimation? Are we looking at 
10,000 troops, UNIFIL troops there semipermanently? From 1978 
to now is about 28 years. Is this ``new'' UNIFIL likely to be 
deployed for this duration?
    Mr. Welch.  I think the countries that are stepping up to 
these deployments, while they're not signing on for something 
permanent, understand that this is not a transitory deployment.
    Senator Obama.  This isn't long term. I'm just trying to 
play out the end game here. Are the goals to limit the 
skirmishes along the border, so that you're not seeing the 
kinds of incursions back and forth that we had seen before, 
that you're not seeing missiles launched into Israel or cross-
border rapes. Is that an accurate assessment of, sort of, the 
modest goals that we've set forward here?
    Mr. Welch.  Sir, I think our objectives--and, frankly, the 
reach of the resolution--go beyond that.
    Senator Obama.  Describe for me more broadly what our long-
term goals and objectives are.
    Mr. Welch.  Right now, we're in this period between the 
cessation of hostilities and the permanent cease-fire. The 
cessation of hostilities means an end to offensive military 
operations.
    Senator Obama.  Right.
    Mr. Welch.  That has been respected by all sides. As a 
result of that, and the fact that the Lebanese army's 
deploying, UNIFIL--new UNIFIL is going in, and the IDF is now 
pulling out.
    But when you get to the permanent cease-fire, that requires 
respect for what's called the ``blue line.''
    Senator Obama.  Right.
    Mr. Welch.  It's not, as you know, an established border 
with a peace agreement between the two parties. But that would 
mean there are no violations of that line coming from Lebanon 
into Israel or, for that matter, the reverse.
    Senator Obama.  Right.
    Mr. Welch.  That is the premise.
    Senator Obama.  Right.
    Mr. Welch.  And the new UNIFIL is composed with that in 
mind.
    Senator Obama.  Okay. But that's the--UNIFIL's main 
function is just to maintain that blue line and its integrity.
    Mr. Welch.  And to help the Lebanese army in ensuring that 
there is no armed group, other than UNIFIL and the Lebanese 
security authorities, present in that area of operations. 
That's an expanded area of operations under the new UNIFIL, and 
it would mean that there is no Hezbollahi armed presence in 
that area.
    Senator Obama.  Okay. And so, that brings us, I guess, to 
the next question. I mean, my understanding is, no one is 
particularly optimistic about disarming Hezbollah, at this 
stage. Am I correct about that?
    Mr. Welch.  My former boss, Colin Powell, used to say 
optimism is a force multiplier, and, in my business, I need 
force multipliers, so I'm not going to give up the optimism. 
Disarmament of Hezbollah is a national goal. But there are no 
groups, armed groups, to be in the area of operations, the 
Lebanese army, and UNIFIL in the south. So, that is an 
immediate goal.
    Senator Obama.  Okay. So, the immediate goal would be to at 
least--assuming we don't disarm Hezbollah--to restrict their 
operations in such a way as Hezbollah not intruding in this 
southern area around the blue line.
    Mr. Welch.  That's correct. And they appear, so far, to be 
respecting that obligation.
    Senator Obama.  Okay. Get inside Hezbollah's head for a 
moment. They've come out of this, in some ways, as heroes 
within portions of the Arab world. And this may be shortlived. 
But there's a sense, at least that in the short term, Hezbollah 
was strengthened politically on the Arab street by what 
happened. What do they now attempt to do? Do they try to 
further consolidate political power within the Lebanese 
Government? Do they try to plan future attacks, or try to 
undermine UNIFIL's efforts? Do we have a sense of what they 
want, what their end game is?
    Mr. Welch.  Well, this gets into the realm of speculation.
    Senator Obama.  Or intelligence.
    Mr. Welch.  Well, I can't go into the latter, sir.
    Senator Obama.  Okay. Fair enough.
    Mr. Welch.  But I'll try a little informed speculation.
    Senator Obama.  Okay.
    Mr. Welch.  If I were in their shoes, I'd try and change 
the subject, attack the Government of Lebanon verbally, attack 
us, Tony Blair, others, because when Hassan Nasrallah made the 
decision, for whatever reason, on July 12th to launch this 
attack into Israel, he displaced over three-quarters of a 
million Lebanese as a result of the conflict that ensued, most 
of which are his constituents.
    Senator Obama.  Do they blame him, or, at this point, do 
they blame Israel?
    Mr. Welch.  Well, my guess is, they and others likely 
blamed Israel and others in the international community, 
including us. But that's a fish that's on the pier and 
beginning to stink as Senator Biden said. The destruction that 
happened in Lebanon is not something that Israel one day picked 
up and decided it would like to do. It happened because of an 
unprovoked attack for which one party is solely and simply 
responsible, and they will have to live up to that.
    Senator Obama.  Well, I guess the point that I'm trying to 
get at is how we can play a constructive role in--but in a 
realistic fashion--in creating stability in Lebanon when you've 
got Hezbollah still armed, you've got a Shi'a population that 
still feels somewhat disaffected, you've got forces of 
moderation in Lebanon that appear to have been weakened. My 
suspicion is that only time's going to tell how this plays out 
politically. It seems to me that what we've done by deploying 
this international force create a situation which is helpful, 
which is working to stabilize the situation and end the 
immediate hot conflict, but I still don't get a sense of how we 
approach the long-term diplomatic task of getting at the root 
causes of this conflict and creating a stable Lebanon that is 
not a base for future operations by Hezbollah of this sort. And 
I don't know the degree to which that can't be solved until our 
relations with Iran and Syria change, or until we make more 
progress in resolving the Israeli/Palestinian conflict. But I'm 
just trying to get a bigger picture of--if we are trying to map 
out where do we want to be a decade from now, given all the 
elements that are in place, What's our best-case scenario? What 
is it that we're going to be trying to pursue? And it's a 
reasonable answer to say that, you know, we've just tried to 
stop the bleeding right now, and we haven't yet formulated a 
strategy, long term. And, if it is, you know, that's perfectly 
acceptable. I don't fault you for not having that immediate 
answer.
    Mr. Welch.  Well, Senator, I think we've done better than 
that, actually. I don't see the present measures that we're 
trying to put in place as merely stabilizing the situation.
    Senator Obama.  Okay.
    Mr. Welch.  I hope you would agree that, upon examination, 
they reduce the risk that this will occur again.
    Senator Obama.  Well, I'm sorry, go ahead.
    Mr. Welch.  And, second, I mean, let's look at the record 
over the last several years and not just pause it at this 
moment in time and ask ourselves about the challenge at 
present. There are no Syrian troops in Lebanon now. Admittedly, 
it took a tragedy to, kind of, galvanize that change, but this 
is a huge and important development for Lebanese freedom.
    There is a substantial and growing public sentiment in 
Lebanon in favor of a moderate, liberal approach to government. 
You know, I mean, it's, of course, got its character, that's 
Lebanese, in particular. That's the politics of the place. 
Those people need support. But they weren't there before, just 
one summer ago, when you had the first parliamentary election 
in Lebanon in years when there wasn't a Syrian presence.
    Now, ideally, those freedoms will expand, and some of the 
work that we're doing now is designed to help protect that. So, 
I would say that the trend line here, despite these things, is 
actually pretty good, and not in the interests of the enemies 
of peace.
    That said, I believe that these are very determined people 
who have a lot at risk in their position; in particular, in 
Damascus. And I would not expect that they're going to take 
this lying down. I think they see some loss, not just of 
political face, but of practical interests, and they're not 
going to make this easy. But we know that. And I think with, as 
I mentioned earlier, determination and good intentions, we can 
do that.
    The audience for helping Lebanon is much larger now, too. 
We've got a good solid basis of transatlantic understanding on 
how to do this--cooperating with the French, after all, and 
that's not a bad thing. The support we have from our moderate 
friends in the Arab world is excellent. They're all aware of 
the risk of these subcontracted entities like Hezbollah. And I 
think we can use that support constructively to help Lebanon.
    Senator Obama.  Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Obama.
    And thank you very much, Secretary Welch. We very much 
appreciate your opening statement, your comments, and your 
forthcoming responses to our questions.
    Mr. Welch.  Thank you very much, Senator.
    The Chairman. And we look forward to seeing you again soon.
    Mr. Welch.  Thank you, Mr. Chairman.
    The Chairman. The Chair would now like to call our second 
panel. It includes the Honorable Carlos Pascual, vice president 
and director of foreign policy studies, Brookings Institution; 
Paul Salem, director-designate, Carnegie Middle East Center, in 
Beirut, Lebanon; and Augustus Richard Norton, professor of 
international relations and anthropology at Boston University, 
in Boston, Massachusetts.
    Gentlemen, we appreciate your coming today. Let me just say 
that your statements will be made a part of the record. I would 
suggest that you proceed as you wish with statements of 
approximately 10 minutes or thereabouts, so that all can be 
heard and I or other members will have an opportunity to raise 
questions before we come up against a roll-call vote, which is 
promised for about 12:15. I'm going to ask you to testify in 
the order that I introduced you, and that would be, first of 
all, Ambassador Pascual. Welcome, again, to the committee.

 STATEMENT OF HON. CARLOS PASCUAL, VICE PRESIDENT AND DIRECTOR 
     OF FOREIGN POLICY STUDIES, THE BROOKINGS INSTITUTION, 
                        WASHINGTON, D.C.

    Ambassador Pascual.  Mr. Senator, thank you very much. I 
appreciate this opportunity to testify before you and the 
committee, and thank you for the opportunity to also submit for 
the record my written statement.
    My comments today are based, Mr. Chairman, on a trip that I 
just completed in Lebanon on Monday. While it was a time-
limited trip, it was intensive. We had an opportunity to 
interview several dozen government ministers, technical staff, 
diplomats, relief workers, foreign and domestic NGOs, bankers, 
business people, essentially many of the key people who are 
involved in developing a vision for the reconstruction 
program--designing it, supporting it, and actually implementing 
it.
    I came away, Mr. Chairman, most surprised by two things. 
One was the unity of the Lebanese people, and, secondly, the 
opportunity that we have right now. And this has been a subject 
of discussion throughout this hearing.
    There is, indeed, a palpable bitterness about the war and 
the blockade and how it essentially snatched away from Lebanon 
what many people saw as an opportunity to turn around the 
fortunes of that country.
    The economy was finally growing, at a rate of 6 percent, 
tourism was restored, there seemed to be a sense of hope where 
the wounds from the civil war were healing.
    What is interesting is that the response the war engendered 
was one by the Lebanese people as the Lebanese people, not as 
Shi'a, not as Sunni, not as Druze, not as Maronites, not as 
Orthodox, but as the Lebanese people.
    One also saw a tremendous amount of talent in the private 
sector, in the banking sector. From my experience in the former 
Soviet Union, if we had only had such a banking sector in that 
region of the world, we could have done amazing things. And 
what we also saw was a tremendous capacity for crisis 
management.
    If we recognize that, as a result of the war and the 
blockade, there was $2.5 billion in capital flight, 1 million 
displaced people, 30,000 homes that were destroyed or partially 
destroyed, 500,000 dual-citizen Lebanese that left the country, 
and a billion dollars worth of lost revenue as a result of the 
war, and yet, still during this period, the currency has been 
stable, inflation is in check, the society is now starting to 
rebuild, 1701 was negotiated, and the blockade was lifted. The 
Saudi and Kuwaiti Governments deserve a lot of credit for the 
$1.5 billion that they deposited into the Central Bank. This is 
not money to be spent, it's essentially to protect the 
currency. This support helped, but it could not have happened 
without the internal talent of the Lebanese people, and that's 
a tremendous asset on which to build.
    That does not mean that we should be complacent. There are 
three massive challenges, I believe, that have to be addressed 
at the same time, and the cost of these three massive 
challenges I would estimate at about $5.1 billion over 2 to 3 
years. The needs assessments are being done still, but I think 
it's important that we start thinking on this order of 
magnitude, because I think $5.1 billion is actually a very 
conservative estimate.
    The first challenge is on near-term humanitarian aid and 
recovery. Two-thirds of those who have displaced have already 
returned. They did not return because of assistance, they 
returned almost immediately, because of an interest of going 
back to their homes. There's a real time pressure to move and 
provide them assistance because of the winter that is 
encroaching and the requirements to get so much done before 
November.
    Some of the key requirements are: shelter, water, stopgap 
electricity-sectors measures, and restoring the schools. I 
would estimate the cost of this portion of the recovery program 
at about $600 million, based on some relatively conservative 
estimates of the numbers of homes that were destroyed and the 
number of people who were displaced.
    The second challenge is one of building social, economic, 
and physical infrastructure. There's a phenomenal need for 
jobs, Mr. Senator. If we look at the situation on the ground, 
crops were destroyed, tourism has ended. Essentially, the 
people who are going back have no work. They need some form of 
temporary subsidy to be able to survive, but fundamentally they 
need jobs, and their communities need to have a mechanism to 
get involved in rebuilding and put their communities to work.
    There also is a need for long-term physical infrastructure. 
Three-quarters of the country's roads and bridges have been 
destroyed or somehow affected. The electricity sector is 
sporadic. The water system was poor, and is even poorer now, 
and it doesn't reach effectively into the rural areas. A 
reasonable estimate for this portion of the recovery program 
and reconstruction program is $3.5 billion.
    And, finally, there are structural and financial issues 
that have to be addressed. Lebanon has the highest per-capita 
debt in the world; 25 percent of the budget on an annual basis 
goes to debt service.
    Secondly, the electricity sector is one of the most 
inefficient in the world. Subsidies to the electricity sector 
are costing about a billion dollars a year, about 25 percent of 
the budget in subsidies.
    Between these two things, subsidies to the electricity and 
debt service, the government has been spending half of its 
budget. If this cannot be fixed and resolved, there will be no 
sustainable recovery in Lebanon.
    Also because of the high level of debt, it is impossible 
for the Lebanese Government to finance these measures by taking 
on additional debt. And, hence, as a result of the financial 
losses that took place this year--as a result of moving from 6-
percent growth to, at best, no growth, and moving from a 
primary budget surplus to a primary deficit--they need $1 
billion in grant budget support.
    Let me say a few things about the financial requirements 
and flows, because, certainly as demonstrated in the previous 
conversation, I think there's been a lot of confusion about 
that.
    I indicated that this estimate of $5.1 billion, I think, is 
conservative. It does not cover compensation for capital flight 
or targeted subsidies for reform programs. It does not even 
touch on the requirements for the military. It does not touch 
on requirements for boosting investments by the private sector.
    On the supply side, there have been significant pledges. 
For reconstruction, the Saudis have pledged $500 million; the 
Kuwaitis, $300 million; Qatar, another $300 million--$1.1 
billion between them. That should be counted against the $5.1 
billion total. These funds have not been delivered, because the 
mechanisms for their administration have not been established. 
There is no fund for which this money is to be deposited. Qatar 
is looking for a mechanism to adopt villages, but how to do 
that in a systematic way that does not result in corruption 
still has not been established.
    The Saudis and the Kuwaitis, as I indicated, provided $1.5 
billion to the Central Bank. That should not be counted against 
this total. It cannot be used for reconstruction purposes. It 
is there to protect the currency.
    At the Stockholm conference, $940 million were pledged, and 
others have indicated that a total of $1.2 billion have been 
provided so far. Part of that has already been consumed in 
humanitarian aid, and should not be counted as assistance for 
the future. As well, we get a mix of apples and oranges. At 
times, when we look at the totals of pledges, some contain 
military assistance, others contain peacekeeping. I would say 
that a reasonable estimate against the $5.1 billion requirement 
for reconstruction, that about $2.5 billion has been pledged, 
and there is still another gap of about $2.6 billion.
    Against this, we have the U.S. $230 million pledge, of 
which the administration has indicated $180 million relates to 
the topic of economic recovery and reconstruction. The sectors 
in which the administration is working are reasonable, except I 
would caution that we should be looking carefully at whether we 
deliver much further food assistance to Lebanon. It is an 
economy that is fundamentally entrepreneurial, and we should 
not destroy their markets by an oversupply of food aid.
    The approach has been responsible, essentially using 
nongovernmental organizations as a way to disburse money and a 
way to control funds in an unstable environment. It is a 
program that one would say is characteristic of a midsized 
country which is well-meaning and has a limited strategic 
interest in the region. I do not think that that is how we 
would want to characterize the United States.
    If we wanted to associate the strategic interest that is 
appropriate with Lebanon, I would suggest that we set a target 
of $750 million for the U.S. contribution for recovery and 
reconstruction. That would be about 15 percent of the $5.1 
billion total that I indicated, or another $570 million for 
reconstruction and recovery beyond what the U.S. has pledged 
thus far. This 15-percent total would be consistent with what 
the United States provided in tsunami relief. It is actually 
less than the usual 25 percent that we provide in major 
international reconstruction programs. It does not--I would 
stress--it does not include military assistance. And here, even 
$300 million is a conservative figure. If we look at the 
average requirement around the world for equipping and training 
forces, it's usually been about $20,000 per soldier. 
Multiplying that by 15,000 Lebanese troops occupying the south, 
that, in and of itself, gets us to a $300 million total. It 
does not include aerial surveillance or capabilities of 
patrolling the border more effectively. I think we're going to 
see a requirement well over a billion dollars, and we need to 
be thinking about how we're going to respond to that.
    A couple of comments on how to approach the reconstruction 
program and how to use these funds.
    First of all, I would stress a very important principle--it 
has been underscored throughout this hearing, and I would say 
it again--the importance of using this assistance as a way to 
strengthen the Lebanese state and to build confidence in the 
Lebanese state. It is crucial for internal actors within 
Lebanon to believe that the best thing for their future is to 
be part of a unified state and not part of a state within a 
state--i.e., Hezbollah. They must have the confidence that 
Lebanon can provide--the Government of Lebanon can provide for 
their needs. It's critical to attract international capital. 
It's critical to attract people back to the country.
    In terms of how to use the funds, I've provided some 
specific suggestions in my written testimony. I would just 
highlight the importance of using assistance through private 
banks, the private sector, through NGOs, the university 
community, through local private experts, in ways that will 
complement the capabilities of the government. This is going to 
be a tricky process. The government still does not have a very 
effective process of being able to channel and monitor funds to 
a local level, yet there are techniques that have been used, 
particularly in Afghanistan. I had the benefit of traveling to 
Lebanon with Ashraf Ghani, the former Minister of Finance in 
Afghanistan, and we've already begun to outline some of the 
approaches that he took in Afghanistan of being able to use 
money--move money to a local level, get communities involved, 
and get them involved in the employment of local communities.
    Finally, let me just stress a few points on why this 
matters so much.
    Lebanon is, indeed, the most multiethnic society in the 
region. It has the strongest private sector. It has the 
potential to succeed. It can play a leadership role in the 
region. And if it fails, the prospects for peace in the region 
become even yet more dim.
    In the op-ed by Henry Kissinger, which you cited earlier, 
he said that, the balance sheet of this war, in part, is going 
to depend on psychological and political factors. And one of 
those factors is going to be Hezbollah and its de facto reality 
as a state within a state. There is debate on whether Hezbollah 
has become stronger or whether working in the south will 
actually strengthen Hezbollah. I think the answer to 
Hezbollah's future very much rests with the reconstruction 
process.
    There are certain realities that I think are important to 
acknowledge. First is that there is a legacy that was left by 
the Lebanese civil war. There simply was no effective 
assistance that was provided to the south. There's a legacy of 
corruption, of half-finished projects, of discrediting the 
government's role. Hezbollah stepped into a vacuum. And that 
vacuum has to be combated. If there is no effective government 
role, there will be one source of providing for the people's 
needs, and that is Hezbollah.
    Secondly, what I began to hear from people on the ground 
working actively in the south is that, yes, Hezbollah's role is 
real, it's extensive, but that Hezbollah is also being 
overwhelmed. It is a huge challenge. Hezbollah began with an 
immediate dynamic process of handing out checks for those who 
needed to rebuild their houses. Their ability to continue the 
assessment process and hand out those resources has been 
limited. And increasingly what we are being told by the 
government and by NGOs active in the region is that Hezbollah 
is actually opening more and more space for others to come in 
and be active.
    Thirdly, what we heard from the NGOs working in the area is 
that there are many NGOs active in the south who are not linked 
to Hezbollah and who do not depend on Hezbollah to be able to 
undertake their activities. There is an opportunity to be able 
to work very effectively.
    There are, in my mind, two options dealing with the issue 
of the south and Hezbollah. One either works in the south, uses 
NGOs in the interim as a way to help channel resources, 
eventually develops more creative and innovative mechanisms to 
empower the way that the state can move resources to the local 
level; or one blocks such assistance to the south and sends the 
message that the Lebanese Government and the international 
community really have no interest in Lebanon's Shi'ite 
community. If the latter were to be done, I think it would 
simply institutionalize instability.
    I think, Mr. Chairman, there is a real chance to make real 
a prospect for a better Lebanon in the future. And one of the 
things that we have to ask ourselves is, How important is it to 
us to invest resources in this endeavor? I think, just for 
illustrative purposes, it's worth reflecting for one second on 
the fact that we provide $2.3 billion in FMF every year to 
Israel. There are good reasons for why these funds are 
allocated. In this case, I'm suggesting a one-time allocation 
to Lebanon of $750 million, about a third of Israel's annual 
FMF. Both are for exactly the same purpose: a stable Middle 
East that can, in fact, actually provide for a viable Lebanese 
state that is not a source of terrorist activity, that is a 
source of prosperity and stability. And that may one of the 
best investments we can make in Israel's security, as well as 
our interests for stability in the long term in the Middle 
East.
    Thank you very much.


    [The prepared statement of Ambassador Pascual follows:]


               Prepared Statement of Hon. Carlos Pascual

                restoring confidence in lebanon's future
    Mr. Chairman and other distinguished Members of the committee, 
thank you for this opportunity to testify today on promoting viable 
peace and stability in Lebanon. I commend the committee's focus on this 
issue. Lebanon's future is inescapably tied with the broader fate of 
the Middle East. It is in America's interests, and also in neighboring 
Israel's interest, to see Lebanon succeed as a democratic, multi-ethnic 
and prosperous state. If Lebanon remains unstable, it will contribute 
to the destabilization of the region and sink the hope of the Cedar 
Revolution for a free and independent Lebanon.
    My testimony is based on a trip to Lebanon completed on September 
11. I had the benefit of working with Ashraf Ghani, former Minister of 
Finance in Afghanistan and one of the world's foremost experts on 
political and economic transition. We went to Lebanon under the 
auspices of the Brookings Institution and in the spirit of Brookings' 
commitment to contribute to critical public policy issues. We conducted 
dozens of interviews with the Lebanese government, donors, NGOs, the 
private sector, diplomatic community, and various UN offices, including 
UNIFIL.
    I left Lebanon impressed by the talent of its people. I left 
cautious and wary of the political complexity and unpredictability. The 
Lebanese resent the way in which the war and blockade shattered their 
lives--physically, emotionally and economically. War grasped from 
Lebanon yet another chance at normalcy just when the economy was 
growing at 6 percent, tourism was booming and the wounds of the civil 
war had begun to heal. But there is also a surprising opportunity in 
the unity the war has engendered. The Lebanese people stood together 
primarily as Lebanese, and if this sense of unity can be tapped before 
new hardships dominate people's lives, Lebanon has the chance to create 
a new reality in the Middle East. Hence, there is an urgency to support 
Lebanon's efforts now--when there is a real chance for Lebanon to 
succeed.
    Lebanon's reconstruction also cannot be untangled from the fate of 
Hezbollah. Arguments abound on whether Hezbollah was strengthened or 
weakened by the war. Both are undoubtedly true. Hezbollah lost 
combatants and its weapons arsenal is depleted. Its image as a 
resistance force was burnished. But the real test affecting Hezbollah's 
future--and by extension the future of the Lebanese state--is whether 
Hezbollah or the Lebanese government are seen as restoring security and 
economic life to devastated Shiite areas.
    There has been public debate in the United States over whether U.S. 
assistance should go to the south and whether it might reinforce 
Hezbollah. There is no such debate among Lebanese actors. Lebanese 
NGOs, the government, private sector and parliamentarians were adamant 
in our discussions that the south must be part of any recovery 
strategy.
    Some stressed that failure to reach the south after the last civil 
war gave no alternative to Hezbollah's development as a state within a 
state. NGOs indicated that they have options to work with groups other 
than Hezbollah. Alternatively, ignoring the south would entrench a 
Shiite view that they have no place in Lebanon's politics and increase 
the mid-term prospects for political turmoil. The practical options are 
straightforward: mitigate the risk of benefiting Hezbollah by using 
international NGOs as a short-term means to control and disburse 
resources, or block such assistance and make clear that neither the 
Lebanese government nor the international community has an interest in 
Lebanon's Shiites. The latter will simply institutionalize instability.
Three Major Challenges
    To achieve and sustain its recovery, Lebanon must address three 
enormous challenges. The first is to mitigate the immediate impacts of 
war so that those returning to destroyed homes and livelihoods can 
begin to rebuild their lives. It is crucial to get as much done as 
possible by November, before winter begins. The principal needs are in 
the south and in Beirut's southern suburbs. A rough estimate of the 
immediate cost is $600 million. The second challenge is to build 
critical social, economic and physical infrastructure. The focus should 
be on putting to work Lebanon's strongest asset: the private sector. 
Needs assessments are still being completed, but we should expect a 
cost of around $3.5 billion. Thirdly, Lebanon must rectify structural 
economic and financial issues that have saddled the country with the 
world's highest per capita debt. These core reforms are made harder by 
lost revenues and increased expenditures due to the war. A conservative 
base figure to make up for lost revenues this year is $1 billion.
    This total estimated cost--$5.1 billion to begin to address 
credibly all three sets of challenges--is illustrative and 
conservative. It does not compensate for $2.5 billion in capital flight 
or resources needed to stimulate large scale private investment. It 
does not provide for targeted subsides that will be needed to 
facilitate critical reforms, especially in the electricity sector, or 
for crucial refinancing of the public debt. It does not include the 
cost of strengthening the Lebanese military and equipping it to monitor 
its borders and prevent or disrupt arms flows. As detailed later, the 
U.S. should set a target of 15% of this total--$750 million--for 
recovery and reconstruction. This percentage would be comparable to 
American contributions to tsunami relief and reconstruction in 2005. To 
date, of the $230 million the U.S. has pledged, about $180 million 
would support this target (i.e., excluding security assistance). For 
context, this one-time injection of $750 million would be about one 
third of what the United States provides each year to Israel in Foreign 
Military Financing--and the goal, in effect, is the same. If Lebanon 
cannot function as a state, Israel will face yet a greater threat of 
instability and terrorism.
    We cannot overestimate the difficulty of addressing these 
challenges simultaneously, yet Lebanon has little choice if it is to 
move beyond crisis management to stable growth. Reconstruction 
investments can stimulate near-term gains, but they cannot be sustained 
without a viable economic base. The fact that there has not been an 
economic meltdown in spite of the war's destruction, costs, lost 
economic opportunity, and both human and capital flight is a tribute to 
the management of the Lebanese authorities. They have demonstrated that 
they have the talent to succeed. The Lebanese people and private sector 
have determination and resilience. But Lebanon needs a major injection 
of international resources to seize this opportunity to create a new 
reality of multi-ethnic success in the Middle East.
Restoring Political Confidence
    I have been asked to focus on issues related to reconstruction, but 
I would be remiss not to underscore the linkages between economic 
progress and the need to help Lebanon build confidence in the state. 
The Lebanese state must be perceived as able to provide security and 
restart the economy in order to get all sectarian groups to buy into a 
unified Lebanon and transform Hezbollah's existence as a state within a 
state. Perceptions of security and state competence are crucial to 
attracting international capital and the return of 500,000 Lebanese 
dual citizens who left during the war. The way in which reconstruction 
efforts are carried out--whether they help the state become an 
effective actor that also enables the private sector--will strongly 
shape perceptions of state competence.
    It will be just as important to take actions that give both 
international and internal actors confidence that political stability 
can hold and that war is not likely to commence yet again. To be sure, 
the ideal solution is a comprehensive peace agreement for the Middle 
East, but that will take time and a restoration of trust in the region. 
In the interim, several actions can make a symbolic and substantive 
impact and contribute the successful implementation of UN Security 
Council Resolution 1701:


   Trilateral coordination on military issues among Lebanon, 
        Israel and UNIFIL are facilitating an orderly transition from 
        Israeli to international and Lebanese forces in the south. This 
        experience should be institutionalized, perhaps in a Joint 
        Military Commission, to allow for more effective monitoring and 
        communications. If crises arise, communications can occur 
        through established and tested channels.

   Israel and Lebanon should explore the range of engagement 
        they can undertake in the spirit of the 1949 Israel-Lebanon 
        Armistice Agreement. That arrangement remains valid even if 
        details are outdated. But its fundamental purpose, if pursued 
        in spirit, is to underscore that neither side has the intent to 
        attack each other. Such assurances are critical to positioning 
        the Lebanese state to create conditions that can make obsolete 
        Hezbollah's rationale for its militia and facilitate consensus 
        on its disarmament.

   The international community must act on its promise to equip 
        the Lebanese military to control its border effectively, 
        including with helicopters and unmanned aerial surveillance. 
        While Syria appears to have accepted international technical 
        assistance to Lebanese forces patrolling the Syria-Lebanon 
        border, the Lebanese forces need the capacity to act to avoid 
        Hezbollah's rearmament with new and more sophisticated 
        missiles.

   International support should be provided to help the 
        Lebanese military coordinate with internal security forces and 
        the police. If we failed miserably at such coordination to 
        prevent 9/11, we certainly should not assume that Lebanon has 
        the resources, equipment and capacity to do so.

   Risk insurance and guarantees for private investment 
        (through IFC, OPIC, EIB) will help shape perceptions that the 
        international community has reached consensus to secure 
        Lebanon's future and is willing to back it financially.

   Finally, the international community in its diplomacy should 
        assure the Lebanese government that it supports the need to 
        integrate Shiites more fully into the governance of Lebanon. 
        The means for this need to be internally defined, and it will 
        take time to reach consensus. But all actors, internal and 
        external, should back a dialogue that makes the Shiia community 
        believe that its needs are best met by buying into the Lebanese 
        state, not by supporting an organization that acts outside it.
Near-term Humanitarian Aid and Economic Recovery
    The war displaced 1 million people, a quarter of Lebanon's 
population, and it destroyed or partially destroyed 30,000 housing 
units. It destroyed crops and tourism in the south, taking away two 
main sources of income for the year. Losses were concentrated in the 
Shiite south and southern suburbs of Beirut. The immediate objective 
must be to facilitate viable returns for the displaced by November, 
before winter sets in. The key needs are shelter, water, electricity 
and the reopening of schools. Families will need transitional subsidies 
to compensate for lost income. Numerous needs assessments have been 
done, but neither the government, nor the UN, nor the NGO community 
seems to have a comprehensive picture on the near-term requirements.
    For planning purposes, we can estimate a family need of $20,000 for 
each of the 30,000 destroyed or partially destroyed homes, including 
investments that should benefit the community more broadly. That 
suggests a funding need on the order of $600 million. The Stockholm 
pledging conference raised $940 million, but it is a mixture of direct 
bilateral funding for NGOs and funds promised through a yet-to-be 
created early recovery trust fund. Without a clear picture on the 
mechanisms to access funds, the Lebanese government does not yet have 
the means to get them in a timely way to those who need them most.
    At a municipal level, government capacity is limited. Hezbollah is 
said to be under strain due to the magnitude of the reconstruction task 
and is increasingly leaving space for government and other NGOs. In 
some areas NGOs are reportedly bumping into each other; other areas are 
reportedly ignored. Given the time constraints, perfection is not 
possible, but a number of steps can be taken:


   Donors should work with the government and UNDP to get data 
        immediately into a new database controlled by the Prime 
        Minister's office on early recovery and reconstruction support, 
        broken down to the village level and generic types of 
        assistance. This can provide a basis to identify gaps in needy 
        areas and determine where funds are already programmed to 
        reduce duplication.

   International NGOs working in partnership with local NGOs 
        should be the immediate vehicle to disburse funds for recovery 
        in the south. This is not ideal as it bypasses the government 
        as a financial channel, but there are no alternatives in the 
        short-term.

   To bring government into the picture, the government and 
        NGOs should create coordination mechanisms through Municipal 
        Federations that bring together several municipalities. The 
        focus should be to identify needs, adjust programming and give 
        the government a management role in responding to local 
        communities. This is the first step in bringing Shiia 
        communities into more direct relationships with government 
        structures.

   The Lebanese government needs to create a central point of 
        contact in the national government to liaise with 
        municipalities, and link municipal needs to international 
        funding. Municipalities currently fall under the Ministry of 
        Interior, whose primary task is internal security. A direct 
        substantive link is needed to the Ministry of Finance.


    U.S. assistance is working through NGOs to get resources to 
communities. Many NGOs have worked bravely through the conflict and its 
aftermath. However, there is still no clear understanding among NGOs, 
the Lebanese government, and even many U.S. officials on how the $230 
million U.S. pledge will translate into projects and where they will be 
focused. There is no clear strategy for any donor or the Lebanese 
government to make resources channeled through NGOs work to reinforce 
the Lebanese state. Given the crisis environment, that is not 
surprising. Now there is an urgent need to give greater coherence to 
these efforts.
Building Social, Economic and Physical Infrastructure
    As Lebanon moves beyond immediate recovery, it must build a 
sociopolitical and economic foundation that strengthens the private 
sector, creates jobs and integrates Lebanon's poorest communities with 
the rest of the country. Four sets of initiatives can help.
    The first is to give communities a practical role in setting 
priorities, acting on them and providing oversight. Indirectly, such an 
initiative can provide an immediate boost to employment. If these 
communities have a stake in decision making and can see a link between 
their involvement and community-based investments, they will have a 
greater stake in a unified Lebanon. Experience in Afghanistan has shown 
that such initiatives can work at community level even when resources 
are limited. In Lebanon, there are two added tools: a well developed 
banking sector and a vibrant civil society.
    Eventually the model would be for the Ministry of Finance to open 
project-specific bank accounts. Initiatives could start in the South. 
To tap into the accounts, each municipality would need to select an 
oversight committee that represents different segments of society. 
Communities would agree on specific projects. Pre-screened NGOs, 
university affiliates and private firms could be contracted to work 
with communities to develop and implement projects. Funds would become 
available once local oversight committees decide on a project, register 
it with a municipality, and select an implementation partner to provide 
support. Funds would be disbursed in tranches based on performance, 
with final payment coming with the completion of a project. In the 
initial stages, outside partners (NGOs, universities, private 
consultants) may need to take a direct role in implementation, phasing 
down over time. The government would be seen as supporting but not 
directing community activity. Banks would provide a means to control, 
track and audit payments. There is no ``correct'' funding level for 
such a program, but $100 million could cover the south and northeast in 
its first 18-24 months.
    Second is a job creation program. There is no community in Lebanon 
that is not within 30 minutes of a bank. Commercial banks have 
experience in administering micro and small business finance. There is 
liquidity in the banking system, but risk is high, and thus interest 
rates and lending terms are prohibitive for small businesses. One part 
of the initiative would provide partial guarantees and subsidies to 
lower interest rates, provide a repayment grace period, and extend the 
term of lending. While such subsidies would need to be phased out, they 
would open the credit market to a wide range of small entrepreneurs 
whose businesses have been destroyed or disrupted by war. The second 
part of the initiative would rely on NGOs to survey communities and put 
in place contracts with universities and private firms to provide 
services and training to entrepreneurs. Depending on the actual risk 
assessments, $100 million in guarantees could generate several times 
that amount in actual lending. Another $50 million should be used to 
put in place training and technical support contracts. For illustrative 
purposes, if this initiative funded 10,000 loans at $20,000, with each 
loan supporting projects that generate on average 10 jobs, that would 
create 100,000 jobs. Assuming each job benefits a family of 5, one can 
affect about half of the south's population.
    Third is the need for large-scale private sector financing that 
could invest in new business opportunities and support restructuring 
and modernization of medium and large scale enterprises. Lebanon had 
been regaining its place as a hub for business and financial services 
for the Gulf; its engineering and construction companies were 
rebuilding much of the Gulf. A major fund could help attract back $2.5 
billion in capital flight and 500,000 skilled Lebanese who fled during 
the war. The Association of Islamic Banks has announced its intent to 
raise a $2 billion fund, with initial commitments of $200 million. 
Western investment agencies such as OPIC, IFC and EIB could contribute 
to the capitalization of such a fund through investments or insurance, 
potentially opening opportunities for American business through Lebanon 
into the Gulf.
    Fourth, infrastructure crucial to unifying the country, meeting 
social needs, and stimulating private activity needs to be rebuilt--or 
in some case built for the first time. Top priorities are electricity, 
water systems, roads and bridges. Needs assessments must still be 
completed, but preliminary estimates are on the order of $3.5 billion. 
The World Bank has completed a preliminary project design for 
electricity production, transmission and distribution. The Saudis and 
Kuwaitis have pledged between them $800 million for reconstruction. 
More will be needed, but the first step is to work out the modalities 
for project development and disbursement.
    Local firms can handle the design, supervision and construction. 
Ideally there would be one trust fund with common rules to manage 
reconstruction funds, yet many donors do not want to contribute to a 
single trust fund which they do not control. This issue must be 
addressed before the process of administering aid takes up more time 
than putting it to work. The Lebanese Government has suggested the idea 
of countries ``adopting'' projects--which could work for roads and 
bridges. But clear standards and rules would need to be created to 
maintain quality and control corruption so that resources actually 
produce cost-effective results.
    The U.S. has agreed to adopt the Fidar Bridge, and we should 
contribute to this national reconstruction initiative, but we are 
unlikely to be a major financier of infrastructure. More important, the 
U.S. should consider a contribution of $100 million that could be 
managed by the World Bank for the Government of Lebanon to support 
feasibility studies that will accelerate the construction timetable. 
Internationally, it is not unusual for projects to be held up by more 
than a year for want of grant financing for feasibility work. In 
Lebanon, $100 million for feasibility studies could help leverage 
several billion dollars in project funding and give the U.S. a voice in 
the policy frameworks for such projects. It could also give the U.S. a 
role in the design and management of an international infrastructure 
fund where we might otherwise be excluded if we were not contributing 
directly to construction costs.
Financial and Structural Foundations for Growth
    Lebanon's Finance Minister and the Governor of the Central Bank 
deserve praise for keeping the currency stable and inflation in check 
despite massive capital flight and a sharp drop in revenues to the 
government. Saudi Arabia and Kuwait provided timely financial banking 
by transferring a total of $1.5 billion to bolster reserves. (Footnote: 
these funds cannot be used for reconstruction. They should not be 
counted toward international commitments for reconstruction.) But three 
pending problems must be addressed.
    The first is a need for $1 billion in budget support this year to 
compensate for revenue losses. The war caused a direct loss of about 
$650 million in revenues that could not be collected. It also caused 
the economy to contract from a projected 6% growth to at best no growth 
this year, causing another $350 million in revenue losses. The 
government budget will go from a projected primary surplus (before debt 
service) to a primary deficit. The government's only alternative to 
finance this loss is by printing money, which would shatter its control 
over inflation. As discussed below, Lebanon has the highest per capita 
public debt in the world; taking on more debt to finance the deficit 
would only exacerbate a key structural problem.
    The second is a need to refinance the public debt of $36 billion. 
Private Lebanese banks hold $20 billion of this debt, and they have 
indicated that they will refinance. A key issue will be their 
willingness to allow a grace period at a minimal interest rate. The 
remaining $16 billion will require help from international official and 
private creditors. Working out a debt relief scheme will be 
complicated, but the U.S. could help catalyze the process, in 
conjunction with the EU, by asking the IMF to mount an urgent mission 
to develop possible financing alternatives. The United States and the 
EU should state their willingness in principle for OPIC and the EIB to 
contribute to a solution.
    The third problem is rooted in the electricity sector. Subsidies to 
the sector cost the government about $1 billion annually. Between 
electricity subsidies and debt service, Lebanon spends half its annual 
revenues, crowding out other investments in infrastructure or the 
social sectors. Ending these subsidies will produce an economic shock 
and hardship among the poor, likely requiring a targeted subsidy 
program. This is exactly the type of initiative where donor grant 
funding for feasibility studies and technical assistance could have a 
massive multiplier effect.
Status of International Assistance
    There is a great deal of confusion about how much has been pledged 
for Lebanon and how much is needed. Part of the problem is that pledges 
have not been comparable, and some humanitarian aid included in these 
totals may have saved lives--but it has been consumed and is not 
relevant to the future. A quick survey illustrates the confusion:


   Saudi Arabia ($800m), Kuwait ($300m) and Qatar ($300m) have 
        pledged $1.4 billion in reconstruction assistance. Some may go 
        through reconstruction funds, other parts may go to ``adopt a 
        village'' programs. None of it has been spent.

   Saudi Arabia and Kuwait provided $1.5 billion to support 
        reserves. This money cannot be spent and should not be counted 
        as reconstruction assistance.

   The Stockholm early recovery conference raised $940 million. 
        Some have said that a total of $1.2 billion has been raised 
        when added with other pledges. But some pledges were for 
        expended humanitarian aid. The pledges also mix humanitarian 
        and early recovery projects. Of this amount, no government or 
        donor entity in Lebanon could tell us the operative total for 
        recovery and reconstruction.

   Private donors are raising funds, including investment funds 
        such as the fund being developed by the Association of Islamic 
        Banks. Such commercial funds will most likely invest in income-
        generating business and should not be counted upon to finance 
        core reconstruction costs.

   The U.S. and others have pledged funds for security 
        assistance; President Bush said it is $50 million of our $230 
        million pledge. At times security assistance gets mixed up with 
        reconstruction pledges, adding more confusion about the totals.

   Some donors are counting assessed costs for UNIFIL peace-
        keeping mission to their contributions, and others are not.


    If we take as a base for recovery and reconstruction the $5.1 
billion suggested above, the relevant pledges are likely on the order 
of $2.5 billion. Commercial funds are desperately needed to finance 
profit-making investment, but given Lebanon's massive commercial 
financing potential the bulk of such commercial funds should not be 
counted against specific reconstruction targets. An exception should be 
made for small business finance. The costs for equipping the Lebanese 
military could run from $300 million to over $1 billion, depending on 
whether aerial surveillance and response capabilities are funded. Such 
funding needs should be tracked separately. The cost of peacekeeping 
should not be calculated in international totals since it is an 
assessed U.N. cost, but individual donors need to track their capacity 
to meet their assessed shares.
    In short, there is still no danger of over funding. Recovery and 
reconstruction funding is probably half the needed total--in other 
words, a $2.5 billion gap. There is no clear picture on security 
assistance, but it is likely that on the order of another $500 million 
would be required if a robust border monitoring and response capacity 
is to be created.
Adequacy of the U.S. Response
    For the most part, the U.S. portfolio addresses practical 
transitional requirements and uses responsible funding vehicles such as 
established NGOs to channel the funds. U.S. NGOs have played an 
important role in early recovery in Lebanon. The U.S. government works 
closely with the Siniora government in managing post-war crises. In 
nature and scope, the U.S. portfolio is what one would expect of a mid-
sized country with good intentions and a limited strategic interest in 
Lebanon. If we subtract U.S. funding for security, our contribution is 
about $180 million, or about 3.5 percent of the total requirement.
    To be fair, $180 million should not be taken as the full U.S. 
contribution. There has been only a preliminary donors conference for 
early recovery and a major ``reconstruction'' conference is months off. 
But we need to be planning now for a major pledge that brings the U.S. 
total commitment, excluding security assistance, to $750 million--in 
other words, another $570 million above current commitments for 
recovery and reconstruction. In addition to this, the United State 
should provide yet more to support the Lebanese Army. The $50 million 
the U.S. has pledged is about six to ten times short of the lower-end 
requirement, and that does not even consider the need for support for 
Lebanon's internal Security Forces.
    It would be premature to try to specify exactly how another $570 
million should be used without in-depth analysis, but the analysis in 
this testimony is structured to provide a framework for programming. 
Broad program structures have been suggested, of which the U.S. can 
decide whether to fund a share. Illustratively, the outlines of such a 
program might be:


   $100 million for community-based and municipal development.

   $150 million for job creation and small business finance.

   $100 million in OPIC and EXIM costs to generate on the scale 
        of $300-500 million in private investment or finance.

   $70 million to contribute to small-scale targeted 
        infrastructure projects.

   $100 million to support feasibility studies and related 
        technical assistance for construction, infrastructure and 
        structural reform (e.g., electricity sector) projects.

   $25 million to finance auditing, evaluation and 
        accountability activities, including public-private 
        partnerships on transparency.

   $25 million to build government and parliamentary capacity 
        to monitor programs and communicate effectively with the 
        public.


    Actual allocations should be coordinated with the Government of 
Lebanon and other major donors. At least $300 million of the $750 
million should start to be mobilized now, particularly for an expanded 
community development and job creation initiative, with the rest 
appropriated in FY 2007. With funding always tight in the Foreign 
Operations account, Israel might suggest to the U.S. Congress and 
Administration that about 10 percent of its $2.3 billion annual Foreign 
Military Financing allocation could be temporarily reallocated for 
reconstruction in Lebanon, as in the end it would contribute to a 
similar aim of Israel's security and stability in the Middle East.
Opportunity for Leadership and Change
    The reconstruction process in Lebanon will be complicated and at 
times controversial. Political pitfalls abound. This is a region with a 
history of corruption. Economic success is just as dependent on 
political developments and security as on sound policy and resources. 
In this environment, the U.S. has the opportunity to play a tangible 
leadership role that depends on a strong presence on the ground and 
regular diplomatic engagement. We have an opportunity make our presence 
felt more strongly:


   A stabilization and reconstruction specialist has just been 
        deployed to Beirut. A team of 3-5 others should be added to the 
        country team to coordinate the U.S. effort and create a strong 
        on-the-ground capacity to provide leadership and coordinate 
        with the government, UNIFIL and other donors.

   The U.S. can help the Lebanese leadership structure its own 
        reconstruction team. UNDP is playing a particularly important 
        role in coordinating resources, but much can be done informally 
        to discuss management structures to interface with the 
        international community and to handle aid flows.

   The U.S. can lend insights on creative public-private 
        partnerships to monitor projects and combat corruption.

   We can lend informal support in conceptualizing public 
        information campaigns so that the Lebanese understand the 
        government's strategy, see how funds are being used, and 
        develop realistic expectations about assistance pledges.


    It is also important that we transform our own perception about 
what Lebanon's reconstruction signifies. This is not merely a technical 
endeavor. Lebanon has the most ethnically diverse population in the 
Middle East. It has the strongest private services sector in the 
region. It has fundamentally democratic roots. Success in Lebanon has 
the potential to reverse a trend in the region toward extremism and 
intolerance. The Lebanese people have the talent to succeed. The 
international community can provide essential resources. The critical 
determinant will be the Lebanese state--whether it can engender the 
internal and international confidence to get all parties to support 
Lebanon politically and give it an enduring sense of stability. For all 
those who believe in peace in the Middle East, we have a stake in this 
endeavor.
    Thank you for your time. I would be pleased to address your 
questions.


    The Chairman. Thank you very much, Ambassador Pascual.
    I'd like to call now upon Director Salem.

   STATEMENT OF DR. PAUL SALEM, DIRECTOR-DESIGNATE, CARNEGIE 
              MIDDLE EAST CENTER, BEIRUT, LEBANON

    Dr. Salem.  Thank you, Mr. Senator.
    I submitted my testimony for the record. I also submitted 
the draft of an article that's appearing in Foreign Affairs 
which goes in much greater detail into the outcomes of the 
situation in Lebanon, but I'd just like to highlight a few 
points from my testimony and from the article.
    First of all, I share some of the positive outlook that was 
expressed by Secretary Welch and others in looking at the glass 
half-full. One overall thing that we can take away from this 
is, this is an important case where multilateral diplomacy came 
up with a resolution which really has teeth and translated 
certain interests and objectives into actions on the ground 
large parts of which have already been implemented. And I think 
Resolution 1701 is very different from Resolutions 1559 or 425, 
or others relating to Lebanon--or for that matter, to the 
region--is a very excellent example of the U.S. using 
multilateral diplomacy to get real results and to build real 
stability and security.
    Also taking that sort of message in general, if we don't go 
on from 1701 to work on building more stability in Lebanon's 
immediate environment, 1701 will eventually collapse. It cannot 
stand in a vacuum.
    But 1701, in itself, does lay the foundations for a secure 
and stable Lebanon. Lebanon itself is a democracy; it has a 
vibrant political life and dynamic economic life. But Lebanon's 
stability and security is part and parcel of the security of 
the region.
    The main change in Lebanon's security environment is that 
for the first time in at least 40 years, the Lebanese state is 
regaining control of its borders. That development, which is 
already taking place, cannot be underestimated. Its effects 
will be felt in the months and years to come. We don't know 
exactly what effects it will have on the armaments of 
Hezbollah, its disarmament in the future, and the political 
environment within the country, but putting in place this 
cornerstone of sovereignty after the Syrian withdrawal is of 
historic importance.
    The second cornerstone, which is currently not there, which 
is the Lebanese state's ability to have a monopoly on force, is 
the next challenge. It's something that's not immediately 
mandated or immediately explained as to how that's to take 
place in 1701, although it's mentioned as an objective. And 
this really relates to the disarmament or decommissioning of 
Hezbollah. Of course, it also relates to the disarming of 
Palestinian groups in Lebanon. The armed Palestinians were one 
of the key causes of the collapse of the state in the late '60s 
and early '70s. Hezbollah's continued armament is a cause for 
concern at the current juncture.
    Both of these issues were part of the Taif Agreement, were 
part of Resolution 1559, and were being addressed in the 
national dialogue meetings which were taking place throughout 
the year among Lebanese leaders, including Hezbollah, until 
June of this summer. So, there is internal acknowledgment that 
this is a very serious issue that needs to be addressed.
    I think the events and the outcome of the war and 1701 
helps the country move a bit closer down that line. However, 
disarming or decommissioning Hezbollah is very complex, and 
largely a political process, much like the disarming of other 
militias in Lebanon, much like the IRA previously in Ireland.
    The questions of whether the army is stronger than 
Hezbollah, or Hezbollah is stronger than the army, is not the 
relevant question. The army has a large Shi'ite membership--at 
least 35 percent. Any military confrontation with Hezbollah 
means civil war in Lebanon and would destroy the country, and 
is something that is not to be contemplated.
    Yes, Hezbollah has gained stature, it has gained popularity 
in the Arab and Islamic world, for obvious reasons. However, in 
Lebanon itself, it faces a much more difficult situation than 
before the war, and there are a number of reasons for this. The 
primary reason is that the events of the war, triggered by the 
events of July 12, ended up devastating their own constituents, 
the Shi'ite community. And Hezbollah, whatever else happens, 
has to spend the next 2 to 3 to 4 years rebuilding the lives of 
its own constituents, and, for that reason, is not in a 
position to engage in another war or to launch any other 
activities. That is part of the reason why maybe they conceded 
the south, they conceded the border points, for the time being, 
because, in effect, they're not in a position to wage war, as 
they did on July 12th, perhaps encouraged, at the time, by 
Syria and Iran.
    In addition, Hezbollah faces cash problems, in the sense 
that their influx of cash, which used to come freely to them, 
did not come through the banking system; it came through other 
routes. With the control of the port, the airport, and the land 
crossings, the control of cash, or the amount of cash that they 
might have access to, might be compromised. In addition, there 
is a large question mark relating to the extent of the support 
that Iran is willing to give Hezbollah in this postwar 
situation. Hezbollah did not expect this war. The amount of 
money needed to rebuild lives is much more than they have, and 
is probably much more than Iran is willing to give them, and 
that, as the Ambassador just mentioned--initially they rushed 
out with checks and so on, but, since them, they have scaled 
back their promises, probably indicating the reality that the 
money needed is much more than they actually have access to.
    Also, in terms of their deterrent role previously, vis-a-
vis Iran, the effect of this war on their relationship with 
Iran is also a point of some interest and some questioning. At 
one level, their robust performance in the war gives pause and 
protects Iran to some degree. It gives pause to those, maybe, 
in this country or other places who might think of military 
operations against Iran. The recent war gives pause because one 
would think: ``If Hezbollah could do this much, what could Iran 
do?'' On the other hand, Hezbollah's missile system was 
supposed to be a deterrent in case Iran was much more directly 
attacked or under threat. That deterrent was, in a sense, 
wasted in a side war, or in a proxy war. So, the future of that 
relationship, although solid, might be open to some questioning 
regarding the extent of money that might be available.
    Politically, within the country, Hezbollah faces a much 
more difficult position than it did before. Up to the year 
2000, of course, Hezbollah was very much supported within the 
country as resisting an Israeli occupation that largely ended 
in the year 2000. Between 2000 and 2006, the issue of Shebaa 
Farms was somewhat of a figleaf that kept Hezbollah somewhat 
afloat. Syria ran the country, so they could keep them afloat 
throughout that period. But, most importantly, up until July of 
2006, Hezbollah and its leadership did not, in effect, do 
anything that jeopardized, in a major way, the security of 
their own community, or, in fact, the overall security and 
well-being of Lebanon. They were effective, in the '90s, 
getting Israel out of Lebanon, and people saw that as a very 
positive move. So, this is the first time that an action they 
have taken has really come to contradict Lebanese interests, 
and particularly their own community's interests. It also very 
much undermines the logic that they used to put forward before 
July, that their arms would help to protect Lebanon, or that 
their separate existence from the state would protect Lebanon 
from any Israeli retaliation.
    So, despite their popularity in the region, and their 
robust and somewhat heroic performance in the resistance, they 
do face a very difficult political future, in terms of 
justifying their existence as they were before 2006.
    What's likely to happen, in my view, is somewhat of a wait-
and-see situation. And this relates largely to Iran and Syria 
and regional balances of power. For the time being, they're 
laying low, as are Syria and Iran, with respect to 1701. They 
have accepted 1701. They have told Kofi Annan that they will 
support 1701. But, as we all know, the major confrontation in 
the region relates to Iran. It neither relates to Hezbollah, 
nor to any other player. And it's the future of that general 
set of relations, regional and international, which will tell 
us, 6 months or a year from now, what is the balance of power 
in the region. Will Iran and Syria be resurgent? Will they then 
begin to challenge 1701 at a later date? For the time being, 
they are not. In effect, they are being very positive about it.
    I think what's crucial, some of the smaller elements 
relating towards moving towards decommissioning Hezbollah, is 
making progress on two issues that are mentioned in 1701. One 
of those issues is the situation of the Shebaa Farms. The 
Shebaa Farms, maybe, is strategically not very significant, 
but, as a political figleaf, has been very significant. Shebaa 
Farms is a contested area between Lebanon and Syria, but, in 
any case, it is certainly not Israeli territory. And 1701 has a 
mechanism for dealing with that. The return of Shebaa Farms at 
least to U.N. auspices and UNIFIL auspices, would remove one of 
the figleafs or remove one of the issues that could help moving 
towards decommissioning.
    The second issue is also mentioned in 1701, Lebanese 
captives with Israel, which is mentioned, and should be 
addressed.
    These are two things that could serve to help the Lebanese 
deal with some of the issues that are being raised by 
Hezbollah.
    In addition, Hezbollah, as the main party representing the 
Shi'ites of Lebanon, credibly has said in the past, ``Look, the 
Lebanese state did not protect you in the south. We can. The 
Lebanese state did not deliver services. We can. The Lebanese 
state is not allowing you enough of a role in decisionmaking 
and so on. We can.''
    So, there are a lot of challenges, on the Lebanese army and 
on the Lebanese political system and on the Lebanese state, to 
try to answer some of those complaints of the Shi'ite 
community, or some among the Shi'ite community, which justify, 
perhaps falsely, the existence of an independent group such as 
Hezbollah.
    We're in a situation in which, on the one hand, 1701 is 
putting the squeeze on arms and cash and so on, on Hezbollah, 
but, at the same time, we have to wean away supporters of 
Hezbollah as a political party within the Lebanese system. And 
they do have serious concerns, and this will mean a much more 
serious approach to security and defending the borders from the 
Lebanese army, and a much more serious approach to political 
reform and building a state that has much less corruption, much 
less confessionalism than was the case previously.
    Finally, in terms of the international community, and 
particularly the United States, certainly what the Ambassador 
has mentioned, in terms of supporting reconstruction, I think 
that, in a sense, goes without saying, and I support everything 
that the Ambassador mentioned. But the United States is most 
important as a political mobilizer and a political superpower. 
1701 is most threatened to unravel from regional powers. A 
despondent Israel upset about its loss of military prestige, 
which is an immense issue within Israel today, could, in the 
foreseeable future, look ways to reassert its prestige. 
Hezbollah humiliated Israel's land forces to some degree. It's 
very important that at no time in the next year or two any 
operations from the Israeli side erupt; and that's something 
the United States certainly should be engaged in.
    Syria is in a very, very tense state. They have been forced 
to withdraw from Lebanon. They did take a blow in the last war. 
They are under investigation for the assassination of Hariri in 
the U.N. investigation. And they feel that they are, in 
general, targeted by an administration that considers them a 
player in the ``Axis of Evil.'' A cornered Syria could do 
immense damage, as it has in the past.
    However, Syria, even throughout this crisis, has continued 
to indicate its interest in the Golan Heights, and there's been 
a bit of movement on that front. And I think it's imperative 
that the United States take a leading role in trying to get 
some motion back into at least that side of the peace process. 
Dancing doesn't always have to always lead to marriage, but 
dancing can create relationships, and can massage a situation 
in a very tense standoff.
    Finally, most of the chips reside with the confrontation in 
Iran. A military confrontation with Iran will include Lebanon. 
And Lebanon absolutely would not survive a military 
confrontation with Iran. Hence, Lebanon's security, and 1701 
and its chances, rely on a similarly robust approach to 
multilateral tough diplomacy vis a vis Iran. Some elements of 
that are in play right now in the negotiations with Iran, but 
what we might take from 1701 is the possibility of achieving 
important objectives through multilateral diplomacy and 
avoiding the carnage of war, which Lebanon would suffer from, 
definitely, if it happens with Iran.
    Finally, Lebanon is a confrontation state in the Arab/
Israeli conflict. It's no surprise that Lebanon is in the midst 
of a war. It might recur again at a time when there are ongoing 
wars with the Palestinians, confrontation with Syria, 
confrontation with Iran, confrontation with Lebanon. There is 
not enough that can be said about the need to build on 1701 by 
also getting very, very vigorous movement back into the Arab-
Israeli. The Arabs have made their position clear, including 
Syria, that they do want normalization and peace with Israel, 
on reasonable grounds that have already been expressed by the 
United Nations. It is important for the United States to be 
seen--after it was seen as supporting this war--as taking the 
lead in trying to create peace. Even if peace is not achieved, 
trying counts for something and, I think, trying would help 
bring a sense of stability in the region, and would allow the 
United States not to be the target of hostility, and to be able 
to play a stabilizing role in a very, very unsettled situation.
    Thank you.


    [The prepared statement of Dr. Salem follows:]


                  Prepared Statement of Dr. Paul Salem

                lebanon: building on un resolution 1701
    The events of the past two months have demonstrated the power of 
diplomacy to create the conditions of stability and peace from the 
wreckage of war. Lebanon is reeling from one of the most destructive 
wars in its history; with over 1,200 dead, 160,000 housing units 
damaged or destroyed, along with thousands of businesses, hundreds of 
roads, and over 80 essential bridges, losses to the economy are 
estimated conservatively at above 30% of GDP--and this in a country 
that is already carrying a debt amounting to 180% of its GDP. Yet, 
through the efforts of the Lebanese government and the international 
community, the war was brought to a negotiated end through UN 
Resolution 1701 that lays the foundation for lasting security and 
stability in and around Lebanon. 1701 provides a great opportunity to 
consolidate a secure, democratic and prosperous Lebanon; it also 
beckons the United States and the international community to build on 
this success by renewing their efforts to bring the long-standing Arab-
Israeli conflict to a negotiated end.
    Lebanon today stands on the threshold of a new era. After the 
devastation of war, comes the opportunity to secure its borders, reform 
its democratic institutions, and relaunch its once dynamic economy. The 
challenges before the Lebanese government are numerous.
    At the security level, the deployment of the Lebanese armed 
forces--with essential support from the UNIFIL--to reclaim control of 
the country's land, sea and air borders, puts back in place the 
essential cornerstone of Lebanese statehood and reverses the reality of 
four decades in which the state did not control the borders. The 
Lebanese government must consolidate this move by continuing to 
strengthen the armed forces and maintaining the national political 
support and will that is essential to their success. Securing Lebanon's 
borders from outside interference helps secure Lebanon's internal 
unity; and that unity, in turn, stabilizes the country and contributes 
to the stability of the region.
    The government still faces a challenge in securing the other 
cornerstone of statehood, which is a monopoly on armed force. The 
disarmament of all non-governmental armed groups in Lebanon is a basic 
tenet of the Taif Agreement of 1989 on which Lebanon's post civil war 
consensus has been built; it was also reiterated in resolutions 1559 
and 1701. The disarmament of the remaining militias in Lebanon--
Hezbollah and the armed Palestinian groups--was high on the agenda of 
the National Dialogue meetings that were taking place in Lebanon until 
this past June. Agreement was reached on disarming Palestinian groups 
that are situated outside the Palestinian camps, but talks broke down 
before agreement could be reached on the full disarmament of 
Palestinian groups or Hezbollah.
    The decommissioning of Hezbollah, like the decommissioning of the 
IRA, is possible but is also a complicated and mainly political 
challenge. Hezbollah is the principal party of the Shiite community in 
Lebanon and is represented in Parliament and government, and as a 
political party raises valid points about defense of the south, the 
effectiveness of the state, foreign policy, social justice and welfare, 
and the share of the Shiite community in government. While weaning 
Hezbollah away from its military role and its over-dependence on Iran, 
the government must answer some of the concerns of the community 
Hezbollah represents through beefing up the Lebanese army so it can 
truly promise defense and security to the long-suffering inhabitants of 
south Lebanon, and through wider partnership of the Shiite community in 
government, and a more efficient and less corrupt state which can 
deliver development beyond Beirut, and prosperity beyond the upper 
middle class.
    The challenge is to consolidate security by moving ahead with 
urgently needed political reforms. These would include the passage of a 
new electoral law (a draft of which was already presented in June by 
the government's own-appointed National Electoral Commission), the 
passage of a new administrative decentralization law, the consolidation 
of the constitutional court and the judiciary, as well as serious 
initiatives to increase efficiency in the civil service and combat 
political and bureaucratic corruption. It would also include reaching 
out to the Shiite community, in this hour of their greatest distress, 
as full partners in government, within the parameters of this reborn 
sovereign, independent and united Lebanon.
    Prime Minister Fouad Siniora and speaker of Parliament Nabih Berri 
have declared their commitment to this process; these words must be 
turned into deeds in government and in Parliament.
    In terms of relief, reconstruction and economic revival, the 
challenges are clear and urgent. Although it was slow in providing 
immediate relief, the government has moved quickly in assessing the 
massive damages, clearing away rubble, rebuilding roads and bridges, 
and setting up a mechanism to provide assistance for citizens to 
rebuild homes and businesses, and organizing aid. The Arab and 
international community, including the united states, has been 
extremely generous in extending reconstruction aid to Lebanon. The 
challenge before the government is managing reconstruction quickly and 
efficiently, and avoiding the waste and corruption that plagued the 
post civil war reconstruction process in the 1990s. In terms of 
reviving the economy, Lebanon does not need aid, it simply needs the 
renewal of faith in Lebanon from among investors, businesses and 
tourists. This faith was coming back quickly before this latest war; it 
can be recaptured again.
    Beyond Lebanon, the U.S. and the international community have an 
interest to stand behind the full and robust implementation of 
Resolution 1701: in supporting the Lebanese state, the Lebanese armed 
forces, UNIFIL, and the reconstruction process. More importantly, the 
international community must guard against the unraveling of 1701 by 
trying to ensure that none of Lebanon's neighbors--all of whom have 
accepted 1701--act to break it. A despondent Israel, concerned about 
its army's loss of prestige, should be dissuaded from launching any 
further attacks simply to reassert its superiority. A cornered Syrian 
government, fearful of its loss of influence and an ongoing U.N. 
investigation, should be coaxed on the road to peace not war. And 
regarding Iran, regional stability would be better served through 
strong multilateral diplomacy to deal with Iran's nuclear ambitions, 
rather than war.
    A stable and peaceful Lebanon can contribute to a stable and 
peaceful region; but an explosive region will sooner or later come back 
to destroy Lebanon. Resolution 1701 is an important building block for 
peace in the region; but it must be buttressed by further negotiations 
and further agreements in the region. The Arab countries unanimously 
declared their commitment to full peace with Israel in the Beirut 
summit of 2002. Syria, even today, has indicated its interest in peace 
in exchange for its occupied land in the Golan.
    Making peace will not be, and never is easy; but waging perpetual 
war is not a viable alternative. It is my view that the United States 
and the international community should build on the momentum of 1701 
and should bring their immense capacities and resources to bear--not on 
waging another war--but on building a formidable alliance to bring 
about a negotiated, just and lasting end to the Arab-Israeli conflict.
    That objective is within our reach. Lebanon needs it; the region 
needs it; the world needs it. The bible says, Blessed are the 
Peacemakers. Indeed, let all men and women of good faith, in this 
august Senate and in this nation, turn their energies to building 
peace. Let us restart this century anew; not as a century of conflict 
and war, as the perpetrators of September 11 wanted it, but as a 
century of peace and prosperity, as all good people of the world--Arab 
and American--Muslim, Christian and Jew--want it.

                               __________

                 Squaring The Circle: Domestic Politics
               and Regional Security In Post-1701 Lebanon

                           by paul salem \1\
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    \1\ This article is scheduled to be published in Foreign Affairs in 
fall 2006.
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    Wars rarely proceed as expected; proxy wars are no exception. 
Hezbollah's raid on July 12, backed by Iran, was apparently intended to 
entangle Israel in a limited skirmish on its northern border and a 
drawn out prisoner exchange at a time when Iran was facing mounting 
pressure over its nuclear issue. Israel, backed by the U.S., responded 
with a large scale war aiming to deliver a knock out blow to Hezbollah 
in order to eliminate any missile threat on northern Israel, weaken 
Iran in any upcoming showdown, and eliminate what the U.S. considered a 
major opponent in the War on Terror. The U.S. also hoped to give a 
boost to the Lebanese government which they considered a friend and a 
potential democratic success story. Following the law of unintended 
consequences, events in this war did not develop as any of the parties 
expected: Hezbollah got a full scale war, in which it achieved some 
almost unexpected battlefield victories as well as massive popularity 
in the Arab and Islamic world, but which also left its constituency 
devastated and its tactical and political options compromised; Israel 
unleashed massive air power on Hezbollah strongholds and Shiite towns 
and neighborhoods but could not knock out Hezbollah, nor stop its 
missile attacks on northern Israel--even Israel's ground invasion 
suffered serious reverses that punched holes in the IDF's aura of 
invincibility. From the Iranian perspective, it could claim part of 
Hezbollah's popular victory in the Arab and Islamic world, and 
Hezbollah's robust performance served to give pause to those who might 
think that military action against Iran would go as planned; on the 
other hand, the war wasted much of the deterrent power that Iran had 
vested in Hezbollah for Iran's own hour of need. From the U.S. 
perspective, although the war did degrade Hezbollah's capacities, it 
failed to knock out Hezbollah, drove Arab and Islamic public opinion 
further against the U.S., and weakened an already fragile Lebanon.
    Nevertheless, the belated ending to this devastating war, based on 
UNSCR 1701, provides a foundation for moving beyond the crisis and a 
framework for new political and security realities in Lebanon and the 
region that could serve to help rebuild what has been destroyed and 
create a stable and secure Lebanon that, in turn, would serve to 
promote the interests of regional peace.
Gaining Perspective
    For those unfamiliar with Lebanon's makeup, it is a parliamentary 
democracy in which power is shared among the various confessional 
communities. The constitution dates back to 1926 and was modeled after 
participatory government practices that dated back to 1862. The last 
major amendments to the Constitution were undertaken in 1990 to 
incorporate changes agreed upon in the Document of National 
Understanding, known as the Taif Agreement, that was reached in 1989 
and provided the basis for the ending of the civil war that had erupted 
in 1975. Members of Parliament are elected to seats that are reserved 
on a fixed confessional basis with equal representation for Christians 
and Muslims. Parliament elects its Speaker, who must be a Shiite 
Muslim, a President, who must be a Maronite Christian, and (through the 
President) names a Prime Minister, who must be a Sunni Muslim. Seats in 
the Council of Ministers are again balanced on a confessional basis as 
are most high posts in the civil and armed services. Syrian troops 
which had entered Lebanon in 1976 and were supposed to start 
withdrawing in 1992, according to the Taif Agreement, actually expanded 
their deployment in Lebanon in 1990 and ended up controlling the 
country between 1990 and 2005. During that period, they dominated the 
government, interfering in elections, naming presidents and prime 
ministers, and determining major government policies and decisions.
    The change in rule in Syria, with the death of Hafiz al Assad in 
the Summer of 2000 and the accession of his son Bashshar, followed by 
September 11 and the U.S. invasions of Afghanistan and Iraq, changed 
Lebanon's political environment. Bashshar al Assad could not find his 
father's middle path within the U.S.'s new ``With Us Or Against Us'' 
foreign policy, and international toleration of Syria's control of 
Lebanon came to an end. International polarization generated 
polarization within Lebanon, with Prime Minister Rafiq Hariri, Druze 
leader Walid Junblat, and a number of leading Maronite leaders forming 
a pro-Western anti-Syrian coalition, and President Emile Lahoud, 
Hezbollah and a number of smaller parties forming a pro-Syrian 
coalition. General Michel Aoun, a prominent Maronite leader, who 
started in the former coalition, eventually drifted closer to the 
latter. Hariri's assassination in February of 2005 triggered the 
massive demonstrations of March 14 that were followed by a Syrian 
withdrawal. The anti-Syrian coalition, known henceforth as the March 14 
Coalition, hoped that the Syrian withdrawal would enable the removal of 
Lahoud and the weakening of Hezbollah. This did not happen, and the 
March 14 coalition settled into an uneasy stalemate with the pro-Syrian 
coalition, itself dubbed the March 8 coalition after the date of a 
large rally organized by them on that day.
    Hezbollah was established in Lebanon in the wake of the 1979 
Islamic Revolution in Iran and the Israeli invasion of Lebanon in 1982. 
It capitalized on the earlier Movement of the Deprived (organized later 
as the Amal Movement) that had been established by Imam Musa Sadr, a 
charismatic cleric who had mobilized the Shiite community to agitate 
against decades of socio-economic and political marginalization and 
resist Israeli aggression in South Lebanon. He disappeared while on a 
visit to Libya in 1978. In the 1980s Hezbollah mirrored quite directly 
the radical ideology of the Islamic Revolution, calling for an Islamic 
Republic in Lebanon and prosecuting an active war against U.S. and 
Western interests in Lebanon. In the 1990s, reflecting a more pragmatic 
turn in Tehran and adjusting to the realities of Lebanon, Hezbollah 
joined the Lebanese political system through parliamentary and local 
elections, wound down its direct activities against U.S. and Western 
interests, and developed a focus as a guerrilla resistance movement 
against Israeli occupation of South Lebanon. With the withdrawal of 
Israeli troops in May of 2000, Hezbollah claimed a historic victory, 
but had to find new justification for its continued carrying of arms: 
this was pinned on the issue of Shebaa Farms (a strip of land on Mount 
Hermon seized by Israel from Syria in 1967, but claimed by Lebanon and 
Syria to be Lebanese territory) and Lebanese captives in Israeli jails. 
With the assassination of Hariri and the withdrawal of Syrian troops in 
April 2005, Hezbollah now found itself in the forefront of Lebanese 
politics, leading an anti-Western coalition against the anti-Syrian 
coalition led by the Hariri camp.
    From the time of his appointment as Prime Minister in 1992, the 
agenda of Rafiq Hariri largely conflicted with that of Hezbollah. 
Hariri came to power on an agenda of reconstruction and economic 
development that relied on stability and calm to attract Lebanese, Arab 
and foreign investment. He believed that Israel's occupation of South 
Lebanon could be resolved diplomatically, while Hezbollah pursued the 
armed resistance option. Each time Hezbollah's resistance provoked a 
large Israeli retaliation, such as in 1993 and 1996, Hariri's 
development plans were set back several years. The failure of the 
international community to resolve the Israeli occupation 
diplomatically fatally wounded Hariri's efforts. His recovery project 
foundered, and his faith in diplomatic solutions to the South was 
belied by events, and he was essentially driven out of office in 1998 
with Hezbollah in the ascendant and a new hard-line president, Emile 
Lahoud, in office.
    When Israel finally did withdraw from Lebanon in May 2000, it was 
chalked up as a victory for the Resistance not state diplomacy. After 
his comeback in the 2000 elections, Hariri returned to the Prime 
Minister's office, but now in an uneasy relationship with the new rule 
of Bashshar al Assad in Syria, and in a balancing act with President 
Lahoud, Hezbollah and a number of other parties. Strong voices were 
raised at the time arguing that, with the Israeli withdrawal, it was 
time for Hezbollah to be decommissioned. However, Syria, as the 
dominant power over Lebanon, blocked these demands and continued to 
protect and promote an armed Hezbollah under the logic of liberating 
Shebaa Farms and providing a deterrent against potential Israeli 
attack. In many ways, the war of 2006 was a result of what was not 
addressed in 2000.
    Finally, a few words on the Syrian-Iranian relationship in Lebanon. 
Syria and Iran had initially come to proxy blows in the 1980s with the 
ascendance of Iranian Hezbollah at the expense of the Syrian-backed 
Amal movement, with a number of pitched battles being fought between 
the two groups. A distribution of roles was eventually worked out with 
Amal shrinking as an armed group and Amal leader Nabih Berri assuming 
the post of Speaker of Parliament as of 1992, and Hezbollah largely 
taking over the military arena. Syrian-Iranian cooperation in 
supporting Hezbollah proceeded relatively smoothly throughout the 1992-
2005 period, with Iran providing most of the finances, training and 
arms, and Syria providing the conduits and cover and managing the 
Lebanese politics of the situation. With the Syrian withdrawal in 2005 
and Syria's increasing regional and international isolation over the 
investigation of the Hariri assassination, Iran moved to take a more 
direct role in Lebanon, essentially supplanting Syria as Hezbollah's 
supervisor in the Lebanese arena.
    On the eve of the war, Lebanon was in a situation of political 
stalemate. The government led by Prime Minister Fouad Siniora, made up 
largely of members of the March 14 coalition, also included members of 
Amal and Hezbollah who could effectively veto key decisions they 
disagreed with. In the country, the March 14 coalition led by Rafiq 
Hariri's son, Saad, and Walid Junblat, was counterbalanced by a 
coalition including Hezbollah, Michel Aoun, President Lahoud and a 
number of other parties. President Lahoud was serving out his term to 
the autumn of 2007, the government could not push through key economic 
reforms, and the state coexisted alongside the independent power of 
Hezbollah.
The Politics Of War
    In the early days of the war, the government issued a statement 
critical of Hezbollah for undertaking the provocative raid of July 12 
and triggering the war and for arrogating to itself the power of making 
war and peace. The Amal and Hezbollah members of government expressed 
their ``reservations'' vis a vis the statement, but it was issued 
nonetheless. There were similar statements issued, conspicuously, by 
prominent Sunni states in the region, particularly Saudi Arabia, Egypt 
and Jordan. The initial days of the war saw internal tensions escalate 
dangerously. Many in the Hezbollah and March 8 camp suspected the March 
14 camp to have colluded in encouraging the Israeli-American war 
against Hezbollah, and many in the March 14 group suspected that 
Hezbollah, backed by Syria and Iran, had triggered this war to bring 
about the destruction of Hariri's reconstructed Lebanon, bring down the 
government, and take over the rubble that would be left. These tensions 
were fueled further by the reality that most of the Israeli attacks 
were devastating Shiite areas, and by the conditions of high Sunni-Shii 
tension in the region, particularly in Iraq. Serious fears surfaced of 
Sunni-Shii unrest, particularly in Beirut where desperate and 
disgruntled Shiite refugees from the south were being housed in equally 
disgruntled Sunni neighborhoods.
    Public opinion shifted however, when it became clear that Israel 
was not simply retaliating for the July 12 operation, but had launched 
an all out war on Hezbollah, and concomitantly, the Shiite community 
and other parts of the country; Hezbollah was thereafter seen as 
perhaps irresponsible for staging the July 12 attack, but the onus of 
blame shifted to Israel and the U.S. for prosecuting and prolonging 
such a widescale war. As the massive civilian toll of the war mounted, 
early anger at Hezbollah turned to fury at Israel and the U.S.
    Reeling from the destructive effects of the war, and partly 
reflecting this shift in opinion, and partly to avert further Sunni-
Shii escalation of tension, the government shifted gears itself and 
focused its efforts on securing a cease-fire. Stunned by the U.S.'s 
refusal early on to push for a quick cease-fire, the government 
presented its own cease-fire plan to the international community. The 
plan called for an immediate cessation of hostilities, an immediate 
Israeli withdrawal from any territory seized, return of refugees to 
their towns and villages, exchange of prisoners, deployment of the 
Lebanese army to the South, strengthening of the UNIFIL force in the 
South, revival of the 1949 Armistice Agreement between Lebanon and 
Israel, placing of Shebaa farms under U.N. custody, international aid 
to help rebuild the country, and the principle of decommissioning all 
non-state armed groups.
    The eventual resolution, UNSCR 1701, that brought an end to the war 
in mid-August was built on the framework of the government's earlier 
proposal but went beyond it, with much more detail about a beefed up 
UNIFIL force and its role in the south and border points, and much more 
clarity about the obligation of the Lebanese state to extend its 
authority throughout the country and secure its borders and prevent the 
re-supply of weapons to Hezbollah or any other non-state actor. It did 
not include a mechanism for the immediate disarmament of Hezbollah, but 
reaffirmed the necessity of doing so.
Aftermath
    The Lebanese emerged from the cease-fire initially preoccupied with 
the debate about who had won or lost the war. Hezbollah had rushed to 
declare what they called a ``divine victory'', citing their very 
survival, as well as their ability to continue firing missiles at 
Israel through the war and the ability of their fighters to inflict 
heavy losses on Israeli armor and ground troops in a number of 
engagements in the south as proof of their victory. Indeed, this was 
the first Arab-Israeli war that did not end in victory for Israel. And 
it was hailed as such around the Arab and Islamic world. The 
transparent confusion and demoralization of Israeli troops returning 
from south Lebanon, and the very public avowals of failure coming 
through the Israeli press, seemed to confirm Hezbollah's claims. 
Indeed, many of Hezbollah's battlefield victories had been real: they 
had found a way to protect their missile launching capacity from 
Israeli neutralization, and they had devised guerrilla defenses and 
tactics that could effectively slow down Israeli land advances and 
inflict heavy losses on them.
    However, it was also clear that Lebanon, and particularly the Shia 
of Lebanon, had suffered enormous human and economic losses. With 1,200 
people dead (almost a third of those children), four thousand wounded, 
one million displaced, 130,000 housing units damaged or destroyed, 
along with thousands of small businesses, 300 factories, 80 major and 
secondary bridges, hundreds of roads, and significant damage to a large 
number of schools and hospitals, as well as the country's electricity 
network, the airport and the environment, this war was the costliest 
Arab-Israeli war in Lebanon's history; much costlier than the 1996 and 
1993 wars and more devastating even than the 1982 Israeli invasion of 
Lebanon. The initial cost was estimated at around 30% of the country's 
GDP. From a pre-war GDP of $21 billion, costs amounted to about $7 
billion, which included $3.6 billion in direct costs of damage to 
homes, business and infrastructure, and a further $3-4 billion in lost 
revenue from a ruined tourist season, suspended trade, disrupted 
industry, and a devastated agriculture sector. In a country already 
suffering from a 180% debt/GDP burden and having just completed over a 
decade of laborious and costly reconstruction, this war dealt the 
country a staggering blow which it will take many years to recover 
from. The bulk of this destruction was concentrated in the mainly 
Shiite areas of south Lebanon and the southern suburbs of Beirut.
    Hezbollah, as an organization, also had losses to tally, mainly 
tactical and political. It had given up control of the area south of 
the litany to the Lebanese army and a beefed up UNIFIL, and agreed to 
Army control of the Lebanese-syrian border points against re-supply--
both very significant concessions. With the devastation of Shiite 
areas, it also faced the reality that it could not put its constituency 
through another war in the immediate future and would have to 
concentrate on relief and reconstruction for the next two to three 
years at least. In more concrete terms, it had lost a number of its top 
fighters (estimates range from 300-600), exposed its strategies and 
tactics, and lost many of its medium and long range missiles. In 
addition, it found itself struggling to rework its arguments regarding 
its raison d'etre. The argument it used before the war, that its arms 
helped deter Israel had proven incorrect, and Israel had been provoked 
instead. The argument that a non-state actor could defend Lebanon 
better because Israel would not retaliate on the country was also 
proven incorrect. The sense in the country that Nasrallah was careful 
enough not to expose Lebanon to a ruinous war--which had been more or 
less accurate up till July 12--was also lost. Even among the Shiite 
community, although support for Hezbollah and Nasrallah remained 
overwhelming, there was some grumbling that neither Iran nor Syria had 
come to their aid, and that the cost of this seemingly unnecessary war 
was ruinous.
    However, Hezbollah also had strong arguments that it put forward. 
It had shown how an organized fighting force could effectively fight 
Israel and defend against another occupation of the South at a time 
when the Lebanese army showed neither the proclivity nor the ability to 
do so. It also showed how it could move quickly on relief and 
reconstruction work at a time when the state remained slow and 
lumbering. It could also say that Israel's war, which had ruined 
Lebanon, was openly backed by the U.S. administration, which the March 
14 group claimed as their main friend and ally. It could also claim 
victory on the battlefield, and as such was in no mood to surrender its 
arms.
What Is To Be Done? -- Lebanon:
    This latest war presents a number of challenges to Lebanon as a 
state and a nation. Much will depend on what lessons are learned from 
the war, and what steps are taken to consolidate security, economic 
recovery, and political development.
    At the security level the government must be firm and decisive in 
implementing the security provisions of 1701. It must continue to 
strengthen the army, the internal security forces, and the intelligence 
services to carry out these tasks. The deployment of the Army to the 
area South of the Litani has already gone smoothly and is not likely to 
falter because Hezbollah has conceded that area for the foreseeable 
future and might be itself be looking for a buffer to avoid getting 
into another unnecessary fight with Israel. The control of the border 
points along the Syrian border is a much more challenging task; 
Hezbollah conceded the point in principle, but is opposed to the 
deployment of UNIFIL troops along that border. Syria has also 
threatened that if UNIFIL troops are deployed on its border, it will 
close its borders with Lebanon, which would choke the Lebanese economy. 
The firm control of the airport and seaports are of equal importance. 
these are obviously crucial issues, because while Hezbollah is 
exhausted for the time being, if the borders and entry points are not 
controlled, Iran and Syria could channel huge amounts of cash and arms 
to the organization and build it back to its pre-war capacities within 
months. The Lebanese government has been sensitive to the risk of 
confrontation with Syria; it has deployed troops to control the border 
points and declared that it does not need UNIFIL troop assistance but 
only technical assistance in terms of specialized border monitoring and 
control equipment and training. The security services have equally 
moved to secure the airport and sea ports. The approach outlined by the 
Lebanese government is a viable one, as the armed services have the 
capacity to control these entry points; the problem in the past has 
been the consistent will to do so. Finally, in the security area, the 
government must consolidate its authority over all Lebanese territory; 
this would include reclaiming security authority over the southern 
suburbs of Beirut and certain areas of the Biqaa Valley, which are 
still the preserve of Hezbollah,. Surely, this should be done without 
confrontation, but it needs to be done nonetheless.
    This leaves the question of the eventual disarmament or 
decommissioning of Hezbollah. Although this is not a point that is to 
be implemented in this current phase, it is an issue that was being 
discussed before the war erupted, and has now become much more relevant 
and pressing. If the Army secures the South and the border points, if 
there are no future Israeli attacks, and if Hezbollah is prevented from 
re-arming, its military raison d'etre and future would be largely 
compromised, and it would be likelier to contemplate a profound change 
in its role and status in the country. A number of ideas have been 
floated ranging from straight disarmament, like other militias disarmed 
at the end of the Lebanese civil war, to integrating Hezbollah's forces 
under the state's authority within a national defense structure under 
the model of a Civil Defense League, or National Guard, or Boarder 
Defense Brigade or some such similar structure. This hurdle is a 
crucial one, but awaits the outcome of the proper implementation of 
1701 first.
    At the economic level, the challenges are clear and daunting. The 
government needs to act quickly in reconstructing what was destroyed, 
rebuilding tourist and investor confidence, and continuing to manage 
the country's precarious public debt situation. Headed by a Prime 
Minister who oversaw most of Lebanon's previous reconstruction and 
economic development, this government is well equipped to do so. The 
government has already outlined its reconstruction and compensation 
scheme, held an international short term aid conference (in Stockholm, 
August 31) and is organizing a longer-term international economic aid 
donor's meeting. Of course, the proof is in the implementation, and the 
government must remain vigilant that the reconstruction and recovery 
programs for blighted areas not succumb to slow-downs and corruption. 
The opportunity to prove the state's immediate relevance to inhabitants 
of these areas should not be wasted. While Hezbollah initially 
undertook to compensate and rebuild all damaged properties, it has 
since gone back on that promise apparently having underestimated the 
extent of the destruction and overestimated the funds available to it. 
Interestingly, an Iranian delegation that visited the country after the 
war, pledged to channel its main aid through the Lebanese government, 
not Hezbollah.
    At the political level, firm steps should also be undertaken to 
consolidate political unity and develop the country's political 
institutions. The government must move beyond its immediate concern 
with holding on to power and show that it can lead true political 
reform. This means a fuller implementation of the Taif Agreement. At a 
minimum, this means the passing of a new election draft bill, a version 
of which had already been prepared by the National Electoral Commission 
that the government itself appointed, and the passing of an 
administrative decentralization bill that is long overdue. The 
government enjoys a majority in Parliament which can then turn these 
bills into law. The government must also show that it is able to revive 
faith in the state by more effectively combating corruption and 
breathing life into the civil and armed services.
    At a more immediate level, there are serious political divisions 
within the country that cannot be ignored; the government had been 
stalemated before the war, and is likely to continue to be so if these 
divisions are not addressed. A National Dialogue process had been put 
in place throughout the first half of 2006 that had brought together 
leaders of all communities; it made significant progress on a number of 
issues relating to Shebaa Farms, the Hariri investigation, and 
Palestinians in Lebanon, but bogged down on the issues of Hezbollah's 
arms and election of a new President. At a minimum this National 
Dialogue should be resumed. Hezbollah and Aoun are calling for the 
establishment of a government of National Unity in which they would 
have broader representation, but the government has declined, citing 
the confidence of Parliament that it still enjoys, and fearing that 
bringing the opposition into government so early on might paralyze its 
ability to fully implement 1701. Nevertheless, the government must find 
ways to meet the opposition part of the way, and to more fully 
consolidate national unity.
    At a more fundamental level, important players have basic choices 
to make. The leadership of Hezbollah must re-assess its policies and 
status and decide, at some point soon, whether it wishes to fully 
integrate into the Lebanese state and assume its role as a principal 
leader of the Shiite community of Lebanon within the Lebanese 
democratic state framework, or remain an independent extra-legal force 
with principal links to a foreign state, Iran. If the latter, the 
Shiite community in Lebanon also has important choices to make; do they 
really wish to support a ``two-state solution'' in Lebanon, or are they 
committed to a united and independent Lebanon? Different communities in 
Lebanon have gone through similar moments of truth: the Maronites 
allied with Israel to try to regain their power in Lebanon; the Sunnis 
and Druze relied on the PLO at one point to gain the upper hand in 
Lebanon; and everybody used--and was used by--the Syrians. In this 
regard, the Shiite community, as well as other communities, must 
realize that foreign alliances, taken too far, threaten national unity 
and the integrity of the state.
    From another perspective, the mistake that was committed by the 
Maronites in past decades in overplaying their political hand and over-
dominating the government, risks being repeated by leaders in the Sunni 
community. The Sunni community was, arguably, the largest beneficiary 
from the Taif Agreement as executive power was largely shifted from the 
Maronite presidency to the Sunni office of the Prime Minister. The 
Shiite community, which was very numerous and powerful at the end of 
the war, gained only marginal advantages in the Taif Agreement, which 
was, after all, negotiated in Saudi Arabia and mediated by three other 
Arab Sunni states. The benefits came almost exclusively in the 
legislative branch with enhanced powers for the Shiite Speaker of 
Parliament, including a role for Parliament in naming a Prime Minister. 
The executive branch, however, remained largely the preserve of a 
strengthened Sunni Prime Minister and a weakened Maronite President. 
Shiite proposals, such as having a Shiite Vice Presidency or 
establishing a bicameral legislative within a limited time frame were 
not approved. Even an unwritten understanding that the key post of 
Minister of Finance would be Shiite--such that government decrees which 
require financial outlay would have the signature of a Sunni Prime 
Minister, a Shiite Minister of Finance and a Maronite President--was 
dropped in 1992 when Hariri took office. At a time when the Shiite 
community is being asked to gradually wean itself off Hezbollah and 
Iran and integrate more fully into the Lebanese state, the community's 
complaints about how the post-Taif state has developed must be 
considered seriously. While the Syrians ran Lebanon, the main Shiite 
parties, allied to Syria, enjoyed widespread effective power both 
inside and outside the state; but with the Syrian withdrawal, their 
concerns have come back to the fore. At some point soon, progress must 
be made toward establishing a bicameral legislative where the lower 
house is free of confessional restriction of seats and in which the 
Shiite community can feel more fairly represented; in addition, the 
Council of Ministers, as the heart of the executive branch, must be 
revamped with its own internal bylaws (which it now lacks) and a 
broader sense of partnership among major communities. It will not do, 
in the long term, to argue--like the Maronites complained in the past 
that they could not share more power with the Sunnis because they were 
too close to Gamal Abdel Nasser or the PLO--that more power cannot be 
shared with the Shiites because they are too close to Iran or Syria: as 
they feel a wider stake in the state, they, like others before them, 
will and should reduce their reliance on outside players. The horse 
must be put in front; the cart will follow.
What Is To Be Done? -- The U.S. and The Arab and International 
        Community:
    If the Lebanese government is to achieve its goals, it will require 
strong and consistent support from the international community.
    At the security level, the international community must compliment 
its support for a beefed up UNIFIL with serious technical, training and 
materiel support for the Lebanese armed forces and security services. 
The international community must also understand Lebanon's own security 
concerns and help Lebanon implement 1701 without triggering new 
external or internal conflicts. This will require serious consideration 
of how to fully secure the border points without triggering a conflict 
with Syria, and how to move gradually toward decommissioning of 
Hezbollah without triggering civil war.
    At the economic level, the need for Arab and international 
assistance is clear and has already taken off. This should obviously be 
complimented by strong encouragement for businesses and firms to 
reinvest in the country.
    At the political level, the international community should be 
careful not to break Lebanon as it tries to fix it. It should realize 
that Lebanon's stability and independence is best secured through its 
political unity, and that pushing the country too far, one way or 
another, exacerbates internal divisions and can lead to the opposite 
effect. Attempts to push Lebanon into the Baghdad Pact in 1958 led to 
civil war; similarly, the U.S.'s ``With Us or Against Us'' Foreign 
Policy puts exceptional strain on the Lebanese polity. The 
international community should stand by the government, pushing it and 
supporting it at the same time; but also listening closely to its 
concerns and its readings of the internal and regional situations. The 
international community should also encourage the government to 
undertake overdue political reforms and to work toward reinforcing 
national unity.
    Perhaps most importantly, the international community must help 
protect 1701 from forces that could derail it: a despondent Israel, 
eager to redress its loss of military prestige, could renew attacks 
against Hezbollah and Lebanon under the rubric of ``defensive 
operations'' and/or the U.S.-championed ``war on terror.'' This would 
destroy the accomplishments of 1701, destabilize the Lebanese state, 
and vindicate the arguments of Hezbollah. The U.S. must use its 
influence with Israel to prevent such activity.
    The Syrian regime has been pushed out of Lebanon, threatened by 
members of the U.S. administration, and is under investigation for 
Hariri's assassination; in his angry speech after the end of the latest 
war, Bashshar al Assad lashed out at the March 14 group and other Arab 
leaders, but also pointedly concluded that his objective was the return 
of the Golan heights. An intensely cornered Syria can find many ways to 
destabilize Lebanon. Now is as good a time as any to revive Syrian-
Israeli peace talks that almost bore fruit in the mid-1990s.
    Finally, how the U.S. and the international community deals with 
Iran's nuclear ambitions will impact directly on Lebanon: if war is 
launched on Iran, there is little doubt that Israel and Hezbollah will 
be involved in it, and Lebanon would end up in complete and final ruin. 
Only if a political settlement is reached, can Lebanon hope to escape 
being engulfed in another war. Lebanon has no stake in Iran being, or 
not being, a nuclear power; however, how the outcome is achieved is of 
immediate relevance to Lebanon.
Conclusion
    The deployment of the Lebanese army and a beefed up UNIFIL to south 
Lebanon is a move of historical significance that reverses 37 years of 
Lebanese army absence from the sensitive Lebanese-Israeli border and 
neutralizes Hezbollah's main zone of operations; the control of ports 
and border points will also prevent rearmament of Hezbollah and will 
strengthen the state's hand in developing a monopoly on military power. 
However, the building of a strong and stable Lebanon and the eventual 
decommissioning of Hezbollah is a complex and delicate political 
process that requires regional and international help. The Arab and 
international community must help Lebanon to rebuild and should 
appreciate the complexity of the Lebanese political process and be 
careful not to break Lebanon as they try to fix it. Squaring the 
domestic politics of Lebanon with the circle of regional and 
international tensions will not be easy; but Lebanon has emerged from 
complex and costly wars before.
    Peace is built one step at a time. UNSCR 1701 does not fully 
satisfy any of the parties to it; yet it is an important building bloc 
toward stabilizing Lebanon, which in turn should open the way for 
taking further steps toward stability and peace in Lebanon and the 
region. The latest war was a symptom of wider and deeper conflicts in 
the region; let us hope that the treatment of this symptom will 
encourage the regional and international community to treat the wider 
and deeper causes.


    The Chairman. Well, thank you very much, Director Salem.
    I appreciate the extraordinary testimony both you and 
Ambassador Pascual have given.
    Let me just say that we're going to run into the roll-call 
vote, but I want to give as much time as possible to our final 
witness. I'm going to put a time of 12 minutes on the clock, so 
that you, sort of, see how it's moving. That will take us into 
the roll-call vote, but it will also give me a few minutes to 
get to the floor to do my duty.
    Would you please proceed, Professor?

      STATEMENT OF AUGUSTUS RICHARD NORTON, PROFESSOR OF 
 INTERNATIONAL RELATIONS AND ANTHROPOLOGY, BOSTON UNIVERSITY, 
                     BOSTON, MASSACHUSETTS

    Dr. Norton.  Thank you, Senator Lugar. It's an honor to be 
sitting here in front of you.
    The 2006 Israel/Lebanon war will be remembered for the 
momentous miscalculation of Hezbollah, which tried to stretch 
the rules of the game, with disastrous results, and for the 
failure of Israel to defeat its protagonist.
    Israel calculated that it could turn southern Lebanon into 
a killing box devoid of civilians, where it could then defeat 
Hezbollah in detail. Instead, the area was turned into a 
humanitarian disaster zone, where Hezbollah was well-prepared 
to confront the technically superior Israeli army.
    When the war began, neither Israel nor its American 
protector even considered a serious role for United Nations 
peacekeepers. After 34 days of war, a war which was allowed to 
go on far too long, in my view, with civilian deaths rapidly 
growing, especially in Lebanon, where over 1200 innocent people 
died, compared to 41 in Israel, and the international clamor 
for a cease-fire growing, the prospect of a robust U.N. force 
for south Lebanon became very attractive. Unfortunately, I 
believe that we could have reached that point far earlier, had 
U.S. diplomacy been conducted differently.
    There was, between Hezbollah and Israel, a kind of security 
system operating. There's been a lot of uninformed commentary 
about the nature of the conflict in south Lebanon from 2000 to 
2006. In fact, that border was largely quiet. One Israeli 
civilian was killed by Hezbollah fire during that 6-year 
period. A total of 17 Israeli soldiers were killed during that 
period; however, most of them were killed in the occupied Golan 
Heights. So, basically, this was a situation which was not 
perfect, and certainly there was Hezbollah harassment of 
Israel, but, nonetheless, compared to the previous years of 
occupation, it was a reasonably quiet period. There were about 
10 incidents of Katyushas being fired across the border. 
According to Israel officials, generals and others, almost all 
of those incidents were the responsibility of Palestinian 
groups, not of Hezbollah. So, even if Hezbollah survives in 
some way as a militia apparatus in Lebanon, at least, if the 
past is any instruction, there's a possibility of re-erecting 
some kind of effective security system.
    The outcome, in many ways, of this war, it seems to me, was 
foreseeable from the very beginning, and, certainly, careful 
analysts foresaw it from the very beginning: namely, that 
Hezbollah would retain a strong base. It's true, as other 
witnesses have indicated, that debates have been unleashed in 
Lebanon concerning Hezbollah's viability as a political player 
and so on; but, nonetheless, the core constituency has been 
sustained. Why? One of the reasons is, Senator, there are two 
security problems. Israel has a legitimate security problem, 
but the people of Lebanon have a legitimate security problem, 
as well. Upwards of 20,000 people have been killed in Lebanon 
by Israel over the last quarter century. Many thousands of 
those have been civilians. Unless the new robust UNIFIL can 
provide security, then Hezbollah is going to have a rationale. 
It's clear to me, from reading the rules of engagement, which 
are extensive and very carefully drafted, some 22 pages--I 
don't want to go into detail, on the record, for a variety of 
reasons--but, in any case, on the basis of reading those, it's 
clear that this is going to be a very professional force, but a 
force that has no intention whatsoever of attempting to effect 
the disarmament of Hezbollah.
    In effect, what's going to be at play in this UNIFIL zone 
is a don't-ask/don't-tell policy, vis-a-vis Hezbollah. In other 
words, people are not going to go searching for their weapons, 
and Hezbollah's not going to display them ostentatiously.
    That does not point to a route towards disarmament, it 
points to a kind of freezing of the situation. This is what 
U.N. peacekeeping forces do best, they freeze the situation. 
And, in that regard, I certainly would associate myself with my 
colleagues, and with the optimistic hopes of Secretary Welch, 
that we could see an active diplomatic project to basically 
take advantage of that freezing of the situation.
    From the standpoint of the Lebanese army, they have been 
sent to the south to, quote, ``work in cooperation''--in fact, 
the Arabic word that's used is, precisely, ``ta'awun,'' 
cooperation--``to work in cooperation with the resistance.'' 
This does not indicate a project of disarmament.
    My long-term view--and I'll be brief here, Senator, because 
I know that your time is dwindling--but a long-term arrangement 
that makes sense, and the only one I can really think of that 
makes sense at this stage, is to work towards the integration 
of the militia apparatus of Hezbollah into the army. That 
raises all kinds of difficulties, in terms of command 
relationships and so on. Nonetheless, at least as a first step, 
to achieve that goal of integration, in principle, seems to me 
to be a very important direction to move in, because that would 
place the responsibility for that militia apparatus precisely 
in the hands of the Lebanese national government. Much more 
work would need to be done.
    But I would like to end by underlining the point I made 
earlier. There are two security problems, an Israeli security 
problem and a Lebanese security problem. And we need to be very 
vigilant to be sure that both of these security problems are 
addressed if not solved. And that means that the United States 
Government must be very vigilant, in terms of supporting 
UNIFIL, even if UNIFIL has to act against Israel to ensure the 
security of Lebanon.
    Thank you very much.


    [The prepared statement of Dr. Norton follows:]


             Prepared Statement of Augustus Richard Norton

    The 2006 Israel-Lebanon war will be remembered for the momentous 
miscalculation of Hezbollah, which tried to stretch the ``rules of the 
game'' with disastrous results, and for the failure of Israel to defeat 
its protagonist. Israel calculated that it could turn southern Lebanon 
into a ``killing box,'' devoid of civilians, where it could then defeat 
Hezbollah in detail. Instead, the area was turned into a humanitarian 
disaster zone where Hezbollah was well-prepared to confront the 
technically superior, but muscle-bound Israeli army.
    When the war began, neither Israel nor its American protector even 
considered a serious role for United Nations peacekeepers. After 34 
days of war, with civilian deaths rapidly growing (especially in 
Lebanon where over 1,200 innocent people died compared to 41 in Israel) 
and the international clamour for a cease-fire growing, the prospect of 
a ``robust'' UN force became very attractive.
                                   1.
    In May 2000, Israel unilaterally withdrew from Lebanon after facing 
unrelenting pressure from a resistance led by Hezbollah. Hezbollah 
began after Israel's 1982 invasion of Lebanon as a child of the Iranian 
``Islamic revolution.'' If Iran was the mother of Hezbollah, Israel was 
its stepfather because Israel's two-decades long occupation fostered 
and honed Hezbollah.
    Beginning in the 1990s, ``rules of the game'' developed between 
Hezbollah and Israel. These rules provided that both sides would avoid 
attacking civilians and restrict their activities to clearly defined 
areas, especially the Israeli-occupied Golan Heights. While the Golan 
Heights is Syrian territory, a small pocket of the land is claimed as 
occupied Lebanese territory.
    On July 12, 2006, Hezbollah tried to stretch the rules by capturing 
two soldiers on Israeli soil. Hezbollah hoped to use the captives to 
bargain for three Lebanese prisoners held by Israel, but the government 
instead chose to exploit the provocation as a casus belli and to launch 
a war to eliminate Hezbollah as an effective militia adversary of 
Israel. In point of fact, the Israeli army had been chomping at the bit 
for a chance to settle scores with Hezbollah, and both Israel and the 
U.S. relished the opportunity to devastate a powerful proxy of Iran.
    In the six year period that followed the end of the occupation, the 
Israeli-Lebanese border was quieter than it had been for the past 
thirty years. One Israeli civilian was killed by Hezbollah during this 
period, a victim of a falling anti-aircraft round fired at Israeli jets 
violating Lebanese air space. A total of 17 Israeli soldiers died, most 
either in Lebanon or on the Israeli-occupied Golan Heights. There were 
about ten incidents of Katyusha rockets fired across the border into 
Israel or into Israeli territorial waters. Almost all of the incidents 
were attributed by Israelis officials to Palestinian groups, not to 
Hezbollah.
    Thus, while the border was hardly tranquil, it was far calmer than 
even Israeli generals thought it would be when they left Lebanon in May 
2000. Of course, it was Hezbollah's error to presume that Israel was 
either satisfied with the status quo or sanguine about the impressive 
arsenal of rockets pointed towards Israel from Lebanon.
                                   2.
    The United Nations Security Council resolution that won a cease-
fire in the Israel-Hezbollah war envisages the buttressing of the 
existing peacekeeping force in southern Lebanon. The United Nations 
Interim Force in Lebanon (UNIFIL) had been allowed (indeed, actively 
encouraged by the U.S.) to dwindle to a skeleton force of 2,000 
peacekeepers, but resolution 1701 provides for a dramatic expansion of 
the force to as many as 15,000 troops. Contingents have been offered by 
Malaysia, Bangladesh and Indonesia , all nations that refuse diplomatic 
relations with Israel, but the core intent of resolution is to bolster 
UNIFIL with significant European force contributions.
    One of the telling successes of Hezbollah is that it has acquired 
such a fierce reputation for its tough toe-to-toe battles with Israel 
in this summer's war that no sentient prime minister wished to send 
soldiers to do what Israel demonstrated it could not do. Even Turkish 
generals, whose army is no pushover, indicated that they were not 
enthusiastic about sending fighting units to Lebanon.
    France initially balked at sending a sizable contingent to Lebanon, 
and resolution 1701 seemed to be in jeopardy. However, after two weeks 
of careful discussions, mostly focused on the rules of engagement that 
define UNIFIL's behaviour, France, Italy and Spain stepped forward as 
major contributors. France will lead the force until the present French 
commanding general's assignment ends in early 2007, and command of the 
force will then pass to Italy.
                                   3.
    UNIFIL was first deployed in 1978. Its original mandate, largely 
crafted by the U.S., was to oversee the withdrawal of Israeli forces 
from Lebanon. Unlike today, when Hezbollah is seen as the culprit in 
Washington, President Jimmy Carter viewed Israel's 1978 invasion of 
Lebanon as an excessive and aggressive response to terrorism.
    The area of operations for UNIFIL remains much the same today, 
namely Lebanon south of the Litani river. When it first deployed, 
UNIFIL instantly found itself faced with uncooperative belligerents. 
Palestinian militants, who then controlled much of southern Lebanon, 
insisted on maintaining positions in two large sectors, including one 
right in the middle of the UNIFIL zone.
    Israel, too, undermined UNIFIL by refusing to allow it to fully 
deploy. In 1978, Israel handed control of a border enclave to a gang of 
Lebanese Army deserters. Israel dismissed UN protests pretending that 
it had no control over the ``South Lebanon Army'' of Major Sa'ad 
Haddad, which it paid, trained and directed.
    In contrast to the Palestinian militants, who were an alien force 
disliked by many people in southern Lebanon, Hezbollah draws much of 
its membership from the local population. The Shiite party boasts 
strong local support in the region, as the Israelis discovered to their 
cost during their long occupation from 1982-2000.
                                   4.
    After more than a month of bombardment, Hezbollah emerged with its 
support intact if not increased. Its impressive and rapid response to 
the needs of those whose homes and lives have been ravaged--mostly, but 
not all Shiite Muslims--has further consolidated its impressive base of 
support.
    Outsiders often forget that the Lebanese have suffered tremendously 
under Israeli attacks for three decades, so one of the key tasks of 
UNIFIL is to insure that Lebanese civilians are permitted to peacefully 
return to and rebuild their devastated villages. If UNIFIL-plus cannot 
facilitate the restoration of the civilian population, then the next 
few months may only be an interlude in the 2006 war.
    Given Hezbollah's broad base of support, and the fact that its 
Lebanese supporters see no other force that can thwart Israel should it 
decide to reignite the war, it is completely unrealistic that the new 
international contingents will succeed either in disarming Hezbollah or 
in diminishing its appeal. If UNIFIL is going to succeed, it will need 
the cooperation, not the animosity of Hezbollah. For its part, 
Hezbollah has declared its agreement any of its members found carrying 
arms may be detained and disarmed.
    The major question is whether UNIFIL-plus will operate not only 
competently but fairly. The key to restoring stability to southern 
Lebanon is not only to see Hezbollah stand down, but also for the new 
force to avoid being seen as an instrument of Israeli influence or 
occupation.
    The new force will probably total no more than 12,000 soldiers and 
sailors, not the 15,000 originally envisaged. It will be twice the size 
of UNIFIL at its earlier peak strength of 6,000. Even so, UNIFIL-plus 
will retain a major deficit that characterizes almost any international 
force, namely an endemic lack of local knowledge and language skills.
    The introduction of as many as 15,000 Lebanese troops should help 
to mitigate this problem, especially since the UN force is to work 
side-by-side with the Lebanese army. Lebanese civilians have already 
welcomed their army, and Hezbollah has always treated the army with 
respect. While outgunned significantly by Israel, the Lebanese army is 
led by a professional officer corps and it is technically competent. 
Unfortunately, many of the Lebanese soldiers deployed to the South are 
poorly equipped, as reflected in requests to UNIFIL for basic supplies.
    The Security Council resolution anticipates that the Lebanese 
soldiers will disarm Hezbollah. There is absolutely no possibility that 
this will happen. Many Lebanese soldiers applaud it for defending 
Lebanon, and the army has been ordered to work ``in cooperation with 
the resistance.''
    It is popular sport in some circles to castigate the United Nations 
for its failures, but no peacekeeping force will be any more effective 
than the contributing countries allow it to be. Will governments permit 
their soldiers to protect Lebanese civilians from Israeli ``defensive'' 
attacks, or will soldiers be ordered to mount risky offensive 
operations against Hezbollah if they prove necessary? These are 
questions that are more likely to be answered by national governments 
than by UNIFIL commanders. If Israel or Hezbollah attempt to thwart the 
peacekeepers, the success of the force may turn on the willingness of 
European governments to accept casualties.
    Careful thought has been given to creating parameters that minimize 
the risks of an escalation of violence. The rules of engagement (ROE) 
for UNIFIL have been crafted to insure that the force has the authority 
to meet armed challenges, if necessary, with deadly force. Equally 
important, the ROE specifically spell out the authority to use force to 
protect civilians, or humanitarian workers. The rules emphasize that 
when force is used it must be proportional to the threat, minimize the 
prospect for civilian casualties and represent the minimum level of 
force necessary to meet the challenge.
    There is no question that in terms of troop strength, equipment, 
and mandate UNIFIL-plus represents a serious enhancement of the 
peacekeeping operation in southern Lebanon. When UNIFIL was first 
deployed, in 1978, there was a notable effort by French peacekeepers to 
forcefully execute their mandate, but after a few bloody clashes with 
Palestinian guerrillas, who then dominated parts of southern Lebanon, 
the will to use force subsided. Some UNIFIL contingents were even 
directed by their home governments not ever to fire their weapons, and 
in general the operational culture of UNIFIL included a reticence to 
use lethal force. Thus, the new ROE represent, in principle at least, 
the prospect for a more assertive operational posture.
    Hezbollah commands broad support in southern Lebanon, and so long 
as the peacekeepers and the Shiite group maintain a ``don't ask, don't 
tell'' arrangement there are unlikely to be any concerted challenges of 
UNIFIL by Hezbollah. It remains to be seen whether efforts by the 
Lebanese government to stem the arms flow to Hezbollah by more actively 
policing the Lebanese-Syrian border, as well as supplemental steps by 
the naval forces pledged to UNIFIL, curtail the arms flow to Hezbollah.
    There is a greater likelihood that Israel may seek to intervene in 
the UNIFIL zone, perhaps to assassinate a Hezbollah official or to 
interdict a suspected movement of arms. Israel is also likely to strike 
in other parts of Lebanon against suspected arms shipments, or even 
alleged Hezbollah military targets. In the first few weeks of the 
cease-fire following the summer war, UN data indicates that most cease-
fire violations were committed by Israel (the ratio was nearly 19:1). 
In the past, Israel brushed UNIFIL aside pretty much at will and it may 
be tempted to assert its right of self-defence to launch attacks in the 
U.N. zone.
    Unless UNIFIL demonstrates firm resolve against both Hezbollah and 
Israel, it will quickly cede its credibility. The ROE define the 
military means for demonstrating resolve, but it is politics that will 
permit or restrict resolve. It is distressingly easy to imagine a 
situation in which the United States tolerates if not endorses Israeli 
actions that undermine, even jeopardize UNIFIL's operational 
credibility.
    Putting UNIFIL on steroids will probably do no more than freeze the 
situation in southern Lebanon. That in itself is an accomplishment, 
given the intensity of the war of 2006, but the real work that needs to 
be done is diplomatic. The diplomatic work entails patiently rebuilding 
a stable security framework in southern Lebanon that recognizes that 
both Lebanon and Israel have legitimate security interests.
    Peacekeepers do not solve crises, but they do stabilize crisis 
zones. The integration of Hezbollah's military apparatus into the 
Lebanese army should be a goal of diplomacy. This solution has been 
already suggested by Lebanese Prime Minister Fouad Siniora. The success 
of UNIFIL-plus will probably be measured by it ability to inspire 
confidence in both Israel and Lebanon that Hezbollah's independent 
militia role is a dangerous anachronism, but that confidence will not 
be born over night. The success or failure of the force will also be 
hostage to external developments, including conditions in the Arab-
Israeli conflict, the success of international efforts to curtail the 
Iranian nuclear program and the fate of Iraq. In short, as much as the 
cease-fire in the summer war was overdue, the outcome of this 
experiment in more robust peacekeeping is uncertain.


    The Chairman. Well, thank you very much, Professor.
    Each of you has presented extremely complex dilemmas. As a 
matter of fact, the list that I've made as I've been jotting 
down the hazards of this is formidable. First of all, 
Ambassador Pascual dealt with a potential budget of $5.1 
billion, with a suggestion that the United States would 
contribute $750 million, although it's not clear, you know, who 
contributes the rest. But then there is the prospect, which may 
be too pessimistic, that all the rebuilding proceeds, but then 
conflict again occurs, with re-destruction of that, while we're 
still in the process of reconstruction. In other words, in 
looking for some governance, some stability, you wish this 
could be a framework in which Lebanon is isolated for a while, 
and people have a chance to come back, get jobs, rebuild their 
homes and their airport; their tourism comes back, nobody 
touches them. But you're describing, at best, finally, 
Professor, a situation in which maybe there is a stalemate, or 
stability that comes from the fact that nobody decides to make 
an aggressive move, that Hezbollah is not really just armed, 
but, conceivably, in due course, that it integrates with a 
Lebanese army. That might have been the case, for instance, in 
Iraq, perhaps. But it wasn't. This is a concept that has not 
been weighed, it seems, by our Government, as yet, or by 
others. That's the value of these hearings, to bring forward 
important ideas as to how we're to deal with this.
    With respect to Hezbollah, as you've suggested, Director 
Salem, perhaps its constituency has been affected, because it's 
a part of the hundreds of thousands of Lebanese who have been 
displaced or, as Ambassador Pascual has pointed out, are 
unemployed, sometimes without houses or adequate shelter and so 
forth. There must be a rebuilding process for this. But then, 
skeptics would be sanguine enough to say that there's a core 
group of Hezbollah that's not all that worried about 
reconstruction; they're not involved in the building business. 
And, as a matter of fact, maybe we will be successful in 
stopping an arms flow. Maybe Hezbollah won't have many arms 
left. But, on the other hand, the skeptics would say that you'd 
be surprised how much Hezbollah left and how resilient these 
folks are. As Professor Norton points out, Hezbollah is there 
and they're not disarmed. Overlaying all of this, as each of 
you noted, is Iran's role. What is the relationship of Iran, 
not just to the area, but to the United States? What's going to 
happen in the United Nations with regard to Iran's nuclear 
program? A nuclear-armed Iran would cast a shadow across the 
region.
    You've been most thoughtful and generous in your papers and 
in your testimony. We're going to be thinking about this. The 
value of your testimony is evident, I think, to everyone who 
has been a part of this hearing, and we appreciate very much 
your coming and your preparation.
    Dr. Norton.  Thank you, Senator.
    The Chairman. So saying, we thank you, and we are 
adjourned.
    [Whereupon, at 12:20 p.m., the hearing was adjourned.]


                          A P P E N D I X E S

                              ----------                              



           Appendix I: U.S. Government Assistance to Lebanon

I. Lebanon Funding Planned and Reflected in CBJ.

    A. FY 2006: $39.6M ESF; $.99M FMF; $.693 IMET; $1M NADR-HD; $.18M 
INCLE--Total $42.463M

    B. FY 2007: $35.5M ESF; $4.8M FMF; $.935M IMET; $2M NADR-HD--Total 
$$43.235M (does not include the $26.3M anticipated to support UNIFIL 
from the State Operations Contributions for International Peacekeeping 
Activities--CIPA.)


II. FY 2006 Lebanon Post Conflict USG Commitments (as per President's 
announcement of August 21.)

    A. FY 2006 Funds Not Previously Allocated to Lebanon:

                  --$68M IDFA--Identified as emergency relief to 
                Lebanon.

                  --$9.2M P.L. 480 Title I--Food for Progress

                  --$.63M P.L. 480 Title II--Food Aid

                  --$10M MRA--Identified as emergency humanitarian 
                relief; includes $7.3M in FY 2006 Emergency 
                supplemental previously not allocated; $1.6M from 
                unexpected program recoveries and $1M in previously 
                allocated funds for the protection requirements of 
                international and non-government partners.

                  --$13.5M ERMA--Presidential Drawdown authorized 
                August 21, 2006.

                  --$2M IO&P--Reprogrammed to UN Mine Action Group from 
                funds made available as a result of pariah state 
                restrictions.

                  --$2M DA--Reprogrammed from the Asia and Near East 
                Bureau's FY 2006 Program Development and Learning 
                objective.

                  --$27.95M GWOT PKO--Previously identified for 
                numerous CT activities as part of the FY 2005 
                Supplemental that were still pending final approval/
                notification.

                  --$1.5M NADR-ATA--Programmed from the NADR-ATA NEA 
                Regional allocation not previously identified for 
                specific country programs.

                  --$.059M IMET--Reprogrammed from the pool of end-of 
                year funds identified to be excess to other country 
                programs within the IMET program.

                  --$2.723M FMF--Reprogrammed from Nepal, Argentina and 
                ASPA restricted-countries.

                  --$10.632M--DOD Section 1206 authority as part of a 
                larger train and equip allocation.

                  --$2.41M--These funds have yet to be identified to 
                meet our overall reconstruction commitment.

    B. FY 2006 Funds Previously Allocated to Lebanon Country Programs 
Re-Prioritized to GOL Post-Conflict Needs.

                  --Of the $39.6M in ESF, $14.07M is being reprogrammed 
                to address reconstruction activities, impacting the 
                Economic Growth, Democracy and Environment Strategic 
                Objectives.

                  --Of the $1M in NADR-HD, $.42M is being reprogrammed 
                to support specific demining activities related to post 
                conflict reconstruction.


                               __________

            Appendix II: Lebanon--Stockholm Donors Meeting,
                             31 August 2006

           New Pledges, Total Pledges, Flash Appeal Pledges,
                      Recovery Appeal Pledges \1\
---------------------------------------------------------------------------

    \1\ Financial Tracking Service (FTS)/Tracking Global Humanitarian 
Aid Flows, [email protected]; Data compiled by OCHA on the basis of 
verbal statements at meeting plus previous written reports from donors 
and implementing agencies.
---------------------------------------------------------------------------

  Part I: Arab Fund for Economic and Social Development through Korea 
         (Republic of); Part I continues on the following page.


                                     

                                     


                           Part I: Continued.


    Part II: Kuwait through United States; Part II continues on the 
                            following page.


                          Part II: Continued.






                               __________

   Appendix III: Responses to Questions for the Record Submitted to 
          Assistant Secretary David Welch by Senator Feingold

    Question. What is the nature and scope of Hezbollah's activities in 
southern Lebanon? Can you describe Hezbollah's role in reconstruction 
efforts in southern Lebanon specifically? Is Hezbollah's role in 
reconstruction efforts hampering or displacing the efforts of the 
international community, or more importantly, the Lebanese government?


    Answer. Prior to the conflict, Hezbollah operated a substantial 
network of social services throughout southern Lebanon.
    Shortly after the cessation of hostilities, Hezbollah leader Hassan 
Nasrallah made a public announcement that Hezbollah would provide 
substantial assistance to help the Lebanese people rebuild, pledging 
money to help people pay rent and buy furniture. While we have not yet 
seen evidence that Hezbollah is failing to deliver on its promises so 
far, we are skeptical that its leaders will ultimately have the 
financial resources to fulfill these pledges.
    Thus far, Hezbollah's activities have not hindered the ability of 
either the international community or the government of Lebanon to 
provide assistance to the Lebanese people. We are pleased to see the 
Lebanese government taking a leading role on the initial and long-term 
reconstruction effort through their participation at the August 
Stockholm Conference on Initial Recovery and the September Meeting of 
the Economic Core Group for Lebanon that was held on the margins of the 
IMF/World Bank Meetings in Singapore. We anticipate a larger 
reconstruction conference will be held in Beirut before the end of the 
year.



    Question. We all know how complex massive reconstruction efforts 
like this can be. One significant challenge concerns the capacity of 
the Lebanese government to coordinate the various aspects of 
reconstruction efforts throughout the country. Can you identify how 
reconstruction efforts are being coordinated within Lebanon, and what, 
if any, mechanisms exist to ensure that large-scale reconstruction 
efforts are supporting broader political and economic goals of the 
state?


    Answer. The office of the Lebanese Prime Minister has overall 
responsibility for reconstruction, focusing especially on the macro 
economy and investment. The Ministry of Finance and the Council assist 
it in its efforts for development and reconstruction. The Council 
coordinates the details of individual projects at the working level, 
while the Ministry of Finance is in charge of looking at the big 
picture and making sure that economic, administrative and fiscal 
reforms are coordinated with reconstruction.



    Question. When discussing the actual implementation of 
reconstruction efforts on the ground in southern Lebanon, is there any 
one central focal point or organization that is mapping the entire 
range of projects that are necessary, that are being completed, and 
that might need more attention?


    Answer. The office of the Prime Minister is the central point 
coordinating with the Ministry of Finance and the Council for 
Development and Reconstruction (project details), as well as with the 
various affected ministries (Education, Public Works, Defense, 
Interior, etc.).



    Question. How are the U.S. government and the Government of Lebanon 
working with the private sector in reconstruction efforts?


    Answer. President Bush will announce a Presidential Delegation to 
Lebanon composed of distinguished business executives who have agreed 
to launch a nationwide effort in the U.S. to demonstrate private-sector 
support for Lebanon's reconstruction and development. Following their 
trip, they will ask American individuals and corporations to donate 
directly to the U.S.-Lebanon Partnership Fund, a new fund, administered 
by Global Impact, to provide help. The delegation--which included John 
Chambers, President and CEO of Cisco Systems, Ray Irani, President and 
CEO of Occidental Petroleum, and Yousif Ghafari, Chairman and CEO, 
Ghafari Companies--is scheduled to visit Lebanon on September 24. 
Lebanese Prime Minister Siniora has said he will welcome the delegation 
and the private sector initiative in general. Craig Barrett, Chairman, 
Intel Corporation, is part of the private sector team but will not 
participate in the trip.



    Question. The Secretary of State has noted in past speeches that it 
takes a ``plan'' to disarm a militia. What is our plan for disarming 
this militia, and is this plan coordinated with our partners in the 
region? How long will disarmament take? What obstacles, if any, exist 
to effectively implementing a disarmament program?


    Answer. UNSCR 1701 establishes an area in southern Lebanon that 
will be free of any armed personnel, assets and weapons other than 
those of the Government of Lebanon and of UNIFIL forces. This is a good 
first step.
    Through internal dialogue, the Government of Lebanon will need to 
address the disarmament of Hezbollah. We expect Prime Minister Siniora 
to continue to move forward on implementation of 1701, but their 
effectiveness will depend on the willingness of President Lahoud and 
key Parliamentary blocs, including those of Aoun, Hezbollah, and Amal, 
as well as the March 14 coalition, to put aside previous political 
disagreements and put the longer-term needs of the Lebanese people 
first. We can expect various factions within Lebanon to continue to try 
to undermine the democratically elected government.
    Enhanced political, economic, and security support will be key to 
providing the Siniora government the strength that it will need to 
address the Hezbollah threat and ultimately disarm it. Our assistance 
is designed to do just this, and we are coordinating with regional 
partners to ensure their assistance is channeled in this way.
    Through enforcement of the embargo on illicit weapons shipments, 
the international community is also making it harder for Hezbollah to 
rearm. We shall continue to publicly remind Syria and Iran of their 
responsibility under international law to prevent the shipment of 
weapons to Hezbollah.



    Answer. What is your current diplomatic strategy to engage regional 
actors in reconstruction efforts?


    Answer. We are in frequent contact with the Economic Core Group for 
Lebanon, which, in addition to the U.S., other Western donor nations 
and the EU, includes major regional donors or sources of skilled human 
resources such as Saudi Arabia, Qatar, Kuwait, the UAE and Egypt.



    Question. What is the role of the Office of the Coordinator for 
Reconstruction and Stabilization? Given the office's mandate, is it 
playing a lead role in helping develop a strategic plan or in managing 
U.S. reconstruction efforts in Lebanon?


    Answer. On September 5, S/CRS deployed Senior Foreign Service 
Officer Pat Nelson-Douvelis to Beirut for a 90-day TDY to assist the 
Embassy in coordinating USG reconstruction and stabilization 
assistance. Ms. Nelson-Douvelis is a current S/CRS office director, a 
former DCM, and an assistance expert. This S/CRS staff deployment is 
intended to be flexible and conform to the needs of the Embassy and the 
situation on the ground. We have also detailed an S/CRS staff member to 
the Bureau of Near Eastern Affairs (NEA) to assist the Lebanon desk, 
and to participate in interagency planning efforts in several venues.
    Ms. Nelson-Douvelis primarily supports the Embassy and NEA in 
coordinating assistance in cases where there are new programs or there 
is no specific agency representation in the Embassy. USAID and the 
Office of Defense Cooperation (ODC) have well-established 
representation and coordination mechanisms already in place. Ms. 
Nelson-Douvelis also works with the appropriate bureaus and agencies to 
integrate efforts related to the over $230 million assistance package 
announced by the President.
    In addition, Ms. Nelson-Douvelis is working with other diplomatic 
missions and the Lebanese government to better coordinate international 
police assistance. ODC and the DATT have already been involved in on-
going U.S. police and military assistance efforts. Ms. Nelson-Douvelis 
works to integrate the contributions of other donors, and to help 
coordinate programs funded by transfers to the Department of State 
under the Department of Defense's section 1207 authority.



    Question. Is there a strategic plan for managing U.S. 
reconstruction efforts within Lebanon?


    Answer. On August 21, the President pledged a package of over $230 
million to assist the people of Lebanon in rebuilding their country. 
This assistance package includes three main components: assistance for 
reconstruction, emergency and humanitarian relief; and assistance to 
the Lebanese Armed Forces and other security services.
    The funds will support vital needs identified by the Lebanese 
government such as rebuilding infrastructure; road repairs; residential 
reconstruction; repairing schools; restoring livelihoods; clearing 
unexploded ordnance; and assisting with oil spill cleanup.
    Specifically, we are contracting with a company with 
representatives already on the ground in Lebanon to clean a high 
priority oil spill site near Beirut, train clean-up crews, and provide 
the necessary equipment. Working with Lebanese and participating 
international aid organizations, the team will also develop a wildlife 
protection plan, spill response and remediation training to empower the 
Lebanese to be in a position to cope with any future spills on a more 
immediate basis.
    In communities that rely on the fishing industry we are providing 
livelihood kits--including nets, hooks, and other materials--to 
thousands of fishermen along the coastline, from Tripoli to Nakoura, 
whose equipment was damaged or destroyed.
    We are expanding a nearly decade-long landmine and unexploded 
ordnance (UXO) humanitarian clearance program that is supported by the 
U.S. in order to help remove the latest explosive remnants of war.
    We have urged the government of Lebanon to take a leading role in 
the longer-term reconstruction and are pleased to see them doing so. We 
look forward to a larger reconstruction conference to be held in Beirut 
at a later date.



    Question. Experts on the second panel described massive shortfalls 
in the amounts of money needed for assisting Lebanon recover from this 
conflict. This includes support for reconstruction, the security 
services, etc. Can you explain how the U.S. government came up with its 
original amount of just over $200 million? Is this amount tied to any 
strategic plan or assessment?


    Answer. The $230 million that the U.S. pledged to assist Lebanon 
was determined by identifying all funds that could be made available 
quickly to aid with reconstruction, security, and humanitarian 
assistance. Funding was drawn primarily from existing humanitarian 
assistance funds, including the International Disaster and Famine 
Assistance (IFDA) funds, Migration and Refugee Assistance (MRA) funds, 
and Emergency Migration and Refugee Assistance (ERMA) funds. Additional 
funds were derived from Economic Support Funds (ESF), Voluntary 
Peacekeeping (PKO) funds, and Section 1206 Authority funds, among 
others.
    Our goal was to provide funds to address a comprehensive and broad-
based program of aid to Lebanon in FY 06 and FY 07. It encompasses 
reconstruction of housing and infrastructure; humanitarian assistance 
including food and water, relief commodities, and shelter, and support 
to the Lebanese security forces; and international peacekeepers. This 
initial pledge by the U.S. government was designed to provide as much 
immediate aid as possible.
    It is also important to note that the Conference on Lebanon's Early 
Relief, held in Stockholm at the end of August, yielded some $942 
million in pledges--nearly twice as much as expected.



    Question. With the deployment of the Lebanese army and 
international forces into south Lebanon, to what extent does Hezbollah 
still represent leverage for Iran in its nuclear dispute with the 
international community? Has Iran's position in Lebanon been 
strengthened or weakened by the recent conflict?


    Answer. Iran provides technological, operational, and financial 
support and guidance to Hezbollah. While we do not believe that Iran 
directly ordered the July 12 attack that sparked the recent conflict in 
Lebanon, we believe Iran continued its support to Hezbollah throughout 
the recent conflict.
    UNSCR 1701 makes it more difficult for outside actors, including 
Iran, to undermine the sovereignty of the Lebanese government. U.N. 
Security Council Resolution 1701 clearly requires all states to take 
the necessary measures to prevent the sale or supply of arms and all 
other military equipment to Lebanon, unless authorized by Lebanon's 
government or by UNIFIL for its use. This is a matter of international 
law, and we continue to publicly call upon Iran and Syria to meet their 
obligations fully to help implement that resolution and past Security 
Council resolutions on Hezbollah, ultimately to include the full and 
verifiable disarmament of Hezbollah. We appreciate UNSYG Annan's 
delivering this message personally to the Syrian and Iranian 
leadership.



    Question. To what extent is Hezbollah replenishing its arsenal and, 
if it is, at what point might Israel take military action to impede the 
process?


    Answer. UNSCR 1701 created a number of tools to prevent the 
rearmament of Hezbollah.
    UNSCR 1701 calls for countries to prevent all arms shipments to 
Lebanon except those approved by the democratically elected Government 
of Lebanon. We continue to call on the international community, Iran 
and Syria in particular, to meet the international legal obligations 
contained in UNSCR 1701 and prevent illicit arms shipments to Hezbollah 
or any other unauthorized group in Lebanon.
    The Lebanese government has also taken steps to address customs 
issues at its airport, seaport, and borders. PM Siniora has requested 
UNIFIL assistance in monitoring the air and seaports. German customs 
agents have arrived at the Beirut airport, and interim fleets of 
Italian, French, and Greek ships are assisting the LAF in monitoring 
shortly. On the border with Syria, the LAF announced that they have 
deployed 8,600 soldiers to monitor illegal crossings in a variety of 
terrain. LAF troops have also been deployed to bolster customs brigade 
personnel at official crossing points. The Germans are expected to 
provide equipment and training at four official land crossings; experts 
began arriving on Thursday, September 7. DPKO also recently sent a team 
to assess border security.
    At this time we do not have evidence that these tools are not 
working. All UN member states, not simply Israel and Lebanon, are 
required to support the implementation of UNSCR 1701.



    Question. How effective do you think the Lebanese Armed Forces will 
be in fulfilling their peacekeeping mandate? To what extent does Syria 
retain residual influence among Lebanese military officials who worked 
with Syrian counterparts during the period of occupation?


    Answer. It is encouraging that the LAF has almost completed its 
deployment of 15,000 troops to the South of Lebanon. This is the first 
time in almost 40 years that they have deployed to this region. While 
the LAF remains under-equipped, they did not make assistance a pre-
condition of deployment.
    Reports are that the chain of command within the LAF remains strong 
and loyal to the GOL. While a large percentage of the LAF is Shia, and 
some individual soldiers may have Hezbollah sympathies, the LAF did not 
experience desertion problems during the conflict.
    We now have a unique window of opportunity to strengthen the GOL 
via the Lebanese security services in the hopes of empowering them to 
make more difficult political decisions, to include the disarmament of 
Hezbollah, and increasing their ability to secure the Lebanese borders 
with Israel and Syria. U.S. Security assistance is also designed to 
address the shortages of LAF equipment and training to ensure that 
their deployment remains sustainable.


                               __________


                                 

      
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