[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




                 THE STATE DEPARTMENT AND THE IRAQ WAR

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 25, 2007

                               __________

                           Serial No. 110-120

                               __________

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
                  David Marin, Minority Staff Director















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 25, 2007.................................     1
Statement of:
    Rice, Condoleezza, Secretary of State........................    11
Letters, statements, etc., submitted for the record by:
    Davis, Hon. Tom, a Representative in Congress from the State 
      of Virginia, prepared statement of.........................     9
    Marchant, Hon. Kenny, a Representative in Congress from the 
      State of Texas, prepared statement of......................    70
    Watson, Hon. Diane E., a Representative in Congress from the 
      State of California, prepared statement of.................    66
    Waxman, Chairman Henry A., a Representative in Congress from 
      the State of California, prepared statement of.............     3

 
                 THE STATE DEPARTMENT AND THE IRAQ WAR

                              ----------                              


                       THURSDAY, OCTOBER 25, 2007

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m., in 
room 2154, Rayburn House Office Building, Hon. Henry A. Waxman 
(chairman of the committee) presiding.
    Present: Representatives Waxman, Maloney, Cummings, 
Kucinich, Davis of Illinois, Tierney, Clay, Watson, Lynch, 
Higgins, Yarmuth, Braley, Norton, McCollum, Cooper, Van Hollen, 
Hodes, Murphy, Sarbanes, Welch, Davis of Virginia, Burton, 
Shays, Mica, Platts, Cannon, Duncan, Turner, Marchant, 
Westmoreland, McHenry, Foxx, Sali, and Jordan.
    Staff present: Phil Schiliro, chief of staff; Phil Barnett, 
staff director and chief counsel; Kristin Amerling, general 
counsel; David Rapallo, chief investigative counsel; John 
Williams and Theo Chuang, deputy chief investigative counsels; 
Margaret Daum, Suzanne Renaud, and Steve Glickman, counsels; 
Christopher Davis, professional staff member; Earley Green, 
chief clerk; Teresa Coufal, deputy clerk; Matt Siegler, special 
assistant; Caren Auchman and Ella Hoffman, press assistants; 
Leneal Scott, information systems manager; David Marin, 
minority staff director; Larry Halloran, minority deputy staff 
director; Jennifer Safavian, minority chief counsel for 
oversight and investigations; Keith Ausbrook, minority general 
counsel; John Brosnan, minority senior procurement counsel; 
Steve Castor, A. Brooke Bennett, and Emile Monette, minority 
counsels; Christopher Bright, minority professional staff 
member; Nick Palarino, minority senior investigator and policy 
advisor; Patrick Lyden, minority parliamentarian and member 
services coordinator; Brian McNicoll, minority communications 
director; and Benjamin Chance, minority clerk.
    Chairman Waxman. The meeting of the committee will please 
come to order.
    We have a very tight time constraint this morning, so I 
will make a very few brief opening comments, and we will have 
Mr. Davis make his comments as well.
    I want to begin by thanking Secretary Rice for being here 
today. I know she had to adjust her schedule to accommodate 
this opportunity for our hearing.
    The Iraq war is our Nation's top foreign policy priority. 
This has also meant an extraordinary sacrifice for our troops 
and their families. Over 3,800 of our soldiers have been 
killed, and another 28,000 have been wounded. And we have 
already spent over $450 billion on the war.
    For most of this year, Congress has focused its attention 
on assessing the military surge. Much less attention has been 
devoted to evaluating the political progress in Iraq. But 
almost every expert agrees that political reconciliation is the 
key to achieving lasting peace in Iraq. As General Petraeus has 
observed, ``There is no military solution to a problem like 
that in Iraq.'' I think that is exactly right, and that is why 
it is so important to assess what the State Department is doing 
in Iraq and to understand the impacts that corruption, 
mismanagement and lax oversight are having on our mission.
    Beginning in July, our committee has held a series of 
hearings to examine these issues. We have held hearings on the 
Iraq Embassy, Blackwater and corruption in the Iraqi 
ministries.
    These hearings and our investigation have raised important 
questions: Is the Maliki government too corrupt to succeed? 
Have the reckless actions of private contractors like 
Blackwater turned Iraqis against us? Why did the State 
Department select a Kuwaiti company under investigation for 
kickbacks and bribery to build the largest Embassy in the 
world? And can the State Department account for over $1 billion 
spent on a contract to train the Iraqi police?
    The executive office with direct responsibility over these 
issues is the State Department, and the official most 
responsible for them is Secretary Rice. The quality and 
effectiveness of her actions in Iraq and the State Department's 
management are a matter of urgent national concern, and that is 
the focus of today's hearing.
    This week, President Bush asked the American people to 
spend another $46 billion in Iraq. The President also is 
continuing to ask our bravest Americans to risk their lives 
there. As Congress evaluates these requests, we need to know 
what the State Department is doing to combat corruption in 
Iraq. We need to know whether the State Department is capable 
of real oversight over Blackwater and other Government 
contractors. And most of all, we need to know whether the 
mistakes of the State Department have jeopardized any chance 
for political success in Iraq.
    Mr. Davis, I recognize you.
    [The prepared statement of Chairman Henry A. Waxman 
follows:]


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Mr. Davis of Virginia. Thank you, Mr. Chairman.
    Secretary Rice, welcome. Your testimony today will give 
much-needed perspective and context to the complex oversight 
issues being pursued by this committee. We appreciate your 
being here.
    The high-level, results-oriented outlook you bring to our 
discussions has been missed by those of us who want to fix 
problems, not just fix blame. So far, our hearings on Iraq have 
thoroughly and loudly described alleged mismanagement failures 
and well-known challenges that have led to no serious 
discussion about how to repair faulty programs or disjoined 
processes. Pursuing only half of our mandate under House rules, 
it has been all oversight, no reform. I hope our dialog today 
will begin to right that imbalance.
    Effective State Department operations in Iraq and 
throughout the Middle East are critical to our national 
security and our global strategic objectives. Military skill 
and valor open the door, but the path to victory in Iraq, 
however you define that term, can only be secured through 
diplomatic and political dexterity in a dangerous and volatile 
environment. So it is essential that legitimate questions about 
State's operational strength and agility receive sustained 
attention at the highest levels of the Department.
    With the Secretary's presence here today, there should be 
no question that is the case. Regarding the specific issues 
before us--the use of private security contractors, the 
coordination of anticorruption assistance, construction of the 
Embassy compound in Baghdad, and barter efforts to foster 
reconstruction and political compromise in Iraq--Secretary Rice 
and the Department have been proactive in identifying issues, 
addressing problems, improving performance and increasing 
accountability.
    Today we need to hear more about those initiatives, and we 
need to learn what the Department needs from this committee and 
from this Congress to protect and empower America's diplomatic 
forces in Iraq.
    Yesterday, the Department released a report by a special 
panel Secretary Rice appointed to review policies and practices 
governing personal protective services. The steps recommended 
should improve coordination and management of essential 
security functions in connection with critical diplomatic 
activities. But more will be needed and more must be done, as 
we look forward to hearing from the Secretary how the 
Department plans to keep that role of security contractors more 
closely in line with our larger goals in Iraq.
    Reports of construction problems and delays at the new 
Embassy compound in Baghdad have to cause concerns, but worries 
about cost overruns should not be among them. The initial $592-
million project was constructed under a fixed-price contract, 
and any work required to fix deficiencies or meet 
specifications will be completed at the contractor's expense. 
The decision to expand what was already the largest U.S. 
Embassy in the world raises separate fiscal and policy 
questions that I am sure the Secretary is prepared to address.
    Regarding corruption, it has to be conceded that no amount 
of hand-wringing or feigned indignation here can obscure the 
hard truth: The United States did not bring corruption to Iraq, 
and it won't stop when we leave. Focusing on the extent of 
corruption, rather than the effect of anticorruption efforts, 
betrays a desire to publicize corruption, not to help fix it. 
Efforts to refocus and re-energize anticorruption programs in 
Iraq are under way, and we look forward to hearing more about 
them.
    Yesterday, with characteristic tact and understatement, the 
Secretary described to the Foreign Affairs Committee the issues 
she was invited here to discuss as management challenges. But 
we have to acknowledge they are more than that. We should have 
no illusions about the subtext of these hearings.
    Unable to reverse course, the Democratic strategy seems to 
me to drill enough small holes in the bottom of the boat to 
sink the entire Iraqi enterprise, while still claiming undying 
support for the crew about to drown. As that strategy unfolds, 
we should not underestimate the corrosive impact of our 
diplomatic standing on the morale of those pursuing U.S. goals 
in Iraq when we gratuitously flog these problems publicly 
without constructive solutions.
    Madam Secretary, you bring a productive, forward-looking 
perspective to our discussion today. We thank you for your 
continued cooperation with Oversight.
    Thank you.
    [The prepared statement of Hon. Tom Davis follows:]

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Chairman Waxman. Thank you, Mr. Davis, for your statement.
    We are going to go right to the Secretary.
    Madam Secretary, it is the practice of this committee to 
put all witnesses under oath. So I would like to ask you to 
stand and raise your right hand, if you would.
    [Witness sworn.]
    Chairman Waxman. Thank you. The record will reflect that 
you answered in the affirmative.
    We are pleased to have you. And your prepared statement 
will be made part of the record in its entirety.
    Because of the time constraints that are placed upon the 
committee, we are going to ask you to limit your oral 
presentation to no more than 5 minutes. There will be a little 
clock in front of you. When there is 1 minute left, it will 
turn yellow, and then when the time is up, it will turn red.
    There is a button on the base of the mic, so be sure it is 
pressed in so that we will know it is working. And pull it as 
close to you as you feel you need to.
    Thank you.

       STATEMENT OF CONDOLEEZZA RICE, SECRETARY OF STATE

    Secretary Rice. Chairman Waxman, Representative Davis, 
members of the committee, thank you very much.
    And I hope, Chairman Waxman, I won't need the entire 5 
minutes, because I'm really here to answer your questions.
    I want to just make a few opening contextual points, 
nonetheless. And that is to underscore the importance of 
success in Iraq for American foreign policy and, indeed, for 
our security and for that of the world as a whole.
    I also want to associate myself with something that you 
have said, which is that the success of our political efforts 
in Iraq, the success of what civilians bring to the fight, is 
absolutely crucial. And I want to acknowledge the hard work of 
the men and women of the State Department, our foreign service, 
our civil service, our foreign service nationals and our 
contractors, who are playing an essential role in carrying out 
our policies in Iraq and people who, frankly, are in great 
danger. They are away from home, they are away from friends, 
they are away from families, as our military is as well. And 
yet, they serve shoulder to shoulder with our military, some of 
them actually embedded with brigade command teams, dodging 
IEDs, just as our military people do. They serve in an Embassy 
in which they are subject to indirect fire. They are operating 
in perhaps the most complex circumstances that we have faced as 
a Department of State. And they do it with valor, they do it 
with dedication, they do it with great patriotism. And 
everything that we say today should remember that, because 
these are people for whom we want to give the very best support 
because they're giving it all to their Nation.
    I want to note, too, that it's a complex and difficult 
operating environment in Iraq. This is a country that is 
recovering from decades of tyranny. It is recovering from 
United Nations sanctions under the Oil-for-Food Programme that, 
frankly, warped the economy and warped the society. It is a 
country that didn't even have a functioning banking system, 
something that we are still trying to help them establish. We 
are trying, through our programs, to help them find skilled 
labor, skilled personnel, so that they can establish the 
institutions of governance, the institutions of management 
that, frankly, after our long experience, we simply take for 
granted.
    These are difficult tasks in the best of circumstances. I 
think if you read World Bank reports or other reports about 
trying to bring governance and management capability to young 
states, you will find that it is always hard. It is extremely 
hard when you are working in what is essentially a wartime 
environment.
    And so, I just want to acknowledge the very hard work and 
the dedication of our people. And I'm now prepared to take your 
questions, Mr. Chairman.
    Chairman Waxman. Thank you very much.
    We will proceed with 10 minutes by each side, controlled by 
the Chair and controlled by Mr. Davis, and then we will move to 
5-minute rounds.
    And the Chair will recognize himself.
    Secretary Rice, one of my concerns, as we look at Iraq, is 
that our troops are sacrificing their lives, our Nation is 
spending hundreds of billions of dollars, to prop up a regime 
in Iraq that looks like it is fundamentally corrupt.
    Our committee held a hearing on the corruption in Iraq, and 
at this hearing we heard from Judge Radhi Hamza al-Radhi. He 
told us some important things at that hearing. He was appointed 
as the commissioner of the Iraq Commission on Public Integrity 
by Ambassador Paul Bremer. And Stuart Bowen, the Special 
Inspector General in Iraq, had nothing but high praise for him, 
as did Ambassador Lawrence Butler from your State Department. 
They paid tribute to his courage and his tenacity, and they 
said that his departure from the scene in Iraq was a real blow.
    At that hearing, Judge Radhi described a rising epidemic of 
corruption inside the Maliki government that is even funding 
the insurgency and undermining any efforts of political 
reconciliation. He told us, ``Corruption in Iraq today is 
rampant across the government, costing tens of billions of 
dollars, and has infected virtually every agency and ministry, 
including some of the most powerful officials in Iraq.''
    I assume you are aware, Secretary Rice, that Judge Radhi 
told us his investigators had identified an enormous sum, $18 
million, that corrupt Iraqi officials have stolen. Are you 
aware of that?
    Secretary Rice. I'm aware of Judge Radhi's testimony to 
you, Mr. Chairman.
    Chairman Waxman. Thank you.
    He also told us that 31 people on his staff were brutally 
assassinated when they tried to investigate these corrupt 
officials. Were you aware of that?
    Secretary Rice. I'm aware of his testimony to you, Mr. 
Chairman.
    Chairman Waxman. And he testified that the family members 
of another 12 of his staff were tortured and murdered. Were you 
aware of that?
    Secretary Rice. Again, I'm aware of his testimony to you.
    Chairman Waxman. These are the Iraqis who are doing exactly 
what we asked them to do. They are trying to create a 
functioning government and democracy in Iraq. But they are not 
the Iraqis running the government. In fact, Judge Radhi and his 
family have been driven out of Iraq and have been granted 
humanitarian parole in the United States.
    Judge Radhi raised specific concerns about the integrity of 
Iraq Prime Minister Nouri al-Maliki. He told this committee 
that Prime Minister Maliki used secret orders to stop 
investigations of corruption of top Iraqi ministers, including 
al-Maliki's own cousin, Salam al-Maliki, the former minister of 
transportation.
    Do you know whether this is true? Did Prime Minister Maliki 
intervene to obstruct a corruption investigation of his cousin, 
the transportation minister?
    Secretary Rice. Mr. Chairman, let me say that some of the 
questions that you are asking may indeed get into areas in 
which there are concerns about the exposure of sources.
    Chairman Waxman. I don't want you to expose any sources.
    Secretary Rice. Yes.
    Chairman Waxman. I am just asking you whether you are aware 
that Prime Minister Maliki intervened to obstruct a corruption 
investigation of his cousin, the transportation minister.
    Secretary Rice. Let me say that everything that has been 
brought to the attention of either various boards in Iraq or to 
our people is being investigated.
    Chairman Waxman. So you are aware of this allegation, and 
you are aware that this----
    Secretary Rice. I am not personally following every 
allegation of corruption in Iraq, Mr. Chairman, but I am 
certain that we are tracking these allegations of corruption, 
because no one is more concerned about allegations of 
corruption in Iraq, no one is more concerned about what is, in 
fact, a pervasive problem of corruption, than we are.
    Chairman Waxman. Well, you are the Secretary of State. You 
are not tracking every incidence of allegations of corruption, 
but this is an allegation that the Prime Minister, al-Maliki, 
has obstructed an investigation of his cousin, the 
transportation minister.
    And we have thousands of Americans who are dying there. We 
are spending hundreds of billions of dollars in Iraq to prop up 
this government.
    And let me just ask you this question again: Do you know 
whether Prime Minister Maliki obstructed a corruption 
investigation involving his cousin, the transportation 
minister?
    Secretary Rice. Mr. Chairman, we investigate every--we 
investigate allegations of this kind because we, more than 
anyone, are concerned about corruption in Iraq and certainly 
would be concerned with an allegation of this kind.
    But I can't comment on this specific allegation. I don't 
want to do so without reviewing precisely what you are talking 
about.
    Chairman Waxman. Well, you are investigating it. This has 
been a charge that has been around for a while. The question 
is, what do you know? Do you know whether----
    Secretary Rice. Mr. Chairman, I am--Mr. Chairman, I am 
overseeing a very large organization, and we are determined to 
look at allegations of corruption, the ones that you are 
talking about, the ones that we have found. We have many, many 
hundreds of documents, hundreds of reports of corruption. We 
investigate them all.
    But nothing is going to be gained by speaking prematurely 
about allegations without fully investigating them.
    Chairman Waxman. Well, this is a big deal. This is the 
Prime Minister of the country.
    Secretary Rice. I agree with you; it's a big deal.
    Chairman Waxman. His government that we are propping up 
with the lives of our soldiers and the billions of dollars of 
our taxpayers money--and this is not a minor accusation.
    Now, let me ask you about something else.
    Secretary Rice. Well, Mr. Chairman, precisely because it's 
not a minor allegation, I think it is worth giving the time to 
it to fully investigate it before discussing it.
    Chairman Waxman. Judge Radhi gave the committee copies of 
secret orders from Prime Minister Maliki's deputy. And I had 
the secret orders, and we extended a copy to you. These orders 
say that the Iraqi Commission on Public Integrity cannot refer 
for criminal prosecution the Iraqi President, the Council of 
Ministers or any current or former ministers, without the Prime 
Minister's permission. In effect, this order immunizes all the 
most senior officials in the Maliki government from any 
corruption investigation.
    Is this true? Is this what this order does provide? And did 
Prime Minister Maliki's office issue orders protecting current 
or past ministers from corruption investigations?
    Secretary Rice. Mr. Chairman, no one in Iraq is going to 
escape corruption probes. I don't care what kind of order is--
--
    Chairman Waxman. No, no. Are you aware of that order?
    Secretary Rice. I believe that you are referring to 
something that is--because there's an executive branch and a 
legislative branch that are treated differently. Is that the 
point?
    Chairman Waxman. No. The point of the order is that Prime 
Minister Maliki has issued an order saying that he may not be 
investigated, nor may his minister be investigated, of full 
corruption, which means they are immunized from anything----
    Secretary Rice. Well, I can tell you----
    Chairman Waxman. Excuse me, Secretary. Excuse me.
    Which means they are immunized from the investigation by 
the Iraqis, themselves, of corruption. Are you aware of that 
order? And does it trouble you that such an order has been 
issued?
    Secretary Rice. Well, Mr. Chairman, I will have to get back 
to you. I don't know precisely what you are referring to. It is 
our understanding that the Iraqi leadership is not, indeed, 
immune from investigation.
    Chairman Waxman. Well, we held this hearing on October 4th. 
The State Department sent Ambassador Butler to testify. We went 
through all of this with him. We even gave him copies of this 
order. And I don't know if you are telling us you haven't seen 
them or, now that you've seen them, you don't believe them.
    Secretary Rice. No. I'm telling you, Mr. Chairman, that I 
will get back to you on this question. If, in fact, there is 
such an order, and if this order is meant to immunize rather 
than to make certain that the investigation is by appropriate 
bodies in Iraq, that would certainly be concerning.
    Chairman Waxman. Well, this order that was shown to us by 
Judge Radhi, it was discussed at our October 4th hearing. We 
even asked Ambassador Butler from the State Department about 
it. And we expected you to come in and give us your view of 
such an order. Because it, in a sense, says that you believe 
everything is going to be investigated in Iraq. They are not 
planning to investigate corruption by the Prime Minister or any 
of his ministers. And if that is the order, I think you ought 
to tell us that you are as outraged as we are. Because we want 
corruption investigated and not just left for you to get back 
to us another time.
    Secretary Rice. Mr. Chairman, I have just stated that it 
would not be the intention of the United States of America that 
any official in Iraq, including the Prime Minister, the 
President or members of the Council of Representatives, would 
be immune from investigation for corruption. I must get back to 
you on the specifics of the order that you are talking about 
because I don't know whether there are other bases on which 
people can be investigated.
    But I will tell you unequivocally that if there is a 
situation which the Prime Minister or the President of the 
Council of Representatives could escape investigation from, 
concerning corruption, yes, that would be deeply concerning, 
and it would not be an acceptable policy, from the point of 
view of the United States.
    Chairman Waxman. Thank you very much.
    I gather I have used pretty much my full 10 minutes. So we 
will go to Mr. Welch the first time that it comes around to the 
Democratic side.
    I will yield to Mr. Davis for his 10 minutes.
    Mr. Davis of Virginia. Thank you.
    Madam Secretary, let me just ask, would it be unusual for 
senior Department officials of any administration, Republican 
or Democrat, to make public accusations of corruption about an 
ally where we are engaged in significant military, diplomatic 
and political efforts? I mean, what would be the implications 
of publicly----
    Secretary Rice. Well, Representative Davis, I wouldn't want 
to make public allegations about corruption for anybody unless 
I could be certain that they were substantiated, corroborated. 
And I would hope that it would be understood that the last 
thing that we want to do is to talk about allegations rather 
than fully investigating them, rather than taking the time to 
see if they can be corroborated.
    And that would, by the way, follow whether it was an ally 
or an adversary. I think it is best for the integrity of the 
United States that we not simply engage in allegations that may 
or may not be corroborated.
    Mr. Davis of Virginia. Well, let's turn to a more proactive 
note. What are we doing to address corruption in Iraq at the 
diplomatic level?
    Secretary Rice. Well, we understand that the corruption is 
a pervasive problem in Iraq. But, as you said, Congressman, 
this didn't come with the United States. This is a place that 
was, of course, a dictatorship. There was corruption before we 
got there. There was, of course, the Oil-for-Food Programme, 
which we know was a source of considerable corruption--and, by 
the way, not just corruption of Iraqi officials, but corruption 
of a number of international officials as well.
    So what are we doing? We are working very aggressively with 
the Iraqis. We've spent almost $47 million in anticorruption 
measures with them. We have supported their institutions, the 
Commission on Public Integrity, the Board of the Supreme Audit 
and the Inspector General. And there's an additional $350 
million or so that is going into rule-of-law programs.
    But I just want to emphasize, in almost every discussion 
that I have with leaders, with finance ministers, with 
ministers of defense from almost any country in the world that 
is not a mature democracy, corruption is a problem. And it is 
one of the issues that the President has been strongest on, and 
that will be true about Iraq as well.
    Mr. Davis of Virginia. Do you think that the Iraqi 
government has the political will to fight corruption, try to 
put an end to it?
    Secretary Rice. I do know that there are people in the 
Iraqi government who feel extremely strongly about corruption, 
and they certainly feel strongly that no official should be 
immune from prosecution or, indeed, from being punished if 
corruption can be demonstrated.
    And I wanted to say that the characterization of every 
Iraqi in the government as someone who is corrupt and engaging 
in graft while we admittedly sacrifice, I would just challenge 
that there are any number of people in the Iraqi government who 
also have lost family members, who every day deal with 
assassination and death threats. There are a lot of very brave 
Iraqis who are trying to make their country better, as well.
    Mr. Davis of Virginia. Thank you.
    Let me turn to the issue of the private contractors in 
Iraq, particularly security contractors, because that is really 
under your ambit. How do you plan to increase the coordination 
between agencies here and on the ground in Iraq with the 
security contractors?
    Secretary Rice. Well, I was very grateful to the panel that 
went out to Iraq--Pat Kennedy, along with General Joulwan, 
Ambassador Roy and Mr. Boswell. And they have come back with a 
number of recommendations for a better coordination where the 
State Department is concerned.
    But I think the next step, Representative Davis, is that we 
will sit with the Defense Department. Bob Gates and I talked on 
the phone. He is traveling. We have asked the deputy 
secretaries to establish some recommendations on procedures for 
coordination, not just for State and Defense, but there are 
multiple contractors working in Iraq for other agencies, other 
NGO's. And obviously we need a better-coordinated policy for 
all of them.
    Mr. Davis of Virginia. All right.
    Mr. Shays.
    I would yield some time to Mr. Shays.
    Mr. Shays. Madam Secretary, thank you very much for coming.
    I can't think of hardly anything this new Congress, my 
Democratic colleagues, have done to help our soldiers win in 
Iraq and allow them to come home succeeding, rather than 
failing, to help the Iraqi people live in a safe and free Iraq, 
free from terrorism, free from foreign intervention. I, 
frankly, can't think of hardly anything.
    And I was struck by the comment of House Majority Whip 
James Clyburn, who said that, basically, if the Iraqi war went 
well, it would be bad for Democrats.
    I have served on this committee for 20 years. And 
everything this committee has done since we have gone into 
Iraq, in this last year in particular, has been to try to point 
out everything bad that is going on.
    What I would like to ask you is, what would be gained, how 
will our troops be safer, how will they be able to succeed if 
you did a frontal assault against the Prime Minister, accusing 
him of being corrupt? Tell me what will be gained from that.
    Secretary Rice. Well, I see nothing that could be gained 
from a frontal assault. But I want to repeat, Representative 
Shays, what I've said. Our view is that corrupt practices are 
unacceptable. And we're working very hard in difficult 
circumstances to help Iraq develop procedures and not to allow 
people with impunity. So whoever it is, they should not be 
engaged in corruption.
    But to assault the Prime Minister of Iraq or anyone else in 
Iraq with here-to-date unsubstantiated allegations or lack of 
corroboration in a setting that would simply fuel those 
allegations I think would be deeply damaging. And, frankly, I 
think it would be wrong.
    Mr. Shays. Well, I have been to Iraq 18 times, and every 
time I have gone there, almost every time, I have been told by 
American officials that we are continuing to confront the Iraqi 
government on a whole host of issues, among which is dealing 
with corruption at the highest levels. We know that we are 
doing that. But to have you have to come before a committee of 
Congress and declare that the Prime Minister is corrupt blows 
me away. And I am grateful that you are showing an incredible 
concern for our troops who are there.
    Let me ask you this. Congress recently, in the Foreign 
Affairs Committee/International Relations Committee, passed a 
resolution basically condemning Turkey of genocide. I happen to 
be on that resolution, but I can't imagine, for the life of me, 
what good that will do.
    How will that help us work with the Turkish government, and 
how will that help us have our troops in Iraq succeed? And what 
are the consequences of that resolution moving forward?
    Secretary Rice. Well, we believe that the consequences of 
that resolution could be quite dire.
    First of all, we acknowledge the--and the President's 
acknowledged--the mass killings that took place in 1915. He's 
acknowledged that we consider that a great tragedy. We've also 
asked the Turks to work with the Armenians on reconciliation 
and including reconciliation about the history.
    But it would really damage our relations with a democratic 
ally who is playing an extremely important strategic role in 
supporting our troops through Incirlik and through the movement 
of cargo. It would be damaging for a democratic ally, really 
one of the only democratic allies, a bridge between the Middle 
East and the Western world, an Islamic, democratic ally. And it 
would certainly be very damaging at a time when, as I'm sure 
we're all following in the newspapers, tensions are already 
high with Turkey, concerning Iraq.
    So it would be deeply damaging. And I appreciate those who, 
despite the difficulty of the vote, decided not to vote for the 
resolution.
    Mr. Shays. Thank you.
    Thank you, Mr. Chairman.
    Thank you, Mr. Davis.
    Chairman Waxman. Thank you for your questioning.
    Secretary Rice, before we continue, would you just pull the 
mic up a little closer? The Members are saying they are having 
a difficult time hearing you.
    Mr. Welch, for 5 minutes.
    Mr. Welch. Thank you, Mr. Chairman.
    Secretary Rice, if, in fact, the evidence that suggests 
Prime Minister Maliki is in fact protecting corrupt officials 
exists, do you believe that the American taxpayers have a right 
to know? Yes or no on that?
    Secretary Rice. I believe very strongly that, first of all, 
the U.S. Government has a right to know, and certainly the 
American taxpayers will have a right to know.
    But, Congressman, I think we owe it to everyone to do 
thorough investigations, not to respond to allegations, not to 
respond to uncorroborated evidence or uncorroborated 
statements. And I'm going to hold to that, because, not only is 
it potentially damaging to relationships that we are very 
dependent on, in terms of the allegations that are 
uncorroborated, but it's wrong. It's simply not right to sit in 
an open session and do that.
    Mr. Welch. If the American people have a right to know, and 
you know what they have a right to know, when will you tell us 
what they want to know?
    Secretary Rice. What the American people need to be assured 
of is that, if there is corruption, the United States is, in 
fact, dedicated to routing it out. I want to just emphasize 
that--let's not take Iraq in isolation. Corruption is not just 
a pervasive----
    Mr. Welch. I do want to interrupt.
    Secretary Rice. Let me just finish my point.
    Mr. Welch. No. The reason I want to----
    Chairman Waxman. Secretary Rice, please. We only have 
limited time.
    Secretary Rice. All right. Mr. Chairman, may I have an 
opportunity, though, to finish my answers?
    Mr. Welch. My question is only about Iraq. We have very 
limited time, Madam Secretary, and that is the reason for my 
interruption.
    Let me ask you this. On your point that you followup and 
that you want to do thorough investigations, we have received 
information about this order Chairman Waxman asked about, that 
the Commission on Public Integrity, which is a credible group, 
can't refer for criminal prosecution the Iraqi Council 
ministers or any current or former ministers without the Prime 
Minister's permission.
    My question to you is this: That obviously interferes with 
Iraq moving forward, with us moving forward. Will you ask the 
President of the United States to repudiate that blanket grant 
of immunity that is contained in that order after this hearing 
is over?
    Secretary Rice. First of all, if I may complete the 
sentence, which is that we need to understand Iraq in context. 
Corruption isn't just a pervasive issue in Iraq; it is a 
pervasive issue with many countries in the world. And we have 
been dedicated to routing it out around the world.
    Second, there are other boards and other institutions in 
Iraq that are involved in investigating corruption, like the 
Board of Supreme Audit and the Inspectors General. My point to 
the chairman is that the United States would expect and would, 
indeed, say to the Iraqi government that it expects that no 
official would be immune from investigation or prosecution for 
corruption.
    Mr. Welch. That wasn't my question. My question is, if this 
order that gives blanket authority to the Prime Minister to 
block any prosecution stands and exists, will you ask the 
President, in furtherance of the need of the American taxpayer 
and the American soldier to know about corruption, will you ask 
the President to demand that the Prime Minister repudiate and 
rescind this order?
    Secretary Rice. What we have said, and I will repeat, the 
United States will not support a policy that would prevent the 
investigation or the bringing to justice of any official in 
Iraq who----
    Mr. Welch. Do you believe that secret order does interfere 
with the formal, complete investigation? That is a yes or no.
    Secretary Rice. There are other boards that investigate 
corruption, including the Inspector General. I will say----
    Chairman Waxman. Will the gentleman yield to me?
    Mr. Welch. Yes.
    Secretary Rice. Congressman Welch, I think it's important 
that we talk to the Iraqi government and that we repeat 
precisely what I've said. We will not tolerate a situation--we 
would not support a situation in which anyone is immune----
    Mr. Welch. I will yield to the chairman.
    It sounds like we will tolerate, or the President will 
tolerate, a blanket secrecy on investigations.
    Chairman Waxman. That testimony seems to be that you think 
the Iraqi government can deal with it because of the Council on 
Public Integrity. But the man who was the head of it was driven 
out of Iraq. He had 40 people who worked for him killed. He 
told us that there was no one allowed to investigate corruption 
in Iraq. And we have this order from al-Maliki, himself, saying 
that, unless he personally approves, no one may be 
investigated.
    You said you know of people in the Iraqi government who 
care about corruption. Is Prime Minister Maliki one of the 
people that cares about corruption in Iraq?
    Secretary Rice. Prime Minister Maliki has made the fighting 
of corruption one of the most important elements of his 
program.
    But I will repeat again, Mr. Chairman: The United States of 
America does not support any policy that would make immune from 
investigation or prosecution any member of the Iraqi 
government, no matter how high.
    Mr. Welch. I have limited time.
    Madam Secretary, the Independent Commission on Security 
Forces, chaired by General Jones--you are familiar with him; he 
is a credible person--he found sectarianism and corruption 
pervasive in Iraq.
    And there is a State Department report on this topic that 
Chairman Waxman asked for. It was unclassified until he asked 
for it, and it became classified. But according to press 
reports, that State Department report said that Mr. Jabr, the 
minister of interior then at that time, that minister was 
likened to a criminal mob. That is according to press reports 
of the State Department investigation.
    Is that report true, or is it false?
    Secretary Rice. Congressman, at the time of the Ministry of 
Interior under that leadership, we had serious concerns about 
the sectarian nature of that ministry. We had serious concerns 
about corruption in that ministry. We had serious concerns 
about violence that might have been emanating from that 
ministry. It was one of the most important efforts that we 
undertook with the Iraqi government, to try and change the 
nature of that ministry.
    It is absolutely the case that there is much, much more 
work to be done. The Ministry of Interior is still a real 
challenge. But, yes, we were very concerned about----
    Chairman Waxman. The gentleman's time has expired.
    Mr. Burton.
    Mr. Welch. Thank you, Mr. Chairman.
    Mr. Burton. First of all, Madam Secretary, I want to 
apologize to you for the way some of the questioning is taking 
place. You are not being prosecuted, and we are not 
prosecutors. And so we will try, I hope, to give you an 
opportunity to answer the questions clearly and thoroughly.
    And I would just like to say to the chairman, the last 
Member went over about 2 minutes, and I hope he will be lenient 
with the minority as well.
    Let me just say, Madam Secretary----
    Chairman Waxman. The Chair will be fair.
    Mr. Burton. I have about three questions, and I am not 
going to belabor the issue, but I would like for you to answer 
them in sequence, if you would.
    First of all, I would like for you to explain why it is 
necessary to have contractors like they have, like Blackwater 
and others over there. I would just like to know why you think 
it is important.
    Second, yesterday--I am on the Foreign Affairs Committee, 
and I didn't get a chance to ask you a question, so I would 
like to talk about a related issue. And that has to do with 
Israel, because it is all in the same area.
    Prime Minister Sharon gave Gaza back to the Palestinians. 
He bulldozed the settlements over there. Hamas immediately took 
that as a base of operation for attacks on Israel. Now we, as a 
government, are talking about creating a Palestinian state.
    And I would like to get an answer from you on how that 
should proceed and whether or not the absolute guarantee of 
security for Israel will be a part of any negotiation. I don't 
think that Israel, with our support, should be giving up 
anything until it is written in blood that there will be no 
more attacks and that Israel will have a right to exist.
    Now, the other thing I want to talk about real quickly--and 
I will let you answer the questions--is there was an attack on 
September 6th by Israel on a nuclear site--supposedly nuclear 
site. Nuclear experts have said that was, in their opinion, a 
nuclear site.
    I would like to know what the administration is 
recommending to Israel and to others in that area to deal with 
the proliferation of nuclear weapons and, if we find out who it 
was that sent them there, what we intend to do about it.
    Thank you very much.
    Secretary Rice. Thank you, Congressman.
    I can't comment on the reports concerning the Israeli 
strike. Let me just say that if there is evidence anyplace of 
proliferation, we are very actively engaged in countering that 
proliferation, whether it be through the proliferation security 
initiative that we have launched, or taking down the A.Q. Khan 
network, or insisting, with negotiations, for instance, with 
North Korea, that it deal with its proliferation activities. 
And so, if you don't mind that, that is as far as I can go on 
that issue.
    On the Palestinian state, we believe that--and, by the way, 
the Israelis, themselves, have said that, since Prime Minister 
Sharon's famous Herculean speech in 2003, that it is the case 
that there should be a Palestinian state. That is the best way 
to secure the Jewish democratic state of Israel. It can't be a 
state born of terror, which is why we have insisted that it be 
a leadership in the Palestinian territories that is devoted to 
bringing its state about peacefully. And finally, the United 
States, and especially this President, is absolutely devoted to 
the security of Israel. We have no intention of encouraging the 
establishment of a state that would leave a vacuum and create a 
more dire security situation for Israel.
    As to the private security contractors, we need them 
because our people have to be able to move around in a very 
dangerous environment. And let me just note that, thank God, so 
far, we have been able to provide that security to our people; 
they have been able to move around. We believe that we cannot 
take on all of those tasks with our own diplomatic security, 
nor can the military do that. And that was just reaffirmed by 
General Petraeus and Ambassador Crocker during the recent visit 
of the panel to Baghdad.
    But we do recognize that there must be sufficient 
oversight, sufficient rules. And that is why I have accepted 
the recommendations of the panel on the private security 
contractors.
    Mr. Burton. Let me just say real briefly that probably 
many, many members of this committee and other committees have 
gone to Iraq and been protected by the contractors. And I think 
many of us, on both sides of the aisle, will say that they have 
done an outstanding job. And I hope that the investigation by 
the FBI, when it is concluded, will be given to all of us, so 
we can really see what happened and know for sure what is being 
done about it.
    Are there any other Members--I will yield to the chairman, 
or to Mr. Davis.
    Mr. Davis of Virginia. Thank you.
    I just looked at this document my friend from Vermont was 
looking at, No. 282, where it says, referring to the following 
parties, ``The courts need to obtain the consent of the state 
and Prime Minister.''
    The way I read this document is they are trying to 
consolidate and control. It is a turf battle, and they just 
don't want the things--I think that is a reasonable 
interpretation of it, as well, not that they are trying to stop 
corruption.
    I don't know if you have any comments on that at all.
    Secretary Rice. Well, let me just repeat. We can look at 
this document. We can look at the testimony of Judge Radhi. We 
know that there are problems with corruption.
    Mr. Davis of Virginia. Absolutely.
    Secretary Rice. But I don't see anything to be gained by 
publicly discussing allegations that are not yet investigated 
and proven, by publicly talking about things that could be 
rumor or unsubstantiated. If there are substantiated claims, 
then we're going to pursue them.
    And I just want to state again, Mr. Chairman, because I'd 
like to state it in my own words rather than having it be 
stated for me: It is the policy of this administration--and I'm 
quite certain that the President would feel strongly about 
this--that there shouldn't be corrupt officials anywhere, and 
that no official, no matter how high, should be immune from 
investigation, prosecution or, indeed, punishment, should 
corruption be found.
    Mr. Davis of Virginia. Thank you.
    Let me, Mr. Chairman, just followup, if I could, real 
quick.
    The Ministry of Oil is regarded as one of the most 
dysfunctional and corrupt ministries in Iraq and the obstacle 
to security and peace in Iraq. General James Jones, the head of 
the Jones Commission, told the committee last week that it is 
unacceptable that a ministry as dysfunctional and sectarian and 
as possibly corrupt as the Ministry of Interior can be 
tolerated, given the high price we pay every day to try to help 
that country try to find its place in the global family. So 
whatever the pressure points are that we have to play or the 
United Nations has to play or the international community has 
to play in order to effect that kind of change, we should do to 
that, in my view.
    What are these pressure points? And how are the United 
States and the international community applying that pressure?
    Secretary Rice. Yes, the Ministry of Oil is very much of 
the problem. And, again, around the world, ministries of oil in 
state-owned--rather, state-owned oil enterprises tend to be a 
problem, from this point of view.
    We have encouraged the Iraqis to have not just a strong 
ministry but also strong coordination between the ministries 
that are involved in oil and gas: transportation, oil and gas, 
electricity. They've formed a task force to try to better 
coordinate between the ministries. And we have undertaken a 
very major effort to try to help them improve their execution, 
their training of skilled personnel.
    These are efforts that are under way with the Ministry of 
Oil. It has been a problem, and we've been working on precisely 
that problem.
    Chairman Waxman. Time has expired.
    I just want to point out that the document that we have 
that was given to us by Judge Radhi says, ``Peace, mercy and 
blessings of Allah be upon you. It has been decided not to 
refer any of the following parties to the court until approval 
of His Excellency, the Prime Minister, has been obtained: one, 
Presidential office; two, Council of Ministers; three, current 
and previous ministers. With appreciation,'' and the official 
at the Prime Minister's office.
    These are not unfounded allegations. This is Nouri al-
Maliki's edict, that no one is going to be referred to court 
until he approves it.
    Now, not only are we worried about corruption, but we are 
worried about the corruption, tens of billions of it, going to 
supply the insurgents that are killing Americans while other 
Americans are there fighting--all Americans there are fighting 
to keep Prime Minister Maliki in office.
    It is not just our concern about corruption around the 
world. It is our concern about corruption where Americans are 
dying to support a government that, it appears to many of us, 
is so corrupt that it doesn't have the support of its own 
people.
    Secretary Rice. Mr. Chairman, may I respond?
    Chairman Waxman. Certainly.
    Secretary Rice. First of all, we're not fighting to keep 
Prime Minister Maliki in office. We are fighting to help the 
Iraqis to develop a democratic government that can provide for 
its people. Prime Minister Maliki is the leader of Iraq, who 
was, out of an election process, made the Prime Minister of 
Iraq by the Iraqis, not by the United States. So we're not 
fighting to keep him in office. We're trying to support the 
government of Prime Minister Maliki so that it can deliver for 
its people.
    Chairman Waxman. I appreciate that.
    Secretary Rice. But I wanted to repeat, Mr. Chairman: Any 
order, any law that tries to shield ranking officials, of any 
rank, from prosecution or from investigation would be opposed 
by the United States. And we've been very clear with the Iraqi 
government that we do not--that we would not tolerate and, in 
fact, it would not be supported by the United States to have 
any official, no matter how high-ranking, immune from 
prosecution.
    Chairman Waxman. Mr. Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Madam Secretary, it is good to see you.
    You are, no doubt, on the front lines of this war in Iraq. 
And no amount of military surges or blank checks we write for 
this war will resolve the complex efforts and religious 
conflicts that plague Iraq and its neighboring countries. 
Victory in Iraq is not possible without political 
reconciliation. And I am extremely concerned about whether 
corruption in the Iraqi government is undermining our mission.
    Four years after we have toppled Saddam Hussein's regime, 
the Iraqi government remains the third most corrupt country in 
the world, according to Transparency International. And State 
Department IG Stuart Bowen, your inspector, characterized it as 
a second insurgency.
    Corruption--and this is why I think the discussion here is 
so important--corruption funds terrorists who attack our 
troops. Corruption fumes sectarian divisions. Corruption 
stifles reconstruction efforts and corrodes the Iraqi 
government.
    We have been told time and time again, when the Iraqis 
stand up, we can stand down. But I do not see how this is 
possible when the Iraqi people do not seem to have a leg to 
stand on. The agency that has the vital responsibility for 
fighting corruption in Iraq is your agency, the State 
Department. Yet I have serious questions about the job the 
Department is doing.
    The committee has been investigating the effectiveness of 
anticorruption efforts in Iraq, and what we have learned are 
the following. And they are simply astounding. The State 
Department established two groups in the U.S. Embassy to 
address corruption in Iraq, the Anticorruption Working Group 
and the Office of Accountability and Transparency. We learned 
that these organizations have suffered from a lack of 
leadership, a lack of direction and a lack of coordination. 
Coordination is so poor that the Office of Accountability and 
Transparency actually boycotted the meetings of the 
Anticorruption Working Group.
    We asked a former head of the Office of Accountability and 
Transparency whether he was aware of any coordinated U.S. 
strategy to fight corruption in Iraq, and his answer was no. We 
asked another Embassy anticorruption official for his views, 
and he told us, ``You have a system where the coordination is 
lacking.'' Here is what Michael Richards, the executive 
secretary of the Anticorruption Working Group, told us when we 
asked him what the working group had accomplished, ``I would 
like to be able to say that we've done quite a bit in this 
area, but unfortunately we have not.''
    This is very troubling. But the criticism does not end 
there. Independent investigators were also highly skeptical. 
Stuart Bowen, your agency's Inspector General, has investigated 
your entire anticorruption programs, and he testified about his 
findings before the Oversight Committee, and this is what he 
said. He said, ``U.S. anticorruption efforts have suffered from 
poor coordination and focus.'' This is what he said: ``no 
strategic plan for this mission was ever developed.''
    David Walker, the head of the Government Accountability 
Office, released a report finding that the U.S. ministry 
capacity development efforts have suffered from a, ``lack of 
overall direction'' and that the State Department's efforts 
are, ``fragmented, duplicative and disorganized.''
    Secretary Rice, fighting corruption in Iraq is essential 
for our mission to succeed. But your own officer, your own 
officials and independent investigators told the committee that 
the Department's efforts are in disarray. The other side has 
said, ``We need to tackle the problem.'' You've said it is your 
No. 1 priority, it is very important to you. But it seems as if 
there are problems.
    And I just wanted to have your comments on the things that 
your people said. This is not some pie in the sky, somebody 
looking down and just criticizing you. This is your own 
department.
    Secretary Rice. Well, first of all, let me just say that 
there are an awful lot of people working on these 
anticorruption programs, and they're doing it at great risk, 
because it means they have to get outside the Green Zone very 
often, and they have to go out and deal with ministries, and 
they have to deal with places where there's very little 
personnel that is skilled, and they're trying to build systems 
where there were no systems.
    The coordination for these programs is under a senior 
officer of the ministry assistance teams, who works directly 
for the deputy chief of mission for Ambassador Crocker. That 
person is responsible for the coordination of these efforts.
    I will tell you, it is sometimes very difficult when 1 day 
you can go out and the next day you may not be able to go out. 
And I know that there is some frustration in some of the Iraqi 
agencies with the pace of some of the programs. But I also know 
that when you have people who are challenging old ways of doing 
business in Iraq, in some of these Embassies, in some of these 
ministries, in some of these organizations, that you're going 
to get some of the comments that you're getting.
    But these programs are coordinated. Ministry assistance is 
coordinated through a very senior officer in Baghdad.
    Mr. Cummings. Thank you, Mr. Chairman.
    Chairman Waxman. Thank you, Mr. Cummings.
    Mr. Mica.
    Mr. Mica. Thank you.
    Well, Secretary Rice, our committee has a very important 
responsibility. As you know, it is the principal oversight and 
investigations committee of Congress. I have been honored to 
serve on it for 15 years, and I think all of us want to make 
certain that you all do the best job and we make certain that 
you do the best job.
    Now I heard Mr. Cummings say that the government--well, I 
guess it is 4 years now since I guess we started our efforts 
there, but the government's been in place how long?
    Secretary Rice. The government has been in place a little 
over a year, in fact, about 17, 18 months.
    Mr. Mica. And the government was duly elected. I mean, was 
there any corruption in the election process that we are aware 
of? It was probably one of the most monitored--
    Secretary Rice. It was a well-run election.
    Mr. Mica. And I guess there was a lot of hope when we got 
that government in place. I remember the folks with the thumb, 
you know, how proud they were to have voted.
    But I guess the insurgents kind of took advantage of the 
situation. They didn't like it. And with the destruction of the 
mosque and the beginning of what was somewhat of a civil and 
religious war you inherited a new set of responsibilities. But 
you have certain constraints that you work under.
    This is a duly elected, sovereign government, is that not 
correct?
    Secretary Rice. That is correct.
    Mr. Mica. It is interesting, too, that, you know, of 
course, these hearings--we have a responsibility to do 
hearings. And they have done hearings, and they have tried to 
make the administration look as bad as possible and the 
military look as bad as possible and the contractors and the 
Iraqi government. Today sort of a combo, sort of a combo 
hearing where we make both the State Department look bad, the 
Iraqis look bad, the contractors look bad.
    The situation, I have heard, is much better in Iraq. 
Members just returned from last weekend told me that they 
actually didn't wear flak jackets and walked around escorted 
pretty casually.
    As the situation--you have had to adapt to some pretty 
tough situations. One of the difficulties in trying to sort of 
get your act together and control the situation has been a 
violence situation from basically last summer to when the surge 
took place.
    Secretary Rice. Yes.
    Mr. Mica. We now have a different situation. Is it 
possible, you think, that we could begin to stand down some of 
the security contracts that we have had or is that preliminary?
    Secretary Rice. I think it is probably early to consider 
that. But I will say that the security situation and the 
improvement in the security situation has made it possible to 
have a more ramped up--some of these programs can be more 
ramped up. It has also been very good to embed the provincial 
reconstruction teams with the brigade command teams, because it 
allows us to get out in the provinces.
    And, you know, I just want to say while we are talking 
about all of the failures of the Iraqi Government and the 
difficulties that we have in helping them to build a modern 
governing structure, which by the way we have had a long time 
to do that and modern governing structures don't come easily, I 
just want to note that, for instance, the programs that we are 
running on budget execution with their Ministry of Finance and 
with their ministries has meant that, instead of the 20 percent 
of budget that they were able to execute last year, it is now 
70 percent; and this in a country that didn't even have a 
functioning banking system.
    So I don't want the Members to leave the impression that 
the Iraqi Government is not functioning. We have been able to 
get, for instance, $220 million out to the Anbar Province to 
support the surge.
    And I know that a number of Members have been in Iraq and 
have gone to see the circumstances in which people are dealing. 
Mr. Chairman, I don't know how long it has been since you were 
in Iraq, but it would be an invitation to any member of the 
committee, including to you, Mr. Chairman, to go out to Iraq to 
meet with our ministry assistance teams, perhaps to accompany 
one to one of these ministries, to perhaps go out with one of 
the brigade command teams to see how these PRTs work, to see 
the difficult circumstances in which they are acting.
    Mr. Mica. Finally, I wanted to try to get one more question 
in about corruption.
    Secretary Rice. Yes.
    Mr. Mica. One of the subcommittees I chaired on this 
committee was Criminal Justice Drug Policy. I will never forget 
a meeting I had in Mexico City. It was in the late 1990's. And 
I basically stood up and screamed at the Mexican officials that 
the corruption was so bad that they were in danger of losing 
their own country. We had evidence that up to the President's 
office there was corruption.
    I met with a Ukranian official a couple years back, and he 
has begged me not to send any aid there because he said it was 
so corrupt. But, in fact, even with some nations like Mexico, 
which has been around a long time, or emerging democracies like 
Ukraine, it is difficult even where you have relative peace to 
get the situation under control.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Tierney.
    Mr. Mica. Could the Secretary respond?
    Mr. Tierney. Thank you, Mr. Chairman.
    I would just like to refocus--
    Mr. Mica. Could I have the courtesy, Mr. Chairman, of 
having her respond?
    Chairman Waxman. About Mexico? The gentleman's time has 
expired.
    Mr. Burton. Mr. Chairman, I believe we ought to allow the 
Secretary, if she wishes, to make a response.
    Chairman Waxman. Please, go ahead. I don't want to 
interrupt you from responding, but I didn't hear the question. 
But if you heard a question, let's hear it, a response to it.
    Secretary Rice. Yes. I think the point was one I was trying 
to make in response to Representative Welch as well, which is 
that corruption in government is not unique to Iraq. Iraq has 
special circumstances of war, of coming out of dictatorship and 
out of an Oil for Food Program that, frankly, did bring about 
the possibilities, the elements for corruption. But, just as we 
do around the world, we are working very hard, even harder in 
Iraq, because we recognize the tax on the Iraqi people and, 
frankly, on our efforts that corruption brings.
    Chairman Waxman. Thank you.
    Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    Madam Secretary, I do want to refocus to what this hearing 
is about, which is corruption in Iraq and what the State 
Department may or may not be doing to make sure that we have a 
handle on that.
    We don't have $600 billion spent in Mexico or other places. 
We don't have 160,000 troops exposed there on a daily basis. 
And you know, in statements made earlier by some people that a 
lot of people are thinking that everybody in Iraq is corrupt or 
whatever, that is a red herring. We are looking to find out 
what is going on with those who may be corrupt and whether or 
not the State Department is doing what it should be doing in 
that regard.
    We had testimony here not on some speculation but on facts 
that there were billions of dollars involved in corruption. 
Much of that was going to militias. The militias, in turn, were 
shooting our troops. That is why we are having this hearing on 
this basis.
    Now, Mr. Cummings talked to you earlier about the fact that 
you have expressed concern about the levels of corruption in 
Iraq. But we were under the impression, having listened to the 
testimony of Mr. Bowen, who is from your office, and having 
listened to the testimony of Mr. Walker, that there was no real 
coordination of this effort.
    You indicated that a very senior officer in Baghdad is in 
charge of that. So can you tell me why Mr. Bowen would not know 
that and Mr. Walker would not know that after thorough 
investigations? Was this person recently appointed?
    Secretary Rice. No, this is the person who runs the 
ministry assistance teams to try to root out corruption in the 
ministries.
    And, by the way, I see Stuart Bowen every time he comes 
back as well as every time he goes forward, and we try very 
hard to implement his recommendations. But, in fact, the 
ministry assistance teams are coordinated by a senior officer 
at the Embassy.
    Mr. Tierney. Here is his finding on what he testified on 
October 4th, that there has not been adequate leadership in the 
Embassy's anti-corruption programs, and there is no single 
coordinated point for the U.S. support for Iraq anti-corruption 
efforts.
    Mr. Walker, Comptroller General of the United States, he 
testified before the committee and he issued a report, and that 
report says U.S. efforts suffer from a lack of overall 
direction and that no lead agency has been put in charge.
    So I guess the simple question is, if it is that 
significant to the administration's goals of political 
reconciliation, either why hasn't one single person been put in 
charge of it or, if he has, why don't your own investigator and 
the GAO know about that?
    Secretary Rice. The person who is in charge, of course, is 
the Ambassador to coordinate the various programs. But the 
ministry assistance programs are coordinated by a very senior 
officer, and much of the effort at fighting corruption and 
fighting systemic corruption goes through the ministry 
assistance programs.
    We also have Rule of Law programs that are coordinated by 
very senior officers in working to develop better practices for 
the prosecution of people who are accused of corruption and 
investigation of corruption.
    Mr. Tierney. So is it your testimony that your Special 
Inspector General for Iraq Reconstruction, Mr. Bowen, is just 
flat-out wrong when he makes the assertion there has not been 
adequate leadership and that there is no single coordinated 
point for U.S. support for Iraqi anti-corruption efforts?
    Secretary Rice. Congressman, I have talked to Stuart Bowen 
every time, and we have tried to implement his recommendations. 
But I would question--and perhaps I can get back to you. I 
would question whether the right way to go about this is to 
have a coordinator for corruption or to have a coordinator for 
ministry assistance, a coordinator for Rule of Law, and that is 
how we have gone about it.
    Mr. Tierney. One of his findings was that the agencies that 
you mentioned that were supposed to be targeting aspects of 
corruption were boycotting each other's meetings. Were you 
aware of that?
    Secretary Rice. I have just--I have heard that--who is 
boycotting what?
    Mr. Tierney. Each other's meetings. In other words, they 
were not attending meetings called by each of those groups that 
were supposed to get together.
    Secretary Rice. I am not aware of what you are talking 
about, no.
    Mr. Tierney. Not aware of that.
    The Office of Accountability and Transparency at the 
Embassy in Baghdad is an important mission, I think you would 
agree. It is the group the State Department has that is 
supposed to work with Judge Radhi or other anti-corruption 
officials in Iraq. But what we learned during our investigation 
and the hearing is that 10 months since the office was 
established there has been at least four acting or permanent 
directors. In 10 months, four acting or permanent directors. 
The most recent acting director previously served as a 
paralegal who performed administrative functions for the 
Embassy.
    Now, Secretary Rice, nobody here is certainly trying to 
pick on this paralegal. We have great admiration for anybody 
serving in Iraq and serving their country. But how is it 
possible that in this important position that there is a 
paralegal involved, not an experienced diplomat, not a person 
with training in diplomacy and anti-corruption practices?
    Secretary Rice. The very senior people who are serving in 
Iraq oversee all of these programs.
    Mr. Tierney. If I can interrupt, this is the head of the 
Office of Accountability and Transparency. This is a woman who 
is a paralegal who apparently has no training in diplomacy or 
anti-corruption efforts. How can that be?
    Secretary Rice. I will have to get back to you on that one, 
Congressman Tierney.
    Mr. Tierney. The latest information, as long as you are 
going to get back to us, is in fact her position has been cut, 
which seems a little ridiculous. If you could also get back to 
us on that, I would appreciate it.
    Secretary Rice. Congressman, I think what I should probably 
get back to you with is a sense of how we manage these 
programs. Because I can't respond to a single post that may 
have been reorganized into some other post. When Ambassador 
Crocker went out to Iraq, he reorganized considerably and 
significantly some of these programs so that they would be more 
effective.
    Mr. Tierney. It would be helpful if you would get back to 
us.
    Secretary Rice. So a program here or an office there may 
well have been integrated into something else. I will get back 
to you on that.
    Mr. Tierney. I don't think so, Secretary Rice, but I would 
be happy if you would get back to us.
    Because that is not what your Inspector General tells us, 
that is not what Mr. Walker tells us, that is not what the 
testimony tells us, and we weren't able to get into it any more 
because you didn't allow certain members from the State 
Department to testify before this committee in an open hearing.
    Secretary Rice. I have to answer that, Congressman, 
because, in fact, I have told members of the State Department 
that they should be willing to speak with the committee.
    The question--
    Mr. Tierney. Madam secretary, we had to issue four 
subpoenas in order to get that testimony.
    Secretary Rice. The question has been, on some of these 
issues, whether or not closed or open session is more 
appropriate.
    Mr. Tierney. Some of those we needed subpoenas just to get 
testimony, not whether it was closed or open. We had to issue 
four subpoenas just to get the cooperation to come in and 
testify.
    Secretary Rice. Well, I have told everybody in our 
Department to be responsive to this committee.
    Mr. Tierney. I hope they will be more responsive to you, 
Madam Secretary.
    Chairman Waxman. The gentleman's time has expired.
    I do want to point out that James Santelle, who is your 
Rule of Law coordinator at the Embassy, he is the one you said 
was coordinating things, well, he did cooperate with us and 
talk to us. And his statement to us was you have a system where 
the coordination is lacking. And he is referring to all of the 
dysfunction and disarray that appears to be going on, 
frustrating U.S. anti-corruption efforts.
    Secretary Rice. Well, I would hope that he will have 
reported that to the Ambassador so that it can be remedied.
    Chairman Waxman. Well, I am sure he has. If he talked to 
us, he reported to the Ambassador. Maybe you ought to talk to 
the Ambassador to report to you.
    Secretary Rice. I am sure that Ambassador Crocker would 
want to remedy any such situation.
    Chairman Waxman. Thank you.
    Mr. Westmoreland.
    Mr. Westmoreland. Thank you, Mr. Chairman.
    And just to kind of followup on it, I am sure Mr. Santelle 
is working to find somebody to be the permanent replacement in 
the Office of Accountability and Transparency. Is that not 
true?
    Secretary Rice. Well, first of all, again, Ambassador 
Crocker has gone to great lengths to reorganize a lot of these 
efforts so that they are less duplicative and so that there is 
not so much overlap. When there are vacancies, we try and make 
certain that Ambassador Crocker has the very best talent 
available to him.
    I know--and perhaps this is the explanation--that 
Ambassador Crocker was not always satisfied with the level of 
talent that he was getting. So the Department undertook a major 
effort to get more senior people to staff Ambassador Crocker, 
people who had more appropriate skills and people who had 
language skills. So that, for instance, the three top officers 
in Ambassador Crocker's office right now have all been 
Ambassadors in their own right.
    Mr. Westmoreland. Thank you.
    Madam Secretary, let me thank you for the hard work you are 
doing for this country and your professionalism every time I 
see you. So thank you for that.
    You know, we are a Committee of Oversight and Government 
Reform, that is our official title, but lately investigate and 
attack has been kind of this committee's motto. We 
investigated, you know, the military and what all was going on 
over there, and now that the surge is working we seem to need 
to find another target. And, unfortunately, usually our targets 
are somebody that has Republican ties or a successful 
businessman or part of the administration. So I guess you fall 
into that part of the administration part of it.
    But we have recognized--and this country has been around 
for over 200 years, and we still have corruption here, many 
things of corruption. We don't like it, and we try to do the 
best we can.
    But, as you mentioned, that young government over there and 
the influx of money that has been over there that we have sent 
and other countries have sent to a people that, No. 1, has 
never been involved in a government before and, No. 2, never 
had any real wealth, and so the atmosphere has been for 
corruption. But you have acknowledged the prevalence of it 
there; and, in your dealings with the Iraqi Government, what is 
your sense of their commitment to ending it?
    Secretary Rice. I believe that they very much want to end 
it, because they know that it is a problem for governance. It 
is, after all, now a democratic society.
    And, by the way, if you think there are stories about 
corruption in Iraq in our newspapers, you should see some of 
the reporting in the free Iraqi press, something that would not 
have existed without the liberation of Iraq from Saddam 
Hussein. So, in fact, their own people are concerned about 
corruption and are concerned to expose it.
    But, yes, it is a real problem. Corruption is a real 
problem. It is a young government. It is a government that 
comes out of a dictatorial past. It is a government that has 
oil wealth, which we know sometimes leads to corruption; and it 
is a government that is fighting a war.
    And they, by the way, also have no interest in having money 
go to militias that are killing our soldiers because they are 
killing their soldiers and, frankly, many of their families.
    Mr. Westmoreland. Well, thank you. Thank you very much for 
being here, and thanks for your attention and your willingness 
to sit through this process. Thank you.
    Secretary Rice. Thank you.
    Chairman Waxman. Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman.
    Madam Secretary, thank you for your willingness to testify 
here.
    As you know, the administration has already committed $450 
billion to securing and rebuilding Iraq; and right now Congress 
has before it an additional request received recently for 
another $196 billion from the President. We in Congress have at 
least a couple of roles in this.
    First of all, we are the direct elected representatives of 
the families whose sons and daughters are putting on that 
uniform and, in many cases, making the ultimate sacrifice in 
Iraq.
    We also, in our constitutional role here, exercise the 
power of the purse. Now, the power of the purse is not simply 
the power to open the purse and surrender the contents. In our 
roles as appropriators, we also are responsible for 
scrutinizing these requests; and that requires that we make 
informed decisions.
    We had several reports so far, and I know you talked about 
unfounded reports or rumors of corruption, but we have some 
pretty good reports here. This one is from the GAO, David 
Walker, Stabilizing and Rebuilding Iraq, that has extensive 
sections on corruption. I have one here by the Special 
Inspector General of Iraq Reconstruction, Joint Survey of the 
U.S. Embassy Iraq Anti-Corruption Program. There is another 
report somewhere here by General James Jones of the U.S. Marine 
Corps about corruption. Your own State Department has a couple 
of internal reports that you have classified that talk about 
corruption. You have denied hundreds of documents pursuant to a 
subpoena issued by this committee, Chairman Waxman, that offer 
other evidence of corruption.
    So to say that this is unfounded or that we don't have a 
hard case is really unbelievable. And the idea that we have to 
wait until there is a prosecution or some type of indictment, 
our kids are on the ground now. They are on the ground now in 
that country fighting and dying, and we cannot wait a moment 
longer before we talk about this.
    That is what we want to do. We want to talk openly, 
publicly about the corruption in Iraq; and we want to know, as 
appropriators, whether it is a good idea to send $196 billion 
to a country where the government has severe corruption. And we 
have to do our responsibility here, our constitutional duty.
    And there is one point I would like to make on this before 
I ask my question. It has been said by the State Department 
that if we talked about corruption in Iraq, it would hurt our 
relationship with the Iraq Government. The fact of the matter 
is, it would be good. It would be good for our relationship 
with the Iraqi people if we talked about the corruption in 
their own government. I think that democracy is aspirational. 
We are certainly not perfect, and we have had a lot of people 
talk about that today. But I think this signals our high 
expectations of democracy in that country and in our own that 
we put it all out there.
    Sunlight is the best disinfectant, and I think that closing 
off that evidence is complicit with--is covering up some of the 
corruption that is going on there, some that we know about.
    So I want to ask you this. Knowing that more transparency 
will be helpful in this country and in Iraq on this subject, 
will you rescind the directive that prevents the State 
Department employees--high-ranking State Department employees 
coming here and discussing in great detail the levels and 
degree of corruption in Iraq? Will you do that?
    Secretary Rice. Congressman, first, I have to correct the 
record on a few things that you have said, if you don't mind.
    The first is I did not say that to talk about corruption 
would hurt our relationship with the Iraqi Government. I said 
that I was not prepared to engage in discussions of premature 
allegations--prematurely of allegations or things that may be 
uncorroborated or unsubstantiated until in fact they had. And I 
saw no good purpose in doing so.
    I am here talking right now about corruption in Iraq, about 
concerns of corruption in the ministries, concern in corruption 
in particularly the--
    Mr. Lynch. In very vague terms, though, Madam Secretary, 
with all due respect.
    Secretary Rice. I am here talking about specifically about 
our concerns about corruption.
    Now, if you would like us to be able to actually do 
anything about corruption, Congressman, we have to be able to 
investigate it. We have to be able to get the testimony of 
people who are bringing the stories and the facts to us. We 
have to be able to protect them from what is obviously a very 
hostile environment. We have to be able to preserve that 
access.
    That is why we have offered to have you have any document 
that you would like and any official who would be able to 
address those documents to come and spend as much time as you 
would like in closed session so that we can protect the 
underlying sourcing and the underlying people who bring those 
allegations to us.
    Mr. Lynch. Let me say one thing.
    Secretary Rice. I will renew that again today.
    Mr. Lynch. I appreciate that, Madam Secretary, but the fact 
of the matter is this directive that came out of the State 
Department instructs the employees not to talk about broad 
statements or assessments which judge or characterize the 
quality of Iraqi governance or the ability or determination of 
the Iraqi Government to deal with corruption, including 
allegations that investigations were thwarted or stifled for 
political reasons. And so--
    Secretary Rice. All right. Let me say right now, 
Congressman--
    Mr. Lynch. Just--please, I have limited time.
    Secretary Rice. Yeah, you do.
    Chairman Waxman. And it has expired.
    Mr. Lynch. On top of that, you know, we have a directive by 
the Iraqi Government itself that--by Nouri al-Maliki that has 
basically said no prosecution of any ministry can go forward 
without my approval. So that is a stopgap as well at that 
level. So we are not seeing a lot of that. So--
    Secretary Rice. Would you like me to answer you, 
Congressman?
    Mr. Lynch. That would be great. Thank you, Madam Secretary.
    Secretary Rice. The first point that I would like to make 
is that directives come from me. I didn't make this directive. 
Consider it rescinded.
    Second, I will nonetheless direct that anyone who is 
speaking on these matters should do so in closed session. 
Because there are underlying sourcing issues, there are 
underlying testimonies from people who might be either in 
danger or who may not come back to us if they are exposed.
    I want to renew the offer that I made to the chairman, 
which is that any document that relates to this, any official 
who might have knowledge of those documents is available to you 
at any time, anywhere, in closed session.
    Now, as to the Iraqi Government, I have said that the 
United States will not support any law or any order that would 
try and shield Iraqi leaders, no matter how high, Iraqi 
officials, no matter how high, from prosecution or 
investigation.
    Mr. Lynch. Well--
    Chairman Waxman. Mr. Lynch, I am sorry, but your time has 
expired and the last pending question was responded to. We have 
to be considerate of the other Members.
    Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    Madam Secretary, I have--first, let me say I have very 
great admiration and respect for you, especially so since a few 
years ago when I heard you speak to the National Prayer 
Breakfast. But let me ask you this.
    William F. Buckley wrote in 2004 that if he had known in 
2002 what he then knew in 2004 he would have strongly opposed 
the war. More significantly, he wrote in June 2005 that if we 
had as many as 500 U.S. deaths over the next year that we would 
reach a point where, ``tenacity conveys not steadfastness of 
purpose but misapplication of pride.'' We have had over 2,000 
U.S. deaths since that time. And I wonder, first of all, how 
you would respond to Mr. Buckley.
    Second, before the war started, many articles said that 
Lawrence Lindsey, the President's economics adviser, was 
dismissed because he had very publicly said a war with Iraq 
would cost $100 to $200 billion. In a very small briefing that 
I was called to at the White House just before our vote, I 
asked about that and I was told, oh, no, the war wouldn't cost 
nearly that much, $50 to $60 billion, and some of that would be 
paid for by the Iraqis themselves. I am wondering if you are 
shocked or surprised at how much these costs have escalated to.
    And I am thinking back to a column that the conservative 
foreign policy columnist Georgie Anne Geyer wrote in 2003, a 
few months after the war, in which she said that Americans 
would inevitably come to a point at which they would have to 
decide did they want a government that provides services at 
home or one that seeks empire across the globe.
    And I know everybody would like to have a $5 million house, 
but they know they can't afford it. And many fiscal 
conservatives have reached a point where they feel we really 
can't afford these excessive, extravagant, staggering costs of 
this war. So I would like your comments to both of those--to 
respond to both of those columnists.
    Secretary Rice. Well, yes, Congressman, if I--it is always 
difficult to go back and try and situate yourself to know then 
what you know today. But even with that limitation, I would 
say, yes, I think to the overthrow of Saddam Hussein, the 
liberation of Iraq, and the chance for Iraq to become a 
different kind of a country in the center of the Middle East, 
from which comes many of the problems of terrorism and danger 
that we face as a country. Yes, it is worth it.
    I know that it has been difficult, and I indeed know that 
it has been expensive. And, yes, frankly, it has been harder 
than I thought it would be. Because I don't think that we 
understood just how broken this country was under Saddam 
Hussein's dictatorship.
    But I would remind that this is someone against whom we 
fought a war before. He was going to remain a threat to this 
vital region as long as he remained in power. And, yes, I think 
it was worth overthrowing him.
    It is also worth it to stand by the Iraqi people as they 
face the multiple challenges of trying to develop a 
functioning, democratic state in the heart of the Middle East. 
I think our security will be better for it, the security of the 
international community will be better for it.
    I cannot by any means make up for the terrible sacrifice. 
Nothing I can say will ever bring one of our soldiers back. But 
I can say that I think nothing of value is ever won without 
sacrificing. Yes, I do believe it has been worth it.
    Mr. Duncan. Let me just conclude by saying, as one who has 
opposed this war from the beginning and still does, I want to 
apologize to you for the rude way that you were treated by some 
of these anti--so called anti-war demonstrators. Those people 
need to realize that they do much more harm than good to their 
cause.
    And, also, Mr. Shays asked that I point out that we are not 
sending this $196 billion, which I think is way too much money, 
but we are not sending it to the Iraqis, we are using most of 
that for our own military costs.
    Secretary Rice. Yes. Thank you very much, Representative.
    Chairman Waxman. The gentleman has a little time left. 
Would he yield to me?
    Mr. Duncan. I will yield it to you.
    Chairman Waxman. I thank you for yielding to me.
    I did want to respond to the Secretary's offer that we have 
a closed door session to receive testimony from witnesses and 
to see documents. The problem with that offer is that you will 
give us information that we then cannot make public because it 
is confidential, and I think there are a lot of things that 
ought to be made public.
    And one question I would want to know, and I think it ought 
to be answered publicly, is money that is being taken from 
corruption--through corruption from the Iraqi Government 
funding the terrorists that are killing our troops? You don't 
have to name a source. You don't have to identify anybody that 
is confidential. But we ought to know that information. And I 
hope you would answer that question as we go into a debate 
about whether we are going to give another $196 billion to this 
war.
    Secretary Rice. There are militias that are being funded by 
multiple sources, including people who are able to use the 
Iraqi system to bring funding to their militias, yes, in the 
south in particular. But a much bigger problem, a much bigger 
problem, Mr. Chairman, and one that will be there in spades if 
we don't complete this mission, is the support that those 
militias are getting from Iran.
    Chairman Waxman. I think that is a very important issue, 
and it needs to be debated, but I don't want to take an offer 
from you to give this Congress of the United States information 
that we can then not talk about publicly as we debate these 
important policy questions. And that is our disagreement on the 
question.
    Secretary Rice. Yes, I understand. But Mr. Chairman, if I 
may say, it is not at all unusual that information is provided 
to the Congress that cannot be made public for reasons of 
sourcing; and so I renew the offer to you.
    Chairman Waxman. We don't need to get into sources. But 
there are a lot of questions we ought to have answered that 
don't involve sources. We will discuss this further, but I do 
want you to know that your offer, while you may feel is 
generous, is not consistent with I think the proper roles 
between the executive and the legislative branch.
    But it is Mr. Yarmuth's time for questions.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    Good morning, Secretary Rice.
    Last year, October 2006, in a State Department briefing, 
you made the following broad assessment, I will characterize 
it, about Prime Minister Maliki, the Interior Ministry, and 
corruption in Iraq.
    You said, I think he is a very good and strong Prime 
Minister. As you know, they have really started to take action. 
We have said many times that the Interior Ministry in the prior 
government before the permanent government was put in place was 
not active enough in really rooting out potential corruption 
and potential violence within the ministry itself or the 
ministry forces, and so they are really starting to take some 
actions of that kind.
    We have heard today and we heard in our hearing 3 weeks ago 
from Inspector General Bowen that he talked about the rising 
tide of corruption in Iraq. It is getting worse and is now a 
second insurgency he called it. And Judge Radhi, we have heard, 
says corruption is getting worse because of the sectarianism in 
the country and the lack of the rule of law.
    What I would ask you is if you are willing to give a broad 
assessment, no sourcing, a broad assessment as to whether over 
the last year, since you made that statement, corruption in 
Iraq has gotten better or worse.
    Secretary Rice. I really would be reluctant to make such a 
broad statement because I would submit to you, Congressman, in 
some places it has gotten worse and in some places it has 
gotten better. And so if we want to do a net assessment, I 
think I ought to go do a net assessment for you.
    But it is very clear to me that some of the problems that 
existed, for instance, in budget execution, have been 
ameliorated and are better. It is very clear to me that some of 
the problems that existed in the Ministry of Interior are being 
addressed. But there are still pervasive problems of corruption 
in any number of ministries, including in the Ministry of 
Interior. So some things have gotten better, some things have 
gotten worse. I can give you a net assessment. I can't give you 
a net assessment on the spot.
    Mr. Yarmuth. So you are not willing to agree with the broad 
characterizations that Mr. Bowen made and that Judge Radhi 
made?
    Secretary Rice. I would rather do my own net assessment. 
Thank you.
    Mr. Yarmuth. Thank you.
    As part of our investigation we also talked to State 
Department officials, again trying to find out whether the 
situation has improved or not. And when we interviewed Mr. 
Folk, who is one of the U.S. Embassy's top anti-corruption 
officials, we asked him about your statement a year ago. And he 
said he could not answer in an open forum, as you said, because 
it would require me to go into details that would break into 
the guidelines that were given to me. So basically he said he 
was under orders not to comment whether your statement was 
accurate or not.
    And my question is, if you are making broad assessments 
that are flattering to the Iraqi Government, as you did in 
October 2006, and now as your public policy you are not willing 
to make those statements, isn't it fairly obvious that you are 
afraid of concealing negative information, and any person with 
half a brain would understand that the situation is not good or 
else you would want to talk about it?
    Secretary Rice. Let me--since I am certain we all have a 
brain, let me say it this way. There is a very bad problem of 
corruption in Iraq. It is a problem in ministries. It is a 
problem in government. It is a problem with officials. I don't 
think that is very flattering.
    Now, the effort has to be to help the Iraqis address that 
corruption and also to have an assessment ourselves through 
investigation and through taking information. You know, much of 
the information that you continue to put out by SIGIR and so 
forth actually comes from the Embassy looking into these issues 
themselves.
    So one of the problems with the--with simply relying on the 
Inspector General reports--which, by the way, I do, too; and, 
as I said, I meet with Stuart Bowen every time I can--is that 
these are often issues that are being uncovered by the 
Department and then reported to the Special Inspector General.
    So it would be wrong to leave the impression, as is being 
done, that somehow the Inspector General is going in and 
finding things that the State Department is trying to hide. If 
you look at his list, you will very often find that these are 
through interviews with our people who are in the process of 
trying to fight corruption.
    Mr. Yarmuth. And it is very frustrating I think to those of 
us who sit here that when we ask for assessments of the 
situation from the leadership of the State Department that we 
don't get candid answers. And I would submit to you that I and 
many others sitting on this panel are in our positions today 
because the American people was convinced that they weren't 
being leveled with about the conduct of this war. And that if 
we had been more candid, if the administration had been more 
candid, then maybe the approval rating for what we are doing 
over there would be at reasonable levels. And unfortunately, 
this total stonewalling and lack of candor is what is 
contributing to a lack of confidence in the American people.
    Secretary Rice. Congressman, if you don't mind, I will 
respond--because I don't know how to be more candid. There is a 
pervasive problem of corruption in Iraq. There is a problem in 
the ministries. There is a problem in the government. There are 
problems with officials. Our job is to try to investigate when 
we hear of and when people come to us. It is our job to put in 
place anti-corruption efforts to help the Iraqis do so 
themselves.
    But I don't know how to be more candid. I don't know how to 
be less flattering. There is indeed a problem of corruption in 
Iraq that we are trying to address through multiple fronts.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Shays.
    Mr. Shays. Thank you.
    It seems to me the basic contention of the Democratic 
majority is because Iraq is corrupt we need to withdraw. Which 
has come down from, well, we weren't winning, we needed to 
withdraw; it was immoral, we needed to withdraw. So that is 
basically what is on the table, which is patently absurd.
    Iraq is corrupt. We all know it is corrupt. We know it is 
pervasive. You know it is pervasive. But for you to be called 
before a committee to name names is destructive, and I am happy 
that you have resisted that temptation.
    When I go to Iraq, I ask, are you a Sunni? They say, I am a 
Sunni, but I am married to a Shi'a. I say to someone else, are 
you a Shi'a? They say I am a Shi'a, but my tribe is Sunni. I go 
to someone else, and I say, are you a Kurd? And they say, yes, 
but don't you know we are Sunnis?
    They lecture me continually on the fact that they are Iraq, 
the Nation of two rivers. And they say, didn't you study about 
us when you were in school? There is tremendous pride that the 
Iraqis have for their country.
    Bernard Lewis points out that there is a difference between 
patriotism and nationalism, and he said in the Balkans you had 
nationalism.
    My question to you is, do you see a patriotic spirit 
emerging?
    And I am going to just add to this that we are constantly 
lecturing the Iraqis on how they need to get their act 
together, and I haven't seen Congress pass hardly any 
legislation. I haven't seen them come to an agreement on even 
Iraq. We can't come to agreement on Iraq, yet we did on a 
bipartisan basis going in, two-thirds of the House and three-
quarters of the Senate. But we here can't work together to 
decide how we deal with Iraq, yet we lecture Maliki on why 
can't he get his act together, Sunnis, Shi'as, and Kurds.
    And my question to you is, one, your view of the 
intervention in the Senate that said break Iraq into three 
units. Because the feedback I get from the Iraqis is how dare 
you tell us what to do, it is our country. I would like your 
feedback on that.
    And I would like you to speak in general about whether you 
see a sense of patriotism. Is Maliki doing what I think he is 
doing, trying to build consensus among Sunnis, Shi'as, and 
Kurds, trying to get 70 percent support where they can't even 
get support of 60 percent in the Senate? If you would speak to 
that.
    Secretary Rice. Yes. In fact, what the Iraqis are trying to 
do is to pass their laws by more than a majority, because they 
recognize that they are trying to buy into these very 
fundamental and existential laws, the entire Iraqi population, 
Sunni, Shi'a, and Kurd, which is why they don't want to just go 
with a 51 percent majority.
    It has been difficult. We continue to press them on passing 
these laws. I would just note that they did pass a budget. That 
is no small matter.
    Mr. Shays. We haven't done one here yet.
    Secretary Rice. That is my understanding, Congressman. And 
that they are in fact executing that budget at a very higher 
rate than they did last year, 20 percent last year, 70 percent 
this year. That they are getting the money out to places like 
Anbar, which leads me to your question about patriotism.
    While we are sitting here talking about all of the problems 
of the Iraqis, let us remember that it is the sheiks of Anbar 
and their sons of Anbar who rose up to fight and to push al 
Qaeda out, with our help, of an area that was just last year 
said to be lost by our intelligence agencies.
    Let us remember that there are 60,000 concerned citizens, 
as they call themselves, who are part of neighborhood watches 
to guard their neighborhoods in Baghdad, in and around Baghdad.
    Let us remember that one of the--that the leader of 
Awakening, the Sunni rebellion against the foreign extremists, 
was killed in a brutal assassination attempt, only to be 
replaced by his brother, who stood and said that I will 
continue to fight because my brother will not have died in 
vain.
    So, yes, there are patriotic Iraqis. Yes, there are 
Iraqis--they are losing more forces by far, many times over, 
than we are in the defense of their country.
    And to go to your first point, Congressman, I know that 
there is corruption in Iraq. I don't think I have been trying 
to hide that fact here. I know that there are lots of reports 
that need to be investigated, and we are more than willing to 
share those with this committee in an appropriate setting. 
Which, by the way, is not at all unusual in sharing information 
that is sensitive.
    But the most important point that I would make is that if 
the implication is that because there is corruption in Iraq 
that we should simply give up on this extremely important 
security concern of the United States, then I think that in 
itself would be irresponsible. What we have to do is fight the 
corruption and help them to fight it.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Clay.
    Mr. Clay. Thank you, Mr. Chairman.
    Dr. Rice, I want to ask you about Blackwater; and I want to 
begin by commending you for taking action to strengthen 
oversight over this company and other private military 
contractors. But my question is, why has this taken 4 years? 
There have been plenty of warning signs, but it wasn't until 
the September 16th shootings triggered an international 
incident that the State Department finally acted. By that time, 
a lot of damage to the U.S. mission in Iraq had already been 
done.
    And let me start my questioning by asking you about one of 
these warning signs. This is an incident that occurred on May 
12, 2005. This was over 2 years ago, near the start of your 
time as Secretary of State.
    I have a State Department cable that was sent from the 
Embassy in Baghdad to you; and you have a copy, I believe. 
According to this cable, two Blackwater guards fired multiple 
shots at a car as it approached the Blackwater motorcade in 
Baghdad. The Blackwater guards killed one Iraqi civilian and 
wounded two others. The State Department conducted an 
investigation of this particular incident and concluded that 
the Blackwater personnel acted improperly. This is what the 
official State Department reports said. The victim's car was, 
``traveling at a moderate rate of speed on an open road, 
displaying no aggressive behavior such as rapid acceleration or 
change in direction.''
    The report also found that Blackwater's warning signals 
were perfunctory and that a reasonable person in the same 
circumstances would foresee them to be ineffective. The State 
Department's own investigation concluded lethal force was used 
prior to the exhaustion of all available options.
    What bothers me most about this incident is that the only 
sanctions requested by the State Department were that the two 
shooters should be dismissed and barred from any future 
employment. Dr. Rice, do you think this was an appropriate 
response by the Embassy?
    Secretary Rice. Since this was investigated by the Embassy 
and by Diplomatic Security and I don't have access at this 
moment to the full record of their response, I don't want to 
respond on the appropriateness of it. I do think that what we 
have done in insisting now on greater coordination and 
accountability will help to avoid such incidents in the future.
    And, Congressman, I would note that one of the things that 
we believe is necessary--two of the things we believe are 
necessary, first, that we really do have to review the order 
under which all of this has been done since the creation of the 
Coalition Provisional Authority back in 2003. That is one of 
the problems, is the basis on which it is done; and we are 
working and believe that there needs to be legislation so that 
there can be appropriate action taken when incidents of this 
kind occur.
    Mr. Clay. Well, in this case, Doctor, the facts are not in 
dispute here. Your investigators found that an innocent Iraqi 
was shot and killed and that Blackwater was at fault. Yet the 
Embassy recommended only that they lose their jobs. It 
shouldn't be a hard question to say whether that response was 
sufficient. Was it sufficient?
    Secretary Rice. I am not going to second-guess the decision 
of the people on the ground who investigated it, who looked 
into it and made a response.
    Mr. Clay. OK. But, on top of that, now the incident should 
have been a warning sign that something was wrong in the State 
Department's relationship with Blackwater.
    But there were many other examples. Just a month later, in 
June 2005, the State Department found that a Blackwater team 
killed an innocent Iraqi in al-Hillah and tried to cover it up. 
Again, the only disciplinary action was dismissal.
    And there were many other similar incidents, including ones 
where Iraqi officials protested Blackwater's actions. Yet for 
years the State Department acted as Blackwater's enabler and 
never restrained the company's aggressive tactics. Do you think 
you made a mistake by taking so long to recognize that the 
oversight of Blackwater was woefully inadequate?
    Secretary Rice. Congressman, there was certainly a concern 
to make sure that our diplomats were protected, and that has 
been achieved.
    I agree with the report of the team that I sent out that 
oversight has been inadequate, which is why we have moved to 
tighten the oversight. It is why we are determined to have 
oversight not just of the State Department contractors but to 
work with Bob Gates to have broader oversight as well. But, 
again, these are decisions that were made on the ground by 
people who were reviewing the circumstances, and I am not going 
to second-guess them here on the spot.
    Chairman Waxman. The gentleman's time has expired.
    Mr. McHenry.
    Mr. McHenry. Thank you, Mr. Chairman.
    Secretary Rice, thank you for being here.
    We have had 9 months of numerous hearings covering the 
myriad of subjects we have already covered here today. Your 
staff has testified, as you I am sure well know, extensively. 
And I am sure we have consumed a great portion of your time as 
well in helping them prepare their testimony, and I thank you 
for that.
    But the one thing we can't forget here is we are talking 
about a war zone, and men and women's lives are on the line, 
brave men and women there in Iraq. And there have been a number 
of questions, and my colleague just asked one about 
contracting. It seems a contradiction to me that at a time when 
this Congress, the Democratic majority in Congress wants to cut 
the level of troops, they want to nationalize contractors, 
thereby increasing the number of troops required for protective 
service of State Department officials, Embassy officials as 
well, as well as provincial reconstruction teams. It seems to 
me a contradiction when you espouse a smaller footprint in Iraq 
that you want to eliminate contracting. There have been a 
number of questions about this.
    But I want to ask, in regard to the State Department's use 
of contractors versus full-time government employees, what is 
the better use of taxpayer money? Have you analyzed this as an 
ongoing process in Iraq? And if you could just comment on that.
    Secretary Rice. Yes. Well, we believe that we get--in that 
sense, it is a reasonable way to handle the significant problem 
that we have of providing protection for the diplomats.
    I would repeat that when the team went out and they asked 
directly General Petraeus and Ambassador Crocker, should this 
be done instead by Diplomatic Security--which, by the way, we 
have increased the numbers, the allocation to Diplomatic 
Security over time. But they were asked, should Diplomatic 
Security try to do this, which means you would have to bring it 
in house, should the military do this? And they were told, no, 
that would not be appropriate. So we are left with the need for 
private contractors.
    Now, there can be certainly better oversight of the private 
contractors, which is why we are taking the steps that we are 
taking. But this is the best way that we can find to make sure 
that our people can get out of the Green Zone and go to do all 
of the programs that are being questioned here, whether they 
are on anti-corruption or budget execution or training 
personnel.
    Mr. McHenry. So there are really three choices. The 
military can guard the State Department--
    Secretary Rice. Right.
    Mr. McHenry [continuing]. You could have in-house security, 
which would have to be a massive expansion of what is currently 
available, or you could use contractors. And the first two were 
rejected, is that correct?
    Secretary Rice. That is correct.
    Mr. McHenry. Has there been a cost-benefit analysis as a 
part of this in terms of the cost to taxpayers?
    Secretary Rice. Well, I think that, first of all, if you 
just imagine bringing on enough Diplomatic Security agents to 
do this full-time, and we will have to as a result of a report 
bring more people on, I think they said 100 people, but if you 
tried to have 1,100 or 1,200 Diplomatic Security agents, you 
are creating a career path, people who would, of course, be 
there for throughout a career. This allows us to be flexible in 
terms of how temporary an assignment might be. So it is--the 
cost benefit is very good, and I think you certainly wouldn't 
want American soldiers to have do this task.
    Mr. Cummings. Mr. Chairman.
    Mr. McHenry. And if I may continue, because, as a part of 
this, the idea is that we are in Iraq not on a permanent basis, 
therefore, you do not hire career government workers to be 
there on a 30-year basis, for instance, with retirement 
benefits and things of that sort.
    Secretary Rice. Exactly.
    Mr. McHenry. So there have been advantages to having 
contractors as part of the work force for the State Department.
    Secretary Rice. Yes. Because you can use it in a kind of an 
accordion-like way to increase when you need and to decrease 
when you don't need. That is not true if you hire permanent 
employees.
    Mr. McHenry. So flexibility.
    Secretary Rice. Uh-huh.
    Mr. McHenry. Now, let me move onto the provincial 
reconstruction teams; and I think this is a very key point of 
your role in Iraq. I know there is a discussion of corruption, 
but we have a number of different functions within government 
that are overseeing that. For you, as Secretary of State, these 
provincial reconstruction teams, some of which provide 
technical expertise for agriculture or clean water or build 
roads, we have seen wonderful things that have come about with 
my colleague from Massachusetts, Mr. Tierney, and I and my 
colleague from Minnesota, Ms. McCollum, when we were in 
Afghanistan, some really community changing opportunities for 
regional reconciliation. And I know the Jones Commission had a 
lot to say about that localized reconciliation and building 
that up in order to strengthen national security.
    The provincial reconstruction teams I think are a key part 
of what you and the State Department are trying to add, the so-
called diplomatic surge. With the security issues being 
actually less of a potent political force for some here in 
Congress, with that being resolved, can you discuss with me, if 
we could just take a moment or two, and talk about the value 
and importance of the provincial reconstruction teams and the 
work that you are putting into building those and getting those 
out in a timely manner?
    Chairman Waxman. The gentleman's time has expired, but we 
will get an answer.
    Secretary Rice. In late 2005, we began to deploy these 
provincial reconstruction teams, which allows us to work at the 
local level, the provincial level, and therefore to multiply 
our points of success, because the delivery of goods and 
services to populations really can't take place out of Baghdad. 
And so we began with provincial reconstruction teams in places 
like Mosul, which were able to work with local government. And 
they do not just delivery, but they do really help to build the 
capacity of local governments and provincial governments. They 
help with budget execution. They help get resources from 
Baghdad down to the provinces.
    I want to reiterate it is a country that doesn't really 
still to this day have a functioning electronic banking system, 
and so moving funds is difficult.
    But what it has allowed us to do is build from the bottom 
up. Now we thought that this was working very well but that we 
could make it better, and so I have worked with Secretary Gates 
and with the military, and we have now embedded people into 
brigade command teams, and they really have become one. We talk 
with them frequently. They go into very dangerous 
circumstances, but they go down to provincial level in places 
like Anbar and Baghdad neighborhoods, and they work with local 
governments to deliver services.
    Chairman Waxman. Thank you very much.
    Mr. Sarbanes.
    Mr. Sarbanes. Secretary Rice, thanks for being here.
    I wanted to call your attention to the report of the 
outside panel that you convened and its conclusions, which are 
in stark contrast to some of the statements that were made by 
officials of the State Department. So let me begin by going 
over some of those statements, and then we can look at the 
report's conclusions.
    On October 1st, I mean, just recently, your spokesman made 
this statement. The State Department is, quote, scrupulous in 
terms of oversight and scrutiny not only of Blackwater but of 
all our contractors. I would strongly dispute anyone's 
assertion that the State Department has not exercised good and 
strong oversight in our efforts to manage these contractors.
    On September 27th, your deputy, Ambassador John Negroponte, 
said that every single incident in which Blackwater fires its 
weapon is, ``reviewed by management officials to ensure the 
procedures were followed.''
    And on October 2nd, Ambassador Richard Griffin, who is the 
Assistant Secretary of State for Diplomatic Security, testified 
before this committee that every time a weapon is fired by a 
security guard an investigation is triggered.
    Were those accurate statements made by those officials?
    Secretary Rice. The reason that I ordered a bottom-up 
review was that I wanted to be certain about what was actually 
going on in terms of oversight. That is why I told people that 
I wanted a probing, 360-degree review.
    I am sure you understand, Congressman Sarbanes, that when 
you are in a large organization like the State Department, when 
issues come the most important thing to do is to get to the 
bottom of what is going on and then to fix the problems. And so 
that is why I ordered the panel, because I wanted to be sure 
that indeed we were carrying out oversight as scrupulously as 
we could. I think the report demonstrates that we were not, and 
therefore--
    Mr. Sarbanes. It is a good thing you ordered that report.
    Secretary Rice. That is why we made the changes.
    Mr. Sarbanes. It is a good thing you ordered the report, 
because these were high-level officials who were apparently 
totally out of touch with what was in fact happening.
    Let me read three conclusions of Ambassador Kennedy's 
report.
    The first one, when incidents involving the discharge of 
weapons occurred, the scope of investigation has not been broad 
enough to ensure that on-the-scene information is gathered 
quickly and thoroughly.
    Second conclusion, the Embassy process for addressing 
incidents, including those involving the U.S. military, is 
insufficiently comprehensive.
    Third, the process for coordinating and sharing of 
information between the Embassy and the multinational force in 
Iraq is not sufficiently robust to ensure knowledge of the 
particulars of incidents that could potentially affect U.S.-
Iraqi relations.
    So the report that Ambassador Kennedy made is very clear 
that the State Department's oversight of Blackwater and these 
other contractors was seriously deficient.
    Secretary Rice. I am the one who ordered the report because 
I believe when you are managing an organization and you have a 
situation like we had you owe it to your people in the field 
and to the country to have a full, 360-degree look at what is 
going on, to have a full look by people, by the way, who are 
independent of the Department, including General Joulwan and 
Ambassador Roy, and to then act on those recommendations.
    But, frankly, after the Blackwater incident, I did not--
could not myself say that I knew that our oversight was 
adequate; and that is why I ordered the report.
    Mr. Sarbanes. And the report reached some of the 
conclusions that I just enumerated.
    I am trying to understand how these officials, as recently 
as late September and early October, who are high-level people 
who presumably have access to the very kinds of sources of 
information that the panel looked at, could be saying publicly 
that everything was fine, that there was good scrutiny and good 
oversight. And what I am trying to understand is were they 
speaking just because they didn't have any information or 
facts, or were they trying to mislead the Congress or the 
public?
    Secretary Rice. No, no one was trying to mislead you, 
Congressman. I do think that what--that people were asking 
those responsible, do you have appropriate oversight? The 
answer was, yes, we have appropriate oversight.
    What I then did, because I could not say without 
qualification or without concern that there was appropriate 
oversight, was to have people go and look thoroughly at the 
situation. You might note that panel interviewed many, many 
tens of people that, for instance, John Negroponte would not 
have interviewed when he made those statements.
    So when you have a management problem, the way to fix it is 
to have a thorough, 360-degree look at it by independent people 
and then to act on the recommendations.
    Mr. Sarbanes. I appreciate there was a management problem 
in the State Department, and I am curious to know whether you 
regret the failures of the Department to conduct the kind of 
oversight of these outside contractors that appears to have 
occurred.
    Secretary Rice. Congressman, whenever there is an incident 
of this sort I consider it my responsibility both to 
acknowledge it and to try and fix it.
    Mr. Sarbanes. That wasn't my question. My question was 
whether you regret the failures of your Department, whether you 
regret your failures to conduct oversight of these contractors.
    Secretary Rice. I certainly regret that we did not have the 
kind of oversight that I would have insisted upon. We now will 
have that oversight. But it is our responsibility as managers 
to recognize that when there is a problem, you need to 
investigate that problem thoroughly, and then you need to act 
to fix it.
    Mr. Sarbanes. I appreciate it.
    Chairman Waxman. The gentleman's time has expired.
    Ms. Foxx.
    Ms. Foxx. Thank you, Madam Secretary. I think you are--you 
certainly have earned the respect that you have from both sides 
of the aisle for your straightforwardness and your ability to 
answer questions, and I admire you tremendously. So thank you 
very much for being here.
    We've established that corruption has been a serious 
problem in Iraq, and you've said that yourself several times. 
We've also heard about some of the steps the government's 
taking to fight corruption in Iraq, ranging from the military 
surge, the diplomatic efforts. I'm going to ask you three 
questions and let you answer them all at one time, if that's 
OK. And, you know, we've been called for votes again.
    Would I be correct in saying that our assistance in 
fighting corruption is a long long-term effort? That's the 
first one.
    And when do you think we'll see the results of this long-
term effort? At what point will we do that?
    And are there any lessons that we can learn from our 
experience helping factions in Northern Ireland, in the Balkans 
work through peaceful coexistence that some thought would never 
see peace?
    Secretary Rice. Well, yes, it is a lot of effort. It's a 
country that's been through war and dictatorship, and, yes, 
it's a long effort to fight the corruption.
    I can't give you an exact date, but I know that the Iraqis 
are making efforts to improve the circumstances there. Some of 
the things that will help, for instance, when they get a system 
that is less dependent on subsidies, there will be less 
possibility for corruption. Part of it comes out of that 
system. So we'll continue to work with them.
    Yes, we've seen in the Balkans--which, by the way, 
corruption is still a problem--we have seen that it takes 
people time to reconcile. But I just want to repeat, I don't 
know what the implication is of saying that, yes, Iraq--I do 
not think that the implication of saying that Iraq has a 
corruption problem is to say that is therefore reason for the 
United States to stop dealing with the Iraq Government or 
working to help them fight their corruption problems. It's too 
important to our security, and that's why we're going to 
continue to help them fight their corruption.
    Ms. Foxx. Mr. Chairman, if I could, I would like to tell 
the Secretary one little story. Two years ago I was at the 
Louisville Elementary School speaking to a group of second-
graders, and we actually were having lunch together. Second-
graders. And I asked them if they had any questions they would 
like to ask me. And there was a little girl there who said to 
me, well, since President Bush cannot run for reelection, do 
you think that Secretary of State Rice might run? I think she 
would make a great President.
    Secretary Rice. Thank you.
    Ms. Foxx. So I want you to know that second-graders in 
Louisville are very much fans of yours.
    Secretary Rice. Thank you very much.
    Chairman Waxman. Thank you, Ms. Foxx.
    Mr. Braley.
    Mr. Braley. Good morning, Secretary Rice.
    I want to talk to you about the Christmas Eve shooting on 
December 24, 2006. According to documents that the committee 
has obtained, a Blackwater employee who was drunk shot and 
killed a security guard for the Iraqi Vice President inside the 
protected Green Zone in Baghdad. This didn't happen on a 
mission protecting diplomats. It happened on Christmas Eve 
after a party inside the Green Zone. And if this shooting had 
happened here in the United States, there would have been an 
arrest, a criminal conviction and a prosecution. And if one of 
our soldiers serving in Iraq had engaged in this type of 
behavior, they would have faced a court-martial under the 
Uniform Code of Military Justice.
    But according to what the committee has determined, this is 
what the State Department did. It flew the contractor out of 
Iraq within 36 hours. Then it asked Blackwater to make a 
payment to the family. And according to the e-mails that we 
have been provided with, a payment to the families was 
considered and then, quote, the best way to assure that the 
Iraqis don't take the steps, such as telling Blackwater that 
they are no longer able to work in Iraq. And my simple question 
to you is, as we head toward another Christmas Eve, do you 
agree that the State Department made a mistake in responding to 
that incident?
    Secretary Rice. First of all, that incident has been--or 
that circumstance has been referred to the Justice Department. 
And I've testified here that there's a lacuna in the law, and 
we are working to get appropriate--we would like to get 
appropriate legislation that speaks to the prosecution of 
civilian contract personnel working in circumstances like Iraq. 
That was one of the findings of the panel that I sent out. And, 
in fact, we very much would like to see that because you're 
right, the Uniform Code of Military Justice provides a context 
for our soldiers. And there is protection inside the United 
States. We believe there's a lacuna that needs to be filled.
    Mr. Braley. When we had the CEO of Blackwater, Erik Prince, 
sitting in the exact chair that you are sitting in right now, I 
went through this with him, and he told the committee under 
oath that, in his opinion, all Blackwater employees were 
already subject to the Uniform Code of Military Justice, the 
War Crimes Act, and other international accountabilities that 
our current military is subject to. And then I went through the 
individual statutes with him, and he seemed to admit that if 
you look at the language of those statutes, they don't, in 
fact, apply unless they are accompanying U.S. military 
personnel.
    Secretary Rice. I agree. And that's why we are seeking and 
working for legislation, and we're very happy to work with 
anyone who would like to, to get that legislation. There is a 
lacuna in our law about this. And even though this particular 
case--I want to reiterate--has been referred to the Department 
of Justice for further action, we believe that there is a hole.
    Mr. Braley. The House recently passed legislation 
addressing this very issue. Have you taken a public position on 
the merits of that legislation?
    Secretary Rice. We believe that there are some problems in 
that particular House law, but we are prepared to work to get a 
law--working with the Senate and working with the House to get 
a law that we think addresses the problem.
    Mr. Braley. Are you prepared today to identify the specific 
problems that you have with the legislation?
    Secretary Rice. I think we should allow the discussions 
that are going on that are being led, as these are, by the 
Justice Department to get that law. But I am very strongly 
supportive of a law that would close this loophole.
    Mr. Braley. How do you square your support for this concept 
of legislation with the White House's stated public opposition 
to the legislation?
    Secretary Rice. Because the specific legislation has a 
number of problems and concerns from the point of view of not 
just of those who would have to operate in the field, but also 
the Justice Department. And, of course, it is the Justice 
Department that advises the President on this kind of matter.
    Mr. Braley. Now, this same e-mail we were referring to, 
which was actually sent out from Margaret Scobie from Baghdad 
the day after the incident in question on Christmas Eve, says, 
will you be following up in Blackwater to do all possible to 
ensure that a sizable compensation is forthcoming?
    Are you aware of the actual compensation that was paid to 
the family of this Iraqi security----
    Secretary Rice. I'm not aware of the actual amount in this 
case. I can't recall it at this point. But I will say, 
Congressman, that this process or this practice of compensation 
is something that is used--it's a part of a kind of cultural 
norm, and it is used, used by us and used by the military.
    Mr. Braley. Are you aware that the charge d'affaires 
recommended a payment of $250,000 and that the actual 
settlement was $15,000?
    Secretary Rice. I know that there was a significant 
difference in what was recommended and what was done.
    Mr. Braley. Do you agree that $15,000 is not a sizable 
compensation?
    Secretary Rice. I'm not going to second-guess the decision 
at the time, Congressman, because I was not on the spot, and I 
didn't review all of the factors that might have been taken 
into account.
    But the practice of compensation, of course, is one that is 
used very broadly in the region.
    Mr. Braley. It seems that if this government is paying 
$1,222 a day for Blackwater for the services of its employees, 
that a compensation of $15,000 for the life of an Iraqi who is 
guarding the Vice President of Iraq seems like a very 
meaningless compensation.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Hodes.
    Mr. Hodes. Thank you, Mr. Chairman.
    Madam Secretary, I would like to pick up on one of the 
issues that you've just discussed. You said you now see that 
there's a hole in the law, and you would very much like to see 
legislation. On Tuesday your blue ribbon panel investigating 
the use of security contractors in Iraq issued its report, and, 
as you've indicated, one of its principal findings is 
particularly troubling. It doesn't simply say there's a hole; 
what it says is that the legal framework for providing 
oversight over personal protective service contractors is 
inadequate in that the panel is not aware of any basis for 
holding non-Department of Defense contractors accountable under 
U.S. law.
    I find this an amazing statement. And while we can 
acknowledge that we need to fix it, I'm very curious about how 
we could have possibly gotten into this situation. Ambassador 
Kennedy's panel, in effect, found that Blackwater and the other 
security contractors had been acting above the law, essentially 
in free space above the law. In this country no one is above 
the law, yet the contractors, according to your panel, have 
been above the law for the past 4 years.
    How could this happen? You've paid Blackwater over $800 
million. Didn't anyone, didn't you or your subordinates ever 
stop to ask whether or not the legal framework was in place to 
hold these contractors accountable for their actions? The 
military certainly is when there is error committed. How could 
this have happened?
    Secretary Rice. First of all, this is not just a problem 
for State Department contractors. We have a lot of contractors 
working in Iraq, and we want to make sure there's a proper 
framework. But I don't think of it as proper to say that they 
were above the law. I just told you that one of the--that the 
case that was just referenced has, in fact, been referred to 
the Justice Department. So it is not above the law. It is being 
handled by the Justice Department.
    We continue to believe that the tightening of that 
framework would make a great deal of sense, and we want to work 
for that legislation. But that case, the case of Christmas Eve, 
has indeed been referred to the Justice Department.
    Mr. Hodes. We have heard graphic testimony and seen 
convincing evidence that over the past 4 years there have been 
numerous, numerous incidents by Blackwater which arguably could 
constitute criminal behavior under U.S. law, yet there has not 
been a single prosecution brought by the Justice Department. 
I'm aware of no previous FBI investigations or any action by 
the State Department to hold Blackwater accountable for any of 
the previous incidents involving arguably unwarranted violence 
against Iraqis.
    You now come and say there's a hole in the law and that the 
Justice Department is handling this matter. If, in fact, there 
is currently no legal framework under which the Justice 
Department and the FBI, if it finds something wrong was 
committed, could handle the matter, how do you explain to the 
American people and this panel that in 4 years no proper legal 
framework has been put in place until apparently you are now--
your support today for some legislation to handle these 
matters?
    Secretary Rice. This is an issue of prosecution under U.S. 
law. I would note that this--the framework in Iraq for dealing 
with the contractors comes from a period--the CPA period in 
which Order 17 governed this. It isn't adequate for the current 
circumstances. The case in--the case of the Christmas 
circumstances have been referred to the Justice Department.
    I would remind that this is a war zone, and that it is true 
that sometimes incidents happen. They are reviewed. It's not 
the case that they haven't been reviewed. But we do believe 
that it would be very helpful to have a law that is explicit to 
this particular circumstance.
    Mr. Hodes. Madam Secretary, with all due respect, I think 
it's questionable whether anything that the CPA did had, in 
fact, binding authority on the U.S. legal system. And beyond 
that, I'm not talking about simply the Christmas incident, I'm 
talking about the confidence that we need to have that, going 
forward, the State Department is going to take care of 
something, which it appears that you and your subordinates have 
absolutely recklessly failed to do in the past 4 years, given 
the history of what is either incompetence in management or 
purposeful lack of attention to this.
    How can we be assured that we are going to be going forward 
in the right way to establish a legal framework that works to 
hold these contractors accountable?
    Secretary Rice. Well, first of all, Congressman, in this 
war zone I don't think the people have been either reckless, 
nor have they been trying somehow to shield people in this 
circumstance. What has happened is that we have been--we have 
taken incidents, we have looked at them and reported them. I 
will be the first to say--and it was my answer to Congressman 
Sarbanes--and the reason that I ordered this review is that I 
did not think personally that I could say that the oversight 
and the followup was appropriate. And so we now have a report 
on which we can act.
    We will act on it. We've already acted on some elements of 
it. It will be very helpful to have a law that closes this 
particular lacuna. But the people in the field have been 
dealing with these circumstances under the most difficult 
circumstances where they're trying to protect our diplomats, 
and that they have done. They've been able to protect our 
diplomats. And I hope they will continue to be able to protect 
our diplomats who travel through war zones with IEDs going off 
and with indirect fire. But the framework indeed was 
inadequate, and that's why I've asked--asked for the review, 
and that's why I ask that we put in place these particular 
recommendations.
    Mr. Hodes. My time is up. I find your answer unpersuasive.
    Thank you, Mr. Chairman.
    Chairman Waxman. The gentleman's time has expired.
    I just want to point out, the incident was not in a war 
zone. It was in the Green Zone, and it was a man who was drunk 
on Christmas Eve and who shot the----
    Secretary Rice. That one has been referred to the Justice 
Department. But again, Chairman, I'd encourage you to go and 
look at the----
    Mr. Shays. Mr. Chairman, could we----
    Secretary Rice. The Green Zone can be pretty tough.
    Mr. Shays. Would the gentleman yield for just a second? I 
would like to point out that there appears to be no witnesses. 
So when I spoke to the Justice Department, part of the reason 
why they are having a hard time reconstructing it is because 
there were no witnesses.
    And second, I want to point out that 30 Blackwater 
personnel have died defending the State Department and other 
officials who travel around Iraq, and they've never failed once 
in their protection, whoever they've been required to protect.
    Chairman Waxman. I want to go on to other Members, but 
there's no law in effect. The man got drunk, shot an innocent 
Iraqi not during the war, but in the Green Zone on Christmas 
Eve, and he can't even be prosecuted because there's no law in 
effect. So that's the situation.
    Secretary Rice. Chairman, I think what Mr. Shays said to 
you is actually correct. The Justice Department is looking to 
see whether he can be prosecuted by--because of the evidence. 
It is not the absence of law in that case, it's a question of 
evidence. So they are investigating it.
    Chairman Waxman. Thank you.
    Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair.
    Secretary Rice, on July 26, 2007, this committee held an 
oversight hearing on the problems with the State Department's 
construction of the new $600 million Embassy in Baghdad. 
General Williams, the head of the State Department Office of 
Overseas Building Operations, testified that there were no 
significant problems. The head of the State Department's Office 
of Overseas Building Operations testified that there were no 
significant problems with the construction at the Embassy, and 
that it would be completed in September. And I'm going to quote 
you what he said, ``I am pleased to report, Mr. Chairman, that 
the project is on schedule, on budget, and we're slated to 
complete the project in September of this year.''
    Then he goes on to say, we have received numerous accolades 
as to the extremely high quality of the construction.
    I would like to continue on, though, that in September when 
General Williams promised the building would be ready, the 
State Department inspectors issued a report on the Embassy's 
fire suppression system. They documented hundreds of violations 
of the contract, specifications, fire codes and regulations.
    At yesterday's hearing before the Foreign Affairs 
Committee, you said we've all experienced problems with 
construction, suggesting that the problems in the Baghdad 
Embassy were nothing out of the ordinary. I would like to show 
you a copy of this 140-page report and read you just a few of 
the excerpts.
    ``The fire service mains are defective.'' ``There is no 
reliable fire sprinkler system coverage in any building.'' ``A 
fire could spread very quickly from one area to another.'' And 
I read the report, and that's because the proper materials are 
not put in between the firewalls. Another problem, improper 
wiring methods used throughout the building. ``The entire 
installation is not acceptable.'' And the final one I will use 
is, the contractor could not provide a timeline for completion 
and continues to struggle with the understanding of project 
specifications. And, in fact, in one of the minutes--and Mr. 
Thorpe asked the attendees, who will take responsibility if a 
fire occurs? The underground breaks--and they're talking about 
the main pipeline--cannot supply water to the fire. And in the 
minutes it says, there was no response.
    Many of these problems were known long before the July 
hearing. For example, the report says a year ago the State 
Department was informed that the contractor used the wrong 
materials on underground fire service mains, and they've 
already started to crack.
    It's very hard for me to reconcile the testimony the 
committee received in July which promised the Embassy would 
open in September with an inspection report and the documents 
with scores of serious construction problems, problems of life, 
health and safety. So could you please explain to this 
committee why we were told in July that this Embassy would be 
open in September?
    Secretary Rice. Well, General Williams did testify that the 
Embassy would be ready in September, but obviously if there are 
flaws and defects at all, we weren't going to open it under 
those circumstances.
    The problems that you're referring to, Congresswoman 
McCollum, are indeed problems that the State Department found 
itself. These were problems found by the Office of Overseas 
Buildings' own overseas fire inspectors. So, of course, when 
those were found, the remediation had to be done at the expense 
of the contractor, and so it delayed bringing the building on 
line.
    So, yes, these are--these are problems in construction. 
They were found by the--our own inspectors. They're being 
remediated by the----
    Ms. McCollum. Madam Secretary, the State Department was 
aware of the problems that I just cited, aware of the problems 
before the July meeting. General Williams came to this 
committee and told us that the construction was of extremely 
high quality, and he told us that this Embassy would open in 
September. Now, given the magnitude of the problems and many 
that the State Department was aware of well before this 
hearing, it would be not good if your staff did not know in 
July when coming before this committee that this building had 
such serious problems. That's a huge communication problem in 
the State Department or a deliberate communication problem in 
the State Department before those who came to testify to this 
committee.
    Now, Mr. Chair, I also have a question for you. We had 
asked for documents. This committee had asked for documents. We 
have received some of them, but my understanding is 3 months 
later we have still not received the bulk of documents we 
requested at that hearing. Is that correct, Mr. Chair?
    Chairman Waxman. Yes, it is.
    Ms. McCollum. Mr. Chair, I would--I know that you're asking 
for them. We were told in other cases the documents will be 
made available. Obviously building inspection reports are not 
classified at this level for repairing construction, and I 
would hope the committee could receive everything.
    Chairman Waxman. Thank you. The Secretary----
    Secretary Rice. Well, I would like to respond, Congressman.
    Chairman Waxman. Sure.
    Secretary Rice. First of all, again, in construction, 
complex construction in a complex environment, there were 
problems with the fire suppression system in the guard house. 
Those problems are being remediated at no cost to the United 
States or to the taxpayers by the company on the basis of 
inspections that we ourselves did.
    I think anybody is familiar that when you take ownership of 
a construction project, you go and you find out what is wrong, 
and then the company remediates. That's what is going on here. 
It's a completely normal practice. The circumstances of Iraq 
are anything but normal, but we are not going to accept a 
building that these problems have not been dealt with.
    Chairman Waxman. Thank you.
    Secretary Rice. On the documents.
    Chairman Waxman. Yes.
    Secretary Rice. As I understand it, we have 18 separate 
substantive requests. We have exerted 10,000 manhours in tying 
to fulfill those requests. In one case, Mr. Chairman, the 
request was one that globally would have brought about a 
million documents--a million pages of documents in.
    So it takes time, Congresswoman. I have a staff of people 
working as hard as they can to make those documents available 
to you. They are career people. They are not political people. 
They're trying to make them available to you. I can, if you 
would like, assign an officer from some other high-priority 
task to try and do this full time. I'm prepared to do that. But 
I can tell you that the document requests have been quite 
extensive, and we are doing everything that we can to get the 
documents to you.
    Chairman Waxman. Well, I want to have cooperation and want 
to also be reasonable with you. I must tell you, your 
Department has been the most difficult to get documents from. 
We have worked with other departments of government as well. We 
are the watchdog committee. This committee watches the 
government spending taxpayers' funds, and we think we're 
entitled to get that information. It's certainly not national 
security for us to know how the money is being spent.
    Secretary Rice. As we have said, we will get the documents 
to you, Mr. Chairman. It's not that we're not trying to get the 
documents to you, but the requests are quite extensive.
    Chairman Waxman. I appreciate that.
    Mrs. Maloney.
    Mrs. Maloney. Thank you, Mr. Chairman.
    And, Madam Secretary, thank you for your service.
    In your opening statement, you said that our troops deserve 
the best support, and I couldn't agree more. And in fact, part 
of that support was supposed to be training the Iraqi police so 
that they could stand up--as the President would say, stand up 
so our troops can stand down and come home.
    Because of this focus in mission, and because it's so 
important to our Iraqi mission, I was incredibly disturbed to 
read the report from Stuart Bowen, the Special IG for Iraqi 
Construction, this week, and in his report he said that the 
State Department's $1.2 billion contract with DynCorp to train 
the Iraqi police is missing. He said, ``the State Department 
does not know specifically what it received for most of the 
$1.2 billion in expenditures under the DynCorp contract for the 
Iraqi police training program.'' He further called it, ``the 
weakest staffed, most poorly overseen large-scale program in 
Iraq.'' In February, he testified before this committee that 
$4.2 million was spent for an Olympic-sized pool in a palace 
for the Iraqi police, and it has never been used. He called the 
program in complete disarray. And I repeat, this was one of our 
most vital focuses.
    So how do you respond to his scathing scandalous report?
    Secretary Rice. Well, first of all, it is simply not true 
that we don't have a copy of the contract. We have a copy of 
the contract.
    Mrs. Maloney. You have the contract. He says $1.2 billion 
is floating around----
    Secretary Rice. We don't have a copy of the contract. Let 
me just correct the record. We have a copy of the contract.
    Mrs. Maloney. He said the money's missing.
    Secretary Rice. No. The money has to be reconciled.
    Now, let me explain to you what happened with INL and this 
DynCorp contract. When I became Secretary, there had been 
during the transition considerable concerns about how INL was 
being run and staffed. The first change that I made----
    Mrs. Maloney. They told us in a staff briefing they could 
not find the contract file.
    Secretary Rice. I'm told that--let me explain. There is--we 
have the contract. And the contract file--there was not a 
contract file kept by the person who oversaw this at the time.
    But I need to go back here just a moment, Congresswoman. 
When I became Secretary, I knew that there were problems in 
INL. One of the first personnel changes that I made was to have 
a new Assistant Secretary for INL. I brought in a senior 
manager who did an internal audit of INL's operations, 
including over contracts of this kind, found sufficient 
difficulties so that the incoming Assistant Secretary, 
Ambassador Anne Patterson, who had a lot of experience with 
this having been Ambassador in Colombia when we ran large 
police contracts, then began--we had another external review 
and then began to remediate the problems at INL.
    Mrs. Maloney. So what was your response to the $1.2 billion 
missing?
    Secretary Rice. You will see from the report that Stuart 
Bowen has is that since mid-2006 when Anne Patterson 
established appropriate reconciliation measures for reconciling 
invoices and services, that is completely accounted for. We 
have four people now working on the previous time to 
reconcile----
    Mrs. Maloney. Madam Secretary, I'm going to contact 
tomorrow the IG Bowen and ask him to give us another report 
since you seem to say it's all right now. Furthermore, 
Secretary, if I could----
    Secretary Rice. Congresswoman, please don't----
    Mrs. Maloney. Can I tell you that I am not surprised at 
that report that came out from General Jones where he said the 
national police are ineffective and--and I want to quote this 
because I find it almost unbelievable.
    He said the national police should be disbanded and 
reorganized. And I am not surprised, given the fact that the 
money that was supposed to train them is missing.
    My question, Madam Secretary, is for you to put yourself in 
my shoes. I'm home in my district. I'm standing in front of a 
town hall meeting of hard-working American men and women who 
are paying their taxes. Many of them punch a clock for their 
time. They are accountable for their time and for their money. 
And how do I explain that the IG says that $1.2 billion is 
missing that was supposed to train the police, the most 
critical of our missions to help stand up, and how do I explain 
$4.2 million for a swimming pool that has never been used? What 
do I say to my constituents when they say, why are American 
young men and women being killed when the American Government 
cannot even account for the money to train the Iraqi police 
that is supposed to help them bring stability?
    Chairman Waxman. The gentlelady's time has expired.
    Secretary Rice. Yes. Would you like my response, Chairman?
    First of all, Congresswoman, it is not right to say that 
$1.2 billion is simply missing. There is a process that needs 
to take place of the reconciliation of invoices which were 
considered inadequate. And so, in fact, goods and services have 
been delivered. We deliver the goods and services to MNSTC-I on 
the military side. They do the training. But the--and so the 
training is not actually a State Department function. Our 
function is to administer the contract.
    Now, as to the contract----
    Mrs. Maloney. If those are State Department dollars, the 
State Department should be accountable.
    Secretary Rice. Would you like me to complete my answer? 
Thank you.
    Let me read to you from Stuart Bowen's account: ``the 
Bureau has taken action''--meaning INL. ``the Bureau has taken 
action and continues to take actions to improve its management 
of the DynCorp contract in particular. As a result, we have in 
the reconciliation process that has been taking place already 
identified some $20-plus million that we've billed''--``$29 
million that we've billed the company for because the invoices 
were inadequate. There's another $19 million that is being 
pursued with the company. We expect to find more.''
    So there's a reconciliation process going on. You can tell 
your constituents this is not a matter of having lost the 
money. This is a matter of invoices, as I am told by the people 
who are doing this. This is a matter of invoices and records 
that were not solid enough for us to be confident that the 
goods and services were being billed properly. Therefore, we'll 
put four people on reconciling contracts prior to mid-2006. We 
are up to date on reconciling those after mid-2006. So that is 
the story.
    And I want to again note that SIGIR didn't find this. This 
was a Department of State audit of its own procedures that came 
under new management because there were problems in the Bureau 
of INL. And that's very often the case with many of the things 
that have been mentioned here. It is the Department that finds 
problems and then seeks to fix them.
    Chairman Waxman. Madam Secretary?
    Secretary Rice. Yes.
    Chairman Waxman. We are trying to accommodate your 
schedule, and it was our understanding you wanted to leave at 
12:30. We have four Members who would still like to ask you 
questions who have been here all day. I was wondering if you 
could stay extra time, 15, 20 minutes.
    Secretary Rice. I have a really very important meeting. I 
can perhaps, if the Members can keep their questions short and 
I can answer all of them at the end, that would be best.
    Chairman Waxman. Maybe do 3 minutes each Member? And then 
you will have a chance to respond to those Members' questions?
    Let me ask the Members if that's acceptable.
    Mr. Shays. I would like my colleague to have 5 minutes to 
ask his questions.
    Chairman Waxman. Well I would like my colleagues to have 5 
minutes as well.
    Mr. Shays. It's not acceptable.
    Chairman Waxman. It's not acceptable. Then the question is 
to you, will you stay a little longer so we can accommodate a 
few more Members?
    Secretary Rice. Yes, Chairman.
    Chairman Waxman. OK. Thank you.
    Mr. Jordan.
    Mr. Jordan. Thank you, Mr. Chairman.
    Secretary, thank you for your service to our country and 
the professional way you go about your duties.
    Let me ask a general question. I want to leave some time to 
my colleague from Connecticut. What impact do you think actions 
and statements by Members of Congress have had on your ability 
to deal with corruption in Iraq and, maybe more importantly, to 
hurt our chances of succeeding in our mission? And I'm thinking 
specifically of statements like--made by Members of Congress 
when they talked about a slow bleed on denying dollars to our 
troops; I am thinking about Members of Congress who talked 
about a public timetable; being bound by unprecedented 
statements made by Members of Congress talking about the war is 
lost; and the actions recently where 79 Members of Congress 
voted not to condemn an organization that slandered the 
reputation of a 30-year veteran and a four-star general. Could 
you comment on that if you would, please, Secretary?
    Secretary Rice. Well, I--people can say what they would 
like, but I think for the morale of our people in the field, 
what is important is for people to recognize and to say that 
they know that they're giving their service to their country 
under the very most difficult circumstances that they--the 
State Department people who are being talked about for programs 
that are trying to do this but may not be fully achieving that 
are people who are serving far away from family under extremely 
difficult circumstances, dodging indirect fire in order to 
carry out these goals. And I think their service ought to be 
honored, and I appreciate that you have made that comment.
    Mr. Jordan. Thank you.
    I would yield the balance of my time to Mr. Shays.
    Mr. Shays. Thank you.
    There has been information----
    Chairman Waxman. Excuse me for a minute. May I ask all of 
the Members that still have time that they hope to have to ask 
questions that they keep it as short as possible? Mr. Shays has 
talked three times. And, Mr. Shays, you certainly have a right 
to speak, but I don't want you to deprive other Members.
    Mr. Shays. I will explain why I want my full 5 minutes.
    Chairman Waxman. Well, you are on your 5 minutes.
    Mr. Shays. We have had incredible misinformation provided 
to the Secretary, and we've had a number of Democrats who have 
gone one after the another. And I would like to make sure that 
we are clear on this.
    Does any of the $96 billion that is appropriated by the 
United States go to the Iraqi Government?
    Secretary Rice. It goes to programs--either programs on the 
State Department side or to fund our troops and our diplomats 
in the field and our operations in the field.
    Mr. Shays. Thank you.
    Secretary Rice. That's what it's for, not for the Iraqi 
Government.
    Mr. Shays. The second question I want to ask you----
    Mr. Davis of Virginia. Would the gentleman yield?
    Mr. Shays. Yes.
    Mr. Davis of Virginia. Does that mean with the $96 billion, 
then, could any of that end up with Iraqi corruption or end up 
in the enemy's hands?
    Secretary Rice. It is going to fund our troops. And fund 
our diplomats, and fund our Embassy operations and fund 
programs that we run.
    Mr. Davis of Virginia. So that couldn't end up in enemy 
hands, as has been alleged over here, correct?
    Secretary Rice. It would be difficult to see how.
    Mr. Davis of Virginia. Thank you.
    Mr. Shays. And that's the reason why we're trying to ask 
these questions.
    The other question that Ms. McCollum has constantly asked, 
it was your report that uncovered the problems with the 
Embassy; is that not correct?
    Secretary Rice. That is correct.
    Mr. Shays. And it is based on your report, you have taken 
action to make sure that the contractor fixes it, correct?
    Secretary Rice. That is correct.
    Mr. Shays. And is it true that you will not take possession 
of this property until they are corrected?
    Secretary Rice. That is correct.
    Mr. Shays. Let me just ask you about Blackwater. 
Blackwater--I would like to know about how many Blackwater 
soldiers--first off, I would like to know the makeup of the 
individuals that are comprising the guard, the security force. 
It's my understanding that they are former military personnel, 
either Army, Marines, Air Force, SEALs. That's my 
understanding; is that correct?
    Secretary Rice. That is correct. And they are people who 
are thoroughly vetted. Even despite the fact that they have 
significant security experience and have most often served in 
our own Armed Forces or the like, they are still vetted beyond 
that, and given--and have been vetting to have Secret security 
clearances.
    Mr. Shays. It is also my understanding that there have been 
30 Blackwater, Army police border--Army police, Navy SEALs, 
whatever, now under Blackwater's payment that have lost their 
lives.
    Secretary Rice. Yes, that's correct.
    Mr. Shays. It's also my understanding that they have been 
in charge of protecting Americans. Have they lost any American 
that they were charged to protect?
    Secretary Rice. Thank God and knock on wood, no.
    Mr. Shays. I find that absolutely astounding that they have 
not lost any in this war.
    And I just thank my colleague for yielding.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Davis.
    Let me suggest, Mr. Davis, Ms. Norton and Mr. Cannon, I 
would hope all three of you, if you don't feel you need to use 
your 5 minutes, would be respectful of the Secretary's 
schedule.
    Mr. Davis of Illinois. Thank you very much, Mr. Chairman.
    Madam Secretary, let me just clarify something. Under 
responding to questions from Representative Maloney, did you 
just testify that no contract file was kept for the $1.2 
billion program?
    Secretary Rice. I said that the coordinator, the 
representative did not keep a full contract file. That file is 
being reassembled. It is one of the reasons that I made a 
change in the management of that Bureau.
    Mr. Davis of Illinois. Well, thank you. Thank you very 
much.
    I want to ask why the State Department selected First 
Kuwaiti as the prime contractor on the Embassy project. The 
State Department awarded the $600 million Embassy construction 
contract to First Kuwaiti in July and September 2005. At the 
same time the managing partner of the company, Wadi al-Absi, 
was apparently under investigation for paying kickbacks to 
procurement officials to obtain Federal subcontracts for First 
Kuwaiti.
    I would like to show you--this is a court document in my 
hand that the Department of Justice filed in May in a criminal 
case involving one of the officials who Mr. Al-Absi apparently 
bribed. This official pleaded guilty to these charges. And let 
me just read some of the excerpts from the pleading.
    In or about June 2003, the managing partner offered to pay 
a kickback. Prior to the bid process for the subcontract, the 
managing partner paid approximately $10,000 as an advance on 
their kickback agreement. Under the kickback agreement, the 
official was to receive approximately $50,000 for awarding 
subcontract 167 to First Kuwaiti.
    Now, of course, the taxpayers not only in my district, but 
across the country will find this difficult to understand. The 
Embassy project is the largest construction project in the 
history of the State Department. It is a crucial part of your 
long-term plan for Iraq. Yet the contracts were awarded to a 
company that is run by someone who is under investigation for 
kickbacks and bribing contract officials. Can this be 
justified? Do you think there's justification for this?
    Secretary Rice. I believe that this is a sealed document; 
am I right?
    Mr. Davis of Illinois. Yes.
    Secretary Rice. Yes. And we were therefore not aware of 
this Justice action.
    Mr. Davis of Illinois. But it has been unsealed.
    Secretary Rice. Yes. After the fact. I just want to note 
that this is a sealed indictment.
    Mr. Davis of Illinois. It was indeed a sealed indictment.
    Secretary Rice. So we were not, in fact, aware of a sealed 
indictment against this official.
    You asked how Kuwait got the bid. First Kuwaiti offered a 
firm fixed-price contract, and it was thus awarded the 
contract. Many other elements were bid, but, in fact, it was 
awarded because it was a fixed-price contract. And I want to 
repeat, we are going to continue to inspect the product that is 
turned to us--turned over to us. We're going to continue to 
make sure that First Kuwaiti remediates any problems at its own 
expense.
    Mr. Davis of Illinois. Well, Madam Secretary----
    Secretary Rice. No, we were not aware of this.
    Mr. Davis of Illinois. Well, let me just say that I don't 
think a lack of information or ignorance of facts really can be 
an explanation. The contractor that Mr. Al-Absi apparently 
bribed is KBR, which at the time was a subsidiary of 
Halliburton. They have the single biggest government contract 
in Iraq. Halliburton reported the bribery to Army officials in 
2003 and were, in fact, cooperating with the investigation. All 
that you or your staff had to do was ask the Army or the 
Justice Department about their experience with First Kuwaiti.
    I think you should have known that First Kuwaiti was 
implicated in serious corruption before you awarded the 
contract to the company. But assuming that you did not know the 
facts when the contract was awarded, you certainly and 
obviously know them now, yet the State Department does not seem 
to be doing anything to separate itself from First Kuwaiti. In 
fact, the State Department is actually awarding First Kuwaiti 
new contracts in Africa, Indonesia and the Middle East.
    So my question really is why are you continuing to award 
large contracts to First Kuwaiti when you know that the head of 
the company has been implicated in bribery?
    Chairman Waxman. The gentleman's time has expired.
    Madam Secretary.
    Secretary Rice. Since this information has become 
available, let me just say that the contract that we're aware 
of in Jeddah, for instance, is actually to an American company, 
Grunley Walsh of Rockville, MD, for which First Kuwaiti is a 
prime--is a subcontractor. Now, I have asked that we review all 
of our contract possibilities with First Kuwaiti, and that 
review is underway.
    Chairman Waxman. I'm sorry, Mr. Davis. Your time is 
expired.
    Mr. Cannon.
    Mr. Cannon. Thank you, Mr. Chairman. I appreciate your 
indulgence for the full time allotted, and those others on the 
panel who wish to use their full time.
    And I want to thank you, Madam Secretary. I apologize for 
not having been here during this whole hearing. Unfortunately I 
have had other things to do, but I watched you on TV, which is 
really what counts. And you've been calm and concise; heckled, 
but unharried. So I think to the American people you come 
across very, very well.
    I want to thank you for your service. This is difficult. I 
was talking to a Congressman on the way back from the last 
vote, and I was just asking him, who wrote the book on what 
we're supposed to do, because I haven't seen it yet? And we're 
sort of struggling forward as we go. We are dealing with 
something that is fairly unique in our history as Americans, 
and that is that one of our parties seems to be vested in our 
failure in the war on terror in general, in Iraq in particular. 
And I suspect the American people are going to figure that out. 
And your presence here today has been very, very helpful in 
helping them understand the sort of the complications that we 
have.
    For instance, we've been talking about contractors under 
investigation. But you can't debar a contractor when he's under 
investigation, can you?
    Secretary Rice. That's right. And, in fact, what we rely on 
is a schedule that is provided from the GAO and the OMB that 
says that this contractor is acceptable for bid, and unless 
they're on the barred list, then they can be acceptable for a 
bid. And certainly in circumstances in which something is 
sealed, one wouldn't be expected to know that the Justice--
every single investigation that the Justice Department is going 
through.
    So, yes, they were not on the debarment list to answer your 
question.
    Mr. Cannon. And an investigation would not put them on a 
debarment list, nor a conviction would. We have a process for 
that. But we are a government of laws, not of discretion 
unbridled, as some apparently would wish to see.
    Now I have a question that is really burning because I 
followed the issue closely with the contract security. And I 
have argued with people here in my home district about the 
importance of this. It seems to me that--and, in fact, both 
sides of the aisle here in Congress are saying, we need to 
solve this problem diplomatically. And I think it takes more 
than just diplomacy, but it at least does take diplomacy. And 
we've had a record of no deaths of diplomats under the 
protection of Blackwater particularly, but of other government 
contractors. Can you talk a little bit about how important the 
protection of diplomats has been in the process?
    Secretary Rice. Yes. First I want to repeat that, thank 
God, and I again will knock on wood, we have not lost people. 
And I think it is--it's the very good contract security that 
we've been provided. And our people have to be able to get out 
of the Green Zone. They have to be able to function in 
ministries like the Ministry of Finance that's in the Red Zone. 
They have to be able to function in PRTs when we're not 
embedded with the military. They have to be able to get out and 
work with provincial councils. They have to be able to do all 
that work. And without protection, I can't send unarmed 
diplomats out to do that.
    The military can't protect us. We don't have enough 
diplomatic security agents to protect us. So somebody's got to 
protect us, and that's what the private security firms do.
    Now, as I said, I think--I know that better oversight of 
these private security contractors is necessary. I'm the one 
who ordered the review, and, having gotten the review, we are 
now acting on those elements. But we cannot do our work--and 
for all of those who think, as the chairman began, that the 
political task now is absolutely critical if we're going to 
succeed in Iraq, the political task can't be done without 
security for our diplomats.
    Mr. Cannon. Thank you. I appreciate that. I'm sort of 
wondering if we armed our diplomats how some people might be 
killed by their inaccurate aim.
    Secretary Rice. I think that's not where we want to go.
    Mr. Cannon. I think you're right.
    I want to yield to Ms. Foxx for another question.
    Ms. Foxx. Thank you.
    Madam Secretary, I am very concerned about our relationship 
with Turkey and about what's happening with the PKK and their 
coming into Turkey and killing Turkish citizens. We've promised 
additional action, and we've promised that we will stop these 
incursions into Turkey, and yet the violence has increased. Can 
you tell us what we're going to be doing to stop this violence 
and stop the killing of Turkish citizens?
    Chairman Waxman. The time is expired, but please answer the 
question.
    Mr. Cannon. It has not expired. Oh, it has now. I yield 
back. I would hope that the gentlelady would be able to 
respond.
    Chairman Waxman. I think she is entitled to respond.
    Secretary Rice. We have worked with the Iraqis and the 
Turks to put together a trilateral committee that tries to deal 
with these incidents. There will be a delegation of Iraqis in 
Turkey. We think that this is an opportunity for Iraqis and 
Turks to work together to try to deal with the PKK.
    Everybody believes that the PKK is a terrorist 
organization, so there isn't any difference there. They operate 
in a very remote part of Kurdistan, so it's very difficult to 
completely rout them out. But we have been saying to the 
Turkish Government that nothing is going to be gained by 
escalating the situation in an unstable environment, and so 
thus far we've been able to use diplomatic means. We've been 
able to use promises and work together on intelligence sharing 
and information to try to deal with the problem.
    Chairman Waxman. Thank you, Madam Secretary.
    I am going to--we have three Members. I'm going to set the 
clock at 3 minutes. You are entitled to 5. But when you see 
it's expired, see if you can wrap up. I'm not going to deny 
anybody their time. And, Madam Secretary, I'm going to give you 
the option of responding to whatever questions are asked in 
writing for the record.
    Secretary Rice. Or perhaps I can get all the questions and 
I can just respond at the end, Mr. Chairman.
    Chairman Waxman. Well, let's try it. Is that acceptable to 
those who have time?
    Ms. Watson, you are the one who's next.
    Mr. Watson. Welcome again, Madam Secretary.
    About 4\1/2\ years ago I asked someone from the State 
Department if we had planned on occupation and nation building, 
and the response was, that's absurd. So the Baghdad Embassy is 
a $750 million project to build the largest Embassy in the 
world; yet the man in charge of this project, James Golden, has 
not laid eyes on it for the past 5 months. And the committee 
interviewed Mr. Golden and his deputy Mary French, and during 
the course of these interviews, we learned that Ambassador 
Crocker ordered Mr. Golden to leave Iraq in May, and he 
basically kicked him out of the country, and Mr. Golden has not 
been allowed to return since. And we've learned that Mr. Golden 
was escorted off the Embassy compound by armed guards.
    At our hearing in July we asked Ambassador Kennedy about 
this, and he said that Mr. Golden's expulsion from Iraq 
followed a discussion with Ambassador Crocker about operating 
procedures. And since then we've been informed of the 
allegations that Mr. Golden may have been expelled because he 
attempted to cover up substandard work by the prime contractor 
First Kuwaiti--and I understand that the report that's been 
referenced has been unsealed for the last 2 years--and the 
contractor First Kuwaiti after a mortar blew through a wall 
that was supposed to be blast resistant.
    So, Secretary, can you provide us with any more information 
about why the head of this project Mr. Golden is now persona 
non grata in Iraq? And let me just go through these questions 
related and you can answer them all at the end or give the 
answers in writing.
    Do you support Ambassador Crocker's decision? And you can 
respond at the end. Mr. Golden acted in a manner that required 
him to be expelled from Iraq under armed guard, we understand, 
and yet was it inappropriate for him to continue managing a 
$750 million project even though he can't actually go there and 
see it. So I just want the State Department to clarify this.
    And we're concerned about the cost of this major project, 
and I was told in the beginning that we don't plan to occupy, 
but it's going to be the largest Embassy in the world. I 
believe there are 56 million people in Iraq, and we have 1,000 
people in there, looking at employing 5,000.
    Secretary Rice. Do you want to take the other questions, 
and then I will respond?
    Chairman Waxman. However you wish.
    Secretary Rice. Uh-huh.
    Chairman Waxman. Thank you, Ms. Watson.
    Ms. Norton.
    Mr. Norton. Thank you.
    And thank you, Mr. Chairman.
    And thank you, Secretary Rice, for coming today. I have a 
question that is essentially remedy-oriented.
    As I listen to your testimony in hearings before us about 
Blackwater, about corruption in Iraq, I kept thinking, well, 
there should be a ready-made vehicle for this, and agencies use 
it. And I'm referring to the inspector general. The inspector 
general at the State Department is Howard Krongard, and we have 
had very, very disturbing testimony from many officials. We 
viewed very serious problems in, of all places, the IG's 
Office. Those are the kind of people who expose the kind of 
corruption that we've been looking at; that he's halted 
investigations, censored reports, refused to cooperate even 
with law enforcement agencies such as the Justice Department, 
and even to pursue possibly criminal matters.
    I must say since I've been in Congress, I've never heard 
such allegations against an inspector general. I can detail 
some of this for you, but this comes from people in--employees 
of the State Department who have come forward to testify about 
serious problems in all three divisions of your IG Office, 
Investigations, Audit and Inspections.
    I wonder if you would be better served by a vigilant IG 
which would have enabled you to move forward on some of these 
problems yourself, because it would have come at least from 
within the administration and not--and not all of it from 
oversight hearings here in the Congress.
    Chairman Waxman. Mr. Murphy.
    Mr. Murphy. Thank you very much, Mr. Chairman.
    And thank you for your patience, Secretary Rice.
    I'll ask a fairly straightforward question, and it's in 
regards not necessarily to the value of the services that we're 
getting, and there's been a lot of discussion here in regards 
to that issue, but rather the profit that many of the 
companies, in particular the private companies, that are 
operating in Iraq and Afghanistan are taking out of these 
contracts.
    We had Erik Prince, CEO of Blackwater, before this 
committee several weeks ago, and his answers in regards to 
questions--in response to questions from Mr. Duncan and Mr. 
Welch and I regarding profit that Blackwater has taken out of 
the profit, regarding his salary as the head of a company that 
makes 90 percent of their money off of government contracts, 
his answers were very troublingly evasive.
    And what we gleaned from that conversation at the very 
least was that Blackwater's potentially making a 10 percent 
profit, which on one contract alone could be $85 million; that 
Mr. Prince's salary is potentially 10 times, maybe 20, 30 
times, as much as General Petraeus's salary is for leading our 
troops on the ground there.
    I think the question is very simple. Assuming that this is 
an issue that you find concerning, at the very least don't you 
believe that this Congress and your Department should have full 
disclosure of the profit that these private contractors are 
taking out of these contracts and the compensation that the 
executives of these companies are making?
    Chairman Waxman. Madam Secretary, do you want to respond?
    Secretary Rice. Yes. Is that it?
    Chairman Waxman. I think that is it.
    Secretary Rice. All right. Fine. Then I will respond.
    First of all, I will respond in writing to you, Mr. Murphy, 
and to Ms. Watson. Because there are personnel issues involved 
here and particularly concerning--and, by the way, Mary French 
is the owner's representative, and she is the one who is on the 
ground all the time making sure that things are good with the 
project.
    So it is not that the project has not had oversight, 
Congresswoman Watson. It is that we did make an adjustment, but 
it is a personnel matter, and so I will not get into that.
    Ms. Watson. Thank you.
    Secretary Rice. If I may, though, and, also, I am obviously 
not competent to talk about Blackwater's balance sheet, 
Congressman, but I will get back to you with the spirit of your 
question.
    Now perhaps I could use, however, Congresswoman Norton's 
question to make a point. Howard Krongard has said that he 
wants very much to answer all the questions and allegations 
that have been put against him, and he will do that. We have 
also asked help from the Committee on Professional Integrity 
and Efficiency, which is an organization of senior IGs; and so 
we will use their help.
    But I want to focus on something that you said, Ms. Norton, 
which is that somehow the problems were discovered by--would 
have been discovered by the Inspector General. Overwhelmingly, 
the problems that have been identified here today have been 
discovered by the State Department in one way or another. 
Whether it is the DynCorp issue concerning the police contract, 
where I made a change in that bureau when I first became 
Secretary, in which there were two internal investigations by 
the Department of problems of contracting in that bureau, in 
which there was then an outside review ordered by the Assistant 
Secretary--the new Assistant Secretary to fully review the 
project management in that bureau. She came directly to me to 
say that she thought we had big problems in INL; and I 
authorized her to fix them, which is why the number of contract 
officers in INL for this contract has been going up, why the 
number of contract officers in general has been going up. So 
that one was discovered by, and being remediated by, the 
Department when SIGIR came into the picture.
    When it comes to various problems in the Embassy, the $592 
million part of the Embassy, which was what was programmed when 
I became Secretary in 2004, is being completed, I am told, on 
budget. Yes, there have been some problems in terms of getting 
it done on time. It is a difficult security environment in 
which convoys can't always get through.
    It is also the case that when some of the problems were 
identified by OBO's own inspectors that the company is being 
given an opportunity to remediate those at the cost to the 
company, and that once that remediation is done there will be 
an external inspection by external actors of the work that they 
have done. So, again, the Department's own processes found 
these difficulties and has been remediating them.
    Ms. Norton. But not the IG. And that was really my 
question. I understand that you have been able, and I 
congratulate you for what you have uncovered, but systematic 
review, failure to----
    Secretary Rice. Just a second.
    Ms. Norton [continuing]. Move forward----
    Secretary Rice. Just a second. Just a second.
    Ms. Norton [continuing]. Would not appear to be a maximum 
use of the IG.
    Secretary Rice. Just a second. Much has been done by the IG 
as well. It is to the IG that then Acting Secretary Nancy 
Powell turned to get help on finding out what was wrong in INL. 
So the IG's office has, in fact, been very active, Ms. Norton.
    Sometimes the IG is the way that we find these things. 
Sometimes it is management instinct, as it was for me when I 
thought there was a problem in INL and moved in the first week 
as Secretary to deal with it. Sometimes it is a problem that 
comes up through an incident, as is the case with Blackwater. 
Sometimes it is a problem that is identified by a new 
management team coming into an area and says you have a problem 
there, let us remediate it. But that is the nature of managing 
a complex organization, particularly when we are doing things 
like we are doing in Iraq in a time of war.
    So I just want to underscore that the SIGIR process is one 
in which they go to our people to interview and to see what 
problems our people in the State Department identify. I have 
been very well served by the SIGIR process. I have a very good 
relationship with Stuart Bowen. I meet with him frequently, and 
we have cooperated with him frequently. But it would be 
incorrect to leave the impression that somehow either the 
Oversight Committee or, for that matter, SIGIR has uncovered 
problems that in many cases the State Department found itself.
    Ms. Norton. But, Madam Secretary, you have not been well 
served by your IG. And, Mr. Chairman, I understand that we are 
going to have a separate hearing on the IG at the State 
Department precisely because so many issues have been raised.
    Secretary Rice. Yes. I would like to finish my--I think I 
was supposed to respond at the end.
    Chairman Waxman. Yes. Your time to respond and then we are 
going to conclude the hearing.
    Secretary Rice. Thank you.
    So, again, the IG wishes to respond to the allegations. We 
have asked for a referral of the case to this body. But good 
management is not relying on an IG to identify problems. Good 
management is having managers who identify problems. Good 
management is knowing when you sense that something is wrong, 
as I sensed with the Department of INL when I became Secretary.
    That is why I made a change in leadership there. That is 
why I brought an experienced temporary head for that 
Department, who began--for that bureau who began the process of 
remediation. That is why I brought one of our most experienced 
Ambassadors who had police training experience in Colombia. She 
made major changes.
    And, again, if you read the SIGIR report, it notes that 
there have been considerable efforts made in that bureau to 
improve contract management oversight; and those efforts are 
going to continue.
    So thank you very much, Mr. Chairman. I am very glad to 
have had an opportunity to report on the efforts the Department 
has made to deal with the multiple management challenges.
    Chairman Waxman. Well, Secretary Rice, I can't thank you 
enough for your willingness to be here. And no one on this 
committee, Democrat or Republican, underestimates or minimizes 
the challenges that you face over a broad number of issues.
    I do want to tell you that the suggestion was made that 
those of us who are concerned about corruption in Iraq are for 
pulling out of Iraq if there is corruption in the Iraqi 
Government. Our concern is that if there is corruption in the 
Iraqi Government then this government is not going to be able 
to have a political reconciliation. It is not going to get the 
support of its own people. It, in fact, is going to make it 
impossible for us to accomplish our goals in Iraq.
    And we did hear from several State Department people who 
told us that fighting corruption was not only completely 
dysfunctional, but they, the two State Department agencies, 
actually boycotted each other's meetings. We did hear from 
Judge Radhi that 30 of his people, when they tried to deal with 
corruption internally in Iraq, were killed; and he had to leave 
and seek refugee status in the United States.
    So if there is an epidemic of corruption, which is the term 
that was used by Stuart Bowen, that is undermining political 
reconciliation, and he believes also that it is funding the 
terrorists, I think it is a concern that we both share. But I 
wouldn't want anybody to leave this hearing with the impression 
that those of us who are concerned about it are concerned about 
it because we want to pull out of Iraq.
    Secretary Rice. I really appreciate that clarification, Mr. 
Chairman. I think that is a very important point, because we 
are going to have to work on this and fight it together.
    And if I may just renew an invitation, I don't know when 
you were last in Iraq, but I think it would be useful for you 
or any member of the committee to come.
    Chairman Waxman. I was there a couple years ago, and I 
would be happy to go again. Perhaps you will invite me to go 
with you. I would enjoy the opportunity.
    Mr. Davis.
    Mr. Davis of Virginia. I need to go along and make sure 
Henry is seeing the right stuff.
    Mr. Chairman, thanks for calling this hearing.
    I think a couple things this hearing has shown. No. 1, U.S. 
tax dollars aren't going for terrorists. They aren't being 
spent corruptly by an Iraqi Government. The construction of the 
Iraqi Embassy is a fixed-price contract; and, like all 
contracts, major construction contracts I have ever been 
associated with, there are punch-list items that need to be 
completed on the contractor's tab. That in point of fact 
allegations, sealed indictments and so on, there have been no 
resolutions or no convictions on these; and under current code, 
under the current law, that is not a reason for debarment.
    Now we can always revisit that if we want do that. We 
tried--the previous administration tried this under what was 
called blacklisting regulations, and they got repealed very, 
very quickly because they were found to be inoperable. We can 
have that debate. But what has happened here is the Secretary 
has followed the law; and I think, as I said, that can be an 
issue for the committee down the road. But it is certainly 
outside the purview of the Secretary of State, who has followed 
the current law.
    In fact, what we have found is when agency heads step up to 
resolve issues outside the proverbial regulatory or statutory 
box we are the first ones to call them up here and find out why 
they didn't follow the law.
    Madam Secretary, you are doing the best that you can; and I 
think the question we should have asked you is, how can we help 
you? What legal changes are needed to help you get a very, very 
difficult job done?
    You have acquitted yourself and the State Department well 
today, in my opinion; and I am proud of the job you are doing. 
Thank you.
    Secretary Rice. Thank you very much.
    Chairman Waxman. We want to help you, but we also want you 
to help us do our job, which means give us the information we 
need to represent our constituents. And I appreciate your 
willingness to do that.
    Secretary Rice. Thank you very much.
    Chairman Waxman. That completes our business. The committee 
stands adjourned.
    [Whereupon, at 1:09 p.m., the committee was adjourned.]
    [The prepared statements of Hon. Diane E. Watson and Hon. 
Kenny Marchant follow:]

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