[Senate Hearing 110-687]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-687
 
   IMPLEMENTING SMART POWER: SETTING AN AGENDA FOR NATIONAL SECURITY 
                                 REFORM 

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

                                HEARING



                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE



                       ONE HUNDRED TENTH CONGRESS



                             SECOND SESSION



                               __________

                             APRIL 24, 2008

                               __________



       Printed for the use of the Committee on Foreign Relations


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                     COMMITTEE ON FOREIGN RELATIONS

                JOSEPH R. BIDEN, Jr., Delaware, Chairman
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
JOHN F. KERRY, Massachusetts         CHUCK HAGEL, Nebraska
RUSSELL D. FEINGOLD, Wisconsin       NORM COLEMAN, Minnesota
BARBARA BOXER, California            BOB CORKER, Tennessee
BILL NELSON, Florida                 GEORGE V. VOINOVICH, Ohio
BARACK OBAMA, Illinois               LISA MURKOWSKI, Alaska
ROBERT MENENDEZ, New Jersey          JIM DeMINT, South Carolina
BENJAMIN L. CARDIN, Maryland         JOHNNY ISAKSON, Georgia
ROBERT P. CASEY, Jr., Pennsylvania   DAVID VITTER, Louisiana
JIM WEBB, Virginia                   JOHN BARRASSO, Wyoming
                   Antony J. Blinken, Staff Director
            Kenneth A. Myers, Jr., Republican Staff Director

                                  (ii)

  






















                            C O N T E N T S

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                                                                   Page

Adams, Dr. Gordon, professor of international relations, School 
  of International Service, American University; and 
  distinguished fellow, Henry L. Stimson Center, Washington, DC..    41
    Prepared statement...........................................    44
    Responses to questions submitted for the record by Senator 
      Russell Feingold...........................................    71
    Responses to questions submitted for the record by Senator 
      Richard Lugar..............................................    76
Armitage, Hon. Richard, president, Armitage International, 
  Arlington, VA..................................................     5
Biden, Hon. Joseph R., Jr., U.S. Senator from Delaware, opening 
  statement......................................................     1
Locher, Hon. James R. III, executive director, Project on 
  National Security Reform, Center for the Study of the 
  Presidency, Washington, DC.....................................    35
    Prepared statement...........................................    37
    Responses to questions submitted for the record by Senator 
      Russell Feingold...........................................    69
    Responses to questions submitted for the record by Senator 
      Richard Lugar..............................................    75
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening 
  statement......................................................     3
Nye, Dr. Joseph S., Jr., dean emeritus, John F. Kennedy School of 
  Government, Harvard University, Cambridge, MA..................     7
    Joint prepared statement of Hon. Armitage and Dr. Nye........    11
    Joint responses of Hon. Armitage and Dr. Nye to questions 
      submitted for the record by Senator Richard Lugar..........    71

                                 (iii)

  


   IMPLEMENTING SMART POWER: SETTING AN AGENDA FOR NATIONAL SECURITY 
                                 REFORM

                              ----------                              


                        THURSDAY, APRIL 24, 2008

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:39 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Joseph R. 
Biden, Jr. (chairman of the committee) presiding.
    Present: Senators Biden, Feingold, Bill Nelson, Menendez, 
Lugar, Hagel, Voinovich, and Isakson.

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

    The Chairman. Let me begin, a way no chairman should, by 
apologizing for our tardiness. I thank the indulgence of my 
colleagues. The train that I take down every morning gets in 
here about 10 of 9. The problem is the train ahead of us had a 
run-in with a pedestrian and apparently killed a pedestrian or 
a pedestrian walked on the track. So they shut down the track 
for a little bit to do an investigation. So I sincerely 
apologize for my tardiness.
    Today the Committee on Foreign Relations holds a second in 
a series of what is going to be more than one on smart power. 
It is part of a larger effort to reexamine our Nation's foreign 
policy and present a new vision for policymakers.
    As the current administration ends, we face a multitude of 
new challenges. The emergence of China and India as major 
economic powers. The resurgence of Russia floating in a sea of 
oil revenue. A unifying Europe that has its own problems, and 
the spread of dangerous weapons and lethal disease. The 
shortage of secure sources of energy, water and, as witnessed 
by rioting in several countries in the last week, even food. 
The impact of climate change. Rising wealth and persistent 
poverty worldwide. A technological revolution that sends 
people, ideas, and money around the planet at ever faster 
speeds. And the challenges to nation states from ethnic and 
sectarian strife that I suspect none of us think is going to 
end today. The struggle between modernity and extremism. This 
is a short list of the forces shaping the 21st century.
    These challenges raise the question, Do we have the right 
nonmilitary instruments, the right institutions, and the right 
relationships among those institutions to deal with the new 
threats and opportunities to address these and other 
challenges?
    I want to make it clear I am not pessimistic about this. I 
think this presents us a significant opportunity as well, but I 
think we have to think differently than we have.
    In the committee's last hearing on smart power, we posed 
these questions to two of the finest military officers that we 
have had, GEN Tony Zinni and ADM Leighton Smith. Their 
resounding answer was no, we are not ready. We are not ready 
yet.
    As commanders in the field have told us, the military lacks 
the adequate civilian counterpart in Iraq and Afghanistan to 
effectively help reconstruction of those societies. The 
national security planning process is fragmented and 
disjointed. The resources we allocate to nonmilitary tools do 
not match the challenges we face.
    And I want to make it clear this is not meant by me to be 
an indictment of this administration. It is a recognition of 
how much has changed in the world. One of my favorite poets is 
a guy who always picked on us Irish, William Butler Yates, and 
in a poem called Easter Sunday 1960, he had a line. He said the 
world has changed. It has changed utterly. A terrible beauty 
has been born.
    Well, I think the world has changed utterly, and the 
question is whether we turn this change into something that can 
be beautiful or is going to be terrible. We are here today to 
seek a path to reform. Today's hearing will focus on 
implementing smart power, that is, the skillful use of all our 
resources, both nonmilitary as well as military, to promote our 
national interests.
    Our first two witnesses are well placed to help us with 
this inquiry. Dr. Nye first coined the term ``soft power'' in 
the late 1980s to describe the ability of a country's culture, 
political ideals, and policies to influence and persuade 
others. After all, it is not leadership if no one is following.
    Dr. Nye is joined by Secretary Armitage, his cochair on the 
CSIS Commission on Smart Power. I always hurt the Secretary's 
reputation by saying of all the people I have worked with in 35 
years, he was the straightest talking, most direct, and most 
honest with me and is a person I have great regard for. 
Secretary Armitage has an equally distinguished public service 
career, most recently serving as Deputy Secretary of State.
    As Secretary Armitage wrote with Dr. Nye in the recent op-
ed in the Washington Post, ``The world is dissatisfied with 
American leadership. The past 6 years have demonstrated that 
hard power alone cannot secure the Nation's long-term goals.''
    I look forward to this hearing and hearing some of the 
answers to these critical questions, and those questions that I 
am going to be looking to here, Mr. Chairman, are, first, do we 
have the right instruments to effectively address these 21st 
century challenges? Do we have the right people and resources 
to tackle critical global challenges?
    Second, do we have the right institutions? Is our national 
security system, largely shaped during the cold-war era, up to 
the larger task we face today?
    And third, do we have the right relationships among our 
institutions to achieve national security objectives? Is there 
a need to restructure the interagency system, and if so, how?
    Our second panel is going to bring us two preeminent 
thinkers on our national security system. Jim Locher was a lead 
staff person in the Senate over 2 decades ago, devising the 
original Goldwater-Nichols legislation that reorganized the 
military services. He is currently leading a broad effort on 
national security reform.
    And Gordon Adams is a former senior national security 
official at the Office of Management and Budget who has written 
extensively on national security budgeting, resource 
allocation, and capacity-building.
    I think we have the right people here to guide this debate 
and to help us define these issues and to begin the search for 
the right answers. So I look forward to hearing from them all.
    But before I recognize our first panel, let me yield to 
Chairman Lugar.

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

    Senator Lugar. Well, thank you very much, Mr. Chairman. I 
congratulate you on initiating these hearings on smart power as 
a very important initiative of our committee, a very timely 
one.
    And I join you in welcoming two good friends to the 
committee once again this morning. During their distinguished 
careers, Secretary Armitage and Professor Nye have rendered 
outstanding service to our country and we look forward, once 
again, to having the benefit of their experience and their 
analysis.
    During the last 5 years, the Senate Foreign Relations 
Committee has focused much attention on how we can improve our 
diplomatic and foreign assistance capabilities and integrate 
them more effectively with the military components of national 
power. Since the year 2003, we have been advocating through 
hearings and legislation the establishment of a civilian 
counterpart to the military in post-conflict situations. We 
have argued for a rapidly deployable civilian corps that is 
trained to work with the military on stabilization and 
reconstruction missions in hostile environments. And I am very 
pleased that the Bush administration is requesting $248.6 
million for the Civilian Stabilization Initiative. Creating and 
sustaining this civilian capacity is precisely the intent of 
the Lugar-Biden-Hagel legislation that passed the Senate in 
2006 and passed this committee again last March. Increasing the 
capacity of civilian agencies and integrating them with our 
military power is essential if we are to be ready for the next 
post-conflict mission.
    In the absence of a strong civilian partner, largely due to 
the lack of resources, the role of the Defense Department in 
stabilization and reconstruction, foreign assistance, and 
public information programs has grown. This new role includes 
increased funding, new authorities, and new platforms such as 
AFRICOM. To the extent that we are not effectively coordinating 
our civilian and military components, the result is that the 
Pentagon and the State Department are unable to benefit from 
the expertise and the activities of the other.
    It is clear that the United States Government is paying 
insufficient attention to fundamental questions about whether 
we are building national security capabilities that can address 
the threats and challenges we are most likely to encounter in 
the future. Although our defense, foreign affairs, homeland 
security, intelligence, and energy budgets are carefully 
examined from the incremental perspective of where they were in 
the previous year, our budget process gives neither Congress 
nor the executive branch the ability to adequately evaluate 
whether the money flowing to these areas represents the proper 
mix for the 21st century. In the process, funding for diplomacy 
and foreign assistance persistently falls short.
    These findings were confirmed by two Senate Foreign 
Relations Committee staff studies. The 2006 study entitled 
``Embassies as Command Posts in the Campaign Against Terror'' 
documented the increase in security, development, and 
humanitarian assistance being administered by the Pentagon. The 
report recommended that all security assistance, including 
section 1206, be included under the Secretary of State's 
authority in a new coordination process for rationalizing and 
prioritizing foreign assistance.
    A second study in 2007 entitled ``Embassies Grapple to 
Guide Foreign Aid'' focused more broadly on U.S. foreign 
assistance efforts that are managed by all Government entities. 
It recommended that a comprehensive foreign assistance strategy 
be linked to our actual foreign aid spending and that the State 
Department's Director of Foreign Assistance be responsible for 
all Government agencies' foreign aid programs.
    While defense agencies have been granted authority to step 
into the often empty space where we expect civilian agencies to 
be, the military is ill-suited to operate foreign assistance 
and public information programs. A far more rational approach 
would be to give the State Department and USAID the resources 
they need to carry out what clearly are civilian missions. This 
view was echoed by Defense Secretary Gates in a number of 
recent speeches where he pointed out that the total foreign 
affairs budget requested for 20 is roughly equivalent to what 
the Pentagon spends on health care alone. We must adjust our 
civilian foreign policy capabilities to deal with a dynamic 
world where national security threats are increasingly based on 
nonmilitary factors.
    I would underscore that although military and civilian 
capabilities are severely out of balance, the United States 
must do more than simply add funds to the foreign affairs 
budget. We must build our diplomatic capabilities in the areas 
of greatest consequence, paying particular attention to 
international economic and energy policy.
    I was pleased to see that the smart power report identifies 
energy security as an important component of U.S. global 
leadership. I would appreciate hearing more from our witnesses 
about how the United States can create a global consensus on 
energy policies and practices. We should ask whether the State 
Department and other Federal agencies have the resources and 
the expertise to effectively function in a world where power is 
being wielded through energy relationships and other rapidly 
evolving economic mechanisms such as sovereign wealth funds. We 
must also examine what structural reforms are necessary to 
integrate military and civilian power to achieve U.S. national 
security objectives.
    I appreciate this opportunity to explore with both panels 
how we can achieve an integrated foreign policy strategy.
    I thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Gentlemen, if you would deliver your testimony in the order 
you have been called, starting with you, Mr. Secretary, and 
then you, Professor Nye.

    STATEMENT OF HON. RICHARD ARMITAGE, PRESIDENT, ARMITAGE 
                  INTERNATIONAL, ARLINGTON, VA

    Mr. Armitage. Thank you, Mr. Chairman, Mr. Lugar, Senators.
    I have said before up here that I realize that your 
patience is in inverse proportion to the length of our opening 
statements, so I am going to do a very short opening statement 
and then turn it over to Dr. Nye who will do the same. I am 
kind of a micro guy. He will be the macro thinker.
    Let me tell you how we got here, Mr. Chairman. After 9/11--
--
    The Chairman. As Jim Eastland said, because we invited you. 
Right? [Laughter.]
    I am only joking. Bad joke.
    Mr. Armitage. But in addition to that----
    The Chairman. I have to explain that. Jim Eastland once 
said to me--I went down to campaign for him in Mississippi to 
prove that he was not old. I was a young guy, and he had a 
bunch of judges. They all got up honoring him saying they were 
appointed by Eisenhower and Nixon and went on and on. He stood 
up and said, you all know why you are judges, do you not? And 
they all looked at him. He said, because Jim Eastland said so. 
So I was only joking.
    Mr. Armitage. In addition to that, Mr. Chairman, the 
background of how we had this commission. In the wake of 9/11, 
it was our view that we were twice victimized. We were 
victimized by terrorists, and then we victimized ourselves. We 
started exporting our fear and our anger rather than our hope 
and our optimism. We started tying our own hands up.
    We felt, Joe and I, Dr. Hamre at CSIS, that it was about 
time to sort of relook this and see if we could not unvictimize 
ourselves. A Democrat and a Republican, joined by Senator 
Hagel, Senator Reed of Rhode Island, Betty McCollum, and Mac 
Thornberry wanted to make a very graphic point. Not only did we 
recognize that we needed to do something differently, but we 
could do this in a bipartisan way and a bipartisan spirit. And 
every one of us was motivated, I think, by the following 
thought, that is, that we have dedicated our lives to 
prolonging and preserving our preeminence as a nation as a 
force for good as long as humanly possible.
    We also, I think, all recognized that we have the premier 
military in the world and they fight and win the Nation's 
battles. And they are ideally suited to fight an enemy on the 
battlefield. They are not ideally suited to fight ideas or 
climate change or to guarantee energy security, et cetera.
    We are often asked by Members of Congress, at the end of 
the day, are you not going to be talking about more 
appropriations, more money for foreign aid that is so 
unpopular? Our view is this is not foreign aid. This is not 
charity. This is a cold calculation of our national security, 
and that is the way it ought to be put forward by witnesses 
today and, I would argue, by Members of the U.S. Congress.
    We take the view that the world wants an indispensable 
nation, and we are that indispensable nation. But we can only 
occupy that space when our national values and our words and 
our actions are in line. We cannot stand against torture and 
then waterboard. You cannot do it. We cannot be an 
indispensable nation that way.
    We want to be, without being too maudlin about it, that 
shining city on the hill that Mr. Reagan used to talk about. 
That should be the image of this country, not the image of Abu 
Ghraib
and Guantanamo Bay. That is kind of where we started on this 
endeavor.
    We took a look, Mr. Chairman, at public diplomacy, and I 
think there is a real misunderstanding about public diplomacy. 
It seems in some quarters that there is a feeling that public 
diplomacy is just a matter of speaking more loudly, getting 
people to understand this. Well, that is not the problem. There 
is not a person in this world that does not understand exactly 
where the United States is coming from. The question they have 
is whether we understand them. And I think that is a good place 
to begin in public diplomacy.
    Now, as I have indicated, Dr. Nye is going to talk about 
the specific big ideas we had. The problem with big ideas, as I 
am sure our friends, Jim Locher and Gordon Adams, will tell 
you, is they take a long time to bring to fruition and it is 
frustrating. Military actions you can see almost by the minute. 
These are, by definition, long-term projects. So it is hard to 
be gratified.
    But I am going to give you a couple of short-term issues, 
if you want to feel gratification, that can help on the way to 
a longer term solution. You know the most effective public 
diplomacy I have seen? It has been basketball. We sent 
Georgetown graduates around the world, 46 different countries. 
They never had to talk about Arab-Israeli peace. They did not 
have to talk about anything except growing up black in America 
and how to balance college sports with college academics, and 
it was front-page news all around the country, all around the 
world.
    There is a J.D. Walsh right in basketball. He is a Maryland 
graduate. He is in India doing the same thing. But he has 
expanded on the idea. He is using it also, as they teach 
basketball, to have HIV/AIDS testing, to teach courses in 
nonviolent conflict resolution. He is not talking about Arab-
Israeli peace issues or al-Qaeda for that matter. But he is 
having more effect in diplomacy than you can imagine.
    Mr. Hagel, I know, was cosponsor of some legislation, along 
with Ms. Cantwell, I believe, that would help enormously the 
Coordinator for Reconstruction and Stability in the State 
Department to be able to immediately have both a civilian 
reserve corps and, as Senator Lugar indicated, a Civilian 
Stabilization Initiative which would bring reserve officers, if 
you will, into the civilian component where we could swarm or 
flood the zone if we had a problem. We do not have to wait 2 
and 3 and 4 years.
    You had other ideas. I think Mr. Hagel is also involved in 
the reconstruction opportunity zones which are designated by 
the President of Pakistan, Afghanistan, and it targets textiles 
and things of that nature to make a rapid change in the 
economy.
    There are lots of these micro issues, but all of them will 
take some leadership from this committee and other committees 
because we have become so risk-averse. And I think the signal 
that one would need from Capitol Hill is we understand there is 
a risk, but you have to manage risk. You cannot avert it. And I 
think that kind of mind set change, if it can be led from up 
here, will rather dramatically assist people in the short term 
to make some rather dramatic actions that can start to change 
the regions and the troubled areas.
    So, Dr. Nye.

  STATEMENT OF DR. JOSEPH S. NYE, JR., DEAN EMERITUS, JOHN F. 
KENNEDY SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY, CAMBRIDGE, MA

    Dr. Nye. Thank you very much, Mr. Chairman, for inviting us 
to testify here. I will supplement what Rich Armitage said by 
giving you what I might call our top 10 list, but there are 
other things in the report and equally important is the general 
philosophy. I think, as Rich pointed out, it is not that any 
one of our recommendations is so brilliant or wonderful. I 
suspect we do not have the answer. But the fact that we were 
able to assemble a distinguished group of Republicans and 
Democrats in a political year to rise above the partisan level 
and to identify a number of things which we could agree on, 
that in itself was interesting. There is a famous phrase of 
Samuel Johnson's about the remarkable thing about a dog walking 
on its hind legs is not that it does it well, but that it does 
it at all. So we are not claiming that this report has all the 
answers, but the fact that we were able to get a bipartisan 
agreement on the kinds of things I am about to mention to you I 
think is a healthy sign.
    But it is also a sign of the need to make changes. We have 
enormous capacity in this country and in this Government which 
we are underutilizing. Essentially if smart power is the 
ability to combine the instruments of hard and soft power into 
a successful strategy, we did that in the cold war. We deterred 
Soviet aggression with our hard military power, but we ate away 
belief in Soviet ideas behind the Iron Curtain with our soft 
power so that when the Berlin Wall eventually went down, it 
went down not under an artillery barrage but under hammers and 
bulldozers. We need to recover that capacity to basically 
project hope, not fear, as Rich said, and also to integrate the 
multiple instruments that we have into one effective strategy.
    Here is a list of 10, but as I said, 10 is not a magic 
number. And we are open to argument on many of the things on 
the list, but at least it does have a bipartisan backing.
    First on our list was that the next President should create 
a deputy national security adviser who is double-hatted as a 
deputy at the Office of Management and Budget because the 
various tools that are available to the Government are spread 
among multiple agencies and bureaus, and the National Security 
Adviser is too swept up in the urgent challenge of unfolding 
crises to be able to develop a strategy for this. We argued 
that this smart power deputy would be charged with developing 
and managing a strategic framework for planning policies and 
allocating resources, working closely with relevant 
congressional committees. This should probably lead a process 
parallel to the QDR but for the civilian tools of national 
power.
    In some ways, the plans that General Eisenhower, then 
President Eisenhower, had in place for the NSC when he ran it I 
think was a good precedent, and it is a pity that they were 
scrapped by President Kennedy.
    Second on our list is the next administration should 
request and Congress should resource a personnel float for 
civilian agencies that allows for increased training and 
professional development. The Department of Defense can budget 
10 percent more military officers than there are jobs for in 
operational assignments, but the civilian agencies do not have 
that capacity. The result is you do not have the training in 
leadership and the skills in the civilian agencies that you do 
in the Defense Department.
    We also recommend in that same idea that the number of 
Foreign Service personnel serving the Department of State 
should be increased by more than 1,000.
    Third, the next administration should strengthen civilian 
agency coordination and expeditionary presence on a regional 
basis. This is something your committee has already done a good 
deal of important work on. But it is interesting that if we 
look at the fact that so much is happening in the world at a 
regional level, we really do not have a regional command 
structure comparable for the civilian agencies to that that the 
Department of Defense has. And as a result of this, we prevent 
the development of regional strategies that integrate 
interagency operations on a regional basis.
    The next President, we argue, should empower the senior 
State Department ambassadors known as political advisers, or 
POLADs, assigned to advise regional military commanders, a dual 
authority to head a regional interagency consultation council 
comprising representatives from other Federal agencies that 
have field operations in those regions. And Congress and OMB 
should work closely with State to make sure that resources are 
available for that.
    We also mention that we think the next administration 
should make sure that we fund the increases in the number of 
civilian personnel able to participate in regional 
expeditionary missions, such as the Civilian Stabilization 
Initiative.
    Fourth, the next administration should strengthen America's 
commitment to a new multilateralism. We see America's alliances 
as force multipliers, and we believe that the United Nations, 
while it has problems, is still an important instrument of 
American foreign policy, particularly in areas like 
peacekeeping, peacebuilding, counterterrorism, global health, 
energy, and climate.
    We also believe, though, that we need to supplement this 
existing structure by developing new structures. For example, 
the G-8 could be expanded to a G-12 or -13 which would be much 
easier than trying to reform the U.N. Security Council which 
has proven to be very difficult to do. And a group like this 
could serve as an executive committee which could then bring 
actions back to the United Nations in a larger framework.
    Fifth, we argue that the next administration should elevate 
and unify its approach to development by creating a Cabinet-
level voice. Notice we said ``voice,'' not ``department.'' In 
our commission, we went back and forth on this question of 
creating a totally new department such as the British DFID, as 
it is called. We did not come down in favor of that, but we did 
feel that there was an extraordinary disaggregation of 
assistance in the U.S. system today and that there was a need 
for some form of coordination and a voice at the Cabinet level 
to try to pull this together.
    There are various ways that can be done. Our colleague, 
Gordon Adams, who you will hear from later has made some 
interesting suggestions here about how the F function could be 
wrapped into an operational deputy in the State Department. But 
the main point was we felt that it was important to have a 
voice at that level coordinating assistance and that that was 
more important than a department as such.
    Sixth, the next administration and Congress should 
encourage greater autonomy, coherence, and effectiveness for 
U.S. public diplomacy. We did not come out in favor of reviving 
USIA, but it would not be a bad idea. There is a difficulty 
with the current structure for public diplomacy.
    The next administration has to strengthen the resource 
commitment to public diplomacy, but they also have to look at 
the fact that a great deal of American soft power is generated 
by our civil society. It is the Gates Foundation, American 
higher education Hollywood--these are sources of American 
attractiveness around the world.
    Edward R. Murrow, in his time as the head of USIA during 
the Kennedy period, said that in public diplomacy, the most 
important part is what he called the last 3 feet, that face-to-
face communication in which you have two-way communication, in 
which we learn and listen as well as speak, which means that 
although we should be investing more resources in broadcasting, 
far more important is to get stronger public exchange programs.
    For example, we recommend doubling the size of the 
Fulbright program, and we are quite taken by the idea that our 
colleague, David Abshire, has suggested a foundation for 
international understanding which, though modest in cost, would 
do a great deal to provide access for youth around the world to 
American ideas.
    Seventh, the next administration should shape an economy 
flexible and competitive enough to deliver economic benefits 
while minimizing the human cost of adjusting to change. 
International trade is a difficult issue in an election year in 
any democracy, including this one. But we do remain of the view 
that it is an international public good which, if this country 
does not help preserve it, the world will be worse for it, and 
hence will we.
    But while we have a consensus that within the WTO we need 
to develop free trade agreements, we also realize that the 
benefits of trade are not evenly distributed and that to be 
able to provide this international public good, the next 
administration will have to work to reform trade adjustment 
assistance, perhaps looking at issues like wage insurance to 
facilitate the reentry of American workers who have lost jobs.
    Eighth on our list, the next administration and Congress 
must make addressing climate change and energy insecurity more 
than just a political catch phrase. There we feel that we are 
going to need to develop a set of rules and costs associated 
with carbon dioxide emissions which could have disruptive 
implications for trade, energy security and competitiveness, 
and economic growth unless they are carefully worked out. This 
is going to take work with Congress to place an economic value 
of greenhouse gas emissions by a mechanism that sends out 
clear, long-term price signals for industry.
    International collaboration is going to be crucial here. 
One area where China has passed the United States as a 
superpower is in the production of greenhouse gases. This year 
they produced more, not per capita, but totally, than we do. 
You cannot think of how to solve this by traditional means. 
Obviously, we are not going to bomb Chinese coal-burning 
plants, and if we put sanctions on, we are going to destroy the 
trade system. We are going to have to find ways to provide 
incentives for Chinese who are building coal-fired plants with 
dirty technology to have a market incentive to put in clean 
coal technologies.
    That means we are going to have to look at issues of 
international collaboration here, and perhaps one idea we 
suggested is the Department of Energy, in partnership with 
major companies, could establish a 10-year endowment for 
funding energy and technology-related research and that an 
international consortium of the NSF and equivalents could 
disburse grants through a peer review process to researchers in 
different countries. This might also be supplemented by some 
sort of facility at the World Bank.
    Ninth on our list, American leaders ought to eliminate the 
symbols that have come to represent the image of an intolerant, 
abusive, unjust America and use our diplomatic power for 
positive ends. As Rich has already said, Guantanamo Bay and Abu 
Ghraib consumed a great deal of our soft power. There are 
things we can do that are not easily done but which are 
important. We can begin the closing of Guantanamo. And I think 
effective American action internationally is going to require 
removing those symbols, as well as maintaining and restoring 
our capacity as a mediator on issues of global conflicts, 
including the Arab-Palestinian conflict.
    Tenth and finally, the next administration should not fall 
into a new cold-war struggle to compete with and contain 
Chinese soft power. China's soft power is likely to continue to 
grow, but this does not necessarily mean that Washington and 
Beijing are on a collision course. The next President should 
seek to identify areas of mutual interest between the United 
States and China on which the two powers can work together on a 
smart power agenda. Energy security and environmental 
stewardship top that list in our view, as well as transnational 
issues such as public health and nonproliferation. Global 
leadership does not have to be a zero-sum game.
    This is a short version of a longer report. I apologize for 
what we have left out, but we can perhaps answer some of those 
issues in questions.
    Thank you, Mr. Chairman.
    [The prepared joint statement of Mr. Armitage and Dr. Nye 
follows:]

   Prepared Joint Statement of Hon. Richard L. Armitage, President, 
  Armitage International, Arlington, VA; and Dr. Joseph S. Nye, Jr., 
Distinguished Service Professor, Kennedy School of Government, Harvard 
                       University, Cambridge, MA

    Mr. Chairman, we would like to thank you and your distinguished 
colleagues on the Senate Foreign Relations Committee for the invitation 
to speak today on the subject of ``Implementing Smart Power: Setting an 
Agenda for National Security Reform.''
    As you know, we are cochairs of CSIS's Commission on Smart Power, a 
bipartisan commission that included one of your fellow committee 
members, Senator Chuck Hagel, as well as Senator Jack Reed and two 
distinguished Members of the House of Representatives. CSIS's president 
and CEO John Hamre asked the two of us to form this Commission in late 
2006, and the Commission released its findings on November 7, 2007. It 
is our privilege to sit before you today to provide our thoughts on 
implementing a smart power agenda in the months and years ahead.
                       smart power: the big idea
    Mr. Chairman, as you know, your committee held a hearing on smart 
power in March of this year, receiving testimony from ADM Leighton 
Smith and GEN Tony Zinni, who is also a member of our Commission. 
Admiral Smith and General Zinni spoke on behalf of 52 retired generals 
and admirals who are backing the idea of smart power, organized by the 
Center for U.S. Global Engagement. The pair did an excellent job of 
explaining smart power, so we do not want to spend too much time here 
on what you already know. But please allow us to briefly explain how we 
came to this idea.
    The two of us--one Democrat and one Republican--have devoted our 
lives to promoting America's preeminence as a force for good in the 
world. What we have seen recently, however, is that too many people 
around the globe are questioning America's values, commitment, and 
competence.
    Two decades ago, the conventional wisdom was that the United States 
was in decline, suffering from ``imperial overstretch.'' A decade 
later, with the end of the cold war, the new conventional wisdom was 
that the world was a unipolar American hegemony. Today, we need a 
renewed understanding of the strength and limits of American power.
    The rest of the world knows that the United States is the big kid 
on the block, and that this will likely remain the case for years to 
come. But our staying power has a great deal to do with whether we are 
perceived as a bully or a friend. Humility increases America's 
greatness, it does not weaken it.
    Smart power has been portrayed by some in the media as simply 
presenting a ``kinder, gentler'' face of America to the world. The 
thought seems to be that all that is required is a new administration 
or shift of style rather than substance. Smart power is much more than 
this. It is an approach that seeks to match our strategies and 
structures at home to the challenges that face us abroad.
    Our military is the best fighting force bar none, but many of the 
challenges we face today do not have military solutions. We need 
stronger civilian instruments to fight al-Qaeda's ideas, slow climate 
change, foster good governance and prevent deadly viruses from reaching 
our shores. The uncomfortable truth is that an extra dollar spent on 
hard power today will not necessarily bring an extra dollar's worth of 
security.
    Smart power is based on three main principles:

          Frist, America's standing in the world matters to our 
        security and prosperity.
          Second, today's challenges can only be addressed with capable 
        and willing allies and partners.
          Third, civilian tools can increase the legitimacy, 
        effectiveness, and sustainability of U.S. Government policies.

    This is why we have called for an integrated grand strategy that 
combines hard military power with soft ``attractive power'' to create 
smart power of the sort that won the cold war. Power is the ability to 
influence the behavior of others to get a desired outcome. Machiavelli 
said it was safer to be feared than loved. Today, in the global 
information age, it is better to be both.
    Smart power is a framework for guiding the development of an 
integrated strategy, resource base, and toolkit to achieve U.S. 
objectives, drawing on both hard and soft power. It underscores the 
necessity of a strong military, but also invests heavily in alliances, 
partnerships, and institutions at all levels to expand American 
influence and establish the legitimacy of American action.
    The United States can become a smarter power by investing in the 
global good--providing services and polices that people and governments 
want but cannot attain in the absence of American leadership. This 
means support for international institutions, aligning our country with 
international development, promoting public health, increasing 
interactions of our civil society with others, maintaining an open 
international economy, and dealing seriously with climate change and 
energy insecurity.
    Elements of a smart power approach exist today, but they lack a 
cohesive rationale and institutional grounding. U.S. foreign policy 
over-relies on hard power because it is the most direct and visible 
source of U.S. strength. The U.S. military is the best-trained and 
resourced arm of the Federal Government. As a result, it has had to 
step in to fill voids, even with work better suited to civilian 
agencies. The military has also been a vital source of soft power. 
Witness the massive humanitarian operations it launched in response to 
the Asian tsunami and Pakistani earthquake.
    The U.S. Government is still struggling to develop its soft power 
instruments outside of the military. Civilian institutions are not 
staffed or resourced properly, especially for extraordinary missions. 
Civilian tools are neglected in part because of the difficulty of 
demonstrating their short-term impact on critical challenges. 
Stovepiped institutional cultures inhibit joint action.
    U.S. foreign policy decisionmaking is too fractured and 
compartmentalized. Many official instruments of soft power--public 
diplomacy, broadcasting, exchange programs, development assistance, 
disaster relief, diplomacy, even military-to-military contacts--are 
scattered throughout the government, with no overarching strategy or 
budget that tries to integrate them with military power into a unified 
national security strategy.
    There is little capacity for making tradeoffs at a strategic level. 
The United States spends about 500 times more on the military than we 
do on broadcasting and exchanges. How would we know if this is the 
right proportion, and how would we go about making tradeoffs?
    Furthermore, how should the government relate to the nonofficial 
generators of soft power that emanate from our civil society? This 
includes everything from Hollywood to the Bill and Melinda Gates 
Foundation, which is a private sector actor that now has the throw-
weight of a government. These are some of the challenges our Commission 
identified and sought to address.
    Distinguished members of the committee, we developed smart power in 
large part as a reaction to the global war on terror, a concept that we 
consider to be wrongheaded as an organizing premise of U.S. foreign 
policy. America is too great of a nation to allow our central narrative 
and purpose to be held captive to so narrow an idea as defeating al-
Qaeda. We were twice victimized by September 11--first by the 
attackers, and then by our own hands when we lost our national 
confidence and optimism and began to see the world only through the 
lens of terrorism.
    The threat from terrorists with global reach and ambition is real 
and is likely to be with us for some time. When addressing the threat 
posed by al-Qaeda and affiliated groups, we need to use hard power 
against the hard-core terrorists, but we cannot hope to win unless we 
build respect and credibility with the moderate center of Muslim 
societies. If the misuse of hard power creates more new terrorists than 
we can kill or deter, we will lose.
    Similarly, when our words do not match our actions, we demean our 
character and moral standing and diminish our influence. We cannot 
lecture others about democracy while we back dictators. We cannot 
denounce torture and waterboarding in other countries and condone it at 
home. We cannot allow Guantanamo Bay or Abu Ghraib to become symbols of 
American power.
    The cold war ended under a barrage of hammers on the Berlin Wall 
rather than a barrage of artillery across the Fulda Gap because we 
successfully balanced principle with pragmatism. The United States had 
a strategy aligned with the challenges at hand and an approach that 
relied on all means of national power.
    This is an important lesson for the challenges we face today. 
Americans in their hearts may be reluctant internationalists, but they 
also realize that we cannot cut ourselves off from the rest of the 
world today. We are no longer protected by our two great oceans in the 
way we once were.
    Foreigners will continue to look to America. The decline in 
American influence overseas is not likely to endure. Most want the 
United States to be the indispensable nation, but they look to us to 
put forward better ideas rather than just walk away from the table, 
content to play our own game.
    The United States needs to rediscover how to be a smart power. 
Smart power is not a panacea for solving the Nation's problems, and it 
is not about getting the world to like us. It is essentially about 
renewing a type of leadership that matches vision with execution and 
accountability, and looks broadly at U.S. goals, strategies and 
influence in a changing world.
                         an emerging consensus
    We believe there is a strong and growing measure of bipartisan 
agreement on the need for America to become a smarter power. A number 
of leading Americans and allies have spoken out in recent months that 
the United States ought to invest more heavily in modernizing our 
civilian tools of national power and increase the emphasis of these 
tools in our global strategy. The following five examples stand out:

          Secretary of Defense Robert Gates gave a major speech at 
        Kansas State last November making the case for strengthening 
        America's capacity to use soft power and better integrate it 
        with hard power. Secretary Gates lamented how civilian tools 
        that helped win the cold war were gutted during the 1990s 
        through Foreign Service hiring freezes, deep staff cuts at 
        USAID, and the abolishment of the U.S. Information Agency.

          Former and current American political leaders on both sides 
        of the aisle have endorsed the arguments behind smart power. 
        This list includes notable Democrats such as Sam Nunn, 
        Madeleine Albright, John Edwards, and Harry Reid, and notable 
        Republicans such as William Cohen, Frank Carlucci, Christine 
        Todd Whitman, and Newt Gingrich.

          Each of the three remaining Presidential candidates have made 
        public statements supporting strengthening some aspect of 
        America's civilian international affairs agencies. Each has 
        also advocated a new approach to U.S. foreign policy in which 
        we lead by attraction rather than primarily by virtue of hard 
        power.

          Military leaders have been some of the most active in calling 
        for a smart power approach to U.S. foreign policy. In addition 
        to General Zinni and Admiral Smith's testimony before this 
        committee on behalf of 52 retired generals and admirals, former 
        CENTCOM Commander General John Abizaid and SOUTHCOM Commander 
        James Stravridis have both endorsed elements of the 
        Commission's findings. Combatant Commanders have their war 
        plans, but they also recognize that much of how they engage 
        today requires soft power as they try to shape their 
        environments in favor of peace and stability.

          German Foreign Minister Frank-Walter Steinmeier told an 
        American audience last week that smart power is George 
        Marshall's vision in a nutshell, and precisely what we need 
        today to repair the trans-Atlantic relationship and better 
        serve the world's interests.

    There are many others who have spoken out in favor of smart power 
who are not included in this brief listing. It is clear to us that 
there is something attractive about the pragmatic, commonsense approach 
of our Commission's findings that appeals to Republicans and Democrats 
alike.
    We recognize that there are also others who may oppose our vision, 
whether because they stand committed to the grand strategy of the past 
7 years, doubt that civilian institutions and our allies abroad can 
keep us safe, or simply expect the next President to demand less of our 
foreign policy instruments. There are also some, including 
distinguished members of this committee, who have voiced frustrations 
at the slow pace of translating the ideas behind smart power into 
concrete action.
    We share the sense of urgency in moving from rhetoric to action, 
and realize that if America is to become a smarter power, this agenda 
will have to be taken on jointly by the next administration and 
Congress alike.
                        from rhetoric to action
    It is our view that the emerging consensus on the idea of smart 
power must move in the coming months toward greater agreement on a 
specific Agenda for Change. Numerous commissions, task forces, and 
experts continue to provide their blueprints for how to build and 
modernize America's civilian tools and make the United States a smarter 
power abroad. This activity is a welcome sign of a rising tide, but 
there is also a danger that divergent visions on how to implement smart 
power could unhinge momentum that has accumulated in support of the 
basic concept and rationale.
    We will outline a few of the strategic priorities our Commission 
identified, including those recommendations that concerned specific 
instruments and institutions of the U.S. Government. Neither our 
Commission nor the two of us, however, hold the golden key. It may well 
be that recommendations emerging from like-minded initiatives such as 
those you will hear on the next panel may prove to have more lasting 
impact. The critical task is moving toward a set of feasible action 
items that can be taken up by the next administration, whether 
Republican or Democratic in the months ahead.

First, the next President should create a deputy national security 
adviser who is ``double-hatted'' as a deputy at the Office of 
Management and Budget.

    The various tools available to the U.S. Government are spread among 
multiple agencies and bureaus. There is no level of government, short 
of the President, where these programs and resources come together.
    The national security adviser is swept up in the urgent challenges 
of unfolding crises and lacks the ability to focus on long-term 
strategy development or manage interagency tradeoffs.
    This ``smart power'' deputy should be charged with developing and 
managing a strategic framework for planning policies and allocating 
resources, working closely with relevant congressional committees.
    The smart power deputy should lead a process parallel to the 
Quadrennial Defense Review for the civilian tools of national power 
that conducts a systematic and comprehensive assessment of goals, 
strategies, and plans.

Second, the next administration should request and Congress should 
resource a personnel ``float'' for civilian agencies that allows for 
increased training and professional development.

    The Defense Department is able to sustain a far superior process 
for leadership education because it routinely budgets for 10 percent 
more military officers than there are jobs for them in operational 
assignments.
    This ``float'' permits the military to send its officers to 
leadership development programs, to work as detailees in other agencies 
to broaden their professional experiences and judgment, and to meet 
unforeseen contingencies. Civilian agencies have not budgeted a 
comparable personnel float.
    The next President should increase the number of Foreign Service 
personnel serving in the Department of State by more than 1,000 and 
consider further expansions in other relevant civilian agencies.

Third, the next administration should strengthen civilian agency 
coordination and expeditionary presence on a regional basis.

    Civilian government agencies do not have a regional command 
structure comparable to the Department of Defense. As a result, this 
prevents the development of regional strategies that integrate 
interagency operations on a regional basis.
    The next President should empower the senior State Department 
ambassadors known as ``political advisors'' or POLADs assigned to 
advise regional military commanders a dual authority to head a regional 
interagency consultation council comprising representatives from all 
other federal agencies that have field operations in those regions.
    Congress and OMB should work to provide the State Department 
resources to support these regional coordination councils.
    The next administration should request and Congress should fund 
increases in the number of civilian personnel able to participate in 
regional expeditionary missions, such as through the pending Civilian 
Stabilization Initiative.

Fourth, the next administration should strengthen America's commitment 
to a new multilateralism.

    America needs the United Nations, but we need a better one than we 
have at present. The United Nations could play an active role in 
promoting American interests in peacekeeping and peacebuilding, 
counterterrorism, global health, and energy and climate.
    The U.S. alliance system negotiated during the last half century 
consists of nearly 100 formal treaty arrangements and security 
commitments. Rather than view these agreements as hindrances to 
American action, the next President ought to view this alliance network 
as a force multiplier.
    For decades, America has been the global champion of legal norms 
and standards. The United States directly benefits from a strengthened 
international legal order. At those times, though, when treaties are 
objectionable, the United States can justify stepping back but not 
walking away.
    The main institutional architecture absent today is an effective 
forum for coordinating global strategic thinking on a set of specific 
practical challenges. The G-8 could spin off a series of yearly 
meetings on energy and climate, nonproliferation, global health, 
education, and the world economy.

Fifth, the next administration should elevate and unify its approach to 
global development by creating a Cabinet-level voice.

    The next President should task the smart power deputy to work with 
the Cabinet Secretaries to develop a coherent management structure and 
institutional plan within the first 3 months of office for creating a 
Cabinet-level voice for development.
    The Commission on Smart Power heard a range of arguments for how to 
organize this aspect of our civilian capacity. Disagreement centers 
around the degree of integration that will best serve American 
interests and the priority placed on effective development.
    Some have called for a Department of Global Development while 
others have promoted the creation of a ``super State'' Department of 
Foreign Affairs. Ultimately, we concluded that a Cabinet-level voice 
for global development was important for putting forward a more 
positive face of the United States to the world.
    This new Cabinet official should take the lead on launching new, 
high-profile global public health initiatives, building on successful 
Bush administration and private sector efforts. These could include 
developing a global health network and bringing safe drinking water and 
sanitation to every person in the world.

Sixth, the next administration and Congress should encourage greater 
autonomy, coherence and efectiveness for U.S. public diplomacy and 
strategic communication efforts.

    Reviving USIA may not be the most practical option at present. The 
next administration should strengthen our resource commitment to public 
diplomacy and consider what institutional remedies in addition to 
capable leadership could help make U.S. public diplomacy efforts most 
effective.
    One possibility the next administration should consider is the 
establishment of an autonomous organization charged with public 
diplomacy and reporting directly to the Secretary of State. This quasi-
independent entity would be responsible for the full range of 
government public diplomacy initiatives, including those formerly 
conducted by USIA.
    Congress should create and fund a new institution outside of 
government that could help tap into expertise in the private and 
nonprofit sectors to improve U.S. strategic communication from an 
outside-in approach. As the Defense Science Board has suggested, this 
center could conduct independent polling, research and analysis on U.S. 
Government priorities; promote a dialogue of ideas through mutual 
exchanges; and shape communications campaigns to help shape foreign 
attitudes. The center should have an independent board that could serve 
as a ``heat shield'' from near-term political pressures.
    Effective public diplomacy must include exchanges of ideas, 
peoples, and information through person-to-person educational and 
cultural exchanges, often referred to as citizen diplomacy. The next 
administration should expand successful exchange and education 
programs, including doubling the size of the Fulbright program.

Seventh, the next administration should shape an economy flexible and 
competitive enough to deliver economic benefits while minimizing the 
human cost of adjusting to economic dislocation.

    International trade has been a critical ingredient to U.S. economic 
growth and prosperity. The next administration should seek to create a 
free trade core within the WTO, negotiating a plurilateral agreement 
among those WTO members willing to move directly to free trade on a 
global basis. While consensus within the full WTO remains the goal, and 
could potentially be reached in some areas within the coming months, in 
many cases it is not realistic. The next administration should seek to 
lock in a minimum measure of global trade liberalization.
    There is no doubt the benefits of trade are not evenly 
distributed--within a nation or across nations. The next President 
should exercise U.S. influence in international financial institutions 
to direct the efforts of these organizations toward aiding poorer 
countries that face the inevitable adjustment issues that come with the 
opening of markets. We should also reexamine our own trade policies 
toward these nations. The next administration should fundamentally 
reform trade adjustment assistance to facilitate the reentry of 
American workers who lose their jobs.
    Global competition today is less for markets and more for capital, 
talent and ideas. Half of all patents issued in 2006 were of foreign 
origin. The United States must do more to prepare itself for increasing 
economic competition.

Eighth, the next administration and Congress must make addressing 
climate change and energy insecurity more than just a political catch 
phrase by creating incentives for U.S. innovation.

    A world operating on different sets of rules and costs associated 
with carbon dioxide emissions could have disruptive implications for 
trade, energy security, competitiveness, and economic growth. The next 
administration should create a level playing field to underpin the 
carbon-constrained economy. It should work with Congress to place an 
economic value of greenhouse gas emissions via a mechanism that sends 
clear, long-term price signals for industry.
    As world energy demand continues to rise, the next administration 
must reduce demand through improved efficiency, diversify energy 
suppliers and fuel choices, and manage geopolitics in resource-rich 
areas that currently account for the majority of our imports. The next 
administration should take the lead within international institutions 
to establish a common principles charter for energy security and 
sustainability. The charter should outline sound energy policies and 
practices, including protection of sealanes and critical 
infrastructure; investment-friendly regulatory and legal frameworks 
that respect sovereign rights of resource holders; and promote regular 
dialogues between producers and consumers to improve information-
sharing.
    The next administration and Congress should establish and fund a 
joint technology development center. International collaboration helps 
reduce costs and accelerate the pace of innovation. The U.S. Department 
of Energy in partnership with major global energy companies should 
establish 10-year endowment for funding energy and technology related 
research. This could be administered by an international consortium of 
the National Science Foundation and equivalents and disburse grants 
through a peer review process to researchers to provide venture capital 
to develop and deploy next generation energy technologies, such as 
biofuels.

Ninth, American leaders ought to eliminate the symbols that have come 
to represent the image of an intolerant, abusive, unjust America, and 
use our diplomatic power for positive ends.

    Closing the Guantanamo Bay detention center is an obvious starting 
point and should lead to a broader rejection of torture and prisoner 
abuse. Guantanamo's very existence undermines America's ability to 
carry forth a message of principled optimism and hope. Although closing 
Guantanamo presents practical, legal, and political obstacles, these 
constraints are surmountable if it is a priority for American 
leadership. Planning for its closure should begin before the next 
President takes office.
    The next administration should continue to expend political capital 
to end the corrosive effect of the Israeli-Palestinian conflict. The 
United States must resume its traditional role as an effective broker 
for peace in the Middle East. We cannot want peace more than the 
parties themselves, but we cannot be indifferent to the widespread 
suffering this conflict perpetuates and passionate feelings it arouses 
on all sides.
    Effective American mediation confers global legitimacy and is a 
vital source of smart power.

Tenth, the next administration should not fall into a new cold-war 
struggle to compete with and contain Chinese soft power.

    China's soft power is likely to continue to grow, but this does not 
necessarily mean that Washington and Beijing are on a collision course, 
fighting for global influence.
    The next President should seek to identify areas of mutual interest 
between the United States and China on which the two powers can work 
together on a smart power agenda.
    Energy security and environmental stewardship top that list, along 
with other transnational issues such as public health and 
nonproliferation. Global leadership does not have to be a zero-sum 
game.

    Mr. Chairman, we would both be happy to go into more detail on our 
Commission's recommendations or discuss our personal views on these 
matters during our oral testimony. Thank you again for the opportunity 
to sit before you today.

    The Chairman. Thank you very much.
    Gentlemen, there is so much to ask you about. Your report 
was, I think, very good, in some cases provocative in the minds 
of some of my colleagues, but I think pretty straightforward.
    I just attended for the first time in a long time--I used 
to do it all the time--a conference that was held in Europe, in 
France this weekend with a number of prominent EU 
representatives and thinkers like you gentlemen. We discussed 
over 2 days a whole range of issues, many of which you have 
referenced here. Although I knew what I am about to say, it 
struck me in a way it had not before how fundamental to every 
one of the problems and every one of the opportunities we face, 
at least in that context of the West, Europe, and the United 
States, relates to energy.
    I have been, like everyone here in this body, spending a 
great deal of time over the last decade trying to learn a great 
deal more about possible solutions, alternatives, international 
mechanisms by which we can deal with--as was pointed out, China 
is building one new coal-fired plant per week.
    Senator Voinovich. Two.
    The Chairman. Two now? Germany now has announced it is 
moving from--because of, I assume, Russia--moving to coal in a 
way that is a complete reversal of what was going on.
    As you well know, we have some really qualified staff 
members up here on the Hill, some of the brightest people in 
the country who are underpaid and overworked, but really very, 
very good.
    I reached the conclusion that I would like you to comment 
on. I do not know how we can deal incrementally any longer with 
these issues, whether it is cap and trade, which is not going 
to have any net impact in my view worldwide--it may, here in 
the United States, have a benefit--whether it is moving to 30, 
40, 50 miles a gallon to our automobiles, if we were able to do 
that. It has an impact, but it does not have a profound impact. 
It does not lessen the immense influence of some of the bad 
actors internationally. And I would characterize--I do not want 
to be provocative--Putin as a pretty bad actor and not evil, 
but not a positive influence these days in the world. Russia's 
ability to engage in the kind of use of force, in this case, 
economic force, would be nonexistent were they not floating in 
the sea of oil revenues.
    Did you all discuss whether or not all or any of the 
incremental suggestions about energy are able to get us to a 
place we have to get much more rapidly than the projections 
will get us there? For example, 20 percent of our energy being 
renewable by the year 2020. That is a drop in the bucket. That 
is not going to in any way impact on our dependence and the 
world's dependence on Russian oil, Mideast oil, what is going 
on in Iran, Iraq, et cetera.
    And it seems to me we just need to think in a gigantic way. 
We all use the phrase we need a ``Manhattan Project.'' It seems 
to me there is a need for the ultimately new thing, that we 
should be investing tens of billions of dollars into pure and 
applied research, taking chances--you talk about taking 
chances, risks--taking risks on really genuinely innovative 
ideas that could, if they work, catapult us to a place that may 
get us somewhere in the next 10 years that we are not going to 
otherwise get for another 50 years.
    There is an old expression. I think it was attributable to 
one of the famous economists. In the long run, we are going to 
be dead. I do not know what the heck we are going to do unless 
we get a significant breakthrough on energy policy and 
alternative energy sources.
    I spent 5 of my 7 minutes here talking, but I would like 
you to just respond to that, to put it in your phrase, Mr. 
Secretary, that macro comment. How do we approach this issue? 
Can we continue to do it by this piecemeal, incremental method 
that seems, I think, looking down on consumption patterns, will 
have virtually no discernible impact on our national security 
and foreign policy in the next decade?
    Mr. Armitage. Thank you, Mr. Chairman. I am not the genius 
on this, but I have got strong views and we did discuss this.
    The first rule of holes is when you are in one, stop 
digging. We are in a hole and we are still digging, whether we 
talk about ethanol. The amount of corn to make a gallon of 
ethanol would probably feed a poor family for a month. And it 
is not making that big a difference in terms of energy needs.
    We fooled ourselves for 30 years since the time of 
President Carter by talking about energy independence. It is 
not going to happen. So anybody, politician or public figure, 
that talks about energy independence--you got to dial them off 
right away. You cannot get there.
    You are absolutely correct in the view that a holistic 
approach is necessary, and that is not just the search for the 
magic bullet. If we had the magic bullet in technology, the 
United States, which has 85 percent of the world's coal 
reserves, would be sitting pretty good. We would not be having 
problems in Appalachia. I will tell you that. But a magic 
bullet is probably not going to happen. There will be some 
incremental changes.
    If you look at it holistically, we have to look at our own 
rapid transit. We have known these problems were coming. Coming 
in today, I was almost late for the hearing because of the 
traffic here.
    So I think you are absolutely right that a holistic 
approach has to be the way to do it. We cannot depend on the 
magic bullet.
    And I am sorry to bring up the dirty word, but we are also 
going to have to massively and quickly get nuclear. Now, we 
have had the first license request here recently granted, and 
that is good. But we are going to have to really look at all 
these issues and start talking straight about it, but beyond 
that.
    Joe.
    Dr. Nye. Well, I agree with Rich. The danger is that we use 
a slogan, ``energy independence.'' We have been using it for 30 
years.
    The Chairman. I am not using it.
    Dr. Nye. No. I am not saying you did, sir. But I just am 
saying we as a country have used this, and it diverts us from 
what we really need to do.
    I think the first thing you need to do is make sure that 
you do not interfere with the proper signals that markets give. 
Market prices make a difference. When we saw the seventies' 
crisis in energy, it is interesting. We cut our energy 
intensity in half as a result of reactions to market prices.
    The second thing is we want to distinguish between the 
input and the output side. Our energy input problem is getting 
energy security, but there is also an output side. If we got 
all the energy we wanted and put it up in the atmosphere 
afterward, then what do we do? So there are two parts to this.
    The third is----
    The Chairman. But if I can interrupt you there, Joe.
    Dr. Nye. Yes.
    The Chairman. You are operating on the premise that we 
operate around here, that the only energy we are talking about 
is fossil fuel. That is my problem.
    Dr. Nye. Right.
    The Chairman. My problem with you, my problem with 
everybody out there. I am not being facetious. That is my 
problem. If you continue to discuss this within context of the 
available fuel supplies, the type of supplies available, which 
are basically fossil fuels, there is no way out. No way out in 
my view.
    So the question is, When we make calculations based on 
price--and I will end with this, gentlemen--because the market-
driven approach is consequential, should we not be calculating 
the cost of our CENTCOM force as part of the cost of energy as 
we talked about? Should we not be--and it is real. How can we 
dissociate the cost accompanying our dependence, as well as the 
ability of the bad actors in the world to take actions that 
cause us to spend tens of billions of dollars to counter the 
actions, which they would not be able to take were they not in 
a position of this vast economic power? I think we need a whole 
new calculus. That is really my question.
    I think we think much too small here. All the experts that 
come before us--nobody has come before us and said, hey, look, 
while we are walking, we should be able to chew gum too. We can 
walk and do all the things that have to be done that can 
incrementally bring down both in terms of input and output, 
deal with it, whether it is ethanol or whether it is other 
things.
    But in the meantime, the resources we have--for example, 
let us just make this up. Let us assume. This is heretical what 
I am about to say.
    Let us assume that we could come up with--it would cost us 
the equivalent of $250 a barrel of oil in Btu output. Assume we 
could come up with hydrogen power, but it would cost that much. 
It seems to me we have got to start recalculating here. Is $250 
a barrel really that much more costly than $117 or $118 a 
barrel if, in fact, the consequence of that is to radically 
change the environment in which we operate, allowing us to 
radically reduce the investments we are making both military 
and otherwise and the opportunity costs that exist for us?
    So we do not talk that way. We talk like we are the owner 
of energy companies or we are the guy sitting there with our--
we are doing arithmetic and not algebra or calculus is my 
point.
    Dr. Nye. Well, I agree with that. We had a study at Harvard 
called Energy and Security, which my colleague, Bill Hogan, 
said as you calculate prices, you have to put in a wedge for 
security. In other words, a good economic calculus has to say 
what are the hidden costs, which is what you were just saying.
    But I think the general feeling is what you are suggesting 
is right to get us out of where we are. We need to diversify 
sources and diversify energy sources of fuels.
    But I was saying--and I think this is the point that Rich 
was making as well--it is not going to happen right away, and 
we have got to ask what is our security until we get there. And 
in that sense, I think we want to be looking at questions 
like--take your Russian case--working with the Europeans to 
make sure the trans-Caspian pipeline is built. On the Chinese 
case that you mentioned, we want to bring China into the 
International Energy Agency and particularly into a climate 
regime of some sort.
    I think another thing that will be useful is to set a 
floor. In other words, we now are all complaining about oil 
prices at $120. Suppose we said we will pass by legislation 
something in which oil prices will not fall below $60. That 
would call forth a lot of this technological investment. 
Investors, who have seen this happen in the past where prices 
shot up and then fell down again, would know that if it goes 
through a cycle like that again, their investment is secure. So 
there are a lot of things we can do in addition to the things 
we are doing in the Department of Energy of developing new 
technologies, which we could start down that path that you are 
talking about.
    The Chairman. Well, thank you very much. Just imagine if we 
were engaged in a joint venture with China on sequestration. 
They do not want to pollute their environment.
    Dr. Nye. I think carbon sequestration has got to be one of 
the major efforts we make.
    The Chairman. I am just giving you that as an example. I am 
way over my time. I apologize.
    Senator.
    Senator Lugar. Well, thank you very much, Mr. Chairman. I 
think the questions and answers you evoked really is the 
purpose of this hearing, to try to come to grips with improving 
the tools of our national security. Our panelists have given us 
an excellent report and Professor Nye's 10 points from that 
report which are all stimulating.
    I just want to, first of all in a nostalgic way, pay 
tribute to Secretary Armitage. He and Secretary Wolfowitz, when 
they were much more junior in the State Department in 1985, 
came before the committee the first year that I became chairman 
to talk about the Philippines. It was entirely out of the blue 
and their testimony was highly provocative as they described 
Marcos and the Philippines at that point.
    I would say that that led to a change in United States 
foreign policy, without going through all the ups and downs of 
the next year, in which President Reagan came forward with the 
thought that we will oppose authoritarianism of the right, in 
addition to totalitarianism of the left. Opposing both sort of 
marks the beginning of a democracy movement, which was a new 
doctrine and markedly different than anything he had proposed 
in election campaigns or other things. And it came really from 
provocative experience in that situation.
    I remember likewise Professor Nye and Professor Graham 
Allison coming before the committee in later years talking 
about arms control, among other things. We moved along the 
trail there, as the chairman will recall, with President Reagan 
appointing an arms control observer group. Things did not move 
along nearly so rapidly as all of us had hoped through the 
Reagan administration or through the Bush administration, but 
in due course, we came to some remarkable agreements. So the 
doctrine of mutually assured destruction was really replaced by 
something that was a good bit more--not necessarily benign, but 
more practical in terms of arms destruction, better control, 
and so forth.
    And that is why these exercises are so critically important 
because historically they make a big difference in the history 
of our country, as well as in the prospects for peace overall.
    Now, I pick up from your report today these elements, 
although they are emphasized in different ways. We discussed 
energy and the environment for a moment, and I want to get back 
to that. But I would add another element, that of food 
supplies, and you have touched upon this, Secretary Armitage. 
For the moment, we are getting reports on 25 countries with 
potential political instability. That may not be the half of it 
because essentially many people in the world are eating a whole 
lot better. Pork as opposed to rice. But there is not as much 
to go around, and therefore the differentials even within 
countries, as well as the rest of the world, are growing. It is 
exacerbated by the debates that you have suggested, Secretary 
Armitage, about ethanol or soy diesel. But these are sort of 
trivial pursuits in comparison to the real dilemma, that here 
you have a whole world that is demanding more energy and more 
food. In fact, more of everything.
    And these are huge issues that really go beyond specific 
conflicts. The issues our committee becomes involved in day by 
day sort of understandably undermine the whole situation. 
Clearly, energy touches upon the environment in one way or 
another, about every way you look at it.
    But I would also add that we have had good testimony in the 
past about avian flu, potential pandemics, and other worldwide 
situations. We have been spared this thus far. But I have heard 
testimony that, for example, if avian flu came to the United 
States, the real dilemma even here would be food supplies 
ultimately as opposed to fatalities. In other words, the 
disruption of our economy, disruption of the ways in which we 
provide for ourselves comes as society breaks up in these ways.
    Now, the point of all of this is to say that the chairman's 
call for a smart power series and your testimony points to the 
fact that we may not be very well organized as a country to 
meet these challenges. We have interesting hearings and 
philosophically share these things in a bipartisan way. You 
have made these issues especially available in an election 
year, which is really important.
    But I am hopeful that you can suggest specific 
recommendations today. How do we reorganize our Government 
beyond double-hatting various people or, as we have been 
modestly suggesting, having a bigger civilian component so that 
our soldiers do not have to do everything?
    Or how do we get into a budgeting situation where we do not 
just incrementally say this department gets 3 percent more this 
year and this, 4? But we are not really clear either one of 
them are relevant to the whole because we have not thought 
through what Department X or organization Y is doing, and it is 
hard to do a comprehensive review in the course of the budget 
process, the appropriation, and the politics of all of this.
    A President will not be able to discuss all this or even 
begin to talk about it in a campaign. But somebody is going to 
get elected. Now, when that happens, what ability does the 
President have, if he or she is very visionary, to organize/
reorganize our Government? Granted, the Congress has checks and 
balances and so does everybody else in the vested interests 
that are there. But physically how do you go about doing this 
rather than insinuating these ideas into a bureaucracy or a 
Government that does not work very well?
    Mr. Armitage.
    Mr. Armitage. Senator, could I add, if I may, to the food 
supply, et cetera, the following thought and then I will try to 
answer your question?
    It is ironic, is it not, that we are in the period of the 
greatest wealth creation ever seen in the world right now, and 
yet it is distributed so unequally. And we have more people who 
are without than ever before, first of all. And the reason for 
the food problems, which are not limited to other nations--I 
saw Sam's Club is rationing bags of rice now in our country. 
Coffee went up a dime, by the way, this morning I noticed at 
the 7-11. So this is going to soon cut everybody.
    But add to that list fresh water because it may be actually 
more imminent. The problem of fresh water is more imminent than 
the need for us to get a handle on the fossil fuels.
    And I do not believe, sir, that your comments are heresy. 
It is just the difficulty of putting a value on climate change 
damage, and you might extend it to the military. At some point 
in time, if we continue fossil fuel dependence and it continues 
to rise, we are going to have a conflict between our civilian 
needs and our military needs. It is going to happen. The money 
will make it so.
    The President has not much, I think, beyond a bully pulpit 
to reorganize, but he has got one thing he can do. And you have 
a big part in this, and that is to demand competency and have 
accountability. Competency in those people in the 
administration.
    We have a line in our report that says that we are in 
danger of being seen as not competent. I was told in Saudi 
Arabia that for the first time people were questioning our 
basic competency. And I thought they were going to then talk 
about Iraq, but no, they were talking about Katrina. Katrina. 
So the one thing the President can do that you have a say in is 
to have competent people and demand accountability.
    You know, leadership in my view is not just about having a 
vision. You have to have that. That is openers. It is like a 
pair of jacks in poker. But you have got to have execution and 
accountability. Those are three things the President can do.
    Dr. Nye. Can I just add a point on the reorganization 
question? Because once the President is elected, it is going to 
be tight in terms of the agenda of things that he or she will 
have to be dealing with.
    But there are some of the things that we recommended which 
actually can be done without legislation, without creating new 
departments and so forth. Now, obviously, a wise President will 
consult with the Congress before doing it, but something like 
this dual-hatted deputy NSC adviser does not require a lot of 
legislation. It may require some consultation.
    The danger of doing things which require a lot of 
reorganization is that you wind up using a lot of your 
political capital and your time on things that take a long 
time. Some of the things we recommended actually can be done 
relatively quickly. You could do those things and start the 
planning of all of them right after the election in November.
    You should then start a group to work on larger questions 
which you might be able to get through after something changes 
in the larger conditions. Unfortunately, we tend to respond 
after crises, and if we do not have a good plan of what to do 
after a crisis, we have a bad plan, which is immediately 
generated. I will volunteer the perhaps unpopular view that in 
creating the Department of Homeland Security and the DNI, what 
we did was respond with an inadequate plan after crises. And 
what we can be doing is the types of things we are suggesting 
in our testimony today which could be done quickly and then 
longer term changes being ready for when the climate is such 
that you could get them through, rather than doing the ad hoc 
improvisation that we have seen.
    There is a difference between reform and reorganization. We 
have, I think, spent much of the time in the last few years 
reorganizing in response to crises rather than really reforming 
the process.
    The Chairman. I will just make one brief comment to Senator 
Lugar. In 35 years of being a Senator, I do not think the 
country has ever been riper for fundamental reform. The 
country, the politics--I do not think it has ever been riper. 
If the President does not hit the ground knowing what he or she 
wants to do, the idea of a long-term study group to do it--it 
ain't going to happen in my view. That is just the politician 
in me.
    Senator Nelson.
    Senator Bill Nelson. Reform not reorganization. Do not just 
rearrange the deck chairs.
    In your presentation, you say, ``We need stronger civilian 
instruments to fight al-Qaeda's ideas, slow climate change, 
foster good governance, and prevent deadly viruses from 
reaching our shores. The uncomfortable truth is that an extra 
dollar spent on hard power today will not necessarily bring an 
extra dollar's worth of security.''
    The United States Southern Command is starting to move in 
that direction, and that seems to be the whole idea of the U.S. 
Africa Command. Yet, we have these bureaucratic logjams, and 
one of the things that you have given an opinion of today is 
you are concerned that the military may dominate too much the 
need of the civilians to step forward.
    Do you want to give us some suggestions? And I am right in 
the middle of this on another committee of mine.
    Mr. Armitage. Yes, sir. You are absolutely correct. Admiral 
Stavridis in the Southern Command is moving out. He was very 
congratulatory about this particular report because he sees it 
is going in the direction he was already heading. And he is an 
economy of force theater, so he needs these other tools. He 
wants us to have a lot of tools in our toolkit.
    Let me make a comment on something that Senator Lugar 
referred to because it gets at this. All of us, I think at one 
time or another, have decried the fact that our military is run 
hard and put away wet. They are asked to do all sorts of things 
that probably they did not realize they were going to do when 
they first signed up.
    1206 authority, global train and equip, is one of those. I 
fought against giving this to the Department of Defense not 
because they are not competent, but because it detracts from 
their basic duty of fighting the Nation's wars. Further, it is 
not always the case that a regional CINC who has real military 
needs will be sharing the national view of who should be 
trained and equipped. So, I think that we made a mistake in 
this 1206, and I would heartily recommend that it come back 
under the Secretary of State's direction.
    In terms of the tools, I think both AFRICOM and SOUTHCOM 
share the economy of force problems, and it is forcing them to 
be very creative. It is forcing them to depend more on their 
POLADs, the political advisors, to give them sort of the flavor 
and the texture of the region. I think this is a very good 
thing and it is to be applauded.
    Joe.
    Dr. Nye. Yes. I would agree on that.
    I think one of the key questions we ought to be asking is 
whether we have enough capacity, operational capacity, in 
civilian agencies. One way of looking at this is a great deal 
has migrated in the direction of the Department of Defense 
simply because it has operational capacity. So if you look at 
the increase of foreign assistance that goes through DOD, which 
has increased quite impressively, it is partly because we do 
not have enough capacity elsewhere.
    And if we have a Government which is one operational giant 
and a lot of pygmies, the net result of this is that we wind up 
with an overly militarized foreign policy not because the 
military is seeking this, but because the President, having to 
turn to an operational agency to get things done, turns to the 
one that can do it. And until we do more to rebalance that to 
create greater capacity in the civilian agencies, we are going 
to be stuck in this same position.
    So, I think Admiral Stavridis has done a very good job in 
SOUTHCOM. I think AFRICOM is a good idea, but there is a 
question of whether these should be primarily seen as military 
missions or primarily civilian missions. And I know Jim Locher 
is going to testify before you later, but some of the thoughts 
that he has had about having regional civilian structures 
rather than just regional military structures I think make a 
lot of sense.
    Senator Bill Nelson. Thank you, Mr. Chairman.
    Senator Hagel. Thank you, gentlemen. I am like all here on 
this panel--and I think speaking for Americans in general--am 
grateful to the two of you and to John Hamre and CSIS and 
others who participated in this effort. I was very proud to 
play a very small part in what you have contributed here to not 
just a better understanding of what not just the United States 
and the world face, but coming forward with ideas as to how 
then we frame up a 21st century structure, strategy, policy to 
deal with these issues.
    One of the points that you made, Secretary Armitage, 
about--``diffusion'' was not your word; it would be my word--
diffusion of great economic power today in the world--and I 
would add to that, along with that great diffusion of economic 
power that is probably unprecedented comes tremendous new 
influences which will dictate the new center of gravity 
certainly for the first part of the 21st century in 
geopolitical relationships.
    What we are dealing with--and you made this very clear--is 
a situation probably unprecedented as well in history of having 
the world's circuits overloaded. Our circuits are overloaded 
and we have explored some of these areas today. My colleagues 
have talked about energy; the environment. And it seems almost 
that we are in a hole that we do not know how to get out of 
because of the uncontrollables. There are so many dynamics here 
now that we cannot control, starting with energy. But we are 
going to have to deal with these issues in a way that probably 
we have never had to before.
    You also mentioned, both of you, President Eisenhower and 
the time after World War II. And I have always believed that we 
are living in a very parallel time to that 10-year period after 
World War II because in that period of time, the leaders in the 
world essentially restructured the format of the world. They 
essentially built a new world order.
    Now, I know some of my colleagues do not like that term 
``world order,'' which implies a lot of things. But that is 
what we are talking about, coalitions of common interest. You 
mentioned them, as you did, Professor Nye, in your testimony 
when you talked about the United Nations. That certainly was a 
product. NATO, the EU, the World Trade Organization which then, 
to begin with, was a general agreement on, as you know, tariffs 
and trade.
    I want to direct my question to that general area of what 
you started to talk about, some of my colleagues have focused 
on. How do we better use these alliances and bring these 
alliances together in a smarter sense of common interests, 
defining relationships not on our differences, but on the basis 
of our common interests? We will always have differences, and 
you have noted that.
    I am going to also mention an area that you did not talk 
too much about, you did examine in your report, NGOs. You both 
talked a lot about trust and confidence. Secretary Armitage, 
you mentioned the Saudi Arabian issue. Now there is some 
significant question about our basic competency. And I noted 
the Zogby International poll that was released about a week 
ago, which I suspect you all saw, over 4,000 respondents, which 
essentially, bottom line, says that more than 8 out of 10 of 
the citizens in the Middle East have a very negative opinion 
about the United States for many reasons. So it coincides with 
everything you have noted in your report.
    But I would like to take the remaining time I have. If you 
would both address the larger issue, which you have touched on 
to some extent. How do we use these coalitions of common 
interests, these alliances, these structures, these 
relationships not just to enhance our ability to help lead and 
our purpose and our focus and our power and our significance, 
but to start to move toward these real issues of water, of 
energy, the human condition? Because if we do not get 
underneath that, then it will not make any difference what we 
do because the problem will be so big.
    And we know what the demographics are in the world today, 
6.5 billion people. We are going to get to 9 billion people. 
Around 40 percent of that 6.5 billion today under the age of 19 
years old, all in the troubled areas of the world. We are just 
not prepared, and I do not think it is just the United States. 
It is the world.
    So if you would take any piece of that, both of you, and 
respond, I would appreciate it. Thank you.
    Mr. Armitage. Senator, thank you. First of all, I do not 
know that I will have the opportunity and the honor of 
appearing before you again, and I want to say as a citizen 
thank you for your courage both in the military service and in 
the U.S. Senate and for your unwavering voice that cautions us 
all, at the end of the day, to do the right thing. So, thank 
you.
    You are right. The tectonic plates are moving under us. I 
mean, some people would say back in the 19th century when 
united Germany rose that that was the most monumental thing 
that the world had ever seen. Some would say the same in the 
20th century, the rise of the United States, and now people are 
talking about the redevelopment of China on the world stage is 
as important as the united Germany or the United States. 
Combined with the energy and the water and the food problems, 
they are all coming at us all at once. So we are not ready for 
much.
    However, it is my observation on alliances, first of all, 
if we look at alliances as something that is burden-sharing--
and that is what alliances are--that is also, to some extent 
power-sharing. We have to have an understanding of that. It is 
not my way or the highway just because we are in an alliance 
and we happen to be the strongest. Burden-sharing is power-
sharing. I think it is a very sensible and healthy way to look 
at alliances.
    And No. 2, nothing is going to happen very meaningful in 
the world without us using our alliances to be a forcing 
function. I do not mean we force people to come our way, but we 
force some attention on a problem. We have been able to do that 
in Asia somewhat on the question of infectious diseases with 
Japan and using Japan as the base from which we move forward. 
We can do that with NATO. We can do that with others. There has 
to be someone who stands up and says follow me or here is an 
idea. If you guys want to take the lead, take it. Those 
structures are there. We do not need to reinvent them.
    Dr. Nye. Let me make Rich's sentiments about your service 
bipartisan, Senator.
    But in responding to the issue of institutions, I had 
mentioned the idea of finding smaller groups that can be 
effective and then bringing the action into larger groups. 
Harlan Cleveland, who I think first coined this phrase, said 
the problem in international institutions is to get everybody 
into the act and still get action. That is why we suggested 
this idea of broadening out the G-8 to a G-12 or -13. It may be 
that in these types of ad hoc arrangements, we can get smaller 
groups which actually can get action and then bring them into 
larger settings. So we need more institutional imagination on 
that.
    But even so, there are existing institutions we can do more 
with. Let me mention the World Health Organization. Earlier 
there was a discussion of avian flu. I do not know how many 
people realize that more people died of avian flu in 1918 than 
died in all of World War I, and yet, think of the money we 
spent in World War I and think of the money that we actually 
spend on the World Health Organization. It is in our chart 
somewhere. A few hundred million is our share of the budget.
    If you said what can we do about avian flu, if we develop a 
public health system in Cambodia, just to take one example, and 
get not only a good public health system, good statistics, good 
laboratories, transnational contacts of doctors so that we get 
early warning so that they are better able to cope with this, 
we are going to do a lot better defending ourselves against the 
avian flu. So there is an existing organization which I argue 
is severely underfunded. So in addition to building new 
organizations, you could say in the larger perspective of avian 
flu, we ought to be thinking of the World Health Organization 
in a totally different perspective than we are now thinking 
about it.
    Senator Hagel. Thank you very much.
    The Chairman. Thank you very much.
    Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Thank you both for your testimony. I appreciate the full 
statement that you have here and some of the language that 
speaks to the issue of soft power and to our overall standing 
in the world. When I read elements of it--I do not know if you 
got to say this in your opening statements because I know that 
your whole statement was included in the record, but when I 
read from your statement when you say, ``Similarly, when our 
words do not match our actions, we demean our character and 
moral standing and diminish our influence. We cannot lecture 
others about democracy while we back dictators. We cannot 
denounce torture and waterboarding in other countries and 
condone it at home. We cannot allow Guantanamo Bay or Abu 
Ghraib to become symbols of American power.'' And then you go 
through a whole list. So I appreciate the strength of what you 
have said here.
    As the subcommittee chair--Senator Hagel is our ranking 
member on that subcommittee--that deals with all foreign 
assistance, I am particularly interested in some of your views. 
How do we better incorporate that as an element of soft power?
    Over the last several months, I know that I have asked AID 
to come to us with a proposal to build up the human resource 
capacity at AID, but also to look at how we deliver those 
development services as a critical tool of soft power. I see 
that you have mentioned, Mr. Nye, the whole issue that there 
should be 1,000 more Foreign Service officers. It seems to me 
that in the AID capacity, I am not sure that they have the 
capacity to deliver what we want them to do.
    I am wondering if you have some insights on that 
specifically, either one of you.
    Mr. Armitage. Thank you, Senator. Thank you very much for 
your comments.
    There used to be a fellow up here by the name of Paul 
Clayman. He has gone out in the private sector now. But he 
really studied hard about the foreign affairs budget and 
foreign aid. He used to have what he called a spiderweb chart, 
and it showed, I think, 23 or 24 different agencies who had 
programs around the world, but they really were not coordinated 
not through USAID or through the State Department. Everybody 
was kind of doing their little thing. So in your 
investigations, I would hope you would look at that, at least 
not replow that ground because I think there is a lot of data 
there.
    Second, you are exactly right. There is very limited 
capacity in USAID. And I am afraid--this is my personal fear--
that if you look at what we did with the development of DNI, we 
are going to fight al-Qaeda. We need better intelligence. So 
what do we do? We have a headquarters here in Washington. The 
fight is out there, wherever there is. It is not back here in 
Washington. So I think USAID does need much more capacity. They 
need to be encouraged to be much more out in the field and to 
be much more autonomous.
    There is a colleague sitting in the back of the room who 
ran the program for Afghanistan for the U.S. Government until 
recently. He told me a story about a road building project. He 
and General Eikenberry and our Ambassador in Afghanistan got 
together, and they decided they would start a roads initiative 
in Afghanistan. And it was 2 years before they could develop 
through the appropriations cycle the $800 million necessary. 
The U.S. military had some walkaround money through the CERP 
funds and they could do smaller versions of those same roads 
tomorrow.
    So my observation is as you rightfully look at capacity-
building in USAID, I hope you would also, sir, encourage them 
to get out there and do it and not be so risk-averse, but just 
learn they are going to have to manage risk as they move 
forward. We are not going to eliminate it.
    Dr. Nye. Yes. I agree with what Rich said on that. I had 
mentioned earlier the idea of an operational deputy in the 
State Department to coordinate the fragmented aid, but equally 
important is finding regional structures where you get more or 
less peer-to-peer coordination in the field. So we need both.
    Senator Menendez. You mention in your report a Cabinet-
level voice for global development. Could you expound upon 
that? How does that work? How does the interaction work between 
State and AID? How do you see a Cabinet-level voice working? It 
is not a Cabinet member, as I read the report, but it is a 
voice.
    Dr. Nye. Well, we deliberately choice the word ``voice'' 
not ``department'' because we did not want to rearrange deck 
chairs and create a new bureaucracy. We feel that has been one 
of the problems of our reorganizations.
    On the other hand, it is true that if you go into a meeting 
in the situation room in the White House and there is nobody at 
a high level around the table, that set of interests is not 
well heard. The Secretary of State has a lot of other things on 
her plate at the same time. If you had an operational deputy in 
State who could be present anytime those issues of assistance 
and coordination of assistance were discussed, you would have a 
voice, not a new department, but another voice at the table.
    Senator Menendez. Finally, I look at this issue of soft 
power and believe greatly that we need to focus a lot more. In 
the context of our foreign assistance, I just think that it is 
an element that many look at with disdain. Yet, I think about--
just take one part of the world right here in our own 
hemisphere. A lot of the things that we are debating in the 
Congress of the United States and here in the Senate are 
related to some of these core issues. We debate undocumented 
immigration into this country, but why do people leave their 
countries? One of two reasons: Civil unrest or dire economic 
necessity.
    And if we were dealing with that in our own national 
interests, we would not only stem that tide, but we would also 
be creating greater markets for U.S. goods and products to be 
sold. We would create greater stability in the hemisphere. We 
might reverse the tide of where we see the hemisphere going in 
a spectrum of political ideology that is not in the national 
interest of the United States. We would see a reduction of 
health issues that have resurfaced along our southern border 
that we had largely eradicated. We would do a lot more about 
making sure that a poor coca farmer finds a sustainable 
alternative to that because he is going to sustain his family 
one way or the other. And so it would be part of our narcotics 
interdiction efforts.
    It just has a lot of elements to it that are not even about 
being a good neighbor by any stretch of the imagination. It is 
about self-interest, national interest, national security, and 
I certainly applaud your efforts in this regard.
    Mr. Armitage. If I may, Senator, I think no one will accuse 
Dr. Nye or me of being fuzzy-headed liberals or whatnot.
    Senator Menendez. Certainly not the fuzzy side. [Laughter.]
    Mr. Armitage. I used the term before you arrived, sir, that 
this is not--maybe ``assistance'' or ``aid'' is not the proper 
term. It is not charity. It is a cold calculation of our 
national security. That is exactly the point I think you are 
making.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. Senator Voinovich.
    Senator Voinovich. Thank you, Mr. Chairman.
    Dr. Nye, when did you publish Soft Power?
    Dr. Nye. Well, I think the term first was published in 
1990. I then wrote a book. That was in a book called ``Bound to 
Lead'' in 1990 in which I said that people who thought the 
United States was in decline were missing the fact that not 
only did we have military and economic power, we had a 
tremendous power to attract. And people were not taking that 
sufficiently into account.
    Senator Voinovich. Well, I read your book about 4 months 
ago. I talked to my staff and said let us peel out the best 
ideas that are here. And I am so excited to be here because 
actually you come up with 10 recommendations. I would really 
ask the two of you, through your organization, to come back to 
us with some recommendations as to what we could do at all 
legislatively, what the next administration can do.
    We are not looking for the Department of Homeland Security. 
Anybody that really thought about that, to take 22 agencies and 
over 200,000 people with different cultures and put them 
together should have known it was going to be a debacle, and it 
is still a debacle. Unless we get somebody in charge of 
transformation and give them a full term, it is never going to 
get done.
    But you would do us a great favor to come back and talk 
about some practical things that we could do.
    Second of all, the American Academy of Diplomacy has got an 
advisory group. They are putting together some recommendations 
on a foreign affairs budget. It would be interesting to know 
what people think about what those recommendations are.
    Condoleezza has come up with this new civilian response 
corps to be developed over the next few years. I would be 
interested in how you feel about that.
    I had a meeting with General Jones a couple years ago, and 
he talked with me at length about the challenges of Afghanistan 
and the fact that many of the challenges related to the 
difficulty of creating a cohesive and successful strategy from 
so many different funding pots, authorities, and agencies, from 
democracy-building programs at State to writing laws for the 
justice and commerce and so on and so forth, that they need 
that flexibility and that we ought to have a national security 
budget and look at how these things all integrate with each 
other. I would be interested in that.
    And the last thing I want to say is that I told the 
chairman of the committee I happen to believe that this cap-
and-trade legislation that came out of the Energy Committee 
will not get the job done.
    I attended the Aspen Institute. We had 4 days on China-
United States relations. Why not an international fund where 
you have got the largest economies getting together, put the 
money in there to challenge the best and brightest people in 
the world to come up with ideas on how we capture carbon and 
how we sequester it? We know we are going to burn a lot of 
coal. I mean, the Chinese are burning more coal now than we do, 
the European Union, and Japan. So we know we are going to burn 
coal. The question is, How do you get the thing done?
    Dr. Nye, from a point of view of public diplomacy, would it 
not be wonderful if you could get the Chinese, us, and the 
others to come together and say, this is a global problem, we 
are going to work on it together, and come up with the new 
technologies so we can move forward?
    Dr. Nye. First, let me say, Senator, that it was a great 
pleasure for me when I was dean at the Kennedy School, to work 
with you on the questions of government organization and 
getting the right young people in the government. I am grateful 
for your service on that.
    To pick up your point, we will look at a number of these. 
We have some suggestions. We will look at a number of these 
other points that you mentioned and would be happy to follow up 
on that.
    But let me just pick up your point about CO2 and China. We 
need a mind set which is different if you are going to deal 
with this. I think you mentioned earlier that China is 
producing two new coal-fired plants a week. One of my 
colleagues at Harvard pointed out by a calculation that she did 
that if we did not just get fuel efficiency standards but 
stopped driving, parked all our cars, for a year, the amount of 
CO2 that China is putting into the air would equal that in less 
than a year. That puts this into a perspective. We cannot solve 
our problems unless we get cooperation with others.
    Now, from the point of view of the Chinese, they say we are 
only one-fifth as intensive as you are in producing CO2 per 
capita. But that does not matter from the point of view of the 
environment. It does not care whether it comes per capita, 
thinking of the overall burden.
    So if you ask what can we do about this, you cannot do it 
by coercion. You can use the hard power of threats or 
sanctions. It will be self-destructive. The only way you are 
going to do this is by a cooperative program, attracting the 
Chinese and others into something where it is in their interest 
and in our interest.
    And I think an international fund is going to be essential 
to this. Some people have talked about a facility under the 
World Bank or within the World Bank framework. Others have 
talked about a new facility. But unless we are able to do----
    Senator Voinovich. By the way, we have the Asian-Pacific 
Partnership that is doing some good things, but has never been 
funded properly.
    Dr. Nye. Yes, I agree. That might be a vehicle. But I think 
it is probably going to need to be a global vehicle on this.
    But in any case, going at a series of cooperative steps 
with China, some of which we mentioned in the testimony here, 
but some of which need further development, I think is going to 
be essential if we are going to deal with this, in our 
interests as well as their interests.
    Mr. Armitage. Senator, you asked specifically about Dr. 
Rice's request for a civilian reserve corps. It is a 500-person 
reserve corps. There is funding in the 2007 supplemental I 
believe awaiting an authorization. I do not know how many 
votes. You will need 60 votes, I guess. I think it is being 
blocked here in the Senate.
    But this will be a good thing for two reasons. One, I think 
it does start to detract from the need of the U.S. military to 
all the heavy lifting around the world, and second, it will 
allow us on smaller contingencies to have civilian experts fall 
in immediately on a problem; a problem such as Haiti, something 
that is more manageable than an Iraq, for instance.
    Associated with the civilian reserve corps is the Civilian 
Stabilization Initiative, the CSI, which is a 250-person active 
corps, 2,000 standby, and 2,000 more in a standby response 
mode. These are eminently worthy and sensible suggestions which 
will relieve, to some extent, our U.S. military.
    Mr. Armitage. By the way, on the whole question of China--I 
was at Stanford recently giving a speech, and I answered a 
question and then got into a colloquy, as you would say up 
here, with a person in the audience who was a scientist who was 
involved in taking the filters out of Lake Tahoe. And guess 
what he told me he found? Environmental damage from China.
    Senator Voinovich. Mr. Chairman, could I just ask one quick 
question? I know I have run over.
    The Chairman. Sure.
    Senator Voinovich. But the question I have is we are coming 
up with ethanol, cellulosic, and all these other things. Would 
it not be wise for us to kind of sit back and see how all of 
this starts to affect other things? In other words, we have got 
ethanol. We are supplementing ethanol, and now we are saying we 
are going to go to cellulosic, and then we are going to do 
this. And how does this ricochet around in terms of the big 
world picture in terms of food and some of these other things 
before we just go off and do little things. Do you understand 
what I am saying? Step back and look at the big picture and see 
how does this all fit together and where should we be putting 
our effort.
    Dr. Nye. I think that is exactly right. One of the problems 
is to seize on something as a silver bullet and not realize 
that there is an enormous web of interdependency so that as we 
got a little bit overenthusiastic about corn-based ethanol, we 
found that this was having effects around the world which were 
much more costly than we first believed. So it does require a 
more careful and thorough study on some of the measures we 
take. There are things we can do, but I think we have not 
always been as wise as we could in doing them.
    And I still believe that pricing systems make a difference. 
In other words, if you have a floor--you create a floor and 
then people can make their decisions by market mechanisms above 
that floor--that is different than going at direct, pinpointed 
subsidy on something which may turn out to have hidden side 
effects.
    Senator Voinovich. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    The Senator from Georgia.
    Senator Isakson. Mr. Chairman, I want to associate myself 
with all of your opening remarks, all of the ones that I heard 
vis-a-vis energy, the next new solutions and what we need to 
do.
    Senator Hagel referred to preparedness and the fact that we 
were not prepared. It caused me to remind myself that 2 weeks 
ago at my staff retreat in Georgia, I invited General Russell 
Honore to come speak. I do not know if you all remember who he 
was, but he was the general that the President sent in to 
mediate the disaster left by Katrina, and he fixed the mess 
that FEMA had really started. He saved lives, helped victims 
get out of there, and was really a take-charge guy. In his 
famous press conference, he made a statement to a reporter who 
asked the same question for a third time. He called him ``stuck 
on stupid.''
    I think we are ``stuck on stupid.'' I am talking about the 
United States Senate here. I am not trying to throw a wide net, 
but the body politic.
    I think energy is a crisis. Yes, markets have cycles, but 
these cycles keep going up from a higher base every time they 
go down. And we have ways that we know we can reduce our 
dependence on fossil fuels and we argue politically over doing 
those.
    It seems to me like we need a two-tiered approach. Tier No. 
1 is to put down our arms and recognize that we do know how to 
use nuclear energy. The Air Force has flown B-1s on synthetic 
fuel, so it is doable. Clean coal technology is, in fact, in 
Florida. Southern Company was building a coal gasification 
plant that, unfortunately, at the last minute was shut down 
because of the fact that it was coal. They did not want to take 
the last step.
    It seems this Manhattan Project we are talking about ought 
to be an effort, a short-term effort--short-term probably being 
10 years--to get our nuclear title efficient to be able to turn 
these plants out reasonably and safely, to focus on green space 
because it is a part of the solution in sequestration of 
carbon, to focus on renewable sources of energy and to focus on 
synthetic sources of energy.
    And then have the second tier as the next new thing, which 
is the Manhattan Project, because there are some bullets out 
there. We hope that one day hydrogen will be a bullet. We hope 
there will be other things.
    But I do think we have got to stop arguing about what is 
the next new thing. We do not know what it is, but we know a 
lot of things that can reduce some of our dependence today. I 
think we ought to have that short-term focus on those things, 
with the long-term focus on the future development of science 
and technology.
    I would appreciate your comment.
    Mr. Armitage. I very much appreciate your comments, 
Senator, both as a constituent living in Savannah and as a 
citizen.
    Look, we have got to stop kidding ourselves, I think is the 
way I would say what you are saying. We have kidded ourselves 
in various energy bills that we actually were doing something. 
We are now kidding ourselves that carbon sequestration will 
solve the problem. So maybe in the first instance, that is what 
we ought to do.
    A two-tiered approach is perfectly reasonable. I noticed 
that Senator Biden was using a term which I have an affection 
for, which is ``holistic'' approach to this, and it has to do 
with the defendant technologies. It has to do with reductions 
in our own demand here. It has to do with rapid transit 
development, which would assist us in driving less and changing 
our habits. It has to do with a whole lot of things. But it 
seems to me that is going to have to be a back room 
conversation for a while with very interested Members of the 
U.S. Senate before it can come out into the daylight because 
that is going to really gore a lot of oxen if we really 
approach this thing holistically.
    Senator Isakson. Dr. Nye.
    Dr. Nye. If I could just add, I think the two-tiered 
approach makes a lot of sense. We should be having major 
programs to look for alternatives which will transform the 
situation, but we have still got to live through that short 
run, which may be a decade or two. And in that short run, 
nuclear, which I am in favor of expanding, is not going to 
solve it. If we are realistic about this, what we are seeing is 
that coal is going to be burned. India, China, for example, 
have enormous reserves of coal. What we have is a strong 
incentive to get clean burning of coal and carbon 
sequestration. We have some pilot plants on carbon 
sequestration. What we have not worked out is how it works as a 
system as a whole. How do you get the regulatory framework? 
What happens if it is large-scale, and so forth? I would like 
to see something like a Manhattan Project in that area.
    Senator Isakson. On the subject of nuclear, I do not 
disagree with you. I did not list it first to say it is the 
solution, but in this holistic approach, it is a part. It is a 
terribly expensive capital investment to put in the ground, and 
if you are looking to a 10-year goal, you can probably get it 
operating maybe on the 10th year. But for 30 more years, it is 
going to contribute to the lessening of the pressure.
    I was reading your 10 points here. On the 10th point, the 
next administration should not fall into a new cold-war 
struggle to compete with and contain Chinese soft power. If I 
understand all the key components of soft power, it seems to me 
that we need the Chinese thinking more in that line than the 
militaristic line. I mean--we can never let our defense and 
guard down. We have to be prepared for the worst. But we need 
to start encouraging the best. So I do not know that a little 
positive competition for creating soft power is not a good 
thing.
    Mr. Armitage. It is a very good thing. Maybe we in an 
inelegant way were trying to make that point. But that is the 
exactly the direction. We do not have anything to fear from 
Chinese soft power as long as we also stay engaged across the 
board using all our tools in the toolbox.
    Senator Isakson. I cannot help but think, Mr. Chairman, if 
we do perfect the clean coal technology, the Chinese will be 
the first people to come buy it. I do not know that they would 
be the first people to go develop it, but they will be the 
first people to come buy it. And that is good for the economy 
and, in the end, good for everybody else.
    Thank you, Mr. Chairman.
    The Chairman. Well, gentlemen, you have been contributing 
and continue to contribute for the last--I will not mention the 
decades, but for a long time. The point made by the Senator 
from Ohio about maybe you could come back with us--and I 
realize it is a burden--with some specific notions about how we 
should be proceeding here legislatively--I just think that if 
there was ever a time politically that thinking bold has an 
opportunity to actually succeed, I really do not think it has 
ever been set up, teed up this--you referenced Samuel Johnson, 
Professor. I believe he is also the one who said that there is 
nothing like a hanging to focus one's attention. It sounds like 
hyperbole, but I will tell you what. The American public is 
getting it.
    I will conclude by saying one of the interesting things 
asked by a poll--I do not know whether it was Pew or whoever 
did it--a reputable pollster, about 8-10 months ago, asked the 
question. It did not get much coverage. At least it reinforced 
my confidence--and I am not being solicitous--in the American 
people. It asked what is the greatest threat to our security, 
and they listed all the threats including energy. And they all 
said energy. I mean, not all; 71 percent or 72 percent. So the 
American public gets this. I think we vastly, vastly, vastly, 
underestimate the willingness and the appetite of the American 
public to be able to take a chance, to take a risk.
    So that is all I meant. I know you did not think it, but 
for the record, I want to make it clear.
    This contribution you made is significant. I was just 
suggesting that if there is any time in our history since 1946 
to think big about accommodating to the changes taking place in 
the world, this is the moment. And I think the public is ready 
to absorb it.
    I would suggest that we do not have that authorization that 
Condy wants for a bill that Senator Lugar and I wrote, and 
maybe you could go visit in your quiet way, Mr. Secretary, 
Senator Coburn. [Laughter.]
    It would be a very helpful contribution to make.
    At any rate, I thank you both. I hope we can continue to 
call on you. Your contribution has been significant. Thank you 
very, very much.
    Our next panel is James R. Locher III, executive director 
for the Project on National Security Reform; and Dr. Gordon 
Adams, professor of international relations, School of 
International Service, American University, distinguished 
fellow.
    I am delighted you are both here. I read your statements. I 
hope we can get to talk a lot about them because I think you 
are meeting my desire of thinking big here, and so I hope we 
can have some time.
    My colleagues' having to leave is not a lack of interest in 
what you have to say. Each of them has other committee 
requirements that they indicated to me ahead of time. Two may 
be back, but I just want you to be aware of that.
    So why do I not yield the floor to you gentlemen in the 
order in which you were called, and then we will maybe have a 
conversation here.

  STATEMENT OF HON. JAMES R. LOCHER III, EXECUTIVE DIRECTOR, 
 PROJECT ON NATIONAL SECURITY REFORM, CENTER FOR THE STUDY OF 
                 THE PRESIDENCY, WASHINGTON, DC

    Mr. Locher. Thank you, Mr. Chairman, Senator Lugar. I 
appreciate the opportunity to testify on national security 
reform.
    Since the beginning of the 21st century, the United States 
has suffered a number of painful setbacks: The terrorist 
attacks of September 11, the troubled stability operations in 
Iraq and Afghanistan, and the inadequate response to Hurricane 
Katrina. These setbacks are not coincidental. They are evidence 
of a system failure. Our national security system is not 
capable of handling the threats and challenges or exploiting 
the opportunities that confront us in today's complex, fast-
paced information age world.
    These deficiencies are not about the lack of talent or 
commitment by national security professionals. They are working 
incredibly hard and with unsurpassed dedication. The problem is 
that much of their hard work is wasted by a dysfunctional 
system.
    Of our antiquated arrangements, Defense Secretary Gates has 
observed, ``We have tried to overcome post-cold-war challenges 
and pursue 21st century objectives with processes and 
organizations designed in the wake of the Second World War.''
    Of dozens of problems in our national security system, 
three are most pronounced.
    First, we are not able to integrate the diverse expertise 
and capabilities of departments and agencies. Our challenges 
require effective whole-of-government integration, but we 
remain dominated by inward-looking, vertically oriented, 
competitive, stovepiped departments.
    The second major problem is that the civilian departments 
and agencies are underresourced, and they are culturally and 
administratively unprepared for national security roles. Mr. 
Chairman, you and Senator Lugar noted this challenge with 
respect to the resourcing of our civilian departments in your 
opening comments.
    The third problem is that congressional committee 
jurisdictions, which generally match executive branch 
structure, tend to reinforce the vertical structure and 
processes of the departments and agencies. Focused on the 
parts, Capitol Hill cannot address a whole-of-government 
approach to national security missions.
    These three problems and others are not new. Our national 
security system has almost never been capable of integrating 
all instruments of national power. Our shortcomings, however, 
have become more serious in recent years. The question is why, 
and there are two answers. Complexity and rapidity of change. 
In an increasingly complex and rapidly paced world, our 
vertical stovepipes are less and less capable.
    What must be done? Three sets of sweeping reforms will be 
needed. First, new Presidential directives will be required. 
The next President could make enormous changes on his or her 
own through these directives.
    The second set of reforms will be a new national security 
act replacing many provisions of the 1947 act. Mr. Chairman, at 
the committee's hearing on March 5, you spoke of your interest 
in developing a national security act of 2009. You are 
absolutely on target. We need a new national security act.
    A third set of reforms will be amendments to Senate and 
House rules. One key possibility is to create select committees 
on interagency affairs. These new committees could be peopled 
by the chairman and ranking members of current committees with 
national security jurisdiction, plus corresponding 
appropriations subcommittees.
    The goal of the Project on National Security Reform, which 
is sponsored by the Center for the Study of the Presidency, is 
approval of a new system early in the next administration. The 
distinguished coalition of former officials, Brent Scowcroft, 
Jim Steinberg, Newt Gingrich, Joe Nye, Tom Pickering, Michele 
Flournoy, Dave Abshire, Leon Fuerth, GEN Jim Jones, GEN Chuck 
Boyd, and 11 others of great expertise and experience, guide 
the Project on National Security Reform. More than 300 national 
security professionals are participating in our 14 working 
groups.
    As you may know, Mr. Chairman, 13 House Members have formed 
a working group on national security interagency reform. A 
principal objective of their efforts is to promote 
congressional understanding of the need for historic reform. A 
similar effort is required in the Senate.
    The Project on National Security Reform will produce an 
interim report on July 1 and a final report on September 1. The 
interim report will focus solely on problems, their causes, and 
their consequences. The final report will offer alternative 
solutions, will evaluate them, and will also offer an 
integrated set of recommendations.
    Following release of these reports, the project will draft 
Presidential directives, a new national security act, and 
amendments to Senate and House rules. These will be completed 
by the November election.
    You suggested that we think big and in the project we are 
thinking big because the Nation needs these reforms. National 
security reform must happen and soon. The cost of failing to 
move forward rapidly could be catastrophic. Moving this large 
mountain will require sustained dedication of a coalition of 
like-minded people in the executive branch, Congress, think 
tanks, universities, businesses, and concerned citizens. I hope 
that the distinguished leaders and members of this committee 
will decide to play a leading role in this coalition.
    Mr. Chairman, the time for action is now.
    [The prepared statement of Mr. Locher follows:]

  Prepared Statement of Hon. James R. Locher III, Executive Director, 
   Project on National Security Reform, Center for the Study of the 
                       Presidency, Washington, DC

    Mr. Chairman, Senator Lugar, and members of the committee, I 
appreciate the opportunity to testify on national security reform.
    Since the beginning of the 21st century, the United States has 
suffered a number of painful setbacks: The terrorist attacks of 
September 11, troubled stability operations in Iraq and Afghanistan, 
and inadequate response to Hurricane Katrina. These setbacks are not 
coincidental; they are evidence of a system failure. Our national 
security system is not capable of handling the threats and challenges 
or exploiting the opportunities that confront us in today's complex, 
fast-paced, information-age world. These deficiencies are not about the 
lack of talent or commitment by our national security professionals in 
all departments and agencies. They are working incredibly hard and with 
unsurpassed dedication. In many cases, they are being crushed by their 
workload. The problem is that much of their hard work is wasted by a 
dysfunctional system.
    Of our antiquated arrangements, Defense Secretary Robert Gates has 
observed, ``. . . we have tried to overcome post-cold-war challenges 
and pursue 21st century objectives with processes and organizations 
designed in the wake of the Second World War.''
                                problems
    There are dozens of problems in our national security system, but 
three are most pronounced. First, we are not able to integrate the 
diverse expertise and capabilities of our departments and agencies. Our 
national security challenges require effective whole-of-government 
integration, but we remain dominated by outmoded, inward-looking, 
vertically oriented, competitive, stove-piped bureaucracies--or what 
some have wryly begun to call ``cylinders of excellence.'' We need 
these elements of excellence, not as ends in themselves, but as 
building blocks in a whole-of-government approach. We need to be able 
to work horizontally across department and agencies boundaries, 
organizing and reorganizing these building blocks in an agile, 
adaptive, fluid way against the myriad unpredictable and dynamic 
threats we face.
    Consider the unity of effort required in combating terrorism. We 
need to integrate law enforcement, diplomacy, military, intelligence, 
information, finance, health, transportation, and more to effectively 
combat the threat of terrorism, an amorphous threat that is constantly 
changing. But our mechanisms for producing this integration are weak 
compared to the power of the massive, departmental bureaucracies. We 
have a tiny headquarters--the National Security Council and Homeland 
Security Council staffs--that in any event have only advisory 
responsibilities. Only the President has the authority to integrate the 
efforts of the departments and agencies, but he lacks the time and 
mechanisms to do so. Presidents have sought to delegate their authority 
to lead agencies or czars. Neither of these approaches has been 
successful, and both have engendered an ad hoc approach. Integration of 
our national security efforts could be promoted by a strong interagency 
culture or a national security strategy that directs the activities of 
the departments and agencies. Unfortunately, we have neither. In sum, 
our organizational arrangements are misaligned with our security 
challenges. Until we address these arrangements through comprehensive 
reform, we will continue to be disappointed by our performance and run 
the risk of incurring future catastrophic costs in blood and treasure.
    The second major problem in the national security system is that 
civilian departments and agencies are under-resourced and culturally 
and administratively unprepared for national security roles. We have 
heard recently a great deal about the resourcing side of this issue, 
especially from Defense Secretary Gates. He said, ``What is clear to me 
is that there is a need for a dramatic increase in spending on the 
civilian instruments of national security--diplomacy, strategic 
communications, foreign assistance, civic action, and economic 
reconstruction and development.'' Secretary Gates is absolutely 
correct. But there is another dimension to this issue: The lack of 
preparedness of civilian departments and agencies to rapidly deploy 
their expertise overseas.
    The problem of the underfunding and underpreparedness of civilian 
departments and agencies stems in part from our outdated concept of 
national security. With World War II in mind, the National Security 
Council was focused on military, diplomacy, and intelligence--it still 
has that focus. We know that national security today is much broader: 
Finance and economics, trade, law enforcement and legal, information, 
energy, health, environment, and more.
    Third, congressional committees are organized with jurisdictions 
that generally match the structure of the executive branch. As such, 
Congress tends to reinforce the vertical structures and processes of 
the departments and agencies. Capitol Hill focuses on the parts and 
cannot address a whole-of-government approach to national security 
missions. National security reform will be unsuccessful without 
creating means for Congress to address national security missions from 
end to end.
    Moreover, as the need for more integrating mechanisms in the 
interagency space in the executive branch takes full expression, 
Congress will need to oversee these new entities. We have already begun 
to see these new entities take shape although they are insufficiently 
formed at present. The National Counterterrorism Center, U.S. Africa 
Command, U.S. Southern Command, and Office of the Coordinator for 
Reconstruction and Stabilization are seeking to promote interagency 
integration in their areas of responsibility. But they remain 
underpowered and in some cases ill-conceived for these roles. Focusing 
on the interagency space would represent a totally new jurisdiction for 
Congress. If you believe, as I do, that the most important national 
security work in the future will take place in the interagency space, 
this is a jurisdiction that Congress must add.
    These three problems and others in the national security system are 
not new. Our system has almost never been capable of addressing 
national security missions with a whole-of-government approach. We have 
seldom been able to integrate all of the instruments of national power. 
We could not do it well in Vietnam or Operation Just Cause in Panama or 
elsewhere.
    Our shortcomings, however, have become more serious in recent 
years. Why? Two answers: Complexity and rapidity of change. In an 
increasingly complex and rapidly paced world, our vertical stovepipes 
are less and less capable and less and less responsive. The gap between 
our capacities and the demands being placed on the national security 
system is widening. This is a frightening conclusion.
                             reform agenda
    What must be done? Modernizing the national security system will 
require sweeping reforms in the executive and legislative branches. 
Marginal or incremental changes will not do. We need a 21st century 
government for 21st century challenges. There are many important 
department-led reforms that are attempting to increase our ability to 
integrate national power and deal with the many effects of 
globalization and a changed international security environment. In the 
State Department, Secretary Rice is leading a number of these efforts 
under the rubric ``Transformational Diplomacy.'' Ultimately, the 
success of such departmental reforms will depend upon an effort to 
change the way we operate at an interagency level. This is the focus of 
the Project on National Security Reform.
    Three sets of national security reforms will be needed. First, new 
Presidential directives governing the operation of the national 
security system will be required. The next President could make 
enormous changes on his or her own through these directives. Although 
he or she would lack some authorities and could not create a permanent 
system, the required transformation could be started.
    The second set of reforms will be a new national security act, 
replacing many provisions of the 1947 act. At the committee's hearing 
on March 5, you, Mr. Chairman, spoke of your interest in developing a 
National Security Act of 2009. You are absolutely on target. We need a 
new national security act to mandate historic reforms on how we plan, 
organize, and train for national security in the 21st century.
    A third set of reforms will be amendments to Senate and House rules 
to bring about necessary congressional reforms. One key possibility is 
to create Select Committees on Interagency Affairs in the Senate and 
House of Representatives. These new committees could be peopled by the 
chairman and ranking minority members of current authorizing committees 
with national security jurisdictions plus corresponding appropriations 
subcommittees. This would create, in effect, horizontal teams in the 
Senate and House that could take whole-of-government approaches to 
national security missions. These Senate and House select committees 
would empower and oversee the national security system. They would not 
interfere with the jurisdiction of the standing committees and 
subcommittees, which would continue to perform their current oversight 
responsibilities.
                          prospects for reform
    Change is never easy. Transforming the world's most important, most 
complex organization will be incredibly challenging. The status quo has 
great powers of inertia and some formidable defenders.
    Despite obstacles, major reforms can be achieved. I have been 
actively involved in three major reform efforts--each a historic 
success: (1) The Goldwater-Nichols Department of Defense Reorganization 
Act--which unified the Pentagon and created the world's premier joint 
warfighting force; (2) special operations and low-intensity conflict 
reforms, known as the Cohen-Nunn amendment, which created the U.S. 
Special Operations Command and the magnificent special operations 
forces that played extraordinary roles in Afghanistan and Iraq; and (3) 
defense reform in Bosnia and Herzegovina, where I served as the 
chairman of the Defense Reform Commission, which took the three warring 
factions and successfully put them into one military establishment and 
on the path to one army. In each of these cases, 95 percent of the 
experts judged that reform was impossible. The many naysayers to these 
earlier reforms remind me of a statement by Supreme Court Justice Louis 
Brandeis: ``Most of the things worth doing in the world had been 
declared impossible before they were done.'' As in the case of these 
earlier reforms, national security reform will take visionary 
leadership and the skilled application of change management techniques.
                  project on national security reform
    The Project on National Security Reform, sponsored by the Center 
for the Study of the Presidency, is working to bring about such 
historic change in the national security system. The Project's goal is 
approval of a new system early in the next administration. In its 
report, the Commission on Smart Power observes: ``Implementing a smart 
power strategy will require a strategic reassessment of how the U.S. 
Government is organized, coordinated, and budgeted.'' The Project on 
National Security Reform is working to provide that strategic 
assessment for consideration by the next President.
    A distinguished coalition of former officials--Brent Scowcroft, Jim 
Steinberg, Newt Gingrich, Joe Nye, Tom Pickering, Michele Flournoy, 
David Abshire, Leon Fuerth, General Jim Jones, General Chuck Boyd, and 
11 others of great expertise and experience--guide the Project on 
National Security Reform. Fortunately, three members of the Project's 
Guiding Coalition--Nye, Pickering, and Boyd--also participate in the 
Smart Power Commission. More than 300 national security professionals 
from think tanks, universities, consulting and law firms, businesses, 
and government are participating in 14 working groups to examine 
problems in the national security system.
    The project has the support of senior officials in the Departments 
of Defense, Treasury, and Homeland Security, Office of the Director of 
National Intelligence, and Homeland Security Council staff. Congress 
provided $2.4 million for the Project in the FY 2008 Defense 
appropriations bill. This funding is being delivered to the Project 
through a Cooperative Agreement with the Department of Defense. 
Secretary Gates selected a Cooperative Agreement as the funding 
mechanism to preserve the Project's independence. He is adamant that 
the project does not become viewed as an instrument of the Department 
of Defense, and that is absolutely the case. The project is totally 
independent and comprised of a broad coalition of nongovernmental 
organizations. The project has raised $400,000 from foundations and is 
seeking additional funding from a number of government and private 
sources.
    Thirteen members of the House of Representatives have formed a 
Working Group on National Security Interagency Reform. A principal 
objective of their efforts is to promote congressional understanding of 
the need for historic national security reform. Importantly, the House 
Working Group has representatives from the committees with national 
security jurisdictions. A similar effort is needed in the Senate.
    The Project on National Security Reform is pursuing its work with 
the same rigorous methodology that produced the Goldwater-Nichols Act. 
First, there is the need to understand the history of how we arrive at 
our current organizations and processes. Second, underlying assumptions 
must be analyzed to determine if they remain valid or no longer fit 
with reality. Third and most important is the requirement to identify 
problems and their causes. This is the most challenging part of the 
intellectual effort and is often underdeveloped in Washington reform 
efforts. It is especially hard in problem identification to get beyond 
symptoms to identify the real problems. We often focus on the fact that 
the patient has a 104-degree temperature but do not work to determine 
the fundamental illness.
    Also in the project's methodology is the examination of all 
elements of organizational effectiveness: Vision and values, processes, 
structure, leadership and organizational culture, personnel incentives 
and preparation, and resources. Too often just one of these elements--
structure--receives all of the attention. One conclusion from the 
Project's early work related to leadership is the increasing importance 
of leaders with incredible skills of collaboration. We have had 
considerable experience with leaders who have emphasized competition 
over collaboration. This approach undermines our efforts to create the 
interagency teams upon which every national security mission depends.
    Only after these steps have been taken will the Project on National 
Security Reform begin to consider solutions. It will develop the full 
range of alternative solutions to fix each of the identified problems, 
evaluate each alternative as objectively as possible, and recommend an 
integrated set of solutions that directly relate to the problems and to 
an even greater extent causes. The project will also give major 
attention to implementation. We know that implementation is 50 percent 
of the battle in achieving the desired outcomes.
    An interim report will be produced on July 1 and a final report on 
September 1, the latter as required in the National Defense 
Authorization Act for FY 2008. The interim report will focus solely on 
problems, their causes, and their consequences. The final report will 
offer alternative solutions, their evaluation, and an integrated set of 
recommendations.
    Following completion of these reports, the Project will begin to 
draft Presidential directives, a new national security act, and 
amendments to Senate and House rules. These will be completed by the 
November election.
                         role of next president
    The next President will have a central leadership role to play in 
making national security reform a reality. The intellectual and 
political opposition cannot be overcome without a strong commitment 
from, and active involvement of, the president.
    The Project on National Security Reform has worked to keep the 
three Presidential campaigns informed of its progress. The McCain, 
Obama, and Clinton teams are aware of our agenda and have expressed 
keen interest in its direction and intended outcomes. On July 13, 2007, 
Senator McCain called for legislation to reform the national security 
system: ``To better coordinate our disparate efforts, I would ask 
Congress for a civilian follow-on to the 1986 Goldwater-Nichols Act 
which fostered a culture of joint operations within the separate 
military services. Today we need similar legislation to ensure that 
civil servants and soldiers train and work together in peacetime so 
that they can cooperate effectively in wartime and in postwar 
reconstruction.''
    We must make national security reform a campaign issue. Given the 
serious deficiencies in the national security system, the Presidential 
candidates must be asked to articulate a plan for fixing the Nation's 
antiquated security system and to make specific commitments to do so. 
Change has been a central theme of campaign debates. Of all of the 
possible changes to be discussed, national security reform must be at 
the top of the list given that providing for the common defense ranks 
as the government's premier responsibility. Hopefully, the candidates 
will commit to a specific program of action to be undertaken during 
their first 100 days in office.
                               conclusion
    National security reform must happen, and it must happen soon. The 
costs of failing to move forward rapidly with an agenda of reform could 
be catastrophic. The Nation's security cannot be adequately preserved 
without 21st century organizations using 21st century leadership and 
management techniques. The Nation will be best served if bold reforms 
are initiated at the start of the next administration.
    Moving this large mountain, however, will require sustained 
dedication of a coalition of like-minded people in the executive 
branch, Congress, think tanks, universities, businesses, and concerned 
citizens. I hope that the distinguished leaders and members of this 
committee will find that national security reform merits their 
attention and decide to play a leading role in this coalition.
    The time for action is now.

    The Chairman. Thank you very much.
    Doctor.

   STATEMENT OF DR. GORDON ADAMS, PROFESSOR OF INTERNATIONAL 
     RELATIONS, SCHOOL OF INTERNATIONAL SERVICE, AMERICAN 
UNIVERSITY; AND DISTINGUISHED FELLOW, HENRY L. STIMSON CENTER, 
                         WASHINGTON, DC

    Dr. Adams. Thank you very much, Mr. Chairman. First, I want 
to congratulate you on these hearings and thank you for the 
opportunity to testify. And to you, Senator Lugar, as well.
    I genuinely agree with you, Mr. Chairman, that this is a 
critical turning point. We have a tremendous opportunity to do 
something about the civilian toolkit of Government as well as a 
number of the major issues that you have raised. I want to 
address just a few key points here in my opening statement and 
put the rest of my statement in the record. I am happy to 
remain available to you, as you proceed in your hearings and 
your work.
    It is ironic that the Department of Defense was created in 
the original National Security Act of 1947 in part to balance 
the toolkit of statecraft after the Second World War against 
the excessively powerful Department of State. That is one of 
the original ironies.
    The other crucial decision, with respect to the civilian 
toolkit, was a decision made repeatedly throughout the last 50 
or 60 years, which is that every time we need to put resources 
against a problem, there has been a tendency to create an 
institution to do it. But that institution is almost always 
been outside the Department of State. So we have a disjuncture 
inside the civilian toolkit between organizations that deliver 
programs and organizations that handle diplomacy.
    What I am suggesting here today is that as a result, as the 
CSIS Smart Power Commission put it, diplomacy and foreign 
assistance are often underfunded and underused and foreign 
policy institutions are fractured and compartmentalized.
    The consequence we have seen in the last few years is that 
we rely excessively on the most organized and best funded 
institution in Government, the Department of Defense, to plan, 
fund, and execute our national security strategy.
    So my objective here today and in general is to rebalance 
the toolkit, and in doing that, to end what I call the diaspora 
of foreign policy institutions. It is a diaspora that struck me 
from 1993-97 when I was the national security budget official 
at OMB, spending 90 percent of the resources for which I was 
responsible through the Department of Defense, but 90 percent 
of my time dealing with the foreign affairs budget, as a result 
of this diaspora.
    Let me just make a few suggestions about how you might 
approach that problem. You have all put their fingers on the 
issues that we have to deal with; it is an issue agenda that 
goes well beyond the needs of an effective civilian counterpart 
for post-conflict stabilization and reconstruction. That is a 
piece, but it is only one piece. If you think of the challenges 
of globalization, adequate, effective governance in failed, 
fragile, or brittle states, identity conflicts around the 
world, transnational issues like health and terrorism and 
environment and crime and drugs, and the shifting power 
balances that we are facing in the world--I think Senator Hagel 
called it a diffusion of power in the world--it is an enormous 
set of challenges that go well beyond that one issue.
    The first area that I wanted to say something about is 
foreign assistance. We definitely need to strengthen, reform, 
fund, and integrate the civilian foreign assistance toolkit.
    The diaspora that I talked about a moment ago still exists 
today. There is no integrated, institutionalized planning or 
budgeting organism in the foreign policy world. There are major 
human resources problems I will come back to in terms of the 
number of people, training programs and skills in planning, 
budgeting. I believe it is very important we not try to solve 
these problems by separating development out from the rest of 
the toolkit.
    We do need to empower USAID or a development and foreign 
assistance function in the Government as a primary source of 
budgeting and planning for foreign assistance. And we need to 
strengthen the capacity of the regional bureaus at the State 
Department--so they adequately integrate their diplomatic and 
foreign assistance responsibilities.
    I would suggest we keep and build on the current process 
known as the Office of the Director of Foreign Assistance with 
better bottom-up work, greater transparency, more 
institutionalization, and better long-term planning. Professor 
Nye referred to the idea of an organizational deputy secretary 
at the Department of State. I think it is an idea very much 
worth considering. There is a statutory position for such a 
deputy. And having at State somebody who has responsibility for 
both management and program as an internal COO, if you will, is 
a very important issue to consider.
    I would not go down the road of creating a separate cabinet 
department of development. I understand the desire for a 
Cabinet-level voice for development, but trying to create such 
a department, first of all, would exhaust us for the next 2 or 
3 years in bureaucratic battles that would waste the moment of 
opportunity, as Senator Biden called it. Moreover, it would 
create a department in competition with the State Department. 
It would exacerbate the diaspora of organizations I have 
described. Most important, it would separate out the 44 percent 
of our foreign assistance portfolio that does not have 
development as its primary objective, which is planned and 
budgeted at State through the Freedom Support Act, SEED, 
peacekeeping operations, counterterrorism, counternarcotic 
operations, and the like. Where do we organize those programs? 
Who delivers those and how do we integrate those into our 
statecraft? So there are real weaknesses, I think, in going 
down that road.
    I am focused on connecting our assistance programs to our 
overall foreign policy objectives and having development be one 
of those very important foreign policy objectives.
    And finally in the foreign assistance and State Department 
arena there are major human resources issues that we need to 
deal with. Senator Voinovich was nice enough to mention the 
American Academy of Diplomacy study that he is participating in 
and both of your offices have expressed interest in. We are 
doing the legwork for that project at the Henry L. Stimson 
Center, and we are looking forward to coming back to you over 
the next few months as we work toward the same objective that 
Jim Locher is pursuing, which is very concrete proposals for 
human resources and funding in the civilian toolkit.
    Second, let me just briefly mention the stabilization and 
reconstruction area. I am concerned that we may be seriously 
fighting the last post-war by trying to create capabilities 
that are too large for the situations we may face once the Iraq 
and Afghanistan conflicts are over. I draw, in part, from 
comments Senator Biden made at Georgetown about not having a 
one-size-fit-all approach to the problems of post-conflict and 
terrorism. Terrorism is a tactic and the conflicts that we are 
fighting are going to require all the tools of statecraft.
    We need to focus that more broadly on the issue of failed, 
fragile, and brittle states as a broad foreign policy and 
security challenge we face.
    We are right now creating another diaspora in the post-
conflict arena with the proposal for and expanded S/CRS to 
expand, a CERP program at DOD, PRTs in the field, an Office of 
Transition Initiatives at AID, a Combatant Commanders 
Initiative Fund, and the overseas humanitarian disaster and 
civil affairs programs at the Department of Defense. We now 
have six organizations and budget spigots that are all tasked 
in the area of post-conflict. We do need a small, capable, 
operational interagency capacity even if we do not do Iraq 
again. We need to grapple with how to avoid that second 
diaspora.
    The next issue is the balance between defense and the 
civilian agencies in the area of security assistance. This 
raises a major problem you have pointed to: The migration of 
foreign assistance capabilities and responsibilities to the 
Defense Department. It is a risky migration for three reasons.
    First, as has been mentioned already today, this is not an 
area of work that is in the central core competence of the 
military. They are doing a hell of a job with a problem that is 
not within their central core competence, and it is part of the 
stress on the forces.
    Second, by assuming we have to call 911-DOD every time we 
need to provide security assistance, we further weaken our 
civilian capability. We are assuming that Defense must do this 
job because we assume the civilian capacity is not there.
    And third, in effect, we are putting a uniform face on our 
international engagement. While we value and honor our 
military, that is not always true around the rest of the world 
when our civil affairs, governance, and reconstruction programs 
end up being the responsibility of the United States military.
    So for stress and capacity and international relations 
reasons, I think we need to take a close look at things like 
the section 1206 program. I very much endorse the comments made 
earlier about bringing that program back into the Department of 
State's authorities, about the risks in the proposed range, 
funding, and globalization of the CERP program, about the need 
for a stronger State Department role in determining funding for 
coalition support, and whether the Combating Terrorism 
Fellowship Program ought to be included in the IMET program. I 
urge you to take a look at all of these issues.
    And finally, the question that Jim Locher has raised, the 
interagency question. I fully agree with him. The interagency 
system that we have created over the past 50 or 60 years is now 
flawed. It is reinvented by every administration. It is ad hoc 
and there is not enough learning from administration to 
administration. There is very little long-term and strategic 
planning capability in the interagency system. And there is a 
wealth of ideas out there I am sure you will draw on from Jim 
Locher's project, from CSIS, from work that Cindy Williams and 
I have done that I have shared with the committee, and from 
experience of such efforts as the National Implementation Plan 
for Counterterrorism, which tried to draw the government 
together in just that one area of policy--the strategy, 
guidance, and detailed budgeting for implementing a cross-
agency strategy on counterterrorism.
    What is possible here? I think a lot of things are 
possible. We are at a critical moment when a quadrennial 
national security review is possible, when a national security 
planning guidance for key priorities is possible, when NSC and 
OMB, as Joe Nye suggested, can begin to work in tighter harness 
with all the relevant agencies participating in the process, 
and when the central institutions in the White House can take a 
new look at their roles and responsibilities. These are now 
different in the new world we are living in.
    The last point I want to make is one Jim made as well, 
which we too often waltz around. We are testifying before the 
Congress, which is not only part of the solution, it is part of 
the problem as well. Committee jurisdictions are stovepiped. 
The Budget Committee has always considered 050 and 150 as 
separate stovepipes in the budget process. The process to 
establishing joint hearings or Jim's idea of a joint committee 
looking across agency issues is difficult. The 302(b) process 
for appropriations side is stovepied, as well. And it seems 
very hard to achieve comity and trust between the executive 
branch and the Congress so that we have greater flexibility in 
executive branch operations across agency budgets, more 
contingency funding capability for the executive branch, and 
fewer earmarks in the foreign policy world. We do not have the 
right kinds of reporting and accountability to the Congress so 
that you trust the executive branch as they use these funds.
    So I congratulate you on the hearing. I think you have 
embarked on a very difficult, but very promising road at a very 
critical moment in time.
    [The prepared statement of Dr. Adams follows:]

  Prepared Statement of Dr. Gordon Adams, Professor of International 
 Relations, School of International Service, American University; and 
     Distinguished Fellow, Henry L. Stimson Center, Washington, DC

    Thank you, Mr. Chairman, for inviting me to testify today. The 
hearings you are conducting on these issues are critically important to 
help build an American statecraft fitted to the security challenges 
this Nation faces, so I commend you on your very timely process.
    The focus of this hearing is how the Nation should approach 
restructuring the Federal Government to cope with the foreign policy 
and national security challenges of the 21st century. There is no 
question that this is a critical, high-priority problem today. The 
nature of the security dilemmas we face as a nation, which are the 
dilemmas the world faces, have changed substantially. And our foreign 
policy and national security institutions are not up to the challenge.
    I want to focus today on two dilemmas we face as a nation. First, 
our civilian national security tools--primarily diplomacy and foreign 
assistance--are weak, poorly focused, and dispersed. Diplomacy is not 
adequately linked to foreign assistance, and the foreign assistance 
agencies are scattered and poorly coordinated. Strategic planning is 
not used, and both strategy and budget planning are not pulled 
together. And, they are woefully understaffed and underfunded. As the 
CSIS Smart Power Commission put it: ``Diplomacy and foreign assistance 
are often underfunded and underused [and] foreign policy institutions 
are fractured and compartmentalized.'' \1\
---------------------------------------------------------------------------
    \1\ Center for Strategic and International Studies, Commission on 
Smart Power, A Smarter, More Secure America, Washington, DC: 2007, pp. 
8, 9.
---------------------------------------------------------------------------
    As a consequence of these internal weaknesses and chronic 
inattention, we have come to rely excessively, in my view, on the 
Defense Department and the military services to plan, fund, and carry 
out our national security and foreign assist-
ance strategy. We urgently need to rebalance the national security 
toolkit and strengthen, empower, fund, modernize and integrate the 
civilian instruments to achieve that end.
    Once rebalanced, the other dilemma remains: We need to reform and 
strengthen the interagency coordination of the toolkit so that 
strategic and policy priorities are clear and the White House can 
provide clear direction to agencies; so that strategy and budgets are 
prepared consistent with those priorities; and so that implementation 
follows from those priorities.
    This is a much bigger challenge than the problem of creating 
adequate civilian counterparts to the military to carry out post-
conflict stabilization and reconstruction (S&R) in countries where we 
have used military force. It is true that the funding, staffing, and 
implementation weaknesses exposed by the conflicts in Iraq and 
Afghanistan have highlighted the broader problem and given rise to the 
urgency of this discussion. Focusing the discussion on S&R needs, 
however, may be fighting the last war. Meeting that need alone could 
prove to be a dangerous, even fatal diversion from the restructuring 
and process reforms we need to deal with a much broader security 
agenda.
Our National Security Challenges are Broad and Diverse
    Our national security structures and processes need rethinking 
because the broad agenda of global challenges we face exceeds the 
capacity of existing institutions and processes to plan, fund, and 
implement meaningful solutions. These challenges are far broader than 
the challenge of providing local reconstruction through a Provincial 
Reconstruction Team, and we must focus on that broader agenda, lest 
PRTs become our only answer, and an inadequate one, at that.
    The broader challenges include the many dilemmas posed by a 
globalized economy, communications, and information infrastructure. 
Poverty and inequality are just one of those dilemmas. So, too, are the 
instability of global financial markets, which we see as the mortgage 
crisis spread around the world and the dollar decline in value. Equally 
important, as China and India rise as new powers, their energy 
consumption, combined with our own consumption of a quarter of the 
world's energy supplies, are having profound impacts on the price and 
availability of fossil fuels, adding to globally rising prices. Most 
recently, the diversion of agricultural production to ethanol-producing 
crops, has exacerbated a global food crisis, reaching significant 
proportion today, with destabilizing consequences. We are stumbling, 
nationally and globally, in the effort to address the challenges of 
globalization. And we cannot delude ourselves that our ``national'' 
economic power will be a tool we can use in dealing with these 
challenges. As British Prime Minister Gordon Brown put it in a lecture 
at Harvard last week: ``With global flows of capital already replacing 
the old national flows and global sourcing of goods and services 
replacing the old local sourcing, national systems of supervision and 
economic management are simply inadequate to cope with the huge cross-
continental flows of capital in this interdependent world.''
    A companion, and related challenge, is the danger posed by fragile, 
brittle, and failing (or failed) states, many of them in the Middle 
East, Africa, and parts of Asia. Governance is a central national 
security dilemma; the ability of countries to ensure that they can 
maintain order within their boundaries, while providing for their 
citizens' needs, and ensure a level of responsiveness to the public 
that, while it may not be what we would call democracy, is at least 
representative of public views. Unstable and ungoverned regions of the 
world, or governance that breaks when challenged, pose dangers for 
neighbors and can become the setting for broader problems of terrorism 
and migration. We have diverted our energy into programs to promote 
democracy, but have yet to develop a comprehensive, civilian-driven, 
strategy, either nationally or internationally, to strengthen 
governance around the world and assist stable political transitions.
    A third, and equally interdependent challenge is the rising tide of 
identity conflicts--hatreds between nationalities, ethnic groups, and 
religious beliefs. These are not restricted to conflict within Islam or 
the Arab world, but cover a wide range of tensions around the globe. We 
have no strategy and virtually no programs to cope with this tidal wave 
of conflict.
    A fourth, linked to the others, is the growing agenda of 
transnational problems that have no ``sovereign face,'' do not respect 
national boundaries, and are global in their impact. I speak of the 
problem of infectious diseases like HIV/AIDS, TB, and malaria; the 
growing crisis of global climate change and environmental destruction, 
migration and immigration in Europe and North America; and 
conspiratorial organizations that carry out terrorist attacks (and seek 
major military capabilities, such as nuclear weapons, to do so), 
narcotics distribution and sales, and criminal activity. We have 
different programs, some of them overlapping, to cope with these 
transnational challenges, but do not have a national or global 
strategy, as yet.\2\
---------------------------------------------------------------------------
    \2\ The Government Accountability Office concluded, for example, 
that the U.S. did not have an integrated, cross-agency strategy to deal 
with terrorism and extremism in Pakistan. See GAO, ``Combating 
Terrorism: The United States Lacks Comprehensive Plan to Destroy the 
Terrorist Threat and Close the Safe Haven in Pakistan's Federally 
Administered Tribal Areas,'' GAO-08-622, April, 2008.
---------------------------------------------------------------------------
    And, finally, there is the challenge of shifting international 
power balances--the rise of new global actors like China and India, the 
growing size and importance of the European Union, a resurgent Russia, 
and rising regional powers such as Iran and Brazil. One by one, these 
rising powers make it clear that if there was an ``American Century'' 
or anything remotely resembling ``American hegemony,'' it is already 
passing from the stage. Some of these powers possess, and others may 
wish to possess, nuclear weapons, posing a renewed challenge of 
proliferation. A new international order is emerging. Rather than be 
mesmerized by our own military power and hubris, we need to attend to 
the impact of these changes on our national power and our capacity to 
exercise leadership.
Are We Effectively Organized to Cope With the Challenges?
    The institutions and processes we are using to cope with these 
challenges are failing the test today. We are hard pressed to organize 
new approaches to the problems of globalization and energy resource 
scarcity. We have proven ineffective, at best, in promoting good 
governance, let alone democracy, in key regions of the world. We have 
no strategy, institutions, or programs to deal with identity conflicts 
and we have no clear strategy to cope with the changing balance of 
international power. Despite some excellent efforts, the transnational 
challenges, particularly the danger of terrorist attacks, has not 
disappeared; in fact, it may be growing.
    These are, of course, policy dilemmas, to be answered by policy 
change. But the best of policies will prove ineffective if we lack the 
structures, funding, and processes we need to carry them out. My 
concern today is that our toolkit is chaotic, unbalanced, and poorly 
integrated. We have neglected the civilian tools for decades, now, and 
have come to rely increasingly on the military as our default 
instrument of statecraft.
    Our global effectiveness now depends on empowering, funding, 
modernizing, and integrating the civilian tools, balancing them with 
our military, intelligence, and homeland security tools, and 
coordinating all of them in a more effective way. I am going to address 
four specific dimensions of this need for reform and restructuring:

          1. The need to reform, strengthen, fund, and better 
        coordinate the civilian diplomatic and foreign assistance 
        tools;
          2. The need to solve our institutional chaos with respect to 
        stabilization and reconstruction programs and capabilities;
          3. The growing need to restore civilian leadership, policy-
        setting and budgeting to our growing portfolio of security 
        assistance programs; and
          4. The need for a more institutionalized and integrated 
        interagency and congressional process for dealing with national 
        security decisionmaking.
Diplomacy and Foreign Assistance
    In the 5 years I spent as Associate Director for National Security 
and International Affairs at OMB I was responsible for budgeting and 
planning with respect to all of the national security organizations. I 
was struck by the fact that 90 percent of the resources for which I was 
responsible were spent by the Defense Department, while 90 percent of 
my time was spent integrating the planning and budgeting and resolving 
internal controversies among the civilian diplomatic and foreign 
assistance agencies. The problems I faced then remain very much the 
same today.
    A ``diaspora'' of organizations in the budget Function 150 world. 
Although the State Department absorption of USIA and ACDA simplified 
this world somewhat (with negative consequences for our public 
diplomacy), the diaspora was exacerbated by the creation of two new 
foreign assistance organizations--MCC and PEPFAR, one separate from 
State and USAID, and one inside State but with considerable autonomy in 
planning and resource management. There are more than 15 agencies and 
departments within the International Affairs account, alone, and at 
least 20 other Federal Departments actively engaged overseas, many of 
them in our embassies. Multiple reports and task forces have pointed to 
the problem this poses for integrating U.S. international engagement.
    There was no integrated planning or budgeting function for the 
foreign affairs agencies (known as 150). State RPP tried--but was an 
office of the secretary, not a standing organization, and it had no 
reach into any other organization but State and, with tolerance, USAID. 
DSS Richard Armitage tried to improve on that, creating a Resource 
Management Bureau, which would integrate operations, foreign 
assistance, and strategic planning. It made some progress, but relied 
on his strong leadership to operate. Today, a new approach has been 
implemented, the ``F'' process, whose successes and failures I will 
discuss in a moment.
    There were significant human resources issues in the State 
Department and foreign assistance agencies. There were no incentives at 
State or in the Foreign Service community to engage in long-term 
strategic planning and little ability to plan, budget, or manage 
programs, or to provide overall administration for diplomacy and 
foreign assistance. There was virtually no training of the Foreign 
Service in program development, implementation, or evaluation; 
budgeting and strategic planning, contracting, or congressional 
relations. With all due respect, most Foreign Service professionals saw 
this committee as their key interlocutor on the Hill, but were 
professionally unconscious about the appropriations process. They were, 
and many remain, underinformed about the resource programs operated by 
State or USAID, let alone other institutions in the 150 world. USAID 
and other foreign assistance personnel were in thin supply, overworked, 
and key functions and program delivery were provided by personal 
service contractors or contracted out, and continue to be.
    This cobbled-together civilian structure will never be able to 
manage its missions in the 21st century world if it is not 
significantly reformed, better integrated, funded, and staffed than it 
is today. Ideally, the foreign relations institution of the U.S. 
Government--the Department of State--should provide the strategic 
vision and integration for these activities. It does not do so today.
    To ask that all of our diplomatic and foreign assistance 
capabilities be placed in a single department is a bridge way too far. 
In a globalized world, we will never survive with just one channel of 
engagement. But the diaspora has had an adverse effect on our ability 
to conduct foreign policy and has contributed to the unbalanced 
character of our national security toolkit.
    The first, and perhaps most important issue, involves the 
integration of foreign assistance as a tool of American statecraft. For 
decades, as a new assistance requirement emerged, the typical U.S. 
Government response was to create another agency to meet it. Today, if 
the U.S. is to have a meaningful and effective foreign assistance 
program it makes sense to integrate at least some of this capability. A 
more integrated capability needs to be designed that meets the needs of 
development as a goal of U.S. international engagement, while it also 
connects our foreign assistance to our foreign policy and national 
security purposes.
    There are some who feel that development as a goal of U.S. foreign 
policy is, and should be, a separate goal from the other objectives of 
our more than $25 b. foreign assistance effort. My view is a more 
comprehensive one. While development is a worthy goal of U.S. foreign 
assistance, it is only one of our goals, and not the most well-funded, 
at that.
    In FY 2007, for example, roughly 22 percent of U.S. foreign 
assistance could be said to have economic development (in a broad 
sense) as its primary goal. At the same time, 44 percent of U.S. 
foreign assistance had a foreign policy or strategic purpose and was 
connected to U.S. foreign policy goals such as support for democracy in 
eastern Europe and the former Soviet Union, counternarcotics, 
counterterrorism, peacekeeping training, foreign military training and 
education.\3\ In my view, the development goal ought not be separated 
from the other purposes of our foreign assistance programs, it ought to 
be considered an integral part of our overall foreign assistance 
investment.
---------------------------------------------------------------------------
    \3\ The remainder is the substantial commitment we have made to the 
Millennium Challenge Corporation and the President's Emergency Program 
for Debt Relief.
---------------------------------------------------------------------------
    While the argument is often made that integrating these programs 
would mean subordinating development assistance providers to the State 
Department, which is said to be incapable of managing such programs, my 
view is that integrating them, as I suggest below, will have the effect 
of empowering our foreign affairs agency to become a better manager of 
assistance programs. It is true that assistance programs were largely 
separated from State because the diplomatic community decided, decades 
ago, that diplomats were not program providers, so other agencies had 
to do the job.
    It is also true that this is changing today, and has been for some 
years. Today we see a growing ``mission creep'' inside State, which is 
planning, budgeting, and managing a growing portfolio of programs in 
counternarcotics, antiterrorism, democracy support, and peacekeeping 
operations support. Rather than strip this activity away from State, it 
makes sense to recognize this reality, staff it properly, and fund it 
inside the State Department.
    Moreover, a substantial part of the foreign assistance portfolio 
planned and budgeted by State is actually implemented by USAID, in 
addition to its own development portfolio. I think it is important not 
to separate out the USAID portfolio, but to strengthen it, in both 
dimensions (development, and strategically driven foreign assistance). 
And it may well make sense to ensure that the new capabilities of MCC 
and PEPFAR are included in this capability; not operated independently.
    I believe it makes sense to consider a significant reorganization 
of USAID building on its current capabilities, as the primary planning, 
budgeting, and implementing agency for U.S. foreign assistance, 
including both its current development assistance programs, and the 
more strategically oriented programs. This means strengthening its 
capacity for planning and budgeting, expanding its staff (a process 
begun with the administration's FY 2009 budget request), and 
integrating its planning activity more closely with the regional and 
functional bureaus at State.
    For this strengthened USAID capability to be linked to our foreign 
policy and national security policy objectives, there needs to be broad 
reform and integration at State. Budget and program officials need to 
be strengthened inside the regional bureaus, allowing them to act as 
the principal channel for preparing country and regional plans for 
overall foreign assistance. Ideally, the regional assistance 
secretaries need to be empowered to oversee not only policy activity in 
the different regions, but assistance programs, as well, working with 
the reformed USAID staff on planning, budgeting, and implementation.
    The alternative approach, creating a separate Department of 
Development, is, I think, ill-advised. Its advocates want to raise 
``development'' to equal status with ``diplomacy'' and ``defense'' in 
U.S. national security policy. But, as I have suggested, 
``development'' is only part of the goal of U.S. foreign assistance 
policy. The idea of a department has three fundamental weaknesses:

    1. It would exacerbate the diaspora of organizations that is the 
Achilles heel of our civilian toolkit and distance development even 
further from the foreign policy establishment that should be its 
greatest advocate. At the Cabinet level, it would create severe 
coordination problems between a powerful Secretary of State and a 
weaker, smaller Cabinet office in charge of development.
    2. It would leave the rapidly growing, strategically driven foreign 
assistance programs (FMF, INCLE, NADR, IMET, ESF, FSA, SEED, PKO) 
caught between a weakened development assistance organization and a 
historically powerful traditional diplomacy architecture. They would 
need to be incorporated into the new Department, which would divert 
that Department from its development mission and would break the link 
between these programs and their strategic planners at State. Or, if 
the new department were to remain a purely development organization, 
one would have to create yet another organization inside State to plan, 
budget, and implement the strategic programs, which would exacerbate 
the dispersal of capabilities in our foreign policy establishment, 
further weakening its effectiveness.
    3. It would expose development funding to a serious risk of budget 
reductions. While foreign assistance funding has substantial public 
support, it is not as salient to most Americans as it is to the small 
community of development organizations. And it has never had widespread 
strong support in the Congress. Separate from the State Department, 
moreover, it is not a given that the Secretary of State would provide 
the same support for development funds, support that has been important 
in raising development funds up to now. The long-term risk is that 
support for a ``development only'' program falters and the program is 
cut, not expanded.

    Reforming and integrating foreign assistance in the way I propose 
also suggests it is very important not to throw out the recent reforms 
that created the Director of Foreign Assistance and the ``F'' bureau. 
The State Department's budget planning process has a troubled history, 
especially when it comes to trying to integrate planning and budgeting 
for international affairs. The ``F'' process, created in 2005, had many 
flaws, many of them reparable. In its first round, it was very top 
down, inadequately incorporating the views and recommendations of 
embassies and field missions. It was not adequately transparent to the 
Congress or interested parties outside the government. The 
``framework'' with which the F organization worked was more mechanical 
and less supple than it needed to be. It did not have adequate reach to 
the broader range of foreign assistance programs, especially at MCC, 
PEPFAR, and Treasury. And it did not succeed in meeting the goal of 
longer term planning, badly needed in our foreign assistance and 
diplomatic agencies.\4\
---------------------------------------------------------------------------
    \4\ For an interesting discussion of these weaknesses, see Gerald 
F. Hyman, ``Assessing Secretary of State Rice's Reform of U.S. Foreign 
Assistance,'' Carnegie Paper No. 90, Carnegie Endowment for 
International Peace, February 2008.
---------------------------------------------------------------------------
    All of these weaknesses of the F process are fixable; none of them 
are fatal. The second year of the F effort has seen improvements in 
transparency, less rigidity in the framework, and substantially greater 
involvement of the field. But eliminating F and going back to business 
as usual (let alone inventing a new department) would be a mistake, and 
would waste valuable months or years of time in the new administration, 
before an effective assistance program could be created. The strength 
of the F process was that it represented the first, even semi-
institutionalized effort I have seen at State to integrate planning and 
budgeting for foreign assistance, at least across those programs over 
which the Secretary of State had authority, and to do so reflecting a 
sense of U.S. strategic priorities. We should all be able to agree that 
this is a worthy objective.\5\
---------------------------------------------------------------------------
    \5\ For an expansion of these views, see Gordon Adams, ``Don't 
Reinvent the Foreign Assistance Wheel,'' Foreign Service Journal, March 
2008, pp. 46-50.
---------------------------------------------------------------------------
    Instead, I recommend building on the F model, and integrating that 
capability into State more fully, as part of the transformation of 
USAID, and along with stronger planning and budgeting capabilities in 
the regional bureaus. I would also suggest that State use its existing 
authority to appoint a second Deputy Secretary of State to 
institutionalize the responsibility for overseeing internal State 
Department operations and foreign assistance planning. A new Under 
Secretary for Foreign Assistance could replace the position of 
Administrator of USAID and, together with the existing Under Secretary 
for Management could report to the Secretary through this Deputy.
    In addition, I believe it will be increasingly important for the 
Department to address the human resource dimension of this question. 
While I cannot go into length on this issue here, staffing, training, 
and human resource issues, along with funding levels for diplomacy, 
public diplomacy, and foreign assistance, are the centerpiece of a 
study we are conducting at the Henry L. Stimson Center, supporting a 
project of the American Academy of Diplomacy focusing on Function 150 
needs for the next administration. For State to be fully capable of 
integrating diplomacy and foreign assistance, it is now urgently 
important to rethink the initial and mid-career education and training 
provided all foreign affairs personnel. This should include particular 
attention to training in strategic planning; program planning, 
implementation, and evaluation; budgeting; and the Washington, DC 
policy process, as integral part of a career in foreign affairs.
    A fully integrated and empowered foreign assistance planning and 
budgeting capability inside the State Department, along with human 
resource reforms, would help address the strongest criticism currently 
offered of the existing State Department--its incapacity to manage 
program effectively or to integrate program with policy. It would 
empower the civilian diplomatic and foreign affairs tools, helping them 
increase their funding and implement civilian aspects of U.S. national 
security strategy. And with reform and greater funding on the civilian 
side, there would be a more effective balance in the national security 
toolkit, a balance that is missing today.\6\
---------------------------------------------------------------------------
    \6\ A recent paper from the National Defense University's Institute 
for National Strategic Studies concluded: ``The systematic underfunding 
of State and USAID is the single greatest impediment to the effective 
planning and execution of developmental assistance, reconstruction, and 
stabilization. State cannot be equipped only with good ideas while 
Defense has all the money and most of the deployable assets. This is a 
prescription for an unbalanced national security policy, one in which 
State will not be a mature player or will have to savage its worldwide 
diplomacy to keep up with operations in conflict areas.'' Joseph J. 
Collins, ``Choosing War: The Decision To Invade Iraq and Its 
Aftermath,'' Occasional Paper No. 5, NDU/INSS, April 2008.
---------------------------------------------------------------------------
Stabilization and Reconstruction/The Problem of Fragile States
    Although S&R missions are not, and should not, in my view, be the 
centerpiece for reforming the civilian tools of statecraft, they remain 
a focus of attention today. Rather than deal with these missions as a 
focus, I prefer to see them in the context of the larger issue of 
governance. The question is how we need to structure the executive 
branch to deal with this broader issue, including having the capability 
to provide a civilian component for interventions by the U.S. military.
    Unless we take this broader perspective, I believe, we are in 
serious danger of ``fighting the last post-war.'' Because the post-
combat situations in Iraq and Afghanistan have not gone as predicted, 
or especially well, we have a growth industry in Washington, DC, 
seeking to strengthen the civilian capacity for stabilization and 
reconstruction, but it is focused on how the civilian tools complement 
the military in situations where U.S. forces have been deployed. This 
short-term, pressing issue risks leading us down an expensive and 
counterproductive path toward creating a very large, very expensive 
capability for civilian intervention. We could have that capability and 
find ourselves unlikely to use it in any near-term future. Or we could 
find that having it, and using it, in conjunction with the use of 
military force, proves counterproductive overseas because it is 
unwelcome.
    If we focus on fragile, failing, and brittle states, however, it is 
clear that these are a major security concern, not only to the United 
States, but to other nations and regions. Even if the U.S. is not 
intervening with military force, or is only part of the response to 
such a problem, the governance issue is an international security 
problem to which we, along with other countries and organizations, will 
need to respond. It is equally clear, given recent experience, that we 
lack the capacity, acting largely alone, to ``build'' another nation, 
democratic or otherwise, and are not always welcome in trying to do so. 
It may be beyond the capacity of any country to build the kind of state 
it wishes to see in somebody else's territory.
    That said, we are manifestly chaotic in the way we have organized 
the government to provide even the minimal capability to support the 
restoration of effective governance in countries that are in trouble, 
the narrower S&R mission. The capacities that exist we have built in 
small packages or on the fly. Today, however, I count at least six 
programs and offices that have some responsibility for this problem:

    1. Provincial Reconstruction Teams (PRT): a ``built in the field'' 
program in Afghanistan and Iraq, funded from multiple spigots, thinly 
coordinated, and not strategically planned. The Investigations 
Subcommittee of the House Armed Services Committee recently reported 
that the PRT effort is largely ad hoc in nature: The PRTs ``are not 
subject to a unified or comprehensive plan for stability, security, 
transition, and reconstruction in either Iraq or Afghanistan. . . . The 
relevant departments have not articulated clear objectives for what 
they want PRTs to do, and they cannot effectively evaluate their 
performance. . . . ``There is no clear definition of the PRT mission, 
no concept of operations or doctrine, no standard operating procedures. 
. . . The funds are not controlled or coordinated centrally; rather, 
different agencies control the different funds.'' \7\
---------------------------------------------------------------------------
    \7\ U.S. House of Representatives, Armed Services Committee, 
Subcommittee on Oversight and Investigations, ``Agency Stovepipes v. 
Strategic Agility: Lessons We Need to Learn From Provincial 
Reconstruction Teams in Iraq and Afghanistan,'' April 2008, pp. 16, 18, 
23.
---------------------------------------------------------------------------
    2. The Commander's Emergency Response Program (CERP) DOD created in 
Iraq and now operating in Afghanistan. CERP provides some of the PRT's 
most flexible and agile funding, but is also widely used for other 
purposes, some of which are quite similar to development assistance.
    3. The Combatant Commander's Initiative Fund (CCIF). CCIF is a 
longstanding, small source of funding for small local initiatives, but 
its authority has been expanded to cover stabilization and 
reconstruction activities. The Pentagon seeks $100 million for this 
fund in the FY 2009 budget.
    4. The Office of Transition Initiatives (OTI) at USAID also targets 
transitional governance and early stabilization programs in countries 
emerging from conflict, including activity in Iraq and Afghanistan. OTI 
remains a small fund, however, at $40 million in the FY09 budget 
request.
    5. The Office of the Coordinator for Reconstruction and 
Stabilization (S/CRS).
S/CRS was created in 2004 and empowered by the White House through 
NSPD-44 in late 2005 to coordinate governmentwide planning for S&R 
operations (outside of Iraq and Afghanistan), to develop a matrix for 
anticipating such crises, and to create an active, standby and reserve 
corps of civilian specialists for such missions in the future. The FY 
2009 budget seeks $248 m. to create a standing S/CRS capability for 
such missions, and another 210 positions to fulfill these new missions.
    6. The Overseas Humanitarian, Disaster, and Civic Aid (OHDACA) 
program at DOD has also been given more resources to provide assistance 
for stabilization and reconstruction operations. DOD has sought an 
expansion of the ODHACA authority to include stabilization activities.

    This institutional diaspora is chaotic. The policy intentions for 
the use of these capabilities are unclear. The leadership of the USG 
effort for such missions is unclear and ad hoc, and the links between 
such operations and long-term U.S. national security objectives is 
rarely specified. Is it our intention to centralize the civilian S&R 
effort in S/CRS? Then what is the fate of OTI, whose small program 
overlaps with S/CRS? Is the S/CRS capability we are developing to be 
large, or limited in size and scope? What is its relationship to the 
broader, and better financed U.S. effort to support effective 
governance through USAID development assistance, Economic Support Funds 
(including democracy support at State), and the programs of the 
Millennium Challenge Corporation.
    Developing this capability raises significant, broad policy 
dilemmas. Does the United States intend in the future to engage in 
large-scale, unilateral overseas nation-building, similar to the 
largely failed exercise in Iraq? Many analysts think we must be 
prepared to carry out such missions in the dangerous world in which we 
live. Allow me to be skeptical. The United States has performed this 
mission poorly in its last two major efforts--Vietnam and Iraq--and is 
at risk of failing in Afghanistan. The appetite for a major unilateral 
intervention of the Iraq kind is not likely to be large, either in the 
military or with the American people. The requirement, then, for a 
large S&R capability--a kind of Colonial Office--also seems to me 
unlikely to grow. We are more likely to be entering a world where 
fragile and failing states may not welcome such an intervention, in any 
case, or welcome it only in international clothing, not in an American 
uniform or civilian suit.
    The twin reality that we will have a lower appetite and the world 
may prefer an international capability suggests that the capability we 
require may be less than the ambitious plans being made across 
Washington, DC, in think tanks, the military, or even in the State 
Department. But a smaller capability could be an important contribution 
the U.S. could make to a broader international effort to deal with the 
problem of failed or fragile states.
    The primary policy leadership for this capability should be in the 
State Department, not the Defense Department. What the Congress might 
want to consider is a small, civilian contingency capability at State/
USAID with flexible contingency funding (and close congressional 
oversight) to provide assistance to countries in distress, either after 
conflict or when government collapse is imminent. That capability could 
and, in my view, should work closely with allied nations, governments 
in the region, and international organizations, to strengthen local 
governance and reconstruction capabilities.
    This capability can be built through the current S/CRS structure or 
the flexible, but small OTI capability currently existing at USAID. 
There is no reason for two such capabilities at State/USAID. I 
seriously question whether there is a need to expand or make permanent 
the CERP at the Defense Department; it was a funding program developed 
and intended for local commanders in combat zones in Iraq and, later, 
Afghanistan. Unless the Congress foresees a major U.S. combat force 
deployment in another country where an occupied zone only permits U.S. 
military forces to operate safely, or Congress sees the military as 
uniquely capable of reconstruction assistance, it is wise to restrict 
CERP to the two current theaters of operation, and as a temporary 
authority.
    The same reasoning applies, I think, to PRTs. While useful in Iraq 
and Afghanistan, this joint civil-military operating capability may be 
neither appropriate, nor welcome, in other parts of the world. A small, 
standby capability at State/USAID, training regularly with DOD, may be 
adequate for future contingencies, especially if it also trains and 
operates with other, non-American countries and organizations. Equally, 
it seems to me unwise to expand funding and authority for the CCIF 
program if the primary responsibilities in this area are to be covered 
by a civilian capability. Likewise, there is no need to expand DOD's 
OHDACA authority to include post-conflict reconstruction and 
stabilization.
Defense's Role in Security and Foreign Assistance
    The discussion of S&R capabilities reflects a larger dilemma in 
strengthening and empowering the civilian tool of statecraft: The 
broader expansion of DOD authorities and programs that parallel 
important civilian programs and activities. This includes not only 
CERP, but the security force train and equip programs under section 
1206 of the National Defense Authorization Act, as well as the 
Coalition Support Funds (CSF) provided by DOD, and the Counterterrorism 
Fellowship Program (CTFP).
    Over the past two decades, but particularly over the past 7 years 
there has been a continual expansion of security and foreign assistance 
programs being carried out through the Department of Defense. Many of 
these programs are parallel to the existing architecture of programs 
planned and budgeted through the Department of State, and implemented, 
in some cases, by DOD. While some of these programs predate the attacks 
of 9/11, most of them were created in response to terrorist attacks and 
the ongoing conflicts in Afghanistan and Iraq. These programs include:

          1. The train and equip program for Afghani and Iraqi security 
        forces, created in 2004;
          2. The global train and equip program for security forces, 
        known as the section 1206 authority, created in 2006;
          3. The Commander's Emergency Response Program, in Iraq and 
        Afghanistan, created in 2003;
          4. Coalition Support Funds, which reimburse countries 
        providing assistance for counterterror operations, created in 
        2002 under existing DOD authorities; and
          5. The Combating Terrorism Fellowship Program, providing 
        counterterrorism education and training for foreign militaries, 
        created in 2002.

    Over the past 7 budget years, Congress has appropriated nearly $40 
b. for these new security assistance programs, nearly $29 b. of that 
for the Iraqi and Afghani T&E program, alone (See table).

 TABLE I.--NEW DOD SECURITY COOPERATION AND FOREIGN ASSISTANCE PROGRAMS
                          [Dollars in millions]
------------------------------------------------------------------------
                                FY 2002-FY    FY 2009        Parallel
             Name                2008 DOD      budget     traditional SA
                                total \8\     request      programs \9\
------------------------------------------------------------------------
Train and Equip (T&E) Funds        $28,849     * $1,850  FMF, IMET.
 for Afghan and Iraqi Forces.
Section 1206 Authority:                500          750  FMF, IMET.
 Global Train and Equip.
Commander's Emergency                3,713        1,500  USAID-OTI/OFDA
 Response Program (CERP).                                 and State MRA.
Coalition Support Funds              6,595            ?  ESF.
 (reimbursements to coalition
 partners).
Combating Terrorism                   97.9           35  IMET.
 Fellowship Program (CTFP).
------------------------------------------------------------------------
*  FY 2008 Pending Supplemental Request

    Each of these programs duplicates in some way existing security 
assistance programs that are planned and budgeted through the 
Department of State under the authorities of the Foreign Assistance 
Act, implemented (in some cases) by the Department of Defense, and 
funded through the International Affairs function of the federal 
budget. Many CERP-funded programs are similar to USAID's development 
assistance programs, as well as Economic Support Funds (ESF) planned by 
the State Department and implemented largely by USAID. Coalition 
Support Funds are, in effect, budget reimbursement/subsidy programs 
similar to some of the uses of ESF. Train and equip programs are a more 
agile and flexible version of programs carried out through Foreign 
Military Funding (FMF). The CTFP is very similar to and implemented 
using the structure and processes of the International Military 
Education and Training program (IMET).
---------------------------------------------------------------------------
    \8\ These figures were compiled from defense authorizations, 
appropriations and supplemental bills between FY 2002-FY 2008.
    \9\ Acronyms: OTI=Office of Transition Initiatives (USAID); 
OFDA=Office of U.S. Foreign Disaster Assistance (USAID); MRA=Migration 
and Refugee Assistance (State).
---------------------------------------------------------------------------
    For two of them--the CERP and section 1206--the Department of 
Defense has sought permanent authority under Title 10 of the United 
States Code, rather than temporary authority under defense 
authorization acts. DOD also seeks to increase the funding level for 
section 1206 train and equip from $300 million to $750 million; wants 
to extend the coverage of the program to allow training for internal 
security forces; and seeks the authority to waive the restrictions of 
the Foreign Assistance Act. To quote Secretary of Defense Robert Gates 
from last week's hearing on the section 1206 program before the House 
Armed Services Committee: ``In my view, building partner capacity is a 
vital and enduring military requirement--irrespective of the capacity 
of other departments--and its authorities and funding mechanisms should 
reflect that reality. The Department of Defense would no more outsource 
this substantial and costly security requirement to a civilian agency 
than it would any other key military mission.'' \10\
---------------------------------------------------------------------------
    \10\ Secretary of State Condoleezza Rice's endorsement of the 
section 1206 authority at the same hearing was slightly more 
restrained: ``Let me underscore that this is not a substitute for more 
robust funding for security assistance accounts, but we strongly 
advocate continuing these important contingency authorities and they 
are the additional tools that we need to meet emergence exigent 
problems that very often emerge out of budget cycle.''
---------------------------------------------------------------------------
    The expansion of DOD foreign and security assistance activity is 
noticeable. According to data supplied by the U.S. Government to the 
Development Assistance Committee of the Organization for Economic 
Cooperation and Development, the U.S. Defense Department provided 7 
percent of overall U.S. development assistance in 1998, a share that 
had risen to nearly 22 percent in 2005. While a significant part of 
this assistance was related to U.S. operations in Iraq and Afghanistan, 
it excluded the military's train and equip programs. Had they been 
included, the share of U.S. bilateral assistance would have been 
significantly higher.
    It is important for the Congress and for this committee to take a 
close look at these programs and authorities, before it moves down the 
road to providing permanent authorities for the Department of Defense 
to carry out such central responsibilities with respect to national 
security policy. While it is understandable that DOD would focus on 
what it needs to perform its missions in Iraq and Afghanistan and with 
respect to combating terrorist organizations, the central direction of 
U.S. foreign and national security policy is not the responsibility of 
the Defense Department. It is the responsibility of the White House and 
the Department of State.
    There are serious downside risks, in my judgment, to continuing 
this trend.\11\ First, continuing this trend imposes a severe cost on 
the military. It expands their roles and missions at a time when they 
are already stretched carrying out their core functions. The governance 
and economic development of other countries is not a core military 
mission. Taking responsibility for such missions greatly expands the 
training, requirements, and operations of our military forces. While 
many soldiers and officers have been carrying out such tasks in Iraq 
and Afghanistan with the best will and effort they can muster, these 
are not core military skills. Relying heavily on the military for 
missions that are, at their core, civilian missions, stresses the 
forces even further. Moreover, in many of these cases, the funding for 
security assistance programs is drawn from DOD operating funds, 
competing with the support DOD must provide for troops operating in the 
field.
---------------------------------------------------------------------------
    \11\ For additional discussion of this issue, see Center for 
Strategic and International Studies, ``Integrating 21st Century 
Development and Security Assistance,'' Task Force Report, January 20.
---------------------------------------------------------------------------
    Second, assuming that only the military has the funding and 
organization to carry out such missions and should, therefore, be given 
the permanent authority to do so not only duplicates civilian programs 
and capabilities, but has the effect of further weakening the civilian 
toolkit that currently exists. Our development and diplomatic tools 
have already been weakened by fiscal neglect and inattention, a 
situation of great concern to this committee. Expanding the military's 
role makes the weaknesses of the civilian tools a self-fulfilling 
prophecy. They become even less coherently organized, funded or staffed 
for the responsibilities they should have. Why bother fixing the 
civilian tools when we can just ask DOD to do the job?
    Third, assigning these responsibilities to the military reduces 
their visibility to the Congress and the oversight such programs need 
to have on a regular basis. While large in relation to the 
International Affairs budget, funding for these activities is swamped 
in the broader defense budget, leaving little time for authorizing or 
appropriating staff to provide proper oversight.
    Fourth, and perhaps most serious, relying increasingly on DOD and 
the military for these functions puts a uniformed face on the U.S. 
international engagement. While we can honor the military for the many 
roles they play overseas in promoting America's interests, this 
expanded military role is not always viewed benignly outside the United 
States. A growing foreign assistance role for our military sends the 
wrong message, one that could even prove counterproductive for our 
international image and our long-term interests and goals.
    As the CSIS SMART Power Commission report noted: ``The Pentagon is 
the best trained and best resourced arm of the Federal Government. As a 
result, it tends to fill every void, even those that civilian 
instruments should fill.'' \12\ If we truly believe that the civilian 
instruments can fill this role, we should be empowering them to do so, 
not allowing this drift to continue.
---------------------------------------------------------------------------
    \12\ Center for Strategic and International Studies, Commission on 
Smart Power, ``A Smarter, More Secure America,'' Washington, DC: 2007, 
p. 8.
---------------------------------------------------------------------------
    I am not saying the military has no role to play in security 
assistance; to the contrary, because of its unique knowledge, 
technology, and skills, the military and DOD are a key implementer of 
security assistance. They have done so for years with the FMF, FMS, and 
IMET programs. But they should be doing so under the policy direction 
and budget planning of America's foreign policy agencies, which are 
responsible for and attentive to the overall relationship between the 
U.S. and the recipient country.
    If the civilian responsibility for stabilization, reconstruction, 
and governance needs reform, empowerment, staffing and funding, then 
that should be the focus of our investment. The military's role should 
be restricted to delivering assistance under its own authorities to 
support activities that are clearly short term, humanitarian, emergency 
based, and in areas where the security environment does not permit 
civilian operations. CERP authorities should be temporary, and 
restricted to these uses, not global and in areas where security is not 
an issue.
    Funding and skill training at State and USAID need to be adequate 
to enable them to provide such support--especially for governance and 
economic reconstruction and development--which is clearly core to their 
mission. This committee will want to examine the relationship between 
USAID's development programs, Office of Transition Initiatives (OTI), 
Office of Foreign Disaster Assistance (OFDA), and the growing 
capabilities of the Coordinator for Reconstruction and Stabilization, 
as well as the funding levels needed for these programs.
    If fellowships to combat terrorism are an important part of the 
U.S. program for educating officers of foreign militaries, it should be 
integrated into the IMET program, under the Foreign Assistance Act and 
the authorities of the Secretary of State, and implemented, as it is 
today, through the Department of Defense.
    If budgetary reimbursement to countries such as Pakistan and Jordan 
for support they provide for U.S. counterterrorist operations is a 
priority, the strategic decision to provide such support should be made 
under the Secretary of State's authorities, in coordination with the 
Secretary of Defense, not the other way around. The funds should be 
budgeted and provided through the International Affairs accounts, as 
ESF is today. Foreign Service officers abroad should be adequate in 
numbers and properly trained, to examine reimbursement requests in 
cooperation with defense attaches in the embassies, and verify the 
activities for which reimbursement has been provided.
    If the U.S. needs a train and equip capability that is agile and 
flexible, and can meet the needs of allied and friendly military 
forces, then we should be designing such a tool, based on reforming the 
existing FMF program. One option for providing more flexible global 
train and equip support would be to provide it through a ``drawdown'' 
authorized by the President on the recommendation of the Secretary of 
State. This would be a simple fix, and provide adequate flexibility to 
permit such a program on shorter notice than the current FMF process. 
It may be sensible, however, to retool and adequately fund FMF 
authorities to provide such programs. The right answer is not to turn 
the policy and budgeting responsibilities over to the Department of 
Defense. Even with the existing ``dual-key'' arrangement for section 
1206, the initiative for a program lies with DOD under current 
temporary authorities. The initiative should lie with the department 
that has responsibility for our overall relationship with other 
countries and can set the desirability of a T&E program in the 
framework of our broader strategic and foreign policy purposes.
    Little would change operationally by putting this authority under 
the leadership of the State Department. State and Defense could 
continue to consult and coordinate in the definition and adjudication 
of programs.\13\ They could be implemented through the same processes 
as those used for FMF programs today, with a continuing role for the 
Defense Security Cooperation Agency (DSCA). In the long term, a careful 
reshaping of our training and equipping programs requires the 
combination of both departments. As Ranking Minority Member Duncan 
Hunter put it at last week's House Armed Services Committee hearing: 
``The long-term answer must reflect an integrated approach to foreign 
assistance and not simply a shift in those types of missions to U.S. 
military forces.''
---------------------------------------------------------------------------
    \13\ The first year of the 1206 program saw uneven cooperation 
between State and Defense, with adequate coordination taking place less 
than half of the time, according to the Government Accountability 
Office. This coordination process has reportedly improved. See GAO, 
Section 1206 Security Assistance, ``Briefing for Senate Foreign 
Relations Committee Staff,'' December 14, 2006. However, according to 
Secretary Gates, the proposals for 1206 programs ``emanate entirely 
from our combatant commands,'' not from State Department personnel. 
Response to question from Representative Hunter, April 15, 2008.
---------------------------------------------------------------------------
    In the end, the foreign security assistance issue comes down to the 
question of balancing the toolkit between Defense and State 
responsibilities. The current trend shifts this balance significantly 
to the Defense Department. It is critical to consider how we shift the 
balance back, strengthen, fund and empower the civilian tools, and 
provide the broader policy oversight for which the State Department 
should be responsible.
Interagency Coordination
    The remaining issue I want to discuss is the integration of the 
national security policy toolkit at the White House level. One of the 
most evident problems of the past 20 years is the absence of a modern 
mechanism to integrate national security policymaking, planning, and 
budgeting across the responsible agencies. Here, too, the issue has 
been too narrowly framed by the problem of stabilization and 
reconstruction operations. The urgency of the S&R need and the lessons 
of Iraq and Afghanistan have displaced attention from the more basic 
question of whether our national security machinery needs fundamental 
reform to cope with the broader challenges of the 21st century I 
outlined at the start of my testimony.
    I believe it does, and I commend the many efforts underway in 
Washington today, including the one led by my colleague, Jim Locher, to 
shape new concepts for interagency work on national security issues. I 
have only a few comments to offer here.
    First, we need to acknowledge that the current interagency process 
is flawed. Every new administration comes to office, as we did in 1993, 
assuming that the interagency process would serve their needs. And 
every administration discovers that it has to reinvent the interagency 
wheel. The national security strategy is drawn up every 4 years, but 
rarely provides clear guidance for the national security decisions that 
are made. Crises are dealt with ad hoc, rather than through a 
systematic process, leaving only a faint learning curve behind to guide 
the administration through the next crisis. Agencies defend their turf 
and, without strong leadership at the center, resist entreaties to work 
together.
    The White House tries to bend the system into an operating process 
through coordination, czars, or temporary coordinators.
    Second, there is now a wealth of thinking about what to do to try 
to fix these problems. The Center for Strategic and International 
Studies has provided serious thinking and proposals on the subject 
through its Beyond Goldwater-Nichols project. My colleague, Cindy 
Williams, and I have amplified that work over the past 2 years, 
focusing particularly on planning and resource issues. The Intelligence 
Reform Act of 2004 provided a prototype of a new interagency approach--
the tasking to the National Counterterrorism Center to design an 
integrated strategy and guidance for combating terrorist organizations. 
While imperfect, this effort made real progress in shaping guidance for 
agencies in this key policy area.
    Third, in thinking through how to strengthen the interagency 
process, it is important to set aside the shibboleth that the National 
Security Council ``must not become operational.'' Asking the NSC to 
play a more active and concerted role in interagency strategic planning 
and in providing agencies with guidance is not the same as making it 
``operational.'' Implementing programs and policies is and remains the 
task of agencies.
    But I believe it is critical for the NSC, and for OMB at its side, 
to play a more active role than it has in the past in providing 
strategic planning and guidance. There are several key elements of such 
a role that are worth consideration:

   A Quadrennial National Strategy Review (QNSR), led by NSC 
        and OMB, with full agency participation;
   A biennial, classified National Security Planning Guidance 
        (NSPG) to agencies. This could be provided not for every area 
        of national security policy, but for those areas that are 
        chosen as priority foci of an administration's long-term 
        national security strategy, such as governance and democracy 
        promotion, post-conflict stabilization and reconstruction, 
        global poverty reduction, environment, counterterrorism, or 
        nonproliferation policy.
   A full partnership between the NSC and OMB in coordinating 
        that guidance. This means ``powering up'' both organizations 
        with additional staff, seasoned in long-term strategic and 
        budgetary analysis and planning, a capability neither has at 
        the moment.
   Full agency participation in and support for this biennial 
        guidance planning process, and full followthrough by OMB on the 
        implementation of the guidance in agency budget planning.
   The preparation of a single, annual document presenting the 
        administration's national security program and budget request 
        to the Congress. This document--a ``national security 
        budget''--should include the resources being sought to support 
        the strategy by all the relevant national security 
        departments--State/USAID (and all of Function 150), Defense 
        (and intelligence), and Homeland Security.
   A rewrite of NSPD-44 by the next administration to task the 
        NSC and OMB more centrally for the coordination of interagency 
        planning for complex contingency operations. This would bring 
        true interagency attention and authority to the planning 
        process it does not currently have.
   Integration of the Homeland Security Council into the NSC, 
        to bring the two processes into closer relationship than they 
        are today.

    Fourth, the Congress can play an important role in this reform, 
including doing everything it can to reshape its own work around a more 
integrated process:

   Reform the budget process to consider national security in 
        its entirety, as part of the work of the budget committees, 
        including considering all national security spending by the 
        relevant departments together. This would mean setting 
        Functions 050 and 150 together in hearings on the budget. And 
        it would mean creating a budget function for Homeland Security, 
        which it does not now have.
   On key issues of the national security program, holding 
        joint hearings between the relevant authorizing committees, to 
        put parts of the program and spending portfolios together and 
        explore the synergies.
   Find ways in the appropriations process to explore how 
        national security budgets might be considered together, in the 
        process of setting out 302(b) allocations to appropriations 
        subcommittees.
   Work with the administration to find ways to provide greater 
        flexibility within and across agency budgets, reduce earmarks 
        on foreign assistance funds, and allow greater use of 
        contingency funds, linked to the reporting and review 
        requirements that would reassure the Congress that such 
        flexibilities were being executed responsibly.
   Establish in statute a requirement for a QNSR, NSPG, and the 
        integrated national security budget document.
                               conclusion
    I have offered a broad range of proposals and suggestions for 
reform. They are not cast in stone, but it is vitally important that 
the Congress and the next administration be thinking now about how to 
transform the national security planning system and rebalance the 
toolkit of statecraft. No structures or policy processes are perfect, 
nor can they guarantee good leadership or 100 percent successful 
decisions. But our toolkit is increasingly out of balance today. The 
civilian institutions urgently need empowerment, reform, funding, and 
coordination. And the interagency process in place today does not serve 
the Nation well. A strengthened civilian toolkit and a more 
institutionalized process will provide the next administration with the 
opportunity to carry out a more balanced and integrated approach to the 
broad agenda of security problems we face.

    The Chairman. I am going to yield to Senator Lugar, but let 
me just make one quick comment.
    I think our mutual experience--and I have not talked to 
Chairman Lugar about this, but this whole notion of comity and 
trust, in my experience being here for seven Presidents, that 
depends completely on the President. The degree to which the 
Congress distrusts does not go to institutional issues. It goes 
to motivations perceived by the Congress about the President 
whether they are going to count him in.
    And I think all three candidates who are running, including 
our colleague, Senator--you know, there are some disadvantages 
of having Senators run, we are told, for President. We are 
going to get a Senator for President. I am not being facetious 
when I say this. Whether it is John McCain or Barack Obama or 
Hillary Clinton, I think we have a prospect of that 
institutional trust being a lot better, which is a big leg up 
if that occurs.
    I am going to yield first to Senator Lugar, and then I will 
come back with questions.
    Senator Lugar. Well, I join the chairman in the hopes that 
our colleagues will still remember us. [Laughter.]
    Still, we have to operate on faith.
    And I think the point that you have made is an important 
one not only about the shifting roles of the Department of 
Defense and the State Department, but likewise the 
congressional jurisdictions. Leaving aside our relationship 
with the President, our relationships with each other are very 
important. I have noted that some committees feel an affinity 
to the department over which they are exercising oversight. It 
is all one team and they are very defensive about giving away 
the authorities or money. But hopefully, this is the purpose of 
our thoughts now to invigorate the system and I hope that as 
the new Congress comes, as well as the new President, that 
there are these opportunities.
    I was just thinking, as I listened, about some fledgling 
attempts in this area. In part, our committee has taken 
seriously the thoughts of the last panel with regard to energy 
policy, and Mr. Boyden Gray, who has been active in Government 
before, has come back in a role at the State Department and 
attempting to play a role as an energy emissary, ambassador, or 
thinker in the State Department.
    In part, this has come from some of the experiences of some 
of us who are trying to be helpful out in the field, and I 
think it is an illustration of a visit that I paid in January, 
starting with the premise that it is very important that the 
resources of oil and natural gas from Kazakhstan, Turkmenistan, 
the flow through Baku, Azerbaijan, and the Tbilisi-Ceyhan 
pipeline, somehow some of this reaches Europe. This is of very 
great importance in terms of our NATO relationship that there 
be at least some alternatives to supplies by Gasprom and Luke 
Oil.
    For instance, the Kazakhs understand the need for a more 
diverse portfolio. It is best not to have only one customer. At 
the same time, logistically and in terms of history, their 
relationship with Russia on these issues has gone well for 
them. So as a result, even in January during this period of 
time with President Putin on the telephone with the President 
of Kazakhstan and Turkmenistan, new agreements were formed for 
very large supplies of natural gas.
    From my visit with the new President of Turkmenistan, I 
believe there is at least an opening for more possibility for 
dialogue with the United States or with others. It is moving 
along slowly, but it is moving, and to his credit, he has taken 
some initiatives.
    Then in Azerbaijan, we have President Aliyev who is very 
impatient with both of the above for failing to get into a 
Caspian Sea situation. He feels unable diplomatically or in 
terms of the clout perhaps of his nation to engage those two in 
what might be a mutual interest.
    Now, this is just as background for what even a person, 
maybe Boyden Gray or maybe three or four people, might be able 
to do in a very initial start. This does not get to these 
fundamental issues of climate change or energy independence or 
anything of this sort, but just simply a loosening up of the 
international system, if we have also the initiative of 
thoughtfulness of what needs to occur out there.
    Absent that, we have substantial reverses. The State 
Department, as well as Defense, could give briefings on why 
attempts to provide channels of oil or natural gas into Europe 
are failing because the Russians, acting more rapidly, have 
signed agreements quickly with Bulgaria, with Serbia, and 
others. And this is happening right now during this 
administration. To the credit, at least, of Secretary Rice, she 
has perceived this, acting slightly upon it.
    We are talking about the real world in terms of trying to 
somehow have proper organization. Now, this could occur, I 
presume, through the Department of Energy, and some would say 
that is really where it belongs. Why is anybody in the State 
Department fooling around with energy? Or some could say 
because we have more contact with these countries, the Defense 
Department still is the mainstay. This is the way you finally 
get people who have at least authoritarian or semiauthoritarian 
governments loosened up to work at this.
    But I seize upon this as sort of a practical example with 
some personal experience as to how the world works now and how, 
in the first year of the next administration, it might work 
better in the event that proper thinking came.
    But I agree with you entirely with the precept that somehow 
or other there has to be some money, some cooperation, some 
thoughtfulness that moves us away from what I perceive to be 
one of the problems of some of the initiatives in this 
committee, and that is, sometimes they are simply stalled on 
the Senate floor by members of another committee that put holds 
on the bills. They do not happen. So a lot of hearings have 
occurred. Very able witnesses like yourselves give testimony. 
Reports are written, but the net effect of this is zero 
because, in part, we built a public tradition that, if you need 
tough diplomacy, if you need tough people in a tough world, it 
is over at DOD that these people exist, not in what is seen 
sometimes by people in a derogatory way as ineffective 
diplomats or people over at the State Department who really are 
not tough enough to deal with today's challenges. And that may 
be a mindset in the public, as well as the Congress, that needs 
addressing, in addition to the valid academic points that we 
are all making today about how our policy ought to go.
    In other words, if we are talking about change here, how do 
we recharacterize what is to happen? Maybe we do not talk 
initially about the State Department at all. We talked about 
objectives. They just happen to wind up here because the 
President assigns them there and so forth. But address, if you 
will, this predicament.
    It is not by chance I think that the flow of men, 
materials, and money has gone from State to Defense over 50 
years, and it is not in the process of being reversed. If 
anything, it takes a major effort to maintain even the Foreign 
Service levels that we have now, quite apart from money for 
foreign assistance of any sort. How do we change that 
perspective politically in the Congress and the administration? 
We have some chance now of addressing the subjects you have 
talked about.
    Dr. Adams. This is a wonderful issue because it classically 
captures exactly the agenda that we are facing. First, this is 
a new issue for statecraft. Second, it is inherently 
interagency. It is not just one agency's problem to deal with. 
Three, because we do not have a strengthened civilian toolkit, 
especially for strategic planning, we default to dealing with 
the issue through the uses of the military forces. We are 
worried about safeguarding supplies. We are worried about being 
a power in a specific region and how we use the military to be 
a power in a region. We ask the COCOM's to go around and talk 
to countries about U.S. strategy in the region, and we default 
to that process on the civilian side.
    Senator Lugar. That is an especially important point, the 
default aspect. If you do not have any out there and you have 
emergencies----
    Dr. Adams. And then you have emergencies, and we use the 
instrument that is organized and well funded, and by God, they 
go out and do the best job they can do.
    But this sets us back in the long run. And this is one of 
those long-run issues where civilian leadership is critical, 
which brings us back to the HR problem. Do we bring people who 
understand this issue into the diplomatic service? Do we hire 
them? Do we promote them? Do we incentivize them? Do we put 
them in positions of authority?
    So partly it is an HR issue. Partly it is a training issue. 
Do we train our civilian side to think in terms of the long 
term strategic planning, the resources we need to apply, the 
connections between our domestic supply and the international 
supply, and the diplomacy required?
    The other aspect that you pointed to, which is critically 
important here--and I think Senator Biden said this earlier--is 
that we cannot solve this issue alone. There is no way we can 
solve the energy issue alone. I agree with my predecessors on 
the panel about energy independence. This is a fool's mission--
energy independence. The solution has to be international. This 
means looking at new institutions, new negotiations, new 
processes. As I argued in my testimony, you need to put your 
diplomats and your foreign assistance providers at the helm, at 
the leadership of the effort to engage those countries and find 
solutions.
    Senator Lugar. Yes. Who calls the meeting is the problem 
and how do you have a peace treaty on energy?
    Dr. Adams. Well, I think we and the European Union and the 
Japanese and, I would argue, the Chinese are in a very strong 
position to call such a meeting together.
    Mr. Locher. You know, if I might, Senator Lugar. One of the 
problems both in the executive branch and on Capitol Hill is 
that we do not look at national security from a whole-of-
government perspective. We are focused on the parts. If you 
look at what happened in the National Security Act of 1947, it 
reinforced the parts. It created a strong Department of 
Defense. It created the intelligence community, but it also 
created a very tiny headquarters, which only had advisory 
responsibilities, in the National Security Council staff. And 
so we do not have the mechanisms for integrating across the 
Government.
    So one of the things is to think about national security as 
a system, and that is why in my commentary about the Congress, 
I talked about the Select Committee on Interagency Affairs that 
could look across all of the standing committee jurisdictions 
at national security as a whole. We are of the opinion that in 
the interagency space, in the future the most important 
national security work will be done, and that is the space that 
currently the Congress does not have jurisdiction over. We are 
seeing a number of organizations beginning to emerge.
    The work that is being done in the Africa Command and in 
the Southern Command is really pushing toward a civilian-led 
regional organization that would integrate all of the 
instruments of national power for the United States on a 
regional basis. The Coordinator for Reconstruction and 
Stabilization in the State Department is supposed to be an 
interagency entity, but it is not because it does not have buy-
in from the rest of the Government. And it is placed there in 
the Department of State, but it could be kicked into the 
interagency space and made a viable organization.
    In my project, we are following a very disciplined 
methodology to identify what are the problems. Most reform and 
reorganization efforts do not give sufficient attention to 
that, to really understanding what is wrong and what is causing 
it.
    But we often try to present illustrative solutions so 
people have a sense of what might be possible. And one of the 
solutions that we have often talked about is if prior to our 
invasion of Iraq, if we had in the interagency space a 
horizontal team that was responsible for reconstruction and 
stabilization and it had all of the expertise of the United 
States Government, and it was asked to put together the plan 
for reconstruction and stabilization in Iraq, thinking of all 
of the expertise and capabilities of the United States 
Government, and then was instructed to go to Baghdad and to 
implement that plan with a team that was properly led, manned, 
empowered, linked back into all of the departments and 
agencies, we would have had a much more effective effort.
    Could we create such a team? Absolutely.
    If we look at what is going on in business today, 
businesses had to deal with the same complexity and rapidity of 
change as Government has not been able to handle, and they have 
done it through creation of horizontal teams. In big business 
today, more than 50 percent of the work is done horizontally, 
and that is because the corporations need the ready expertise 
of all of their functional elements to solve a problem quickly 
and effectively. And in Government, we can move in that 
direction.
    We are starting to see these ideas emerge. There is really 
no authority for them, but the Africa Command and the Southern 
Command recognize that the most important tools in their 
regions are civilian tools. And that is why they are trying to 
integrate civilians into their command structure.
    But it is this requirement to look at national security in 
a whole-of-government perspective. We are completely out of 
balance. We cannot integrate. We have a very tiny integration 
capability, and we have these massive stovepiped bureaucracies 
that have a tremendous amount of capacity, but they cannot be 
integrated in useful ways for the United States.
    Senator Lugar. Mr. Chairman, I will just conclude with the 
thought--Chairman Biden, in fact, tried with this committee to 
generate enthusiasm for the idea you have suggested on Iraq 
reconstruction. And we had many witnesses, many hearings, very 
good ideas. In fact, we hoped something was going on in the 
administration and even called for witnesses, and they were not 
forthcoming. They said we are just not going to send anybody 
over to testify about all this.
    Ironically, on the very same day that witnesses were not 
appearing, the witnesses were appearing over at the Pentagon in 
a press conference, and we had the anomaly of press people over 
at the table listening to the press conference and the 
testimony we might have been having here. I take this as a 
bizarre and extreme example, but this occurred historically.
    So we are back around again. As the chairman has said, 
fortunately, we will have three colleagues--one of the three 
will be President. Hopefully we will get witnesses. We will 
have some cooperation. But your testimony is very timely as we 
try this again.
    Mr. Locher. Senator Lugar, may I add one more point in this 
regard? As you know, I was involved in the Goldwater-Nichols 
act, and we had the problem that we had a Department of 
Defense, but it was fractured among the four services. For 40 
years, warfare required that we be able to work in an 
integrated fashion, but the four services wanted to maintain 
their independence and prerogatives. And it finally took the 
Congress overruling the Department of Defense to create the 
joint warfighting capabilities we have today.
    And if you think about where are we on the interagency, we 
are at the same place. We have more tribes in the interagency, 
but the challenge is the same. How do we take that great 
capacity that is in the individual departments and agencies and 
integrate it to meet the complex threats that are in front of 
us? It can be done. The combatant commands are those horizontal 
teams in the Department of Defense, and we need their 
counterparts at the interagency level.
    Dr. Adams. Let me introduce one caveat to what Jim said 
because we can't agree on everything. I think it is very 
important in the two cases that you have cited that we not 
fight the last post-war. We really blew that one big time. But 
we should not construct a capability that will do post-conflict 
reconstruction Iraq-style on the scale of Iraq. Such a 
contingency is both unlikely and probably counterproductive. We 
will not be invited to carry out an exercise of that kind at 
any time in the near future.
    That is why I suggested we need to look at it as an issue 
of failed, fragile, and brittle states. That is a governance 
problem around the world, and we are going to face that, like 
it or not, everywhere around the world. And it is going to be 
not only our problem, but that of other countries as well to 
think about how we create a capacity that may be more 
restrained than what we would have sent into Iraq, but is 
capable of providing reconstruction and governance support that 
other countries are going to need in advance to make an 
invasion unnecessary and to ensure that the country does not 
become a security threat to other countries.
    The Chairman. Thank you.
    Senator, let me explain. I yielded to the Senator. I am 
going to ask questions and yield to you.
    I may have been hanging around too long with Senator Lugar 
these last 30 years because the very point he started off with 
was what I wanted to discuss, and I am going to raise it from a 
slightly different perspective, if I may.
    The things we seem to tiptoe around are a culture at each 
of these departments. And notwithstanding the fact that we 
should not learn the wrong lesson from the last war--and pray 
God, we are not in a circumstance where we are ``intervening'' 
in any way to the extent that we are intervening now in Iraq 
and have to deal with that.
    The point that Senator Lugar made was absolutely correct. 
We held hearings. We listened to very informed witnesses. The 
Senator and I joined in op-ed pieces and reports saying that we 
need this interagency, this civilian capability. You cannot go 
in alone. We talked about everything in detail from the number 
of--essentially police forces would have to go in with the 
military forces and the civilian force necessary. I mean, we 
went into some considerable detail, and we were assured that 
that was being done. But they would not come and tell us how it 
was being done. And it turns out it was not being done at all, 
which leads me to this proposition I would like you to respond 
to briefly.
    In my experience hanging out in this place for a long 
while, a great deal of what is able to get done depends upon 
whether or not a President using the bully pulpit wants to get 
it done. The truth of the matter is--and I am not trying to 
pick a partisan fight here, but this administration, at least 
at the front end, dominated by two very strong and bright 
personalities, the Vice President of the United States and the 
Secretary of Defense, had as part of their mission--those of us 
who have known them well--to recapture what they thought was a 
loss of power of the Presidency that began in Vietnam, the 
unitary executive. And I think that notion drove an awful lot.
    Second, this administration began with an assumption, quite 
frankly, that the CIA was deficient. It was defunct. It did not 
take chances. It was not to be listened to. And you saw a whole 
attempt to set up a whole new not interagency, but a CIA within 
the Vice President's office--not literally the CIA but an 
intelligence unit within his office, as well as over at the 
Defense Department. And further, there was the assumption that 
the State Department was both effete and ineffective.
    So they came to office with these very strongly held views 
about the culture of the departments and about the balance of 
power and the separation of powers issues and debates. I think 
that colored a great deal of what happened.
    That leads me to the point that you raised, Professor. You 
said--or one of you said--strategic planning capacity on the 
civilian side is missing. I would argue it is not missing. It 
is like that phrase attributable to G.K. Chesterton. It is not 
that Christianity has been tried and found wanting. It has been 
found difficult and left untried. If we had a Secretary of 
State who decided to engage, there is nothing that suggests 
that he cannot or she cannot write that document, pull 
together, not withstanding his or her jurisdiction to take the 
case to the President of the United States of America.
    So as much as I am an advocate of a national security act 
of 2009, which is a gigantic undertaking institutionally, 
bureaucratically, it seems to me it all starts with self-
starting initiatives not just here but with a new President and 
the persons he or she ask to people the organizations that they 
want, which leads me to the point I would like to raise. And I 
will be anecdotal to make the point, as you were, Jim, when you 
were giving examples of what things we could do.
    I, like Senator Lugar and Senator Feingold and others, have 
been strong supporters of more muscle, resources, and authority 
for the State Department, the civilian side of the equation. 
But having traveled I think now 13 or 14 times into--and if I 
add Bosnia, 25, 26 times, if my numbers are correct. It is over 
20--into these ``battle zones,'' in every instance I have 
walked away saying to my staff, you know, God darn it, I do not 
like doing this, but we have got to increase the CERP funds 
because the State Department is ineffective. They are 
ineffective. And even though I know it is counterintuitive to 
what I want to see happening, I am a guy who put--if we had 
listened to, at the front end of this process, General 
Chiarelli of the 1st Cav instead of Bremer, we would be a hell 
of a lot further along.
    And I am going to say something heretical. The best 
diplomats I have found are guys wearing bars and stars on their 
shoulders. Not all of them, but there are some really talented 
people out there. I remember Chiarelli saying to me, Senator, 
look, give me some PCV pipe to put in the back of these homes 
to get the sewage, which he showed us pictures of and we went 
and saw, of 3 feet of raw sewage in Sadr City, up to the 
hubcaps of our HMMWVs, while the State Department and the 
administration let a contract for a tertiary sewer treatment 
plant for a half a billion dollars that was going to take 
several years to construct. In the meantime, not a damn thing 
was happening on the ground.
    Another example I was given in one of my many trips to Iraq 
was one of our generals pointed out to me, he said, Senator, we 
have produced and built the biggest water fountain in the 
world. We came in and built this whole new water facility in 
Baghdad for potable water. But guess what. It is not hooked up 
to anything. Not a joke. Not hooked up. So people in Sadr City 
looking for potable water had to take a bucket. He said, ``just 
give me, again, some PCV pipe, some authority to go out and 
contract the locals to dig the ditch. Let me put the pipe in. 
And guess what. Things will radically change here.''
    The Department of Agriculture--again, I am being 
anecdotal--in Iraq--it used to be the bread basket of the 
Middle East in the fifties. Commanding general says to me, 
``Senator, do you want me to deal with the militias?'' Get a 
functioning Department of Agriculture here, and then gave me an 
example. There is a fungus that kills the date palm tree. You 
have to spray for it like the boll weevil in cotton. He goes to 
the State Department, goes and says, we have got to do 
something about it. They said, no, that is up to the locals. So 
what happened? He said, I did what Saddam did. I used my 
helicopters to spray. I went out and that is what I did. 
Seriously.
    So what I want to talk to you about here, as we go to 
rebuild this civilian capacity, is there a need for a change in 
the culture at the State Department? And I know this is a 
pretty in-the-weeds question that the public at large will 
wonder why I am asking it. But is there also a need for us to 
go out and attract something other than--and we have not even 
been attracting them--the typical Foreign Service officer in 
terms of the mentality, the kind of person we want? They are 
the brightest people in Government. I mean, I am absolutely--I 
do not know about my colleague from Wisconsin. I am impressed 
with these State Department personnel.
    But guess what. I used to say facetiously, which gets me in 
trouble--back in the eighties I would say they like carrying in 
their briefcase their lunch instead of plans relating to arms 
control. I mean, it was like instead of doing something, there 
is this mindset that is like pushing a rope.
    So I think there is a dichotomy here between those of us 
who want to build the civilian capacity--here you have the 
Secretary of Defense making a speech pointing out there is a 
19-to-1 discrepancy in dollars spent. It has got to change.
    The plea I get in Afghanistan, in Pakistan, in Iraq, 
wherever I go is give me more civilians. Get more civilians in 
here.
    So just talk to a me a minute about the practicality. It is 
a little bit like when we talk about doctors being trained. 
They are not trained today to deal with the interaction of 
various prescriptions and medications. They are not trained 
today--so this whole discussion in the health field about 
training--our educational institutions, medical schools 
changing their curriculum. What is the curriculum we want for 
the new foreign policy establishment? What background should we 
be looking for? You do not have to answer it literally, but 
talk to me about this whole issue of the culture.
    Mr. Locher. Mr. Chairman, the cultural issue is an 
important one, and I want to start one level higher than you 
began in talking about the culture of the State Department.
    There is no interagency culture.
    The Chairman. Right.
    Mr. Locher. It does not exist. And if there were an 
interagency culture, like the joint culture we have in the 
Department of Defense, it could be powerful in helping us 
integrate all of our capability.
    The Chairman. What do we do to change that?
    Mr. Locher. Well, first of all, in the Goldwater-Nichols 
legislation, there were joint officer provisions. One of the 
most important was it said you could not be promoted to general 
or flag rank unless you served in a different service or in a 
joint assignment.
    Those same sorts of requirements will be necessary for the 
interagency. In all of the departments that have national 
security responsibilities, you will not be able to pass a 
certain level unless you have worked in an interagency or in 
some sort of cross-department assignment. There will have to be 
specific education and training requirements. There will be 
qualifications for various positions, and we want to nurture 
that interagency culture because it can be a great tool.
    Then as we come down to the departmental level, there is 
the issue that in lots of departments, like the Department of 
State, there is not that operational culture. You may know that 
Ambassador Herbst in his job as the Coordinator for 
Reconstruction and Stabilization is running against the grain 
in the Department of State.
    The Chairman. Yes.
    Mr. Locher. He is very much alien organization there.
    So what will be required as part of this new national 
security act is to identify in all of the departments and 
agencies what sort of expeditionary capability is required and 
what sort of cadre will have to be built in the Department of 
Agriculture and in the Department of Commerce and in the 
Department of Justice to be able to go overseas and rapidly 
create the kinds of organizations and capabilities that the 
United States needs? Now, that can be identified, but this 
overarching interagency culture will help contribute to these 
departmental operational cultures.
    But there is also another important dimension that came out 
in your early comments when we were talking about the 
competitive nature of some of the Cabinet secretaries. For 30 
or 40 years, we have normally seen the Secretary of State and 
Secretary of Defense be at odds, but we know that national 
security missions today require the integration of lots of 
Government capabilities. That means we have to have incredible 
collaboration.
    The Chairman. That is why I said I think it does go back to 
the President.
    Mr. Locher. It does.
    The Chairman. The next President choosing his or her 
Secretary of State and Secretary of Defense--both of us--very 
briefly, my friend from Wisconsin--had he stayed, he might have 
been the nominee. I stayed longer, and I did not become the 
nominee. But both of us I think would agree.
    I speak for myself. The single most important task I 
thought would be required of me, had I become the President of 
the United States of America, was to make sure that the 
Secretary of Defense and my Secretary of State were on the 
exact same page, that they understood in order to work for me 
as President of the United States they had to, ahead of time, 
make sure that they signed on to the same goals and objectives 
requiring the elimination of the stovepipes and their 
mentality. So if a President does not do that, if a President 
does not start there, I think this notion is doomed from the 
outset.
    Dr. Adams. Let me just add to what Jim Locher said, 
Senator, because you put your finger on an absolutely critical 
problem. You will remember that I said earlier that I think a 
lot of this is an HR issue.
    The Chairman. Yes.
    Dr. Adams. It is a serious HR----
    The Chairman. HR. You mean human resources.
    Dr. Adams. Human resources.
    The Chairman. Not just numbers.
    Dr. Adams. Not just numbers. It is what kinds of people we 
recruit, what we train them to do, how we incentivize them to 
move up the career ladder, what we reward them for being 
capable of doing. And that is all part of what needs to be 
changed in the culture.
    When I was responsible for the State Department budgets, 
among others, I was one of those people who was always asking 
hard questions. At OMB, my job was to ask hard questions. When 
they came to me with a budget request and said we need the 
following amount of money for this program and they could not 
answer how, why, when, who was going to do it, what were the 
deliverables, and how do you measure the effectiveness of the 
program, we were not going to go fund programs that they could 
not deliver, for which they lacked the capacity.
    So the challenge is how we develop that capacity in our 
diplomatic institutions. I am coming to the question of 
curriculum that you raised. We need to bring in people who have 
a broader range of experience, who accept that the nature of a 
Foreign Service office career is not just report, negotiate, 
and represent, but is also develop program, budget for program, 
plan program, implement program, and evaluate program.
    The Chairman. It seems to me to be a mindset. I am going to 
yield to my colleague.
    Dr. Adams. It is clearly a mindset, but it is one that is 
only going to be fixed long term if we bring in the right 
people, both junior and mid-career, and open up the Foreign 
Service and the diplomatic establishment on a broader scales.
    The Chairman. Let me give you one closing example. So it 
does not think I am picking on this administration, I will go 
back to the Clinton administration.
    I will never forget standing in Brcko in Bosnia and walking 
into a neighborhood that was virtually abandoned with homes 
that were about 2,800 to 3,300 square feet, lovely homes with 
red tile roofs in a development. There must have been--I do not 
know; I am guessing. There must have been 300 homes in this 
development, laid out, obviously built in the previous 10 years 
or so. And the State Department guy is with me, and there is a 
young military guy with me, a marine.
    And we walk out in the middle of this neighborhood, and the 
issue was resettlement. And when we are standing there, the 
commanding general allowed this young captain to literally 
take--it looked like a construction van, like a construction 
trailer--to sit it right in the middle of the neighborhood in 
an intersection there. And while we are talking and I am 
getting briefed on what is going on in the neighborhood, I look 
down the road and there is a family, it turned out, of 8 to 10 
men with pitch forks, sledge hammers, no weapons, no guns, 
walking down heading toward us. And the young captain goes, oh, 
excuse me, Senator. Excuse me. I have got a problem.
    Now, the State Department guys are standing around. He 
walks up the street and confronts these guys, not with a 
weapon, and he talks to them. He happened to speak Serbo-
Croatian. He talks to this group. You know where they are 
going? Literally on the intersection we were standing, there 
was a Serb family occupying a home that had been the home of 
this family, which was Croat. And they were coming down to 
physically drag that family out and repossess their home.
    The young guy goes up and he walks back and I said, what 
did you do, Captain? The kid was--I do not think he was 31 
years old, 32 years old. He said, well, Senator, I told them I 
had already gone and spoke to the Serbs in that household and 
told them we will build them a new house or get them a new 
house. I went to them and said to them, now, look, do you want 
a new house or do you want your house back? They said, we want 
our house back. He said, well, come back tomorrow at 12 o'clock 
and we will have this worked out.
    I later went back and called to find out what the kid did. 
He worked it out. The State Department guy was like with his 
thumb in his ears. The kid took action.
    I am among the biggest supporters over 35 years of the 
State Department, their budgets, and all. But I just think 
unless the mindset changes here about being proactive, actually 
physically being in the game, I do not know how this changes.
    So I apologize. I see there is a vote. I assume that is 
where the Senator went. Is it he coming back? No. I am sorry 
because he always has really good questions.
    I would ask unanimous consent--it is easy to do since I am 
the only one here----
    [Laughter.]
    The Chairman [continuing]. That the questions that the 
Senator had will be able to be submitted in writing. If you 
guys would not mind responding.
    While I have you, I am going to ask one of each of you, if 
I may.
    Dr. Adams, does the United States need a unified national 
security budget that is going to help Congress understand the 
tradeoffs? Or will such a unified budget just morph things in a 
way that it all flows to the most powerful piece of the budget, 
which would be the State Department? From your budget days, 
what is your instinct about that notion?
    Dr. Adams. At the very least, we need a unified document. 
When I was at OMB, I tried to write the budget document of the 
President so that the international affairs section came first 
and the Defense Department section came second. That was a 
minor tool, but it was a way of saying our purposes, our 
intentions, our strategy are what drive the direction and 
orientation of all of these tools. That was not enough. I think 
you need a unified consideration of all of the national 
security tools in the budget process in the executive branch so 
that they are confronted and combined with each other in trying 
to meet the objectives of the strategy. I have suggested in my 
testimony as well that you need to take some of those key 
purposes and drive them down through the interagency as 
guidance in the preparation of budgets so that agencies are 
assigned tasks and responsibilities, and come back in their 
budget submissions to the White House with the right integrated 
requests.
    A document needs to come to the Hill that is an integrated 
national security document, with the executive branch saying 
here are the purposes and here is the way these tools are 
oriented to accomplish these purposes. So the budget committees 
and to the authorizing committees and the appropriations 
committee have an integrated document that tells you how we 
intend to relate these tools to each other.
    To literally unify the agencies in one big budget planning 
exercise is, right now, a bridge too far. There would be enough 
cacophony there to sink the Queen Mary. Right now one major 
problem is that none of the other organizations in the 
executive branch have the program planning, budgetary planning, 
analytical capability, and long-term thinking that the Defense 
Department has.
    The Chairman. Well, I agree.
    Dr. Adams. They are the only agency that does it.
    The Chairman. Quite frankly, no matter how informed and 
bright and visionary the President is, there is no one place he 
can go and get that.
    Dr. Adams. That is the only agency that will deliver it to 
him.
    The Chairman. Yes. There is no one place.
    Dr. Adams. And this is why I think the Office of Foreign 
Assistance at State is so important. It is only a start. It is 
very flawed. But institutionalizing that capacity, pushing it 
to carry out long-term planning for the civilian side, giving 
it the resources and the informed and educated staff it needs 
is a very important first step to pulling together the civilian 
capacity to budget with the same sophistication.
    The Chairman. The very bad part of having a good idea is 
you are going to get asked, like I am going to ask you, Will 
you help this committee figure out what that document should 
look like? We will figure out who draws it up. But just to 
conceptualize for us on a piece of paper what are the elements 
of that document. I mean, how does it get written. That does 
not even answer who writes it, but how does it get written 
because one of the things I think the next President is going 
to need--because I know them all personally, they all think 
about this. They all think about this in varying degrees. They 
all get a sense of the dysfunctional nature of the planning 
process in terms of national security.
    So it would be a useful thing to literally have a document, 
what you are doing, Jim. You guys are getting very explicit 
about how to do these things because you have been through this 
exercise.
    Again, I want to compliment you on Goldwater-Nichols. I was 
here during that whole process. I was a bit player engaged in 
that up here, which leads me to my last question for you.
    And I know you could comment on the question I just asked 
extensively, but I want to ask a question that takes it below 
what you and I, at least, are talking about, a hope that the 
possibility of generating, which is a big order, a national 
security act of 2009, I mean, to think that big. And we need to 
in my view.
    But within that, there are the immediate and crying 
emergency requirements that we have to respond to, one of which 
I am seized with is Goldwater-Nichols made a great deal of 
sense in the era in which it was written. We did not 
contemplate then, looking at that document, the fact that we 
may be deploying for somewhere between 6 and up to 24 months 
total our Reserves and our National Guard. They are breaking. 
The idea that we can, with the manpower we have now, continue 
to task as such an integral part of the ability to project 
force the National Guard and Reserves I think is not possible, 
notwithstanding the fact we should not look at the last 
experience as what the next experience will be necessarily.
    But I mean, I know you know this, Jim. We are $100 billion 
short now in equipment for the States in terms of them 
responding to national emergencies. You saw what happened in 
that town in Kansas that had the tornado that just devastated a 
town. They did not have the trucks. They are in Iraq. They are 
left there. So if we were just to reinstate or replenish the 
equipment through attrition and/or being left overseas, which 
makes sense for the next group coming in, you are talking about 
these Governors being over $100 billion short on equipment to 
handle just internal national disasters or, God forbid, another 
terrorist attack.
    So talk to me, just for a minute, about Goldwater-Nichols 
and what kind of changes are needed unrelated to the 
interagency, if it is unrelated. Maybe it is not. What do we do 
about what I promise you is becoming a gigantic political 
dilemma in terms of the electorate, the deployment of National 
Guard and Reserves to the degree they are being deployed now?
    Mr. Locher. Well, Mr. Chairman, in that regard, in all of 
the departments and agencies, there are many internal problems 
that need to be addressed. And there are lots of great 
initiatives. The transformational diplomacy initiative by 
Secretary Rice needs to be lauded as she is beginning to try to 
address some of the challenges that you raised.
    In our project, we are thinking that the first step that 
needs to be taken is to think about how we are going to operate 
whole-of-government. For the 21st century, how do we need to 
put together the national security interagency system? And once 
that is understood and a new national security act is passed to 
mandate that kind of approach, then there will have to be 
detailed attention to aligning reforms in the individual 
departments and agencies.
    The Chairman. Well, that sequentially for me answers the 
question. And there is only 1 minute or 2 left on the vote. I 
am going to have to leave. My immediate concern--and this is 
just the practical politician in me responding to what is 
happening out there with the American people--is that I want us 
thinking big. I do think we have to look along the lines that 
you guys are talking about. But even in the most optimistic 
scenario, it is going to take some time to get there. I think, 
Jim, you are going to see such an urgent, urgent crisis over 
the next 18 months relative to the way we think about--and it 
cannot be solved in 18 months either. I do not mean to imply 
that. But you have got to give some reason for some hope out 
there that we recognize this dilemma and there is a process in 
train in a more narrow sense to deal with it.
    But here is my question. I really am impressed with--it is 
presumptuous of me to say this--with both of you. And I am 
wondering whether you would be willing, over the next month or 
so, not in this formal setting, to come, sit in my office with 
me and other Senators who might want to get much deeper into 
the weeds about some of the things you are doing, Jim, and some 
of the things you are suggesting, Doc, about how we proceed. 
Would you be willing to do that?
    Mr. Locher. Absolutely.
    Dr. Adams. Absolutely.
    The Chairman. Unfortunately for you, we are like poor 
relatives. We show up when we are invited. [Laughter.]
    So I promise you we are going to be asking you because we 
need your help. I think this has been very, very helpful. At 
least for me, it has been. And I thank you and apologize for 
having to run out now and make this vote. But I thank you for 
being here and I look forward to continuing to work with you.
    We stand adjourned.
    [Whereupon, at 12:31 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


  Responses of James Locher to Questions Submitted for the Record by 
                        Senator Russell Feingold

    Question. Based on your long experience both inside and outside 
government, how important is it that our collection of intelligence as 
well as classified information be truly global and that we don't 
continue to allocate what the DNI himself has acknowledged are 
``disproportionate'' resources to current crises, rather than to 
strategic challenges and emerging threats around the world?

    Answer. It is vitally important that the U.S. national security 
system effectively gather, manage, and effectively disseminate 
intelligence and information needed to address immediate and long-term 
strategic threats and identify strategic opportunities. The current 
system tends to overemphasize traditional threats and underemphasize 
emerging challenges. At the core of this shortcoming is the difficulty 
in accurately predicting what contingencies will have the highest 
likelihood of impacting future national security. To address this 
challenge, the United States needs to improve its ability to monitor 
global affairs and assess the strategic environment. This requires 
approaching the entire spectrum as an interdependent global system that 
can be influenced through ``smart'' as well as ``hard power,'' rather 
than through a lens focused solely on specific threats, adversaries, 
and conflicts.
    Building into the national security system an institutionalized 
capacity for strategic foresight will enable greater interagency 
capability to pick up on weak but important signals, identify trends 
and understand patterns, and better anticipate the nature of future 
conditions with national security ramifications.

    Question. I am gravely concerned that we do not have strategic 
collection plans that address all the ways that the U.S. Government 
gets information about the world, not just from the Intelligence 
Community but from diplomatic reporting and open sources, and that, in 
turn, we have failed to allocate budgetary resources in a strategic 
fashion. This kind of strategic planning and resourcing should 
presumably be the job of the interagency process, but in many cases it 
appears broken, ineffective or simply nonexistent. Do you agree, first, 
that the U.S. Government's need for information about the world is met 
through a combination of intelligence and nonclassified information-
gathering, and, second, that projecting truly ``smart'' power requires 
interagency strategies for collecting this information?

    Answer. The United States does need more comprehensive mechanisms 
for gathering and analyzing all types of information for the purposes 
of improving decisionmakers' knowledge of the strategic environment. 
Key decisionmakers are often confronted not only with imperfect 
information but also cannot access germane and actionable information 
in an effective and timely manner. Additionally, intelligence is stove-
piped both between and within agencies, limiting access and imbuing 
information with organizationally influenced perspectives that would 
otherwise be of greater value to the broader interagency consumer if 
not filtered or institutionally colored.
    The U.S. capacity to project ``smart power'' rests on the ability 
to address these limitations and better integrate interagency 
intelligence and provide enhanced system knowledge. Today, national 
security perspectives outside the traditional national security 
community are underrepresented; the increasing diffusiveness of 
national security challenges calls for involvement of agencies and 
actors who previously played reduced or even marginal roles in national 
security policy development. The Department of Agriculture, for 
example, was not initially included in meetings to address bioterrorism 
challenges. Moreover, few if any means exist to provide nongovernmental 
or private sector perspectives on a sustained and consistent basis.
    Additionally, powerful bureaucratic, cultural, and individual 
disincentives to sharing information prevent decisionmakers from 
accessing relevant knowledge on a timely basis. The lack of a coherent 
national strategy and implementation plans cause departments and 
agencies to develop task-based strategies that draw almost exclusively 
on their own knowledge and information sources. This behavior fosters a 
culture that is averse to knowledge-sharing. Other strong disincentives 
exist to sharing knowledge. Limiting access to knowledge can be 
essential for advancing particular organizational interests. Moreover, 
overclassification of information is a major impediment to effective 
information-sharing, and sensitive information is so compartmentalized 
it is difficult for analysts to independently evaluate and exploit 
intelligence generated by other agencies. The existence of almost 40 
different classification systems also impedes knowledge-sharing, as 
does the intelligence community's ``need to know'' culture.
    Knowledge sharing within the national security system is also 
hindered by the lack of integrated information systems. This problem 
has been widely perceived as a problem of connectivity, but greater 
connectivity does not automatically produce better decisionmaking. 
Although integrating systems will generate enormous amounts of 
information, this increased information is not necessarily in the form 
of knowledge that allows informed decisionmaking. To the extent that 
knowledge generation and sharing currently occur within the national 
security system, the tendency is to share it vertically within 
departments and agencies. To be most useful, knowledge should be 
distributed to decisionmakers who need it, and those decisionmakers are 
frequently not at higher leadership levels but rather dispersed 
throughout the system at the working level.
                                 ______
                                 

Responses of Dr. Gordon Adams to Questions Submitted for the Record by 
                        Senator Russell Feingold

    Question. Based on your long experience both inside and outside 
government, how important is it that our collection of intelligence as 
well as unclassified information be truly global and that we don't 
continue to allocate what the DNI himself has acknowledged are 
``disproportionate'' resources to current crises, rather than to 
strategic challenges and emerging threats around the world?

    Answer. It is critical to create the capacity in the intelligence 
community to think long term. The National Intelligence Council series 
looking out 15-20 years has been a very useful tool to identify 
emerging challenges; that perspective should be institutionalized 
throughout the intelligence community.

    Question. I am gravely concerned that we do not have strategic 
collection plans that address all the ways that the U.S. Government 
gets information about the world, not just from the Intelligence 
Community but from diplomatic reporting and open sources, and that, in 
turn, we have failed to allocate budgetary resources in a strategic 
fashion. This kind of strategic planning and resourcing should 
presumably be the job of the interagency process, but in many cases it 
appears broken, ineffective, or simply nonexistent. Do you agree, 
first, that the U.S. Government's need for information about the world 
is met through a combination of intelligence and nonclassified 
information gathering, and, second, that projecting truly ``smart'' 
power requires interagency strategies for collecting this information?

    Answer. ``Open sources'' have become an increasingly important 
source of real intelligence and the intelligence community has still 
not effectively addressed this source. Part of the weakness lies in the 
lack of policy-driven priority-setting for the community. That is a 
responsibility at the White House level, and it has fallen short in 
recent years.
                                 ______
                                 

    Joint Responses of Joseph Nye and Richard Armitage to Questions 
           Submitted for the Record by Senator Richard Lugar

    Question. DOD in Foreign Assistance. This committee has been 
concerned with the increases in funding and authority for DOD-managed 
foreign assistance programs more traditionally associated with the 
State Department and USAID. Congress granted expanded authorities to 
the military on a temporary basis, and this year, the Pentagon is 
requesting permanent authority to manage these programs on a global 
basis.
    In your opinion, how should these programs, such as sections 1206 
and 1207, and the Commanders Emergency Response Program, be managed 
between DOD and State? Would you recommend that DOD maintain these 
authorities, or that the State Department take a higher profile?

    Answer. DOD's role in managing foreign assistance programs has 
expanded in recent years. The Pentagon has taken the lead in directing 
new counterterrorism and counterinsurgency capacity-building programs 
that are part of phase zero ``shaping'' efforts to build partner 
capacity; post-conflict operations connected to ongoing wars in Iraq 
and Afghanistan; and massive humanitarian relief operations in the 
aftermath of the Asian tsunami and Pakistan earthquake. A recent CSIS 
task force noted that the Pentagon's share of disbursing official 
development assistance grew from 5 percent in 2002 to over 20 percent 
in 2005. This issue is at the heart of what it means for the U.S. 
Government to develop a balanced toolkit capable of deploying hard and 
soft power.
    The Smart Power Commission argued that the military can be an 
important source of soft power, and that civilian agencies have not 
been properly staffed or resourced for extraordinary missions. The 
critical question, though, is whether the Department of Defense is best 
suited to address these new challenges in both the short and long term. 
Your questions refer specifically to sections 1206 and 1207 
authorization, CERP funds, and whether the State Department or 
Department of Defense should manage these portfolios. Let us try to 
address these questions below.
    Section 1206. The administration has made the argument for 
sustaining and expanding 1206 authorities to train and equip partner 
security forces. They contend that current funding mechanisms managed 
by State, such as FMF, are not agile enough to be responsive in the 
short term to our needs in managing the threat posed by al-Qaeda and 
affiliated terrorist groups with global reach. They envision that the 
best way of tackling these challenges is to build partner capacity, and 
they see 1206 as a necessary tool in this fight.
    There are four main problems, however, with making 1206 authorities 
permanent through the Global Partnerships Act and housing these 
authorities in the Defense Department. First, there is a danger that 
``shaping'' tasks could distract the military from its basic war-
fighting mission. Second, the Combatant Commands may lack a sense of 
how certain train-and-equip activities fit within broader U.S. foreign 
policy. Third, it remains an open question how effective the Pentagon 
is at nonmilitary security training. And fourth, there is a danger that 
expanded 1206 authority could potentially overmilitarize the face of 
America abroad at a time when a softer and smarter approach could prove 
more effective.
    Ultimately, we would prefer to see flexible and responsive funding 
mechanisms for the State Department and USAID to ensure their ability 
to support U.S. national security interests over the long term.
    Section 1207. Section 1207 authorities permit DOD to transfer money 
to State in support of stabilization and reconstruction operations. 
This is a positive development, in the spirit of the Smart Power 
Commission's findings and Secretary Gates' speech last November at 
Kansas State in which he argued for increased funding for civilian 
agencies. The U.S. military understands better than anyone that 
increased operational capacity of civilian agencies to help deliver 
outcomes like good governance and rule of law is vital for success in 
theaters like Iraq and Afghanistan where the military plays an 
essential role in establishing security but where there is no military 
solution.
    A key question the committee may wish to investigate further is 
whether the amount of money transferred from the Pentagon to State 
actually results in a net increase of DOS operating funds, or if this 
money is then subtracted from State's operating expenses during the 
budget process. Congress may wish to look into alternative ways of 
supporting S&R capacity other than through this transfer authority, 
such as through support of civilian stabilization measures.
    CERP. According to military commanders on the ground, Commander's 
Emergency Response Program funds are playing a vital role in Iraq and 
Afghanistan. This is money that can be used immediately in the field to 
help bring stability and buy local support. As CSIS's Tony Cordesman 
has written, one of the first lessons the U.S. military drew from its 
operations in Iraq was that dollars were as important as bullets. The 
FY09 funding request for CERP is $1.5 billion, and $3.7 billion has 
already been allocated between FY02 and FY08. This is a considerable 
expenditure. The advantage of the program--its decentralized nature--is 
also its weakness, namely a lack of oversight. In principle, authority 
must reside in the field. Rigorous analysis, though, is required to 
determine whether CERP funds have been used wisely. It is essential to 
know when and where this money has actually delivered results. This 
analysis is critical to developing doctrine that could make the 
disbursement of these funds less dependent on the judgment of 
individual commanders and better leverage the development community's 
program expertise.
    Congress should encourage programs that depend on State and DOD 
working and planning together. At the end of the day, State remains the 
best unifier of our tools of national power for long-term U.S. 
strategic interests. The problem is that it lacks the operational 
capacity of the Department of Defense. It might make sense to add an 
operational deputy secretary in State. Rather than write State off and 
default to DOD, now is the time to help build and modernize the 
capacity of U.S. civilian international affairs agencies to better 
complement DOD's essential role in keeping America safe.

    Question. Energy, Climate Change, and National Security. Our 
national security is dependent on the intertwined issues of energy 
policy and climate change. Specifically, how can the United States 
provide global leadership on these issues? How would a global framework 
for the development and deployment of clean energy technologies work?
    How does your recommendation for a fund for Joint Technology 
Development differ from the President's request to fund a Clean 
Technology Fund at the World Bank?

    Answer. There is no magic bullet to solve the twin challenges of 
climate change and energy insecurity. Energy independence is a popular 
slogan, but we will have to deal with energy and climate 
interdependence. There are smart things we can and should be doing in 
the near term to improve our situation going forward such as developing 
and demonstrating clean coal and sequestration technologies at scale 
and working to overcome the obstacles to a greater role for nuclear 
power. At the same time, we should be investing in applied research 
over the long term to search for alternatives to fossil fuels, as well 
as trying to forge a global consensus on market-based energy policies.
    The best way for the United States to provide global leadership is 
to take action at home. We can enhance our energy security by changing 
our demand habits, encouraging new sources of supply and suppliers, 
improving our infrastructure capability, promoting technology and 
better managing our geopolitical relations. We can similarly advance 
the interests of a global approach to climate change by placing an 
economic value on greenhouse gas emissions via a mechanism that sends 
clear, long-term price signals for industry in all sectors of the 
economy. These signals are necessary to creating a level playing field 
and encouraging the development of new technologies worldwide.
    The United States also needs to help shape a new global energy 
framework that can improve energy security, spur innovation, and engage 
marginalized portions of the developing world. An important first step 
would be to take leadership within existing international institutions 
to establish a common principles charter outlining sound energy 
policies and practices that serve as the foundation for global energy 
security. The critical objective should be to get everyone into the 
act, but still get action. Provisions of the charter could include 
protection of sealanes and critical energy infrastructure; investment-
friendly regulatory and legal frameworks that also respect the 
development needs and sovereign rights of resource holders; regular 
dialogues between producers and consumers to improve information-
sharing and facilitate government-industry cooperation; and improved 
governance and transparency of revenues and sustainability principles.
    U.S. leadership is also necessary to encourage innovation. Energy 
technology development and deployment are critical elements of any 
solution to climate change or energy insecurity. International 
collaboration can play an important role in sharing the cost of and 
accelerating the pace of innovation. In this regard, the Smart Power 
Commission recommended creating a Joint Technology Development Fund. We 
support the President's proposal, but our fund differs from the 
President's request to fund a Clean Technology Fund at the World Bank 
in two primary ways. The purpose of the WB fund is to assist in the 
deployment of new technologies, while the fund proposed by the Smart 
Power Commission would focus primarily on the development of next 
generation energy technologies. Second, the WB trust fund would be 
administered by an existing multilateral organization beholden to its 
Member States who might not agree to diverting large amounts of 
resources to energy and climate. The Smart Power Commission recommended 
creating a new international public-private consortium to manage the 
fund and it could be seen as a complement to the World Bank.

    Question. Aid Cordination. Many observers recommend that we better 
coordinate and integrate defense, diplomacy, and development. Some 
would argue that better coordination first needs to occur within each 
of those pillars. According to the U.S. report to the Organization for 
Economic Cooperation and Development (OECD) of our official development 
assistance, there are 27 U.S. Government departments and agencies that 
provide some type of foreign aid. How would you design a mechanism to 
achieve governmentwide coordination of our aid programs? What 
government entity should have the lead?

    Answer. The Smart Power Commission noted the proliferation of U.S. 
Government departments and agencies that provide foreign assistance. 
The report argued that the lack of coordination and coherence between 
these institutions has had an adverse effect on America's ability to 
use its aid as a tool to achieve its strategic objectives.
    There are three main obstacles to governmentwide coordination of 
foreign assistance. Each of these must be addressed in any new 
mechanism seeking better coordination.
    The first obstacle is that clear strategic direction guiding 
assistance across the various arms of government is absent. Aid is used 
for goals as divergent as spurring economic growth, targeting basic 
needs, ensuring friendly governments, building the capacity of military 
partners, strengthening democracy, preventing conflict, and rebuilding 
countries after war. There is no sense of the relative value of these 
different objectives, let alone how to make tradeoffs between them. 
Different parts of the government bureaucracies will not readily 
concede turf in the absence of determined leadership.
    The second obstacle to more coherent aid is that institutional 
``work-arounds'' have become more convenient to political leaders than 
core institutional reform. This means that rather than build the 
competencies of agencies like USAID to perform new tasks and meet 
rising challenges, officials often prefer to create new agencies that 
are untainted by the perceived failings of the existing institutions.
    And third, congressional funding priorities have tended to dictate 
a fractured approach to foreign assistance. Members of Congress often 
take a single-issue view of assistance, earmarking programs and 
preferred recipients in the appropriations bills or the committee 
reports that accompany them.
    The Bush administration has attempted to overcome these obstacles 
by creating the position of the Director of Foreign Assistance, 
launching the first institutionalized effort in State's history to 
improve strategic planning of U.S. foreign assistance programs through 
the ``F'' process, and better coordinating assistance strategy through 
joint State-USAID working groups. The next administration will have to 
consider which of the Bush administration's initiatives to sustain, 
which to expand, and which to take in new directions.
    It is our view that launching a new Department of Global 
Development as some have suggested will not necessarily foster the 
governmentwide coordination of aid. There are too many different 
assistance programs run out of too many different departments and 
agencies for too many different reasons to imagine housing them in a 
single place without generating serious institutional conflict. 
Additionally, development is only one part of the broader foreign 
assistance pie, which would leave assistance programs housed outside 
the new Department untouched and the problem unchanged.
    The ``F'' process was a step in the right direction toward greater 
transparency, coordination and coherence. It had a flawed beginning, 
though, in large part because it created an overly centralized process 
that is more tactical than strategic.
    Furthermore, by limiting the ``F'' process to State and USAID, it 
fails to account for U.S. assistance governmentwide. State may not be 
the best department to coordinate a governmentwide review of aid.
    The NSC, in conjunction with OMB, could be charged with 
facilitating working groups and producing an easily digestible document 
on U.S. assistance to every country and for every major functional area 
such as democracy assistance. The Smart Power Commission recommended 
``double-hatting'' a deputy to the NSC and the OMB director charged 
with developing and managing a strategic framework for planning 
policies and allocating resources.
    This cannot just be a top-down process alone. It makes sense for 
strategy to be set in Washington, but tactics ought to be determined in 
the field. The Smart Power Commission noted that too many recent reform 
efforts have not shown the necessary focus on the field. A clearer 
distinction between what constitutes strategy versus tactics and who 
should be responsible for what must be part of any reformed ``F'' 
process.
    Efforts to achieve a more coordinated assistance strategy will by 
necessity be efforts to better coordinate policy. Coordinating 
assistance goes beyond lining up budget allocations. It ultimately 
means thinking about the implications of certain policies on those that 
interconnect; for instance, examining the effects of our trade and 
defense policies on the long-term development prospects of poor 
countries.
    Finally, any effort to better coordinate U.S. assistance should 
seek to better align U.S. efforts with those of foreign governments and 
multilateral donors. This ought to start with, but go beyond, OECD 
countries. Non-OECD countries such as China, India, and those in the 
gulf, as well as remittances sent back by individual family members, 
are increasingly playing a larger role in shaping development outcomes. 
Better coordination with these actors is likely to result in more 
effective responses on the ground, where they matter most.

    Question. From a budgetary perspective, it is clear fact that we do 
not know the level of federal spending from all government agencies on 
official development assistance until 2 years after funds are 
appropriated, when we report these figures to the OECD. For calendar 
year 2006, the last year for which we have data, the State Department 
and USAID provided 58 percent of aid, DOD provided 18 percent, and 
other agencies contributed 24 percent.
    What is the value of a unified national security budget that 
combines defense and international affairs spending? What are the 
benefits and disadvantages of including all assistance provided by 
various domestic agencies in the Function 150 account?

    Answer. Implicit to the idea of smart power is striking a better 
balance between spending on hard and soft tools. Hard and soft tools 
are not necessarily analogous to defense and international affairs 
spending. Some military spending, for instance, such as toward the USS 
Comfort, promotes soft power rather than hard power. The Smart Power 
Commission explicitly stated that smart power is not trading hard for 
soft--both are needed.
    That said, the next President will have to make tough decisions 
involving budgetary tradeoffs. A significant increase in the size of 
the Foreign Service or, say, Pashto broadcasting on the Pakistan-Afghan 
border could cost less than the price of one C-17 transport aircraft 
and bring needed results. There are no good ways, however, to assess 
these tradeoffs in the current form of budgeting. A unified national 
security budget that combines defense and international affairs 
spending could make these choices more readily transparent.
    On the other hand, it is not entirely clear that a unified national 
security budget will result in more money for soft power tools, if this 
is ultimately the goal. Defense spending has a natural constituency, 
and the nonmilitary tools of national power do not. As Defense 
Secretary Bob Gates has recently pointed out, the F-22 aircraft is 
produced by companies in 44 States, which means 88 Senators.
    A recent review of the major studies and commissions to modernize 
the civilian tools of national power identified three reports that have 
called for a unified national security budget between the 050 and 150 
accounts. An equal number have called for producing a unified budget 
just within the 150 account. The benefits of including all assistance 
provided by various domestic agencies in the Function 150 account are 
clear. Doing so would help decisionmakers to see a common picture for 
what tradeoffs are possible within nonmilitary foreign assistance. This 
could lead to more strategic and better coordinated assistance.
    The main disadvantage to this approach is the same as combining the 
150 and 050 accounts into a single national security budget. The 
process would not work unless there were analogous reforms of the 
committee structures on the Hill. There appears to be little political 
appetite for this at present. Joint national security authorizing and 
appropriating committees, however, will be a necessary component of any 
effort to achieve true coherence to our national security budgeting and 
assistance efforts.
                                 ______
                                 

  Responses of James Locher to Questions Submitted for the Record by 
                         Senator Richard Lugar

    Question. Aid Coordination. Many observers recommend that we better 
coordinate and integrate defense, diplomacy, and development. Some 
would argue that better coordination first needs to occur within each 
of those pillars. According to the U.S. report to the Organization for 
Economic Cooperation and Development (OECD) of our official development 
assistance, there are 27 U.S. Government departments and agencies that 
provide some type of foreign aid. How would you design a mechanism to 
achieve governmentwide coordination of our aid programs? What 
government entity should have the lead?

    Answer. The lack of coordination and integration of U.S. Government 
international aid funding limits the effectiveness of recipient 
programs and leads to inefficiencies in resource allocation strategies 
and delivery. Effects of this coordination failure can be significant. 
For instance, the incapacity of the Department of State, Agency for 
International Development (USAID), and Department of Defense to 
effectively coordinate development in Iraq and Afghanistan severely 
constrained U.S. post-conflict reconstruction and stabilization 
efforts. Reports by the Government Accountability Office and 
Congressional Research Service, in addition to numerous independent 
sources, note that individual agency foreign aid and development goals 
are often at odds with the conditions on the ground, other department 
objectives, and larger U.S. strategic interests.
    A number of mechanisms could be considered for generating more 
effective coordination of government aid and development funding. 
Congress could seek greater integration of independent agency budget 
requests, ensuring that disparate departmental aid funding is aligned 
to broader goals and strategy. A number of organizations have suggested 
ideas for these mechanisms. For example, the 2007 HELP Commission noted 
that Congress should mandate greater coordination between the 
Secretaries of State and Defense on all foreign aid activities. 
Reflecting the systemic limitations identified above, such coordination 
requirements would help mitigate the current redundancies, 
contradictions, and gaps in foreign aid.
    The Project on National Security Reform has noted that greater 
congressional coordination of authorization and appropriations is 
necessary to effectively address the growing and diverse challenges 
facing the nation. With respect to foreign aid and assistance, this 
could take a number of forms. Although it would be premature to 
prescribe particular recommendations, ideas put forward by entities 
such as the HELP Commission provide a useful starting point. For 
instance, a joint committee on foreign aid, combining members from 
foreign relations, armed services, intelligence, and appropriations 
committees could provide greater coordination of authorization and 
oversight of international development programs.
    The question of which government entity should have the lead is 
less profound than recognizing that a single government entity should 
have responsibility for coordinating development assistance. Much as 
the creation of the Office of the Director of National Intelligence 
assisted in the centralization of intelligence operations, so to the 
centralization of foreign assistance under one office, agency, or 
interagency team could significantly increase the efficiency of 
interdepartmental aid funding. This entity, whether new or existing, 
should be able to integrate information across the foreign aid spectrum 
and independently advise Congress on where appropriations and 
authorization can best be directed to achieve coordinated foreign aid 
policies that are reinforced on the ground.
    Current foreign aid law is a cumbersome, disparate array of 33 
goals, 75 priority areas and 247 directives. Passage of a comprehensive 
foreign aid authorization bill that streamlines current law is a 
critical first step to achieving effective governmentwide coordination 
of aid programs and objectives. Future annual authorization bills will 
also be necessary to refine and modify foreign aid objectives and 
legislative direction if U.S. interests are to be continually advanced 
in an increasingly complex and evolving global foreign aid environment.

    Question. From a budgetary perspective, it is clear fact that we do 
not know the level of federal spending from all government agencies on 
official development assistance until 2 years after funds are 
appropriated, when we report these figures to the OECD. For calendar 
year 2006, the last year for which we have data, the State Department 
and USAID provided 58 percent of aid, DOD provided 18 percent, and 
other agencies contributed 24 percent.
    What is the value of a unified national security budget that 
combines defense and international affairs spending? What are the 
benefits and disadvantages of including all assistance provided by 
various domestic agencies in the Function 150 account?

    Answer. The most apparent value of a unified national security 
budget lies in creating a basis for symbiotic policy that is reinforced 
through complementary funding. The advantage here lies not necessarily 
in creating a combined budget but rather in establishing integrated 
authorization and appropriations processes and structures. For example, 
the idea of a joint committee to review all international affairs and 
national security funding could eliminate some of the redundancies and 
gaps currently present in the system.
    The need for new and comprehensive national security appropriations 
and authorization processes is clear. There have been no major 
revisions in foreign aid legislation since 1985 and no State Department 
authorization bill since 2002. As a result, no foreign policy agency 
receives up-to-date congressional guidance, revised authorities, or 
timely funding. In 4 of the past 10 years, budget resolutions have not 
passed to set limits on federal spending. Although there has been a 
defense authorization bill each year, the measure has been enacted 
before the October 1 start of the fiscal year only five times since 
1985. Even the defense appropriations bill was passed before the start 
of the fiscal year only 10 times in the past 30 years. The situation is 
even worse for the appropriations bills for the State Department and 
Foreign Operations. Neither bill has been passed before the end of the 
fiscal year since 1996. Only four times in the past 20 years has the 
Foreign Operations bill been passed on time; for State Department 
funding, it has happened only three times.
    At the same time, it may not be feasible to combine different 
aspects of the current national security system into a unified and 
comprehensive budget. For instance, the classified aspects of the 
intelligence budget cannot easily be integrated into public 
authorization of the defense and foreign operations budgets. 
Recognizing the need for certain or entire parts of agency budgets to 
remain classified, Congress can nevertheless establish comprehensive 
mechanisms for joint review and authorization. The notion of a select 
committee on national security could be one such mechanism for ensuring 
that interdepartmental funding priorities are aligned along shared 
objectives and national security goals.
    The Project on National Security Reform is examining problems in 
the resource allocation process for national security. A unified 
national security budget will be among the alternatives that the 
project considers in formulating its recommendations.
                                 ______
                                 

  Responses of Dr. Gordon Adams to Questions Submitted for the Record 
                       from Senator Richard Lugar

    Question. Aid Coordination. Many observers recommend that we better 
coordinate and integrate defense, diplomacy, and development. Some 
would argue that better coordination first needs to occur within each 
of those pillars. According to the U.S. report to the Organization for 
Economic Cooperation and Development (OECD) of our official development 
assistance, there are 27 U.S. Government departments and agencies that 
provide some type of foreign aid. How would you design a mechanism to 
achieve governmentwide coordination of our aid programs. What 
government entity should have the lead?

    Answer. We need institutions and processes at the State/USAID level 
and at the White House level. First, at the State Department level, a 
strengthened and reformed Office of Foreign Assistance should have 
authority over current State and USAID foreign assistance budgets. It 
should also extend its scope to the MCC, PEPFAR and the multilateral 
development banks (including the World Bank). It should be empowered to 
hold budget hearings to deal with all of the 150 accounts, and present 
an integrated 150 budget document to OMB. Second, at the USAID level, 
we need a stronger, better funded foreign assistance delivery agency, 
whose administrator is a regular member of the National Security 
Council.
    Third, at the White House level, we need a Senior Director for 
Foreign Assistance, who coordinates an interagency working group on 
foreign assistance that includes not only 150 agencies, but all other 
executive branch agencies with international programs. We also need a 
Senior Director for Governance and post-conflict reconstruction, who 
chairs an interagency working group that does anticipatory planning for 
post-conflict stabilization and reconstruction programs. Third, we need 
a Senior Director for Public Diplomacy, who chairs an interagency 
working group on the topic, combining all federal activities in this 
area. Finally, the NSC needs to cochair each of these working groups 
with OMB, to ensure a resource dimension is part of strategic planning.

    Question. From a budgetary perspective, it is clear fact that we do 
not know the level of federal spending from all government agencies on 
official development assistance until 2 years after funds are 
appropriated, when we report these figures to the OECD. For calendar 
year 2006, the last year for which we have data, the State Department 
and USAID provided 58 percent of aid, DOD provided 18 percent, and 
other agencies contributed 24 percent.
    What is the value of a unified national security budget that 
combines defense and international affairs spending? What are the 
benefits and disadvantages of including all assistance provided by 
various domestic agencies in the Function 150 account?

    Answer. On the second issue, OMB needs to issue a data call 
gathering all agency funding for international activities. These can 
continue to be budgeted in their existing accounts, but need to be 
coordinated at the NSC/OMB level through the above working groups.
    On the first issue, as I suggested in my testimony, we need, at 
least, an integrated budget document for Congress that does four 
things: Lays out the policy priorities of the administration, describes 
the basic capabilities each agency brings to the table to be able to 
meet national security and foreign policy needs (DOD, State, 
Intelligence, foreign assistance, and homeland security). Third, it 
needs to target 3-4 leading priorities (e.g., nonproliferation, 
governance, post-conflict reconstruction and stabilization, terrorism, 
or others) and present an integrated view of how the entire national 
security toolkit is addressing these problems (the result of an 
integrated guidance to agencies). And fourth, it needs to provide a 
cross-agency view (minus guidance) of resources and programs addressing 
the secondary set of priorities (e.g., climate change, energy, 
migration, etc.).

  Appendix to Armitage-Nye Joint Testimony--Charts Excerpted From the 
           CSIS Commission on Smart Power Report (Nov. 2007)

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