Washington, DC February 5, 2002

Testimony by Secretary Colin L. Powell at Budget Hearing before the Senate Foreign Relations Committee

SECRETARY POWELL: Let me take this opportunity, sir, to thank you for all the support that you have provided to the Department, especially to our diplomats who are out there on the front line of offense, as I like to call it. And also, sir, if I can drift back to my earlier days, thank you for all the support you have provided to the men and women in uniform, our GI's who serve us so well. And Mr. Chairman, thank you for the personal support that you have given me going on some 15 years. I deeply appreciate it, sir. Thank you so much.

Mr. Chairman, I do have a statement that will go beyond just the crises of the day and try to lay out for you some of the opportunities that are out there. You captured it perfectly, Senator Biden, when you said there are seeds of opportunity. There are a lot of great things happening in the world right now. There are a lot of new opportunities that have been provided to us out of the crisis of the 11th of September and other things that were going on before then that shows the impact that President Bush's leadership is having on the international environment. And as I go through my presentation and talk about some of these opportunities, I will marry them up with the crises of the day as well.

I want to say a word, though, about something Senator Helms said and that was the "axis of evil." And it does have a familiar ring, Senator Helms--it occurred to me as well--it's the old evil empire of the Ronald Reagan days. And the fact of the matter is Ronald Reagan was right, and the fact of the matter is George Bush is right. And as I go through my presentation, I hope that I will be able to demonstrate why these nations that he identified, and there are others in this category, I would submit, are deserving of this kind of designation.

But at the same time, it does not mean that we are ready to invade anyone or that we are not willing to engage in dialogue; quite the contrary. But because we are willing to engage in dialogue, and we are quite willing to work with friends and allies around the world to deal with these kinds of regime is no reason for us not to identify them for what they are, regimes that are inherently evil. Their people are not evil, but the governments that lead them are evil. And the clearer we make this statement and the more sure we are of our judgments, the better able we will be to lead the international coalition, lead nations who are like-minded in pursuit of changes in the policies of these nations, and it will make for a better and safer world for all of us. So I thank you for that comparison.

I might touch on something you mentioned also, Senator Helms, which is not in my prepared statement or in my reading statement, and that is the detainees at Guantanamo Bay and other detainees held in Afghanistan who may be heading toward Guantanamo Bay. You are quite right, all of us in the administration are united in the view that they are not deserving of prisoner of war status.

There is a question that we are examining, and it is a difficult question, and that is the legal application of the Geneva Convention. This is a new kind of conflict. It is a new world, but at the same time, we want to make sure that everybody understands we are a nation of law, abiding by our international obligations. And so we are examining very carefully and have been for a number of days now, the exact applicability or lack of applicability to the Geneva Convention to the detainees.

And this is a decision the President will be making in the very near future. Whether he finds one way or the other on this issue, the reality is that they will be treated humanely in accordance with the precepts of the convention, because that's the kind of people we are. We treat people well. We treat people humanely. And you can be sure that's what is happening with the detainees at Guantanamo, and all others who are in the custody of the United States Armed Forces, or other parts of the United States Government.

Mr. Chairman, I'd like to begin my presentation by thanking you again for all the support that this committee has provided to me and to the Department in my first year of stewardship. And let me begin once again by saying thank you for all the confirmations of appointees that you provided to me. One hundred and forty-five members of my team have passed through the committee's confirmation process, and I thank you especially for passing out Ambassador Ricciardone to go to the Philippines yesterday evening. That was a very important signal to us.

As many of you will recall, at my first budget testimony last March, I said that I was going to break the mold, and instead of just talking about foreign affairs, I wanted to focus on the financial condition of the Department, as well as the morale of the Department, as well as the responsibilities that I have as chief executive officer of the State Department, as well as chief diplomat of the United States.

I did that last year, and I do it again this year, because the resources challenge for the Department of State had become, and still remains, a serious impediment to the conduct of the nation's foreign policy. You heard that testimony last year, and you responded, and we are very grateful. And because of your understanding and generosity, we have made significant progress in the remainder of Fiscal Year 2002; we will make even more. In new hires for the Foreign Service, we have made great strides. We have doubled the number of candidates for the Foreign Service written exam. I am very proud of the fact that we are communicating a message out to the young people of America that serving your nation in the Foreign Service is a noble calling, and something that all young people should consider as a career choice.

Moreover, I am very pleased that among the new recruits that we have attracted to the Foreign Service exam process, 17 percent of them are minorities. In African Americans alone, we tripled the number of applicants for taking the exam, and I'm very proud about that. We are doing the same with the Civil Service. We are looking at the Department as a team, not just Foreign Service officers, but Civil Service officers, Foreign Service Nationals, all part of one great team that is bound together by trust and commitment to the foreign policy of the administration, and the foreign policy of the American people.

We also want to make it a friendlier place to get into. When I took over last year, it was taking 27 months, from the date somebody signed up, took the Foreign Service exam, to get into the Foreign Service; it is now down to less than one year. So we've made that kind of progress in one year, and I hope to make even greater progress to get it down to just a matter of months.

We are also well under way in bringing state-of-the-art information technology to the Department. We have an aggressive deployment schedule for our Open Net system, which is a way of getting the Internet down on every single desktop in the Department of State. I want everybody to have access to each other and to the Internet. Some 30,000 State users worldwide. And we are also deploying our classified connectivity program at the same time. We want to make sure that we are in the forefront of technology in order to do our job better.

In right-sizing our facilities and shaping up and bringing smarter management practices to our overseas building program, we are moving forward briskly as well. I heard from Congress that we had to do a better job on embassy construction, bring more modern business practices into the construction and refurbishing of our embassies, and you all know that General Chuck Williams, who I brought on board to do this, is hard at work and is doing a terrific job in making sure that we have a master plan. We do have a master plan that takes us all the way through 2007, and I am very pleased at the progress that we are making.

I am also very pleased to report that I think the morale of the Department is on the upswing. We have focused on families. We have focused on security. We have focused on putting people back into the ranks. For a couple of years in the '90s, we didn't even recruit people for the Foreign Service. You can't do that. You put an air bubble in the system. But now, as a result of your generosity and as a result of the request that I hope you will respond to that I'm making this year for more people going into the Foreign Service, another 400 positions, I think that will help to improve morale. The people in the Foreign Service now know that everybody cares about them -- the Administration, the Department and the Congress.

Just as an aside, Senator Biden, because you and some of your colleagues were there in Kabul, I hope you had a chance when you were around our embassy which has now reopened to talk to some of those Foreign Service Nationals, an often misunderstood part of our family team. These are those wonderful foreigners who work at our embassies. In the case of Kabul, after we were driven out and had to leave, those Foreign Service Nationals stayed there and they took care of that building. It got banged up a little but, but when we went back in a couple of months ago, it was pretty much intact. And one of the funny stories is that in the basement of the embassy….

CHAIRMAN BIDEN: That's right. Except for the plumbing. (Laughter.)

SECRETARY POWELL: But in the basement of the building, we discovered that all of the automobiles that had been left there were there in perfect condition. All we had to do was charge the batteries and they all started. So through all that period of the Taliban, those cars were there. And as our charge, Ryan Crocker, said to me, we have the finest fleet of 1985 Volkswagen Passats in the world -- and there they all were lined up ready for inspection.

CHAIRMAN BIDEN: By the way, Ryan and his wife and that staff not only do the normal duties; they sweep, they physically themselves clean, they wash the dishes. I mean, it's incredible what that job, what your team is doing there.

SECRETARY POWELL: The team is marvelous. And, Mr. Chairman, you all travel a lot. It is reflective of the kind of people we have at all of our missions and stations overseas.

CHAIRMAN BIDEN: I agree.

SECRETARY POWELL: And that is why it is so important we let them know we believe in them and we trust them.

With regard to our budget last year, I told you that the out years were a source of concern to me, and they still are. In fact, given the costs of the war on terrorism, the downturn in the economy and the accompanying shrinkage of revenues, I am even more concerned this year than last. But I was confident last year that I could make the case for the State Department, and I am confident that I can do it again this year. We need to keep the momentum going. That is why for Fiscal Year 2003 you'll get no break from me. I am going to focus on resources again this year because it is so critical that we continue to push the organization and conduct of America's foreign policy into the 21st century.

So let me deal with the resources requested using my CEO hat before turning to foreign policy. The President's request for the Department of State and related agencies for 2003 is $8.1 billion in our operating accounts. These dollars will allow us to continue initiatives to recruit, hire, train and deploy the right workforce. They will help us to continue to upgrade and enhance our worldwide security readiness -- even more important in light of our success in disrupting and damaging the al-Qaida terrorist network. The budget request will include $553 million that builds on the funding provided from the Emergency Response Fund for the increased hiring of security agents and for our counter-terrorism programs.

The budget will also continue to upgrade the security of our overseas facilities. The request includes $1.3 billion to improve physical security, correct serious deficiencies that still exist, and provide for security-driven construction of new facilities at high-risk posts around the world.

It will also allow us to continue our program to provide state-of-the-art information technology to our people everywhere. And it will allow us to build an aggressive public diplomacy effort to eliminate support for terrorists, and thus deny them safe haven. We've got to do a better job with the message we give to the world.

The budget includes almost $518 million for international broadcasting, of which $60 million will be dedicated to the war on terrorism. This funding will enable the Voice of America and Radio Free Europe, Radio Liberty to continue increased media broadcasts to Afghanistan, and the surrounding countries, and especially throughout the Middle East.

And let me say a little bit more about that. The terrorist attacks of September 11th underscored the urgency of implementing an effective public diplomacy campaign. Those who abet terror by spreading distortion and hate, and by inciting others to take full advantage of the global news cycle, and we have to do the same thing. Since September 11th, there have been over 2,000 media appearances by State Department officials. Our continuous presence in Arabic and regional media by officials with language and media skills has been unprecedented. Our international information website on terror is now on-line in seven languages. Internet search engines show it is the hottest page on the topic.

Our 25-page color publication, The Network of Terrorism, is now available in 30 languages, with different adaptations all around the world, including a full insert in the Arabic edition of Newsweek. Right content, right format, right audience, right now describes the philosophy we'll be applying to our overseas public diplomacy to efforts.

All of these State Department and related agencies, programs and initiatives that I've just touched on the surface of are critical to the conduct of America's foreign policy. And some of you know my feelings, I am quite sure, about the importance of the success of any enterprise of having the right people in the right places. And if I had to put one of these priorities at the very pinnacle of our efforts, it once again would be recruiting.

So as I indicated earlier, we're going to sustain the strong recruiting program we began last year. We want to get to the point where our people can undergo training without being pulled out of jobs because we have a float in our personnel system for people to go off to be trained.

And so I think that we have been successful in the first year in our stewardship of the Department, and I hope that you see the same thing, your staff sees the same thing, and we can enjoy your continued support this coming year, and in the years ahead.

Mr. Chairman, I now want to talk about foreign policy, and I'll talk about it in the usual terms, in the regional setting, in talking about specific countries. But I hope as I do this, you will see it in a broader tapestry, a tapestry of the growth of democracy around the world, the impact that market economic principles are having around the world as more and more nations understand that this is the direction in which they must move.

I hope you will see it in terms of how more and more nations, notwithstanding the terrible crises that still exist and the horrible regimes that are still in place, nevertheless more and more nations are understanding the power of the individual. When you empower individual man and woman with the opportunity to reach the heights of possibility limited only by their unwillingness to work and ambition and not by the political system in which they are trapped or in which they are living, so many wonderful things have happened. So as I get into the "eaches,*" let's not forget the power of the whole, the power of democracy and the power of the free enterprise system.

Let me begin, sir, by talking about Russia. One of the major items on my agenda almost every single day has to do with Russia. President Bush, in his conduct of our foreign policy with Russia, has defied some of our critics, and he has structured a very strong relationship. The meetings that he has had with President Putin and the dialogue that has taken place between Russian Foreign Minister Ivanov and me and between Secretary Rumsfeld and his counterpart and at a variety of other levels have positioned the United States for a strengthened relationship with Russia, the land of 11 time zones.

The way that Russia responded to the events of September 11th was reflective of this positive relationship. Russia has been a key member of the anti-terrorist coalition. It has played a crucial role in our success in Afghanistan while providing intelligence, bolstering the Northern Alliance, and assisting our entry into Central Asia. As a result, we have seriously eroded the capabilities of the terrorist network that posed a direct threat to both of our countries.

Just as an illustration of how things have changed, a year or so ago when I first came into office, there was a bit of tension between me and my Russian colleagues over what the United States might or might not be doing in Central Asia. After September 11th, after we coordinated with one another, after we had such a successful nine or ten months of dialogue, of building trusts between the two administrations, things changed so radically. So much so that when my colleague, Foreign Minister Ivanov, a few weeks ago was asked on television, "Igor, why are you cooperating with the Americans in Central Asia? They are the enemy, aren't they?" Foreign Minister Ivanov said, "No, you're wrong. The enemy is terrorism. The enemy is smuggling. The enemy is extremism. The enemy are all these other transnational threats. We are now allied with the United States in fighting these kinds of enemies, and we will find a way to move forward in cooperation."

It is this kind of most dramatic change that I think is one of the seeds of opportunity that Senator Biden talked about. And as we go forward in this next year, we're not going to let this seed be trampled out. We're going to continue working with Russia and with the countries in the region to structure a new relationship that will bring stability to the region and provide opportunities for peace and democracy and economic reform.

Similarly, the way we agreed with Russia to disagree on the ABM Treaty reflects the intense dialogue we had over the 11 months before we made that decision. A dialogue in which we told the Russians where we were headed. We said to them clearly, we are going forward to achieve missile defense. We are going to have missile defense. And we can work together. And if we can't work together, then we'll have to agree to disagree. We didn't just pull out of the treaty on a whim, we spent time exploring opportunities with them, exploring options with them. We made it clear where we were going. And we asked them, is there a way we can do this together to go forward.

At the end of the day, we agreed to disagree, and we notified Russia that we were going to withdraw from the ABM Treaty. I notified Foreign Minister Ivanov that we were going to make this decision. I went to Moscow and sat in the Kremlin with President Putin and described to him how we would unfold this decision so that he was ready for it and he could respond in an appropriate way in accordance with his national interest. President Bush talked to President Putin about it.

And then at the end of the day, we made our announcement. To the surprise of, I would say a number of people, an arms race has not broken out, and there is not a crisis in US-Russia relations. In fact, their response was we disagree with you, we think you made the wrong choice, but you have made that choice and now that disagreement is behind us. Our strategic relationship is still important. It is vital, and we will continue to move forward. And I think this is an indication of a mature relationship with Russia and especially a positive relationship between the two Presidents, President Bush and President Putin.

Both Presidents pledged to reduce further a number of their offensive nuclear weapons, and we are hard at work on an agreement to record these mutual commitments. This is all part of the new strategic framework with Russia.

To your point, Senator Biden, Mr. Chairman, we do expect that as we codify this framework, there will be something that will be legally binding, and we are examining different ways in which this can happen. It can be an executive agreement that both houses of Congress might wish to speak on, or it might be a treaty. And we are exploring with Russia, and we are discussing within the administration, the best way to make this a legally binding or codified agreement in some way.

We even managed to come to an agreement on how we're going to work through NATO. We are now developing mechanisms for pursuing joint Russia-NATO consultations and actions of 20 on a number of concrete issues. Our aim is to have these mechanisms in place for the foreign ministers' ministerial meeting in Reykjavik in May. And as we head for the NATO summit in Prague in November, where expansion of the alliance will be considered, I believe we will find the environment for the continued expansion of NATO a great deal calmer than we might have expected.

And Senator Helms, I just might mention that as we talk about NATO at 20, and as we talk about the expansion of the alliance, it will all be done without Russia having any veto about what NATO might do at 19, or what the alliance will do in determining who should be allowed into the alliance. Russians understand this perfectly, but at the same time, we are responsive to their concerns. And we are trying to meet those concerns. That's what you would expect to do with somebody you are now calling a partner and not an enemy.

We will defend our interests, and we will defend the interests of our alliance, but we want to work with our new partner, the Russians, who increasingly want to be drawn and/or attracted, and want to be integrated in the West in a way that fits the mutual interest of both sides.

I believe the way we handle the war on terrorism, the ABM Treaty, nuclear reduction and NATO is reflective of the way we will be working together with Russia in the future. Building on the progress we have already made will require energy, good will and creativity on both sides as we seek to resolve some of the tough issues on our agenda. We have not forgotten about Russian abuse of human rights, and we raise issues with them. We raise Chechnya at every opportunity. We raise freedom of the press at every opportunity. We raise proliferation activities to countries such as Iran, or Russian intransigence with respect to the sanctions policy for Iraq. And there has been considerable progress on that issue, and we can discuss that in greater detail when we get to the question and answer period, with respect to moving to smart sanctions.

Neither have we neglected to consider what the situation in Afghanistan has made plain for all of us to see. How do we achieve that more stable security situation in Central Asia? In fact, the way we are approaching Central Asia is symbolic of the way we are approaching the relationship between us and Russia as a whole, and the growing trust between our two countries. Issues that used to be sources of contention are now sources of cooperation, and we will continue to work with the Russians, as I indicated earlier, to make sure that the seeds that Senator Biden alluded to are landed in fertile ground, get the nutrition they need, and blossom in a positive direction.

Mr. Chairman, we have also made significant progress in our relationship with China. We moved from what was a very volatile situation in April, when the reconnaissance plane was shot down over Hainan Island, and people were concerned that this would be such an obstacle that we wouldn't be able to go forward, and things would not work out.

As it turned out, things did work out. We were able to recover our crew rather quickly, and the plane came back not too long after that. And both countries were interested in getting this incident behind us. And I think you saw, as a result of the trip I took to China in the summer, but most importantly President Bush's trip to the APEC meeting in Shanghai in October, and the subsequent meeting between President Jiang Zemin and President Bush at that APEC Summit, showed that the relationship is back on an improving track.

Because there are certain shared interests that we have with China, and we have emphasized those shared interests. They are regional and global interests, such as China's accession to the WTO, stability on the Korean Peninsula, and combating the scourge of HIV/AIDS. On such issues, we can talk, and we can produce constructive outcomes. There are other interests where we decidedly do not see eye to eye, such as on arms sales to Taiwan, human rights, religious freedom, missile proliferation. On such issues, we can have a dialogue and try to make progress.

But we do not want the issues where we differ to constrain us from pursuing those where we share common goals, and that is the basis upon which our relations are going rather smoothly at present, that and counter-terrorism.

President Jiang Zemin was one of the first world leaders to call President Bush and offer his sorrow and condolences for the tragic events of September 11th, and in the almost five months since that day, China has helped in the war against terrorism. Beijing has also helped in the reconstruction of Afghanistan and we hope will help even more in the future.

Moreover, China has played a constructive role in helping us manage over these past few weeks the very dangerous situation in South Asia between India and Pakistan. When I could call the Foreign Minister of China, Mr. Tang, and have a good discussion, making sure that our policies were known and understood, it made for a more reasoned approach to what was a volatile situation between India and Pakistan. As a result, China supported the approach that the rest of the international community had taken. Beijing was not trying to be a spoiler but, instead, was trying to help us alleviate tensions and convince the two parties to scale down their dangerous confrontation, which now appears they are trying very hard to do.

So it is a case where this so-called coalition that has been formed has utility far beyond terrorism in Afghanistan. We are just talking to each other a lot more; we are finding other areas in which we can cooperate, and the India-Pakistan crisis was one of them.

All of this cooperation, however, came as a result of our careful efforts to build the relationship over the months since the reconnaissance plane incident. We never walked away from our commitment to human rights, to nonproliferation or religious freedom, and we never walked away from the position that we don't think the Chinese -- that we think the Chinese political system is the right one for the 21st century. We don't. But we, at the same time, are anxious to engage and we continue to tell the Chinese that if their economic development continues apace and the Chinese people see the benefits of being part of a world that rests on the rule of law, we can continue to work together constructively. A candid, constructive and cooperative relationship is what we are building with China: candid where we disagree; constructive where we can see some daylight; and cooperative where we have common regional, global or economic interests. These are the principles that President Bush will take with him to Beijing later this month when he meets again with President Jiang Zemin.

As we improved our relations with China, we also reinvigorated our bilateral alliance with Japan, Korea and Australia. Nowhere has this been more visible than the war on terrorism, where cooperation has been solid and helpful from all of our Pacific and Asian allies and friends. Prime Minister Koizumi of Japan immediately offered Japan's strong support within the confines of its constitution, and he is working carefully to enhance Japan's capability to contribute to such global and regional actions in the future. Always the linchpin of our security strategy in East Asia, the US-Japan security alliance now is as strong a bond between our two countries as it has been in the half century of its existence. Our shared interests, values and concerns, plus the dictates of regional security, make it imperative that we sustain this renewed vigor in our key Pacific alliance, and we will.

With respect to the Peninsula, our alliance with the Republic of Korea has also been strengthened by Korea's response to the war on terrorism and by our careful analysis of and our consultations with the South Koreans on where we needed to take the dialogue with North Korea. President Bush has made it clear that we are dissatisfied with the actions of North Korea, that they continue to develop and sell missiles that could carry weapons of mass destruction, but both we and the Republic of Korea are ready to resume dialogue with Pyongyang on this or any other matter at any time the North Koreans decide to come back to the table. The ball is in their court. We conducted our review last year. When that review was finished in the summer, I communicated to the North Koreans and communicated to our South Korean friends that the United States was ready to talk any time, any place, anywhere, without any preconditions with North Korea. North Korea has chosen not to respond. North Korea has chosen to continue to develop missiles, although they comply with the moratorium that they placed upon themselves, and they stay with in the KEDO Agreement, as we do. But nevertheless, their actions have not been responsible and their people are still starving, and we are helping to feed those people.

So while we are open to dialogue, I see no reason that we should not call it the way it is and refer to them by the terms that are appropriate to their conduct and to their behavior. And those of us who are in the business of dealing with North Korea realize it is a very, very difficult account; but, at the same time, we are waiting for them to come out and realize that a better world awaits them if only they would put this hard past behind them.

Other friends in the region have also been forward-leaning, and I could list all of them, but just let me say that our Australian friends in particular have been forward-leaning in their efforts to support the war on terrorism. Heavily committed in East Timor already, Australia nonetheless offered its help immediately, and we have been grateful for that help. The people of Australia are indeed some of America's truest and most trusted friends.

As I look across the Pacific to East Asia, I see a much improved security scene, and I believe that President Bush and his interests in Asia and the Pacific region deserves a great deal of the credit for this success.

Let me turn for a moment, Mr. Chairman and members of the committee, to Europe, where I think there has been a great deal of success in our relations over the last year. In waging war together on terrorism, our cooperation with Europe has grown stronger. NATO invoked Article 5 for the first time ever on September 12th, the day after the events of September 11. Since then, the European Union has moved swiftly to round up terrorists, close down terrorist financing networks, and improve law enforcement and aviation security cooperation. President Bush has made it clear that even as we fight the war on terrorism, we will not be deterred from achieving the goal that we share with the Europeans of a Europe whole, free and at peace. We continue to work toward this goal with our allies and partners in Europe.

While in the Balkans there remain several challenges to achieving this goal, we believe we are meeting those challenges. We have seized war criminals, helped bring about significant changes in governments in Croatia and Yugoslavia. And our military forces are partnered with European forces in Kosovo and Bosnia to help bring stability and self-governance, while European-led action fosters a settlement in Macedonia. We need to finish the job in the Balkans, and we will. And we went in together, and we will come out together.

I also believe we have been successful in bringing the Europeans to a calmer level of maturing with respect to what many had labeled in Europe as "unbridled US unilateralism." Notwithstanding the reaction we have seen to the President's State of the Union speech last week, I still believe that is the case. We spend an enormous amount of our time consulting with our European and other friends. It is a priority for the President. He met with Chancellor Schroeder. I don't even want to count the number of European ministers I have been in touch with over the last week or so.

But beyond Europe, we have been in constant touch with foreign ministers around the world, defense ministers around the world. The President is readily available for the leaders who come to this country. We believe in consultation, but we also believe in leading. We believe in multilateralism, but we also believe in sticking up for what we believe is right, and not sacrificing it up just on the altar of multilateralism for the sake of multilateralism. Leadership is staking out what you believe in and coalition-leading means leading, and that is what this President does. And I think he does it very, very well. And he demonstrated it in Europe last year, beginning with his speech in Warsaw, talking about a Europe whole and free; his participation in G-8 meetings; and the US-European Summit, and the European Summit; our extensive consultations with respect to the new strategic framework with Russia; and culminating in the brilliant way in which the President pulled together the coalition against terrorism. I believe we have demonstrated to the world that we can be decisively cooperative when it serves our interests and the interests of the world. We have also demonstrated that when it is a matter of principle, we will stand on that principle whether it is universally applauded or not.

I think we have been very successful. Let me note also that this sort of principled approach characterizes our determined effort to reduce the threat of weapons of mass destruction, an effort well under way before the tragic events of September 11th added even greater urgency. We and the Russians will reduce our deployed nuclear weapons; in the meantime, along with our friends and allies, we're going to go after proliferation. We are going to make sure that we do everything possible to cut off the kinds of technologies that rogue nations are using to threaten the world.

The principled approach that we take does not equate to no cooperation; quite the contrary. We are ready to cooperate, not just with our European friends, but our Asian friends, and we are quite prepared to cooperate and anxious to cooperate in even broader form. We are looking forward to the World Summit on Sustainable Development in Johannesburg later this year. There we will have an opportunity to talk about all kinds of transnational issues, good governance, protection of our oceans, fisheries and forests, and how best to narrow the gap between the rich countries and the poor countries of the world.

And that also allows me then to turn to Africa, where this summit will be held next September. We have crafted a new and more, I think, effective approach to Africa, the success of which was most dramatically demonstrated in the WTO deliberations in Doha last November, that led to the launching of a new trade round.

The United States found its position in these deliberations, being strongly supported by the developing countries, most notably those from Africa. You may have some idea of how proud that makes me as American Secretary of State, proud of my country and proud of this Congress, for its deliberate work to make this possible. The Congress laid the foundation for our efforts with the African Growth and Opportunity Act, an historic piece of legislation with respect to the struggling economies in Africa.

In the first year of implementation of this act, we have seen substantial increases in trade with several countries: South Africa by 11 percent; Kenya, 21 percent; Lesotho, 51 percent; and Madagascar a whopping 117 percent, all based on the first three quarters of 2001 compared to the same period in 2000. Likewise, we are very pleased with the excellent success we had with the first US Sub-Saharan Africa Trade and Economic Cooperation Forum, which was held last October.

A large part of our approach to Africa and to other developing regions and countries as well will be a renewed and strengthened concern with progress toward good governance as a prerequisite for development assistance. Where conditions are favorable, where the rule of law is in place, where there is transparency in their economic and financial systems, then we will encourage investment. We will encourage companies to take a look at those nations that are moving in the right direction. Agriculture, of course, is the background of Africa's economies, and we are working with them to revitalize their agricultural sector in an open system in order to reduce hunger and lift the rural majority out of poverty. Fighting corruption, good governance, getting rid of debt, getting rid of those despotic regimes and individuals who hold their people back, all of this is part of our agenda.

The people of Africa know that in many cases their governments do not deliver the healthcare, transportation and other systems that they need to be successful in the 21st Century. And our policies toward these countries will be to put them on the right path, move them in the right direction, and allow their people to enjoy the benefits that come from democracy and economic freedom.

We also know that especially in Africa none of this potential economic success is possible if we don’t do something about HIV/AIDS. It is destroying families, destroying societies, destroying nations. That is why I am pleased to report that pledges to the global fund to fight AIDS, tuberculosis and malaria now exceed $1.7 billion and continues to grow. Soon the fund is expected to accept proposals and begin disbursing money. And we will continue to support that with additional contributions.

Mr. Chairman, we have also I think had some success here in our own hemisphere with the President's warm relationship with Mexico's President Fox, to the Summit of the Americas in Quebec last spring, to the signing of the Inter-American Democratic Charter in Lima, Peru, to our ongoing efforts to create a free trade area of the Americas. All of this suggests to me that we are moving in the right direction in our own hemisphere even though there are difficult problems in Argentina, Colombia, Venezuela and other places that are of concern to us.

We need to keep democracy and market economics on the march in Latin America, and we need to do everything we can to help our friends dispel some of the dark clouds that are there.

Our Andean counter-drug initiative is aimed at fighting the illicit drugs problem while promoting economic development, human rights and democratic institutions in Colombia and among its Andean neighbors.

For our Caribbean neighbors, the situation has gotten worse as a result of September 11th. Lower growth, decreased tourism, increased unemployment, decreased tax revenue and decreased external financial flows. This economic decline is also affected by increasing rates of HIV/AIDS. I will be going to the Caribbean later this week to meet with the foreign ministers of the Caribbean to talk about these problems and to also talk about these problems and to also talk about President Bush's Third Border Initiative which seeks to broaden our engagement with our Caribbean neighbors based on recommendations of the regions' leaders on the areas most critical to their economic and social development.

The Third Border Initiative is centered on economic capacity building and on leveraging public-private partnerships to help meet the region's pressing needs. At the end of the day, it is typical to exaggerate what we have at stake in our own hemisphere. Political and economic stability in our own hemisphere and in our own neighborhood reduces the scale of illegal immigration coming to the United States, drug trafficking, terrorism and economic turmoil. It also promotes the expansion of trade and investment. So we must remain engaged in our own hemisphere.

I touched on some of the dark clouds that are on our foreign policy horizon, but let me focus on one or two areas that are especially distressing. The Middle East, of course, is the one that is upper most on my mind and the minds of most of us here in the room. With respect to the tragic confrontation between Israel and the Palestinians, I want you to know that we will continue to try and focus the parties on the need to walk back from violence, to find a political solution. Our priorities have been and will remain clear, ending the violence and terror, the establishment of an enduring cease fire, and then move forward along the path outlined in the Tenet Security Work Plan and the Mitchell Report recommendations. Agreed to by both sides and supported by the international community, this forward movement will ultimately lead to negotiations on all of the issues but must be resolved between the two parties.

Israelis and Palestinians share a common dream: to live side by side in genuine, lasting security and peace in two states, Israel and Palestine, with internationally recognized borders. We share that vision. The President spoke to that vision in his speech to the UN last fall, and I gave more form to that vision in the speech I gave at Louisville. Even though things have not gone well in the recent weeks, we cannot walk away from it. We must not become frustrated or yield to those who would have us turn away from this conflict or from this critical region.

As the President has said, the United States has too many vital interests at stake to take such a step, and one of those vital is the security of Israel. A positive vision will not be realized, however, as long as violence and terror continue. The President and I and General Zinni have been unequivocal with Chairman Arafat. The Palestinian people will never see their aspirations achieved through violence. Chairman Arafat must act decisively to confront the sources of terror and choose once and for all the option of peace over violence. He cannot have it both ways. He cannot engage with us and others in the pursuit of peace and at the same time permit or tolerate continued violence and terror. I have made it clear to Chairman Arafat and to his associates that the smuggling of arms by the Palestinian Authority by Iran and Hezbollah aboard the Karine A is absolutely unacceptable. Chairman Arafat must ensure that no further activities of this kind ever take place and he must take swift action against all Palestinian officials who were involved.

He knows what he must do. Actions are required, not just words, if we are to be able to move forward. Israel must act as well. Prime Minister Sharon has spoken of his desire to improve the situation of life for Palestinian civilians confronted with a disastrous economic situation and suffering daily. We have urged the Israeli government to act in ways that help ease these hardships and avoid further escalation or complicate efforts to reduce violence.

Difficult as the present circumstances are, the United States will remain engaged. But, in the end, Israel and the Palestinians must make the hard decisions necessary to resume progress toward peace.

With regard to another trouble spot that occupies much of our attention--Iraq--that country remains a significant threat to the regions' stability. We are working at the UN and elsewhere to strengthen international controls. We stopped the free fall of the sanctions regime. We got the Security Council back together. We are working hard to come up with the smart sanctions that we think are appropriate and we will not stop in that effort. And I am confident, very confident, that by the end of this six month sanctions period we will be able to implement smart sanctions in a way that all members of the Security Council will be able to abide with.

There was reporting this morning that the Iraqi regime has asked the UN to have a discussion. It should be a very short discussion. The inspectors have to go back in under our terms, under no one else's terms. Under the terms of the Security Council resolution, the burden is upon this evil regime to demonstrate to the world that they are not doing the kinds of things we suspect them of. And if they aren't doing these things, then it is beyond me why they do not want the inspectors in to do whatever is necessary to establish that such activities are not taking place.

With regard to Iran, we have a longstanding list of grievances, but at the same time, we have been in conversation with Iran. We take note of the positive role they played in the campaign against al-Qaida and the Taliban. We take note of the contribution they have made to Afghanistan's reconstruction efforts. But we also have to take note of their efforts with respect to the ship, the Karine A. We have to take note of some of the things some parts of the Iranian Government are doing in Afghanistan, which are not as helpful as what other parts of the Iranian Government are doing. We have to take note of the fact that they are still a state sponsor of terrorism.

And so we are ready to talk, but we will not ignore the reality that is before our eyes. And those who got so distressed about the President's strong statement, ought to not be looking in our direction; they ought to be looking in the direction of regimes such as Iran, which conduct themselves in this way.

I might just touch very briefly, Mr. Chairman, on the standoff between India and Pakistan. It's of concern to us, but I'm pleased that both nations remain committed to finding a peaceful solution to this crisis, and we will continue to work with them. I visited there a few weeks ago and had positive discussions with both sides, and both sides have made it clear to me then and in their actions since that they are trying to move forward and find a diplomatic solution.

President Musharraf gave a very powerful speech that put his country on the right path, and I hope he will continue to take action to reduce incidents over the Line of Control, and round up terrorist organizations and do it in a way that will give India confidence that they are both united in a campaign against terrorism, and not let it degenerate into a campaign against each other.

Mr. Chairman, I think you are aware of what we have been doing in Afghanistan. I don't need to belabor the point. We should be so proud of our men and women in uniform who fought that campaign with such skill and efficiency. And now the task before us is to make sure that we help the people of Afghanistan and the new authority of Afghanistan get the financial wherewithal they need to start building hope for the people of Afghanistan, and to bring reality to that hope.

I was pleased that, as one of the co-chairs of the Tokyo Reconstruction Conference, the conference was able to come up with $4.5 billion to be disbursed over a period of five years, which will get the country started. The big challenge facing Mr. Karzai and his colleagues, the challenge of security, providing a secure environment throughout the country so that the reconstruction effort can begin.

With respect to our continued campaign against terrorism, I think the President has spoken clearly. We will continue to pursue terrorism. We will pursue al-Qaida around the world. We will go after other terrorist organizations, and we will deal with those nations that provide a haven or a harbor for terrorists, and we will not shrink from this. We have the patience for it; we have the persistence for it; we have the leadership for it.

Mr. Chairman, in my prepared statement, you have the various details of budget items, and since I've gone on quite a bit, I don't want to belabor it any longer. But I just wanted to take the time that I did to show that there is a lot more going on than just what we read about in the daily papers on a particular crisis. We have forged good relations with Russia and China. We have solid relations with the Europeans. We have solid relations with our allies in the Pacific-Asia region. We are working the problems of Africa and our own hemisphere.

There is no part of the world that we are not interested in. We are a country of countries. We are touched by every country, and we touch every country. And we have a values-based foreign policy that rests on principle, and it is principle that is founded in our value system of democracy, the free enterprise system, the individual rights of men and women. We seek no enemies; we seek only friends. But we will confront our enemies, and we will do it under what I believe is the solid, dedicated, persistent leadership of the man who heads the foreign policy of the United States, President George W. Bush.

Thank you, sir.