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Celebrating 60 years of the U.S.-Australia Alliance

Secretary of State Hillary Rodham Clinton and Defense Secretary Leon E. Panetta attend a ceremony in which Australian Foreign Minister Kevin Rudd, second from left, and Australian Defense Minister Stephen Smith, far left, awarded former U.S. Secretary of State George P. Shultz, far right, the Honorary Member of the Order of Australia in San Francisco, Sept. 14, 2011. DOD photo by U.S. Air Force Tech. Sgt. Jacob N. Bailey.

Secretary of State Hillary Rodham Clinton and Defense Secretary Leon E. Panetta attend a ceremony in which Australian Foreign Minister Kevin Rudd, second from left, and Australian Defense Minister Stephen Smith, far left, awarded former U.S. Secretary of State George P. Shultz, far right, the Honorary Member of the Order of Australia in San Francisco, Sept. 14, 2011. DOD photo by U.S. Air Force Tech. Sgt. Jacob N. Bailey.

Good afternoon, everyone. It is a great pleasure for Secretary Panetta and I to welcome Foreign Minister Rudd and Defense Minister Smith and the entire Australian delegation, our friends and our partners, here today. I must say, on a personal note, it’s a special pleasure to see my friend Kevin Rudd back on his feet, serving his country, and making this important journey to be with us here today.

We have come to San Francisco to celebrate 60 years of the U.S.-Australia alliance in the place where it was born. Here at the Presidio Golden Gate Club back in 1951, in the month of September, our predecessors signed the treaty that cemented the ties between our nations. Today, we reflect on that history, celebrate the vision of those who brought our alliance to life, and chart a common path forward together. And as we announced earlier this week, President Obama will be visiting Australia in November to commemorate this important milestone and to advance our alliance.

For 60 years now, each new global challenge has brought with it a new cause for cooperation with Australia and an ever stronger partnership grounded in our shared values. And that is exactly what happened 10 years ago. When America was attacked on September 11th, just days after the 50th anniversary of our alliance, Australia invoked the treaty to come to our defense.

In the decade since, Australia’s men and women have fought alongside our own, just as they have in every major conflict since the First World War. In Afghanistan, Australia is the largest non-NATO contributor to our mission. In Libya, Australia now provides 10 percent of the international humanitarian budget. So from cyberspace to food security, Australia makes vital contributions to global security, stability, and well-being. And we greatly appreciate their efforts.

As Pacific powers, the United States and Australia are committed to working together to seize the opportunities of a fast-changing Asia- Pacific region. Our alliance has provided a context for the region’s dynamic economic growth by underwriting peace and security and promoting trade and prosperity. The detailed joint communiqué we are releasing today reflects the full range of our shared interests, values, and vision from maritime cooperation to joint development projects to building stronger ties with India to promote democracy and prosperity in the Pacific Islands.

We are working to encourage trade through the Trans-Pacific Partnership and through APEC, whose leaders the President will be hosting this fall in Hawaii. Together, we are strengthening regional institutions like the East Asia Summit and ASEAN. And as Secretary Panetta will explain, our military relationship is deepening and becoming even more consequential.

One country of particular shared concern is Burma. In recent weeks, we have seen some welcome gestures from Burma’s Government. It’s important for us and for others to try to understand better what is unfolding in Burma today. Our new special representative and policy coordinator for Burma, Ambassador Derek Mitchell, has just returned from his first visit to the country, one that included productive meetings with both the government and Aung San Suu Kyi.

Frankly, we have serious question and concerns across a wide range of issues, from Burma’s treatment of ethnic minorities and more than 2,000 prisoners to its relations with North Korea. Still, we welcome the fact that the Burmese Government has launched a dialogue with Aung Sun Suu Kyi and begun to speak of the need for important reforms. But just yesterday, Burma added 10 years to a prison sentence of a 21-year-old journalist. So I would urge the Burmese Government to follow its words and commitments with concrete actions that lead to genuine reform, national reconciliation, and respect for human rights.

The ties between our nations are as close as any in the world. Our peoples and our governments overwhelmingly support our partnership. And although Australians have taken over the Oscars, the Tour de France, and now the U.S. Open, our affection for your country remains undiminished. (Laughter.) The communiqué we have produced today is forward-looking and action-oriented, and it reflects our confidence in this alliance and in what our two countries can and will accomplish together.

So today we celebrate 60 years of a strong, steady alliance. We honor those who fought and sacrificed to sustain it, and we recommit ourselves to continue to work closely together as allies and friends to make good on its full promise for many years to come.

Secretary Panetta. I think – Foreign Minister Rudd.

FOREIGN MINISTER RUDD: Thank you very much, Secretary of State Clinton and Secretary of Defense Panetta. Both Stephen and I have appreciated the hospitality here in San Francisco, and at this 60th anniversary of the alliance which shares our two countries. It is good that we reflect on why we have this alliance. Sixty years is no small span of time. If you’re a student of military history, there are few alliances in history, in modern history, which have outlasted that span of time. And so we should ask ourselves why is that so in the case of this alliance between our two great democracies.

I think the answers can be found in the extraordinary ties between our two peoples. The answers can also be found in the fact that between us we are among the world’s oldest continuing democracies, and therefore at the deepest level we share common values. No one can overestimate the importance of the sharing of common values. Of course, we share common interests as well in the complex challenges which confront us today in the international community. But the reason that we have endured these 60 years, and, I believe, have a long span of time ahead of us yet in this alliance, is because we are fundamentally anchored in a common view of what is important in the affairs of the world.

As Secretary of State Clinton just mentioned, we’re reminded just recently of the importance of those values. Ten years ago, we saw the horrendous attacks on innocent Americans and citizens from across the world here in the United States on September 11. We in Australia were shocked then, as we remain shocked now, at such a callous act. It cut deep into the hearts of Australians. They saw, they felt, and we knew we were as one. That sentiment remains alive 10 years later. For our friends in America, I sense very closely and acutely that the feelings of that day are still very close, though a decade has now elapsed. It is a salient reminder of our common challenge based on our common values, to deal robustly, comprehensively, and globally with the challenge of terrorism today. And that’s one of the reasons we cooperate together at this great alliance between Australia and the United States.

In our discussions today, we have covered a great scope and a great span. We’ve reviewed our engagement across the Asia-Pacific region. This region of ours, the Asia-Pacific – the waters of the Pacific we see out here off the coast of San Francisco. This region will be the center of gravity for global economic growth, for global security for the half century to come. And it is in our combined interest, therefore, to ensure that this Pacific century is indeed a Pacific century. And therefore, that must be based on not just the sharing of values but concrete cooperation in the hard areas of foreign policy and national security policy, and that is what we have reviewed again today: our engagement with China and the countries of Northeast Asia, including the Republic of Korea and Japan; in Southeast Asia, our common engagements with countries there, including Australia’s nearest neighbor, the Republic of Indonesia, now a welcome member of the family of democracies; our common engagement across the Indian Ocean and South Asia, and our relationship, of course, important that it is, with India.

We focused also on regional challenges, and the nuclear program being adopted by North Korea is one which profoundly concerns our two countries and profoundly concerns the Government of Australia. More broadly of course, we also reviewed our common interests in the Middle East. The peace process, the recent changes underway in Egypt, in Libya, and we follow with great, great concern the continued and systematic abuse of human rights and the killing of innocent people in Syria.

The Secretary just mentioned Burma. I would endorse wholeheartedly her remarks. When I visited Burma myself just a couple of months ago, I emphasized there to the regime that if they wish to engage international community comprehensively, then the first and foremost requirement is to deal with the state of democratic conditions within their own country and the absolute imperative of the release of prisoners of conscience and other political prisoners in that country. We welcome recent signs from the Burmese regime that they are open to such a dialogue, but like the United States, we proceed cautiously and we would call on the Burmese regime to talk concrete steps to manifest to the world at large that they are serious about that country becoming a democracy without the threat of imprisonment for those who impose – those who pose, in the regime’s view, a threat to them.

Finally, this is a significant AUSMIN conference. It is significant because we have also addressed new challenges of a global nature for the future. Here I refer in particular to the challenges represented by cyber security. What we are doing today in the statement that we’ve released, in separate joint statement on cyberspace is underline that this is a new area of operational engagement between ourselves and the United States in this critical area which affects governments, businesses, and citizens the world over, the region over, and in our countries individually as well.

I’ll draw in particular attention to the reflections and the statement contained within the joint statement on cyberspace. It says, and I quote: “We” – that is the Governments of Australia and the United States – “recognize that cyberspace plays a growing role in ensuring national security.” Mindful of our longstanding defense relationship and the 1951 security treaty, our governments share the view that in the event of a cyber attack that threatens the territorial integrity, political independence or security of either of our nations, Australia and the United States would consult together and determine appropriate options to address the threat.

This represents a new dimension of our lives, an important dimension given the realities we face in this 21st century. One cyber attack can cripple an economy for hours and days on end. Let there be no doubt, cyber attacks are not only attack on governments, they can cripple businesses, and Australian businesses are not immune. We know that Australian businesses have already been the subject of cyber attacks. And if it’s a big enough economy, it would have reverberations throughout the world. Like terrorism, it’s a battleground that is fought unconventionally, often without a known enemy. That is why it critical that this become a formal part of our alliance deliberations and committed cooperation in the event of such attack in the future.

If I could conclude by saying this: We in Australia look forward to the upcoming visit by President Obama to Australia. Any president of the United States is a welcome guest in Australia. We look forward very much to that visit, we look forward to making the President welcome in our country, and it constitutes, in our view, a further symbol and signpost of the significant relationship which expands not just across the foreign policy and security sphere, which we have dealt with here, but across the full breadth of the engagement between our two great democracies. Thank you.

SECRETARY CLINTON: Thank you, Kevin. Leon?

SECRETARY PANETTA: I’d like to join Secretary Clinton in extending a very warm official welcome to Minister Rudd and Minister Smith and all of our Australian colleagues and thank them for traveling all the way across the Pacific to join us in marking a very historic event here at the Presidio. It’s a real pleasure for me – personal pleasure for me to be able to participate in my first Australian-U.S. ministerial, and all the more so because it gives me an opportunity to show off my home state of California and this great city of San Francisco to these dear friends.

The depth and breadth of discussions we’ve had here today really do confirm for me that the United States has no closer ally than Australia. Sixty years after the signing of the ANZUS Treaty here at the Presidio, we come together again today and affirm this alliance, affirm that it remains strong, and that we are determined to deepen our security cooperation even further to counter the threats and challenges that we face in the future.

With that goal in mind, we discussed today the efforts of the Bilateral Force Posture Working Group, the United States and Australia working together, which has been making steady progress in developing options for our two militaries to be able to train and operate together more closely, including more combined defense activities and a shared use of facilities. This work to strengthen our alliance’s presence and posture in the Pacific reflects a reality we all recognize: security and prosperity of our two great nations depends on the security and prosperity of the Asia-Pacific region.

We also discussed, as has been pointed out here, a whole range of efforts to enhance cooperation in emerging domains such as space and cyberspace. The joint statement on cyber released today sends a very strong signal about our commitment to work together to counter and respond to cyber attacks. I’ve often mentioned this is the battlefield of the future, and our ability to work together is extremely important to the challenge of being able to counter this very significant emerging threat.

As we work to build on these new areas of cooperation, American and Australian forces continue to fight together in Afghanistan as they have in every major conflict over the past century. I expressed to Minister Rudd and to Minister Smith and all of our Australian friends that were gathered here the deep appreciation of the United States Government and the American people for their very strong partnership in these efforts, and for the considerable sacrifices Australian troops and their families have made during this time of war.

Over the past decade, and indeed for the past 60 years, we have gone into battle together and we have bled together because of the shared values and the deep bonds between our people. We are both immigrant nations, and that creates a very strong bond between the United States and Australia, particularly for this son of immigrants. As we mark the 60th year of our alliance, I have no doubt that if we continue to work together hand-in-hand, we can build a better and safer and more prosperous future for our two countries.

DEFENSE MINISTER SMITH: Thank you very much, Madam Secretary. I thank you and Secretary Panetta for your warm hospitality and for our very productive meeting today. I’m very pleased to be here to mark the 60th anniversary of our alliance, an alliance between Australia and the United States which was forged in the battle for Australia, the battle in the Pacific, in the Second World War. And to mark that, later this afternoon I’ll lay a wreath at the USS San Francisco Memorial. But out of that battle in the Pacific in the Second World War, in 1951 came our formal alliance. And for 60 years, that alliance has been the indispensible bedrock of Australia’s strategic security and defense arrangements.

The people, our predecessors, who wrote and signed the alliance would not have envisaged that 10 years ago yesterday, the alliance would be formally invoked for the first occasion in the face of international terrorism against a non-state actor, not against another nation-state. And today, we formally record as one of our resolutions from AUSMIN that cyberspace and an attack on the United States or an attack upon Australia in cyberspace could itself invoke the treaty. This tells us that the treaty, which we have both respected over that 60-year period, is a living document that moves with the times, as it did 10 years and 1 day ago, in the aftermath of September 11th.

Can I also indicate that the discussions we’ve had today also deal with other challenges for the future – our cooperation in space and space awareness, our cooperation in ballistic missile defense. In addition to those productive discussions, as Secretary Panetta has said, we’ve done further work on the joint working group that we’ve established 12 months ago in Melbourne on the United States Global Force Posture Review. And we received a report from our offices, work on that Global Force Posture Review is ongoing. But we are looking at increased joint exercises, increased joint training, increased joint operations. As I’ve put it colloquially in Australia, more ships in, ships out; more planes in, planes out; more troops in, troops out. We have further work to do, but we regard this work as very important.

As Secretary Panetta has said, we also spent some time dealing with Afghanistan, yet another of the conflicts that the United States has been involved in where Australia has stood shoulder-to-shoulder with the United States. We remain committed to the transition strategy. Australia’s assessment is that in Uruzgan province, where we are, we will effect transition before the end of 2014. We’ve also started discussions about what contribution Australia can make in the post-transition Afghanistan, whether that’s special forces, whether that’s training, whether that is institutional building, development assistance, capacity building.

Secretary Panetta and I also discussed issues of budget constraints and capability, in particular the very good cooperation that we are seeing in a very important project for Australia, our new submarine project. And I’m gratified to Secretary Panetta for the ongoing cooperation that Australia is and will receive so far as work on that project is concerned for 12 new submarines.

We also spoke about the joint strike fighter and the need to ensure that the joint strike fighter is delivered on schedule. I’ve made the point in Australia and in the United States before that we are keen to ensure that there is no gap in our capabilities so far as our air combat capacity is concerned in Australia.

So today, we’ve dealt with the range and the array of shared interests that Australia and the United States have, including the fact, as the foreign minister has said, we regard very much this century as the century of the Asia Pacific, where political, strategic, economic, and military influence moves to our part of the world. The rise of China, the rise of India, the rise of the ASEAN economies combined, the emergence of Indonesia as a global influence, and the ongoing economic prowess of Japan and the Republic of Korea. So all of these issues we have dealt with in the context of an alliance between two nations, an alliance between friends, which has served us well for 60 years and will continue to serve us well into the future. Thank you.

MS. NULAND: We have time for four questions today, two from each side. First question to Reuters, Arshad Mohammed. Please.

QUESTION: Secretary Clinton, are the U.S. officials and the EU officials and former Prime Minister Tony Blair making any discernable progress on the Israeli-Palestinian issue? And can you conceive of a way to give the Palestinians a non-member state status at the UN while curbing or restricting their ability to go to the ICC or the ICJ? In other words, is there a way to give a nod toward statehood for the Palestinians but to prevent some of the deleterious consequences that could flow from that status, in your view?

SECRETARY CLINTON: Well, Arshad, as I said on Tuesday, we believe strongly that the road to peace and two states living side by side does not go through New York; it goes through Jerusalem and Ramallah. And it is our absolute conviction that we need to get the parties back into negotiations on a direct face-to-face basis and that they have to be at that negotiating table working through the framework that President Obama laid out in May. That remains our focus. We are absolutely committed to pursuing that. As you know, Dennis Ross and David Hale are back in the region, having been there as well just a few days ago. We are working closely with a range of international partners, and we intend to keep our attention where we think it needs to be, which is how we can try to convince both sides to do what must be done in order to bring about a resolution of the issues between them, and that’s going to be certainly the core of all of our efforts for the next several days.

QUESTION: (Inaudible.)

SECRETARY CLINTON: Well, I’m not going to get into specifics, because a lot of these are very sensitive conversations that we are all having, and I don’t think it would benefit the decision-making for me to be speaking prematurely. I cannot give you the odds on how successful our entire effort will be, but I think there is certainly a growing recognition among not only the parties and the region, but beyond, that there is no real answer to all of these concerns that we share, other than negotiations on the tough issues, like borders, like security, and other matters that can only be resolved – and will not be resolved if some other route is taken at the United Nations.

MS. NULAND: Next question, Brad Norrington, The Australian.

QUESTION: Could I direct this question to Defense Secretary Panetta and Defense Minister Smith? Could you detail how Australia is going to see a considerably increased number of U.S. ships, aircraft, and personnel? And is the boosted U.S. presence in Australia likely to involve existing facilities or new facilities?

SECRETARY CLINTON: Stephen, you want to start?

DEFENSE MINISTER SMITH: Well, we’ve been working on the Force Posture Review for the last 12 months. In Melbourne, at AUSMIN 2010, we established the joint working party. Then-Secretary Gates and I made the point that a lot of work needs to be done. But we were looking, and both Secretary Gates and I repeated this at the Shangri-La Dialogue in Singapore in July, from memory, that we were looking at opportunities for further exercises together, further training together, the possibility of pre-positioning stores and equipment in Australia for purposes of humanitarian relief and disaster assistance and potentially greater access to ports and our facilities. We’ve come to no final conclusions. We’re very pleased with the progress that our offices have made, and we are pleased with the progress of discussions today.

But we’ve got more work to do. There are a range of things that we’re not envisioning. We don’t have United States bases in Australia. We have joint facilities, and they’ve been established for some time. They perform a very important function. And we’ve had those joint facilities since the mid 1980s. So we’re not looking at additional or new facilities; we’re looking at the sharing of current facilities. And I’ve made the point in Australia, whilst we regard this very much potentially as an extension of work we already do, good work we already do, it will in an operational sense be the single largest potential change to the day-to-day working arrangements of the alliance since the establishment of those joint facilities. But no decisions have been made. When to come to finalize our deliberations, obviously decisions will be made and announcements made in due course. But we are pleased today with the work that our officials had done, both civilian and military, and pleased with the progress of discussions today.

SECRETARY PANETTA: Obviously, I concur with what Minister Smith said about our discussions. I think the thing to understand is that we are in negotiations on what that force posture would look like. Those discussions are continuing, and our goal is basically to build on a very strong relationship that we’ve had throughout the years. We’ve done exchanges, we’ve had these exercises together. This is something we’ve done pretty much in the past, and our goal here is to try to strengthen that relationship as best we can so that we can send a clear signal to the Asia Pacific region that United States and Australia are going to continue to work together to make very clear to those that would threaten us that we are going to stick together.

MS. NULAND: Next question, Dan Deluce, AFP.

QUESTION: Yes. To Secretary Clinton and Secretary Panetta, given that the two U.S. hikers were not released, despite the promise of the Iranian President Ahmadinejad, what do you think that says about his role and the power relationships inside that regime, and how does that affect your efforts to try to curtail that country’s nuclear program?

And Secretary Panetta, do you share the view that a U.S. – that some kind of military strike on Iran’s program would merely delay that program?

SECRETARY CLINTON: Well, let me begin by perhaps providing a little context. We continue to hope that the two young Americans will be released as part of a humanitarian gesture by the Iranian Government. We have seen in the past some delays that have occurred after decisions were announced, so that – at this point, we are not at all concerned, because we have received word through a number of sources, publicly and privately, that the decision will be executed on and that we will see their return to their families.

So I’m not going to speculate on what the reasons are or what it might mean or might not mean, but I’m going to count on the Iranian Government fulfilling the announcement that was made by the leadership of the country, and hope that it can be expedited and we can see their release very soon.

SECRETARY PANETTA: And I, again, concur with Secretary Clinton’s description of that situation. I mean, it’s very difficult for us to try to speculate as to the differences and battles that are going on in the political leadership within Iran and to really understand just exactly what the nature of that is. Our goal here is to try to get these hikers released, and we’ve been assured that steps will be taken to make that happen, and we hope that does – that is the case.

With regards to the broader question on Iran’s nuclear capability, we remain very concerned, very concerned, about their efforts to develop a nuclear capability, and we have indicated our concerns directly to the Iranians, and we have indicated that it is important for them if they want to become part of the international family that they have to take steps to stop progress in that area. And I’m not going to talk specifically about what steps we would or would not take in order to make sure that doesn’t happen.

MS. NULAND: One last question. Ben Potter, Australian Financial Review.

QUESTION: This is a question for Secretary Panetta. Will the U.S. be able to fulfill its side of the agreement envisaged by the – what you’ve discussed and announced today regardless of Defense budget outcomes from the current talks, both in terms of personnel, existing equipment, and acquisitions of expensive new equipment projects on which interoperability depends?

And also for Secretary – Minister Rudd – I’m sorry – how do you plan to reassure Beijing that this is not somehow directed at them, given – especially given Secretary Panetta’s strong statement a few minutes ago about people in the region better look out?

SECRETARY PANETTA: With regards to the budget situation, I think, as I’ve made clear, that – even with the numbers that have been presented to us by the Congress – that we believe that we can implement those savings in a way that protects the best military in world and that maintains our strength in dealing with all of the threats that we have to deal with in the world. And that’s particularly true with regards to the Asia-Pacific region. My goal is to make clear that the United States will always maintain a very strong presence in that part of the world and that we will fulfill our commitments to Australia and all of our allies in that part of the world in order to make very certain that the countries in the Asia-Pacific region understand that we’re there to stay.

FOREIGN MINISTER RUDD: On the second half of your question, I think it’s important to recognize the fundamental principal here which is the long term prosperity of the Asia-Pacific region rests on continued strategic stability of the Asia-Pacific region. The question is how is that stability to be maintained in a post-war period? And the answer is the strategic presence of United States. It has been the underpinnings of what we have seen unfold. And if I look particularly at the extraordinary economic growth levels that have occurred in China, by the countries in Northeast Asia and Southeast Asia and now South Asia in recent decades, it’s because of the continued U.S. strategic presence in the Asia-Pacific region.

I think the second point is this, that there is nothing particularly novel about U.S. forces using Australian facilities. I think that’s been the case since 1951, under the terms of this alliance, and then if we flick back another decade or so to 1941. There have been U.S. troops, U.S. aircraft, there have been U.S. ships using our facilities since year dot of our strategic cooperation, and probably going back to the days of the Great White Fleet in 1907, 1908. But there’s nothing new under the sun. In terms of the further negotiations between officials, I simply reinforce the comments made before by Stephen Smith.

I think the last thing about the future of the region though, is we have a common regional interest in establishing a wider sense of security community across Asia and the Pacific. That is why we, and our friends the United States, but also countries right across East Asia, including China, have supported the inclusion of the United States and Russia at the upcoming East Asia Summit. That will have on it, obviously, a significant discussion of regional political and security questions, as it should. And the overall objective there is to bring about a greater common sense of security between the various countries of our wider region – greater transparency, greater mutual trust, expanding confidence and security building measures, the sorts of things the Europeans were working on something like 35 years ago or more. Frankly, in the Asia-Pacific region where we’ve started from very little of that, we have an opportunity now to build on that. So for those various reasons I believe our communications with our partners in the wider region should present no difficulty at all.



A Conversation with Secretaries Hillary Clinton and Leon Panetta

VICE ADMIRAL RONDEAU: Welcome to NDU. This is the apex and the vortex for interagency and whole-of-government education, knowledge, conversation, dialogue, and discussion. We are indeed extraordinarily privileged and honored to have the inaugural Distinguished Leader Program speakers be our secretaries of Defense and State and the very distinguished Frank Sesno. Please let’s give a very warm NDU welcome to these great leaders. (Applause.)

MR. SESNO: Well, good morning, everybody. And good morning to both of you.

Secretary Clinton and Secretary of Defense Leon Panetta participate in a conversation moderated by Frank Senso and hosted by the National Defense University in Abraham Lincoln Hall. State Department photo by Michael Gross.

Secretary Clinton and Secretary of Defense Leon Panetta participate in a conversation moderated by Frank Senso and hosted by the National Defense University in Abraham Lincoln Hall. State Department photo by Michael Gross.



MR. SESNO: It is a great pleasure and privilege to be here with the Secretary of State and the Secretary of Defense, and I cannot think of a more propitious time for this conversation with the world watching this country going through the budget gyrations, I think is the right word, with a world so uneasy with our wars ongoing. So some of what perhaps we can talk about here today – and we will incorporate your questions into this conversation – will be: Is America a wounded colossus? Are these wars winnable? Where and how do these two big departments, this extension of American foreign policy, diplomacy, and military strength work together?

I want to thank National Defense University and Admiral Rondeau for your gracious welcome today. So welcome to both of you.

SECRETARY CLINTON: Thank you, Frank. Thanks for doing this.

SECRETARY PANETTA: Thank you, Frank.

MR. SESNO: Let’s start with the budget, which is, I know, your idea of a good time. (Laughter.) The world has watched with bated breath as to whether we were going to default, whether American troops were not going to get their paychecks, which is an incredible thing. As you face the prospects of budget cuts and the reality of this – Secretary Panetta, go first – what’s really at stake here? What’s really at stake for foreign policy as well?

SECRETARY PANETTA: I think this is about the national security of the country. Our national security is our military power, our Defense Department, but it’s also our diplomatic power and the State Department. And both of us, I think, are concerned that as we go through these budget tests that we’re going to go through that the country recognize how important it is that we maintain our national security and that we be strong. We recognize that we’re in a resource limitation here and that we’ve got to deal with those challenges, but I don’t think you have to choose between our national security and fiscal responsibility. And I want the country to know that we can get this done, but we have to do it in a way that protects our national defense and protects our national security.

MR. SESNO: You already agreed to – not agreed, but you’re going to have 350 billion or so in cuts.

SECRETARY PANETTA: No, that’s right. That’s right.

MR. SESNO: If the trigger takes place, if there’s an inability for the Congress to decide where to go from here, it could be 500 billion more. Then what?

SECRETARY PANETTA: Well, I made the point that with the numbers we’re dealing with now, that the President and Bob Gates before me basically decided pretty much the parameters that we would have to be looking at, and we’re within that ballpark with what the Congress just did. If they go beyond that, if they do the sequester, this kind of massive cut across the board, which would literally double the number of cuts that we’re confronting, that would have devastating effects on our national defense, it would have devastating effects on certainly the State Department.

But more importantly, when we think about national security, I think we also have to think about the domestic discretionary budget as well, because education plays a role, other elements of the discretionary budget in terms of the quality of life in this country play a role in terms of our national security. More importantly, and I’ve made the point based on my own budget experience, that if you’re serious about dealing with budget deficits, you can’t just keep going back to the discretionary part of the budget.

MR. SESNO: What would be the most damaging part? And Secretary Clinton, I’ll come to you in just a moment. But what would be the most damaging part to the Department of Defense and to the national security if you had to face hundreds of billions of more above the 350? Examples.

SECRETARY PANETTA: Very simple. Very simply, it would result in hollowing out the force. It would terribly weaken our ability to respond to the threats in the world. But more importantly, it would break faith with the troops and with their families. And a volunteer army is absolutely essential to our national defense. Any kind of cut like that would literally undercut our ability to put together the kind of strong national defense we have today.

MR. SESNO: Secretary Clinton, you have a harder case to make given the public skepticism about development aid, foreign aid, where America is spending its money.

SECRETARY CLINTON: Well, Frank, I know it’s a harder case because I think there is a lot of both misunderstanding and rejection of the work that is done by the State Department and USAID. We comprise, if you round it off, 1 percent of the discretionary budget. And what we have done over the last two and a half years, I think was long overdue, because basically we said we are a national security team, we’re all on the American team. And by that I mean that we have civilians who are in the field with our military forces in areas of conflict, we have civilians who are in the field on their own in other very dangerous settings without our military with boots on the ground, but we are trying to enhance the coordination to achieve our national security objectives.

So one of the goals that Secretary Gates and now Secretary Panetta and I have is to make the case as to what national security in the 21st century actually is. It is, of course, the strongest military in the world that has to be given the tools to do the jobs we send it out to do. It is our diplomatic corps, which is out there on the front lines all the time, trying to deal with very difficult situations to the betterment of America’s national interest and security. And it is our development experts who put another face on American power, who are trying to deliver, as we speak, aid to 12 million people in the Horn of Africa who are facing famine and starvation, in some measure because of al-Shabaab, which makes our challenge even more difficult.

I want to go back though to underscore something that Leon said, because between the two of us, we have many years, probably more than either of us care to admit, of experience in dealing with a lot of these issues. And Leon as the chair of the budget committee, as the director of OMB, as the chief of staff in the White House in the ’90s, was part of a process that got us to a balanced budget. This is not ancient history. We’re not talking about some time so far back we can’t remember it. The tough decisions were made in the ’90s to, yes, cut spending, yes, deal with some entitlement issues, and yes, increase revenues so that –

MR. SESNO: Raise taxes?

SECRETARY CLINTON: Yes. Absolutely, so that we had the kind of approach that got us on a trajectory, had we stayed on it, where we would not be facing a lot of these issues. And I will end where you started, Frank. I know how difficult this was for our country domestically over the last months. It’s always hard seeing the sausage being made. I happened to be in Hong Kong a few weeks ago, and I said confidently that we were going to resolve this; we were not going to default; we would make some kind of political compromise.

But I have to tell you, it does cast a pall over our ability to project the kind of security interests that are in America’s interest. This is not about the Defense Department or the State Department or USAID. This is about the United States of America. And we need to have a responsible conversation about how we are going to prepare ourselves for the future. And there are a lot of issues that are not in the headlines but are in the trendlines. We are reasserting our presence in the Pacific. We are a Pacific power. That means all elements of our national security team have to be present, and we can’t be abruptly pulling back or pulling out when we know we face some long-term challenges about how we’re going cope with what the rise of China means.
We have so many issues that Leon and I deal with every day that are not going to be getting the screaming headline coverage but which we know, looking over the horizon, are going to affect the economic well-being of our country and the security of America citizens.

MR. SESNO: A couple things, and then we’ll go to our – to the audience for our first question. Secretary Panetta, talk about the headlines through, there was one, and it really bears directly on the budget and some of the very tough choices and big changes that may be in store. And that is a report on CBS yesterday that the Pentagon is considering a very substantial revamp of the retirement program for those in the military, 401(k)s and ending the eligibility after 20 years and making it normal retirement age. Is that true? Is that the kind of change and the depth of change that’s out there?

SECRETARY PANETTA: Well, that report came as a result of an advisory group that was asked by my predecessor, Bob Gates, to look at the retirement issue. And they have put together some thoughts. They’re supposed to issue, actually, a more complete report at the latter part of this month. No decisions have been made with regards to that issue.

MR. SESNO: But that’s the kind of thing that you have to think about?

SECRETARY PANETTA: But look, it’s the kind of thing you have to consider in terms of retirement reforms in the broad form.

MR. SESNO: So when do decisions –

SECRETARY PANETTA: But you have to do it, Frank, in a way that doesn’t break faith, again, with our troops and with their families. If you’re going to do something like this, you’ve got to think very seriously about grandfathering in order to protect the benefits that are there.

MR. SESNO: So it wouldn’t affect the people in this room?

SECRETARY PANETTA: Exactly. So at the same time – (laughter and applause).

MR. SESNO: You know what they say about know your audience.

SECRETARY PANETTA: I know my audience. (Laughter.) No, but – well, you do have to do that. You have to protect the benefits that are there. But at the same time, you’ve got to look at everything on the table. I mean, my view when I was on the budget committee, when I was director of OMB, was that you have to look at everything; you’ve got to put everything on the table. You can’t approach a deficit the size we’re dealing with and expect that you’re only going to be dealing with it at the margins. You’ve got to look at everything, and we should.

MR. SESNO: Secretary Clinton, back on the budget and then to the audience. And perhaps, Secretary Panetta, you’ll want to respond to this. You and your predecessor talked a lot – or Secretary Panetta’s predecessor – talked a lot about your budget and the need for the development budget and how development is cheaper than war. We had that conversation at George Washington University. What do you say to Secretary Panetta about your budget and your needs, and your needs and your lobbying for more in terms of what he’s got and what you need to accomplish?

SECRETARY CLINTON: Well, I mean, obviously, the DOD budget far outweighs the combined budget of the State Department, USAID, 10-12 to 1. We understand that. And we know we’re going to also have to put everything on the table. We’re going through a very difficult budget process. And we have –

MR. SESNO: And that includes development, which you hope to grow. You’ve been wanting to grow that.

SECRETARY CLINTON: Well, it includes everything, because I’m not saying we should be exempt and education or healthcare here at home should bear all the costs. I’m just saying that as we look at everything that is on the table, we have to try to do a reasonable analysis of what our real needs and interests are. And it’s easy in a political climate, which I know something about, as Leon does, to say, “Oh, well, look, I mean foreign aid.” If you go out to the American public and you say, “What’s the easiest thing to cut in the American budget?” it’s always foreign aid. “Well, how much do you think foreign aid represents in the American budget?” And people honestly say something like 15, 20 percent. And then you say, “Well, how much should it represent?” And they say, “Oh, maybe 10 percent.”

Well, we understand that we have a case to make and it is a case that we’ve been making. And there is a new way of looking at it, which Bob Gates and I, and now Leon and I, are working on. The military has always had in the defense budget something called Overseas Contingency Operations that go to the kind of conflicts and investments that have to be made in places like Afghanistan and Iraq. For the first time, we have now the Congress accepting that we, too, need what’s called an OCO, because we have a lot of costs that will begin to go down over time because they’re not part of our base.

So we’re doing things to try to get smarter about explaining what we do and what it’s going to cost for us to do it. But the bottom line, Frank, is we want national security to be looked at holistically, and we want people to understand that a lot of what we’re going to have to be doing in the future is not sending our young men and women into harm’s way, but trying to avoid that in the first place.

MR. SESNO: In a word, what’s your view of her budget?

SECRETARY PANETTA: It’s absolutely essential to our national security.

MR. SESNO: Should it grow or it’s going to be need to be cut? Or are you saying that in this –

SECRETARY PANETTA: No. Listen, we all know we’re going to have to be able to exercise some fiscal restraint as we go through our budgets. But the bottom line is that what I hope the Congress doesn’t do, what I hope this committee doesn’t do, is to walk away from their responsibility to look at the entire federal budget. I mean, the entire federal budget now – annual budget is close to $4 trillion. In the discretionary side, which is around a trillion plus, it’s already been cut a trillion dollars by virtue of this deal that was made in the Congress. So we’re already taking a trillion dollar hit over these next ten years. Two-thirds of that budget has not been touched. Two-thirds of the federal budget has not been touched.

If you want to deal with the deficit, you’ve got to deal with mandatory spending programs, you’ve got to deal with revenues. Every budget summit that I’ve been a part of, going back to – Ronald Reagan was the first budget summit I participated in. It was a balanced package that dealt with cuts and revenues. It was true for Ronald Reagan, it was true for George Bush, it was true for Bill Clinton, and it has to be true today if you’re serious about dealing with this –

MR. SESNO: Let’s take our first audience question. Anybody got a question on the budget? This gentleman right here. We got a mike over there? I’d ask you to identify yourself and ask your question briefly, and we’ll get a response.

QUESTION: Colonel Rich Outzen. I’m an Army Foreign Area officer and a student at the Industrial College of the Armed Forces. Welcome to both of you. Like many of my peers here, I’ve spent about five years out of the last ten in the Middle East and Afghanistan. One of the things that concerns me, as we see the budget tsunami approaching, is problems with the teaching of foreign language and culture. It’s an incapacity we’ve had in the Force that persists now. How will we deal with that as we lose the hundreds of millions of dollars to throw at contracting solutions? Have we looked at ways that maybe State and Department of Defense can synergize efforts to teach? Have we looked at working with academia? Is that sort of restructuring and reengineering how we approach these missions that are budget sensitive going on?

MR. SESNO: Secretary Panetta, why don’t you start?

SECRETARY PANETTA: Well, I certainly think we’ve got to look at creative ways to be able to deal with it. I’m a believer in foreign language training. I think, unfortunately, this country hasn’t devoted enough resources really to foreign language training. We’ve looked at the three Rs – reading, writing, and arithmetic – but we haven’t looked at reality of the world that we deal with. And in order for – I mean, when I was CIA director, I did not think you could be a good intelligence analyst or operations guy without knowing languages. And I believe that for the Defense Department and I think for the State Department, there’s a recognition that you need to have language in order to be able to relate to the world that we live in. So my goal would be, as we go through the budget, as we develop the restraints that we have to develop, that we are creative and not undermine the kind of teaching and language training that I think is essential to our ability not only to protect our security, but frankly to be a nation that is well educated.

MR. SESNO: You have similar issues at State.

SECRETARY CLINTON: Well, I certainly say amen to that, and I think your suggestion that we look for ways that we can better coordinate our language and culture education programs is a very good one. I have begun to do that in the State Department/USAID because they had different platforms; they had different IT platforms, different language instruction platforms. And when I came in, I didn’t think it was the most sensible way for us to train our development experts and our diplomats, but I think we are going to have to be more creative. I mean, NDU is a perfect example of whole-of-government education. We have Admiral Rondeau, who leads the NDU team, and Ambassador Nancy McEldowney from the State Department, who is the number two. That is what we have to get in our minds is more likely to be the pattern of cooperation both before deployment, whether it’s as a military or civilian personnel, and then after deployment because we cannot, number one, afford to do it any other way.

But secondly, I think it gives us a better result. You may have seen the article in The Washington Post over the weekend about one of the civilian employees in Afghanistan. I think it was Garmsir District. And because of his Pashto facility, the military really looked to him because he was able to communicate not just in a formalistic way, but informally, colloquially, in a way that really captured the attention and eventually the cooperation of a lot of the Afghans. That’s what we need across the board. So any way we can work together, it’ll save us money, but it also will begin from the beginning to put together this whole-of-government national security team.

MR. SESNO: Let’s move around the world a little bit. Let’s start with Afghanistan –terrible, costly week last week; 35 Americans lost their lives there. And there are a lot of Americans who say: With this loss, is this worth it? Are we prevailing? Should we stay? What is your response to that? How do you view what is happening in Afghanistan and the trajectory?

SECRETARY PANETTA: It was tragic what happened last week. We’ve lost 4,500 in Afghanistan. We’ve lost many more – we’ve seen a lot more that have been wounded. There are a lot of our men and women that have put their lives on the line on the mission that we’re involved with there, and we can’t forget the mission. The mission, as the President said, is that we have to disrupt, dismantle, and defeat al-Qaida, and make sure that it never again finds a safe haven in Afghanistan from which to launch attacks to this country. I think we’ve made good progress on it. I think – I just talked with General Allen this morning. We are making very good progress in terms of security, particularly in the south and southwest. Those are difficult areas. We’ve now got to try to improve the situation in the east.

But overall, the situation is doing much better. We have weakened the Taliban significantly, and we’re continuing to work on that. We are continuing to build the Afghan army and police; they are right on target in terms of the numbers that we needed to develop. So we are working in the right direction. We’re going through transition, we’re beginning to transition areas. There are others we’re going to have to do. We’ve got to make sure that the Afghan Government is prepared to not only govern but to help secure that country in the long run. But I really do believe that if we stick with this mission that we can achieve the goals that we’re after, which is to create a stable Afghanistan that can make sure we never again establish a safe haven for the Taliban or for al-Qaida.

MR. SESNO: Secretary Clinton, what is the conversation the two of you have about the reliability and stability of the Karzai government and whether you should be negotiating with the Taliban?

SECRETARY CLINTON: Well, Frank, we have, as Leon just stated, a strategy for transition that we are following. And it is based on, frankly, the decision that President Obama made upon taking office that we had lost momentum to the Taliban. When he came into office, the situation that we found was not very promising. And so he did order additional troops. I ordered and fulfilled the more than tripling of the civilians on the ground from 320 to more than 1,125. We put in a lot of effort to try to stabilize and then reverse what we saw as a deteriorating situation.

I think we both believe that we are now at a place where we can begin the transition and do so in a responsible way. Part of that transition is supporting Afghan reconciliation. We have said that for a very long time. I gave a comprehensive speech about our approach in February at the Asia Society in New York. Ambassador Marc Grossman, who is leading our efforts to build a diplomatic framework for this kind of reconciliation effort, is proceeding very vigorously, because we know that there has to be a political resolution alongside the military gains and sacrifice that we have put in alongside the sacrifice and suffering of the Afghan people. But we want this to be, as we say often, Afghan-led and Afghan-owned.

MR. SESNO: But can it be with the Afghan team– regime that you’re working with?

SECRETARY CLINTON: Yes, yes. And as –

MR. SESNO: Do you trust Karzai?

SECRETARY CLINTON: Yes. I mean, look, I deal with leaders all over the world who have their own political dynamics that they’re trying to cope with, which are not always ones that we experience or that we think are necessarily the most important. But they get to call the shots. They’re the ones who are coming out of their culture. They’re trying to implement democracy, often in places where that’s a very foreign concept. It can be a difficult and challenging partnership; there’s no doubt about it. But there is certainly a commitment on the part of the Karzai government to this transition process.

Remember, when we adopted this process that will go through 2014 at the NATO Lisbon Summit, it was in concert with the Karzai government making the same commitment. Now, we’re also discussing what kind of ongoing partnership – diplomatic, development, military – that we will have with Afghanistan. President Karzai made a very important statement just this past week: He is not seeking a third term, which is a very strong signal that there has to be an active dynamic political process to choose his successor.

So look, I’ve dealt with President Karzai now for nearly 10 years. I’m looking at my old chairman of the Senate Armed Services Committee down there, John Warner. I dealt with him as a senator and I have dealt with him as Secretary of State, and you have to listen to him because all too often we come in with our preconceptions about how things are supposed to be, and he says over and over again, you know, I don’t like this or I’m not sure about this. Take the private contractor issue. That went on for a long time because we didn’t quite get what his concerns were.

So it’s not all a one-sided critique here. I think there is – there’s got to be a recognition that we have a dialogue and a partnership and that we both have to work at it.

MR. SESNO: A question on Afghanistan from the floor. The gentleman right there.

QUESTION: Tom Nicholson, International College – Industrial College of the Armed Forces. We’ve mentioned a lot about Iraq and Afghanistan, and it comes to mind our allies and partners in Pakistan are also critical in what’s going on with our efforts there and as a strategic partner going forward. What are your thoughts on how we continue to enhance that relationship, especially given the difficulties we’ve had recently?

SECRETARY CLINTON: Well, let me start by saying we consider our relationship with Pakistan to be of paramount importance. We think it is very much in America’s interests. We think it is in the long-term interest of Pakistan for us to work through what are very difficult problems in that relationship. And this is not anything new. We’ve had a challenging relationship with Pakistan going back decades.

And we’ve been – we’ve kind of been deeply involved with Pakistan, as we were during the ‘80s with the support for the Mujaheddin, the old Charlie Wilson’s war issue. And if you remember the end of Charlie Wilson’s War, the Soviet Union is defeated and Charlie Wilson and others are saying, well, now let’s build schools, let’s work in Afghanistan, let’s support Pakistan. And our political decision was we’re exhausted, we’re done, we accomplished our mission, which was to break the back of the Soviet Union; we’re out of there.

So I think the Pakistanis have a viewpoint that has to be shown some respect: Are you going to be with us or not, because you keep in, you go out? And it is –

MR. SESNO: Well, are they partner or adversary?

SECRETARY CLINTON: Well, they are partners, but they don’t always see the world the way we see the world, and they don’t always cooperate with us on what we think – and I’ll be very blunt about this – is in their interests. I mean, it’s not like we are coming to Pakistan and encouraging them to do things that will be bad for Pakistan, but they often don’t follow what our logic is as we make those cases to them. So it takes a lot of dialogue.

MR. SESNO: Secretary Panetta, let’s talk about Pakistan for a minute. I mean, there was a story that the Pakistanis, our adversary – our allies here, handed over parts of the helicopter that went down in bin Ladin’s compound or gave access to it to the Chinese. Is that true and is that what an ally does?

SECRETARY PANETTA: As the Secretary has said, it’s a – this is a very complicated relationship with Pakistan. (Laughter.)

MR. SESNO: Is that a yes? (Laughter.)

SECRETARY PANETTA: I’ve got to protect my old hat. (Laughter.) I –

MR. SESNO: It’s not a no, though.

SECRETARY PANETTA: Well, I’m not going to comment because it does relate to classified intelligence. But –

MR. SESNO: But are you concerned about this?

SECRETARY PANETTA: — clearly we’re –

MR. SESNO: Are you concerned?

SECRETARY PANETTA: We’re concerned with the relationships that Pakistan has. What makes this complicated is that they have relationships with the Haqqanis, and the Haqqani tribes are going across the border and attacking our forces in Afghanistan, and it’s pretty clear that there’s a relationship there. There’s a relationship with LET, and this is a group that goes into India and threatens attacks there and has conducted attacks there. In addition to that, they don’t provide visas. They – in the relationship there are bumps and grinds to try to work it through.

And yet there is no choice but to maintain a relationship with Pakistan. Why? Because we’re fighting a war there. Because we are fighting al-Qaida there and they do give us some cooperation in that effort, because they do represent an important force in that region, because they do happen to be a nuclear power that has nuclear weapons and we have to be concerned about what happens with those nuclear weapons.

So for all of those reasons, we have got to maintain a relationship with Pakistan. And it’s going to be – it is not – as I said, it is complicated. It’s going to be ups and downs. I mean, the Secretary and I have spent countless hours going to Pakistan, talking with their leaders, trying to get their cooperation.

MR. SESNO: Take us into – let me ask the two of you to take us into a conversation that you might have together in the privacy of several hundred people and cameras. (Laughter.) This war that you talk about is largely conducted with drones. Those drones are deeply resented and complicate your efforts on the diplomatic front. How do you balance that? Isn’t your best asset your worst nightmare?

SECRETARY CLINTON: No, no. Let me take you back to conversations that are not maybe so current but I think relevant. Shortly after I became Secretary of State, we were quite concerned to see the Pakistani Taliban basically taking advantage of what had been an effort by the government in Pakistan to try to create some kind of peace agreement with the Pakistani Taliban and to, in effect, say to them, look, you stay in Swat, which is one of the territories, you stay there and don’t bother us, we won’t bother you. And I was very blunt, both publicly and privately, with my Pakistani interlocutors in saying you can’t make deals with terrorists. I mean, the very people that you think you can either predict or control are, at the end of the day, neither predictable nor controllable.

And I was very pleased when the Pakistanis moved in to Swat and cleaned out a lot of what had become a kind of Pakistani Taliban stronghold. And then they began to take some troops off of their border with India to put more resources into the fight against the Pakistani Taliban.

Now, as Leon says, we have some other targets that we discuss with them – the Haqqanis, for example – and yet it’s been a relatively short period of time, two and a half years, when they have begun to reorient themselves militarily against what is, in our view, an internal threat to them. We were saying this because we think it will undermine the control that the Pakistani Government is able to exercise.

So we have conversations like this all the time, Frank, and I do think that there are certain attitudes or beliefs that the Pakistanis have which are rooted in their own experience, just like we have our own set of such convictions. But I also think that there is a debate going on inside Pakistan about the best way to deal with what is an increasing internal threat.

SECRETARY PANETTA: Let me just add to that. I mean, the reason we’re there is we’re protecting our national security. We’re defending our country. The fact was al-Qaida, which attacked this country on 9/11, the leadership of al-Qaida was there. And so we are going after those who continue to plan to attack this country. They’re terrorists. And the operations that we’ve conducted there have been very effective at undermining al-Qaida and their ability to plan those kinds of attacks.

MR. SESNO: What’s left of them?

SECRETARY PANETTA: But let me make this point. Those terrorists that are there are also a threat to Pakistani national security as well. They attack Pakistanis. They go in to Karachi, they go in to Islamabad, and conduct attacks there that kill Pakistanis. So it is in their interest – it’s in their interest – to go after these terrorists as well. They can’t just pick and choose among terrorists.

MR. SESNO: What’s left of the al-Qaida network?

SECRETARY PANETTA: The al-Qaida network has seriously been weakened. We know that. But they’re still there and we still have to keep the pressure on. Those that are suggesting somehow that this is a good time to pull back are wrong. This is a good time to keep putting the pressure on to make sure that we really do undermine their ability to conduct any kind of attacks on this country.

MR. SESNO: Will they ever be defeated, or was Donald Rumsfeld right and this is just the long war?

SECRETARY PANETTA: You know, we can go after the key leadership of al-Qaida that I think has largely led this effort, and we have seriously weakened them. We certainly took out bin Ladin, which I think seriously weakened their leadership as well, and I think there are additional leaders that we can go after. And by weakening their leadership, we will undermine al-Qaida’s ability to ultimately put together that universal jihad that they’ve always tried to put together in order to conduct attacks on this country.

So the answer to your question is that we have made serious inroads in weakening al-Qaida. There’s more to be done. There are these nodes now in Yemen, in Somalia, and other areas that we have to continue to go after. But I think we are on the path to being – seriously weakening al-Qaida as a threat to this country.

MR. SESNO: Let’s talk about Iraq for a few minutes and then we’ll take a question on that topic from the audience. We’ve seen a terrible string of attacks over the last 24 hours that have claimed, at last count, nearly 90 lives, hundreds injured, leading to grave concerns about the ability of the Iraqi Government to look after its own security. What is happening in that country now? What do you read from this wave of violence?

SECRETARY CLINTON: Well, what I see happening is that there continues to be a terrorist capacity inside Iraq. I don’t know as – at the time I left my office, no one had claimed credit, but we believe that it could very well be al-Qaida in Iraq trying to assert itself.

MR. SESNO: The Sunni extremists.

SECRETARY CLINTON: The Sunni extremists. At the same time, we know that there are Shia extremists who have been also conducting attacks, not quite to the extent of what we saw yesterday, but attacks that have killed Americans and killed Iraqis.

Now, I’m of two minds about this, Frank. I mean, I deplore the loss of life and the ability of these terrorists to continue to operate inside Iraq. I also know that until recently, the trajectory of violence had been going in the right direction, namely down. And we saw that and we were feeling that it was headed in the right direction.

The Iraqis themselves have more capacity than they did have, but they’ve got to exercise it. And we spend a lot of time pushing our friends in the Iraqi Government to make decisions, like naming a defense minister and an interior minister, so that they can be better organized to deal with what are the ongoing threats. And certainly we’re in discussions with them now because they do want to be sure that they have sufficient intelligence and surveillance and reconnaissance capacity, ISR. They want to be sure that they can defend themselves both internally and externally, and that’s a conversation that our ambassador and our commander are having in Baghdad.

MR. SESNO: Has it been worth it, and should we stay?

SECRETARY PANETTA: Well, the bottom line is that we are going to maintain a long-term relationship with Iraq to ensure that they remain stable.

MR. SESNO: Militarily? This is a discussion they’re having internally themselves.

SECRETARY PANETTA: I think we’ll – that’s a discussion that we’ll have with them as to what kind of assistance we’ll continue to provide. But the bottom line is, whether it’s diplomatic, whether it’s military, we’ve got a long-term relationship with Iraq. We’ve invested –

MR. SESNO: So if asked to stay –

SECRETARY PANETTA: We’ve invested a lot of lives there.

MR. SESNO: If asked to stay militarily, we’d stay?

SECRETARY PANETTA: We’ve invested a lot of blood in that country, and regardless of whether you agree or disagree as to how we got into it, the bottom line is that we now have, through a lot of sacrifice, established a relatively stable democracy that’s trying to work together to lead that country. And it happens to be a country that is in a very important region of the world at a time when there’s a lot of other turmoil going on. And it is very important for us to make sure that we get this right.

SECRETARY CLINTON: But Frank, I just want to just append to what Leon said. The President made a commitment that we would be withdrawing our forces from Iraq and that he would follow the timetable that was set in the Bush Administration, which is for our troops to be out at the end of this year.

MR. SESNO: Right.

SECRETARY CLINTON: So that is – that’s a period. That’s the end of that commitment. There is, however, a discussion that the Iraqis are having internally and beginning to have with us about what we would do following that. So I don’t want there to be any confusion about that. I mean, our combat mission in Iraq ends at the end of this year. Our support and training mission, if there is to be such a one, is what the subject of this discussion would be.

MR. SESNO: But don’t these attacks demonstrate that the security situation is still precarious, that if the Iraqi Government were to ask for an ongoing American military presence, it might well be more than mere training, that there is combat that is still taking place?

SECRETARY CLINTON: Well, but we don’t believe that the Iraqis have that on their list of asks. I mean –

MR. SESNO: Do you agree?

SECRETARY PANETTA: Well, I think what they want to do is to, obviously, be able to confront counterterrorism within their own country. And we’ve given them help; we’ve given them training; we’ve given them assistance in that effort. And obviously, that’s something as a country they’re going to have to confront. But their main goal right now is to get the kind of training that will allow them to improve their defense capability and –

MR. SESNO: Let’s turn to the audience for a question on Iraq. Anybody have a question on Iraq? On the aisle right here, if we can bring the mike over here. Do we have a microphone? Right down here. Yes, sir. Stand and tell us who you are and ask a question briefly.

QUESTION: Keith Crane, the Rand Corporation. I’ve been – I was in CPA in 2003 and followed Iraq every since. I just want to ask you, don’t you see it in the U.S. national security interest to actually have all the troops leave by the end of the year, I think, in terms of both the Middle East, Afghanistan, for the Iraqis themselves? I understand what the Secretary Clinton had said in terms of we are leaving, but even to have troops there training there afterwards, don’t you think it’d send a really strong signal that we’re not interested in bases and that we would – are going to leave if we do not have a training mission there as well?

SECRETARY PANETTA: Well, I think – I mean, as the Secretary said and as the President’s made clear, we are leaving by the end of the year. Our combat mission is over. The discussions now are what kind of assistance can we continue to provide with regards to training, with regards to other assistance that is provided. We do this with other countries. We’ve done it with other countries in that region. And I think this would be what I would call a normal relationship with Iraq if we could establish that kind of approach for the future.

SECRETARY CLINTON: Well, that’s why I wanted to be very clear that the combat mission is over and our troops are leaving and they are in the process of literally packing up, and that was what we agreed to. And I agree with you that that is very much in America’s interest to keep that commitment. But what Leon is saying is also important. If a country comes to us within what we would view as a normal diplomatic relationship and says, “My troops need training. They’re not yet what they need to be. I’m going to need continuing help on collecting intelligence, learning how to do it for counterterrorism purposes,” I think it would be irresponsible of us not to listen to what they’re requesting.

And indeed, the Iraqis have not made a formal request, but we have reason to believe that they are certainly discussing it internally. We do that in Kuwait, we do that in Bahrain, we do that in Qatar, we do that in UAE, we do that in Saudi Arabia. So it would be a little bit, I think, unusual for us to say, “No. We will not respond to a responsible request.” What it is, we don’t know yet, and that’s the next stages.

MR. SESNO: But I think the bottom line here is very interesting, and it’s something that the country will respond to, which is that if there is a responsible request, as you put it, a military relationship of some form going forward, not unlike these other countries in the region, in Europe, in much of the world after other conflicts, will be part of the military diplomatic landscape.

SECRETARY PANETTA: Look, Frank, just to – for the record, this is going to be a process of negotiation and there’s going to be discussion. And I think what – the good thing is that the Iraqis indicated a willingness to have that discussion. We will have that discussion and try to deal with it. But as to what ultimately turns out, we’ll have to leave to them.

MR. SESNO: A couple other issues in the time remaining. Syria – is it time for the United States to clearly, emphatically, unequivocally state that President Asad has to go, should step down? There’s been talk that that is going to be forthcoming from the Administration. It has not been yet. Is today the day?

SECRETARY CLINTON: Well, Frank, I’m not a big believer in arbitrary deadlines when you’re trying to manage difficult situations. And what we see happening in Syria is galvanizing international opinion against the Asad regime. And that is a far better landscape for us to be operating in than if it were just the United States, if it were just maybe a few European countries.

Just think of what’s happened in the last two weeks. You’ve had the Arab League reverse position. You’ve had King Abdullah of Saudi Arabia make a very strong statement and the Gulf Coordinating Council also making a strong statement. You had Turkey desperately trying to use its influence, which is considerable within Syria, to convince the Asad regime to quit shelling its own people, withdraw its troops from the cities, return them to barracks, begin a process of real transition. And yesterday, the foreign minister made it clear that the Asad regime is not following through on that.

So I happen to think where we are is where we need to be, where it is a growing international chorus of condemnation. The United States has been instrumental in orchestrating that. And we are pushing for stronger sanctions that we hope will be joined by other countries that have far bigger stakes economically than we do.

MR. SESNO: I get all of that. But you know that your critics are saying leading means being out in front, that you condemn from the White House the heinous acts of the Asad regime, but –

SECRETARY CLINTON: Well, look, we have condemned it, and we will continue to condemn it.

MR. SESNO: So tell him to leave.

SECRETARY CLINTON: Well, I have to say I am a big believer in results over rhetoric, and I think what we’re doing is putting together a very careful set of actions and statements that will make our views very clear, and to have other voices, particularly from the region, as part of that is essential for there to be any impact within Syria. I mean, it’s not news that the United States is not a friend of Syria’s. That is not news to anybody. But it is, I think, important that we send an ambassador back there. I’m very proud of what Ambassador Ford has done, representing the best values of our country. So I think we have done what we needed to do to establish the credibility and, frankly, the universality of the condemnation that may actually make a difference.

MR. SESNO: Secretary Panetta, another place to go to, since the world is such a cheery place these days – (laughter) – Libya. So we find these very interesting developments where we hear of another defection, potentially, from the senior ranks of the Qadhafi government, and yet we also hear that the rebel forces may be having some very serious internal pressures, tensions, and disputes themselves. What is your read on the military campaign in Libya and whether Qadhafi is any closer to being driven out?

SECRETARY PANETTA: Well, I talked with our commanders in the area just within the last few days. And the indication is that yes, there are these concerns about the opposition, but we’ve had concerns about the opposition for a period now. But the fact is the opposition is moving. They’re moving in the west towards Tripoli, towards the coastline, and moving in that direction. The opposition in the east is moving to Brega and moving in the direction of Tripoli as well, that that pressure is having an impact, that the regime forces are weakened. Qadhafi’s forces are weakened, and this latest defection is another example of how weak they’ve gotten.

So I think considering how difficult the situation has been, the fact is the combination of NATO forces there, the combination of what the opposition is doing, the sanctions, the international pressure, the work of the Arab League – all of that has been very helpful in moving this in the right direction. And I think the sense is that Qadhafi’s days are numbered.

MR. SESNO: We’re moving into our final few minutes of the conversation. I’d like to take one last question from the audience, if someone’s got one. If I see a hand – this gentleman here.

QUESTION: Randy Crabtree, Defense Intelligence Agency and a student at Industrial College of the Armed Forces. My question is: Are the messages we’re sending in Libya and Syria really sending a message that the U.S. isn’t prepared to underwrite stability in the world anymore and that we just simply can’t afford it?

SECRETARY CLINTON: No. I don’t think so. I’d see it somewhat differently. I think it’s a message that the United States stands for our values, our interests, and our security, but that we have a very clear view that others need to be taking the same steps to enforce a universal set of values and interests. So I view this somewhat differently than I know some of the perhaps commentary has evidenced.

If you look at Libya, this is a case for strategic patience, and it’s easy to get impatient. But I think when you realize that this started in March, there was no opposition, there were not institutions, there was nothing that – there was no address even for trying to figure out how to help people who were attempting to cast off this brutal dictatorship of 42-plus years. The distance they have travelled in this relatively short period of time, the fact that for the first time we have a NATO-Arab alliance taking action, you’ve got Arab countries who are running strike actions, you’ve got Arab countries who are supporting with advisors the opposition. This is exactly the kind of world that I want to see where it’s not just the United States and everybody is standing on the sidelines while we bear the cost, while we bear the sacrifice, while our men and women lay down their lives for universal values, where we’re finally beginning to say, “Look, we are by all measurements the strongest leader in the world, and we are leading. But part of leading is making sure that you get other people on the field.” And that’s what I think we’re doing.

And similarly, as I told Frank in Syria, it’s not going to be any news if the United States says Asad needs to go. Okay. Fine. What’s next? If Turkey says it, if King Abdullah says it, if other people say it, there is no way the Asad regime can ignore it. We don’t have very much going on with Syria because of a long history of challenging problems with them. So I think this is smart power, and I talk a lot about smart power, where it’s not just brute force, it’s not just unilateralism, it’s being smart enough to say, “You know what? We want a bunch of people singing out of the same hymn book, and we want them singing a song of universal freedom, human rights, democracy, everything that we have stood for and pioneered over 235 years.” That’s what I’m looking for us to be able to achieve.

MR. SESNO: Before we close today, I want to ask you about one other place, and I want to ask you specifically about the kind of coordinated assistance that your two gigantic departments have tried to bring.

SECRETARY CLINTON: Well, he’s gigantic. (Laughter.)

MR. SESNO: Well, some might look at your department and see gigantic, too. But what you see depends upon where you stand, right?

SECRETARY CLINTON: That’s right. We may be small, but there are those of us who love us. (Laughter.)

MR. SESNO: I’m talking about Somalia here – a gut-wrenching, horrible famine, images and suffering that’s brought to American and global homes every night. And some might say this can and should be a model for how these departments respond – how much is humanitarian, how much is military, what the integration and coordination is. Would you talk about that for just a moment?

SECRETARY PANETTA: Actually, that’s a very good example of the kind of close coordination between the two departments in dealing with a real crisis in that area. I mean, the reality is that it’s a very difficult situation in Somalia. You’ve got al-Shabaab, which is a real threat to that area. We’ve got literally thousands upon thousands who are starving right now as well. And so what we’ve been doing – and I’ll just – I mean, on the military side – is we have been working very closely through AFRICOM with the State Department, with the diplomatic sources that are there, with the NGOs to try to make sure that we’re providing whatever assistance we can provide to help in that region. And so –

MR. SESNO: Logistical assistance and other such things.

SECRETARY PANETTA: That’s correct. And so we are working. We’re doing that on a daily basis, and we’ve made clear that any additional assistance we’re prepared to provide. So it’s a very good team approach to dealing with a crisis in that part of the world.

SECRETARY CLINTON: I would just add a few points. The United States was the principal funder of something called FEWS NET, the Famine Early Warning System Network. And when we began seeing signs of a potential famine, we began to pre-position food and material. That gave us the chance to be able to get our equipment and our food into these areas quickly. We’re talking about 12 million people in the Horn of Africa, in an area twice the size of Texas. Ethiopia and Kenya have been responding very generously, given their own situation, and we’ve made progress.

I remember the last time Ethiopia had a famine. I remember those terrible pictures. That affected about 12 million people in Ethiopia. Now it’s down to about five million, which is still an unacceptable number, but shows that we’re trending in the right direction. So the United States has now spent about $580 million in helping these people who are starving and particularly trying to help women and children who are the most at risk.

At the same time, the United States has supported the African Union mission in Somalia, the so-called AMISOM. And we have been making progress in driving back al-Shabaab out of Mogadishu. Very brave troops from Uganda, Burundi, and other places are working with the Transitional Federal Government in Mogadishu. And as you know, al-Shabaab left Mogadishu. Unfortunately, they are still posing a very real threat and obstacle in south central Somalia to our getting food into that area. But we’re making some progress. I say all that because as you look at just the Horn of Africa, you can see the complexity of what we’re dealing with and to try to sort out what is the defense role, the diplomatic role, the development role, how do we work with the UN, how do we work with NGOs, how do we work with governments.

And what I have said, Frank, is that stability in Somalia is so much in the interest, first and foremost, in the Somali people’s interest, but also in the region and beyond. And yet the United States is not going to put boots on the ground. We remember what happened with what started as a humanitarian mission that morphed into a military mission that was, unfortunately, the – resulting in the loss of American lives. But what we are going to do is empower Africans themselves, provide all kinds of support to them, and enable them to stand up for themselves. And this is the kind of multi-layered approach that we’re taking in a lot of complex situations now.

MR. SESNO: We’re virtually out of time. I know that each of you would like to have a moment to kind of pull your thoughts together – the appearance of the two of you here is a commentary in and of itself – perhaps Secretary Panetta to talk to those in uniform here and around the world who are watching; Secretary Clinton to talk to American diplomats and those who are serving in this country and around the world who are watching through our embassies, and our public through C-SPAN and other media.

Secretary Panetta.

SECRETARY PANETTA: Well, we – these are challenging times, as we’ve just seen through this discussion alone. We’re involved in two wars, we’re in a NATO mission in Libya, we’re confronting other threats from Iran and North Korea, we continue to be in a war on terrorism, we’re fighting a concern about cyber attacks – increasing cyber attacks here, and we have rising powers – nations like China, India and Brazil, not to mention Russia – that we have to continue to look at in terms of their role in providing stability in the world. And we’re facing resource constrictions, budget constrictions now.

As I said, I don’t think we have to choose between our national security and fiscal responsibility, but we are a nation that has a special role in the world, a special role because of our military power, a special role because we’re a diplomatic power, but more importantly, a special role because of our values and our freedoms. The key thing that goes to the heart of our strength is the willingness of men and women to put their lives on the line to help defend this country. And I think we need to learn a lesson from what they do, that the leadership of this country needs to be inspired by the sacrifice that’s being made by men and women on the front line and hopefully exercise the kind of leadership that will ensure that this country remains free and strong.

SECRETARY CLINTON: And I think both Leon and I carry that responsibility very seriously because we understand what this country means. We’re both beneficiaries of the generations that came before that gave us our freedom, that gave us the opportunities that we’ve been able to enjoy. And I want to see that continue. I’m very proud to be the Secretary of State of the United States of America even during a period that is quite challenging, and there is no guidebook written for it. And in looking back at history, I’ve tried to take some lessons from other points when these challenges also presented themselves.

And one of my favorite predecessors is George Marshall, who held both Leon’s position and my position, most uniquely in our history. And at the end of World War II, President Truman and George Marshall looked around the world and said, “You know what’s in America’s long-term interests? Rebuilding our enemies, creating stable democracies, creating free-market economies.” And what did they do? Well, they said to people like my father, who had spent five years in the Navy, they said, “Look, we know all you want to do is go home, raise a family, start your business, make some money, have a normal life. Guess what? We’re going to continue to tax you to rebuild places like Germany.” And it was a hard sell. It didn’t happen automatically. Truman, Marshall, and others went across this country making that case, and we invested in those dollars — $13 billion in four years, which would be about $150 billion in our own currency right now. And we helped to make the world stable and safe and open for all the post-war decades.

We have an opportunity right now in the Middle East and North Africa that I’m not sure we’re going to be able to meet because we don’t have the resources to invest in the new democracies in Egypt and Tunisia, to help the transition in Libya, to see what happens in Syria, and so much else. And the problems that Leon mentioned, the rising powers we hope are peaceful and successful, but we’ve got to be competitive. We can’t just hope. We have to work, and we have to make a strong case for the continuing leadership of the United States. So it’s my hope that as we deal with these very real and pressing budget problems, we don’t know the cost of everything and the value of nothing. Budget documents are value statements – who we are as a people, what we stand for, what investments we’re making in the future. Whether we will continue to be strong and be able to project American power is up for grabs. And we’re going to make the best case that we can that American power is a power for the good, that it has helped to liberate hundreds of millions of people around the world, that it has helped to enhance the opportunities for people and to give young girls and boys the chance to live up to their own God-given potential. And we need to make sure we continue to do that. And I think you’ll be hearing Leon and I making that case, and we hope that it will find a ready audience in the Congress as these negotiations resume.

MR. SESNO: A ready audience in the Congress, and I hope a receptive and listening audience in the public, because the public needs to be part of this conversation, needs to understand what’s at stake, needs to have an opportunity to ask the tough questions and get straight answers from you and others. So as this dialogue unfolds, this is of immense importance to the country.

Admiral Rondeau, thank you very much: Senator Warner; Congresswoman Harman; to the men and women in uniform and who are serving the country here and around the world; to those in our Foreign Service and Diplomatic Corps; and most importantly, to Secretary Panetta and Secretary Clinton, thank you so much for a fascinating and insightful conversation today.

SECRETARY CLINTON: Thank you, Frank.

SECRETARY PANETTA: Thank you, Frank.


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