there remain many concerns about iran's to ship goods through countries with weak implementation of sanctions or trade controls commonly called transit concern." i guess the basic question there, and i know you may have to elaborate it in writing, but anything you can say to urge china to do what it should do about this elicit transfer? >> it's one of our highest priorities and we are working with the chinese. they have made some progress. they have eliminated some of the companies that were engaging in that trade, but they have not done everything that we would like to see them do. so i will get you more details. some of that will have to come in a classified section, but i will respond to that. >> thanks very much. >> senator rubio?

>> thank you. good afternoon. how are you? a few months ago, i had the unique opportunity to travel to libya in the aftermath of that transiti transition. i don't have a point of reference having never been there before, but it was startling to watch pro-american graffiti on the walls and people walking up to the streets and thanking america. they knew who was with them. i hope that will pay dividends into the future. we're several months into that transition. my question is two part. number one, how is that going in terms of the money we are spending and how the budget anticipates our ongoing involvement? and the second question is that there will be a transition similar to that in syria and what lessons are we learned or are learning that from the libyan experience that as far as what role we could play particularly in things in making sure the sophisticated weapons

don't fall into the wrong hands. how is the transition going as far as our role is concerned and what lessons are we taking from that that could be applied to a syrian transition hopefully very soon. >> senator, thank you for that visit. i remember very well getting briefed about it. and you're right. i think the united states has a very important opportunity from libya through tunisia. if we do what we need to do in those countries, we can really help them move towards sustainable democracy and produce results for people. libya is more challenging because gadhafi destroyed all institutions. they don't have institutions that they can remove people from and fill people with because it was, you know, such a

personality cult. i would suggest he meet with this committee and explain what he is doing and what his government is doing. they have cooperated with us ongoing after the man pads. we have implemented a plan that we worked through with them, and we are also working with them to fulfill their signing of the conventional weapons and technical arrangement. so they have been very cooperative. we know they face problems in combining all of the militias into a coherent, organized military presence. we are certainly supporting them

in their efforts to do so. i think that we've got a chance here to really respond to their very positive attitude towards the united states. this is something that can, you know, bring dividends in not only how they develop, but in our own standing and leadership in the region. reintegrating these militia members into civilian life and security services is the biggest challenge. they are getting their economy up and going. we're working with them on trying to help with their wounded warriors, something that, i know, is important to several members of the senate. the people in libya seem still to be quite optimistic about how things are going. but, you know, it's like starting from scratch. they really are working as hard as they can. i think it's in our interest to support them.

with respect to syria, it's a much more difficult and complicated set of circumstances. i recently returned from a meeting where about 70 countries and organizations were present to try to plot a way forward on syria. the potential of supporting the political transition, the humanitarian assistance that they need, ratcheting up pressure, the eu just adopted tougher sanctions yesterday, is what we're all working on. as you know, there's a big debate about whether there is a feasible way of trying to help the people who are under assault by the assad regime defend themselves. so this is at an early stage and there's a lot of good work being done, but there's no plan yet that we can point to.

>> thank you. and my last question is involving pep far, which as you know, is incredible bipartisan support here. i was pleased to see earlier this year an increased support. how does the current budget projections, which i think has some level of reduction, you might know the answer, but does that skill keep us on track of the goal of putting 6 million victims on treatment? does it keep us on that trajectory? >> it does. and i would welcome the opportunity to provide you with more specific information, but i just wanted briefly to say that we have brought down the cost of the drugs dramatically. we have also leveraged american support for the global fund to do the same. so i am confident we're on the track to bringing down the

number of infections and bringing up the number of people on treatment. and as you referenced, senator, we do have a chance to have an aids-free generation because the evidence is compelling that treating people very early helps to prevent aids. and the requests that we have given to you will give us the maximum impact in our investment in fighting hiv aids. but i will give you details on it because this has had bipartisan support. this was a really historic program started under the bush administration. begun by president bush, fully supported on a bipartisan basis. it buys us so much good will. if you go to africa, it's one of the reasons why people have a positive view of the united states.

so we think we're on track, but i'll give you additional information on that. >> thank you, senator rubio. >> thank you, mr. chairman. secretary clinton, i have to apologize for missing your opening remarks. i was priding over the senate at the time. let me begin by expressing my agreement with your words of caution about the syrian situation. it's enormously complex. and i think it's right to proceed carefully. one of the more clarifying moments of my life was when i was a journalist in beirut in 1983. you remember how complicated that was and in the middle of a complicated fire fight. a marine said never get involved in a five-sided argument. i would like to ask you a couple questions with respect to this

region. the first is i'm interested in learning more about this middle east and north africa incentive fund. it's in the budget request for that fund. and that comes on top of other programs, as you know. $2 billion for the opec and a billion in debt swaps to egypt. i'm just curious to learn from you what particular ways you see that it fund as working. >> this fund idea came out of two experiences, senator. one experience about what happened this past year when we were constantly trying to carve out money to respond to the emerging needs in tunisia, egypt, and libya.

and how we could make sure we were demonstrating leadership, whether it was humanitarian leadership or in the case of trying to create enterprise funds, debt swaps, the kinds of things that would send a clear message to these new arab transformations that we were on their side. the second source of experience is what we did at the fall of the soviet union. back in 1989, for example, we had support for democracy in eastern europe where we provided assistance for hungry in poland at a $1 billion fund level. it gave us flexibility. we could be agile about it. so what we're asking here is to give us some of that flexibility. we would obviously come back to the congress and notify the congress. we would look at projects based on rigorous analysis as to what could work, helping the

democratic transformations. i just came back from tunisia and here's an islamist government that is saying all the right things on human rights, women's rights, economic reform. they have a huge budget gap by their standards is a billion dollars. that's a huge budget gap. they have a very well-thought out plan about how to reform their economy, open it up, but they have to get some help from where they are to where they are headed. and just basically said what can the united states do for us? and can you help us then leverage what you can do with other countries? that's the kind of request that we want to respond to because it's in our interest to do so. so the fund would compliment existing programs, but it would give us flexibility to look and be as smart as possible. >> thank you. we have about $12 billion in this budget request going to iraq, afghanistan, and pakistan.

at least by our staff's account, $4.8 billion into iraq, $2.8 billion for diplomatic funds, $4.6 billion into afghanistan, and $2.4 billion into pakistan, which actually reflects an increase in funding for pakistan military as compared to last year. the first question i would have on this goes to some correspondence that we initiated last year expressing concern about how pakistan is expanding their nuclear program even as our assistance programs have continued over these years. and wanting to know whether we have a clear way -- have a firewall in the moneys that are going into pakistan so that they don't directly or indirectly assistance in expansion in their

nuclear program. >> we certainly have constructed one. i think, you know, the fair question is even with a firewall, if you provide aid for other purposes, does that permit the government then to divert funds that should be spent for health, education, energy, et cetera, to that program. it remains a serious concern of mine, senator. you know, part of our ongoing and very tough dialogue with pakistan is around the reform they need to make for their own people. they have invested the great bulk of their revenues into their military establishment, including their nuclear program to the great cost of, you know, providing basic education, health care, electricity, the kinds of things that would demonstrate to the people of pakistan they had a government that, number one, cared about

them and number two, produced for them. so i can answer the direct question, yes, we have a firewall, be that isn't the end of the dialogue, as you know very well. and we're going to keep pressing hard to make sure the imf and the world bank and we and others are working toward the kind of reforms that are going to stabilize pakistan for the long-term. >> well, i hope we can continue to focus on that. we may have some more dialogue. i had a number of discussions on this subject and it's something that i think we should really put one of our highest security priorities. and i understand how that could be taken in a different way from the pakistan side, but you can't not look at the way that they have expanded their nuclear program and, you know, not want to try to figure out if we are indirectly assisting that. i'm running out of time, so i'm

just going to say here that i hope we can find the right kind of offramps in terms of the amount of money that we are spending in these transitional occupations and contingency operations like we have in iraq and afghanistan for the good of our own country and the good of our own budget. but in a way that doesn't destabilize the region and again, i apologize for not being here in the beginning. >> senator, on the last question on offramps, we are very committed to that. and i would like to have our team come and brief you. and if you have any ideas about that, i certainly would welcome them. and i also want to publically thank you for the great preliminary groundwork you did with respect to burma. it made a big difference. >> thank you very much. and i look forward to that meeting with your people. thank you. >> thank you, senator webb. senator demint?

>> thank you, mr. chairman. secretary clinton, thank you for the way you have represented us around the world and for being here today. i certainly agree with you that american power is a stabilizing force around the world. and i'm sure you'll agree with me that any perception of american weakness is a destabilizing force around the wor world. we are overextended here at home and maybe tires of intervention that our determination to continue to be a stabilizing force is in question. as i look at your budget and budgets throughout the federal government now, i have to look at it not so much as i once did as what we want to do or what we should do, but we are financially able to do given the fact that probably half of the money that we'll be spending

through the state department is either borrowed or printed money. so we have to make that money work for us. and i agree with your priority certainly of facilitating and expediting international business travel, trade, energy supplies, are key to americans' interest. and i do question, and i guess looking at history, our attempts to let's say buy friends in lots of parts of the world have not appeared as successful. it does seem that countries we have spent decades supporting are willing to turn on us relatively quickly. so i am very concerned at how we spend our money, particularly the fact that we don't have enough to do the things we need to do domestically. so i have a number of questions about the budget, but i'll just turn to one of them because maybe it will shed some light on others. this in the context of our money

meaning something. as you know, last year the u.s. pulled its fund for unesko. when the organization decided to grant membership to palestine. they have not changed their position on palestine, but the administration is now requesting $78 million and a waiver from congress in order to fund it. so i would like you to explain why we are changes, if we are, previous policy and asking for a waiver of u.s. laws instead of insisting that they comply with really u.n. agreements about palestine and that's been going on for decades. >> well, senator, thank you. our position is absolutely clear. there cannot be any premature

recognition of palestinians in any international body because that's not the way to bring about a lasting peace through a negotiation over a two-state solution, and we believed, as we said at the time, that palestinian membership was premature. we continue to make that clear. we tell everyone that we are against it. and that we have legislation that requires us to withdraw. now the state department does believe that some benefits accrued to the united states in membership in these organizations. as was pointed out in my earlier hearing before the senate foreign ops subcommittee of the appropriations committee, israel remains a member of unesco.

but there are a number of areas where their action is helpful to the clr instructions from our legislation, but we still think it's in america's interest to do things like education programs, stand up for the freedom of press and expression. so the waiver would give us the opportunity to evaluate specific circumstances, and it would also give us the chance to react if by some unforseen circumstance some of the major u.n. organizations like the world healthinternational atomic ener

agency headed to extend membership. those are organizations that we really have a big stake in. so the policy is one we agree with. we obviously follow the legislation, but as we have done in many situations over the years, providing some national security waiver would allow us to make case by case decisions. >> aren't you afraid that this is going to send a signal to the united nations to the whole world that our threats don't mean anything? we warn them not to take this action. you warned them personally. and for us, less than a year later, for us to come back and say never mind we're going to fund you again, it seems like we're telling the world our words don't mean anything. >> well, you know, i think, senator, that all of these

issues that we're confronted with have different, you know, different factors. certainly, we have made it abundantly clear that we would stand in the way at the security council to any attempt to try to provide a shortcut to the palestinians. that's the real issue, to me, is that they will never be a member of the united nations unless they negotiate a solution with israel. we do worry that there are a lot of initiatives that are undertaken by these organizations that directly help israel, directly contribute to the potential for negotiations, and then there are other actions that are very much in the united states' interest. if there were some new flu virus that arose out of somewhere in the world that was killing people on the way to the united states, working with the world

health organization would be in the interest of, you know, our people. so i agree with you that we have taken a stand. it is based in our law. but we can't predict the future, and i think some flexibility that would be only exercised very prudently might be worthwhile considering. >> thank you. and thanks again for your service. >> thank you, sir. >> thank you shaheen? >> i want to echo my colleague's thanks for all of your effective and hard working service for our country around the world. i would also like to echo what you had to say about the role of our embassies around the world in promoting american trade and business interests. my office had the opportunity to help organize a trade mission to india. the business people who went on

that mission would not have the same opportunities to do future business without the support from our embassy in india. so thank you very much for that effort. as i look at the top five recipients of u.s. foreign assistan assistance, number two is afghanistan, which has been in the headlines in the last several weeks because of concerns about trust between the united states and afghanistan. certainly on the military side, there have been concerns raised about whether our strategy of being able to turn over security to the afghan forces has been an effective one. and i wonder if you can talk about what you're seeing on the economic foreign assistance side and whether you see those same

kinds of strains and what concerns you have about how our efforts there are working. >> senator, thank you for the kind words about the work on the embassy. i will remember how difficult it was for you having planned such an excellent trip and then being kept, because of senate business, unable to go. but that is what we like to do to try to promote that kind of interaction and we think it pays off. with respect to afghanistan, you know, we do see progress on the civilian side in terms of what are our investments and what our partners have brought. there's still a long way to go, but if you look at health indicators, maternal mortality has dropped significantly in

afghanistan and that could not have been possible without investments on the part of u.s. and others, but also a real commitment on the part of afghans themselves. you know, education, energy, infrastructure. so we do see progress, but i hasten to add we see a lot of instability and we see a very difficult road ahead for afghanistan. you know, the transition that is agreed to to have the end of combat missions and troops in 2014 is one that we're working to try to support because like we saw in iraq when 2014 comes and troops leave, the civilians in the united states and other countries will be there. and we'll be interacting with the government, working with

businesses and citizen groups. so we are intent to do everything we can to strengthen those parts of the equation. it's a difficult environment, but i think if you, as i did recently, talk to hundreds of our civilians who are serving across afghanistan and ask them what they were doing on rule of law, on women's empowerment and so much else, they are proud of what they are doing. they feel like they are making a difference. so we have to protect them and we have to enable them to continue to do what they need to do and to be prepared with whatever the right sided mission is for our relationship after 2014. >> thank you. as you know, we have a serious situation in egypt. it's also been in the headlines as a number of very effective

ngos. their employees have been arrested. their records have been taken. i wonder if you could speak both to the situation there and what we think the prospects are for an effective resolution that releases those americans who are being held and allow those ngos to continue to do their work or not. but also speak to it in the context of the effort we have spent in egypt over the years in terms of providing foreign assistance, and again it's in the top five of those countries receiving foreign assistance, and how we explain to the american public about the effectiveness of those foreign assistance and what they are currently seeing being expressed by egyptians in the news today. >> well, first, as you know,

senator, the great majority of our foreign assistance over the last three decades has been to the egyptian military. and it did create a very positive working relationship that was certainly to the benefit of the camp david accords enforcement and the peace treaty between egypt and israel and also to the united states. and it helped greatly in avoiding what we're now seeing in syria when the egyptian revolution began. long ties between american and egyptian officers played an instrumental role in encourage canning the egyptian military not to intervene and cause a great blood bath in the streets of egypt. with respect to our ngos, we think they have been