verything can be done in such a virtual way that you can really be in the hardware business even if you're one person. and we found some great example of a couple of art teachers making products just for fun. the risk, though, is because there is no head to this monster, it is one of the big problems we're already seeing is concerns about privacy and security. >> yeah. >> which is no surprise. so, you know, a lot of the folks are going into the business of internet of things of you know, sort of smart devices don't have a lot of history, may have no history may literally be start-ups. so they don't understand concepts like privacy by design. they don't think about encryption, don't really think about what's the risk case here? and not so much even the damage, but the bad pr that it causes for everybody when somebody hacks the smart baby monitor and starts talking to somebody else's kid, which is so creepy that people start to step back and say, oh well maybe there

should be some central authority here defining the standards before we go too much further. it's clearly not the way things happen in the united states. it doesn't matter if that's what you want or not. but it is one, i think one of the downsides to our open-ended kind of permissionless innovation culture. >> it's interesting. you mentioned sort of the data sets that are being built and whether it's controlled. one of the things that sort of we're seeing is there's all this silo data being built up by multiple different players that isn't talking to each other. and in fact, there's a little exercise over the last few months, i extracted all the data i could from every single digital service i use. i wanted to see who had what on me. i went to google, to facebook, you know, to fitbit, to all of these sources and pulled the data. and the reality is what you realize when you do that is well, one there's an unparalleled amount of information being captured, you know, for instance i learned

from google that my average altitude last year was 602 feet. so good to know my average altitude. well, it's quite a factoid they don't necessarily publish. i'm just struck by kind of the silo data. and i suppose what i'm intrigued by is you can look at that as, you know, all of the -- all of the security threats, the trust issues, the privacy. what's the opportunity of that data being connected? and where is that going to lead? and how will that data be brought together. a really example, photos and videos, and if any of you are like me you got your photos stored in a variety of places and video. you've got your fitness data and other date sets. think about that narrative if it was brought together about telling a story about what you did last year.

i'm just fascinated by how does that data set get harnessed in the future? how does it get combined? how does it improve our life, entertain us, inform us, and, indeed, maybe in the business, certainly in the business world, business outcomes, we're in this interesting period of time where things aren't really talking to each other, we're all using, creating this proliferation of data. it's yet to really be harnessed. i think one of the brilliant things though is it's all sitting in the clouds. when technology finally catches up, my 40,000 photos that sit on the icloud or in googler. >> we moved to predictive engines. we use a great job of looking in the past there's no reason today

that some of fitness devices couldn't also look at my calendar, which is digital. it connects with this inner enjoyment that we have. i didn't like the beach, and these recommendation engines are saying i should check out these beaches because of the photos they've been able to pull through.

hesitant to be too over the top with how much they can tell them. they don't bother to tell you the average altitude it is. they don't necessarily want to freak you out. but when that becomes a useful data source a data bite, to inform and to predict something that you might be interested in. and then i think, that's where you start to really see it. >> yeah. and how you drive usefulness out of it. i have -- i've been using the tile app, that little tile that you attach to your keys. and, you know, it's tracking my location. and, you know, am i fully aware this small start-up has all this location data? well, i am. but it's also the reason that when i was at a concert and parked my car in a place i completely forgot, it was able to guide me in the rain and dark

back to where my car was. and so i'm happy to have that tradeoff of them knowing my location when events like that happen that are you know, remarkable when they occur. >> so you're both talking about kind of this use of the big data for sort of personal enlightenment. but then of course, there's also the collective enlightenment. i was hearing a story on the radio this morning about the genetic testing service. and this is where you take a swab of your saliva and they decode interesting parts of your dna. and they've already, you know in a short time built up a substantial database of individual dna samples. they're now with the permission of their members they've sort of sent a data set of 5,000 sets of this information to pfizer to use in research on, you know future lupis treatments and drugs.

a lot of people abstract it and then, you know, use that for something completely different than what it may have been originally collected for. >> of course, again, as soon as you start talking about either of those uses, sometimes the creepy factor, you know, sending data to the drug companies, that sounds awful and then you think well, okay one, they have permission, two, it's for research, three it may improve health outcomes. you have to start making tradeoffs, as you were saying. and sometimes they're implicit and sometimes explicit. we're going to have to make a lot more of them as this data, as these data sets start to become connected or connectible. >> yeah. >> and we see these possibilities and we realize, okay, the good news is x, the bad news is, y -- >> it's interesting, an incremental set of jumps around the personal data. one of the things i just find amazing over the last couple of years, three years or so.

there's been lots of talk about when we were going to use the cloud as our golden copy for our data. and, you know, it's been talked and, you know internet space, technology space for years. if any of you bought a new iphone and when you bought your new iphone and had your old iphone and you wiped your old iphone and then you connected your new iphone to icloud and all your photos got downloaded to your phone. most people did that, most people didn't through itunes. and your phone became secondary to your golden copy that was sitting in the cloud. and i think, i think that's happened and, you know that flip from stuff being stored locally and all of your personal memories being stored locally to now the golden copy being in the cloud is something that's happened to us.

and most people don't realize that massive shift occurred. but i think there are these incremental jumps that are happening. and, and, you know i think back to one of the earlier comments. each one of those might not seem that big. but my god, it takes you so far. there was -- in the golden globes won for "boyhood" this amazing film where he shot it three days every year for the last 12 years. and one of the things he did it was a great interview with the economist later. and he made sure that in every shot they did, every shoot they did each year, they included technology of the day in the shots so you could see the advance that occurred. because he was insightful enough to understand that all of the they thinks that are going to change, one of the things that would impress upon people was the change in technology. and indeed, that's what you see.

every 12 years, the technology that was being used in each one of those years of the movie was remarkable. and so i think it's that -- those incremental jumps. >> phones get smaller and smaller, start getting bigger and bigger, smaller and smaller. >> it's also fascinating how preferences all change in a short space of time. you know, you'll know this shawn, much more qualified to talk about this than i am. but, you know, just that change in smartphones. went all from having small smartphones, thinking that was the norm to within two years small smartphones feel weird if you want an iphone 6 plus and holding the iphone 5, you think this is a toy device. and so i think change can happen. behavioral change can happen very fast. that's why i'm bullish on the apple watch and wearables generally. we'll all shift fairly rapidly. >> and i think that's the experiment that's taking place now. it's no longer this technological question about if but it's a, is it technologically meaningful?

when i look at something like the apple watch or really any does the internet make sense on the wrist? and if so what is the use case scenarios. one is payments. payments make a lot of sense on the wrist. we're going to empower payments on the wrist. but if at the fundamental level, that's the question we're asking everywhere. does the internet make sense in your vehicle? does the internet make sense here, make sense there? that's the question we're going to be asking for the next three to five years. and then you start to say does data elsewhere make the internet in that yoga mat a better experience? and then you start to tie those data streams together. so if i can take some information here and influence this decision here or this experience. and that to me is the ultimate test for all of these things. something happens in the physical world we digitize it we connect it, we sensorize it.

and that's the easy part now. the real question is do we close that feedback loop and get something to then change back in the physical world? and this analog state? so if it's a fitness device, now digitalized the level of fitness, the level of activity, the steps. did it cause me to eat differently? sleep differently? to do different things change my behavior? if it doesn't, that's where things really start to unwind. and i think that's some of what will start to set in. or we go you know the use case scenario isn't that rich and i'm going to keep my analog whatever. you know my analog yoga mat. because knowing i have payments on my wrist didn't influence it. whatever it is. >> it's interesting. but with technology prices collapsing so fast do you actually even need to make the decision about whether you digitize or not? is it really a question of everything's going to be digital and it's a question of whether it's on or off?

>> well, i think -- >> like the yoga mat example, you know, are we going to get to the point where these sensors, we're already getting to that point where they're selling expensive. you know maybe they can draw power from, you know, your emotion. it's going to be implicit. in most products over a certain value. >> so i think yes, but i think the bigger question is does it provide a meaningful experience for the user? if it doesn't provide a meaningful use case scenario, it doesn't matter if it's digital, connected, sensorized because it doesn't really change what's happening. and so i think you already see that in some states of the world. and, you know, if you look at the way we greet each other. we still do that in a very analog way. it's a very efficient way. and digitalization hasn't really impacted that yet. you know, and so just because digital can be, doesn't mean it will be. >> but to me, the secondary

effects can be and often are even more dramatic and more important from an economic standpoint than the questions you're asking here. okay, is this valuable for me? but even more importantly, as, you know, you look at the whole range now of health and fitness related iot devices and all the different types of biometrics being tracked. and you start to kind of, again, imagine a world as you do. if you put all those things together and start to collect that information in a standardized way. okay, it tells you a bunch of stuff about yourself and changes your behavior and your nutrition and exercise and so on. i'm not interested in that. i'm more interested in what affect does that have on the health care industry? you know we have, you know, sort of western -- we have 100 plus years of a model, where there's a professional class of doctors and health care professionals and the only ones with the secret information and the ability to tell you the

blood pressure glucose level oxygen level. and that's sometimes for better or for worse has been structured. well, now suddenly as an accidental consequence of all of this cheap technology, you can imagine pretty soon a world in which every patient has that information about themselves. they're getting feedback, changing the behavior as a result of that. the ones that can catch the incumbents by surprise in an exciting way, depending on which side of the equation you're looking at. >> if nothing else, it changes the dialogue. it changes the dialogue that we have with the professional services. and ultimately, i think it changes the experience that we have.

so we already see that taking place. if you look at the digitalization of entertainment. you know one thing it did was break apart music. you saw the explosion of single track experiences and other elements. the entire music experience is fundamentally different than it was prior to digitalization. and you can -- >> now it's happening with video. >> yeah, it's happening with video and it's happened with books and you even see the breakdown in books where amazon has kindle singles. something that fits into a smaller space. when i look at the digitalization, the connection, and other spaces it has the ability to really influence the experience we have. we talk about autonomous vehicles at ces. when your vehicle's autonomous, you don't need a steering wheel, seats that face forward. you can do anything you want in that vehicle. you could put beds, you could put couches, a hot tub, you could do -- it's a fundamentally different experience because of

those building blocks. and so you can change everything. and i think if you're in an experience industry, you need to think about how that experience changes once it becomes connected and digitalized. >> especially when it's coming from left field. when it's coming from, you know, people like google or the smartphone manufacturers or all of these other devices that have no intention of disrupting you. you're just their collateral damage. >> i have to ask you know, you're obviously more connected with washington. but regulation we mentioned health, mention driving you know mentioning drones. as you look at all of those regulation plays a massive part in the ability for businesses, maybe not consumers, but for businesses to be able to do some of the -- >> yeah. >> some of the, you know, novel use cases. how do you see that playing out? >> well, this is also a big part of shawn's work, as well.

but i think that when i mentioned before that some industries are affected in a different pace than one of the big determinants of how fast digitalization and other technologies transforms an industry is the degree to which it's already protected in some ways. it's, you know, existing business model, health care's a good example. it's in some ways protected from transformation by you know, vast regulatory space. they complain about it. now it becomes in some ways their protection from change and a weapon. you see this of course very publicly in how the taxi cab companies are responding to things like uber, how the hotel industry is responding to things like air bnb. it may not make sense anymore or much of it, but we can do it a lot differently. that's not the conversation we want to have. the conversation we want to have, yo uv got to stop these guys from working because they don't have to play by those

rules, they can deliver these things at a lower cost because they don't have the cost of regulation. and the regulation becomes kind of the bludgeon with which to slow or change the pace of disruption often for worse, you know, sometimes for better. but in many cases it really becomes the gating factor what we refer to in our book as the bullet time, from the matrix where they can use it to slow down what would otherwise be a much faster disruption. and, shawn i know, you and cea have a lot of thoughts about this because we work closely together on these issues. >> yeah, definitely. and it is setting up a series of hurdles that inhibit the spread of technology. so let's now open the conversation more broadly to q & a. there may or may not be microphones around. two microphones around. so feel free to join our conversation here.

why didn't you just -- is this going to be driven by -- >> what was it? >> water grids? >> so i think it's both. i think they're happening at the same time. and, again, it's the question of where does the internet make the most sense? i think we're at this period where we're moveing into the next phase of the internet. and the example i like to give is in 1995, the home page for the internet is something like a yahoo that is putting additional

information on a single page and you go there and the metrics we're using to measure success is how long are people staying on that single paid? and then with the explosion of websites, we move to something like a search engine like a google. and then with a further explosion of internet properties, we start to move to something like a curated experience. i feel like we're now moving as we go from 2 billion smartphones in the world and 1.7 billion pcs in the world to 50 billion objects, we're moving to the next phase of the internet where we're really re-defining the home page. what's happening on the enterprise side and on the consumer side are both moving in the same direction. but the fundamental question is does the internet make sense in water grids as your example? or in locomotives or in engines and so that's the enterprise side, and ge calls that the industrial internet, cisco calls it the internet of everything.

ultimately, and i think in 15 years, we'll just call it the internet. we don't talk about the mobile web very much anymore. it's just the internet. and i think the same thing will happen with the internet of things. that in 15 or 20 years, it'll just be the internet. >> i think the both are happening, too. but i think there really has been a fundamental shift towards consumers taking the lead. i remember when i first started looking at disruptive technology many years ago the model we had was starts in the military applications, moves to the business applications. and then finally, to the consumer. particularly for computing because it was so expensive. now it's clearly the other direction. because of social media in particular, they can experiment and they can communicate about new stuff, much more effectively than enterprises can. and so they do so. and they become sort of the lab rats for moving the other way. >> i think just the barriers -- everyone has access to the same

technology, but the reality is the barriers to get something in the consumer's hands consumer using it are far lower than getting into an enterprise or indeed, getting into a military application. so i think invariably consumers or end users, you know, are where things hit first. and then, i think also, you know, you mentioned regulation. regulation slows down a lot of commercial applications of certain technologies. so i think we're going to continue to see it consumer led initially and then used by the enterprise. so i think consumer leads. and also you know the buzz, the brands is consumer led, let's be honest. >> next question. >> way in the back, there's a mike. >> good morning. this is for you. when we're speaking about a macro environment with the information and digital.

a conduit of this information and what repositories can we develop off this? and who is going to lead the way in this? >> so i think we have most of the core technologies in place the cloud, the high-speed networks. we now you know we now all talk about 4g. i was at a conference late last year on 5g networks, which will be coming in the next decade. and they're even crazier than the last. those are sort of the key building blocks, obviously, and then the sort of standardized data. who's going to lead? that's a much more interesting question. you can sort of make the case, i think, economically that it could be the providers it could be the network, you know, engineers could be sort of ericksons or could be the verizons, or it could be the information experts that the googles and so on. i think all of those are plausible and probably some combination thereof. >> and i think what ends up

happening in this world of exploding opportunity exploding data exploding technological devices and innovation is that we go through these periods of chaos, and then we try to organize it and then we have this chaos period and then we try to organize it. and you can see that if you just look simply at the web where google tried to organize it and then as it explodes we start to move to other things that try to curate it. and so you have this constant cycle of explosions of information and then cure ration that tries to apply order to that explosion. and so i think you want to look at whichever companies are trying to create order. and that order, that order might look like aggregation, might look like insights and cure ration. but look at the companies that are trying to apply order to the chaos that's unfolding. >> i think it's also, about network effects, as well. who is going to create the

network effect that drives the most value? and locks up locks up certain eco ecosystems? >> yeah, and that's why there's been so much focus on platforms. platform businesses today are trying to create that order to the chaos. next question. >> what new business models do you see emerging? just take, for example, a couple of things that -- ge doesn't sell jet engines anymore, right? they're basically renting the rotation of the rotors. or if you take uber and the driverless car you build a whole new industry. you don't need to own a car anymore. right? assets become services. so do you see emerging now as new business models that are going to result from that? that's question number one. question number two is aren't you guys a little bit afraid of what the ultimate solution could be? because talked about singularity or if you watch these tv shows,

you know, like "person of interest" where there's a master computer that basically directs you to do certain things and you have google kind of doing that already. aren't you worried that at some juncture we are not the cog -- we're not the director we're a cog in some big thing. >> so go back to the first question. what's the real business models? >> so i think you -- i think you hit on a piece of it. which is this idea that capital becomes more productive. so one of the things that we've seen over a long period of time is that we replace labor with capital or we infuse labor with capital. we give our workers pcs. we give them heavy machinery and the next stage of that is that we give them sensors and sensor data. and that's one way that we'll make them more productive. so i look at areas where we'll have large pools of labor and

areas that are highly labor intensive. and you're already starting to see the infusion of capital into their experiences. so i look at like leisure and entertainment, hotels that have crews that go around and clean the rooms. today, they'll ring the doorbell, they'll wait. they'll ring the doorbell again. they'll wait. they'll knock. then they'll eventually open the door and inevitably somebody's still in there and shut the door and move on to the next one. you're starting to see hotels use infrared doorbells so they can tell there's somebody in the room and they become more efficient. you look at uber, air bnb. this is taking capital that was being underutilized and deploying it in a more useful, more productive way. so i think anywhere we have capital that's being underutilized or anywhere we have large labor pool that isn't using a lot of capital are areas that will be disrupted in the next ten years. or if you have -- >> well, i like the second

question. and i don't have any, any science or any sort of empirical evidence for this. but i've always been very optimistic about the likely impact of future technologies. and the way i try to think about it is there's sort of two possible outcomes. and if you put this in star trek terms, you have either you know, the united federation of planets where everybody cooperates and everybody has the ability to achieve their own personal enlightenment and their own sort of personal best or you have the board where everybody is nobody. that it's just one giant collective. and some ways, these are two very different futures that come from the same set of technologies. i've just -- i'm always imagined it would be more like the federation and less like -- >> just on that big question. i think you could look at the negative and, you know all the fear. but i think there are so many exciting problems that need solving.

there's so many, so many big ticket problems to get solved that will be solved over the next few years. the idea thatter our kids will speak to their children and speak about a time when 30,000 people got killed on the roads. that's, you know, there are so many of these really big ticket. >> and i look at the way we toggle between the physical real world and the digital world.

and today that's the mobile bridge bridge. it becomes more pervasive and more seamless, it becomes less intrusive. it'll become a much more natural intuitive experience. i look at the way we talk with computers today. you go back in time, use things like punch cards. things we didn't even understand if you just looked at it, but that computers understood. and over time, we've moved them along this continuum to where it's a much more natural conversation. similar to what we might have with another person. >> i have a point to make. i was at ces last week. what's the ability to get past to really make use of these things? 20 years ago we used to laugh

our parents had a vcr blinking 12:00 all the time, right? today, we have over half the returns of best buy and amazon, the product works, consumer turned it in again. we've got a problem from early adapters to mass market for these consumer products no matter how sophisticated they are, they can't buy, they don't know what to buy, don't know how to use them. how do we get past that adoption curve with a proliferation of all the devices? >> so i think we're moving into an environment where we have what i referred to as fragments in innovation. we've focused thus far on the products that are widely owned, 80, 90% of households. but very few products are actually owned by 80% or 90% of households. only 64% of households actually own their home. and so, i think we're going to start to move into niche markets where the saturation is 40%, 50%, 30%. so we'll start to identify these these you know, i think the

idea is you start with really well-defined discreet problems. and you offer a solution to that and then you start to, over time, pull those together. to create this much more wholistic experience. so you look at what's happening with driverless cars, we're getting there by solving these very well-defined discreet problems. parallel parking okay so you get parallel parking assist. falling asleep while you're driving, lane assist. approaching a vehicle while you have cruise control engaged. adaptive cruise control. all of a sudden, each one of those starts to look like a very discreet autonomous experience. you put them all together, you end one the full autonomous driverless car experience. i think that's what happens. when he start to find these and solve these really well-defined problems that may only be applicable or of interest --

the senate foreign relations committee will come to order. mr. secretary, i know you've been doing a lot of traveling around the world and have a lot of important issues to deal with. and we appreciate very much you coming in today to talk about your budget and your testimony today. and as you know, the purpose of this hearing is to learn more about the state department's fy-2016 budget request. i know that these hearings also become a time, many cases to talk about public policy issues. i think you know there may be some questions about the aumf and other issues that you're dealing with at this time. so we appreciate you answering all of those. one of our top priorities is to complete a state department authorization that helps the department become more efficient and effective within a sustainable budget.

chairman purdue will be taking on that effort. i know we met yesterday with the state department, had a good meeting to launch that. and i think all of us want to make sure that as we're dealing with many crises we're dealing with around the world that the state department is set up in a way to leverage our efforts and to ensure that we're doing on a daily basis everything we can to make sure that we continue to pursue our national interests in so many ways. and that's the purpose of doing that. obviously, the president has sent forth a budget that increases spending $74 billion. and i think all of us understand that's not where we're going to be. i know you're here today to talk about your component of that. but we all know that's not where the budget is going to end up. it's going to be at a greatly reduced number. so we know we have some challenges in front of us. and we appreciate, again you being here for us to not be able to talk with you about those.

state department is also proposing some increases in foreign aid. not just in foreign ops. and yet in many cases there's a difficulty in trying to evaluate the effectiveness of that. again, i think that's one of the important reasons for having an authorization, overseas contingency operations funding still compose about 14% of spending. and at some point, i think we all know we've got to move away from funding to getting things on an enduring budget. and again, that's something through the budget process we're going to attempt to do this year. i do have four things i'd like to highlight. and that is the state department right now has an overreliance on carryover balances. and i think there's a great concern that those carryover balances create a lack of discipline within the department. the budget's misalignment with strategic planning efforts such as a diplomacy and development

review process. those not being linked up in an appropriate way seem to miss an opportunity to make sure that we are aligned properly. we have a massive increase in peace keeping that betrays previous agreements with the united nations on the u.s. share of funding. and we have a failure to reprioritize resources in line with the asia rebalance. been a lot of discussion about that. it's very difficult to see the resources that are being put forth to deal with that. so we look forward to your testimony. i know there'll be numbers of questions, not just about the budget, but other activities that you've been dealing with. we thank you for your service to our country. we thank you for taking time out to be with us today. and with that, i'd like to recognize the distinguished ranking member, senator menendez. >> thank you mr. chairman, secretary, welcome back to the committee. i see you have a big binder there. hopefully it's got all of the good answers we want to hear. as we meet it's a challenging time for states budget and for

the nation. negotiations are continuing with iran even as it perpetuates the war in syria. isil is expanding its territory and sphere of influence in the middle east and north africa. and putin has reneged on his commitments to solve the ukrainian crisis. china is rising, pressing for the own political and territorial advantages. ebola remains a threat due in part to a lack of inadequate medical infrastructure and delivery system. we have many challenges in the world, and i know that the state department is at the forefront of trying to meet those challenges. the fact is that world history has taught us that no matter what the threat or challenge dealing from a position of weakness is always a greater provocation than dealing from a position of strength. so i appreciate your total engagement as evidenced by the fact that in 306 travel days, you've logged over 700,000 miles to 59 countries.

and we'll be looking forward to being able to hear what we have accomplished in some of that travel. i want to take one or two moments to talk about one or two issues as a framework. on iran, i stand second to no one to see my desire of a negotiated solution that rolls back and dismantles the nuclear program. but a deal that allows iran to continue as a nuclear threshold state gives it power -- gives it relief from sanctions, potentially allows it to go from being a threshold to an actual nuclear weapon state is no deal at all. i'm very concerned about the news that is leaking from the negotiations and that this entire deal will hinge on inspection and verification regimes while leaving iran with a vast majority of its nuclear infrastructure. and in a much -- if the facts and we don't know whether they are facts or not, but if

various reports address it in a matter of time, that's far less than anybody would've envisioned. on cuba i think the deal was one-sided. the review has not changed tactics. in fact, it's flaunting its success in the negotiations. last week's congressional -- which didn't include any visits with human rights activist political dissidents or independent journalists were followed by the arrests of more activists across the island. in havana, seven members of the ladies in white were arrested. several dozen more were arrested for accompanying them. prominent civil society leaders as well as independent labor leaders were also arrested. on thestern cuba, over 90 activists from the cuban patriotic union were arrested in santiago. another 13 ladies in white were arrested in santa cruz along. but that's not all. one of the ladies in white was

actually splashed with tar, clearly the regime hasn't changed. and if anything, seems they can do this with impunity notwithstanding our engagement. and finally, on ukraine, the most recent diplomatic efforts seem to have only emboldened putin. there have been hundreds of cease-fire violations and the city has fallen under rebel control. putin's forces now threaten, which could provide a land bridge to crimea and his intentions are clear. on february 9th the president said that providing lethal defensive weapons is one option being considered by his team. i look forward to hearing whether this option is more likely given the failure of -- there's something that the committee in a bipartisan fashion sent to the president signed by the president. i hope that we will help the ukrainians be able to defend themselves. you know sending them night vision goggles and being able to

see your enemy doesn't do much for you. you can't stop them. and that's where we're at right now. i do want to say one very supportive thing in addition to recognizing your most recent comments in ukraine which i applaud. for the past several years, i have complained, cajoled, encouraged pleaded and pushed in every way i know how the u.s. needs to direct additional resources to foreign policy priorities in our own hemisphere. and the budget requests for central america focuses on the right priorities and is a very good start. we need to work with these countries and help create opportunities which in our own national security interest. i look forward to discussing those and other interests with you. and thank you, mr. chairman. >> thank you, senator menendez. and again, we want to thank you for being here. i think you know the drill. your comments will be entered into the record with no option. your full comments if you could keep your comments to about five minutes, i know it's going to be robust questioning. and with that, thank you, again

we look forward to your testimony. >> well, mr. chairman and ranking member menendez and my good former colleagues and i guess, one person i didn't have a chance senator perdue, welcome to this great committee. and i'm delighted to be able to have a chance to share an important dialogue. and i appreciate the comments both of you made. i'm confident that during the questions we'll have a chance to dig into most of the things you raised. but, and i will summarize to try to maximize our time and respect yours. i want to just make it clear

that since leave inging, as chair. and having spent, what 29 years on this committee beginning way over here, even further than my friend friend. i've watched a lot of events unfold in the course of this committee and in the senate. number of wars, major debates. it is interesting for me to see from now serving as secretary the reality the degree to which what we choose to do is really important. and how the congress acts, makes just a gigantic difference to the sense of unity of purpose about our country. and this is about our country. it really shouldn't be about party. the old saying that you know foreign policy concerns and national security interests

should end at the water's edge. and what has come home to me more than anything is the degree to which we in the united states are privileged. and sometimes burdened, with the responsibility of leading. i mean leaving, making things happen. stepping in where others won't, can't. and i will say to you that i believe we legitimately. you may disagree with how we're doing in libya at this particular moment. or you may think something more should have been going on in syria. i'll tell you, i can't think of a time. and i hear this from former colleagues. former secretaries, when we have had to deal with as many explosive transformational moments historically than now. and i -- i just want to respectfully suggest to all of you.

and i will say this at some point, and i'll talk about at length i hope i can get a chance to do so where i can say more about it. but we ask for 1%. 1% of the federal budget 1% of the total budget of the united states of america goes into everything we do abroad. all of our efforts for our citizens, our visas our embassies, counterterrorism our aid, our assistance. everything, 1%. but i absolutely guarantee you that well more than 50% of the history of this era will be written off that 1% and off the things we do or don't choose to do in terms of foreign affairs. and when you look today at the challenge of dash, isis, when you look at the clash of

modernity, with opportunity and culture and youth populations and bad governance, corruption, all the challenges that are out there we've got our work cut out for us. now, we are leading in putting together this precedented coalition. i say unprecedented because this is the first time in anybody's memory that anybody knows about five arab countries sunni engaging in pro active military operations in another country in the region, syria, in order to go after a terrorist organization. and we have five major channels of effort on foreign fighters, humanitarian, on countermessaging, counterfinancing, on the kinetic. all of which are geared to try to win this. and we will win it. i'm confident of that. providing we all make the right choices. we certainly have the tools. in iraq we worked diplomatically to implement the president's policy to make

certain that we didn't take over that effort before there was a transitional government in place. and i'm telling you we spent amazing amount spent an amazing amount of time and hours and good diplomacy to help the iraqis to make their own decisions about their leadership for the future to transition away from maliki to prime minister abadi and a new inclusive inclusive, proactive capable governance. we got as you know, all the chemical weapons out of syria. no small feat, particularly when you consider if we hadn't done that, they would be in the hands of isil today. we have been leading the effort to curb ebola. we took the risk, president obama took the risk of sending 4,000 young american troops to build the infrastructure so we could do that. it was risky at the time we did that because nobody had all of the answers but it worked. and american led an effort to

bring people to the table to help keep this from providing the 1 million people dying that were predicted if we didn't have the response that was provided. the ruble is down 50%. russia's economy is predicted to go into recession this year. there's been a capital flight of $151 billion. you know, they may be able to pursue this short-term goal of stirring the waters of ukraine. fall willing behind in technology and production and a whole lot of other things. the fact is on iran sure it's controversial. may have some risks.

but we are daring to believe that diplomacy may be able to provide a better alternative to ridding iran of the possibility of a nuclear weapon than a war. or than going first to the threats that lead you to confrontation. so we are trying. i can't make a predictions what the outcome will be. but we're leading to try to make that happen with our 5p5 plus 1 partners. in korea, we are working with -- north korea, we're working with the chinese. we've been able to make certain changes i'd rather talk about in a classified session. in afghanistan, we rescued a very complicated election process, negotiated a bsa, got a unified government and now we're working on a transition with the potential even of some talks taking place with the taliban. global trade, we're pursuing two

of the biggest global trade. and the asia rebalance in after, we hosted the summit of african leaders. aids and we have ramped up -- president obama made a deeper commitment. the result is we are on the cusp of perhaps having the first aids-free generation in history in africa. and in china we came through with a historic climate agreement by with both of us can agree to do within our executive powers to lower emissions and begin to prepare an agreement in paris this december and that's leadership because by getting the two of us together and leading in that effort, we have about 45% of the world's emissions at the table agreed to reduce in a way that leads others to the table.

so i had a more prepared comment. these are not the prepared comments and i'll commit them all for the record mr. chairman but there are other policies we need to talk about and i'm prepared to do so. but i just want to make the point to all of you, sequestration, i was here when it happened, i didn't like it they be then and i don't like it now. sequestration is key prooifing the united states, the most powerful planet, and the world's richest nation, it is institutionalizing the notion that congress is either unwilling or capable of making a decision and choices and it is arbitrarily winding up doing things to our budget that historically knocked our gdp down and lost a lot of jobs. not to mention it deprives us about making the decisions what we're going to do to make that 1% or hopefully more have a

greater impact in providing for the security and protecting the interests of our country. so, i plead with all of you to think about how we are going to meet this moment of challenge. we had -- i'll end on this. we had a counterterrorism summit this past week, last week, which really underscored how big a challenge this is. it's a generational challenge. my parents, our parents, many of you generation rose to the challenge of world war ii. we spent the -- then equivalent of about $3.9 trillion. today maybe about $30 trillion. but we rose to the occasion. we did what we had to do to beat back fascism. i think it's a legitimate question to ask whether or not the rule of law the norms of behavior we fought for for all those years since world war ii, that we're going to do our part to uphold them.

and to make it possible for other countries to not be subjected to the fascism and dictatorship and tyranny of a group like isil that rapes young girls and imprisons people women, burns books and destroys schools and deprives people of their liberty, burns pilots, cuts off the heads of journalists and basically declares a caliphate that challenges all of the nations in the middle east and elsewhere and threatens all of us with violence. so, we face a challenge. i hope everybody here will stop and think about all the components of how we respond to that. it's not just kinetic. the new president will be asking you to deal with somebody somewhere. unless we start to think about

how the world joins together to drain the pool of recruits that are readily accessible to people with such a warped and dangerous sense of what life ought to be life. so, it's up to us and that's my message for my opening statement. i look forward to the hearing.

i assume if we only spent 1% on our budget on foreign aid and foreign operations, you would think we need to do that in the most efficient way possible. do you agree with that? >> of course, obviously. >> i think you would support, then, an authorization being put in place. we haven't done one since 2003 actually didn't do one for the entire time you were chairman. you do support that now as head of the state department, is that correct? >> we actually made a run at authorization bill mr. chairman. i would have loved to have passed one. in fact the last authorization bill, i think, was passed, i did it. when senator pell was chairman. and he deputy tiesized me to get an

authorization bill through and we did. i'm delighted to see you take this bull by the horn. we have not seen it since 2002. it elapsed in 2004. and there are -- the reasons of the way the senate came to work that literally made it impossible to do. so, i would love it if you can do it. >> well, let's -- i hear that. and i think that probably we'll spend a lot more quality time if you will with heather and others in the department. i know you're dealing with a lot of other issues. we had a very good meeting yesterday. i do sense you support that. we appreciate that very much. and i am aware of the history regarding some of the complications. certainly that was not meant as a criticism. let's move on to -- i spent the last week in baghdad and inner irbill talking with turkish officials along with ours. you sent request for authorization for use of

military force, the president has. but it's your belief today that the administration has the legal authority to conduct operations against isis with existing authorities, is that correct? >> yes. >> that is correct? >> that we -- we're looking for a separate authority under the ama. >> you believe -- >> we believe we have the testimony under 2001. that's the testimony i gave you in december. and we do believe that. >> one thing people are going to be looking for f you're asking for a separate authorization, i know there's some debate among the committee here as to whether you do or do not have the legal authority, you believe you do, but one of the things that people are going to be looking to is, is there a real commitment by this administration to deal with isis. and i have to tell you, as i

look at the authorization and i visit turkey and understand what's happening in syria i have to ask this question -- do you believe that it is moeshlral, do you belief it's pragmatic to spend a lot of money training and equipping people in far off places to come back into the fight in syria and not protect them from the barrel bombs that assad will be dropping against them? do you believe that's a moral place for us to be in the country and a pragmatic place for us to spend money training people and yet not protect them from the barrel bombs that assad will be dropping on them? >> i think it goes beyond morality, senator. i think it's a matter of practicality, if we're training people. and they have a goal and we're committed to the goal. i think it's important for them to be successful. and i think it's important since

the title 10 program we've now joined into together which is going to train folks partly to go after isil, particularly, it seems to me that if assad were to attack them or somebody attacks them in the course of the time that they're going after isil, that's part of the fight. and so we need to provide that. that -- >> so, our authorization should actually authorize the administration to go against assad when they're doing things that take on the free syrian opposition we're training. >> that's not what i said. assad is an entirely different component of this, which then raises all kinds of challenges with respect to the management of the coalition itself. what i said was, they have to be authorized -- the authorization is such that defending those who are engaged in the fight of isil

is an important part of defeating isil. that's a debate as to how that's implemented that's taking place in the administration right now. the president hasn't made a final decision on that. i think we need to be constitutesing that as the amuf come together. it's important the president has as much leeway as possible within the three years he's asked for to get the job done. now, he's asked for three years. >> on the ground dealing with those we wanted to bring into the coalition in a more serious way, the fact that we are not willing to talk about an air exclusion zone above aleppo or we're not willing to provide air support for free syrian folks that we are training against

isil, by the way. this is what this title 10 program is about makes it appear that we are not serious in this effort. and it makes many of us on this committee concerned about the administration's commitment to this effort. you can understand why that's the case. and i know they're holding back and you know this, they're holding back what they're doing until they find out whether we are committed to doing those things that would actually allow these people to be successful on the ground. and if we're not willing at this front end to say that we're going to protect them after their trained, coming in especially around the aleppo area, which is likely where they will enter, if we're not willing to protect them, it speaks to the fact that the administration really doesn't seem serious about taking isis on as it relates to syria. >> nor let me make it as clear

as i possibly can. this president is absolutely determined to accomplish the goal that he set out, which is to degrade and destroy isis. now, he has begun with a particular focus on iraq because of the fragility of iraq originally, because there is an army that is significantly trained and available, that needs more training. and because there is an urgency an immediate urgency to try to restore iraq in anbar and in the sunni province because of the impact on holding the integrity of the country together and ultimately driving isis out. that's what we believe we'll do. at this point in time we've flown some 2,500 strikes. about half and half, syria and iraq. at least huge numbers of isil top leaders have been taking off

the battlefield. almost 1,000 isil fighters were killed in the course of the kobani fight which you may recall everybody heralded as the test of america's commitment, the test of the war. it was about to fall. and we, on the other hand, upped our strikes and negotiated diplomatically to be able to create a corridor to get the peshmerga to come in and ultimately reinforce the people there and won. and isis had to admit it lost. and it admitted so publicly. so, i think we've demonstrated a powerful commitment. we've already reclaimed -- we is wrong. the iraqis and their coalition folks on the ground have already reclaimed about 30% of the territory that had been held by isil. and isil can no longer move as easily. they can't drive in convoys. they can't communicate the way they were. we've gone after their financing. we had more than 60 countries

here for the counterviolent extremism meeting. we have major initiatives under way to deal with the foreign fighters, the counterfinance, so so forth. so, all i can say to you, every one of those things is a manifestation of the administration's commitment to defeat and destroy isil. now, as you move out of iraq, then there's more to do in syria. we understand, senator, that it's going to take more on the ground and more capacity to do that. as you've seen there's been some discussion of an arab force in the region. there's also discussion going on about how fast we can train up some of our opposition to be on the force. on the ground. and there are additional efforts going on with respect to what weapons, what methodologies may be undertaken. and those are the -- those are the per view of a classified briefing. i can guarantee you no one in the region will have any doubt about our commitment to

defeating isil. >> well, i can guarantee you, and i'm sorry this is taking so long, but i appreciate your full answer but i can guarantee you that today there are concerns. there are concerns about those most majorly needed in this coalition because of the very point that i just mentioned. i think you know that. i know the white house knows that. and i just hope that very soon the white house will not only make statements but make agreements relative to the -- to what i just discussed so that those who are going to be working with us in this fight understand that there is a real commitment and that negotiations about the iraq nuclear deal and other issues are not in some way holding us back from making those commitments. but i thank you for being here and i'll turn it over to senator mendez. >> ten seconds, senator. i really think if we get into a

classified session we can go through more of this. i think you'll have a sense of the upgrading taking place and the pressure that will answer a lot of those questions. i'll be attending a gcc meeting this friday. i think it's friday in london. and we will7tt be discussing all of this with our friends. >> thank you mr. chairman. mr. secretary, based on some recent press reports which i have found on more than one occasion on this issue seems to have more meat than not i often learn more about it through them, i want to share my deep concerns about where we appear to be headed in our negotiations with iran, if those reports are true. the essence that i gleaned from reading various of them is that one variation being discussed with the a irans would place a ten-year regime of strict controls on iran's uranium

enrichment, but if iran complied, the restrictions would be gradually lifted over the final five years. the core idea would be to reward iran for good behavior over the last years of any agreement gradually lifting constraints on both uranium enrichment and easing more economic sanctions, which in essence in my mind doesn't make it a ten-year deal. really makes it a five-year deal if you're going to ease up on the ability of them to pursue enrichment capabilities. can you give us a sense, are those reports accurate? >> mr. chairman i'm absolutely going to answer your question, but i want to -- >> and you're not going to take all my time to do it. >> i promise you unless the chairman might give you an extra minute here. you raised the issue or -- strike that. it was raised by the chairman. i'll come back and won't chew up your time. the answer is the proverbial don't believe what you read and

i'm not going to go into the details of where we are, what we're doing. >> okay. since you're not going to go into the details, would you phantom doing something like that? >> let me make it clear to you, there's -- we're looking for a deal that will prove over the long term that each pathway to a bomb is closed off. there are four pathways. one is through natanz through enrichment. one is through iraq through plutonium production. one is through fordau through enrichment that is now#w5 partly underground. finally, the last is covert. you need inspection to find covert. president obama has made the pledge that iran will not get a nuclear --

>> i've heard that pledge. i believe that's what he means. the question is, for how long, under what set of circumstances is when you let iran ratchet back up and, in essence, give some future president maybe no choices but to pursue a military action and very hard to try to get a global community together again once the sanctions have been released. i get you're not going to give us a specific but i want to raise my sabre with you that i thought, and every time we've talked, we were talking about 20-year time frame. now we're talking about a 10-year time frame if it's true. and with relief in the five latter years of the ten years. if that happens to be in the universe, that's problematic. i just want you to take that back with you because i think -- >> i completely -- >> -- it's really a great problem. >> the only thing i would say to you, senator, first of all, i've told you it's not true. >> okay. >> secondly, i'm not going to go into what is or isn't the situation. >> fine. >> the one thing i would say to everybody on this committee the

bush administration, george w. bush administration, had a policy of no enrichment. and iran in 2003 had 164 centrifuges, with a policy of no enrichment, that would have been for five years, since years they moved up to a place where they now have, perhaps 20,000 centrifuges, 19,000 installed and you know the numbers that may be running. what happened? who did what? where was that administration with respect to the enforcement of the no enrichment policy? so, guess what, they learned how to enrich. they're now enriching. and the question is whether or not one can now create a system where they have a peaceful nuclear program like other people who enrich that is

manageable controllable, verifiable accountable, sufficient they're living under -- >> well, i'm certainly not an advocate of what the bush administration did. i criticized it during its period of time that iran was pursuing this program and that in fact, the world was not responding in the aggressive way that we needed to, which is now -- >> that's where we are. >> at this threshold position. >> i know. >> but i just want to leave with you, because i want to move on to another subject, if the parameters are out there, you said are not true that's fine. could be elements that are not true, could be elements that are. if those are the parameters, that's problematic. let's move to ukraine. putin took crimea, donetsk, while he's paid somewhat of a price and you mentioned it in terms of sanctions the price has not changed his behavior.

the question is under the ukrainian freedom support act, we gave the president significant powers. we supported an effort of yes sanctions but also helping the ukrainians be able to defensively protect themselves. and i would argue change putin's equation where there are consequences beyond economic sanctions to his continuous engagement. he is on a process that he's going to have a land bridge to cry mere yeah. when that happens, for all our talk of not it will be gone. so, the question is is the administration ready to assist the ukrainians in providing them with the wherewithal to defend themselves as the ukrainian freedom support act, passed by a broad bipartisan vote in the congress provides for? >> well, senator that is under active consideration. i think you know that. >> i don't know that, but i'm glad to hear that. >> well, it's under active -- it's been written in "the new

york times" and elsewhere that this discussion is going on. we were in the munich -- >> you just told me not to believe everything i read. so, i don't know when it's good and when it's bad. can you cipher -- >> well, of course it is "the new york times," right? >> well, that's a whole other thing, but in any event. what i wanted to say is the -- i just talked over lunch with the german foreign minister who had just finished meeting in paris with the russian foreign minister ukrainian foreign minister and french foreign minister. they had a discussion of where they are in the implementation of minsk. whether or not they very aggressive breaches of the minsk agreements are now going to be shifted into compliance mode is critical to any decisions made by anybody as to what the next step is. the separatist movement is in

our judgment a de facto extension of the rush military. and that has been exercised in the ways we obviously have objected to. what we have done in our sanctions have had a profound impact. the ruble is down 50%. capital flight is in the total of about $151 billion. the predictions are that russian economy will be in recession this year. there is a significant derek i think they're down 375 -- >> i don't disagree with you. i would also say -- >> the point is -- >> -- continuing to send troops armaments, heavy significant and people across the border. at some point you have to give the ukrainians the wherewithal to defend themselves. >> there are pros and cons on

both sides of that argument, obviously. it's under consideration. and we'll see where we wind up in the next -- -- in short term. >> one final follow-up on ukraine. i know there's a list of individuals, including individuals on the eu and canadian targeted sanctions list as relates to ukraine that do not appear on the american list. the most egregious example in my mind is alexander, head of the russian fsb. he is not on the u.s. list in relation to either ukraine or magnitski but on the eu and canadian list. he was here, as a matter of fact, in the u.s. last week during president obama's cve conference. so, i'm puzzled. could you shed any light on that? >> yeah. we each had different choices about who we thought might be more effective to have a

sanction on and what entity and individuals. so, we both agreed that each would take their steps and that would place pressure on all. and the next step, i think, if we take one in the next days, which is under consideration depending on what unfolds, will bring us into sync. not only will we come into sync there will probably be additional sanctions to boot. >> thank you. senator johnson. >> secretary welcome again. i want to go back to isil. i just want to ask a pretty simple question. what does defeat look like? what does destroy mean? specifically. >> destroy means eliminate their presence on the field of battle and their ability to threaten the united states and other people. >> over what period of time? >> as fast as possible. can't tell what you that will be. most people have predicted it will take a fair amount of time.

>> in iraq or syria -- >> wherever they are. that's what the president has said and that's what his policy is and that's why he asked for no geographical limitation. >> everybody, i think has read the atlantic article by graham wood talking about really what isil is all about. they require territory. does defeat mean denial of territory? >> ultimate -- of course it does. >> so, what number would be left? >> look -- i'm trying to get some sort of sense here. i can't tell you. where there fewer nazis left after world war ii? sure. was the war end and unconditional surrender? yes. but were there nazis around? you bet. will there be members lingering around? probably but they'll suffer the same fate. the point is -- >> but the --

>> the point is as an organization, as an entity, as a viable sort of conglomerated threat to the united states and the west and the rest of the world, it will be destroyed. >> pretty well decimated. do you agree i think most military experts that in order to achieve that decimation that defeat, that destruction, is going to require ground forces? of some type. >> i believe it will require some type of forces on the ground. >> now, if it's not -- >> not ours, but some type. >> so, you've got 30,000, 40,000 members of isil right now. kind of the reports we're hearing is their numbers are growing faster than we're destroying them. they're not being degraded. they may be degraded in some places but growing in others, spreading in other places. how many ground troops do you think it's going to take, realistically, to decimate them, to defeat them? >> well, it's not up to me to prognosticate on the number of ground troops.

that's something that general dempsey and sandy -- >> fair enough. it would be -- >> but one thing i know is it's doable. and there are a number of different ways to do it. and we're looking at exactly what that structure and format may be. there are a number of ways to come at it, by the way, some of which mix kinetic with diplomatic. and, you know, we have to see what happens in the course of the decisions that are made over the course of the next weeks and months as to what shape that approach takes. >> so we have arab states participating in air strikes. have you got commitments of other arab states other than the iraqi security forces and kurdish peshmerga do you have commitments from any other states in terms of ground troops to join that coalition? >> i have personally personally

listened to affirmations of a willingness to do it under the right circumstances or under certain circumstances. i'm not going to call them commitments until they are in a context, but it clearly is a potential under certain circumstances. >> who would lead that ground effort? >> well, these are all the details that have to be worked out. and in order of battle and structure -- >> i understand they're details but is there really -- somebody targeted in terms of arab states, somebody capable of doing it? >> absolutely. >> okay. let me go on to ukraine. president poroshenko can give a very impassioned speech here in front of a joint session of congress where he did say we don't need to provide the ground troops. they'll take care of defeating the rebels but they have to have more than blankets.

i know in discussions with a number of people that one of the reluctance of providing those defensive weaponry is that calculation is if we provide defensive lethal weaponry, they'll just up the ante, is that one of the cons, one the things the administration is concerned about? >> i'm not going to speak to -- i'm not going to articulate the parameters of the debate in terms of what they're concerned or not concerned about, but an argument is certainly made by people that whatever you put in -- nobody -- not even poroshenko who i met with a couple weeks ago, not even he believes they can get enough material that they can win. he believes they might be able to raise the cost and do more damage but there isn't anybody who believes that ukraine with its size of its military and current structure is going to have the ability on its own to win a war against russia.

so, there's an imbalance to start with here. and you have to sort of try to pin that in. it doesn't mean it isn't worth raising the cost. there are plenty of people advocates you want to raise the cost no matter what. >> nothing concern i've heard voiced, and i agree with this, the weaker russia becomes, the moral dangerous they are. is that a calculation you agree with as well? >> not necessarily. it's certainly one of the theories put on the table. it's a calculation you have to analyze and weigh. but it doesn't necessarily have to be true, no. there are elements internally within russia that ultimately could come into play, who knows when and how. an economy by the summer that is still hurting.

could be an economy that some people predict could create internal dissension and problems. there is chatter today about a very isolated putin, with an isolated group of people advocating this and people scared to, you know -- i mean, there are different parameters to this. i'm not going to sit here and analyze it, you know, at this moment except to say there are lots of different considerations. >> a quick budget-related question. i think everybody that has gone to ukraine, eastern europe is dismayed at how effective russian propaganda is. there really is no push back. it's -- we feel disarmed in terms of propaganda war. is that something within your state department budget you're looking to -- >> it is but -- >> you bet it is, but i have to tell you, it is within the constraints that we're operating in. and it is nowhere near what it ought to be.

we are engaged in a major initiative. we're working with the amerotis is paying for and this will be useful for social media to counter some of the propaganda put out by isil itself. but russia has resorted to a level -- you all see it -- it floods the baltic states. it floods poland. it floods the front line states bulgaria, et cetera, et cetera. it has a major impact. we just frankly are not allocating the money to counter the way we ought to be. and we're fully prepared to go out there and undertake this. senator, you members of the juried at the beginning why we use oko, this is one of the reasons. we rely on oko, frankly, because

appropriations aren't on time. so, we need multi-year authority to do multi-year tasks. and we need to get the resources to respond to this kind of thing. about $7 billion in oko and we're putting a fair amount of that into afghanistan, iraq, pakistan and syria, humanitarian assistance, counterterrorism, partnership, countering russian pressure. we have $350 million. so that's how we're bolsterring ukraine, moldova, georgia, to actually go after this. it's not enough. i'm just telling you bluntly. it's not enough. and they're spending hugely on this vast propaganda machine which people believe in the places they get them because there's nothing countering it. according to people in many of those states we're the problem. russia is there defending

russian-speaking people. there's no sense of russian transgression across the border. the people in russia don't even know how many soldiers are dying. this completely hidden from them. we need to be able to counter this and tell the story. >> my point exactly. thank you, mr. secretary. >> thank you. senator cardin. >> thank you, mr. chairman. mr. secretary, always a pleasure to have you before our committee. just on ukraine, one point. some of us have been there we've seen the problems in the country. they've been asking for capacity to defend their own borders. they know that they cannot stand up to the russian military, but they do need the capacity in order to protect their borders from russian incursion. that's why we pass the authorization in this congress. and i would just urge the administration with some urgency

to look at an aid package that will allow the ukrainians greater to -- we cannot believe anything president putin says about his intentions. he's shown by his actions a willingness to counter all the agreements he's entered into. i would urge the administration to be more aggressive in providing the help to the ukrainian people. second point i want to make is that we had a hearing here on trafficking and persons. we'll have a mark up later this week. during that hearing, we had assistant secretary seoul who offered to help us regarding leverage we have in trade negotiations on the tpp to deal with improved labor conditions particularly in countries we're negotiating with that have less

than acceptable rights. i mentioned malaysia, which is a tier 3 country under the t.i.p.p. report and i would urge your personal attention as we get close to niece negotiations, to use that leverage to improve labor conditions on trafficking and also issues on trafficking in the countries we're negotiating with the tpp. the question i want to ask you about is the summit of americas that will be taking place in april. president obama, i understand, intends to participate in it. and there's a lot happening in our hemisphere. one of the initiatives included in the president's budget is aid to three central american countries to try to deal with the crisis we experienced last yaer with the unaccompanied children. we've seen a law, but i think most of us know the conditions are still there and we're likely to see a rise of matters on our border as to whether it gets changes.

my question to you is we can't just continue to layer aid programs. we need to make sure aid programs really are effective. in conversations with some of the leaders in our hemisphere they hope to use summit of opportunity challenges in the region so that the people of our hemisphere have hope in their own countries for economic growth. can you just share with us the role the united states plans to take in summit of americas and how we can help try to provide real opportunities within not just the three central american countries that are targets for immigration, but also dealing with the security issues and dealing with the areas that have been at the root cause of so many children leaving honduras and el salvador. >> absolutely. >> and guatemala.

>> thank you senator cardin very, very much and thank you for your constant vigilance on these kind of critical issues of rights, human rights, and of security and opportunity 37 we are very focused on the summit of americas. i went down to the panamanian president's inauguration. we talked then about the lead-in. we've had any number of conversations since then. the vice president has been engaged in this. we want to make sure there's a civil society component to the discussion there and human rights and we've pushed that. that is has been seniquinon to our willingness to have a presence of cuba or any others there. it's got to be an up-front discussion of these issues. that's number one. number two when i was in mexico last year i took advantage of

that to have a meeting with the three presidents personally honduras guatemala and el salvador and it was at the height of the unaccompanied children problem. we had a very frank discussion in which we talked about the need for enforcement, frankly, for their help to close borders, to prevent people from movering. also in exchange we also had to talk about reducing the incentives for people to want to do that. and they were very frank about that part of it. one of the principle reasons for those departures was the circumstances within which those folks were living. the violence the fear, the narco trafficking, the criminality, the bad governance the corruption all of those pieces. that's why we put this $1 billion request together for you. we're doing it i think by a healthy dose of humility and

wisdom acquired through mistakes in the past. in other words, how you manage that money where it goes, what the support system is underneath it, what the transparency and accountability is with respect to how and where it's spent. we targeted three key areas. security, so we will work with police, we'll work with the judicial system, we'll work with the parental sxed indication and other components of trying to make sure we're reaching the kids in creating the security structure necessary. the second piece is governance itself. >> i would urge on the governance piece which i think it's going to be the most challenging considering the history of corruption et cetera, that there be ways that we can evaluate whether progress is, in fact, being made.

i think we all support safer country and opportunities in the country and governance but we have to have accountability in these programs. we've had many programs in central america and the results have been less than consequential. >> right. you're absolutely correct. i don't disagree with that at all. one of the first conversations i had with rashaw when i came in is how do we improve our development delivery system, how do we sort of blend millennium challenge corporation kind of goals without defeating the notion that sometimes you're going to have to do assistance that is not as economic based but it's more -- it's more humanitarian. it has another type of purpose. there will be assistance like that 37 but what we decided is to put about $250 million in to reinforcing the democratic institutions, to increasing transparency and accountability.

for instance like making information available to people through internet where it's available or publication or otherwise otherwise, holding -- targeting corruption, which we can be helpful with given our knowledge and law enforcement community input. we can strengthen efficiency accountability of the judicial institutions. we know we can help them with improvement of the management of their funds by creating tracking systems, accounting systems, computerized systems, accountability and so forth. and all of that is part of our goal. the key is who's doing it underneath. you're not just giving them money and saying go do it. have you implementing, implementers, experienced people coming in and working side by side to make it happen. it's labor intensive but it's probably the only way to have the accountability, i think, everybody wants. >> thank you. thank you, mr. chairman.

>> thank you, mr. chairman. thank you to secretary kerry. you quoted in your testimony dean atchison from decades ago. i thought it was an apt quote, saying that these problems we have in foreign policy will stay with us until death. it's hardly a surprise or should be a surprise when contingencies come up. you said his words remind us we entered into an era of virtually nonstop danger regarding one type of challenge or another so that tells us we have a lot of issues and we'll continue to have, yet we're requesting oco funds as if these are unforeseen. that if we -- that pulling out of afghanistan or out of iraq or new problems in syria or iraq

are somehow unforeseen and we can't plan for them. if we've been in this kind of period since world war ii why is it that only now since 2012 has the state department started requesting oco funds? now, prior to that, i understand there were supplemental appropriations that went to state for various contingencies. but it's only since 2012 these oco funds have been requested. and in my vushgs and i think the view all of us have is that the state department is becoming overly reliant on oco funding. you described these as temporary, as unforeseen and something we need to move away from, yet who seem to be overly reliant on them. do you want to comment on that? >> you're right. we are and it's because we can't get the budget increase we need to institutionalize it. put it in the budget. i mean we're already asking for

what i think is tantamount to -- if you take all of our foreign assistance because of the oco, it's about a 14% increase. if you take our -- or an 8% increase. if you take the -- just the parts of the usdai and state department which is about you know 50.3 billion, that represents a 6% increase, i guess. the point i'm making is are you prepared to give us what would then amount, if we institutionalized oco, the larger increase? that's how simple it is. you want to institutionalize it please do. while you're at it, up it to the amounts we need to do the other things i've talked about. >> if we were to do that then no more oco funds would be requested, is that -- >> no. look you're always going to have an emergency. senator, no way for me to come in front of you and tell you -- >> i understand that. >> and that's going to require a kind of oco. >> those have been dealt with.

>> i think it's important to have -- i don't want to be flippant about this i do think it's important to have an overseas contingency fund. >> he zoo we have always dealt with issues like that with the supplemental. >> but should it -- >> the problem with oco, i think all of us recognize it's kind of just an offline, you know, budgetary amount that we deal with and just increase oco funds. so, it's a layer we shouldn't have -- >> no argument from me. you know the way to deal with it pass the authorization pell pp we'll work with you to do it. then we have to get the appropriations people to fill it out otherwise we'll be right back here with other oco requests. by the way, it would help if we had an actual budget rather than a continuing resolution, i think. >> thank you. moving on. with regard to cuba i've been very support stif of what the administration has done and pleased we're going to establish diplomatic relations. you mentioned that is accounted for in the budget. it's not an increased budgetary amount, is it, to establish an

embassy in havana? >> no, no, it's not. >> good. a lot of people don't realize -- >> we have to find a prepainted sign in the basement of the current intersection and just put it up. >> i say that only because some people don't realize we have quite a vibrant mission there now that's been operating for quite a while. >> by the way, senator thank you for your thoughtfulness on this and your support for it. we appreciate it. we appreciate senator udall, likewise, being involved on in. >> i appreciate that. and i do think there are severe problems in cuba, obviously, and human rights issues, but i think that they can most effectively be pursued if we have diplomatic relations. so, i agree with the administration there. now, with regard to iran for a minute, i've been also supportive of the administration pursuing negotiations and i've withheld support for increased

sanctions during that time because i think the administration needs and deserves the space to pursue every opportunity for an agreement. i'm still hopeful a good agreement will come. having said that, as one who served in the senate for nearly 30 years do you feel that the senate and the house, the coming, should have a vote on that agreement in the end or some kind of approval or disapproval as the chairman has suggested with legislation? >> well, i have no doubt that congress will find plenty of ways to approve or disapprove. you have a vote because ultimately the sanctions that congress has put in place will not be lifted unless congress lifts them. >> but they can be provision alley lifted or waved for a significant -- >> well, you ultimately are the ones who have to terminate them. at some point in time, have you to make a decision whether that has to happen or not.

let me just go one step further, philosophically and practically. this is much like a sort of labor agreement and tpa and things like that. if you're hanging out there as sort of approval people that's another layer of negotiation. and fundamentally, it's -- it complicates it. hardens positions makes negotiating more difficult. there's this looming other entity out there. i think the president feels very strongly that you'll have a sense of whether it's a good agreement or a bad agreement. there are plenty of ways that congress can weigh in on that but we don't think it needs to be formalized in some prearranged way that makes the negotiation more difficult. >> thank you. >> by the way, when we finish this, if we finish this, i'm telling you, we have tough issues in front of us. no guarantees here, very tough issues.

and we're adamant about not doing a deal that can't withstand scrutiny. it's not just going to be your scrutiny. every -- every other country in this. we have france, germany britain, china russia, all at the table, all with powerful feeling about nonproliferation and what ought to be done here. that's sort of a first barrier. in addition, we have scientists all over the world our nuclear scientists community is going to have to look at this and say, does it make sense? if they're cloeshing this, then we have a problem, obviously. so we're being very thoughtful and careful about running things by people, we're talking to them, what works what doesn't we're taking advice. we've had exchanges with all of you through this process. we're well warned as to sort of where the thresholds are and what's difficult. in the end, the president will have to make a tough judgment f we get an agreement.

but it is not certain yet that, you know they're prepared to meet whatever important standard we think they should meet for these judgments and conclude. but i'm not going to go into all the pluses and minuses of this right now. and there are powerful reasons for how this winds up being the better way to prevent them from getting a bomb than some other way. and when we get into that discussion i look forward to it. this is not the moment for it nor the place for it. >> thank you mr. chairman. >> thank you. i would just say that as you've said in the past, it does have to pass muster with congress. you've been on the record in that way. i doubt there's any body of any of these other countries that has actually passed through

their parliament -- we pass through congress. it's a very unique situation. and i hope we will figure out a way to have a role and say grace over this before the regime is -- totally dissipates. senator shaheen. >> thank you, mr. chairman. and thank you to secretary kerry for all the great work you've been doing and for being here today. i want to start first with about asking about our humanitarian efforts to assist syria in particular and jordan and also lebanon as we look at the threat from isis and the support we've gotten particularly from partners like jordan and lebanon, who are really struggling under the refuse geese in their countries and ask

if you could talk a little bit about what we're requesting in the budget to address that and what we hope that will do. >> sure. well, senator, let me -- i'm really glad you asked that because i think this is one of the reasons i think we all have to buckle down and figure out how we're going to come together around the next -- around the syria component of this because the truth of the matter is, as syria is disintegrating under the pressure of the sectarian struggle, three-quarters of the people of syria are now displaced. and about half of those three-quarters are displaced in jordan lebanon and turkey. turkey can assimilate more effectively. lebanon is a problem. jordan is an even bigger problem.

and this has a major impact on jordan's economy, on its social structure, its politics. you know, you have these vast number, many of whom are in the camps but many of whom are not in the camps. their permeating jordanian society. they get a job. they work for heck of a lot less. that puts pressure on the labor market, creates a lot of dissent. they come in tend to an apartment and throw in whatever they have and rentçh+xq apartment but they rent it for more than would have been rented to a normal person or family. so all these distortions are taking place, not to mention that with them can come some dangerous politics in these places. so, i believe, we believe that this pressure on jordan is a reason to really try to work harder to find the way forward to get some kind of political resolution out of syria. now, we continue to believe that

there -- and adamantly, there's no military solution here. you pursue some scatter brain military solution you could have a total scatterbrained military sloogs military solution, isil could end up with syria. you could have any number of outcomes that are very dangerous. what we're trying to figure out is, you know, what's the road to that diplomatic outcome and we're pursuing that. i will tell you, i won't go into the details with you but we're actively talking with the players in the region. it's one of the topics that we'll have at the gcc meeting this friday is sort of, how do we get there. and beating isil is a key part of that. >> i appreciate that and certainly agree with what you're saying. my question really is more about what our humanitarian efforts look like. for example, just recently the

state department announced an additional $125 million in assistance to the u.n. world food program which we know ran out of funding at the end of last year at a time when the funding was particularly critical to some of the humanitarian efforts. >> right. >> in places like jordan and lebanon. how can we avoid having that kind of situation happen again. and what kind of negotiations, pressure, whatever we want to call it, are we entering into with the u.n. so that that does not happen again? >> well, the shortfall itself to the u.n. world food program? >> right. >> unfortunately, people have made pledges aren't stepping up. and the demand is increasing. and this has reached. it's the largest humanitarian crisis on the planet today and it's going to get worse. sitting here, this is part of

the frustration. it's going to get worse. now we are the largest single donor in the world and we should be proud of that. more that $3 billion we've put on the table since 2011 more than any other donor. and we have got $2 million that just recently went into the red crescent to provide hot meals. we put $133 million into the world food program and other partners because of the emergency needs. it's not sustainable. and it's one of the reasons why we are looking at this question of the syria and other things with great urgency right now as to what other alternatives may be available. >> the 2016 budget request $2.2 billion for work at our embassies and i understand that that's in response to the recommendations of the arb

following the benghazi attack. can you talk about how that will get prioritized if sequestration goes into effect? where does that happen on the -- or fall out on the list of priorities? >> it's a highest priority in the state department is protecting our people. and we've closed on 25 of the 29. our recommendations. there are four benghazi recommendations that remain open. we're actively working to close them. there are things that take longer to implement. it's not that they haven't been atended to it's just that they don't close because it takes a lot longer to do them. we have a major number of high threat locations that have undergoing renovation in various places, huge expenditures in kabul right now to harden down

that place, particularly given the drawdown. and you know you can run the list of places easily in your heads as to where, you know, most of this work is going. but i made the decision with president's consent to do the drawdown in yemen because we weren't able to do diplomacy. most of the people we had there were protecting the few people trying to do diplomacy. it didn't make sense. we're doing it from a distance. we're not going away. by the way, our facilities aring with being used by the u.n. and protected. our computers are not accessible. you know, we destroyed all of the classified information. it was done in a very orderly way in a period of four or five days with a very well-managed exit that was done through commercial air, not in some panic. i'm really proud of the people who pulled that off.

but we're not going to leave people at risk in these chaotic kind of situations which is the same thing we did in triply. but in many of these stages before you get to that stage we've got to take steps to increase perimeters harden buildings, do things so that there is no risk of negligence with respect to anything that might flow. and that's where those priorities are going. i would rather not talk about specific places in public because it begins to flag things. >> sure, i understand that. thank you very much. >> thank you, senator perdue. mr. secretary thank you for being here and thank you for you service over 30 years. it puts you in a unique perspective to talk to us today. i want to come back to your comments in your opening. i agree with you so much. i just believe we are at a moment of challenge. i mean i see this as a very dangerous world.

i respect so much what you're doing in this position to try to deal with that. you also mentioned that we need to lead and i couldn't agree with that more. but i see two things you've also mentioned as well that really create challenges and i sense the frustration in your testimony today relating to one of these. first of all the national security crisis relative to the threats not just abroad but even here at home, relative to the threats abroad between a nuclear iran, an isil that is really running rampant among the middle east and of course what's going on in the ukraine and russia. but you mention also our fiscal irresponsibility and the questions that raises around the world relative to our ability to back up our agreement, our ability to fund our military and our ability to really live up to the leadership role that has been thrust upon us. you know, you mentioned punlt constraints. listen, i recognize that frustration. as an outsider i see this

uniquely as someone new to the process. i would like to get your sense of priorities. particularly, just one example of how you see on this budgeting process relative to all that we mentioned and all that you've talked about. how do you determine priorities and our ability to really do what we've got to do against your objectives. and the one is a specific. i spent last week in israel and i stood on the heights and i looked across into syria and i saw the three villages where the fighting is going on. it's a very confused space. but then i went to the west bank open saw both sides of the equation. in the 2016 budget the administration is requesting the aid for gaza and the west bank. earlier this year that we ar allowed access to the criminal court. this is a troubling situation they'll attempt to use to bring charges against israel. but independently yesterday, this leads to my question.

a federal district court in manhattan rules that the palestinian authority independently and the palestinian liberation organization were both liable for their role in supporting six terrorists attacks in israel between '04 and '06 in which americans were killed. that half a billion dollars that's being requested there could that be used in different ways to deal with some of the things that you're talking about certainly on some of the social media counter balance with isil and some of the cybersecurity issues you've talked about. it's a small number but it's the principle of the thing. and my question is how do you see that very complex priority set as you try to develop the highest and best use for your budget? >> great question, senator. i want to tackle both parts of that. with respect to the $450 million that you talked about to the palestinians, you asked bluntly

could it better togo to something else and the answer is no. of the $450 million budget support for the palestinian authority, $425 million goes to israeli institutions including utilities and creditors of the p.a. so effectively it's going to israel. but it helps palestinians to survive. why is that important? it's critical. if the palestinian authority were to fail -- and i warned about this in london. they're not getting the transfer of the tax revs because they're going to the icc. but if they were to fail, what takes their place? hamas? jihad? i don't know. i just know that as troublesome as they have been in certain respects at many times, that president abbas remains

committed. that has to be put to the test at some point in time. eni understand the problem they've had having taken part in those negotiations for a long period of time. we objected -- we do not believe palestinians have the right to succeed to the icc because we do not believe they are a state? standing to be able to go to the icc, and we made that argument. as did other countries, by the way, a number of other countries made that argument. but we lost. and we also forcefully advocated to the palestinian leadership, don't do this. it's a mistake. you're going to breach, you're going to create all kinds of hurdles for the possibilities in