i believe this presents our best chance for success. many of us will have questions about this strategy and i have numerous questions. what does success in afghanistan look like? what do you believe must be accomplished in the next 18 months? what risk are we in the next 18 months and how can we mitigate them? how do we convince the pakistani is that their interests lie with us? how will we measure the process of the time and how will we help the afghan people build a legitimate government and end the insurgency? while i have questions about implementation, i do not have any doubt that we must succeed in afghanistan and the president is right to ordered the deployment of the additional 30,000 troops on top of the troops already approved and that the new strategy provides a good path for success. . provides a good path for success.

i hope our witnesses today can help us fill in the details of how the difficult but achievable goals can be accomplished. ultimately we are working to protect the american people and to end the threat from al qaeda. now i turn to my good friend mccann, the ranking member, the gentleman from california for comments he may have. let me buck one administrative note before our witnesses begin their statements. members are reminded there is a classified briefing with admiral lafever, the military officer in pakistan and 3:01 today given the importance of pakistan, i hope members will schedule themselves to attend there. themselves to attend there. and with that, let's begin. >> thank you, mr. chairman.

general mcchrystal, ambassador ikenberry, welcome, and thank you for being here this morning. this committee, this congress, and the american people have been awaiting your testimony. before i go into the substance of my remarks, i want to state at the outset that all of us support your mission in afghanistan and the men and women serving under your command. for over three months, washington has been mired in a substantial war debate. pundits and academics alike have been weighing in on whether the conflict in afghanistan is in our national interest and if this is a fight we can win. in the absence of a clear authoritative voice during the months of the white house review, the course of the debate has followed a flood of leaks from the always popular but never accountable anonymous source. to put it mildly, this was not helpful. during this time, the public support for the war waned.

and i worry our mission suffered too. with the president's speech last week and your testimony here today, i believe we've finally turned a corner in this war. we must now move from the assessment stage to the execution stage of this strategy. instead of asking if we can achieve success, we must now give the time, space, and resources that you need to succeed. rather than questioning if the united states has a will to win, you, general mcchrystal, ambassador ikenberry, and the thousands of u.s. military and civilians in afghanistan will demonstrate the will of this mission to defeat al qaeda, route the taliban, and bring stability to afghanistan. it's time we conclude this chapter on the war debate in washington and write the next chapter on national consensus and mission success.

you, gentlemen, will have the pen. you shall be the authors of success. today you will write the first page of this next chapter. after these hearings, washington must step aside and let kabul once again become ground zero in this conflict. general mcchrystal and ambassador ikenberry, the task before you is enormous. i know i speak for the entire committee when i say you are the best people to take on this challenge. this country is blessed to have leaders like you in its service. in september, your written word when we received your assessment, we read your written word when we received your assessment. today we need to hear you speak about the unwritten words between the lines of the assessment. this is your opportunity to speak to the citizens of this country and interested parties

across the world. i think when they hear from you they'll be convinced of the soundness of our strategy and optimistic about the chances for our success. fortunately much of your assessment seems to have been internalized in washington and by members of this committee. on tuesday night, the president agreed to provide you with additional troops to execute a counterinsurgency strategy. the commander in chief responded to the urgency of the situation when he committed to deploy those forces as fast as possible. last week, secretary gates testified that our aim is to reverse the taliban's momentum, which is precisely what your assessment described as essential to preventing mission failure in afghanistan. yet, the president's speech and subsequent testimony last week left me concerned that the administration did not adopt some of the fundamentals of your

assessment. nowhere in your assessment did i see discussion of a date certain to begin withdrawal. in fact, you wrote that the long-term fight will require patience and commitment. i believed your concern was at the afghan people are waiting on the sidelines to see how committed we are. did we demonstrate that commitment last week? on thursday, secretary gates testified that he was persuaded by you and general petraeus that beginning a period of transition on a date certain will, in fact, incentivize the afghans. moreover, i cannot find need to -- before last week's speech, i assumed like many that the afghan national security forces were doing everything they could to get into the fight. while corruption in the realm of governance and development undermined our security efforts,

i believe that the afghan ministries of defense and interior were part of the solution and not part of the problem. in fact, the variable holding back the growth of the afghan national security forces were things outside the control of kabul. namely funds to pay for a larger force, and more capacity on the part of nato to train the afghans. so where did this new narrative of putting pressure on the afghans come from? what i did not hear last week was a commitment to follow the recommendation of your assessment and build an afghan national security force of 400,000. instead, admiral mullen spoke of taking it year by year. again, i don't recall your assessment recommending incrementalism. i'm interested to hear how your headquarters will interpret last week's guidance from washington. finally, there's the critical question of resources.

first, are 30,000 additional forces enough to win decisively? as you wrote in the assessment, resources will not win this war, but underresourcing could lose it. given the many leagues you requested at a minimum 40,000 additional forces. please explain why the president is not underresourcing his own strategy. will you have to cut the scope of the mission because you did not receive 60,000 to 80,000 more forces? and next year, you determine that additional -- if next year you determine that additional forces are required, do you have the flexibility to ask for more? while we've heard about top line numbers, we've not heard discussion about the composition of these forces. how many combat brigades will deploy? how many will be trainers? will each combat brigade receive

all its enablers. will the cap of the 30,000 forces make you choose between adding combat forces or enablers? general, ambassador, this is your opportunity to answer the critics and bolster the supporters. no one is more qualified to do this than you. again, thank you for being here. good luck, god speed in your mission. i yield back. >> thank you, gentlemen. now we open the floor and general mcchrystal, please. >> mr. chairman, congressman mckin, distinguished members of this committee. thank you for the chance to appear before you today. i welcome this opportunity to testify on our way ahead in afghanistan. and i'm pleased to do so with ambassador carl ikenberry, an old friend.

let me begin by saluting the bravery of the men and women of the international security force in afghanistan. they're anchored by over 68,000 courageous americans, our close partners in the nato alliance, and a 43 nation coalition. we honor the sacrifices of the fallen, the veterans, and their families. we also recognize the toll paid every day by our counter parts in the afghanistan security forces and afghan civilians who ultimately suffer the most from this insurgency. it is for them and for all of us that we seek a stable afghanistan, a defunct al qaeda, and a secure future in that vital region of the world. i first deployed to afghanistan in 2002 and have commanded forces there every year since. despite that experience, there is much in afghanistan that i have yet to fully understand. for all of us, afghanistan is a challenge that's best aproufed

with a balance of determination and humility. while u.s. forces have been at war in afghanistan for eight years, the afghans have been at it for more than 30. they are frustrated with international efforts that failed to meet their expectations, confronting us with a crisis of confidence among afghans who view the international effort as insufficient, and their government is corrupt, or at the very least, inconsequential. the afghan taliban is a prominent threat to the government of afghanistan as they aspire to once again become the government of afghanistan. the insurgent groups have more limited geographical region objectives, but they are no less lethal. all three groups are supported to some degree by external elements in iran and pakistan, have ties with al qaeda, and coexist within narcotics and

criminal networks both fuelling and feeding off instability and insecurity in the region. the mission in afghanistan is undeniably difficult and will incur significant costs. i participated fully in the president's assessment and decision making process and was afforded multiple opportunities to provide my recommendations and best military advice, which i did. combined with insights and policy considerations from across our government. i believe the decisions that came from that process reflect a realistic and effective approach. to pursue our core goal of defeating al qaeda and preventing their return to afghanistan, we must disrupt and degrade the taliban's capacity, deny their access to the afghan population, and strengthen the afghan security forces. this means we must reverse the taliban's current momentum and create time and space to develop afghan security and governance capacity.

the president's decision rapidly resources our strategy recognizing that the next 18 months will likely be decisive and ultimately enable success. i fully support the president's decision. the president also reiterated how this decision supports our national interests. rolling back the teleban is a prerequisite to ult ultimate defeat of al qaeda. the mission is not only important it is also achievable. we can and will accomplish this mission. let me briefly explain why i believe so. my confidence arrives first from the afghans resolve since it is their actions that ultimately matter most in ending this conflict. with their interests and by extension of our own secured. second, we do not confront a popular insurgency. the taliban have no widespread constituency, have a history of failure in power and lack in appealing vision.

third, where our strategy is say plied we've begun to show we can help the afghans establish more security and more credible governance. finally, afghans do not regard us as occupiers. they do not wish for us to remain forever, yet they see our support as a necessary bridge to future security and stability. i've been back in afghanistan for six months now. i believe that with the president's decision and ongoing reforms i outlined in our initial assessment our efforts are now empowered with the greater sense of clarity, capability, commitment and confidence. let me start with clarity. the president's recently completed review of our strategy to include its deep and pointed questioning of all assumptions and recommendations has produced greater clarity of our mission and objectives. we also have greater clarity on the way forward. additional forces will begin to deploy shortly, and by this time

next year new security gains illuminated by specific indicators and clear to us that the insurgency has lost the @@@r >> thank you, mr. chairman. from that harm's way we will remain partnered with the afghan security forces in a supporting role to consolidate and solidify

their gains. results may come more quickly and we may demonstrate quickly towards measurable objectives, the silver fact, there are no silver bullets. ultimate success the cumulative effect across mutt 358 lines of operation. increasing our capability has been about much more than just troop increases. for the past six months we have been implementing organizational and operational changes that are already reflecting improvements in our effectiveness. but the additional forces announced by president obama are significant. forces to increase our capacity to train the afghan national security forces and forces to partner with afghan army and police in expanding security zones in key areas will provide us the ability to reverse insurgent momentum and deny the taliban the access to the population they require to survive. the additional capability we are building translates into credibility in the minds of afghans who demand proof not only that we want to protect them, but that we can.

in a world perception where the battle field is the mind of an afghan elder, it's hope of an afghan mother, the aspirations of an afghan child, this can be decisive. our commitment is watched intently and constantly judged by our allies and by our enemies. the commitment of 30,000 additional u.s. forces along with additional coalition forces and growing afghan national security force numbers will be a significant step towards expanding security in critical areas and in demonstrating resolve. the commitment of all coalition nations will be buttressed as clear understanding of how we will mitigate risks. i'll briefly mention three. the first is the afghan government's credibility deficit, which must be recognized by all to include afghan officials as critical area of focus and change. equally important is our ability to accelerate development of the afghan security forces.

measures such as increased pay and initiatives, literacy training, leader development and expanded partnering are necessary to position the afghan national security force to assume responsibility for long-term security. third, the hazard posed by extremists that operate on both sides the border with pakistan with freedom of movement across that border must be mitigated by enhanced crossborder coordination and enhanced pakistani engagement. looking ahead i'm confident we have both the right strategy and the right resources. every trip around afghanistan reinforces by confidence in the coalition and afghan forces we stand alongside in this effort. but i also find confidence in those we are trying to help. that confidence is found where an afghan farmer chooses to harvest wheat rather than poppy. or where a young adult casts his or her vote or joins the police. or where a group of villagers

resolving to reject the local insurgency. we face many challenges in afghanistan, but you are efforts sustained by one reality. neither the afghan people nor the international community want afghanistan to remain a sanctuary for terror and violence, and if we are to be confident of our mission and prospects we must be accurate in the our assessment of progress. we owe ourselves, our leaders and the american people transparency and candor, because the price to be paid is high and the stakes are even higher. in closing, my team and i would like to thank you and your colleagues for your support to the american men and women currently serving in afghanistan, and to tell you a bit about them. we risk letting numbers like 30 k roll off our tongues without remembers those are fathers, mother, sons and daughters serving far from home, self fls their sacrifices for each of us.

the other day i asked a young but combat experienced sergeant where he was on 9/11. his answer, getting my braces removed, remind me it's been more than eight years since 9/11, and many of our service members and families have experienced and sacrificed much. but as i see them in action at remote bases, on patrol, partnering with afghan forces, recovering in combat hospitalses, they don't talk about all they've given up. they talk about all they are accomplishing and their determination in this endeavor. this is not a force of rookies or dilettantes. the brigade commander in post is completing his fourth combat tour in afghanistan, and his experience and skirtese is reflective of the force that represents you. all have felt fear and loneliness. most have lost comrades. none have lost heart. in their eyes i see maturity beyond their years, in their

actions i see a compliment to succeed and a commitment to each other. i'm confident that i share your pride in what these great american, doing for our country in afghanistan and it will be my privilege to accept your questions on their behalf. thank you, mr. chairman. >> general, thank you. after the next witness testifies, i'll ask that the members of the press, the photographers, move from the immediate front to the sides. it would be of great help to us. ambassador eikenberry, we thank you for being with us. you're now recognized. thank you. >> chairman skelton, ranking member and distinguished members of this committee, thank you for the opportunity to present my views on afghanistan today. and i'd ask that my full statement be submitted for the record. >> without objection. make sure you get real close to the microphone there. >> how's that? >> much better. thank you. >> okay. last week in the speech at west point, president obama presented

the administration's strategy for afghanistan and for pakistan. his decision came after an intensive deliberative and far-reaching review. i'm honored to have been part of that. i believe the course that the president outlined does offer the best path to stabilize afghanistan and ensure al qaeda cannot regain a foothold to plan new attacks against us. i can say without equivocation that i fully support this approach. i consider myself privileged to serve as the united states ambassador and to represent an amazing team of diplomats, development specialists and civilian experts who formed the most capable and dedicated united states embassy anywhere in the world. and i'm extraordinarily proud of them. i'm also honored to testify alongside general stan mcchrystal, my professional colleague and friend of many

years. i want to say from the outset that general mcchrystal and i are united in a joint effort where civilian and military personnel work together every day. side by side with our afghan partners and our allies. and we could not accomplish our objectives without this kind of cooperation. as you know, mr. chairman, the united states is at a critical juncture in our involvement in afghanistan. on december 1st, the president ordered 30,000 additional troops to deploy to afghanistan on an accelerated timetable with the goal of rating the insurgencies momentum, haynesing the security forces and establishing security in key parts of afghanistan. on the civilian side, we aim to increase employment and provide essential services in areas of greatest insecurity, and to improve critical ministries in the economy at the national

level. these steps together will, i believe, help us to remove insurgents from the battlefield and build support for the afghan government. as the president said, we will be clear about what we expect from those who receive our assistance, and after a difficult election, the afghan government does show signs of recognizing the need to deliver better governance and security. we await urgent concrete steps in a number of areas. i'd like to briefly discuss the three main pillars of our efforts in afghanistan. security, governance and development. general mcchrystal has already addressed our plans for improving security and building the afghan national security forces. suns assuming my post i've made a special point of getting out of kabul and see conditions firsthand and fully concur with general mcchrystal the answersment that the situation remains serious. sending additional u.s. and nato

ispp forces is critical. this will expand our role and toe the afghans it take on a larger role in prying for their own security. president obama said the transition to afghan responsibility will begin in the summer of 2011 when we expect afghan security forces to begin assuming lead responsibility for defending their country. moving on from security. the second pillar of our comprehensive strategy focuses on governance. at the national and sub-national levels. our overarching going, improve governance so afghans can see the benefit of supporty a lift government and the insurgency loses its support. as general mcchrystal pointsous,

one of our major impediments faced, the afghan government's lack of credibility with its own people. to strengthen its legitimacy our approach at the national level is improving key ministries, increasinged number of civilian technical advisers and providing more development assistance directly through these ministries' budgets. by focusing on ministries that deliver essential services and security, we can accelerate the building of the afghan government to one that is sufficiently visible, effective and accountable. at the provincial and district levels we're working jointly with our military through our provincial reconstruction teams, our district development working groups and our district support teams which help build afghan capacity, particularly in the areas of greatest insecurity, in southern and in eastern afghanistan. underpinning all of these efforts is the need to combat

corruption and promote the rule of law. with our assistance, the afghan government is steadily building law enforcement institutions to fight corruption, organized crime and drug trafficking. in its inaugural address, president karzai stated husband intention to make merit based appointments in his new cabinet and implement and anti-corruption strategy. we're very encouraged by these statements. the cultivation of poppy and trafficking of opium continues to have a debilitating effect on afghan society. our strategy is multipronged involving demand reduction, efforts by law enforcement agencies and the military to detain traffickers and interdict drug shipments and support for illicit agriculture development. the narcotics problem will, of course, never have solution, though, without economic development. this leads to the third pillar of our effort clshs is development. in recent months, we've adjusted

our approach to focus on building key aspects, or key elements of afghanistan's private sector economy. increasing our emphasis on agriculture, enhancing government revenue collection and improving the coordination of assistants with the united states' government and the international community. these steps were taken to produce improvements in the lives of ordinary afghans, and to contribute to more effective government and lesson support for the insurgency. rebuilding the farm sector in particular is essential for the afghan government to reduce the pool of unemploy the men who form the recruiting base for extremisist groups. we estimate some 80% of the afghan population derives their income directly or indirectly from agriculture. mr. chairman, i want to emphasize that we're concentrating on what is essential and obtainable. the president's strategy is based upon a pragmatic

assessment of the security interests the united states of america, and our belief that a sustainable representative government and a sustainable economy in afghanistan are essential to our success. we need a viable afghan government so our forces can draw down and the investment of u.s. taxpayer dollars can be reduced. in closing, i'd like to mention two important risks that we face in carrying out this strategy in which i share with general mcchrystal. the first is, in spite of everything we do, afghanistan may struggle to take over the essential task of governance and security on a timely basis. the second is our partnership with pakistan. the effort we're undertaking in afghanistan is likely to fall short of our strategic goals unless the -- if the main elements of the president's plan are executed and if the allies are partners,

i am confident we can achieve our objectives. i say this with conviction because for the first time, all the elements of national power are being employed with our allies. achieving our goals inside afghanistan will not be easy, but i am optimistic that we can succeed with the support of congress. our mission was under resource for years but it is now one of the government's highest priorities. we will soon have increased our presence in cobble -- int kuehl -- in kabul. the united states foreign assistance is a small fraction of the total amount spent in afghanistan over the last eight years. additional resources will be

necessary if we look forward to sharing more details on our anticipated needs in the coming days and weeks. mr. chairman, afghanistan is a daunting challenge. with additional troops and other resources, and with the help the united states congress, we will work tirelessly to ensure that al qaeda never finds refuge in afghanistan and threatens our country and homeland. >> thank you so much for being with us. if there are any photographers in the immediate -- >> mr. ambassador, thank you so much for being with us. if there are any photographers in the immediate front the witnesses, please, move to the side. i believe some already have, if not all. thank you for that.

general mcchrystal. tell us what your mission is. >> mr. chairman, i believe that our mission is to do two things. first, al qaeda is a threat to the united states and to our allies worldwide. our ability to prevent lk ann curry reestablishing safe havens inside afghanistan is key. as most people know, many of the 9/11 hijackers were in fact trained on afghan soil in al qaeda-run training camps, and it's critical we prevent their ability to return to spaces inside afghanistan and repeat that kind of activity. wider than that, our mission is to help the government of afghanistan have the ability to defend itself, to conduct its own nation building. top provide it time and space for it to labor or effectively

fend off ex-esterile threats to its sovereignty. >> general, do you agree with the president's decision to strategize and increase the number of troops? >> i agree with the president's decision, and i believe that it provides me the resources that we need to execute strategy to accomplish the mission that's outlined for us. >> general, will you be successful in your mission? >> i believe we will absolutely be successful. >> what do you need from us, general? the armed services committee. >> i believe the resources have been provided by the president's decision. i believe what we need from the armed services committee and from the american people is continued commitment and support for our forces in this mission.

>> ambassador eikenberry, november 12, "washington post" discussed two leaked cables sent by you. let me read. "the u.s. ambassador to kabul sent two classified cables to washington in the past week expressing deep concerns about sending more u.s. troops to afghanistan until president hamid karzai's government demonstrates that it is willing to tackle the corruption and mismanagement that has fueled the taliban's rise" senior officials said. would you explain those "leaked" telegrams? >> thank you, chairman. if i could make three points. first, throughout the very vigorous review of our strategy that went on for a three-month period of time --

>> a little closer to the microphone, please. >> how that? >> very good. >> okay. thank you. let me make three points. first of all, in the process of the strategy review that went on for three months, all the participants in this very vigorous review process were encouraged to state their assessments and their recommendations, all of the participants did that in a variety of ways. through video teleconferences, through direct conversations, through written communications. my second point is, i'd like to clarify that at no point during this review process, mr. chairman, was i ever opposed to additional troops being sent to afghanistan. as i said during my opening statement, i fully agree with general mcchrystal's review of the strategic assessment he had done and i shared his views about the severity of the situation, which was dire in certain places of the country. completely shared his view about

the need for the accelerated growth of the afghan national security forces. that requires additional u.s. troops, nato troops, to accomplish that. so it was not a question of additional troops. it was the question, as we all had about the number of troops. what would be the timelines for those troops? what would be the context that those troops would operate? and then the third point i wanted to make is as a result of this very extensive review, the mission was refined. the ways forward were clarified, and the resources now had been committed to allow us to achieve the refined mission. with that, at this point in time, as i said in my opening statement, mr. chairman, i am unequivocally in support of this mission, and i am exactly aligned with general mcchrystal here to my right in moving forward now to vigorously

implement the assigned mission. >> i thank the ambassador. the gentleman from california, my good friend, ranking member mr. mckeon. >> thank you, mr. chairman. general mcchrystal, the washington rumor mill has been thriving over the last three months, as the last question we just had there. you know, i have heard that your request of the president was anywhere from 10,000 to 80,000 additional troops. we have not been given your request. all we've had to go on is what we've heard. with each option i know that you requested -- you tied it to a risk factor. now, when i was in afghanistan in august, and we met, i mentioned that i know had you

been given certain direction from the secretary and from others, and i asked you directly if that was going to influence the request that you made of the commander in chief. you told me, no. you said, you have a moral obligation to ask for what you needed to be successful in the mission. as i mentioned, congress has not had the opportunity to review your troop requests. we did -- we were able to read the original assessment that you sent, but i have the highest level of confidence that you adhered to your word and asked for what you thought you needed given your best military judgment to be successful. general, can you tell this committee and the american people what were the different force options you requested and the degree of risk that was tied to those requests?

>> congressman, that is still a classified document. so i'm unable to go into detail, but i can certainly go into the process, and i'd like to do that. when we completed the initial assessment, we went into a resource analysis which we called it, which is the classified document, and in that is outlined for you during your visit we identified different force packages with associated risk based upon our assessments of that, and then i said that we would also make a recommendation, technically not a request at that point, bought very direct recommendation of my chain of command and what the appropriate force level was. and i did that. through this process, then, when that went into the president's assessment and decision-making process, what i was very pleased about is, beginning with my initial assessment i was not only encouraged to be candid and

straight forward, i was demanded to be canid and straightforward. as we went forward with the resource analysis and that became part of what was considered in the president's assessment, throughout that process, which was exchange of different documents and then a series of security dcs, in every case i was able to make my recommendations or my analysis and they would come back for more detailed rashen nall to explain that. i thought was a very healthy change as ambassador eikenberry laid out, getting everything on the table, getting everybody very clear on where we were, and what i think came out of that was, as we focused on the mission, the understanding of the mission, i believe that the president's decision reflects resourcing, resources that do, that are congruent with what i recommended we needed. so i'm very comfortable with the outcome resourcewise of what was

made in the process. >> general, would you be willing to, in a classified session with the committee, give us what you asked for? >> absolutely, sir. >> and let me now frame the question in a little different way, in public. did you ask for 30,000 troops in 2010? >> i asked for four sets to be deployed as quickly as they could be deployed, and as the flow worked out, that was going to be about that, in 2010, but i didn't ask it that way. >> thank you, general. did you recommend that the troops begin withdrawal by july 2011? >> i did not recommend anything to do with -- i made no

recommendations at all, no. >> in your judgment, does the deployment of 30,000 troops to the eastern and southern parts of the country and the 18-month timeline provide the least risk and most opportunity for success compared to the other options you gave to the commander in chief? >> i believe that nothing in this is without risk, as you've said with least risk. i think it's appropriate rick. what i'd like to do is give the wider context of this. as we look at our partnership with afghanistan from now through the strategic partnership that the president and the secretary of defense have discussed, in the long term, what in fact we have done is provided the afghans the assurens that we are going to be strategic partners with them. that likely will not involve

impart forces but different things over time, but it's a very important part of the long-term commitment to them, and if you are in the insurgency thashs is also a very difficult fact to deal with, because essentially makes the insurgent long-term approach not viable. if you come to near-term, the president has just announced 30,000 additional u.s. forces, and we expect to get some range of additional coalition forces. so starting very quickly, beginning this month, actually, with deployment, we will have a significant increased force on the ground that's going to allow us to turn the momentum, both actual momentum on the ground and momentum in the eyes of the afghan people over about the next 18 months. i believe the next 18 months are the critical period in this war, because i believe they are critical in the minds of the afghan people and in the minds of the insurgency. so i believe the researchers we've been provided along with

the strategy which we already started implemented and the resolve reflected by this support of the american people and our own co-lgs allies i believe for this 18 months we'll make tremendous progress against this while with simultaneously grow afghanistan's capacity to provide for its own security. that, then, bridges to the long term. so i'm very comfortable where we are now as we go out towards the strategic partnership and i don't--i think inappropriately they will try to use it in information operations and describe it as something that it is not in terms of a lack of commitment on the part of that, the u.s. and the coalition, because we've committed to a long-term partnership, but i think we can deal with that. and on the positive, it is a bit of a forcing function by being very clear to all the players involved that we are going to be looking hard at things, it

provide as forcing function and impetus for moving forward for the afghans and others to continue to make progress towards their own capacity.@@@@ >> you still could being able to assess for another review next december? i will. of course, we will to constant

assessment as we do to see where we are. i actually think the progress already been made by the forces approved in march and by the other steps we have taken and how we operate, their cumulative with the additional forces that will start flowing in. we will actually start earlier this year than those that were approved in march. will try to employ them as quickly as pecan. by december, we will have had more time to mature our thinking and show progress and i am confident that we will. that you will have the flexibility a year from now, december of 2010, to ask for additional forces if your assessment at that point points to those additional forces needed for success? >> i believe i'll have the responsibility to give my best

military advice, whichever the direction the situation is going. i do not anticipate the requirement to ask for additional forces, but i would always provide my candid, best military advice. >> thank you very much, general. thank you, mr. chairman. >> thank you. general, how goodicanreroops un command? >> they're even better than we think they are. they are, they are amazing. i've been in 33 years. carl and i served together most of that, and when i impair it to when i came in in the '70s it is completely different. we are fighting an extended war with a very professional force augmented by citizen soldier whose do an extraordinary job. i was up at walter reed yesterday, as many of you do, seeing our wounded, and as i met soldiers and sailors who had

been wounded, their sense of commitment to get back into their units, back with their forces, was extraordinary and their sense of focus on the mission. then when i go down on thanksgiving. i flew around to as many combat outposts as i could and i went to, i don't know how many, but it was a lot, and on one of them it was a young second lieutenant platoon leader along with an afghan national police element, and the organization was out there in the middle of nowhere and did not have hot chow, because their generator wasn't working, and so they were there and there wasn't a complaint at all, but one of the young sergeants came up to me and talked about partnering with the afghan police, because you know they are the much maligned afghan national police and he said, sir, you got to understand, this is working great. this is extraordinary. the progress we're making. we should have started this months ago, that unit's on yoir 11th month of a 12-month deployment. so when i see that, every time i get out, i'm extraordinarily

convinced how good they are and how well they're doing and at what we've asked them to do. >> you mentioned the citizen soldiers. all of us have national guard troops that have been deployed. how good are the national guard troops? >> well, they're extraordinary, but one of the things i'd say, sometimes someone will fall in and say, just as good as active duty or active army troops, regular troops. that's not the case. in many cases they bring skills from around the country, bring things that active components skills and maturity components don't have subpoena they're not exactly the same, but together they are much better. so, and we are losing, we are paying a price with our citizen soldiers in casualties and in lost time away from home, just like we are with our entire force. so -- i just -- i cannot say enough about their performance. >> ambassador, the question is

put to you. >> could i say one thing? >> how good are our troops? >> chairman, our troops are -- >> get closer, please. >> our troops are every bit as good as general mcchrystal said they are. i wish -- i wish when we were lieutenants together that they were as good as they are now, but if i could say one word about the civilians in the, that are in afghanistan as well. chairman, with your permission, our civilian force we've got in afghanistan representing the full inner agency of our government, the federal bureau of investigation, the drug enforcement administration, the department of agriculture, usad, treasury, i go go on, they are also, we'd say a world-class force. i could give you one example. on the 13th of october, at a u.s. army unit a striker brigade operating down in spenbolduk. a combat hilt by ieds.

whenever i learn we have swilling in harm's way i'll give them a call that night to see how they're doing. in this particular case there was a mr. jim green from the department of agriculture, 55 years old from oklahoma and a mr. travis gardner, usaid, 38 years old from nebraska. in the same convoy out there doing their job as agriculture specialists with the u.s. army. i talked to them both on the phone that night, asked how they were doing. they said doing fine. they were just out there doing their job with the u.s. army. we should be enormously proud of the u.s. swilling serving alongside our soldier, sailors, airman and marines. >> thank you very much. i'm informed that the witnesses have a hard stop at 12:30. with that we are into the five-minute rule. mr. reyes? >> thank you. thank you, mr. chairman, and general and ambassador, thank you for being here with us this morning.

the president commented in his speech at west point that we are being assisted by 43 countries. as we go around the world trying to convince other countries to join in the fight, because truly this fight against al qaeda, somehow we have to convince the rest of the world that it's in everyone's best interests to assist. there are two issues that are brought up. the first one is that some, somehow the belief is we're going to leave there, and leave prematurely. secondly, that something has to be done about the corruption with the karzai government. in particular, these -- these two issues are very important to the traditionally muslim countries where i think we need

to focus to get their assistance into this very critical region of the world. can you comment, first of all, on how we can convince others to join in this effort? secondly, on the issue of corruption and the things we can do to change that. both of you, please. >> great. congressman, i thought i'd start on how we can convince others to stay focused on this. we do have 43 nations. in fact, that's about to go up fairly soon as well, and that's extraordinarily important to the effort for a couple of reasons. one, they all bring capacity, but it's also very important, because we are a coalition there we have additional credibility with the afghan people. they know a coalition will never be occupiers. so there's no way to paint us as the soviet union. so that's very important. i think it's important to all of

our coalition partners to stress our long-term strategic commitment with afghanistan. many of our coalition partners are there because they believe it's important. others are there because they believe that either the nato alliance or the relationship of the u.s. is another factor and i think that's very important. but stressing the consistencesy of our commitment, i think is the most key point. >> and general, you don't think that the deadline, 18-month deadline, affects the commitment in others, other nations? >> i believe if we put the perception of that, because, in fact, i don't -- i don't view july 2011 as a deadline. i stview that as a point at whi time the president directed we will reduce combat forces but we will decide the pace and scope of that based upon conditions at that time. so i don't believe that is a deadline at all. i think it's just a natural part

of the evolution of what we're doing. >> congressman, if i could address your question about corruption. general mcchrystal and i both in our opening statements emphasized the importance of efforts to help strengthen the legitimacy of the government of afghanistan. we are working right now in many areas. let me highlight three. first of all, combined efforts, partnered efforts, with the government of afghanistan to improve their law enforcement capabilities. we have many programs. one, for instance, the development of a major crimes task force, the equivalent of an afghan fbi led bike our training efforts and the allies. secondly, we're working to help improve the transparency and accountability of key afghan ministries through certifications programs. more of our money, of our development money, going directly into afghan ministries that are certified and in a transparent way. this requires partnership as

well. right now about 80% of the developmental dollars being put in by the international community into afghanistan are outside of the afghan budget. so they need help in this area as well. and then third, we're working hard, again, with the combined international effort to help improve the civil service of afghanistan. these are long-term efforts. there's not going to be any kind of a silver bullet, but i'm optimistic we can make progress, but this all has to be underpinned by afghan leadership. encouragingly, president karzai in his inauguration attempt talked an efforts to go after corruption, but this is something we have to make progress on over the next 12 months and the next 24 months. we're going to need more afghan leadership and more commitment, but also we're going to have to do this in partnership with the government of afghanistan. >> thank you. thank you, mr. chairman. >> thank you, gentlemen. >> thank you. i read an article this morning. i think it was from the "washington post" talking about

an afghan with one eye and a beard to his chest and aligned himself with the national government and with our presence there and he acknowledged that if the taliban came back to power, they were going to cut his head off. if that is a general perception of afghans, isn't it going to be kind of difficult to get them to align themselves with the federal government and with us? let's imagine for a moment that i'm one of the bad guys. i'm evil, but i'm not an idiot. i have long-range plans and above all i'm very patient. the president has signaled that we're going to begin a drawdown in july of '11, and if conditions on the ground are okay, that drawdown is going to continue a pace. i'm going to make sure conditions on the ground are okay, because i'm a very patient

guy and two years or so is not very long to wait. i'm just going to cool it for those two years or so and then these guys are going to be gone and i can have at it. isn't it going to be frightfully difficult to recruit afghans that if they know we're not success and success is not ensured, we're not successful, they're going to have their head cut off or something like that? and why isn't it true that the bad guys who have far more patience than we have. that part of the world sees the future very differently than we do. i let it go now to china to talk about energy. they began their discussion of energy by talking about post-oil. that's a long way off, sir. why won't they just wait us out? why isn't this a really non-productive approach to the solution of that problem? >> two great points that i'd like to bring out on this. first is that you're right about the insurgency and their use of

coercion. they will and do threaten people and it's very powerful, because the threat of being harmed stops you from making decisions you might otherwise make. so it's important that we be able to protect the afghan people. we can try to win their hearts and minds in the neartime, but you must be able to protect them from coercion. the second point, however, is that the insurgency has an essential weakness in this, and the challenge that does allow them to simply wait. first, they're not popular. they are not a national liberation front that people inside are just waiting for their success. they succeed on largely on their coercion. but if they go to ground or if they go to areas and simply wait, what happens is, during that period as we protect the afghan people along with our afghan partners and build up a way of life and convince the afghan feel they have a >> -- becomes more difficult to

cope worse because did people have something to protect and have something to lose that they do not want to lose. at the same time, the afghan government are building their own capacity of. as the people are starting to buy into a new life and their government has increased capability to defend them, suddenly the insurgents are faced with a much less vulnerable target for much less burnable afghan populace. they really cannot afford to wait. this is the key to us trying to establish security and the future in the minds of the afghan people as we move forward. >> d.c. that changing? i read about one afghan that was really happy in 2001 when we got

the taliban out of there, but he will now welcome them back because at least they are predictable. it listed minister of justice and at least they are not corrupt. what kind of confidence to you have that the afghan government can become a central government. they have never had a central government in 300 years. why do you think that will change? >> i think it will change. they have had a central government, but it has never been a central government that has the same kind of control. levels that we might in different models. >> it's been a pretend central government. hasn't it been, sir? >> a legitimate central government but, again it does not run things quite the way, in most nations, that we're familiar with. but i believe that this is the hard part. probably the most difficult task we have, to create credibility governance at the local level that reaches to the national level.

>> doug snyder? >> thank you, mr. chairman. thank you, gentlemen, for being leer. ambassador eikenberry, i got my colleague aiken here. about a year and a half ago we did a report for the armed services committee and actually stumbled ton this looking at prts, and benefits and medical care. i think i'll do this as question for the record. what we found 18 months ago, quite a bit of discrepancy in civilian incentives, support for family, wounded, i mean, literally having a military person in a civilian u.s. government person killed in action and yet they were treated differently, and i would encourage you as a question for the record to report back. are you safred as we augustment the number of civilians going into harm's way that they will be treated fairly and their families get the kind of support and they will get the kind of support we would expect? >> that's a very important question, representative, and we get you an answer back for the record. >> thank you. general mcchrystal, i don't want

to be too careful reading here but the reading comment of your statement was given to us, it says final statement, and then, but you did make one change here on page 3, talking about the summer of 2011. your written statement says from that point forward as we begin to reduce combat level wes will remain partnered with the forces in a supporting role. you changed that, while we have pure courses in harm's way i am soup that's an acknowledge if you reduce forces there's nothing that says you couldn't pull out support troops or -- i don't want to do, be too careful reading that that. is that an acknowledgement, you said reduce combat levels? >> that's more a case of last-minute editing i probably didn't catch. the bottom line is we will start to reduce troops in some capacity. and i expect it would start with combat forces but -- >> that's fair. i don't want to pay too much attention on that.

in neither of your written statements nor your oral statements did i hear a lot of discussion about possible incentives for getting people who are currently connected with the taliban to come over to a different side, and i don't need detail on this. i assume that is part of the discussions and in the mix? correct? >> it is. that must be a government of afghanistan run and managed program. we have stood up a particular cell to support them in that. we have resources available to do that. we think it's critical to offer fighters, maybe not the most senior leaders of the taliban but fighters the ability to lead the battlefield. >> and you have everything from congress you need to pursue those different objectives? >> we do. >> general mcchrystal, i had some communication i think the day after the president's speech, and you mentioned information how people would respond overseas to the discussion about the middle of 2011, which is a fire discussion.

a fair discussion. and this major military is currently trading captains for deployment overseas. mutt me in the position of being a village elder a brother killed by the taliban and you're the young captain just assigned to afghanistan. what are you going to tell me about what does that mid-2011 mean if i and my family and clan and my jeer graphic area that i control aligned myself with the international forces? what are you going to tell me about what that date means? >> i start with the fact that we have committed to a strategic partnership. that's what i tried to explain. we are going to stay partnered with the government of afghanistan and the people of afghanistan for their future, whatever that has to look like. then i welcome back and say in the near term we are going to do a significant effort to grow your afghan national security forces so afghanistan can be secured by afghans, and we are going to use additional coalition forces to provide time

and space, breathing space to do that. i will then come back to him and say, this is a sha shared responsibility. flg fg belongs to afghans. afghanistan must be built and secured by afghans and i would say that they have got to make the decision to do the kinds of things that help that process along. it is difficult. it does put people in hard decisions. i go back to our revolution where our leadership put an awful lot on the line, and an awful lot of people in afghanistan are in the position of doing the same thing. >> thank you. finally, general mcchrystal, there has been some acknowledgement, i think, through the years that the women in the military, your women troops, perform very, very well and this is a different kind of war than some of the legislative restrictions we've had on the assignment of women. do you see any reason that the congress shouldn't consider as time goes by giving more flexibility to the military for the assignment of women so you don't feel like you have your

hands tied when assigning units or posting women? is there anything out there you see that would restrict that? >> sir, to be honest i haven't given a lot of thought. i will tell you on the battlefield i don't give it a lot of thought now, because our female forces perform amazingly well and i just haven't run into many situations where at least at my level, where i've found that to be a consideration. >> good. thank you. thank you, sir. >> thank you. mr. thorn bare? >> thank you, mr. chairman. general, i want to express appreciation for your service, especially over the last eight years. the success you've had and in a variety of jobs and the way you've achieved that success gives me, and i think others, with some insight into your role a much greater confidence that our strategy will be assessed and implemented praply to make the mission in afghanistan a success.

let me start, we've heard a lot in the last week about how the mission has been narrowed, and i would appreciate some specifics from you about what was in your mission at the end of august that is no longer your mission in december? >> i think that the best, the way i look tat is, the mission has been effectively and appropriately refined. as we went into the process from the president -- as we took the information that was in the president's strategy decision in march and then in subsequent documents and we informed ourselves with those and our initial assessment and then our campaign design, we designed a campaign that would focus on those areas we thought that needed to be secured. not every part of afghanistan is either under threat or needs to be secured at the same level. we focused on those to determine what level of force we would

need both afghan security forces and coalition forces, to be able to do that. as we went in and made our recommendations through the chain of command on that, in fact, that turned out to be a great point around which we discussed to refine everybody's understanding of the mission. in fact, we had the word defeat, which we had received in the initial guidance, but that gave us a great opportunity to discuss that in tremendous amount of detail, because in military terms, defeat actually means rendering a enemy incapable of accomplishing its mission. does not mean that you eradicate that enemy down to the last individual. it could be similar to politics where you defeat the other party in an election but you don't wipe them out. but -- but -- so as we look at the strategy, this really helps govern how many forces you need and where you need to go.

so it turned out to be a very, very helpful process as we did this, as we were forced to explain just how much terrain, how much of the population we had to protect, the lines of communication that were important for that and then the forces we thought were appropriate for that. that was the essential refining that i think was very valuable. >> okay. and in your assessment at the end of august, you talk a lot about the need to fully implement a counterinsurgency strategy, different culture, different organizations. great differences beyond the number of troops, and i really very heard very much about that in the last week. were the recommendations you made about different strategy, organizational changes and other things fully agreed to by the white house? >> to my knowledge, they were. in fact, they've also been extraordinarily supportive with across nato, with our nato isep

forces. you're asking our forces to do different things. to operate a counterinsurgency, but starting when i arrived in june we've been pushing in that direction. we haven't been stopped in any of those areas. we reorganize our command, stood up several new commands inside it, an intermediate joint command to run detention operations. stood up a counter insurgency advise and assist team. we've done these things opinion culturally we continue to work inside our force. most of our force dos very well but there is a mindset to do counterinsurgency that takes a lot of learns and maturity over time. it will probably be unfinished business forever. >> in your august assessment you say that failure to gain the initiative and reverse the insurgent momentum in the near

term, pra ren that zis, the next 12 moss, risk outcome where defeating the insurgency is no longer possible. if that was flew august does that mean we have nine months to turn this thing around? >> i think it's important that we turn it around quickly. i might say a little bit longer now, but we eyesed the last six months at full throttle. so we didn't waste a minute of the last six months. agency as we start to deploy those approved what i tell my command, by next summer i expect there to be significant progress that is evident to us inside our force, by next december when i report back to you in detail, i expect that we'll be able to lay real progress out that will be clear to everyone, and by the following summer of july 2011, i think the progress will be unequivocally clear to the afghan people, and when it's unequivocally three to them that will be a critical, decisive

point. >> thank the gentleman. the general lady from california. >> thank you mr. chairman and thank you both gentlemen for being before us today. general mcchrystal, on march 27th this year president obama announced a new strategy for afghanistan which included a deployment of 20,000 additional troops. the president stressed there were four goals to that strategy. number one, to disrupt terrorist networks in afghanistan networks in afghanistan and pakistan. two, promote capable, accountable and effective afghan government. i would assume that means not corrupt. number three, dsm self-reliant afghan security forces that could lead the counterinsurgency. and four, involve the international community to actively assist in addressing those objectives. so it's been eight months later and we're hearing the same objectives for this new strategy being presented to us. only this time it's going to cost us an additional 30,000 troops.

so general, let me read this question, because it's a little detailed. president obama said that the withdrawal of u.s. forces from afghanistan will begin in july of 2011. and that promise, of course, has been reinforced, but rather ambiguously by the secretary of defense, secretary of state, and national security advisers. i watched them all on sunday's shows. all of those individuals cautioned that the completion of the withdrawal will be conditioned on concrete progress towards our strategic objectives on the ground in afghanistan. and that promise to begin the withdrawal at a certain date and the stipulation that the pace of withdrawal will be conditional, strike many of us as fundamentally inconsistent. for two reasons. if conditions on the ground are paramount, it's not really possible to predict a date, when withdrawal will make sense. and two, conditions on the ground are dependent on a wide array of variables, many of which are beyond our control,

including the strength of the enemy force and readiness of the afghan forces to assume responsibility. so if you could answer yes or no, please, if u.s. troop @@h@

i noted that in vietnam, one of the biggest problems weapon had were governments that were corrupt, and not well lined with what the people needed in vietnam.

so my question to you is, have you seen anything in the last 18 months that would tell us that the karzai government is doing something about corruption? have you seen him, i don't know, arrest his brother, put people in jail, bring people to trial, stand up a court system that's actually going to take care of some of this corruption, ask him for the numbers to swiss bank accounts? what have you seen in the karzai government. he's been in for five years, he's just gotten another five years and we know it's been completely and totally corrupt. >> congresswoman, as i had said during my opening statement, and have said in the previous -- >> please get closer. >> as i said in my answer in a previous question, what you're asking right now, the need to improve the accountability of the afghan government, it is central to our success. but against that, we have to be

clear over the last seven years, starting from a very, very extraordinarily low baseline, there has been progress in afghanistan. if you look in the government of afghanistan in the central ministries right now, there's some success there. the ministry of public health, the ministry of education, the ministry of the interior. your question about the need to improve in efforts against corruption, there are points of excellence right now in the afghan government. we've got progress that's been made in the counternarcotics sector with very effective justice task force that's been established. i mentioned the major crime task force, the afghan fbi. this is going to be a very uphill fight that the government of afghanistan has to wage. i will make the point, that president karzai in his inauguration speech, he did take this on. but actions are going to be required, congresswoman. >> thank you, mr. chairman. i was just requested, i'll put

it in a request for question for the record. but i would like a positive and definitive answer to that, not just what -- >> before i call mr. jones, in previous conflicts, commanders have had limitations placed on them by civilian leaders. in korea, for example, the president placed a limit of events of the american forces in the 38th parallel. in vietnam, there were similarly politically determined limits. do you have any such limits in your efforts? >> i am not aware of any limits. i certainly don't have any that i feel right now. >> thank you very much. mr. jones? >> mr. chairman, thank you very much. i want to thank you gentlemen for being here today for your leadership to our nation. and i represent the district where the camp lejeune marine base is located and i'm very proud of all our men and women

in uniform, marines, too. i want to ask a question. several of my colleagues, mr. sanchez and mr. partlet, and in your comments you talked about the karzai government. and knowing that there have been numerous articles written about the brother being a drug dealer and on the payroll. what i want to know from a professional like yourself, how difficult is it to say to the afghan people, trust your government? i mean, if they see us as propping up this corrupt government, try to help me understand just how difficult that is, or if it's not difficult to say, trust your government? >> congressman, it's an extraordinary challenge. what's clear, that the afghan people right now, that they have much greater expectations of

their government. their ability to deliver basic services, the ability of their government to be accountable, the ability of their government to provide predictable justice to them. and that's perhaps more acute in the areas of eastern and southern afghanistan right now where insecurity exists. and that's part of the cause for the reasons of insecurity. so it's absolutely central that the government of afghanistan addresses this. but it is an extraordinary challenge. we're talking about a country that had three decades of conflict. a country because of that three decades of conflict that has literacy rates of 25%, we're talking about the complete collapse of institutions. but i will tell you, i've served in afghanistan since 2002, and there has been progress that's been made. we don't want to overlook substantial progress that's been made. but what's going to be essential now over the next two years, that president karzai's

administration in partnership with us, with the support of the international community, that they start to take stronger measures to become a more accountable government. and that they do address seriously the problems of corruption that plague the society. >> mr. ambassador, thank you for that answer. you are a successful professional, and that's what gives the american people much concern is that it's going to take a long time for this country to ever have a central government, or to be a nation. we have a recession, a deep recession in this country, and this is a debate that i hope we will have on the floor of the house soon about the policy as it relates to afghanistan. general mcchrystal, what do you anticipate once the 30,000 americans are on the ground in afghanistan, as far as the insurgency? do you anticipate this will fuel

the insurgency, embold them to come back out and really challenge to show their strength? i mean, i imagine that's probably a given, but i'd like to hear your comment on that. >> i believe they will try to do that. but i think that they're going to be challenged to do that. when they mass now in any significant numbers, they are defeated fairly quickly with significant losses. so what i think they will do, and what we see them talking about doing, is trying to maintain pressure, show a brave front against this, and continue to show the momentum that they believe that they have. i think, however, that they will end up using an increasing number of asymmetric tactics, suicide bombers, improvised explosive devices and coercion of the population at night and things other than large-scale operations. >> general, let me ask you this, and this will be my last question. time's running out.

if the -- if you needed to pursue the enemy, like during vietnam they had a sanctuary, laos, do you have the green light to go across the border in hot pursuit? >> sir, we have the ability to protect our forces with fire across the border, artillery and airfire. and we do that in coordination with our pakistani partners. so we can pursue them to target them and do that fairly routinely. but again, we coordinate that and have a series of procedures in process, or in place that allow us to do that. >> mr. chairman, i would like to ask that in the future, from time to time, if possible, that we would have classified briefings with men like mr. mccrystal -- general mcchrystal, excuse me, and the ambassador. >> we, of course, have done that in the past. we will do our best in the future. >> thank you, sir. >> thank you so much.

mr. andrews? >> thank you, mr. chairman. good morning, general, good morning, ambassador. thank you for your service. general, ambassador, do you agree with the statement that there is not a robust al qaeda presence in afghanistan today? >> in terms of numbers, there is not a robust al qaeda presence. in terms of the ability linkages to people like the hikani network through surrogates, in fact they do have significant linkage in influence. >> in your written testimony on page two, general, you say that our core goal of defeating al qaeda and preventing their return to afghanistan. return from where? >> there are many locations. their primary location in that area is pakistan. >> i thought you'd say that. and what's the plan with respect then to al qaeda sanctuaries in pakistan?

let me just play a devil's advocate question right now. it's not my view, but i hear it. there is a robust al qaeda presence, both quantitatively and qualitatively in pakistan. so we're sending 30,000 more troops to afghanistan. what are we doing to be aggressive in wiping out the al qaeda sanctuaries in pakistan? >> sir, my current position, i don't have direct responsibility for operations inside pakistan. although i maintain close liaison. based upon my background, i would tell you that the most effective long-term tactic against terrorism is governance, where you establish effective governance with rule of law in an area. it's very difficult for terrorist groups to operate. so our strategic partnership with pakistan and the government of pakistan, i believe is the critical long-term way to help reduce al qaeda. and that's true in other

locations as well. >> mr. ambassador, what evidences that the pakistanis are executing their part of that strategic partnership by aggressively going after al qaeda in the federally administered tribal areas? >> congressman, that's not my domain as the u.s. ambassador to afghanistan. we do have a very close collaborative relationship with our united states embassy in pakist pakistan. the issues of security we're talking about here today are inextricably linked, afghanistan and pakistan. but it wouldn't be for me to -- >> i appreciate that. and i think that secretary gates and secretary lou were pretty good on this. but some unsolicited advice here. the american people are not going to support the deployment

of 30,000 people on a bank shot. on an indirect strategy to try to deal with a very direct problem. and i understand that the prevention of a re-emergence of a sanctuary in afghanistan has real value. but it's pretty clear to me that one of the central focal points of this mission is to help the pakistani government survive, and to help it gain its footing and credibility. i do think we need to articulate that. i think it's a very legitimate rationale. i think it is in our national interest to do so. but i think if we omit that from our discussion, we're omitting an awfully important point here. just one follow-up to mr. jones' question. general, you said that your orders permitted you to fire across the border, as i understand it. would the force protection rules of engagement permit you to

pursue across the border if in your judgment force protection required that? >> i'd like to take that for the record so i could consult the specific rules of engagement. >> i understand. if you were writing those rules of engagement, what would your recommendation be? >> i would never take away from american forces, particularly their ability to protect themselves. however, i would be very cautious in how i framed it, and how i executed it, because the sovereignty of pakistan is as sacred as the sovereignty of any other -- >> i appreciate that. i know the question is even provocative. and i don't mean to be. my hope is that the taliban are degraded to the point that they're not a virulent force within pakistan. that government can stabl lies, execute the position of the fatah and get both size of the border dealt with. i want to emphasize, this is a bi-national problem. the taliban would see it as

their own sovereign nation in that area. thank you. i yield back. >> thank the gentleman. i also thank the gentleman for raising the issue of pakistan. raising the issue of pakistan. a reminder that there is@@@@@ @r

be partnering with ambassador eikenberry and the government of afghanistan's team for governance. because where we create security, it is not durable without governance. and then i think the last, of course, is probably just getting at the psychological aspects of the afghan people as they are coerced by the insurgency. it plays into everything else, but convincing them is a critical task at hand. >> thank you for making that concise. your first point was the security forces, and that was going to be a question i wanted to ask more about. and that is, what would you say is the condition of the security forces in afghanistan? we're on a committee with chairman snyder here and we looked at the same thing in iraq. and you have to oh sort of build up and build. what is the status of the forces in general, if you can do it fairly quickly? >> yes, sir. together the afghan national security forces are just about 190,000 people assigned, or on the rolls right now.

the afghan national army is significantly ahead in terms of professionalization, capacity in the afghan national police. because we started earlier. we started in 2002. at the battalion and company level, they fight pretty well. organizationally, there's much development to do. the afghan national police have much further to go. the percentage of policemen who have actually received formal training is fairly low. we are increasing our partnership and our focus on them. but we are starting in a much lower level. the last point is, the police, of course, have a tremendous challenge because they operate so dispersed, it's harder to have leadership and influence over that. but they also die in larger numbers than any other force on the battlefield, fighting. so while we can be very critical, i think we also need to balance the fact that they are dying for their country pretty courageously. >> the additional troops allows you to protect them better and partner with them better?

>> that is exactly the heart of the strategy, create more security. >> thank you very much, general. ambassador, a couple of questions. thinking back a little bit from lessons from afghanistan, do they have a constitution in afghanistan -- i mean, from iraq -- do they have a constitution in afghanistan now? >> sir, they do. they've had -- >> could you pull your mike up a little higher, please? >> i'm a slow learner here. they have had a constitution since 2004. >> and did we make the same mistake in that one, to put sharia law into the constitution or not? >> the sharia law is not the dominant judicial system. >> that sounds like a double-talk to me. if it's in the constitution -- >> respect for islamic law is in the constitution. congressman, it is locally

interpreted. >> locally understood? okay. corruption is something that a lot of people have been hitting on that theme. is there any -- is corruption inevitable, as long as we've got the massive poppy crops that are -- i have to say that carefully -- over in afghanistan? >> there's no question that the high level of poppy production and opium trade contributes to corruption. >> is it possible for us to deal with the corruption problem as long as there is that major dependence on that supply of income? >> it will be difficult, but there is progress that is being nad against narco trafficking. congressman, last year there was about a 20% reduction that occurred countrywide in poppy production, and last year the number of poppy-free provinces of afghanistan went from 18 to

20. there could be reverses from that promising development last year. but there is a comprehensive effort that's being waged by the government of afghanistan, sun port by our civilian side, especially in law enforcement and and the agricultural programs and the military. >> thank you. the last thing is, have you been paying attention to governance from the bottom up? sometimes i think we started too much from the top down. >> congressman, that is a very serious problem. and i would agree with you, i'd characterize our first several years in afghanistan just focusing at the national level. our new strategy does call for emphasis at the sub-national level in very direct support and close coordination with our military and their efforts out in the field. >> thank the gentleman. the gentle lady from california.

i appreciate, general, your mentioning the men and women who are serving in, i think particularly and their families, i continue to think we're still a military at war, not a nation pat war. and quite frankly, i'm not sure that we're trying to address that problem. we talk about the credibility of the afghan government to their own people. and we mentioned many times about the corruption. and i want to just focus on our role for a second. mr. ambassador, are we supporting leaders who in fact are fueling the insurgency in  many ways? we have a great deal of resources to the ministries. you mentioned certifying the ministries. but i want to know whether the congress has a role in trying to condition some of that support further, and the extent to which

we could be playing a more significant role? >> well, as you know, congresswoman, you do play one very significant role in that you have the responsibility for the special investigation, for afghanistan reconstruction, the group called segar, which is a very robust auditing and investigation arm that reports directly to the united states congress. indeed, in afghanistan today, in our united states embassy mission, we have over 30 from segar that are assigned. and they're very working in close partnership with us to rigorously audit and investigate the spending of our money. so yes, you are playing a very vital role. and as we move forward in afghanistan, we have many very progressive, good afghan ministers right now that like to condition developmental aid in ways that help them to work with their own parliament, with very

stringent standards being set -- >> i think i'm looking for ways that this really translates to the afghan people, though. the extent to which they see that we're actually doing something about that, and that some of these leaders are not really acting in their best interests. how are we communicating that to them? and it's critical that they get to see that change. >> again, i think that president karzai, as he laid out in his inauguration speech, he has a program for reform. he's emphasizing accountability. and i'm cautiously optimistic at this point about our ability over the next year, over the next two years to increasingly work in partnership with the afghan government to achieve the goals and objectives that you've articulated. >> thank you. i know this is progressive and it doesn't happen on a dime, but i also believe that there may be a time at which we see that the metrics of the work that segar is doing would indicate to us that things are not progressing

in the way that they should. i look to you, and i look to the general as well, to be able to say that, you know, we see some real problems here, and if this continues on a trajectory like it has been, we can't get to where we want to go. i mean, it is a bridge too far. >> the challenges are daunting for government accountability right now. we're working with the afghans in partnership, but it is going to be, as general mcchrystal said, it's perhaps our most difficult task, given what our starting point was back in 2001. >> general, as you work with the troops, and certainly to develop the afghan police in a different way than we've been working on for the last number of years, we know that we're very dependent on tribal leaders to encourage

their men to join with the forces, and yet we also know that the attrition rates are very high. there are multiple, multiple problems in doing that. so what are going to be your indicators, and in fact, you're moving in a progressive way, where would you like to be in three months, in six months? because this has got to happen soon. >> it will happen at different rates in different areas. but if we pick an area like the hellmen river valley where we're very focused, what we'd like to do is increase the number, or percentage of trainees that have had training at all. then once we put them through that training, we partner with them. so we have elements that are with them literally all the time, 24/7. that gives us two things. one, it gives us an ability to help build their professionalism, but it also gives us a constant window into thaur level of professionalism. and it is somewhat a deterrent as well as corruption and

misbehavior because they're partnered with us. what i want to get to is the afghan villagers, the people in the local area assign credibility in their mind to the afghan police. that's the most important metric. more so than their ability to go after crime. they will provide security, but it's, do the people view them as credible. >> if the answer to that question is no, this is not happening, then what? >> we just keep working through that. at the end of the day, the afghan national police must be viewed with credibility by the local people. it will never be perfect, but we have to get to that. >> thank you. >> thank the gentle lady. before i call mr. forbes, very quickly, general, given the mission the president has assigned you, are you convinced that the forces provided you are adequate? >> mr. chairman, i am convinced. >> thank you. mr. forbes? >> thank you, mr. chairman.

general, thank you for your patience and answering our questions. i want to bring the three attributes you said we should have. you responded to the ranking member earlier that you thought it was your responsibility to provide your best military advice, and i assume that means to us as well, to the armed services committee. here's the core of what every member of this committee needs to know, and the american people need to know. in your experience, in your best military advice, should we send 30,000 additional troops to afghanistan, or a number greater than 30,000? not what you requested, not what were in documents, not what the president ordered, in your best military advice? >> in my best military advice, this is the right decision. the coalition forces that i expect will be helpful as well, but i believe this is the right -- >> you believe 30,000 would be the right number? >> of u.s. forces, yes, sir. >> how many total troops? more than 30,000? >> i think we're going to end up

with about 37,000, although it's absolutely unclear at this -- or a little bit unclear at this point. >> on thursday of last week, the chairman of the joint chiefs of staff sat where you sat, and he indicated that you had received everything that you requested. according to military doctrine, normally that formal request for troops, as i understand it, would go from you, to the combatant commander and then to the president. is that a fair representation? >> that's correct. >> was the chairman correct that you received everything you requested? >> that is correct. >> during the period of time that you have served in afghanistan, from 2002 on, has there ever been a time under that chain of command, with that request going through like that, that you have not received what you have requested? >> i have never been in a position where i requested before. so it would be misleading for

me. the force that i had was completely resourced. >> so you had never made a request that you hadn't got. so if i said during the entire time you've been in afghanistan, you've received everything you've requested, that would technically be correct? >> that would be correct. >> earlier today the chairman asked you a question, he said will you be successful in your mission, and you answered yes, you would. from 2002 on, for every command that you had in afghanistan, if i had ever asked you if you would be successful in your mission, was there ever a time that you would have publicly said no, you would not have been successful in that mission? >> no, there's not. but i was in a fairly narrow part of the world. >> i understand. you would never have said, no, we're not going to be successful? >> no, i would not. >> the final question i would like to ask you, you believe that the afghanistan war is a war of necessity, do you not? >> i do, sir. >> if it is a war of necessity, then i would like to follow up

on a point that was raised a little bit earlier. if it's a war of necessity, i would think by definition we would think by definition we would have to win it, is that a i know you would do that. my point is not with you. my point is as a nation, how can we say, if this is a war of

necessity, that we will guarantee we are going to begin withdrawing troops in 18 months if we have to win it, and if in 17 months we determine that we've got to have more troops to win this war? >> sir, i believe that the key point here is really the long-term stra te tick partnership with afghanistan, which the president has outlined. i think that underpins everything. >> general, just one last shot at this. for my determination part of the three attributes that you asked us to have, wouldn't it be fair to say that as a nation, if we've determined that this is a war of necessity, and if in 17 months or 13 months or whenever that period of time comes, we determine as a nation that we've got to have more troops to win this war, that we've got to put more troops in there to win this war of necessity? >> sir, what i can guarantee is, i will give my best military advice. i would think that the nation has to make decisions then based upon a much wider context. >> thank you, general.

>> thank the gentleman. the gentleman from georgia, mr. marshall. >> thank you, mr. chairman. thank you both for your service. i think we've got a great team there. and for all the service of all those you lead. i'm going to continue my lobbying, campaign, provincial reconstruction teams, change the name to provincial development centers, something like that. have an afghan face on this as quickly as possible. we should have done that already. shame on us for not having figured this out five or six or seven years ago. have an afghan pdc university. it's interesting, when i talked with you, general mcchrystal, you agree, and ambassador, if the two of you could just get together and make this happen, i think it would be helpful to the entire cause. i don't envy your balancing act with sophisticated characters, the ones that this -- the 2011 date might have a force function with. presumably they'll be listening to our counterinformation

operation, to cushioned on the unsophisticated characters saying, you need to jump on our side of the fence here, at least get off the fence and help us out in the next year and a half. clearly the taliban are going to be emphasizing 2011, july 2011. and we've talked enough about a. but you've got quite a challenge here when you think about the different characters that you're trying to persuade with regard to two different objectives. in vietnam, as far as i can determine, about the only really successful thing that we had going for us was the village pacification program. just about everything else we tried didn't work very well. then we screwed that up by moving the folks who were very effective at guarding their own villages, having help from special forces teams, we tried to move them into more conventional forces and move them to different parts in the country and then they just didn't want to fight there. we've really struggled with the afghan national army. it's really very visible.

it's pretty easy for the taliban to avoid them just like it's easy for the taliban to avoid us. what we really need people are -- we need the one-eyed bearded guy that roscoe bartlett was referring to, you know, looking out for us and our interests in the rural areas. and it seems to me that the people who would come to him and say, look, you better not be helping the americans, because when they leave, we're going to cut your head off, he would like to be in a position to say, oh, really? well, here's the way it's going to work. before they leave, i am going to cut your head off. so i won't have to worry about you showing up after they leave. and that's the kind of almost vigilante justice that occurs in rural areas of afghanistan, and has for centuries. now, general mcchrystal, the central aspect of your new campaign is to empower local defense groups, and its local communities, in strengthening those local communities.

yet you've got this national concept at the same time. so there's a clash here. as far as the local folks are concerned, a lot of them are going to want to treat the enemy exactly as i just described. you help the taliban, i am going to kill you. no questions asked. i'm just going to do that. there's not going to be a trial. if it is, it's the law west of the pecos. we'll give you a trial and then we're going to hang you. how do we, how does america fit in there, when you have the national government and local folks, and local folks not interested in abiding by our concepts in going about doing this? >> i'll start on that. what we have got to get to is afghan responsibility for their security. and by a responsibility, it's got many facets to it. they absolutely have a tradition of local security, denying their area to outsiders of any kind. and i think that we need to reinforce that, and we need to support that where we can. we need to balance that with great caution against a

tradition that's much newer, but much hated in afghanistan of warlords and militias. on the one hand you have a local security tradition, on the other hand, for about the last 20 years, groups have come up under warlords that have been predatory and are much hated by the people, and took part in the civil war. so we've got to make sure that we don't either let reality or perception of those two work against each other. so as i say, with caution, as we go forward. and we are working programs, congressman, to try to build at local levels and we're having some success there with our afghan partners, government and local elements. the other parts of shared responsibility that are wider than just security forces that might carry weapons, it's also elders not allowing the young men to join the taliban. it's also people turning in information on improvised explosive device locations, or just telling taliban, you can do

ieds, but you can't do them in our neighborhood. as that grows out, that's the kind of confidence the locals would like to do that, but they lack the confidence right now. it's like a neighborhood that's been intimidated. so we've got to do a balancing, very credible national force, and there must be an afghan national army and police with a strong neighborhood fabric that is part local security and part just governance, neighborhood watch, and trust for each other. >> thank the gentleman. the gentleman from florida, mr. miller. >> thank you, mr. chairman. general mcchrystal, welcome, sir. in your opening statement, you made a comment about defeating al qaeda, and then in the same line you said you must disrupt and degrade the taliban's capacity. could you explain for us the difference between defeating al

qaeda and degrading the taliban? >> certainly. i believe that it's u.s. policy, and i believe it's an important objective that the taliban be defeated. and that means over time, wherever they are around the world, they must be prevented from being a threat against either the united states or our allies. i think that will take many years and it won't be just an american effort, it will be all of our partners. but where they are, i believe al qaeda both as an organization and as an ideology needs to be defeated. and that will require a lot of muslim nation partners as well. in terms of taliban, what i think we need to do there, sir, is -- and we had an extensive discussion about the term defeat. i think what we're doing is preventing -- taliban, i'm sorry, preventing the taliban from being an a threat to the

people. to lower the capacity within their own means, that afghanistan can hold them from being a major threat to either their way of life or their government. and i think over time, that will cause the taliban to go away, to become irrelevant and cease to exist. >> we do intend to defeat the taliban. >> the military term, in fact, without parsing that too tightly, we intend to prevent them from doing what they want to do. >> thank you, sir. and also following up, you described in your assessment, initial assessment, in that you would write a second assessment. do you intend to provide congress a copy of that second assessment? >> i have not been tasked to write a written assessment in that same form, but i understand from my secretary i will provide an assessment next december. so my -- i don't know the form

yet of that -- format of that, but it will be clearly a complete assessment. >> ambassador eikenberry, do you think we've got enough civilians working now? i mean, it seems like an awful small number when you're talking about 100,000 troops, and we've got less than 1,000 civilians out there right now. and there were press reports earlier that said state department employees were in fact refusing to -- i know we can't compels -- but that they were refusing to deploy to afghanistan. it's happening awful slow. we've been hearing this now for eight years, that we need to, you know, to bring people in, to augment, if you will, the troops with civilians. >> well, congressman, as you know, we're not trying to match military numbers right now. it's not about how about, it's

what effects do they get. on the other hand, though, when we talk about the growth of the forces in afghanistan, it's been extraordinary. the military organizes with units like companies and battalions and brigades, and they deploy large units. when we're talking about individuals, when we're talking about civilians, we're talking about an individual agricultural specialist, an individual from the federal bureau of investigation. so against that, now, if we do look at the buildup of civilians that have occurred over the past 12 months, or soon by the end of january of next year, over a 12-month period, we'll have had a three-fold increase of civilians on the ground in afghanistan. by military standards, a three-fold increase is extraordinary. and it's even more extraordinary for civilians. do we have enough on the ground right now for the present mission that we have by the end of january? we'll have what's needed. we will have to grow further, though, now with the decision

that the president's made for the strategy where we have 30,000 more troops coming in. that means we'll have additional requirements out in the field and we meet those. but if i could give -- >> sir, i'm running out of time. i think it's important in context, sir, you talk about a three-fold increase, that's only to 970-plus. it is not that large of an increase. and, you know, if we need civilians to get in there, we need civilians to get in there. >> congressman, if i could. let me give you an example of civilian effects we're achieving. right now in hellmon province where general mcchrystal forces are operating, in one district in the province, we have one agricultural expert that's operating there. he is leveraging then an organization of several hundred afghans who are implementing, and they are providing then for a voucher program of

agricultural assistance, for some 14,000 afghan farmers. i want to emphasize that one well-placed civilian in afghanistan gets tremendous effects. we're not talking about the need for tens of thousands of civilians. >> thank the gentleman. >> thank you, mr. chair. i just want to ask both of you, particularly, i guess, ambassador, about agriculture. a fax released by the white house last tuesday states, and i quote, our top reconstruction priority is implementing a civilian military agricultural strategy to restore afghanistan's once vibrant agriculture secretary, unquote. now, having visited one of the national guard's agricultural development teams in july when i was last there and saw you, and thank you very much for hosting

our delegation, i believe that redefining and growing the afghan economy will be key to stabilizing the country and eventually allowing our troops to come home. does the president's strategy entail an expansion of the number and the location of these adts, these agricultural development teams? >> congressman, i would like to get back with you on that. i'm not sure what the projected growth of the agricultural development teams are. i will say on the department of agriculture front, though, there's a very substantial increase that's going on. we started with very few on the ground this year, and over the course of the next several months, we will have about 65 department of agricultural experts, 5 working in the minister of agriculture, all of the rest out in the field aligned with general mcchrystal forces. >> the number i had was 60.

so it's 65 then. as far as you know, there's no projection to go beyond that 65 projection to go beyond that 65 yá# @ @ @ @ @ @ @ @ @ @ @ >@ @ r

out to afghanistan here in january. with 80% of the afghani economy tide to agriculture, if we're going to make a dent in possible insurgent recruits, if we're going to get after this narco trafficking problem, if afghanistan's going to have long-term economic sustainability, agriculture's key. that's really our focus. >> i agree. thank you. and general mcchrystal, obviously there's a security component to this as well. obviously these adts and other civilian projects will be linked closely to military action. so the security is gained, the adt, the prts, which i think is a misnomer, i agree with my colleague from georgia, that they follow close behind to help this whole build-and-transfer strategy we're talking about. could you elaborate a little bit on that? the security and agricultural development? >> absolutely. in fact, they follow in time

very closely behind security. but they actually increase security. once you increase agriculture in most cases, but also any kind of employment, what you do is take fighters off the battlefield, or you take potential fighters off. because unemployment is the biggest recruiter for the taliban right now. so the ability to get back the fabric of life, when people have something to lose, they are much less interested in having insecurity in their area. so it's what makes security durable. >> thanks to both of you. in my remaining time, i guess i just want to make a comment about the pakistan connection here. because obviously i'm a little bit -- still a little bit confused as to sort of what our strategy entails with respect to pakistan. i understand there's only so much that can be said in open session. i'm looking forward to the hearing. i thank the chair for that this afternoon at 3:00. but i have a lot of the same concerns about pakistan, i should say, that my colleagues

do on both sides of the aisle. and specifically, how it is the case that in the near term, and going forward, our strategy is going to deal with the problems of pakistan. i understand entirely the sovereignty issue. obviously pakistan is a sovereign nation state, just like the united states is. we have to be careful about our cross-border operations. but at same time, if we are really looking for a long-term solution, pakistan's going to be absolutely critical. thank you for your time. >> thank the gentleman. mr. wilson? >> thank you, mr. chairman. and thank you, general, ambassador for being here today. i also want to thank you for your hospitality and briefings as i was with you in august. i'm very grateful to be the co-chair of the afghan caucus, so have a particular appreciation of your commitment. i'm also very grateful my former national guard unit served for a year. general bob livingston, training the afghan police and army units. it was the largest deployment

from our state. 1,600 troops since world war ii. general, i agree with you, that the persons who serve there are very grateful and proud at their service. and they developed a great bond with the people of afghanistan. and identified them as afghan brothers. i also have another identification with the two of you. i began my military career in the 1970s. and i believe just as both of you stated that we have the best troops ever. i know this firsthand. visiting fort jackson, i represent parris island, marine corps station, buford naval hospital, and then i'm also grateful, i have four sons currently serving in the military. so these truly are the best troops ever. and we want to back you up in every way we can with equipment and support. and i'm honored to serve with susan davis, military personnel backup families.

general, the president set july 2011 as when the u.s. troops will begin to redeploy out of afghanistan. is this a conditions-based target that will be ajust if the afghan security forces or afghan government is not ready? is the process conditions based? and what are those conditions? >> sir, i view it is a solid decision the president has made. and i operate under the assumption that we will begin to decrease our forces beginning in july of 2011. but i do that in the context that the president is also providing the people of afghanistan a long-term strategic partnership, a guarantee that we are going to be partners with them over the long haul and help them continue to protect their security and their sovereignty. i think that while everything is conditions based,ive think it will be informed by conditions we're about to put 30,000 more americans and additional coalition forces and go hard at

this insurgency over the next 18 months, between now and june 2011. my expectation is, the insurgency will be less robust in the summer of 2011, significantly so. and it's also my expectation that the afghan national security forces will be morrow bust. they will still be imperfect, but they will be more robust. i think i see confidently in the summer of 2007 that beginning the reduction of forces will be appropriate. the pace and scope of which i think needs to be conditions based. i think it goes back to how strong is the insurgency at that point. what is the pace we've seen and the growth of afghan's ability to provide for their own support. and then i think the last one is the minds of the afghan people. at that point, i hope to have convinced the afghan people, not myself, but this effort, i hope will have convinced the afghan

people that their government is going to be successful here, and they will then make the decisions that increase their support. >> thank you very much. ambassador, you've identified, and with your background in the military, and also now serving as ambassador, you say that there's progress in afghanistan. could you tell us about roads, schools, medical access, cell phone usage? >> yeah. the -- in many of those areas you've pointed to, and we could go beyond, congressman, indeed, there has been extraordinary progress. take education. in the dark years of 2001, there was only 1 million children in afghanistan going to school. and they were all boys. and they had a certain type of education, that they were being delivered. now there's about 6.5 million children going to school. about 35% of those are women. we've gone from very little access in 2001 to health care, and that's been extended, now basic health care, to about 80% of the country.

and we could go on. these are areas of great socioeconomic progress. it should give us confidence that if we get the proper strategy, that we have things to build upon. and i do believe that we've got the proper strategy right now. >> it's been reported there are no roads in afghanistan. of course, i've seen the paved roads. could you tell us the level of success there? >> yeah. there's been -- there has been great progress that's been made. there's several thousand kilometers of paved roads. one of the areas we're emphasizing in our agricultural program is putting a lot of effort into farm-to-market roads. and so yes, there's been great progress in developing the transportation infrastructure of afghanistan over the last several years. >> thank you. >> thank the gentleman. before calling the gentleman from pennsylvania, general mcchrystal, very briefly, can you identify the officer seated behind you?

>> sir, these are members of my staff. of course, we've got bill rafferty from the uk, to his right i've got our communications officer rear admiral greg smith. i've got one of my two aides, and then my executive officer, colonel charlie flynn. >> general, thank you. >> general mcchrystal, when you answered some questions from representative mckeon, you talked about your force planning and assessment of criteria, continually doing so. when president obama as commander in chief stated in march that our real goal here was al qaeda in pakistan, and then one of his three objectives was our partnership with pakistan, as you came up with your forces, was that part of the benchmarks for determining the proper number of troops?

>> most of our assessment was -- for forces was what we recommended for inside afghanistan to create conditions that would be complementary to progress inside pakistan. so i think i'm answering your question here, we did not shape our forces for anything inside pakistan. >> so the 35,000 taliban that are in pakistan were not part of your assess the of how many troops you might need to take care of those key population centers, even though the border is not recognized? >> not for operations inside pakistan. the forces we need inside afghanistan were, however, informed by conditions as we assess them inside pakistan. >> in the sense then your benchmarks are ones that as you assess what troops you need, then what the military prowess is of the pakistani counterinsurgency effort, and whether the adversary flows back

and forth is part of your benchmarks for determining as we go forward, success or an alternative approach, or less or more troops? >> they are absolutely considerations, factors that we will take in terms of the relative strength of the enemy and what we need to do. >> and were they part of your assessment? >> they were. >> are those benchmarks available? the president had promised in march that we would have benchmarks. we got a draft that was considered inadequate in a number of people's minds in september. so you do have these benchmarks by which you determined for that objective, which we say is our overall objective, which is al qaeda, and leave afghanistan inhospitable that they might not come there. you have those available in a classified form? >> i want to make sure i use the terms correctly here. when i talk about the factors, relative strength, those are

considerations in our planning. benchmarks is the term that would be metrics that we take to measure the situation. they are not dissimilar. >> but you have benchmarks by which you are going to measure your progress with the 30,000 additional troops, that take into consideration his overall objective, which is al qaeda? and however those considerations are, getting the taliban on the other side flowing back and forth, you have the metrics for that? >> we have a lot of metrics. we are still refining them into what i call mature benchmarks. >> they were good enough to come up with the amount of troops you have. >> they were. >> general -- i mean, mr. ambassador. when you were here back in 2007, you testified that iran worked toward similar objectives as we do in afghanistan. they didn't want the sunni taliban -- al qaeda there, they wanted stanlt. they wanted to put in roads. what is your assessment today, three years later?

>> on specific intelligence, i'd defer to general mcchrystal. but i would say at a broader strategic level, yes, iran, i would characterize in general, its policies with afghanistan as one where they're certainly not trying to cause instability throughout the country, indeed, a return of the sunni regime to afghanistan. they would look at it obviously as would look at and obviously as against their security interest. and they probably have shared interest as well in trying to deal with the massive narcotrafficing problem that afflicts their own society. >> when you both joined up in vietnam, we had 5,000 usaid personnel and 7500 including contractors and others in vietnam. you have 3 or 400 today. my question is the defense department in the past since 2007 has cut its oda funding from 16% of overall oda to about

9%. has that money moved into the defense procurement or have you seen any of it flow over to you in order to do this civilian surge? and the monies intended to make it happen? it is about $1.5 billion. have you seen that? >> congressman, i'm not aware of that in terms of the accounts from department of defense to department of state. what i would tell you now is that i'm very satisfied with the development budget that we have. i've put in a request for additional development funds. and that's being looked at right now. but i'm comfortable with the level of development assistance that we're providing to afghanistan and i'm very comfortable with the buildup of civilians we have on the ground. >> i thank the gentleman. mr. lobiondo? >> thank you, mr. chairman. and general mcchrystal and ambassador eikenberry, thank you for being here, thank you for your service and helping us better understand what is

happening. i want to go back to the idea that we have talked about a little bit that@ á@@@ @ @ @ @ @ mentioned, you know, it seems to me there is some ambiguity here and there needs to be clarity for the people of afghanistan to

understand our commitment and translate that into their support for us. can you comment on that? >> sir, most importantly they're going to judge us by our actions. and as we go down into areas where we have recently secured, the question back to us is always are you going to stay this time? and when we respond the marines are asked this all the time and we say, yes, we are, sometimes they'll come back and say, but you didn't last time. so what they are really judging is not our rhetoric but our performance in staying and we do have a deficit of trust from that standpoint to make up because they know that the taliban can be trusted to at least make an effort to come back and coerce. what i think we need to -- this is a serious challenge, sir. but i think what we need to stress is, one, the effects we will have with increase in forces that we have. but more importantly the long-term partnership. that's really what they want. even down at the lowest level in villages, they're looking for

long-term predictability in their lives and a long-term partnership with people who will help them. and us to help their government. so i think we should not be -- i think we should contest enemy propaganda about timelines, but we should stress really the timeline that we are on is helping them in the long-term partnership. >> well, i appreciate that. i still think there is some gaps in connecting the dots between what the afghan people are hearing and understanding, considering their apprehension about our leaving and now hearing these things about 2011 that why shouldn't the enemy sit on their hands and then, you know, after the deadline ratchet up? and i, you know, i wish you all the success in the world and we hope that that comes together, but in the next couple of months, do you expect you're going to be able to have an ability to better explain this

to the afghan people so that they're more on your side because, it seems like they don't depend on their own government. >> this is a challenge. but working with their government i think we can do a number of things. one of which is they don't -- they want to partnership, they want ainsuranssurance from us b don't want us to stay forever. they don't want foreigners in their country. in many ways, we will support them but not stay too long, that guarantee is actually a positive as well. so what we have got to convince them is we are going to help their government and their forces create conditions of security that will be reassuring and stable enough for them, and that we will have a long-term partnership with them that will make them feel comfortable to move in that direction. but i do go back. we have to prove that with our actions, not just with our words. >> and lastly, back to pakistan for a minute, i think it has

been widely acknowledged that no matter how good we're doing that if the pakistanis don't step up to the plate, we got a real problem on our hands. i'm assuming there is a renewed intensive effort to convince them to do more than they have done before, because we have only gotten rhetoric out of them in many cases. >> sir, i think that their recent actions over the last year or two against their own internal insurgency are really a good indicator of just how serious they are about conducting counterinsurgency operations and reducing instability on their side. i think that also pakistani leadership shares with us an understanding that instability on either side of the duran line threatens the others. so i don't believe that either afghanistan or pakistan can be fully stable or secure over the long haul if the other isn't. and i think that gives them shared strategic objectives. >> i think --

>> thank you. >> the gentle lady from maine, miss pingree. turn your microphone on, please. >> thank you. thank you, mr. chair. and thank you, both, for your testimony today. i certainly appreciate all you've had to say. i probably am one of the members of the committee who has deep reservations about the president's suggestion and proposal and so let me take that perspective. i do want to thank you for your comments about our troops. i think that our troops are excellent. they're skilled, they're highly dedicated. from the state of maine we deployed half of our national guard so we're very well aware of their skills, the capabilities they bring as you say, the citizen soldiers being added to the mix. they add a lot. and they also have made tremendous sacrifices and their families have as well. and in our state it has had a huge impact, the number that have been deployed. but i do also want to say that while i understand the

importance of you advocating for your mission before congress, i as a member of congress respecting the concerns of my own state also worry overall about the long-term cost and lives in particular and costs financially to this country, the increase in the deficit and the great need during this recession to provide some of the very assistance we're providing across the globe here at home. so i balance these concerns overall, not just in the mission before us. but i do want to say as i look over the troop levels of the last four years, i see two things. i see a steady increase over time in the number of american troops on the ground, and second i think we can all agree that part of the reason we're here today is because during the same part of time period we have seen a resurgence of the taliban and many have asked about that today. we have seen a great increase in the number of lives lost projected increases even further in the future, continual increase in the amount of resource spent on this conflict, and no net improvement in the security situation.

so in my opinion we have reached a security plateau where no matter how many troops we commit, how many dollars we spend, how many aid workers we send, or elections that we have or rehave in afghanistan, we cannot significantly improve the security situation. with all due respect, it seems to me sometimes like we're trying to kill bees with a bigger baseball bat and as it gets bigger, it doesn't seem to work, it is only a bigger bat. so when i hear more proposals about adding troops in afghanistan, my immediate question is what historic successes do we have? i know you've answered many questions today about the strategy, about the ways of going about it, but i have to emphasize that i don't see over history how this will work, how it will continue to work. i have deep hopes since i think this may well proceed with or without my approval, that you are able to succeed. but if you're not in 12 months, will we be back here saying well, there was a miscalculation, we should have done this, we could have done

that, what will you do if it doesn't succeed? but more importantly, historically, how do you convince me that this could work and is worth the cost? >> insurgencies are very difficult to deal with. and if you go back and study counterinsurgency, you'll find a tremendous number of unsuccessful efforts to defeat an insurgency. the reason i believe we can defeat this insurgency and the reason i believe there is great reason for optimism is, one, the nature of the insurgency. this insurgency was a group that was in power, the most prominent part of the taliban, and they were not incredible in power and they are not credible as a political entity now. so they are not the national liberation front of afghanistan coming back to free the country. in polling data in my own anecdotal discussions, almost every day with afghans, both in cities, they don't want the taliban back. the only time they accept the

taliban is with reluctance as a reality, not as a desire. so what they would like is help. i think the other thing about counterinsurgency is as we study it and we learned more about it, when you lag in insurgency, when insurgency grows it like a fire in a house. if the fire starts and you can put it out immediately, or in your kitchen with a small fire extinguisher, that's what it takes. if you ignore it or don't do that quickly enough, and it is into several rooms, suddenly the requirement to put the fire out has gotten larger. in many ways that happens in many insurgencies. and in afghanistan, because the insurgency grew as a recovered after 2001 but slowly until 2005, that grew, that shadow governance, the presence among the people was not met by increases in afghan national security force strength levels

or in coalition forces. so what i'm saying is we lagged behind that. we have a saying as we studied this that counterinsurgency is not a game where you play catch-up ball. i think we can get ahead of it this time. >> thank you. >> i thank the gentle lady. mr. kline. >> thank you for being here. general mcchrystal, i want to be perfectly clear and get this on the record. i believe you responded to the ranking member, mr. mckeon, one of my colleagues, when asked about the july 2011 date if that was a date that you had proposed or recommended. >> i did not recommend that date. but i did identify to my leadership that i felt that 18 -- in about 18 months, about december of 2011, that we felt we could make significant progress against this insurgency. >> i understand, excuse me. but you didn't recommend that such a date be put out there and announced.

i want to be clear about that. >> no, congressman, i didn't. >> okay. thank you. i notice that in discussing this date that you felt that there were those who opposed us, the enemy presumably, would seize upon this for information warfare and, quote, we can deal with it. let me just say that i hope and pray that we can deal with it, because i think it is a problem for you. and i do think that it has put ambiguity out there that we heard from both sides of the aisle today. and we're hearing from our constituents and the american people. they don't know what that date means. i've listened very carefully to you and to admiral mullen and to secretary gates and i understand that it is a start of a transition, but i think we put ourselves in a very tough position by having this date out there, with you and others, and must constantly explain to the afghans, the aill lllies and th american people. so i hope you can deal with it because i worry about that ambiguity. moving to another subject, which

is, i find, interesting and somewhat amazing and that has to do with what our hope for a outcome is. you said general mcchrystal, quote, i'm confident we have the right strategy and the right resources, closed quote. i was delighted to hear that. i have great confidence in you and have had since i guess we probably met the first time in some remote corner in baghdad or somewhere, you were doing a fantastic job. but what is it that we have the right strategy and the right resources to do? is that to win? >> i believe it is to let the afghan people win. >> okay. and is there an important difference there? we're asking our sons and daughter literally in some cases to go over there and fight, 30,000 more of them. are we asking them to go over and win? >> we're asking to go over and be on the winning team. the reason i parse this is because the afghans are the ultimate winners here.

>> i understand that. i think the parsing is interesting because it seems to be consistent that whether it is admiral mullen who i asked whenever we had the last hearing here a few days ago if we were seeking victory and he said, no, it is success. well, i don't understand why we're parsing these words success and victory and win, but it seems to be consistently coming from that table. now, secretary gates reportedly said this weekend, quote, we are in this thing to win, unquote, when talking to our men and women in afghanistan. and i certainly think that's right and i certainly hope that's the message that we are portraying to the men and women that we're sending over there, that they're going over there to win. and i guess my question to you is is there some guidance from somewhere to all of you that says we can't use the words when or victory? >> not that i have received. >> okay. outstanding. i'm very pleased to hear that. because i don't -- just amaze we

got into this parsing business. i would have been perfectly happy to see success and victory and win until i started discussions with people who preceded you in the panel and you and those words win and victory don't come out. you say at least we're helping the afghans win but i really hope there is no -- there is no direction or command or guidance that says we can't use those words because i think it is important for our men and women in that uniform to know that they're going to win. and then finally, because my time is running out very, very rapidly, i want to pick up on the points that mr. andrews and some others made and that's about pakistan and the importance of pakistan and the importance of our winning, succeeding, having victory in afghanistan of not letting the taliban take control in afghanistan, the importance of that to pakistan. it is your judgment that should

we fail in afghanistan, should the taliban re-emerge, pakistan and its nuclear weapons and its democracy would be in grave danger? >> i believe it would be a significant threat to pakistan were the taliban to succeed in afghanistan. >> thank you very much. my time has expired. i yield back. >> i thank the gentleman. mr. kissell? >> thank you, mr. chairman, and thank you, gentlemen, for being here today. and general mcchrystal, i want to go back. you said that three biggest challenges you felt we had was the growing an army, the governance and the afghan palme themselves. and i like to give both of you comments on this and i ask you the same question, i was in afghanistan back in early november. the sense of afghan nationalism versus all the other influences of tribal, history, religion, is there a strong enough sense of nationalism that the afghans will come together as a nation and pull this thing off with us

providing the security? >> i do believe that's the case. when i first went to afghanistan in 2002, congressman, i knew very little about the country. one of the big surprises i got back in 2002 was to get a better sense of afghan nationalism. they have tribal identities. they have community identities. but to an extent, i find an extraordinary afghan when asked who are they, they are an afghan and they're very proud of -- they're very proud of their afghan identity. there is much to build upon there. >> that's absolutely the case. and we deal with afghans and you say, well, what are you, they say, well, i'm an afghan. much of the ethnic divides that we hear so much about now really came at the end of the fight against the soviets with the rise of warlords in the civil war. and most afghans want to repair that and get behind them. >> second question, the same

line of thinking of the governor ans. one thing mentioned to us a lot when were visiting last time was a new developing classification, people in the ministers. and while we have concerns about president karzai, mr. ambassador, if you could address that briefly for me, please. >> as i said earlier, congressman, there really is a very impressive group of ministers right now in the afghan cabinet. and, indeed, their president karzai's ministers. he does get the credit for naming of those ministers, finance, commerce, health. i could go on. and he's also committed very publicly in his inauguration speech to improve upon the quality of those important ministries. we're waiting to -- for his announcements to be made. we expect the first round will be within the next several days.

we have a degree of confidence they'll be improvements in the central government. >> thank you, sir. general, in building the afghan security forces, this is getting into a detailed level, but i think it is important, one of the areas we hear the difficulties is that only, like, 10%, i believe of the afghan military force is literate. and so to have them learning skills, reading maps, doing the basic day to day, how are you coping with that in terms of building this force? >> that's an important point. one is literacy training and not only is that important to help make the force better, but it also is very popular. and it helps get people in the service and it helps keep them in the service and makes them a stronger service so we are ruining literacy programs. the other thing about it, though, when people say ill literal peopli literate people can't fight, i remind them that the taliban is illiterate. it is not automatically a defining ability to be a good soldier.

>> i thank you, all, for being here. and i would like to finish with just a comment. and i've spent some time with general fields, c guard, i think that's so important that we do monitor our commitments in the civilian areas, what we build, what we do, to make sure we're giving the people what they need, what they want, and are getting the input from the afghan leaders. it is just so important. thank you so much, and i yield back, mr. chairman. >> i thank the gentleman. mr. conaway? >> good morning. or afternoon, now. thank you, sir. thank you, mr. chairman. general, the numbers of afghan security forces both police and military between 300 and 400,000 have been thrown around. the 300,000 being key to next summer. do we have the billetts in place to train 300,000 or the differential between where we are now assuming some of them are properly trained to get to

that number? and then on a long-term basis, president karzai said today it is going to be 15 years before he can afford to maintain that force on his own. so ambassador, if you'll talk to us about how we're going to pay for this force of 300,000 to 400,000 or who is going to pay for it and can we get there by this time next summer or by next summer? >> sir, we're at about 180 and 190,000 assigned between the afghan army and police right now. and we'll continue to grow up on and a -- that they can meet, how fast can they recruit and train. we'll take a significant force out of what the president just approved and put that into what we call initial entry training at the training base this and will help our capacity grow immediately along with our coalition partners who also put people into that command, nato training mission in afghanistan. and then over the long haul, the rest of the development of the force, in fact, most of the development occurs when they're

in units. that's by partnering with our force which is, again, a simple tenet of the strategy as we go forward. >> we can talk about the 300,000, about 300,000, i think, next summer in place? >> we won't be there by next summer. we will be by next fall of 2010 we expect to be about 134,000 in the police, and just maybe a little over 100,000 in the -- i'm sorry in the army, a little over 100,000 in the police. it would take another year, summer of 2011, before we would talk about a combined number of 300,000. >> ambassador, how does the afghan government pay for this increased force? >> three points if i could, congressman. i saw president karzai's comment this morning as a result of his meeting he had with secretary gates. fi first point is clearly the united states of america very important allies, we're going to need to have a long-term security assistance relationship with afghanistan. we're going to need to provide support, training support,

budgetary support, we know, in the years ahead. we don't know exactly at this point in time, of course what that level would be. the second would be very importantly in our programs in afghanistan, we are working hard right now to help afghanistan's economy move forward so they can have more autonomy. our agriculture, we're helping to develop revenue collection systems so we're cognizant of having the afghan economy and government move in directions they're going to be able to pay for. third point here, i don't know exactly what the ratio of cost is for an afghan soldier to an american marine or army soldier deployed in afghanistan, maybe 1 to 25, maybe 1 to 50, it is at a ratio right now where obviously it make good sense if you're only looking at the finances of this to invest more in the afghan national army and to have the afghan police and army defending their own country. >> ambassador, 970 plus of

100,000, how many of them sleep in kabul? >> right now out in the field -- >> that's more than i thought it would be. >> it has been a very impressive gain. >> general, one final, you've been beat to death about the head and shoulders about these numbers, but let me ask you one other different way. you're going to get 30,000. your focus is on population centers. if you had 40,000, what is that differential in terms of population centers that won't get the attention that it would have gotten with 40. are those communities going to be left to the taliban until we get to them later? what is the cut on that? >> congressman, the key thing is i'm going to get at least 37,000 with coalition forces and what i recommended did not say u.s., it said forces. so i'm really just about what i -- >> but are you confident those additional,0 7,000 will come wi

the limited number of caveats that you can put them where they need to go? >> i think we'll be in good shape. >> so the effect on population centers will be few communities or how do we understand that? >> i think it will be very small because as we laid out this, we focused on the south and east, but we also were going to put small parts of the forces elsewhere. i think between the 37,000 and the fact that they are flowing very quickly that we're going to be able to cover the areas we need to. >> general, thank you very much. i trust you. >> thank you very much. we have four votes have been called and the gentlemen, our witnesses have to leave at 12:30. we have time for mr. nye and mr. hunter to ask one quick question. mr. nye, you're on for five minutes, quickly. >> try to be quick. thank you, both for being here today and thank you for your service to our country. before swearing into congress this year, i spent some time

with civilians in afghanistan and iraq. i'm left with two clear impressions during this process from my experience in the field, that's one, i am absolutely confident in the capabilities of both our military forces and our civilian forces to successfully run a counterinsurgency program in afghanistan. but my other impression is i'm left with a very serious concern about the fact that our success here is largely dependent on what happened on other side of the border in pakistan where our civilian -- to a large extent and our military forces are not really present. recognizing you're not responsible, either of you, specifically for issues that concern areas outside of afghanistan, general, i wonder if you could comment on the additional forces sent what kind of capability did they give us to control the ability of our enemies, to cross that border, and harm our mission in afghanistan? >> we will put some of the force along the border, some

partnering with the afghan border police, some operating in regular military locate, but the bulk of our forces will be protecting the population. what it will really do is if elements come from across the border what they won't be able to do is get at their objective which is the people and the key population centers. i think it is a denial that really upsets their entire ability to operate their strategy, which is undercut population security. >> thank you. i appreciate that. i'm also concerned with our ability to get at our forces who are there protecting the afghan population. are you confident we'll be more successful with that mission given the initial a decisiaddit? >> i am. >> thank you very much. ambassador, you've mentioned the importance of not just focusing on the national level, but focusing down at the local level. can you give us an idea of your confidence, the ability of the afghans to work together with us to develop those capabilities so that we'll be able to hand off? >> congressman, we're innovating now, working closely with our military partners to try to figure out the right

combinations of local governance, reinforced by central -- by the central government of afghanistan. what is the right mix of very basic services that need to get delivered, what are the right kind of combinations of justice programs. what i would tell you that if some areas i have confidence we're seeing the outlines of what success could look like, but against that, if you were to ask me what is our number one challenge on the civilian side right now, it is at the local level, trying to figure out as we go through the mantra now the approach of clear, hold, build, but the transfer. this is probably our biggest challenge right now as we go into rural areas of afghanistan or population centers in the south, in the eastern afghanistan our military forces move in. how do we get to that point that we can actually transfer governance responsibility, deliver of services to the afghan people? this is one of our greatest challenges. >> thank you very much. appreciate that.

mr. chairman, i yield back. >> i thank the gentleman. mr. hunter? >> thank you, mr. chairman for the opportunity to squeeze in a question here. i thank the gentlemen for being here. we all talk about critical enablers and how short we are on those enablers. we mentioned over and over again we're short on rotary wing aircraft, counteried stuff now, short on trainers, short on isrs, short on civilians, short on infrastructure like hangars, things like that, so you add 30,000 troops, then what? how do you identify who will be the enabler and who will not be and this july 2011 timeline compared to your troop cap of 30,000 or 33,000 or 40,000, whatever it is going to be, that's going to be a hard and fast troop cap. you're going to have to say, general, grunt, you go home because i want a new imagery analyst out here. how are you going to make that distinction and what is going to make you decide when it comes to enablers, or actual combat

troops? >> actually it is a great position to be in from the standpoint of if i get to shape the force and what we need more of and what we don't need. of the 30,000 right now, my anticipation is a tremendous percentage of that will be enablers. rotary wing, intelligence, combat engineers and what not. we are going to -- it is my intent to move significant combat forces which will provide security, but because everything is a team at this point, the distinction starts to blur between whether a rotary wing aviation is an enabler or a combat force. i'm very comfortable that within that force i'll be able to shape it and what i would expect to do is over time continue to shape it. i expect and general petraeus and i talk about this, over time, to be shaping our brigades into advise and assist brigades, which are slightly different structure and it is what we have gone to in iraq. it allows you to have a more robust ability to partner with

host nation forces than you do in just a straight normal structure. >> in the interest of time here, we don't have the assets now for counter-ied. 80% of your casualties are ied casualties. you don't have the enablers now. you flood in 30,000 people, young americans, we can't do it now, why are you optimistic you'll have the enablers to do it then when you start flooding the theater with more people? >> the counterto ieds is security. there is no isr. there is no engineer asset. there is no technical jammer that defeats ieds completely. so what you have to do is secure an area. that's when ieds go away. when you start to get security in the locals start turning in ied locations or preventing them, that's what it does. you do all those things at the same time. and i was visiting engineers who were grievously wounded in afghanistan yesterday at walter

reed and they make unbelievable contributions to this. but they need to be part of a team that produces security in an entire area. so that's what i think the shaping of this force will allow us to do. >> lastly then, when you look at this, for instance a marine corps regimental combat team, vu to tell them you might have to leave some people back because you don't fall under this specific troop cap. because they have an actual number they have, you're going to say, no, you only get 5,322 people, not 5,327 people. how are you going to micromanage that and should you really be doing that? why not let the marine corps bring its whole regimental combat team? you won't be able to do that now under this hard and fast troop cap. >> yeah, we always do that, though. we grow up. i grew up as a paratrooper and who you put on the airplane, you got a certain number of seats and you take people based upon what the mission is on the ground and you decide it. it is the same thing at large levels. in the marines, the regimental

combat team and the meds are all carefully crafted for the mission at hand. and they do an extraordinarily good job at doing that. that's why they're so effective on the ground. i'm pretty comfortable i won't have to micromanage, i'll be able to work with all of the players and say here's the mission we're doing, but here are some constraints you got to live within and do the best you can there. >> i thank the gentleman. we appreciate you being with us, your testimony. the young man, young women in uniform today are the finest american troops ever. i'm convinced. i'm also convinced that the leadership that we have provided by general mcchrystal and ambassador eikenberry are the finest. that we in america can provide. i hope that you will stay in touch, tell us in this committee what you need, tell us what your

recommendations are, and we wish you the very, very best and godspeed. thank you.

this is about two hours. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> the meeting will come to order. good morning, and thank you for being here. the investigation has taken as behind-the-scenes of one of the biggest bailout in american history. every bank of america senior executive involve hat -- involved in this has told the

committee that they were not forced to go through with this. they told us that they decided to go through with this deal because they thought this was in the best interest of bank of america and the shareholders. kenneth lewis has also said that no one in the government did anything improper during this transaction. if there are still people who want to say that the government forced bank of america to go through with the deal, they are turning a blind eye to the truth that we now have before us. with the deal they are turning a blind eye to the facts we now have before us. over the course of this investigation, we have been given testimony from the top executives with bankamerica. we have conducted numerous interviews, with the unprecedented interviews for internal records.

subpoenas to the federal reserve for internal records and reviewed nearly half a million documents. most importantly, public scrutiny and oversite by this committee has produced tangible results. today, two days ago, bank of america paid back its entire $45 billion federal loan plus interest. in addition under pressure from the committee, bank of america agreed in september to pay $425 million to the treasury department in compensation for toxic asset insurance. the bank received, but never paid for, and some, our bipartisan investigation has resulted in the american taxpayers receiving approximately $47.5 billion. even in today's world that is real money. and every member of this committee should be proud of our

efforts, and i take the time to salute you for your involvement and your hard work, and it's been great to get to this point. while we have thoroughly examined all of these issues involved in this case, i agreed to grant the ranking member's request for one more hearing to tie up some loose ends that he is concerned about. this will close the committee's full, fair and successful investigation of the bank of america, merrill lynch merger. on that note, i thank you, and i yield to the ranking member of the committee, the gentleman from california, congressman darrell issa. >> thank you, mr. chairman, and thank you for holding this hearing. i have already told the chairwoman that quite frankly i do believe she's the book end of this investigation. she's the book end because tim geithner has never appeared before us. she's the book end because, in

fact, there never really was much there, there. bank of america is a regulated bank. monies were made available on an extraordinary basis and have now been paid back. today in the short time that we will take of the chairwoman, we in the minority will ask, where do we go from here? the security of our banks, fdic insured banks. the future of banks conveniently becoming banks when times of trouble and perhaps not being banks in other times. these are important questions that this committee should ask, not because of the financial services committee, but because we are the watchdog of the american dollar and the american process and the laws that are passed at the executive branch and its affiliates must adhere to mr. chairman, i'm deeply concerned that in your opening statement you quite understandably said that the american people were paid back $47-plus -- or $45 billion with

interest over $47 billion. i must caution you the american people didn't get a penny back. that money has not come back to the american people. in fact, it's simply been put back into the slush fund that was created under a republican president with tim geithner and hank paulson's assistance and today, in fact, not a pen hey been paid back to the american people. that money is being recycled into do-good causes or whatever the president in this administration would like to do. mr. chairman, i look forward to us getting the american people's money back as it was promised. we were told that, in fact, we would be paid back all of our money and probably with interest. mr. chairman, unless that money comes back immediately, when you look at chrysler, general motors and, of course, 31-plus billion dollars to aig that tim geithner himself now said we will not get back it is clear that even if all of the other monies given to

various organizations through a process of buying mostly preferred debt, if, in fact, all of that is paid back with interest, the offset of the nan we now know we're going to lose would barely make us whole without considering interest is anything other than principle payback. so, mr. chairman, this is the book end. we have only a few questions for our esteemed witness and we appreciate you bringing her here today, but this is not the end of presenting the american people's money, not the end of this committee's jurisdiction of ensuring that the intent of law becomes the fact in law. with that i thank the chairman and yield back. >> thank you, gentleman, for a statement, and that maybe what we can do is that with some of this 47.5 billion, that is use it to create job and job opportunities. maybe that's a good way to use it. >> mr. chairman, i would certainly appreciate a bill authorizing that and i look forward to working with you on such a piece of legislation,

which is our constitutional sporchlts thank you very much. appreciate it gentleman and look forward to working with you. mr. chairman, would the ranking member yield? >> i see -- >> if the chair certainly could -- >> would the chairman ain lew me to just respond to something that ranking member said? >> very quickly. >> very quickly. i just want the ranking nobody know there are members on this side of the aisle who share his view about the need to address the deficit and that the first obligation of the repayment of t.a.r.p. money or the use of unused t.a.r.p. money ought to be that. >> thank you very much. this hearing is being countried by the domestic policy subcommittee, of course, and they have done a superb job in working with us on this issue, and i now would like to yield five minutes to the gentleman from cleveland, ohio, mr. kucinich, the chair of that subcommittee. >> thank you very much, mr. chairman. mr. rice. members of the committee.

on december 5, 2008 the shareholders of bank of america voted to approve a merger with merrill lynch. only 12 days later ken lewis, ceo of bank of america, made a call to then secretary of treasury hank paulson initiating a process that led to addses 20 billion bailout of the merge are and a promise of government insurance for losses up to $118 billion. the chronology of events strained belief. was it true that the financial situation at merrill lynch shifted so dramatically in that short amount of time as ken lewis said? or did top management know or should they have known about the deteriorating situation at merrill lynch much earlier? did they fail to make necessary disclosures to shareholders? bank of america would be in legal jeopardy if it failed to disclose information to shareholders about large losses at merrill lynch known or knowable before the shareholder

vote bp the subcommittee investigation found evidence of possible security laws violations at bank of america. bank of america unreasonably and negligently relied on internal fourth quarter '08 forecast created by merrill lynch that omitted any forecast of how the cdo, cds and other toxic assets would perform during the quarter. the former merrill cfo admitted that this forecast was not in fact a valid forecast. bank of america knew at the time that the forecast was of questionable validity. however, bank of america did not do any actual financial analysis to make up for the merrill omissions. instead, bank of america merely pull add number out of thin air, which was recorded on a forecast as the gut feeling of neil cotty, bank of america chief

accounting officer. bank of america simply created and assumption that merrill lynch's ill liquid assets would almost break even for november thereby spreading october's bad results that were too much. the attorneys add bank of america and at lipton did not question this information. they advised bank of america not make further disclosures to its shareholders based on the official forecast and the gut feeling. with weeks reality crowded out wishful thinking. merrill lynch's exotic investments continued to lose large amounts of money causing merrill to lose over $21 billion in just the fourth quarter. bank of america went running to the u.s. government for rescue. when i asked ken lewis about this at our first hearing he told us that he relied on advice of counsel. protecting shareholders is often in the final instance the responsibility of corporate general counsels and their outside counsel. the subcommittee's investigated

findings demand a question. where were the lawyers? where were the lawyers? the glaring omissions and inaccurate financial data and the critical november 12th forecasts so obvious that they should have been, should have alerted the attorneys to the necessity of reasonable investigation before making a decision of bank of america's legal duties to disclose. the apparent fact they did not mounts such an investigation makes the decision not to disclose merrill's loss and the shareholders and egregious violation of securities laws. the stage for these violations set by former sec chairman christopher cox. at exactly the time that cdos and cdss pro liferrated in other markets, the chairman discouraged formal investigations are and security fraudsters. bank of america's country was the corporate reaction to years

of weakening enforcement at the sec under chairman cox. chairman shapiro made efforts to turn the policy around. i applaud the sec for enforcing the law in the case of the nondisclosure of 9 merrill, failure to disclose accelerated losses at merrill lynch before the shareholder vote is more significant. indeed. those undisclosed losses dwarf the amount of undisclosed bonuses. the reliance on counsel defense asserted by ken lewis raises the broader question, will the securities and exchange commission allow corporate management to rely on the advice of counsel defense and then allow the counsel to avoid liability for their advice? the investing public, and now this congressman wants to know, where is the sec?

as of yet, we don't know. thank you. >> thank you, gentleman for your state. i yield five minutes to the ranking member of the domestic policy subcommittee mr. jorden from the state of ohio. >> thank you, mr. chairman and thank you for holding today's hearing. i look forward to exploring the role between bank of america and merrill lynch, this committee's investigation "veals important abuse of power. as i've said before, while the access of government officials took place in a time of significant economic challenges and, you know, certainty there must be limits to government action even in a time of crisis and those limits must be respected. also keep in mind the action of government officials in this merger occurred after many of the nation's banks were forced to accept taxpayer money through the t.a.r.p. program. we know in october 2008, from testimony ken lewis gave at first hearing on this issue, that october 2008 meaning mr. paulsen and mr. bernanke and geithner and ms. bair brought the ceos to treasury don't

demanding they accept in exchange for money of the government's choosing. look forward to learning about mrs. bair's role in that meeting. this investigation occurred to, continued to reveal the unintended consequences and negative implications of the government's intervention in the private sector and hope the congress will apply these lessons as we debate the appropriate framework for our financial system as we move forward. with we have with us the chair of the federal deposit insurance corp. we must share every witness in, so please raise your right hand. do you solemnly swear to tell the truth, the whole truth, and nothing but the truth? let the record reflect that the witness has answered in the affirmative.

you may began with testimony. >> ranking members, and members of the committee. as requested by the committee, my testimony will focus on the fdic and their role -- >> do you want to pull the microphone? >> >> and please be closer. >> as requested by the committee, my testimony will focus on the role of the fdic to provide insurance to the bank of america. bank of america is an open institution, and the fdic is very sensitive about any discussions, with the operating institutions. in december 2008, bank of america announced that they would acquire merrill lynch. the acquisition was approved by the federal reserve on november 26, 2008, and slightly before

december 21, 2008, the fdic was told by the federal reserve and the treasury that bank of america had expressed reservations about the acquisition of merrill lynch. it was clear to officials from the federal reserve and the treasury that systemic risk would exist to provide assistance -- that would affect the ability to provide assistance. the fdic received a draft term sheet, describing the assistance package, with a capital infusion and a transaction with the fdic, and the treasury, to guarantee against certain losses. the fdic was continuing to analyze how much the exposure was, and how much this was impacting the fdic. there were ultimately persuaded

that they prevented a systemic risk and that the transaction would mitigate the risk, and the deposit insurance fund in a cost-effective manner. this also limited their risk to a small portion of the exposure. fdic's risk to a small portion of the covered exposures recognizing the fact that most of the exposures resided with the investment bank and not the insured depository institution. on january 16, 2009, the plan treasury capital infusion and the treasury fed fdic transaction were announced. in early may 2009, b of a asked the ring fest transaction not be completed. moving forward we have work continuously with congress the treasury and the financial regulators towards creating a more resilient, transparent and better regulated financial system. one that combines stronger and more effective regulation with market discipline. one of the lesson swres learned over the past few years is that regulation alone is not enough.

we need to establish an effective and credible resolution mechanism to ensure that market players will actively monitor and keep a firm handle on risktaking. we commend you and your colleagues in the progress you've made in moving towards providing the regulators with the tools to effectively deal with future crises. thank you and i will be pleased to take any of your questions. >> thank you very much for your statement. let me just state to the members, we're going to be really tight on the five minutes today, because five minutes really means five minutes. which means five minutes to ask the question and for the person to answer the question, because i promised the chairperson i would have her out by no later than 11:15, 11:20. we want to respect that and try to move forward. let me just sort of ask one quick question. are there step us think congress can take to avoid future bailouts of the banking industry? >> yes. i think we have put a very high priority on a robust resolution

mechanism. we have that for insured depository institutions and when smaller institutions start to fail they are put into a very severe resolution mech name requires shareholders and unsecured creditors to take loss, generally complete loss, for non-bank entitys or activities outside of banks this resolution authority does not apply and we think something very similar to the fdic process which is shareholders and creditors take losses, not the government, is very important, and we think that that, the house bill that is on the floor now moves very well in that direction, and we think it should be very clear and the resolution authority should specifically ban assistance to individual institution going forward and i believe that is sass in the house bill. >> i now yield to the gentleman from california, ranking member congressman issa. >> i ask that -- go first. >> the gentleman from arizona. he nields to the gentleman from

arizona. >> i yield. >> gentleman from california. >> okay. >> the gentleman's yeeding to me to be expeditious. madam chair, i want to be brief also and i've got just a series of short questions. first of all, from the standpoint of the fdic, looking back now, wasn't, forgetting about whether the merger was a good merger, all the other things that this committee worked on, wasn't the underpinning of the additional money, preferred stock as a form of loan, wasn't that, in fact, the most appropriate thing for the fdic to approve of so that the capital worth of bank of america would be undeniable? >> well, i think it's always hard in hindsight, to answer questions like that. >> actually i normally find it easier in hindsight. i'd hate to have -- >> it may be easier in

hindsight. i guess it's easier to re-evaluate decisions that were made. i think -- the distinction needs to be made between the insured depository ins sthugs had a strong capital position with other activities going on in the bank holding company. and so i think if you're looking just to the insured depository institution with exposure there's a question whether additional capital was needed. i do think that -- >> i'm not saying whether it was needed. it's clear that in hindsight, it's clear they didn't need it, because they've paid it back to you essentially without it being from actual new money in any large amount. they passed the stress test and they passed the stress test and said they could pay it back. so i know that part of hindsight is clear. >> right. >> but the real benefit of the $45 billion of loan, and i repeat, it was not -- it's not -- we didn't bail them out. we didn't give them anything. we bought stock. we bought the worth of the

company, and we got interest guarantee and the ability to get our money out ahead of everyone else. preferred stock is not all bad. >> right. >> but the effectiveness of it was to, if you will, over-capitalize the company in hindsight, but wasn't that essential lay good thing in that if there was no other benefit to t.a.r.p., the confidence of knowing that these companies, these particular banks were extremely well capitalized, not as to the stockholders but as to -- the depositors, wasn't that effectively the good thing that came out of this arrangement? >> well i think, yes. the capital investment certainly created a fortress balance sheet. that was the original intention of all of these capital investments under t.a.r.p. again we not, the only role we have is on the ring -- not the treasury. it was a treasury decision. absolutely going to have a stabilizing affect, yes. >> the next question is the

harder one. many banks and -- many non-banks decided to become banks conveniently in this crisis. >> right. >> many entities in fact fled to the fdic and the fdic finds itself with its funds, funds which are designed to ensure that we never have to actually put in taxpayer dollars, those funds are stressed right now. going forward, do you believe that in fact in the future people should be able to run to the fdic, run to being a bank, when it suits them, even if they hadn't been when it didn't suit them? >> no, i don't think they should be able to do that. absolutely not. >> is that -- a reform that you presently see on the horizon that would give you that ability next time to say, you better be there early or not come at all? >> well i think two things. i think we need a robust resolution mechanism so when entities get themselves in trouble, they don't get government assistance. they get put into receivership. i think entities asking for

assistance maybe won't ask for assistance so much, if they know that that is the reaper cushion. in terms of entities becoming bank holding companies and having insured depository, not just for that or fed lending facilities, there needs a systemic risk council that would decide and have the power to say to an entity that became a bank holding company perhaps later doesn't want all the reg tlags entails they still need to subject themselves and be subject to pro verbal supervision. they can't become a bank holding company when it suits them and escape it when it's not suiting them. >> thank you. i yield back. >> i yield back. >> thank you very much. i now recognize the ranking member -- i'm sorry. chairman of the policy committee. yes, mr. kucinich from ohio. >> chairman bair, do you have any concerns that america may

face yet another bank collapse? >> no, i don't, but i think there's a lot of work that needs to be done to continue the stabilization and the cleanup, and i think the regulatory reform efforts going on right now in kongs are absolutely crucial to that. >> do you think banks that are too bill to fail or too big to exist ought to be broken up? >> well i think there -- the problem with too big to fail is the same problem you had with fannie and freddie. an implied government backstop which feeds into risktaking. if shareholders and creditors think they have the up site and the got the couldn't down side that is going to contribute to this. we think that's the major crisis, hate to pound sound bike a johnny one know, congress needs to establish a robust and severe resolution. he niche that says they will take losses if these institutions go down. right now they're happily you know, feeding extending credit

and making equity investments and i fear they're not really doing their own due diligence in terms looking what's going on in the large institutions. do they understand the risks? do they understand, is plgt on top of those risks? i don't think we have market discipline now and we need that. >> do you have any kwern concerns banks may be over -- derivative markets? >> absolutely. financial institutions, i absolutely have that concern, yes. >> what can you tell the american people about the security of their bank deposits? >> they are very secure. that is one thing we have done very early on with a public information campaign. the resolutions smoothed. everyone's deposits completely protected as they always have been. there is no question the fdic has resources to deal with whatever may come. >> would you tell us what those meet resources are to secure security of deposits? >> we are full faith in credit and have a treasury line and congressional commitment to back insured deposits. that's in effect for 75 years.

right now we have required pre-pavement of assessments that's going to bring in another $45 billion at the end of the year which will bring our crash position probably in the first quarter around $60 billion, given what we already have and additional monies we're going to bring in. so i think it's a very strong cash position. we can borrow up to $a 500 billn if we need to do that from the treasury department. i don't see a reason that would be necessary. >> thank you. yield back. >> now yield to the ranking member of the full committee. >> thank you. i'll be equally brief this time. madam chair, you on january 9th determined it is clear that -- i'll quote it. it was clear that officials from the federal reserve and treasury believed this systemic risk would exist absence agreement by the government provide assistance to b of a. that's the point which you came in. in is true the deal was already

done prior to that time to give them the money? isn't that what we've discovered? >> well i will tell you i know conversations that already occurred between the treasury and fed and mr. lewis prior to the time we contacted. i wasn't privy to those conversations, so i don't -- >> i realize we've been unfair to you on the tail end of everything and only if something was bank or about to become a bank holding company. >> right. >> let me follow-up with this question. specifically in your role at fdic chair, if you had a choice and you were told what would you like to do? when b of a said we're going evoke the mac or give us more money. it doesn't matter who stead but that occurred, wouldn't the fdic's position in the future be, go to congress, or go to the t.a.r.p. and bail out merrill lynch directly. this, if they don't want it and there's money needed, and obviously there wasn't new management or consolidation in the merger at all, wasn't it

really, go bail out merrill lynch, do whatever you're going to do with mer many lynch, they're not a bank and why should be be with me? isn't that see leshly you and future chairs position that you would prefer? it is important to act as one government, but my first job is to protect insurance deposits. with the 15-billion dollar insurance fund, i cannot tell everyone how with what we have, and i have to make certain that we are able to protect them, first and foremost. it would have been nice to have the other mechanisms available. >> as we are quarterbacking up here, and we see that chrysler and general motors qualify, if there was any mistake, it was this very lucrative merger that they are very happy about. but when faced with the dilemma,

it was merrill lynch, they should have made a decision relative to them, go in with the bank holding company and they would then have a systemic risk problem, which would come to your fourth step, with $45 billion of taxpayer money being paid back in play. >> there were already a bank holding company. this was an acquisition that was funded into the structure. >> on a lighter note, this committee, on a bipartisan basis, moved for a common platform, although not what you use. we mandated a comet -- a common uniform platform so there will be transparency either to those who are clear, or in the

information that is available to the public, directly to the public. what is your experience and what would you expect, with xprl and the ability that it gives you to look down and allow others to live down? -- look down? ose not my forte. we have been leaders in this area, i think we've had a good experience and i was certainly offer the people to give you a more detailed briefing on that, if you would like. >> last follow-up question and i'll yeed back. do you believe that this committee is on the right track when we insist that databases be common, robust searchable and interactive so that, in fact, when appropriate the american people can have transparency is? >> right. you may get me in trouble with other agency if i can follow that a positive experience and i encourage others and this

facility to this. >> thank you. i yield back. >> thank you. i now yield to the gentleman from maryland, congressman cummings. >> thank you very much. thank you for doing such a superb job. >> thank you. >> i recognize that the fdic's role in the bank of america bailout was different than that of your fellow regulators at treasury, and the federal reserve, but nonetheless, we have a responsibility to explore all aspects of this tainted transaction. in your written testimony you note that the fdic was notified of potential government assistance in the bank of america merrill lynch merger around december 21, 2008. you go on to say over the next three weeks a discussion continued about bank of america's financial condition and the nature of the assistance to be provided. you discussed the case with secretary paulsen, chairman bernanke and others on january 9, 2009. and you were provided a draft term sheet on january 14.

this is all correct i hope and i'm working from your own written testimony. is that right? >> that's right. >> my concern is the fact that in the past hearings in this committee we have heard about how ken lewis briefed his board of directors on december 22, 2008 and again on december 29, 2008, indicating at least $12 billion in fourth quarter merrill lynch losses would be covered by the federal government. i'm not asking you what happened at those meetings. i know you weren't there, but what i'd like to address is this -- do you have any reason to believe that ken lewis had sufficient basis on the structure of any potential deal to brief his board with such certainty? >> no. again, we weren't privy to any of those discusses and certainly the fdic had made no decision at that time about whether we would participate and to what extent we would and how that would take place and whether it was

necessary. >> based on your testimony, the government regulators were still reviewing the bank of america positions and working on whether a deal would occur well into the new year. certainly it doesn't sound like it was a done deal. does it? >> no. and, again, i can't -- we only a small piece of this. from the fdic's perspective, we committed to continue talking with the fed and treasury and examine the facts and analyze to what extent assistance would be appropriate. we had not made any decisions during that time period, no. >> this is not you saying. this is me saying this. one could read this as mr. lewis pulling a fast one on his board and, to get them to approve the deal. unless you want to comment, i will yield back. >> i think i'll stay away from that. thank you. >> thank you very much. thank you, mr. chairman and i yield back. >> thank you very much. thank you for those questions. now i yield to the ranking

member of the committee. mr. jordan. >> thank you, mr. chairman. chairman bair, let me, i've looked at your record and regulatory policy and very impressive. i'm just curious on a, in a broad context, are you, like i am, a bit troubled, frankly for me it's more than a bit, troubled by this, what i've called unprecedented involvement by the government in the private sector? whether we're talking president of the united states deciding who gets to be ceo of general motors. whether we're talking about the fact that we now have in the united states of america something i thought i would never see, but a federal government pay czar telling private american citizens how much money they can make, and bailouts and t.a.r.p. and second stimulus coming in on and on it goes. so just as a, an accomplished professional individual, i mean, are you nervous about this

general direction? again, this unprecedented involvement of the government in the private marketplace? >> absolutely. and we think better tools are needed for the government to deal with this in different ways going forward. we're very much opposed to, i believe the house bill does this, prohibits capital investments in banks, in financial institutions going forward. i think government ownership and financial institutions have created not only a lot of public outcry and cynicism, but also very difficult issues about what should be private entities and private sector decisions based obviously on some prudential regulatory standards but government ownership has created a whole list of problems and we would like to end that going forward. >> that being said, let me take you back. this, again, pointed out in the my opening statement was brout out when we had ken lou kniss front of this committee several months ago. the meeting that took place in

washington, d.c. ten days after the t.a.r.p. legislation was passed. it was passed, designed to go in, get the credit off the books straighten up the balance sheets et cetera. ten days later the nine biggest banks were brought to the nation's capital. according to mr. lewis' testimony, mr. paulsen, mr. brn band you were in that meeting and mr. lewis indicated he had no idea what the meeting was about, that they, that the meeting went with a piece of paper slid across the paper to the banks telling them how much money they were now going to take from the t.a.r.p. program whether they asked for it or not. and that they had to sign a statement saying they were in agreement to that. >> uh-huh. >> is his recollection of that meeting accurate is that in fact what took place? again, not ten days after we were told, the congress of united states was cold, that the t.a.r.p. program, the money that was made available be used for something entirely different? >> right.

we -- i was invited to attend that meeting. i was not involved in decisions about who should come to that meeting and who is going to get what. my role was confined to explaining the temporary, debt guarantee program and that was the only remarks i made to explain that program. and i did not opine or comment at all on the capital invechlgts piece. we were not involved in the decision-making and remained silent during that discussion, but, yes, these banks was strongly encouraged to take this money. >> going back to your answer to my first question, were you troubled that day about what you saw taking place in that meeting? in light of the fact you just said that you -- two statements already today. troubled by this unprecedented involvement of the government and in response to mr. issa's question, the government should act as one. were you troubled by what took place in that meeting ten day

afrs it had been passed for an entirely different purpose? >> yes. these decisions were made in the fog of war. these decisions had to be made very quickly and the situation was becoming more and more destabilizing and also there had been an international agreement to use a combination of liquidity guarantees, we were involved in capital investments to stabilize the system. i frankly, the idea of it took my breath away, and it was quite unprecedented in terms of the private sector system that we have, and so i was concerned and i have said -- >> was that the first time -- did you know what was taking place in that meeting or did you come into that meeting like ken lewis -- >> we were told in advance who was going to come and they would be asked or enkwurged to tame capital investments. absolutely told that in advance. i did not weigh in one way or the other. i confined my troel explaining the debt guarantee program.

i said in retrospect i wish we had. on troubled asset relief, we still need a program and would like to see perhaps congress authorize that going forward. that still needs to be done. >> if i could, real quick bp i appreciate what you said, chairwoman. this has been very helpful. if i could say one other question, mr. chairman. the talk this week is about using t.a.r.p. dollars for stimulus for something else out of the scope. >> right. >> again, i think it was done already. but i totally disagree with this. your thoughts if you would, on the idea of using t.a.r.p. money for second stimulus. >> well, i think you're asking me something beyond my pay grade, because i like to confine my public comments to areas i think appropriate fall with my sphere as chairman of the fdic. i do think there needs to be more focus in terms of troubled asset relief.

we still have toxic assets on the books of banks particularly the smaller banks really did not benefit from the capital investments. the smaller banks are a large share small business lending but there need to continue to work out and reserve against these legacy loans they have, it's inhibiting their ability to engage in new lending. we think it would be appropriate and consistent with the troubled asset relief program to try to deal with that problem. but beyond that i would not want to opine about other uses others might want to make of the t.a.r.p. money. >> gentleman's time expired. >> thank you, i yield to the jae from virginia. >> congressman connolly, i thank the chairman and welcome chairwoman bair and would ask you to move your mike closer. i cannot hear you because of the acoustics in this room. i'm listening to my friend from ohio and he loves to use the phrase, this unprecedented

federal intervention, and the financial sector as if we didn't have the worst meltdown in 70 years a year ago september. let me ask you were wearing your fdic hat, as somebody with an interest in insuring deposits, depository, deposits in depository institutions regulated by the federal government. what if we hadn't had that federal intervention by a republican administration, by the way? what would have happened to the banking secretarier in america, wearing your fdic hat? >> i think it wasn't pretty it wasn't perfect. in retrospect and hindsight always has additional wisdom. >> should we not have done anything? >> no. we had to do something. >> i'm sorry. >> we had to do something and it did stabilize the system. i absolutely agreed with that 7 something need to be done a decision that immediated to be made and it did stabilize the system t. was necessary? >> absolutely necessary, yes it was. >> the intervention designed came from a pointy headed

liberal ak democrat africa some ivy league college? right? it didn't come from a republican secretary of state and a republican administration did it? >> i'm sorry. what are you referring to? >> who proposed the idea of the t.a.r.p.? >> the tarp was proposed by, yes, by the treasury of the fed. >> oh. not a pointy headed liberal. by a republican businessman who was the republican pointed secretary of the treasurerly in a republican administration. is that correct? >> yes, that's my recollection. >> ah. >> if the gentleman would yield. >> no, i'm not going to yield. let me ask awe question. in your testimony, you say that you've got wearing your fdic hat a direct interest in both bank of america and merrill link, because they are depository institutions. is that correct? >> that's right. >> what -- >> merrill lynch is not. >> i'm sorry? >> bank of america. the bank is a insured depository, merrill lynch an

investment bank. >> i'm reading from your testimony. >> right. >> you assert fdic has a continuing stake in the financial well-being of those insured depository institutions. >> right. >> okay. so what was the view ever the fdic at the time the bank of america proposed to acquire merrill lynch? was that a good business decision? was that a risky business decision? were you aware of the unprecedented losses without the federal intervention? >> we are not the holding company. we do not approve of this, the fed does. we make certain that we have a supporting supervisor authority. we think a better cover of this would come from the fed. we must rely on the primary regulators.

with those capriotes -- caveats, i did not know that merrill lynch was facing such major losses in the third quarter. >> we have a bill that is pending before the house of representatives today, that would constitute a major overhaul and would finally allow oversight of the risky derivatives market. and this would, in effect, extend some federal oversight and regulation on the investment banking. none of this existed, previously. do you think that we made a mistake to explicitly exempt the derivatives? e to explicitly exempt derivatives of multi-trillion dollar market

from any federal regulation? >> oh, absolutely. that was a mistake. absolutely. >> again, this unprecedented federal intervention in the financial markets in the case of derivatives since there is no such unprecedented federal intervention at the moment maybe in retrospect we should have had some? >> we absolutely should have had nor regulation in areas particularly in derivatives. no question in my mind about that. >> thank you. my final question, does the fdic had a point of view with respect to the extension of fdic that's contained in the bill that's pending before the house today? is that a good idea? to extend the fdic and finance that extension by having the big banks have an extra fee rather than taxpayers do it? >> yes. we do support -- we have said that for banks and bank holding companies that have insured depository institution wes would like to be the resolution authority. nor non-banks we'll let congress decide that. and i think they decided they would like one entity doing it all, and, yes, we think that

this should be a very robust resolution mechanism that provides no open bank assistance, no conservatorship, everyone goes in receivership. shareholders take losses and that's the process we use for banks and that's the process that works and so, yes. we think working kwaept needs for this fund should be provided through a risk-based assessment on the larger financial entities, and, again, this could be another lever, another tool to discourage excessive risktaking. >> thank you. >> gentleman's time expired. i yield to the gentleman from missouri. >> thank you, mr. chairman. madam chairwoman, thank you for being here this morning and just curious. now that we have some non-banks that are banks and lehman brothers absorbed by b of a, have you been in to examine that portion of b of a? been in to examine the bank itself? been in to examine goldman-sachs and those folks since this all took place? >> we have -- i cannot comment

on specific institutions. i will tell you generally what we are doing which is right now we have backup authority only for insured depository institutions. so activities outside of this, like investment banks even though they might be part of a broader holding company structure, we have no authority there. that is exclusive to -- >> goldman-sachs now a bank. is it not? >> no. because the insured depository institution is only a subsidiary of the larger bank holding company structure. this has been a problem for us. and another positive thing we think the house bill does is gives us backup authority over everything in the holding company. right now it's only over the piece that has the deposit insurance which is not the whole thing. >> do you think that there needs to be some ability to regulate and have oversight of these balance sheets liabilities? >> absolutely, yes. >> what are your plans to do that? >> well, fortunately the accountants have done a lot of it already. we are implementing 156 and 167,

requiring these off balance sheet exposures be count and balance sheet. so you have to hold capital and reserves against them. we will be finalizing rules next week to make clear that you need to hold capital in reserves from the regulatory capital that we will treat those as on balance sheet assets. on the derivatives area, the otc derivatives area i think congress needs to act on that, because of the commodity futures modernization act there is little authority. to provide product or market reg lace and we've been bork wek working with the sec to strengthen that and are generally supportive of that. >> you mentioned our banks are in great shape yet this last year or two we've had a record number of bank failures in a short period of time. >> right. i don't know that i said -- >> how many mo failures do you anticipate over the next year or two years? >> i think most banks continue to be profitable, and, but there

are clearly some under disstre and we do not publicly release or famed bank projections but it will go up and we think it will peak next year. >> your comment earlier also with regards to a lot of small banks have be to absorb some of these, they're a part of the ripple effect of some of the big guys here and are certainly under stress at this point. do you have any plans for forbearance for those folks to allow them to be able to withstand this and to outlive some of these problems that they're not going to be closed as a result of some of the actions of some of the big guys and while we had forbearance with the big foiks and helped them we don't have t.a.r.p. funds available for the small guys and forbearance for those folks the ones that will to suffer disproportionately to the other folks. it may not be a big deal to those folks, it will certainly impact a lot of small districts around this country. >> well, congressman, by statute, if a bank becomes

insolvent or can no longer meet liquidity demands it needs to be closed. there's a very well defined prompt corrective action procedure in the statute. we cannot provide open bank assistance unless there's a systemic risk, and then only if the fed and the treasury and the president agree. by statute -- >> with all respect, my question is are you going to have forebearance on the folks because of the unusual circumstance they find themselves in through no fault of their own. they don't have the opportunity like you just said for the t.a.r.p. funds, things like this. is there willingness on your part to look at these situations on a case-by-case situation and say the rest of the bank has been profitable. we're going to deal with this and work with them on this and not close them down as a result of that. >> we have done that already. we released and were able to get an inner agency agreement on

guidelines recent ly to allow banks to do loans. only if you have a credit worthy borrower. we tried to do that already. once the institution no longer becomes viable, there is no flexibility for forebarence. sometimes if it just denies the problem that exists and delays the closing it be end up costing the government more none. which is what happened during the snl days. for the healthier institutions that can make it, we are trying to give them flexibility to work these loans out. >> your time has expired. i now yield five minutes to the gentleman from louisiana. >> thank you very much, there chairman. i would like to continue questioning concerning community

banks. in louisiana many of the banking systems are community-based banks. and they are impacted tremendously by the financial overhaul that we are looking at. ma dad chair, can you provide me with the number of banks that have failed in louisiana. >> i do not know that off the top of my head. i can get that to you this afternoon when i get back to the office. >> probably it's either none or extremely few. >> i would really need to check. i'm sorry. but we'll have about 140 failures. it's difficult to know state-by state. i will get that information back to you very quickly. >> the community bank in louisiana they did not involve themselves in the subprime

mortgage mess. as much many of them were profitable in the past years while some of the big banks have failed. my question to you here is why are we making these small community banks who were successful, who operated within the boundaries of the traditional loan iing criteria, they followed the rules. why are we making them pay for the fault of the big banks through this tremendous overhaul process. >> i think two things. i think you're right. they didn't make these high risk mortgages. they did engage in commercial real estate lending. some of that was not prudent. some of it was. because of the economy they're going bad now. as the economic problems

continue, more and more of the failures are driven by that. but again banks mold hold certain levels of capital against their loans. if they can't immediate liquidity demands. if they can't have enough cash to do that, then they need to be resolved. and that is -- again, there's a well defined procedure in our statute to do that. i think this is right for smaller banks to provide assistance for continued need for troubled asset relief for the smaller institutions. we would be strongly supportive. our statute does not allow us to provide open bank institutions to large or small institutions. >> it seems to me the small

banks are being penalized for the action of the bigger banks. >> i am greatly troubled. i have spoken out about of the long time of the different treatments between large and small. the very large get the t.a.r.p. money get the support and the small ones get closed. going forward i would like to close the big ones, too. if we're going to have a free market system going forward, i think resolution regime needs to be able to work for small and large institutions. right now it can only work for the smaller ones. we need to make t.a.r.p. work better for the smaller institutions. with troubled asset relief not so much capital investments, that's a problem. troubled asset relief, providing support there, we're very supportive of that.

>> i agree with you that the big banks, with need to have a better mechanism of overseeing the their operations. but can you explain to me how regulating these smaller community banks that are already regulated by state law, how would that improve our country's financial health when they have been profitable, when they have been following the traditional method of loaning. they would not involve or did not contribute to this mess. how would it improve our financial health? >> there are no failures in your state. i think we provide supervision obviously of small and large banks because they have deposit

insurance. we always protect to insured depositors. with that comes prudential supervision. that's been the case for over 75 years. moving forward my concern from a sup supervisory perspective -- and community banks have been relegated to commercial real estate lending and small business lending. they provide good support for their communities in those two areas. they don't have much diversification. going forward i would like to see if they can change that to help them diversify their sheet.

>> we have three minutes left on the vote. of course, we will return ten minutes after the last vote. i understand there's will our recess until 10 minutes after the last vote. we are in recess. the committee will reconvene. the second witness is mr. robert mazami,