in the east, we saw gains in discrete areas, in jalalabad, out and then the heart, which is at number four on your map, as well as pockets as lobar and wardak, just south of kabul city. the east as difficult, complex, and physical terrain, and there's much work to be done there. up in the north, we focused on baghlan. what is important in that area is the intersection of two of the main commerce routes. the expanded security read that intersection and increased the freedom of movement in that area in the north. if you look good number six, going around counter-clockwise and your map, that is important because that is up last -- that is the last place that there ring road has to be completed. an important commerce route to connect the west and north. and we made security gains in both baghdis and faryab.

herat, number seven on your map, is a bustling city, largely free from violence incidents and ready to transition to afghan lead very soon. in general, last year we saw the implementation of a plan that demanded focus and synchronization. we also that where we do that, we make steady progress. our immediate focus right now is to accelerate certain effects throughout the wintertime, the time that traditionally sees less violence, when the enemy refits, rearms, retrains, and prepares for the upcoming spring and summer operations. and while this is going on, we are conducting shaping operations to make the environment of the enemy much more inhospitable than it was last year. and i can tell you more about

that later if you would like. we did just finished a review and update of that plan that we began last year. and there is now expanded participation in those planning efforts. so the u.s. and u.k. embassies, other civilian players, as well as -- very, very importantly, the afghan ministries -- civilian ministries of the independent director of local governance and the minister of rural rehabilitation and development also for dissipated in that plan -- altogether helping to bring better coordinated effects to a common plan. we will stick with the current approach. we're going to continue to expand the security areas outward from the central helmand river valley and kandahar city and its environs, connect these two secure areas and also connect them out to weesh-chaman, just southeast of kandahar city, an important commerce route from the central helmand river valley out to pakistan.

we will also continue to expand the kabul security zone and continue the slow but steady progress in the north and west. important this year, to build the durability and the sustainability of the afghan national security forces. we put a tremendous effort last year to get the infantry forces fielded to increase the number of boots on the ground for the afghan security forces. and this year nato training mission -- afghanistan will focus on logistics to support the long-term sustainability of the afghan army. there are tremendous efforts to be -- being made in both literacy as well as leadership training. all important things to this -- to sustain the afghan army in the future and add quality to the quantity that we produced last year, which was 70,000 new afghan national security forces. as you know, we focused much of our attention on the army. we will continue that army moving forward, but the police need more instances than we are adjusting heart emphasis to

support those efforts now. we will continue to support the building of the local governance that serves the people. i am confident that we have the right approach, that where we focus our efforts together, we see progress, and that we're helping to set the conditions for the people to participate for -- more fully in building a better future for themselves. our challenge is to help the afghans, as the increasingly take the lead, make this progress durable. now there is still a lot of work to be done, but i am confident, as are my afghan partners and the troops in the field, that is worth doing. and together we can continue to build on the progress we have made this year. now i will take your questions. >> general, there are two key areas where you will need

success, one obviously being along the pakistan border from the pakistan is, and to, as you mentioned, the training up of the afghan security forces. can you talk a little bit about what progress you are making in working with the pakistanis to get this moving a little more aggressively there? and have you decided how many more security forces you will need as you move toward transition? and have you convinced other countries to help contribute trainers? >> on the pak military coordination, we continue to grow our relationships with the pak military. we conduct combined planning with both the pakistan military, the afghan national security forces, and ourselves. we have increased that planning effort over the year. right now we are conducting planning conferences between the three partners on the complementary operations that will occur over the next six months. so we continue to be optimistic that that will move in the right direction. and the coordination between

both the afghans and the pak military has continued to increase over the last year. on the afghan national security forces, that is going to the decision process right now. general petreaus and the isaf leadership is working hard to get that decision made. we will see how it turns out. >> when you talk about the pakistani effort, are you talking about joint operations between the u.s., or that pakistan is, but on the afghan side at the border and on the pakistan site on the border?

>> i meant to say complementary operations. there are significant operations going on in pakistan and the money and leisure areas up in the north. -- indeed -- in the mohmond and bajuer areas. we have complementary operations going on to squeeze them and take advantage of those operations. >> of the pakistan me -- if the pakistanis do not move decisively into north waziristan, taking on haqqani and other militants in that effort, how much of a setback to your efforts on the afghan side of the border will that be in the springtime? how important is it for the pakistanis not just to continue into bajaur where they are, but the move into north was there a stand? >> all that has a positive impact. it also leads to the durability of what we have to build on the afghan side of the border. we're working to continue the operation, especially those that threaten the pakistan state. together we think that will move in the right direction. >> can you win without them? if they did not do anything more than they're doing now? >> i think that we can, but that

gets back to the durability that you have to build in the afghan security forces and the afghan government. that is doable if it does not get significantly worse. >> there was a report in the british press this week about how taliban guys in sangin says specifically were going after their own rank-and-file as well as village leaders there because they were edging toward negotiating or dealing with isaf or nato forces. is this something you have seen elsewhere? does it complicate the efforts to wind up the american presence if the taliban will neutralize its own elements that are willing to deal with united states and isaf? >> that has been their response in just about every cases. the things that threaten them are good security forces and good government. or that has happened, their response is to go after those leaders to prevent that from happening. that has been the tendency every place we have gone, and it will continue to be, because that is

the biggest threat to their control of the people. >> they are killing their own? >> they are killing their run. they're around, you have got to understand that in that insurgency, there's a hierarchy of the most committed to the least committed. they have been going after the people who were part of their efforts, before, but are on a lower scale trying to turn over and support their government. >> t get any evidence, any more information of whether the taliban will be able to reconstitute themselves for this spring? that is always been the big question. second question, what exactly is operation hope? >> that is the whole name of the plan that the afghans put together. >> which is what we see in front of us? >> those of the key areas that

the afghan leadership believes they need to control to build stability in the country. >> this is not yet -- u.s. or isaf? >> it is combined, both afghans and isaf. it is an entire effort here. >> my first question is about reconstituting the taliban. >> that is when things -- one of the things we continue to work with the pakistani military to decrease the regenerative capability that is over there. what we're trying to do is make the environment less hospitable than it was last year. right now, again, we are focusing on continuing the pressure on the leaders inside afghanistan. we're going after the support bases that have been there for many years. just an example of how effective that has been, in the last 12 weeks we have discovered and cleared 1250 cache sites, ok?

now last year in that same time period, the number was 163. now those of the things we are trying to set the conditions in afghanistan to make it much less hospitable than it was last year. we are also working on the afghan national security forces leadership and supporting the afghan government and their police outreach to the public to strengthen the public's stand against the enemy. >> do you know any more now than you in november? >> about the regenerative capability? no, we do not. >> it is still an unknown. >> gas, and this year also because of the different conditions that they're going to come back with a different type of strategy, the enemy is,

which i believe is going to be focused on the leadership much more than it ever has, the political leadership. the people who are supporting the government and the government leaders. >> could you expand on that? when you say go after, are you talking about assassination hit teams? >> yes, the assassination hit teams, i edie's, indirect things. it will not be as direct as they were last year. >> and the 1500 marines just put in their recently, as i understand, the time frame for them to be there is about 90 days. >> yes. >> does that extended to the springtime offense of? are they going to be brought out before, and where were they put their in the first place?

>> they were put in there in the first place to seize on an opportunity to quickly expand the security areas into the upper geresk river valley. that is right on the edge of the central helmand river valley. has the afghan security forces continue to get built -- and remember, when we went into the central helmand river valley last year, there were five of us to every one afghan national security force. now there is one to one in that area. we're trying to get that expanded out as quickly as we can, build the durability there to withstand the challenges that will come in the summer, and then expand the security areas for the people. >> those 1500 marines are not intended to stay there through the spring offensive? >> no, they are not. the upper geresk river valley is right north of the central helmand river valley. >> it is up near sangin? >> between sangin and route 1 and the northern part of the central helmand river valley. yes, sir. >> the new tactics which were expecting the taliban to adopt next year, are you basing that on firm evidence on an assumption that is the way they'll go? how will you be able to protect the leadership that are the ones that you think it will try and target?

>> that has been their response in the local areas each time we had seen it over the past year, so that is what we think they are going to do this year. again, how we protect against that is the combination of things that we are doing. we will continue to pressure on the leadership. we will continue to build the capability of the afghan national security forces, and again, work to mobilize the people as fast and effectively at the afghans can to make all that part of the solution to protect the leaders. >> last week, general, arnold fields testified before the commission on wartime contract and and he laid out very stern warnings, very stark warnings that the united states efforts to build infrastructure for the growing afghan security forces is lagging. it is lagging at pace that you could have many soldiers out

there with no places to stay, basically. what is your perception there? is there real problem in terms of a long-range construction program? >> i have not seen that out in the field yet, but that question would really be for general caldwell who would know the precise information on that. i do not, but i'm telling you from my perspective, i have not seen that be a problem in the field yet. >> north waziristan, could you sharpen your answer? my impression is that pakistan does not need to go into north waziristan to ensure u.s. success in arce's if you grow afghan security forces at the pace you're going, and things and i get significantly worse. is that inaccurate press to mark >> again, we need them to do more. we're going to encourage them to do more because that makes it easier on what we are doing. but it is still doable without them, you know, decreasing what they have been doing the past year, which is a significant.

excuse me? yes, we continue to need them to do what they have been doing, and they have been doing counterinsurgency operations in the fata over the last year, and it is been very effective, whether it be in swat or whether they be in other areas. we need them to do that and we're working with them so they work that piece. >> but it is not military significant if they do not go into waziristan? >> it is about a whole thing. if they go everyplace but north waziristan, that would be significant and be really helpful even if they did not go into north was harassed and. >> the thrust of the debate in washington is that pakistan needs to go into north was their stand. it is not necessarily militarily for the united states to win -- >> that is not a mission stopper in my mind. and everybody, whether it be the

pakistani leadership, the u.s. leadership, or the international leadership is all focused on that issue about pakistan and encouraging in did do more and we are, too. >> the lead the sense of what the size of the withdrawal that you could approve for july will be? or is that all tied up in what happens in the spring? and secondly, in past years, pre-surge, pre-new strategy, progress and that can -- progress in afghanistan was very temporary. is there anything that gives you any level of confidence that the progress you are describing will be more lasting? >> first of all, we think it is still too early to tell about what will happen in july 2011 about the size and the pace of the withdrawal. again, we will have to see how the enemy comes at the afghans this year. we'll again make those decisions as we get closer. on the second part, as you know, in many places before we would clear places and then we would leave. that is part of the difference

and why this has an opportunity to have a more lasting effect. the other important part is that again the afghan national security forces are increasing lease -- increasing significantly in the board and places. -- in the important places. rather than the one to five that we were in the central helmand river valley, we're now one to one there, and we're actually one to 1.2 in cannes are city, in its environs. so there are more afghan security forces out there to help with the hold. in the last 18 months, there has been a significant effort to train civil servants by usaid and the u.s. embassy. so rather than have one or two people in the district government trying to do something, they now have 10 or 15, in some cases more, to try to build that stability. and that is part of the situation that i talked about as being an iterative process.

because as the security improves, as their confidence grows, then more of them will come out to serve. that is what has to occur, over time, to build the momentum so that they can maintain the hold to properly build this long- term stability that they desire. >> following up on the first part with the withdrawal, what is speaking, are you expecting a relatively small symbolic withdrawal of a few hundred or a couple thousand, or something more significant in the 10,000 or 15,000 or 20,000 range? >> we will see how that comes out. we're not at that point of making those decisions or recommendations yet. we will make those decisions in the next two or three months. >> on the regenerative issue about the taliban, one of the key aspects at the strategy has been reintegration of the taliban and tribes. but last time i checked, that has been going extremely some -- extremely slowly.

the afghans have gotten procedures in place but have not moved beyond reintegrating more than a thousand or so afghan -- sorry, insurgents. can you achieve what you want to achieve next year without a significant expansion of reintegration -- in other words, thousands of enemy fighters taken off the battlefield? >> and a thousand that we're at right now is about right. you have to understand that program has really started kicking off. and it has got to earn the trust and confidence of the people. so those thousand have to be treated well, and the program has to be run effectively. but as that grows, we hope that that will accelerate. the other thing happening out there that we do not have a great feel for because it is hard to measure is what we call "silent reintegration."

some of that is happening along the reintegration program, the formal program that has about a thousand in it right now. so we need to have reintegration. again, that is part of what we're doing with the encouragement to the afghans to outreach to the local communities to provide them the opportunity. and as those representative councils get built and as the government gets built and the security forces, more and more of them are increasing that confidence in a better future for themselves. >> honestly, you say it is kicking off, but has not been around and under discussion now for certainly more than a year? and it seems the afghan government can never really get their act together and move forward without actually offering incentives to insurgents to come over to their side. why is it taking so long? and again, if they do not get it moving in a more robust way, can you achieve your goals for this year?

>> yes, it has taken about a year. again, they have had a program for several years that nobody had any confidence in. now you have to overcome that lack of confidence in the past. now there are reintegration councils built throughout the country. the high peace council has started traveling out to the country to do that, all to inspire more confidence in the people. and the resources, both the international and the u.s. funds, are starting to flow through that process. but i do not think it is unreasonable that it has taken a year to actually do that for the afghans as all the other things combined are happening. and again we do need that. we want that. the afghans want it. i think it is moving forward, but we have to keep the momentum and pick up the momentum over time to do effectively what we want to do. >> on the east, you talked about more work to be done in a difficult situation. can you give us an idea of how you see that evolving in the coming months and the security situation and what challenges

you face? >> as you look in regional command east, that the major density population that heads right out of kabul over to jalalabad and out to torkham gate, a very important commerce route. that has continued to make progress in discrete areas like i mentioned earlier. also important, from kabul city out and down the south, which is route 1, important down to wardak, logar are and ghazni. and then the other piece is out into the coast bowl -- khost bowl, another population density area. they're also working hard in the could are river valley, that comes right out -- right down into jalalabad. that is a number of employees. >> recently said senator carl levin said he would like to see an even larger afghan national

army than what is planned for in hopes that that would speed up the return of u.s. troops. at roughly the same time, a gao study came out and so that the current number of trainers that are in afghanistan to train afghan security forces is not enough. that is creating questions as to whether or not once we leave, they will still be able to continue the mission of protecting that country. what are your reactions to those two question marks first, senator levin's idea of a larger army, and gao's criticism of the current training for the current goals? >> i think that on the second part, the training has increased in effectiveness and it is very clear. so when we get the units out of the training base, they're much better prepared than they ever have been in the past. we will also continue to press to get more trainers to do that more effectively.

but the other phenomenon that is occurring at the same time is that they're now more afghan trainers, and they're going through ntm-a and cstc-a the same transition process. so we're pressing that is to get more trainers, and the combined effort is what to can see on the ground, because i am the one who received the product of that training base. that has continued to improve. >> is it crunch time on the training in terms of a lack of training and are you hitting a period where you're going to have asked for u.s. trainers if he cannot fill the gaps which are >> we have done that in the past. again, that is really a general caldwell question. i am just telling you the effects of what i see in the field. they continue to improve. on the size of the army, they are going to that decision process right now on the size of the army and the police and everyone is made their recommendations and we will see how it comes out. >> again, looking forward to july and your decision-making

process regarding any kind of drawdown, can you elaborate on what factors will play into that decision-making process? levels of violence, security forces? >> the things that other measures of effectiveness and the metrics that we have been using all along. you have got the effectiveness of the afghan national security forces. the real question there is, can they do it with less of us were to march in reality, that gets down to the question. can they provide that security for the afghan people so that they go about their daily business? is there sufficient governance out there that does not negatively impact on security? those of the things we will be looking at. you have to understand this is already occurring in different places, ok? so when you look at now zad, which is down in the helmand province, a year ago there were two marine battalions down there. now there is a company plus. and the afghan national security

forces have been built sufficiently that the combination of a marine company, plus a few people and plus a few enablers, the afghan army and the afghan police can provide the same level of security that, again, it just over a year ago, took two battalions. in the central helmand river valley, the same thing is occurring. so there are less of us in areas where we have improved security -- we are less density. and they are spreading out, which is how it has got to happen throughout the country as we move forward here. >> there is a lot of talk about partnership and expanding governance. in planning with your afghan counterparts, do they have a plan to establish an integrated district to provincial to national strategy and command structure, and how is that progressing pressure mark >> on

the partnership, that goes all the way up and down, from the strategic level all the way to the tactical level. that has done many things for us. of course, the afghan team brings the local understanding to us, and then we bring some capabilities that be -- that they do not have yet, that they're developing that will take some time to build. it is the combination in the strength of the team together that is increasing the effectiveness of our operations. now the partnership pieces that we talked about earlier, we always focused just on the army, a little bit less on the police. what is important over time is that the afghans build partnerships between their government, their security forces, and the people. so we're supporting those every -- we're supporting those efforts every which way we can. as far as the connection between the district and the province and the national, that has to be there to build the stability

that is required. that is occurring. we would love it to go faster, but there are linkages between the districts and the provinces, and the province and the national in many places. >> you said that hearat is as good as ready for transition very soon. i think i am right in saying that there satellite 1200 american troops in that area, plus spanish and others. would they be at the top of the list for potential withdrawal? >> there are several places like that. right now the afghan government initiate the transition process. it is e another month or to go -- until they get complete, until all that gets worked out so that we can officially start moving along the transition process. also, of course, where those soldiers are, there are a couple of options. one is reinvestment in different places.

that is one of the alternatives to solve part of the training thing. if we can move out of the operational force and over to the training force, there are a lot of options on how about operate. we will have to see how that comes out in the future. >> the american troops there would just be redeployed somewhere else, either training or somewhere else? >> it is all reinvestment, redeploy and all that. those will get made based on the conditions on the ground. >> following up on the reinvestment idea, as you look forward, it is that possible that when you do the drawdown in july, that the troops that come out could be headquarters or support troops, and that you would maintain your same level of combat and training power? is that possible? >> as you look, long-range, the things that require a longer time to develop are the command and control that the

headquarters provides, the integration of a significant level of intelligence, access to joint effects, air being the most important one, but some artillery, and then logistics and medevac. those things take longer time to build than an infantry company. as we look over time, that -- those are the ones that will be there longer relative to all the combat troops. >> we saw some reports at the beginning of the year that iran was stopping -- stopping shipment of fuel across its border into afghanistan, which does not affect your -- your soldiers and your vehicles have their own supplies and can operate as they will. how does that dynamic continue to affect the way afghan forces can work in the way the population can go about their business in the areas you are trying to protect? >> we did not see a huge negative impact on security from that, but it did make it harder

on the people out there in the west to go about their daily activities. the afghan government and the iranian government are working hard to solve those issues, and there has been a decrease in the limiting of that fuel moving forward here, especially being tough in the wintertime. >> cannot fall on your comments about the east? you talked about pakistan not having to go into north waziristan in order for the military to have success. >> it was not going to be mission failure, yes. >> but that said, doesn't the u.s. then have to at least either continue or increase its efforts there to avoid north waziristan become a region becoming a pretty solid safe haven? >> yes, absolutely. again, it is not that we do not want them to do any of those things. all the international community is focused on that because they know that we need more support from pakistan to make this

easier. it is all linked. so, yes, there has to be some plan, some way, and some effect to decrease the impacts of that safe haven. >> u.s. obviously has taken some action in there in various ways. with the u.s. have to increase that in order to make sure that the militants just don't -- >> it depends on what they do. if it continues to get worse, that is a different situation. >> going back to the spring offensive, can you give us more of an idea of what it will look like? around this time, it seems that we have a general who stands up and says we're. have a big offensive. what are we going to see this year? there are more u.s. troops there than there have been ever. you expect more of an offensive, more of a defensive on the u.s. part? >> we will continue to stay

offensive the whole time. there are 110,000 more troops there this year than there was last year, 70,000 of them being afghans, ok? so again, what we need to do is support the afghans as they expand that public outreach, as they expand the security areas and as they prepare, you know, for the increase in violence that is going to occur. that is what has changed over time with the caches i just talked about, 1250 in a 12-week period. and that occurred for several reasons. one of course is the high operational tempo that we continue to execute throughout the time, the increase in afghan national security forces that are out of places, in tough places that the taliban used to own, that are pursuing the support bases to limit them. it is also -- and one of the most important part -- the afghan people helping to provide significantly more tips

because they see afghan security forces out among them more than they ever had because of the increase in the numbers. >> cannot fall on your phrase "increase in violence?" you anticipate just the normal seasonal increase in violence? would you expect an increase in violence over the violence we saw last year, which was the deadliest year for american service members? at this is a complicated question -- given the change you see in the taliban tactics, would you expect an even larger or a fewer number of american casualties this coming year? >> that is hard to determine, jim. we will have to see what they do. but they will have to come again with a little different plan which will be focused on the afghan leadership and the afghan people who are supporting moving forward in a peace process. >> is the increase in violence the usual seasonal increase?

>> the usual seasonal increase. >> despite the fact that they're more troops there, you still do not expect more -- there would be presumably more kinetic action. >> that occurs just naturally. with 70,000 more troops -- that is afghan forces, 110,000 total that are out in places that the afghans, that the enemy used an unknown. in zhari and panjway owned that. it is the same in marjah. they will continue to fight back, but guessing the violence level is just not possible at this point in time. >> and the taliban change in tactics that you predict indicates that they will concentrate more on soft targets. does that mean that the taliban is weaker going into this spring offensive than they were a year ago, do you think? >> i can, we will have to see that. that is a hard question. i am telling you we have reduced the support bases inside afghanistan that will continue to keep the pressure on their

leadership, all designed to reduce the effectiveness of the insurgency. how that will occur and how well they will become a we will have to see how effective both us and the afghans are doing that. that is what we're trying to do with the environment that they will sealed differently in the spring -- is the taliban on the ropes here? >> no, the taliban is not on the ropes yet. ok? thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> egyptian president said he and not seek reelection this fall. this comes after a week of anti does government protests. he is vice president when

another was assassinated in 1981 produced a -- 1981. >> my fellow countrymen. i and jesse it. -- i address you. these conditions are about to take us to the unknown. we are facing harsh moments. there is an expression of their concern and aspiration. they wish to wreak havoc and to

violate the constitution. these demonstrations are a very civilized. it is controlled by political forces which a to add fuel to the fire.

there are diplomatic missions on our soil. we are facing painful days. it has haunted the majority of the egyptians. there are concerns and worries about what the future is holding for them, their households, their families, and the future in this city of their country. the incident of the past few days require us all, one and all, people and leadership, to choose between chaos or stability, and lay ahead of us different egyptian realities, which should be addressed by both are people and our resources with absolute prudence for the interest of the people and the nation.

my fellow countrymen, i immediately sought to form a new government with a new priorities in response to the youth demand and mission. i instructed the vice president to engage with all the political forces on all the issues raised for political and democratic reforms, and the commitments to the legislation in order to materialize these local demands and restore stability, calm, and stability. there are certain forces who turn a blind eye to dialogue simply for their own agendas, turning a deaf ear and a blind eye to this defining moment we are facing. the invitation is still valid. i address you today directly.

to the people of the nation, christians, elderly and youth, each and every egyptian man and woman in the countryside and in the cities, i never sought power or influence. the people are aware of the harsh conditions where a shoulder that responsibility and what i offered to the nation. i am one of the personnel and it is not my nature to betray or abandon their responsibilities. my top priority now is to restore the security and stability of the nation to ensure the peaceful transition of power in an atmosphere providing security and saving the people, guarding the people, to pave the way for

this, who is to be elected by the people in the coming elections. i tell you in absolute voracity, regardless of the current circumstances, that i did not intend to run for the coming presidency. i have exhausted my life serving egypt and its people. however, i am totally keen on the ending my a regime for the sake of the nation in a way that guarantees handing over

the banner in an atmosphere of security, stability regarding our legitimacy and preserving the constitution. i tell you in plain words, i will work toward restoring the procedures that will guaranteed the peaceful transition of power by virtue of the powers invested in me by the constitution. [unintelligible] to amend the qualifications and delicacy to the presidency -- and dedication to the presidency.

both houses will debate these amendments. the related amendments to legislation i call on parliament to hand it down. i will continue to follow on the work of the coming government on the instructions given to them in a manner that they choose. that is performance. there is social reform.

it in stirrers social misfits. i instruct the police to to protect and save the citizens respecting their freedoms. at also amend the pallor to continue to identify and the security. there are those that intimidate the unsuspecting citizens predella this is my pledge to

the people. i pray to god to guide me to egypt will break through these circumstances most strong. it is no rigid more coherent and more cautious of what materializes. they hold steadfast to the future. close to meet mubarak -- hosni mubarak serve to egypt in the people.

it is my homeland. i defended the soil. i will die on the soil. i will be judged by history. homeland will live on. they will live on. drugs will be handed over. we can ensure this. may god preserve this nation and its people. >> tomorrow, we will get an

update on the political situation in cairo and the it that they can have on the arab world. after that, in gary shapiro will talk about the way the u.s. can improve innovation. "washington journal" each morning here on c-span. tomorrow of the senate judiciary committee will discuss the legality of the ball >> this begins at 10:00 a.m. eastern prad. now and look at the u.s. transitions in iraq this is

about two hours >. >> we were waiting for senator lugar. he isn't transit. we will get started. when he gets here, legal case here. it is good timing. let me welcome everybody to the first hearing of the new session of congress >. to this opportunity to welcome, though we haven't yet adopted the rules or officially sworn

people in with respect to committee proceedings, we are welcoming a number of new members to the committee. i'm delighted onhe republican side to welcome senator rubio of florida. happy to have you on board. and look forward to working with you and your contributions to the committee. and also senator leavy from utah. and on the democrats' side, slighted to have senator udall, tom udall, from new mexico, and happy to have somebody on the committee who is thirsty for the work that we do. and we're happy to have you here. likewise, senator kuhns will continue on the committee. delighted to have you back. look how fast you've risen in seniority. absolutely extraordinary. i remember sitting down there for years. and also, really, happy to have

senator durbin, the assistant leader, who will be joining the committee. so we have five new members, and we look forward to getting together informally, as we did, beginning of last year, to have a chance just to get to know each other. this committee works best, as i think any committee does actually, but this committee certainly because of the issues that we deal with when they are nonpartisan and nonideological, and when we reallyake into account, the best interes of our country and work in a bipartisan way. and i congratulate the committee for its leadershi and efforts with regard to the s.t.a.r. agreement and what we did last year. now, before we get started this morning, i just want to say one thing about the events that are now taking place in the middle east. we are witnessing an historic moment in the middle east. and it is impossible to predict exactly what lies ahead.

but clearly, whatever transpires, it is going to have a profound impact, huge influence, on the region and on american foreign policy in that region for years to come. this morning, i have an op-ed in "the new york times" that expresses my point of view, a personal point of view, that the people of egypt and events in egypt, have in their own power and in the simplicity of their sponeiety. and i think it is for president

mubarak to help and transform the future for egypt. i think in order to do that it is imperative that he address the nation and announce with leadership his understanding that his people are making and of their aspirations and to embrace them fully and to make clear that neither he nor his son will be candidates for re-election, or for election, in the next elections. and to go even further, to move to put together a caretaker governance over these next months, working with the army, working with the civil society, in order to avoid violence and help to transition egypt into the future that its people want and that it deserves. we have huge interest in this, the world does, obviously in the stability of the region and the avoidance of violence and

conflict and in in helping to create a template for transformation for all of the region. so that's what's at stake. it's a subject that this committee will examine very closely over the cour of these ne days and weeks. we are also, obviously, gathered here today to resume discussion over an issue that, in all years since 2001, has consumed this committee and the debate in our country. but which, because of afghanistan, pakistan, the middle east and other issues, and also because of successes, has moved off of t front burner, so to speak, but despite that fact, it remains as important as it always was, throughout all of those years. and i think our witnesses today will make it clear that it also remains a challenge with serious

issues still at stake. all of which, together with all of the other issues of the middle east, require our focused attention which is why the committee is beginning this hearing this year. i'm paicularly -- some people have referred to forgotten wars at variousoints in time. afghanistan was the forgotten war, now is not. and to some degree, some people have ben to assert that iraq is. but it's important to the long-terstability to the middle east cannot be underestimated and that will be very clear today in the testimony of our distinguished witnesses. i'm particularly happy on behalf of the committee to welcome jim jeffrey and general lloyd austin. they are without question two of our most dedicated and capable public servants and that's why

where they are, dealing with the issues that they are. the caliber of their leadership has been shown by the fact that our military in baghdad praises ambassador jeffrey, and our diplomats in baghdad are equally enthusiastic about general austin. they have forged a superb partnehip, much in the brand of what ambassador cocker and general petraeus had previously. and their unity is something that the rest of us near washington would do well to emulate. significant progress has been made in iraq in the last four years. more than 100,000 american troops have been withdrawn. and the security situation, although sometimes strained, that is not unraveled. forming the government was obviously a long and contentious process but the political factions kept their commitment to negotiations over violence. despite this progress, we face

difficult choices this year. i want to particularly say at this time, i want to express my respect for and appreciation for the leadership that the administration, but particularly, vice president biden has offered on this issue. when he was chair here, he made more visits to iraq than any other member of the committee, or the congress even. and he has spent a long time building relationships and gaining a significant understanding of the issues. and i think a respect that leaders there have for him and his understanding of those issues serves our country well. and i think he has been particularly instrumental in a public of negotiations and conversations in helping to bring us to this point that we're at now. but he would be the first to tell you that the job is not done. and questis remain.

in accordance with the 2008 bilateral agreements that were signed and negotiated by the bush administration, american troops must leave the country by the end of the year. but these agreements also acknowledge, and it's important for people to focus on this, they also acknowledge the need for continued military cooperation. as in many countries around the world, our troops will be responsible for improving the bar defense relationship by providing security assistance. the size, scope and structure of this presence, however, remains undetermined as we are here at this moment today. after our troops are gone, the diplomatic mission that remains will be of unprecedented size and complexity. the current planning calls for me 17,000 people to be under the chief administration authority, on roughly 15

different sites. beyond our embassy in baghdad, one of the largest in the world, these sites will include three air hubs, three police training centers, two consulates, two embassy branch offices and the offices of security operations sites. now, time is short. the civilian effort has to be fully operational by october. that would be complicated enough if we had a complete inventory of all of the moving parts, but there is still important unanswered questions which we want to try to address this morning. does the state department have the capacity to support an ambitious military mission without american military support? in the still dangerous security environment what is the future of the u.s./iraqi relationship? and perhaps most importantly, are we as a nation, willing to

commit the resources necessary to that civilian effort in order to ensure its success? today, the senate foreign relations committee is releasing a staff report that examines these issues in detail. i believe it sheds important light on the tradeoffs that are involved here. the report makes a number of recommendations which i hope the administration, in fact, i know the administration is already seriously considering. with so much uncertainty, we need to make sure that the scope of the mission is balanced with resources that are available. these include our civilian capacity. the financial commitment from congress. a degree of u.s. military support and the backing of the iraqi government. if these elements are not in place, we may face a difficult choice between scaling back the diplomatic missio or accepting the degree of physical risks that's all too familiar for the military personnel but normally

unacceptable for our diplomats. i think we can get the balance right. but it will require a whole of government approach. and that means maximum integration, better integration, between the departments of state and defense and frankly a greater willingness from congress to provide the financial resources necessary for success by supporting our diplomatic efforts with the same vigor that we devote to our military mission. in the coming weeks, i will explore the possibility of a multiyear authorization package for iraq that would include the operational costs of the mission, as well as the security and economic assistance programs. this package could serve as a road map to the american public, so that our efft in iraq will end better than it began. before turning to senate luger, i want to thank those still serving in harm's way.

those who did serve, but ti particularly, those who are still serving in harm's way in iraq. uniform and civilian alike. i think every member of this committee joins in expressing our gratitude as members of congress and those as a nation for their courage, their commitment and service to our country. you are not forgotten and nor will our debt of gratitude to you everen forgotten. senator lugar. >> thank you very much, mr. chairman. it's a point of personal privilege that i congratulate you on your extensive travel since last we met in this hearing room. and i know that we will benefit from your experiences and your testimony. by joining you this morning, reading our witnesses and welcome this opportunity with you to examine the united states policy in iraq. although the visibility of iraq is a foreign policy issue has

been reduced as the american troop presence has been drawn down, we will continue to have profound interest in developments there. and the president has said that the american military mission will come to a close at the end of this year. but as our military presence diminishes, our civilian presence is being enhanced by thousands of personnel, engaged in diplomacy, development and security, as you mentioned. indeed, the united states embassy in baghdad is now largest embassy in the world. an office of security cooperation of nearly 1,000 defense department personnel is planned to mentor the iraqi military. despite progress in iraq, violence continues. and the most recent report on security in iraq by the departments of state and defense cites improved conditions but labels the situation i that country as, quote, still

fragile, end of quote. although the united states should continue presences for winding down the military mission, the goal from iraq caot be the sole driver of our policy there. we have strategic interests in iraq. it's important that our government is exploring ways to further those interests in the absence of significant united states military power in the country. we also know that what happens in iraq will have influence in many parts of the middle east. iraq's status, stability and relationships will affect, balance the power calculations in the region. and these are particularly important considerations. giving the ongoing upheaval in egypt. our idealor iraq is that it becomes a stable, pluralistic society that includes a genuinely representative government, maintains a self-sustaining economy and cooperates with the united states and other like-minded

nations to resist aggression and terrorism. as we continue to work with the iraqis, we'll have to be judicious about how and when we exert leverage. even if the iraqi government prefers to maintain some optical distance from the united states, it has reasons to preserve a good working relationship with us, including our backing for its territorial integrity, our mediation services with some iraqi groups. our intention for expertis our ongoing military training and other benefits that we bring to the table. as we pursue goals in iraq, we face competition from iran which is does not wish to see a pluralistic modern american friendly society next door. at this stage, the iraqi government has demonstrated its intent to maintain relationships with both iran and the united states. but this is not a static situation. and iraq's alignment depends on

much on the domestic political forces, as it does on calculations of its need for external support. iraq's ability to provide for its own securit to meet its budget demands, maintain basic services, including electricity and education will depend heavily on how it develops and manages its oil sources. currently, iraq is producing about 2 million barrels of oil per day. based on the 12 contracts, the government of iraq signed with international oil companies to develop 14 oil fields. iraq expects increase producon capacity by 400,000 barrels a day by the end of this year. the convex call for iraq to reach the extremely ambitious target of 12 million barrels per day by 2017.

an authority at bfc energy stated that this would mean iraq would achieve in seven years what it took saudi arabia 70 years to do. the hurdles iraq must clear to make that happen are tremendous, however, and industry experts think the iraqis will be fortunate to reach 5 million barrels per year by the end of 2016. to reach even the 5 million per day figure, the equivalent of adding about a half million barrels a day per year, over the next year years, would require absolute commitment by the government. it would require that a large share of oil revenues be reinvested into oil infrastructure. and require the secury continue to improve and would require that oil revenues and investments be handled transparentsly, with a minimum lost to corruption. iraq will also have to overcome the brain frame that has occurred in the country over the

last eight years seeking an infusion of human capital, such as saudi arabia did to help manage the massive efforts. iraq's capacity for sustaining democracy will depend greatly on the out out come of oil efforts. there will be less tension between factions and regions and more stability grounded in improved services in education. what should the unitestates do to encourage the iraqis to develop their oil production infrastructure, while simultaneously, prevenng the development of a petro-dictatorship, over the longer term, as oil revenues increase. how will our programs going forward help iraq withstand pressures from iran? is the lanned u.s. civilian presence in iraq sufficient to achieve our objectives and are

we confident that the security arrangements at the embassy and others in aq are adequate and will allow american personnel to carry out their mission. i appreciate very much the efforts of master jeffrey and general austin. thank you, mr. chairman. >> thank you very much, senator lugar. gentlemen, again, we welcome you, we're glad to have you here. ambassador jeffrey, we were commenting that you were here with condoleezza rice when she was testifying. glad to have you back. thank you. we go first with ambassador jeffrey and then general austin. >> it's good to be back, senators. chairman kry, ranking senator, memberer lugar. senators, thank you for having this hearing and inviting general austin to appear before

you to discuss the transition from military-led to a civilian-led withdrawal from iraq. we face a critical moment in iraq, and we will either step up to the plate, finish the job and build on the sacrifices made or we will risk core u.s. national security interests, be penny wise and pound foolish and fail to cede to al qaeda. in a force of establishment and moderation in a troubled region, we cannot afford to let the games we have about sized so much for us slip away. the president has clearly articulated our vision for partnership with iraq. we seek there a country that is sovereign, stable and self-reliant, with a government that is just, representative and

accountable that denies support and safe haven to terrorists, is able to assume its rightful place in the community of nations and contributes to the peace and security of the region. the u.s. military, as we all know have performed admirably, but they cannot stay in iraq forever. the department of state is ready to take the lead. but we need support and resources to finish the job. we need to have plat forms around the country to carry out key transitional missions for the next three to five years. these include, work, political, economic, security and other officials throughout the country, especially in key areas such as kirkuk and mosul, where past experience has shown how a small number of americans, working daily, with their iraqi counterparts can have a disproportionately great impact on helping to defuse crisis.

and also helping iraqis specialize their police, to provide security to help iraqis finish the job against al qaeda and other terrorist groups. to not finish the job now creates substantial risks of what some people call a charlie wilson moment in iraq with both the insurgence of al qaeda and the empowering of other powerful players. al qaeda, as we well know, is still possible of making attacks. gutting out a presence in iraq could also provide iran increased stability. the u.s. has paid a dear price in this war. over 4,300 deaths, over 3,300 wounds among our military personnel, along with hundreds of embassy casualties, and a far

greater toll among the iraqi security forces and civilians. as vice president biden states in his recent visit it is vital that we leave behind an iraq that is worthy of sacrifices that so many u.s. troops and civilians have made. while all is expensive in iraq, the civilian presence represents a significant reduction in expenditures. for example, between 2010 and 2011, the u.s. military withdrawal reduced the bill by approximately $15 billion. while the increase in state's budget was only $2.5 billion. and while the state department's 2012 funding needsill naturally increase over that level because of the military to civilian transition, the overall cost for the u.s. will continue to decrease dramatically. moreover, u.s. development assistance to iraq is not open-ended. iraq has vast untapped oil resources but due to the devastated oil infrastructure,

it will be a number of years as senator lugar described, where iraq will have meaningful time for revenue. again as senator kerry recently wrote to the secretary of state, getting the civilian transition in iraq right it will also demonstrate more generally, the ability of our country to transform security successes in war zones to long-term stability that goes beyond iraq, for example in afghanistan. in closing, i would like to thank the department of defense, the central demand and above all, general austin, and his troops, for the support they are giving us in this mission. while our agreement is to go down to zero troops in the country, we have tremendous support from the u.s. military that will continue backing our office of security cooperation and ov the horizon in cencom.

ides also like to express my regards for those who risk their lives in a cause for what they believe in, the iraq i was just describing. thank you once again for the opportunity to appear before you today. i will be happy to answer any questions the committee may have. look forward to working hand in hand with you and our other congressional colleagues. >> thankou, ambassador. general? >> chairman kerry, senator lugar, thank you for the opportunity to testify with ambassador jeffrey this morning. i'd also like to thank you for your support for men and women in uniform, as well as our civilian partners. ambassador jeffrey has the most professional team of diplomats

that i've ever witnessed career, it is indeed an honor to serve with him and s team. i'd like to give you my assessment on the current security environment and the capabilities of the iraqi security forces anded where i see them in 2012 and beyond. the security environment in iraq has been steadily pving over the past few years. most notably, during the delay in government formation from march to december 2010. it was very encouraging to us at that iraqi security forces remain apolitical and formed admirablduring that time. they provided the iraqi leaders the ti and space that they needed, and their admirable work is paying off. today, iraq has the most inclusive government in their nation's history, and the security environment is the best it has been since 2003. security incidents in 2010 were

25% lower than the previous year, and that trend has continued following government formation. security is the foundation for continued progress in iraq. the security environment continues to improve, but as ambaador jeffrey noted, it will remain complex and threats to iraq's stability will remain in 2012. sunni extremist groups like al qaeda will continue to target the government of iraq. the iraq security forces and the iraqi civilians in order to garner media attention in an attempt to demonstrate that the government cannot provide security for the iraqi people. shia extremist groups will continue to target u.s. personnel, the iraqi government and its institutions. while the iraqi security forces have a good capability to confront sunni and shia extremist groups, they will have

gaps in their external defense capabilities in 2012. iraq will not be able to defend its sovereignty for some time. they will also require continued development on capabilities such as logistics and sustainment and intelligence, as well as new equipment fielding and more complex training such as combined arms traing and joint forces training. united states forces, iraq and the embassy are joined at the hip and are closely working our transition. usfi is developing the office for security corporation, which will fall under the embas and assume responsibility r continuing the training programs and the $13 billion worth of foreign military ses programs that we have with t iraqis. this office will work hard and be dedicated to narrowing the capability gap s within the irai security forces. clearly, there is much work to do but i am encouraged by the

progress that iraq has made over the last few years. and i'm confident that iraq can achieve its ll potential if it stays on the path that it's currently on, a stable, secure, self-reliant iraq will provide stability to a region that has been historically unstable. the underpinning of iraq's progress has been the improving security environment, and the isf will be key to iraq's success in the future. we at united states forces iraq are doing everything that we can with the limid time remaining to strengthen the iraqi security forces. the key to the successful transition from a military-led effort to a civilian-led one is the need to fully resource the embassy to perform these tanks and responsibilities. i'd like to take just a moment to publicly acknowledge the near 50,000 soldiers, sailors,

airmen, marines and coast guardsmen, as well as our corp of professional civilians serving under the united states forces in iraq for their dedication and perseverance. i'd also like to commend our families for their many sacrifices. we certainly wouldn't be where we are today without their unwavering support. mr. chairman, members of the committee, thank you once again for thispportunity to appear with ambassador jeffrey this morning, and i stand ready to answer any questions that you may. >> general, thanyou very much. again, thank you both for your leadership. what we will do is have a seven-minute round, for those of you new to the committee, we've always operated on a seniority basis. some committees do it on the early bird. but we have stayed with that. and we go back and forth, side to side. so hopefully it is a fair distribution of the time and

effort. let me begin by, first of all, asking ambassador, your mission is supposed to achieve full operational readiness by october, is that correct? >> initial, in many things, it goes in layers, senator, depending upon whether it's police training of the osei, but by the october/december time period, we need to have the initial operating capability up in all areas. >> and is it your mission that you're on track to achieve that? >> we are on track to achieve the initial capability, that's right, sir. >> now, for what degree do the outstanding politica issues that have been outstanding for a long period of time -- i can remember we talked about this briefly before the hearing. when condoleezza ric testified us before, i think it was down

in the first floor in dirksen. she said we were momentarily about to achieve the agreement on the oil revenues and the constitutional issues, et cetera. we are now three or fo years later, and we still don't have those agreements at this point in time. to what degree does that -- i mean is that a signal that is a warning system to us about what may happen as we draw down and leave? or is that something that you feel is just manageable and it's the way of life, period. >> frankly, senator, that's one of the things i'm more confident about. mr. chairman, what we've seen is not final resolution of any of these problems but we've seen dramatic pgress over the last several years. for example, in the formation of government, it took a long time, but the formation itself is part of the political process. the various groups, the kurdish

alliance, and the sni/shia alliance, and the national alliance, primarily, of shia, basically came to an agreement on the policy-sharing issues. they decided they would make a fiber carbon law on priorities. and they've taken steps in this direction, both on wait that they have dealt with the problems be it the central bank and its independs the last few days, or for example, oil being shipped out of iraq from areas of the kurdish regional government into the pipeline to turkey. this has been an issue in the past. they have reached an agreement the other day that will allow initially 100, and soon 150,000 barrels a day. this is to respond both to the i imf and their own internal needs. this is that step-by-step, if you will, slicing the salami

that is to democratic policies around the world. it's slow, it's complicated, but it's hitting in the right direction and it's very, very dierent than what i was there in 2004 and 2005. >> geral, how do you -- can you give us a sort of stronger personalized kind of evaluation, if you will, of the capacity of the iraqi army to respond, particularly -- i mean, most of the games that we've made, i gather, have been special forces operations jointly. backed u obviously, by everything else but the ability to sort of neutralize al qaeda at this point in time. in the absence of our lead on that, can you share with the committee what it is, on a personal level, gut level that gives you a sense, maybe some examples of the kinds of things that may have even surprised you

about iraqi capacity that gives you a sense, that without our presence, they can hold on to those gains? >> well, thank you, senator. and as you know, this is my third tour in iraq. and so, i've watched this force develop over time. and we basically began with very little, and where we are -- if you look at where we are now, it is truly remarkable, in terms of the progress that has been made. my assessment is that the iraqis do have the ability, or will have the ability to conduct internal -- or provide for internal defense. as a matter of fact, they are leading the effort today in addressing all of the issues, all of the security issues in the interior of iraq. so tre are things that they need to continue to work on. things like logistics and

sustainment. and intelligence collection, analysis and dissemination, but they made great progress. and if you look for any examples, i would say, there are two that spring to mind right away. the first is the fact that, you know it took about nine months to form the government. and in that nine-month period, the iraqi security forces held steady. not only did they hold and remain apolitical, but the security in the country was -- improved incrementally over time. the other thing that i would point to is that most recently, here in the last week and a half, we witnessed a pretty large religious observance in iraq. the estimates that there were about 9 million or so pilgrims

that travel down and attended that observance in kabul. whereas, we did see some violence, it compares to what we salast year, last year, there were only about 3 million pi pilgrims on the road. about the same amount this year, the iraqi planned and executed the security for that event on their own. and that's very, very encouraging. so there are a number of instances like that throughout, i think they continue to improve. but, again, there are a couple of things that they will have to continue to work on. >> ambassador, with respect to the security situation, for your personnel as the military does draw down to negligible presence, how do you envision providing this balance between the right amount of security for people and not having them sort of bunkered into these various

facilities? >> thank you, mr. chairman. first of all, to do our job, we have to get outside the wire and go to the iraqis. not every day, sometimes they come to us. sometimes, we can use telephones, but you have to do that for many reasons, including show them that you're out there with them. we're doing this now -- we're doing it under dangerous conditions. we had a vehicle from baghdad prt on the road hit by an ied this morning. no casualties, but this is a common -- essentially a daily occurrence between incorrect fire ieds and other attacks. and we've been doing it for years. when i was there in 2004-2005, we had large installations, we called them rios in hillah, kirkuk and basra that we operated and secured ourselves. and we did most of our movement

ourselves throughout those areas. again, we took casualties, but we got the job accomplished. what we will do -- >> you did that with a combination, didou not, of private security forces and military backup? >> well, we had no military backup, for example, in basra because there were no u.s. forces within hundreds of miles of there. >> british? >> they were british. as i said, let me just say we were on our own, senator, and we secured our own people. >> secured them with diplomatic security? >> diplomatic security and contractor security. our plan is, as much as possible, to use the lessons we've learned from the military, for example, on dangerous moves using what are called mraps those are the vehicles that our people are in today. more heavily armed vehicles, receive something from the military in the months ahead.

using route recon distance. the magnitud is different. we are very, very confident in this regard we can do the job. >> i appreciate that. i've gone over my time. let me just say, first of all, that i think we have to be careful in replacing the military presence we have today with the private mercenary presence, in a sense, adequate to the task. i think that's going to be a delicate balance. we see while president karzai is responding to private security forces in afghanistan. and i think we're going to have to be sensitive to that and therefore get the right balance in the overall deployment. and i think those are issues we put out in the report today. and we can come back to that later. finally, let me just say, it's good to hear your message, it's

influenced voice and accent here. itives me great confidence. senator lugar. >> thank you, mr. chairman. let me just follow up on some of the comments i made in my opening statement about oil developments in iraq. i have several questions. i'll put them all together in one composite and ask you, ambassador jeffrey, to respond. first of all, how great a success are the iraqis having, or are they likely to have eye with the international oil communities, bringing in their industrial people from very diverse nations? and are they the iocs making investments in training iraqis, or are they likely to do so, as opsed to their own national personnel on the scene?

secondly, how, if iraq does develop something beyond the 2 million barrels per day. and they've been stuck in this range for a while, whatill be the reaction of iran to the northern gulf oil market dominated by iraq? it might be the case that the iraqis are as successful as they hope to be. thirdly, as a part of this, unfortunately, an old friend of mine has told me that he has been offered a direct sale of iraq oil at a $10 per barrel discount. by coming along with that proposition, was demand that he pay the adviser, in quotes, $5 per barrel of the $10 discount. the whole problem of corruption and all sorts of dealings in

various ways has plagued other countries other than iraq. but i ask you some composite feeling, first of all, how the international community coming in is going to impact upon iraqis, the training possibilities. the iranian influence competition or pressures. and finally, just plain corruption. is it possible? and what should our attitude be -- going to be now, probably among those who are attempting to buy iraqi oil, although most of the initial contract seemed to have been elsewhere. but discuss, if you can, for us this overall picture in the confidence that you have. you h. >> thank you, senator lugar. first of all, we think that the iraqis so far have been quite successful. in fact, surprisingly successful given the difficult operating environment throughout the country in reaching what is the

initial 10% increase in oil production. so iraq is now up probably well over 2.4 million barrels a day in actual oduction. exports are also climbing. right now, what is slowing things down is iraq needs to complete a major rehaul of its -- and buildout of its offshore terminals, the ecoi project by the end of this year to double the ability of export from the south, they export about 20%, 25% out of the north through turkey. once that is done, they and the iocs will be on track to considerably expand to perhaps -- whin a relatively short period of time in the order of 3 million barrels a day of exports roughly equivalent to what iran is doing. and move forward from there. they have the second largest reserves in the middle east, we think, extraordinary capabilities. the iocs are doing well. rather like us, in fact.

i went down and visited several of the sites. they have large operating installations that those of you who have visited i iraq or afghanistan would find quite familiar. they have to do security. they do hire a lot of iraqis, it is something we're lookinat in trying to do as well. it makes sense from several stdpoints, ranging from costs to local awareness, security and relations with the local folks. the question of iran, i have a hardnough time working out u.s. policies towards iraq. i don't know how iran would react, senator that would just be hypothetical. i will say tt as iraq's oil exports climb, this has a downward effect on international prices that is quite significant. and so not only iran, but other

countries in the region will notice that. there will be some issues related to the quotas under opec, iraq remains an opec member state, but it currently does not have a quota on it at some point that will become an issue again. so there are several things that will arise, not just with iran, but with other couries. but i think that in the long run iraq's success is a success for everybody in the region because it will contribute to stability. and in terms of the $10 a barrel discount, there is a fair amount of corruption as the iraqis are the first to acknowledge in iraq and we have various programs it is one of the things we have been most active on. in terms of oil sales, these have been under the supervision and observation of the united states since 2003. we're transitioning with the recent lifting of several u.n. security council resolutions on december 15th to a iraqi

mechanism for handling the sale of these quantities of oil, but in any case, they will still have to be transparent sales because among other things the iraqis still have to compensate 5% of their total sales to kuwait under u.n. security council resolutions. smuggling and other things it is a somewhat different story. in terms of the u.s., we, last year, imported almost $10 billion worth of oil from iraq. so we're a major customer, even though we don't have as large an exposure among the iocs as other countries do. but still we have exxonmobil and we have occintal there and a lot of oil company -- oil service companies as well active. >> i'm glad you touched on the last point. many american citizens would say that we have given a great deal in terms of sacrifice to bring iraq to this particular point. how ironic it would be in a

world fighting over oil resources if we came out very -- on the short side of this, granted that we want iraq to be self-sustaining, we appreciate this is the revenue that could make it a scessful state. still, in our own way, we would like to play a part of that, having given as much as we have given. is there a sense on the part of the iraqis of some equity of that sort? >> wouldn't put it in that direct an equation, senator. what i would say is there is great respect for american firms and great respect for american technology and no-how. iraqis worked closely with us on a great variety of ings primarily to the military, but also on the civilian sector. the iraqis prequalified in their set of contract negotiations that you discussed earlier seven american firms. this was the largest number of firms from any country. in the end, only two american firms engaged in bids, but the

reason for that was the firm's decision in terms of profit loss, engagement, other competing priorities, not that of the iraqis. i'm very, very confident that the iraqis, they talk about this all of the time from prime minister maliki and talabani an down. they want to see more american companies come. unlike some of the national oil companies, we and the political and governmental sector cannot really have much influence on these companies. they're internaonal companies. they take their own decisions. but we'll do everything we can to make sure they're aware of the opportunities and the benefi of doing this. >> thank you very much. thank you. >> thank you, senator lugar. senator cardin. >> mr. chairman, thank you very much. and ambassador jeffrey and general austin, we very much appreciate your service and what you've been able to do on behalf of our country. at previous hearings including one with secretary clinton i raised the issues of the refugees and thenternally displaced individuals and was assured that this is one of the highest priorities of our

government is to make sure that these issues are attended to by the iraqis, and that there is attention given to the plight of the refugees. it is my understanding that there is still a large number of refugees in syria, in jordan and other neighboring countries. and that there are many iraqis that have been internally displaced that have not been able to go back to their original communities. the longer this issue is left outstanding, a de facto situation exists and makes it almost impossible for people to be ablto return to their communities. can you give me a status as to where we are and what the u.s. position is in regards to making this a priority in our relationship with iraq? >> give it a try, senator. this is one of our largest prioties. in past years we have put well over $300 million a year into refugee assistance for iraq. we also have several programs to

bring iraqis' refugees to the united states over the past number of years we have brought at least 78,000 to the united states. last year it was approximately 18,000 and it generally stays at about that level. in terms of the numbs, the unhcr registered about 200,000 in jordan and syria. we and the iraqis believe there is considerably more there. these people have family, tribal, professnal and other contacts with their neighboring arab countries and it is easy for them to move back and forth. so the number is considerably larger than that. in terms of internally displaced folks, there is about 1.5 million that were displaced after the violence beginning in 2006 in samarra and there were about 1.2 million displaced again internly prior to that. so it is a very, very large number of people. again, we have many programs, health, food, direct grants and others through various ngos,

unhcr, iom and other programs to help them. we're also working with the iraqis because as the oil revenues increase in iraq grows more prosperous, we would expect the iraqis to do more. they have recently increased substantlly the amount of money that they're providing the internally displaced refugees. and we are working with them to over time take this over. >> well, i appreciate that answer. and i strongly support the relocation of iraqis who have assisted the united states here in america who are at risk in their own country. we have worked hard to get those numbers up. and i also very much support the efforts of our financial assistance for -- along with the international community to help the refugees. but i guess my major focus -- the question is what are we doing so that people who want to return to their original communities can do so safely and that the iraqi government makes that a priority t allow the

return of families to their commity without fear of safety? >> the overarching reason why people do not eturn, senator, is concerns about security and when you have a feeling that security isn't there, even if security has returned and you're living some place else, you're very reluctant to go back. we're working with the iraqis through the efforts of general austin and the u.s. and iraqi security forces to improve security and at the same time to reach out to people. there is also has been a political issue related to this. many of the people who fled to syria and jordan were not happy with the makeup of the iraqi government. they felt particularly if they were sunni arabs they wouldn't be treated correctly. we think the inclusive government that we have now with participatn by all iraqi groups will be a step in the

right discretion and will help convince those people that they should return. it is important to note several of the people who have high level positions in the iraqi government in fact were basically refugees not able to come back from jordan just a few months ago. >> well, i would hope that you would keep us informed as to the efforts being made by the united states with the iraqis and the neighboring countries to get more opportunities for people to return to their communities. i think that's i their interest, but it is also deals with the financial commitments of refugees that would ease that circumstance. i wod underscore the point that the chairman made as far as safety of our personnel as we do this transition, which we all support with our military presence being dramatically reduced. we want to make sure that our personnel are safe. so i hope that you will be very open with this committee as to what we need to do to ensure the safety of u.s. personnel as we move forward with our -- more of

our programs to assist in the development of the country rather than the security of the country. but on that same side, the chairman talked about a long-term commitment in iraq. i think we all understa that we're going to be there from the point of view of helping to rebuild the country. what can you tell us is being put in place to make sure that u.s. funds are being used in the most cost effective way that we have protections against u.s. funds being used to help finance corruption, local corruption in the country, how do we avoid that and what are we doing for promoting u.s. values including gender equity issues, making sure we move -- continue to make progress. do we have -- do you have an accountability system in place that gives us confidence that we should be considering a more permanent longer term commitment to iraq? >> yes, sir, on all of those accounts, senator.

first of all, this is an important priority for us and it is an important priority for this administration and the last administration. in fact, a unique institution, the special inspector general has been set up and they have a very active program. they have dozens of people either stationed or tdy wh us out in the field in iraq. we also have the state department and other igs, but seger in particular has been very active looking into assistance programs and how effective and how efficient they are and to what extent there is corruption. i meet with the head of it, stou stuart bowen with his deputy and others frequently. in addition, since the time of ryan crocker, we have organized the embassy in a unique way where normally we have the ambassad and deputy chief of mission. for the commission and assistance elements of it we have created essentially a second deputy chief of mission,

ambassador peter bode who looks into that and focuses directly on the issues of are wie gettin our bang for the buck, are we looking into corruption? and these kind of issues. a good deal of our assistance goes to -- a good deal of our political relationships with the iraqis and our engagement with them goes to issues such as gender equality, minorities, the refugee issue. we have a very, very broad dialogue wh them. we played a role behind the scenes on some of the decisions taken in the iraqi constitution on gender equality, for example. 25% of the parliament has to be female. now, there are problems with this at times, for example, iraqis both men and women were unhappy with the makeup of the cabinet. the prime minister then decided that he would have to hold off the completion of the cabinet until he could find more female

candidates and that process is ongoing. so iraqis are sensitive to this themselves. they have a reputation in the middle east of being a very -- a country that understands gender equality, a country that respects the role of women. it is a quite so sfift caphisti country and something we give to priority to as well. >> thank you for that. i urge youto be as more transparent as you possibly can in the review ofow u.s. involvement in iraq is being -- how the funds are being used to get value for the american taxpayer and that we are promoting our values. think the more that you can get that information made public, the easier it will be for legislation such as our chairman is suggesting to be favorably considered here. >> thank you,enator cardin. senator lee, you weren't here when i had a chance to welcome everybody, but i want to welcome you personally to the committee. we look forward to working with

you and hopefully we c be as productive as we were the last two years. good effort. so welcome aboard. i recognize you now for a question period. >> great, thank you. first of all, i want to thank both ambassadorjeffrey and general austin for being with us this morning and for your informative and generous and candid responses. it has been very helpful. as a new member of the committee, i'm very grateful for you being here. i also want to echo the expression of gratitude and support that has already been articulated by my colleagues this morning. so grateful to you and those with whom you have labored in iraq for all that you do to make this world a better place in which to live, from the bottom of my heart, i thank you. i also want to thank in this forum all freedom-loving iraqis. i suspect you'll agree that ultimately this th stability that we're trying to achieve in iraq rests with them, those who love freedom in iraq and i look forward to seeing that come to

fruition as they stand up and handle this. general austin, i wanted to ask you, having trained extensively as i understand it with the iraqi military forces, what are your biggest areas of concern with regard to their rdiness to take the reins following the troop withdrawal later this year? >> thanks, senator. as i stated earlier, they are in the lead for security as we speak and they're doing a pretty good job of standing up to some pretty significant challenges. so i think at about the time that we draw our forces down, they'll have a pretty good capability to address the internal security. the -- again, i mentioned earlier there is a requirement to continue to develop the logistics and sustainment and

the intelligence capability. from the standpoint of providing for defense against an external threat, there is still work to be done. i think they need better equipment and they have purchased some of that equipment. they need to train on that equipment. and then at some point they need to progress to a point where they're doing combined arms training. tanks and howitzers, used in training and the maneuvers. and also integrating the capabilities of their aircraft. and so there is still some work toe done to develop that foundational external capability -- capability. as you know, they don't get their aircraft until 2013 or so. and so they don't have the ability to prove for the protection for their skies for

some time. that's also a concern. and i think -- i think if you add those things up, you know, that's -- they recognize that there is some things that need to be continued and i think they will continue to focus on that. >> under what circumstances, if any, do you anticipate that it might become necessary to extend the u.s. troop presence beyond december 2011? >> well, sir, as you know, in accordance with the current agreement between the united states and iraq, you know, the plan is to go to zero and our forces will exit completely by the end of this yr. and so that's what we're focused on and at that point we'll transition responsibilities to the embassy and it will be a civilian-led effort. and i think the ambassador has done great work in preparing for this.

ther is work to be done yet for sure. but i would say that in order for that to be successful, we certainly have to ensure that he is adequately resourced to provide for the security in the future. >> and some of the resource deficiencies that you identified including some of the equipment, aircraft and so forth, you think that -- from a military standpoint, is still feasible for us to withdraw without creating a power vacuum problem? you're comfortable with that from a military standpoint? >> clearly iaqis will have to continue to acquire that equipment and train on that equipment. and as you know we have a number of fms cases that -- where we'll be continuing to provide equipment and training to them in the future. and that eort will be under the supervision of the ambassador through our office of

security corpsoration. >> thank you, mr. chairman. >> thank you very much. senator menendez. >> thank you for your serce and your testimony. i want to ask the ambassador, the vice president and the deputy assistant secreta of state michael corbin described and characterized our civilian mission in iraq as the largest since the marshall plan. like the marshall plan, the implications oits success or failure could alter the balance of power in a crucial region. and while we expect the military to civilian transition to be difficult, our efforts will still hinge on the political stability of the iraqi government. so -- we certainly need a stable and cooperative partner to implement a civilian mission. so i want to ask you, ambassador, how do youee the precarious political arrangement in iraq after the december cabinet appointments?

are there things in the near term that could jeopardize the support for the maliki government? and most importantly, i read your testimony, and i am very concerned about the role that iran plays here in using its political influence in iraq and what that means for us in terms of policy implications. so could you give me a sense of those three things for starters? >> with almost everything i do, senator, i start with where i was when i was in iraq last time. and the government is far more stable and far more capable now than it was then. iraqis had to make a decision after the march elections when four major blocs essentially split the vote four ways with all four of them getting roughly 25% of the vote. how they would then form a government. they took the decision, it is a decision we agreed with but wasn't our decision to take,

that they would try to be as inclusive as possible to have as many of the different groups participating in the government. this required a great deal of work because you had to put a coalition together that wasn't just 51% of the members of parliament winning votes, but rather as it is now about 300 of the 325 members of parliament. and they did succeed after much back and forth beginni in november and then culminating on the 21st of december. the gornment is inclusive. it is focused on power sharing. we have already seen a number of examples of that with the decision that i mentioned a bit earlier about allowing oil to be exported from the kurdish areas of the north through turkey, positions taken on the central bank and its role. and the willingness of the various groups to cooperate on a rolling basiso move

legislation forward and to basically tackle problems such as the independence of some of the institutions that are separate commissions, such as the oil issue, and some of the security questions that are still out there. also, reconciliation, de-baathification, the iraqis took a number of important steps in that regard, basically lifting the de-baathification on several people who are critical now to the government formation. they have come a long way, but, of course, there is still a great deal of -- not a great deal, but there is still some violence in the country. there is still active terrorist groups and groups i'll get to that in a second supported by iranian elements that are active. and this poses problems forhe government, it poses problems for the stability of the country. we're quite confident that this is a partner that we can work with. we are -- we believe that in the

near term this is a coalition that will hold together. the sadrists in particular are a group that does not like us, but they have committed to staying within the political process. we'll have to see if that, in fact, is correct. in the past they have tried to do both, be in the political process and also run militias and attack us and attack the iraqi government. so that's a question that remains unresolved. but the rest of the political process is deeply committedo a peaceful working out of the problems between them. in terms of the iranians, all of iraq's neighbors obviouy have are very, very concerned about iraq, iraq and the battle days was a threat to iran. an eight-year war, it was a threat to kuwait. the turks have interest in the north including the pkk presence there. other countries also. the iranian influence, i would say, is that of an important neighbor. it has probably the highest level of trade of any given

country followed by turkey. there are a great many theological links between the shia center in najaf and many of the people who are now in the iraqi government, not just shia arabs but kurds and others found refuge in iran during the saddam regime. what concerns us is, first of all, the general role of iran in the middle east. we think that iran is attempting to expand its influence and expand it in illegitimate ways through violence, through supportive groups and such. we're concerned that will happen. our spread in iraq as well. but we do believe the iraqi leaders including prime minister maliki and others are well aware of threatso their sovereignty, well aware of threats coming in various directions and they can be counted upon to do the right thing. >> let me ask you a quick question, does iran want this government to succeed or fail? >> one of the problems in assessing iran, and i'm not an

iran expert, but i've worked on and off with it, there are different power centers in iran, senator. i think some of them probably would like to see an iraq that is not a threat to them. that's a legitimate concern given what they went through with saddam's invasion. and are happy to see an iran that is -- an iraq that is a success because they feel an affinity for the shia arabs who make up a majority of the population. i think that there are other people in iran who probably would like to see much more iranian influence over iraq and would hold iraq's success hostage to additional iranian influence. and sorting out that is one of our challenges. >> one last question. we have spent about $20 billion to develop iraqi securityforces and increased ministerial

capacity. overall we spent about $58 billion in reconstruction in iraq, including the building of infrastructure, establishmentf political and social institutions and a whole host of other things. now i understand the iraqis have a sense of their own budget crisis, but certainly with the challenges that we are having here at home, at some point one would presume that the shift of where we are spending our resources will go to the iraqis funded by, let's say, increasing oil revenue. how long do you anticipate the united states needs to be engaged in this civilian mission at the currently planned support level? and how accurate are the current estimates of $5 billion annually? and -- or is it a more realistic number to say 7 to $9 billion as some academics have suggested?

>> senator, at this point we're talking about a transition of three to five years. several things will happen in those three to five years. first of all, our assistance will drop. it is already quite low. we're looking at a police training program of roughly a billion dollars a year. the military is doing it now. we'll take it over. the program for fy 11, run from the department of defense, rather than the normal fmf program, that's 1.5 billion. and there is another roughly $500 million, not counting the refugees, separate account, which is esf and related other things. so right now we're lookingt fy 11 approximately three to thr3 billion in assistance going down om what you said, well over $50 billion we spent on security and reconstruction. in return, the iraqis, for

exame, their capital investment budget, equivalent to what we were doing a few years ago in water, electricity, oil, energy and other projects, is about $8 billion or about 15% of their budget. their expenditures on security, again, about $8 billion. about 15% of their budget. and th expenditure level in this fiscal year is about the same. so the iraqis are putting a tremendous amount of money into this, far more than we're putting in to this point. we have an agreement with them over the last ar and a half that on any specific project or activity we do, in a civilian side, they'll provide 50% of the funding or other support. so we're watching that. it is going down. it will go down further. as their oil revenues come up in a stability continues to improve. >> well, i appreciate that. let me close. my time is over. we will be watching it very closely as well because after

$58 billion when we were told that iraqi oil would fund the full costs of our invasion in iraq and the costs of it, obviously it is tough to see here in america the challenges that we have, the lack of investment that we have on critical issues and spending $58 billion in iraq and a continuum of anywhere between 3.5 and $5 billion a year is something that i think is going to be increasingly under a microscope. i look forward to working with you on that and thank you for your answers. thank you, mr. chairman. >> thank you, senator menendez. senator coons. >> thank you for convening this important hearing on the transition fr a military-led to a civilian-led role in iraq going forward. i want to express my deep appreciation to the witnesses today for their service, for their insight, for their candor and for the sacrifice th has been made by thousands of americans in our armed forces as

well as civilians, diplomat, allied forces. the best way for us to honor both the sacrifice and the investment of over a trillion dollars here is to plan adequately for the transition. and hopefully for a stable and security ally in iraq. i would like to start by asking, ambassador, if i could about how you see relations between iraq and some of its other neighbors we haven't touched on yet, syria and saudi arabia, in particular. i believe there is still not a saudi embassy in baghdad. how do we transition towards a point where iraq can play a constructive role regionally as we move out of a military-d to a civilian-led presence in iraq? >> thank y, senator. we touched a bit on iran. let me go around counterclockwise from north toward the west and south. turkey, as i mentioned, is a major trading, investment and energy partner of iraq's. that relationship is developing in a very, very important, almost dramatic way.

the current erdogan government has taken a very different approach than earlier governments with the kurdistan regional govnment in the north and now has a good and close relationship with it. but also at the same time primacy to the central government, of course, in baghdad. we're seeing this in increased energy, exports, through tuey, increased turkish investments, not just in energy but particularly in oil and other energy fields, electricity, housing, and, again, two-way trade. the turk do have security interests in iraq, particularly the presence of the pkk, kurdish guerrilla group in the north of the country and we have a process of dealing with that where -- >> what is the status of the syrian border arrangements at this point? >> the syrian border arrangements, there are agreements between iraq and

syria, b frankly we're still seeing foreign fighters cross over into iraq and general austin might perhaps talk more about the security implications of that. but this is one of the major problems outstanding between syria and iraq. jordan, relations are very good. jordanas been very supportive. more generally in the arab world, then i'll touch on saudi arabia, iraq was in a special status beginning in 1990, 1991 with a variety of security council resolutions, huge debts, compensation for its damages that if created in kuwait and elsewhere, and it has slowly worked its way out from under them. we had a breakthrough on the 15th of december. vice president biden presided over the security council as many of these security council resolutions were lifted. that sets the foundation for increasing normalcy in iraq's relationship with the region, and particularly with its neighbors. the next step will be to try to

deal with some of the issues outstanding still between iraq and kuwait. the kuwaiti prime minister recently for the first time in 20 years traveled to iraq. iraqi leaders are going to be traveling to kuwait for the anniversary of the liberation coming up here soon. that's another positive step. with saudi arabia, that's a complicated issue. i've traveled to saudi arabia twice and met with king abdullah on the iraq issue. and that's going to be probably the last-- the last step that will be taken in the noalcy. but, again, the iraqis are trying very hard. we recently had encouraging comments by the saudi form, prince saoud and we want to build on those. whatverybody is focused on with the saudis and the rest of the region is the arab league summit that will take place in baghdad for the frst time in 20 years in march. we'll have to see how the situation in egypt overshadows that, but for the moment, this will be another very, very significant step forward.

>> thank you, ambassador. if i might, general austin, i'm interested in security of the borders with syria as well as others. you made reference earlier to the iraqis' ral challenges in maintaining any air superiority for the next couple of years. i'm interested in that. i'm interested in hearing your views about what lessons we can learn about our successes or challenges in standing up training and supporting both the iraqi police and their national security forces. and then what those lessons on both the military and civilian side, what lessons we canhen apply to afghanistan from that experience. >> well, thank you, senator. i would -- of all the security forces i would rate the border security elements as being the least developed. it is simply a matter of the way that we went about our work the. we had to stand up the army, stand up the police, and then enable them, the federal police and the border security forces

were the last that -- of the forces that we're able to get to and work with in ernest. having said that, they made remarkable progress. there is still a lot to be done. the iraqis fully appreciate that. with respect to the foreign fighter flow, we're probably looking at somewhere between five and nine foreign fighters coming across the border on a routine basis per month. that's much decreased from what we saw back in 2007, 2008 when the numbers were much higher than that. part of that is because of the great work of our ct forces. but also it is because of the work that -- th iraqi security forces are doing currently. we have been working with them d partnering with them. they have learned a lot, they're developing capability, there is still a long way to go in some

cases. i talked about that earlier with respt to intelligence, collection and analysis. with respect to lessons learned, there are a lot of them. but i would say some of the key lessons learned are that, you know, by partnering with the host nation forces, and working with them side by side on a daily basis, we're able to move things along much more rapidly than we would have been if we had taken another approach. we're starting to see that some of those techniques have migrated to afghanistan in terms of how they're aroaching business down at the, you know, battalion company platoon level. as you know, general petraeus was afghanistan ande was a guy that really helped to implement a lot of the techniques that we still use today. you can expect a lot of that would migrate over to

afghanistan. but i think there are numerous lessons learned and we continue to catalog those and share them with the community at large and certainly push key lessons learned to afghanistan wherever possible. >> and, general, as you transition from a military-led to a civilian-led world, how you to see that transition working particularly in terms of supporting the police and security forces? >> i think the transition is going well, senator. i think, as i mentioned earlier, ambassador jeffrey and i really are working closely together on this. we were literally joined at the hip. most importantly our organizations are working well together. with ever responsibility and task that we transfer, there is a deliberate process of transfer -- for transferring those responsibilities. and the ambassador and i together oversee the progress of those efforts and so'm pretty

confident that we have good processes and i think our people are working well together. >> that's great. i was encouraged by your submission of joint testimony and by the chairman's opening comments about your joint operations and partnership. i thank you for your opening positive comments about our vice president as long service and i look forward to continuing delaware's long tradition of service on this committee. thank you very much. >> thank you very much, senator coons. we'll begin the second round now. let me bear down a little bit on a few things if i can. its my understanding that some requests for critical nonexcess equipment such as helicopters has been denied. bassador, how -- if that's true, how does that impact t question of readiness and capacity for this civilian side

to manage this. >> there has been a great many security-related requests we have made. i mentioned the mraps. we're working on the cram system for early warning and alarms related to direct fire attacks which is important to get people under cover. in addition, while it is not as easy to summarize, we're getting an extraordinary amount of effort by the u.s. military all of the locations where we will be taking over because there are cations where the u.s. military and we are jointly present at this time to do engineering, do joint planning, provide equipment, provide, for example, the containerized trailers if you will that people are living in. we're getting extraordinary support. the only ting that i'm aware of and you mentioned this was the helicopters. at one point we asked for

blackhawk helicopters. but the military has --s we well understand a pressing need for those in afghanistan and elsewhere and therefore the ste department has gone out an purchase d 20 s-61 sakorsky helicopters that are on track to arrive, that will more than do the job, we'll support that with uh-1 helicopters that we already have or will be able to get. >> who will pilot those? >> sir, we have -- what we call a state department ear wing developed in central and south america, some 20 years ago, very active in columbia. right now i have about -- all told in all embassy elements, over 20 aircraft operating in a combat environment today in iraq will more than double that. and we believe that we have e people we have been doing this for a long time. it is not an easy mission, it is not easy for the military either.

the equipment will be there. we have got some of the world's best pilots operating. >> help me to pin down this question of need with respect to the numbers there. the current plan beyond 2011 cas for 17,000 individuals on 15 different sites with, as i mentioned, three different air hubs, three different police training centers, and two consulates, o embassy branch offices, five office of security corporation sites, that strikes me as a -- that's a big footprint. that's a lot. do we really need all that? >> let me start with the -- to answer that with one word, yes, sir, right now it is a big -- it is a huge operation. but right now to operate under the current ciumstance with the u.s. military as our

partner, we have almost 8,000 personnel assigned to the chief of mission. we're all over the country. a few months ago when we still had what we call the eprts, we had 22 main sites and w had individual political offices with battalions and brigades and even other places. we were literally all over the country, sir. we were ratcheting that down. of the 17,000 personnel, the vast majority are going to be contractors. most importantly perimeter security contractors, people who don't go out and interact with the iraqi community and then a smaller number of personal security details, security contractors, those people are registered with the iraqi authorities. the iraqis regulate them, they're under iraqi law and more importantly from my standpoint, they're under the direct supervision of our diplomatic security people who have somebody ridg in every convoy. >> is it more expensive to do that than to maintain effort through the military?

>> well, first of all, with the military, senator what you get is if you have a -- and general, austin, ofourse, as i say in this particular issue too, for example, we have artillery or infantry battalions providing support for our prts, but this takes up a company or a battery's worth of troops. these troops are being paid for. they're in the base of the department of defense budget. theye being paid, their equipment is being purchased and maintained and such. whether they're in ft. hood or whether they're in -- >> i understand that, but i'm trying to understand the cost analysis here, whether on a dollar for dollar, person for person basis, when you finish costing it out, is on less expensive than the other? has that analysis been done? >> we haven't -- >> i understand the big rubric of the promise of our troops and the drawdown. i got all that. i'm just asking the question if notwithstanding all of that

there is a simplicity and a lesserost and even praperhaps a greater guarantee of success for the different model. >> certainly you will have a larger chance of success if you have a u.s. army combat brigade providing security for you. you can respond at any level of reaction including a major massive complex ambush. but for the kind of security, we haven't seen that for a lg time in iraq. for the kind of security threats we have, we think we have a model that will work. in terms of cost, it is expeive to do these psds. we have many of them in iraq. and they do cost a great deal of money. but it is also very, very expensive just for the incremental costs of our u.s. military in iraq as well, senator. >> well, fill out what people are going to be doing on one of those 15 different sites. >> okay. first of all, on the 15 different sites, to sketch very

quickly you have a set of sites in baghdad. you have an embassy and across the street the headquarters of the osci which will be a defense security systems organization under chief admission authority. under the current police training area where the military is now training iraqi police at the police academy, which we call it fob shield, we will take over that operation and have our own police -- civilian police trainered to replace the police trainersthe civilians that under the state department inl are providing to the military now. it is not a conceptually major change. we will have also in the greater baghdad area some osci people doing training for the heavy equipment armor and such. at the airport we will have an aviation hub, again, taking over part of the area that the u.s. military is currently operating. then we will have four major

locations, mosul, erbil, kirkuk and basra, basra and erbil will become consulates, mosul and kirkuk will be temporary facilities. this requires the iraqis to agree with this. we're working with them on the dimensions of this. >> land us agreements have not yet been signed? >> that's right. >> construction has not yet begun. >> construction, again, these are all sites where we are now operating with the u.s. military and we have done some preliminary work. and we'll work through with the iraqis. we have briefed the iraqis on this. we're waiting for the final approval. >> what is the current cost of this mission? >> it is about -- the current operations that we have roughly not counting the foreign assistance is about $2 billion. >> going forward? >> moving forward, the construction is in the order of

about a billion dollars over several fiscal years. and then the operating costs will up it many hundreds of millions of dollars largely for curity and life support. >> at this point and time, how much revenue do we anticipate coming from iraqi oil? >> iraqi oil currently is abo about -- >> that is to say against those costs. >> right. >> not total, but -- >> iraqi oil, the iraqis are earning about $50 billion year from their oil. it will go up this year because oil prices have ge up and as i said they're beginning to export more. so, say, 60, 60 plus billion dollars would be the upper limit. >> and how much of that will go to defray these expenses? >> well, again, the iraqis are taking over much of the training and equipping of their own security forces, the vast majority at this point. we figure $8 billion this year.

and they have taken over almost all of the earth turning reconstruction and capital investment. we don'to that anymore, senator. >> but we still have to lay out $2 billion against $60 billion of revenue? >> again, to maintain our own presence. now, for example, all of these sites that we mentioned and all of the others, there are basically small satellite sites, are all inside iraqi military bases. so the iraqis have an inherent responsibilityo provide security. they're securing themselves. they're securing us. we use iraqis for our movements through the cities. they support my movements. they support all the movements of ourprts in the military through the cities as well. so they're contributing a considerable slice of combat power to work with us. >> well, i'll pursue that a little more with you at a later time. i used my time here. senator lugar and then -- >> mr. ambassador, in the

process of transfer of authority and equipment and missions from the defense department to the state department, i want to inquire of you just as a person very responsible for this transition how this is perceived. i do so on the basis that we wrote last november to secretary gates i letter asking how the department of state had responded to several letters of request. and liwise back and forth. the department of defense assured us that a draft to my staff that these issues have been worked out. but there appears to be evidence that it is difficult to transfer a military materials such as helicopters, early warning assistance, to protect facilities, for example, some have suggested facetiously it is easier to transfer these

situations to foreign governnts than it is for the defense department to transr to the department of state. i just ask how smoothly are these transfers, first of all, of material working out and what do we need to do back in the weeds of our own situation to make certain that this huge change which may be unprecedented works smoothly, even more so with missions. the department of defense has been doing a great number of thins which the department of state has never been asked or tasked to do before at all. and yet you've been describing the numbers, the personnel that will be on the ground attempting to do all of this. i just went from your experience as a diplomat and a person not only in the department of state, but someone who worked with the defens department and all sorts of ways, first of all, really how is it going -- what, if anything, can we do in the congress to help expedite this

situation or is this entirely an internal administration proposition of defense and state department people finally getting their act together, getting some transition rules that will work for us here. and then down the trail in afghanistan where we'll have the same proposition. >> the short answer, senator, as you would probably would expect is it is going fine. a longer answer would be, in m 40 years of government service, i have never seen anything done in government go easily without hiccups and problems and various issues. and you just work through them. what is important and what we have here is commitment of leadership, beginning in the field in baghdad between usfi and the embassy but going up to secretary clinton, secretary gates and the president and vice president. and we hope the support of the senate and house to do this and then we can overcome these

problems. a few months ago, most of these things that you cited were issues and we were going back and forth and holding the proverbial government meetings and we have worked through this. secretary gates recently signed an agreement that has cleared ay a lot of this in terms of the responsibilities for providing security and other support and funding for osci so that big part of my mission will be basically overseen by department of defense in conjunction with us so that we'll have the very powerful support of dod in making sure that that mission is accomplished correctly. again, on the transfer of equipment, everything that we have needed other than the helicopters, which we have another fix for that i'm perfectlyhappy with has gone forward. there are issues, for example, on the way the dod will fund the osci. they'll need some changes in legislation or other things and so we'll have to work that and that will be an issue as well. but i'm absolutely convinced

that at that level we'll get everything done. in the field, we have big job physically doing the construction, deploying the people, and actually getting these things up to, as senator kerry said, full operating capability. and that's a challenge that we have before us in the next year. >> this is a follow-up for that. frequently over the course of several years we have had testimony as to how funds have gone in the minds of some of those who have testified disproportionately to the department of defense as opposed to the department of state. what was once a fairly equal type of funding situation has become disproportionately very different. secretary gates recognizing this has been among the leaders in saying really some things can better be done by the department of state, and almost a question of how can i transfer my money or what have you to get the

thing done over here. i raise this because we stated we're dealing with this in iraq now, going to be dealing with it in afghanistan, nobody knows how many other times, and just as a veteran ofhe trail of these sorts of things, how can an administration, this one or another one, better testify to us as the congress, as appropriator and so forth, really who can do what or how in this world we need more flexibility. should we rewrite some laws, regulations what have you to make this sort of thing possible or is this pragmatically going to have to happen country after country in the field, depending upon circumstances? >> it is a big question, senator. in the last administration, at the height of combat activity when we had 150,000 troops in iraq, decisions were made for

certain -- what normally would be considered the usaid assistance programs, the isif program for the equipping of iraqi forces, again something that would be normally funded by an fmf program. went to dod and the police training with were doing in '04, '05 went to dod for management and funding. again this is an issue that administrations have to take in the heat of combat. what we're doing now is to basically migrate those activities back to the nmal place where we normally do them. assiance programs, esf are reques of over $300 million for iraq will be done by usaid in the future. we're looking for an fmf program beginning in fy 12 and the police training program as we have briefed has already begun to be funded through the state department and will be fully

funded through the state department. so without getting into the very tailed and very controversial and complicated issues here, i would say under a temporary war time basis, funds and activities, responsibilities were shifted to dod. as soon as we could in the transition we're shifting them back to the department of state. >> hopefully with memos and white papers or maybe in memoirs you'll describe the situation that will be helpful to your successors. i thank you very much. >> thank you, senator. senator rubio. >> i wanted to briefly examine the detainee issues. i know that we have turned over several facilities to the iraqis. what is the status of -- i don't know who the appropriate person to answer that, maybe both, what the status of those facilities that have been turned over to iraqi administrations in terms of recidivism rates and things of that nature? >> as you mentioned, we have

turned over all of the -- the detainee facilities with the exception of one. we continue to hold a number of detainees, about 200 at camp cropper, which is -- we plan to transition those detainees in the summer. and we're on track to transition them. so i don't think there will be any issues there. but inrecidivism, we continue to see some recidivism, that's to be expected. but by and large i think we have been very effective in the way that we transferred the detainees over to the iraqis and we didn't have any major issues as a result of that. >> do you -- general, do you know or have any indication of how many foreign fighters have been released by the iaqis and have we re-engaged with them at any point and so forth?

>> i don't have at my fingertip the numbers of foreign fighters or former foreign fighters that were detained and released by the iraqis. but there are no question have been some. and, of course, we detained them and based upon the evidce that is available, the iraqis will determine whether or not they continue to detain them. so there will no doubt be instances where people have gone through the due legal processes and as a result of evidence or lack thereof may have been released back to the population at large. and i guess my last question on the detainee issue is i know we had had some level of success, i success, i think, at dealing with some of the less radicalized prisoners that have come into some programs set up to pull them away from that sort of stuff. have the iras have continued with that, and if so, at what level of success? are they doing that as well? >> the iraqis doing some things

but not to the degree that we were doing down in buca and other places there. i think as thei system develops, they'll learn from what we did. they'll also learn from what the saudis have done and complement more and more of those processes. >> ambassador, this question is for you. it's a little broader, but i think it ties into what the testimony was about today. we're wahing the events in egyp and before that in tunisia and yemen. what's your sense of how that's perceived by people in iraq and how that could manifest itself over the next few months and years in terms of this government's ability to sustain itself? i know it's outside the focus today, but i think clearly aligned, any thoughts you may have as toow this could be perceived in iran by people there? >> in terms of iraq, i've been

out of the country for a week. so i haven't been following it as close as we normally do, but i think that from what i've seen and from talking with iraqis, they believe that in a democratic system. you were the purple finger elections in 2005. this is part of the ethos of that country, a democratic political system. frankly, they think they're a little ahead of most of the rest of the middle east, and they're proud of their constitution. they're proud of their elections, and i think we'll see to some degree what's happening, if it turns in a good direction, towards a more true democracy as a confirmation of the path they have taken. a path that has been challenged violently. how it all plays out, of course, and that's the question we're still working our way through is not certain, but we hope for a

good solution in egypt and elsewhere in the middle east. we support democtic reform throughout the region. the lesson i take from that and of some relevance today is we need to be, first of all, out all around the country. you can't follow what's going on in egypt or iraq from cairo or baghdad any more than you can try to figure what's going on the in the united states from washington, d.c. closed our consulate in alexandria as budget-saving move and it probably is a mistake. i know what it's like to be out there in the countryside. i think that that is very, very important. it's an early warning system and one reason why we're asking for the funds and taking the risks we are to keepur people outn iraq to basically keep our finger on what's going on and try to help our friends and

particularly to help the democratic transformation. to provide a platform for the u.n. also out there and other members of the international community. in terms of iran, it's an excellent question. i can't tell you how they're reacting. they had their own street demonstrations a year and a half ago. they were put down with merciless violence, and i think that this is not a good development from their standpoint. he they may try to exploit it one or another way by seeing this as an opening for extremist groups, but my sense is that would be fairly hard for them to do. >> i don't mean to put words in your mouth or exaggerate your poin but your sense is people in iraq look at what's happening in egypt and other places and feel like they're ahead of the curve? in essence those couldn'ntries coming their way? they take pride in the idea that they've begun to build for

themselves the society an in fact, these other countries are coming in that direction to one extent or another? >> as i said, i've been a little bit removed from the past week, but i think you're on target, senator. >> general lee. >> nothing further. thank you. >> just a couple of quick questions before we wrap up. senator luger may have more. general, can you speak to the tick in the rise of violence recently and last week, about 159 iraqis killed last week in one week. what do you attribute that to? >> thank you, senator. i attribute it to in one word opportunity. as i stated earlier, last week wathe week of an annual religious observation or celebrati celebration, and during that religious event millions of pilgrims, she shia pilgrims get

the road and walk to karbala. we anticipated that during the celebration or observance we would see al qaeda use as an opportunity to try to ferment violence by attacking shia pilgrims, and they did much as they've done in years past. as we look at the pilgrims on the road this year, about 9 milliothis year and last year it was about 3 million. so that indicates that there's probably a greater sense of security by -- on the part of the iraqi citizens. but the numbers of attacks were about the same or exactly the same as we count them. eight major incidents last year, eight major incidents this year. the numbers of casualties, however, were down this year from what we saw last year.

so with a much-increased number of pilgrims out there, so a much bigger target, less -- they were less effective in thr attacks. that speaks to the diligence and professionalism of the iraqi security forces. they continue to improve. again, they plan and conducted, coordinated and conducted the security for this even themselves. >> well, that is encouraging. let's hope that that can continue. obviously, one of the biggest threats to long-term stability is the relationship of kurds to the arab community. i think it's accepted that you had a good success with the combined security mechanism in which you have the ars, kurds and u.s. forces coordinating to provide the checkpoints, et cetera, and e joint patrols. i guess that's taking place in four provinces.

is that going to be able to continue when you have completed the drawdown? is the state department going to have the ability to maintain this combined security mechanism, which has been successful? >> certainly the embassy is taking a hard look at how they do this. i'm let the ambassador to speak to that piece. there are options. it depends on how the iraqis want to address the issue in the future. you could seek a third party like the u.n. to come in and fill that void, or you could seek another element to come in, perhaps nato may look at that and say that that's a place that they would like to contribute. or you could approach the management of those combined security positis differently and go to bilateral arrangements

with an oversight element at a higher level that rtinely visited these sites and made sure we kept our finger on the pulse. there are a number of options to address our departure, and i'll let the ambassador speak to that. >> the bilateral wou be the arab and kurd and we'd come in as the oversight? >> correct. >> ambassador, do you want to speak to na? >> the csms are extraordinary successful, but they're an important tactical tool in the field to suppss possible violence or possible disputes or possible sparks that ignite a confrontation. let me talk about the strategic and operational level. at the strategic level much of what we're doing and what the iraqis are doing is aimed at reconciliation between the kurds

and the sunni arabs up in that regi region. we've seen encouraging developments with the sunni arab traveling to meet and come up with a common position on government formation two weeks ago. that's a first. the compromise on the oil exp t exports is another development. the agreement to move forward at the hydrocarbons. as you develop these cooperative steps between the political forces and between baghdad and iribil, you create an environment where people are less willing to let, you know, a curse or a chambered round start a conflict along that line. at the operational level, there is a new effort to resolve these problems, which are related to where you draw the boundy, who has security, where these territories go.

some of them are associated with kirkuk and what's called the article 140 related to the iraqi constitutional process to come up with a negotiated solution that would then be confirmed by a referendum. the u.n. head of unami, the u.n. organization in iraq has launched another round of visits in the region to try to kick start that. we'll support that and try to work that out at every level. back to the tactical level, our hope is that -- we haven't worked out the detail yet. that the iraqi military would continue these. there are a nmber of coordination centers we would like through the embassy to still have eyes on in these coordination centers and provide as much of a role as possible in supporting it. to do that, we have tbe in kirkuk and mosul sul where two of the centers are. >> fair enough. it's a process still in the

making, obviously, that particular component of it. i respect the dynamics you described. the final question i would have is simply regarding the integration of sunni. we've received some reports that the integration of the sons of iraq into the army is a uneven process. if the new government were to break down into sectarian divisions, which is always possibility, the question then is whether the extremists have an opportunity to pull people back into insurgency. i wondered if you'd sort of speak to the of the iraqi gornment's determination to continue this beintegration and how you see that proceeding. >> yes. senator, i think the iraqi government is committed to

continuing this migration of the sons of iraq into jobs either for the government or into the civilian sector. as you know we were making progress, and at one point we stopped that transition because we needed sons of iraq to help with the security for the elections. certainly as the the new administration solidifies and comes on board, i have ever reason to believe they'll continue with the wrk they've done up to this point. there are some good signs out there. the sons of iraq are getting paid routinely now versus a year and a half ago. we really had to struggle to work to make sure that people were being paid. of course, as the economy begins to improve, there will be more

opportunities to transfer from the sons of iraq into meaningful civilian employment. i think that will be a great help as well. >> gentlemen, senator luger, i don't know if you have additional questions. i want to thank you very, very much. we've covered a fair amount of territory, and i think you've been very helpful with respect to the committee's concerns. there are obviously a lot of things that you'll be tracking and so will we. it's going to be a challenging year with enormous consequences. so we look forward to working with you at we go forward. i look forward to getting out there fairly soon to visit. get up to speed again on some of the these issues, but i want you to know that we're here ready and willing to be helpful to try to break through any of these logjams and/or to help think through some of the these solutions.

again, on behalf of everybody here, you heard it from everybody but let me rerate we are enormously grateful for your personal service and for your efforts here, which are of huge consequence to our country's national security interests and, of course, we are as i said in my opening comments grateful beyond words to the sacrifices made by a lot of families, a lot of folks who are on third, fourth, even some fifth tours. it's a pretty incredible demand that's been made of our armed forces, and we're both grateful and proud. thank you very, very much. we stand adjourned.

loish >> that is one reason the national association of mortgage investors is supporting our efforts here. lost mitigation programs have important benefit even for servicers. bankruptcy courts have title questions that have been raised by faulty title work. protecting servicers against future investor litigation. pooling and service agreements of on the leave them unsure to modify or for close.

court can help to alleviate by signing off on the reasonableness of a settlement. ultimately, i believe giving bankruptcy court on primary resident the mortgages would be the least costly way to keep families in their homes but that's not the topic of today's hearing. this morning we focus on far more modest lost mitigation programs which without conferring new subject of powers have proven effective in unnecessary for closures mostly because it's the first time the homeowner has had a chance to talk with a human being from the bank with the authority to look at the file. thank you you very much. we'll hear from the senator and then - i don't know the if senator blum eneenthal cares toe

a statement. >> it's important to study the relationships between bankruptcies and for closures and the committee needs to also study if the president of the administration is responding to for closures, whether that response is working and the 75 billion dollars that administration is proper use of the taxpayers money, and if so, whether that money is being used in the most effective manner. this hearing has a chance to have some of the facts come out and to have the issue wholly and fairly examined and i'm open to listening to proposals that can make a difference and i had an opportunity before the holidays to have such a discussion in my office with senator white house

and i appreciate very much you're coming to discuss your legislation. the nation is experiencing some difficult times. fellow citizens are hurting and we must get the economy moving in the right direction. helping spur job creation and wisely spending tax payer money. ehrlich effort is part of our responsibilities to if fellow citizens we must examine how it effects the whole economy and how the money spent will impact future generations the issue of mortgage modification is not simple. there's significant and real concerns about the mortgage loan modification run by bankruptcy courts and questions how these programs are administered and their impact on the economy. for example. concern also includes questions about whether judges will use

the programs to mandate cram down, which obviously is a reduction in the principal amount of loan. something even the obama administration program doesn't condone. i also know there are questions about whether the discussion on loan modification programs rub by bankruptcy courts is just ignoring the very real problem. if you'll review the written materials run by the bankruptcy court in rhode island you see multiple references to the home modification program. the treasury department currently operate as number of for closure mitigation programs. of the affordable - the home affordable modification program is a 75 billion dollar program that began two years ago.

however the home affordable modification program has come under severe criticism. even from obama administration officials. although homeowners have applied to the program, and received trial modifications, the number of modifications converted to permanent agreements that enable them to avoid foreclosure is in fact low. particularly concerning treasury hasn't established performance goal or benchmarks for home affordable modification program, meaning there's no effective way for us to know whether the 75 billion dollar program is accomplished it's intended purpose. that's not accountability or transparency. that's just more taxpayer money going out the window. in july of last year, as ranking member of the finance committee i participated in the finance

program a few days after the hearing i sent a letter to treasury secretary urging him and his department to establish specific goals and benchmarks. remarkably, the letter i received back defended the program as a success and confirmed the department does not and apparently refuses to set permanent goals for the program. my concern is shared by the special inspector general for tarp. just six days ago, the special inspector general issue as report continuing to return failures of the home modification program. that report also continues to call for the treasury department to establish specific goals and benchmarks just as i asked the treasury secretary to do. as special inspector generals report reveals the number for the programs are quote unquote

remarkably discourageing the number of permanent mortgage modifications on the home affordable modification remain anemic. there's just under 532,000 unpermanent as of december 31st. combined total of more than 792,000 trial modifications have been cancelled with more than 151 thousand modifications still in limbo. these permanent ones pail in comparison to closures and the prediction that the home affordable modification program would quote, help up to three or four million at risk homeowners avoid closures by reducing monthly payments to sustainable levels. the inspectors report concerns my steadfast treasury refuse

toll adopt meaningful goals and benchmarks as perhaps the most fundamental of the programs to have material impact on the preventing for closures and the report also outlines disturbing conduct of the treasury department quote. rather than develop meaningful goals and metrics for the program to allow meaningful oversight accountable. >> i agree with the special inspector general's of conclusions that quote, giving

current pace of foreclosures achievements look remarkably modest and hope this program can ever meet it's original expectation is slipping away. now, in light of the documented problems with the program and it's continued failure to provide real relief, the question comes, why are tax pairs paying 75 hundred million dollars. it doesn't work. next question, appropriate here is, will another government program this time in the bankruptcy courts without congressional oversight really work to - to turn things around? we also must be mindful that there will be limited congressional oversight of congressional action over judges within the bankruptcy court program. accordingly we must be careful

before we grant judges who are not elected the case of bankruptcy judges through the confirmation process. new powers without thoughtful approach. i look forward to that's an evidenced by the chairman's discussion with me back before christmas. >> thank you. >> thank you very much. for opening statements in order of a riva ofa rival. >> [inaudible] homeowners as well to the industry, having come from an office where we have seen daily and weekly and year after year, the heart-wrenching consequences of homeowners being given the run around confronting the problem

of red tape and often losing homes as a result. we know, from our experience that mediation and intervention really works and the numbers show it in connecticut. we have had a program said thousands of homeowners in this situation a state run judicially mediation program that has stopped foreclosures and modified loans to the benefit of the lenders as well as homeowners and the numbers in the rhode island program within the bankruptcy court further add evidence to the importance and potential practical consequences beneficial to all sides of this kind of mediation program. we're here for the very limited purpose as senator white house pointed out of clarifying the

law to enable the mediation programs to take place under the authority of the bankruptcy court. but i think in their potential for encouraging state operated programs, they also have great significance so i want to thank you for being here, thank you for your in sorrytive work. i know judge dren has been important in encouraging innovative solutions to these needs and challenges and they are very important challenges but i'm looking for ward to the tournament and how the programs can be expanded.

>> i'm looking forward to hearing from the withins. >> and the junior senator. senator frankin. >> thanks for leading on this issue for so steadfastly, and for so long, and for holding this important hearing on for closure mediation programs in bankruptcy courts to better protect consumers and i applaud you for your work in this area. forgive me. i'm bouncing between here and energy committee hearing, so i'll be back and forth. many problems have come to light since the beginning of the for closure crisis. recently we saw mortgage closers signing affidavits to execute

for closures with zero personal knowledge of the individual borrower situation. this problem known as robo signing. i called recently for suspension of all for closure situations until this problem has been resolved. i got a form letter from ally taughting efforts to deal with this. it's nice to see they don't treat they're homeowners or servicing any worse than they treat a senator. i also joined with senator mendez to ask regulation of the role of overseeing for closure proceedings. i worry that it is a day late and a dollar short.

foreclosure - borrowers are such at an extreme u disadvantage that are ob o signing are just one way to have been taken advantage of most homeowners because they don't have access to legal advice or by basic use age most never come to light. some may have heard the story that i told of amin and list homeowner that fell behind when her payments went up. entered mediation program or ham up but was told my mortgage servicer her file was closed because she failed finalize her mortgage location. she hadn't done that she's working with twin cities for habitat a wonderful nonprofit helping her to fight this and stay in her home.

every homeowner deserves this stance. minnesota takes important first steps to acquire mortgage services to provide homeowners with pre foreclosure that include counseling resources. every state needs this to give homeowner as fighting chance. please the judge, to join us today to tell us about the innovative foreclosure program developed the southern district of new york, in minnesota more than 22 thousand people filed for beening run si this year. this is a record number and is more than 80 percent - 87 percent higher than the bankruptcy right before the recession occurred. i realize reforms won't help all families go through devastating

foreclosures. these are one important way that we can help families in minnesota and elsewhere to stay in their homes. thank you. mr. chairman, i look forward to hearing the witnesses tournament. >> now i'll ask all of thes to please stand and be sworsworn. >> let's begin with the homeownhomeowner from riversi homeownerfrom riverside o - mr.

britt, teaches english as a second language for the rhode island literacy and hope as and hold asba from the riverside institution. please proceed. >> thanks for taking part in this important hearing. my name is larry britt and i've owned my home in riverside, ohio since 1993. i bought my home in the permanent residents to spend my future retirement years. it wasn't an attempt to get in the real estate boom of the times. i work in metro, providence and i'm an adult educator teaching work place readiness and english proficiency and u.s. preparation skills. one month from now i'll enter the third year of the mortgage

process. when i started process in march of 2009 i'd never been late paying any bills to creditors and my credit score was near perfect. since entering modification process with bank of america my credit rating has been ruined and has been the major contributor about the energy certainty of my future. my credit score dropped 160 points by in proper reporting by bank of america. during that process i subscribed to a credit reporting services that received weekly notifications of weekly impact of my scoring. two creditors closed my accounts and three radically lowered my credit limits. equally i'm concerned about denied credit that my elderly mother and other families have

served as a consequence of their relationship with me. i was told my credit score would be conversely effects but couldn't provide proof that i was told of this. i received documentation from the bank that contradicts this. after i contacted the office of controller of currency. because of financial and legitimate hardships i haddock amended, i entered into bank of america's mortgage modification process in the past 24 months i've immediately applied for and requests documentation. if we have time i could read through an chronology from march 2009 to may 2010, but it sounds like i have a time limit so in short the chronology lays out a

repeated cycle of applications and an approvals and denials. mixed messages and multiple departments and customer services that left me unsure about my modification status. i'll skip the details of that period of time. senator, kind of at the end of that time period in may of 2010 i received a letter saying i'd been denied mortgage modification because all documentation had not been received by the bank. in may of 2010 i was told to disregard the letter dated may 7th. customer service said according to bank of america records all documentation was complete and received of march 29th 2010. at that time, i became truly frightened at the prospect of losing my home. i had mailings saying i was

about to go into foreclosure and i was not eligible for mortgage modification. two customer service representatives told me to ignore the letters but i had nothing from them to ensure my case was still under review. so i contacted senator white house's-offices and got a letter from a case worker in the senator's office. karen's efforts resulted in a connection for me with the department of treasury temporary solution center. at first my worker sounded like the answer of my own problem. he said he would be and advocate for me with bank of america. at that time the representive said he had learned i was under review for making home affordable second look program. i contacted the solution center

7 times. each time the representative told me his updates directly from bank of america said my modification was under review and i applied as well as honored my agreements to make on time monthly payments. after a few months i felt they were reading from the same script as banks. there was never any updates or outstanding bank requests for documentation from me, yet once a month over the same period i received an additional documentation from the bank for more documentation. i continued to make payments and the bank still reported me delinquent. consequently my credit score continues to go down. by september i started work on filing form with all three credit reporting agencies in attempt to getb o a

modifications as modified payments rather than delinquencies. the credit reform tried to get the creditors to correct the problem. i contacted bank of america on october fourth of last year and asked them to review my account and confer i made modified payments i agreed to customer service representative said my mortgage was in default and i'd been sent a letter saying i was eligible for the program because i did not provide bank of america with requested documents. the representative also said i had been sent a letter requesting the documentation. i never received this letter and i explained the following to the representative. this page - this next tournament is just a rehash of what i've already said. >> go ahead and summarize then.

>> finally, i talked to that representative's supervisor and she wouldn't give me her name and had no time for me and hung on up on me. i think to wrap up i'd say since the first modification in october of 2009 i been paying my modified monthly payment on time. however since the bank considered my payments incomplete the most recent agreement states the modified principal balance has been increased by over 11,000 dollars. as bank told me in a prior mailing the modification says this amount includes unpaid and escrow and other costs. the agreement also states interest will now a crew on the unpaid interest added to the an outstanding principal ambulance

that would not happen without this agreement. had the bank honored it's terms of the october 2009 modification agreement with me and permanently modified my loan after i made the greeded upon modifications my principal balance would include three months of deferred interest and fees rather than the 16 month fee. as with past months agreements, i've once again provided all the payment and made three on time trial payments. unlike the last with bank of america, i now have a customer advocate from the bank's office of the ceo and president. she has the first name and the last name and can i talk to her with this when needed but i feel it took the ad slow casey of my senator receive the level of customer service all consumers

deserve. i'm truly grateful to the senator's office for what i hope is a final resolution. however, given the past 24 months of miss information, can i be sure that bank of america's approval is for real? does another bank of america division have me slated for foreclosure? i can't be sure and the 24 month process has forced me in deeper financial trouble and emotional distress. i know the story is hard to follow. it's taken me untold hours to compile the scores of interactions i've had with the bank and the solution center. if needed i can document all of my fifths, phone calls and documents sent and the names of customer service representatives. i'd be happy to elaborate obstacle any points made.

>> thank you. your story provides an important backdrop which our next witness. judge robert drain has been a bankruptcy judge since 2002. prior he practiced bankruptcy law. he is a fellow of the american college of bankruptcy and a member of the american bankruptcy institute. international solvent and national conference of bankruptcy judges. hold asba from yale and we're delighted he's take ten trouble to join us to day to share his experience. judge drain? >> thank you senator. thank you for invited me to testify on the lost mitigation program implemented on january 1, 2009 by the united states

bankruptcy court for the district of new york. senator white house summarized my biography. since i started practicing back run si law in 1984 i dealt exclusively with large corporate bankruptcies and the types that the court for the southern district of new york is known. however like our colleagues around the country we preside over thousands of consumer bankruptcies where the fate of home is of central importance. when confronted late 202008 with the mortgage foreclosure crisis my colleagues and i saw a set of problems that cried out for formal mediation structure. i like to believe our experience led us to see the issues as much from the lenders perspective as homeowners in fact, it was creditors lawyers. i want to emphasize that. creditors lawyers representing that first asked the court to

consider such a mediation program. the problem was and is i think basic. increased defaults and the drop in home prices rendered the autopilot applied to the vast majority of home mortgage loans inadequate. in the ordinary course for tiny percent and disclosing on the context of the rising market all too often simply didn't work anymore. in the present mark tote maximize recovery. lenders would have to actually decide between adding to stock of foreclosured homes or engageing with workout with their borrower. either course could be preferable in the right circumstances. this process simply was not happening with loan after loan after loan. loan services were leaving enormous money on the table simply because they continued to

press the foreclosure button rather than renegotiated defaulted loans. lenders saw this as did we, more over whether because of fears of reaching the automatic stay constraints in the governing documents or perceptions of the risk of liability to beneficiarys if they negotiated with borrowers, they went to court setting a framework for such negotiations. finally, and importantly, lenders wanted structure imposed to make sure the home owners would not simply waste lenders time. they almost completely overlapped with the borrowers. nothing more frustrating than loan services refusal or an built to direct them directly banker to borrower on a business like basis. we heard tournament of this

today. from my experience such tournament does not describe a merely isolated incident but a widespread pervasive problem to develop the mediation guidelines that eventually became the lost mitigation program in our district. we open the discussion from the creditors lawyers to consumer lawyers and a wider group of creditor and consumer lawyers and put the proposal out for public comment. we reached out to the creditor consumer borrower after it had operates for an about a year in 1/2. however, remarkable consensus knlts in it's support. we did not frankly have anyone object to it. the lost mitigation program is embodied in two general forms of the court as well as commonly used documents in summary it

applies under the bankruptcy code by primary resident and may be invoked and with opportunity to object by the only home enter or lender. there's deadline establishing contact information for representatives with the authority to he go shachlt request for relevant information such as debt or thes financial information and an appraisal of the house and the filing of affidavits disclosing the information that has been submitted. which after about a year and a half we foundness to have disputes over where information was provided to the lender. frequent home owner is the lender ask for the same information after it has already been sent. the guidelines provide for a conference between parties andness, with the court as well as an outside day to conclude

mediation. while the parties are negotiated all litigation between them is put on hold although either can request termination and litigation resume. lender objections to the in vocation and request to terminate are granted if taking into account the homeowners circumstances and value of the house, it is not reasonable to expect the parties negotiated in own self-interest will reach agreements. as best we can tell and we're trying to improve stats. there's been over two thousand requests of lost mitt gavenlths only of 90 of which withdrew request by the lender. we have granted and of the remaining 15 based on my experience, most of the creditors actually - once they met with the lender - sorry with the debter agreed.

with experience under the program, it became clear that it would not be in slow kated a ad objection to lost as all but ceased. homeowners ability for the government-sponsored program is not limited hamp modifications it's not expressly limited loan modification. the parties may consider negotiating graceful exit with time to leave the house. perhaps coincideing with the end of the school year. perimeters of short sale. last mitigation program ensures there's a responsible lender representative with whom to discuss the loan. i can't emphasize this enough. without the structure imposed by the program, most of the time this simply would not happen.

second, the program structure under the ultimate supervision of the the court ensures parties deal with each other in good faith. most correlation benefits relate to bankruptcy context. they can see how the home owner is revolving their entire financial predicament. the bankruptcy cold let's wholly under water junior loans and otherwise clear title and it provides forum dealing with tax liens. more over they document problems which is of not a negligent concern that can be settled with approval of the bankruptcy court. the courts supervision is critical but limited and our role is to ensure parties deal with each other in good faith. we may not impose outcome by for

example refusing to relieve them in until they reach agreement. we're there to impose deadlines and resolve complaints the party is acting ark theirly to the detriment of good faith negotiations. we might ask the lender if they've considered debter offer together pay more than the house in foreclosure but it would be inappropriate to insist that the lender reconsider evaluation done in good faith at times we may request impact but only on the basis the parties tend to agree. 1/2 of the last mitigations conclude resolved in some form of agreement. usually reducing interest and stretching out payments. those that did not result in agreement also had a good effect. homeowners saw after engaging

with lenders the dollars and cents reasons they could not keep their house. at time when many homeowners could not get their letters and phone calls returned, often by banks of those that have been made acutely aware of those that have been bailed out by government. before implementing the lost mitigation program we ensured ourselves do so. it's consistent with congress and federal courts general encouragement of mediation and section 105d of 76d and 9014 and the court's general power to imagine their own document. the mitigation for our lost mitigation program has never been challenged though i'm aware for the district of rhode island recently been denied for that.

one reason for legislation is to make the court's authority absolutely clear. there's another reason as well however. by passing legislation expressly recognizing home mediation programs. congress would endorse it by encouraging banks to return to being bankers. can i tell you my personal view of legislation is less is best. each if you share that view and perhaps especially if you do, facilitating home lenders of the resolution of their loans is a good idea. thank you again for inviting me to testify on this important topic and i'm happy to try to answer any questions you may have about it. >> thank you, your honor. i'm grateful for you sharing your experience. next witness is an tour with the national law center focusing on consumer credit and bankruptcy

issues. served at numerous training and conferences and served as expert witness in court cases and testified in congress on son consumer management. coarthur coauthor and contributing to student loan laws. stop predator lending and bankruptcy and foreclosures edition. he's contributing author to the collier bankruptcy guide. he is a member of the federal judiciary rules obstacle commission a pointed 2006. he is a part of the bankruptcy conference and consumer bankruptcy attorneys and former board member for the federal bankruptcy institute. he's and add junth faculty at

boston college school of law. he served as manager attorney of rhode island legal services and headed the center unit. he deals with consumer and bankruptcy issues and evaluating low income clients and before administrative agencies i can ensure both from being with him and against him, he was an excellent advocate. he was a graduate of boston university and received his degree from california, hastings. thank you. >> senator is - thank you for holding this hearing. >> just note. i know you have a lot of tournament in the record and i hope you will confine yourself as best use can for the times scheduled. as a former practicing attorney i'm intimidated of judges i did

not gavel but i would urge witnesses to try to make it a the time frame. >> i testify on the behalf of the low income clients as well as national association of consumer bankruptcy attorney. it will not reach it's goals of 3-4 permanent loan modifications relying on the voluntary efforts of services and no effective method was incorporated in the program's design. treasury has used various energy incentives but these have not results in compliance in response to the very basic problem of homeowners that cannot get services to properly consider they're modifications in a timely manner or for that matter to get a simple yes are no. numerous programs have been adopted by state and local courts at the core, these

programs are procedural devices to bring mortgages together to consider alternatives to foreclosure. they do not compel a particular outcome or force a service or modify the contracts orer is of the cram down a loevenlt all they can tell is the party designate someone with authority to participate and parties negotiate in good faith in that respect they're consistent with the many court in next alternative dispute mediation programs that have been common place in both federal and state courts. i would like to outline the reasons why bankruptcy courts too can play an important role in foreclosures. homeowners continue to encounter barriers. mr. drain mentioned he was required to submit the same documentation over and over again. new york and rhode island lost mitigation programs attempt to

break the log jam by requiring the servicers to contact the institution for mitigation. the programs provide for the entry and order with specifies time deadlines for the request for information to be exchanged. also too often homeowners wait under the program for over a year for a decision to get a modification request. these delays occur despite the guidelines requiring decisions in 30 days after an application has been submitted. contrary to mr. grossman's statement. the reality is hope now, doesn't help homeowners get through to a decision maker. the advantage of mediation programs is that they require each party to designate a person having authority to revolve the matter. a major failure is also homeowners are often never told

why they're modification request has been denied even though treasury requires them to provide those reasons. under the rhode island and new york laws mitigation program, the services wish to terminating the program must state that in reasonable request to the court and information about denials can be obtained. the services are under contractual obligations to consider them before they close if a home owner is found eligible they're suppose to stop the foreclosure but the guidelines do not provide the same while they're application is under consideration. in bankruptcy loss mitigation program, that protection to avoid the foreclosure from proceeding while the application is going is available because of the automatic stay. more troubling than servicers not making decisions, is they're often providing proprietaries on

these. oversight panel reported almost 70 percent of loan modifications have not been under hamp and they have a much higher redefault rate and all the parties can look and see what was done and make sure the homeowner was properly evaluated for this. the lost mitigation programs in bankruptcy also deal with the second mortgage program. many homeowners have seconds that prevent the first mortgage holders from modifying loan. finally, the modification of a bankruptcy proceeding prevents the court and homeowner to address the all the debt the consumers entire debt load. all the debts. car loans and that has a way of

increasing the possibility of avoiding redefault on the modifications. thanks for holding this hearing and i'm happy to answer any questions you may have. >> thank you. appreciate you being here. our next witness is doctor anthony sander as distinguished professor of financial issues. his research focuses on financial finand on financials and his degree is in finance. >> i'm focused on real estate final economic. when president barack obama was elected in 202008. the housing index was 165 point 95 down froiments peak in june

of 2006 of 226 point 9. the unemployment rate was 6.5 up from 4 point 8 at the peak of the housing bubble in 2006. according to the recent releases they decline further to 107.29 and unemployment 9.1 percent. housing prices have fallen substantially in arizona, nevada and california. other states like road is land. maryland and michigan have over 20% housing crisis and in terms of unemployment there's rates far higher than the national average of 9 point 1 percent. thus until unemployment shrinks and housing crisis recovers,

successful loan modifications will be difficult to achieve. the forecast for unemployment is not positive so difficulties in loan modifications are likely to continue. a number of alternative programs. the hamp and current servicer programs have been proposed ranging from the principal reductions of the mayor proposal to loan modifications for the unemployed. whatever congress proceeds it's a steep hill decline. 2010 foreclosures and more are expected in 2011. it's projected the wave will subside in 2012 but not before 7,000,000 foreclosures have been filed and we could only hope that housing prices start to rise again in 2012 and unemployment begins to decrease. the proposal highlights

difficulty of the government solution problem. essentially they advocate having freddie and fanny for refinancialing of mortgages the borrowers principal will reduce thus negated equity and curtailing financial problems. while its true it may reduce future foreclosures the costs are staggering. hence, the difficulty trying to implement a government solution to try and fix the negative equity problem. one of the objectives of the government loan modification is home preservation. it's an achieved loan modifications used to keep borrowers in their home that desire must make economic sense to investor and servicers. what do i suggest? first having a mandatory mediation assuming the borrower is better off as an owner rather than renter.

giving large supply of vacant rental property, at 11 percent nation wide it's likely borrowers are better off renting. second. man da tear mediation for the process that's already severely strained. average time to liquidation is 17 months and already. costing the investor lost in asset value. if bankruptcy is more appealing because of mandatory mediation we expect delays in moving borrowers to foreclosure. this may result in by passing of ha hamp. fanny and freddy of expansions and borrowers services with loan modification if fanny and freddy have trouble with delinquencies and foreclosures what's the odds a court can interfere with loan modification solution that it could not direct it's servicers

to accomplish. any requirement of modification must be made explicit when the loan fmortgage. as of now there's no law that mandatory is required or possible. this provides market participants that are in all cases viewed negatively. more surprises might further decrease in less available mortgage and funds. finally, while mediation may result in lower loan mortgage qualifications being made. it's 50% and could be high fair house prices continue to be soft. stated differently, if the stan cards getting loan modification are lower, more likely the failure for modifications would increase. the housing market needs to persist in attempts at delaying foreclosure rather through

mediation only as additional housing or in uncertainty of the housing recovery. thanks for your willingness and letting me share your thoughts with you. >> thanks. our last withinc andrew cross man a visiting legal fellow in the center for legal and judicial studies at the heritage foundation. his research focuses on law and finance. bankruptcy and the constitutionle separation of powers. he's also a litigator at baker and of stead in washington and received his degree from pennsylvania and a bachelors degree from b a public college. >> the committee is commendd for holding this hearing to consider the promises and

pitfalls. recent innovation while there's anecdotal evidence there's yet to be the formal evidence that can drive sound policy making. as to whether the lost mitigation are in the broad's possible sense successful i can offer no firm opinion because i do not believe anyone can say with certainty if they're positive impact on our housing market overall. there's reasons to doubt and to make a positive net contribution. i'll does cuss three. first, it seems unlikely absence coercion there will be a significant marginal over the mird youed of problems that exist to home energies in distress. bankruptcy should be a last resort not a front line to achieve broad policy results. it's unlikely when pre bankruptcy interventions have proven unsuccessful.

home mortgage modifications have mixed records of success. ha hamp- will never achieve what it's promised. it has a record of failed modify equati equations that should give concern to all. organized under the acronym hope now has a better record with over many achieve inned 2010. foreclosure rates remain high and starts are growing in many areas of the country. primary reason is stubborn reality. individuals have little equity unable to afford the payments for the homes in which they're currently living. refinancing is not available in many cases so this problem takes money. know not legal tweaks. convince mortgage investors to write down in part bad loans.

it offers subsidies to under take the modifications and reduce monthly payments. tens of millions of dollars remain on the table. the underlying loss mitigation program is general areas that hamper usually beneficial modifications. this discuss many avenues of homeowners that now exist. they do not take advantage but they do say this was hard to come by and modifications remain slowly through a processes that's long past. while mitigation also assumed a large- number of cases it's possible to achieve a mortgage modification. debter another leader are made to confer. as experience with this has shown. low-hanging fruit is gone. most modifications obviously

win, win could be done without any intervention without a bankruptcy court. modifications that fall outside of the band of mutual benefits have been modified or could be at any time again without action by the bankruptcy court. modifications outside of that band where even in e fish sis to make a deal are likely unworkable. it's likely to be more than the borrower can afford to pay. no reason to think lost mitigation can cause deals to emerge previously impossible or otherwise inferred. without putting additional money on the table bankruptcies can help bridge the gap. there are however situations that might superficially be the case. that mice second point. there's a real risk it can programs could function in the matter that's coercive. putting undue pressure on

mortgages and has backed unexpe unexpected mitigations. first seeking termination must provide the court with specific reason why lost mitigation would not be available. and second the decision-making authority to enter into loan modification or take action. third the parties must negotiate in good faith under sanction to do so. fourth, when the period allotted has run it's course. any party usually the debter can continue negotiations and partty including must show reason why it's inappropriate. these effectively place debt on the lender why it's not ebl for relief. instead the creditor must make a show together enforce who it is on paper a legally enforceable

right. this is a level field in bankruptcy practice. several bankruptcy courts discuss in the absence of the context of the absence their authority to order changes to the terms of loan agreements and primary residents. implications is although bankruptcy judges clamp down. they may regarding high ranking officials enforce the servicers or lenders to show cause. effectively achieve the same results. in these ways lost mitigation can coerce creditors and remaining on good terms with bankruptcy courts to make concessions to compromise rights. lastly, there's in some incidents that will it cause harm to those it's meant to aid. modifications that ultimately prove unworkable the results of

additional financial stress. this is a great risk. they're at the approach to making modifications but any of the safeguards and strict eligibility are subsidies that may serve to reduce payments. unfortunately the bankruptcy courts u under take the data collectionness to chart the mortgages modified in this manner. not only do we not know if theiren injurying a portion of those they should benefit which has been the case with hamp we'll have no way of knowing that want it may drive some homeowners to bankruptcy that might not have otherwise is also harmful. one third of all chapter 13 filers complete it successfully and get a fresh start. the u rest pays many fees and invest time and money to reconstruct fbl affairs and wind

up with nothing more than temporary relief. holding out the promise to encourage more individuals to file for bankruptcy is bad policy. bankruptcy delays foreclosure while imposing enormous costs for those already finally vulnerable. i thank you for the opportunity to testify and look forward to answering your questions. >> thank you mr. grossman, judge drain, let me ask you. you have done, according to your tournament. more than two thousand of the lost mitigation immediate asians. in yasi mediations. only 90 of them grew an objection. the original