ideas making headlines for doing nothing more than the job you're pointed to when it comes to the issue of cuba or your work in any closed society, i do not believe usaid's actions, as clearly articulated in your mission statement to promote "resilient democratic societies that are able to realize their potential," are in any way a cockamamie idea. i believe it is exactly what the people of cuba, iran, burma, belarus, north korea, and other authoritarian nations need to help them communicate with each other. to help them achieve the usaid's stated mission of a "free, peaceful, and self-reliant society with an effective, legitimate government." so i commend you for helping people have a less control platform to talk to each other,

helping them find a way to connect and share their views. global internet freedom programs, u.s. international broadcasting, and support for human rights activists are all fundamental components of our country's long-standing efforts to remote democracy overseas. for more than 50 years, the united states has had an unwavering commitment to promote freedom of information in the world. our work in cuba is no different than our efforts to promote freedom of expression and uncensored access to information in the ukraine, russia, belarus, iran, china, or north korea. it should be noted that in the bill there is $76 billion set aside to promote global internet freedom and democracy in closed societies like cuba, where the

regime allows no independent press and limits access to the internet. it also states that "with respect to the provision of assistance for democracy, human rights, and government activities, these programs shall not be subject to the prior approval by the government of any foreign country." it is common sense that we should not ask the government of iran or egypt or china for permission to support advocates of free speech, human rights, or political pluralism or provide uncensored access to the internet or social media. at the end of the day, just giving people the opportunity to communicate with the outside world and each other is, in my mind, a fundamental responsibility of any democracy. as bill gates said, "the internet is becoming the town square for the global village of tomorrow."

and he is right. to go one step further, the town square will become more free and inclusive thanks to the efforts of organizations like usaid. let me close on this one point. i think it is dumb, dumb, and even dumber to suggest that there can be freedom and we should seek freedom of internet access and freedom of expression globally but that somehow the people of cuba do not deserve the same freedom. and i will finally say on this topic, there is only one entity responsible for the imprisonment of alan gross, and that is the cuban regime. it is not this government. it is not aid. it is the cuban regime. and i am tired of blaming ourselves when the entity that

should be blamed as the regime that unlawfully holds an american in prison for doing nothing but having the jewish community in cuba be able to communicate with each other. it is pretty outrageous. finally, with reference to the overall priorities of the budget, we look forward to your perspective and how we can make certain that u.s. development assistance is alive and well, and i look forward to looking at your priorities for the federal budget. i speak for all the members when i say how impressed i have been by your creativity and energy, which has been essential to usaid reform, and your agency's pursuit of international development priorities in ways that focus on best practices and results. as we have discussed on numerous occasions before, as i said to the secretary when i was here, i remain deeply concerned about

the resources for the western hemisphere. they are insufficient to meet the challenges of the region, and its importance to our own prosperity, security, and shared interest in health and development. that is something we look forward to continuing to engage you on. while efforts to address the transnational criminal networks or pose the greatest threat to stability in the region, a long-term strategy that boost economic growth and consolidate the rule of law is fundamental, and in my view currently lacking. i believe we can do better in the hemisphere, and i think we can do better in the context of our international development priorities within the hemisphere. i look forward to an ongoing conversation about how we can get the best results, for foreign assistance, donors, ngo's, and taxpayers. now i would like to recognize

senator corbin. >> thank you for those passionate comments. mr. shah, we appreciate you being here and all the work you do around the world. my comments are going to be more brief. we look forward to your testimony. look, we appreciate you being here to go over your budget request for 2015. we appreciate the reforms you are trying to put in place around the world, but also within usaid itself. i think foreign aid is one of the most misunderstood concepts that the american people have sometimes, and the fact is we spent 1% of our overall u.s. budget on foreign assistance and foreign aid, foreign activities. i would like for you to herald some of those successes. i know you will do that today. it is also our responsibility to have some healthy skepticism regarding programs. i appreciate what you are trying

to do with food programs to make them more efficient, and i look forward to talking to you about that. there are other programs where we will be dealing 30% with local entities, and that is a much appreciated concept. on the other hand, i want to make sure we have results. thank you for being here today. i look forward to your questions and testimony, and thank you for your work. >> administrator shah, the floor is yours. we will enter the full statement in the record without objection. summarize it in five minutes or so so members can have the opportunity to have a dialogue. >> thank you, chairman menendez and ranking member corker. i want to thank you specifically for your very strong leadership and your support for america's development programs around the world, ensuring they are a full reflection of our values. i want to thank all the members

of the committee for your guidance, counsel, support, and oversight in these past years. i am honored to present the president's fiscal year budget request for usaid, which totals just above $20 million. this resource is a core part of keeping our country safe and secure over the long term, and improving our own domestic prosperity as the world prospers with us. our mission is to end extreme poverty and promote resilient democratic societies. our efforts over the last few years, with your support, have constituted a serious rebuilding of this agency. during my tenure we have hired more than 1100 staff, rebuild the capacity to manage budgets, protected priorities in food, education, water, and health, and expanded our partner base to include more local organizations, companies, faith-based institutions,

universities, scientists, and students, in addition to our traditional ngo and contracting partners. we expanded capacity to evaluate all of our major programs. when i started, there were a few dozen even valuation's put forth every year. this year we will have nearly 280, with more than 50% of them used to make course corrections in how programs are implemented, with all of them being open and publicly available. our efforts have constituted a new model of development that engages the private sector, science and technology, faith institutions, and others in new types of partnerships. and we believe that these partnerships are delivering results. president obama's feed the future program, represented with nearly $1 billion in this budget request, now reaches 7 million small-scale farmers in 19 countries. this year, 12.5 million children will no longer be hungry because they are in families that are

beneficiaries of feed the future. our investment is matched and in some cases exceeded by private sector partners who have committed $3.7 billion to this effort, and i want to thank the committee for its leadership in supporting incremental food aid reforms that will help us reach an additional 800,000 children in the context of disasters around the world this year. our efforts to support and save children's lives, especially children who die unnecessarily under the age of five, are supported in this budget with a $2.7 billion budget request. between 1990 and today, every year we save more than 5 million children from dying under the age of five. we set for ourselves a similar goal of saving 6 million kids a year by 2030, and mobilize the global community to work with us to achieve those goals. in education, water, energy, and many other sectors of the economy, we work in a

results-oriented way, and i look forward to that discussion today. last week, i was in the philippines with secretary hegel, working with asean defense ministers on how we can coordinate humanitarian relief more effectively, helping them build the capacity to be great partners in dealing with disasters. the budget request includes more than $3 billion for disaster assistance in places like syria, central african republic, and south sudan. our investments in democracy, human rights, and governance are an important part of what we do all around the world. this past weekend, we noted with some initial success an election in afghanistan that saw nearly 60% voter turnout and a large proportion, more than expected, of women. those efforts were supported by the united states and other international partners and led by afghan institutions themselves. our work in our own hemisphere is of particular importance, and while budgets have been tight

and this budget does make trade-offs, we have now launched a u.s. global development lab that brings businesses, scientists, technologies, and universities together. i believe in the latin american region in particular we are beginning to see interesting results. we closed an interesting leverage partnership in which we will spend $5.7 million to motivate local banks to commit $133 million to small-scale farmers and producers in agricultural land in colombia, peru, and guatemala. that kind of leverage and that kind of scale is what is possible if we do things in a more creative and effective way. let me close by saying thank you. i have the opportunity this year, and i was honored to deliver the speech at the national prayer breakfast. it reminded me that when we come together to serve the world's most vulnerable people, this is an issue that can cut across

partisan divides, bring us together as a nation, and allow us to continue our proud heritage over past decades as the world's humanitarian and global health leader. thank you. >> thank you. let me start off with one concern i have, the western hemisphere. almost every major accounts in the fiscal year 2015 budget for the western hemisphere will be cut. venezuela will be cut by 14% even amidst the current crisis. haiti, colombia, guatemala, all cut. i think we underestimate the problems we face in our own hemisphere. we have enormous challenges in central america, which has one of the highest homicide rates in

the world. we have challenged governments in terms of meeting that challenge with rule of law issues. we have still in mexico some states that are relatively lawless near the frontier, border with the united states. we have the challenge of venezuela, and a growing set of circumstances there where civil society is under siege. in ecuador, we have basically the government closing our missions. i see a wide range of issues, and i understand that some of these countries have sort of graduated, but by the same token, what happens is instead of looking for other investment opportunities in the hemisphere the money is sent to other parts of the world, and we have now

seen year over year over year double-digit cuts that from my perspective our unsustainable. so, can you convince me that you will work with us, as the secretary said he would, to see how we change this dynamic? i think in our own hemisphere, our own front yard there are challenges that are both in our national interest on so many different questions, from security to drug interdiction to economic opportunity to health care issues that know no borders when it comes to diseases. can you talk a little about that? >> yes. thank you, senator. i appreciate that point of view and agree with the central nature and importance of the region. while we have made tough trade-offs over the last many years as secretary kerry noted and president obama said, this region is of critical importance to our future, from a trade,

immigration, and partnership perspective. as a result, we are trying to position our programs in such a way that, especially if countries get wealthier and move into middle income and middle and upper income status, our programs shifts to engaging more public-private partnerships, and we are doing more creative and technical partnerships in lieu of in some cases slightly lower resources. in particular i am proud of the fact our development credit authority has dramatically expanded the loan guarantees we provide to local banks, whether it is in el salvador we have allowed a bank to open $25 million of lending for small businesses, or in nicaragua, or in mexico, where i will be next week to meet with some of these partners. we are making real progress in helping to unlock local finance using credit guarantees in a highly leveraged way. i would like for us to do a lot

more of that. as we reprioritize science, technology, and innovation, we have a host of new and improved partnerships with businesses and research institutions throughout the region. one is an innovative partnership with starbucks to help them reach 25,000 small-scale farmers in colombia, previously farc-affected communities, so they can bring better prices and build supply chains that enhance economic opportunity while supporting their own presence. we are trying to evolve into those partnerships, and the region can become a model for that new model of development partnerships, especially in countries that are moving up in the income scale. >> i appreciate that. i welcome it. but we are also looking at some of the other challenges in the hemisphere, so we will continue to engage with you in that respect. in the ukraine, the language

passed by this committee and signed by the president asks state and aid to reprogram assistance to the ukraine, $50 million to be budgeted for the improvement of democratic governance, rule of law, and free elections, and $100 million for security assistance over the next three fiscal years. where are you in the process of reprogramming this assistance, and when would you expect it to get to ukraine? when do you believe the usaid mission director will sign a bilateral agreement with the ukrainian government that will transfer the $1 billion in loans? any sense of the timeline? >> i would appreciate the chance to come back to you on the specific question of the bilateral agreement, but our acting deputy and assistant administrator are actually in

the ukraine right now, working with civil society groups and groups that are supporting the election process. i would note some of our partners were critical, documenting some of the human rights abuses that took place in the 45-day period during the protests. our economic portfolio is being restructured to support the implementation moving forward with the imf agreement so ukraine can get access to tens of billions of dollars of imf resources. we are helping them with technical support to change the fuel subsidy structure and the future of their energy security policy, and a number of other areas where that kind of economic and technical assistance has been requested. we have a proud and significant history of working in ukraine. we delivered very important results, and we look forward to continuing to do that at a higher level now, given some repositioning of resources and given the very strong support of the committee. >> finally, i understand a.i.d.

plans to incentivize on budget funds from the accountability framework. that is an important initiative that deserves highlighting in a time constrained budget. what hard deliverables will we be emphasizing in discussions with the incoming afghan government? what are some of our goals? what are some of our challenges there? >> thank you for your leadership in supporting our programs in afghanistan. for 2% to 3% of the total cost of the war, we have delivered tremendous and important results that create the basis of a more stable and secure society going into the future. we were part of an international conference effort in tokyo a year and a half ago to bring together all the international partners and create a set of conditions that the afghan

government would have to meet in order to receive the full amount of committed development assistance, not just from the united states but from the u k, australia, japan, all the international partners speaking with one voice. benchmarks include anticorruption activities that are clear and transparent and effective, the conduct of free and fair elections, peaceful transition of power. they include collecting more customs revenue and using domestic collection of revenue to replace developmental assistance over the long term. we have seen a 360% increase on the benchmark, and seven or eight other critical ones, including protecting women's and girls'base our rights, and access to education for young girls in particular. our committee meets twice a year to assess performance, and we intend to make shared determinations after an assessment conducted with the new government. >> senator corker?

>> thank you. again, thank you for being here. you and i talked a great deal about the food for peace program, and i know it has been partially implemented. we all know that due to parochial interest we are really not delivering food aid in the way we need to as a country. the goal is to alleviate suffering for people who are starving and malnourished. i wonder if you could talk a little about that, and what you would like to see fully happen relative to our food programs. >> thank you, senator, and thank you for your leadership on this critical issue. america has through food for peace, which usaid implements, over 50 years serve more than 3 billion people providing food assistance when they need it. because, like nearly every other country that provides food assistance, every country that provides food assistance has made a shift to purchasing food locally so they can buy and

deliver in the most efficient way. >> that empowers those local countries to be far more self-sufficient over the long haul, is that correct? >> it absolutely does. >> it raises the standard of living. >> yes. >> how many more people could be served if we would move fully to this kind of program, which i think anybody would say from the standpoint of what we are trying to do makes more sense than what we are now doing, shipping u.s. products overseas to places and never building up the independence we would like to see happen over time areas how many more people would be served? >> this budget proposal calls for 25% likability in the program, and that correlates to 2 million additional children who would receive food at times of crisis. those are kids and women and men inside of syria, in oman, lebanon, central african republic, south sudan, and afghanistan. >> and if we didn't fully, how

many more people would be served? >> i have not made a 100% estimate -- >> we think it is 7 million to 9 million more people each year who would be served if we moved away from the constraints we now have by ensuring that -- helping the local economies, which is what this is all about. we also have preferred shippers. could you tell us about that? >> well, the way the shipping contracting system works relies on a handful of core partners. they have been important partners over the course of the program, and the president's proposal maintains an important role for american farmers, food producers, and shippers. we are simply asking for a little additional flexibility so we can meet the needs of beneficiaries at a time when humanitarian caseloads are higher than they have ever been

and are budgeted under constraint. >> another program you have underway is usaid 4. we asked for a gao study on that. this is along similar lines in many ways. your goal is to contract 30% of activities at the local level. one of the concerns we have, though, is right now the way you are tracking that is you are tracking how much money you are spending but not tracking outcomes as i understand it, to see that even though the money may be 30% going, are we getting the same result? this is a different kind of effort in the food aid program. this is contracting with people to carry out the work usaid is underway with. could you talk to us a little bit about that, and do you have similar concerns we are only measuring money out, not measuring results? >> well, i would reframe that a little bit, senator. i think usaid forward is

intended to cover a range of reforms that allow us to be a better and more efficient partner, allow us to be more efficient, and critically allow us to be better at reporting on core results. so, that is a package of reforms that includes a number of things to move us in that direction, and i think we have proven we have been able to do that. i will say i believe the gao review is focused specifically on the shift to including more local ngo's and local institutions. i would have hoped they would broaden the analysis, because if you brought in the analysis you will find that, unlike a few years ago, today i can say here and say we are reaching 7 million farmers through our agricultural efforts. our child survival programs are saving millions of lives a year, and that ability to quantify and report on those results is also a part of usaid forward. i would note our progress in moving to local institutions is,

as designed, incremental. i think we are doing this at a pace that is responsible. but the ultimate goal is to build enough institutional capacity locally so that american aid and assistance is not needed over the very long run. we want to build that self-sufficiency so that we don't have to be there forever. >> one of the important things that we do as a nation is trade capacity building. these are along the lines, as most people would like to see, making sure we are doing on a daily basis everything we can to empower countries that we are working with to be sustainable on their own and not be dependent upon aid forever from the united states. we want on a website to determine who is in charge of trade capacity building. there are 24 u.s. agencies involved, and i would ask you, which one really is ultimately responsible for building trade capacity in countries we are

dealing with? >> well, first i think this is a critically important issue. we commit nearly $200 million a year as a victory to trade capacity building, but frankly far more than that if you look at agricultural trade support in regions in africa and elsewhere. michael froman, the u.s. trade ambassador, and i are cohosting discussions with a number of partners to understand how we can together optimize implementation of the new agreements that provide a framework for intercountry trade. president obama launched trade africa based on some extraordinarily strong and independently validated results that showed that for every dollar we generated in trade capacity and trade transit we were developing $40 in value through east african trade hubs.

we work in close coordination. usaid probably provides most of the financing. >> i think the concern is, and again, you are one of the most reform-minded leaders of this organization we have ever had, and we applaud those efforts, but i think the concern is that there is not really one person or small group of people that is driving this. as you mentioned, it is incredibly important, and there is so much we can do without much money to really empower these countries to be involved in trade. if it goes on forever, versus what we are doing relative to aid. maybe you will not answer this today in this setting, but there is a way you could work with us to help figure out who actually is in charge and responsible and accountable for these activities, so that it has a focus that gets us to a place we all like to go? >> we absolutely would like to work with you. i will say, the way it currently works, usaid takes

responsibility for implementation of the programs and ensuring they are well-designed. the u.s. trade representative leads the negotiations. it is critical that we work closely together. i can report to you with a high degree of confidence that the partnership has never been closer. >> thank you very much. i appreciate hearing, mr. chairman. >> administrator shah, thank you very much for your leadership. development assistance is a critical part of our national security interest, and the obama administration has made it clear our national budget includes development assistance programs. you are less than 1% of the federal budget, and a very small fraction of the total national security budget. it is very, very important.

i want to acknowledge the budget support for east asia pacific, the subcommittee i have the opportunity to chair. as i told you, you are working under a very tough budget. overall budget growth is very much reduced, and you had to make tough decisions. i particularly appreciate the priority that has been given to east asia and the pacific, consistent with the president's rebalance to asia, from the philippines and disaster assistance funds to burma, democratic institutions. your trade capacity improvement in laos. many countries are benefiting directly from what you are doing in east asia and the pacific. the initiative secretary clinton initiated, affecting the environment and health and infrastructure, is a major

initiative that we can be very proud of. having said that, we went to make sure the aid is done in the most efficient way. that is why the food aid programs you are initiating are very valuable improvements so we can reach more people and leverage our dollars further than we do today. you started the global development lab. i want to talk a few moments about that. using science and technology, innovation and development, to leverage the moneys that we make available through our academic centers that have expertise in this area that are already engaged in the countries we are engaged in, as well as private companies that also want markets in these countries and are prepared to make investments. if we work in a coordinated way, we can get a much more effective result and achieve our development assistance

objectives in a more efficient and hopefully a shorter time period. can you share with the committee how this program, where you are using existing resources, how you anticipate it operating as you launch the development lab? >> thank you, senator, for your leadership on so many issues related to our work and for your personal commitment to food aid reform and the u.s. global development lab. we are excited to have lunch the u.s. global development lab. in my time in this role, we have increased spending on science and technology, research and development, from about 100 $30 million previously to just over $600 million this year, and we have done that entirely through programmatic trade-offs where we are making tough choices to move money into this area. what this has allowed us to do is create development innovation

laboratories on college campuses across this country, and we are seeing groups of students and faculty and researchers create new technologies like new ways to allow babies to breathe through low-cost continuous airway pressure devices that came from rice university, the pratt puch, from the duke school of biomedical engineering. women can take that, go to their homes, and when they give birth take one dose before and one the child after and prevent the transmission of aids from a mother to a child without being in an assisted medical environment. those reduce the cost of saving kids' lives, mothers' lives. >> also improves the customer would do in direct health services in these countries, dealing with babies that are affected. >> that is exactly right.

we have also found that companies across the country and the world have been eager to partner with us. walmart has joined and is working with us to reach farmers throughout sub-saharan africa. unilever and procter & gamble are providing packets of material that allow us to purify water in places like burma. they are donating those, but also helping us reach hard-to-reach communities where too many children die just because the water is impure and has micro organism's in it. these public-private partnerships, coupled with a real professional science and technology capacity, will allow usaid and u.s. development efforts around the world to have a darpa-like capability to create new technologies, deploy them on behalf of the world's poorest people, and allow young people who want to create entrepreneurial businesses, whether it is making and selling

solar powered flashlights in parts of rural africa where there is no energy access, or commercializing the cpap positive airway pressure device, which they now do for $20 or $30 a device, we find a lot of young people are inspired by the opportunity to become inventors and entrepreneurs and use the business savvy and skill to solve the world's most challenging problems. >> you are leveraging the strength of america in science and technology, and what we have been able to discover and share with the world, as well as our entrepreneurial spirit of private companies. these are american values being used to help you deal with your objectives in development assistance. where are the challenges, and where can congress help? >> we have requested a series of new authorities in congress to help us be a little more flexible and modern in how we carry out this work.

they include the ability to use program funds to hire specialized individuals with science and business backgrounds, the ability to provide prizes. we have seen a lot of technological innovation comes out of prize competitions, and you only spend money on those that are winning. you are able to motivate hundreds, sometimes thousands of new partners, some you would never otherwise be able to find, to compete for winning prizes on some of the innovation awards. some flexibility in how we use resources in the development assistance account, which is particularly critical to finding this effort. of course, funding the usaid budget. those would be the requests. i would like to thank members of the committee for the extraordinary effort you have made to support this new way of working. >> one final comment. as i understand it, it is using existing resources in a more efficient way to accomplish greater results? >> that is correct.

>> senator rubio. >> thank you for being here and for all your work. mr. director, usaid is not a charity, right? it is a u.s. agency that promotes humanitarian development around the world. but also furthering u.s. interests around the world. a two-way street. doing what is right for the world, but also furthering our national interest, right? >> yes. >> so as you get involved in each country, you look at the specific needs. every country has different needs. some have a lack of access to water. some countries, women are not treated appropriately or rights are violated. every country has different needs. so what usaid aims to do is go into specific countries, determine what the needs are, and promote those humanitarian causes but also in a way that furthers u.s. interest, is that an accurate position? >> yes. our mission is to end extreme poverty and promote democratic societies, because over the long term, touching that mission

makes us safer and more secure. >> so with that in mind you have programs on the island of cuba you have been engaged in in the past and continue to -- the clearly stated goal of the program, available for the world to read, is to break the information blockade in cuba and promote information sharing, among other goals. those are stated goals of our involvement, correct? >> we have notified congress every year since 2008 on the goals of those programs, and we run internet access and freedom of information programs in many parts of the world, including cuba. >> the reason i bring that up, rightfully so that you focus on information sharing, because cuba according to freedom house is the second most repressive government in the world, only after iran, a very close second after iran in terms of denying access to information sharing, denying access to the internet. people in cuba cannot go on the internet. if you are close to the

government you may be able to sneak in access, but the average person on the street cannot go on the internet in cuba. it is not just capacity. it is prohibited. i will send out a tweet right now. if i sent this out in cuba i would be put in jail. i will send it as an example of what people in cuba cannot do. people in cuba cannot do what i'm about to do, so as a result of that usaid, as has been revealed in the last few days, usaid had a program that was designed to provide the people of cuba access to information and break the information blockade and allow people to share information. i want to walk through this. there has been an insinuation made by some that this program was illegal, but in my opinion, and yours i believe as well, was completely within the stated mandate of your purpose in cuba, to promote information sharing. that is accurate, right?

within that goal. >> we have publicly notified that these programs are designed to enable open communications. >> i have heard the argument this was a covert program, but this was reviewed by the general accounting office, right? >> correct. >> and they had no criticism of the way the money was being administered. >> they consummated usaid on improve management oversight of the program. >> this was not an intelligence program. we were not spying on the cuban government. >> no. >> we were not selling weapons on this program or somehow arming elements on the ground in cuba to the program. >> no. >> this was basically allowing cubans to communicate with other cubans because the government does not let them do that. in an advanced society, people should at least be able to do that, right? but in cuba they are not, so the program chose to fulfill the mandate of this program to break the information blockade and promote information sharing.

i read this article that said that at its peak there were 40,000 users. that is actually not true, at the peak there were 60,000 users. here is my question. when was the last time we stop the program because it was too successful? this program in my mind is successful. not only am i glad we did it. i am upset we stopped, and i don't think we should stop at a twitter-like program. we should do everything possible. maybe usaid is not the perfect agency for this, but i believe we should do everything we can to provide the people of cuba and other repressed societies full access to the internet. if they want to read a communist rag in cuba, they can do it. if they want to read the cnn website or the "new york times," whatever they want to, they should be able to as well. for everyone outraged by this program, when was the last time undermining a tyranny was

counter to the stated purpose of the united states? when was the last time we were outraged by a program that undermines a tyranny and provides the free flow of information? i read these quotes, people setting themselves on fire about this. since when? we have radio broadcasts to europe during the cold war. we have radio broadcasts to europe right now that have content in them. all we want is for people to talk to each other, and i want to know, when was the last time it was against the stated purpose and goals of the united states of america to undermine tyranny? we heard testimony three days ago, tyranny involved in the single greatest violation of u.s. sanctions against north korea since they were imposed. a tyranny consistently on the side of every madman and tyrant on the planet.

when there was a vote on syria, they were with assad. if there is a vote on russia, there with putin. time and again. when was the last time cuba ever lined up on the side of decency and human rights? this is an anti-american government not as undermining its own people, it tries to undermine our foreign policy and the foreign policy of the free world. my question, and i know this is a long-winded question, when do we start this program again? not just start it, but expanded to people in cuba can do what i just did, speak freely to the world and each other about the reality of cuban life and anything else they want, including the latest record from beyonce, what someone wore to the oscars, whatever they want to write about. when do we start again? >> i want to clarify, usaid programs are designed to promote open access to information and facilitate communication.

any programs that have further purposes are not implemented by usaid but by other parts of the state department or national endowment for democracy. in terms of restarting these things, we have the fiscal year 2014 guidance, pretty clear as to which agencies will be pursuing these activities in the future. >> senator durbin. >> thank you. i guess i want to follow my colleague and friend senator rubio. i sure don't quarrel with the premise. whether it is china or cuba, opening up information, free exchange of information is so fundamental to our country, so fundamental to what i consider to be the basic values of democracy. so critics, mr. shah, ought to come up with a better idea.

but the notion behind the premise is sound. i may go a little further than my colleagues on the committee when i say that after over 50 years of what has been a dubious foreign policy in cuba by the united states, i have been in favor of opening up as much as we can cuba to the ideas of people of the world and the united states. that is how communism and the soviet union came to an end. they were overwhelmed by reality. i have been to cuba. they are isolated from reality. if we had more contact, i don't think the current regime could survive, as the communistic regimes did not survive in eastern europe. i want to bring in one point, that i am sure has been mentioned. i visited alan gross two years ago. what a heartbreaking situation. this poor man is being held because he may have brought in equipment that would have

brought in more information into cuba. i do not know specifically whether he did or did not, but that is the charge, espionage. what they have done to this poor man is heartbreaking. when you visit and see what his life is like today, you meet his wife and family, as i have. i said to cuban officials, i have leaned your way in opening relations with the united states, but you lost me on gross. what you have done in closing out his small little effort to bring in equipment is outrageous. this poor guy is still in prison, and is going on a hunger strike. i do not know how he keeps his mind about him when he faces every single day. i do not disagree with your premise, senator rubio. open it up. the more ideas we can pour into the island, the better i think the chance they will move toward values that we share. so those who are critical of this basic approach, give me a

better one. give me something else. two things i focused on. one was a legacy from my predecessor, senator paul simon, about water for the world. appropriating money. i know usaid has been focused on it. the other one was child marriage. we finally passed that as part of the violence against women act. i know there is a program underway in usaid to try to discourage child marriage and all the awful things which come as a result of it. i would like you do comment on those two areas, if you could. >> thank you, senator. first, thank you for your leadership on water and water for the poor. thanks in part to your leadership and your predecessors, we have an extraordinary opportunity now to reach 32 million people who would otherwise not have access to clean and reliable sources of water. when we succeed, that means

girls who are usually sent into dangerous environments to fetch water have time and a safe places. they avoid being abused and rates and hurt as they're going about those tasks, and they can do things like go to school. it is an extraordinary accomplishment that the entire congress should be proud of. prior to 2012, are spending went up from $1.4 billion to $2.4 billion. we were able to make that extraordinary increase at a time of tight budgets because as we have focused on investing in those things that deliver the most cost effective results, save the most lives and reduce the most opportunity, particularly for girls around the world, investments in water are near the top of the list, and that is why you have seen that transition. i just want to thank you for your leadership. i am proud of the way the agency

has focused on measuring results in terms of lives saved from water programs and diarrheal disease reduction and sanitation access. with respect to child marriage and gender-based violence, we have new programs that focus on these issues in particularly high risk places. but it is just extraordinary, the challenges people face. i was just in eastern congo a few months ago and saw the u.n. report last week that shows 15,000 girls that have been raped, a part of how war has been conducted in that part of the world. i am proud of the fact that thanks to your support and the committee, the united states leads the world in supporting health services for victims, helping girls get back on their feet and helping people reintegrate into society in finding economic opportunity going back to school.

the range of those programs has gone up significantly since secretary clinton made a visit to that region five years ago. i think it is something america can be very proud of. >> thank you very much. i might add that i am promoting a product made in chicago. this is shameless promotion. it is called portapure. this man is an engineer in water sanitation and he has made a six gallon thermos. whatever you pour in the top comes out clean drinking water in two minutes. no chemicals involved. using nanofibers. it is $60. in haiti a family spends $3.50 a week for a jug of water. in a few weeks, they could buy this job that for two years would provide them safe drinking water for their family.

one idea you mentioned. i hope your folks will take a look at it. portapure -- one word. if you meet george page, you will be very impressed with this man trying to change the world. >> thank you, senator. we set up the u.s. global development lab to help distribute precisely those technologies, so we would be eager to follow up. >> take a look at it. thanks. >> legitimate promotion is one of the duties of the united states senate. [laughter] >> we have pretty good water filtration technology centers in milwaukee as well. probably helped out that company. administrator shah, welcome. i really enjoyed your keynote at the national prayer breakfast where you made a very strong case for foreign aid. unfortunately, not every american got to hear that case. it is also unfortunate that when

you take a look at our current budget situation, the enormous pressure we are under, most americans look at foreign aid and it is the first place they want to cut. can you speak little bit in terms of making the case for foreign aid? >> thank you, senator, and thank you for your leadership. what i learned from the opportunity to be at the prayer breakfast this year was that when we come together across different communities, republicans, democrats, house, senate, business, entrepreneurs, and very importantly, faith community members who carry out this mission with exactly the right intention of serving those who are least fortunate amongst us, we present a picture to the world of an america that cares about vulnerable people, that cares about countries and societies that have been left out of the tremendous growth and opportunity that has swept over

the world over the last several decades, centuries. and when we start to remind americans of just how much suffering there is out there, that 860 million people will go to bed hungry tonight, 6.6 billion children will die under the age of five, almost all from the simple illnesses they can be dealt with with pennies per dose treatments, people will see the opportunities to do more, not less with our foreign assistance and development. our priority at usaid has been to demonstrate that the resources congress interested in us at a difficult physical time are deployed as effectively and efficiently as possible, and congress has helped us a lot rebuilding our agency to do

that, but we now evaluate every major program. i can sit here with confidence and describe programs that work, and sometimes those that don't, that need to be changed. >> i will ask senator kaine to preside. i will vote and come back. i know senator flake wants to come back. >> you mentioned a word dear to my heart, prioritization. one of the things that harms foreign aid is when foreign aid is given to countries that are very corrupt and maybe supporting programs -- the opposite of what senator rubio asked. can you name a program, give me the argument where we ended a program that has been unsuccessful, because we have not been able to influence a country into better behavior? >> over my tenure, we have shut down 34% of our programmatic areas of investment around the world. that is what we needed to do to free up the resources to invest in feed the future, which works in 19 countries and delivers incredible, outstanding results.

specifically, i went out with my team a couple years ago to afghanistan. we did a comprehensive review of everything that was planned. we called it a sustainability review, and we removed from the game plan a number of projects we did not think would be financially sustainable or generate the return on investment that would have been required. right now, i am very glad we did. i do not want to name those -- >> provide my office with that list. that would be good information. i can say, we have a good administrator, looking at the programs. 34 of these ended, appropriately so. also, let's keep going on prioritization. looking at your budget request, you have about $500 million toward level climate change initiative. the appropriations committee, we

talked about somebody whose writings i respect awful lot because he is really looking at prioritization spending. where'd you get the most bang for the buck? he wrote a pretty good book that argues we are far better off spending money on malaria, addressing the problems of hiv and aids, freshwater initiatives, freshwater for populations, as opposed to spending money on global warming, climate change initiatives. so, can you speak to that? it is 3% of your budget being allocated to something that he is really scratching his head, saying you are far better off spending money elsewhere. >> we can. first, i want to be clear about what our priorities are. our largest area of investment at usaid is health, $2.7 billion. when you include the hiv program, it is $8 billion a year.

food is the next largest, $2.5 billion. that includes the feed the future program that invests in agriculture. >> here is another $500 million for climate change that could be put toward food. >> we have 800 million dollars for education, six hundred million dollars for water, and our energy programs which are often characterized and are part of the president' is climate change initiative are growing in the budget. it is because access to clean energy in country after country is critical for development. i was in the democratic republic of congo. they have 9% energy access. they want hydropower. they want energy solutions for local communities. we work on all of those issues, and those are also, by the way, as we carry them out and implement them, they will be carbon reduction strategies as well. >> hydropower is very cost effective. i like that concept. solar power is not economically feasible.

i am asking the question, where is this money being spent? >> it is being spent wisely and i point out when we are looking at communities, people pay a huge amount of money for diesel generation, for power and energy where there is no access. in that context, small-scale energy solutions that rely on solar, wind, and other sources are cost effective for those communities in those contexts. this is the kind of math we do to make sure we invest in things not just because we want to invest in things that have the highest return, but we are making an initial investment, and countries have to sustain these systems over time, and like in afghanistan, we want these sustainable and how we carry out this work.

i give credit to our team for bringing that analysis and thinking to how we do this work and carrying out cost effectiveness and analysis on these programs. >> thank you for your answers. >> thank you. just three comments and a set of questions around syria. and humanitarian relief. senator cardin and others talked about global development, really excited about that project and congratulations on the successful rollout. technology entrepreneurs that are benefiting because of work with usaid. is strong regard for our country. when we see the latin

america line of items going the combined message that we seem to be sending well each of these might have their own explanation is that latin america is not really a place of importance to us. and just because it is not of importance to us does not mean that it is not of importance to china or iran. russia is doing military exercises in the caribbean for the first time in 20 years in that worry about this. i want to echo what the chair said. the committee two weeks ago in the full senate last week past a resolution, sr 384 dealing with

humanitarian aid in syria. the u.s. is the largest provider of humanitarian aid to syrian representative -- refugees. the aid has been delivered through ngo's and the u.n. to refugees who have fled across the border in turkey, lebanon, and jordan. to a lesser degree, iraq and egypt. we passed a resolution taking up on the un security council resolution saying now is the delivery ofss order humanitarian aid. there are 3 million refugees outside but 9 million in need of commentary and assistance inside syria. the u.n. indicates that unimpeded access cross-border is something that is supported by the un's security council and our resolution of last week called on the administration to bring back to us within 90 days of how we will be more aggressive in the delivery of umanitarian aid.

>> thank you. i hope more merit can scan see that the $1.7 million we provided is making a huge difference. it is reaching 4.2 million people inside of syria. it is reaching the 2.5 million refugees that are tremendous and unsustainable crisis to their neighboring countries. and within syria as you point have been notn reachable.

because for u.n. agencies to do the same was agreed to by the security council and per the report presented at the end of march, it shows the syrian theme has not allowed for terms of that security council to be met and any reasonable scale. there has been a few convoys across the border that was done in coordination with the syrians. it was a small and very incremental step given that there are 3.5 million people that could be reached that are not being reached because the terms of that resolution are not being of fermented as aggressively. currently the writer of cross-border assistance. that has allowed us to provide surgery and medical support to 250,000 injured syrians.

we need ultimately the regime to abide by what is in the un security council resolution to allow for that. i was in a meeting with save the children, many of the many ngo's that does work and we were talking about the fact that the regime is not allowing access in accord with a security council resolution. while there is, located feelings about syria and that was in therated authorization of military force. they're not complicated feelings. -- we would not be providing one point $7 billion of aid of it was

controversial. as the administration wrestles with what is the next step to try to make the syrian policy more effective, take advantage of the fact that you have a congress that is unanimous about the aggressive delivery of humanitarian aid in loading cross-border. that is something we are with you and there is not controversy about it so there is much more that can be done. >> thank you. that is wonderful to hear because tomorrow i am convening my counterparts from other donor countries to basically ask them to do more of this type of cross-border work. it is good to know that there is support for that. thank you. >> thank you for presiding. >> thank you. i appreciate your testimony. i want to respond to some of the comments made earlier that the chairman started off talking about the cuban issue and said i will paraphrase, it is dumb, dumb, and even dumber to essentially shield cuba from the

influences that we have on other dictatorial regimes and authoritarian regimes. i could not agree more. i cannot agree more. that is why i have opposed our policy on cuba for so long. mentioned koran as fromnly country less free cuba. we do not shield the evil from the influences of americans traveling there. we encourage it. as korea, if there government would allow more we would encourage more. where more americans would travel. we have all the stone going to cuba and praising the educations this -- system. they would say note such thing. because they would realize it is a different world than is described i some who travel there.

me i cannotife of our goal ishy when to expose cubans and the cuban government to american influence, we cut off our arm and both feet here by denying ordinary americans the ability to travel freely there. i have no doubt that if we thatd up the travel ban ended, the cuban government would try to be more selective. they are all about control. if somebody is going to limit my travel it should be a communist, not discover. thatis the broader problem policy regarding cuba. specifically with this one. i do have issues. and not with the fact that we

have programs like this going. but the fact that they are conducted by usaid. you can say this is something we should have known about. it is authorized. it is legal. we would argue whether that is covert or it discreet. that does not shield the fact that it is ill advised for a id. usaid that has the role to provide humanitarian relief and encourage democratic development around the country or the world. that benefits us in them in the long term. it benefits u.s. interests as well. when we have programs elsewhere in the world to describe some of the things we are doing, we provided humanitarian relief to those in south sudan. we have supplies coming from nairobi to south suzanne.

we're working with partners inside syria. we may not have people on the ground but we do in neighboring countries. this is serious stuff. what are we doing to our program -- programs around the world when they hear that there are covert or discrete programs like this going on by usaid. do you have any concern that this program in cuba jeopardizes our programs elsewhere in the world? i am not questioning whether we should do this. i am questioning where we are doing it. >> your remarks illustrate there is a debate, policy debate on the overall policy. with respect to the implementation of programs what i can assure you is that our implementation is consistent the authorizations and appropriations language that has directed us to do this.

at the end of the day, i believe that our mission to end extreme a broad, openes society to participate in that task. and i appreciate your mention of south sudan and syria where our people are conducting aerobic, world leading, and modern technology. >> if i could get back to cuba, i have limited time here. a look at some of these text messages that we hired people to

from somewhere in south america to write some of these and i am reading a few that we have access to. this is a tweet sent out under this program. lex i do think that this program is no longer operational. i have asked my team to review the content we're seeing in various ap stories. we know the intent of the openam was to support information. >> will we have access to the tweets are the messages that in. sent we can judge here because we have to determine, we have to provide oversight. will we have access to these? >> i will ask my team to review these documents. most of the documents are not in

our position. >> but you have access -- >> they will gather them, review them, and we will make our findings available to you. >> i am not interested in your findings, i am interested in the data. >> we will make the data available. >> we will have access to each of these tweets or messages that was sent out by usaid or its contractors? >> you will have access to what we are able to gather. >> we had programs like this dating back -- i am not pointing fingers to this administration. this program has done great things in broadening travel. i applaud this administration for doing that much better than the last administration. the republican administration in this regard. the last administration had for a while a ticker in cuba where

messages were put up that, the only way to describe them, was juvenile. it would chide cubans for not providing school lunches for their kids when those were provided in miami, for example. it is juvenile sayings that i do not think served anybody's purposes. we are continuing the things like that. it smacks of that kind of program. i am not making a political point. our policy is wrong. let's simply allow travel to juvenile and we would achieve in

my view -- if we have the information from this program to actually review it, then make a decision, do we want to continue to fund programs like this that in my view my point usaid contractors or individuals from other countries, including cuba, that participate in this program in danger for what? i'm not sure what we get out of this. allow americans to travel, allow them to take flash drives, allow them to go and do good instead of saying you cannot travel, we are going to shield the cuban government from the influences that come with american travel. i do not see american travel as some kind of a reward for good behavior have the cuban government. we are unlikely to see that. it is finally a get-tough policy with the cuban government. >> if i may say, the fy 2014 languages clear about the purpose and authorizations of these programs as well as which agency should be in the lead for their implementation. we intend to follow the law and that case and transition some of

those issues to the national endowment for democracy. the larger policy debate here, but i want to come back to assuring you that we believe our implementation and passed with this program has been consistent, that these are not covert, these have been publicly notified a number of times. >> thank you, senator. administrator, do you conduct internet access programs in other countries in the world? >> we do. at the direction of specific language in the congressional -- >> do you have an idea how many of those are? >> part of what we do everywhere around the world, and internet access is one component of is supporting civil society so that you have an open and inclusive approach to development in a number of different contexts. >> because a society that can come together and share what its

goals are is part of the information as to what is sustainable programs we might be able to support. i would like you to give the chair a list of all the internet access programs you conduct. i may ask you for the same thing senator flake has asked for for all those programs, because it seems to be we are either going to judge whether or not we are going to be supportive of internet access in the world or not. and i think it is consistently unfair that one set of democracy programs has the greatest scrutiny of the federal government to the absence of all others. as the authorizing committee, we want to see what is happening across the entire spectrum.

and i would ask you to give me information about all of those programs and all of the programming of those programs and all of the tweets and all of the e-mails and everything so that we can make an informed judgment here. and that share is of the view of the authorizing committee that either we believe in these programs collectively, which i generally think i do, in which case we support it, and not choose which country deserves it and which country does not as it relates to internet access, and whether or not the aid is the appropriate entity. aid as part of its overall development program, the democracy programs that have been run by aid are critical. and so i am not one to advocate having aid all of a sudden be stripped of its democracy programs. because democracy programs in and of itself, generally speaking, maybe they are in some

open societies in which we seek to strengthen democratic institutions, but there are many in which they are not, which is why we are having democracy programs in the first place. these are not governments that are receptive at the end of the day. the are governments that oppose it and just as the voice of america and a whole host of other surrogate broadcasting was meant to bring broadcasting to different parts the world, it seems to me what we're trained to do is to exactly that for which we have a global perspective and understanding the value of those programs and a commitment to it. those commitments should not be decided by picking and choosing which country we somehow like and which countries we do not. if they fail to provide their people access to the basic flow of information, it seems to me we should be pursuing it. i would like the information on all programs. and if i could finish, and also,

let me just say i would like to get a full sense of all your democracy programs beyond the internet as well. because we are gone to judge all of those in context as well. and maybe i will ask for gao inspector general reports on some of them. because in my mind, there is a siege mentality. i respect that there is a difference of opinion as to what our policy should be. what i do not respect is the siege upon one part of our democracy programs to the exclusion of all others. so that is something we are going to have a full spectrum analysis of. senator flake? >> i was going to care for, this program is not to provide

internet access. it was social media content within access that already exists. >> this program was designed to provide access to information and create a platform. >> it did not provide internet access to any cuban that did not have before, correct? >> i will let my team respond later. but the program was intended to provide open access to information and a platform to communicate with each other. >> clearly there is a basis that didn't exist because people thought to when they had the opportunity, if they have some other venue, they would use some other venue. telephone access inside of cuba. the problem is the regime blocks access to both the internet and to these platforms. and so that is the challenge of a regime as other regimes of the world that simply do not want to allow its people have information, because when they have information, they may suddenly decide to make choices or to peacefully protest to try to create change in the government, which we generally

in the world -- we look at turkey and what it is doing, and the world has come down on turkey for what is happening there. we look at iran and what has happened there. we look at china and the challenges there. and we condemn those. but in cuba, the cuban people deserve that flow of information. we are going to have a broad range of judgment. one final note, i know that senator flake has a different view, senator durbin expressed some of that, too, but the problem is that way and you do travel to cuba, there are millions of people going to cuba, millions, europeans, latin americans, canadians, and others, and yet the regime has become not less repressive but more repressive and more selective.

when you travel and go, you end up feeding who? unfortunately, not the cuban people, but the regime. why? because the regime is the one that has through its company, which is basically owned by the military, the entities by which those who go visit and largely stay at her either with a foreign partner or with entities that are totally owned by the military. so we ultimately feed a regime versus feed people. this is a legitimate debate. we have different views. what should not be a debate in my view, in this context, is the nature of our democracy programs and creating access the information, people, anywhere in the world. with the thanks of the committee, we will keep this

record open for questions until the end of tomorrow, friday, and this hearing is adjourned. lex coming up this afternoon, we will ring you live for more -- remarks from treasury secretary jack lew. we have that for you at 6 p.m. eastern , paul ryan headlines the iowa republican dinner in cedar rapids. he is one of a number of speakers that gets underway. you can tweet as using the hash [inaudible] between must choose

running for president in 2016 or seeking to chair the ways and means committee. the vice presidential nominee has kept his thinking private, making enough new -- moves to keep his allies guessing about his plan. in the fall he headlined the birthday fundraiser and in the first quarter of this year paul ryan brought in $1.4 million and fundraising. that is his largest fundraising haul. also we want to let you know about our live coverage from new hampshire of an all-day conservative summit beaching -- featuring speeches from rent

hall and former governor mike huckabee. all day live coverage begins at 10 a.m. eastern here. we will invite you to share your thoughts on facebook and twitter. >> there is no question that congress routinely and administrations routinely do not speak the truth to the american public and it is not just about inaccuracies in terms of what the affordable herald -- health care act would do. it is the absence of speaking the truth about where we are. where are we? at a standard of living the same as what we had in 1988. family on funded obligations and pure debt of $1.1 million per family. so thatds to be spoken we can build the context for the tough things that are going to come. the biggest problem i see with

congress is its denial of reality. good personl be a and deny reality. we all have flaws and we deny realities in some sense in our lives every day. we do not want to face them. the fact is we have not had the leadership in this country a long time and i am talking presidential and congressional that would stand up and tell the truth to the american public about the situation we find ourselves in. you can debate what caused it. i pretty will have my idea of what caused it. click senator coburn on his career am a politics, and reasons for his retirement from the senate. sunday night at 8 p.m. on "q&a." >> next a discussion about bitcoin and the future of digital currency. -basedn is an internet system for conducting financial

transactions. lawmakers have expressed concerns about bitcoin enabling illegal activity like rogue smuggling. supporters say it makes it easier and cheaper to transfer funds and is less susceptible to fraud. hosted by the atlantic council, this event is 90 minutes. >> good morning. thanks for joining us to discuss this what i would call this reactive technology application. i may have different words when we're finished. with implications of virtual currencies but other block chain

for theplications future broadly and i will get into what i mean in a little bit. the atlantic council is a nonpartisan organization that remotes constructive u.s. and european either ship in the world to meet today's challenges , working with our allies but we also serve a public education function. i cannot tell you how many people from what i would call our traditional constituency here at the atlantic council which is a long-standing institution here in washington, how many people have come up to me and said, what is this thing called the coin and what do i need to know about it and how important is it, what are the parameters, is it going to fail tomorrow, or will it be here in 2050, and that is part of the reason i decided we should have an event that performs these functions that i have tried to bring together. esteemedied to ring experts from different disciplines and i'm thrilled and honored their here to explain

what bitcoin is and what it might portend for the future of our society and for our security as well. our focus today on virtual currencies is one area of the body of research that we have ,one on disruptive technologies particularly those that empower individuals relatively more than nationstates at the strategic foresight initiative here at the council. in the last year we have published analyses on such issues as the impact of robotics on the future of manufacturing, how big it will influence decision-making by corporations, individuals, and companies and a major report last december on how the u.s. can harness the technological revolutions that are ongoing, including biotechnology, three-dimensional and four dimensional printing, and other technologies that are

changing our operating environment in our world. pretty soon we will publish a new concept on how the u.s. concedes its role in this dynamic world and a new concept for national security strategy. there will be a conference here major 14 on foreign policy and defense policy aspects of these issues. the discussion on that day will be kicked off by the chairman of the joint chiefs of staff. general martin dempsey. very interesting presentation by him as well as the director of darpa. number of important and interesting speakers. i would commend may 14. it would yet an interesting conference. last december we hosted what we called the strategic foresight form which gathered top thinkers to engage in very deep conversations on how to harness these technological disruptions

to be better prepared for trends moveare really looking to us toward a very different world where natural resources are much individuals where and small groups have a lot more power to do things, to do things that are good and advanced society and strengthen our security but also each of these technologies has darker potential applications that can cause significant new security and military threats in a number of sources of stability. negative isitive and found. this is a clear marker of yet another innovation that empowers individuals and democratizes a task that traditionally has been reserved for governments and here i am talking about the regulation of currency. it is something i think we could not even fathom just a few years ago and now it is upon us and we

will talk about how it is upon us today. a significant set of questions will try to address with this panel. ispeer-to-peer engagement displacing government and such tasks, what other functions that we are used to the performing might also soon be disrupted, what does this mean for the security of our finances, how might international affairs be affected, how might national security be affected by the digitization of services like this, and a number of other questions. i would like to introduce our experts. it is an excellent panel and i am thrilled. to my immediate left is mr. ronald marks. a number of increasingly senior positions with the cia. he could kill you. senator bob dole.

he was special assistant to the associate director. he was at the state department as a program director for law enforcement issues in russia and eastern europe. and a senior budget director at the national reconnaissance office. since leaving government, he has been a senior defense contractor and software executive. he comments extensively on a defense and intelligence issues. i am thrilled to have wrong with us here today. houk.s left is mr. kevin he is an established bitcoin miner. he studies security and risk analysis and he will be working for block chain.info in their london office. the cyber-patriot

competition team. secure how well one can computers from viruses and backdoors. his team came in second place among the 1600 teams. not bad for the work he did. he interned with the north are from a -- northrop grumman co rportation. as directoraley, for cyber infrastructure for attention at the white house, he coordinatesor efforts to secure cyberspace and critical infrastructure immediately after the 9/11 attacks. created bonds between the finance sector and

government that remains strong today. most recently he edited a book domain," therce conflict.ory of cyber it is an interesting book with a lot of anecdotes and analysis. it was reviewed favorably by "the economist" when it came out. and chris brummer. he is also the project rector of the council lost transatlantic finance initiative. he leads work on reagan story and trade policies and provides by policy in -- bipartisan analysis. he frequently serves on the nasdaq delisting's panel. for the national adjective for a council beginning in 2013 he received his jd from columbia

law school and a phd in dramatic studies from the university of chicago. i'm going to turn to ron. please join us on twitter using the hash tag we use for events like this, a c. disrupt. and i will turn to ron. >> let me be disruptive. i was trying to think of what i was going to say that would still allow me to be friends with berry, maintain my relationship with the council and something i think is the truth. let me relate you a little family history and context. i come from a long line of people who have a slightly questionable reputation. >> my grandfather was someone who was from boston and was originally part of something called the ponzi scheme and he made a lot of money out of it.

i was born in 1966 and my dad was born in 1906. in the first years of his life he lived through three depressions. you think the last one was bad. in 1907 in world war i and 1929 u.s1929to more than double digit unemployment. the banks fail. people do not necessarily trust the government which wasn't necessarily all that involved. so, growing up with my father and listening to him talk about the banks and the depression come an and by the way he was a lobbyist in washington. the opinion as you can imagine it wasn't high to begin with. it was an interesting experien experience. my memories are of post-world war ii.

1944 near new hampshire and washington hotel people from the united kingdom, the u.s. and other countries gathered together to figure out how in the world we will survive after world war ii because we had gone through ten years of depression, ten years of paraphrasing etc. in the 1930s which pretty much stipe is the world economy. he was representing the british anand trying to hang on to whateveonto whatevershred of die marketplace. they were bankrupt. they went bankrupt just after world war i. they almost went bankrupt in the 1930s and by 1944, they were broke again and living essentially on our money. the largest empire in the world was essentially living on the

u.s. dollar by borrowing on the u.s. dollar. so this conference in 1944 was about how the united states and others were going to rule after world war ii. some of these delightful buildings that you see around at the bank, inf o imf and all thoe places, this all came out of that. the british found convenient to world war ii it was about $4.60 and it went down at the end of the war it was $2.60. it was going to reign supreme. we had roughly half of the world's gdp and pretty much called the shots. by the way the decision was made at that point to have a dollar which was not only hold the value throughout the world but was actually exchangeable for something. $35, it was amazing. some are higher than others.

and if you aragain if you are ae and in old spy to be leaving james bond. do you remember goldfinger, the movie goldfinger? it was about gold arbitrage. you can move at $35 an ounce and if you have the right you can move to europe with $9,042 albums were into the middle east like pakistan where it would be $300 an ounce. there are pleas of working around the system and i've also added that my father and my uncle after world war ii and living in paris i wouldn't be surprised when the stories were related to me how they used to take suitcases of dollars and exchange them there for other things. we grew up in a stable time. the last 70 years of our existence has been based. the u.s. dollar has been dominant in that period of time. i've been to 50 some on

countries and no one turns down. even the russians when the currency wasn't exchangeable, wouldn't turn down a dollar because it was considered a value. now, by 1971 we went off the gold standard. why? because there was a tremendous desire to have the u.s. dollar overseas and those people wanted to convert to that in the 1960s it demanded a whole lot of gold. gold. with contempt again in the 1970s to demand a lot of gold out of fort knox. you don't physically ship it. you put the sticker from one side to another, that it's going to be an article reserve. the united states dollar since 1971 has been based on the full faith and credit of the united states.

we have this old certificate with dollar bills etc., etc.. that system lasted pretty much through the 1990s. we won the cold war or as i think of it i won the cold war. and then between 1991 to 2001, we drifted along fairly well. since 2001, and certainly since the last depression starting in 2008 and by the way if you have a job it is a recession and if you don't it is a depression. we have seen other parts of the world begin to move forward. china in particular. we've also seen the world that has been increasingly allowing itself, more than allowing itself, connecting itself. 2.5 billion people on the internet today. they belong to some 200 countries not all of whom have stable currencies.

i can sit here right now and recite which peso and whatever else is promulgated by different countries over the years or who slashed a couple of zeroes off the end of their currency. now ask me what that does to people when they start thinking about stability. some of you are probably too young to remember that even in the united states i remember parking money at about 19.5% because the mortgages were being charged at 16.5% because the inflation was 12 to 14%. that was unusual in our circumstance. it's not unusual around the world. so, when you start asking other people to have full faith and credit in their money, they look at you, smile a little bit, non- to their head and go on their way thinking i have to do what i have to do to survive. i was just recently spent three weeks in the uae to an enormous

amount of bracelets and necklaces and whatever an ounce of gold it comes for me to pakistan, bangladesh or burma and we don't trust the local currency. we want to get the mind frame of the 20th century american and 21st century where the power of the united states is not as great as it used to be. the cover of the dollar isn't as great as it used to be and we have to start thinking about a way of dealing and communicati communicating. i purchased one by the way because cardin the expression dialect is my money where my mouth is, i've taken a look at this and i think to myself okay is this the be-all and the end-all?

is a ponzi scheme? i don't think so. but we will see. does it represent value and ability to exchange across the border's? like money than the answer is yes. does i that represent a threat o the nationstates? take a look at china. however, and i will probably conclude on this one note. one of the things i spent a career doing is getting around the rules and around the borders and around different places in the world. exchanging value to family and friends you will use money orders you will use a bitcoin if possible. kennedy forged and copiesof visit as it is cracked up to be?

take a look at what happened to the regular currency. if it is subject to something besides the regular currency, i don't know. given some basic aspect of what bitcoin is. >> so basically it might get a little bit complicated, and i will definitely do my best to come up with bridges for you to help understand the process. but basically just keep in mind it's dollars and computers can exchange to one another. and this dollar can be written on the physical paper if you want to. the way bitcoin is revolutionary

is that encryption, decryption has been around for a while. they were the first to use encryption for asymmetrical encryption to have the value of money and it' how much people perceive the value to be. this works on a principle of when somebody wants an address or think of it like a paypal e-mail they click the button on the computer and basically it will create two keys for you. one is called public key and this key you give to anybody that you want to send bitcoin. so they will have the key and send funds to the public key. it's two sides of the same claims when you create a public key you also create private key that you used to unloc use to uf

the funds that are sent. if you give anybody your private key they could very well steal all of your money. and so. minors are the things that keep the network going. there is no central bitcoin like paypal. everything is distributed. it's something that gives more power to the people. and this works on basically they will take ten minutes worth of transaction so i will send a bitcoin to my mom and whoever will be sending bitcoin and all of the transactions are floating in the namespace. and then in the meantime there's people running programs on their computer that basically check the transactions across the

network. so the way that they do this is called the block chaining that bitcoin gives to the world. that's the way that you don't need a central authority. it is a large ledger that tracks transactions. so if i were to say that i have one it would say okay you have fewer bitcoin from fred and he got his from bob and so it's like okay you do have a bitcoin to send. the key is valid. i will send that to you. so the way that they do that is if they race to find out which one is going to solve the puzzle. so imagine a very large puzzle and the only way to solve it is for a minor to through random numbers in the puzzle, check to see if it's right and then if

they are doing this a million times a second they will try another one so they will throw a combination of numbers into the sudoku puzzle and then they will broadcast that answer to the world. so when you have a solution is relatively easy to check. hard to find the answer that easy to check. when the network confirms you have found the answer, the one that sounded is awarded the first work. the bitcoin reward is decreasing. so a couple of years ago, as great minor was given 50 big claims for solving the puzzle. today the reward is 25 bitcoins until the cap of 21 million is hate. once that is reached, there will

be no more reward for finding the answer to the sudoku puzzle. so once they find the answer to the puzzle it does one last check with these ten minutes of transactions in limbo to make sure nobody is our return late saying i'm going to transmit 100 billion bitcoins because they will check and see that you are wrong. so they go through the transactions and use answers they've gotten from the puzzle and they will compress all of these into a block and add it to the chain and then once the confirmation page and they add it to the block chain, they work all over again and the puzzle will change every single block. to keep the program itself designed to be every ten minutes that compression will hit and they will be minted.

it wanted to be ten. if they take more and more people come if they take five minutes to nine what they will do is make the sudoku puzzle harder. it will make it bigger so you have to spend a little bit more time throwing out random numbers in order to find the answer. so once this is confirmed, then you've successfully made the transfer of bitcoins. once they are added, the transaction becomes more and more final and etched into stone because the further chain in the transaction is the more that this transaction basically is as good as gold. tell me why 21 million is the magic number. >> like i said what the time being ten minutes that's the way

the program is designed. i don't want to blow your mind much, but they introduced the currency and so there is a bunch of different other currencies like the claims current value i think it's $11 a coin. it's capped at four times as big and it's block time is two and a half minutes so it is basically created by a graduate he got his claims excited about it. there are so many. >> we have two more informational passions i'm going to move on to the panelists. when we had this 21 million, is there anybody that has bought about 1has foughtabout will thaa discontinuous sort of milestone or will things keep going the same? has anyone thought about that?

>> yes the program is very clever in that every transaction it's recommended that you tip the minor as you tip a waiter. it doesn't matter if you are making a 20-dollar transaction or a million-dollar transaction you can tap the miner a penny or less than a penny and that is more than enough because all of the text between the ten minutes of transactions that adds up to be a lot. so that's the way as opposed to paypal which will take a percentage of what you're transacting that they don't care. we could honestly be transferring $100 million or 1 dollar. the transaction fee will be less than a penny and after 21 million have hit that is the incentive for the miner. but the reward decreasing in the way to be finished rewarding than about 110 years. >> my understanding is that it's

not like we will run out of money. we can just say we can keep using smaller and smaller. we can keep chopping up the piece into fewer pieces. >> a lot of people will refer to them now as micro bi bitcoins. if i'd had $100 in, i don't want to be getting .1. that's kind of demeaning. [laughter] >> last question. what is it about the inventor, where does he live, does he exist? the person that wrote the code explaining what the code does and what he feels like it should accomplish, this person doesn't actually exist. there was a story among or two ago about a reporter saying that they found him.

he was using the name in california, that they just really poured through his life and he was just the guy on the model train. but the thing is in my opinion i don't think that this figure could have revealed himself. i don't think that it would be viable for something like this because if i had a guy or an organization if we knew who did it, than the first response would be it is going to profit them. they created it fo for themselvo no matter where it goes they are just basically doing it as a ponzi scheme. so i think the reason that he did it anonymously was to try to just really a sure people yes, this is a new technology. i am not trying to game you. just do with it what you will.

i think that you have quadrupled my knowledge. what is your take on this? >> your central question was what are the implications between now and 2050? i'm going to pick up two aspects of that. one is confusion and security. and the second is how this fits into the larger government battled over the last i would even go back as far as 30 years and maybe even a little bit further. the part of answering the 21 million is it was sort of arbitrary. 21 was kind of fixed and maybe it's not completely arbitrary but there is a lot to it, and that bothers a lot of people. but, dollars are arbitrary. a lot of financial instruments

have arbitrariness built around them. the true financial professionals will tell you even gold is arbitrary. and over time we introduce a new financial instruments of any kind whether it is a currency or a commodity there is often a lot of confusion about it, confusion by government, confusion among the public and even confusion among the professionals. this is no different than when we were introducing paper money when the united states was going to paper money folks could be rolling out all sorts of different dollars. the greenback was the federal government trying to come in and that's why we have the secret service. they rolled it back in the 1860s and the secret service was there to nick sure this was the one currency that we had about the different banks could be printing their own u.s. dollars. and we had lots of other confusions when we rolled out the instruments. the archery stocks.

they were in this piece of paper entitles you to a portion of this company. just like we had security issues for thi bitcoin, the stock certificates saw all sorts as one of the classic incidences. i watch a lot of turner classic movies and it seems like every other movie is about someone perpetuating some stock fraud. i worked in hong kong for a while and you would see the way that the modern chinese are dealing with the stocks that are coming out and it seems very familiar to those movies in the 1930s. the new financial instruments on its confusion about it. a lot of arthur train us david christie si