International Affairs FY 2008 Budget

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SECRETARY RICE: Thank you very much, Madame Chairwoman, and thank you very much to the committee, Ranking Member Wolf, Chairman Lewis. Thank you very much.

What I'd like to do, I do have a full statement. I will enter that into the record and just make a few comments because I think there are a lot of issues that we would like to get on the table and therefore I'll not go on too long.

President Bush's Fiscal Year 2008 International Affairs Budget Request for the Department of State, USAID and Other Foreign Affairs Agencies totals $36.2 billion. In addition, the Administration is requesting $3.3 billion in war supplemental funding in 2008 and $1.37 billion for foreign assistance as well as $1.3 billion for State operations to support emergency requirements in Iraq and Afghanistan. I have testified previously concerning the supplementals, so I will concentrate today on the Fiscal Year 2008 Budget Request.

This request -- and I want to thank the Chairwoman for recognizing this point. This request is really fundamental to our national security. I, too, was very glad to have the State Department classified along with the Department of Homeland Security and the Defenses Department as security -- as a security agency because clearly many of the issues that we're dealing with in the world today there is no military solution. We may, in fact, have to use military force, as for instance in Afghanistan, but it is really the development of institutions, democratic institutions, accountable institutions in these countries; the betterment of the lives of the people; the efforts that we're making through public diplomacy and exchange programs to try and pull young people away from the temptation of terrorism; the development of well-governed democratic states that can deliver for their people. That is really the answer to American security in the long term.

And we recognize that our Foreign Service, our Civil Service and our Foreign Service Nationals -- people that I often refer to as the crown jewels for us around the world -- are performing a vital national security role in difficult and dangerous posts, far away from families and friends, in many cases shoulder-to-shoulder with our men and women in uniform. We're asking our civilians to do far more than manage the existing international order these days. We are charging them with helping foreign citizens and their governments to literally transform their countries, to move them toward peace, freedom, prosperity and social justice.

This is the national security mission of the Department of State today. We've referred to it as transformational diplomacy. And to succeed in this critical work, it is extremely important that we support our men and women in the field, support them with security measures in difficult places, support them with adequate -- in adequate ways with IT support, support them in their own training and development in critical languages, in the ability to function in these societies.

And that is why this budget does represent a substantial increase over last year's budget. I think it's probably recognized that the Department is doing a lot to try to mobilize the resources that we have through reorganizing, through global repositioning, through what I will soon announce, which is an effort to look at our very basic services in the Department and how we deliver our management services to see if we can not improve our efficiency there. But there is only so much we can do in the reallocation of resources. We really do have to have more resources for the Department and for our people, and I want to emphasize not for the Department but for our people.

We are very active in, of course, the promotion of and the support of democratic forces around the world, but I would like to use the President's recent trip to Latin America as an example of how we see democracy and development as going hand in hand. Because democracy is not just the next election; democracy is the development of institutions and it is the ability of democratic countries to deliver for their people. Therefore, the Millennium Challenge program, which I think has been very successful around the world in creating the right incentives for countries to govern wisely, to fight corruption, to invest in the health and education of their own people, has been one of our most important tools in changing the conversation about how development takes place, that there is responsibility on behalf of donor countries but there is also responsibility on behalf of those who would receive our aid.

We have worked with the countries that are receiving these compacts. It's an interesting process in which it is not just the government but civil society that participates in that process, and I think it is one of the best innovations in foreign assistance that we have had.

But we have not in doing the MCC left the traditional foreign assistance programs on the sidelines. We've been innovating there, too. We have reorganized our foreign assistance so that we get better integration, better coordination between the State Department and USAID. About 80 percent of our funding comes -- of U.S. Government funding comes through those two agencies.

I think the next step is to better integrate and better coordinate with other U.S. Government agencies. Very often, a lot of that integration goes on on the ground, but when we're making budget decisions we need to have a sense of the continuum of what U.S. Government agencies are doing. And in that regard, Madame Chairwoman, let me just address one of your questions. I do think we have excellent coordination now with the Defense Department and with the military, not just in conflict circumstances like Afghanistan or Iraq, but when we were recently in Guatemala to see the medical readiness teams that are serving poor populations in the highlands of Guatemala, it was very clear that they were in very close contact with our embassy there, working with our people in the embassy, and making sure that those programs are augmenting and complementary to what we are doing with USAID. We have more work to do, but I believe that this is a kind of model of what we can do.

If I could just make one final comment, and that is that obviously we have some areas of the world in which we are deeply focused because of the high tension, and I'll turn here to the Middle East very briefly. You, Chairwoman, and Ranking Member Wolf asked for a kind of update about the Middle East. I will return to the region at the end of the week. I think it is extremely important to continue to show American commitment to the development of a political horizon so that the Palestinian people can see that their future rests with moderate forces like Abu Mazen, not with those forces that are extreme.

In that regard, frankly, the formation of the Palestinian unity government has provided something of a challenge because the Palestinian unity government as formed does not meet the Quartet principles. I have stopped calling them the Quartet principles; I now call them the "foundational principles for peace" because quite clearly you cannot have peace unless you recognize the right of the other party to exist, unless you're prepared to renounce violence and unless you're prepared to live up to past agreements. But there are people in the Palestinian political leadership and indeed in this government who have themselves personally accepted those principles and lived their political lives on that basis, therefore, our position toward the Palestinian unity government is that it must move to accept these foundational principles for peace. The United States is not prepared to change its assistance policies toward this government because it does not recognize those foundational principles for peace.

We are encouraging others in the international community to continue to deal with the needs of the Palestinian people through the mechanisms that are available that do not go to the government where Hamas still holds the prime ministership. I noted a story in the paper this morning, something that we have known, very interestingly since -- in the last year there has been more aid actually to the humanitarian and other needs of the Palestinian people through individuals, through nongovernmental organizations and I think it shows that we are not ignoring the humanitarian needs of the Palestinian people. We're speaking to those needs.

We will nonetheless not suspend our contacts with those in the Palestinian government who have a record of fighting for peace. I think that keeps a way to continue to influence the development of this Palestinian unity government. And we will, of course, continue to work with Abu Mazen who is himself committed to this cause. In that regard, I think it is extremely important that the United States continue to fulfill the President's commitment and my own personal commitment to work tirelessly to try to realize the President's two-state solution.

We will -- I will be coming back to you with a reformed plan or a reestablished plan for how we would use security funding under the new conditions. I hope to have that to you fairly soon. But I believe very strongly we do need to support the development of security forces that are loyal to those who accept the Quartet principles because I'm quite certain that those who do not accept it will continue to build their security forces. But I will come back to you and the committee with that reformulated plan.

A lot to do; it is a busy time in the international system. But I think that the United States has the possibility now to use the gains that we have made as well as recognizing the challenges that we've seen over the first six years of the Administration to bring home some of our efforts for greater democratization, for dealing with the challenges of proliferation and for continuing the American -- the very well-deserved American reputation for compassion for the neediest among the world's people.

Thank you very much.

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