Interview With the New York Post Editorial Board

QUESTION: Do you have any messages for us today?

SECRETARY RICE: I don't. I'll just start out with whatever is on your mind. I'm sure we'll get to plenty of my messages as we go.

QUESTION: Might as well start with Iraq.

SECRETARY RICE: Yeah, sure.

QUESTION: Now that the surge, the troop surge, seems to be working, what are the implications on the diplomatic front and what seriously besides warning the Maliki government that it needs to be more cooperative is the Administration prepared to do?

SECRETARY RICE: Well, let me divide the diplomatic front into the political work with the Iraqis and then the diplomacy of the region. With the Iraqis, what is really happening -- and one could not really have predicted it -- is that you have a pretty robust, bottom-up kind of movement that's going on. And it's not just in Anbar. It's spreading in other places.

And so in addition to continuing to press the Maliki government on getting the oil law passed, getting de-Baatification legislation, we've been spending a good deal of time through our Provincial Reconstruction Teams working with them on getting resources to the regions. Because what you -- or to the provinces. Because what you really have is that even though they haven't passed an oil law, they are on a budget basis distributing the oil revenues to the provinces by formula. Even though they don't have a de-Baathification law, people are coming back into the security forces and getting pensions and the like. Even though they don't have a provincial powers law, the provinces are clearly stepping up and exercising their powers. So in addition to continuing to press on the national reconciliation efforts, we're trying to solidify and indeed push forward this very positive trend toward local control, if you will, or local governance.

In the region the surge has really helped a lot for a couple of reasons. The countries, the neighbors, were really worried that the United States might leave and they were worried that there would be a kind of chaotic situation. They were frankly concerned that the Iranians would make good on -- (audio gap) -- a more region-wide approach where the Gulf States are enhancing their own security cooperation and their cooperation with us, and in which we are building a kind of neighbors’ network for Iraq on the diplomatic side.

QUESTION: Well, (inaudible) to the diplomatic front. I mean, what -- again, what is expected of the government? What is the Administration prepared to do if the government doesn't respond as favorably as --

SECRETARY RICE: Well, I think this government is trying to respond. I mean, the notion somehow they don't want to do these things, I think -- it really doesn't recognize that actually it's just very hard to do some of these things. But we're continuing to press them on the legislation that they need. But as I said, the most -- in some ways, the most important thing that they can do right now is to support the rather bottom-up, more local control efforts that are going on in the provinces, make sure that resources get out to them, make sure that these people have a way to be integrated into the security forces. And we're spending as much time making sure that the national government is supportive of these provincial developments as the other way around.

QUESTION: To the extent that that's successful, does that lead to a de facto federation (inaudible)?

SECRETARY RICE: Well, no, this is really -- the way to think about this is not partition but decentralization. You don't really want everything coming out of Baghdad. And frankly, it's a lesson that I think we learned that we should have perhaps seen earlier, which is that if you have a reasonable local government or a reasonable provincial government, they're more able to deliver services, it turns out they're more able to recruit for security, they're closer to the needs of the people -- all the things that we in the United States know pretty well. You would never think of, if you lived in Cincinnati, of going to Washington to have your sewer system fixed. And so they're developing those mechanisms at the local level to do that. So it's not partition in the sense of independent political entities. It's really a matter of decentralization of governance and service provision in a way that I think is going to be much more effective for the country.

QUESTION: Well, then the Senate in its nonbinding resolution (inaudible) partitioning Iraq. Given what you've just said, why do you believe that that's a bad idea?

SECRETARY RICE: Well, because we're not talking --

QUESTION: (Inaudible.)

SECRETARY RICE: Yeah, I was not talking about partitioning. We're talking about -- you know, decentralization and federalism is in their constitution. But you can't partition this isn't kind of ethnic enclaves. That would be a real mistake. And by the way, the first and most important reason that you can't do it is that Iraqis don't want to do that and reacted extremely badly to the idea of partitioning the country into ethnically governed enclaves.

So I actually with the Administration opposed the idea that was contained in that resolution. And we need to stay on a course for a unified Iraq but one where service provision and indeed elements of governance are decentralized.

QUESTION: Could you elaborate on the bottom-up successes outside Anbar where -- where are they and why haven't we heard more about them there?

SECRETARY RICE: Well, because it's an evolving situation. I think what you have is the Anbar example is starting to spread. Now, to be sure, Anbar is a huge province and you have Fallujah, Tikrit, Ramadi --

QUESTION: But a small population, right? Relatively – (inaudible) larger?

SECRETARY RICE: No, no, not for the Sunni population. Not a small population at all -- the Sunni population.

QUESTION: No. Right, no. The Sunnis --

SECRETARY RICE: Yeah. And an area that, of course, was al-Qaida's epicenter. So that's really the importance of it is the kind of expulsion of it. But you're starting to see the movement spread to Diyala. Now, Diyala is more complicated because Diyala has a more ethnically mixed or sectarianally mixed group. There are Baghdad neighborhoods where there are local councils coming to us and saying, you know, we want to be able to govern more ourselves and can you help us to do that. And we've got these Provincial Reconstruction Teams structures that allow us to work at that more local level.

But it's not going to be a substitute for national governance. It's not. It's not going to be a substitute for a national army. It's not going to be a substitute for a national budget. Won't be a substitute ultimately for national legislation. But it does give you a way to have multiple points of success that's just not dependent on Baghdad to do everything.

QUESTION: Diplomatically in terms of the (inaudible) in Iraq, the potential for the British to leave Basra outright, what role did the State Department have in -- you know, this is obviously -- it's obviously a military question, how do you make sure that Basra doesn't sort of fold in on itself. But what is going on there?

SECRETARY RICE: Well, the |South is, as you've identified, a somewhat different problem. There you have a kind of Shia-Shia problem, rival Shia groups. And there are any number of efforts going on among the Shia, including from some of the religious personnel, to try and deal with that situation.

But we do have some reconstruction teams in the South. They are not embedded like the ones are where we embed with a brigade commander which we find to be the ones that can move around most effectively and most actively. And we're looking at what our structure should be in the South. Now, the British are not gone by any means and they won't be gone. They just -- they left a particular station in Basra and have moved.

But the South is a different problem. You're beginning to get Shia more local leaders calling for, in similar response to the violent militias that the Anbaris gave to al-Qaida, so you're beginning to have people say that it doesn't matter that these are foreigners. And then you've got -- and are not foreigners.

But then you have also an Iranian factor in the South, which is the Iranian support for some of the most aggressive and most violent of the militias. And what we have been doing about that is to be very clear to the Iranians that we will go after their operatives when they are engaging in activities that are dangerous to our soldiers or dangerous to innocent Iraqis. And we continue to pick up members of the Iranian elite, the IRGC, in Iraq.

QUESTION: How far will we go to pursue those Iranians --

SECRETARY RICE: Well, in Iraq we will pursue them. And --

QUESTION: But not over the border?

SECRETARY RICE: Well, the military believes that what they need to do is to pursue them in their activities in Iraq and that's what we're doing. And we've been very clear to the Iranians that people won't be safe if they're engaging in those kinds of activities.

QUESTION: Well, what if you fail to kill them? I mean, you know, are you going to hold on to them, let them go? You know, it's --

SECRETARY RICE: Well, there's a regular review process and after somebody -- after you determine that somebody has given you all the value and information that you need, you might well let somebody go. But we also have recently captured some people that we think are very important to this effort.

QUESTION: What about this truce that Prime Minister Maliki was talking about with Iran in terms of restricting the flow of weapons?

SECRETARY RICE: Well, he -- when he was in Iran, in Tehran, he told the Iranian Government that they expected them to stop the flow of weapons across the border. And they are continuing to press that case. This is not something actually new that he's been talking about. He's been talking about --

QUESTION: Any sign of an Iranian response to that report?

SECRETARY RICE: Well, the Iranians say that they don't want to destabilize the South of Iraq; they don't want to destabilize Iraq. What we tell them is that if they don't want to destabilize Iraq, they're behaving in a very strange fashion and that there are costs to doing what they're doing.

QUESTION: Is there any credence to what Sy Hersh wrote about today in The New Yorker?

SECRETARY RICE: I haven't read what Sy Hersh wrote.

QUESTION: About plans to target Iranian Revolutionary Guard.

SECRETARY RICE: The President doesn't take any of his options off the table, but we've got a very strong program right now of making sure that their operatives, if they're trying to operate against our forces in Iraq, are taken care of.

QUESTION: Can I ask you a little about the diplomatic process with Iran, since we don't have, you know, conventional diplomatic channels?

Is it your experience that the messages that you are delivering are heard? Are they a rational actor in the sense that they respond -- they respond in conventional ways to conventional diplomatic overtures or statements or anything like that? Or are they sort of more like the North Koreans that respond in (inaudible)?

SECRETARY RICE: No, we have the Swiss who are, in effect, the protector of our interests in Iran, and that is a channel and we use it and it -- I think for the passing of messages it works just fine.

QUESTION: But they don't -- this is not like -- I guess my question is dealing with a -- you know, irredentist revolutionary whatever, they're not like the North Koreans or the North Vietnamese were, like and actually when you say A then hear A and they respond with B?

SECRETARY RICE: Yeah, I think so. That's fair to say that. Now, I might say that I don't know why they're not more responsive to overtures to, for instance, help them develop civil nuclear power if they'll give up the fuel cycle, but I don't think that's because of a message problem. I mean, that's a policy problem.

The other interesting question, and it is one we're constantly asking ourselves, is how much we're able to get information to the population. Because on something like what are the Iranians really asking, they will say to their population, well, we just want to have high-level civil nuclear technology and they're trying to -- they, the West -- are trying to deny you the technology that you deserve as part of a great civilization.

And we're not saying that. And we're saying they shouldn't have the technology that leads to a weapon. I suspect that they don't, and I know that in their messaging to their population they don't say what we're really after is a nuclear weapon. So breaking through to the population is actually not easy.

QUESTION: Do you think the population understands (inaudible)?

SECRETARY RICE: Well, it's one of the most important questions, but I believe that if the Iranian people recognize that nobody is trying to deny them technology, nobody is trying to deny them a place in technologically sophisticated quarters and that their energy needs can be met, that that is something that would be attractive in the context of full integration and access into the international community.

QUESTION: Well, in terms of getting a message to them, this report over the weekend or at the end of last week that Ahmadi-Nejad had invited the President to come speak at a university in Iran, which in theory reminds one of Reagan going to Moscow State in 1998, is that a serious offer? Is it something that could be used by us?

SECRETARY RICE: I don't know if he was serious or not, and he sent the President a letter once, too, if you remember, and I don't remember it as being something that seriously addressed the issues before us. And you know, it's actually very different, of course, than going to Moscow where we had been -- we had diplomatic relations since 1934 and where even though we had fundamental disagreements with the Soviet Union, fundamental disagreements that were only resolved when the Soviet Union collapsed, there had -- the Soviet Union was not a wholly irresponsible actor in international policy, I think in the way that -- and we have no diplomatic relations with Iran.

But what's remarkable, I think -- and again, it's an issue of are they getting the message or not listening -- we did offer to reverse 28 years of American policy and talk to them about anything that is on their agenda if they'll just do the one thing that the world has been demanding, which is to suspend their nuclear weapons -- or suspend their enrichment and reprocessing activities. So that option was there, but they chose not to take that option. Instead, it's this more kind of public dramatic thing which has -- I don't -- I'm not going to try to judge whether it's serious or not.

QUESTION: Do we (inaudible)? Are we comfortable that we know who is the actor in Iran, whether the president actually is the person with the power or whether the mullahs -- who runs what there, who's in control of foreign policy, who's in control of domestic policy?

SECRETARY RICE: Decision making in Iran is not very transparent and there are multiple layers of actors. But I think we have to treat what comes out as the policy of the Iranian Government when it's coming from the President, who tends to say things in much more volatile ways or others in the Iranian Government. But you would hope that if the Iranians begin to -- the Iranian regime begins to understand the cost of what it is doing that there might be more reasonable people within the Iranian regime or leadership that want to try to take another way. So that part of the strategy is to, through the means that we're using, including financial means, to make it -- make at least some within the Iranian regime make a choice as to whether or not this is the course they want to stay on.

QUESTION: The cost of what they're doing may be escalating, at least in the eyes of some of the people in old Europe. In France in particular there seems to be a change in the tone and tenor of the message going to Iran. Sarkozy calling for -- you know, saying that, you know, a nuclear Iraq (sic) is intolerable, it can only lead to war, appeasement is not the right -- and all that. You know, aside from the fact that this is a new regime in Paris, is there anything that they know about Iran's progress toward becoming a nuclear power that that is -- has anything changed besides, you know, the players that would lead to this more resolute position?

SECRETARY RICE: Well, let me just say that even though you've had a much more publicly resolute French position, you've had a pretty -- the French were pretty resolute about Iran and we've been able to maintain really good unity on what we were doing with Iran with the French. But I do think that this leadership has been more outspoken about it.

And it's also the case that as the Iranian program moves forward, people recognize the importance of doing more effective -- have more effective means of bringing about that strategic shift in Iranian thinking. I do think that the fact that we've been able to hold together the coalition of the six states -- that is, the EU-3 plus Russia, China and the United States -- has put the -- has given the Europeans the sense that they can come along with us on these more difficult measures rather than where we were a couple of years ago where they felt that we were not being forthcoming and that somehow they had to play middle man between us and the Iranians. I do think we've managed to transfer the onus for the, thus far, inability to resolve this problem to the Iranians.

And so all of that is leading people to be more pointed in what they say, but also more willing to be -- to look at doing harder things. And the financial measures are -- if we can get more unity on some harder financial measures, that's going to make a difference.

QUESTION: I think the French are skeptical though and (inaudible) about the ability of the Russians to go along and the Chinese, the ability of the Security Council to really step up to the plate.

SECRETARY RICE: Well, you've got the track which is the Security Council, in the UN Security Council, and we've had two resolutions and I think we'll have a third because I don't believe the Iranians are going to do very much in the next couple of months so I think you'll have a third.

No, the quality of those resolutions, the toughness of those resolutions, is not what we would write. They are clearly negotiated resolutions. But you shouldn't underestimate the impact that a unanimous 15-0 resolution has on the Iranians, who had always believed that Russia and China would not vote for a sanctions resolution. For instance, talking about the decision making, when Ahmadi-Nejad got up and said, "This is just a scrap of paper," the newspapers that were associated with Khamenei said, "No, this is not just a scrap of paper. This is not the United States against Iran. This is the world against Iran." So we shouldn't underestimate, whatever the resolution says, that the passage of a Chapter 7 resolution, unanimous, has a certain weight in and of itself.

Now it also allows for collateral effects so that if you've got a country that's under Chapter 7 resolution, financial institutions and companies make much more guarded decisions from a reputational and investment risk position of whether or not they want to extend their activities with Iran. And it's not surprising, then, that you've had several major financial institutions pull out of Iran. And you then have the additional work that is being done where the Germans have cut export credits by 40 percent last year and the French have now made it pretty clear they're not going to extend export credits.

And so you have the UN track. That's important. And what's in the resolution may not be what we would have in the resolution, but you're having these other effects that I think ultimately will have more weight.

QUESTION: Does the Bush Administration consider it among its objectives, containing the Iranian threat before the Administration comes to an end?

SECRETARY RICE: Well, the Administration will come to an end and America --

QUESTION: (Inaudible.)

SECRETARY RICE: No, no, and America will still have an objective, which is to prevent Iran from having a nuclear weapon and to deal with the aggressive policies of Iran in support of terrorism. And that's not going to end when this Administration ends and of course, we want to do as much as we can to resolve some of that. It would be a very good thing if the change in Iranian regime behavior took place next week or three months from now or six months from now. But the United States has got to stay on a steady course to have the kinds of policies that are ultimately going to make Iran make different choices.

And by the way, part of that does have to do with success in Iraq, because to the degree that Iraq is stable and finds its Arab identity, it's going to be a block against Iranian influence in the Middle East. To the degree that it is unstable and the Arabs don't embrace it, then it's going to be more of a bridge for Iranian influence. And so there are a lot of pieces to this, but I wouldn't underestimate the degree to which the fact of an American long-term relationship with Afghanistan on one side of Iran, a long-term relationship with Iraq on another side, strong relations with Gulf states is, in the medium term and maybe even in the short term, not a bad geo-strategic position in which to deal with Iran.

QUESTION: Is Pakistan in that mix as well?

SECRETARY RICE: Yes, absolutely; a good, strong relationship with Pakistan and --

QUESTION: What's the outlook there?

SECRETARY RICE: Well, they're going to have a couple of very important political events. They're going to have the election for president and then they're going to have parliamentary elections. And the parliamentary elections, in particular, are going to be a real test of the willingness of the government to really allow for free and fair elections and we're pressing that case very hard. Because Pakistan has -- and Musharraf has done a really good job of bringing Pakistan back from the brink. I mean, it was really on the brink of extremism and he's really a good ally he's and made clear that he doesn't think a modern Pakistan can exist with an extremist core.

But moderate forces do need to unite in Pakistan in order to be able to continue to resist extremism and to continue the considerable economic progress that the reforms have brought about. So it's going to be an important several months, but we're working very closely with the Pakistanis to --

QUESTION: Is there a place for Bhutto in that mix?

SECRETARY RICE: Well, I don't see why not. You know, it's certainly -- there will be, we believe, and there should be a contested parliamentary election and that people ought to be able to participate.

QUESTION: Given that -- given the history of corruption charges twice leveled against Ms. Bhutto, is she necessarily the right figure to either try and restore that (inaudible) democracy there?

SECRETARY RICE: Well, that's going to have to be a decision that Pakistani institutions make about those issues and that Pakistanis make about whether or not she's a viable political force. That's not something the United States can decide. But there just needs to be -- there needs to be a contested parliamentary system, but whether or not she is able to overcome that and whether Pakistanis are willing to allow that is really up to them.

QUESTION: So if President Musharraf flips over and essentially becomes the leader of a party coalition that will make him the Prime Minister, which I guess inevitably (inaudible) a possibility by the Supreme Court, does that represent a contested parliamentary election?

SECRETARY RICE: Look, I'm talking about for the seats in parliament.

QUESTION: For the seats, I understand, I understand, but --

SECRETARY RICE: There's the seats in parliament. Look, we -- the United States -- I'm not going to try to help dictate every detail of how the Pakistani elections are going to turn out. The Pakistanis are going to decide that. We have to stand for certain principles and those principles include that they would be free, which means that people get to participate freely, that they would be fair, which means that there's access to media and access to ways to bring your message to the people.

One remarkable thing about Pakistan is the degree of press activity and press freedom -- it’s a very vibrant press environment. So those are the sorts of issues that we raise. Precisely how it plays out with who becomes Prime Minister and -- that's not for us to decide.

QUESTION: Can we go back to Iraq for a moment?

Given the mounting allegations of problems and abuses, why the continued support for Blackwater?

SECRETARY RICE: Well, first of all, there is an investigation going on of a specific incident that took place. And that will play out and we'll see what that brings about. I've asked that a team which should be on its way to Baghdad -- Pat Kennedy, our *Under Secretary for Management, will go out to do a kind of 360-degree look at the whole -- quite apart from the actual incident, from the issues associated with contracting, authorities, rules of engagement and so forth. I'm very pleased that they're an independent -- that some independent people are going to help me with that: George Joulwan, former NATO Commander, and Stapleton Roy, a very senior former ambassador.

And they will report to me on how we're structured, if we're properly structured, how the authorities work, given we're in the country in a different circumstance than we were in 2003 when there was no government. And then we will see, but we have to find a way to both protect our diplomats and to do it in a way that gives us at least a fair chance of no repeat of the -- you know, of these kinds of incidents. So I'm not going to make any early judgments about it. I will look for the report.

But I have been very clear with people that I expect it to be probing, I expect it to be a 360-degree look, and I expect it to be unvarnished from these outside experts and I'm sure it will be.

QUESTION: But don't you sort of feel like -- I mean, it's -- what's the just -- other than there just not being enough troops, is there any justification for, sort of, the use of mercenary -- I mean, or whatever you want to call them --

*Director of the Office of Management Policy, Rightsizing, and Innovation

that can be done by contract security, that you don't essentially want to tie down American military forces doing all this. The Pentagon uses contract security for some of their efforts.

So it's -- if it's well-managed and the authorities are right and it's -- and we look at it very, very closely, then I'm quite sure we're going to continue to make use of contract security. But what I want to know is not just what happened in that specific incident. That's important and that will be carried out. But have we -- do we have the right structure and the right authorities in place to make this work? But we move a lot of people and we need to be able to do it with appropriate security for them and contract security provides that.

QUESTION: Almost (inaudible), you hear people complaining -- one side is the military, but not just in the military, complaining that State Department personnel don't stay in-country long enough to develop relationships. A 90-day stint is the standard.

SECRETARY RICE: No, that's just not true. It's a year.

QUESTION: It's not -- it's a year?

SECRETARY RICE: It's a year and many people extend for more than a year.

QUESTION: Well, my question was going to be --

SECRETARY RICE: Yes.

QUESTION: -- are you satisfied --

SECRETARY RICE: Yeah.

QUESTION: -- that the necessary relationships are being developed?

SECRETARY RICE: We have, from time to time, people who go out to fill a gap for 90 days. But the people who are assigned to go to the Embassy or to go to the PRTs, which are developing relationships, those people take on a year assignment and very often, they re-up for even more time. And it is true that the hardest part has not been to get the people to go; we've not had trouble filling the ranks of people to go, but to make sure that we're getting people of the right language skills set -- of which, by the way, there are too few, because the United States, as a country, has not really invested in Arabic language training.

And so we -- that's a problem and to get people at the right levels. Now what we've had to do in order to get people at the right levels -- and I'll just give you a practical problem that emerged. Let's say that I wanted to ask a political officer who was serving in Cairo to go to Baghdad. That person, by the way we had it structured, was going to have to uproot the whole family, bring that family back to the United States -- let's say it's January, the child's in school, this is a very -- so we just changed those rules; let the family stay in Cairo. And now it's much easier for that political officer to go and serve in Baghdad.

And there are a number of things like that that we've had to do to make it possible, because we don't have the infrastructure support for families, we don't have military bases like the military has, it's a much different system. And making the Foreign Service expeditionary, that is able to go out to tough places like Baghdad or Kabul or Islamabad or the like, where they serve unaccompanied, is -- it has required some rejiggering of the way that we send people out and what we do to support them. But our people are serving some 20 -- more than 20 percent of the Foreign Service has served, at one point or another, in Iraq, for instance. So we're getting people out there and they are staying and in the PRTs, they really are enjoying the work on the front lines.

But one thing to remember is that the Foreign Service is actually very small. The entire Foreign Service is about 11,000. Of that, about 6500 are actually officers -- political officers, economic officers, not security officers or technical people. That's an undersized brigade, so it's a --

QUESTION: Exactly (inaudible).

SECRETARY RICE: And you think worldwide, 6500 people, the -- yes, the entire State Department corps is 30,000, but most of those -- of the -- some 20,000 of those are actually Foreign Service nationals. So it's a Pakistani working in Pakistan or an Afghan working in Afghanistan. Those people aren't going to be moveable around the world. So the Foreign Service is very small and getting people deployed to the right places means that we've had to take a hard look at the way that we used our personnel.

I moved 300 officers out of Europe and decided I didn't need them in Europe and now, those positions belong to New Delhi and belong to Islambad and belong to places that are on the front lines. We're trying to multiply our ability to send people out by our American presence posts in places that are not insecure. We'll put, practically, a single diplomat out there to cover an area in places like Busan in Korea. But I had as many officers serving in Germany with 80,000 people as I had serving in India with a billion people. That's a real mal-deployment and so we've been working on trying to fix some of those numbers.

QUESTION: You know Newt Gingrich, among others, has been making a point about the desperate necessity for State Department reform, that the system is outdated and that, like everything in Washington, doesn't make effective use of new technologies and the ability to move people around quickly. And you're indicating some of this yourself, but I'm wondering if you have looked at any of his proposals, which are kind of incendiary and --

SECRETARY RICE: Well, Newt is on my transition -- Transformational Diplomacy Advisory Board.

QUESTION: Right.

SECRETARY RICE: So I talk to him about these issues and I'm trying to do -- we've had to do several things for the State Department and it's a big part of what I'm interested in and concerned about. I do not think that the State Department was the modern institutions that it needs to be. Now to be -- let me just say I benefited from the fact that Colin Powell started this work. When he got there, people were still using Wangs on their desks, quite literally. Now nothing was wrong with Wang in 1985 when I had one on my Pentagon desk, but they were using Wangs. And he made a big push to increase the capabilities in terms of technology and in terms of training and people in management and leadership.

But there's more that we have to do. The State Department personnel have to be expeditionary. They have to be able to go out to the front lines in Islamabad when there's an earthquake. They have to be able to go out to Hilla and be in a PRT alongside our military doing budget reform. They have to be able to go to Anbar and help the provincial leaders access budget monies from Baghdad. They have to be able to go out in a village in Mozambique and help run and AIDS program.

And between State and USAID -- and by the way, USAID is even smaller, it's about 1,100 officers, so we're talking about really small numbers -- you've got to be able to move people out to these hotspots. You've got to have the ability to take care of family issues for them. You have to be able to train them for these hotspots.

But ultimately, when there's a big effort like Iraq or Afghanistan or for that matter even smaller ones like Haiti and Liberia, you have to be able to mobilize civilian personnel and talents that don't reside in the State Department. I don't have city planners working in the Foreign Service. I don't have engineers working in the State Department. I don't have people who understand how to reform a justice system.

And so the President announced something in his State of the Union called Civilian Reserve Corps which is -- Civilian Response Corps, which will allow Americans to volunteer, much like the National Guard, to go out and be -- if you're, you know, a states attorney in Arizona, maybe you want to spend a year working on legal reform issues in Kabul.

And so that's the kind of capacity that the United States has not had. It is the old term "nation building." It's not that I object to nation building, but it really shouldn't be what our military is doing. But we haven't had the civilian capability to do it, so we're trying to build some of those structures now.

QUESTION: Is this something that we need an agency for? Is it something that can be done within the auspices of --

SECRETARY RICE: It has to be done within the auspices of the Department because what is diplomacy today? It is less and less about sitting across the table from another government, another government representative, and negotiating in words. It is more and more about running aid programs and health programs and what we call kind of diplomacy of deeds or transformational diplomacy. It's more and more about helping well-governed democratic states to come into being, which makes us more secure.

I was just at something called the Partnership for Democratic Governance, which is another institution we helped to create. And the idea is that if you are a new democracy in a post-conflict society, you don't have the very structures of governance at your disposal. Somebody has to help you build those. So that's really more and more what diplomacy is, and so if that's not in the State Department, then what is the State Department? That's the modern State Department. That's the State Department of the 21st century.

QUESTION: Secretary Rice, what is the United States doing to counter, push back at Hugo Chavez' subversion in -- against us in Latin America, and his creeping Bolivarian revolution in Ecuador and Bolivia and even Argentina?

SECRETARY RICE: Well, the first thing that we have to do is we have to have a positive agenda and it has to be an agenda that's not anti-Chavez, but that is pro-democracy and development and getting that language right is extremely important because countries want to be associated with that positive agenda.

And the United States has doubled development assistance in Latin America over this presidency. We have programs that are -- go to the core of helping these states build democratic institutions, provide for their people, do health programs, do economic programs. And we can't let the, you know, populists of the world occupy the ground that says that governance also has to be about providing jobs and healthcare and education. And so when we have a positive message that says we recognize the importance of democracy, jobs, education-- and healthcare, it's a much more positive message and it resonates with most of the countries of the region.

So I spend very little time anymore -- or ever, answering Hugo Chavez. There's actually, frankly, nothing that he likes better than to have the United States responding to him. I'll tell you an interesting story. When the President was in Latin America on his last trip there, the President didn't mention his name and he just wouldn't mention his name. And he would be asked a question and he wouldn't mention Chavez' name. And we got to Uruguay and we were getting reports that Chavez was going around saying, "Why won't President Bush mention my name?" That tells you how he wants this to play, so we have to keep on our positive agenda.

The second point is that we have, through the Millennium Challenge Corporation, large-scale assistance projects that really are going at the core of poverty alleviation in places like Honduras and Nicaragua, even, when Daniel Ortega is in power. The third, you also have to -- we also have to recognize that there is something of a -- it's a little too strong to call it a backlash, but in some places where Chavez has gone on record supporting a particular candidate, that candidate has been roundly rejected because people don't like the interference of Venezuela in their affairs. So -- and by the way, we don't limit it to Latin America. We have programs right in Venezuela that are continuing to try to help democratic institutions.

QUESTION: He has programs in the Bronx.

SECRETARY RICE: Yeah, that's -- well, you know, if he wants to come and make a PR move in the Bronx, I hope people can see through it. But we're contesting him in Venezuela as well and when he closed down RCTV, it really did mobilize Venezuelan society in ways that it had not been before. The main thing, though, is to have a positive agenda around which people can identify.

QUESTION: Is Vladimir Putin setting himself up to be a dictator for life?

SECRETARY RICE: Well, he says that he will not change the constitution. I believe him. I think he won't change the constitution.

QUESTION: Does he need to?

SECRETARY RICE: Well, I think the concerning thing about Russia right now is just the concentration of power in the Kremlin; leave aside the presidency itself. But it's quite obvious that there are not strong countervailing institutions. The legislature is not, the Duma is not, the courts are not. One has questions about the independence of the courts. The independent media is, at least on the electronic side, dormant. And that is a problem because whenever you get that kind of concentration of power in the executive branch, it can lead to the -- pushing aside of alternative voices.

We've been making the argument to the Russians that this is not where they want to be, but we're also trying to strengthen trends that might counter that concentration. For instance, there is a growing and ever more vibrant middle class in Russia. Probably the most popular thing you can have right now is a 30-year mortgage in Moscow. And eventually, the real question is, will those people be able to protect their economic interests without the ability to affect the political system, entrepreneurs and people who are doing that. And I think that they will not be able to and I think they'll bring pressure for change.

But it's a good -- like I was saying in Pakistan, I can't tell you how all of this is going to play out. I know that if the United States remains strongly and vocally in favor of certain rules of the game and continues to try to support nascent democratic movements that you can lay the seeds for change to come. But it's troubling in Russia, because I understand that the period in the 90s was, by most Russians, the period that was pretty chaotic and a period when there was a lot of depravation. And so perhaps what we saw as a kind of great firing of democracy, many Russians didn't see in that way.

But it needs to find a better center, it needs to find a place where there are really competing institutions. And all we can do and the Europeans can do is to try to nurture those nascent institutions that are around.

QUESTION: Go ahead.

QUESTION: Apart from their internal political questions, given Putin seeming to want to, sort of, rearmament of Russia, his seeming aggressive moves within former communist nations and so forth, should Russia under Putin, whether he's a President or Prime Minister, should be considered hostile in the context of U.S. interests?

SECRETARY RICE: Well, I don't -- I really don't think Russia is hostile. I mean, we disagree on a number of issues. Some, we're trying to bridge, like missile defense, where I just don't think -- I think the Russians keep saying that they believe this is aimed at their deterrent; it can't possibly be a few interceptors in Poland and a couple of radars in the Czech Republic are not going to deal with thousands of Russian nuclear warheads. And I think the Russians understand that. So we just have to go right at it on issues like that.

We have really good cooperation on the six-party talks with North Korea. We even have reasonably -- you know, we have tactical differences on Iran, when to put forward a resolution, how much the resolution should say. But essentially, we've got pretty good cooperation on that issue. We have excellent cooperation on terrorism and nonproliferation policies, counter-proliferation policy. When it comes to the areas around the -- around Russia, the kind of former Soviet states, there, we have to -- we are trying to get the Russians to see that it isn't a zero-sum game. And we don't like some of their policies and some of the -- some of what they do in places like Georgia.

But I would not -- but we have, by the way, very good cooperation on the Middle East. I would not characterize it as hostile or even adversarial. It is certainly not the Soviet Union, where everything was a zero-sum game and the only thing that we had in common was we didn't want to annihilate each other, which is why the arms control treaty was the moment that everybody waited for. When the Secretary -- when the Secretary -- when the General Secretary of the Communist Party and the President of the United States got together, that was the moment everybody waited for because that was the only thing that we could possibly agree on. We have considerably broader areas of agreement, considerably broader areas of cooperation, and I think that's going to continue. But yes, we have some differences as Russia reasserts its interests. But I think it would be a mistake to turn that into a narrative of an overall adversarial relationship.

QUESTION: There is talk that behind the scenes or that there are aggressive efforts being made by the State Department to broker some kind of a new peace deal between Israel and the Palestinians. And what I'm curious about is given the weakness of the Abbas regime and the, you know, state of tension that exists between Abbas and Hamas and the relative political weakness of the Israeli regime, why this is -- why this is a good moment for there to be serious political negotiation between weak actors.

SECRETARY RICE: Well, the first answer is that there never seems to be a good time in the Middle East, so you have to decide whether or not you think that the -- because was it a better time when Yasser Arafat was in power? Yes, he was strong. He was a strongman of sorts. But he couldn't give up terror, as we know from the fact that he was accepting weapons from Iran when that shipment was intercepted. So was that a better time to make peace? I don't think so.

I actually think it's a better time to make peace when you have a real partner for the Israelis in Abu Mazen and his Prime Minister Salam Fayyad, who clearly have given up the notion of creating a Palestinian state out of violence and out of terror. Yes, it may be a fragile political system and yes there is Hamas out there, but there was always Hamas out there, by the way. There was always -- there were always the Palestinian rejectionists who were not a part of the --

QUESTION: Yeah, but they didn't control half of the Palestinian territory.

SECRETARY RICE: Yeah, but it is not unknown in international politics to have a government that does not control all of its territory. That's not unknown. And so it is -- you have to make your choices. I would rather have a Palestinian leadership that is committed to peace, committed to moderation, committed to tolerance, and see if you can move toward the establishment of a Palestinian state with them, given that I think that is where most Palestinians are, and then present that vision or that possibility and see who comes along and see if Hamas really wants to reject that at that point then a concrete manifestation of a Palestinian state.

So on the Israeli side you have a changed circumstance in Israel where really, thanks to Ariel Sharon, the Israeli political -- the breadth of the Israeli political leadership that supports a two-state solution, that has given up on a greater Israel, that talks about dividing the land, now includes not just Labour but Kadima, which of course was the Sharon split with the more conservative elements of Likud, to provide a really pretty broad agreement that a Palestinian state is in Israel's interest.

And I think for the first time you actually have the responsible Arab states who want to have a resolution to this crisis and who -- to this conflict and who are -- we will see, but who I believe are prepared to support a Palestinian leader that comes to agreement on a Palestinian state. That piece was not there for Camp David.

So in any complex situation you're going to have puts and takes. Some things are going to be better than they were and some things are going to be not as good as they were. But if I have my choice, I would rather have as broad -- the breadth of the Israeli commitment to a Palestinian state that you have now as opposed to in 2000, a leader in the Palestinian territories who even though he is not unnecessarily -- his government is fragile, is actually committed to peace based on nonviolence and a two-state solution, and Arabs who want to see that two-state solution come into being. I think that and the fact that there is the challenge of Iran that unites all of those interests may mean that this is a time when you can move the two-state solution forward.

QUESTION: Thank you very much.

SECRETARY RICE: Thank you. Oh, all right. Gee, thank you. That went fast.

2007/834

*Director of the Office of Management Policy, Rightsizing, and Innovation