Thank you, John [Chipman], for that introduction.
     And my thanks to the Kingdom of Bahrain and his majesty King Hamad for graciously hosting us once again. The United States and Bahrain have been friends for decades, and we look forward to working together for many more.
     Much has changed in this region since we met last year. Of course, my country has had our share of change. Some of you may have caught in passing news of the presidential election last month.
     I bring from President-elect Obama a message of continuity and commitment to our friends and partners in the region. Though the American political process is at times tumultuous – and our open and vigorous debates might seem to indicate deep divisions – I can assure you that a change in administration does not alter our fundamental interests, especially in the Middle East. Throughout my career in government – which began over 42 years ago – the security of the Gulf has been a central concern of every administration for which I have worked. That will not change, especially considering the great challenges we all face – from the need to defeat violent extremism to the necessity of forging a two-state solution between Israel and the Palestinians that will allow everyone in that region to live in peace and prosperity.
     I had thought that my remarks would be a valedictory and farewell, but that was not to be. The President-elect asked me to stay on as Secretary of Defense and, as you know, I accepted. I am honored to continue leading the Department of Defense, and am doing everything in my power to ensure a smooth transition. On that note, I should mention that more extensive planning has been done across the government in preparation for this transition than at any time I can remember – and I have worked for seven presidents, soon to be eight. So anyone who thought that the upcoming months might present opportunities to “test” the new administration would be sorely mistaken. President Obama and his national security team, myself included, will be ready to defend the interests of the United States and our friends and allies from the moment he takes office on January 20th.
     For the next few minutes, before taking your questions, I want to talk about some of the most pressing issues that the United States, and all the nations of the Gulf, will face in the years ahead.
     Let me start with Iraq. As you know, the United States and Iraq just concluded a Status of Forces agreement that calls for U.S. combat troops to be out of Iraqi cities by the end of June, and out of Iraq by the end of 2011. This agreement balances the interests of both countries as we see the emergence of a sovereign Iraq in full control of its territory – and it also marks an important step forward in the orderly drawdown of the American presence there.
     With the passage of the provincial elections law in September, the stage is set for January elections that we hope will draw more fully into the political process Iraqis who have been underrepresented in the government.
     All of this indicates, I believe, the dawn of a new era in Iraq – where a sovereign, independent, and representative government has finally taken root. It is a government that increasingly looks at problems from a national, not an ethnic, perspective – and whose solutions are increasingly driven by a nonviolent, if sometimes contentious, political process. It is also a government that desires to, and can, play an important and constructive role in this region.
     Of course, that depends in substantial measure on the nations represented here. For the better part of 50 years, Iraq has presented a strategic problem for its neighbors and for the region – inflicting suffering on its own people and on many others.
     I mention this because I am aware that, in international affairs, old wounds do not heal easily. If, however, you look closely at Iraq’s economic and political potential – about what it can offer the Middle East – you will see that it is in everyone’s strategic interest to support the new government and the people of Iraq in whatever way you can.
     First, on the diplomatic front. The past year has seen a number of high-profile diplomatic engagements – from meetings between heads of state, to exchanges of ambassadors, and more. I strongly encourage those nations that have not yet taken steps to restore full diplomatic relations with Iraq to do so. Iraq can only play a constructive role in this region if it is on an equal footing diplomatically – which also requires its government to take proactive steps, such as continuing to appoint its own ambassadors. Regional engagement also means that Iraq should be included in regional forums for economic and security cooperation, and considered for membership in Middle Eastern organizations, such as the Gulf Cooperation Council.
     Second, the economy. Business and trade are key to the growth of Iraq’s economy and therefore its long-term security and stability. Expanded trade will also benefit the region as a whole.
     • Those countries that have not forgiven Saddam-era debt should try to move forward as quickly as possible and follow through with pledges they have already made.
     • Iraq should continue to engage with regional multilateral financial institutions as both a contributor toward and recipient of training and development programs – including the Arab Monetary Fund, the Islamic Development Bank, and the Arab Fund for Economic and Social Development.
     Finally, there is the security situation. Earlier I mentioned that great progress has been made. But let me emphasize that it is the opinion of everyone – Americans, Iraqis, civilian leaders, and military commanders – that the gains are still reversible. There remain those who wish to see the government of Iraq fail – and those who will continue to kill innocent civilians to further this goal, as we saw just a few days ago in Kirkuk.
     I do not need to impress on the nations represented here the dangers posed by al Qaeda and its ideology. All of us have a stake in Iraq’s ongoing fight with extremists. Neighbors must lend support and increase their border-control efforts, especially those that have thus far failed to live up to pledges to tighten border crossings.
     Further, I applaud and encourage the nations of the region to continue programs that can dissuade potential recruits from joining extremist groups or rehabilitate those that have. On this point, I should note that much progress has been made with innovative programs to halt the tide of extremism – and offer alternatives to those who are most susceptible to the radical teachings of Al Qaeda. We must keep in mind that this is a fight that will require patience and resolve over many years, if not decades.
     Unfortunately, no discussion of the security situation in Iraq is complete without mentioning Iran, a country whose every move seems designed to create maximum anxiety in the international community.
     There is no doubt that Iran has been heavily engaged in trying to influence the development and direction of the Iraqi government – and has not been a good neighbor.  Much of that effort has been focused on training and supplying groups intent on undermining the government – more often than not through violence and attacks on Iraqi security forces and government installations and officials. Of course, the use of sub-national actors as Iranian proxies should be no surprise considering the financial and military support that Tehran has long given organizations like Hamas and Hezbollah, which also seek to undermine legitimate governments by violent means.
     Now, when it comes to Iran’s missile programs, we all know that pictures can be deceiving. Even so, it is clear that Iran has, this year, tested long-range missiles that can hit any country in the Middle East. At the same time, Iran has continued its pursuit of a nuclear program that is almost assuredly geared toward developing nuclear weapons. The last thing this region – or the world – needs is a nuclear arms race in the Middle East.
     So what can be done about Iran? For starters, the international community has come together and has increased pressure on Iran diplomatically and economically. I encourage you to implement fully the financial measures called for by the United Nations.
     But I think that you can be even more influential by carrying out many of the actions I mentioned earlier – by welcoming the new Iraq into the Arab fold. Your interests and Iraq’s are aligned on a number of levels: in the fight against Al Qaeda and terrorism; in the desire to develop a vibrant and resilient economy; in efforts to bridge the sectarian divides in this part of the world; and, of course, in the necessity to limit Iranian influence and meddling nationally and regionally – meddling that has already cost far too many lives.
     For other Arabs to withhold support and friendship because of the composition of Iraq’s government, or because of past aggressions by a defunct government, would be to increase the risk of the very outcome many in the region fear – just when Iraq is determining its future path at home and with its neighbors. Iraq wants to be your partner.  And, given the challenges in the Gulf, and the reality of Iran, you should wish to be theirs.
     Let me also say a few words about Afghanistan. As you know, the United States has focused more on Afghanistan in recent months and intends to add more resources and military forces next year.
     There is no doubt that it is tough fight in Afghanistan, but it is one that is critical to the Middle East as a whole. Al Qaeda and its ideology were incubated in the failed state of Afghanistan, and the extremists have largely returned their attention to that region in the wake of reversals in Iraq. It is a movement that began in that region, and it is a movement that must end there. As we have seen from attacks across the Middle East, the danger reaches far beyond the borders of Afghanistan or Pakistan.
     In the last few years, there has been a substantial increase in resources devoted to Afghanistan. There are 42 nations, hundreds of NGOs, universities, development banks, the United Nations, the European Union, NATO, and more – all working to help a nation beset by crushing poverty, a bumper opium crop, a ruthless and resilient insurgency, and violent extremists of many stripes, not the least of which is al Qaeda. The problem, of course, is that the operation is incredibly complex, and, with so many partners, it is hard to keep everyone on the same page. Nonetheless, I believe the upcoming year will see significant progress – the result of more resources, improved cooperation, and lessons learned over the past seven years.
     As with Iraq, the nations of the Middle East have much to offer the Afghan people. An enduring requirement is the ability to rapidly train, equip, and advise Afghan security forces – as we are doing to improve the size and quality of Afghanistan’s army.
     I was heartened by the pledges made at the Paris Support Conference earlier this year by Gulf nations. I would ask that all the countries here to look at what more they can do, especially with regard to:
     • Helping fund the Afghan army sustainment, as well as supporting the 2009 presidential elections;
     • Sending security forces or civilian experts to help build Afghan capacity. Some nations have contributed field hospitals, and other needs include more engineers and agricultural experts, medical and de-mining teams, a variety of military equipment, and more;
     • And, finally, ensuring that your governments are doing everything in their power to halt financing of the Taliban, whether through the legitimate banking system or illicitly through the drug trade. This should include strengthening counter-terrorism finance laws.
     The final topic I want to discuss is related to what I’ve already mentioned: regional security through venues like the Gulf Cooperation Council and the Gulf Security Dialogue.  While the GCC and the GSD cover a wide range of issues – from trade and energy infrastructure security to counter-terrorism and regional stability – I want to focus on two in particular: air and maritime security.
     Along with the traditional challenges facing our nations, there is a range of diverse, unconventional threats that transcend national borders. Some are ancient – such as piracy, ethnic strife, and poverty. Others are of more recent vintage: terrorist networks harnessing new technologies; weapons proliferation; environmental degradation; and the emergence of deadly and contagious diseases that can spread more rapidly than ever before in human history.
     What these challenges have in common is that they simply cannot be overcome by one, or even two countries, no matter how powerful or wealthy. They require multiple nations acting with uncommon unity.
     That is particularly true of air defenses and maritime security – areas where multi-national cooperation is not just a preference, but a necessity.
     The momentum from last year’s Gulf Security Dialogue meetings led to significant progress in air and missile defense throughout the Middle East. Several Gulf Cooperation Council nations are in the process of acquiring, or have expressed interest in, Shared Early Warning – near real-time information on air and missile attacks that would allow maximum time for a nation to defend itself.
     Additionally, all GCC countries have expressed a desire to obtain, or are already obtaining, active defense systems. These procurements demonstrate the GCC’s commitment to regional security and interoperability with each other and the United States.
     The need for increased maritime security – and potentially new and better means of cooperation – has been highlighted by the recent, high-profile acts of piracy off the coast of Somalia and the Gulf of Aden. As with terrorism, piracy is a problem that has serious international implications – and should be of particular concern to any nation that depends on the seas for commerce.
     Earlier this year, the United States Fifth Fleet, based here in Bahrain, established a Maritime Security Patrol Area in the Gulf of Aden and is leading an international coalition to keep shipping lanes safe. I thank Saudi Arabia for agreeing to support the effort and encourage other nations to do so.
     Given the vast coastal areas of Somalia and Kenya – more than one million square miles – there are limits to patrolling alone. More must be done.
     • Under the United Nations Security Council resolution passed last week, members of the international community must work together to aggressively pursue and deter piracy.
     • Companies and ships must be more vigilant about staying in recommended traffic corridors – and should consider increasing their security personnel and non-lethal defensive capabilities.
     • New efforts for countries represented here might include developing a maritime surface picture and standard operating procedures against seaborne threats beyond just piracy – such as terrorism, narcotics trafficking, and smuggling.
     All told, multinational efforts like these are encouraging. They bolster the defensive capabilities of everyone involved, while not diminishing pre-existing bilateral or multilateral relationships. They are, I believe, a model for how all of us can better address the challenges of the 21st century by fostering cooperation between and among the nations of the Gulf.
     Let me close with a personal observation. In preparing to – at some point – retire from government service, I have been pondering all I have seen since joining the United States government in 1966. There have been good times and bad times – great successes, and haunting failures. Yet, despite the challenges, no matter how tough the problems, I have always been amazed by the ability of many nations of the world to come together and get the big things right.
     For so long, many of the problems in this part of the world have seemed intractable. I believe, however, that there are many reasons for optimism – from an Iraq that is fighting its way out from the darkness of recent decades to the unprecedented cooperation between the nations of the Gulf as they – and we – face incredibly difficult and dangerous threats.
     As we look to the future, let us vow to continue and strengthen these activities – to cast aside old animosities and work together in the spirit of friendship – to forge, in the end, a better and brighter future for all of the peoples of the Middle East.
     Thank you.