WARTIME SUPPLEMENTAL

Hearing of the
Senate Committee on Appropriations

September 22, 2003

SEN. STEVENS: (Strikes gavel.) Mr. Ambassador, I notice you have your statement ready, and we have -- other senators are on their way. I'm going to call on you to make your statement first, and then senators will make their statements or ask questions after you're finished.

STATEMENT BY

AMBASSADOR L. PAUL BREMER III,
Administrator of the Coalition Provisional Authority

MR. BREMER: Thank you, Mr. Chairman, members of the committee, and thank you for this opportunity to discuss the president's supplemental request.

Mr. Chairman, before I begin, I would like to pay tribute to the men and women of our armed services. Leading a coalition, our armed forces delivered a military victory without precedent. In roughly three weeks, they liberated a country larger than Germany and Italy combined, and they did it with forces smaller than the Army of the Potomac. They did all this while absorbing and inflicting minimal casualties. Iraqis understood that we tried to spare the innocent. After the first days of the war, only those citizens of Baghdad living close to obvious targets feared our bombing.

Mr. Chairman, I know you and all Americans hate waking up to hear a newscast that begins: "Last night, another American soldier was killed in Iraq." Well, my day starts eight days (sic) earlier than yours, and I'm among the first to know of those deaths and --

SEN. STEVENS: Eight hours, I think, Mr. Ambassador.

MR. BREMER: Excuse me?

SEN. STEVENS: Eight hours. Eight hours earlier.

MR. BREMER: Yeah.

SEN. STEVENS: Yeah.

MR. BREMER: No one regrets those deaths more than I do. But these deaths, painful as they are, are not senseless. They are part of the price we pay for civilization, for a world that refuses to tolerate terrorism and genocide and weapons of mass destruction. Those who ambush coalition forces, like those responsible for this morning's suicide bombing in Baghdad and those who ambushed Governing Council member Akila al-Hashimi on Saturday, are trying to thwart constitutional and democratic government in Iraq. They are trying to create an environment of insecurity. Mr. Chairman, they are in a losing battle with history.

President Bush's vision, in contrast, provides for an Iraq made secure through the efforts of Iraqis. In addition to a more secure environment, the president's plan provides for an Iraqi economy based on sound economic principles, bolstered by a modern, reliable infrastructure. And finally, the president's plan provides for a democratic and sovereign Iraq at the earliest reasonable date.

If we fail to recreate Iraq with a sovereign democracy sustained by a solid economy, we will have provided the terrorists with an incredible advantage in their war against us.

Terrorists love state sponsors, countries that provide them with cash, arms, refuge; a protected place to rest and plan future operations. Saddam's Iraq was one of those countries. If terrorists cannot find a congenial state sponsor, they thrive in chaotic environments with little or no effective government. When militias, warlords and communities war with each other, terrorists are right at home. Think back on the Lebanon we knew in the 1980s.

Either outcome, or some combination of both, is possible in Iraq if we do not follow up on our military victory with the wherewithal to win the peace. The opposite is also true. Creating a sovereign, democratic, constitutional and prosperous Iraq deals a blow to terrorists. It gives the lie to those who describe us the enemies of Islam, enemies of the Arabs, or enemies of the poor. That is why the president's $87 billion request has to be seen as an important element in the global war on terrorism.

Mr. Chairman, our national experience teaches us how to consolidate a military victory. We didn't have that experience 85 years ago, when we emerged victorious from the First World War. Many had opposed that war; wished to shake the Old World dust off their boots and solve the problems here at home. We had spent and lent a lot of money. The victors celebrated their victory, mourned their dead, and demanded the money they were owed.

Mr. Chairman, we know the results of that policy. Extremism bred in a swamp of despair, bankruptcy and unpayable debts gave the world fascism in Italy and Nazism in Germany. The result was another world war.

After that conflict, we showed that we had learned that military victory must be followed by a program to secure the peace. In 1948, our "greatest generation" recognized that military victory was hollow if democracy was not reinforced against tyranny and terrorism. Democracy could not flourish unless Europe's devastated economies were rebuilt. That generation responded with the boldest, most generous, most productive act of statesmanship in the past century -- the Marshall Plan. Winston Churchill called it "the most unsordid act in history."

The Marshall Plan, enacted with overwhelming bipartisan support, set war-torn Europe on the path to freedom and prosperity which Europeans enjoy today. After a thousand years as a cockpit of war, Europe became the cradle of peace in just two generations.

The $20.3 billion in grants to Iraq the president seeks as part of this $87 billion supplemental, bespeak grandeur of vision equal to the one which created the free world at the end of the Second World War.

Iraqis, living in freedom with dignity, will set an example in this troubled region which no -- which so often spawns terrorism. A stable, peaceful, economically productive Iraq will serve America's interest by making America safer.

There are a few things I'd like to point out about this $87 billion request. No one part of this supplemental is dispensable, and no part is more important than the others. This is a carefully considered request.

This request is urgent, Mr. Chairman. The urgency of military operations is self-evident. The funds for non-military action in Iraq are equally urgent.

Most Iraqis welcomed us as liberators, and we glowed with pleasure at that welcome. Now the reality of foreign troops on the streets is starting to chafe. Some Iraqis are beginning to regard us as occupiers and not liberators. Some of this is inevitable, but faster progress on reconstruction will help.

Unless this supplemental passes quickly, Iraqis face an indefinite period with blackouts eight hours daily.

The link to the safety of our troops is indirect but very real. The people who ambush our troops are small in number and don't do so because they have undependable electrical supplies. However, the population's view of us is directly linked to their cooperation in hunting down those who attack us. Earlier progress gives us an edge against the terrorists.

We need to emulate the military practice of using overwhelming force in the beginning. Incrementalism and escalation are poor military practice, and they are a poor model for economic assistance.

This money will be spent with prudent transparency. Every contract of the $20 billion for Iraq will be competitively bid.

That the money be granted and not loaned, Mr. Chairman, is essential. Initially, offering assistance as loans seems attractive. But once again, we must examine the facts and the historical record.

Iraq today has almost $200 billion in debt and reparations hanging over it as a result of Saddam's economic incompetence and aggressive wars. Iraq is in no position to service its existing debt, let alone take on more. Mountains of unpayable debt contributed heavily to the instability that paved Hitler's path to war (sic) -- power. The giants of the post-war generation recognized this, and the Marshall Plan assistance was overwhelming in the form of grant aid.

Turning to the specifics of the supplemental request, the president's first priority is security -- security provided by Iraqis and to Iraqis. That security extends to our forces and changes Iraq from a logistics and planning base for terrorists into a bulwark against them.

The president's supplemental seeks $5.1 billion for three pillars of security. The first pillar is public safety. If Congress agrees to the president's request, we will spend just over $2 billion for police and police training, border enforcement, fire and civil defense, public safety training and a communications network to draw all of these together. Already, Mr. Chairman, 40,000 police are on duty throughout Iraq, and our plan will double this number in the next 18 months.

National defense forces are the second pillar of this security. The president seeks another $2 billion for a new three-division Iraqi army and a civil defense corps. The first battalion of the new Iraqi army will graduate on schedule October 4th. By next summer, Iraq will have 27 battalions trained.

The third pillar is a justice system to reign in the criminal gangs, revenge-seekers and others who prey on Iraqis every day and make them fear that they will never know the quiet enjoyment that so many of us take for granted. To fund this justice system, the president requests approximately $1 billion for technical assistance to investigate crimes against humanity, to provide security for witnesses, judges and prosecutors, and to construct prisons sufficient to house an additional 16,000 inmates.

This security assistance to Iraq benefits the United States in four ways: First, Iraqis will be effective. As talented and courageous as the coalition forces are, they can never replace an Iraqi policeman who knows his beat, knows his people, their customs, rhythms and language. Iraqis want Iraqis providing their security, and so do we.

Second, as these Iraqi security forces assume their duties, they replace coalition forces in the roles that generate frustration, friction and resentment, things like conducting searches, manning checkpoints, guarding installations.

Third, this frees up coalition forces for the mobile, sophisticated offensive operations against former regime loyalists and terrorists, for which they are best suited.

And finally, these new Iraqi forces reduce the overall security demands on coalition forces and speed the day when we can bring our troops home.

Now, security is the first and indispensable element of the president's plan for Iraq. It is not, however, by itself sufficient to ensure success, because a security system resting only on arms is a security system that will fail. Recreating Iraq as a nation at peace with itself and with the world, an Iraq that terrorists will flee rather than flock to, requires more than people with guns.

A good security system cannot persist on the knife edge of economic collapse. When Saddam scurried away from coalition forces, he left behind an economy ruined not by our attacks, but by decades of neglect, theft and mismanagement. Imagine the effect on the economy of operating without a budget for a quarter century. Saddam, who came to power in 1979, Mr. Chairman, never prepared a national budget. Ill-conceived and clumsily-executed policies left Iraq with an oil industry starved nearly to death by under-investment, thousands of miles of irrigation canals, so weed-clogged as to be almost useless, and an electrical system that can, at best, meet only two-thirds of demand.

Reflect, Mr. Chairman, if you will, on that last item. As millions of households, including my own, this past weeks discovered, it is almost impossible to live in the modern world without dependable electricity. Think of what we would be asking of Iraqs were we to suggest they fashion a new economy, a new democracy, while literally in the dark eight hours a day.

The Iraqis must refashion their economy. Saddam left them a Soviet-style command economy. That poor model has further hobbled -- was further hobbled by cronyism, theft and Pharaonic self-indulgence by Saddam and his intimates.

The good news is that important changes have already begun.

The Iraqi minister of finance yesterday announced a set of market- oriented policies that is among the world's boldest. These policies include a new central bank law, which grants the Iraqi Central Bank full legal independence, makes price stability the paramount policy objective, gives the Central Bank full control over monetary and exchange-rate policy, and broad authority to supervise Iraqi banks. This is rare enough anywhere in the world and unique in that region.

The Iraqi government council proposed and on Thursday, Mr. Chairman, I had the great joy to sign into law a program opening Iraq to foreign investment. Foreign firms may now own wholly open -- owned companies or buy 100 percent of Iraqi business. Under this law, foreign firms receive national treatment and have an unrestricted right to remit profits or capital.

Iraq's new tax system is admirably straightforward. The highest marginal tax rate, as announced by the minister of finance yesterday, on personal and corporate income tax is -- get this -- 15 percent, 1-5 percent.

Tariff policy is equally simple. There is a two-year reconstruction tariff of 5 percent on all but a few imports.

Foreign banks are free to enter Iraq and will receive equal treatment with Iraqi banks.

On October 15th, Iraq will get a new dinar, new currency, which will float against the world's currencies.

Iraq's pro-growth policies should bring real sustained growth and protect against something we've all seen and regretted in the past: economic assistance funds disappearing into a morass of poverty.

Mr. Chairman, the Iraqi government has put into place the legal procedures for encouraging a vibrant private sector, but those policies will come to nothing if Iraq must try to establish itself on an insufficient and unreliable electrical grid or in a security environment that puts a stick in the spokes of the wheel of commerce. Iraq, in short, cannot realize its potential to return quickly to the world stage as a responsible player without the services essential to modern society.

We have made significant progress restoring these essential services. The widely predicted humanitarian crisis did not occur. There was no major flow of refugees. All of Iraq's 240 hospitals and 90 percent of its health clinics are open today. There is adequate food, and there is no evidence of epidemic.

We have cleared thousands of miles of irrigation canals so that farmers in these areas have more water than they've had for a generation. Electrical service will reach prewar levels within a month.

But the remaining demands are vast, and that is why the president is requesting almost $15 billion for infrastructure programs in Iraq. Here are some of the main areas in which the president plans to use the supplemental to bring essential services to the Iraqi people: $5.7 billion for the electrical system; $2.1 billion for the oil infrastructure; $3.7 billion for potable water, sewer systems and related public works; $3.7 billion for water resources, transportation, telecommunications, housing and construction, health and private sector development.

Mr. Chairman, on another front, there is already good news. The democratization of Iraq, on which so much global attention is focused, is further advanced than many people realize. Encouraging a quick political transformation, we have laid out a clear seven-step process leading to sovereignty. Three of the seven necessary steps have already been completed.

First, an Iraqi Governing Council, the most broadly representative governing body in Iraq's history, took office in July. In August, the Governing Council took the second step by naming a preparatory committee to determine the mechanism for writing Iraq's new constitution. Earlier this month, the Governing Council appointed ministers to run the day-to-day affairs of Iraq. The fourth step will be writing a constitution which sets the framework for all that follows. This will occur after the Iraqi Governing Council decides how to act on the recommendations of the preparatory committee. This constitution, Mr. Chairman, will be written by Iraqis and for Iraqis. The fifth step -- the constitution will be ratified by the popular vote of the entire adult population. This will give Iraq its first popularly-approved constitution. Next, after the constitution is ratified, elections for a new government will be held. The seventh and final step comes after elections, when we transfer sovereignty from the Coalition Authority to the new government.

And Mr. Chairman, I mentioned that the Governing Council had appointed ministers, and it's my great pleasure to note for you and the members here the presence of two of the ministers of the new Iraqi government. I would like to introduce the minister of public works and municipalities, Nesreen Berwari, and the minister of electricity, which is the power industry, Mr. al-Samaraie.

They are here in Washington this week for meetings and discussions, and I consider it an honor that they would take the time to come up here and hear my opening statement. They are indicative of the quality of people in this new cabinet. Mr. Chairman, the cabinet has 25 members, 17 of whom have PhDs, which must make it one of the most -- best educated governments anywhere in the world. Extremely able group of people.

Mr. Chairman, that's our seven-step plan. Some suggest that we should move soon to give full sovereignty to an Iraqi government. I firmly believe that such haste would be a mistake. Iraq has spent a quarter-century under a dictatorship as absolute and abusive as that of Nazi Germany. As a result, political distortions and inequities permeate the fabric of political life. No appointed government, not even one as honest and dedicated as the Iraq Governing Council, can have the legitimacy necessary today to take on the difficult issue Iraqis face as they write their constitution and elect a government. The only path to full Iraqi sovereignty is through a written constitution ratified and followed by free democratic elections. Short-cutting the process, in my view, would be dangerous.

Mr. Chairman, members of the committee, as you examine the president's plan, I'm sure you will see that it is an integrated and thoughtful whole. Every part depends on every other part. As the Congress knows, sweeping political reforms cannot be separated from sweeping economic reforms. It is equally obvious that a population beleaguered by the threat of terrorism and endless insufficiencies in water, electricity and telephones finds it hard to concentrate on the virtues of a new constitution and market-oriented policies. The need to protect the coalition and populace alike against terrorists and common criminals is obvious and indispensable. This entire program requires the help of Congress. The United States must take the lead in restoring Iraq as a friend and democratic model. There is a donors conference in Madrid in late October. The United States must set the example for other countries of good will. Other nations who do not wish to see Iraq become a terror-supporting tyranny or a landscape of factions should join us. We set an example and work with other donors to avoid the near-anarchy in which terrorists would feel right at home.

When we launched military operations against Iraq, we assumed a great responsibility that extends beyond defeating Saddam's military. We cannot simply pat the Iraqis on the back, tell them they are lucky to be rid of Saddam, and ask them to go find their place in a global market to compete without the tools of competition. To do so would invite economic collapse followed by political extremism and a return to terrorism. If after coming this far, we turn our backs and let Iraq lapse into factional chaos, some new tyranny and terrorism, we will have committed a grave error. Now only will we have left the long-suffering Iraqi people to a future of danger and deprivation; we will have sown the dragon's teeth, which will sprout more terrorists and eventually cost more American lives.

You may think I exaggerate. I ask you to look at what happened in Afghanistan, another country which, after being debilitated by decades of war and mismanagement, become easy prey for the Taliban and al Qaeda. The reconstruction of Iraq may seem distant from American concerns today. Eight time zones and two continents separate the East Coast of the United States from Iraq.

The West Coast is effectively half a world away.

Two years ago, on September 11th, terrorists brought their threat home to us. From a faraway corner of the world, they showed us that we must fight terrorism globally.

Iraqis only seemed far away. Today Iraq is a focal point in our global war on terrorism. Failure there would strengthen the terrorists morally and materially. Success tells not just Iraqis, but the world that there is hope; that the future is not defined by tyranny on one side and terrorism on the other.

Mr. Chairman, members of the committee, we respectfully ask you to honor the president's supplemental request, which responds to urgent requirements. The administration and I look forward to working with you to achieve the vision of a sovereign, stable, prosperous and democratic Iraq at peace with us and with the world.

Mr. Chairman, I'd be happy to take your questions.

SEN. STEVENS: Well, thank you very much for your statement, Mr. Ambassador. And we thank you for bringing the Iraqi citizens with you. Perhaps we'll have a chance to visit with them later.

Now, this supplemental will be the subject of hearings more than any supplemental I'm aware of. And we've gone back and checked the history. In the past, we've had a supplemental request for Operation Desert Shield and Storm; we had only one hearing. That was true for Bosnia and Kosovo, too. The House and the Senate will conduct, I'm told, seven hearings regarding this supplemental, where administration officials will appear before the Congress. And, Ambassador Bremer, I'm informed that you will appear at six of those hearings. You're going to have a busy week.

MR. BREMER: Yes, sir.

SEN. STEVENS: I believe this supplemental is necessary to protect the lives of our people who are there now in Iraq. That includes our troops, as well as Americans who will be working there. We need to help rebuild their infrastructure, as you have said, and get the Iraqi people back to work. Mr. Ambassador, from my point of view, you will have my full support for this important task, and your colleagues in the Coalition Provisional Authority, known as CPA.

Liberation of the Iraqi people from the repressive rule of Saddam Hussein is no small feat, nor is the task of helping the Iraqi people craft a nation rooted in freedom, free markets, and the rule of law. With our help, America's help and leadership, the Iraqi people should become a stable nation with a promising future.

Last week, as you said, the administration sent us an $87 billion supplemental request, of which $71 billion is for Iraqi-related programs. Of that amount $20.3 billion is for activities under your jurisdiction.

That includes $5.1 billion for security-related programs, including costs necessary to stand up a new Iraqi army, 5.7 billion (dollars) for the electricity repair and reconstruction, and 2.1 billion (dollars) for repair of oil infrastructure and oil products. You expanded that in your statement.

The nexus between support for our troops and ongoing reconstruction efforts in Iraq, for me, is undeniable. The sooner a new Iraqi government is formed and effectively functions, the quicker our soldiers, sailors and all Americans can come home.

Throughout this week, staff on the Defense and Foreign Operations Subcommittees of this committee will continue to meet with relevant administration officials, including members of your CPA, to better understand the details and assumptions of your supplemental request. And I look forward to your further comments.

Through this hearing today, we are going to have a policy, if there's no objection, of recognizing each member, one from each side of the aisle, as we go down the line, for -- not to exceed eight minutes the first time around. And then we will continue along and as long as we can continue the hearing.

Senator Byrd.

SEN. ROBERT BYRD (D-WV): Now when you -- may I ask you a question without its being taken from my time?

SEN. STEVENS: Yes, sir.

SEN. BYRD: When you say eight minutes, does that include our opening statements, as well as our questions?

SEN. STEVENS: Yes, sir. Eight minutes, which each member can use as they wish as we go through the first round. And then we'll have -- we'll go through another round, as long as we can.

SEN. BYRD: Well, Mr. Chairman, it'll take me more than eight minutes for my opening -- for my statement. Could the chairman and the ranking member have some time for a statement, at least those two members, to begin with, without its being taken out of the time which we need for questions?

(Off-mike conferral.)

SEN. STEVENS: Well, Senator, I think -- they tell me I used four minutes. I'll let you have the rest of my statement -- my time.

SEN. BYRD: Well, now, Mr. Chairman, you say you'll let me have -- I'm here on behalf, as you are, of millions of Americans. This is a very serious matter that we are going to be studying. It seems to me that our time is going to be extremely limited if we pursue this, as I envision it, under the chairman's proposal.

SEN. STEVENS: Senator --

SEN. BYRD: I'm not trying to be argumentative. I have a statement which will require at least eight minutes. I'll try to move through it. But also, if I'm only to be allowed eight minutes, then I'll use the full eight minutes on my statement, without getting to the questions which I have.

SEN. STEVENS: Senator, there are 29 members of this committee. If we give each one of them eight minutes, it will be almost 3 hours -- a little over three hours before we get back to me.

SEN. BYRD: I understand. Now, how many sessions are we going to have in this committee?

SEN. STEVENS: We're going to have this hearing today and we're going to have another hearing on Wednesday, and maybe one on Thursday. We're considering having an additional meeting on the Afghanistan portion of this, but there are several portions of this supplemental. The Defense one is the largest one. It will be the subject of the Wednesday hearing. And hopefully, we can go to other aspects. I've not discussed with members of the committee what other aspects they might -- we're thinking perhaps of having one portion of our hearing cover the question that's been raised by Ambassador Bremer, and that's the question of the contracts for reconstruction, which, as he indicated, will be subject to competition. I think that's a matter that should be explored.

But we're going to have as much time as we possibly can. As I said --

SEN. BYRD: (Inaudible) -- second round today --

SEN. STEVENS: -- Senator Bremer -- Ambassador Bremer has scheduled six separate hearings, and as I understand, he is also returning to Iraq at the last part of the week, with the House Appropriations Committee. So, we've got a lot to do in a short period of time.

But Senator, I'm not trying to be arbitrary, either. I do believe I've been told that every member of the committee will be here today. And each one of them is entitled some time, though in order to be entitled to some time, we have to limit all of us, at least as we go through the rounds.

But Senator, I agree we would not take this time out of your statement. I'd be glad to recognize you, and I hope that you'll make your statement as short as you can. And I certainly will allot you the balance of my time.

SEN. BYRD: Well, Mr. Chairman, does the time used by the witnesses come out of the eight minutes when we get to our questions?

SEN. STEVENS: Yes, it does, sir.

SEN. BYRD: You see, that's not the way we ought to do things. And I'm not blaming you for that. That's the way we're doing things around here anymore. But it used to be that we opened a line of questions, and then we were permitted to pursue that line for much more time than we now are allowed to do.

And I'm not faulting you for that. We have the same situation in the Armed Services Committee. But this is --

SEN. STEVENS: See, Senator, I remember when I first came here, new senators were seen and not heard. We didn't get a chance to ask questions until the senior members had exhausted their questions. That policy changed about midway through my 35 years, and I think we're conducting this hearing in a manner that you conducted yours, sir, when you were chairman.

SEN. BYRD: Well, I don't remember having any hearings on a matter of this kind. And we had five days of hearings when I conducted this -- when I was chairman of this committee last -- I believe it was last -- at the beginning of last year. We had five days of hearings. You participated in those hearings. I'm simply saying that we're going to need more time than it appears is going to be provided.

SEN. STEVENS: The senator's correct. We did have hearings on the subject of the new Department of Homeland Security. It was a brand new issue, and I did sit through all those hearings with you. There's no question about it.

This is on the question of a supplemental appropriations bill, which the president and Ambassador Bremer said is absolutely necessary that we get this matter settled as quickly as possible, and there are other committees involved, both in the Senate and the House.

So all I can do is be as fair as I can, Senator.

SEN. BYRD: Well, Mr. Chairman, you are always fair. No question about that. But this is a different matter from any that I've dealt with in quite a while, and it takes more time -- it's going -- it really requires more time than it appears is going to be given.

You and I can talk about this to some extent after the hearing. But I hope that we'll have more days of hearings, because it's obvious that with an $87 billion request, that's a thousand dollars for each Iraqi, man, woman, boy and girl. That's a lot of money. And I hear my friends on the other side of the aisle saying, "This is your money," to the people, you see, when we have these tax cuts. "It's your money." Well, here again, it's your money. And I'm just arguing that we really need more time. And I hope you'll think about it.

So I'll begin then.

SEN. STEVENS: Yes, sir.

SEN. BYRD: Mr. Chairman, I thank Chairman Stevens for convening these hearings, and I thank Mr. Bremer for his testimony today.

Mr. Bremer, you have a tough job. You've been handed an extremely difficult job under critical and dangerous circumstances. Now, I've been following you in the press as best I could. I think that you're doing the best you can do with what you have. And you have a terrible situation on your hands. It means life and death every day for you and our soldiers.

And so, the questions I ask are not going to be -- intended to be personal or unfriendly, but the chairman talks about his 35 years here. I've been in this Congress -- this is my 51st year. And there are people -- the people who are most affected can't be here today to ask questions -- our children and our grandchildren. They can't be here to ask questions. The American people out there, the voters, cannot be here today to ask questions. That's our responsibility.

We passed a supplemental earlier this year. We didn't have extensive hearings on that supplemental. We passed a bill providing for $40 billion within three days after September 11. No questions asked.

Now, this is a lot of money, and I understand the need to expedite the action. But this does not shield us from the responsibility to ask questions. We haven't had -- this administration, I have to say, has not been -- has not wanted to ask questions -- not wanted to answer questions. This is a bill -- this is a request in which I think we have to ask the questions. And so, I hope you'll accept my questions in the spirit in which I ask them. I don't mean to be contentious or combative, but the questions need to be asked. And so, I recognize your problems as best I can, as looking through a glass darkly. And I appreciate your coming here.

The president's request for an additional $87 billion for the military and for the reconstruction of Iraq is eye-popping -- E-Y-E -- eye-popping. This request comes at a time when the American people are expressing serious reservations about the president's go-it-alone occupation of Iraq. The American people are asking questions about the reconstruction plan. They are questioning the wisdom of a policy that has our soldiers serving as sitting ducks in an Iraqi shooting gallery.

The committee has before it the president's request for $87 billion for Iraq. The request arrived late Wednesday, without detailed justification or explanation. That's not your problem -- that's not your fault. That explanation arrived over the weekend, and we're gathered here today with a committee vote on the supplemental expected as early as September 30th.

Is that what you're proposing, Mr. Chairman? A markup by September 30th?

SEN. STEVENS: I would hope to have it passed before the recess, yes, sir.

SEN. BYRD: I hope that we will not be in such a rush. This is a complicated, controversial and incredibly costly request that has enormous, long-range funding and policy implications. It's not something that this committee should rubberstamp. We ought to examine this request line by line and see if the high-minded rhetoric coming out of the White House matches its proposal.

I believe that two days or three days, or whatever the chairman has said, are not sufficient, and I hope that the committee will take more time to consider this request. We need expert witnesses and we need independent analyses to advise us on these matters.

In his $87 billion request, the president asks future generations of Americans to pay for his war in Iraq. By refusing to pay for this war today and, instead, exacerbating the largest deficit in the nation's history, President Bush is forcing those young Americans who are now in kindergarten to pick up the tab for his war in Iraq.

If the president's $87 billion request is approved, the deficit for fiscal year 2004 could reach $535 billion. That assumes spending the $164 billion Social Security surplus in the streets of Baghdad. Such a deficit totals nearly $2,400 for every person in this country; almost $10,000 for every family of four.

Just a few short years ago, we had eliminated annual deficits and were on a glide path to wiping out the debt by 2008. But that financial security has been destroyed in this administration's fiscal "shock and awe" campaign. The president's unsubstantiated justification for his war in Iraq has left the nation questioning the White House's current efforts.

The administration was wrong, it seems, on its claims of an Iraqi broad-scale advanced weapons of mass destruction capability.

It's not your fault.

The administration was wrong on its claims that American soldiers would be welcomed with open arms as liberators. And the administration remains wrong in its refusal to share authority and responsibility for the restoration of Iraq with the rest of the world.

We obviously cannot accomplish this task alone. I think that's becoming more and more clear every day. Yet that is exactly what we continue to attempt. It is no wonder that the country is losing confidence and patience in the president's Iraqi program.

Many of us on this panel have seen what a loss of public confidence and trust can do to a war effort, to a government and indeed to the fabric of a nation. I saw it in Vietnam. Have we not learned the lessons of our own past?

Despite the best hopes for an Iraqi democracy, we have begun to realize the worst fears of occupation: hit-and-run murders of American soldiers, guerrilla tactics, sabotage. We have forged a cauldron of contempt for America that may poison the efforts of peace throughout the Middle East and indeed the world.

Winning the war has proved, by comparison, a far easier task than winning the peace. We had the weapons to win the war, but we have not shown the wisdom to win the peace.

What has become tragically clear is that the United States has no strong plan for reconstruction and no clear concept for maintaining order. America is stumbling through the dark, hoping by luck to find the lighted path to peace and stability in Iraq.

The Bush administration's single-minded focus on Iraq has ignored, in large respect, the terrorist threat that produced the attack of September 11, 2001. The leader of that attack on our shores has not been found. Eyes have been trained solely on Iraq while we remain vulnerable here at home.

Many of us on this committee have tried to better protect the American people from future terrorist attack, but time after time, the administration has actively opposed efforts to boost homeland security funds. In this request, however, the Bush administration seems very willing to back Iraqi homeland security dollars. The administration fought against a $200 million boost for America's police officers, firefighters and paramedics, but Iraqi first responders would get $290 million through this supplemental.

Last Wednesday I, along with representatives David Obey and Martin Sabo, offered an amendment to the homeland security appropriations conference report that would have provided $125 million to hire 1,300 Customs inspectors on America's borders.

That amendment was rejected as too expensive. Yet on the exact same day, the president sent Congress this emergency request for $150 million for 5,350 border inspections personnel, including 2,500 customs inspectors, in Iraq.

The cost of the president's war in Iraq grows by the day. And even when the supplemental requests stop and our soldiers do finally come home, the American people will continue to pay for this war for years to come.

In essence, American faces two wars at once: the war brought against us with the attacks of September 11, 2001 -- that's one war; and the war that we brought to Iraq on March 19, 2003. The Iraqi war was the wrong war for the wrong reasons against the wrong enemy. It is a tragedy of American foreign policy that the sympathy which most of the world had for the United States after 9/11 has been squandered by the Bush administration's head-long pursuit of an unnecessary preemptive war against a sovereign country, a country which posed no imminent and direct threat to our national security. I don't blame you for that.

Mr. Bremer, you are the president's point man for Iraqi reconstruction. You have been placed in an almost untenable position by a flawed policy and a nondescript plan that some have called "compassionate colonialism."

I believe that the best approach for this administration is to garner more dollars, more men, and more expertise from the United Nations. It is painfully obvious that despite the best efforts of Mr. Bremer and those in charge of the American occupation of Iraq, we cannot continue on this path alone. We ought to seek help before we completely alienate the international community and give Iraq a future of chaos instead of stability.

Five months ago, Congress provided more than $70 billion in funds for military and reconstruction activities in Iraq and Afghanistan. Now we learn that the administration needs far more money for Iraq far sooner than it either anticipated or admitted. When it came to the president's last supplemental bill for Iraq, Congress could not get straight answers from the administration on the expected cost or the expected duration of the Iraq operation. We cannot afford to settle for evasions this time around.

Again, Mr. Chairman, I thank you for calling these hearings, and I look forward to the testimony from the witnesses.

SEN. STEVENS: Thank you very much, Senator. Senator Domenici.

SEN. PETE DOMENICI (R-NM): Thank you very much, Mr. Chairman.

First of all, the last I remember, the vote in the United States Senate for this war was 77 senators "aye" and 23 "no." I would think that we could at least say that the Congress of the United States declared this war. And it's not the president's war, it's our war.

Now, I have so many things that I disagree with the distinguished senator from West Virginia on, but I am going to -- in fact, I might say I disagree with his entire statement. And let me leave it at that. I think it's -- it has things in it that aren't true, it has accusations in it that are invalid. But I had another reason for coming today, and I will not let the distinguished Senator Byrd distract me from what I wanted to establish here today with you.

(To Mr. Bremer.) First, let me say your statement is a superb statement. As a matter of fact, the more I think about it, the more I perceive it to be a brilliant analysis of the current situation. Secondly, I believe it sets forth in great detail what you are going to use the money for. And thirdly, I am pleased that you choose to mention a plan, the Marshall Plan. And I come here today because I want to ask you -- and this is all asked in terms of trying to be positive, trying to be helpful and trying to answer what my constituents want to know about Iraq. They're not so interested in many of Senator Byrd's attacks, but they would like to know if we have a plan. And I have to answer that more often than anything else: Does the administration have a plan?

Now, Mr. Ambassador, today in your statement, you mentioned a great American achievement called the Marshall Plan. I read about it, only because of this. I am thoroughly amazed. I thought it must have been something huge and it must have lasted forever. It was $13 billion and lasted four years, and it was -- it is thought to be the reconstruction -- that's somewhere around 150 (billion dollars) today, Mr. Leader -- and it is seen as the instrument for the revitalization of 21 countries who are our friends.

Now, you talked today about specifics, but I want to ask you: Do you have a definite plan, with a timetable, with guideposts, for the rehabilitation of Iraq's economy, infrastructure and the turning over to the country, with its full political strength?

Do you have one that is -- that can be viewed by the American people, can be presented as a plan to the Congress, to the public, so that we will know what it is and how you are going to implement it?

Can I stop there and ask you to please answer that question?

MR. BREMER: Thank you, Senator. We do have a plan. The plan addresses four major areas: restoring security, restoring essential services, giving Iraq a vibrant private economy, and transforming Iraq's political structure to provide for a sovereign, democratic Iraq. Each of those four areas is then enlightened by a serious of particular steps.

And to answer your question, there are timelines and metrics on every single one of those steps. The plan, which I released -- the latest version was released here to Congress on July 23rd, the plan runs now to, I think, some 98 pages, and has some 300 or 400 individual tasks, each of which has a metric to measure over the next year to see how we're doing. It's a very comprehensive plan.

SEN. DOMENICI: Yeah. Mr. Ambassador, is that plan a plan which is going to be followed and which -- is it transparent? Can we see it? Can it be viewed and understood?

MR. BREMER: Yes. The answer is yes to all those questions, Senator. I think I have a copy of it with me here, but -- and I'd be happy to provide copies again to the committee. It is an unclassified plan. It's available to anybody on our website and can be read and studied by people and used however they wish.

I will say this, that in the kind of circumstances we're in, which is a -- obviously a rather fluid, complicated situation, we have to be flexible about the plan. We have -- my motto is: Strategic clarity and tactical flexibility. We've got to be clear where we want to get in all four of those areas, we've got to be clear about the end state we want, and we have to be flexible how we get there. But that plan drives our work every day in Baghdad.

SEN. DOMENICI: I'm not looking for a plan that cannot be changed.

MR. BREMER: Clearly.

SEN. DOMENICI: I mean, obviously --

MR. BREMER: This is the plan, Senator. It's here.

SEN. DOMENICI: That's it?

MR. BREMER: Yeah.

SEN. DOMENICI: I wonder if there's some way that you might, when you leave here, ask some of your experts to reduce that plan to some simple propositions that can be presented to a committee like ours, where you say it's four parts; here's the part on the political and here's the start, and here's how it goes. Here's the part on economic.

Could you do that, do you think?

MR. BREMER: That's an excellent idea, Senator. We'll do that.

SEN. DOMENICI: I think you should have it ready the next time you testify, and it should be put up there where people can ask you questions from it. That's too cumbersome and too difficult for us.

Now, it has been said that we intend to do this seeking help from no one. Is that true?

MR. BREMER: No, sir.

This is already a rather broad international effort. Sixty-one countries are already -- have already pledged to the reconstruction of Iraq. The troops of 30 nations are already on the ground fighting alongside our soldiers. And I have on my staff representatives from 25 other nations. It's already an international operation.

SEN. DOMENICI: Aren't we about to or have we just completed a mechanism for an international bank that will handle the international banking transactions of Iraq? And did not somebody named Peter McPherson leave Michigan State University or Michigan and come to help you with that?B. BREMER: Yes. Mr McPherson's been my top economic adviser the last four months. He's just finished his tour. He was instrumental in putting together the proposal for a trade bank to finance imports into Iraq that you just mentioned.

SEN. DOMENICI: And what would be the purpose of a trade bank?B. BREMER: The purpose of that bank is to provide finance for Iraqis who wish to import materials -- could be a General Electric or a Siemens engine of some kind -- for which they need trade credit.

SEN. DOMENICI: Now, most countries immediately after a war have trouble with banking. This country already has a banking system, does it not?B. BREMER: After a sort. It has two state-owned banks which ran rather on Soviet style and therefore were not really banks as much as mechanisms to push money to favored people in the economy. We do have them reopened now. Most of their branches are open, so we do begin to get some activity. But as I said in my statement, a more important element is that the minister of finance announced yesterday that we're going to allow international banks to come and compete. And that will give us a real modern banking system.

SEN. DOMENICI: But are you not going to have a central banking system with --B. BREMER: Yes, sir.

SEN. DOMENICI: -- central monetary system?B. BREMER: Yes, sir. We established the central bank as the first independent central bank in Iraq's history in July.

SEN. DOMENICI: And that exists already?B. BREMER: That exists, yes, sir. That's up and running.

SEN. DOMENICI: What is it modeled after?B. BREMER: It's really modeled more or less after the Federal Reserve here.

SEN. DOMENICI: Right. And -- my time up? Sorry, Mr. Chairman. Excuse me. My time is up.

SEN. STEVENS: Yes, sir. Thank you very much, Senator.

SEN. DOMENICI: Thank you.

SEN. STEVENS: Senator Domenici (sic). Pardon me, Senator Inouye. You're Senator Domenici. Senator Inouye.

SEN. DANIEL INOUYE (D-HI): Thank you very much. I thank you very much, Mr. Ambassador, for your statement. In listening to your statement, sir, you mentioned the words "coalition forces" seven times. How many troops are in the coalition forces?B. BREMER: I think as of today, it's about 16,000.

SEN. INOUYE: Of that number, the United States is how many?B. BREMER: Oh, I'm sorry. I thought you were talking about the non-American. The total number is about 160,000, of which all but 16,000 are American. I may be off by a couple of thousand, because the numbers change from day to day, and I've been away from Baghdad for two days.

SEN. INOUYE: And there are 31 non-American countries there?B. BREMER: That's right.

SEN. INOUYE: That includes the British?B. BREMER: That's right.

SEN. INOUYE: With how many?B. BREMER: The British have about 8,000, I think, Senator.

SEN. INOUYE: And the next largest group?B. BREMER: Next largest group would probably be the Poles, who are heading a multinational division based in -- based south of Baghdad. They have, I think, a reinforced brigade, probably 3- to 4,000.

SEN. INOUYE: What about the others, the small ones? There must be small ones.

MR. BREMER: Well, the numbers depend. There is a Spanish-led brigade as part of the Polish division, which has battalion-level troops from countries like El Salvador, Honduras and Nicaragua. But there -- I mean, I could submit for the record or I could have the Pentagon submit for the record the full list, Senator. I just don't have it at (sic) the top of my head.

SEN. INOUYE: I would like to see that, because I've never seen this.

MR. BREMER: Okay.

SEN. INOUYE: When one speaks of the coalition forces, you get an impression of huge armies there. But I would gather from this that there are some countries that have provided what, a hundred troops?

MR. BREMER: Well, there will be some with company level. That's right.

SEN. INOUYE: Now you spoke of 60-plus countries that have provided aid for reconstruction.

MR. BREMER: Yes, sir.

SEN. INOUYE: What is the total amount that you are anticipating from all sources?

MR. BREMER: It's a bit hard to tell right now. Those 61 countries, according to our information, have pledged just under $1.5 billion. As I mentioned in my statement, we are working with the World Bank and the U.N. for a donors' conference in Madrid at the end of next month. And I think that will be the point at which we hopefully will see some substantial contributions by other countries and by international financial institutions.

SEN. INOUYE: We will be providing in this bill roughly 20 billion (dollars) for reconstruction?

MR. BREMER: Yes, sir.

SEN. INOUYE: In this $87 billion, do we anticipate assistance from other countries --

MR. BREMER: Yes. The --

SEN. INOUYE: -- or is this all American?

MR. BREMER: Well, the 87 billion (dollars), of course, is all American. The World Bank has just about completed an assessment of the needs of Iraqi economy. They judge that the Iraqi economy needs something between $60 (billion) and $70 billion in the next four to five years. Our 20 billion is part of that needed 60 to 70 billion (dollars).

SEN. INOUYE: So the heavy load at this moment in personnel and money is borne by the United States?

MR. BREMER: That's correct.

SEN. INOUYE: Now I gather from reading the press that much work has been done. As you've pointed out, schools are open, hospitals are open. The water is running.

We have electricity for 16 hours a day, et cetera, and oil seems to be pumping. Who has done that work?

MR. BREMER: Well, that work has been done by Iraqis, often financed -- almost always financed by the Coalition Provisional Authority, using in some cases appropriated funds that the Congress appropriated earlier this year. And in other cases -- in fact, now the majority of the funds come from Iraqi sources, Iraqi oil revenues, frozen assets and so forth.

SEN. INOUYE: Do we have -- this is a question that is asked of me quite often -- do we have major American corporations involved in the reconstruction?

MR. BREMER: Yes, we've had a number of contracts. I think the total now is 92 contracts have been let. And under U.S. law the contract, the prime contractor in those cases must be an American corporation.

SEN. INOUYE: How much are the contracts worth?

MR. BREMER: I would have to -- I would have to get back to you, but they are certainly worth 2.4 billion, because that's the amount that was appropriated. And then there will be other contracts that we have let using Iraqi funds that will have gone to American companies also. But I would have to get back to you with a precise number, senator. It's certainly at least 2.4 billion.

SEN. INOUYE: How are the contractors selected?

MR. BREMER: Contractors are selected on an open and fair bidding process, consistent with U.S. law.

SEN. INOUYE: Were we prepared for the terrorism and guerrilla activities that are now occurring? Did we anticipate that when the president announced the fight was over?

MR. BREMER: I think we anticipated that there would be resistance by remnants of the former regime. The degree to which we are now threatened by terrorists I think has been an unwelcomed surprise to some of us. You will recall that at the beginning of the war we attacked an Ansar al Islam base in the north of Iraq. We killed quite a few of the terrorists, but a number of them escaped into Iran. Those terrorists have since infiltrated back into Iraq, and now there are scores of them in Iraq, many of them in Baghdad, who pose a threat that I think is important to both the coalition and to the Iraqi people, as we have seen in the terrorist attacks, including the one today.

SEN. INOUYE: Would this be unfair to say, that we should have learned something in Afghanistan that there the war never ends?

MR. BREMER: Well, I'm not enough familiar with the precise circumstances in Afghanistan to make a comparison, senator, but I think it is clear that we have got to now continue the process we have started of imposing a sense of security in Iraq, and that the key to that, as I've suggested, is to get Iraqis more involved in it. And I think we will find more success as we get Iraqis more involved in it.

SEN. INOUYE: Some of my colleagues have been discussing the possibility of dividing this $87 billion in two parts, military and reconstruction. What would be the effect or the impact if this Congress passed the military portion, the 50-plus billion, and left the remaining 20-plus (billion dollars) for debate, awaiting the president's presentation of his case before the United Nations?

MR. BREMER: Well, senator, as I suggested in my opening remarks, I think this $87 billion is an integral part. We cannot secure security in Iraq in the long run. We cannot find a path to withdraw our troops there unless we can provide Iraq and Iraqis with the essential economic infrastructure which will give them a sense of security and let them move forward. And, as was noted, five billion of the 20 billion dollars is directly related to security, to the new Iraqi army, to the police, to the justice system. Those are inseparable, it seems to me, from the security of our forces and providing security there. So I think it would be -- of course the Senate should have whatever debate it needs to have on the supplemental, but I think it would be a mistake to separate parts of these out. This is extremely urgent. We need to get this $20 billion going quickly.

SEN. INOUYE: I notice my time is up. I thank you, Mr. Ambassador.

SEN. STEVENS: Thank you very much, senator. Senator Bennett?

SEN. BENNETT: Thank you, Mr. Chairman. Ambassador Bremer, thank you for your appearance here and for the clarity of your statement. Reference has been made to the Marshall Plan. I think that's an appropriate reference, and I would make this comment in response to earlier comments that were made in the committee. At the head of the Second World War, our national debt stood 150 percent of GDP. In other words, the national debt was half again larger than the total amount of goods and services produced in the United States. Today the national debt owed to the public is 38 percent of GDP. We are not endangering our children and our grandchildren financially with an $87 billion supplemental. I know $87 billion sounds huge, compared to 15 billion or 13 billion for the Marshall Plan, but I also remember when you could buy a decent lunch for 35 cents, and you can't do that today.

So in constant dollars, measured as a percentage of GDP, the point I would make is that this is not a terrifying amount of money that you have asked for.

Second, I would point out that the Marshall Plan began in 1948. The war ended in 1945. We cannot afford to wait three years to deal with the economic and infrastructure reconstruction of Iraq, as was done in Europe. So I applaud you on the speed with which you have moved to get this job done much more rapidly than was done in a previous circumstance.

Senator Burns had to leave. He handed me a note as he left and asked me to raise this issue on his behalf, which I am happy to do. Senator Burns, as you know, is very much concerned with telecommunications issues in the Senate Commerce Committee, and he believes strongly that the ability to communicate will be a cornerstone of the reconstruction. He has been trying to find a name of someone on your staff with whom he can communicate on this issue. And on his behalf I would ask you to provide that name to Senator Burns. He points out there are $322 million for telecom and postal corporation internal communication. He would like more information about how that 322 million would be used. And, again, the name of someone on your staff with whom we could talk. Could you respond to that?

MR. BREMER: Yes, I will get him a name this afternoon.

SEN. BENNETT: Do you agree that telecommunications and postal service is an essential part of this?

MR. BREMER: Absolutely. Iraq needs its economy brought quickly into the 21st century, and we are working already to restore the telecommunications system that existed before the fiberoptic system, and we are trying to get a mobile cellular system up. But it's quite clear that if Iraq is going to have a modern business -- and we hope it will -- a vibrant private sector -- and we hope it will -- we are going to have to spend several hundred million dollars on putting together a modern telecommunications system. It's a vital part, as you know, of this proposal.

SEN. BENNETT: I applaud the four statements that you are -- or the four areas that you are concentrating on, and I agree with the priority -- security first, and then essential services, working to get the economy under control, and then ultimately the political structure that will preserve these things.

One of the statements that have been made -- one of the accusations that has been made with respect to this is that we are doing things in Iraq that need to be done in the United States, and why are we spending money to build schools and pave roads and do all these wonderful things in Iraq, when we need more schools and roads, et cetera, in the United States? As I look through your presentation, there is none of that. You are not talking about building schools or providing anything that might be considered above the very basic survival kinds of levels. We have just gone through the experience with the hurricane, and four million people out of power, and we are focusing in this committee, as I am sure emergency monies come through, and the speed with which we get back to a certain base line. As I read your plan, you are talking about establishing a base line. You are not talking about constructing anything on top of that that might be something that the Iraqis themselves could construct. Do I have it correct in my examination here?

MR. BREMER: Yes, senator. The main thrust of what we are trying to do here is get the fundamental preconditions, the economic and essential service preconditions, that will allow Iraq to create a vibrant private sector which can then pay for itself. And I should say that if one looks forward in the budgeting process our estimate is by 2005 Iraq's oil revenues should be more than sufficient to pay for the Iraqi government and provide an extra amount that could be used for capital investment in other areas, either more electricity or more schools. It's also the case that we think the donors conference will probably focus on some of the things you just mentioned -- education, health care and so forth. So we have tried to focus on the essential services.

SEN. BENNETT: But we are not trying to do anything in Iraq other than to provide simply the absolute base line plain-vanilla kinds of security and services that are necessary, and then we look to the Iraqis to build beyond that?

MR. BREMER: The Iraqis and the international community.

SEN. BENNETT: The international community. I held a hearing as chairman of the Joint Economic Committee on this issue of the cost of reconstruction of Iraq, and in that hearing discovered something that I had not known before: Iraq has fertile soil and Iraq has water, and prior to Saddam Hussein's incredible mismanagement Iraq was a net exporter of food in the region. I had not realized that.

MR. BREMER: Right.

SEN. BENNETT: I'm concerned that a single product economy is a shaky economy. As you look down the road, are you looking at things that can be done, and does your plan help provide a base line for things that can be done by the Iraqis to build an economy based on something other than total reliance on oil, specifically agriculture? To have a net exporter of food in that region would be a very significant thing.

MR. BREMER: Yes, senator, it's a good point. Many people when they think about Iraq's wealth think only about the oil. But the fact is it has great water and very fertile soil -- when the water is put together with the soil, it was after all the fertile crescent, and it was an exporter of agriculture, and there's no reason why it can't be. We are spending something like $900 million on -- particularly on the irrigation, which is the main problem -- so that we can put that agriculture back on its feet as an export earner and as a new source of revenue. I think there are other sources of revenue, which are obvious -- they are taxation, and in the end tourism. But he focus here is on agriculture, about $900 million.

SEN. BENNETT: Thank you very much. I have one quick final comment, Mr. Chairman. I remember in this Congress when we approved an action in Haiti, went into as it now turns out to replace a brutal dictator, much beloved with American conservatives, with a brutal dictator much beloved of American liberals. (Laughter.) We turned the reconstruction responsibility over to the United Nations and left, and the people of Haiti are now worse off economically and politically than before we went in. We do not want another Haiti in Iraq.

SEN. STEVENS: Senator Leahy.

SEN. LEAHY: Thank you, Mr. Chairman. And I also welcome the ambassador. After the president, he probably has the most difficult job these days in the federal government, and he's doing it under very dangerous and difficult conditions. I want to thank you, ambassador, for your office, and OMB for the detailed materials you sent up with the supplemental request. You mention your July 23rd plan. I'd ask you to send a copy of that to the Congress, so that we can see what it is too, please. I'll assume that's a yes. And you may want to double-check your answers to Senator Inouye's question about the first $2.4 billion being in open and competitive bids. I'm not sure that's accurate. But if you --

MR. BREMER: I'm sorry, no, I can correct -- there was one bid that was not open, that is correct, before the war. That is correct. But I was answering the question on the future of the 20 billion.

SEN. LEAHY: I'll let you look at the question --

MR. BREMER: I'll get you -- I understand.

SEN. LEAHY: I do appreciate you telling me your answer to the letter I sent you several months ago answered today -- you mentioned you did not have a fax machine. I sent it to your office here in Washington, and I assume that every few months that they do -- find somebody to correspond with you, or at least with all the people that we are sending back and forth over there.

Now, I don't know the way this bill is written whether I'm going to vote for or against the supplemental. But I want to take this time to make our point. The president has got us into a costly and dangerous situation in Iraq. We're at a crucial juncture. American lives, our resources -- also our credibility -- are on the line. I think the next 12 months are going to have consequences for decades to come -- long after all of us are out of whatever offices we are holding now. Since the fall of Baghdad, practically everything the White House and the Pentagon predicted about Iraq has turned out to be wrong. You wouldn't know it when you listen to some of the officials here in Washington, make these overly optimistic assessments -- or when people raise questions about whether they're wrong -- instead of an answer we're told that we are not really true patriots, and we have the patriotism question of people -- many of whom have served with distinction in our military.

Now, we get a different picture from those in Iraq in the field. Vice President Cheney said Saddam Hussein had reconstituted nuclear weapons. There's no weapons of that nature or any weapons of mass destruction have yet been found. Last week, even though we were told that -- by some in the administration -- that there was a link between Saddam Hussein and 9/11, President Bush continued there was none. The vice president said our troops would be treated as liberators. I am sure most Iraqis are grateful that we moved Saddam Hussein -- I'm grateful that he's gone. But it's clear the Iraqi people increasingly don't want us there. The New York Times article last week entitled "Iraqis' Bitterness Is Called Bigger Threat Than Terror" described this program. You may disagree with this, but it's hard to overlook such warnings when our soldiers, who have performed so bravely, so admirably, are ambushed and killed. There seems to be too much jubilation in the streets -- not just by remnants of Saddam's regime.

Initial cost. Five months ago we passed a wartime supplemental, that I believe, Mr. Chairman and Senator Byrd had two and a half billion dollars for reconstruction of Iraq in it. We were told that's all the U.S. taxpayers would be asked for this year. But that was a gross miscalculation. Former OMB Director Daniels said the total cost could be between 50 and 60 billion. The deputy Defense secretary said we're dealing with a country that can finance its own reconstruction. They said the oil revenues of the country would bring between 50 and 100 billion over the course of the next two to three years. Those are wildly off course. I'd say I agree with Senator Byrd: When the Americans saw the $87 billion price tag, it gave Americans sticker shock and awe -- it's had the same effect up here.

Counting the supplemental, we'll spend more than a hundred billion dollars in the first year to rebuild Iraq -- this in a country -- and the administration said they're not in the business of country- building. And it's clear we're going to be back for a lot more. We don't have the money in the bank. It is red ink. We are heading for a trillion dollar deficit that our children and grandchildren will pay off. I'd question whether such fiscal spending, responsible or otherwise, of this magnitude, would bring to our current economy, to our national priorities -- our schools, our health care, our ability to fix Medicare and Social Security just is one instance.

Now, one of the reasons many of us disagree with the administration's decision to attack Iraq without the support of the United Nations -- it would be harder to do it on our own. As one senator, I feel it would have been better if the administration had not alienated our allies through arrogance, or snub Mexico and Canada, among others, only to find ourselves needing their support today.

I haven't heard anything about how this supplemental is going to take care of the situation in Iraq, or bring our soldiers home. We are told the security problems would be solved by rebuilding the Iraqi army . That's going to take years, as we have seen in Afghanistan, another country where we are doing nation-building, where crime and violence today are on the rise. And I worry that our soldiers, the relief workers, will continue to die. The tents we build will continue to be thwarted by saboteurs and the Iraqi people's will will subside. It's a long road on the Iraqi Governing Council, even with some of the superb people you have on it, to a viable democracy. And even if that's possible, guess who is going to be there until the job is done? We are. Our soldiers, our aid workers, well qualified and motivated diplomats like yourself -- and of course our money. I want to know how much it is going to cost, when the Iraqis can take over. I don't think we can drift along spending more than a billion dollars a week with no plan, no time table. Every week another four or five Americans killed or wounded, growing resentment of the Iraqi people. I think it's time to abandon the same old go-it-alone strategy that has squandered on wholesale magnitudes the good will, the tangible support of the international community. I think we have got to get the community behind us.bassador Bremer, I hope you don't take these criticism personally. You inherited a policy without a strategy. We want you to succeed, and we were told the two and a half billion the president wanted for the Iraqi relief and reconstruction fund was all you'd need back in April. Five months later you asked for another two and a half billion, just for 2004. Now, do you believe you are going to need another 75 billion or are we really going to see donations -- because the amount of donations -- we talk about 30 countries. I mean, some of them have got forces in there the size of some of the rural police forces in Vermont. You can't really count that. And the kind of money that some are getting -- I know we are going to get a request for more foreign aid then they sent in this. So are you going to be back here next year asking for another 25 or 50 billion?

MR. BREMER: Well, senator, the amount we are asking for here represents what we think is urgently needed now, and for immediate needs, and we don't anticipate coming back for another supplemental of this magnitude. That's all I can say at the moment. I think we found -- the reason that the 2.4 billion initially was not sufficient was that we found the infrastructure in the country was in a lot worse shape than we thought, and that's the problem we've got. We have got to redo that infrastructure. It's expensive.

SEN. LEAHY: Mr. Chairman, I'll submit my other questions.

SEN. STEVENS: Thank you. Senator Brownback.

SEN. BROWNBACK: Thank you, Mr. Chairman. Thank you, Ambassador Bremer, for being here today. I appreciate your testimony. I thought your statement was quite good and eloquent, and very captivating on the current situation. It really describes something quite different than we read in the press it seems like on a daily basis, where most of the news seems to be pretty negative.

I think it's important to go back and look at this situation and some of the history of how we as a body got here, because as Senator Domenici pointed out, I think there were 77 senators, or somewhere around that voted for the Iraqi war conflict.

In the House, the vote was 296 to grant the administration the authority to go to war and move forward, versus 133 against: strong, bipartisan -- nearly 300 votes in the House out of the 435 were there. So, I mean, strong, bipartisan support.

And if you go back prior to September 11th, probably wouldn't have been there, but after September 11th, we changed. And that same week of September 11th, we appropriated nearly $40 billion for reconstruction and war efforts and gave the president and the administration the authority to go to war in Afghanistan with about an hour's debate, so moved was the country that we needed to do something about the terrorism threat. And then, when that moved forward, and after that, there was a continuing threat in the war on terrorism that we're experiencing in the world today, and the administration comes forward with a proposal on dealing with Iraq.

Now, I've been dealing with the issue of Iraq and Iraqi opposition for some time. I've been on the Foreign Relations Committee since I've been in the U.S. Senate -- 1996. I've worked with Dr. Chalabi, that you work with now, for some period of time. We've had him up for a number of hearings, the Iraqi opposition, and talking about the horrific situation that the Iraqi people were experiencing. And also, the three different areas of Iraq: and the north was basically governing itself separate from Saddam; in the south, Saddam was pillaging the countryside and draining the wetlands areas that I hope we're working on getting restored; and they came forward and put forward for us a bill, the Iraqi Liberation Act, that passed the Congress, was signed into law by President Clinton. And it called for regime change in Iraq. Signed by President Clinton. This was passed probably in 1998 -- I'm thinking somewhere through that period of time -- allocated $100 million, which I wished we had spent it at the period of time in working and building up the opposition.

The whole point that I'm putting forward here is that Saddam has been a problem for a long period of time, and any allegations or assertions that were coming up that the Bush administration came up with new claims about Saddam Hussein -- I was getting the same intelligence reports under President Clinton as I was under President Bush about the Iraqi threat and the nature of the threat. And these were not -- you can't know in intelligence reports for certain, because you're gathering information; unless you've got somebody in the room, you're not certain what is taking place, but the best estimates. And we did know that he had used chemical weapons against his own people and against the Iranians. We knew that. And we knew he had terrorists operating on his soil. And so, you had that mixture of terrorists and the ability to constitute weapons of mass destruction. And we were in dependency on Saddam Hussein that he wouldn't mix the two and use them against us. So, when the vote comes up for the Congress, most of us said: I'm not willing to depend on Saddam Hussein that he's not going to use -- find some way to get chemical weapons, give a pickup truck full of them to terrorists, and find them here on our soil, as we did on September 11th.

We moved forward on Iraq. The war moved, I think, much more quickly than most people thought it would, surprisingly so, and we were very happy about that. But now we're at a point in time, do you go ahead and move forward and conclude and deal with the situation that we're in, or do you pull out, like we did the prior time in Afghanistan in the 1980s. And I think everybody's concluded you can't pull out at this point in time, you have to work in reconstructing and building back Iraq up.

I do get two pointed questions often from my constituents on this, and they're this. Number one is, we hate the loss of any life, particularly an American life. And is there -- are there any other things that we can do to protect these American lives? Or how can we move forward with protection of those American lives? That's the thing that just strikes at the very nerve of Americans, is that issue.

And then, the second one that I'd like for you to address is a number question -- say, Iraq has the second-largest reserves of oil in the world. Can't they pay for this in the reconstruction effort? And you've addressed a portion of that, that by 2005 they'll be able to pay for their government and some capital investment. Project me on out a little bit further on that point, if you would.

MR. BREMER: Thank you, Senator. Just before I answer your questions, two points. We have about $100 million in this supplemental request to begin the reconstitution of the marshlands that Saddam Hussein drained.

And you mentioned the chemical attack. The secretary of State and I, a week ago today, visited the site of the chemical attack in 1988 in Halabja, up in the north. And it was a very moving thing to see this village where more than 5,000 people were killed by Saddam's chemical attack in 1988. I met a man there who was the only member of a 24-member family who survived the chemical attacks. And it's quite a moving thing.

On the question about protecting lives, there basically are three things we're doing to try to deal better with security. Number one, we're trying to improve our collection of intelligence against the people who are attacking us, whether they are former regime loyalists or terrorists. We have a fusion cell that we've established in Baghdad, under my direction, which is trying to focus our intelligence more closely.

Secondly, we are in the process of reconfiguring our forces to make them more mobile and lighter so that they can move around and respond more quickly to threats.

And thirdly, as I mentioned in my statement, and as is very prominent in the president's request, we need to get Iraqi forces more involved in their own security. That's why you have $2 billion in here to speed up the training of an Iraqi professional police, and $2 billion to train an Iraqi army. And contrary to one of the earlier comments, with the president's supplemental, we will be able to train a full three divisions by next summer of the Iraqi army.

That's a significant force for Iraq.

On the question of the oil reserves, the problem is this. The oil infrastructure was severely run down over the last 20 years, and partly because of sanctions over the last decade. Iraq has a theoretical production capability of about 3 billion (sic) barrels a day. We hope to get back to that level by the middle of next year, roughly, some time in the late summer next year.

Once Iraq reaches that level -- that's its maximum production level -- it should be able, assuming a price of about $18 a barrel, to generate in the neighborhood of $20 billion a year in oil revenues.

To get substantially beyond that level means increasing their production, which means exploiting new fields. And that will involve a substantial investment, presumably from outside Iraq, into the development of new fields, so that resources can be brought forward.

But even with just getting back to 3 billion -- 3 million barrels a day by the year 2005, they should be producing a surplus on their cash budget, which will allow the Iraqis to begin to pay for some of the less urgent things that we've got to pay for over the next 12 to 18 months.

SEN. BROWNBACK: Thank you.

Thank you, Mr. Chairman.

SEN. STEVENS: Senator Dorgan.

SEN. BYRON DORGAN (D-ND): Mr. Chairman, thank you very much.bassador Bremer, thanks for being here.

There's no doubt that the money that you are requesting is needed, and let me describe my reaction this way. First of all, with respect to the military funding that you are requesting, I think that the Congress will move quickly. I don't think we will withhold one dollar that's needed to support the troops who we have asked to fight for this country. And so I believe that is going to be appropriated fully by this Congress.

I want to go through with you, however, the issue of reconstruction funding. The campaign that was initiated in Iraq, called "shock and awe," exclusively and specifically did not target infrastructure. We didn't target their electric grid. We didn't target the dams and the basic infrastructure of Iraq.

My colleague from Kansas made the point that Iraq has the second- largest oil reserves in the world, next to the Saudis. You made the point that by next summer Iraq will be able to produce 3 billion -- 3 million barrels per day. And at that level of production, with about 80 percent available for export, the way I calculate it, using reasonably conservative prices, the Iraq oil fields will produce about $16 billion a year of net revenue. That's $160 billion in 10 years or $320 billion in 20 years.

When I take a look at what you want to do in Iraq with respect to reconstruction, basic investment in water, sewer, irrigation; developing marshlands; improving power plants; developing communications plans, including Wi-Fi; housing projects, 3,500 new housing units in seven communities, and so on, this occurs to me not a reconstruction based on damage done by the war but reconstruction that you believe is necessary for the long-term welfare and economic health of the country of Iraq.

The question for me is, why would we not use the Iraq oil revenue to collateralize loans from the IMF or the World Bank to pay for the reconstruction of Iraq? Three hundred and 20 billion dollars over the next 20 years. It seems to me collateralizing loans from the International Monetary Fund, which, I read this weekend, just provided $13 billion to Argentina -- why is it that you have chosen to say that rather than moving in that direction, the American people should provide 20-plus billion dollars in grants for reconstruction?

Could you identify, or at least address, that piece? Because I think that no doubt the reconstruction is necessary, no doubt it is urgent, but there's also another way to pay for this. And I don't understand why you have chosen grants from the American taxpayers, and incidentally told us in your testimony that the new tax rate in the country of Iraq will have a top rate, and you beamed apparently when you said 15 percent. So, we will have taxpayers in this country paying a much higher tax rate on income taxes than you have, or the council has, created in Iraq, and then use the money to invest in exactly the sort of things we're debating about in this country: water, communications, transportation, infrastructure. Might you address that, Mr. Ambassador?

MR. BREMER: Yes, thank you, Senator.

We, of course, considered the question of whether this supplemental should be done in the form of loans of some kind, which is effectively what you're mentioning. And as I said in my testimony, and I feel quite strongly about it, I believe it would be a mistake to lay any more debt onto the backs of the Iraqis. They are under a burden, an extraordinary burden, of about, roughly, $100 (billion) to $120 billion of debt, entered into by Saddam's regime over the last 20 years or so, and another $90 (billion) to $100 billion in claimed reparations from countries because of Saddam's wars. That means that Iraq has something like $200 billion in debt outstanding. There is no way the Iraqi government is going to be able to pay that, even if you took all of the excess amounts projected.

And I answered earlier, in answer to Senator Brownback's question, the math is roughly as follows: Starting in 2005, the cost of running the Iraqi government with no major capital investments is about $15 billion a year. The revenues, as you rightly point out -- we think they will come to roughly $20 billion a year by then, because they will have some tax revenues, they will have some tariff revenues, in addition to the oil revenues. So, you have revenues of roughly $20 billion and expenses of roughly $15 billion. You could imagine roughly $5 billion a year, in other words, available for capital.

If the debt is assumed to be $200 billion, and if you assume, just for sake of math, an average interest rate of 6 percent a year, the debt service alone on that debt would come to $12 billion a year, just for the debt that they have now. Therefore, it has been our view that we need to help carry them across the bridge of 2004, which is the year when they are going to not be generating enough excess income to pay any extra capital by themselves.

SEN. DORGAN: Mr. Ambassador, I frankly don't understand that. You say that the country of Iraq has accrued a debt of $200 billion roughly. Did you, then, developing a new government in Iraq, inherit the responsibility for the debt it created by Saddam Hussein? It's a rather peculiar thing to inherit, it seems to me, number one.

Number two, it seems to me the first obligation would be to begin seeking debt forgiveness, and I'd like to ask, who is the largest holder of that debt?B. BREMER: Of course, we do inherit the debt -- that's international law -- until something is done about that debt by a sovereign government, which will come into being after the elections.

SEN. DORGAN: And who is the largest holder of that debt?B. BREMER: The largest holders, and there is some imprecision as to exact amounts, are France, Russia, Germany and Japan.

SEN. DORGAN: And we can talk about risk-free encumbrances at some point later. I have rather limited time. But I do want to make the point, if you're saying that you and the administration decided to seek grants for reconstruction in Iraq rather than collateralize their oil production, and I think we have a disagreement of about $5 billion a year, and we'll go over that later as well in this calculation, but if you're saying you made that decision because of overhanging debt, it seems to me that if one works hard at debt-forgiveness, and certainly one should -- Saddam Hussein is gone; --B. BREMER: Yes.

SEN. DORGAN: -- good riddance -- whatever debt burden the Iraqi people now have around their neck, it seems to me, ought to be forgiven. And especially those countries who did business with the country of Iraq during a time when there was an embargo, there ought not be any obligation for you or anybody else in the governing council to accept that debt. I understand international law, but look, I really think, as this committee begins to strategize and think through what we do here, I think first and foremost, we provide the money for the troops. That's essential. We do it quickly.

Second, we think through a policy, a cogent policy on behalf of this country, what should we do with respect to the reconstruction in Iraq? Not whether we do it, because we must, but who pays for it? Should that be the burden of the American people? And I don't -- frankly, I don't think so, especially when you're dealing with a country that has the second largest oil reserves in the world.

And I do want to make one additional point, and I'll pursue this at a later time. There was a newspaper story, a rather lengthy story in the Washington Post about two days ago that gave me great pause. Ambassador Bremer, you talked about the opposition in Iraq being guerrillas and insurgents and the Fedayeen and so on. This was a story that I read and I put the paper down and thought a lot about it. It was about a family holding a picture of their son. Wasn't part of Saddam's operation. Wasn't part of the Fedayeen. Wasn't part of anything. He was just a guy that became incensed and angry and part of the local group in his town and decided to go out and kill some Americans. And I don't know whether that's happening over there in large degree or not. I mean, you described the insurgent movement as guerrillas associated with Saddam's old regime, but some of what we're ready, Mr. Ambassador, suggests that it is more than that. And if it is more than that, that we really need to address that as well in a very significant way.B. BREMER: Well, let me -- I know your -- our time is up here, but let me just answer that question, Senator. I saw the story, and there are no doubt isolated cases of people meeting that -- meeting that definition. This fellow went out and fortunately he was killed and did not kill any of our soldiers, so it had a happy ending as far as I'm concerned. There are no doubt isolated cases like that, but by far the majority -- and we know this from our intelligence; we know it from the people we catch; we know it from the people we kill -- the people who are attacking and killing our soldiers, our men and women, are Fedayeen Saddam, former regime loyalists, Ba'athists, members of the former intelligence community. That is a fact. Now, there -- I don't say there are aren't people like that story, but they are not what is driving the situation.

SEN. DORGAN: Well, Mr. Ambassador, that is helpful. And might I ask as you're here this week, if we could exchange some information about oil revenues, potential oil revenues, expenses, so that I can at least pursue the issue of whether we ought not collateralize the oil capability of that country to invest only in that country, by the way.

SEN. STEVENS: Senator DeWine?

SEN. MARK DEWINE (R-OH): Mr. Ambassador, thank you very much. This is a ton of money, but I don't think there is any doubt that it is necessary. I don't think there's any doubt this Congress will approve it.

I thank you for your testimony, I thank you also for your service. We appreciate it very much.

You have outlined a plan which, as you have testified, puts a great deal of emphasis on security and infrastructure as the beginning of the prosperity and return of Iraq, and I think that is certainly understandable.

I would like to talk about something that I think also is important to Iraq, and that is the confidence of the people that things are improving. And that's one area, and that is the health care for children. Saddam Hussein's government spent virtually nothing on health care and nothing on -- virtually nothing on the health of its children; ignored the children, with devastating results. The under-5 mortality rate, we're told, has more than doubled in the last decade, with one in eight children now dying before their 5th birthday. Of those deaths, 70 percent are due to preventable illnesses such as -- common things such as diarrhea or respiratory infections.

We have seen presented to us -- you have presented to us the Coalition Provisional Authority plans to rehabilitate the health care system, which does include a new children's hospital, which I applaud that.

My question to you is whether or not in this plan there is sufficient money that's been allocated to meet the health needs of children in a timely manner? In other words, will we -- is there enough in there for this, and are we going to see some results based on this plan? Because I do think it is important -- you know, people need to see some results. It's important from a humanitarian point of view. What's happened to these kids is just absolutely atrocious, in a country that should have been able to provide for their children. And I think if we want to see -- let people see some results and some changes, which is what they want to see, people need to see some changes, that the health care of their own kids is a pretty good place for them to be able to see it.

MR. BREMER: Well, I agree, Senator. We do have something like $850 million in here for health. I'll give you two numbers that are worth thinking about. In the last six months of 2002, Saddam Hussein spent $13 million on health care for the entire country, a country of 27 million people. In the budget which I approved for these six months, the comparable six months of 2003, we're spending $211 million. It is a 3,500 percent increase in health care. And we're going to continue -- we have in the budget for 2004 a comparable run rate on health care.

I have visited a lot of the hospitals in Iraq, and you will never find more dedicated doctors and nurses anywhere in the world. But the infrastructure is appallingly run down. You have children in incubators that are 20 or 25 years old, that have not been maintained. You have children in wards where there is no air-conditioning, and the outside temperature is 127 degrees. You have hospitals where there are no generators, so that the operating rooms and the oxygen tents cannot operate when the power goes down.

We are placing a great emphasis on health care. We agree with you, it's important. It has to move quickly. The children's hospital will take longer --

SEN. DEWINE: Right.

MR. BREMER: -- because we have to build it.

SEN. DEWINE: It's an infrastructure issue, sure.

MR. BREMER: But there are actions in this program to move quickly in this area, and in others, to show that life is improving.

SEN. DEWINE: What else? Take a moment -- I'm going to take some of my time for you to explain to me, how do you start moving -- I mean, what everyone has told me is there are doctors there; there have good doctors in Iraq.

MR. BREMER: Yes.

SEN. DEWINE: That this is not the problem.

But how do you begin to improve the infant mortality rate or the terrible rate that we see under the age of 5, when you're losing kids to very, very common -- what to us, in our country, is very common, very preventable diseases that should not be occurring in a country like Iraq.

MR. BREMER: One of the most important elements here is the $400 million we're asking for hospital refurbishment. I mean, there are lots of hospitals; there are 240 hospitals. There actually are more beds than they need. The problem is the infrastructure. So, if you look at how that's going to be spent, it's going to be -- it's going to move quickly on things like immunization; trying to get nutrition counseling going.

Again, in visiting hospitals, particularly in the Shi'a south, which was crushed by Saddam, malnutrition is an extremely -- particularly of the mothers, is an extremely important problem. And we need to get quickly at that, and we can get quickly at that with many of the proposals here to rehabilitate some 200 of the 240 hospitals. We're going to try to get maternal and paternal referral centers and care centers up to do counseling, for mothers in particular, to know better how to take care of their children.

But there's a whole series of things here, Senator, that we think can be done quickly.

SEN. DEWINE: Is the security situation good enough to be able to put those -- some of those programs in place?

MR. BREMER: Yes.

SEN. DEWINE: Because this is -- it must not be just refurbishing and updating the hospitals; I mean, to get out and deal with nutrition issues and educations issues, you obviously have to get beyond the hospital.

MR. BREMER: That's right. But it's an important point, Senator, which you bring out, and that is Iraq is not a country in chaos. Most of the country is at peace. The north is quiet; the south is quiet. We have problems in the Baghdad area, and particularly in the area just north of Baghdad.

But the area I was talking about in the south, where I have visited often, and I visited a number of hospitals there, people are moving around, they're going about their business in a perfectly normal way. There's no reason why we can't carry the kind of health care message out into villages that we need to do.

SEN. DEWINE: Is there a health care -- is there a health structure there now to do that, or do you have to create one?

MR. BREMER: No, there is; there is a Ministry of Health, a very dedicated group of people. And the Ministry of Health has offices in each of the 18 provinces that we can use. Now, the civil service is not as creative as you might hope because they've lived for 35 years under one-man rule, so people don't take enough initiative. But as we start to work with them, we find them enjoying their freedom and starting to think creatively.

SEN. DEWINE: So, you'll be using the current --

MR. BREMER: Yeah.

SEN. DEWINE: -- health structure.

MR. BREMER: We will use the current health structure.

SEN. DEWINE: Is that a governmental health structure?

MR. BREMER: Yes, it is. It's a Ministry of Health.

SEN. DEWINE: All right. Well, this is something that I obviously have a great deal of interest in, and I would like to follow this up with you, if I could.

MR. BREMER: Sure.

SEN. DEWINE: Thank you very much.

Thank you, Mr. Chairman.

SEN. STEVENS: Ambassador Bremer, I'm back to my time now. I do want you to know that as chairman of this committee, I haven't had one single senator tell me that he or she will oppose the military money in this bill. And I was pleased to hear Senator Dorgan make the comment he did. Our hearing really here today is about the, what? -- $20.3 billion that's in the structure for moving the Iraqi government and people towards a point where they could be self-sufficient; a very important distinction. But the military money is absolutely necessary to assure that you can get on with the job. The other money is necessary so that you can help us get those men and women back here.

So, I do have a few questions of my own. Do you believe with this money that you can be successful in aiding the Iraqis and creating a self-sustaining police security force that can handle the problem of these terrorists that are still loose in their society?

MR. BREMER: Yes, I do, Senator. I think if you cast your eyes forward to a day when Iraq has a sovereign government, the key question will be do they have a competent, honest police force? It's the same question that any country has to ask itself. It's the police who, in the end, are responsible for law and order. And they will -- with this supplemental, we will create a police force of 75,000 to 80,000 trained police in the next 18 months.

The second question is will they be able to defend themselves so that they can stay at peace with their neighbors? And the answer is with this supplemental, we will produce a new army with 27 battalions in about a year. That should give them enough, at least for now, while there are still coalition forces on the ground, to be assured of staying in a secure environment.

So, I believe that this money spent now is, indeed, not separable from the rest of the money. It is all part of the question of security for Iraq and for the American success, so that we can bring our soldiers home once Iraq is stable, secure and democratic.

SEN. STEVENS: Now, your CPA is going to have a lot to do. Do you have sufficient personnel now in your CPA organizations to oversee not only the reconstruction efforts, but the security efforts?

MR. BREMER: I believe we need a few more people. But we have largely got the people we need in the CPA structure now. We are going to -- I am establishing a special office, a project management office, that will oversee the large-scale projects that are in the supplemental, the large-scale construction projects: electricity, hospitals, water projects, because these tend to cut across various ministries in Iraq, and they are not accustomed to working together, because of the very rigid structure Saddam kept them under.

So we're going to have a project management office which will work with standard Pentagon accounting and contracting procedures, to be sure that we are consistent with American law and can move contracts quickly.

SEN. STEVENS: Now those contracts, under our law, are let primarily -- and, I think, exclusively -- to American businesses, aren't they?

MR. BREMER: That's correct. The prime contractor, by law, must be American.

SEN. STEVENS: The CPA -- have you put out a statement of goals or objectives for the CPA itself?

MR. BREMER: Well, our goals and objectives are essentially what's in our plan. This is what my people work towards, which is our plan. That's our goals and objectives.

SEN. STEVENS: Okay. What about these oil assets now that have been mentioned? I believe when I called you once over there, you told me that every time you get the pipelines repaired, the power plant goes down or a power plant goes down goes down. By the time you repair the power plant, the pipeline goes down. And the money that's coming in now from the oil assets is primarily dedicated to the ongoing war to get the infrastructure reestablished. What's situation over there now? I think that several weeks ago we had that conversation.

MR. BREMER: Yes, sir, it was. Well, we do still find acts of political sabotage against both the pipelines and against the power structure. But we are gradually getting better. Yesterday we produced 1.9 million barrels of oil, which is the record since liberation. Yesterday we produced about 3,700 megawatts of power, which is getting towards our goal of 4,400 megawatts of power.

But there will be bad days ahead. The saboteurs know where -- know that this is a very fragile infrastructure, both the oil and the electricity infrastructures, and they know how to attack it where it hurts. And they have done that in the past, and I -- no doubt they will do it again.

We are trying to rebuild the police -- the electricity police and oil police to make it more difficult for them to attack the infrastructure, and we're making progress. And we will get back to our goal of prewar power generation within the month, and we will get back to the goal of 3 million barrels a day within a year. But there will be ups and downs; I wouldn't want to mislead you.

SEN. STEVENS: Alaskans know a little bit about the oil business, not as much as we'd like to, but enough. My friends tell me that if they had anything to do with that series of oil fields you've got, they'd go rebuild it from scratch, because what you inherited probably is harder to keep going than to build it all new. What really is the situation over there with regard to the status of the assets that are necessary to increase their production?

MR. BREMER: Well, Senator, I'm not an expert on the oil industry. The fields have been managed, according to our oil experts, reasonably well. But the fact of the matter is that if Iraq is really going to have a bright economic future, they're going to have to probably double their production rate, and that is going to require new fields coming on stream. I mentioned earlier, in answer to a question, I think, from Senator Brownback, that is going to take a lot more investment in the future.

The Iraqis are known in the oil industry --

SEN. STEVENS: None of this money is for that stage yet, though, is it?

MR. BREMER: No. No, because -- no. That will be something the sovereign government will have to decide what -- because it will raise immediately the question of whether they're going to allow foreign investment in the oil field.

SEN. STEVENS: I see the yellow -- let me ask one other thing. Is your CPA going to have anything to do with the donor conference in Madrid?

MR. BREMER: Yes, sir.

SEN. STEVENS: Will you have a role in it?

MR. BREMER: Yes, sir, I will. But more importantly, my --

SEN. STEVENS: Should we be optimistic?

MR. BREMER: Yeah, I think so. I think the international community will realize they have an interest in our success in Iraq; in Iraq not becoming a hotbed for terror; in Iraq being a stabilizing force in the Middle East. And I think the donors will make, we hope, a substantial contribution.

SEN. STEVENS: What role will this $20.3 billion play in trying to get those people to the table?

MR. BREMER: Oh, I think it's very important, Mr. Chairman, because it shows that the American people understand their obligation now to win the peace, just as we won the peace in Europe after the second world war. It will show leadership, and that's what they need to see from us.

SEN. STEVENS: Thank you. Senator Byrd?

SEN. BYRD: You had a plan there. May we have a copy of the plan?

MR. BREMER: Yes, sir. Of course.

SEN. BYRD: Are these -- have we seen -- have we seen this plan before?

MR. BREMER: Yes, you have. This plan was presented to every member of Congress on July 23rd, sir.

SEN. STEVENS: Yes, we've had that.

SEN. BYRD: (To staff.) Have we seen that?

MR. BREMER: I'll be happy to submit it again.

SEN. LEAHY: I never saw it. I never got it.

MR. BREMER: Be happy to submit it again.

SEN. BYRD: I'd like to have it.

SEN. STEVENS: You got it mailed.

SEN. LEAHY: Hmm?

SEN. BYRD: I'd like to have that plan, for the first time.

SEN. LEAHY: I've been watching very carefully, I haven't seen one.

MR. BREMER: Well, I don't know where 535 copies of it went -- (laughs) -- on July 23rd. Maybe they were faxed to Baghdad.

SEN. LEAHY: (Aside.) Did you get a copy? Maybe just the Republican side.

SEN. STEVENS: No.

MR. BREMER: No, it was sent to everybody on the Hill, sir.

SEN. BYRD: When was it sent?

MR. BREMER: July 23rd.

SEN. BYRD: I'll be glad to have a copy.

MR. BREMER: I'd be happy to present it to you, sir.

SEN. BYRD: I hope you'll present today.

MR. BREMER: Sure.

SEN. BYRD: Where does the administration plan to find the additional 38- to $55 billion that is estimated to be needed for rebuilding Iraq?

MR. BREMER: If one looks at the World Bank needs assessment, Senator, from which the numbers are derived, basically, they're looking at a longer period than we are looking at. They are looking at a 4- to 5-year period. And we are trying to address the urgent needs over the next 12 to 18 months. We are hoping that the international community will come forward at the donors conference once we set the example. We are hoping that the international financial institutions like the World Bank and the IMF will make substantial contributions. And we are hoping, as I've said earlier, that by 2005, the Iraqi government and the Iraqi people themselves will be able to contribute substantially to closing that gap. Our goal is to try to close the gap of the urgent and essential things in the next 12 to 18 months.

SEN. BYRD: In addition to U.S. taxpayers fund and oil revenues, the administration plans paying for the rebuilding effort by using seized Iraqi bank accounts and the millions of dollars in cash that were discovered in Iraq during the war. How much money has been seized or discovered to date?

MR. BREMER: Nine hundred million dollars.

SEN. BYRD: How are those fund being used?

MR. BREMER: Those funds have been entirely spent -- and they're now exhausted -- they've been spent on paying the Iraqi government salaries -- salaries for the Iraqi government.

SEN. BYRD: Are you keeping detailed records on the receipts and outlays of seized or discovered funds so that Congress may examine or audit the use of those funds?

MR. BREMER: We have detailed records of those funds, sir.

SEN. BYRD: When you say "we," are you talking about --

MR. BREMER: The CPA.

SEN. BYRD: The CPA?

MR. BREMER: Yeah.

SEN. BYRD: Has detailed records --

MR. BREMER: Yes, sir.

SEN. BYRD: -- on the receipts and the outlays?

MR. BREMER: Yes, sir.

SEN. BYRD: Could you tell this committee today what the total amount is for the receipts and outlays of seized or discovered funds?

MR. BREMER: Well, the seized assets are in the neighborhood of $900 million. That has been spent. The frozen assets, which were the assets that the president froze here at the outset of hostilities, totaled $1.7 billion. Of that, all but $63 million has been expended, also on the Iraqi salaries, on paying for the new currency, a variety of things. That is essentially exhausted. Those are the two funds I think you asked about. Those two are essentially now exhausted, with the exception of $63 million.

SEN. BYRD: So you have records that can be audited by Congress?

MR. BREMER: We have records of all of the receipts and expenses.

SEN. BYRD: Now, you spoke earlier of the salaries that are being paid.

MR. BREMER: Yes, sir. Yes.

SEN. BYRD: How much -- how much -- I don't mean just to be you personally, of course. How much are you paying to, let's say, the police, each of the police? What's the salary -- what are the salaries for the policemen?

MR. BREMER: The salaries for a starting policeman now are $60 a month, which is ten times what they got under Saddam, and we hope we're getting better policemen.

SEN. BYRD: What are you paying the people that are going into the army?

MR. BREMER: They're getting about -- I think the privates get about $110 a month -- I may be off by $10, but it's in that neighborhood.

SEN. BYRD: You spoke of the number of men that other countries among the 30 are contributing. How many of those, of the 30, would you say contribute as many as 1,000 men?

MR. BREMER: Senator, I'd have to get you the answer to that. I just don't have all those numbers in my head. And it is more on the side of the -- military side of the house than on my side. But we can certainly get you those numbers.

SEN. BYRD: Yes, okay. That's probably a better question for Mr. Rumsfeld. Thank you.

MR. BREMER: Yes, sir.

SEN. BYRD: The president plans to spend over $20 billion in this bill on reconstruction in Iraq, but he is asking Congress to let him reallocate that entire $20 billion after we approve it. This means he can tell us one thing today, but do something completely different in Iraq tomorrow. Do you expect to adhere closely to the spending plans outlined in this request?

MR. BREMER: Yes, sir.

SEN. BYRD: If so, why do we need to authorize the reallocation of the entire $20 billion?

MR. BREMER: Well, Senator, I am not an expert on these legislative matters, but I do work in a rather fluid environment, where we have plans and we try to follow them and we do our best, and I believe that we will spend this $20 billion as we have suggested we will spend it, but I can't exclude that as events move forward, there might have to be some adjustments in that plan.

SEN. BYRD: But do you anticipate that the president will delegate any of his proposed reallocation authority to you so that you can have extra flexibility to divert from the administration's spending plans?

MR. BREMER: Well, Senator, that's a good question, and I don't have an answer to it for you today.

SEN. BYRD: Well, that's a good question that we need an answer to, and so, will you be -- if the chairman decides to ask you to return to this committee, when do you think you might be able to do that? This is the chairman's responsibility, but I would like to know on behalf of the -- of my side, at least, of the committee.

MR. BREMER: Well, I'm in the chairman's hands, Senator, and I can get you an answer to that once I discuss it with other officials in the administration. I just don't know the answer.

SEN. BYRD: Yeah, well, I am very concerned about this reallocation authority. I believe strongly in the Constitution and in the power of the purse as being vested here. And I don't believe that we should give too much authority to the executive branch, to the president or to you, with all due respect, or anybody else to reallocate monies that we appropriate that are the -- are your monies -- your monies -- (chuckling) -- the people who are watching through those electronic lenses. It's their money. And so, I'm anticipating that you would expect the president to delegate some of this proposed reallocation authority to you.

Is it fair to say, Ambassador Bremer, that for many of the spending decisions being made on the ground in Iraq, that you have complete and final authority over those decisions?

MR. BREMER: No. I have an international staff. I have Iraqi ministers who have actually been instrumental in drawing up the plans for the supplemental, because they are people who understand the needs on the part of the Iraqis. And I have a program review board which makes recommendations, which has representatives from other coalition countries, as well as the United States, which actually makes the recommendations to me.

SEN. BYRD: Can you supply for the record the number of countries out of the 30 that supply -- that provide at least 1,000 personnel? And can you supply the names of those countries?

MR. BREMER: Yes, sir.

SEN. BYRD: Would you say that 20 out of the 30 -- none of the 20 out of the 30 provide at least 1,000 persons?

MR. BREMER: I'll get you that answer, sir.

SEN. BYRD: Yeah. All right. Perhaps the secretary will be in a better position to provide that.

MR. BREMER: Yes.

SEN. BYRD: Is that my time? My time is up?

SEN. STEVENS: Yes, sir. Senator Domenici is in the rear, and he'll be coming back in a minute, sir. I was letting you go until he comes back.

SEN. BYRD: Very well.

(Pause.) With respect to U.S. payments for oil infrastructure, the president is requesting $2.1 billion for the cost of repairing Iraq's oil infrastructure. Should oil receipts be used for that purpose?

MR. BREMER: Well, Senator, I think the problem is that we don't -- the oil receipts are simply not there. There are no -- not going to be any excess oil receipts before 2005. So, it simply is not an option.

SEN. STEVENS: Would the Senator yield for just a moment?

SEN. BYRD: Yes.

SEN. STEVENS: Senator Byrd, Senator Domenici was called to our leader's office for a conference of chairmen of pending bills coming up this week, and he will not be returning soon, not before the votes. May I yield time now to Senator Brownback? He is waiting, sir.

SEN. BYRD: Can I follow on that just for one brief moment?

SEN. STEVENS: Yes, sir.

SEN. BYRD: In Secretary Rumsfeld's testimony before the Senate Appropriations Committee on March 27 of this year, he said, quote, "I do not believe that the United Sta0tes has a responsibility for reconstruction. We want to participate in reconstruction. Other countries will want to participate in reconstruction. And the funds can come from frozen assets, oil revenues and the oil-for-food program." Clearly, the secretary misjudged the extent to which these other sources would produce revenue.

Now, do you have -- do you believe that the United States has a responsibility for reconstruction? Now, I'm using Secretary Rumsfeld's statement as a background here, in which he said he didn't think it did -- didn't think the United States had that responsibility.

MR. BREMER: I think that, as my testimony -- my prepared statement suggested, I believe that we have a responsibility to ourselves, to our service men and women and to the American people to win this war against terrorism where it's being fought, which today is in Iraq. And I believe that we will be able to speed the day when we win that war and bring home our troops by providing the Iraqis with the wherewithal to win that fight. And that means approving the president's supplemental request.

SEN. STEVENS: Senator, I must interrupt now and let Senator Brownback, who's been waiting for a time, come in.

SEN. BYRD: Okay. Will we have another round?

SEN. STEVENS: Yes, sir.

Senator Brownback?

SEN. BROWNBACK: Thank you very much, Mr. Chairman. I appreciate that.

And Ambassador Bremer, thank you for hanging in there with us on going through more questioning rounds.

You mentioned earlier that a number of hostile forces that we're facing are leftover Saddam loyalists, and then terrorists that are coming in.

MR. BREMER: Yes.

SEN. BROWNBACK: Where -- do we know basically where these terrorists are coming in from; what border they're coming across and what countries they're coming from?

MR. BREMER: Yes. We think they're coming mostly from Syria and to some extent from Iran. And they are from a variety of countries, judging from the ones we've captured or killed. They carry Syrian, Saudi, Yemeni, Sudanese passports or travel documents.

SEN. BROWNBACK: Is there any dominance of those? That it's mostly Syrians that are coming in, or mostly Saudis, or Yemenis?

MR. BREMER: We have in detention several hundred third-country nationals as detainees who are people who have been fighting the coalition. They may not all be terrorists, in the sense of being trained terrorists. The majority of those 278 detainees are Syrians.

SEN. BROWNBACK: What's the next largest group?

MR. BREMER: The next largest group, I think, are Jordanians. I have it. I'll check while you're asking your next question.

SEN. BROWNBACK: If you could -- because I find this an interesting point of where these -- where the terrorists are coming in from and where they're coming from in attacking our troops. If you could.

MR. BREMER: The total is 278, of which 123 are from Syria. The next largest is actually Iran, 62, and Jordan, 38.

SEN. BROWNBACK: How many from Saudi Arabia?

MR. BREMER: One.

SEN. BROWNBACK: What's --

MR. BREMER: Mind you, these are not -- these are not necessarily terrorists.

SEN. BROWNBACK: These are detainees.

MR. BREMER: (Inaudible) -- detainees, some of whom may be terrorists, some of who may have been simply fighting alongside Saddam's army. You will recall that at the outset of hostilities, a number of countries said they were sending volunteers to fight alongside Saddam. So some of these -- I don't know when these were detained. Some of these may have been detained actually during the war.

SEN. BROWNBACK: But these are hostile combatants when they were detained?

MR. BREMER: That's right.

SEN. BROWNBACK: In hostile actions. What's the Syrian government and the Iranian government doing to help us or to in the contrary to hinder us in this by letting people flow in?

MR. BREMER: Well, we've had discussions with the Syrian government. We believe there are -- it's pretty well established that there are rat lines for people coming in across the Syrian-Iraqi border. Some of them are terrorists. Some of them are foreign fighters. Some others are simply smugglers. We do not think the Syrians have done enough to control their border.

The same can be said of the Iranian border. We are asking in this supplemental, among other things, for funds to try to reestablish some control, effective control, over Iraq's borders through standing up a border police and a border patrol. And that's an important element obviously in creating a secure environment inside of Iraq. It's one of the reasons, another reason why this money needs to be approved quickly.

SEN. BROWNBACK: What about the Iranian government? What are they doing to either help or to hinder us in this effort?

MR. BREMER: Well, Senator, it's a difficult question to answer because it's sometimes hard to tell who speaks for the Iranian government.

But my impression is that elements of the Iranian government are causing mischief in Iraq, interfering in affairs through their intelligence services and through the Revolutionary Guards. This is not helpful.

SEN. BROWNBACK: Seems to me that the two countries that benefit the most from us having difficulty in Iraq today are either the Syrians and some reassertion of a Ba'athist-type regime or area of control for the Ba'athists, or the Iranians, with a theocracy-style government coming into place in Iraq. Is that -- are we seeing the communicated by those government in allowing these, you called rat- lines to be established and people coming in?B. BREMER: Well, we have, as you know, diplomatic relations with the government in Damascus, so we are able at least to talk to them in a rather direct way. The same is not true in Tehran.

The good news on the Iranian question, Senator, is that as I go around and talk to Shi'a and other Iraqis -- Sunnis, Kurds -- Iraqis do not want their neighbors to interfere in their affairs, and they do not welcome Iran's interference. And indeed, there was a poll recently that showed less than a third of the people in the entire country believe in any kind of a theocratic government coming from these -- the constitution and the elections. So I think the Iranian interference is not falling on fertile soil, and I'd hope that will continue to be the case.

SEN. BROWNBACK: I want to ask one other line of questions. A gentleman in Kansas lost his -- husband and wife in Kansas lost their son in the battle -- Jacob Butler, who's a Kansas from Wellsville, Kansas. And his dad would like to go over to Iraq sometime soon as part of the heeling process to see the area where the battle was that his son was involved with. Are you -- number one, are you seeing some requests like this come through? And are you able to assist and to work with some of these family members? Or is that something that just doesn't -- isn't -- you aren't available to do to date?B. BREMER: Well, we haven't seen it yet, and I think as the security situation gets better, we probably will see more people who want to do that. We just haven't seen it yet.

SEN. BROWNBACK: Okay, well, we will be making a request of your office, since his dad has made a direct request of me, and I told him when I contacted the family members after the loss of their son, I said is there anything I can do to help, and this was the one thing that he has asked of me, is he wants to go to the site in the battle where his son was involved in. And I told him, well, we will at the appropriate time try to help out as much as we can in the process. And I think you probably will be seeing a few more of those.

Thank you for your direct answers. I really appreciate those.

Thank you, Mr. Chairman.

SEN. STEVENS: Senator Leahy, do you have further questions?

SEN. LEAHY: I do, Mr. Chairman. And Ambassador Bremer, I do find so many things I agree with in your comments. I mean, obviously having overthrown the Iraqi government, we can't just walk away. But I worry that to some extent, we've done that in Afghanistan, and we may pay a deep price for it.

Iraqis need a chance to rebuild their country.

I have not seen your plan, and I haven't found anybody on this side of the aisle, at least, that have. I'm not -- I don't doubt your word that it was sent out, and maybe it's in -- like the proverbial check, it's in the mail, and some day I'll see it.

But, does the plan ask for more than just more money and more of the same?

MR. BREMER: The plan was written, Senator, as I mentioned, in the -- it was sort of under constant revision from the time I got there in May, and it continues to be under revision. It was not established as a document to request for money, it is established as a document to show the way forward in the four critical areas.

SEN. LEAHY: Well, I think what we see here today, and I think there's a feeling of all senators, both sides of the aisle, that we're going to be asked for more and more money. Each time we've been told this is the final amount. Within weeks, it's anted up considerably more. I remember the almost arrogant disregard of the former OMB director, Mr. Daniels, when anybody even dared question that we'd be spending more than $20 billion or so here. Of course, now we're way over that.

I'm also, though, still concerned that we start mending our fences around the world so that we might bring other countries truly into it. I think of a country like Canada, our neighbor. I can drive in an hour from my home and cross the Canadian border; often do. I know I heard a lot of Canadians' attitude toward them, and yet they're helping.

We hear the constant numbers, whether it's 30 countries, 40 countries, whatever, but when you look behind those numbers, some of these countries, the forces they provide, as I mentioned earlier, are not much larger than a small rural police department in Vermont.

And I think back to the terrible tragedy in Beirut, when our Marines were killed in a truck bombing in a country where such bombings are endemic. It turned out, subsequently, that the White House had not allowed them to put the normal tank traps, even though we had intelligence that said that they might get hit that way. Turned out the White House had not allowed them -- the sentries to be properly armed, even though they'd asked to be. And it turned out the White House had ignored warnings when they put them all in the same place.

But within a few days after that, we invaded Grenada, and the world's attention went to that, and proved that U.S. military was able to take on the dozen or so, couple dozen Cubans in Grenada and free it for good, and then even had heads of state come to Washington to say that this was the greatest thing that ever happened. But even that was diminished when we found out later some of those heads of state were given large amounts of cash by the U.S. government prior to showing up in Washington.

So my question is this: Do we have any of these countries that are providing support that have either been promised money up-front or been promised reimbursement for whatever they did, subsequently?

MR. BREMER: Senator, I really am reluctant to answer, not because I think that the answer won't please you but because I don't know the answer. These are really questions, I think, concerning the force disposition there that belong more appropriately with the military side of the Pentagon. I understand the committee will have the secretary and General Abizaid up on Wednesday.

SEN. LEAHY: But you're not aware -- maybe I should ask you this: I accept that answer that they be the ones to ask, but you are not aware of any country that has either given money or materiel prior to coming in there or promised money or materiel for that?

MR. BREMER: I'm not aware.

SEN. LEAHY: Thank you.

I don't think anybody doubted whether they supported or opposed the war that we would ultimately be victorious. After all, we have the best army, navy, air force and marine corps in the world. I mean, nobody even comes close to that. So, that was never in doubt. I still go back to the question of Afghanistan, which is not your portfolio, but I'm afraid that the administration and maybe the congress is losing sight of Afghanistan, where we knew al Qaeda was. We also know that al Qaeda was very very heavily, and still is, in Saudi Arabia, our close and dear and loving friends, and protected by some of the Saudi government, even today. In Pakistan, another dear close ally, we have al Qaeda there, and some are captured. Some -- the Pakistani government closes a blind eye. So I just worry that all the burden suddenly gets put on you to stop terrorism, when maybe we ought to look at some our very very very close friends, like the Saudis; and I don't think that there is -- and I mean not just this administration but past administrations (that have ever done that enough ?).

Now you, -- you say that by next summer the Iraqi national army will be a significant fighting force. Would it be able to defend itself from threats posed by Iran? I mean, Iran has more than a half a million troops. It has hundreds of aircraft. In fact, some that they have left over from when Saddam Hussein tried to put them there safely. They have a budding nuclear capability. Would Iraq by itself, next summer, if threatened by Iran -- would they by themselves be able to defend themselves, or would they need the United States?

MR. BREMER: Well, I think the question of how long foreign forces will be needed in Iraq is one that eventually a sovereign Iraqi government, like every government in the world, is going to have to make its own determination on whether they would at that point ask for a SOFA agreement for American or other forces is really a question for a sovereign government.

On the face of it, the answer is no. The Iraqi army will only have about 35,000 members by next summer, and, as you point out, the Iranians have a much larger armed forces and probably more capable; and this army will not have, for example, combat airforce, and will not have an offensive capability; will not have heavy equipment.

SEN. LEAHY: Let me ask a question on elections. The extremist former Ba'athists are some of the best organized elements in Iraq. The Iraqi Governing Council has varying degrees of popular support.

Are we going to hold elections if it looks like the extremists are going to win?

MR. BREMER: One of the reasons why I emphasized in my opening statement the importance of following a steady path to elections, Senator, is because I think there is always a risk of early elections. And my view is that those elections -- and it is the view of the president and our government -- those elections should only take place after the Iraqis have been through the discipline of writing their constitution, so that there is a framework, a political framework, for subsequent political action.

And I think while it is perhaps frustrating to the Iraqis to have to wait that long, I think our experience shows the importance of getting a constitution and getting it right. After all, it took us the better part of 12 years to figure this out, and we might as well learn from that lesson.

SEN. LEAHY: We didn't have computers. Many here would agree with you, Mr. Bremer.

I -- and I thank you, Mr. Chairman, for the extra time.

SEN. STEVENS: Thank you.

Let me state that I've been informed there will be two votes at 5:30 and also state that at 10 a.m. Wednesday, in the Russell Caucus Room, Room 325, Secretary Rumsfeld and Generals Myer (sic) and Abizaid will be here to -- will be there to answer questions, make statements concerning the military portions of this.

SEN. LEAHY: Is this Russell Caucus --

SEN. STEVENS: Rumsfeld will be --

SEN. LEAHY: It will be Russell Caucus --

SEN. STEVENS: Yes, it's the Russell Caucus Room, yes.

SEN. LEAHY: Great. We have something nearby.

SEN. STEVENS: Senator DeWine.

SEN. DEWINE: Mr. Chairman, I just have one additional question.

SEN. STEVENS: Yes.

SEN. DEWINE: Mr. Ambassador, there have been some published op- ed pieces and some articles by individuals who have been involved in the reconstruction, and they were expressing their frustration about their inability to operate in Iraq. And it was -- if I can sort of paraphrase the articles, they were saying that it was a tough environment, understandably, I guess. It's a very tough environment to work in. You know, they would have to get permission with -- from the military to move around -- you know, just very, very, very difficult.

These articles that I read were a couple of months old. Has that changed any in the last couple of months? Is that still a problem, or how do you perceive the -- maybe if you can just take a minute or two and tell us: How is the environment to work in there today?

MR. BREMER: Thank you, Senator. It is a lot better than it was a couple of months ago. The security situation, as I said earlier in response to another question, is by and large good in most of the country, with the exception of the area north of Baghdad and obviously parts of Baghdad.

But even in Baghdad, things are getting better. I had a petition presented to me last week by a group of restaurateurs, who said, "Business is so good now that we'd like you to extend the curfew from 11:00 to midnight or later, because we want to have more business. The people are out there, enjoying themselves, and they want to stay later for dinner." This is a good sign because it means the people are in fact moving around with more confidence in Baghdad.

But I would not hide from you the fact that it is a difficult environment. There are, after all, significant dangers. There are terrorists. There are quite a number of al Qaeda terrorists in the country. I was picking up on the point Senator Leahy just made. And it's a tough environment. But it is considerably better than it was a couple of weeks -- a couple of months ago.

SEN. DEWINE: All right, thank you. Again, I thank you for your service.

Mr. Chairman, thank you very much.

SEN. STEVENS: Yes.

I would place in the record, without objection, the statement of Senator Mitch McConnell regarding this bill.

Senator Murray?

SEN. PATTY MURRAY (D-WA): Thank you, Mr. Chairman, and thank you, Ambassador, for being here today. And I apologize for being late. I will keep my questions short, Mr. Chairman.

I just flew in, and I have to say that many of my constituents at home in Washington state had a little bit of sticker shock over $87 billion. It's a lot of money at a time when our economy here is struggling. And I heard that comment over and over to me in the past week since we heard that figure. I'm sure you've heard it, as well. And I think part of it is that no one was expecting the price tag to be that high, and now you've come forward, and I think we're all trying to work our way through it to see what it is. I think a general sense in my state, at least, that we understand that Iraq needs to rebuild their economy and their infrastructure and their government, but what our responsibility is, getting other countries to help, is critically important.

But one of the things that I heard over and over again was, "Weren't the oil revenues from Iraq supposed to finance much of this reconstruction?," and "What happened?" I know there's a story behind that. I'd like to hear a little bit about that from you; what happened. But also, specifically, I see in your proposal that you have 1.2 billion (dollars) to invest in the infrastructure -- in your testimony. Is that investment alone enough to get the Iraqi oil revenues to cover any reconstruction costs beyond what you have presented to us in this proposal? Or are we going to be seeing that that's not enough and we're going to have to look again at future proposals?

MR. BREMER: Thank you, Congresswoman. The problem with the oil revenues is basically two-fold: Number one, that the previous regime, as was the case throughout the economy, did not invest in infrastructure. The oil industry, as I said in my testimony, was basically starved of investment for a period of almost 20 years. The Iraqi oil engineers, who are very competent, labored heroically and were able to get production at various times up to the maximum, which is about 3 million barrels a day. And our objective is to try to get the industry back to that level. But with the damage that was done by under-investment in infrastructure, and with the repeated damage that is done now by political sabotage, and if you add into that the looting that took place in the immediate postwar period, we are in a situation where it is going to take this billion -- $1.2 billion to assure that the Iraqis get back to that 3 million barrels that they had prewar.

And what that means in terms of revenues is that next year, they will still not generate a surplus in revenues. It will cost them as much to run the government as they can get from revenues. In 2005, assuming we can get the oil production up to 3 million barrels a day, they should be generating excess cash for capital investments on the order of $4 (billion) to $5 billion a year.

SEN. MURRAY: You do believe that the 1.2 billion (dollars) is enough to get that reconstruction to where we are seeing that?

MR. BREMER: Yes. Yes. In fact, in general, the answer to your question about, you know, are we coming back for more, is that what we've done here is put together the amount that we believe represents what's urgently needed now to get -- to address Iraq's immediate needs. And we don't anticipate coming back with another major supplemental like this this year. This is our best --

SEN. MURRAY: This is your best --

MR. BREMER: Now, well, we hope that in other years, the whole -- any needs for Iraq are handled in a more normal way through the regular budgetary process.

But I answered, I think, a question from another senator before, Senator, this is -- you know, this is the best estimate that I can give you on what is needed. I do not believe we will need major additional amounts of money.

SEN. MURRAY: And do you think the oil production that we'll be able to generate is enough revenue to eliminate our continuing investment, post-2005?

MR. BREMER: Certainly on anything like this scale, yes.

SEN. MURRAY: Okay. Let me ask you a more specific question about Umm Qasr. I know that rehabilitation of that port was essential to getting food and other supplies into Iraq, shortly after --

MR. BREMER: Done by the Stevedore's Association of Seattle.

SEN. MURRAY: Correct. And I know that there's been a lot of problem with sabotage and looting. I note in here that you have $45 million for the rehab of the port there. Do you think that's enough to cover the costs, now that we've seen some of what the infrastructure is like there and some of the costs of security that weren't anticipated?

MR. BREMER: Yes, although the fact that I think it's enough is less important than that my experts think it's enough. The people we worked with in the Ministry of Transportation and our own experts believe that this should be enough to put the port, which is a very important port, it is our only port.

SEN. MURRAY: Right.

MR. BREMER: So it's very important, particularly for the import of food products, and now for the import of fuel oils that we're importing.

SEN. MURRAY: And it is open and operational at this point?

MR. BREMER: Yes, it is. It's been open since June 16th.

SEN. MURRAY: Okay. And is the $45 million enough to cover security for the people running the port?

MR. BREMER: Yes. Of course the security part of this supplemental comes more in the front part of it, where we talk about the roughly $5 billion for an Iraqi police force, for the Facilities Protective Service, which is more likely to take on fixed-site security on places like ports. It's more likely to come through a different part of this supplemental. But we believe the amount that's in here for security should be enough.

SEN. MURRAY: Okay. Because I was noting that railroad rehab was $303 million. That's a lot more than 45 (million dollars) for the port. Is that -- am I just looking at that --

MR. BREMER: Well, it's an extremely -- it's a very -- it's the region's largest rail system. It's a very extensive rail system. Again, drastically underinvested in over the years, with an outmoded rail -- the actual physical rails are not adequate and need to be replaced. It's a very big capital project.

SEN. MURRAY: All right, thank you very much, Ambassador.

MR. BREMER: Thank you.

SEN. STEVENS: Thank you.

Senator Domenici?

SEN. DOMENICI: Thank you very much, Mr. Chairman.

Mr. Ambassador, I'm sorry that I wasn't here for all the rest of the testimony, but I was here for part of it, and I'm very pleased to return for a couple of questions.

First, about 10 days ago, 12 days ago, I got on the telephone and called five senators. Don't ask me why; I just decided five names. I trusted them and I'm pretty good friends. And I asked them if they'd like to work on thinking about, talking about, learning about reconstruction of Iraq.

Most interesting, everyone said yes. None of them are on the Foreign Relations Committee or the like, but four are on Appropriations, this committee.

We have since had a number of meetings. We met with Condoleezza Rice. We meet with the secretary of Defense. What we're really trying to find out is everything we can about what is the reconstruction contract, the reconstruction agreement for Iraq? And a lot of good ideas have come out. I want to share one with you, and I really believe you ought to seriously consider it.

First, if you make the plan, if you put in on four stools, and I think that's what I heard you say, and you abbreviate them where they're on placards instead of in a packet, I would submit to you that the American people ought to hear you regularly explain the plan versus what you've accomplished. It's simple, but it would be a press conference which you would pledge as part of making sure that the public has full understanding and that it is totally visible to the public of America. And so you hold a press conference, and you say, "The plan was --" and "It is one month since the last meeting, and here's what we have done" or "here's what we have had to change."

Now I really believe, Ambassador Bremer, that your should do that, and you should do it in a way that is factual, forthright, the whole goal being to make this whole reconstruction totally transparent to the American people who are interested. Do you have a thought on that?

MR. BREMER: Oh, I think that's a very good suggestion, Senator. I already made a note earlier of your idea of getting a simplified explanation of the plan, and we'll follow that up.

SEN. DOMENICI: Now the senator -- new senator from Tennessee, former governor and secretary, he's the one in our meetings that came up with, why don't we tell America about it, and I'm passing that on to you. Okay?

MR. BREMER: Thank you.

SEN. DOMENICI: Now, there are some who continue to act as if the American people are against the war in Iraq. Some are trying to make sure they turn out against the war by suggesting they should be against the war. I submit it's your responsibility and the president's, if you want to win, to make sure the American people understand from you all that we're winning this. Now by that, I mean that you tell them in detail that the plan is being implemented, and we are succeeding, because I believe there is still a very large percentage of Americans who think we should have gone into this war, who support it, but who are fragile because they don't understand the plan. That's why I think that plan of yours is good for you and for a bunch of people who are helping you, but it isn't very much good for the American people, because they're not going to read it, and that press crowd's not going to read it, and that TV outfit's not going to report it.

So, I would hope that you would make it so.

My last observation is the American people would be thrilled if you could come close at some point to telling them that we don't need any more capital after this $20 billion. Now, why do I say that? I say that because it's obvious to me that contrary to those who are attacking you and the president and the plan, that you're trying to make this a reconstruction plan that has borrowing capacity, that goes out into the donors' market to see what you can get others to give and purchase and loan. And I submit to you that all of that sounds like you're trying to make this $20 billion leverage so that you can get this done. Am I right?

MR. BREMER: Yes, that's right. I think I said, in response to an earlier point, that I think it's very important in the run-up to the donors' conference that it is clear that the American people are stepping up and doing our part. And it's important for us to have that $20 billion on the table.

SEN. DOMENICI: Now, I want to talk about oil, but very quickly. I thought it too easy that you could just look at Iraqi oil as a great big asset and that you could say eventually, Iraq should have a valuable flow of money that should help defray some of these expenses.

Now, I want to submit to you that I understand everything is going to be privatized and internationalized, except oil. And I understand that. Almost every country that has oil, except us, has done that. In Mexico, they call it their patrimony. In Spanish, el patrimonio, which really means it's -- the fatherland is equated with their oil.

Well, I submit, nonetheless, that even though it's heavily in debt, Iraq, and it will be a while before you get oil, that you clearly ought to start talking early about a possibility that in a few years, some portion of that oil revenue might come back to either pay donors or pay America back. Now, I'm not suggesting that we tell the Iraqis we don't want them to grow and prosper. But I just think as a financier what would be wrong with a pledge of a dollar a barrel or $2 a barrel, starting five years from now? No, it probably wouldn't have an impact at all, but it would be a lot of money, and it would surely add credence to a donors' conference in terms of how people might want to bid to do things in Iraq. I offer the concept of oil as an asset in the outer years and something that I really think you should consider early with the Iraqis so they wouldn't think that you come along with it later and want to take something away.

Thank you, Mr. Chairman, and thank you very much, Mr. Ambassador.

MR. BREMER: Thank you.

SEN. STEVENS: Thank you, Senator.

Senator Harkin.

SEN. TOM HARKIN (D-IA): Thank you, Mr. Chairman.

Mr. Ambassador, again, I want to add my name to Senator Byrd's request for the plan. We've asked around, and no one's -- I haven't seen it, and I've asked my staff (for it ?) on July 23rd, and no one can seem to find it.

So hopefully it'll surface sometime soon, and we'll see that --

SEN. STEVENS: Well, Senator, they came to my office, and I've sent to get it and get the letter that will transmit it. I understand it was transmitted to all members of Congress.

MR./SEN. : Right.

SEN. STEVENS: It's just a book, but he's got a copy of it right there.

SEN. HARKIN: Well, I just asked my staff, and they've asked around it, and no one seems to have seen it. So I don't know where it is, but maybe it's around here someplace, one of those things that came and just was chucked or something like that. But I'd like to see it.

Mr. Ambassador, the $21 billion that we're looking at for public works, water, housing, health and other things, on a per capita basis in Iraq, that's more than we're spending here at home on some of those things. And I've been told that that's about half the GDP of Iraq. That would translate into about $5 trillion of that kind of spending here in the United States in one year. That's awesome. That's awesome. Half of the GDP of Iraq.

SEN. STEVENS: What figure did you use, Senator?

SEN. HARKIN: I don't know if that's true or not. Someone told me it was. Forty billion dollars.

SEN. STEVENS: We're dealing with $20.3 billion. Ambassador Bremer's testifying concerning $20.3 billion.

SEN. HARKIN: That's right. I don't know -- what's the GDP of Iraq right now?

MR. BREMER: Well, now, 40 billion (dollars) is as good a guess as any.

SEN. HARKIN: Well, that's what I'm saying.

MR. BREMER: We just don't have -- we don't know.

SEN. HARKIN: Well, okay.

MR. BREMER: But call it 40 (billion dollars).

SEN. HARKIN: Okay. So this is half the GDP. I'm just saying if you were spending that much on reconstruction in the United States, half the GDP, it would be $5 trillion in one year in the United States. So that's awesome.

The other thing that came to my mind is, is the amount you're asking here consistent with other nation-building efforts in the past on a per capita basis -- Kosovo, Bosnia, East Timor, among others? How does this compare on a per capita basis to those other countries? I don't expect you to know that answer, but I think it's something that we ought to find out, in terms of what the per capita basis is here.

Now again, I'd also like to know how the $20 billion will be spent. I think Senator Byrd touched on that. What process will you use? FAR rules or some other approach? Who signs the checks?

Will they all be competitive bids? In your statement, you said they would be competitive bids, but competitive bids by whom? By other countries? German companies? France -- French companies? Iraqi companies? Who can competitively bid for these contracts? Is it open to anyone globally?

MR. BREMER: Let me answer both of those questions, if I can. On a per capita basis, there's a study by the RAND think tank that looked at the general question of spending and made the point that successful transitions tend to be characterized by large amounts spent early.

And to answer your question, it -- because it just happens to stick in my mind, the per capita spending in Kosovo was about the same as what we're planning to spend here. It's about $800 per capita.

On the process for bidding, it will be done under our American regulations. And appropriated funds, by law, will have to go -- the prime contractor will have to be an American firm.

SEN. HARKIN: Will have to be an American firm.

MR. BREMER: That's the law.

SEN. HARKIN: But they could subcontract it --

MR. BREMER: That's right.

SEN. HARKIN: -- to anybody else they want.

MR. BREMER: That's right.

SEN. HARKIN: And will you know that before the contract is approved -- who they're subcontracting to?

MR. BREMER: Normally not, but the guidance that the contractors we have now follow -- my guidance is to place as much of the subcontract as possible in the hands of Iraqi companies, so that we create jobs.

SEN. HARKIN: There's an article this morning, ran in the New York Times -- I don't know if it was brought up earlier; I apologize if it was; I was on a plane just coming back, but reading the New York Times in the plane coming here -- said that the Iraqi leaders are going to come here to Congress next week.

I'll just read you this paragraph. It said, "In interviews, the Iraqi leaders said they plan to tell Congress about how the staff of L. Paul Bremer III, the American occupation administrator, sends its laundry to Kuwait; how it costs $20,000 a day to feed the Americans at the Al Rasheed Hotel in Baghdad; how American contractors charge large premiums for working in Iraq; and how across the board, the overhead from supporting and protecting the large American and British presence here is less efficient than granting direct aid to Iraqi ministries that operate at a fraction of the cost."

It says they're coming here. It said that "In a 6,000-mile end run around American and British occupation authorities, leaders from the Iraqi Governing Council say they will go to Congress this week to argue that American taxpayers could save billions of dollars by granting sovereignty more rapidly to the council" and doing this.

Do you have any comment about that, Mr. Bremer?

MR. BREMER: Well, let me make a few. First of all, we don't send our laundry to Kuwait, but we did.

SEN. HARKIN: You did.

MR. BREMER: We did when we first got there. We had no electricity. We had no running water. And so for the first six weeks, the only place anybody could get any laundry done was in Kuwait. We don't do that anymore because the hotel is open.

We spend $17,500 a day on food. We serve 3,000 meals. Works out to about $5 a meal, which, incidentally, is $3 less than it costs for an MRE.

On the question of overhead, there is no doubt it is more expensive to have Americans than Iraqis, but the fact is, we are needed there for all the reasons that have been laid out in the supplemental. And we are convinced that this $20 billion can be spent in accordance with our regulations, can be spent quickly, and can help give the Iraqis the necessary economic infrastructure so that they can have a viable economy. And that in turn will provide for a secure environment, which allows us to withdraw our troops.

SEN. HARKIN: The rest of the article went on, it said, "In the spirit of demonstrating such savings, the governing council this month cancelled the $5,000-a-day contract that Mr. Bremer had arranged to feed the 25-member body, and its staff found a cheaper supplier." That's $200 a day for the 25-member council

MR. BREMER: Yeah, that unfortunately is factually incorrect. The governing council arranged that themselves. They were charged on a per capita basis, and instead of feed 25 people a day, they were feeding about 100 a day because they were having their staff and bodyguards eat there.

They're on their own budget now, Senator. And it's up to them to figure out how much they're going to pay for meals. It's not my responsibility.

SEN. HARKIN: So when they say that the governing council canceled the $5,000-a-day contract that you signed --

MR. BREMER: That's incorrect.

SEN. HARKIN: -- that's incorrect? That you had arranged. That's incorrect?

MR. BREMER: That's incorrect.

SEN. HARKIN: Well, I guess --

MR. BREMER: They have -- they have, I understand it, decided that they were spending a bit too much on food, which I entirely agree with. They were.

SEN. HARKIN: Well, I'm glad we cleared that up, because obviously this is misinformation that's getting out, right?

MR. BREMER: Shocking.

SEN. HARKIN: Shocking, isn't it. Shocking. Shocking. (Laughter.)

The other thing I wanted to clear up was that on the amount that you're asking for here, in April we were told that the 2.5 billion the president wanted for the Iraq Relief and Reconstruction Fund was all you would need from American taxpayers.

Five months later, you're asking for another $20 billion just for this year. I right to believe that you will need more like $75 billion, and that the balance of the $55 billion will be paid for with Iraqi oil exports and donations from other countries? Is that what we're looking at?

MR. BREMER: Well, the $60 billion to $70 billion -- it's probably more like $60 billion to $65 billion overall need is the assessment of the World Bank of what is needed in the Iraqi economy over the next four to five years. It involves things like water and power and schools and health care and all of the basics.

What we have done is said: What is the most urgent and essential stuff that we need for our strategy and for our plan? And we decided it is security and basic infrastructure. And then we asked ourselves: And what needs to be done now, in the next 12 to 18 months? And that's how we arrived at the plan that you have before you for the supplemental; that's the $20 billion.

The rest of the money will come over a period of years. We hope it will come from the donors conference, which we are going to attend, that the World Bank is calling in Madrid on October 23rd. We hope that by the year 2005, Iraqi oil revenues will be more than sufficient to pay for the running costs of the government, and they will have probably $4 billion to $5 billion a year in excess revenues spun off by the oil revenue, that they can then invest. And that's how you will fill in this gap.

SEN. HARKIN: Mr. Ambassador --

SEN. STEVENS: (Sounds gavel.) Time has expired.

Senator Bennett's time will be the last before the votes. The votes will start in two minutes. There are two votes, start at 5:30. We'll return here after that time. bassador Bremer, if you'll continue to be available?

MR. BREMER: Sure.

SEN. STEVENS: Senator Bennett?

SEN. ROBERT BENNETT (R-UT): Thank you very much, Mr. Chairman.

A wild question, off the wall. But do you have any idea what the GDP of Japan was at the end of the Second World War?

MR. BREMER: No, I don't. (Chuckles.)

SEN. BENNETT: Neither do I.

MR. BREMER: (Chuckling) I'm sorry.

SEN. BENNETT: I don't know what percentage of our -- what our contribution to Japan would have been, measured as a percentage of Japanese GDP.

MR. BREMER: Don't know.

SEN. BENNETT: But I think it would probably have been more than 50 percent of the GDP at that point, because Japan was absolutely prostrate.

MR. BREMER: Sounds right.

SEN. BENNETT: I used to own a business in Japan, and I remember driving through the streets of Tokyo and said to the manager of the business there, as I looked at the various buildings, some of which were traditional architecture and some of which were new, I said to her, "How many of these buildings survived the war? How many of them are prewar?" And she said, "None." I said, "None?" She said there were only two buildings in Tokyo at the end of the war, the Imperial Palace and the Dai-Ichi Insurance building, which was built out of solid concrete, seven stories, three stories above ground and four stories below. I may have those numbers wrong. She said, "MacArthur took that as his headquarters."

I don't think we measure reconstruction money as a percentage of GDP of a country that has been destroyed.

SEN. STEVENS: Will the senator yield just for a moment there?

SEN. BENNETT: Sure.

SEN. STEVENS: I think this president is the first president that's asked for money in advance for a military operation such as this. The money for Kosovo, for Bosnia, for -- even for Tokyo, for occupation in Europe came out of the operation and maintenance accounts of the Department of Defense.

The president was asked, the last time we had this bill up, why we didn't budget in advance, and so this time he gave us the budget in advance for the military costs of this operation needed now for the future, a supplemental for '04. And I commend him for doing it. It was really -- past presidents have taken the money out of money we appropriated to the Department of Defense, under the Food and Forage Act, and spent the money for the occupation forces, and we -- Congress replaced it in the Defense budget. This is the first time we've had a stand-up amount -- it's an enormous amount -- in advance for the costs of an operation like this, a military operation to support what you're doing in terms of your program for reconstruction.

Thank you.

SEN. BENNETT: If I can go back to the hearing that I held in the Joint Economic Committee, I remember being struck by the testimony of the final witness that we had, and by coincidence, or happenstance, rather, it happened to be the witness that the Democratic members of the committee had called. Republicans called some of the witnesses; the Democrats called some of the witnesses. And she said to us, "I wish to make four points about Iraq." I'm not sure I have them in the right order. She said, "Number one, Iraq will be very, very difficult. Number two, Iraq will be very, very expensive. Number three, Iraq will take a very long time. And number four, in the end, Iraq will be very much worth it."

And I think that's the point you're trying to make to us here. It will be expensive, it will take time, but in the end, it will be very much worth it.

We have a poll in front of us. I'm mistrustful of polls, but it's the only public opinion poll that's been taken in Iraq, done by the Zogby organization in connection with the American Enterprise Institute. Seventy percent of the Iraqis said they expect their lives to be better in the next five years, and 32 percent, or roughly half of that, said they expect their lives to be very much better. Which shows a great sense of optimism among the Iraqis, which is not what you hear from the American press.

Now, what is your perception of how much of Iraq is in an optimistic mood and how much is in a funk, let us say, or a great concern? I understand that it changes geographically. Can you give us a sense of what -- where in the country there is a sense of support and excitement and optimism about the future, gratitude for the Americans for being there, and what portions of the country are saying -- kind of they wish they'd get us out? Because we keep hearing from the American press as if there is only one position in Iraq and it's they hate us. And now, I think a country that size, clearly there's going to be divisions, just as there are divisions in this country. Can you give us your sense from the ground as to who is optimistic, who is not, who feels good about our being there, who does not? How many on each side, and where are they geographically?

MR. BREMER: Well, Senator, thank you, thank you for that comment. I've seen the poll also, and as you say, one doesn't know about polls. But certainly my sort of empirical experience traveling around -- and I do travel a lot -- suggests that something like 70 or 75 percent of the people in the country are optimistic. I'm very optimistic about Iraq's future. That a similar percent of people are delighted, even more delighted with liberation.

And I think the exception tends to be in those areas where we are being regularly attacked. About 80 to 85 percent of the attacks against American forces are from a very small area north of Baghdad between Baghdad and Tikrit. And there are historical reasons for that, and that's a thing we have to keep to -- keep working on. But if you go anywhere in the north, from Mosul north, if you go anywhere from Baghdad south, you will first of all find a country that is basically going about its business. Kids are going to school. Kids are playing soccer on the soccer fields. People are driving their cars. They're going out to restaurants. And this is the story that you don't hear as much as one should in the American press.

SEN. BENNETT: Give us a sense of how long you think it will take in those -- well, no, let me go another place, because my time -- my time is going. There are some who say that we cannot ever expect Iraq to function, because it's an artificial country created by Winston Churchill, et cetera, when the British drew the lines, and they drew them in arbitrary ways and so on. As you move around the country, do you get a sense that there is an Iraqi identity that would override the Sunni, the Shi'a, the Kurd and the other subdivisions of those divisions that we hear about and that in fact Iraq has a national identity that can be tapped to create a viable country?

MR. BREMER: I think so. I find the Iraqis very proud of their history and of their country, and they do have a great history that goes back 6,000 years, after all. And I find that it does cross the lines -- this is not to minimize the problems. There are ethnic and sectarian tensions in Iraq that have to be dealt with, and it's one of the reasons we have to insist on following a careful process as we move on the political front. We cannot rush it, because to rush it is to court real trouble, as I said in my opening statement.

But I think the Iraqi do have a sense of identity. In some degree, it's defined in -- as an identity which is contrast to several of their neighbors. They spent 1,200 years under the Persians, so they have a view towards Iran. They spend 400 years under the Turks, so they have a particular view towards the Turks. So they have managed to pull together something of a national identity, which takes pride in going all the way back basically to the Mesopotamian period 3,000 years before Christ.

It is a -- it is nonetheless going to be a challenge to get across all of these lines and put together a government that is unified, but it is our main job.

SEN. BENNETT: Just very quickly, with my time gone, how long have you been at this?

MR. BREMER: Since May.

SEN. BENNETT: MacArthur took seven years in Japan.

MR. BREMER: I hope you're not going to tell me I'm going to take seven years, Senator. (Laughter.)

SEN. BENNETT: No. The Marshall Plan, as I said earlier, came after three years --

MR. BREMER: That's right.

SEN. BENNETT: -- of occupation in Germany, et cetera. I think by historic standards, you are proceeding at breathtaking speed. And I'm sorry the New York Times is impatient, but I am not. I agree with the witness: Iraq will be very expensive; Iraq will be very difficult; Iraq will take a very long time.