IRAQ TRANSITION (PART III)

HEARING BEFORE THE
SENATE FOREIGN RELATIONS COMMITTEE

April 22, 2004

OPENING STATEMENT OF

RICHARD G. LUGAR
A Senator from Indiana
and
Chairman, Senate Foreign Relations Committee

LUGAR: This hearing of the Senate Foreign Relations Committee is called to order.

Today the committee will hold its third in our series of three hearings this week on Iraq. This hearing is the most important of the three because we will have an opportunity to learn from representatives of the administration about their plans for the transition to Iraqi sovereignty.

American credibility in the world, progress in the war on terrorism, our relationship with our allies, the future of the Middle East and the fate of Iraqis themselves depend on the resolve and the wisdom of the United States government and the American people in achieving a positive outcome in Iraq. What happens in Iraq during the next 18 months almost certainly will determine whether we can begin to redirect the Middle East toward a more productive and peaceful future beyond the grip of terrorist influences.

Consequently, moving the Iraqi people toward a secure, independent state is a vital United States security problem that requires the highest level of national commitment. The president and other leaders, including members of Congress, must continue to communicate with the American people on this point because the work that must be done in Iraq will test our national fortitude.

LUGAR: American lives will continue to be at risk in Iraq and substantial American resources will continue to be spent there for the foreseeable future.

During the last two days we have heard testimony from 10 expert witnesses representing many perspectives, and we have asked them whether American and Iraqi authorities are ready for the transition to Iraqi sovereignty on June 30 and what steps are required to fill out a comprehensive transition plan. Their contributions greatly advanced our understanding of the situation in Iraq and helped this committee to answer many questions.

However, expert witnesses cannot speak for the United States government. That is the duty that falls to our witnesses today. Our experiences with adequate planning and communication related to Iraq contribute to the determination of this committee to impose a very high standard on the information provided about Iraq.

Yesterday I noted the lack of information about the transition plan in Deputy Secretary Wolfowitz's testimony on Tuesday before the Senate Armed Services Committee. We're clearly hoping for more details today.

I would stress that what we are attempting to do here is not an academic exercise. Within the substantial bounds of Congress' oversight capacity, we're attempting to illuminate the United States' plans, actions and options with respect to Iraq, both for the benefit of the American people and to inform our own policy-making role.

I'm convinced that the confidence and commitment demonstrated by the pronouncement of a flexible but detailed plan for Iraq is necessary for our success in Iraq. With lives being lost and billions of dollars being spent in Iraq, the American people must be assured that we have carefully thought through an Iraq policy that will optimize our prospects for success. Moreover, a detailed plan is necessary to prove to our allies and to Iraqis that we have a strategy and that we are committed to making it work.

LUGAR: If we cannot provide this clarity, we risk the loss of support of the American people, the loss of potential contributions from our allies, and the disillusionment of Iraqis.

We may determine after this hearing that more hearings on Iraq are required to generate answers and to provide the confidence that we seek.

At yesterday's hearing, I urged the administration to prepare quickly for a hearing on the nomination of Ambassador John Negroponte to be our ambassador to Iraq. We would like to hold that hearing next Tuesday. It is critical that Ambassador Negroponte and his team be put in place at the earliest possible moment.

During the first two days of hearings I posed a set of six questions as a way of fleshing out a plan for Iraq. I believe that clear answers to all of these questions would constitute a coherent transition strategy for Iraq.

First, what are details of Ambassador Lakhdar Brahimi's plan for an interim Iraqi government to which a transfer of sovereignty is planned on June 30, 2004? Specifically, what executive and legislative positions will be established in the interim government and how would these positions be filled? Are we confident that Iraqis will support the United Nations formula for a new government? And what would the United States do if the Iraqis reject the Brahimi plan? What is our fallback strategy at that point?

Our expert witnesses expressed confidence in Ambassador Brahimi and his ability to find credible Iraqis to serve in the interim government.

But some concern was voiced that the United States must better synchronize the military and diplomatic actions of Ambassador Brahimi's efforts to build an interim government. We must think creatively about how the coalition and the international community can facilitate the emergence of national leaders in Iraq who are viewed as legitimate and prepared to govern.

Second, what should be contained in a status of forces agreement so that the United States and coalition armed forces will have clear and effective roles in providing internal and external security for the new Iraqi government?

And will that agreement make clear the chain of command or chains of command -- because we heard yesterday from a witness that as many as three chains of command might be required -- and the relationship of Iraqi police, reserves and army personnel with United States and coalition forces?

LUGAR: All of our expert witnesses agreed that achieving security was the key to success in Iraq. They underscored that we have to determine who our partner is in the status of forces agreement. They also generally believe that the current level of U.S. forces could not achieve the degree of security that is necessary for a successful political outcome.

In the short run, this may require more U.S. forces and more patrols that secure streets and neighborhoods. It will also require us to find other sources of competent troops from willing nations.

Our ability to find these troops will depend on our flexibility in including the United Nations in decision-making on the ability of our own troops to diminish violence in the short turn.

We heard many views on how to establish improved Iraqi security forces, but generally our experts believe that an effective Iraqi army and police force would require much more time, equipment and resources than we have thus far dedicated to bringing these units to fruition.

Third, will United Nations Security Council resolutions undergird the international legitimacy of the new Iraqi government and all of the security arrangements that it will require? How will the United States pursue such resolutions and what will they contain?

Our experts stressed that United Nations involvement is necessary if we are to generate greater international participation, improve the political legitimacy of the interim Iraqi government and take the American face off the occupation of Iraq.

They also underscored that we know how to operate under the auspices of U.N. Security Council resolutions, and we can do so without sacrificing command of our troops or the intent of our mission.

Fourth, will elections for the transitional and permanent Iraqi government, scheduled for tentatively January 2005 and December 2005 respectively, be held under the auspices of the United Nations or under some other authority? How will that authority provide security for the elections and assemble a registration list or otherwise determine who is eligible to vote?

LUGAR: How would we deal with elections that are postponed or deemed to be fraudulent? Will the national assembly that is to be elected in January 2005 have full authority to write a constitution and construct the framework of a permanent government?

Our experts spoke to the importance of going forward with elections in Iraq even if security and registration procedures are imperfect. They noted that elections would force Iraqi factions to enunciate policy choices and would stimulate dialogue between political leaders and the Iraqi populous. In the absence of elections, factions will continue to bid for influence through violence, croneyism or anti-American demonstrations.

Fifth, beyond Ambassador Negroponte what will be the composition of the United States embassy in Baghdad? And what is the schedule for the arrival of embassy personnel?

Given security concerns, our witnesses noted that some system must be worked out to allow embassy personnel to travel throughout Iraq. They emphasize that we should attempt to get as many personnel as possible in place before June 30.

Sixth, will the costs associated with the new diplomatic presence be covered by a transfer of funds under the umbrella of the $87 billion appropriation enacted by Congress last year? But if not, what is the plan for providing necessary funding?

There was general consensus that some transfer of sovereignty will occur on June 30, but U.S. forces will be required to provide security in Iraq for at least several more years. We should develop cost estimates that assume an extensive United States involvement.

Another important point generated by yesterday's hearing was that the interim Iraqi government will require funding as well. What parts of oil reserves or the $18 billion of reconstruction money will be controlled by the interim government? Or what other sources of revenue will be available to them?

The Foreign Relations Committee will be persistent in asking these questions and many others because Americans should have the opportunity to understand the administration's plan and to carefully monitor its progress.

We welcome today Mr. Marc Grossman, undersecretary of state for political affairs; Mr. Peter Rodman, assistant secretary of defense for international security affairs; Mr. Andrew Natsios, administrator of the United States Agency for International Development; and supporting them, Mr. Frank Ricciardone, our ambassador to the Republic of the Philippines and State Department coordinator for the Iraq transition; and Lieutenant General Claude Kicklighter, the transition chief for the Coalition Provisional Authority.

We welcome these witnesses. We thank you for coming to the hearing this morning.

Before I recognize you, I want to recognize first of all my colleague and this committee's ranking member, Senator Biden.

OPENING STATEMENT OF

JOSEPH BIDEN
A Senator from Delaware
and
Ranking Member, Senate Foreign Relations Committee

BIDEN: Thank you very much, Mr. Chairman.

I thank our witnesses for being here today.

We have serious and prominent witnesses. And I hope before the hearing process ends we will have their bosses before us as well, the secretary of defense and the secretary of state.

Let me begin by explaining to everyone that I notice a number of people looked when I walked in with my new staff person as I sat back here.

BIDEN: My new foreign policy adviser is my granddaughter. For some of you who may not know, today is Bring Your Daughter To Work Day. And I brought my granddaughter in the hope that someone may mistake her for my daughter.

(LAUGHTER)

And so I just want to explain that. I realize it's a bit unusual. But I can see the looks on some of your faces: "It's a serious hearing and what's he bringing a 4th grader in for?" It's Bring Your Daughter To Work Day.

Rather than do my whole statement, Mr. Chairman, because I'm anxious to hear the witnesses and because you have laid out such a thorough road map here, I, as we say in our business, associate myself with your remarks. I think the questions you asked are the ones that have to be answered.

I would just like to say that it seems to be we really have no option but to invest in the success of this undertaking in Iraq.

But the thing that I hope we keep on our eye on is to oversimplify it in one sense and understate it in another. We cannot want a representative government for the Iraqis more than they want it. We cannot want a representative government for the Iraqis more than the Iraqis want it.

And the premise upon which I continue to support this what hopefully history will judge is a noble undertaking is because I believe that the vast majority of the Iraqi people want a representative government.

I might note for the record -- and from the beginning I think my friend from Nebraska shared this view as well, and possibly my chairman and my friend from Rhode Island; I'm not certain. I don't want to associate them with me if I am mistaken -- but I have never believed from the outset, do not believe now, we are going to have a liberal democracy established in Iraq in the near term; a liberal democracy in the sense that we mean it.

But I do think it's fully in our capacity to have a representative government that's within the existing border that the vast majority of the people of Iraq feel they have a voice in.

BIDEN: Now, whatever form that takes, I'm not certain. But if we think we're going to have a replication of what we have here in the United States or European capitals, I think that is somewhat naive.

And so I want to make it clear again that -- because we're going to be -- come back and be judged based upon whether or not we succeeded or failed in this undertaking based on what we state our objective is.

Mine personally is a representative government that is probably a loosely federated republic of some nature, that has the ability to grow over generations into what we call a living democracy.

But again, we can't want that government more than they want it.

I know all the witnesses well, respect them all. I think I probably know Marc better than most, him having to deal with me for so long.

And I'd say to Secretary Grossman that one of the reasons why we continue to focus so much on the security piece of this is we -- or I have come to the conclusion that there is no reasonable prospect that that -- what we would say in U.S. political terms 25 years ago, that silent majority of Iraqis who want a representative government, there's no way after 30 years, three decades of being battered and beaten by a dictator, that they're going to raise their heads in any environment other than a secure environment.

And I say to Secretary Rodman, we have an inordinately high regard for the bravery, the decency and the idealism -- and I say idealism -- of our troops who are fighting over there. But the primary focus -- and it should be first and foremost -- is providing security for our troops, not security for the Iraqi people in the way in which we would think about it here.

We have over 100 missions that go through the neighborhoods every day, but they usually go through in a Humvee about 30 to 40 miles an hour, and I don't blame them.

BIDEN: I've thought from the beginning we have too few forces on the ground, whether they be American or others -- total number of forces -- to be able to do something more than force protection.

And the irony is I think we've created resentment. We've created resentment as the neighbor's daughter is raped or kidnapped or the house is looted or they are robbed, and there's a Humvee going by and no one's seen it.

In a sense, we have suffered from expectations that were not particularly reasonable but understandable. After 30 years of thinking Saddam was not only a dictator and a brutal thug, they also thought he was somewhat omnipotent and incapable of being taken down. And along comes the United States and in very short order, in an awesome display of power, takes him down. I think it raised expectations that we are suffering from, as well. But somehow we got to deal with it.

And so my generic point is this: I think that we went with too little power and too little legitimacy, and I think the only way to rectify this is to figure how to generate more power and more legitimacy. And I think they go hand in hand, which leads me -- and I'll ask unanimous consent that this all be placed in the record, Mr. Chairman.

LUGAR: It will be placed in the record in full.

BIDEN: But to summarize, I think it leads me to the conclusion that -- and please, guys, I love ya'll, but don't tell me how you all agree, OK? None of us will believe it if you tell us that State and Defense are in agreement on this. Please don't ruin your credibility. We love you. Make your statements, but don't try to convince us what we know -- I know for a fact is not true, OK?

So please don't do that because I came through the door here today and I turned to Tony Blinken. I said, "Tony, I'm going to try to be really, really polite today."

(LAUGHTER)

"I'm going to try to be really calm and cool and collected today." So please don't do that.

But one alternative -- one alternative is that we end up with some international group involving major powers, not necessarily the United Nations, not necessarily the Security Council, but major powers that is not unlike the contact group. I call it an international board of directors. Call it whatever you want. But it seems to me we need to get the major powers -- PERM 5, even some of the neighbors of Iraq, maybe even, as heretical as it sounds, Iran, Syria -- to basically be put in place by some umbrella sanctioning of an international organization, like the U.N., who will come along and bless what the president says he's about to bless, Brahimi's proposal, whatever that turns out to be exactly.

BIDEN: And we think we know.

And then maybe go back and get some legitimacy for that through the U.N. with no U.N. control. As George Will said, paraphrasing, you know, "The U.N. maybe should come in as a convenient way to mask the fact that we are still in power."

But everybody -- even the George Wills of the world acknowledge, we, kind of, need some umbrella of legitimacy here to get a number of nations to do what I think they still are willing to do, although time is running out, which is to provide some more legitimacy and power -- the combination of the two.

And I think that's the only way to base the testimony we heard yesterday and from a lot of people we individually interview is that we get NATO into the deal. And by the way, Marc, I have no illusions, or, Mr. Secretary Rodman, I have no illusions that NATO can send 50,000 troops in. I don't suggest that at all. But they can send 3,000, 5,000, 7,000 now. They can take over border patrol now. They can do significant things now. They can free up 15,000 to 20,000 American forces now. They can do a lot.

But most of all what they can do is convince the American people we're not in this alone. Because for NATO to be involved means major powers said their prestige is at risk as well in the success or failure of Iraq.

So let me conclude by saying the questions that I want, and some of them overlap, who's going to decide in the future, when we set up this embassy, how to handle the Fallujahs and the al-Sadrs? Is it going to be an Iraqi caretaker government? Is it going to be the American military? Is it going to be some senior national figure?

When we claim that our commanders on the ground say that they have enough forces to carry out their mission, what's their mission? What's their mission? Does that include more than force protection? Does it include civil protection? Does it include policing? Does it include reconstruction? What's the mission?

And one of the private security contractors, the second largest armed group in Iraq after American armed forces -- estimated 20,000 -- what is our policy toward them? How are they handling the morale problems there likely to create for our regular soldiers who were paid considerably less -- in some cases, 10, 12, 15 times less? Are they under an effective command and control? Are they coordinating with our uniformed military? How do they plan to reestablish the security?

What's the plan for training the Iraqi police? I know, Secretary Grossman, you know -- you're going to tell me you don't but I know you know -- that no one you've worked with in the last 10 years thought we could train up an Iraqi police force in less than three to five years, and no one thought we could train up an Iraqi military of more than 40,000 forces in less than about three years. And yet we put 200,000 people, quote, "in uniform."

BIDEN: Why has only $3 billion of the $18.6 billion that Congress appropriated last year been spent on the urgent request that the president made? Is it something you need help from us in breaking through bureaucratic Gordian knots here? Because we want to help. I can't speak for anybody else, but if there's a rational way to do this, we want to do it. Or what's the explanation?

And after June 30, who's going to be in charge in deciding how the money is spent? And when the Pentagon decides or the State Department decides they're going to put a road here or there or a project here or take care of this electrical grid, does this Iraqi sovereign government have a right to say, "Hey, no, no, no. We don't want the money spent there. We want you to go over here and build X, Y or Z"? Who makes those decisions?

And what's the current burn rate? I think we were told -- I think that came out yesterday -- about $4.6 billion per month for our military. And what are the range of the estimates of cost for Iraqi stabilization and reconstruction for next year? How are we going to pay for it?

Now, I'll conclude by saying I know that some of these figures are not precisely -- to use the secretary of defense's favorite word last year -- "unknowable." I know some things are unknowable.

One thing we know: If we're going to have more than 100,000 troops there, it's going to cost more than $4 billion a month, if they're just hanging around. So don't we know that it's going to cost for fiscal year 2005 somewhere -- somewhere in the neighborhood of $50 billion, at a minimum? Don't we know that? And if we know that, why don't you tell us now, and then come back for a supplemental beyond that if you need it?

So those are the questions I have along with others, Mr. Chairman. I ask unanimous consent that the appendix to this statement, which lays out more clearly some of the points I made, be made part of the record at this point.

LUGAR: It will be made a part of the record in full.

BIDEN: I thank you for your indulgence.

I thank you gentlemen for being here.

LUGAR: Well, thank you very much, Senator Biden.

I'm going to ask Secretary Grossman to testify first. Mr. Natsios will be in support of him; I understand will not have an opening statement.

Is that true or do you have one, sir?

NATSIOS: I actually had a short one.

LUGAR: Very well. Then we will ask you to testify, and then Secretary Rodman.

Let me just indicate in advance I know that Secretary Grossman, because he has already filed a very important statement, has considerable detail, and I would simply invite him to embellish that further.

This is not a hearing in which the bell is going to ring after five minutes or 10 minutes or what have you. It is a hearing to explore as fully as possible the plans of our administration.

I know from previous conversation with Secretary Rodman that he has a much briefer comment, and has, in fact, indicated to me, so that we'll not have anybody in the dark about this, that many of the decisions on security are, in fact, the subject of administration talks and visits even as we speak, or today or the days ahead, so that much of that, perhaps, he is not available to give to us today.

LUGAR: But we invite you, Mr. Secretary, as you hear Secretary Grossman and you've heard the questions, at least, of Senator Biden, myself, to give us as much detail as you can and to be responsive to our questions.

I would like now to call upon Secretary Grossman for his testimony.

STATEMENT OF

MARC GROSSMAN,
Under Secretary of State for Political Affairs

GROSSMAN: Mr. Chairman, thank you very much.

Senator Biden, thank you very much.

And I appreciate the opportunity to be here to report to you on progress we are making regarding the 30th June transition in Iraq.

Senator Biden, I also wanted to just welcome your granddaughter. It's a good thing, bring your daughter to work. My daughter was going to come with me, but she kept hearing I was such a low-ranking State Department official, she said, "The hell with it. I'm not coming."

(LAUGHTER)

BIDEN: With your daughter here, we would have elevated...

(LAUGHTER)

It may have been the one way you could have got more respect.

GROSSMAN: Perhaps. Perhaps. I'll certainly take your invitation to the secretary back, but just for the record, I mean, the letter of invitation was to me, and I am very glad to be here. I'm very glad to be here.

Like you, and I think all of us here on this side and in the committee, let me also start by paying tribute to the men and women who are serving the United States of America today, military and civilian, in Iraq, in Afghanistan, around the world. They demonstrate the highest degree of dedication, determination and courage as they try to bring security, democracy and prosperity to Iraq.

And I also think it's worthwhile to thank our coalition partners, who have also sacrificed, both military and civilian.

And if I could, as I have done on many times before this committee, thank you for your support of the State Department, and particular today, as I go through some of the details of a new embassy, for your support of the Diplomatic Readiness Initiative, so we have the people and the wherewithal we need to carry out this country's diplomacy.

And I also appreciate the statements that you have made in support of John Negroponte's nomination by the president to be our ambassador to Iraq. And we appreciate the rapidity that you want to go ahead and get this confirmation hearing done. And we will work with you to get this done as quickly as possible, because I agree with you completely, we need that finished so that he also can join us and make sure we are going forward as quickly as we possibly can.

As I said, I read the letter of invitation that you sent to me very carefully. I've listened to the questions that you and Senator Biden have posed, not just today, but I looked at the ones for the past couple of days. And it seems to me that your focus on the preparations that we're doing to get ready for 30 June/1st of July are the right ones, and that you ought to keep asking us these questions, we ought to keep doing these hearings, because, as you both said, they're absolutely crucial to the success of the United States.

I report to you today on what I consider to be a tremendous amount of work that has been done. As you say, we don't have all of the issues settled, but we look forward to close consultations and further hearings or any other way that this committee would like to have interaction on these issues.

We have, I believe, the guidance that we need, the direction that we need, and also I hope to convince you that we have a plan for going forward between now and the 30th of June.

Our guidance comes from President Bush, and he repeated it last week. He said the central commitment is to transfer sovereignty back to the Iraqi people on a deadline of June the 30th. And he went on to describe that day, and I think it's important to put it out, which is to say, on June the 30th, when the flag of a free Iraq is raised, Iraqi officials will assume full responsibility for the ministries of government.

On that day, the Transitional Administrative Law, including a bill of rights that is unprecedented in the Arab world, will take full effect. The United States and all nations of the coalition will establish normal diplomatic relations with an Iraqi government. An American embassy will open. An American ambassador, obviously subject to the confirmation of the committee and the Senate, will be posted.

The specific direction that we take with this guidance comes from Secretary Powell, who says that it is our -- he has put the State Department in motion to support the president's direction.

As I reported to you one other time, Senator, after CPA and the Iraqi Governing Council signed the November 15th agreement and established the June 30 transition date, Secretary Powell asked Ambassador Frank Ricciardone to come back from Manila to head our transition team. And in his first day on the job he went to the Pentagon to meet his counterpart, Lieutenant General Mick Kicklighter, and they are today one interagency team. And I just would ask them both to stand up so that the committee knows who they are...

LUGAR: Thank you.

GROSSMAN: ... and what they are accomplishing. And I think they've done a tremendous amount in the weeks that they have worked together.

GROSSMAN: We thank them.

We have also established an interagency team in Baghdad under the leadership of Ambassador John Holtzman (ph). He works on transition planning and implementation in immediate consultation with Ambassador Bremer and General Sanchez.

I can tell you that the secretary's involvement in our transition planning continues daily. We send to the secretary each night a table of what got accomplished today and what needs to be done in the next day, and these notes I think demonstrate the broad range of interagency, bilateral and multilateral things that we have to get done.

We're also following the president's guidance and the secretary's direction. We have developed a plan which I have put there -- and I know it's far away from people, but we will leave one for everybody -- about how to get to and through the 30th of June. And we've set ourselves some broad deadlines and some specific ones as well. And to execute that plan we have, and continue to work closely with our interagency colleagues and consult regularly with Congress, coalition partners, Baghdad and Washington.

Mr. Chairman, among the questions that you asked and one I'd like to deal with first with your permission is how to transition from the Coalition Provisional Authority to an embassy of the United States of America.

The first job that we undertook here -- a very good idea of General Kicklighter's -- was to send teams to Iraq, assessment teams, to consider what the basic requirements were to make this transition successful. And we identified 15 key sectors that we thought were crucial to success.

We've identified those 15 broad areas, and we're working now to make sure that each of them -- that the requirements there are accomplished.

Each of these sectors is broken down into individual tasks and milestones. And again, I'll just show you what we've got which is about 500 or 550 of these tasks broken down. Somebody is responsible, there is a date for each one of them. And as you can see, some are green, some are red, some are yellow. Object obviously is to turn them all to green.

And I would invite the committee and the committee staff to come to the State Department at any time where we have this on the Web and it's a living document, and all of you are certainly welcome to take a look at it at any time so that you can get updated as you wish.

LUGAR: Is the document classified?

GROSSMAN: It is not, sir. But it's on our intranet and we want to keep it that way. But you're welcome to come to the department, and your staff, and look at it at any time, because it changes all the time.

LUGAR: I thank you for that invitation.

GROSSMAN: And I think it'd be useful as we go forward.

As I say, each of these are broken down into milestones, individual tasks, and our object, obviously, is to get them all done.

As I said, there were 15 of these large tasks to accomplish. I won't -- even with your invitation to be detailed -- go into all of them.

GROSSMAN: But I'd like to talk about four today, if I could. I'd like to talk about people, security, buildings and money. And I think all of those were encompassed in questions that you asked.

The State Department, of course, as you know, and as we have talked about from time to time, has been in Iraq from the very beginning, from Jay Garner's operation, ORHA, to Jerry Bremer's operation, CPA. And we currently have a 170 people in Iraq of whom we are immensely proud. And they come from many parts of our Washington operation and around the world: senior officers, junior officers. And I say we're proud of them and of their service.

How big will this embassy be? It's not going to be a 3,000- American person embassy as I have seen places in the press. Our planning is for about 1,000 Americans and about 700 Iraqi employees.

So exactly how do I get to that figure? I get to that figure in this way. First, the State Department has announced positions of 142 American employees and 155 locally engaged staff: Iraqis.

In addition, in January of this year, Secretary Powell asked his Cabinet colleagues to identify contributions that other agencies might make to the mission in Iraq as we have contributions in missions all around the world from other agencies.

To date, 10 Cabinet agencies have come back to us and requested a presence in Embassy Baghdad for a total of 254 Americans and about 300 locally hired personnel.

Long term, because we haven't heard back from everybody, we estimate that there will be about 350 to 400 Americans, other than the State Department, from some 12 to 15 agencies and then a reasonable number also of foreign service national staff.

A number of CPA staff who have specific and very important skills to bring will also continue, we believe, to work after July the 1st under the chief of mission. And we have put in a reasonable number for them as well.

And so that's how I come to a number of approximately 1,000 Americans and about 700 Iraqi employees.

I will say -- and I hope that you will be proud of this as well -- we have had so many State Department people volunteer for these jobs that we have no trouble assigning them to the 142 positions that we have currently announced. In fact about 200 people have requested to be assigned to the new embassy.

And of those 142 positions that we have announced, we have formally assigned 97 people. Thirty-two more assignments are pending. And we do believe, Mr. Chairman, as you asked, that they will be in Iraq well before the 1st of July.

GROSSMAN: In fact, I guess using a retail term, our object is to have a soft opening of our embassy some three weeks in advance so that people can get used to what they're doing and then on the day, there will really be an American embassy there.

I should also say that we've already begun hiring for local staff, and the first people that we have hired are currently in Washington undergoing training. And their job is to then go back to Iraq and get more locally hired staff.

So for those who just joined us, it's about 1,000 Americans, about 700 Iraqi employees.

The American ambassador, as we discussed the last time I was with the committee, once confirmed by the Senate, will carry with him a letter from the president, as all of our ambassadors to, that spells out clearly his authority in Iraq.

It will say that he, as the chief of mission and personal representative of the president reporting to the secretary of state, will have responsibility for the direction, coordination and supervision of all United States government executive branch employees in Iraq except for those under the command of the U.S. area military commander or on the staff of an international organization.

And that is exactly how we do it everywhere in the world, and we believe that this will work successfully in Iraq.

Of course, the American military commander and the ambassador are going to have to have the closest possible relationship and, of course, we do this other places in the world, like in Afghanistan, to ensure that they their respective operations are fully coordinated and best serve the interests of the United States.

There have also been questions about the command and control of U.S. forces in Iraq after June 30, and I can tell you that U.S. forces in Iraq will report to the U.S. commander of the Multinational Force I -- Multinational Force Iraq -- will report to the president through the military chain of command.

We'll obviously consult closely with the Iraqi interim government. As General Myers said earlier this week, we'll be looking for a partnership with this Iraqi government.

And I don't know, Senator, where the three chains of command come from. As I see it, those are the chains of command that we look forward to in Iraq.

The president has said we will turn sovereignty over to Iraqis on June 30/July 1.

GROSSMAN: In the security area, obviously there's going to have to be an arrangement with that Iraqi government that is based on the Transitional Administrative Law, that's based on U.N. Security Council 1511, that's based on CPA order 17.

But I believe that Iraqis who have this vision for their own society recognize that they can't meet that vision without security. And they can't create that security without the support of the United States of America.

And so with General Myers' vision of a partnership with the Iraqi forces and with Ambassador Negroponte on the ground, I'm confident that turning sovereignty over to Iraqis with this security arrangement will be successful for us.

Second area, and that is security. Our top priority, obviously, is to keep people safe. Everybody here should understand that this is not just a dangerous mission for our military forces and coalition military forces that are out in Iraq. This is a dangerous mission for our people as well.

We've already begun the security upgrade of the planned interim embassy buildings and we've selected a site for a future new embassy compound based largely on its security features.

We have 51 armored vehicles already in Iraq. Another 98 are on order, and I can tell you that these vehicles have already saved Iraqi and American lives.

You ask whether we had security agents already on the ground. The answer to that question is yes. We have 32 diplomatic security staff who are already in Iraq to define the mission's security requirements and begin to meet them.

Difficult questions in the security area are left to be answered but, as you know, Deputy Secretary Armitage and our assistant secretary for diplomatic security, Frank Taylor, were in Iraq earlier this week and now will come back and I think help us define further questions in the security area.

But I repeat that this is going to be for us, as well as for our military colleagues, a dangerous place to live and work for some time.

Facilities: Our director of overseas building operations, Ambassador Chuck Williams, traveled to Baghdad in February. We've identified a building to serve as the embassy from the 1st of July until a more permanent facility can be established. We're referring to that as the temporary chancery. It's already under renovation and, Senator, you asked, we believe we'll be absolutely ready to go on the 1st of July.

GROSSMAN: In that temporary chancery will be the ambassador and a limited number of staff. In addition, until we build a new embassy compound, we'll continue to use some of the buildings that the CPA is currently using, mostly for non-public operations, and we'll continue to use the residence that is currently used by Ambassador Bremer.

We've got some housing issues. CPA people are currently housed in trailers. That's where our people will be temporarily. We've got some more trailers on order. But in the facilities area as well, I think we've got a plan in process.

And again, Rich Armitage, who was in Baghdad on Tuesday, walked all of the sites of the temporary facility, walked the site of a new -- possible new embassy compound, and reported to me by phone yesterday that he was confident that in this area we can get this job done.

Finally, you asked about money. And here, Senator Nelson, when I was before the committee the next time, asked me about the money. And I have been trying to get him an answer ever since, and I am finally able to give you, I hope, Senator, a complete answer about where the finances go.

And here's how this works, as far as we're concerned. Our current estimate for the resource requirements for the mission for the rest of FY '04 and all of '05 are between $1.1 billion and $1.5 billion, excluding -- excluding the cost of a new embassy building.

Obviously these cost estimates are subject to change. I'm giving you a snapshot as they are today. The $1.1 billion to $1.5 billion.

We have so far identified $535 million to pay these bills through the end of this calendar year, broken down as follows.

First, we have $97.3 million from the FY '03 and FY '04 Iraq supplementals, which will help provide for some ongoing renovation and security costs, and interim facility requirements.

Second, based on current OMB apportionments, $195.8 million will be available in the fourth quarter from CPA operating expenses, since they will transfer to this embassy. And so that will help as well.

And third, as a successor to CPA, up to 1 percent of the Iraq Relief and Reconstruction Fund, and that's about $184 million, can be transferred for operating expenses.

And our FY '05 did include $46 million for some State Department operating costs, support costs, and $29 million for staffing.

GROSSMAN: So that's $523 million that we have identified.

We're also exploring a number of other funding strategies, nonreimbursed support from other agencies that will participate in this embassy. It's possible also -- and the lawyers are looking at this -- to use a larger percentage of the Iraq Reconstruction and Relief Fund for administrative expenses. And so there are ways that we are looking to fill that gap.

But both Senator Biden and Senator Lugar asked about a supplemental. And if you ask me, in terms of our requirements, we believe a supplemental will be required. Obviously the size and timing ought to be set by the president.

So that is where we stand on the finances at the moment. We'll continue to refine those numbers. But we've got a job in front of us, we've identified some money, and we're going to continue to work on this as we go forward.

My report to you (inaudible) and I say I was very encouraged by hearing from Rich Armitage on the phone the other day is that he believes that the work that has been done by General Kicklighter and Ambassador Ricciardone, and the work that is being done on the ground means that we will be ready to stand up an embassy of the United States of America on the 1st of July.

The second major question that you have both posed is what about the transition on the political side? What happens in Iraq 30 June/1st of July? And let me take a moment to talk about those issues as well.

The restoration of Iraqi self-government on June 30, we have here, again, clear guidance and clear direction. The president has said on a number of occasions that we will return sovereignty to Iraqis on the 1st of July. The plan for restoring Iraqi sovereignty is essentially laid out in the November 15th agreement -- and I just have a chart; and again, I would be glad to have some left with you so this is not an eye examination -- is the way forward from the November 15th agreement.

You'll remember that agreement.

GROSSMAN: It was signed by CPA and the Iraqi Governing Council. It calls for a Transitional Administrative Law encompassing a basic bill of rights. And that agreement, as it goes along there by dates, calls for the selection of an interim Iraqi government to oversee the preparation of national elections and the transfer of governing authority to an interim government by June 30, 2004.

The agreement also established a timeline for national elections and the drafting and ratification of a new constitution and the election of a government under that constitution by December 31, 2005.

Mr. Chairman, I might suggest, if it would be all right with you, is I'd like to ask the TAL in its entirety be submitted for the record. I think it's a very important document and one that does lay out the plan as we go forward. I think it would be very worthwhile.

LUGAR: It will be included in the record in full.

GROSSMAN: Thank you, sir.

Now, there have been some changes in the November 15th agreement since that time. But I think the basic framework and the timeline still holds.

The first step was obviously the governing council's agreement on the Transitional Administrative Law now almost three months ago. It marked an important achievement: equal rights for all Iraqis without regard to gender, sect, opinion, belief, nationality, religion or origin. It confirms Iraq as a single state with federal structures. It confirms civilian control of Iraqi security services and the independence of the judiciary.

And finally, the TAL establishes the general framework for national elections by January 31, 2005, and the drafting of a permanent constitution by August 15, 2005, and then the transition to a constitutionally based post-transition government by December 31, 2005.

Let me talk specifically about the Iraqi interim government. As you all know, and we've talked about before, following the U.N. secretary general's February 23 report and the signing of the Transitional Administrative Law, the governing council on March the 17th asked the United Nations to come to Iraq to help it with two jobs: first, to advise it on how to get to this interim government and, secondly, to advise it about how most popularly to do elections.

GROSSMAN: And so, on April the 5th, Ambassador Brahimi returned to Iraq to resume intensive consultations with Iraqis for this purpose.

And you all have seen, I know, the statement that President Bush made last week that we welcome the proposals that Ambassador Brahimi presented. He's identified a way forward to establishing an interim government that is broadly acceptable to the Iraqi people. The president thanked the United Nations and the secretary general for making Ambassador Brahimi ready for this work. And we look forward to working with him more closely.

In our consultations with the United Nations and in our talks with Ambassador Brahimi we have tried to lay out what we think this Iraqi governing council ought to be about. Let me just give you some criteria that I consider to be important.

First, that this interim government should represent the diversity of Iraq.

Second, that it should not have a law-making body. We don't believe that the period between the 1st of July and the end of December should be a time for making new laws. The structure of the government should be effective, simple, and in order to avoid deadlock should not be overly large.

Third, the process of selecting the government should be as simple as possible.

And fourth, the interim government should have all the necessary authorities it needs to lead Iraq into the community of nations, and especially to undertake agreements with economic reconstruction and to prepare the country for elections.

And as I say, given that criteria, we are pleased with the sketch that Ambassador Brahimi provided of his proposed way forward, and believe his idea fits in our vision.

Mr. Chairman, you have talked a little bit about that vision of Ambassador Brahimi. He believes he can establish by mid-May an interim government led by a prime minister, that also includes a president, two deputy presidents, a council of ministers which would report to the prime minister, and then an advisory body which would be selected by a national conference to be held -- as Ambassador Brahimi foresees it -- sometimes in July which would serve alongside of the executive, but not have legislative authority.

We look forward, obviously, to discussing this further, and I know that Ambassador Brahimi will be reporting to the Security Council on Tuesday in more detail, but we look forward to that.

GROSSMAN: I also want to highlight Ambassador Brahimi's statement regarding the central importance of elections, and that is something with which we absolutely agree.

And in fact for us, the call for national elections in early 2005 was a key part of the November 15 agreement.

In this regard -- and I just really have to say how much we admire the work that the U.N. election team, headed by Ms. Pirelli, did while they were in Baghdad.

They got to Baghdad in late March. They were there for quite a number of weeks. They worked very hard with the Iraqi Governing Council and other Iraqis to establish an election system. And I just want to highlight something that Ms. Pirelli said in her press conference on the way out, which is that the timeline for getting these elections going is very tight. And so we need to pay close attention to getting the election system in Iraq right.

Finally, on the United Nations Security Council resolution, you asked about that, Senator, and both President Bush, Secretary Powell and others have talked about the need for a new U.N. Security Council resolution on Iraq.

Now, I can tell you today that we've not decided in terms of its exact text or when would be the best time to get it: either just before the 30th of June, after the 30th of June; that is something that we are still considering.

But what we have done is lay out -- and I will lay out for you today -- some of the basic components of that resolution when it comes.

The new resolution should, obviously, extend a hand to the new Iraqi government and support it, as you've said, Senator Lugar. It could deal with reconstruction activities including the future of the Development Fund for Iraq, and with the continuing need, obviously, for security for the Iraqi people. It would help the Iraqi people complete the political process for themselves. It would, as Senator Biden said, encourage other nations to get involved in security and reconstruction efforts.

And the resolution could also structure a role for the United Nations in this new political framework, particularly in supporting the process toward elections, which was another of your questions: Who runs these elections?

So, Senators, I sit before you here on the 22nd of April. I have a vision of Iraq on the 1st of July where there will be, subject to Senate confirmation, an American ambassador.

GROSSMAN: There'll be a large but recognizable American embassy.

The ambassador's team, including a highly experienced deputy chief of mission, will include representatives from a broad range of United States government agencies.

There will still be a very large number of American troops on the ground helping to provide security and train Iraqi army and police forces.

And when the ambassador goes to call on Iraqis in government, he will be calling on the president and prime minister of a sovereign Iraq.

But clearly the work we have to do will not be complete. Iraq will still be in transition.

I think it's important to recognize, as the chart does and as we will do I'm sure during the question-and-answer period, that this is an interim government that lasts from the 1st of July until December, and its job is to get elections going, help us and participate as a partner in security.

Security will still be an issue. Elections will need to be held. A permanent constitution will need to be drafted. Economic reconstruction will remain unfinished.

The United States is committed until we reach our objective: a democratic prosperous Iraq governed by a duly elected representative government at peace with itself and its neighbors.

And I hope, Mr. Chairman, that we moved this conversation along from the last time I was here and we have a lot more detail on both ends of this plan. I recognize that we don't have every answer, but I believe we have a plan and we are well on our way to carrying it out.

And I thank you for offering me the chance to give the statement in detail and I hope it has been of some use to you.

LUGAR: Well, thank you very much, Secretary Grossman, for a very comprehensive and extraordinary statement. Each one of us will want to digest carefully as we respond with questions back and forth.

Ambassador Natsios?

STATEMENT OF

ANDREW NATSIOS,
Administrator, U.S. Agency for International Development

NATSIOS: Thank you, Mr. Chairman.

USAID has played a major role in the reconstruction of Iraq. Over the past 12 months, it has been hard at work doing this reconstruction. I expect that it will continue to be hard work for quite some time.

But it has been very rewarding, and I would say the thing that surprised us the most in the reconstruction process is the high technical competence of the Iraqis in the ministries and in local government that we've met and in the other public institutions. That has made our work much easier when you have competent local partners who can manage things and get things done.

We have programs in every province of the country and we intend to keep them going. We have built a solid presence in many places. Obviously our headquarters is in Baghdad, but we have large offices in Irbil, in Al Hillah and in Basra, and we continue those offices beyond the 30th of June.

We have worked very closely with the CPA. We report to Ambassador Bremer, and on the 30th of June, or the 1st of July, we will report to the U.S. ambassador, my good friend John Negroponte, who, by the way, was an ambassador in three countries where there were AID missions. So he knows what AID missions do. He works well with them. Our officers actually were quite pleased with the choice of John Negroponte for this position.

We work in the following areas: in health care, humanitarian assistance for people affected by the war, in local governance and economic growth, in education, in infrastructure, electricity, agriculture, civil society and civic education, and water and sewage treatment systems.

NATSIOS: We work through 32 partner organizations, 11 contractors, 11 NGOs, five universities -- and, by the way, our university partnerships are quite innovative. They're American universities which have partnerships with five European universities and five Iraqi universities. And what we're doing is now having our professors go there to teach and then some of the Iraqis come back to the United States because many of them have never been allowed out of the country and they want to see what the West if like. They keep asking us that.

We also worked with five U.N. agencies, some of them to an enormous degree. They've been extraordinary partners for us under difficult circumstances.

To date, we've been allocated $3.8 billion from the first and second supplementals, and we've obligated of that $3.3 billion.

Let me explain what obligation means. It means there is a signed, written contract, grant or cooperative agreement with a partner organization, that organization has money transferred to its account, and that they begin work on the ground.

Because most of what we're doing we started a long time ago, our partner organizations have a well-established presences on the ground. There are about between 70 to 80 AID officers in Baghdad and these other regional offices. And there are 100 Iraqis who have been working with us for the last eight months. There are about 755 to 800, depending on the time of year and the projects, expatriate contractors who work for our partner organizations.

And then there are thousands and thousands of Iraqis -- depends on -- last summer, we were up to 35,000 Iraqis who were working for AID partner organizations, exclusively funded by the U.S. government. It's down less now because we were using a lot of contractors to do the reconstruction of schools, but it's still on the order of 5,000 or 6,000 as of last week.

I could go through all of the accomplishments of last year. I don't think you want to here that. That is in the record of the larger statement. But I just wanted to give you a sense now.

From our perspective, unless Ambassador Negroponte tells us to change course, we will continue to implement our contracts that are in place and our programs and projects in the areas that I just mentioned on July 1st. The difference will be, we will revert to a traditional AID template in terms of how we actually do our operation.

This is not a normal operation, obviously, in Iraq. It's a massive operation, the most massive AID has been involved in since the Marshall Plan in the late 1940s, where we actually got our start in reconstruction.

But we don't use strategic objectives now because there's one strategic plan for reconstruction the CPA has. We're part of that.

On June 30th, we will revert to the traditional system. We will have our own strategic plan, which is being written now, and we will function under what are called strategic objectives. Strategic objectives are implemented through contracts, grants, cooperative agreements and our staff using the budget that's given to us by OMB and the embassy. And that's what will happen July 1st.

NATSIOS: But we rebid all the contracts: 10 of the 11 contracts we started with before the war. We rebid them recently and they're three-year contracts. So in terms of our time horizon, our planning horizon now is three years.

We do have -- the NGO contracts or grants are about two years, but they can be annually renewed without any difficulty. They don't have to be rebid because of the nature of the contracts.

We will simply continue these projects.

If Ambassador Negroponte decides he wants us to undertake other activities, we will do that. There are four new activities we were given in the last few weeks by Ambassador Bremer. We're out to bid now on these projects. One of them is a very innovative thing in civic education to prepare the country for a democratic transition at the national level.

In any case, we will do as we're asked to do, and we will revert to our traditional mission structure in reporting relationships to the ambassador.

Thank you.

LUGAR: Well, thank you very much, Ambassador Natsios.

The extent of that work really does need to be illuminated. You have done a good job, at least in outlining that today. And all of your testimony will be a part of the record for each of one us to study and to understand how much is already proceeding, but likewise the relationship with the new government.

Secretary Rodman?

STATEMENT OF

PETER RODMAN,
Assistant Secretary of Defense for International Security Affairs

RODMAN: Thank you, Mr. Chairman.

I want to commend the chairman and the ranking member of the committee on the timeliness of this hearing and on the importance of the subject matter.

I also should take the opportunity to commend my colleagues at the State Department, my Defense Department colleagues for what I do believe is a very smooth transition. We're working together. There are always bureaucratic issues to resolve, but I think this is an unusually successful example of cooperation.

Senator Biden was hoping to stimulate some fireworks between State and Defense. I guess I should try to accommodate him, but on this I have to say it won't be as easy to do as he may believe.

The point I did want to stress, if I may, Mr. Chairman, is just to say why the June 30th transfer of sovereign authority is so important.

Of course, first of all, it shows that we're keeping our promise. It symbolizes that we came there as liberators not as occupiers. It is important, as I think everyone recognizes, to end the occupation as such as soon as possible.

In addition, it adds to the incentive for the Iraqis to step up to their responsibilities. As long as CPA is in charge of everything, we see the Iraqis, you know, hanging back a little bit. But we see the value of this deadline because it has brought Iraqis forward. It has given us, I think -- increased our ability to find good people and give them the responsibility when the day comes.

But more than that, it's really at the heart of our strategy. Our strategy is not just a military strategy, it's a political strategy. The collapse of the old regime left a vacuum, and the essence of our strategy is to fill that vacuum with Iraqi institutions -- to help the Iraqis build their own new institutions: political, economic, security institutions.

RODMAN: First of all, it empowers the moderates in getting the Iraqi moderates in charge to the maximum degree is precisely -- it's the way you marginalize the extremists politically while the coalition is out there trying to hunt down the extremists militarily. So it really is at the heart of what we're doing.

And the validity of it I would say is confirmed by the famous Zarqawi letter that you're familiar with. This is the message sent by Mr. Zarqawi that we intercepted a number of weeks ago -- a message he was sending to his Al Qaida colleagues.

And one of the things he dwelt on in that message was how big a problem June 30th was for him. He said, "Once democracy is there, we have no pretext. How do we get Iraqis to attack their own brothers and cousins once the Americans have stepped back?"

So he seems to think this strategy of ours is an effective one. He and his colleagues are doing everything they can to derail it. And I dare say that so far they have not succeeded in derailing it.

So this political process is crucial to our overall strategy. That's why I believe we have to pursue it, which is why we have to make that transfer of authority a success. That's the one point I wanted to make. Thank you.

LUGAR: Thank you very much, Secretary Rodman.

The committee will go into questions and answers now and we'll limit our first round to 10 minutes each.

I'll commence the questioning by raising three questions to you, Secretary Grossman, to amplify your testimony in these ways. And I'll ask all three questions so that you can comprehensively fill in the interrelationships.

First of all, will the Iraqi government -- the officials that are to be named by Ambassador Brahimi after consultation, are we confident that they will accept the transition law that you have pointed out and the timetables?

LUGAR: In other words, you've suggested that not much legislation really is contemplated. The group of consultative persons will be just that to the president and the prime minister and the two vice presidents, and they will have ministries and administrative authority.

But nevertheless, as you are pointing out, we are transferring sovereignty. It is, after all, their government at that point and they did not adopt -- the governing council before them has adopted this transition plan including the bill of rights and various other aspects of this that we found very commendable.

So my first question is the degree of certainty about the timetable the transition law: Can we count upon that being the rules of the game and the framework during this period as you prepare for the elections?

And secondly, to what extent is a status of forces agreement required?

You've pointed out General Myers' testimony about the importance of a partnership between the new Iraqi government and the armed forces of the United States and the coalition. And that surely common sense would dictate that security has to be provided for some time by the United States and coalition forces, even as Iraqis are trained for the police and civil guard and their army.

But, once again, sovereignty comes July 1. It's a new government. They have a president of Iraq, a prime minister, two vice presidents. And it's conceivable that from time to time they might have different ideas as to how security should be obtained or who ought to do what.

And furthermore, if there's not a status of forces agreement that -- which we've tried to think this through beforehand -- there could be divisions that become extremely injurious and hazardous to all the people who are involved in Iraq as well as our armed forces and diplomatic forces.

LUGAR: So I'm curious, once again, about how we pin down the status of forces situation.

And thirdly, you mentioned that our government is now thinking through, by ourselves and with others, the value of a United Nations Security Council resolution that brings recognition, legitimacy, some undergirding to these new arrangements -- that would include the security arrangements and the sovereign government arrangements that Ambassador Brahimi and others have come before -- and likewise offers grounds for other nations, who have either been reticent to participate, or some who want the resolution in order to continue participating, and suggested that might come just before or just after.

But would you fill in why the timing at that point, at the point that the resolution has to come after sovereignty occurs? Why might not that occur likewise in prudent preparation during the month of June, say?

I was heartened by your testimony -- I think it's a very important fact -- you mentioned that by mid-May a lot of the groundwork is going to be there. A lot of Americans, a lot of Iraqis, are to be a part of the diplomatic presence. And certainly, you've suggested that Ambassador Brahimi's plan, the naming of these four important officials, would occur by then.

So these are not unknown factors. So that's the basis of my first question: how do we know and when do we know?

So you're saying by mid-May. However, at that point, unless Ambassador Brahimi has been extraordinarily successful at touching all bases, there may be objections by some Iraqis to the people that are suggested. Or may be objections by the United States or by Great Britain or whoever. Now, how is all of that resolved?

One would say, "Well, after all, you have some time. If the nominations have come in May, and for some reason there's some extraordinary need to reconsult, why, you still have a few days to do that." That's far better than springing it all on July 1.

So you (inaudible) recognize that, and that has been the point of some of my tedious questioning: the need, really, for much of this to occur in May and June, for this massaging of all the players in the new drama. So that when the curtain opens on July 1, the participants are not only familiar with each other and their plans, but we've undergirded it with, if possible, a U.N. resolution, the status of forces, acceptance of the government, this timeline that would have legitimacy adopted, the bill of rights; all of this.

LUGAR: That would be very reassuring to Iraqis, to Americans, to the U.N., to anybody else looking in on this.

And it appears to me that, obviously, you've thought of all of these subjects and have illuminated really the plans, as you suggested today, plus very detailed planning on 500 positions, as you pointed out, that's available for the committee to examine, and that's important likewise, and some much more precise figure on how many Americans will be involved, how many Iraqis in the diplomatic side.

So let me ask for you to comment at least on these three questions: the timeline, the U.N. Security Council, the status of forces.

GROSSMAN: Yes, sir. Let me try to do all of those things.

We certainly agree with you that as much of this as can be accomplished, as early as possible, is obviously a good thing, for exactly the reason that you say, Mr. Chairman, which is that we should not be in a position, we don't want to be in a position on the 30th of June of turning on a light switch and having all of these things appear.

We would much rather be in a position, in terms of our embassy, in terms of our representation, and in terms of what the Iraqis are going to move forward with in an interim government to have, as you say, have practiced this a little bit.

And that's why I said to you, we are trying to have -- we will try to have what we might call a soft opening of our embassy a few weeks in advance so people have a chance to learn their roles and do what they're supposed to do.

And, you know, Mr. Brahimi in his press conference said as clearly as could that he was confident that it will be possible to form such a government in a timely manner during the month of May 2004.

And so I have seen nothing since he gave this press conference on the 14th of April to lead me to believe that that isn't true. And so we ought to be able, Mr. Chairman, to bring some of these lines together in the way that you wish.

Let me try to answer each of the questions as specifically as I can.

First, what happens, what about this interim government in relationship to the Transitional Administrative Law?

When Brahimi gave his press conference, he said that he had been in Iraq a few weeks, he had consulted widely, and he'd come to certain conclusions. And among the conclusions that he had come to was that it was possible under the Transitional Administrative Law, as it calls for, was to create an interim government.

And so I believe that the answer to your questions is, yes, is that this interim government, which will serve from the 1st of July to the end of December of this year -- I think there's a high degree of confidence that they will accept the Transitional Administrative Law.

And why do I say that? Because I would bet you -- and he'll have to speak for himself -- that as Mr. Brahimi went around to his consultations and starts to make his list of people who are going to be on this government and that he would recommend be on this government, I would imagine among the questions he would ask them would be, "Do you believe in the Transitional Administrative Law?

GROSSMAN: "Do you believe in the bill of rights? Do you believe in this timeline?" And I think that would be a prudent thing for him to do. And we'll see when he reports to the Security Council on Tuesday.

LUGAR: And hopefully listen to your testimony right now.

GROSSMAN: I hope so.

But I think of the things that you have asked me, I think there's a high degree of confidence that that answer is yes.

Second, when Ambassador Brahimi left Iraq on the 13th of April, he left behind some homework. And that homework was to Iraqis and to the CPA and to others, which was to start generating more lists of people; start talking to people: jurists, for example, people in the NGOs, people who are working with Andrew's people, others, the Iraqi Governing Council. So that when he arrives back in Iraq in the first week of May, there will have been generated a big conversation about who these Iraqis are that will fill these jobs.

And again, I think it's very interesting to read in his press conference that he believes -- he's optimistic about getting this job done in May for all the reasons that you say.

Second, in terms of the SOFA, here's what we have come to on the SOFA. We believe that for now, and certainly for the period until there is a transitional government, three documents really serve as a status of forces agreement.

First is the Transitional Administrative Law, and you've already been good enough to put that in the record that Article 59 of the transitional law talks about the relationship of the Iraqi armed forces to our armed forces and says specifically, in subparagraph C, that, "The elected transitional government shall have the authority to conclude a binding international agreement regarding the activities of the multinational force." And so part of this SOFA question is dealt with in the TAL.

The second part of the issues that are around the SOFA are from U.N. Security Council Resolution 1511 and, we believe, any subsequent U.N. Security Council resolution. I won't quote you from there but there's a paragraph, number 13, out of 1511, which we believe helps us in terms of status of forces.

And then finally, is what's called CPA Order 17, which lays out how our forces are operating in Iraq; whether -- their privileges and their immunities and their jobs. And we believe that the Transitional Administrative Law, Resolution 1511 and any subsequent resolutions, and CPA 17 will take us through the period until the end of this year.

You asked me, "What happens? You know, how do you work with this new government?"

GROSSMAN: And these are, obviously, questions that we are considering as well.

I think I'd go back to, kind of, a couple of basic points, which is that we are going to turn sovereignty over to Iraqis on the 1st of July.

In the security area, there's obviously going to be an arrangement that has to be made so that we are able to continue to provide security for Iraq.

And the reason I say that is that Iraqis want to have a certain kind of society and they can't get there without security. And they can't get there -- they can't create that security on their own. And so all through the Transitional Administrative Law and all through the other things that we're doing is this recognition that we are going to have to provide for security in Iraq for some time to come for Iraqi success.

And I believe that with General Myers' view of partnership, with Ambassador Negroponte on the ground, with the work that we are doing with the new Iraqi army, the security forces, the police, the civil defense corps and the border security patrol that -- the border security forces that this, that we are very confident that this can work out.

Now, is it perfect every time? Absolutely not. But we've done this before. We did this in Afghanistan. We did it in Bosnia. We do it around the world where we're dealing with places where there's an arrangement, armed security.

And in a sense it comes after the 1st of July to a question of diplomacy. Indeed, which is the ambassador of the United States of America, the commander of U.S. military forces and the people who are in charge of the sovereign government of Iraq.

Finally, to the question of the Security Council resolution, I appreciate what you say about the testimony. I've tried to lay out some of the elements in there. The reason we haven't made a decision about timing, Mr. Chairman, part -- I guess part of the reason is -- goes back to your first question, which is, it seems to me anyway, it makes more sense for a Security Council resolution to come after Ambassador Brahimi has finished his consultations and made some kind of decision or announcement.

And since I don't know what day that is, I can't give you a date for the Security Council resolution. But I think you can see, given the kind of elements that I've said would be in there, where it most like -- where it might most logically fall.

GROSSMAN: Because again, none of us -- and certainly I don't -- we don't want to be running around at midnight in New York on the 30th of June trying to get a Security Council resolution. That's something that ought to have been done to support this effort well before.

So we're working on these things, but we've got to -- I think Brahimi's effort has to be complete before there can be a Security Council resolution.

LUGAR: Well, I thank you very much for those responses.

Let me just say that when Ambassador Negroponte was nominated by the president, Secretary Powell was asked by our committee for help in doing our job. And I want to just acknowledge appreciation to Senator Biden, staff on both sides of the aisle and our committee for their work in preparation for a hearing next Tuesday. Likewise, the State Department for moving ahead through the paperwork that is required.

This is clearly an abnormal situation, and I think we all recognize that. And therefore, sometimes routines and things that we always take for granted are accelerated.

But it seems to most of us to be warranted and my prayer is that with the help of my distinguished friend from Delaware, we'll have a quorum next Thursday for a business meeting. It may be held somewhere in the Capitol, wherever we can find a quorum so that we can, in fact, by the 1st of May, and prayerfully the 29th of April, at least confirm on the part of our committee our work. Then we will move to the floor of the Senate and we will appeal to our colleagues, at least in this special instance, to confirm this ambassador.

And so this is the reasons -- and I spell all of this out because we have some obligations too. We've been calling upon you for timetables and so forth. It's reciprocal, and we are in this together. And I appreciate your cooperation and that of the secretary.

GROSSMAN: I appreciate that.

We certainly are doing everything we can to meet your timetable on Ambassador Negroponte's confirmation hearing. Secretary Powell told the senior staff today to get this done as quickly as possible. And so, we want to do our part.

LUGAR: Thank you.

Senator Biden?

BIDEN: Thank you very much.

Let me pick up where you left off with the status of forces agreement. And, Secretary Grossman, I understand the three documents you referred to as the basis for this agreement, and you made an analogy to Afghanistan and Bosnia with loose ends.

There's a big difference: In Afghanistan and Bosnia we had international involvement in a big way. We had U.N. resolutions. We had an international legitimacy that hung over. We had an interim government there that we, you, helped put together in Germany, but it had the major powers all buying into it. There is an international security force and NATO is in Afghanistan and in Bosnia. It's not even comparable in my humble opinion for the following reason.

What happens on September 7th when the prime minister and the two -- or what? -- one president and two vice presidents, et cetera -- what happens when there's another Najaf and/or in Karbala there is another major, major undertaking, one of the militia goes off the wall and our U.S. commander says, "We're going to take out Sadr. We're going to go in and take out whomever"?

And I predict to you what will happen with this government if it has any legitimacy, they'll say, "Do not go in there." Just like Sistani has said, "Don't -- don't go in and take out Sadr," because he can't afford to be seen as siding with an American force.

Does the government have the authority to say under this new agreement, "The United States of America, we do not authorize you to use forces inside the city of, bang"? What's the answer to that question?

GROSSMAN: Let me try to answer both questions.

In terms of Bosnia and Afghanistan, the reason I raised those, Senator, is that to say that we know how to deal with or have some experience in dealing with governments that have sovereignty but in which we have an arrangement on security. And I don't dispute any of the points that you've made, but my example was, sort of, a more specific one.

BIDEN: Well, no, here, let me just make sure because I have great respect for you. Let's make sure we don't just gloss over this.

The reason why you were able to have those arrangements is because there's an international blessing, international responsibility. The governments with which we are dealing were about to, with their people, look to, as they negotiated with us as to how to proceed diplomatically, the imprimatur of the United Nations as well as NATO forces and the European power. So therefore they weren't left hanging out there.

This time around, as a president of this transition government is going to be nakedly dealing with one person, again the United States of America, with no international imprimatur on this, at least as of now; maybe you're going to have a resolution asking for that.

And, look, it seems to me, Marc, the dilemma is this: Iraq is going to need a significant force in place for years to come to help them work through democratization and this transition. And as the president so eloquently said, he understands why they will chafe under occupation. There is no reasonable prospect -- and I will bet my career on it -- of us being able to stand up an Iraqi army and police force in the next six months, eight months or a year that will do anything other than be able to augment and work with oversight by a major international force doing the bulk of the work.

So what's going to happen is that on -- for this to work on June 30th, it seems to me, in a general sense, there has to be two things: one, that there has to be a maintenance of this massive force in Iraq, and, two, there has to be a meaningful change in the circumstance that the Iraqi people think they find themselves in.

But what they going to find? On July the 1st, they're going to wake up and there's going to be 160,000 American troops and an American ambassador pulling the strings.

I love your phraseology. You said, "When the American ambassador," -- where was that phrase about getting in the car? -- "When the American ambassador" -- this is an important. Excuse me for the digression here.

GROSSMAN: That's right at the end.

BIDEN: At the end.

GROSSMAN: I said he would, "get in his car and go call on...

BIDEN: Yes...

GROSSMAN: ... call on the president of the sovereign Iraq."

BIDEN: ... and that's exactly what's going to happen. The whole world's going to see it. The American ambassador's going to get in the car, and going to go call on the new president.

BIDEN: There's going to be 160,000 American forces out there, 140,000, whatever the number's going to be, and the American ambassador, when there's a problem, is going to get in his car and he's going to go speak to -- get in the car and go talk to the new transition government, whatever that form's going to take.

Now, how does that translate to the Iraqi people as they wake up in the morning thinking there's any transition? I mean, how is that reflect this notion that there is going to be some meaningful change in their circumstance, the average Iraqi? I mean, how does that take the American face off of this?

You know, it reminds me, at least with the CPA we had Bremer and we had Greenstock and we had other international diplomats in a room, and they all played some part. This is kind of like going from Clark Kent to Superman, you know? Clark Kent at least was dressed in his suit when he was in the CPA, everybody knew Bremer called the shots, but there was Greenstock and there are others. Now it's like Clark Kent taking off the suit and saying, "Now I'm the new super ambassador, I'm the proconsul."

I'm not being facetious.

GROSSMAN: I understand.

BIDEN: I mean, I'm very, very concerned about how this changes what the president acknowledges is the Iraqi chafing under occupation. What has changed in this June 30 arrangement?

GROSSMAN: I believe that a lot will change under the June 30 arrangement. And maybe we make a mistake, Senator, and maybe I make a mistake in focusing solely -- although very important -- but let's just stop focusing for just a moment on the security question.

BIDEN: Yes.

GROSSMAN: I'm not trying to put it aside.

BIDEN: No, I agree.

GROSSMAN: What will Iraqis see on the 1st of July that's different from today? They will see a minister of health. They will see a minister of transportation. They will see a minister of reconstruction. They will see all of those ministries.

BIDEN: All of whom will get in the car and drive to the ambassador and ask, "What can I do?"

GROSSMAN: Well, no, sir. Well, I don't think -- look...

BIDEN: Tell me how that's not going to happen.

GROSSMAN: I'll give you a good example. We've already transferred, the CPA has already transferred the ministry of health over to Iraqis, a couple of weeks ago. One of those things, you know, it doesn't get reported anywhere in the news.

BIDEN: Yes.

GROSSMAN: Saddam Hussein in his last year spent $16 million or $17 million on health, and they're now spending about $1 billion on health. The Iraqi ministry of health is now run by Iraqis, period, that's all. Jerry Bremer doesn't go there and tell them what to do. And on the 1st of July, all of those ministries will be run by Iraqis.

GROSSMAN: Iraqis will take control of the Development Fund for Iraq. It'll be their money. Iraqis will take control of the oil revenues. It'll be their money.

I don't debate you in the security area. But what I say to you is, is that in many, many, many other parts of Iraqi life there will be a very important Iraqi face on an Iraqi government.

And I'd say one more thing...

BIDEN: Sure.

GROSSMAN: ... and that is, is that there will also be an Iraqi/U.N. face on elections.

One of your questions was, Who runs the elections? I mean, the TAL says that this transitional authority will run the elections. They're going to need a lot of help from the United Nations. But that's another place where I think the Iraqis and the international community will do a lot.

And finally, you know, I know that people say, oh, they're only little numbers and they're from, you know, odd countries. But I don't think we ought to denigrate the contribution that the coalition makes here.

BIDEN: I wish you guys would stop this. No one's denigrating. This always happens. We talk about, you know when we say there's no real coalition. You guys always say, "Well, you're denigrating the Hondurans or you're denigrating..." I'm not denigrating. They're wonderful, brave soldiers.

But let's get something straight. They are hardly a blip on the screen of security. We have no major powers there. We have Great Britain there with what, 6,500 troops? The people in my state think Great Britain has 20,000, 30,000, 40,000, 50,000, 60,000 people. They got 6,500 troops there.

We got 140,000 Americans, 6,500 Brits, no Spaniards, the Polish minister on the way out says, whether it happens or not, we have to consider whether we pull out the Polish division. Hopefully, that will not happen. We have a minor little hemorrhage going on right now.

So come on. I mean a coalition is a coalition is a coalition. That's like me saying I'm going to have a baseball team where I'm going to play center field and I got eight other little leaguers on the team with me. Their average age is 8 years old. They're wonderful, brave kids. They'll turn out to be brave athletes.

But my goodness, I'm not denigrating any of these other nations. But I am putting in perspective the physical contribution they provide -- and it is de minimus. It is brave, honorable and noble where it's provided, but it is de minimus.

BIDEN: I mean, it's like this little game we play here. It's like when we had the hearings before we were going into Iraq. And Secretary Wolfowitz said to me, when I said there's going to be no Iraqi civil service to stand up -- remember that? We were going to stand up -- this Iraqi civil service was going to be stood up, remember that? And I was presumptuous enough to say there was no possibility of that.

And, "Oh, no. Are you suggesting, Senator, the Iraqi people aren't bright and competent and capable?" Give me a break.

All I'm trying to figure out is how do we get, in a circumstance where the Iraqi people look out there on a day-to-day basis and see, you know, something happened on June 30th here and this is no longer a U.S. occupation. That's all I'm trying to get at...

GROSSMAN: And I appreciate that. And all I can say is that I believe that in ministry after ministry, and relationship after relationship, with this interim government Iraqis will see an Iraqi face.

And further, I do hope, as I've testified, that there will be a new U.N. Security Council resolution. And as I've said in my testimony, that that Security Council resolution will invite other countries to participate.

BIDEN: Who's going to be the referee? Who's going to be the referee when there is a significant internal dispute? Right now in Afghanistan when that happened, what'd we do? You, under your leadership, State Department, got everybody together and said, "Boys, go back to the tent. This ain't going to work."

Who's going to send them back to the tent? Us? It wasn't us in Afghanistan. It was the international community. Who's going to say, "No, no, no, no, no," when Chalabi, if he's still around, cuts a deal with Sistani, which he will -- he's going to eat you guys alive, by the way -- cuts a deal that women no longer have the rights we thought they should have under the transitional agreement? Who's going to say, "Hey guys. Now wait a minute. You've got to go back in the tent and work this one out or go back to the meeting house or go back to" -- I wasn't being derogatory saying tent, literally that's what happened, you know. Who's going to say that, the American ambassador?

GROSSMAN: I think it'd be some combination of the American ambassador, and, as I say, once we have a new U.N. Security Council resolution which talks about an increasing role for the United Nations -- I don't mean to stick a name on it, because I don't know if it'll be Ambassador Brahimi, you know, but we hope...

BIDEN: So you envision there will be a U.N. figure, a prominent U.N. figure, not Brahimi, whoever, a prominent U.N. figure that's going to have a prominent, visible role in Iraq? Is that what you're thinking?

GROSSMAN: I don't know the answer to that question yet because the Iraqis haven't asked for it and Kofi Annan hasn't asked for it, as Secretary Powell has said on a couple of occasions. I know that in your speech...

BIDEN: Kofi Annan didn't ask for anything in Bosnia. He didn't ask for anything in Afghanistan. Let's get off this, OK? They're not going to ask for anything. We're the ones who have suggested it when we sit down with the other major powers and say, "How do we work this out?"

And, you know -- I will end, Mr. Chairman.

BIDEN: But the idea we're going to invite -- I assume Mr. Rodman is going to tell me we're going to invite NATO to participate. Right? That's what we're going to do? We're going to invite them.

RODMAN: We've already been talking to our allies about the future, about the next phase, the multinational force, after sovereignty, after the U.N. comes back in.

BIDEN: Have we sat down with them and said, "Look, NATO, we need your help, and this is what we would propose" -- which we did in Bosnia, we did in Kosovo, we did ultimately in Afghanistan. We said, "This is what we need, and this is what we propose, because we've been doing this for 50 years with you guys, and this is how it works."

Because you all know, but the public doesn't know in this little Kabuki dance we're having here, that's how it gets done. The way it gets done is the president of the United States authorizes the secretary of defense to pick up the phone and call General Jones and say, "General, as supreme allied commander, we'd like to see if you can put together a NATO force."

The general sitting behind you knows exactly how this works.

"We'd like you to put together a NATO force, and we'd like you -- and it should be along the following lines. Over here at DOD, we figured out this is the best way to do this. And it would be best if we had the following number of -- boom, boom, boom, boom, boom, boom, boom, boom, boom, boom. We can only provide the following nine helicopters, because we had a fight over Afghanistan in providing four other helicopters, and we're going to do this..." And it's an American that does that. And we then go in and we have a plan.

Do we have a plan like that, or we going to sit down like President Carter -- like Secretary Vance did, when I was a part of a group convincing the president of the United States that we should lift the arms embargo in Bosnia. And what did Secretary Vance do? He want over to Europe and said, "You know, I think we should lift the arms embargo, what do you guys think?" Which was signal, "Don't worry, don't have to lift the arms embargo."

It matters how we do this. And I guess my time's long up. I just hope that somebody sitting there has made a firm decision: "We're going to get NATO involved, we have a specific game plan that we're going to try to sell NATO and work it hard to get it done." And if that's happening, I'd be overjoyed. It may be happening and you all aren't telling us.

But the idea, if we're going to wait for Kofi to ask us -- I spoke to Kofi yesterday for 10 minutes. He's not going to ask you. What he's going to do is find out what you want, what you're willing to give, what your plan is, and then'll find out whether he's willing to sign on. But he's not going to ask you, Marc.

LUGAR: Thank you, Senator Biden.

LUGAR: Senator Hagel?

HAGEL: Gentlemen, thank you for coming before the committee this morning and express our thanks to your colleagues for their service.

Secretary Grossman, could you explain what we are doing to enlist the support, involvement of Iraq's neighbors, our Arab allies, what roles are we asking them to play as we work toward a transition and beyond?

GROSSMAN: Yes, sir, Senator Hagel.

One of the reasons that the president sent Rich Armitage to the region last week was to do precisely that. He visited a number of Iraq's neighbors, and his messages were really three.

First, it's very important that they support this transition and the date of the June 30th and give all the support that they possibly can.

Second message was that they, as best they could, with the communities that are important to them, either Sunni or Shia -- that they also send messages to those communities that they needed to support the governing council now, the transitional government -- the interim government -- when it comes on the first of July. And those were obviously to those that are our allies.

We've also, as you know, Secretary Powell has sent a letter to the Syrian government saying it's very important that they pay attention to their border and to do all they can. And with the Iranians we have communicated as well that they have a responsibility, just like we do, to try to make sure that Iraq comes out right.

And so we've tried to be in contact with everybody in the neighborhood.

HAGEL: What additional roles do we foresee these Arab allies, Iraqi neighbors playing?

I understand what you've just said, what Rich Armitage is doing. It's important diplomatic outreach. But give us an example, if you can, where you could see more active involvement in Iraq from our Arab allies and Iraq's neighbors.

I'll come to you in just a minute, Mr. Secretary.

I suspect Secretary Rodman wants to talk about the security part of this, in which I'll welcome that.

But give me some tangible explanation, beyond what Rich Armitage is doing visiting the capitals, and that's important.

GROSSMAN: Right.

HAGEL: But what could we expect will be a follow-on -- a tangible follow-on from that?

GROSSMAN: Well, first, of course, is to make sure that countries in the region, especially the near neighbors, meet the obligations that they gave at the Madrid conference to contribute money.

Second would be to speak out, because I think it's very important that these countries speak out in favor of the Iraqi interim authority once it's established.

We would also look, as I say, I think quite important, and I don't want to put it aside, for them to speak to the various communities.

GROSSMAN: For example, if the countries in the region who had impact on the Sunni community inside of Iraq were to reach out to them and say, "You have a future here and you ought to get yourself organized politically, and you have to leave aside, you know, the people who are leading you to violence," all of those things would be extremely important.

So it's, sort of, physical resources, it's political resources and then, you know, I'd looked to Peter to see whether there were any military things that could be done.

HAGEL: Do you expect that, in fact, our Arab allies, Iraq's neighbors, will, in fact, do that; will, in fact, speak out and be helpful in the areas that you just noted?

GROSSMAN: Certainly from what I could get from Richard's trip, the answer to that question is yes.

And there's one other point that I did forget to mention, although I mentioned the Madrid pledges that were made, also very importantly is debt reduction; in those countries that hold a lot of Iraqi debt that they respond positively to Secretary Baker's response that that debt be dealt with.

HAGEL: Is Secretary Baker still involved in that project?

GROSSMAN: Yes, sir.

HAGEL: Active?

GROSSMAN: Yes.

HAGEL: Thank you.

Secretary Rodman?

RODMAN: I just wanted to add that the Jordanians are doing police training. The Egyptians want to get into the same game and we, of course, encourage that. I endorse everything Marc said.

In all of our conversations with our military colleagues or with Arab governments, we encourage them to do anything they can do, including in the political side, giving political support to the Iraqi political process that we have going. A lot of them have humanitarian projects or economic projects in the country. So I mean, all of us are working on the Arab neighbors to support it.

Now, obviously, there are sensitivities. It's not self-evident that Iraqis want a lot of the Arab countries, you know, in -- there are some sensitivities within the Arab world, so there are delicacies that have to be respected. But we're encouraged by the attitude of most of these countries because they feel the same stake in the success of Iraq that we do, if not more.

HAGEL: Thank you.

Let me ask you each, from Armitage's reports, which you're picking up, have our efforts that you have each been talking about in response to my questions with our Arab allies and Iraqi neighbors been in any way impaired or inhibited as a result of Prime Minister Sharon's visit here last week and the president's new position on the Palestinian-Israeli issues?

For example, wasn't the king of Jordan supposed to be here this week?

HAGEL: So can you tell us, panel, has that had an impact at all on our relationship with the Arab world?

Secretary Grossman?

GROSSMAN: Yes. I'm answering a specific question you're asking me, which is, "From the reports I'm getting, you know, has it impacted on the requests Rich was making to people to help out in Iraq?" I think the answer to that question, as near as I can tell is, "No."

For example, you're right. The king of Jordan was supposed to be here this week. He decided not to come but he'll be back on the 4th of May. But the very important police training program that Peter talked about continues in Iraq. And so in that sense, I think the answer's "No."

HAGEL: So there's been no static or no problems as a result of this?

GROSSMAN: In terms of the requests we've made for them on Iraq, no, sir.

HAGEL: Secretary Rodman?

RODMAN: I agree.

HAGEL: Secretary Grossman, could you explain in your opinion -- and I would welcome Secretary Rodman's thoughts on this as well -- if, in fact, there is a rise of Islamic nationalism in both central and southern Iraq, what then is the possibility is an Islamic fundamentalism taking hold in these areas?

Obviously we have seen some disturbing dynamics occur over the last few weeks. And I guess the real political question that we get to is is this leading toward a Shiite-Sunni domination of the political process in Iraq?

So if you would unwind that for me, Secretary Grossman, I'd appreciate it.

GROSSMAN: I'll do my best.

I think the most important thing, Senator, is to try to convey to Iraqis, through the Transitional Administrative Law, through the timetable that we have, that Iraq has to stop being a winner-take-all state. It was a winner-take-all state in Saddam's time. It was a winner-take-all state probably before that as well.

And somehow we have to continue to work to make sure that the Shiite who were, of course, dominated by the Sunnis in the past field that the reverse won't happen to them, and that everybody has a stake in this new Iraq. And that's why, I think, the Transitional Administrative Law is an important thing.

And I also think this change on the 30th of June to Iraqi sovereignty is important. It's a commitment not just to get sovereignty there, but to let these Iraqis start to work some of these things out themselves.

In terms of Islamic fundamentalism and Islamic nationalism, all I can tell you is that from things that I see and reports that I get, and polls that I see, or local elections, you know, for local councils that we see, this is not something that Iraqis want.

Iraqis want a secular society. And like Senator Biden, I don't say that they have to have a democracy like our or like anybody else's, but a representative government and a free government and a place where they are able to do things on their own.

And so near as I can tell, this is not a question of rising fundamentalism. It is a question of having Iraqis understand that this can't be any more a winner-take-all society.

HAGEL: Let me ask this as a follow-up. And I know you wanted to add something, as well, Mr. Secretary, which we'll get to you.

Is the United States prepared to accept whatever government the Iraqi people want? I think, as we all understand, nations are built from the inside out. They're not built from the outside in.

HAGEL: We've made some dramatic foreign policy mistakes in this country, as all countries have, thinking that we could do just the opposite.

So as the elections stay on track, which we all want that to happen in January -- and, by the way, I strongly support the president's position on this handover on June 30th; with all the questions and all the problems, for all the reasons you mentioned, it's important we do that, as well as keeping on track with that January election time frame.

So we are prepared then to accept whatever comes?

GROSSMAN: In the end, Iraqis have to govern themselves. But what we are trying to do, with us, the international community and others, through the TAL, through the transition, is to try to say to Iraqis, "There is a way to live in this modern world with representative government, and there's a way to live in this world with a bill of rights."

HAGEL: But if they choose another way, that's their decision?

GROSSMAN: Iraqis in the end have to choose their own form of government, yes, sir.

HAGEL: And any efforts to impose any kind of government aside from that would not be made by this country?

GROSSMAN: What we're trying to do, through the kind of work that Andrew is doing and the Defense Department is doing and we're doing, is try to open the window for Iraqis on a new kind of way of life.

I mean, Senator Biden said, think of what their life must be like after these 35 years that they've had, and that we've got to open some windows on the way that they can live in the future: windows on a free economic life, windows on rule of law, windows on things that they don't have much experience with.

And so what I'm confident of is, is if we give people a chance here and we're patient and we're prepared to help out and we can open these windows, that they will choose to become part of the modern world and choose some kind of representative government. I believe that.

HAGEL: Thank you.

Mr. Chairman, may I indulge the committee to ask if the other two witnesses wanted to answer that? And I apologize, my time's up.

Mr. Secretary? Secretary Rodman?

RODMAN: May I -- no, it's a very good question. But we have confidence that there will be a moderate outcome. And, I mean, that's really the essence, it's our strategic to strengthen the moderates, to empower the moderates.

You asked about Islamic fundamentalism, and I would say two things. One is, there is a province in southern Iraq called Diyala province, that has held 17 local elections in the last month, and the Islamists lost in almost every single case.

The Shia in Iraq, they're not radical. They come out of a secular tradition.

The second point is, the Sadr rebellion, the Sadr putsch attempt, was an attempt to tip the balance among the Shia in the direction of his brand of radicalism. He was a marginal figure among the Shia, and he attempted to remedy that by radicalizing the community, making himself, by intimidation, the dominant figure.

He failed. The moderates among the Shia have rolled him back. Particularly when we started rolling him back militarily, the moderate leaders of the Shia found the courage to put political pressure on him, and he failed in his attempt to become the dominant figure among the Shia.

So, again, we think this is -- the Iraqis are a common-sense people. We think the overwhelming majority of the people are moderate, they want a modern, moderate kind of government. And I think our influence, as long as it's there, can have a great effect in helping the moderates, who are the majority.

HAGEL: Thank you.

NATSIOS: Just from a ground perspective, a little different perspective, to reinforce what both my colleagues just mentioned, we've been looking at the structure of Iraqi society, the value systems developing, and it's very interesting what's going on.

Early on last fall, our democracy officers were going with one of our contractors to these local councils that had been elected, and the agreement is, they form themselves into a council, we teach them how you run a meeting, how you take a vote, how you make decisions, how you have a public hearing.

NATSIOS: And at one of the hearings, one of the first early ones, one of our democracy officers was sitting there and they were yelling at each other, literally screaming -- no fist fights -- but for three hours on how to spend a small grant. We set the thing up and then we go in and say, "Decide how to spend $20,000. We'll help you spend the money, but you decide what the project is and where it is and what it is in the village."

And after this yelling for three or four hours, Chris said, "I've got to go to the next town. You can't make a decision here."

And the chairman of the council said, "Do not leave. They'll kill us."

And Chris said, "Who is going to kill you?"

He said, "The people in the village know you're here with this money to do this project. We just can't decide what it is. If you leave, they're going to kill us. Isn't that what democracy is?"

And Chris started laughing and said, "No, that's not what democracy is. It means you might get defeated in the next election, but we don't kill our public officials because we don't like what they do. We just take them out of office by an election."

And we thought he was kidding. They have no conception of what this is.

I've been there twice. For a week I met with delegations of people. One was a delegation of 11 graduate students from the best universities in Baghdad, and I had two hour -- it was fascinating to talk with them. They're all in their late 20s and early 30s. One of them said to me something extraordinary. He said, "You started the operation. We're on the table. You opened this up. Complete the operation. Please do not leave until you finish. We want you to finish. We were under this psychopath all these years. We want you to finish. We just don't understand what this means."

These are young students now. They said, "We do not -- we like democracy because it's like America and Western Europe, but we don't know what that means."

So we're running now a huge public -- about to run a huge public education campaign that was designed by Larry Diamond, one of our true greatest democracy scholars from the Hoover Institute, a good friend of mine from Stanford University. And he put down the areas -- he went over there for weeks interviewing people -- "What don't you understand?"

We designed a curriculum with papers explaining, what does minority rights mean? What is an election? What's a political party supposed to be? What is freedom of the press? What do these things mean? There's going to be radio, TV, there's going to be interviews, and it will be done on a mass basis so they will understand what this thing is that we talk about. Because we're all assuming people want democracy when they really don't know what that means.

Another thing that hasn't happened, we were expecting large-scale atrocities against the people who committed the atrocities against the Shia and the Kurds, and it has not happened.

NATSIOS: We had teams sent out last year, a year ago, to stop the atrocity. They haven't happened.

So I sent an expert in human rights in. And he went to police station after police station. He went to mullahs. He went to imams. He said, "How many people have been killed in revenge killings for what happened in the 1990s and 1980s by Saddam?" Maybe 40 or 50 people in a year. We couldn't understand why.

You know why? Because the imams and the mullahs in the mosques, every Friday they get up all over the country and say, "We are now -- the Americans have come and the British have come. There's a thing called rule of law. If you think someone committed an atrocity, we have to go to the courts. We have to prosecute them. No revenge killings." And guess what? The people are listening to them.

We had an incident down in Umm Qasar when we first arrived where a school teacher, an English teacher, got up before a crowd of men, was going to burn half the Baathist Party houses down and kill all the Baathists because of what they had done, because this was a Shia city. And the guy got up alone in front of 300 men who were screaming saying, "I'm going to kill them all now -- the Americans in Iraq -- I'm going to kill them."

He said, "The Americans have told us and the British have told us that rule of law means you prosecute people through a court. We never had courts here except to execute people. And it was a joke. You have to present evidence. We cannot use retribution to run this country."

Guess what happened? They put their torches out and they went home and they never burned one house down.

So what I'm suggesting to support my colleagues here, you know, they want a change after what they've been through.

One last story -- an NGO told me this story. It was a sheikh who supports the more radical fundamentalists but he was talking to, you know, one of the NGO guys from the United States who's an American. And he said, "I shouldn't admit this to you in front of the other sheikhs, but my mother, who's an elderly lady, prays for the health of George Bush every night."

And he smiled -- this guy's a Democrat, he's not a Republican -- but he told me the story. He said, "I know why you're going to tell me, but tell me why." She said, "Because he got rid of Saddam and the lunacy that has governed this country and he's at least given us some hope for the future." That's the mother of a sheikh who's on the radical side.

And he smiled and he said, "We do appreciate it even if we're having trouble with this transition."

So the impression you get in the media is a little different than you get at the grassroots level.

HAGEL: Thank you, Mr. Chairman.

LUGAR: Thank you, very much, Senator Hagel.

Thank you, Senator Dodd, for your patience. And at the same time, the testimony...

DODD: I was beginning to think I was listening to some colleagues in the Senate here.

(LAUGHTER)

A bit of a filibuster. Sometimes I wonder if we're living on the same planet, however, when you say some of these things. And I appreciate your comments.

Let me, first of all, Mr. Chairman, thank you again for doing this, you and Senator Biden.

DODD: This is the historic and proper role of this committee, and you are fulfilling it with these hearings. And while it's uncomfortable to be witnesses and to face a barrage of questions, I think it's a tremendously important function you're performing here, and I for one deeply appreciate it. I've said that before, that it's been very, very helpful.

I'm going to ask unanimous consent that opening comments and statements be included in the record.

And let me just -- I know Senator Biden has expressed this. I said it yesterday, and I'll repeat it again today: Whatever the differences I had years ago with John Negroponte, I happen to feel that he's a very fine foreign service officer, done a tremendous job in many places. And I second your comments and hopes that we'll be able to move expeditiously through this committee and on the floor of the Senate. Whatever else one's feelings may be, I think it's critically important that we get an ambassador there.

And so I'll just give my support in trying to get that done. I'm sure my other colleagues will as well, and hopefully we can move along.

Let me, if I can, go back, with Secretary Grossman and others here. I want to follow just two lines of questions, and I'll start with one that I think may be a little easier to address first, and that is the role of the U.S. embassy that is going to emerge here, and how the lines of authority are going to develop under this new embassy. And then I want to quickly get to the June 30th issue, and how we're going to deal with some of these questions.

It's unclear to me how authority lines are going to develop, with -- putting aside now the June 30th date -- but just what is the role of the U.S. ambassador going to be here in the reconstruction effort? Will he be head of mission in Iraq, with all of that means, very specifically? Will the Department of Defense maintain control over the purse strings, or is that going to now shift to the U.S. ambassador in terms of those efforts?

GROSSMAN: Yes, sir, Senator.

In my testimony, I said that Ambassador Negroponte, if he's confirmed -- and I hope he will be confirmed like you -- will go to Iraq with a letter from the president, like all of our ambassadors have, that says that he will be responsible for all of the activities of the United States of America's executive branch, except for those that are under the command of an area military commander.

So we certainly expect that all of those questions, of the money and the priorities and the reconstruction, will be his responsibility.

GROSSMAN: Just to be clear, it's not to say that we won't take advantage of the extremely important structures that are in the Department of Defense; for example, you know, using Army contracting or using some of the other structures that are there. But the person responsible will be the ambassador and then the secretary of state.

DODD: But there will be no unique lines that are developed here in terms of the purse strings in dollars beyond what you just described. All of that will fall under the auspices of the U.S. ambassador.

GROSSMAN: Yes, sir.

DODD: So I don't expect I'll be looking at some different chart here in a few weeks that shows some different lines of authority in terms of how that operates.

GROSSMAN: That's correct. On the questions you've asked me, that's correct.

DODD: Mr. Natsios, let me quickly point out to you here, in terms of the reconstruction and some of the efforts that are going on, there was a very devastating report from National Public Radio yesterday about the Iraqi health ministry selling equipment and medicine for personal profits. I don't know if you saw that. Did you see that report?

NATSIOS: I did not see it, Senator.

DODD: Well, you ought to take a look at it. It's the kind of thing that worries us in terms of these transitional issues.

I'm also wondering if you have any comments to make about the reports that GE and Siemens have pretty much pulled out of its operations because of the security problem.

NATSIOS: Siemens and GE are not our contractors. Bechtel is our big infrastructure contractor and has not pulled out.

DODD: Do you know about GE and Siemens? Do you know about that?

NATSIOS: I read it in the newspaper.

DODD: You know nothing more about it than that?

NATSIOS: They report to the Defense Department, and they do Defense Department contracts.

DODD: Mr. Secretary, I apologize then.

Secretary Rodman, do you have a comment to make on that?

RODMAN: I am not familiar with it. I can get an answer on the record, certainly.

DODD: All right. Let me move in time here then to this issue.

We've heard from witnesses, including ones yesterday, that I thought were very, very helpful and described two or three issues, and there may be more. You might want to add to them.

They all were very different, by the way. We had people who were witnesses from the political, the military, economic, human rights side, I guess you might add. Yet all had a common theme as they talked.

And they listened when Chairman Lugar asked them I think to prioritize what the top issues were. All of them came back and said security was the number one issue.

And I see you're nodding affirmatively that you would agree with that, Secretary Grossman.

But getting not only the security of our own people and forces there, but obviously it's important to the Iraqi people.

Secondly, it was raised -- or the second issue was the stabilization plan in place, one that would really offer some clear pattern of how we're going to bring some order so that these ministries we're talking about could actually function and operate in at least some degree of success so that civil society would begin to function with some degree of normalcy.

DODD: Thirdly, there was a discussion of to what extent can we truly internationalize these efforts through the reconstruction phases, additional security questions. I no longer hear the kind of debate that occurred -- at least I don't hear it as loud as I did before -- about, sort of, the exclusion of the international community, but more importantly, how can we get them all more involved in all of this.

Here's my concern -- and I know my colleagues and others -- and I understand the significance, having made this commitment last, I guess it was November, on the June 30 date. My concern is the, sort of, bureaucratic rigidity to that date, and realizing that if you let it slip, you cause problems. And I accept that. I'm not suggesting this is not without difficulty if you do this.

But it seems to me to rigidly hold on to that date, when the issues of security, stabilization and internationalizing our efforts over there may be put in jeopardy if we hold too rigidly to that date, is a far greater long-term loss in Iraq than whatever short-term problems we may face if, in fact, we allow that date to move, because we don't have these issues in place.

To pick up your point, Secretary Grossman, the idea of running around at midnight on the night of June 20th or 29th or 30th trying to get a U.N. resolution adopted.

And I'm very worried as I look at this.

Chairman Lugar raised it, I think, at least, if I heard him correctly, in talking about, for instance, the security force; what happens if after June 30, if I read the -- as I think I did -- "a law for the administration for the state of Iraq, the transitional period, the first phase shall begin with the formation of a fully-sovereign Iraq interim government" -- a fully sovereign government.

You've talked about limited sovereignty, Secretary Grossman, in some public statements. But if they decide for whatever reason that they want some different configuration on the security issue after June 30th, thus making it far more difficult for us to achieve the job we need to get done there -- whichever one seems to agree must be the case -- then don't we find ourselves in a situation, having embraced that June 30th date so rigidly, that we make it far more difficult to get the security job done, or the stabilization plan, or, in fact, that they make decisions that make it far more difficult for us to get international cooperation?

Haven't we, in a sense, made our job that much more hard, that much more difficult, if we hold on? That's sort of the question I get.

And I want to know, in that context, by the way, whether or not we're going to see some annex that I read in this law. I gather nothing's been developed, but that law goes on here, the provisions of the transitional period talks about the governing council and the Coalition Provisional Authority and possibly in consultation with the United Nations.

DODD: "This government shall exercise authority in accordance with this law including the fundamental principles and rights specified herein, and with an annex that shall be agreed upon and issued before the beginning of the transitional period and that shall be an integral part of this law." Is there an annex? And I'd like you to address that as well.

But get to this question of June 30th if you can. And my concern here -- just so we're painting ourselves into a corner on this is my worry. And we're so determined to hold on to that date that we're sacrificing some of these other critical issues that will determine ultimately whether or not we're able to do exactly that which I think all of us want, and that is a stable, peaceful Iraq with a chance to determine its own future.

GROSSMAN: Senator, thank you very much.

If I could just go back to the comment you made on your opening comments, I just want to be clear and I hope that people who, you know, are watching this, maybe even people who are watching this in Iraq, or will see it in Iraq, it is not uncomfortable to be a witness. This is our democracy.

And I mean that honestly. We're glad to come here because you are asking the right questions. And you have the right to ask those questions and we have a responsibility to try to answer them. And we've always considered especially to work with this committee to be a very good consultation.

So, as people watch this, this is what democracy is about. And I appreciate it. I appreciate you saying that.

In terms of the June 30th deadline, I guess when you say that you are worried we're painting ourselves into a corner, I guess the way I look at it is through a mirror which says that this seems to be on the 30th of June to be a way out of that corner. Because if it is right that we want to put an Iraqi face on this -- more Iraqi face on Iraq, then one way to do that is to transfer the sovereignty on the 30th of June.

If we want to step back and not have a Coalition Provision Authority administrator occupation, and we want to have an ambassador of the United States of America, the way to do that is on the 30th of June.

And so with respect, I accept your point, I take it, and I think it's one way to look at this. But we think, and we're working hard to make it real that this is the way out of this corner that we're currently in. And that corner we're currently in is called it's all the United States. And so we'd like to move out and put more of an Iraqi face on this.

I'll give you a couple of specific examples on the issues that you raised.

First, in terms of security, I was nodding my head because I agree with you. Security is absolutely the first priority. And I think it's a priority for all of us including our military colleagues and our Defense Department colleagues.

But one of the things that General Myers has been testifying on over the past couple of days, which I found extremely interesting to listen to, is if in terms of security -- if on the 30th of June, 1st of July, Iraqis feel that they are now fighting for an Iraqi interim authority for Iraqis for their own country, rather than for a Coalition Provisional Authority, that this may actually strengthen their capacity to move forward.

GROSSMAN: And I know that our military colleagues say, and listening to them for a couple of days, believe that this is an important part of increasing the capacity that we have to bring security to that country.

Second, in terms of those stabilization plans, I'd say two things. One is, yes, absolutely, there ought to be a stabilization plan, and it ought to be clear to people.

DODD: We only have 70 days left here, though.

GROSSMAN: Well, that's right. But one of the reasons that this embassy is going to be so large is because there's going to be a huge amount of work to do before the 30th of June and after the 30th of June.

And the other thing, in terms of stabilization plan -- and, you know, I'm the first person to admit that I wish this would have gone along a lot faster -- is we also have to remember that some of the $18.4 billion in reconstruction funds that you all provided are now going to start to spend out here over the next few weeks.

And so, as we've got these 70 days, more and more Iraqis will be employed, more and more Iraqis will be part of this economy. I think that will also be part of the stabilization plan.

And finally, in terms of the international effort, again, from my perspective, if Brahimi says, "I'm confident I can do this in May," I have no reason to think anything other than let's help him make that true. If he can accomplish that task and then you can have a Security Council resolution, as Senator Lugar said, in advance of -- to support what Brahimi has said, then, why wait? Why not take the opportunity of that 30th of June date, because you've got then a government, you've got people, you've got a structure, you've got a plan. And as Senator Biden said, "Let's put a more Iraqi face on this."

I think that the 30th of June date is an important one, not just for us -- and maybe even less for us -- but it is really important for Iraqis.

DODD: Would you get to the annex question? I know my time is, but this...

GROSSMAN: Yes, I apologize. Can I come back to you on the record or here in a minute? I don't know the answer to that question. I just don't want to get it wrong.

DODD: You know what I'm talking about, though?

GROSSMAN: I do. Yes, I do.

DODD: Because that does -- it spells out an awful lot of the authorities.

GROSSMAN: Right.

DODD: And I think it's going to be very, very clear, that difference between that and, obviously, the Iraqi transitional government, which is eight months later. In this period this annex is not an insignificant document, and to my understanding isn't -- do you have it ready? Is there an annex document ready yet?

GROSSMAN: Well, I'm told no, there is not one now. It's being drafted by the Iraqi Governing Council.

But let me -- so I don't goof this up, let me come back to you with a more complete answer.

NATSIOS: Could I just answer your question about civil society, which I think is a very important insight into the preparation of the country for the transition?

We engaged five major American NGOs last summer in setting up a set of community action programs at the village and neighborhood level in the cities across the country; huge programs. We're now in our second phase of that. They were $7 million grants each, $50 million, and there's another $50 million that's going out to them now, because it's an extraordinary program.

I met with many of the local groups that have been formed by these NGOs to make decisions. These are not town councils, they're just community groups. And they make decisions on, "Shall we repair the water system or the electric lights, or do we want to redo the school?" And we require them to put some of their own money -- they actually engage the community to put some of their resources in, in addition to ours. So it's their projects, not our projects. Which is very important, because they provide the protection so that the looting that took place last year does not happen again; they protect it because it's their project.

DODD: OK.

NATSIOS: The effect of this is to get a new generation of political leaders at the local level who people can look to for leadership. I mean, sometimes they don't do very well and they get defeated in the next election.

DODD: Well, very good.

Mr. Chairman, I'll just conclude again here, I, for one, and I believe most of my colleagues, are anxious to see this work and succeed. This is not a hostile environment where some people may wish to see this fail somehow. I don't believe that's the case.

But I am very, very worried that we're -- and I'm not suggesting you change the date today at all; obviously, 70 days allows a little time. But if there isn't some real progress fairly soon on this, let -- my simple recommendation is to be careful.

I realize it's a problem by moving away from a date. But by holding on to that date and not having the questions answered about security stabilization and how we develop the kind of longer-term international commitment involvement here, putting that at risk with an interim government that may have a very different set of political calculations than we do.

DODD: My experience sitting this side of the dais is, you know, politicians and politics, it's always local. And they're always going to be making their -- determining their futures based on what they think is in their local best interest.

And we may find ourselves in direct conflict here at a time when we may decide that we need more security or we need more international involvement. And it may be that much harder for us to achieve it and look back and regret deeply that, while we knew there was a price to pay by moving the date of June 30th, we cause ourselves untold problems by sticking with it and turning over authority prematurely, when it was not ripe yet.

And so I urge you during these coming weeks to assess that knowing full well you'll pay a price if you change it. But the price you pay may be a lot less than the larger price if you hold on it and discover we're really all alone in this effort, we don't have the security forces we need to protect our own troops, let alone the Iraqis, and there's no way in the world you're going to get a stabilization plan with chaos reigning in that country.

So I just urge you to be careful. Think carefully about this.

Thanks, Mr. Chairman.

LUGAR: Thank you, Senator Dodd.

Senator Chafee?

GROSSMAN: I'm sorry. May I answer the senator's question on the annex?

LUGAR: Yes, please.

GROSSMAN: I apologize. And I apologize I didn't know offhand.

I'm told that there is a drafting committee for that annex, that Adnan Pachachi of the Iraqi Governing Council is chairing that committee, that the CPA is involved, and that their objective is to try to incorporate into the annex Brahimi's ideas for the interim government. And if there's more than that, I'd be glad to submit it for the record.

DODD: That's fine.

Mr. Chairman, I just urge that you and Senator Biden, if we could be kept informed as to how this is progressing so that we know what's in that. It's a very important document. A lot of the authorities are going to be in that annex.

GROSSMAN: I'll be glad to commit to that.

LUGAR: Good advice and we will attempt to follow through.

Senator Chafee?

CHAFEE: Well, thank you very much, Mr. Chairman.

One of the things I think we're learning in the last few days and weeks is that there's a culture of denial in the administration. And that certainly in the build-up to the war we're seeing that the existence of weapons of mass destruction, the threat of Saddam Hussein to us has been pretty much debunked. And even Andy Card, I think was quoted recently as saying, "There's no there there," when he received a briefing on the weapons of mass destruction.

In fact, I, before voting on the war, went out to Langley to the CIA by myself; had about 15 people there to give me a briefing. "What do you have?" And after that briefing, I was underwhelmed enough to tell my local paper, the Providence Journal, "We're not going to find any weapons of mass destruction." And that was a year ago.

But now we're there. We've lost 700 young men and women -- or nearly 700. We're spending over $1 billion a week, but nonetheless now we're there.

But what's very, very alarming to me is that this culture of denial now exists on the relationship between what we're doing in the Israeli-Palestinian issue and in Iraq. And President Mubarak was in Crawford, Texas, saying to the president -- his quote was, "the centrality of the Arab-Israeli conflict to our problems there." And from hearing you answer Senator Hagel's question, you're saying, "No, there's no connection."

When I was in Baghdad and Mosul in October, the Arab graffiti was all about the Palestinian cause. And that's what the Americans were telling me.

And certainly if you read the Dridjian (ph) report, which the Bush administration commissioned, their own people who studied the Arab world. The finding was that the Arab world looks at U.S. foreign policy through the prism of the Arab-Israeli conflict.

And now you're saying here testifying, "No, that there's no connection between the rise of the intifada in April and the intifada between the Israelis and Palestinians."

CHAFEE: And that's what's going to get us in trouble, that same denial that we had back in the WMD question, and now we have here.

We're not going to win in Iraq. I want to win. I join my colleagues. We want to prevail there. We want a stable Iraq. But we're not going to do it as long as we continue, my opinion, to inflame the Arab world by not participating more fairly in -- this is a change -- what President Bush did with the Sharon plan, is a change from six previous administrations. Ever since the Six-Day War of 1967, American administrations, Republicans, Democrats, have had a policy. That just changed. And for you to say that's not going to adversely affect us in Iraq, it's why we're not going to prevail.

We have to address some of the Palestinian issues if we're going to prevail in Iraq. And I don't really know what kind of questions to ask as long as this culture of denial exists.

Maybe I can say -- only question I have is, are you told not to make any connection between the two?

GROSSMAN: Senator Chafee, I think you put me in a position that I'm not in. Senator Hagel asked me whether on Rich's trip whether there were things that Rich asked people to do in the region to help in Iraq, which they said no to because of Prime Minister Sharon's visit. And I said the answer to that question was no.

And the example I used -- and thanks to Peter Rodman for reminding me -- the Jordanians, I'm sure -- the Jordanian king didn't come here because of how he felt about that visit. But did they stop their training of the Iraqi police forces in Jordan? No. And that was the example I used.

I don't say to you -- I'm not sitting here saying to you that these things are unconnected or that people in the Arab world don't see all of the things that we are doing in the Middle East.

If you ask me that question, then it allows me to remind people about the president's speech in June of two years ago, calling for a Palestinian state.

I think it allows me to talk about the kinds of things that the president and Secretary Powell have been talking about these past couple of days since Sharon's visit about recognizing some realities.

It allows me to talk about a trip that I took earlier this year in support of our -- support for reform in the Middle East, the six or eight countries around the region, to promote reform, to promote democracy in the Middle East.

GROSSMAN: So I just ask, please, I answered a specific question and I answered it to the best of my ability, but I don't want to be put in a position saying that I am in some culture of denial about how we are looked at in the world. I'm not.

CHAFEE: Well, say that in response to Senator Hagel's questions, also you mentioned how much we need our Arab neighbors.

GROSSMAN: Yes, sir.

CHAFEE: And you mentioned the Jordanian police, you mentioned I think Syrian border patrols, Egyptian help in various areas.

We're not going to get it if this continues. I think King Abdullah's cancellation of his visit is a fair, fair warning. And President Mubarak subsequently, after his visit in Crawford, had some scathing comments to say on the rise of anti-Americanism through the Arab world.

And I don't know what role Congress is going to play, as we see this big change in U.S. foreign policy, but I think it puts at great risk our success in Iraq.

LUGAR: Thank you very much, Senator Chafee.

Senator Feingold?

FEINGOLD: Thank you, Mr. Chairman.

And thank you again for all you patience, and ranking member, for making this happen.

Mr. Rodman, we desperately need a plan to bring stability to Iraq that does not depend on the U.S. military and U.S. taxpayers to bear as great a portion of the burden as they have to date. At the same time, the American people need to hear as much as possible the hard and honest truth about the nature of the U.S. commitment in Iraq.

Our exit strategy seems to be to train Iraqi security forces to take over the roles currently played by the U.S. troops, and increasingly, and worryingly to many of us, to have it done in significant part by private security firms. But we have seem that slap-dash efforts to train and deploy Iraqi security forces can lead to dangerous failures and instabilities.

So I'd like to tell me how long it will take to properly train Iraqis, such that they are able to provide for their country's security and as a part of that, for how long will security be primarily the responsibility of U.S. forces.

RODMAN: Thank you, Senator.

Let me, first of all, address the point about private security contractors. I think this is an opportunity you've given me to address something that is much-discussed.

I've heard that there's an army of 20,000 private security people, which is the second biggest military force.

RODMAN: Our figures are different, and our figures are that there are about 15,000 civilian contractors in Iraq, of which no more than 2,000 are armed and doing security functions. You know, maybe my figures are wrong, but that's what we've heard.

And we are, at the same time, trying to tighten the rules by which these people operate. I mean, we're developing policy guidance to make sure that any people who are fulfilling that role protecting some private company that they're, you know, accountable to our military people so that they limit themselves to what they are properly there for, which is the protection function. They don't do military operation that's for sure. That's a small thing.

FEINGOLD: I appreciate that, but I have limited time so I hope you'd get to my question.

RODMAN: The big point is the performance of the Iraqis. And we all admit that the performance in the recent period was disappointing. A lot of the units did well. A lot of them didn't do well.

No one expected that by April of 2004 they would be substituting for the American military. Even by June 30th, they're not expected to substitute for the American military.

We've learned some lessons from what has just happened. We've learned that we've got to work harder to find Iraqi leadership -- you know, good, good quality Iraqi commanders. We've got to maybe move faster to equip them.

Some of the units, as I say, did do well. Some of them didn't show up for work, although they're now back at work. So we've learned something from this.

But I think after June 30th, the coalition will still be there. All of the Iraqi political leadership knows that. It's reflected in the TAL that we will still be there to train -- to help continue the job of training them for the job of maintaining security.

Now, police -- I mean what happened in the last few weeks would have overwhelmed any police department. So that's -- what we count more on is the, what we call the civil defense corps, which is a more heavily equipped force, plus the Iraqi army, which is being trained.

This is a work in progress and we have to accelerate it.

RODMAN: But again, June 30th isn't the deadline. I mean, that's how long we're going to be there.

FEINGOLD: That's what I need to know. I realize that the president said, "We'll stay as long as we need to and not a day more," but I got to tell you, some more reasonable estimate about what we're in for in terms of time when they'd take over and we really...

RODMAN: No, I ...

FEINGOLD: ... would be very helpful

RODMAN: It's the natural question to ask, but you know, I can't give a firm prediction. We hope that we've overcome the challenges of the last couple of weeks: the Sadr rebellion, which I think has been pushed back, the Fallujah problem, which we think we have a plan to deal with.

We will deal with these military problems. And if we can restore a sense of stability, then the -- whatever violence is going on will lose it's strategic significance.

FEINGOLD: Let me suggest...

RODMAN: (OFF-MIKE)

FEINGOLD: My time -- I need as specific a response as I can get on it. And I know it's hard, but, you know, you're on the ground there, people are on the ground and you have an idea of what the capacities are.

We announced to the world that we were going to turn over authority on June 30th. We announced that time, not as an estimate, but as a date certain.

And I'm just looking for some kind of a time frame -- just as we gave the American people a time frame in turning over the authority -- a timeframe that the American people could look at that would be a reasonable estimate for turning over the security primarily to the Iraqis, as opposed to the United States.

What can I tell them is a reasonable estimate of time?

RODMAN: Unfortunately, I'm not in a position to give you a number of years or months. I think it's going to be a gradual process. As security conditions improve, we can reduce the number of Americans.

We're still hoping to bring in more international contributors, particularly after the U.N. comes back and sovereignty is turned over.

FEINGOLD: How about a goal? What's your goal?

RODMAN: Well, it's not really up to me to set a number of years.

FEINGOLD: I would ask the administration to come up with at least a timeframe, a goal that we can point to so I can tell my constituents what might happen or what might we hope for.

Let me turn to Mr. Grossman.

At the same time that Congress passed and $87 billion supplemental spending bill, requested by the administration primarily for Iraq last year, Congress also created an inspector general for the Coalition Provisional Authority to ensure that massive sums of the U.S. taxpayer dollars were no lost to waste or fraud or abuse.

As of the end of February this year, only $900 million of the $18.4 billion appropriated for reconstruction programs in Iraq have been obligated; less than 5 percent.

When Congress created the IG for the CPA, we did so because we recognized that the amount of money involved in reconstruction was so great, and we needed an IG in the ground in Baghdad, not an office in Washington that viewed Iraq as one operation among hundreds that needed oversight.

What will become of the CPA IG given the fact that the funds he was supposed to oversee have barely begun to be obligated?

The law says that the IG's office will terminate six months after the authorities and duties of the Coalition Provisional Authority cease to exist. Seems to me that the authorities and duties, in terms of the reconstruction effort, don't end on June 30th.

FEINGOLD: So will the CPA IG be subsumed into the State Department's IG office or is some other arrangement under consideration?

GROSSMAN: I don't know the answer to your question, but I'll be glad to get back to you for the record.

FEINGOLD: Can you speculate on what...

GROSSMAN: No, sir. I truly don't know the answer to your question.

FEINGOLD: Let me ask both Mr. Grossman and Mr. Natsios.

The inspector general for the Coalition Provisional Authority has indicated that potentially billions of taxpayer dollars intended for reconstruction are being spent instead on security and insurance. Seems to me that this means that we must even resign ourselves to accomplishing less or we must spend more. Which is it? If we're planning to accomplish less, which priorities don't make the cut?

The administration has simply decided to ask for more money. When do you plan to make that request and how do you suggest the country pay for it?

Let me start with Mr. Grossman.

GROSSMAN: I apologize. I was being talked to over my ear. And I...

FEINGOLD: I do understand you. You want me to repeat the question?

GROSSMAN: I apologize. I'm really sorry.

FEINGOLD: Should I repeat the question?

GROSSMAN: Would you be kind enough?

FEINGOLD: I'd be happy to.

I indicated that obviously under the IG situation that the money is not being spent all -- in fact, even close on just reconstruction. Instead it's having to be spent significantly on security insurance because of the problems that have occurred.

And so what I was saying was we have to either resign ourselves to accomplishing less or we must spending more. Which is it going to be? If we're planning to accomplish less, which priorities will not make the cut? If we're going to be spending more, when will you ask for it and how much will it be?

GROSSMAN: I can just tell you, Senator, for our portion of it, we've been allotted $3.8 billion. We've obligated $3.3 billion.

I've asked what the average set-aside, because we did allow last fall when there was an increase in violence where our contractors and NGOs and partners needed help. And the average at this point is about 20 percent. It is not billions of dollars but it is hundreds of millions of dollars of the amount that we were given.

I cannot speak for the Defense Department contractors. I only can speak for the people who work for us.

NATSIOS: I guess the simple answer I would give you is is that we'll have to look at all these priorities, and as I testified earlier today, if there's a need for -- we believe there'll be a need for a supplemental -- and the timing and amount of that is obviously up to the president.

FEINGOLD: Secretary Rodman, did you want to say something?

RODMAN: Just wanted to add, my understanding is that DOD contractors are required by law to provide workers' compensation insurance for their employees overseas. And that's an allowable cost under the contract, so that we may not have a lot of flexibility.

FEINGOLD: So it sounds like we're looking at a request for more money rather than scaling down the priority, in all likelihood.

GROSSMAN: Well, as I happen to be referring to the needs for our embassy. But, you know, I said that if there was a requirement to fill that gap that seem to us that there would be a requirement for supplemental, as I say there are timing and amounts to be determined by the president.

FEINGOLD: Let me ask one more question, Mr. Natsios. What is the standard of legitimacy for an emerging Iraqi leadership?

From the beginning, I've been concerned about the likelihood that our -- whether or not our democratization efforts will succeed in Iraq, not because I do not believe the Iraqis desire and deserve the same basic political and civil rights enjoyed in democratic states, because I wondered about the political culture in which ideas about humiliation are so prominent and whether they could accept any model that is proposed by a foreign occupier.

How likely is it that resistance to the United States presence in Iraq will become, in effect, the new standard of legitimacy for Iraqi leaders who seek to appeal to constituents on other than the, sort of, more traditional religious or ethnic grounds?

NATSIOS: The polling data does not seem to indicate that that sort of rage is manifesting itself at this point or that there is a distorted or, sort of, predatory value system developing as a result of this transition. In fact, the opposite is the case.

Oxford Analytica did a very detailed analysis with, I think it was ABC or NBC News. We study these things, because we did our own polling last fall, because it does tell us something about how people see public services and whether they're improving.

Last fall they did not have -- we didn't have good polls, in terms of public service. We do now.

The poll that Oxford did -- which we had nothing to do with, did not pay for, we were not involved, we didn't know it was been done until it was after it was finished -- said 58 percent of the people said things have improved since before the war; 20 percent -- 19 percent said they had not. And the rest were undecided. Eighty percent, though, had, sort of, hope for the future.

So in a broad sense, there is a perception that things are improving, which makes it harder -- and this was a month ago, admittedly -- that a demagogue will come by and say, you know, "Nothing's happening, nothing's improving." There is a visible sense in the polling data, and if you go around the country, that things are changing in terms of public services, that's all I'm speaking about now, my area.

In terms of the legitimacy of the government, it will be determined by two central issues: Can the government deliver services? And that's one of our central goals. We're doing capacity building in the ministry so they can manage services better. There was no central budgeting system. I mean, even Saddam didn't know how people spent the money in the ministries.

You know how they controlled people's behavior? They had a prison in each ministry, and if the minister got upset at a bureaucrat, they simply put them in jail. I mean, literally, we found jails in all the ministries. We thought it very odd.

NATSIOS: We have a contract -- I think it's the most important thing we're doing, not the infrastructure, not the services -- and that is our local governments contract.

What we're doing is setting up councils with the civil affairs officers and our staff across the country. Ninety-three percent of all the population now is under some elected council.

Some of the people are doing pretty well. We're training them in how you design a project, how you run a personnel system, how you run a meeting, how you take a vote; all the things that a city council or a town council would learn in the United States.

Some of them are getting defeated when they run for reelection. Some of them are getting much bigger votes because they're perceived to be doing well.

In the United States, as you know, Senator, having been a state legislator, most of our senior officials are former state or local officials. Two-thirds of the state legislatures are former local officials, and half of our Congress are former state officials at some point.

In our experience in AID around the world, in a country with no history of democratic governance, the best way to democratize is at the village level, because they will choose candidates from those town councils to be their members of parliament under the new government, whatever the structure is. And you will see emerge -- we're going to do a study of it when it happens -- that a huge portion of the people in the new parliament are likely to be from these town councils.

And our view, our theory is, which has worked in many other countries, is that if we are legitimate in what we're doing locally, then that will increase the legitimacy of the national government, because they'll have confidence in their local legislators.

LUGAR: Thank you, Senator Feingold.

Senator Brownback?

BROWNBACK: Thank you very much, Mr. Chairman.

And thank the gentlemen for coming in front of us.

Secretary Grossman, last time I saw you was on a sad plane ride to Kansas City for you, I know for a family member...

GROSSMAN: Yes, sir.

BROWNBACK: ... that had died. And my regrets to you and your family and your wife for that.

GROSSMAN: Thank you for recalling that.

BROWNBACK: This may seem odd, because you guys are getting pushed a lot, I want to congratulate you on some of the things that have been taking place.

It's, to me, remarkable what's happened in Libya. It's past remarkable. We've been after Gadhafi for 30 years, and him giving up weapons of mass destruction. The move toward democracy that we're seeing in the Middle East is something that people have wanted for a long time. We've never put any effort into it previously, and now we are, and we're seeing results taking place of that democratization move. It's no wonder to me that a lot of the countries in the region would be -- the country leadership in the region would be negatively respondent, because you're going right at their power.

BROWNBACK: When you democratize a monarchy or a dictatorship, you're going right at the guys that own the place.

But that's something we shouldn't be afraid of and we haven't been afraid of in other regions of the world. We have been, I think, somewhat previous in the Middle East. I congratulate you on that and also for your recent moves on peace within the Middle East.

The issue of right of return, which is very sensitive, but it was a bold move that was taken, and I think it also recognizes a reality. Along with this is the first president to recognize or talk about an independent Palestinian state. No previous president has ever mentioned that.

Those are extraordinary bold moves that I think do recognize current realities in moving forward.

I've got a bill in that -- one that I'm presenting is that I think, as we move forward on that track, we're going to -- we ought to recognize realities in Jerusalem too. But I recognize that's a little ways off.

I want to implore you -- and I know the administration wants to stay with this -- to stay with the June 30 deadline of handing over control -- civilian control, to an Iraqi governance.

I was actually on the side of handing over to some form of Iraqi governance much earlier than we have even with this deadline; recognizing that's difficult, but we just got to get Iraqis in control.

And as in Afghanistan, it's not a perfect model of democracy. When Karzai first arose, it wasn't from a popular election across the country. But it was an Afghan running Afghanistan. And so that the chain of command, which Secretary Wolfowitz spoke about the other day -- it's important that when Iraqi security officers are responding it's to an Iraqi that's on top of it, not to some American officer.

And I think that that should really help out substantially in the view of Iraqis toward their own country and getting us out of being an occupier, which they're not -- they don't like and we're not comfortable with. And so I applaud you on those moves and I urge you forward.

Two quick suggestions I'd like to make if I could. One, I met with soldiers at Fort Riley this last week on break that had been in Iraq and had just gotten back from Iraq 30 days earlier. And about 300 -- we did a closed town hall meeting; it was a wonderful visit with them.

They were very enthusiastic about the work that they have done. They think that what they are doing is worthwhile and is important and I absolutely agree. And we don't ever want to back away from them.

BROWNBACK: Many of them will be turning around and going back within less than a year. And they know that. And that's fine. They believe in this work. And they know that it's the right thing to do.

I did ask about the Iraqi military and the Iraqi police. I said, "How are they?" and most of them laughed, the soldiers did. And I said, "Well, what is the issue here?"

And they almost -- the ones that were speaking up on this were talking about Iraqi command and commanders and the need to bring back trained Iraqi commanders; that the military -- the Iraqi military people won't respond to a U.S. military commander the way they will to an Iraqi military commander.

And I know you're considering and reviewing this issue now, but from the guys on the ground, they view it that they need to bring back guys that were trained by Iraqis, that were years invested as Iraqi commanders, and they can't be Baathists. And I'm not sure how you ferret out who's good and who isn't.

And I've been pushing for some period of time that we need to get security control over to Iraqis, security control of Iraqis and one of those that's responsible maybe for pushing this too hard, too fast. There is only so fast you can ride this horse, even though we all desire it.

But they were sure pushing the issue of bring back currently trained Iraqi commanders.

And the question I have for you is about Iran. And maybe you've already answered this at one point in time. What are we seeing actually taking place in Iraq, sponsored by Iranians?

Lots of allegations regarding Sadr's group being sponsored by the Iranians. It looks to me the Iranians are a group in the region that are the most directly impacted by us establishing democracy in Iraq. I think the whole region is, but the Iranians want a theocracy in Iraq too, as they have in Iran. And it's very threatening to them, to their future stability, if we're successful and when we're successful.

What are you directly seeing on the ground of Iranian influence, funding, command and control, if you can say, from Iran in Iraq?

BROWNBACK: And I want to listen to the first part of your comments and if you need to go further, I'm going to have to go over and vote. But I do want to get that out there and ask you about it.

GROSSMAN: Yes, sir. Let me work backwards, then, since -- if you have to leave.

First, I appreciate what you say about our family. Again, I appreciate that.

On Iran, I think the best thing for me to do -- the way to give you the most complete answer if I could is to give you a classified answer.

The unclassified part of it is I can tell you that we are concerned about Iranian activities. We've sent messages to Iran about their activities. We believe that if they think about this in the right way, they will recognize, as we do, that a stable and sensible Iraq actually is in their interest and that ought to be something that they will come to.

We talked to them through the Swiss. We've talked to them in other ways. And we've tried to make that clear.

But on the specifics of, kind of, where they are, what they do, finances, I hope you'll allow me to respond to you in another way on that.

BROWNBACK: We'll do that.

Mr. Chairman, I'm going to run over and vote, as I should.

But you are doing a very difficult thing. But it's very, very important, and I don't think the stakes could be any higher. And undoubtedly, things could be different and better in some situations, but I think your overall push has been really good and I commend you and the troops of what's taking place.

LUGAR: Thank you very much, Senator Brownback.

My understanding is that Senator Corzine is attempting to make his way back from the floor and I'd like to honor that.

Let me ask a couple of things in the interim.

First of all, just a question for the record. Senator Biden has questions for the record of you and I hope that you'll respond to those. They will be placed to you and be part of the record.

I want to inquire a bit more about the general proposition placed before the committee yesterday on security again. Again and again, our witnesses have stressed, and you've not (ph) negated today, that security for the country is imperative if this new democracy is to work well or the efforts of Mr. Natsios or those of our own civil officials be able to travel freely; clearly in the interest if Iraqis themselves.

As we all woke this morning to headlines again of a horrible attack in which children were incinerated in a bus and 73 Iraqis lost their lives.

LUGAR: And yet it's not really clear to me at this point -- and maybe this requires an additional hearing at a proper time to work our way through -- how that security is to be obtained. In other words, how do we come to a point in which in Iraq people believe that, in fact, somebody is in control?

Now, it is not the purpose to go back over the traces of what happened the day after hostilities started and how the police function did or did not work and the training and so forth. But at least in this interim period we're talking about now, the period prior to June 30, or let's even say the month after June 30, as the new government is there in place, who is going to go, more United States armed forces?

We're heard there are not too many people from other countries that might be available, and we hope that those who are still there will be retained. Can any of you offer any further assurances on the security question, which underlays the potential for political success?

RODMAN: Let me try my hand at that.

We expected, and I think we're on record making some statements saying that as June 30th approached, we may well get a spike of people trying to derail it, for the reasons I mentioned at the very beginning: Zarqawi and company see this as a threat.

The accomplishment of a turnover to Iraqis is a major threat to those who want to derail it. But look at it on the other side, that's what our strategy has to be, partly the political strategy of marginalizing the extremists, taking some of the wind out of their sails by putting an Iraqi face on what's happening.

Secondly, our impression of what happened in the last few weeks -- I know if you read the press you get a sense of everything's going to hell and it's all metastasizing into some unified national uprising.

RODMAN: Our commanders on the ground, our CPA people, have a more precise sense of what it is. They see it as separable problems. There's a Fallujah problem -- which we've known about, this is the Sunni, these are the die-hards of the old regime who represent a narrow, very narrow, sliver of the population, with an admixture of foreign troublemakers who had no base in the population.

I can tell you one anecdote. There was a village -- a town -- northeast of Fallujah where, when the Marines came back in and cleaned out or killed a few hundred bad guys, the townspeople came out and thanked the Marines. They said, "We've been held hostage by these people."

So again, we think this is -- the Sunni problem is a manageable problem. And right now Fallujah is under siege by us. So that's one problem.

The Shia problem had the potential to be much more significant because the Shia are the majority. And, as I mentioned, Sadr was attempting to make himself the dominant figure among the Shia. But we think he failed.

And the moderate -- the people, the other Shia leaders who are part of the political process found their courage and seems to be back in the driver's seat.

So we think that what we've been through the last few weeks, these -- I mean, the strategic significance of that violence is as I described.

Now, we expect it to be messy for a while. And until we train up the Iraqis and give them the capability, we'll have to be there. But our strategy is a combination of political moves to empower the moderate Iraqis and a military strategy which we think has the upper hand -- and that's our commanders, and I trust their judgment. So that's the strategy we're pursuing.

LUGAR: Let me ask: Are we confident at this point that we're going to be able to get supplies to the Iraqi police? That is, provision of arms and various things they need to be effective. A great deal has been written in the press about the delay of shipments or difficulties with contracting.

But this is a very serious issue pointing to this current security dilemma.

RODMAN: Well, you were right. We need to fix that.

LUGAR: And so you're moving at least in Defense or wherever to do that?

RODMAN: Well, I'm sharing the responsibility with Marc, if you want to ask him...

GROSSMAN: Sir, again, I've had the benefit of a couple of days of listening to my Defense Department, JCS colleagues. And I think the answer to that question is, there is really a problem here.

And in many cases, one of the challenges for the Iraqi police was they're outgunned. And both General Myers and the deputy secretary of defense said this is, as Peter said, something we have to fix and we will fix and we are fixing.

And we certainly have some responsibility here as well, through the INL programs. In fact, the program in Jordan that I was talking to Senator Chafee about is a department program. And all of this needs to move forward.

And I know that the appointment of General Petraeus who did such a very good job up in the north of Iraq to now take over the training of Iraqi security forces, police, border patrol, we believe is going to help us a lot.

But I want to be clear here that this didn't go fast enough. And we have some responsibility here, all of us. And we're committed to fixing it.

LUGAR: Well, as a part of our ongoing oversight, we will continue to raise questions as to how that is coming. Likewise, other elements of the training exercises and recruitment for the basic force, whether it be the army or the police, because these are obviously elements of sovereignty and security and they involve the success of Iraqis as they begin to take hold of their own responsibilities.

Senator Corzine?

CORZINE: Thank you, Mr. Chairman. I think you're aware we had to go vote and so I appreciate your holding it open. And I appreciate the panel's patience.

It's always great to be the last guy on the line.

First of all, I share the strong desire I sense from the testimony that I observed this morning for the success of both the transition and the movement forward. I think all of us wish for nothing but the best here.

And I must say I feel a little bit better because I think some of the plans that I have seen get at some of the questions that I think a lot of my colleagues have raised.

I must tell you, I continue to be concerned that we seem to have this fixated view on this magic June 30th date, and I don't really get it, because there's lots of reasons why it would really be good, but it might be actually worse if we actually don't deliver what was expected on June 30. The expectations of the Iraqi public is not met by that, I think it could be a very real, long-term setback. And so I wonder whether we even have the flexibility enough to think about that at this stage. We seem to get harder and harder in the conversations that I hear and comments from the administration.

And I must admit that I have some sympathy with sort of the Chafee comments. I would frame it a little bit different on credibility of reading the situation, you know we continually have administration and high senior officials saying such things as the violence is a symptom of our success.

CORZINE: I don't understand that. It doesn't relate to the reality of what at least my common sense tells me, when it was 105 or whatever the number of folks are. And I have great respect and admiration and want to give the strongest support to our troops on the ground. So that is framing.

Let me just some specific questions which actually get at this June 30th date.

Now for instance, Secretary Grossman, you said that the interim government should have the necessary authorities to lead Iraq into the community of nations. Will the Iraqi government have control over Iraq's foreign policy? Will it be free to establish whatever kind of relationships it wishes with its neighbors -- Iran, Turkey, Syria, Israel.

GROSSMAN: Yes.

CORZINE: So if they want to have favorable relationships with Iran on most any basis, just the transitional government will have the ability to do that?

GROSSMAN: Well -- step back for a moment. The Transitional Administrative Law is governing here. And it does give the Iraqis power in terms of foreign relations. And so, yes, but as I have testified during the day today, we obviously are there. And we want to support a sovereign government in Iraq. And this government, don't forget, between the first of July and the elections in December, is there to get their elections going, to get moving. I don't take away their sovereign rights to do things.

CORZINE: So if they start to do things that are in contradiction to what American foreign policy might be, we're more than happy to...

GROSSMAN: No, sir. No, sir. This is what's diplomacy is about. We've talked today about why we want to have an American ambassador in Iraq. And that's why we want to get him there. Because that's what we do, is diplomacy. We do it all around the world and I would expect we do it in Baghdad.

CORZINE: Right. Will this transfer of sovereignty allow for the new Iraq government, interim government, to contract U.S. funds in economic sphere? Will they be able to decide whether Bechtel, or put out for bid, or select whoever the contract will go in expending the reconstruction and resources that are authorized by Congress?

NATSIOS: As a general proposition, Senator, we do our own contracting worldwide. About 85 percent of the USAID budget from all spigots, all the money we spend, is contracted for by us. About 15 percent goes in budget support to about four or five governments where we think stability is critically important. But the great bulk of the money we contract ourselves.

Because the Iraqis are in an unusual position -- they have oil revenues, which are doubling now from last year to this year, and then they go up substantially next year -- they will, I presume, want to contract for their own money. We will contract with our money.

But what we do after June 30th, when there's a sovereign government, we will work on agreements. We call them SOs, strategic objectives. We function in the field in all the countries we work in, with strategic objectives that we sign with the ministries that have oversight over them, like education or health. Unless there's a predatory government, in Zimbabwe, we do not sign SOs with the government in Zimbabwe.

NATSIOS: But, in Iraq, we would not want to do anything unless he was consistent with the policies of the ministry. We will do training programs, which they have requested, and we're setting up now, in procurement reform, in budgeting reform, in accounting and all of this, how you manage these things properly.

But they have to request that, and we'll provide it. But they're in charge, ultimately. We're not going to put our money through their ministry.

CORZINE: Would this government have the ability -- this transition government have the ability to contract with the development of their oil fields? The Russians had previously negotiated an agreement for, I think it's in the northeast portion, the development of the oil fields. Will they have the authority to commit to those kinds of contracts?

NATSIOS: I leave that -- oil is out of my bailiwick here. With their money, I believe the answer to that question is yes.

CORZINE: So with their oil, they'll have the ability to do that.

OK, will the new sovereign have the right of review of the just recently announced structure of the war crimes or Saddam prosecution team headed by Mr. Chalabi's nephew?

Will they have a right of review and ability to endorse or change and or what and/or -- they will?

GROSSMAN: Yes. In the sense that they will be the sovereign government of Iraq.

CORZINE: It's also said that interim governments won't have a lawmaking body. Does this not apply to the election law? What constitutes acceptable campaigning?

What if Iraqi candidates are anti-American, how are we going to respond to this? What if they disseminate untruths? Are we going to have the ability to take over newspapers or shut them down. And who is going to make those decisions?

GROSSMAN: One of the most important things that the United Nations did, in the election team visit to Iraq, was say that there needed to be as quickly as possible an election commission, an independent election commission, established, and that that independent election commission, working with the United Nations, would then create the rules and regulations for this election.

GROSSMAN: And in terms of those candidates that would be anti- American and others, again, I go back to my first answer, which is: That's why we're going to have an embassy there, and it's going to have a lot of people and an ambassador. We have to make our views known in the way that we do around the world.

CORZINE: Now I want to go back to Senator Biden's question, which I didn't actually hear an answer to, if Sadr were to incite the kind of insurgency that we saw over the last two or three weeks, in a world where the new sovereign didn't find it appropriate to respond to that and we thought our men and women were at risk, we thought that there was a reason to respond, what's the deciding force with regard to making a decision about those kinds of issues under this new arrangement?

GROSSMAN: The arrangement would be, I think, as we are doing today, that we would do our very best to consult with that interim government and to take their views into account. But if you put the question to me that says, "At the point where our commanders believe that our men and women are threatened, will we have the right and the obligation to act to protect them?" the answer to that question is absolutely.

CORZINE: Let's use the circumstances we have today.

GROSSMAN: Well, as you see, what we're doing today is, we are working with the Iraqi Governing Council on issues of Fallujah, on issues of Najaf.

But when the question comes to, will we have the right and the power and the obligation to protect the men and women of the U.S. armed forces, yes is the answer to that question.

CORZINE: I hope that the kind of clarity, at least the answers are, your responses are, are the reality, because I hope that we sense that public diplomacy, as well as state diplomacy, is important on the long-run success of what we encouraged to happen or support in happening over the balance of transition from one point to another.

CORZINE: And sometimes, Spain's a perfect example, sometimes where our public diplomacy doesn't match our state diplomacy and we may over-read these situations.

And I think these are the kinds of questions that are going to make or break the difference, and I think those need to be pretty certainly dominated.

I don't want to be totally specific. We heard outside authorities say different things about some of these issues over the last several days.

GROSSMAN: Well I'd be glad to take all of those questions and double check them. But, I mean, what my message to everybody today is the one that we've been trying to get out, and the president's giving out, which is that on the 1st of July Iraqis will be in charge of Iraq and that Iraqis will run Iraq.

And that's what we're trying to do. I say I will take every one of those questions and make sure I have answered them in the right way and as specifically as I possibly can.

CORZINE: Good. Thank you, Mr. Chairman.

LUGAR: Thank you very much, Senator Corzine. Let me raise one question just checking through things I asked to begin with.

Can you make a comment about the budget of the new Iraqi government? Obviously they will have that responsibility and will formulate the monies that they require. And you've indicated that they have some resources, clearly, from oil or perhaps I suggested from some of the transition monies, although that's really just a supposition.

But could you fill in the blanks a little bit on the budget of the Iraqi government itself, its sources of revenue and how that will be established?

GROSSMAN: They do have revenues, senator, as you say. And as a number of senators have pointed out, crude oil production has gone up. And Iraqis, interestingly enough, have now started to make a billion dollar a month contribution to their own Development Fund of Iraq.

In terms of the specifics, I hope you'd allow me to just answer that question for the record, both as kind of what is coming in and how they'll structure what's going out.

LUGAR: I appreciate that, because you have offered very explicit detail -- and very helpful detail -- with regard to our own United States finances, identifying sources and transfers that take up to $500-something million over the period of time you suggested.

LUGAR: And that's precisely the kind of detail that gives a great deal more confidence in forming this whole discussion. The corollary situation was how the Iraqis in this new sovereign situation will handle their affairs, and it's their business. But at the same time we are working and will be working for their success so that they do not have a fiscal difficulty there.

RODMAN (?): I appreciate what you say about the specificity of our testimony. That was certainly what we tried to do today. And we'll certainly try to have the same kind of specificity on the budget and process for the Iraqi interim government.

LUGAR: Let me then ask this question. The information presented today, not only on the budget, and we touched upon -- very importantly upon personnel that will be coming from the United States and from employees in Iraq. The timing of their arrival or retention of personnel who are experienced there now -- the specifics of the buildings and security for these people are all very, very important issues for the American people.

Now, it occurs to me they are equally important for the Iraqi people. And this is an ongoing question. But how can we be better adept at getting this information to Iraqis so that they, likewise, in the same degree of confidence that you are building here in the Senate Foreign Relations Committee, sort of, on the ground in Iraq have similar feelings?

GROSSMAN: Well, we certainly need to do everything possible to get our message out in Iraq. I believe over the past few weeks, with the Iraqi media network and other changes that have been made in the way forward there with CPA, we've got a lot more capacity to do that. We also, at the State Department, are very much ramping up our ability to speak to Iraqis, have Iraqis here.

But you're right, I think we ought to find a way to see what we can do, perhaps not in its length, but at least to put out this testimony about the embassy and about our support for Ambassador Brahimi and have it find a way to Iraqis in a positive way. I think that's a very good suggestion.

LUGAR: And perhaps in our future hearings, this, again, will be one of the benchmarks we take a look at; and that is, how is the public information situation going? Because it's, I think, critically important for our success there.

It's very good news. And so we want to make sure that good news is out there.

I thank each one of you for your testimony today.

LUGAR: It has been, I think, extraordinary in terms of the research that you have been involved in, the reporting of good work that so many have done, perhaps behind the scenes, some more apparent. I think all the members of the committee will want to digest the specific charts and reports that you have submitted to us or have indicated that we could obtain at the State Department or by courier or however. And that's important.

Members who were not able to attend the hearing today, we will inform of the availability of this material and of the testimony that they ought to take a look at.

But I simply express the appreciation of the committee. We look forward to our hearing. Our next hearing will be with Ambassador Negroponte on Tuesday. And meanwhile we have, even this afternoon, a hearing for three ambassadorial nominees that I look forward to conducting about four o'clock, in an attempt -- not in regard to Iraq or the Middle East, I think nominees in this case involve Poland and Saudi Arabia and Romania, I believe, but in any event, forward our work of diplomacy.

And these nominees then can be a part of our business committee agenda for next Thursday, which I've highlighted and indicated that we will do everything we can to obtain a quorum and activity favorably on these nominees at that time.

Thank you all. This hearing is adjourned.