US SFRC: Hearing on Iraq Policy and Issues

Lugar Opening Statement Prepared Opening Statement -	Biden Opening Statement Prepared Opening Statement -
Bremer Statement -	Full Transcript

IRAQ POLICY AND ISSUES

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

LUGAR: Good morning. This meeting of the Senate Foreign Relations Committee is called to order. And we're especially pleased to welcome today Ambassador L. Paul Bremer, better known to all of us as Jerry Bremer, administrator of the Coalition Provisional Authority in Baghdad. Ambassador Bremer, we thank you for coming. And we recognize that for almost five months, you have had one of the toughest jobs in the world and have been in one of the brightest spotlights in the world. You have performed courageously and admirably. And we ask that you pass on our appreciation to the dedicated public servants from many agencies, from coalition governments and from militaries who are working 18-hour days with you in a very dangerous and difficult environment on behalf of peace, stability and democracy in Iraq.

We look forward today to your status reports on the ongoing war and on the complex political and economic reconstruction efforts in Iraq. After today, the Foreign Relations Committee will have held 12 hearings on Iraq so far this year. We've maintained this focus, not simply to generate public information or opportunity to second guess strategy, but because we believe Congress can and should be helpful in developing and supporting effective policies in Iraq.

The United States must succeed in Iraq. And I am hopeful that you will ask us for any legislation, authority or financing that you lack. The most immediate question is the shape of the $87 billion supplemental request from President Bush. But our committee is addressing Iraqi reconstruction in a wide strategic framework that includes such topics as Iraq's relationship to the war on terrorism generally, its impact on America's international relationships, its effect on the broader political and economic dynamics in the Middle East.

Personally, I have advocated a five-year plan in Iraq, not because I believe the United States must stay in Iraq for exactly that length of time, but because I believe such a plan would demonstrate commitment, promote realistic budgeting and help prevent policy drift. A long-term plan, in my judgment, is crucial to reaffirm and maintain the support of the American and Iraqi people and to bring aboard to our situation more international partners.

Iraqis must have confidence that Americans and the world community will stay until a self-sufficient, independent Iraq is realized. Our planning must reflect the promise to establish an Iraqi government that is representative, that is effective and underpinned by protected freedoms and a market economy.

But many Iraqis have had a difficult time understanding how the most powerful nation in the world could defeat their armed forces in three weeks and still have trouble getting the lights turned on. And yet skepticism and frustration and extremely difficult conditions have not eliminated hope among the Iraqi people.

A recent poll conducted by Zogby International working with the American Enterprise Institute found that 70 percent of Iraqis feel that their country will be better off in five years down the road, and 71 percent believe that they personally will be better off in five years. Iraqis by a three-to-one margin responded that politics, not economics, will be the harder part of the reconstruction. And asked to choose which government they saw as the best model for Iraq from among the alternatives of Syria, Iran, Egypt, Saudi Arabia or the United States, 37 percent picked the United States. Only 33 percent said they preferred an Islamic government. Two-thirds said that U.S. troops should remain in Iraq for at least another year.

Now statistics can be misleading. But as a scientific survey, these responses are encouraging. And I am hopeful you can shed light on other positive developments of which the American people are not aware while keeping in mind that they worry about the extreme dangers that persist and in some cases seem to be increasing even as the summer heat dissipates.

To set the stage for our inquiries today, I would offer the following set of questions which I believe are covered in your testimony but will explore as senators have opportunities.

What would a five-year plan for Iraq look like? And how much would it cost? How long will the $87 billion from the supplemental last? How long will the $21 billion of that targeted for reconstruction last? Will the United States commitment help generate international contributions at the donor conference in October or at other conferences surely to come?

How did oil revenue fit into the projections of reconstruction financing quite apart from the overall budget of the country? Do you have the right people in place in Iraq? Are there enough Arab linguists, international economics, public diplomacy experts, developmental analysts and technical experts? What skills do our personnel lack? Can expanded international involvement improve our capabilities? And are you getting recruits for the jobs that you have open from our State Department now or from others of that expertise in our government?

You have been tremendously upbeat regarding prospects for success in Iraq. Although much progress has been made, what worries you about your plans? And what needs to be fixed in the Coalition Provision Authority? Much has been made about transferring authority to the Iraqis quickly. You envision turning power over to Iraqi leadership in stages as institutions become capable of taking on responsibilities.

How do you plan to integrate Iraqi governmental institutions into the coalition's effort? And are there any areas or ministries where the transfer process will occur soon? Finally, as we look to our foreign policy equities, calling on your experience in diplomacy and terrorism, where does Iraq now fit in the global war on terrorism? Are Middle East neighbors of Iraq providing sufficient cooperation in that endeavor?

Those are at least some of the questions, I suspect, that will come before our panel. And many as I suggest, having seen a bit of your testimony, you will respond to at the beginning. We very much appreciate your being here.

And I call now upon the distinguished ranking member of our committee, Senator Biden, for his opening statement.

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

And welcome, Mr. Ambassador. I realize this has been an interesting time coming back home. You're probably anxious to get back to Iraq.

BIDEN: And probably fewer questions. But, Mr. Ambassador, I want to thank you for being here and thank you for making yourself available to some of my colleagues yesterday. I assume the informal sessions, you did it for both Democrats and Republicans. And I want to say at the outset that your being made available, we're thanking you for it. But it's an absolute, positive necessity. Failure to do so would not be in your thinking, but the Congress is, as you can tell, very concerned about what's going on.

I hope the vast majority of the members of Congress in both parties still have open minds. I, for one, think we need to stay the course, and we need to fund this operation, as expensive as it is. But I think you've probably gotten the message how intensely some members feel. And you're here today and you're going to return to Baghdad to what I believe to be a situation not of your making, although made much better because of a failed plan for the aftermath of a brilliantly executed war.

That's not your fault. You were brought in to salvage a situation that was deteriorating dangerously by the day. I remind myself and everyone else that you weren't part of the picture initially. We had all these hearings and all the planning was going to be Garner was in charge and Chalabi was going to be air dropped in and all was going to be well. That's a bit facetious on my part, but you weren't in the picture.

And I commend you for being willing to take on this job. I'm sure some of your friends had to counsel you it was a bad idea. But I'm glad you did it. I commend you for the level of energy and focus you've brought to this to turn around a situation that I think is eminently salvageable.

You brought something else to the table even more critical to the willingness of the American people and the Congress to continue to support this endeavor in Iraq, And that is honesty. You're the first guy that told us the facts, told us the truth. The others didn't lie. The others just either didn't know or didn't say what they knew.

During your visit in July, you began to make clear what many in this committee have been saying for the past year, that reconstructing Iraq will be a lot more difficult than winning, quote, "the war" and will take tens of billions of dollars over several years and require tens of thousands of American troops for an extended deployment.

Prior to that, we had heard obfuscation upon obfuscation, rosy scenario and a word which has worked its way into the lexicon of some in this administration: unknowable. If I hear the word unknowable one more time from this administration, I would suggest that they in their effort to stay in power that they say vote for us, we're the unknowables. We don't know anything.

In fact, the problem and the prescriptions for post war Iraq were absolutely knowable, not in detail, but absolutely knowable from the hearings this committee had and that we convened well over a year ago under both chairmanships, from the work of our leading think tanks, left, right and center and from within the administration itself, thanks to the State Department's future of Iraq project which developed detailed plans for post war Iraq. A lot was knowable.

Instead the administration waited until the 11th hour to begin planning. Its leading members believed we would find an oil-rich, functioning country, that we'd be met by cheering crowds, all we'd have to do is sweep out the top Baathist layers, implant our favorite exiles and watch democracy take root as the bulk of our troops returned home by Christmas.

Well, the reality, as you know better than anyone in the whole world, is quite different. You've seen it. You've experienced it, and you have tried to deal with it. And as the chairman, Senator Hagel and I have seen during our visit to Baghdad, you are going at it full tilt.

Belatedly but thankfully, in my view, the president made a sufficient U-turn two weeks ago that finally sets us in the right direction. First he vowed to make Iraq the world's problem, not just our own, by going back to the United Nations and seeking support of its members for troops, police and money. Because this is simple calculation -- we either leave and there's chaos and there's strategic debacle; two, we stay and pay for everything; or three, we get other folks to pay.

But I don't get it. This is real simple. We leave, we pay, or we get others to help pay in terms of their lives, in terms of their money, in terms of their troops.

First, as I said, he's come around and he's said he's going to seek that support by going back to the U.N., which he did yesterday. I regret that -- his speech although, I think, as they say in medicine, did no harm, I'm not sure based on the accounts of today that it did all that much good in terms of its stated purpose, rallying the world to support us with money and troops.

I think he should have made more clear our willingness to bridge the differences with our allies on the new U.N. resolution and to grant the U.N. real authority, lay down some specifics and ask for help and use the word "ask." Ask for help.

I'm not one of those guys that thinks you should go and apologize for anything. He had nothing to apologize for. But he could ask, you know. It's a useful thing.

One of your counterparts in the European Community I asked about four months ago -- well, actually, just before I went to see you. I said, "What do we have to do?" And this very pro-American, very significant figure said -- he leaned over to me and went, "You've got to ask, not challenge, not demand, not offer to share, ask."

So I'm left questioning the sincerity of the president's midcourse correction. If we want the world to share the burden, we've got to share the authority in Iraq in a meaningful way. The players, the payers, they want to be players. If they pay, they want to have something to say.

And I can't believe we can't find a compromise that meets our rightful concerns about a premature transfer of power but also empowers the U.N. and starts to put more power in the hands of the Iraqi people.

For example, what about double-hatting you? What about double- hatting you, a representative of the international community, instead of reporting -- and in terms of double-hatting you, by that I mean -- I know you know what I mean -- that you run the show under the U.N. auspices.

You know, I'm not sure exactly how it works, but we both know from vast experience -- mine's as long as yours. I've been doing this 31 years.

The guy who pays the bill at the U.N. gets to call the shots. The person that has all the troops on the ground gets to command the troops. I mean, I don't know why we don't say to the French, "You want a piece of this? Fine. We put in $20 million, you want to run it? Let's see your $30 billion."

But the point I'm trying to make is that I don't understand why we can't move in a way that is a little bit different than we have now. Instead of reporting to Mr. Rumsfeld, you report to an international board of directors or the U.S. as the chairman of the board, because we'd be putting in most of the money. I'm not sure what's wrong with that idea. I'd like to talk to you about that.

Second, the president began to level with the American people about the hard road ahead to win the peace in terms of time, troops and treasures. Now I hope the administration continues to level with the American people. It's the only way to sustain their support. But the approach to the supplemental concerns me on this account as well.

Mr. Ambassador, in your testimony before the Senate Appropriations Committee on Monday, you noted that the World Bank estimates for the total cost of reconstruction are not dissimilar to the ones that you've given to be about $60 billion to $70 billion over the next four or five years. This supplemental request covers $20 billion of that total.

It begs a critical question: Where are we going to get the remaining $40 billion to $50 billion? Where is it going to come from? I don't expect you to have that answer.

But again, back to the central theme. Everybody acknowledges that's what we need. We're either going to have to get it from the Iraqis, we're going to get it from the international community or it's going to come from us.

Will it come from the international community? Well, normally that would be a reasonable expectation. The United States typically covers about 25 percent of post-conflict reconstruction costs. By that ratio, we could expect $80 billion from the international community. But we so poisoned the well in the lead up to this war that no one expects the international community to provide more than $2 billion or $3 billion at the donors conference next month. That's a terrible indictment, in my view, of our foreign policy and a harsh example of the price of unilateralism.

Will the missing money be generated by Iraqi oil revenues? That's what the administration led the American people to believe. In fairness, you did not. In fact, if we're lucky, oil exports will generate just enough money to pay for the government's operating cost this coming fiscal year. Forget about paying for reconstruction. Will the missing money be generated by other parts of the Iraqi economy?

Secretary Rumsfeld recently touted the potential of Iraq's tourism industry. Well, the banks of the Tigris may replace the outer banks as a destination of choice some day, but I don't think it's going to happen any time soon.

Or maybe the missing money will come from the taxpayers when the administration comes back to Congress next year or the year after. If that's the plan, we should know relatively soon.

Mr. Ambassador, you know how critical it is for us to show Congress and the American people your plan for turning things around in Iraq if we're going to give the administration the money it now seeks. No one wants to be throwing money away. And surely you don't, either, much less, throw away American lives. So we need to be convinced you have a workable plan with clear benchmarks, timetables and accountability.

I don't want to minimize the successes you've already achieved. The chairman, Senator Hagel and I saw them during our visit. We saw a local council meeting taking place, hopeful beginnings in grassroots democracies that expanded all across Iraq. Schools are open all around the country. Hospitals are caring for the sick. These are major achievements on your part and the part of our government.

But we don't read about them very much. We don't read about them very much. We don't see them on TV. But, Mr. Ambassador, all this progress is jeopardized by our failure thus far to get the two fundamentals as right as they should be: security and basic services. And that failure is compounded by the huge expectation gap created when we toppled in three weeks a tyrant who had plagued the Iraqi people for three decades.

The Iraqi people can't understand, as you know better than anyone, why we can't restore a sense of personal security and turn the lights back on as quickly as we defeated Saddam. Just as important, they don't seem to know what we're doing about these problems or when things are likely to get better.

You know, I found it interesting in my state, like as you were kidding about the lights not being on because of the hurricane here, the American people want to know from me -- they're calling me to find out when Connective or when whatever the various energy company in this area is -- I don't live here -- when they're going to turn on the lights.

Now they don't -- when you tell them and you give them a timeframe, it calms them down. If you say, "We're working on it, we're working on it," it doesn't help very much. But when you said back home it's going to take a week, they grumbled and they were angry, but they said, "OK, in a week. I get it."

The fact of the matter is that the American people understand about how they feel. They should have some sense of what it's been like all summer for you with 128, 130 degree weather and not sufficient electricity.

Yesterday we heard from Dr. Hamre who was asked by Secretary Rumsfeld this summer to assess the situation on the ground. You hosted him. You had this committee out there, and you fully cooperated with them. The report that his team produced spoke of a window of opportunity that was closing rapidly. The window he was talking about was the very poll that was recited by the chairman, which I think wasn't in the last week or so. It was a couple months old or a month old. And he made very specific recommendations echoed by our staff committee report, a bipartisan staff committee report in key areas, including security, services, jobs and communications.

I'd like to know what's been done to adopt these recommendations. I'm deeply concerned the window Dr. Hamre referred to is almost closed. A New York Times story on September 17th entitled, "Iraqis' Bitterness Is Called Bigger Threat Than Terror," end of quote. I mean, that was the title -- cited new intelligence assessments, quote, "warning of the United States' most formidable foe in Iraq in the months ahead may be the resentment of ordinary Iraqis increasingly hostile to U.S. military occupation."

Later it said, quote, "Defense officials spoke on condition of anonymity saying they were concerned about retribution for straying from the official line." They said, "It was a mistake for the administration to discount the role of ordinary Iraqis who have little in common with the groups Mr. Rumsfeld cited" -- I'm still quoting -- "but whose anger over American presence appears to be kindling some sympathy for those attacking the American forces," end of quote.

Mr. Ambassador, if this report is true, this is very bad news. I still believe that this is totally doable, but only if we act with a sense of urgency and if we involve the international community and make concessions about sharing authority to lend legitimacy to the effort and to share the enormous burden. We cannot afford to lose this. If we fail, our credibility and our national security will be damaged badly. And I don't buy the terrorism argument.

I think it'll be damaged badly because of the strategic change that will take place in that region with a country of 40 million people seeking a nuclear capability called Iran being surrounded by two failed states, Afghanistan and Iraq, jeopardizing Turkey as well as Pakistan and probably causing a couple Arab governments to fall in the process. That's the strategic imperative from my point of view as to why we must succeed.

Iraq may become a failed state and our enemies will be emboldened. If we succeed, we can begin to alter the strategic map of the region for the better, strengthening reformists throughout the Middle East, making the Arab-Israeli peace more likely and put our enemies on the defensive.

So, Mr. Ambassador, to save you the suspense, I intend to support giving you the resources you need to get the job done.

But I have very specific questions about the plans, and I also have very specific questions about the sincerity of and the likelihood of the ability to share responsibility. And I want to know whether you're part of the solution or not, or you've become the proconsul and decided, no, no, you're the only guy that can do this.

And I'm going to be very blunt with you about it. You've always been straight with us. It's the thing we most appreciate about you. I welcome you. And I thank you for the job you've been doing.

LUGAR: Well, Mr. Ambassador, with our send-off, we ask you now for your testimony.

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

LUGAR: And we look forward to that. And, please, take the time that you need to make the case, because it's very important that you do so.

BREMER: Thank you, Mr. Chairman, and members of the committee. And thank you for this opportunity.

And thank you in particular, Mr. Chairman, for your kind words about the thousands of people who are working with me, military and civilian people, not the least, of course, our men and women in armed forces.

But I've got a lot of civilians, as you've pointed out, who are working extraordinarily long hours in very difficult circumstances and in dangerous circumstances. And I will certainly convey to them your comment.

Let me begin by paying tribute to our men and women in the armed services. Leading our coalition, our armed services delivered a military victory without precedent. In roughly three weeks, they liberated a country larger than Germany combined, and they did so with forces smaller than the Army on the Potomac.

Our armed forces accomplished all of this while absorbing and inflicting minimal casualties. Iraqis understood that we tried to spare the innocent. After the first days of the war, only those citizens in Baghdad living close to obvious targets feared our bombing.

Mr. Chairman, I know that you and all Americans hate waking up to hear a newscast that begins, "Last night another American soldier was killed in Iraq." Well, my day starts eight hours before yours, and I'm among the first to receive word of those deaths. And no one regrets them more than I do.

But those deaths, painful as they are, are not senseless. They are part of a price we pay for civilization for a world that refuses to tolerate terrorism and genocide and weapons of mass destruction.

Those people who ambush the coalition forces, like those responsible for the recent terror bombings, and those who ambushed Governing Council member Dr. Aqila al-Hashimi last Saturday, are trying to thwart constitutional and democratic government in Iraq. They are trying to create an environment of insecurity.

Mr. Chairman, they will win some battles, but they are losing the war with history. President Bush's vision in contrast provides for an Iraq made secure through the efforts of Iraqis. In addition to greater security, the president's plan provides for an Iraq economy based on sound economic principles and bolstered by a reliable infrastructure. And finally, the president's plan provides for a democratic and sovereign Iraq at the earliest reasonable date.

If we fail to re-create Iraq as a sovereign democracy sustained by a solid economy, we will have handed the terrorists a gift. And with all respect to the senator from Delaware, I think terrorism is a relevant consideration.

BREMER: It may not be the only one. There are strategic considerations. But terrorism is relevant.

And, Mr. Chairman, I might say, in your opening remarks you called me a terrorism expert. I prefer to think of myself as a counterterrorism expert.

BREMER: Terrorists love state sponsors, countries that provide them with cash, arms, refuge and a protected place to rest and plan future operations. Saddam's Iraq was just such a place.

If you think back on the Rome and Vienna Airport massacres in 1985, the architect of those massacres, Abu Nidal, lived out his days under Saddam's protection. Similarly, Abu Abbas, the architect of the Achille Lauro hijacking and the murderer of Leon Klinghoffer, an American citizen, lived in Baghdad for years as an honored guest.

When terrorists cannot find a congenial state sponsor, they seek environments with little or no effective government. When militias, warlords and communities war with each other, terrorists are right at home. Think back on Lebanon in the 1980s.

Either outcome, or some combination of both, is possible in Iraq if we do not follow up on military victory. The opposite is also true. Creating a sovereign, democratic, constitutional and prosperous Iraq deals a blow to terrorists. It shows you can have freedom and dignity without using truck bombs to slaughter the innocent. It gives the lie to those who describe America as enemies of Islam, enemies of the Arabs and enemies of the poor. That is why the president's request has to be seen as an important element in the global war on terrorism.

Mr. Chairman, our national experience, as members of this committee know, shows how to consolidate military victory. We did not have that experience 85 years ago when we emerged victorious from the first world war. Many here opposed that war. As a nation, we wished at the end of the war to shake the old world dust off our boots and solve the problems at home. We had spent and lent a lot of money and a lot of blood. The victors celebrated their victory, mourned their dead and demanded the money they were owed. We won the war, but we did not consolidate the peace.

We know the results of that policy. Extremism, bred in a swamp of despair, bankruptcy and unpayable debts, gave the world fascism in Italy and Nazism in Germany. And the result was another world war. After that conflict, America showed we had learned that military victory must be followed by a program to secure the peace.

In 1948, our greatest generation recognized that military victory was hollow if democracy was not reinforced against tyranny. Democracy could not flourish unless Europe's devastated economies were rebuilt. That generation responded with the boldest, most generous and most productive act of statesmanship in the past century -- the Marshall Plan, what Winston Churchill called the most unsordid act in history.

When Secretary of State George Marshall first described the Marshall Plan, he laid out some truths that, I think, Mr. Chairman, resonate today.

I quote, "Its purpose should be the revival of a working economy so as to permit the emergence of political and social conditions in which free institutions can exist." Highlighting the importance of approaching the issues at the highest levels, Marshall said, "Any assistance that this government may render in the future should provide a cure rather than a mere palliative."

The Marshall Plan, enacted as members know, with overwhelming bipartisan support, set war-torn Europe on the path to the freedom and prosperity which Europeans enjoy today. After 1,000 years as a cockpit of war, Europe has become the cradle of peace in two short generations. The Marshall Plan was a real investment in American national security.

The grants to Iraq the president seeks bespeak a grandeur of vision equal to the one which created the free world at the end of World War II. Iraqis living in freedom with dignity will set an example in this troubled region which so often spawns terrorists. A stable, peaceful, economically productive Iraq will serve American interests by making America safer.

Here are a few of the things I want to point out about this supplemental request. As Senator Biden has asked, we have a plan with milestones, dates and benchmarks. No one part of this $87 billion supplemental is dispensable, and no part is more important than the others. This is a carefully considered, integrated request.

This request is urgent. The urgency of military operations is self-evident. The funds for nonmilitary action in Iraq are equally urgent. Most Iraqis welcomed us as liberators, and we glowed with pleasure at that welcome.

But now the reality of foreign troops on the streets is starting to chaff. Some Iraqis are beginning to see us more as occupiers than liberators. Let's not hide the fact.

Some of this is inevitable. But faster progress on reconstruction will help. Unless this supplemental passes quickly, Iraqis face an indefinite period with blackouts eight hours a day. The link to the safety of our troops is indirect, but no less real. The people who ambush our troops are small in number and they're not doing it because they don't have dependable electric supplies. But the population's view of America is directly linked to their cooperation in hunting down those people who do attack us. Early progress gives us an edge against the terrorists.

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

This money, Mr. Chairman, will be spent with prudent transparency. Every contract of the $20 billion supplemental that I will be responsible for will be competitively bid.

That the money be granted and not loaned is essential. Initially, offering assistance as loans seemed attractive. And I know some members of Congress have been attracted to this idea. But once again, Mr. Chairman, it pays to examine the facts and the historic experience.

Today Iraq has almost $200 billion in debt and reparations hanging over its head as a result of Saddam's economic incompetence and aggressive wars, $200 bill. Iraq is in no position to service its existing debt, let alone to take on more. Mountains of unpayable debt contributed heavily to the instability that paved Hitler's path to power. The giants of the post World War II generation recognized this. And as you know, Mr. Chairman, the vast majority of Marshall Plan funds were in the form of grants.

The president's first priority in the plan for Iraq is security, security provided by Iraqis and to Iraqis. That security extends to our forces and changes Iraq from a logistics and planning base for terrorists and criminals into a bulwark against them.

The president's plan envisages three pillars of security: public safety, police, border enforcement, fire brigades and a communications system; secondly, national defense, a new army and civil defense system; and finally, a justice system affecting courts and prisons.

This security assistance to Iraq benefits the United States in four immediate ways.

First, Iraqis will be more effective than we are. As talented and courageous as our forces are, they can never replace an Iraqi policeman who knows his beat, who knows his people, their language, their customs and their rhythms. Iraqis want Iraqis to provide their security, and so do we.

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

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

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

Security is the first and indispensable element of the president's plan, as you mentioned in your statement, Mr. Chairman. But it is not by itself sufficient to assure success because a security system resting only on arms is a security system that will fail. Re-creating Iraq as a nation at peace with itself and with the world, an Iraq that terrorists flee from rather than flock to, requires more than people with guns. A good security system cannot persist on the knife edge of economic collapse.

When Saddam scurried away from the coalition forces in April, he left behind an economy ruined, not by our attacks, but by decades of neglect, theft and mismanagement. Imagine the effect on the economy of operating without a budget for a quarter century. Saddam came to power in 1979, and he never once prepared a national budget.

Ill-conceived and clumsily executed policies left Iraq with an oil industry starved nearly to death by under-investment, thousands of miles of irrigation canals so weed-clogged as to become almost useless and an electrical system that can best meet at best two-thirds of demand.

Reflect, if you will, Mr. Chairman, on that last item. As millions of American households, including my own and I'm sure many of the people who live in the District will recall, it is almost impossible to live in the modern world without dependable electricity. Think of what we would be asking the Iraqis were we to suggest they fashion a new economy, a new democracy, literally in the dark eight hours a day.

The Iraqis must refashion their economy. Saddam left them with a Soviet-style command economy. And that poor model further hobbled by cronyism, theft and pharonic self-indulgence by Saddam and his intimates is what we face. Important changes have already begun.

You may have noticed the Iraqi minister of finance on Sunday at the IMF meetings in Dubai where he led a delegation announced a set of market oriented policies that is among the world's boldest and certainly the boldest in the region. It goes to the point that Senator Biden was making about the strategic importance of what we're doing there.

The highlights, Mr. Chairman, a central bank law which grants the Iraqi central bank full legal independence. On the Iraqi government council, he announced, and on Thursday I signed into law, a program opening Iraq to foreign investment. Foreign firms may now open wholly owned companies or buy 100 percent of Iraqi businesses. Under this law, foreign firms receive national treatment and have an unrestricted right to remit profits and capital.

Iraq's tariff policy is equally simple. There is a two-year reconstruction tariff of 5 percent on all but a few imports. Foreign banks today are free to enter Iraq and will receive equal treatment with Iraqi banks.

On October 15th, Iraq will get for the first time in 20 years a single new currency called the new dinar. And that will float against the world's currencies.

Iraq's pro-growth policies should bring real, sustained growth and protect against something we've all seen and regretted, which is economic assistance funds disappearing into a morass of poverty through ineffective spending.

Mr. Chairman, the Iraqi government by these measures has put in place the legal procedures for encouraging a vibrant, private sector, what I call the legal infrastructure. But those policies will come to nothing if Iraq must try to reestablish itself on an insufficient and unreliable electric grid or in a security environment that puts a stick in the spokes of the wheels of commerce.

Iraq cannot realize its potential to return quickly to the world stage as a responsible player without the services essential to a modern economy. We have made significant progress, as those of you who have visited Iraq learned when you were there in restoring essential services. The widely predicted humanitarian crisis did not happen. There was no major flow of refugees. As you pointed out, all of Iraq's 240 hospitals and 90 percent of its health clinics are up and running. The schools are open. The universities held their exams.

There is an adequate supply of food, and there are no signs of epidemics. We have already cleared thousands of miles of irrigation canals across the country. Electric power service will reach pre-war levels within this next month. But the remaining demands are vast, which is why most of the president's request for non-military assistance is for infrastructure programs.

On another front, there is already good news, as members of this committee know. The democratization of Iraq on which so much global attention has been focused is further advanced than many casual readers of the newspapers might know. Although I know members of the committee, particularly those who were in Iraq and saw a town council meeting are aware of how far things have come.

BREMER: We have encouraged a quick political transformation and laid out a clear seven-step process leading to Iraqi sovereignty. Three of the seven steps have already been taken. The Governing Council came into being on July 13th.

Secondly the Governing Council appointed a preparatory committee to write a constitution. And on September 1st, the Governing Council took the third step appointing a very able group of 25 ministers to run the ministries, governments.

I might add here, Mr. Chairman, that I learned that of the 25 ministers, 17 have Ph.D.s which must make it, not only the best- educated cabinet in Iraq's history, but probably one of the world's best-educated cabinets.

And I don't know if any of the members had a chance to meet two of the ministers who have been here this week. If you didn't, I regret it. The minister of public work and the minister of electricity have been here, both of whom are experts in their field.

The minister of agriculture is an agronomist. The minister of water resources, a water hydrologist. These are people who really know what they're doing. They don't just have a Ph.D. in some theoretical field. They have expertise in their ministries.

There are four remaining steps. The fourth step is writing a constitution. We hope that the Iraqi Governing Council will move quickly to convene a constitutional convention to write that constitution.

The fifth step is ratifying that constitution. The sixth step will followed that ratified constitution with free democratic elections. And the seventh step will be when we, the coalition authority can transfer all sovereignty back to an elected democratic Iraqi government.

And I might add, Mr. Chairman, nobody looks more forward to that day than I, except perhaps my wife.

Some, including some members of the Iraqi Governing Council, have suggested we should give full sovereignty to an Iraqi government immediately or very soon.

Mr. Chairman, I firmly believe that moving too fast would be a mistake, not because I'm anxious to hold on to sovereignty. On the contrary. But we must remember that Iraq has spent a quarter century under a dictatorship as absolute and abusive as that of Nazi Germany. And I like to remind my historian friends that Saddam Hussein was in power three times as long as Hitler, three times as long as Hitler.

As a result, political distortions and inequities permeate the fabric of Iraqi political life. No appointed government, even one as honest and dedicated as the Iraqi Governing Council can have the legitimacy necessary today to take on the difficult issues Iraqis face as they write a constitution and elect a government. The only path to full Iraqi sovereignty is through a written constitution, ratified and followed by free democratic elections. Shortcutting the process would be dangerous.

As you examine the president's plan, I'm sure you'll see that it is an integrated and thoughtful whole. Every part depends on every other part. And as Congress knows, sweeping political reforms cannot be separated from sweeping economic reforms. It's equally obvious that a population beleaguered by the threat of terrorism and endless insufficiencies in water, electricity and telephones finds it hard to concentrate on the virtues of a new constitution and market oriented economic policies.

The need to protect the coalition and the populace alike against terrorists and common criminals is obvious and indispensable. And all of this, Mr. Chairman, requires the help of Congress. The United States must take the lead in restoring Iraq as a friend and a democratic model. As you mentioned, there's a donors' conference coming up in Madrid October 23rd and 24th. And we must set the example for other countries' good will. Other nations who do not wish to see Iraq become a terror supporting tyranny or a landscape of factions must help us. We set an example and work with other donors to avoid the near anarchy in which terrorists feel right at home.

When we launched military operations against Iraq, we assumed a great responsibility that extended beyond defeating Saddam's military. We cannot simply pat the Iraqis on the back, tell them they're lucky to be rid of Saddam and then ask them to go find their place in a global marketplace. To do so would invite economic collapse followed by political extremism.

If after coming this far we turn our backs and let Iraq collapse into factional chaos, some new tyranny or terrorism, we will have committed a grave error. Not only will we have left the long suffering Iraqi people to a future of danger and deprivation, we will have sown the dragon's teeth which will sprout more terrorists and eventually cost more American lives.

Make no mistake, Mr. Chairman, these requested funds represent an investment in America's national security. You may think I exaggerate, but I ask you to look at what happened in Afghanistan, another country which after it was debilitated by decades of war and mismanagement became easy prey to the Taliban and Al Qaida.

The reconstruction of Iraq may seem distant to Americans today. Eight time zones and two continents separate the east coast of the United States from Iraq. And, of course, the west coast is effectively half a world away. Two years ago on September 11th, terrorists brought their threat home to us. From a faraway corner of the world, they showed us that we must fight terrorism globally.

Iraq only seems far away. Today Iraq is a focal point of our global war on terrorism. Failure there would strengthen terrorists morally and materially. Success will tell Iraqis -- not just Iraqis, but the world -- that there is hope and that the future is not defined by tyranny on one side and terrorism on another. As Mr. Biden said, we must succeed.

Mr. Chairman, members of the committee, I respectfully ask Congress to honor the president's supplemental request. And I look forward to answering your questions.

LUGAR: Well, thank you very much, Ambassador. I'm going to ask that the committee on the first round have seven minutes each. We have a number of members, and others may come. And we hope we'll not have interruptions. And we'll have a second round with time remaining at that point.

LUGAR: Will the gentleman please just leave peacefully and so we can continue with the hearing? We would appreciate that.

Ambassador Bremer, essentially the plan for democracy that you have pointed out is an important one, and the timing you offer rationalization. Let me just ask this. Essentially as the cabinet members have been appointed, the Governing Council is involved, you have pointed out the essential aspect of getting the lights on 24 hours. And this involves huge investments in infrastructure. The reconstruction monies we're involved in are a large part of that.

But likewise, the announcement of the end of the command economy and the announcement of market economic reforms which are really quite bold and are very new, really, for the Iraqi economy have just come into being and may, in fact, provide a remarkable change, not only in Iraq, but for that matter in the entire area as would, in fact, a functioning democracy. It would be a first.

As we shared, Senator Biden and Senator Hagel and I were there with you at the Dead Sea conference, the World Economic Forum. We heard the Arab League people asking where is democracy. There isn't one. So this would be the first, the first market economy.

Now the problem that I perceive here quite apart from how the $200 billion of debt is to be disposed of -- and that is a very important issue -- is you were there, administrators who are working with this Iraqi Governing Council and cabinet.

What would happen, in your judgment, to the democratic process, to the market economic reforms, to the fledgling civil liberties that are being fashioned if, in fact, the advice was taken of some who I've heard at the U.N. on Monday from Iraq who are suggesting immediate delegation to the Governing Council of sovereignty, an appealing thought, really, to some countries in the world who find the American presence to be difficult and would like to see us leave or to mitigate very substantially your authority.

This is a practical matter. How do we get to the reforms? How many roots do they have to have in this? And are they likely to be successful in the long run? Is this a dream that is sort of beyond the possibilities? Or do you really see a plan over a period of time, a timeframe in which these economic reforms, quite apart from the political ones, might happen and might bring and new and vibrant Iraq, preferably debt free so that the monies that taxpayers now in this country are being asked to pour into the country are not recycled out by some other authority in fulfilling debts of the past? Can you give us some feel for this?

BREMER: Mr. Chairman, it is always easier to state the process than to implement it. Moving Iraq from 35 years of tyranny to democracy will not be easy, which is why we believe the path must be carefully followed out. It need not be slow. But it needs to be taking place in the framework of a clear legal and political process. And that process must involve writing a constitution.

Our country, of all countries in the world, understands the value of a permanent constitution. And after all, it took us 12 years to get it right. So we do not believe that passing power to an unelected group early on will be sustainable in the long run. And that's why we think the path, as I said, must pass through a constitution.

This can be done. It will take time. It need not take a great deal of time. It can be done -- the whole process can be done as quickly as the Iraqis can, in fact, write the constitution.

It is more or less the same process on the economic reforms. Though there, I think progress can be more rapid. These laws, which I signed into effect a week ago, take effect from the date I signed them, at least the foreign direct investment law does. The tariff rate goes in on the first of the year.

There is no reason now, other than the quite understandable concern about security, why firms cannot begin now to invest in Iraq. And indeed, that's already happening. As you and your delegation saw when you moved around the country, there has been an explosion of economic activity at the street level in every city in the country.

Thousands of stores have opened up. One of my favorite indicators of the market working was when satellite dishes were first offered for sale about two weeks after I got there. They cost $150. The street price today is down to $45. So it's about a third what it was. The market is working.

Though I don't underestimate the difficulty of making the transition in political and economic reform, but I am optimistic. And I am confident the Iraqis can do it. They are a competent, serious group of people.

LUGAR: Let me ask on a more grim subject. What about the problem of suicide bombers, people with suicidal tendencies? For the moment, we talked about our security forces dealing with the remnants of Saddam or the Baathist party who are still at war. But people in Iraq -- someone in Iraq has killed the U.N. people, an attack on the U.N. again, prominent Shiite cleric, not Iraqi police officers.

These are not Americans. Is there a possibility for a fledgling Iraqi democracy to contend with this form of terrorism? I wouldn't say it's new, but nevertheless the suicidal aspects of it many have commented on, a very horrible tendency, whether these people are Iraqi or anywhere else and wreak havoc with reconstruction or with confidence in democracy and institutions.

Well, what feel do you have as to how we are to work through the suicide bomber situation regardless of who they are and where they're coming from?

BREMER: You're quite right, Mr. Chairman. The suicide bombing is a new -- although not entirely new. We did face some suicide bombings during the military operation. So it isn't as if it hasn't happened in Iraq. But certainly the weight of evidence would suggest that suicide bombers are probably not Iraqis. They probably are terrorists coming from outside the country. Though we don't at the moment have clear evidence of that.

BREMER: The Iraqis are going to have a difficult time with security. And one of the reasons that $5 billion of the $20 billion that I'm here to talk about is dedicated to security is precisely to give the Iraqis a better capability themselves in police and in an army and in a court and prison system to deal effectively with criminals, whether they are, you know, terrorists or criminals. It's going to be a difficult job, but we think they can handle it.

LUGAR: I've about exhausted my time, and I shall not infringe upon others. But let me say again I appreciate your report. What I'm hopeful for is that we can get much more adequate information here in the committee all of the time. I'm not certain where the blocks are. And this is one reason why your personal appearance is extremely important. It is always so informative. But you have friends here. And we just need information for the debate, the discussion in our own country.

And you've already commented upon the difficulties of getting the word to Iraqis. That is another entire subject but an important one...

So please, as the plans are formulated, as you make speeches, statements and what have you, make certain that your friends here distribute those to our committee members because we would like to have that information in a timely way.

I suspect that you've gotten a sense, as I said in my opening statement, of apprehension that is being evidenced by members of Congress in both parties. The polling data that was read relative to the attitude of the Iraqi people could be overlaid with the polling data of the attitude of the American people. The American people have gone from thinking this was a great idea to not such a good idea to now 59 percent of the American people, if my memory is correct in a poll yesterday, saying we should not appropriate this money.

The reason I mention that to you is that's not the basis upon which we should make our decision. But you should understand that time's not on our side. Time is not on our side. The guy behind you, Mr. Correlogus (ph), who knows this place better than anybody I know, and I mean that sincerely, I'd be surprised if when he walks out of here -- and one of the reasons you hired him is to assist you -- is that when things go south here, they go south quickly. And so, there needs to be, in my view, an incredibly sensitized sense of urgency here. And that takes me to this whole, sort of, straw man the French have put up and this notion of Iraqi sovereignty.

The implication the French make is that somehow we don't intend on turning over sovereignty to the Iraqis. We know, everybody here knows that that is our desire for 50 different reasons to do that. But the reason I mention this is that I want to focus on one aspect of the plan as an illustration of what I believe to be the lack of a sense of urgency and the lack of a willingness of the administration to do beyond your pay grade what needs to be done.

And that is that restoring a sense of security on the street to average Iraqis. You told us. Walt Slocum who is one of the most competent guys in the entire defense establishment told us. All your folks who are first rate told us stories that ranged from Iraqis, even though the schools are open, being fearful of letting their daughters go to school, waiting outside until their daughters come out so they could take them home for kidnapping and so on and so forth.

Yet we met with Mr. Kerik who was the former commissioner of New York City and a really first rate team of people who have vast experience in Kosovo and Bosnia and Afghanistan about how to train the Iraqi police forces. We were told then -- that's several months ago -- it would take up to five years to train the Iraqi police force, that there really wasn't a police force. These guys didn't even know how to go on patrol. The idea there was an Iraqi police force was a myth. What you had is you had a group of Iraqis who had uniforms and they didn't know how to do investigative work. They took care of traffic. If people didn't show up, Saddam sent someone and killed them. I mean, it was real simple.

And so, we're really training from the bottom up here. And we were told there was a need for 5,800 foreign European carabinieri, quasi-military police forces in there immediately. You've got 300 from the Italians, another 400 somewhere along the way. In my discussions with Dr. Rice and my discussions with the secretary and my discussions, there was no sense of urgency of going out there and banging on doors and dragging people out to train these Iraqis.

Now we have enough trainers that we could train -- if my numbers are correct, and I think they are -- full bore if we went. We can train roughly 250 Iraqi police -- is it a month -- per month based on the trainers we have.

Just real practical here. Why haven't we made a deal? Why haven't we gone out of out way? Why haven't we? Or maybe you've made the request and said, look, we'll pay a premium. I mean, hell, we're paying Iraqis who aren't working. We're paying Iraqi military folks who were getting the pay before and aren't doing a damn thing. Why aren't we paying, for example, put out the word we need 1,000 American cops? And we'll pay them. What's the deal here? Where's the practical input of how to get this done? This is not rocket science. Why? Why haven't we done those kinds of things?

In fact, there is a great sense of urgency. We do have a plan. I told Mr. Kerik and his colleagues that we couldn't wait five -- actually it was six years. It was 5.9 years, his plan, to get us to a police force of 80,000, which is what we need. We now have about 40,000 police on duty. They are former policemen and therefore, of questionable utility in the long run, which is why each of them is being through a refresher course that teaches them, among other things, human rights and respect for the law.

We have a plan to produce another 40,000. There's $2 billion in this supplemental for it. It is one of the single largest pieces in this supplemental. And the plan is to train those people in Jordan. We plan to start training the trainers in three weeks.

BREMER: We are going to need 1,500 trainers. The State Department has identified 1,000 trainers. We are ready to move on those as soon as we get the money. We, under this plan...

BREMER: American. But we are also -- we've received offers from the Czech Republic, the British, the Italians. I saw another cable this morning. I can't remember which country. There are lots of places.

BIDEN: Roughly what's the total of the European contribution? We were told by the folks running the training facility needed 5,800 European contribution.

BREMER: No, we have reduced that number by running it in a different way. We're down to 1,500 need. And we'll get the 1,500. That isn't going to be the problem. Here's the problem. Even going as fast as we can -- and we will train 25,000 new police in a year.

Just to put that in perspective, Mr. Kerik, who ran the largest training facility anywhere in the world, at a maximum trained 6,000 police in a year. We are going to be training four times as many as have ever been trained anywhere in the world in a year.

That's a sense of urgency, I can tell you. And there's $2 billion in here that makes that happen.

BIDEN: Well, the sense of urgency is that you need trainers. The way this has to work, as you know, you can't send out -- this is something I do know a little about chairing Judiciary for years and writing the crime bills and working with Kerik and all these mayors across the country and all these training programs is what they need is they need to send out competent police officers from other countries with the Iraqi police.

HAGEL: Mr. Chairman, thank you. Mr. Chairman, I have a statement that I would ask to be included in the record.

Ambassador Bremer, welcome. I add my thanks to you and your civilian colleagues as well as our military, our men and women in uniform who are making sacrifices for this country. We appreciate it. And please relay our thanks as you return.

I suspect you have broken or will break some kind of a record up here this week. I don't know of anyone who will have testified to as many formal committees in hearings as you will by the end of the week. So thank you for that. And I know you were asked to even do more. But I don't know, is it nine that you have?

HAGEL: You understand this business why it is important to have you here as you have worked your way through some of those hearings and will continue. Because it's critical that the American people understand what the point is here. One of the concerns many of us have -- and I know you have -- is not just losing an international consensus, but losing a national consensus for the objective that we have ahead of us. So you are as critical a person in this national, international debate as anyone. So thank you.

Before I ask a couple of questions, I thought your testimony was good, and it was to the point. I would add one piece to your reflections on what happened after World War II. And I happen to agree with your assessment. The additional component that I would include in your Marshall plan analysis and why we started to get things right after World War II was that after World War II, as you know, other important things were done. And that is that we set up coalitions of common interest.

The United Nations was formed. NATO was formed. Bretton Woods brought IMF World Bank. The general agreement on tariffs and trade. And what was the point of that? The point of that, of course, was the world had common interests. We should share responsibilities for those common interests. We should develop forums to exchange our interests, our differences and work them out.

So I would add that as another reason why we have been successful the last 58 years, certainly under American leadership. But let's not eliminate the United Nations and other of these multilateral organizations that have been so important to keep relative peace and prosperity in a dangerous world.

The United Nations, the president's speech yesterday, I said that I appreciated very much him going before the United Nations. I have said also that I think he could have been more specific in specific areas of request for assistance, United Nations allies. And could you give us some detailed definition this morning, Mr. Ambassador, as to where you would envision our allies, the United Nations, could play specific roles, their roles of responsibility in helping restructure and rebuild Iraq?

Included in that would be what decision making responsibilities, authority are you willing to give up, are we willing to give up if we are to enlist specific allies as well as the United Nations and force structures and money and training and all that would come with that. So that's the one thing I have not heard much about from you, the president or the administration. Thank you.

BREMER: Thank you, Senator. And I will convey your thanks to my colleagues when I return.

I think the administration's policy on the question of having international support has been all along that we welcome it. I'm sure members of the committee are familiar with the fact that it is already a broadly international effort. We have troops from 30 other countries on the ground with us.

HAGEL: But, I mean, let's be honest about it, Mr. Ambassador. We're paying for most of it. I'm interested if we're going to go after United Nations help and allies' help, the big allies, what are we prepared to do in the way of sharing responsibilities, decision making authority? You and I both know the facts of life here. These people are not going to turn over troops to you, General Abizaid or money or resources without some say in this. And they should have some.

And it gets back to a question I've been asking. Why should this country bear all the burden or certainly 90 percent of that burden when it's in the interest of all the world to stabilize the Middle East? So what are we willing to give up in the way of sharing?

BREMER: Well, I think on the -- I see it as two separate questions. On the question of the troops, I think there is broad agreement that we must retain unity of command and that the country with the largest contributors of troops should remain in charge of those troops.

BREMER: As I understand it, though -- I'm not intimately involved in the negotiations in New York over a new Security Council resolution, so I can't comment in detail on that. But I understand that that particular concept seems to be understood. So there doesn't seem to be any contention over that question.

I would argue that the same has to apply on the question of reconstruction. There must be some unity of command. We cannot have people pulling right and left, which is why I established a coalition international committee which was established under the former Polish Deputy Prime Minister Marek Belka in July to be available to coordinate the efforts that are coming in -- and there are 61 countries that are already contributing to Iraq's reconstruction -- to make coordination so we don't have two countries, for example, wanting to build a hospital in the same city or three people trying to build the same school.

So we already have a mechanism to do that coordination. Whether at the end of the negotiations in New York we find a different mechanism for that coordination I have to basically leave to the negotiations in New York and to the way the administration is going to come up with this new resolution. The president made clear at the time of the war and after -- and he said it again yesterday -- that we certainly foresee a vital role for the United Nations. He specified several areas yesterday in helping write the constitution, in helping conduct the elections.

I've had visitors from the United Nations already helping the Iraqis figure out how to do voter registration. These are things we welcome. Nobody is saying the U.N. does not have a role. And the same goes for other countries. We have welcomed them in. And we'll have to see now in terms of your question of authority how the discussions in New York go over the next weeks.

Ambassador Bremer, I think this is the first time you've appeared before this committee, I believe, since taking on these responsibilities.

SARBANES: Yes. You've had a distinguished career in the foreign service. As I understand it, you retired in 1989 and then became a managing director at Kissinger Associates. And then I don't know whether you continued that right up until you were called back into the government.

BREMER: Well, yes. Although I was chairman of the National Commission on Terrorism. You'll remember, Senator, I appeared before this committee in that respect.

BREMER: And I served on the president's Homeland Security Advisory Council. Both of those were non-paid government service.

SARBANES: Yes. Now you're the administrator of the Coalition Provisional Authority. Is that correct?

BREMER: It is made up of representatives of the coalition. I have on my staff people from 17 different countries who help me with the job of administering Iraq while we continue to exercise sovereignty there.

SARBANES: When the Coalition Provisional Authority makes a decision, I take it that's your decision. Is that correct?

BREMER: Well, less and less because we now have -- since July 13th, we have a Governing Council. And since September 2nd, we have Iraqi ministers. So more and more decision making is effectively collaborative since July.

BREMER: I would put it this way. The ultimate authority is the coalition's. But the decision making is essentially done in co- determination with relevant Iraqis. The authority, as a legal matter, rests with the coalition.

SARBANES: Because in the end, you make the decision for the coalition? I mean, it's a one man show in that regard, is it not?

BREMER: No, it is not a one man show. I have two very senior British diplomats who work literally side by side with me as the...

BREMER: Well, I imagine there would be discussions between London and Washington.

SARBANES: I understand that. But assuming no consensus can be achieved, how is that decision made?

SARBANES: I mean, if you're the ultimate decision maker, why don't you say you're the ultimate decision maker?

SARBANES: All right. All right. Now the supplemental request from the executive office of the president has $65 billion for the Department of Defense.

SARBANES: And then it has a heading, Coalition Provisional Authority and Department of State, $21.4 billion. And then they say the request provides $20.3 billion for the Iraq relief and reconstruction fund for use by the Coalition Provisional Authority. Then the small balance is for the State Department. You basically will make the decision on the use of that money? Is that correct?

BREMER: No, as a matter of fact, the $20 billion supplemental which is before the Congress was developed by the Iraqi ministries, the related ministries, ministry of electricity, ministry of water resource, ministry of agriculture and so forth in conjunction with my experts. It was put together basically to...

SARBANES: Well, will the money go to the ministry and the expenditure of the money then be decided by the minister?

BREMER: Well, the American Congress is being asked to decide on the $20 billion. It will then...

SARBANES: We decided on the big amount and sub-amounts. But when that money goes out, $5 billion $3 billion for this purpose...

BREMER: That will be decided by me, by the Coalition Provisional Authority in conjunction with the plan that's already been put together with the Iraqi ministries.

SARBANES: No, no, no, no. I'm not suggesting that -- that's not the path I'm going down. I'm trying to find out how long you think we're going to need an administrator and a Coalition Provisional Authority.

BREMER: Well, it goes back to the question about when the coalition's authority, the sovereignty that we exercise under international law now, is passed to a sovereign Iraqi government.

SARBANES: I understand that. And I understand the steps you've laid out and so forth. All I'm trying to get is that what, in the timeframe, do you expect a year from now that you'll still be the administrator.

BREMER: Well, what I was trying to explain, Senator, is that depends on how quickly the Iraqis write a constitution.

SARBANES: If it took them a long time to write it, I take it you'd still be the administrator five years from now.

SARBANES: Or if it takes them a short period of time to write it, you'd be the administrator -- you'd be out of there in three months. What do you expect? And I give you a time. Do you expect that a year from now you'll still be the administrator?

BREMER: I think that it is quite possible that the Iraqis will go down that path and have elections some time next year.

SARBANES: Of course, a year from now is next fall, the fall of 2004. Do you expect U.S. military forces will still be in Iraq at that point?

SARBANES: And furthermore, do you expect that U.S. military forces will be there after there's no longer an administrator and a Coalition Provisional Authority?

BREMER: In answer to your first question, I do expect American forces to be there in a year. In answer to your second question, I really don't know. The Iraqis when they have their own sovereign government will do what every government does. They'll assess their security needs, and they'll decide whether they need outside help for their security. And if they do, they presumably will sign some kind of a SOFA agreement with America if they want American forces there.

SARBANES: What's your expectation on how long American forces will continue to be in Iraq?

Are you attending the international donors' conference in Madrid at the end of October?

BREMER: Well, we're hoping that the international community, other countries and the international financial institutions like the World Bank and IMF will make substantial contributions, will agree to make substantial contributions to the recovery of Iraq. As Senator Biden pointed out, the World Bank assessment is that they need something like $60 billion to $70 billion and that we have focused on the $20 billion that we think needs to be spent quickly over the next 12 to 18 months. And a lot of that other $60 billion is in the out years. And we're hoping that we're going to find substantial contributions to that from the donors' conference.

BREMER: No, I don't think so, Senator. If one looks at the Iraqi budget, by the year 2005 if we get oil production back to 3 million barrels a day which we expect to do by October next year, the Iraqi revenue stream should be in excess of the needs of the immediate running of the government by about $5 billion a year. So the Iraqi government should be spinning off substantial amounts that they can put into these less urgent investments that the World Bank says need to be made.

From what I understand, you left Baghdad and came here and got Isabel and lost your electricity here. So you can't win.

CHAFEE: I admire and appreciate the sacrifices you are making. In your prepared statement, you did give us a history lesson of post World War I and the reparations that might have led to the rise of Nazism and Marshall Plan. But what does amaze me -- and then Senator Hagel added a little more of the history of the formation of the United Nations. But what does amaze me is that the entire Bush administration seems to have missed the lessons of Vietnam. And now we do find ourselves mired in a land in which we don't share nationality, the ethnicity, the religion, the language of the people of where we find ourselves. But that's where we are, and now we wrestle with that.

And my question is as we go through the process of forming a constitution, having a democracy, what is the plan if the people of Iraq want to elect an anti-American, anti-Western, Iranian style theocracy or whatever it might be? Is there that possibility? And is there a plan to have some parameters in the constitution to deal with that?

BREMER: Well, first, my assessment is that that's not a very likely outcome. But it's certainly a serious question. We have said that we believe it is important for the constitution to be written by Iraqis. On the other hand, there will be certain major issues. One of them will be the role of religion on which we will want to be absolutely certain that some fundamental principles are respected, in particular, the freedom of worship. And we've made that clear. And I don't anticipate that being a problem in the constitution.

BREMER: No, I don't think so. From our discussions -- both mine, but more importantly, my experts in the field -- from what little polling data there is available -- there was a poll that was cited earlier in which fewer than 33 percent of the people in Iraq want even an established religion. Although, incidentally Islam was established in the previous constitution. So we don't look at with rose colored glasses. We don't diminish it. I'm just giving you my assessment at this time.

CHAFEE: If there were to be some charismatic ayatollah that got involved in the political process, is there going to be some aspect to the constitution that forbids some kind of anti-American, anti-Israel, anti-Western government?

BREMER: Well, I don't know the answer to that, Senator. They haven't even convened the constitutional convention yet. I can understand what the American interest is. And you may be sure we'll make our interests known. But I can't give you an assessment. I do not consider those to be likely outcomes at this point. But the constitutional convention hasn't even been convened yet.

CHAFEE: OK. Thank you. And now we're here asking for a large amount of money. And the big question I'm hearing from my constituents is what is the security going to be for our investment that we're potentially going to be making in waste water, water projects, electricity, obviously the oil pipelines that runs across large, unpopulated regions of the country. How are we going to secure this? How easy is it going to be for guerrillas to sabotage our investment?

BREMER: We will continue to have good days and bad days, as I said in my testimony. I don't portend that we've got the security situation solved. That's why $5 billion of this $20 billion is dedicated to doing those things, making better border police.

BREMER: In the Iraqi budget itself -- not in this supplemental, but in the Iraqi budget itself, we have put aside funds for the oil ministry to stand up a police force dedicated to protecting the oil pipelines. We've given the electricity ministry money to stand up a force to protect the power lines. But there are 19,000 kilometers of power lines in Iraq. There are 7,000 kilometers of pipelines. You cannot guard everything all the time everywhere.

So there will be continued acts of sabotage. But those acts of sabotage are falling off now, as the two ministers pointed out in their statements in the Oval Office on Monday. And we're beginning to see the power generation coming up. Oil production, the day before yesterday, was a record 1.9 million barrels. It's the highest it's been since liberation. And it's on an upward curve. So again, I'm not being Polly Anna. We will have bad days. We will have more sabotage. But the trend is in our favor.

CHAFEE: Yes. I might question that trend myself. But the president of Indonesia was at the United Nations saying that she's seeing a rise, as a result of the war in Iraq, a rise of extremism. And this is a rallying place for extremists to go. Common sense would tell you. And that it's going to get more and more difficult to secure our investment. Any comment on the president of Indonesia's comments that the war in Iraq is working against our...

BREMER: I didn't hear her comments. I didn't hear her comments. But I make no secret in my opening comments that Iraq has become a major front in the war on terrorism. It's not a very comfortable position for me or my colleagues to be in. It's dangerous. But it's a fact.

CHAFEE: Well, very good. Once again, I, on your personal level, admire what you're doing.

FEINGOLD: Thank you, Mr. Chairman and Senator Biden for calling this hearing today.

And, Ambassador Bremer, I do thank you for being here. I'm glad to have an opportunity to be a part of a concrete discussion about where we stand in Iraq and where we're going. I appreciate the fact that you and your staff and many Iraqis are working very hard in this difficult transition in Iraq. And you are right to point out the gains that have been made thus far. But I have to tell you, echoing, I think at least what Senator Hagel seemed to be saying, that based on what has transpired to date, many of my constituents have lost or are losing confidence in our policy. And I share a great deal of their skepticism.

Now we are being asked to invest tens of billions of additional dollars in a scheme that has not earned our confidence without a clear sense of when the demands on the American people might cease, both in terms of manpower and money. So it seems to me that rather than just making the case for why reconstruction is important, the administration also needs to tell us what is going to change in terms of our efforts to date and how it will take action to place our policy on a firmer footing.

In that regard, I'd like to, sort of, ask the converse of a question that Senator Hagel was asking you. What kinds of decision making authorities do you currently possess that you would be unwilling to share, that you think would be a bad idea to share with other donors in the context of seeking their vigorous support and participation in the reconstruction effort? What can't we credibly give up?

BREMER: Well, I think there are two answers to that. One of them is that I do not think we can relinquish the concept of an orderly turnover of the political authority. That's not directly. The question you asked was reconstruction. But I think it is relevant. That is to say I believe that we must stay on the path of insisting that there is a constitutional framework followed by democratic elections before there is full sovereignty returned to the Iraqi people.

It may be that there'll be other countries who will agree with us on that. But I'm just saying I think that concept must be protected.

FEINGOLD: But vis-a-vis the donors, what powers that are now being exercised by the United States in your authority would you be unwilling to give in return for help from the other donors?

BREMER: Well, I would be unwilling to give to other countries the authority on deciding how to spend the $20 billion that the taxpayers of America are putting up.

FEINGOLD: OK. Let me ask you a different question. Ambassador Bremer, in July, Deputy Secretary of Defense Wolfowitz suggested that, quote, "it was difficult to imagine before the war that the criminal gang of sadists and gangsters who have run Iraq for 35 years would continue fighting, fighting what is sometimes called a guerrilla war," end quote. In fact, why we would have anticipated anything else, in my view, is something of a mystery to me.

And then on Monday in testimony before the Appropriations Committee, you indicated that the administration has been surprised by the influx of terrorists who now present a threat to Americans on the ground in Iraq. President Bush told the nation several weeks ago that, "the surest way to avoid attacks on our own people is to engage the enemy where he lives and plans. We are fighting that enemy in Iraq and Afghanistan today so that we do not meet him again on our streets in our own cities," unquote.

So which one is it, Ambassador? Did we fail to anticipate these attacks? Or is this all part of the president's overall plan to engage the enemy in Iraq? It really can't be both.

BREMER: Well, first, analytically those are two separate things. The question of the former regime loyalists attacking us is not the same as the point I made on Monday about foreign terrorists. They are two different problems. They may start to come together. That is a concern of mine. But in terms of the former regime loyalists, I think what happened was -- and again, I am now speaking only from what I've been able to learn because, as Senator Biden pointed out, I was actually not even in government at the time of the war.

But what seems to have happened is a large number of very bad people, in the Fedayeen Saddam, in the republican guards and in the intelligence agencies simply faded away. They were not ever militarily defeated. And this is particularly true in the area to the west of Baghdad, north to Tikrit, which is where 80 percent of the attacks against coalition forces are coming. They simply faded away. They did not stand and fight. They did not stay in barracks and surrender. They simply melted back into the landscape. This, I think, was not foreseen, so I understand by the planners. And that has been a problem for us.

In terms of the terrorists, what has happened -- and the arrival of the foreign terrorists is a relatively new phenomenon. That is to say it dates basically back to, sort of, early July or so, early to mid July. And what happened there was the Ansar Islam terrorists whom we hit in the beginning of the war in the north -- those who survived went into Iran. They spent time licking their wounds and reconstituting and started infiltrating back into Iraq, as I mentioned, in early to mid July. And that is a...

FEINGOLD: So essentially, when the president says, we have to engage the enemy where he lives, when you're speaking of these people, you're speaking of people that just really recently arrived?

BREMER: Yes. But again, if you want to talk about the terrorists, one has to then make...