SECRETARY POWELL: It is, of course, a pleasure for me to appear again before the committee, Mr. Chairman, and I thank you for your powerful opening statement. And, Mr. Lantos, I thank you for your words as well, and with your permission, I will leave tax policy to Mr. Snow and other members of the Administration.

MR. LANTOS: Shows great wisdom. (Laughter).

SECRETARY POWELL: It is a pleasure to be before the Committee again and to begin by thanking all of the members of the committee for the solid support that you have provided to me, but more importantly, to the Department, and even more importantly to the men and women of the Department of State who are serving their nation with such distinction around the world and, as was noted by Mr. Lantos, putting themselves in harm's way and taking casualties just like soldiers do. Knowing that they have your support means a lot to them.

I am here this morning to as for your support again in the upcoming fiscal year. I will get, I am sure, in the course of questioning, the opportunity to talk about all of the various regional issues you mentioned, Mr. Chairman, but hope that you will bear with me as I focus on the budget for just a few moments. With your permission, Mr. Chairman, I do have a full statement, which I would like to submit for the record and then just shorten that statement with a few words.

Mr. Chairman and members of the Committee, I am pleased to appear before you testify in support of the President's International Affairs Budget for Fiscal Year 2004. Funding requested for FY 2004 for the Department of State, USAID and other foreign affairs agencies is $28.5 billion.

The President's budget will allow the United States to first, target security and economic assistance to sustain key countries supporting us in the war on terrorism and help us to stem the proliferation of weapons of mass destruction.

Next, this budget will help us launch the Millennium Challenge Account, a new partnership generating support to countries that rule justly, that invest in their people and encourage economic freedom; also strengthen the United States' and global commitment to fighting HIV/AIDS and alleviating humanitarian hardships; next, help us to combat illegal drugs in the Andean Region of South America, as well as bolster democracy in one of that region's most important countries, Colombia. And reinforce America's world-class diplomatic force, focusing on the people, places and tools needed to promote our foreign policies around the world.

I am particularly proud and committed to that last goal, Mr. Chairman, because for the past two years, I have concentrated on each of my jobs, primary foreign policy advisor to the President, but just as importantly Chief Executive Officer and Chief Leader of the State Department. And under my leadership, or CEO hat, we are asking for $8.5 billion within that $28.5 number.

And let me give you some highlights of what these particular funds are for. First, we have been reinforcing our diplomatic force for two years and we will continue to do so in FY 2004. For some period of time in the last decade, in the 90s', we simply weren't hiring new Foreign Service officers and Civil Service employees in to the Department. And that was a disaster. If you want to have an ambassador in 15 years, you have got to hire a junior officer now. Just as if you want to have a battalion commander in 15 years, you've got to hire a 2nd Lieutenant now. You can't have air bubbles in a personnel pipeline.

We have turned that around. We are encouraging Americans to come forward and apply to be members of this wonderful State Department of ours, and they have been responding. In the last 2 years, some 80,000 young Americans have signed up to take the Foreign Service written exam, a very tough exam.

We are also reaching out more throughout our society so that the State Department can look more like America and more like the world. I am pleased that on the last Foreign Service Exam, for example, 38%of those passing the exam were minorities. So we are reaching out throughout all of the communities of America to get more young Americans to step forward, and they are stepping forward. But if Congress doesn't give me the money to hire some of them, then I'm wasting my time. And so I am very pleased that Congress has been willing to do that, and in this new submission, I will be able to hire 399 more professionals to help the President carry out the nation's foreign policy. This third year of this increased hiring amount to 1,100 new professionals within the Department and it gets us above, well above, the attrition level so people can go to training, people can do other things other than just deal with the daily workload. We will have a little bit of flexibility in our personnel system.

Moreover, completion of these hires will show to the Department that what we said at the beginning of this administration came true. We believe in the Department, we believe in taking care of our people and giving them the additional people to join them to get the work done.

Second, I promised to bring state-of-the-art communications capability to the Department because people who can't communicate rapidly and effectively in today's globalizing world can't carry out our foreign policy. I told the members of the Department that before I left I wanted every person in the Department, no matter where they were in the world to have Internet capability on their desk, classified and unclassified. And we're charging forward on that goal.

We have to make sure that we are in tune with the kind of world we are living in with respect to information technology, with respect to the speed of communication. By way of illustration of how we are trying to do this, after my presentation to the UN last Wednesday afternoon, within minutes it was all being translated into multiple languages, being instantly downloaded at all of our embassies, all of our embassy teams prepared to take that presentation, turn it around, get it out to the people in the countries in which they are accredited to. And we have got to be able to do that more and more on an instantaneous basis.

I have told some of my staff members that on Thursday morning, looking at the reviews of Wednesday's presentation and some of the pictures, the picture that touched me the most as I looked through the newspapers was a picture of a ready room in an aircraft carrier, and these Marine aviators were sitting in their flight seats, these seats where they get briefed for a mission, and they were sitting in the ready room watching the presentation that I was making at the UN the day before.

So they are not waiting to read it in a newspaper. They are not waiting for a brilliant talking head to explain it to them. They're not waiting for the evening news. They're getting the information instantaneously, direct to the consumer -- them. And nobody had more of an interest in what I was talking about than these young aviators, who may well have to go into combat.

So that ability to communicate instantaneously, to spread knowledge instantaneously, I've got to drive that into every single corner of the State Department and put it on every desk in the State Department. And we are well along the way to doing that and I ask for your continued support.

Also with respect to my CEO role, I wanted to sweep the slate clean and completely revamp the way we construct our embassies and other overseas facilities. I found a program that was in some difficulty when I arrived. I put in charge General Chuck Williams, who you've all come to know, former Army officer, Corps of Engineer officer, and he's turned the place around and he's got a great team working with him. Our embassies are now coming in under cost, more cheaply. We've reduced the cost of building. We are using the most modern management techniques with respect to construction. And I ask you again for solid support for that program in the neighborhood of $1.5 billion this year.

Mr. Chairman, as the principal foreign policy advisor to President Bush, I have budget priorities as well in that hat, and let me highlight just a few of our foreign policy funding priorities before I stop, and I will make a few remarks in response to you, Mr. Chairman, and you, Mr. Lantos, and then turn it over to questions.

The 2004 Budget proposes several initiatives to advance U.S. national security interests and preserve American leadership. The 2004 Foreign Operations Budget that funds programs for the Department of State, USAID and other foreign affairs agencies is $18.8 billion. Today, our number one priority is to fight and win the global war on terrorism. The budget furthers this goal by providing economic, military and democracy assistance to key foreign partners and allies, including $4.7 billion to countries that have joined us on the front line of the campaign against terrorism.

Of this amount, the President's Budget provides $657 million for Afghanistan, $460 million for Jordan, $395 million for Pakistan, $255 million for Turkey, $136 million for Indonesia, and $87 million for the Philippines.

In Afghanistan, the funding will be used to fulfill our commitment to rebuild Afghanistan's road network. In addition, it will establish security through a national military, a national police force; establish broad-based and accountable governance through democratic institutions and an active civil society; ensure a peace dividend for the Afghan people through economic reconstruction; and provide humanitarian assistance to sustain returning refugees and displaced persons.

United States assistance will continue to be coordinated with the Afghan Government, the United Nations and other international donors.

Now, that's pretty bureaucratic, Mr. Chairman and members of the committee. The bottom line is we have a success story in Afghanistan. Is it still fragile? Yes. Are there still al-Qaida elements and Taliban elements running around? Yes. Are we going to be there a long time? Yes.

But what we have accomplished in the last year and a half or so has been rather incredible when you consider that we removed a terrible regime, we flushed al-Qaida so that they are on the run, we put in place a government that is representative of the people, representative of the people and respectful of the people. We have started the reconstruction effort to put in roads and schools and hospitals. Women are now being integrated into public life throughout Afghanistan. Over a million refugees have returned to this country. By voting in that way with their feet, they are showing confidence in the future of Afghanistan and we can be proud that we helped give the Afghan people that confidence.

Mr. Chairman, I also want to emphasize our efforts to decrease the threats posed by terrorist groups, rogue states and other non-state actors with regard to weapons of mass destruction and related technology. To achieve this goal, we must strengthen partnerships with countries that share our views in dealing with the threat of terrorism and resolving regional conflicts. The 2004 Budget requests $35 million for the Nonproliferation and Disarmament Fund, more than double the 2003 request. It increases funding for overseas export controls and border security to $40 million and supports additional funding for science centers and bio-chem redirection programs.

Funding increases requested for these programs will help us prevent weapons of mass destruction falling into the hands of a terrorist group or states by preventing their movement across borders and by destroying or safeguarding known quantities of weapons or source material. The science centers and bio-chem redirection programs support the same goals by engaging former Soviet weapons scientists and engineers in peaceful scientific activities, providing them an alternative to marketing their skills to states or groups of concern.

The budget also promotes international peace and prosperity by launching the most innovative approach to U.S. foreign assistance in more than 40 years. The new Millennium Challenge Account, an independent government corporation funded at $1.3 billion will redefine development aid. As President Bush told African leaders meeting in Mauritius recently, this aid will go to nations that encourage economic freedom, that root out corruption and that respect the rights of their people. It is money that will be used to reinforce their commitment to democracy, to make sure that they stay on the path of the rule of law, of democracy, of economic freedom, and of the rights and privileges of their people to select their own leaders and seek their own destiny within a democratic system.

Moreover, this budget offers hope and a helping hand to countries facing health catastrophes, poverty and despair and humanitarian disasters. The budget includes more than $1 billion to meet the needs of refugees and internally displaced peoples.

The budget also provides more than $1.3 billion to combat the global HIV/AIDS epidemic. The President's total budget for HIV/AIDS is $2 billion, which includes the first year's funding for the new Emergency Plan for HIV/AIDS Relief that the President announced in his State of the Union Address. These funds will target 14 of the hardest hit countries in Africa and the Caribbean.

This budget also includes almost half a billion dollars for Colombia. This funding will support Colombian President Uribe's unified campaign against terrorists and the drug trade that fuel their terrorist activities. The aim is to secure democracy, extend security, and restore economic prosperity to Colombia and prevent the narco-terrorists from spreading instability to the broader Andean region.

To accomplish this goal requires more than simply funding for Colombia. Therefore, to deal with other nations in the region, our total Andean Counter-Drug Initiative is for $731 million. Critical components of this effort include resumption of the air bridge denial program to stop internal and cross-border aerial trafficking in illicit drugs, stepped-up eradication and alternative development efforts, and technical assistance to strengthen Colombia's police and judicial institutions.

Mr. Chairman, members of the committee, to advance America's interests around the world, we need the dollars that have been requested for my Department in the President's Fiscal Year Budget for 2004. We need the dollars under both of my hats, CEO as well as principal foreign policy advisor.

Mr. Chairman, I am prepared to answer all of the questions you might have on the budget and other matters, but for just a moment let me just say a word or two about some of the issues raised in the opening statements.

First, with respect to Iraq. Mr. Chairman, when the international community came together after President Bush's speech to the United Nations on the 12th of September, it came together with the certain understanding that if the United Nations was going to remain relevant it had to act on this challenge that had been put before the United Nations by Saddam Hussein, the challenge that had been put before the United Nations for the previous 12 years. And through 16 resolutions, the United Nations had demanded compliance by Saddam Hussein of his obligations under those resolutions and he ignored the United Nations.

The President went to the United Nations because this was a problem, as you noted, sir, not just for the United States, but for the whole world. Saddam Hussein is a threat to his own people, he is a threat to his neighbors, and ultimately he will be a threat to the whole world with the development of weapons of mass destruction. This was not a charge dreamed up by the United States of America. It was a statement of the Security Council of the United Nations, repeated year after year after year. And what the President said to them on the 12th of September, it's time to get serious and put action to the words.

Over the next seven and a half weeks, I worked with my colleagues in the Security Council and we came up with a strong resolution, Resolution 1441, which was passed on the 8th of November. This resolution did several things, which sometimes people forget, and some of the people who voted for the resolution forget.

First and foremost, it said Saddam Hussein and the Iraqi regime are guilty. It isn't a matter of needing more evidence. They have been found guilty previously. They are guilty now. They remain in material breach of their obligations under previous resolutions. So there is no question about whether they are guilty or not. And every member voting that day understood that simple proposition.

Second, we said there is a way to resolve this to the Iraqi regime. There is a way to get out of this problem that you have put yourself in, and that way is to comply, to give up your weapons of mass destruction; to turn over the documents; to make people available to be interviewed, scientists and engineers, to bring them out of the country so they won't be intimidated; to show us where these facilities are; to bring forth all that you have been doing. And that is what the resolution called for Iraq to do. To help you, we will strengthen the inspection system and give more authority to Dr. Blix and Dr. ElBaradei in order to help Iraq comply.

And then finally, to make sure that Iraq understood the seriousness of this issue, the final part of the resolution clearly said that if there are new material breaches, further material breaches, meaning Iraq has not complied as it must, then serious consequences will flow.

Every member sitting in the Council that day and all of their capitals understood that serious consequences meant if Iraq did not take this last chance, this last opportunity to come into compliance, they would face military force in order to bring them into compliance, in order to disarm them. There was no confusion in that Council that day, I can assure you, because we worked on that document for seven and a half weeks.

We now have three months of experience under that resolution, and Saddam Hussein has not complied. He sent forward a false declaration 30 days after the resolution was enacted -- one day short of 30 days. And in that declaration, he gave us a lot of smoke. We specifically put that in there as an early requirement, a 30-day requirement, in order to test, in order to test him to see whether or not he was going to seriously undertake his obligations. He failed the test. Nobody can dispute that. He has also failed to give the inspectors the kind of cooperation that is needed for the inspectors to do their work. I don't thing there is any dispute about that and we will hear more about this from Dr. Blix and Dr. ElBaradei on Friday.

So we are reaching a moment of truth with respect to this resolution and whether it meant anything or not. We are reaching a moment of truth with respect to the relevance of the United Nations Security Council to impose its will on a nation such as Iraq, which has ignored the will of the Council for the last 12 years, and we are reaching a moment of truth as to whether or not this matter will resolve peacefully or will be resolved by military conflict.

The President still hopes it can be resolved peacefully. I think everybody has that hope. I have that hope. I don't like war. I've been in war. I've sent men into war. I've seen friends die in war. Nobody wants war. But sometimes it is necessary when you need it to maintain international order. And the United States is prepared to lead a coalition, either under UN auspices or if the UN will not act, demonstrates its irrelevance, and then the United States is prepared with a coalition of the willing to act. And it will be a good coalition, a strong coalition.

There are some of my European colleagues right now who are resisting the natural, the natural flow of this resolution and what's supposed to happen. They want to have more inspectors. More inspectors aren't the issue. Dr. Blix hasn't asked for more inspectors. Dr. ElBaradei has not asked for more inspectors. It's not clear Saddam Hussein would let more inspectors in. But that's not the issue. The issue is lack of Iraqi compliance. And just to say we need more inspectors is a way of delaying -- of diverting attention from the basic proposition, Iraq is not complying, and the resolution spelled out clearly what should happen at that time.

And the United States will not shrink back from the obligations that we undertook when we worked to get that resolution passed. I hope that in the days ahead we will be able to rally the United Nations around the original resolution and what other resolution might be necessary in order to satisfy the political needs of a number of the countries. But the United States will not be deterred. Iraq must be disarmed -- peacefully or through the use of military force.

It is interesting and challenging, Mr. Chairman, to watch the politics of this unfold, especially within Europe. France and Germany are resisting. They believe that more inspections, more time -- the question I put to them is: Why more inspectors and how much more time? Or, are you just delaying for the sake of delaying in order to get Saddam Hussein off the hook and no disarmament? That is the challenge that I will put to them again this Friday and next week as the debate continues on this issue.

Nations such as the United Kingdom, Spain, Italy, many of the New Independent States, who were once enslaved and under dictators, and who understand the consequences of not dealing with a dictator when one should deal with a dictator are solidly on our side.

We have these debates within NATO and within Europe all the time. The Financial Times made reference this morning to Charles DeGaulle back in 1956 saying the United States is a superpower that has to be brought under control. And so we've seen these kinds of expressions and hyper-power complaints previously.

I still believe that it is possible to rally the international community to discharge its obligations. All of the nations that we are now having debates with are, at the end of the day, allies and friends of ours. We have had our disagreements, we have had our fights in the past and we have always managed to find a way forward. And it is my job as Secretary of State to work with these nations and find a way forward, but never by compromising our principles and our strong beliefs, but by using the power of our principles to convince others of what we should do in a collective fashion.

One final point, Mr. Chairman. Somebody asked me yesterday, "Well, suppose there is a military conflict, infidels would be going into Iraq. Isn't that going to be terrible? Isn't just all kinds of heck going to break loose?" I said, "Yeah, well, nobody complained when infidels went into Kuwait to save the people of Kuwait from an Iraqi invasion. We were welcomed by the Muslim population of Kuwait, which had been invaded by a Muslim nation."

Nobody talked about infidels when we acted in Kosovo a few years ago. Nobody talked about infidels when we were in Afghanistan today because what the Afghan people are learning today, is what the people of Japan, and Germany, and so many other places have learned over the years
-- America comes in peace. America comes as a partner. America comes to help people to put in place better systems of government that respect the rights of men and women.

America never comes as a conqueror. America comes to do the principal thing in the interest of peace and the interest of stability. And that will continue to be the philosophy by which this President runs our foreign policy.

Mr. Chairman, let me just stop there in the interest of time.
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