Keynote Address by Senator Chuck Hagel

U.S. Department of State Third Annual Conference on Program Evaluation
Washington, DC
June 8, 2010

MR. KAPLAN: I'm Sid Kaplan. I'm the DAS for Strategic and Performance Planning here at the Department. And it's my pleasure to open and to welcome all of you to the Department's Third Annual Conference on Program Evaluation.

This year our focus is on diplomacy and diplomatic programs, thus the conference title, "New Paradigms for Evaluating Diplomacy in the 21st Century." We're fortunate to have with us this year some of the most respected writers on and practitioners of program evaluation from the U.S. and other countries. I know that you all will profit from both the formal and informal interaction you'll have with these experts.

I'm also pleased to announce that we have more than 300 participants registered to attend. And that's more than twice the number of people who attended last year's conference, clearly demonstrating increasing interest in the subject.

Our participants this year include program managers, evaluators, management and budget analysts, economists, and other specialists from State and USAID, from other federal agencies, representatives from embassies and foreign ministries of other countries, non-government organizations, and the private sector.

In just a minute I will introduce our keynote speaker. But first I want to say a few words about how the Department has worked over the past years to build a culture of evaluation and to expand our program evaluation capability.

Determining the impact of programs in foreign affairs is a singularly difficult job, one that was recognized as such by the Congress when it passed the Government Performance and Results Act of 1993, known to all of us as GPRA.

Our programs can often be difficult to measure objectively, and have outcomes that may take many years to materialize, so over the years we have learned that progress toward long-term goals can often be best measured by tracking medium-term intermediate outcomes that lead us to achieving the ultimate objectives.

Meeting our legal and fiduciary obligations to assess the extent to which our programs are achieving their intended objectives is challenging, to be sure, but critically important if we are to hold ourselves accountable for effective program results. More importantly, and this is a theme you'll hear echoed throughout the day, program evaluation enables policy-makers and senior leaders to have the information necessary to continually improve and optimize the Department's efforts.

We have made significant accomplishments in the past several years to expand evaluation capacity at the Department, largely through the combined efforts of many people in this room today.

With that, let's move ahead to our keynote speaker, who is someone I know you all admire and respect as I do. In an age of increasing partisanship, Senator Chuck Hagel was and remains a voice for bipartisanship in getting things done and done right on Capitol Hill.

You have his complete bio in your program book, but just to mention a few key points, he represented Nebraska in the U.S. Senate for two terms, from 1997 to 2009, and was a senior member of the Senate Foreign Relations Committee, the Banking and Urban Affairs Committee, and the Intelligence Committee. Senator Hagel also chaired subcommittees dealing with international economic policy, exports, and trade promotion, as well as securities, and he chaired the Congressional Executive Committee on China and the Senate's Climate Change Observer Group.

Currently he is a distinguished professor at Georgetown University and the University of Nebraska. Even in retirement, he still stays active as co�'chairman of the President's Intelligence Advisory Board, Chairman of the Atlantic Council, a member of the Secretary of Defense's Policy Board, and a member of the Secretary of Energy's Blue Ribbon Commission on America's Nuclear Future. And, in his spare time, the Senator serves on the boards of several international corporations and institutions.

We are both honored and privileged to have him with us today to start our conference. So ladies and gentlemen, colleagues and friends, please join me in giving a warm welcome to Senator Chuck Hagel.


SENATOR HAGEL: Thank you very much. Good morning. I am grateful for an opportunity, first, to thank you for what you are doing what you have done for our country, and what you continue to do, not just for our country, but to help make a better world.

We live at a time that represents the greatest diffusion of economic geopolitical power the world has ever seen. That is presenting new dynamics of challenges, of threats, and of opportunities. And what you are about, for the next day and a half, is a critical component of all of this because, in fact, as we begin a process based on strategic thinking, strategic concepts, strategic planning, strategic policy, strategic implementation, then it has to reside in some realm of what I have referred to over the years as the realm of RAR �'�' responsibility, accountability, and reality.

Because if we are to measure, if we are to evaluate, programs, policies, efforts, industry, then it has to be anchored with something more than just process or more than just a grand abstraction, which we are particularly good at in Washington, grand abstractions. Isn't this a grand theory? We're going to bring democracy to the world. Okay. Good. Now, how do we get from that grand policy abstraction over here? That's what the essence of your effort is about.

And it's important. And in a couple of minutes �'�' and I want to share some thoughts with you, and then we're going to go to your questions �'�' I want to emphasize a couple of things from my perspective about this universe that you are part of and you direct and you focus on and you make work.

The perspective from a policy-maker or someone who served in Congress, who had some responsibility for some of this �'�' never implementing it, interestingly enough �'�' but everyone has a role to play. And the congressional role is particularly important not because of the development of policy in coordination with the executive branch of government but, probably just as important, the oversight of that, which is essentially what you are about. You essentially are a part of that oversight when you evaluate, when you measure.

And here's the main point that I want to make on this evaluation measurement effort. It is more than just trying to connect the process or check the boxes. I talked about responsibility, accountability, and reality. You must come at this first with an understanding of what the reality of all of this is �'�' what not just the concept is, but what's the point.

What are we trying to do? What is the objective? Not just what you read and the abstraction of that effort in written material �'�' which is important; it has to be written down, of course �'�' but it's got to go beyond that. And it starts with responsibility.

Everyone needs to be responsible in their job. You are responsible for certain things. That then gets us down into the real anchor of effort and the anchor of any successful policy, process, effort, and that's accountability. Who's accountable?

I mean, look at the current situation in the Gulf of Mexico. I don't know of a better example to point to than that reality of lack of accountability and responsibility, starting with we had senior members of management from Halliburton, from BP, and from Horizon Drilling up before Congress a couple of weeks ago.

And if you watched any of that or if you read any of it, you saw an interesting display of, well, yeah, but they drilled the well. Yeah, but we were relying on them on the rig to tell us if there was a problem. Well, yeah, but we own the well. So we go round and round and round.

Who's accountable? The President of the United States. Any president. Secretary of Interior. Anyone with responsibility has now developed this maddening approach to, my God, somebody tell me who's in charge. Someone tell me how to fix it. Someone show me, give me some answers as to how I can bring all of the efforts and utility and mechanisms and resources together to affix and address the problem.

That is the essence of what you should be looking at when you measure anything �'�' not the process, not checking the boxes, but the reality of this.

Now, one of the things that frustrated many of us in Congress �'�' and not that we could do any better, by the way �'�' but it was a frustration in oversight hearings when we would have members of the executive branch before the committee. We would have an oversight hearing on whatever it was. Doesn't make any difference what department of government or what agency of government.

And as we would try to work our way down into getting direct, honest answers to a question, there was always the periphery that we were dealing with �'�' not always, but almost always, and almost in every case. Well, but this. Well, there's a condition to this. But here's my answer, but it's conditioned on this. Well, here's my answer, but it's tempered by these pieces over here.

And so it was a very frustrating process. And I know the President's going through the same thing regarding the Gulf of Mexico oil spill, and other issues. I just had, for example, Stuart Bowen, the Inspector General, and he wanted to see me on Friday. He just issued another report. You've been following that; some of you have been part of that.

And you talk about measurement and Inspectors General and so on and so on, and that was another example of a component of this maddening frustrating, what the hell is happening in Iraq and Afghanistan? Why is there so much corruption? Why do we have hundreds of millions of dollars that we don't know where it went? Who is accountable for that money?

Well, but the contract and the subcontract and the contract and the contract. All right? But that's not the answer. So my point is �'�' you all know this, but again, I'm giving you at least a perspective that maybe always you don't hear �'�' is try to stay focused on all the techniques that you use in the measurement and evaluation on the reality of the objective.

And we all too often fall prey to the organizational, structural bureaucracy that strangles so much �'�' strangles objective, strangles good intentions, strangles motives. And we know, to a certain extent, that's inherent in any bureaucracy, in any large organization. Doesn't mean it's bad. Doesn't mean people are corrupt.

But bigness is bigness. And concentrations of power are always dangerous. Concentrations of power have no personality. They have no sentimentality. There is very little margin of error. Large, monolithic structures are �'�' yes, they're difficult to manage. They're difficult to organize. But they become dangerous to the point where you see, talking this morning about the politics in America today, what's happened? Tea party. Left. Right. Don't trust anybody in Washington.

It isn't just about Washington. It's about concentrations of power anywhere. It's about the greedy bankers on Wall Street in New York. It's about big oil companies. Pharmaceutical companies. It's about the corruption of Washington politicians. That's the frustration. It isn't just about politicians. This isn't just about Washington.

It's about all these big conglomerates, these great organizations of power and structure where people feel powerless. They feel that they have no control over their lives. The bankers control it. The oil companies control it. The drug companies control it. And then big government controls it. And these politicians are right in the middle of it. That's what this is about.

Now, you may think that that's far afield from the centerpiece and the core of your efforts. It's not because when you're doing the job that you're doing, you've got to factor all of that in. Yes, you have standards that you follow. You have prescribed efforts, and accounting standards, and all the standards that you use to measure, and standards of evaluation. And you must have those. Those are the only real guideposts that you work with.

But it has to be deeper than that. It has to be more than that. It has to be about the intention. It has to be about the motive. And sometimes that's going to lead you a little bit off course. That's going to lead you over into another field, another channel. And we all know about when you get out of your lanes. Don't get out of your lanes. How many times has somebody said, "That's my deal. Stay away from it?”

Well, okay. We have structures. We understand that. But the integration of those lanes is the only powerful antidote to the problems, the complexity, the complications, the dynamics of the kind of world that we live in today.

One of the, again, front-page stories is about the office of the Director of National Intelligence, the announcement of General Clapper as the new DNI. What was the objective when we in the Congress built, working with then the Bush administration, this new intelligence apparatus?

Now, you can question whether it was wise or smart or dumb or didn't work. That's all fair. But what was the intention? What was the point? The point was, is yes, to get out of each, narrow, tunnel vision, stovepiped thinking of how do you integrate 16 intelligence agencies so you get to some apex of reality of operational need for the people in the field, the policy-makers, the men and women �'�' State Department, Defense Department, mainly, on the ground in Iraq or wherever they are. How are those 16 intelligence agencies actually helping our people?

Not just checking a box off and saying, "Oh, no, I'm CIA." It's NSA. No. That was the whole point. That was the essence of the 9/11 Commission. That's why the Congress did what it did.

Now, we made some mistakes on it. We could go back and rewrite it, I think we would rewrite some of it. I don't think there's any question about it. But I've never, ever voted for a piece of legislation �'�' I think I voted 3500 times in the 12 years that I was in the Senate �'�' or let me put it this way.

Probably rarely did I ever vote for any piece of legislation that was an absolutely perfect piece of legislation, that I thought, this is exactly the way I'd do it. That isn't the way you build a consensus in a democracy.

Now, let me wrap this up, and we're going to go to your questions. And I'm going to come back to two books that have gotten a lot of attention recently, and then make another comment.

There has been a great amount of interest in a book that was out a couple of months ago called "The Big Short," Michael Lewis's book about what happened that brought on the global financial crisis. Well, what does that have to do with what you're doing?

Well, I think it has everything to do with what you're doing. In an interview that he gave to 60 Minutes a couple of months ago at the launch of his new book, the question was asked, "Well, Mr. Lewis, I know you wrote the whole book. It takes a whole book to explain what you think happened. But tell us in a paragraph what you think happened. What led to the worst global economic disaster since the Great Depression?" He said, "It was mass delusion."

Now, when you think about that, that's not a bad way to say it. You can apply mass delusion to what you're doing and what you're evaluating, what you're measuring. Mass delusion. We delude ourselves into thinking, like I said earlier, this grand pronouncement policy that we're going to bring democracy to the world, or whatever we're going to do, this great delusion of doing that.

So you say, well, that sounds good. I'm all for that. We ought to have democracy everywhere, shouldn't we? That's good. Good. How are we going to do that? How are we going to measure that?

The billions and billions of taxpayers' dollars that they're very upset about, every taxpayer �'�' including you. You're all taxpayers; you're mad as hell about where your money's going. Well, "The Big Short" tells an interesting story. And if you haven't read it, you should read it because it affects everything you're doing, and it is a great case study in what you're doing.

The second book is Peter Beinart's new book out, "The Icarus Syndrome." Now, why does that have anything to do with what you're doing? "The Icarus Syndrome" is not anywhere near the Lewis book on "The Big Short." "The Icarus Syndrome," if you've read it or if you've read reviews of it, is about America and other great powers overreaching. And you get yourself into a lot of trouble when you do that. Obviously, hence the title, Icarus flying too close to the sun.

Hubris. Arrogance. We're bigger. We're better. We're smarter. We're stronger than anybody. We don't care what the hell the culture is in Afghanistan or Iraq or anywhere else. We can do anything.

Well, we had a very interesting and painful episode in Vietnam over that same concept, and I happen to have been in that war in 1968 �'�' not that I know all about it; I don't. But I was there for a year, 1968. When nations fly too close to the sun, they always get their wings singed. And sometimes they melt.

Now, the reason that applies to what you're doing is because it is a measurement of the third point of my RAR concept �'�' responsibility, accountability, and reality. It applies to reality. What is realistic? And when you're measuring programs, you're measuring performance. You're measuring anything. The realism of that measurement has to also be in play.

And you don't find that measurement necessarily listed in all the components of the boxes that you checked. I did this, Sarah. I'm all done. I've got 12 pages of everything checked off, and everything looks good, doesn't it? Maybe. Maybe not. You may have missed the whole damn thing. That's the second reason why you should read that book because it does apply to everything that you're about.

Final point I'd make: conversations this morning about politics. Many of you know that there are a number of primaries around the country today that will determine candidates in the November election. And I alluded to this earlier in my remarks about politics, and the Congress is at an historically low job approval rating, the Republican party historically low, Democratic historically low.

The President's ratings bounce between 45 and 50 percent. And, by the way, if you're the President at 45 and 50 percent versus the Congress at 13, I think I know which one I'd take.


SENATOR HAGEL: I'm sure Mr. Obama is not happy he's got 45, but when the Congress is at 13, you look pretty damn good because life is all about the relevancy of the reality.

So the point being, there are going to be some changes made. Already have been made. Democracies, especially, have a wonderful way to self-correct. First, we don't use the guillotine, and we don't line people up and shoot them. We self-correct in a very bloodless but painful way to do it.

And there is an immense self-correction process going on in the world today. We are just reflective of that. Politics just reflects society, nothing more, nothing less. Politics doesn't lead society. Politics reflects society. Politicians respond. We react. And if you don't respond or react the way your constituents want you to, you probably are going to be looking for a new job.

Now, it doesn't mean you're right, it doesn't mean you're wrong, by the way. But that's just �'�' that's the reality of what this is about. So I started my comments by talking about or alluding to this great diffusion of economic power that is in play in the world today.

The shifting alliances �'�' look at the maturation of countries. Turkey. Brazil. South Korea. These countries are all different countries than they were ten years ago. They have matured. Now, you may like it; you may dislike it. Does it complicate our way of life? Yes, it does.

I don't think the Turks today consider themselves America's poor second cousins. I don't think they consider themselves today as doing whatever we want them to do and tell them to do, like the good old days.

All these countries �'�' Japan; a prime minister, a government went down over our bases in Okinawa. Now, that's what I talk about and mean when I am referencing the reality of this immense global change, this self-correction, this new center of gravity that's being built in the world today. We are redefining a new world order, right now. Right now.

And what you're doing is a big part of that. And I hope you will think about the larger context of what you're doing when you go through your work every day, and you don't think just in the smaller, more narrow channels of this evaluation of this and this and this.

No. We are building a whole new world order here, and not one nation is powerful enough to shape it alone. We can't. We're not. And I don't need to make that point more than once in this department. I mean, if there's any department of government that understands that, surely it's the State Department that gets that.

So the time for wise analysis and evaluation and measurement and some global strategic thinking has never been more important than right now. And I end with this: I don't know of a time to be part of a government, to be part of, still, the world's leader in every respect, that's more exciting, more important than right now, to have an opportunity to be part of reshaping and redefining a world ordered.

These times come about twice every 100 years. And this will hold, I suspect, probably not as long as the last one right after World War II, which held for about 50, 60 years and held pretty well. Pretty well. This will hold probably not as long. I don't know. I'm not smart enough to be able to tell you that.

But I do think I know that whatever we do and whatever we produce, "we" being the United States �'�' and not just the G7 any more; now it's the G20, and it's bigger than just the G20 �'�' whatever we, globally, together, produce will in fact anchor the world, I suspect, for the next 20 years at least. There will be variations, as there always are, that will work off that.

So again, thank you for the work that you are doing for our county and for the world. Be glad now, Sid, to respond to questions and comments. Thank you.


MR. KAPLAN: If you have a question, please go to the standing mikes on either side so that it can be picked up and everyone can hear it. Don't hesitate. While we're waiting for people to come up, let me ask the first question of the Senator, if I might.

Your references to ODNI and the difficulty of that reinvention, clearly we're living in a much more complicated world, a much more horizontal world. Are we at the point where we need very different structures of government, where our vertical agencies with their own appropriations, their own authorities, are perhaps an anachronism; we need different structures that cut across some areas now to better achieve some of those goals, like the experiment with ODNI?

SENATOR HAGEL: Well, I think we are. And I think the ODNI effort, what propelled that forward onto the national agenda, unfortunately, was a terrible tragedy, September 11, 2001.

And that's what pushed into the reality of we were going to have to do something different �'�' not just with intelligence, but with everything.

Many of you in this audience have served all over the world, and many of you work today closely with �'�' and have during your careers �'�' with Defense Department officials. There are probably some DOD people here and other agencies represented here, the integration of State and DOD and all the other agencies involved in the larger structure of our foreign policy, our general foreign policy.

The integration of those efforts, the integration of those resources, the management, the leadership of all those, has to be integrated. There's no other way. That's being done on a daily basis. Many of you are doing it now and have done it, and you're going to need more of it.

Give you another example. I mentioned the fiasco in the Gulf of Mexico. There's another example of coordinating resources. Back to the issue of accountability: Well, who's in charge? So the President said, well, who do I go to? Do I go to Secretary Salazar? Who do I go to?

So you've got all these different agencies that are connected in here somehow. But my guess is that as this issue is finally addressed �'�' meaning, first of all, that the well is capped and then all the residual damage that's being done starts to be dealt with in a sustainable way �'�' my guess is that Congress not only will be holding hearings, but my guess is that you'll see a pretty significant piece of legislation come out of this, not unlike 9/11, on a better way to respond to these kinds of fiascos and these emergencies.

These things all happen and will always happen. Risks are unavoidable. Just think of the world as it is today, 6.7 billion people. Demographers project by 2025 we'll have 8 billion; by 2050, probably 9 billion people on the face of the earth.

That means jobs. Water. Clean air. Resources. Energy. Health care. And that means we're going to have to find more energy, more places, take more risks. Now, you try to minimize those risks.

Our country, I mean, we use 20 percent of the world's oil, America does, daily. We have to have that oil. Now, we're trying to move in different directions �'�' more nuclear, alternative renewable sources of energy, and so on, and we will. But you're not going to replace fossil fuels very quickly, for all the reasons you all know.

How long does it take to put a nuclear plant online? When is the last time we built a nuclear power plant that went online? I think 15 years ago was the last one that went online. We're closing more of them down each five years and we're building new ones. So we're actually going this way (demonstrating) on nuclear power.

Now, as noted in Sid's generous introduction of me, I'm on the President's Blue Ribbon Commission on the future of nuclear power. They've given me the chairmanship of the subcommittee on the easy one, disposal.

So I get to figure out, along with all the smart people �'�' and let me tell you, I'm looking for every smart person I can find on this issue: What the hell do we do with it? We're closing, totally, Yucca, now, as you know.

Well, point being, there is risk. There's going to be risk. There's going to be more risk. As that risk evolves for the demand for natural resources, the demand for standard of living, quality of living �'�' and that all is connected to what? Stability. Global stability. Security.

When people are out of work, they don't have water. They're poor. They don't have health care. They don't have any future. They're chained to this despondency, to this despair. What the hell do you think is going to happen? Do you think the world is going to be safer? I don't think so.

And this isn't to say that every terrorist is a poor person. Not at all. But we do know that people who are in those states are easy prey for people who would take religion and other forms of governance and reality and thinking and philosophy and distort into an evil purpose. They are easy prey. They are easy prey.

So all this has to come back to a policy structure, an apparatus, to get to Sid's point about the integration of our resources, the integration of our management, the integration of our leadership, the integration of working internationally like we've never worked before.

I think that there's a lot of advantages that we see that have already been produced. But I also see that there are a lot of positives, say, over the last 10 years that have evolved in the international community.

It's still imperfect. It'll always be imperfect. Every nation responds in its own self-interest as we do, as a nation must do. That's predictable. That's good.

But common interests and parallel interests must now anchor all of our interests, even our national interest, our own sovereign interest, whether it's intelligence gathering �'�' we can't stop a terrorist attack on New York without having very clear, seamless networks of intelligence-sharing and gathering with many other countries.

It doesn't do any good after they've hit you, and then you invade a country and then sink yourself into another war. That's not what we want to do here. And only the integration of our people and our capabilities, especially internationally, will stop that. That's the only way to mitigate risk. It's the only way. And there'll be more risk.

SENATOR HAGEL: Okay. Let's go to the gentleman on the far side. Please identify yourself and your affiliation.

QUESTION: Good morning, Senator. My name is Lewis McCall. I'm with State.

You know, you talk about accountability, and it seems, from my experience, that most people only want to be accountable for success. You know, success has many fathers, but failure is an orphan.

And the reality that comes is that sometimes it's very harsh. And for the evaluator that brings that forth, there's sometimes a systemic bias to spin that and downplay it so that it becomes no fault.

And I think that perhaps we need more protections for the evaluator that brings the reality of bad news, and reward them for their integrity in doing that.

SENATOR HAGEL: Well, I agree with that. And I know that some of the oversight committees in the Congress are looking more and more, and have been, as many of you have, I suspect, testified or worked with committee members and staff on this, to deal with this issue.

And there's no question that you have stated the "cover your ass" obvious reality to what you all are dealing with. And I don't think you ever can totally bleed that out. But this now becomes an issue of leadership, like everything does.

Leadership is everything �'�' is everything. And if you put the right leaders in every department in agencies, starting with the White House and the Congress �'�' and I know that's a perfect world that doesn't exist and probably never will �'�' but it is the leadership that has to interpret this and be accountable for it, and find a clear and honest system that projects not just the transparency but a culture �'�' and not just reward it for honesty, but a culture that accepts the fact that this is in the interest of your country.

This is in the interest of what we're about as Americans, and it is our responsibility. If this program is no good, if it's failing, if people are doing whatever they're doing, we have to know about it because it's like everything in life.

I mean, if you've got a bad tooth and it gets worse, it's probably not going to get better, just go away. You're going to have to have a root canal or it's going to be pulled, or something has to be done.

That's the same thing. These things don't get better. It just perpetuates the fraud and the incompetency and the acceptance of it. That's the danger, is a culture of acceptance, a culture of acceptance of mediocrity, and just stay in your lane and don't get out of that lane, and for the very reason, if no other reason, that you've alluded to because I don't want to get my ass burned on this deal.

And I see it. I know it. I've been in and out of many institutions, and I accept everything you've said. But we each have to change that. We each have to change that. Courage is not a commodity of great abundance in Washington. I don't need to tell you that.

You sure as hell don't find it in Congress, and I would say you sure as hell don't find it in the bureaucracy. Now, if that offends some of you, I'm sorry, but I include myself in this. I said Congress. Courage is the essence of leadership. It is the essence of the strength of character. And without it, you are a shell. And without it, you are a coward.

And if you want to take the paycheck, if you want to take the big office, and if you want to take the title, you'd better have the courage to match it. And unfortunately, that's a general area that I think our government �'�' not just our government, but our big institutions �'�' have failed. Wall Street is a prime example, in my opinion, of that. Lack of courage.

I can tell you �'�' and not to belabor this point, but I'll make one last point on this �'�' I can tell you of conversations I had with senior banking, I mean, senior senior, as high as you can go.

And many of these banking institutions �'�' and the people that I'm thinking of are all now gone �'�' but I can tell you about conversations I had with them over the last few years when I sat with them and they said, "Senator, I know that this trading that's going on in London and New York is crazy. I know we can't keep rewrapping these sub-mortgage packages and keep reselling them and having no idea what we're buying. I know we can't continue that, but I can't stop it."

I said, "Why can't you stop it? You're the CEO." "Because my traders wouldn't allow me. My shareholders wouldn't allow me. First blowback I would get, yes, but if Citicorp does it, then all that's going to mean is that everybody's going to go give more business to Goldman Sachs. I mean, I'd be out as the CEO if I tried to stop that."

I said, "Well, you know where this is headed." And by the way, my record is pretty clear on this in the Congress. I was the first one to talk about Fannie and Freddie; back in 2001, introduced legislation that said that we were headed for a disaster on Freddie Mac and Fannie Mae �'�' not that I'm so smart, but if anybody's just paying attention and just observing and listening, it goes right back to Michael Lewis's comment about mass delusion.

I mean, that's what we were all living under. But as long as I was getting my 401(k) reports back and I was going up 5, 10 percent every quarter, every year, I shouldn't say anything, should I? I mean, everybody else is getting it. I mean, I didn't do anything wrong.

Mass delusion. If you really stopped to see and observe, and you didn't have to be a PhD in anything to get this, you'd say, how in the hell can you keep going this? How can you continue to give tens of thousands of mortgages to people who don't have jobs, have no credit records, or are using three and four homes to keep leveraging more and more mortgages to buy five homes? Is that reality? I don't think so.

Well, we found out it wasn't. So again, I may have drifted a little bit from your point, but I don't think so. It all does connect, and you're right.


QUESTION: Good morning, Senator. Albert Fairchild, State Department.

Your comments on the need for us all to sort of keep our eye on that long-term goal rather than sort of the narrow lane that we might be in reminded me of some things I read yesterday about an upcoming report from the Special Inspector General for Afghan Reconstruction, which basically is going to say something like this, that the performance measurement being used by the members of our military effort there are really not very good.

They're measuring things like training delivered to so many people, or equipment delivered and so forth, whereas what they ought to be measuring are things that really reflect the combat readiness of the Afghan armed forces.

And I was wondering if during your time in the Senate, were there times when program managers from whatever agency did something really spectacularly well with regard to program management and evaluations, so well that you recall it fondly?

And maybe the flip side of that, too �'�' maybe something that was so poorly done that it crashed and burned because of poor measurement.

SENATOR HAGEL: Well, there were many times during my 12 years in the Senate and oversight committees, when �'�' at least in my opinion, and I think the opinion of most of my colleagues �'�' when we had members of departments and agencies before us who were giving their evaluations of programs. And the initiatives they took and the imagination they showed was very impressive, was very impressive.

But what at least I was led to as I observed all this �'�' and I used to get out into the field; I used to go all over the world, and still do �'�' now, that doesn't make me any smarter or any better. But I do think you have to go see it.

And you have to go out and spend a couple of days with the people who are charged with it on the ground, whether it's in Nigeria or wherever it is. And we don't do enough of that, quite frankly, in the Congress. I think our staff does that, but I don't think the members do enough of that.

But to your point, what happens �'�' at least, I drew this conclusion, and it kind of goes back to your question �'�' a lot of the evaluation and the measurements and the imagination and the initiative that was taken to do some of this often gets partway up the ladder, for the reason you mentioned, and then it gets strangled.

It gets stopped. It doesn't fit into what the Secretary wants to say in her speech or his speech or whoever it is to the Brookings. And that's why a guy like Stuart Bowen has been so unpopular with his reports.

Now, it'll be your opinion whether you think Stuart Bowen and his people know what the hell they're doing or not. I mean, that's your right, anybody's right. I happen to believe he does, and I've watched that very closely, his people.

A lot of the good stuff that would help us change course or make resources more available to the programs that are working and so on get stopped somewhere, many times before they get way up to the top, because it doesn't fit with the original concept of bringing democracy to Iraq or bringing democracy to Afghanistan or whatever the policy is, or whatever the objective is, because it doesn't fit.

And so, therefore, it gets pushed back down or it gets tempered or it gets thrown off course or pushed aside. And that's what I have seen more than any other one thing.

And of course, what that does �'�' and I don't have to tell any of you �'�' that discourages all of you. It discourages the people who work hard and use imagination and initiative to be honest and actually do this with an objective, and that is to make something work better. Because isn't that the objective?

The objective is not to throw somebody in jail, necessarily. If that happens, that happens. But isn't the objective to make it work better? Isn't that the objective?

And so you can't make something work better unless you're honest. You have to challenge every frame of reference, every reference point, every assumption. And if there was ever a time in the history of America �'�' probably the world �'�' that that is true, it is right now.

I told the President a couple of months ago when we were talking about some of these things, and I said, "Mr. President, you must challenge everything. You must challenge every frame of reference. I don't care if it's from 2005 or 2008. You challenge it. You have to. The world is shifting at that dramatic of a rate of change."

You have to �'�' it may be right. Go back to the Gulf of Mexico problem. I had BP in to talk to me yesterday, by the way, to brief me on some of these things.

And so, to my point, the engineers, the drillers, the concept people, the fortifiers for the shaft, they didn't challenge anything. "We've always drilled them this way. That cement's enough on that side," and so on and so on and so on.

So what's the �'�' well, that isn't good enough. That is not good enough, and especially in the world that we live in today, with policy evaluation and measurement. That's not good enough. You have to challenge it.

And so I'll end this way. Yes, there are many examples of outstanding works that have been brought before the Congress in oversight hearings and so on. But until you get the leadership at the top to encourage that kind of measurement �'�' and I'm not saying it's not there, by the way, but the leadership counts.

It is everybody. It is absolutely everything because the leadership determines the culture and the frame of reference for any agency. It does in a family. It does in anything.

MR. KAPLAN: One last question, please. Tim.

QUESTION: Tim Andrews, Middle East Partnership Initiative, State Department.

Strategies are great; without them, we don't really have anything to evaluate ourselves against. And longer term strategies are good because we know what we seek over the longer term.

But what I've noticed is an increasing demand from oversight entities for detail about implementation, exactly how this is going to be done over what time frame. And that's valuable up to a point, but at a certain point it begins to impair flexibility and the ability to respond to opportunities.

As you pointed out, we live in a highly interactive world with a lot of change going on. And if one has to say a year in advance exactly how one's going to address something in a certain country, one may miss a regional opportunity or one may miss an opportunity to respond to a key change in an important way.

And I'm wondering how you see us getting around those kinds of problems moving forward, especially with the speed of developments.

SENATOR HAGEL: Well, I know I'm over my time, and so I'll try to capsulize this here. I think your question's a very important question, and I would respond this way.

It is my opinion �'�' doesn't mean it's right �'�' but it's been my opinion, and it's more my opinion today than it was when I started in the Senate 13 years ago, I don't think in any strategic planning, strategic thinking, strategic policy, and then the connection of the implementation of that �'�' I don't think any of that can be done without a complete understanding if the regionalization of the context that you're planning that strategy for Iran or whatever it is.

I've always believed �'�' Iraq, Afghanistan �'�' I mean, it's complete folly to talk about any of those issues without talking about Iran, Pakistan, the region, the culture, the religion, the history, the tribal dynamics. You can't.

And to try to do it, in my opinion, without the strategic thinking that plays into that, it's going to end in disaster. Can't but help end in disaster.

Now, you might be able to sustain it for a while, with a lot of casualties and a lot of money. But in the end, what always in a democracy rules and wins out is the sustainability of anything. We all know that in a democracy, you can't sustain a war or any policy without the support of the American people.

So if that is a constant, if you agree with that, which I think is pretty historically the fact, then you've got to factor that into the larger concept of your strategic thinking. And it's more difficult; I get that.

But this is why the strategic thinking is so absolutely critical because if you take �'�' let's just take Iran for a moment. If you focus on Iran, what else does that entail, that issue of Iran not getting the capability to produce nuclear weapons, and the capability to deliver them?

Russia. China. Turkey. India. The Middle East. Arab world. Israel. I mean, that's a pretty good start. I think you'd have to factor in those countries. And that are more, by the way. How about the Europeans? The European Union has a little something to say about this.

So there's where you have to start. Now, how then do you strategically think through and plan for, and then develop a policy and try to implement, that to the objective of what your strategy is?

Well, you have to factor in, okay, how are we going to deal with Russia over here, and China? And the Indians are making deals with the Iranians down south, on pipelines. And the Turks have already said what they've said. And you saw what the Brazilians did.

So you've got to put all those tentacles around �'�' wrap those around these other issues because in the end, you will not have any hope of fulfilling your strategy and your policy and your plan without it. And so, yes, it's difficult. Yes, it's painful. But we don't have any other choice.

And I think �'�' last point I'd make on this �'�' I think where America is really painfully behind �'�' we're getting there �'�' painfully behind is our entire thinking. It's so foreign to what we're talking about here, since World War II.

I mean, when you really think of post-World War II, yes, you had a bipolar world for a while of the Soviet Union and the Communists. But really, there was never any question America was leader of the world, by every measurement �'�' economic measurement, everything.

And so there was also the deterrent factor, that we really know once we got through the Cuban missile crisis and so on, we really knew there was not anything serious coming. I mean, the Russians aren't crazy. They weren't going to blow up the world with a nuclear exchange. So it was pretty predictable, and America pretty much had its well, and it worked its will and had its way.

Now it's a whole different world. And we're having to adjust an entire �'�' your word, on your program �'�' paradigm. New paradigm. We're having, not just for evaluating diplomacy, a new paradigm for everything, for all our thinking, our mind, the dollar, trade, our economy.

I mean, again, I mentioned G7 versus G20. G7, that's a joke, thinking G7 �'�' the G7 doesn't even represent the largest economies in the world. Some of the largest economies in the world are in the G7.

So we go to the G20. And the G20 can't even fix it, all the problems. You go to the 16 nations of the Eurozone. It's a mess. I'm not sure the Euro is sustainable. I'm not sure that the Germans don't do something. I don't know.

My point is, to reflect on your point, our whole concept, our whole strategic thinking, our whole universe of being has to change. And it is changing. And we'll get there. We're just too good a country. Our system is too good. Our people are too good. Our textures too good. Our agility. Our flexibility is better than any country in the world.

I mean, there is no way �'�' I don't think anybody in this room �'�' I certainly �'�' would trade America's position in the world today for China's, for India's, for anybody else's. Nobody's even close to the United States.

Now, that could change. It could change dramatically in 25 years. But it is within our own power and within our own reach, within our own capabilities. And remember, too, capabilities do count.

We have more threats and more uncertainties and more vulnerabilities than ever before. But at the same time, we have more capacity and capabilities to fix these than any nation in the history of man. And it's all up to us, and leadership, and what you guys are talking about today, new paradigms.

Thank you.