Thank you very much, Mr. Chairman, Senator Gregg, Senator Specter, Senator Bond. I’m very pleased to be here with you and to have this opportunity to discuss in some detail both the threats and the opportunities facing our country.

When I appeared before the Senate Appropriations Committee a few weeks ago with Secretary Gates, we both emphasized the need for a comprehensive approach to the challenges we face. We know we are confronting instability in Afghanistan, Pakistan, Iraq, and the Middle East; we have transnational threats like terrorism, nuclear proliferation, climate change; and we have urgent development needs ranging from extreme poverty to pandemic disease, all of which have a direct impact on our own security and prosperity.

Now, these are tough challenges, and we would be foolish to minimize the magnitude of the task ahead. But we also have new opportunities. By using all the tools of American power – the talent of our people, well-reasoned policies, strategic partnerships, and the strength of our principles – we can make great strides against the problems we’ve faced for generations, and address the new threats of the 21^st century. This comprehensive approach to solving global problems and seizing opportunities is at the heart of smart power. And the President’s 2010 budget is a blueprint for how we intend to put smart power into action.

The President’s Fiscal Year 2010 budget request for the State Department and USAID is $48.6 billion, a 7 percent increase over Fiscal Year 2009 funding levels. We know this request comes at a time when other agencies are experiencing cutbacks and the American people are experiencing economic recession. But it is an indication of the critical role the State Department and USAID must play to help advance our nation’s interests, safeguard our security, and make us a positive force for progress worldwide.

Our success requires a robust State Department and USAID working side-by-side with a strong military. To exercise our global leadership effectively, we do need to harness all three Ds – diplomacy, development, and defense.

And this budget supports the State Department and USAID in three critical ways: First, it allows us to invest in our people; second, implement sound policies; and third, strengthen our partnerships. We know it represents a major investment. And we pledge to uphold principles of good stewardship and accountability.

Let me begin with people. The men and women of the State Department and USAID may have the world in their hands, but too many are trying to balance all the balls they have in the air. Many key positions at posts overseas are vacant for the simple reason we don’t have enough personnel. In Beijing, 18 percent of our Embassy positions are open. In Mumbai, 20 percent. In Jeddah, 29 percent. And we face similar staffing shortages here at the Department in Washington as well as USAID.

We need good people and we need enough of them. That's why the President’s 2010 budget includes $283 million to facilitate the hiring of over 740 new Foreign Service personnel. This is part of a broader effort to expand the Foreign Service by 25 percent.

The staffing situation at USAID is even more severe. In 1990, USAID employed nearly 3,500 direct hire personnel to administer an annual assistance budget of $5 billion. Today, the agency’s staff has shrunk by roughly a third, but they are tasked with overseeing $13.2 billion. To provide the oversight that taxpayers deserve and to stay on target of doubling our foreign assistance by 2015, we simply need more people, good people, to do the jobs we’re asking them to do.

We need personnel with the right skills to respond to the complex emergencies of the 21^st century. And that’s why we’re requesting $323 million for the Civilian Stabilization Initiative, and that includes expansion of the Civilian Response Corps. This group of professionals will help the United States stabilize and reconstruct societies in transition from conflict and civil strife.

Now, with the right people in the right numbers, we’ll be able to implement the policies that we think are right for our country, and we’re focusing on three priorities: first, urgent challenges and regions of concern, including Afghanistan and Pakistan, Iraq and Iran, and the Middle East; second, transnational challenges, such as the one that Senator Gregg just referred to, and development assistance.

Now, in Afghanistan and Pakistan, our efforts center on the President’s goal to dismantle, disrupt, and defeat al-Qaida. And we know this requires a balanced approach that takes more than military might alone. So we’re expanding civilian efforts and we’re ensuring that our strategy is fully integrated and adequately resourced.

We’re helping Afghans revitalize their country’s agricultural sector. In study after study, what we have found is that agriculture is still the mainstay for a country that is largely rural. It was once a major source of jobs, and in fact, of export revenue. Afghanistan was considered the garden of Central Asia. Unfortunately, that has been devastated by years of war and civil strife. We’re supporting the Pakistani military as they take on the extremists who confront their country’s stability. We’re making long-term investments in Pakistan’s people and the democratically elected government through targeted humanitarian assistance. And in both of these countries, we are holding these governments and ourselves accountable for progress toward defined objectives.

Finally, we’re seeking resources to deploy a new strategic communication strategy. I would love to get into more detail with you on this, but just suffice it to say, we are being out-communicated by the Taliban and al-Qaida. That is absolutely unacceptable. It is not only true in Afghanistan and Pakistan, but as Senator Bond, who is focused on Southeast Asia knows, it’s there as well. We have to do a better job of getting the story of the values, ideals, the results of democracy out to people who are now being fed a steady diet of the worse kind of disinformation. And even more than that, seeing the media used by these extremists to threaten and intimidate every single night, just as it used to be used in Iraq until we put a stop to it.

As we move forward with the responsible redeployment of our combat forces from Iraq, this budget provides the tools we need to facilitate the transition to a stable, sovereign, and self-reliant Iraq. I was recently in Iraq and we are very focused on implementing the strategic framework that went along with the Status of Forces Agreement so that we do what we can to help increase the capacity of the Iraqi Government.

And as you know, we’re working with Israel and the Palestinian Authority to advance our goal of a two-state solution, a future in which Israel and its Arab neighbors can live in peace and security.

In addition to these urgent challenges – and there are others that I haven’t had time to mention –we face a new array of transnational threats, none more important than the one Senator Gregg highlighted, but we have others as well: energy security, climate change, disease. The United States is not immune from any of these transnational threats. And we’ve got to develop new forms of diplomatic engagement. We cannot send a special envoy to negotiate with a pandemic, or call a summit with carbon dioxide, or sever relations with the global financial crisis. But what we can do is use our ability to convene, to create pragmatic and principled partnerships. We’re working through the Major Economies Forum in preparation for the Climate Conference in Copenhagen. We’re deploying new approaches to prevent Iran from obtaining nuclear weapons. We’re now a full partner in the P-5+1 talks. And as you know, the President and I have launched a six-year, $63 billion Global Health Initiative to help combat the spread of disease.

Development will play a critical role in what we try to do. And I think we have underplayed the importance of development in creating both goodwill among people and stronger partnerships with governments. We’re going to be asking for $525 million for maternal and child health, nearly 1 billion for education, 1.36 billion for addressing the root causes of food insecurity, and 4.1 billion for humanitarian assistance, including care for refugees, displaced persons, and emergency food aid. We really believe this will advance our values. And I know, Mr. Chairman, you agree with us on that.

Our smart power approach will rely on partnerships, and that begins with our own government. We are seeking an unprecedented level of cooperation between our agencies. Secretary Gates highlighted this cooperation when he testified before you last month. These partnerships are critical. If we’re going to be successful in addressing food security, then we’ve got to get everybody who deals with food aid and sustainable agriculture in the same room, around the same table, hammering out the American approach, not the State Department or the USAID or the USDA or some other approach. It’s got to be a team. And we’re trying to forge those teams. We think it will make us more efficient and cost-effective at the same time.

We’re also looking to revitalize our historic alliances in Europe, Latin America, Africa and Asia, strengthen and deepen our bilateral ties with emerging regional leaders like Indonesia, Brazil, Turkey, Mexico, and India, and we are working to establish more constructive and candid relationships with China and Russia.

We’re asking for $4.1 billion for contributions to multilateral organizations and peacekeeping efforts. This is a good down payment for us, because for every peacekeeper that the United Nations puts in the field, like the ones I saw in Haiti a few weeks ago, it saves us money. We don’t have to intervene, or walk away, turn our back and live with the consequences.

We’re also expanding our partnerships beyond traditional government-to-government efforts. We’re working with women’s groups and civil society, human rights activists around the world, and we’re encouraging more people-to-people cooperation. I believe this may be one of the great new tools that we have in our diplomacy. Last week, I announced the creation of a Virtual Student Foreign Service that will bring together college students in the United States and our embassies abroad to work on digital and citizen diplomacy initiatives.

But finally, we must rely on sound principles to guide our actions, and we are committed to practicing what we preach. And that includes having an accountable government here at home.
We’re working to make the State Department more efficient, transparent, and effective. For the first time, we have filled the position of Deputy Secretary for Resources and Management. And we’re going to be reforming our processes in both the State Department and USAID.

Mr. Chairman, we’re pursuing these policies because we think it’s in America’s interests. No country benefits more than the United States when there is greater security, democracy, and opportunity in the world. And no country carries a heavier burden when things go badly. Every year we spend hundreds of billions of dollars dealing with the consequences of war, disease, violent ideologies, and vile dictatorships.

Since last testifying before this Committee, I’ve traveled around the globe, covering many miles and many continents. And I can assure you there is a genuine eagerness to partner with the United States again in finding solutions. Our investment in diplomacy and development is a fraction, a tiny fraction of our total national security budget. But I really believe our country will make very few investments that do more, dollar-for-dollar, to create the kind of world we want for our children. By relying on the right people, the right policies, strong partnerships, and sound principles, we can have a century of progress and prosperity led by the United States of America.

And Mr. Chairman, thank you for this opportunity to present the President’s budget request. And I look forward to answering your questions.

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