he following is the transcript of the hearing on the nomination of Condoleezza Rice as Secretary of State as recorded by FDCH e-Media, Inc.

SPEAKERS:
U.S. SENATOR RICHARD G. LUGAR (R-IN, CHAIRMAN
U.S. SENATOR CHARLES HAGEL (R-NE)
U.S. SENATOR LINCOLN D. CHAFEE (R-RI)
U.S. SENATOR GEORGE ALLEN (R-VA)
U.S. SENATOR NORM COLEMAN (R-MN)
U.S. SENATOR GEORGE V. VOINOVICH (R-OH)
U.S. SENATOR LAMAR ALEXANDER (R-TN)
U.S. SENATOR JOHN E. SUNUNU (R-NH)
U.S. SENATOR LISA MURKOWSKI (R-AK)
U.S. SENATOR MEL MARTINEZ (R-FL)
U.S. SENATOR JOSEPH R. BIDEN JR. (D-DE),RANKING MEMBER
U.S. SENATOR PAUL S. SARBANES (D-MD)
U.S. SENATOR CHRISTOPHER J. DODD (D-CT)
U.S. SENATOR JOHN F. KERRY (D-MA)
U.S. SENATOR RUSSELL D. FEINGOLD (D-WI)
U.S. SENATOR BARBARA BOXER (D-CA)
U.S. SENATOR BILL NELSON (D-FL)
U.S. SENATOR BARACK OBAMA (D-IL)
WITNESSES:
CONDOLEEZZA RICE, NOMINATED TO BE SECRETARY OF STATE
U.S. SENATOR DIANNE FEINSTEIN (D-CA)

LUGAR: The committee is called to order.

Let me begin by welcoming the distinguished new members to the committee who have joined us. I want to introduce Senator Lisa Murkowski of Alaska and Mel Martinez of Florida and Barack Obama of Illinois. We're delighted that you have chosen to be on this committee. And we assure you that we will have activity and, we hope, progress. We appreciate you're coming with us. Appreciate all members' attendance this morning.

We will proceed with an opening statement that I will give. In the event that the distinguished ranking member Senator Biden arrives during that time, he will then deliver his statement. If he does not, he'll deliver the statement following Dr. Rice's statement and before our questioning.

And I will ask, after the two opening statements, our distinguished colleague from California, Senator Feinstein, to introduce Dr. Rice.

The Committee on Foreign Relations meets today to consider the nomination of Dr. Condoleezza Rice to be secretary of state.

We are especially pleased to welcome Dr. Rice to the committee.

As a result of her distinguished service as national security adviser to President Bush and her earlier assignments on the NSC, she is well-known to many members of this committee. And we admire her accomplishments.

We're particularly thankful for the cooperation that she has provided to this committee in its work.

The enormously complex job before Dr. Rice will require all of her talents and experience.

American credibility in the world, progress in the war on terrorism, our relationships with our allies will be grateful affected by the secretary of state's actions and the effectiveness of the State Department in the coming years. Dr. Rice is highly qualified to meet those challenges.

We recognize the deep personal commitment necessary to undertake this difficult assignment. And we're grateful that a leader of her stature is willing to step forward.

The secretary of state serves as the president's top foreign policy adviser, as our nation's most visible emissary to the rest of the world, as a manager of one of the most important departments of our government.

Any one of those jobs would be a challenge for even the most talented public servant. But the secretary of state at this critical time in our history must excel in all three roles.

Since 2001, we have witnessed terrorists killing thousands of people in this country and destroying the World Trade Center and a part of the Pentagon.

We have seen United States military personnel engaged in two difficult and costly wars. We've seen the expansion of a nihilistic form of terrorism that is only loosely attached to political objectives, and is therefore very difficult to deter. We've seen frequent expressions of virulent anti-Americanism in many parts of the Islamic world. We have seen our alliances, our international standing and our budget strained by hard choices we've had to make in response to terrorism.

In this context, many diplomatic tasks must be approached with urgency.

In particular, our success in Iraq is critical. The election scheduled for January 30 must go forward. And the United States must work closely with Iraqi authorities to achieve the fairest and most complete outcome possible. At the same time, you must understand that those forces that want to keep Iraq in chaos will commit violence and intimidation, and both Iraqis and the coalition will have to be resilient and flexible in the election's aftermath. The Bush administration and the State Department also must devote themselves to achieving a settlement of the Arab/Israeli conflict; to coming to grips with the nuclear proliferation problems in Iran and North Korea; to continuing urgent humanitarian efforts in Sudan, the Indian Ocean region and elsewhere; to maintaining our commitment to the global fight against HIV/AIDS and other infectious diseases; to advancing democracy in Afghanistan, Ukraine and elsewhere; to repairing alliances with longstanding friends in Europe; to reinvigorating our economic and security relationships in our own hemisphere; and to engaging with rapidly changing national powers, especially China, India and Russia.

LUGAR: Well, even though this list of diplomatic priorities is daunting, it is not exhaustive and does not anticipate unforeseeable events. Just weeks ago, none of us could have predicted that an earthquake and a tsunami would change the face of the Indian Ocean region. And our efforts must include the expansion of our foreign policy capabilities so we're better prepared for crises that cannot be averted and better able to prevent those that can be. I would like to outline a handful of initiatives brought forward by this committee on which I would ask for your assistance. First, the committee intends to report out a foreign affairs authorization bill no later than March. With the support of the Senate leadership, I'm confident the obstacles -- the Senate passes we have encountered in the past will be overcome. It is crucial that the executive branch, especially the State Department, work together with our committee on this legislation. Not only does the authorization fund the department and foreign affairs programs, it also contains personnel and other authorities important for the department to carry on its work. We will be calling upon you for your advice and to exercise your considerable persuasive power at key moments as the legislation works its way through Congress. Second, the Bush administration must continue its efforts to safeguard and destroy vulnerable stockpiles of weapons of mass destruction. To this end, I plan to reintroduce legislation designed to eliminate impediments to the Nunn-Lugar program. And my bill would drop conditions on weapons dismantlement work that in the past have slowed or threatened to slow the urgent task of eliminating nuclear, biological and chemical weapons. Furthermore, the legislation removes the $50 million cap on the president's ability to utilize Nunn-Lugar funds outside the former Soviet Union. I will also reintroduce the Conventional Arms Threat Reduction Act, designed to improve the State Department's efforts to combat proliferation of advanced conventional weapons, including MANPADS. The bill would unify program planning, coordination and implementation of a global strategy into one office at the State Department. Third, we must ensure the State Department has adequate resources to do the difficult job it faces. Under the leadership of President Bush, the administration has requested major funding increases for the State Department and U.S. foreign policy objectives.

LUGAR: You have argued successfully for the creation of new foreign policy tools, including the Millennium Challenge Account, the Global AIDS Initiative and the new Office of Reconstruction and Stabilization. The State Department's Diplomatic Readiness Initiative, launched by Secretary Powell, has made great progress in addressing personnel shortfalls in the Foreign Service. In addition, the State Department is continuing an efficient program to upgrade security at U.S. missions around the world. Even though Congress has failed to provide all the funds requested by the president to strengthen the State Department and U.S. foreign policy capabilities, this committee is enthusiastic about the progress that you have made so far. And we want to work with you to achieve the president's vision of a reinvigorated diplomatic capability. Finally, I would like to highlight a crucial need that has been identified by members of this committee. Our country must improve its capacity to stabilize failing or war-torn nations, and to assist in their reconstruction. If we are to deny sanctuaries to terrorists -- a goal identified by the 9/11 Commission as a top priority -- we must improve planning and organization for post-conflict reconstruction operations. Last year, the Foreign Relations Committee unanimously passed the Stabilization and Reconstruction Civilian Management Act of 2004. I appreciate the State Department's letter endorsing the purposes of S. 2127, and I ask that the letter be submitted in the record. In addition, a study done by the Defense Science Board endorses the legislation. The State Department has now established an Office for Reconstruction and Stabilization as called for in the legislation.

LUGAR: And the new office, headed by Carlos Pascual, is doing a government-wide inventory of the civilian assets that might be available for stabilization and reconstruction tasks, and is also pursuing the idea proposed in S. 2127 of a readiness reserve to enable rapid mobilization of post-conflict stabilization personnel. In addition, I hope the office will develop the concept of a 250- person active duty response readiness corps. In Army terms, this is less than a small battalion of well-trained people, a modest but vigorous force multiplier that would greatly improve our nation's stabilization capacity. This corps will be composed of State Department and USAID employees who have the experience and the technical skills to manage stabilization and reconstruction tasks in a hostile environment. I consider this new office to be one of the most important long- term defenses the State Department can mount against future acts of terrorism. And I would urge the State Department to embrace the concept of a well-funded civilian stabilization and reconstruction capability. Dr. Rice, we welcome you to the committee on this historic moment. We look forward to a dialogue that will illuminate the direction of the United States foreign policy for members of this committee and for the American people who are witnessing this hearing. Now, at this point, I would call normally upon Senator Biden, but I would say in his behalf, his train canceled out, and so he took the next one possible and he will be here momentarily. And we appreciate that very special effort. But I'm going to now call upon Senator Feinstein, our distinguished colleague from California, for her introduction of -- oh, in the nick of time. (LAUGHTER) The distinguished ranking member has arrived.

BIDEN: I'm prepared anytime you say, Mr. Chairman.

LUGAR: Well, proceed.

BIDEN: My purpose in being here today is to get more money for Amtrak. (LAUGHTER)

BIDEN: If I'm somewhat out of breath, it's because I am. There is very few people I'd run from the station for. And I welcome you, as you already have been welcomed. And I'd also like to welcome the new members of the committee. Senator Obama, Murkowski, and also a man who sat in your chair in a different committee, the distinguished senator from Florida.

BIDEN: But the fact is relations with many of our oldest friends are, quite frankly, scraping the bottom right now and we need to heed the advice of the president of the United States just before his first inaugural when he talked about acting with humility as well as force. In the Muslim world, despite the hundreds of thousands of Muslims that we have helped save in Somalia, in Bosnia, Kosovo, Afghanistan and yes, in my view, in Iraq as well, our motives are still suspect, our actions are resented and, as bizarre as it sounds to most Americans, the polls show that Osama bin Laden has a higher approval rating than not only President Bush but than America as a whole in most of those areas. And the result is, despite our great military might, we are, in my view, more alone in the world than we have been in anytime in recent memory and the time for diplomacy, in my view, is long overdue. As a result, we're in, in my view, a less secure position than we should be in the world. That's because virtually all the threats we face, from terrorism to the spread of weapons of mass destruction, to rogue states flouting the rules, to the pandemic diseases that we face now and will face, none of them can be solved solely by American soldiers by themselves. America is much more secure working with and reaching out to others than it is walking alone. And I believe the heart of your mission must be to help rebuild America's power to persuade and to restore our nation to the respect it once enjoyed, quite frankly, for our own safety's sake. But it's going to be very difficult to achieve any of this until we find a way forward in Iraq. This committee has worked hard across party lines to support the president's decision to hold Saddam Hussein to account. In return, prior to going in, we asked the administration to do two things. One was to build a broad and deep international coalition; and two, develop a detailed plan to win the peace. We held extensive hearings. As you know, we had many discussions in this committee back in the bad old days when I was chairman and then immediately after that, when the chairman took over, not about the day after, we held detailed hearings about the decade after. And the administration, in my view, neither generated a deep international coalition nor had a plan to win the peace.

BIDEN: And I think we're paying a very heavy price for it now. We also asked the administration, most importantly, to level with the American people about how hard and dangerous it was going to be, and how long it was going to take and, to our best judgment, how much it was going to cost. You may remember just prior to going in, we had a meeting with congressional leaders -- you were present -- secretary of state, secretary of defense, in the Cabinet Room. And the president, as he often does -- he's engaging -- leaned over to me and publicly said if front of all our colleagues, Joe, why aren't you with me? -- and he called me Mr. Chairman, which I'm not. I'm flattered he did that, but he really understands who the chairman is. He said, Mr. Chairman, why aren't you with me? And you may remember, I said then and publicly many times, Mr. President, I'll be with you when two things occur: one, when you, in fact, indicate what you're going to do after we win -- because winning is not going to be the hard part -- and two, level with the American people about the cost, the price, they're going to have to pay. I think one thing we all learned whether we were for or against the war in Vietnam, whether went or didn't go, the Vietnam generation, is no foreign policy can be sustained without the informed consent of the American people -- informed consent. And I think the only people who leveled with us before the war, like General Shinseki, who said it would take several hundred thousand troops to secure Iraq and the economic adviser Larry Lindsey, who said it would cost upwards of $200 billion, were shown the door. And since the war, Ambassador Bremer has indicated that he said he needed more force and didn't get them. Field generals with whom I've spoken in my three trips since 2003 to Iraq have indicated they need more force. And we keep hearing from the Defense Department and the president, No, we're winning, and we don't need any additional force and we haven't needed additional force for the past two years.

BIDEN: Just last week, very quietly, the administration ended its search for weapons of mass destruction in Iraq. Not much fanfare. The administration concluded that the reason for going to war, weapons of mass destruction, they did not exist. Found nothing and said so quietly. And the National Intelligence Council, the CIA's think tank, concluded that Iraq has replaced Afghanistan as a training ground for the next generation of terrorists: something it was not before the war. Despite all that, we now learn from the president that there's no reason to hold any administration official accountable for mistakes or misjudgments on Iraq. According to the president, We had an accountability moment -- I'm quoting -- and that's called the 2004 election. Dr. Rice, I hope that you as secretary of state -- and I'm confident you will be confirmed secretary of state and I plan on voting for you as secretary of state -- I hope you will demand accountability from the people who serve you if, heaven forbid, they misserve you to the extent that our country has been, in my view, misserved in Iraq. This is not about punishing people or embarrassing the president. It's about learning from our mistakes so we don't repeat them. And the second term is also a second chance and I hope the president will seize it. I hope he will seize it, quite frankly, by rejecting the neoconservative notion about how we're going to, in fact, secure Iraq and the Middle East. So I hope we can start leveling today. We'd like to hear how you see the road ahead in Iraq, what should the American people expect about what we can achieve and when can we hope to achieve it, and how are we going to succeed. I, for one, want to work with you toward success. But I hope we will not get Wolfowitz answers by saying, It is unknowable. There's a whole heck of a lot that is knowable. Iraq is an overwhelming issue. And this administration, like its predecessors and the seven presidents with whom I've served, is only human. Every major problem winds up on the desk of the same senior people -- the same senior people. Every problem. This is not a criticism; it's an observation. It's not possible in my experience of observing seven presidents up close and personal -- it's not possible to give every challenge the attention it deserves.

BIDEN: Consequently, it's understandable that while we're focused on Iraq, other problems remain, if not on the back burner, not getting full attention. But now some of those pots are boiling over, starting with the nuclear program in North Korea and Iran, the dangerous backsliding of democracy in Russia, and genocide in Sudan, and the lack of focus on public diplomacy, which I hope and I expect you'll talk about. Over the past few years, North Korea has increased its nuclear capacity by as much as 400 percent and now may have as many as eight nuclear weapons, which it can test, hide or sell to the highest bidder. You have said, quote, It is unacceptable, end of quote, for North Korea to have nuclear weapons. What does that mean? And what do you propose to do to stop this growing threat? Over the past few years, the reform movement in Iran has been literally crushed in front of the whole world. Surrounded by about 200,000 forces, it very openly just reached out and crushed the democracy movement. So much for the notion of leveraging power. Over the past four years, things have gotten considerably worse in Iran, and it has accelerated its own nuclear program. There may be nothing we can do to persuade Iran not to develop weapons of mass destruction. But our European allies are trying, through a combination of carrots and sticks. They believe they cannot succeed unless the United States engages in this effort. And in my view -- and it may not be true; I'm anxious to hear what you have to say -- we seem to be sitting on the sidelines. What do you propose to do to defuse or, if necessary, defeat this emerging danger?

BIDEN: Over the past few years, President Putin has reversed the course of democratic development, human rights and the rule of law in Russia. The administration has been largely silent. How can we be so concerned about the advancement of democracy in the Middle East and so unconcerned about the regression in Russia? At the same time, we've gotten little in return for turning a blind eye to Russia's regression. Just last week, the press reported -- hopefully it's not true, but I worry it may be -- that Russia is about to sell new missiles to Syria, which would threaten stability and progress toward peace in the Middle East. One of the most important programs to protect American security, the effort to help Russia account for, secure and destroy weapons of mass destruction and related materials, has become mired in red tape that the two presidents need to cut through. How are we going to approach this problem? How are you going to approach it as secretary of state? And finally, the administration has done, in my view, an admirable job of promoting peace between north and south in Sudan, but in Darfur we have watched the terrible tragedy unfold, as militias supported by the Sudanese government have killed as many as 100,000 civilians and chased as many as 2 million from their homes. I literally, as I was getting off the train, spoke to John Danforth who called me. He said he hoped I would keep an open mind about the notion of carrots and sticks to deal with this problem. I'd like to know how it seemed as though that process worked in Libya. I can't believe had we not made the concessions or agreements we made relative to oil and their ability to produce more in cooperation from the West and us in particular, I doubt very much in my meeting that -- I want to be precise -- when I went to meet with Gadhafi I believe at the president's request, I know it was at yours -- I am confident that -- and I think you did an incredible job -- I'm confident it wouldn't have happened unless there were carrots as well.

BIDEN: The last four years we've not seen many carrots but there, and that process started earlier. Four months ago before this committee, Secretary Powell rightly called what was going on in Sudan genocide. Since then the situation has gotten worth. What do you believe the administration and Congress can do now to stop this slaughter and to help African allies develop their own peacekeeping capacity? There's much, much more to talk about and will not be able to be talked about here at this hearing -- relations with emerging powers like China, faultline friends like India and Pakistan, long-time allies in Europe and Asia and, closer to home, the trouble -- the trouble but ignored in many respects, Latin America. I spent a little bit of time in Europe recently and I have one simple message: Get over it. Get over it. President Bush is our president for the next four years, so get over it and start to act in your interest, Europe. But that requires us to engage the hoped for diplomacy, more from the gentlelady from Stanford. We want to hear your thoughts about bolstering capacity to handle post-conflict reconstruction. I listened on the radio and I know you spoke about that. Chairman Lugar has drafted important legislation to do just that, which I was pleased to co-sponsor. And I hope you'll support it. And I intend to ask you about the source of an urgent opportunity: the Israeli-Palestinian peace process. Abu Mazen's election provide a rare second chance to forge a lasting secure peace in Israel and to give the Palestinians a state of their own. I'd like to know what you believe we should do to seize this opportunity and how urgent you think it is. But let me end with something you've talked about and that I hope you'll elaborate on today: putting diplomacy back at the center of American foreign policy. I strongly agree that this is a time for new diplomatic offensive with old friends, rising powers, and even hostile regimes. But it has to be sustained, it has to be persistent, and it has to do as much listening as it does talking. And it has to use all the tools at our disposal, our military might, but also our intelligence, our public diplomacy, our alliances, international organizations, treaties and agreements, and development assistance, trade and investment, even if it is frustrating, even if the payoff takes years, even if it takes a generation.

BIDEN: You often point out to me privately and to others, with some degree of accuracy, in my view, that the corresponding difficulty after World War II corresponding to the situation in Iraq. I'm not sure how applicable it is, but one way it clearly is: a major, major, major, major piece of our post-reconstruction effort in Germany and after World War II was diplomacy, public diplomacy. We convinced many parts of the world that our ideas were ascendant, that we provided -- we provided what is needed and would provide what was needed to bring security to the region and freedom. I remember when Lech Walesa first walked into my office like he did many of us here. He walked up, I said, Congratulations. I said, Solidarity, ya, da, da. He said, No, no, no, Radio Free Europe. And now we are faced with a new but no less dangerous set of challenges and it seems to me we have to recapture the totality of America's strength. Above all, we must understand that those who spread radical Islamic fundamentalism and weapons of mass destruction, although they may be beyond our reach, we have to defeat them. But there are tens of millions of hearts and minds around the world that are open to America's ideas and ideals. There are 1.2 billion Muslims in the world and we have to reach out to them. So I'm looking forward to working with you to do just that. And I'm anxious to hear what you have to say, and I'll have some questions. I thank you, Mr. Chairman, for allowing me to make my statement. And again, welcome.

LUGAR: Thank you very much, Senator Biden. I call now on Senator Feinstein for her introduction.

FEINSTEIN: Thank you very much, Chairman Lugar, Ranking Member Biden, distinguished members of the Foreign Relations Committee. It gives me great pleasure to introduce a friend and fellow Californian, Dr. Condoleezza Rice, as the president's nominee to be the next secretary of state. Dr. Rice's story began 50 years ago with her birth in Birmingham, Alabama. A precocious child, she began piano lessons at age 3, could read by 5, and skipped the 1st and 7th grades. She attended public schools before enrolling at Birmingham Southern Conservatory of Music in 1964.

FEINSTEIN: Her mother and father are here in spirit today. Her father, an educator and pastor, aptly nicknamed his only child Little Star. Today, she is, indeed, a big star. Dr. Rice's family moved to Denver, Colorado, in 1969, where she entered an integrated school for the first time as a tenth grader. Staying close to home, she opted for the University of Denver, and was awarded her B.A. degree with honors at the age of 19. By this time, Dr. Rice was engrossed with Soviet military issues and the related problems of arms control. She began her graduate studies on the topic at Notre Dame, and was awarded an M.A. degree in 1975. Thereafter, she returned to the University of Denver, to finish her dissertation on the Czech military's effects on society. Dr. Rice's career as an academician then brought her to my alma mater, Stanford University, in 1981, where she became an assistant professor of political science. During this time, she authored Uncertain Allegiance: The Soviet Union and Czechoslovak Army, 1948 to 1963, and continued to follow her great interest in football and piano. From 1989 to 1991, in the first Bush administration, she proved her mettle in government for the first time as a senior director for Soviet affairs and East European affairs at the National Security Council.

FEINSTEIN: President George Bush had this to say about her abilities, quote, Condi was brilliant. She disarms the biggest of big shots. Why? Because they know she knows what she is talking about, end quote. It was then back to Stanford in the early 1990s, where she was named provost of the university. She was the first woman, first African-American and the youngest person, at age 38, to hold the position in the school's history. For six years, she managed a $1.5 billion school budget, 1,400 faculty members and 14,000 students. She returned to the White House as the first African-American woman to serve as national security adviser in January 2001. As a young girl, Condi stood at the gates of 1600 Pennsylvania Avenue with her father, telling him, that, quote, Daddy, I'm barred out of there now because of the color of my skin, but one day I'll be in that house, end quote. She's delivered on that promise. Now she is the president's choice to be our country's next secretary of state. As both the chairman and the ranking member have so well stated, American foreign policy today is at a crossroads. In Iraq, across the Middle East, in North Korea, in our relations with China and in so many other places we face major challenges. I would submit that Dr. Rice has the skill, the judgment and the poise and the leadership to lead in these difficult times. If confirmed, she will have the deep personal trust and confidence of the president; a real asset. She's been by his side for every crucial national security decision in the last four years. My sense is that the president trusts her implicitly. When Dr. Rice meets with Hu Jintao or Ariel Sharon or Vladimir Putin, there will be no doubt that she speaks for and on behalf of the president of the United States. The problems we face abroad are complex and sizable. If Dr. Rice's past performance is any indication, though, we can rest easy. It's difficult to know ahead of time how anyone will perform as secretary of state. Time and events test vision, facile thinking and resolute problem solving. But indeed, this is a remarkable woman that I introduce to you today, and it is with great pride that I do so.

LUGAR: Well, Senator Feinstein, we thank you for a truly remarkable introduction of our candidate. And, Dr. Rice, before I call upon you for the opening statement, I'm going to ask you to rise and to raise your right hand so that I might administer the oath. Do you swear to tell the truth, the whole truth and nothing but the truth so help you God?

RICE: I do.

LUGAR: I thank you. Please proceed with your statement.

RICE: Thank you very much. Thank you, Chairman Lugar, Senator Biden and members of the committee. I'd also like to thank Senator Dianne Feinstein, who, as a fellow Californian, I have admired as a leader on behalf of our state and our nation, and on whose wise counsel I have relied and will continue to rely. Mr. Chairman, members of the committee, it is an honor to be nominated to lead the State Department at this critical time, a time of challenge and hope and opportunity for America. September 11th, 2001, was a defining moment for our nation and for the world. Under the vision and leadership of President Bush, our nation has risen to meet the challenges of our time, fighting tyranny and terror and securing the blessings of freedom and prosperity for a new generation. The work that America and our allies have undertaken and the sacrifices we have made have been difficult and necessary and right. Now is the time to build on these achievements to make the world safer and to make the world more free. We must use American diplomacy to help create a balance of power in the world that favors freedom. The time for diplomacy is now.

RICE: I am humbled by President Bush's confidence in me to undertake the great work of leading American diplomacy at such a moment in history. If confirmed, I will work with the members of this Congress, from both sides of the aisle, to build a strong bipartisan consensus behind American foreign policy. I will seek to strengthen our alliances, to support our friends, and to make the world safer and better. It is a time to reflect on this challenge, and I do so humbly. I will enlist the great talents of the men and women of the State Department, the foreign and civil services and our Foreign Service nationals. And if I am confirmed, I will be especially honored to succeed a man, a man that I so admire, my friend and my mentor, Colin Powell. Four years ago, Secretary Powell addressed this committee for the same purpose that I do now. Then as now, it was the same week that America celebrates the life and legacy of Dr. Martin Luther King. It is a time to reflect on the legacy of that great man, on the sacrifices he made, on the courage of the people he led, and on the progress our nation has made in the decade since. I personally am indebted to those who fought and sacrificed in the civil rights movement so that I could be here today. For me, this is a time to remember other heroes as well. I grew up in Birmingham, Alabama, the old Birmingham of Bull Connor and church bombings and voter intimidation, the Birmingham where Dr. King was thrown in jail for demonstrating without a permit. Yet, there was another Birmingham, the city where my parents, John and Angelena Rice, and their friends built a thriving community in the midst of terrible segregation. It would have been so easy for them to give in to despair and to send that message of hopelessness to their children.

RICE: But they refused to allow the limits and injustices of their time to limit our horizons. My friends and I were raised to believe that we could do or become anything; that the only limits to our aspirations came from within. We were taught not to listen to those who said, No, you can't. The story of Birmingham's parents and teachers and children is a story of the triumph of universal values over adversity. And those values, a belief in democracy and liberty, and the dignity of every life and the rights of every individual, unite Americans of all backgrounds, all faiths, and all colors. They provide us a common cause in and a rallying point in difficult times and they are a source of hope to men and women across the globe who cherish freedom and work to advance freedom's cause. And in these extraordinary times, it is the duty of all of us, legislators and diplomats and civil servants and citizens, to uphold and advance the values that are core to our identity and that have lifted millions around the world. One of history's clearest lessons is that America is safer and the world more secure than ever and wherever freedom prevails. It is neither an accident nor a coincidence that the greatest threats of the last century emerged from totalitarian movements. Fascism and communism differed in many ways but they shared an implacable hatred of freedom, a fanatical assurance that their way was the only way, and a supreme confidence that history was on their side. At certain moments, it seemed that history might have been on their side. During the first half of the 20th century, much of the democratic and economic progress of earlier decades looked to be swept away by the march of ruthless ideologies armed with terrible military and technological power. Even after the Allied victory in World War II, many feared that Europe and perhaps the world would be forced to permanently endure half enslaved and half free.

RICE: The cause of freedom suffered a series of major setbacks: communism imposed in Eastern Europe, Soviet power dominant in East Germany, the coup in Czechoslovakia, the victory of Chinese communists, the Soviet nuclear test five years ahead of schedule, to name just a few. In those early years, the prospect of a united, democratic Germany and a democratic Japan seemed farfetched. Yet America and our allies were blessed with visionary leaders who did not lose their way. They created the great NATO alliance to contain and eventually erode Soviet power. They helped to establish the United Nations and created an international legal framework for this and other institutions that have served the world well for more than 50 years. They provided billions in aid to rebuild Europe and much of Asia. They built an international economic system based on free trade and free markets to spread prosperity to every corner of the globe. And they confronted the ideology and propaganda of our enemies with a message of hope and with truth. And in the end, though the end was long in coming, their vision prevailed. The challenges we face today are no less daunting. America and the free world are once again engaged in a long-term struggle against an ideology of hatred and tyranny and terror and hopelessness. And we must confront these challenges with the same vision and the same courage and the same boldness that dominated our post-world war period. In these momentous times, America has great tasks and American diplomacy has great tasks. First, we will unite the community of democracies in building an international system that is based on shared values and the rule of law. Second, we will strengthen the community of democracies to fight the threats to our common security and alleviate the hopelessness that feeds terror.

RICE: Yet when judging a course of action, I will never forget that the true measure of its worth is its effectiveness. Our second great task is to strengthen the community of democracy so that all free nations are equal to the work before us. Free peoples everywhere are heartened by the success of democracy around the globe. Together, we must build on that success. We face many challenges. In some parts of the world, an extremist view threatens the very existence of political liberty. Disease and poverty have the potential to destabilize whole nations and whole regions. Corruption can sap the foundations of democracy. And some elected leaders have taken illiberal steps that if not corrected could undermine hard-won progress for democracy. We must do all that we can to ensure that nations which make the hard choices and do the hard work to join the free world deliver on the high hopes of those citizens for better lives. From the Philippines to Colombia to the nations of Africa, we are strengthening counterterrorism cooperation with nations that have a will to fight terror, but need help with the means. We're spending billions to fight AIDS and tuberculosis and malaria and other diseases, to alleviate suffering for millions and help end public health crises. America has always been generous in helping countries recover from natural disasters and today we are providing money and personnel to ease the suffering of the millions afflicted by the tsunami and to help rebuild those nations' infrastructure. We are joining with developing nations to fight corruption, instill the rule of law and create a culture of transparency. In much of Latin America and Africa, we face the twin challenges of helping to bolster democratic change while alleviating poverty and hopelessness. We will work with reformers in those regions who are committed to the increasing opportunity for their peoples and we will insist that leaders who are elected democratically have an obligation to govern democratically. Our third great task is to spread democracy and freedom throughout the world. I spoke earlier of the grave setbacks to democracy in the first half of the 20th century. The second half of the century saw an advance of democracy that was far more dramatic.

RICE: In the last quarter of that century, the number of democracies in the world tripled. And in the last six months of this new century alone, we have witnessed the peaceful democratic transfer of power in Malaysia, a majority Muslim nation, and Indonesia, the country with the world's largest Muslim population. We've seen men and women wait in line for hours to vote in Afghanistan's first ever free and fair presidential election. We -- and I know you, Mr. Chairman; and I want to thank you for your role in this -- were heartened by the refusal of the people of Ukraine to accept a flawed election and heartened by their insistence that their democratic demands would be met. We have watched as the people of the Palestinian territories turned out to vote in an orderly and free election. And soon the people of Iraq will exercise their right to choose their leaders and set the course of their nation. No less than were the last decades of the 20th century, the first decades of this new century can be an era of liberty. And we in America must do everything we can to make it so. To be sure, in our world, there remain outposts of tyranny, and America stands with oppressed people on every continent, in Cuba and Burma, and North Korea and Iran and Belarus and Zimbabwe. The world should really apply what Nathan Sharansky called the town square test. If a person cannot walk into the middle of the town square and express his or her views without fear of arrest, imprisonment and physical harm, then that person is living in a fear society. And we cannot rest until every person living in a fear society has finally won their freedom. In the Middle East, President Bush has broken with six decades of excusing and accommodating the lack of freedom in hoping to purchase stability at the price of liberty. The stakes could not be higher. As long as the broader Middle East remains a region of tyranny and despair and anger, it will produce extremists and movements that threaten the safety of America and our friends. But there are hopeful signs that freedom is on the march. Afghanistan and Iraq, are struggling to put dark and terrible pasts behind them and to choose a path of progress.

RICE: Afghanistan held a free and fair election and chose a president who is committed to the success of democracy and the fight against terror. In Iraq, the people will soon take the next step in their journey toward full, genuine democracy. All Iraqis, whatever their faith or ethnicity, from Shias to Sunnis to Kurds to others, must build a common future together. The election later this month will be an important first step, as the people of Iraq prepare to draft a constitution and hold the next round of elections, elections that will then create a permanent government. The success of freedom in Afghanistan and Iraq will give strength and hope to reformists throughout the region and accelerate the reforms already under way. From Morocco to Jordan to Bahrain, we are seeing elections and new protections for women and minorities and the beginnings of political pluralism. Political, civil and business leaders have issued stirring calls for political, economic and social change. Increasingly, the people are speaking and their messages is clear: The future of this region is to live in liberty. And the establishment of a Palestinian democracy will help to bring an end to the conflict in the Holy Land. Much has changed since June 24, 2002, when President Bush outlined a few approach for America in the quest for peace in the Middle East and spoke the truth about what would be required to end this conflict. Now we have reached a moment of opportunity and we must seize it. We take great encouragement from the elections just held in the Palestinian territories. And, Senators Biden and Sununu, I want to thank you for representing the United States at those historic elections. America seeks justice and dignity and a viable, independent and democratic state for the Palestinian people. We seek security and peace for the state of Israel. Israel must do its part to improve the conditions under which Palestinians live and to build a better future. Arab states must join to help and deny any help or solace to those who take the path of violence. I look forward to personally working with Palestinian and Israeli leaders and bringing American diplomacy to bear on this difficult but crucial issue. Peace can only come if all parties choose to do the difficult work. And the time to choose peace is now, but there can be no permanent peace without an end to terror. Building a world of hope and prosperity and peace is difficult. As we move forward, America's relations with world's global powers will be critical. In Russia, we see that the path to democracy is uneven and that its success is not yet assured. Yet recent history shows that we can work closely with Russia on common problems.

RICE: And as we do so, you can be assured that we will continue to press the case for democracy and we will continue to make clear that protection of democracy in Russia is vital to the future of U.S.- Russian relations. In Asia, we have moved beyond the false assumption that it is impossible to have good relations with all of Asia's powers. Our Asian alliances have never been stronger, and we will use that strength to help secure peace and prosperity. Japan, South Korea and Australia are key partners in our efforts to deter common threats and spur economic growth. We are building a candid, cooperative and constructive relationship with China that embraces our common interests but recognizes our considerable differences about values. The United States is cooperating with India, the world's largest democracy, across a range of economic and security issues; this even as we embrace Pakistan as a vital ally in the war on terror and a state in transition toward a more moderate future. In our own neighborhood, we are cooperating closely with Canada and Mexico. And with our close neighbors in Latin America, we are working to realize the vision of a fully democratic hemisphere, bound by common values and free trade. But perhaps most importantly, we must realize that America and all free nations are facing a generational struggle against a new and deadly ideology of hatred that we cannot ignore. We need to do much more to confront hateful propaganda, dispel dangerous myths and get out the truth. We will increase our exchanges with the rest of the world. America should make a serious effort to understand other cultures and learn foreign languages. Our interaction with the rest of the world must be a conversation, not a monologue. And America must remain open to visitors and workers and students from around the world. We do not and will not compromise our security standards. Yet, if our public diplomacy efforts are to succeed, we cannot close ourselves off from the rest of the world. If I am confirmed, public diplomacy will be a top priority for me and for the professionals I lead. In all that lies ahead, the primary instrument of American diplomacy will be the Department of State, and the men and women of its Foreign and Civil Services and Foreign Service nationals.

RICE: The time for diplomacy is now. And the president and I will expect great things from America's diplomatic corps. We know from experience how hard they work, the risks they and their families take, the hardships they endure. We will be asking even more of them in their service of the country and of a great cause. They will need to develop new skills and rise to new challenges. This is a time that calls for transformational diplomacy. More than ever, America's diplomats will need to be active in spreading democracy and fighting terror and reducing poverty and doing our part to protect America's homeland. I will personally work to ensure that America's diplomats have all the tools they need to do their jobs, from training to budgets to mentoring to embassy security. I also intend to strengthen the recruitment of new personnel, because American diplomacy needs to constantly hire and develop top talent. And I will seek to further diversify the State Department's workforce. This is not just a good cause, it's a necessity. A great strength of our country is its diversity. And the signal sent to the rest of the world when America is represented abroad by people of all cultures and races and religions is an unsurpassed statement about who we are and what our values mean in practice. Let me close with a personal reflection. I was in government in Washington from 1989 to 1991. I was lucky enough to be the Soviet specialist in the White House at the end of the Cold War. I got to participate in the liberation of Eastern Europe and the unification of Germany, the beginnings of the peaceful collapse of the Soviet Union. It was a heady time for all of us. But when I look back, I know that we were just merely harvesting the good decisions that had been made in 1947 and 1948 and in 1949 when Truman and Acheson and Vandenberg and Kennan and so many wise and far-sighted statesmen in the executive and legislative branches recognized that we were not in an limited engagement with communism, we were in the defining struggle of our time. Democrats and Republicans united around a vision and policies that won the Cold War.

RICE: The road was not always smooth, but the basic unity of purpose and values was there and that unity was essential to our eventual success. No president and no secretary of state could have effectively protected American interests in such momentous times without the strong support of the Congress and from this committee. And the same is true today. Our task and our duty is to unite around a vision and policies that will spread freedom and prosperity around the globe. I've worked directly with many of you and in this time of great challenge and opportunity, America's co-equal branches of government must work together to advance freedom and prosperity. In the preface to his memoirs, published in 1969, Dean Acheson wrote of the post war period that, Those who acted in this drama did not know, nor do any of us yet know, the end, close quote. Senators, now we know. And many of us here were witness to that end. The end was a victory for freedom, the liberation of half of a continent, the passing of a despotic empire and vindication for the wise and brave decisions made at the creation. It is my greatest hope and my deepest conviction that the struggle we face today will someday end in a similar triumph of the human spirit. Working together, we can make it so. Thank you very much.

LUGAR: Dr. Rice, thank you. The committee asked you to make a comprehensive and thoughtful statement and you have certainly fulfilled our request. And we appreciate the time and effort that you have given to that statement and likewise to the responses you've given to all of our questions. Now just for the benefit of senators and those following the hearing, during the past few weeks, senators have submitted to Dr. Rice folios of questions and they have been answered. And they will all be made a part of the record. For the record some senators may wish to reiterate some of those questions today, but we know you will be well prepared because you have already written some remarkable answers that give us a great deal of assurance.

LUGAR: I've consulted with the distinguished ranking member, Senator Biden, about the format, and we have will now have a round of questions and each member will have 10 minutes. And I'll ask members to be respectful of that time so that they will not infringe upon the opportunities of others. And then, following that, if members wish to ask additional questions, we will have a second round of 10 minutes per member. And, if required, a third and even a fourth round. I've consulted with Dr. Rice. She is prepared for a number of hours of questions, and I appreciate that. We'll proceed at least until noon and maybe a little beyond that; commence again at 2 o'clock in the afternoon. If it appears that the hearing might be concluded at some time in the early evening, it would be my privilege to continue on and to preside and to be with any member that wishes to keep asking questions throughout that period of time. And my hope is that members on both sides of the aisle will be prepared at the conclusion of all of the questioning, whether it should occur today or tomorrow, to have a business meeting of the committee so that we might take a vote upon this nomination and that it might be available, therefore, for action on the floor of the Senate on Thursday, January the 20th. Dr. Frist has indicate that after 3 o'clock roll call votes will be in order. My prayer is that one of the roll call votes will be on this nomination.

LUGAR: But in any event, this is a potential road map for us to proceed through the hearing in an orderly way that is fair to all members. And I want to make that point clear. We have offered two full days so that in the event members have a lot of questions, they will have an opportunity to raise them for a complete record of the hearing. Now, Dr. Rice, I'll begin and I'll ask the time keeper to be as vigorous on my questions as on anyone else's for the next 10 minutes. Let me say that last year, I introduced legislation intended to relieve the burdens placed on the Nunn-Lugar program by the Congress in the form of conditions, certifications, reporting requirements. These have occurred over many years and many were points well taken at the time as there was gross distrust of the Russians and, likewise, reason for progress sought through these restrictions. Nevertheless, they have inhibited substantially in some years the amount of work that could be done to actually work with the Russians in cooperative threat reduction, to take warheads off of missiles, to destroy the missiles, destroy the aircraft that might fly over our country, even on the Shchuchye project, to move toward a neutralization of the chemical weapons. So I simply ask -- the goal of my legislation is to provide President Bush with more flexibility and utilization of this program in achieving nonproliferation and dismantlement goals. Does the administration support this legislation?

RICE: Thank you, Senator Lugar. Yes, we do. And I want to start by saying thank you very much for the tremendous leadership that you have given and that earlier Senator Nunn gave to this. And I know that a number of senators on this committee and other committees have been stalwarts in this extremely important initiative.

RICE: Senator Lugar, the president has raised with President Putin the issue of ratification in the Duma of the umbrella on a number of occasions, including most recently when they were at Sea Island. I'm sure that he will raise it when he sees President Putin in the next several weeks. And we are ourselves reviewing what we may want to do about the liability procedures here. It is extremely important that this work go forward. And to the degree that there are bureaucratic logjams that need to be broken, we've simply got to break them. The other possibility, which is that you leave materials unsecured and you don't take as full initiative as you can under these very important programs, is simply not acceptable. And so we are working to see how we can move this forward with the Russians. We had discussions just recently with the Russian defense minister when he was here about moving forward. So you can be assured that we're looking to break whatever bureaucratic logjams have emerged over this period of time.

LUGAR: I appreciate that response. And I'm hopeful that you will work with the president so that will be on the agenda of his meeting with President Putin. Because, clearly, President Putin is cognizant of all of these programs, but bureaucracy in Russia sometimes moves slowly, as it does in our country. To the extent that we can expedite this, this will be helpful. Because, as the president has pointed out, weapons of mass destruction or materials of mass destruction, improperly secured, are the basis for many of the terrorist threats, whether it be Al Qaida or the Russians' fear of the Chechens or whoever. It is there to be picked up and to be utilized without research and difficulty. So these are critical items that I see and I know that you see. Let me also mention that the G-8 meeting, the so-called 10-plus- 10-over-10 program, attempted to enlist our allies in matching the effort of about $1 billion a year that we are putting into these programs: Defense, State and Energy Departments. It's been difficult for them to do that because they do not have satisfactory umbrella agreements in most cases either. So while the president is visiting with President Putin in behalf of the bilateral, perhaps likewise he could mention our seven allies with the G-8 that we really badly need to enlist in this type of work.

RICE: I agree completely, Senator. In fact, the president has talked to President Putin about the difficulties that others are having extending money. I think one of the really great breakthroughs was when we came up with this Global Partnership Initiative, because it permitted to us multiply the resources that the United States was putting in by resources from Japan and Italy and Great Britain and other places. And it's important that those resources get spent. This is one part, an extremely important part, of a broad nuclear nonproliferation initiatives agenda that we are pursuing with our allies to try and deal with this very nettlesome, difficult problem.

LUGAR: And, of course, also, as the president visits with the German leadership and perhaps the French leadership and what have you, they are parties to this. RICE: They are.

LUGAR: And are hopefully eager to be a part of it.

RICE: In fact, I think the nonproliferation story is a quite remarkable story of cooperation among the major allies. We have outstanding cooperation with France and Germany and our other allies.

We have been working, for instance, in something called the Proliferation Security Initiative, which 60 countries are now party to and a number of others have expressed interest, to try to interdict -- consistent with international law to try and interdict suspicious shipments.

This has given us new means of intelligence cooperation, law enforcement cooperation, naval cooperation. And these are very important. We work best when we're putting the alliance to use and to work on difficult problems together.

LUGAR: And this is a great way to do so.

I would add in agreement, this is also important, the AMEC agreement. We have enlisted the support of Norway and friends who want to work in that area, particularly on the submarine issues and the pollution of nuclear material that may have been dumped or could be dumped without activity on our part. Let me turn to another issue. In your answers to questions for the record -- and I cite that because I've asked this question for the record and you have responded -- I particularly appreciate your response on the Law of the Sea Convention.

You urged the committee to favorably report it out and said that you will work with the Senate leadership to bring the convention and implementing agreement to the floor vote in the 109th Congress.

And you also said the following: Joining the convention will advance the interests of the United States military. The United States, as the country with the largest coastline and the largest exclusive economic zone, will gain economic and resource benefits from the convention. The convention will not inhibit the United States nor its partners from successfully pursuing the Proliferation Security Initiative. And the United Nations has no decision-making role under the convention in regulating uses of the oceans by any state party to the convention.

LUGAR: That's clearing up an issue sometimes raised by opponents of the convention. Finally, you said, The convention does not provide for or authorize taxation of individuals or corporations. I cannot think of a stronger administration statement in support of the Law of the Sea Convention. Should I assume that the president would like to see this convention passed as soon as possible?

RICE: Would certainly like to see it pass as soon as possible. And, Senator, I think you know the history of this better than I, as well as senators like Senator Warner and others who worked very hard to make sure that some of the early concerns about the convention were addressed and that the convention as it now stands serves our national security interests, serves our economic interests. And we very much want to see it go into force.

LUGAR: I thank you for that response. In your responses to questions for the record, you embraced the partner's role as the lead on an interagency team working for a more cooperated approach to stabilization and reconstruction efforts, a role that I've been pushing, as Senator Biden and many others in our committee, as a new core mission for the Department of State. Your support for the department's Office of Reconstruction and Stabilization in the department will be crucial as it seeks the personnel, resources and budget to succeed. Can you outline your own vision for the Department of State in this area? And how would you integrate USAID with this effort?

RICE: We have learned a lot of lessons over the last several years, and one of them, I think, is that we need to be better able to marry civilian expertise in reconstruction and stabilization with whatever we need to do militarily to stabilize the situation. These post-conflict situations require a wide range of skills and talents that we've had to assemble in a rather ad hoc fashion from within the United States government when we faced Afghanistan or faced Iraq.

RICE: And frankly, we will face these again. We face it in Liberia. We face it in Sudan -- we will face it in Sudan if those situations can be stabilized. And so, we have been and I've been very heartened by the work that has been done on this new Office for Reconstruction and Stabilization. I know, Senator, that you and your staff have had a lot of conversations, first with the people who were on my staff in the NSC who were interested in this. And now that the office has been created in the State Department, I've had briefings on what Carlos Pascual and his people are already doing. We are going to try to make sure that they have the resources for this first phase effort that they are in. I think we need to look at what further functions and what further requirements there are for this especially important task. But the State Department does need to lead this effort. There is great enthusiasm in the State Department for being able to do this as I've talked to people in briefings and the like. And so, the office will not only have my support, but I'm counting on it to be able to help us make better efforts as we face these stabilization problems around the world.

LUGAR: Great. And we'll count upon you for leadership of our legislative efforts so we work together on this.

RICE: Thank you.

LUGAR: Senator Biden? BIDEN: Thank you very much. Dr. Rice, you're, I'm told, a great football fan. I notice when I go in your office you are. I'm not going to ask you this under oath. But are you aware who the national champions of 1-AA football were last year?

RICE: Did they come from Delaware, sir? BIDEN: Yes, they did.

(LAUGHTER)

University of Delaware.

Thank you very much.

I knew you'd know that. Very important point.

Dr. Rice, I would like to talk to you about Iraq if I may start there. You quote eloquently and you write eloquently in your opening statement, But when I look back, I know that we were merely harvesting the good decisions that had been made in '47, '48 and '49, when Truman and Acheson and Vandenberg and Kennan and so many other wise and foresighted statesmen in the executive and legislative branch recognized that we are not in a limited engagement with communism, we're in the defining struggle of our times.

BIDEN: Based on discussions over the years, I think we agree that the defining struggle of times right now is this debate, this struggle between freedom and radical Islamic fundamentalism. That's not the only problem in the world, but it's the one I think takes a long time.

And Truman and Acheson and others came up with and leveled with the American people about how long and hard and expensive it was going to be. The Truman Doctrine, the establishment of NATO, the Bretton Woods agreement, the Marshall Plan, well over 300,000 troops in Europe. We still have a considerable number of troops in Europe. And we flat-out told the American people. And yet I'm a little concerned that the American people don't have a clear sense of what is expected of them in this defining struggle that we always talk about. And it starts -- it doesn't start, but the focus right now is primarily in Iraq. And we have an exit strategy, which I happen to agree with. The ultimate exit strategy is a stable, secure Iraqi government brought about as a consequence of a series of elections -- this one just being the first of a series -- and the training of the capacity -- providing the Iraqis with the capacity to maintain order and peace not only in the streets, but along their borders.

And toward that end, we had significant discussions in this committee prior to going in, and a number of experts, from RAND to others, indicated that we were going to need somewhere in the order of 5,000 European paramilitary police types in addition to the military.

BIDEN: I think the number was 5,600.

And my first question is, did your outfit write a report suggesting how many military forces you thought -- your team thought would be needed in Iraq?

RICE: No, Senator, we did not write a report of that kind. We, obviously, were aware of all of the literature out there about how one stabilizes. And we looked at that literature. We considered it. But as a part of a team, that is the National Security Council, and that is the -- where the president's primary national security advisers sit, I sat through briefing after briefing that assessed the plan for both the war and for the immediate postwar period and, as a part of that plan, the troop levels that were recommended by General Franks and by his commanders. The president had good military advice from General Franks, good military advice from Chairman Myers, who represents, of course, not just himself but the corporate body of the Joint Chiefs of Staff. And they were very clear that they believed that the plan that they were going to execute, including phase four, that is the stabilization phase, was adequately resourced in terms of troop strength.

BIDEN: In retrospect, do you think it was adequately resourced? I mean, I'm not trying -- what do you think now? Everybody gets a chance to determine whether or not what they signed onto or thought, recommended by professionals, was workable or not. Do you think it was adequate now, looking back?

RICE: Senator Biden, I would not presume to try to give the president military advice. But I do believe that he got good military advice and I do believe that the plan and the forces that we went in with were appropriate to the task.

RICE: We did meet with some unforeseen circumstances, most importantly as we swept through the country really rather rapidly, the core of this insurgency, that is the Baathists and many of Saddam's loyal forces, melted into the population. They didn't stand and fight. When they reemerged, they reemerged as an insurgency I think that, frankly, cannot be dealt with by military power alone and certainly not by overwhelming military power, but must now be dealt with through the political mobilization of the Iraqi people -- which is why these elections are so important -- through economic reconstruction -- and I would be the first to say we want very much to accelerate that reconstruction -- and most importantly through Iraqi forces. BIDEN: So bottom line, getting a chance to look back you think there were an adequate number of forces beginning, middle and now? I mean, you have no -- you wouldn't, if you got to go back, change the force structure?

RICE: I don't think I would, Senator.

BIDEN: OK. You're aware that Mr. Bremer suggests that we needed -- he is the former, as we all know, ambassador, who was in charge up until we handed over sovereignty. And I've made three trips since 2003. And every trip I make, I meet with the flag officers and I have -- they're all telling me they need more force and they needed more force. But the reason I asked the question is not to assess blame, because who the heck knew? This was -- as I said to Bremer and I think the three of us were together the first time. I said, Mr. Ambassador -- in the first meeting after Saddam was dethroned and we were in Baghdad -- I said, If the Lord Almighty came down and sat at this table and gave you the right answer to 60 percent of all of the difficult questions you'll have to answer, you still only have an even chance of succeeding. No one's ever done what we're trying to do. And I support it, the effort. But it concerns me that in retrospect you still think things were kind of -- you know, the force structure was appropriate. Which leads me to this issue of one element of our exit strategy and that is the training of Iraqi security forces.

BIDEN: On October 21st last year, you said, The Iraqi security force will number 125,000 by the end of the year. There will be 145,000 security forces by February, and 200,000 by the time of the permanent election. And in March of last year, Secretary Rumsfeld said, We now have 200,000 Iraqi security forces that are out there providing security in the country. And a month later he said 210,000 uniformed and called it, quote, an amazing accomplishment. And, now, what I'd like to know is what you all mean by trained Iraqi security force. Do you mean someone who we give a uniform to, someone who had been in the Iraqi military before or the police? Or does trained mean someone capable, absent a physical presence of the United States or a coalition force with them, to, in fact, do their job -- whatever it's assigned in whatever region they're in? What do you mean by trained ?

RICE: By trained, Senator, what we've been trying to do is take Iraqis -- some of whom have served before, some of whom have not -- and to give them, depending on whether it's police training or army training or commando training, the skills that they need to be able to secure the country. Now, we have had to, in many cases, understand that the initial training is just that, it's initial training, and that you face a number of other issues. You face issues of leadership. One of the problems that we've had with the desertion rates that we faced in the Iraqi security forces and with some of the problems of -- I'll call it discipline broadly -- is that we think there has been a leadership gap. We learned early on that Iraqis were not going to train and then serve coalition leaders and so...

BIDEN: What have we done about that leadership?

RICE: We have a very active program now that Prime Minister Allawi is very involved in himself of vetting proven leaders in the former Iraqi security forces to bring top-down leadership to those people. NATO, of course, has put in a training mission that is devoted to training leadership and...

BIDEN: That's not even set up yet, is it?

RICE: Well, it's -- we have, on the ground...

BIDEN: I'm not criticizing. I just want to -- look, here's the reason I asked this question. I talked about earlier -- and my time is about up. I talked earlier about the need to level with the American people. When you say we have 200,000 trained security forces and the secretary of state says we have 210,000, the impression of the average American is we've actually trained up people who can do the job. Now, I've made four trips there. Three since Saddam has come down. I've spent a lot of time. I've gone to the training facility for police in Jordan. With the American head trainer, I said without anybody there and I believe my friend and person who has an ideological bent considerably different than mine, my friend from South Carolina was there. I said, There's no one in the room. Please cut all the malarkey. Is this training program worth a darn? And the answer was no -- from our own trainer. I asked the head of the Jordanian police force who was there and the Canadian Royal Mounted Policeman who was there as the triumvirate running the operation. I've been back and spoke with a General Petraeus on two occasions. He is a first-rate soldier. He has indicated he's just basically beginning. How many -- and this is my last question. How many security forces do you think are trained that can shot straight, kill and stand their ground? I don't mean in a uniform. I mean real, live guys that our Marines. I was spent four hours in Fallujah. Our Marines are not real anxious to stand next to and count on a lot of Iraqi forces except the few that were trained as special forces. Now, how many do you really think are trained that Allawi can look to and say, I can rely on those forces ?

BIDEN: What do you think that number is?

RICE: Senator, I have to rely on what I get from the field. And by the way, I think that the trips that you've made and the trips that the others have made have given us information that we can go back with. And I appreciate your doing that. We think the number right now is somewhere over 120,000. We think that, among those people, there clearly continue to be questions about on-duty time, that is, people who don't report for duty. And so this is being looked at. We are trying to provide for some of these units mentors who can help, trying to provide leadership from the Iraqis themselves that can help these people. But this is the reason that Gary Luck has gone out, at Secretary Rumsfeld's direction, to take a hard look at the training program to see what General Petraeus, who, as you say, is a terrific soldier and has a lot of experience in Iraq, what he's been able to achieve; to work with the Iraqis to address some of these problems of leadership and morale and desertion in the armed forces and in the police forces; and to look at some of the equipping of the police forces. But I do want to note, Senator, that the Iraqis are making a lot of sacrifices here...

BIDEN: No question.

RICE: ... their soldiers, their police, in places like Fallujah, in places like Samarra, in places like Najaf. They have played an active role in their security. But it is a process that takes some time. We believe that we've made some progress. We have more progress to make.

BIDEN: Well, I thank you for your answer. I think you'll find, if you speak to the folks on the ground, they don't think there's more than 4,000 actually trained Iraqi forces. I strongly urge you to pick up the phone or go see these folks. And the reason I press it is not that the Iraqis aren't sacrificing. They are. But that's almost irrelevant in one regard. The exit strategy for America is a trained force of several hundred thousand people. We're talking about a year or more to get anywhere close to that. We should level with the American people about it. But after you take a hard look as secretary of state, I'd like to talk with you more about that. Thank you.

LUGAR: Thank you, Senator Biden. Senator Hagel?

HAGEL: Mr. Chairman, thank you. Welcome, Dr. Rice.

RICE: Thank you.

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

LUGAR: It'll be included in full.

HAGEL: Thank you. As has been noted here, and I think eloquently stated by Senator Feinstein, you come before this committee impressively qualified, well prepared. And it is a nomination all of America can be proud of. And I mean that sincerely.

HAGEL: So thank you for offering yourself for another four years of very engaging, responsible leadership. We appreciate that. I also want to note, Mr. Chairman, for the record, the good work of Secretary Powell and Deputy Secretary Armitage. I noted, Dr. Rice, that you mentioned them in your statement. The work that the Powell-Armitage team has done for this country over the last four years has been significant. All those who were part of that team need to be acknowledged, as well. So thank you, Dr. Rice, for noting Secretary Powell's leadership. I want to pursue, to some extent, some of the same line of questioning on the same subject, as well as other subjects, in my 10 minutes that Senator Biden was talking about: Iraq. He left off with exit strategy. Would you explain to this committee what you and the president see as an exit strategy for America from Iraq, which would be, I suspect, connected to a post- January 30th election which will provide an elected Iraqi national assembly? What are our plans after that?

RICE: Well, we do have some things that we have to accomplish after the elections. Senator Biden has talked a lot about the training of Iraqi security forces. I think that's probably in many ways our most important task. The task of the Iraqis is to find a way forward from their elections for political reconciliation. And we can, of course, try to help in that and do what we can to support that effort. But that's largely an Iraqi task. I think for us to try and improve Iraq's capability to defend itself. And I will just say, I have talked with people from the field and I recently talked with General Casey, who was back here, and others. I think they think that they are doing relatively well on starting to get the numbers up for Iraqi security forces, but that they do need to address these questions of leadership, which then lead to problems with desertion and the like; and that they need to do something that is actually quite promising, which is to work with the Iraqis who have some ideas themselves about how some of the security forces might be restructured.

RICE: So we will focus very heavily I think on trying to give the Iraqis or help them get more capacity on the security side. It is also the case that, of course, we will continue to seek the terrorists, and to help them fight the war on terrorism that they are now fully engaged in, to try and continue to help in building capacity in the Iraqi ministries. Because ultimately, the coalition is there because the Iraqis lack certain capacities. And if we focus in this next period after the election on helping them to build those capacities beyond where they are now, I think we will have done a major part toward the day when less coalition help is needed across the board.

HAGEL: May I just ask a follow-up to that? How will that change from what we have been doing? Can you give this committee some specifics? Of what you've stated, you framed clearly. I think we understand what you've said. I support what you're talking about, your objective. But how will that change from what we have been doing? Fewer troops? Less troops? More NATO troops? Or what will envision the change in what you're anticipating our role to be and connect that to an exit strategy?

RICE: Well, our role is directly proportional, I think, Senator, to how capability the Iraqis are. And so, as Iraqis become more capable, then I would I assume certainly our help will be needed less. I am really reluctant to try to put a timetable on that, because I think the goal is to get the mission accomplished and that means that the Iraqis have to be capable of some things before we lessen our own responsibility. But we will be working with a newly elected government. And I'm quite sure that they're going to have their own ideas about how we move forward to improve security. The Iraqis will take more and more responsibility for fighting the terrorists, for rooting out the Baathists, and we have to help them get there. If I could just add, Senator, we also, of course, have a major task of continuing on the reconstruction front to employ the resources that were given to the executive branch by the Congress so that we can help the Iraqis with their reconstruction tasks.

RICE: But I see it as a diminution of our responsibility over time as the Iraqis become more capable, so we need to focus on building their capabilities.

HAGEL: Will that will require a change of policy?

RICE: I don't think it requires a change of policy. We have all had over time an evolution of attitude, which just comes from the fact that as you work with increasingly more representative and legitimate Iraqi governments, they have more say in how this is all done. And I think that that's only appropriate and right. We are no longer in occupation of the country as we were under the Coalition Provisional Authority, and so this has become a very intensive partnership with the Iraqis to get these tasks done and I think that will probably continue to...

HAGEL: Now let me ask you on the basis of troops, if I have read accurately, and you noted this, General Casey's statements regularly. When some of us were over there last month, we met with General Casey as well as other general officers. Will that mean that 150,000 or so American troops we have there today will now be refocused on acceleration of training? Or what does this mean in the way of actually accomplishing what you are talking about?

RICE: Well, we certainly right now are very focused on security for the election. And while that will pass on January 30th, there will continue to be important security tasks to make sure that the initial stages for this new government are secure. But one of the things that the Luck mission is to try and determine is what the path forward is with the Iraqis in terms of security. Are we continuing to train the right security forces? What ought to be the roles and responsibilities of coalition forces in training versus active security? How much can the Iraqis take on some of these active security roles themselves? So, we thought that the time just before the election and leading to after the election was an ideal time to have this mission. And I think we will get some answers from that mission.

HAGEL: Thank you. Let me move to the Israeli-Palestinian issue. What do you and the president envision as a new role or a different role for the United States now as a result of the Palestinian elections? For example, are you contemplating a special envoy? How are we going to engage more deeply and widely than we have in the past? Or are we going to? Give this committee some sense of where we're going in the next year.

RICE: We all believe, and most especially the president, that we have a really good opportunity here, given the election of a new Palestinian leader, and given the Israeli Gaza withdrawal plan, which is linked to the West Bank through the four settlements that would be dismantled in the West Bank as well. We think this is a moment of opportunity. That means that there is going to have to be engagement at all levels. I expect, myself, to spend an enormous amount of effort on this activity. I can't substitute for the parties and their willingness to take on their responsibilities, and that's the message that we have to keep sending. We've had to note that how hard this road is going to be was in evidence during this last few days. And we've pressed very hard for the Palestinians to take on terrorism because we're not going to get very far if there is terrorism from the Palestinian militants. But you can be sure that we will have very active engagement because we think this is a time of responsibility. I think I need to, for the time being, demure on the question of a special envoy. No one has objections in principle to the idea of an envoy, but it is a question of whether that is appropriate to a particular point in time in the process that we're involved in.

HAGEL: But as secretary of state, you intend to be very engaged with considerable activity as we go forward?

RICE: Absolutely. Because, Senator, I think we can afford to miss this opportunity if the parties themselves are willing to really take advantage of the opportunity.

HAGEL: I probably have time for one question. That's going to be on more -- one more question -- immigration. You noted in your prepared delivery -- and I thought it was excellent; you covered a number of the areas that we all have interest in and we'll wanting to deeper in them. But you talked about exchange programs. You hit on that, I thought, very important point: immigration reform. Is the president going to push for immigration reform?

RICE: As you know, the president has been concerned about and a proponent of immigration reform going back to the time that he was governor of Texas, when he faced these issues as governor. He has a proposal on the table for a temporary worker program that would serve the purposes in a humanitarian sense, in that it would help to alleviate what is really a humanitarian crisis for us. It would help us economically, because matching willing workers and willing employers is an extremely important thing for our economy when there are jobs that Americans will not take. It's not an amnesty, and the president has been clear about that. But it also has for our security real implications, because if we are not asking our border guards and our border personnel to deal simultaneously with immigration that comes out of economic circumstances and dangerous border infringement that comes out of terrorism, and they have a more regularized way to deal with the former, we think that that will make it easier to deal with some of the terrorism and concerns about bad people coming to do bad things.

HAGEL: I'm going to reintroduce my comprehensive -- I think, the only bipartisan immigration reform last year. I'm going to reintroduce it. I look forward to working with you on this. I don't think there is a more urgent problem America has to deal with today; far more important than Social Security, in my opinion, than this immigration reform issue. So thank you. Mr. Chairman, thank you. LUGAR: Thank you, Senator Hagel? And, Senator Sarbanes?

SARBANES: Mr. Chairman, thank you very much. I want to, first of all, welcome our new colleagues to this committee, Senator Murkowski and Senator Martinez on your side of the aisle, and Senator Obama on our side of the aisle. We're very pleased to have them join the committee. And, Dr. Rice, I want to join all of my colleagues in welcoming you here before the committee today. The post for which you've been nominated is, obviously, an extremely important one, perhaps the premier post in the Cabinet. And in an independent and interconnected world, where events that happen thousands of miles away literally within minutes can affect our own economy or our health or our national security, the secretary of state can make a critical difference in our everyday lives. In my view, a secretary who forges meaningful partnerships to foster peace, reduce global poverty and hunger, promote democratic values and address emerging threats can set our country on a course to greater security and prosperity.

SARBANES: By the same token, I think the secretary who adopts a unilateralist approach in the international environment may miss important opportunities to prevent conflicts and to build alliances. And in that regard I just note that it's not enough to have the ear of the president. I think the secretary of state must also win the ear of the world. I do hope -- and before I turn on my first subject I want to cover -- first, I've watched Senator Lugar work assiduously on this cooperative threat reduction issue. I think he and Senator Nunn provided exemplary leadership and Senator Lugar, assisted by others, Senator Biden and others on this committee, have continued to pursue that issue. And the only counsel I would give you is listen to Senator Lugar on the cooperative threat reduction question. He knows the issue. He's lived with it. He's invested an incredible amount of his own time and effort to try to make it work. And I would hope the administration would, in effect, follow his counsel and guidance on this issue. I know of no one who knows the issue better or whose advice is more measured and more reasoned than that of the chairman. I'd extend the same advice, if I may be so bold as to do so, in terms of hoping you would listen to Senator Biden and Senator Hagel as they have an interchange with you about Iraq. They've both been there now a number of times at some risk to themselves, obviously, as anyone who goes out there well knows. And it seems to me again, that's an instance in which the counsel and advice they've been giving is perceptive. It's measured. It's tough minded and I would very much hope the administration would listen to that. Now, my text, if I can use that term for the question I want to put to you, is this new book by T.R. Reid, a very distinguished journalist, which has just only recently come out, The United States of Europe: The New Superpower and the End of American Supremacy.

SARBANES: And I want to talk some economics with you here this morning. I looked through your statement quickly and other -- and a couple of references to prosperity and to free trade. There's not much in it on economics and I think that's a very important part of the dimensions we have to discuss here. In a review of this book that recently appeared in the New York Times, they said that, you know, small things happen. We're not aware of them, but over time they gather and then they become instrumental. I mean, they really end up having a very significant impact. Let me just quote here. Sometimes major events take place quietly, their import obscured by the hub-bub of more arresting happenings. Only with time is the shift perceptible. And in that regard, I'd like to show you just three charts to set the context. The first is a chart that shows the U.S. trade deficit.

Since Senator Dodd is an important part of our efforts to get a trade surplus, I don't want to close him out of this discussion.

DODD: I've been in your shadow for years.

SARBANES: I mean, it's pretty apparent what's happened here: an incredible deterioration in recent years in the U.S. trade deficit, and it's estimated that we're now running well over $600 billion a year; by far the largest trade deficit in our history.

SARBANES: Now, of course, when you look at the current accounts -- it's a somewhat broader measure, of course, of the situation -- we have the same situation: again, an incredible deterioration in the current account situation and much of it highly accelerated in the last four or five years. And the end consequence of running these large trade deficits and these large current account deficits -- astronomical for us in historical terms -- is to give us this net investment position. Now, these are trillions of dollars over here. The others were billions of dollars. But our net investment position is now -- well, it's now going well -- this is 2003, so we're now well over the $3 trillion in the deterioration of our net investment position. Now, it seems to me this ought to be a matter of very, very real concern. I mean, Chairman Greenspan, testifying before the Congress, said that The rate that we're running these deficits and accumulating external debt is unsustainable. Countries that have gone down this path invariably have run into trouble and so would we. And just a few days ago, the president of the New York Federal Reserve Bank, Timothy Geithner, said in a speech, The size and concentration of external imbalances in the system are at an unprecedented scale: between 5 percent to 6 percent of GDP in the instance of the current account deficit. What's new is that we are significantly more dependent today on the confidence of the rest of the world in U.S. economic policy and the safety and stability of our financial markets. SARBANES: Now, The Economist recently said -- talking about the dollar as the reserve currency and the challenge now to the dollar that's coming from the euro -- says, Never before has the guardian of the world's main reserve currency been its biggest net debtor. And The Financial Times earlier this year, in an editorial entitled Borrowing from the rest of the World, warned, Like Tennessee Williams' ill-fated character, Blanche DuBois, the United States has long been dependent on the kindness of strangers. Foreigners' hitherto insatiable appetite for dollar assets is what has enabled the U.S. to keep running on credit for so long. Like Ms. DuBois' dysfunctional relationships, this one is symbiotic but potentially hazardous. How serious do you regard this situation as being?

RICE: Well, I know, Senator, that the president and his economic team regard it as a serious set of issues that they will be dealing with. The president has talked about the importance of the fundamentals of the American economy, strengthening the American economy, the importance of a strong dollar which continues to be our policy. He's talked about the need for budget discipline, and I think he is working toward a budget that will express that.

SARBANES: Do you consider this a matter for your agenda? After all, it affects American power and the ability to project power. And there's a lot of suggestion now that the economic basis on which we can project power is being substantially eroded.

RICE: Senator, of course, the strength of the American economy is an important issue for American power, and therefore an important issue for the secretary of state. I do think that the help that our diplomacy and our foreign policy can give to a strong American economy comes, for instance, through trade and through the efforts that we make to promote free trade and to promote it on a basis in which the playing field is level. The United States is engaged in, through the person who will become my deputy I hope if you confirm him, Bob Zoellick, a very active trade agenda through the Doha Development Agenda, which will improve growth worldwide, but also will improve the American economy because we are believers in free trade. I think that that is one way that we can help.

SARBANES: But the trade balance has worsened markedly. I mean, something's wrong with the set of policies we're pursuing, it seems to me, if we're going to have the kind of erosion in the trade balance that we have seen, particularly in recent

SARBANES: It's a very negative figure. And, of course, every year that that figure is negative, the amount of debt that we owe overseas and our dependence upon others increases.

RICE: Senator, a number of factors that have contributed to that and I do think that the economic team is aware and trying to deal with those factors in the American economy. Where the State Department and our diplomacy can be supportive is really in two ways: first to promote a trade agenda that levels the playing field, that makes certain that the rules of the trading system are followed. For instance, many of the changes economically are coming as the result of a strong and growing China and China's role in the world economy. The need to make certain that China is, in its growing strength in the economy, playing by the rules of the international economy is enhanced by the work that we did to have China accede to the WTO. We now, of course, have to make certain that China is living up to its obligations on the WTO. So we spend a good deal of time, for instance, trying to get the Chinese to react to intellectual property rights issues. Another way that the State Department can help with this very important agenda is to make certain that the markets of others are as open to us as our markets are to them. And that's an activity that I would expect to be involved in as a part of my diplomacy I've been involved in as national security adviser. If we're not to have deformations (ph) in the way that the international economy works, then people can not be protectionist. Those are some of the ways in which I think the diplomacy can support a strong economic policy. And I agree with you completely that a strong economy is very important to our international standing.

RICE: Well, I know, Senator, that the president and his economic team regard it as a serious set of issues that they will be dealing with. The president has talked about the importance of the fundamentals of the American economy, strengthening the American economy, the importance of a strong dollar which continues to be our policy. He's talked about the need for budget discipline, and I think he is working toward a budget that will express that.

SARBANES: Do you consider this a matter for your agenda? After all, it affects American power and the ability to project power. And there's a lot of suggestion now that the economic basis on which we can project power is being substantially eroded.

RICE: Senator, of course, the strength of the American economy is an important issue for American power, and therefore an important issue for the secretary of state. I do think that the help that our diplomacy and our foreign policy can give to a strong American economy comes, for instance, through trade and through the efforts that we make to promote free trade and to promote it on a basis in which the playing field is level. The United States is engaged in, through the person who will become my deputy I hope if you confirm him, Bob Zoellick, a very active trade agenda through the Doha Development Agenda, which will improve growth worldwide, but also will improve the American economy because we are believers in free trade. I think that that is one way that we can help.

SARBANES: But the trade balance has worsened markedly. I mean, something's wrong with the set of policies we're pursuing, it seems to me, if we're going to have the kind of erosion in the trade balance that we have seen, particularly in recent years.

SARBANES: It's a very negative figure. And, of course, every year that that figure is negative, the amount of debt that we owe overseas and our dependence upon others increases.

RICE: Senator, a number of factors that have contributed to that and I do think that the economic team is aware and trying to deal with those factors in the American economy. Where the State Department and our diplomacy can be supportive is really in two ways: first to promote a trade agenda that levels the playing field, that makes certain that the rules of the trading system are followed. For instance, many of the changes economically are coming as the result of a strong and growing China and China's role in the world economy. The need to make certain that China is, in its growing strength in the economy, playing by the rules of the international economy is enhanced by the work that we did to have China accede to the WTO. We now, of course, have to make certain that China is living up to its obligations on the WTO. So we spend a good deal of time, for instance, trying to get the Chinese to react to intellectual property rights issues. Another way that the State Department can help with this very important agenda is to make certain that the markets of others are as open to us as our markets are to them. And that's an activity that I would expect to be involved in as a part of my diplomacy I've been involved in as national security adviser. If we're not to have deformations (ph) in the way that the international economy works, then people can not be protectionist. Those are some of the ways in which I think the diplomacy can support a strong economic policy. And I agree with you completely that a strong economy is very important to our international standing.

RICE: I would note that we are still the fastest growing of the major developed countries of the world, so we have considerable economic strength.

SARBANES?: Our growth is growing in a way, though, that we're becoming increasingly mortgaged to others. China and Japan now are holding tremendous dollar reserves which then, of course, play into the trade relationship much to their advantage.

So that it works in a way we become more dependent, they're able to skew the trade arrangement to their advantage, which makes us more dependent and the vicious circle continues in a downward spiral.

But I see my time has expired. I may revisit this in another round.

Thank you.

LUGAR: Thank you, Senator Sarbanes.

Senator Chafee?

CHAFEE: Thank you, Mr. Chairman.

Congratulations and welcome, Dr. Rice.

RICE: Thank you.

CHAFEE: Senator Feinstein mentioned how proud your parents, John and Angelena, must be and -- here in spirit would be, rather. And out of curiosity, did your father know Martin Luther King at all?

RICE: He did and he was a minister in Birmingham and they all did. And everyone admired him. We also had a number of friends who worked with him, like Reverend Fred Shuttlesworth, who was a giant in our community.

CHAFEE: Well, Dr. King's one of my heroes.

RICE: Mine too.

CHAFEE: Senator Hagel mentioned the distinguished career of your predecessor, Secretary Powell and I'm curious as to how you might look at the improvements as we go forward or how you -- what would you see as you come in now as the new secretary of state. What improvements might be occurring in the State Department?

RICE: Thank you, Senator.

The goal here is to build on the considerable achievements of Secretary Powell and Deputy Secretary Armitage. I think that it is well recognized that they did a great deal to improve the fundamentals in the State Department.

RICE: And so the efforts that have been made to build new security into the facilities and to revamp our most vulnerable posts will be a very high priority for me. The first meetings that I had were with the undersecretary for management, and I would expect to make that a large part of the agenda.

CHAFEE: Do you see any significant changes ahead?

RICE: Well, there's always need for change because, of course, conditions are different. And I think we have to continually review and update the skills of our diplomatic corps. We're asking our diplomatic corps to do more actively in, for instance, helping transform whole societies, getting in and helping the Iraqis with their currency exchange or getting in and helping the Nigerians root out corruption. These are skills that are of a more active transformational diplomacy and one that probably wasn't really foreseen in the earlier stages of building Foreign Service skills. So I look forward to working with those people, but also with members of this committee who I know have some interest in skills development, to see if we can push that envelope.

CHAFEE: Well, thank you. As chairman of the Middle East Subcommittee on the Foreign Relations Committee, I'm interested in your comments on the Israeli- Palestinian issue. And in your opening statement you talked about, America seeks justice and dignity in a viable independent democratic state for the Palestinian people. Can you expand at all on viable ? What do you see as a viable Palestinian state?

RICE: Well, there are several ways to think about viability. One is that it has to have territory that makes it viable. It cannot be territory that is so broken up that it can't function as a state, and I think that that's now well understood. Has to have economic viability. And there it probably needs to have economic viability in relationship to other states around it: to Jordan, to Israel and to others. And viability also comes from democratic institutions. One of the things that I think we didn't pay enough attention to in the past is the development of democratic institutions in the Palestinian territories.

RICE: At a time when we are promoting the progress of democracy in the Middle East, the Palestinians are a people who should be able to adopt those habits and take them up. They are a talented, in many ways educated population, a population that has tried, even under very limited circumstances, to have some at least pluralism in their politics. And so viability, I think, also has a political or democracy dimension that we need to pay attention to.

CHAFEE: I'm sure that many Palestinian moderates would like to hear more specifics on what might constitute a viable Palestinian state. Are we looking at something, perhaps, along the Geneva Accord lines?

RICE: Well, as the president said when he met with Prime Minister Sharon back in, I think, May, we have to recognize that the parties are going to determine their borders; that it is not for us to prejudge what those borders might be.

There has been a lot of negotiation. I think they will need to look at what has been looked at before. But the June 24th, 2002, speech really focused on some fundamentals to get us to the place that discussions of final status would be successful.

And those fundamentals now seem to be starting to come into place. The new Palestinian leadership -- I think a Palestinian leadership that, at least in word, is devoted to fighting terror. It needs to be in in deed as devoted to fighting terror. An international community that whenever I talk to people, is quite devoted to and taken with the idea of helping the Palestinians to build those democratic institutions, to reconstruct economically in areas which Israel leaves.

We have in Israel a new coalition that was built around the idea that Israel will disengage from the Gaza and from the four settlements in the West Bank.

And we now really -- I'd just like to mention the neighbors. The Arab states have responsibilities here, too. And they can't incite violence against Israel on the one hand and call for peace and a two- state solution on the other. And so, we've got work to do with them.

But as the fundamentals are beginning to come into place, everyone can be certain that it is a very high priority to seize this moment to try and push toward the day when we have interlocutors who can work on the final status issues.

CHAFEE: In the news today some are calling upon the new Palestinian leadership to be more proactive against some of the violence which is occurring within their own ranks. The previous Palestinian leadership did not intend to do that under Yasser Arafat; the danger being that once Palestinians take up arms amongst themselves, you could have Palestinian civil war.

How do you look -- how do we go forward with that dilemma?

RICE: Well, I do believe that Abu Mazen made a good start in what he said, which is that there really is no route to a Palestinian state through violence. And that means that he is appealing, to my mind correctly, to those Palestinians who realize that the use of terror techniques, the use of violence is not going to result in the fulfillment of their national aspirations.

Having said that, the people who insist on violence and insist on terrorism have got to be isolated and ultimately disarmed. The Palestinians are fond of saying there has to be one authority, one gun.

We can help with that, because the restructuring of the Palestinian security forces is something that we have helped with in the past and should now with other neighbors, like Egypt or Jordan, be helping with in the future.

The construction of unified Palestinian security forces that are accountable to the Palestinian leadership and are not, in effect, armed gangs is probably one of our most important tasks. So I don't see it as a matter of civil war, but rather as a matter of the isolation of those who are unwilling to pursue the aspirations of the Palestinian people through peaceful means.

DODD: Let me also join Senator Hagel in -- this is a transformational time, as you talked about, for American foreign policy. We'd be remiss in this committee if we did not express our deep sense of gratitude to Colin Powell and Richard Armitage and the staff they put together. He's been a tremendous public servant and whatever else life holds for him, he deserves our commendation for the job he's done for our nation. So we thank him for that, as well. And I want to thank my colleagues for raising some of the issues they have. Obviously, Iraq is a major foreign policy question and rightfully, would dominate a lot of our conversation here today. As Senator Chafee mentioned, Senator Chafee and Senator Nelson and I just completed an eight-day trip to Latin America visiting Venezuela, Paraguay, Argentina, Peru and Ecuador coming back. And I want to focus some attention on that in this first round. There are other questions I have. There are roughly 600 million people in this hemisphere, excluding ourselves, who look to the United States for leadership. Two of our most important trading partners, Mexico and Canada, of course, in this hemisphere. The issues that Senator Sarbanes has raised about economic policy are absolutely on target and one that we pay -- should be paying much more attention to in my view. Because as we found over the last eight days traveling in South America, these issues are the ones they care the most about in many ways. And they're the ones the absence (ph) of our attention to these questions over the last number of years, for reasons they understand. Certainly the 9/11 diverted our attention elsewhere, the events of the Middle East have certainly dominated our attention. But I want you to know at least my observations over the last week or so is we're in trouble in this hemisphere, Dr. Rice. We're in deep trouble in this hemisphere. Others may know other parts of the world well and certainly there've been great changes in China and India, Russia, the Middle East, certainly in Africa, but we need to get back on track in this hemisphere. And I'm going to ask you a broader question about what direction we're going to take here. Let me tell you just briefly some of the things that we found over the last seven or eight days. And my colleagues, Senator Nelson, Senator Chafee can add or detract from these conclusions. We found these governments facing major demands from their citizens with inadequate resources to meet those demands. In fact, the budget indications coming out of the administration are significantly going to provide significantly less resources in terms of aid to this part of the world, and has been the case in previous years. You mentioned the important years of 1947, '48, '49 and thereafter in terms of our efforts to grapple with the great challenge of the second half of the 20th century. Certainly one of the great speeches given to set the tone for that was Harry Truman's only inaugural address, in which point four, which set up the U.S. aid missions that made a huge difference in the 1950s and '60s. The alliance for progress that Senator Kennedy initiated, these ideas had strong economic components to them as we grappled with the great challenges facing choices in those days between what the Soviet Union offered and what we offered.

DODD: So we found great demands on the part of the citizens of these countries. We found government institutions that had been weakened and co- opted by unsolved internal political disputes. We found government officials interested in concluding bilateral free trade agreements, not only because it would improve access to our markets, but because they know it can be a means of institutionalizing reforms that'll mean more jobs and incomes to their citizens. We found government leaders concerned about the decline in U.S. resources available to assist them (inaudible) fight against narcoterrorists, terrorists ready to take advantage of the lawlessness created by the systemic corruption that exists generally throughout the region, and especially in the tri-border area of Paraguay and Brazil and Argentina where Muslim organizations are reportedly raising and laundering monies to support their international ambitions. We found government leaders frustrated by the suspension of U.S. military assistance and training to their military services because of our fixation with the International Criminal Court (inaudible) American Servicemen's Protection Act which links continued assistance in these areas (inaudible) signing of the so-called Article 98 agreement, the United States. And I heard this from American military personnel, Dr. Rice, not from foreigners but our own personnel worried that we're placing so much emphasis on that point, we're stopping the training so necessary to build the relationships in this century to people in that part of the world. We found government leaders desirous of positive relationships with the United States and disappointed that our government hasn't made relations with them a higher national priority. Even President Chavez expressed an interest in improved relations with the United States, putting aside the obvious issue that's going on over the last several days, it's going to be critically important that we try and do something new with Venezuela than the continued policies of isolation, in my view. So I'd like to get from you, if I could, as these opening comments: Are we going to have a new direction here in this critical part of the world? Senator Hagel mentioned immigration. No other issue. Vicente Fox, the one issue that he was hoping he'd get some resolution from over the last four years was on immigration, and nothing was done.

DODD: One speech that I'm aware of, no legislation introduced, no effort up here to make a difference -- it's a crippling economic problem here at home. And it's sort of -- continuing contention between one of our very, very important allies around the globe and the closest neighbor to us with some of the most important issues. What are we going to do about that, and are we going to change some direction here, or are we going to stick with the policies of the past that are creating some serious, serious problems in this part of the world?

RICE: Thank you, Senator Dodd, and thank you also for the time that you did spend -- and I look forward to talking to you more about the future of Latin America. The Western Hemisphere is obviously extremely critical to our agenda. Let me start with Mexico and Canada, because the relationship with our closes neighbors -- a good policy begins with the relationship with your closest neighbors. I do think we've made a lot of progress with Mexico and Canada on a number of issues, for instance, on the smart border initiative which has helped us to solidify and codify our homeland security concerns. It was something that we needed to do in the face of 9/11 and the terrorist threats and the relationships that our homeland security secretaries have been able to forge, so that we get to a position where the borders are allowing in commerce but not allowing in those who might harm us. And that was very important, because I remember in the very first days after September 11th that some of our efforts to secure the border were actually very quickly going to prevent commerce. And so we needed to find the right balance. And we've made a lot of progress in terms of the use of technology and those smart border initiatives will continue. We also, with our Mexican and Canadian counterparts, are talking a lot about what the next steps are in our NAFTA relationship. Because as -- and Senator Sarbanes talked about some of the economic difficulties the United States may face, or some of the difficulties we may face if we should have problems in our economy. We, also, face a lot of competition around the world. And as we have watched Europe and the European Union integrate its economic policies, I think it has raised questions about what the future can look like for NAFTA and for the NAFTA states to extend those relationships.

RICE: And we've had discussions about what the next phases are. And I think that is a way forward. And I would look forward to having extensive discussions about how we improve the competitiveness of Northern (ph) America as we face competition from the rest of the world. We also have been very active in Central America. And I would agree with you, there are very grave challenges now to some of these regimes. And we don't want to repeat what has tended to be a cycle in Latin America of democratic developmen