A Conversation with Andrew J. Shapiro

Friday, April 12, 2013

Assistant Secretary Shapiro discusses the integration of diplomacy and defense in meeting national security challenges.

CELINA REALUYO: Good morning, everyone, and welcome to the Council on Foreign Relations. Just as a reminder, today's meeting is on the record and it's actually being covered by the press, so greetings to everyone who's watching out there as well.

My name is Celina Realuyo. I'm a professor of national security at the Perry Center at the National Defense University, and today I will be serving as your presider.

We have the great honor and privilege of having Assistant Secretary Andrew Shapiro of the Political-Military Affairs Bureau here with us today, who will be discussing his tenure. I understand you're the longest serving politically appointed assistant secretary for pol-mil in the history of the State Department.

And if you think about it, you've been with us in a very auspicious time, because it's actually unprecedented the cooperation between the State Department and the Defense Department, kind of inaugurated between -- a wonderful photo of Secretary Gates and Secretary Clinton talking about the defense and diplomacy alliance.

So as you kind of look back at your four years, what would you think of as your two or three top highlights?

ANDREW SHAPIRO: Well, I think you hit it right on the head that certainly one of the most significant accomplishments has been restoring the balance between the State Department and Department of Defense.

After 9/11, we were at war. And a lot of the traditional missions and authorities of the State Department migrated to the Department of Defense. And when the Obama administration came into office, it made it as a priority to rebalance that relationship. And it was -- the mandate that Secretary Clinton gave me to -- when I took the job as assistant secretary of state for political-military affairs. And I think that we made a lot of progress in that respect, and that the relationship between the State Department and the Defense Department has never been better.

The Bureau of Political-Military Affairs is often referred to as the principal link between the State Department and the Department of Defense. And so, at its core, our mission is to make sure that that relationship goes smoothly, as well as ensuring that what the Defense Department is doing is consistent in support of U.S. foreign policy.

And so we've made progress in increasing personnel exchanges, in rebalancing the authorities, and in a variety of different interactions that the relationship is more intimate and closer than ever before. And it's not just with, you know, the OSD, Office of the Secretary of Defense policy, but my bureau deals with all different organizations with DOD -- the Defense Security Cooperation Agency, the Defense Technology Security Agency, and all these agencies take actions which can have impact on U.S. foreign policy. And we really rebuilt the capacity of the Political-Military Affairs Bureau to have the technical expertise to interact with DOD on its own terms. And so it's one of the things that I think has been a real accomplishment.

Another issue that we've had to focus on has been the geopolitical changes that have really occurred during the last four years so that means, for example, we've had tremendous changes in the Middle East, the so-called Arab spring. And that's led to enormously complicated issues, from challenges in Libya, Egypt, the Gulf, Yemen, Syria now, and so -- and that has had implications for our security assistance policy as well as the way that the Department of Defense interacts with those countries as well, and as the Political-Military Affairs Bureau is designed to make sure that DOD and State are well synched.

It has also impacted our analysis and ability to think about Israel and its QME, its qualitative military edge. Under law, the United States has to consider every sale to the region for its potential impact on Israel's qualitative military edge. And in a time of dramatic change in the Middle East, it means that we've had to refine our analysis and think about how these dramatic changes will impact Israel's qualitative military edge. And in part to respond to that, we have developed new structures of communication and coordination with the Israelis so that we understand how they see the world, and they understand how we see the developing issues in the region, and are able to take that into account when we make these types of decisions.

The other big geopolitical issue is the rebalance to Asia. And there, it's an area where the bureau has really played more of a role on Asian issues than any time in its history.

When the Political-Military Affairs Bureau was created, it was during the Cold War. So a lot of its mission dealt with Russia. I remember talking to my predecessors, you know, from that era, and they spent a lot of time negotiating arms control agreements with the Russians or thinking about how nuclear proliferation could impact our policy in Europe and elsewhere.

After the Cold War, the bureau's focus shifted to the Middle East. You know, obviously, Iraq invaded Kuwait in 1990, and the bureau was a part of developing the agreements that enabled us to have a basis from which to operate from in response to that crisis. And then, obviously, in the post-9/11 era, that's been a primary focus.

But now, we're starting to play much more of a role in Asia. You know, obviously, my -- one of the primary areas I travel to is to Asia -- I mean, it's the Middle East, but the second -- the area I travel to the second most amount is Asia. And it's -- when I took the job, I didn't anticipate that. But it's just the necessity of going to Asia, building these relationships, interacting with these partners that made it a priority in this job.

And the final point -- I'll add a fourth -- is what we've done on export control reform. And early in my tenure, we were finally able to get the Defense Trade Cooperation Treaties passed with the United Kingdom and Australia, and those are coming into force and we're beginning to see those being used.

But the broader export control effort, which is a presidential initiative, is just now going to be -- we're going to be moving items from the State Department control list to the Commerce Department control list, and that's going to happen next week for the first -- the first two categories. And that's a really significant accomplishment. We're going to go through all 19 categories of the United States munitions list and scrub them so that the things that are maintained on the State Department's munitions list are the things we really need to protect and that deserve the highest level of protection. And those that still need to be controlled, but don't need that as high level of protection, move over to the commerce control list. And the categories that we're looking at to move next week are aircraft and engines.

And we think that thousands of licenses, just from those two categories, will be moving from the State Department list to the commerce control list, and we think that when we're done with this process over the next year, that thousands more will move as well. And that's going to have a real impact on our economy at a time when competition is even more fierce and at a time when our manufacturing base could really use a boost.

REALUYO: Great. Well, that's a great way to start out for our conversation. Speaking of the pivot to Asia, I think it's quite auspicious that today, Secretary Kerry is actually in Seoul. And your -- one of these things were -- nobody actually anticipated the timing and particularly the tensions that are rising on the Korean Peninsula.

You've been spending a lot of time traveling to Asia. And I guess the question with your insider's view is how would you actually describe our partnerships with South Korea, Japan, and China, particularly as we are reaching these very interesting dates, anniversaries, that are particularly of interest to the North Koreans, which, for some reason, we're all looking at -- could be some triggers in terms of them trying to show their strength from Pyongyang.

SHAPIRO: Well, as you pointed out, Secretary Kerry is in the region. He just had a press conference in Seoul. And it's important to remember that we're at a unique time in Northeast Asia in that the leaders of Japan, South Korea, North Korea and China are all relatively new. So this is a very timely visit by Secretary Kerry to establish those relationships, to consult on a tense time on the Korean Peninsula, and to make clear our resolve in standing by our partners, as well as communicating with the Chinese about the best approach vis-a-vis North Korea.

And it's important to recognize that we've been through these cycles with North Korea before. And we need to continue to show our partners that we will stand by them and continue to make the case that we need -- that North Korea will not benefit from this type of behavior.

I went to Korea a couple of times in this job. Once, I went with Secretary Clinton and Secretary Gates for what we call a two-plus-two meeting, which is, you know, the defense secretary and secretary of state meet with their counterparts, the foreign minister and the defense minister in South Korea.

It was also during a time of some tension on the Korean Peninsula. And I remember visiting the DMZ, which is literally -- you go to the DMZ and you're stepping back in time. And we went to those little cabins they had that literally straddle the DMZ in half. And when Secretary Gates and Secretary Clinton went into one of those cabins, there's a famous picture of a North Korean soldier looking in, peering in as they were getting briefed on the situation. And it really gives you a sense, when you go up there, that this is a very unique place in that is still stuck in the Cold War. And so we need to continue to demonstrate that we will stand by our partners.

The second time that I went, I was honored and privileged to serve on the presidential delegation to the celebration of the 60th anniversary of the liberation of Seoul. And I went with Veterans Secretary Shinseki and Army Secretary McHugh. And what the Korean government did is they flew in, on their own budget, Korean War veterans who -- to participate in the celebration. Many -- all of them are in their later years in their life. And they sat them at every table, at every banquet, every dinner. So every -- you know, you'd be sitting at a table with, you know, defense minister of Korea and several Korean War veterans.

And what they -- many of them had not been back to Seoul since the Korean War. And they -- many of them were taken aback with emotion when they saw how Seoul had changed since -- from what they remembered it. And, when you think about it, this is what they were fighting for, you know, to have -- give the Korean people, South Korean people an opportunity to have freedom and to enjoy a -- you know, productive lives.

And so it's -- the history of our involvement in Korea is one that often can be forgotten, but we've lost a lot of blood and treasure on behalf of protecting freedom in South Korea. And we need to -- you know, continue to keep our commitment to the South Korean government and people, and that's what Secretary Kerry is doing in his trip now, is demonstrating our resolve and commitment to South Korea and also sending a strong signal that we will stand by our partners.

REALUYO: So over the past actually 12 hours, if not 24 hours, you've had this -- the release of these reports about -- from DIA alluding to the fact that Koreans -- the North Koreans have the capability of perhaps delivering. The question is if they could physically deliver it in terms of reliability, a nuclear weapon via missile, as well as -- yesterday, I understand, at the Carnegie Endowment, one of the heads of the leaders in the parliament of South Korea actually talked about maybe it's time for South Korea to think about also becoming a nuclear arms owner. And that's obviously created an interesting backdrop for Secretary Kerry's meeting while he's in Seoul. And obviously, that has also fueled a lot of rhetoric going there. And obviously, you're involved. And if that would ever be at the case of going down to -- your colleagues at PM would be taking a look at -- even if there's a possibility of discussions of that going down the road.

SHAPIRO: Well, I'll just make a couple of points. First, you know, obviously, DNI Director Clapper had some comments about the DIA report, and, you know, that it did not necessarily represent the consensus for the intelligence community. And I think, you know, I'll let his comments and the comments from the hearing yesterday speak for themselves.

I will -- it does remind me. Eight years ago, I was Senator Clinton's senior defense foreign policy adviser when she was on the Armed Services Committee. And there was a similar interaction that she had with the director of CIA that had a similar public response when she asked a question about the ability of the North Koreans to put a warhead on a missile. And so, you know, the more things change, the more they stay the same. This was an issue eight years ago that we were concerned about. And it's one that we're still concerned about, and it's one, obviously, that our intelligence community is considering and thinking about.

In terms of the, you know, nuclear issue related to South Korea, it would not be something that I would directly work on my -- one of my colleagues, Tom Countryman, is our assistant secretary for nonproliferation, former principal deputy at the Political-Military Affairs Bureau. And so I think that -- you know, I don't think we view that as a formal statement of South Korean policy, and as such, you know, I don't think that it's appropriate for me to respond to that comment, but I imagine that Tom's following it very closely.

REALUYO: Sure. So since you've covered the pivot to Asia, why don't we pivot actually to the Middle East and take a look at Egypt. As you know, Egypt is the second largest beneficiary of U.S. aid both in military and economic assistance. But under the scrutiny of the Morsi government and questions about his interpretation of democratic principles, there are a lot of critiques about whether now we should be thinking about rebalancing. It's predominantly military assistance that we have historically giving the government of Egypt throughout the years -- if there should be actually a rebalancing, to use your words, of more economic assistance. And then, more importantly, the demands that perhaps would be tied to the respect for human rights and democracy, and, particularly, religious freedoms that we've been observing in Egypt. And I believe you actually have also traveled to that part of the world quite a bit.

SHAPIRO: And I was in Egypt, you know, a couple of years ago, talking about these issues with the Egyptian government. And I think that it's important to recognize that we do still have very strong national interests in our relationship with Egypt. We have an interest in ensuring that they abide by the Camp David peace accords. We have interests in the free flow of trade through the Suez Canal. We have interests in working with -- in counterterrorism. We have interests in preventing weapons smuggling. So there are a number of issues where it's important to be able to work with the Egyptian government towards addressing these -- towards addressing our own interests.

So, you know, our security assistance to Egypt is not a reward that we give. It is in furtherance of our own national security interests. So the analysis that we put in is: Does this continue to serve our national security interests? And in our view, at this point, it does.

And so we are seeing progress from the Egyptians in, for example, addressing the border issues in Sinai and so they've taken steps to prevent the smuggling into Gaza. We want to work with them to help them develop that capacity and use your security assistance to further their ability to prevent smuggling. We want to continue to -- the military in Egypt is an important player and we want to continue to have a relationship that enables us to communicate and discuss sensitive issues as they arise.

We've been very clear to the Egyptians that we expect that they will use our assistance properly and we have not seen any indication that it has been misused. And we continue to press them on issues related to human rights, freedom for women, press freedom. And where they don't meet internationally recognized standards, we address it with them. And so this is something that we will continue to look at very closely.

But at this particular time, we believe that our security assistance is still furthering our interest. And we will proceed going forward with an analysis that says, does our security assistance serve our interests, and if it does, we will continue, but we will continue to have a conversation with them on how to ensure that it serves our mutual security interests.

REALUYO: So, in a similar vein, there's a lot of scrutiny as well regarding our assistance to Pakistan, where there's also a lot of questions as to how willing, and more importantly, how able a partner they are. Some people say, what countries keep you up at night? That seems to always be one of the countries that several national security thinkers are always thinking about.

Have you actually spent time on Pakistan? More importantly, are we rethinking the idea of conditionality when it comes to the carrots and sticks, particularly military assistance?

SHAPIRO: Well, as we all know, our relationship with Pakistan went through some challenges over the last couple of years. We had, you know, the Osama bin Laden raid. We had the border incident where Pakistani soldiers were killed. And so we went through a period, a difficult period, where there was not a lot of assistance flowing, and our communication was not great. We are now, I think, on a track where the communication has started to occur again and we're making progress.

But we have to be realistic in our assumptions and expectations. We can expect the Pakistanis to act when it is in their interest. And now, they have had a number of incidents and attacks by extremists that directly impact their interests and also impact our interests. So it makes sense for us to work with them, where we have these mutual interests, to provide them with assistance that will go after the bad guys. And so we will continue to have these conversations with them about the best way to use this assistance.

Early on in my tenure, there was a bit of a debate over who should manage security assistance in our own government with Pakistan. Should it be a Department of Defense issue, since it was directly related to our efforts in Afghanistan, or should it be the State Department? And, ultimately, the State Department -- it transitioned to the State Department, the Pakistan Counterinsurgency Capability Fund, PCCF.

And I think what we demonstrated is that one of the shibboleths that the State Department couldn't manage such a fund, which was not like a typical FMF account, which is Foreign Military Financing account, which is designed for longer term capacity building, and this fund was designed to help Pakistan immediately in their fight against terrorists.

And what I think we demonstrated is that that shibboleth was just that, that the State Department had the technical expertise and ability to manage those types of security systems funds, which gets back to what we were talking about earlier, which is the rebalance between the State Department and the Department of Defense. But we have seen some really promising signs in our dialogue with Pakistan that we think make it worthwhile to continue our security assistance to Pakistan.

REALUYO: So since your bureau actually works hand in hand with the Department of Defense -- every day in this town we're talking about sequestration, and particularly, the effects on the defense programs that we have, particularly in the international arena. Just want to get your view as to how it's actually affecting a lot of the things that you're doing on the ground and perhaps curtailing some of the aspirations that you had during your tenure as assistant secretary for PM.

SHAPIRO: Well, it hasn't fully kicked in yet and so we're planning for it. Obviously, it will mean that our security assistance accounts will have an across-the-board cut of 5 percent. And that means foreign military financing to some really important, you know, partners will see a cut. And that at a time when we're trying to build partnerships overseas, and at a time when we're saying we would like our partners to do more so we don't have to do as much. It seems counterproductive to across-the-board cut our security assistance. It doesn't seem in line with our interests.

More practically, my bureau, for example, funds humanitarian demining programs around the world. Those will be cut. And in terms of U.S. industry, we expect that this -- we rely on expertise from the Department of Defense when we review licenses for export. They have technical experts come, review a license and tell us if it will impact, you know, technology security concerns. If the Department of Defense has to furlough civil servants, that will mean that we will not get an answer as quickly from the Department of Defense when we review a license. So that means that license processing times will increase. And again, at a time when we're trying to compete for contracts overseas and we're trying to preserve our own industrial base, it seems that it's not in our interest for an across-the-board cut to lead to furloughs, which will mean it will take longer for licenses to be processed.

So while there's been a lot of attention focused on the impact of sequestration on the Department of Defense, it impacts just more than the Department of Defense and it will really have, in my view, an impact on our national security and foreign policy when sequestration kicks in fully.

REALUYO: So you're just about to finish your tenure as assistant secretary. Just wondering if there's one thing that you wish you had accomplished, or, more importantly, what you would impress upon your successor. Now, you've seen this whole "who's home at State," the Josh Rogin -- in terms of when that successor is named and perhaps confirmed. What do you think that you would want to impart that you've been working that you did not have the time to achieve?

SHAPIRO: Well, I mean, I think it's not a matter -- there are certain things that are happening that by -- my successor will by necessity have to focus on. Syria, for example, is an issue that will demand a lot of attention, planning for the future. Working with DOD, my bureau handles conventional weapons proliferation. That's a serious issue.

You know, one of the things that I wasn't quite able to get across the finish line but I hope that will happen soon after I depart is that we've been reviewing our conventional arms transfer policy, which is the policy which we use to determine whether we're going to sell a particular weapon system to a particular country. And it has not been updated in over 17 years.

And so it was written right after the end of the Cold War. There's still a lot of references, you know, to Cold War era terminology. And so it was time, particularly given all the changes that have occurred, time -- it was time to take a look. So we've been reviewing it. And now, we've just had the passage of the Arms Trade Treaty so it's -- which means we also need to take a look at it to make sure that our arms transfer, our conventional arms transfer policy is consistent with the Arms Trade Treaty, which we think it will be.

And I think that this will be something that will update a policy that is at the core of our political military policy, which is: What type of assistance are we willing to provide to our partners? And where do we draw the line in terms of the type of assistance that we're willing to provide? How do you take into account nonproliferation, human rights, developing a partner? How do you balance all those? And so we've started that process under my tenure. And I'm hoping that soon after I depart, it will get across the finish line.

REALUYO: Fantastic. Well, let's now turn to the audience for questions and answers. If you actually wait for the microphone and speak clearly into the microphone, state your name and your affiliation. And do finish your question with a question mark as opposed to exposition. Andrew, up here in the front.

QUESTIONER: Thank you very much, Andrew. I think you ought to be congratulated for your four year tenure.

REALUYO: And your affiliation?

QUESTIONER: Global Insight. Sorry. Early on in the administration, there was a great deal of talk and policies, I guess, towards bringing State and DOD together, more united in terms of approaches. And I recall very well Secretary Gates welcomed that. And of course, it was a major initiative on the part of Secretary Clinton. I'm sure you were at the center of it, the quadrennial review, and so on. To my ears, that all sounded very good.

The last two years, let's put it that way, it's come out that DOD has been increasingly active in what I would call some foreign policy areas. In particular, I'm thinking of special forces, which, if you read the recent testimony of the commander of special forces, you really see a global approach to special forces and with -- well, somewhat independent, let's put it that way, of very close State guidance on what special forces do.

Secondly, the CIA, it turns out, has been very active in Pakistan and elsewhere, making decisions with both the military component, for sure, beyond the trigger, but also some foreign policy components. So that puts into question, I put it that way, the whole emphasis on integration of state, DOD or foreign policy defense, and raises the question of, now, where is the engine in making the foreign policy decisions now and what is the direction compared to perhaps the direction at the beginning of the administration?

SHAPIRO: Well, thank you for that question. And I know there's been a lot of interest in the press over what our special operations forces are doing and what their future will be.

I will say one way in which we have responded to the global footprint of special operators that exists is through providing political advisers to the Special Operations Command's commanders, to make sure that we're well synched. And, you know, we have really moved positions around. And there's been a demand signal from special operations commands, you know, not just the SOCOM, which is Admiral McRaven's organization, or the Joint Special Operations Command, but some of the subordinate commands in the -- from the combatant commands which handle special operations.

We are providing senior State Department foreign service officers for the first time to ensure that we're well synched. And I give Admiral McRaven a lot of credit for understanding that there is this anxiety. And, you know, one of the first meetings that I joined Secretary Kerry for was being with Admiral McRaven to, you know, keep the lines of communication going. And he's, you know, been assiduous about, you know, making sure that he touches base with other senior State Department officials as well.

There is, you know, a need to ensure that what these special operators are doing is understood by the chief of mission in the country in which they're operating, that there's transparency so that we can make sure that that is well synched. And because, you know, these are new procedures and practices that are being developed, we need to work that through. And so -- and we are working that through.

And so there may be some bumps along the road, but I think that there is a commitment by Admiral McRaven and his organization and Assistant Secretary of Defense Sheehan to have that type of cooperative relationship. We still don't always agree on the authorities issue, on who should be doing what. And that's why there's an interagency process that helps figure out, you know, who is going to do what when it relates to certain types of assistance. For the most part, though, this administration has reaffirmed that it should be the State Department which has the authority over security assistance. And we work closely with our partners across the river at the Pentagon to do it in a way that fits the gaps that they see that need to be filled.


REALUYO: You know, the CIA -- I mean, that's not my bailiwick. And so I will -- you know, I'm hesitant to speak too much about that, but obviously, we have, you now, both a Counterterrorism Office and our Intelligence Research Office who are very closely synched to the intelligence community. And I think that, you know, given the types of things that you're talking about are not often in the public sphere, I'll leave it at that.

REALUYO: Right here in the front. Charlie Stevenson.

QUESTIONER: Charlie Stevenson. I teach at SAIS. I have questions on two smaller issues. First, on POLADs. The question is: What's been accomplished in your time and what still needs to be done to strengthen for POLADs? I ask in part because, when I worked on policy planning at the end of the Clinton administration, we found that few of the POLADs were really integrated with the combatant commanders or their talents made good use of.

The second question is the Global Contingency Security Fund, which was an extraordinary action by Congress actually creating a contingency fund, $300 million, that didn't have all the strings most of the foreign aid programs have. But what I've heard, and maybe it's incorrect information, is the administration really bungled that, didn't -- took a long time to come up with any proposed use. And what they ended up proposing, folks in Congress, actually, this is not the way we wanted the fund to be used, they haven't extended the authority. So what -- how do you explain that reaction to an unusual action by Congress?

SHAPIRO: Thank you for those questions. The POLAD program stands for -- you know, these are foreign policy advisers that we provide to commanders in DOD. And in 2007, there was only 15, to only basically the senior combatant commands, and to the Army -- the chiefs, the Joint Chiefs, Army chief of staff, naval chief of operations, Air Force chief of staff, Marine commandant.

For the first time, we have added a foreign policy adviser to the chairman of the Joint Chiefs of Staff. And we have expanded this program. It's now almost 100 foreign service officers who are now serving in not just the senior most command but also now subordinate commands. So it's not just the ambassador for his final tour, you know, his retirement billet, but we're having more mid-level foreign service officers serving with two- and three-star commands, and getting that experience serving with the military.

And with the withdrawal from Afghanistan -- I mean, withdrawal from Iraq and drawdown in Afghanistan, it's -- we're not going to have as much of an opportunity for foreign service officers to serve side by side with the military. And so the POLAD program will be a key element of preserving the experience of working side by side with the military commanders. And it's -- you know, our goal is to have future political counselors, deputy chiefs of mission, ambassadors who've had that experience working side by side with military commanders.

And one of the things that we found when I came into the job was that we -- it wasn't considered necessarily a desirable job. And we put a lot of effort into making sure that those who do good work, get promoted, because, if you get promoted or get a good onward assignment, it becomes a more desirable post. And we're now seeing we had more bids for foreign policy adviser jobs last year, exponentially more, than we've ever had before. And we're seeing more foreign policy advisers be promoted than we've ever had before. And so that I think is a testament to the foreign service officers see that these are good jobs that have value and that can further their careers.

Now, on the Global Security Contingency Fund, I don't think you have it quite right. It is an extraordinary fund that we hope will be a real model for the future of security assistance.

For example, and this gets back to Andrew's question, when Admiral McRaven said, you know, I'd really love some new authority to help train special operation forces, we said, you know, you don't need a new authority. We've got it right here in the Global Security Contingency Fund. And, indeed, some of the first projects that we're going to be notifying under the Global Security Contingency Fund are going to be for training special operation forces with key partners.

We've also notified -- designated certain countries to receive assistance already -- Nigeria, the Philippines, Libya. And when you think about it, Nigeria is facing the Boko Haram threat. That's what -- we didn't budget for that. We didn't plan for that, but having a Global Security Contingency Fund which allowed us to reprogram money to help Nigeria is exactly what it's for.

Libya, border security. You know, again, it wasn't budgeted for, but, you know, it became an issue. So we were able to designate it and we're reprogramming money to, you know, help them with their border security.

So it has taken a little longer than we would have liked for it. We'd like it to go a little faster. But part of that is a brand new fund and our congressional committees had a lot of questions about it. And we have eight committees that we have to brief on this. And that's a part that, you know, Congress required, and it takes time to work through it, because each committee has their own particular issues they are focused on.

So that's the part of the drill that's taken us longer than we would have liked, is figuring out how to navigate the eight committees and their different requirements. But now that we've gone through this drill, we're hopeful that in the future, it will go much more quickly. And we think that the -- you know, these projects, you know, are going to add real value.

REALUYO: In the back of the room, the very last row on the aisle.

QUESTIONER: Thank you for your time. My name Ata Koshimuri (ph) from TV Asahi. To deal with North Korea, you mentioned about China. And everybody says China is a key player. But it seems North Korea really, really wants to talk to the United States. Is there any possibility that the United States starts talking with them? If not, why? Could you tell me your opinion? Thank you.

SHAPIRO: Well, I'm not the administration spokesman on North Korean policy so I'm hesitant to make news on a very sensitive topic at a very sensitive time. So I'm just going to point you to Secretary Kerry's comments in Seoul, where, you know, he talked about -- you know, that we're going to stand by South Korea, that North Korea will not benefit from this behavior, that we are going to consult with China as well about the need to deliver a strong message to North Korea that this behavior is not going to achieve their goals. And that's going to be the focus of our policy.

REALUYO: Allan Wendt has been waiting a while here. Up in the front.

QUESTIONER: Allan Wendt, formerly with the State Department. You mentioned early in your remarks that State is moving a large number of items from the State Department control list over to the Commerce Department. How will you coordinate how licenses are issued on those items? And secondly, what mechanisms do you have to coordinate with other countries that might export the same items to countries of concern?

SHAPIRO: Excellent questions. You know, our export control reform effort is designed to have a more unified approach. The ultimate goal is what we call the four singles, which is single enforcement mechanism. We have established a coordination center for enforcement.

Single IT system -- and that will be a critical element of the type of coordination you're talking about with Commerce that right now, all the different agencies have different IT systems. If they can all get on and see the licenses coming, you know, that will make it easier.

And then, Commerce for those -- we will let them know which licenses we'd like to see to evaluate for foreign policy concerns. And they'll send it over to the State Department, and the different State Department bureaus, regional and functional that have equities will take a list and offer Commerce an opinion. There's also -- eventually we'd like to get to a single list and a single licensing agency. So that's one part about it.

In terms of coordinating with other countries, as you know, there's various non-proliferation regimes, including the Wassenaar Arrangement which, you know, is an agreement among countries, and it's not -- my bureau doesn't handle it. It's the Non-Proliferation Bureau that handles it, where they talk about how to control certain sensitive items. And we send delegations to an annual meeting, where they talk about how, you know, we should -- what is the appropriate level of control for various dual use items that have both a military application and a commercial application. And because they have a potential military application, we would want more stringent control than just letting them be sold anywhere to anyone.

REALUYO: OK. Paula Stern (sp) in the very front row.

QUESTIONER: Thank you. Congratulations on your accomplishments. I'm Paula Stern (sp). You talked about review of conventional arms sales and transfer policy. And I'd like you please to bring me and us up to date on the review by Congress of major arms sales. Back in the '70s, I was deeply involved in the legislation we call the Nelson Amendment, which got embedded in the law that requires that major arms sales be reported to Congress for a period of review. How is that working? Does that part of your updating that you're prospectively expecting to see finished even after you leave? Can you tell us about that?

SHAPIRO: Yeah. Well, thank you for the question. And for those of you who don't know, my very first job in government was working in the Justice Department for a commission that Paula was the co-chair of. And this is an issue that's near and dear to my heart because it was a major initiative that the administration engaged in.

And this was, how do we consult with our Congress regarding arms sales? And, quite frankly, my view is that when I came in, the process was broken, meaning that you would go up to Congress to consult on an arms sale, and there as an unbounded period of time that the staff could take to look at an arms sale. And if they didn't say yes, it just was halted. And, you know, there were -- it could be months. And this was not just sensitive sales. It could be a sale to the United Kingdom, or a sale to France, or a sale to Germany that for reasons that, you know, may not even relate to policy, could be held up for 60 days, 90 days. So it didn't make sense. It didn't make sense because it didn't offer reliability to industry. And it didn't force -- if there were foreign policy issues, there was no forcing function to address those issues.

And so we -- with Secretary Clinton's support, we initiated a new system for consulting on arms sales, both the foreign military sales as well as the export control reform changes and moving items from USML to the CCL.

And what we've done is we've said, if it is a sale to our closest allies -- you know, and first of all, we're going to give you information earlier in the process so you'll see this information earlier than you've ever seen it before. Even before we come up to formally consult with you, you'll know that -- you'll see the licenses in a computer system that they've come in. On the FMS side, we'll give it to you earlier as well. So you'll have -- you'll know it's coming.

And we've also used the classified Javits Report, we've really -- we refined to really focus on the sales that we thought they should -- would be eligible for sales in the coming year, and used that process of consultation to try to determine where Congress might have concerns so that we could prepare, if there was a sale that was going to have concerns, to be prepared to brief them.

But we said, if it's a sale to our closest allies, our NATO allies, we'll, you know, give you 20 days of -- even before we notify. Under the law, we have to give Congress 30 days. We've give you 20 days in advance of that. And at the end of the 20 days, if we haven't heard from you, we're going to move it forward. And this is, again, to our closest allies. If it's not a NATO ally, it'll be 30 days. For the sensitive sales, and that includes most Middle East sales, we'll take 40 days and then we'll check in with you and just make sure that, you know, you're OK.

And the result has been -- you know, that the times have gone down. And last year was the first year we, you know, were a bit more tentative in starting so I think I think the times are going to go down even more this year.

And, at the end of the day -- and I want to emphasize this -- if a member raises an objection, we will stop the sale, you know, and we will consult -- we will stop the notification, and we will -- we have committed that we will consult with that member before we move the sale.

So this is not about limiting Congress' authority over arm sales. It's about introducing a degree of predictability, reliability, and a forcing function to have that conversation take place. And it puts pressure -- you know, a timeline on me, that after 40 days on a sensitive sale we've gotten nowhere, we need to call the staff director and say, where are we? And if the member has a problem, it's good to know that because then we can engage. And, you know, we can bring in, you know, a briefing team to address those concerns.

And I think that some in Congress thought that we would, you know, start notifying sales that were controversial and that would lead to introduction of resolutions of disapproval. And that's not how -- that's not in our interest. That's not in our interest to have resolutions of disapproval on arms sales. So we want to be sure that it is going to get through the Hill. And we very much value the consultation process with Congress because they have expertise as well and it's important for us to hear, you know, about their concerns.

So I think that this is -- we've struck the right balance between introducing predictability and reliability into the process, but at the same time, still allowing Congress to play the significant role that the law provides in advising an arms sale and allowing them the opportunity to weigh in on sensitive arms sales.

REALUYO: Let's go this side, second row, right there, next to Allison (sp).

QUESTIONER: Andrew Jeff Smith with Arnold & Porter. And I join everybody else here who congratulates you on your tenure. Everybody I speak to says -- gives you very high marks. I'd like to take you back to China in two areas that I think are in your area of responsibility. One is how you think about arms sales to China, given the dynamic in the region, and secondly, military-to-military relations between U.S. and China.

SHAPIRO: Well, we don't formally sell arms to China. We sell them to Taiwan, of course. And we've had two significant arms sales packages during my tenure, during the Obama administration's first term, and so billions of dollars worth of arms sales, which are designed to meet our obligations under the Taiwan Relations Act and are consistent with them.

And we managed -- you know, and, obviously, the Chinese do not particularly like our arms sales to China, but I think that we have been able to manage the relationship with China while ensuring that we have delivered significant capability to Taiwan. And, you know, this administration remains committed to, you know, the United States' obligations under the Taiwan Relations Act.

On the mil-to-mil relations, I mean, this is -- DOD is -- you know, has repeatedly said that it would like to develop -- further develop our military-to-military relationship with China. General Dempsey, I believe, is going to be headed to China. And I'm sure this will be a topic of discussion.

And I think that the value of military-to-military relations is that having those channels and relationships can be helpful if a crisis should emerge or if there's a sensitive issue that emerges. And it means -- makes miscalculation less likely if you have had those types of communications and consultations. So I think that -- you know, it's something that DOD will continue to pursue. And obviously, from the State Department perspective, we support that.

REALUYO: Time for probably one more question in the second row right here. Very persistent.

QUESTIONER: Hi. Emily Cadei with CQ Roll Call. And I wanted to take you back to Pakistan because you mentioned the PCCF, but in the president's FY'14 request, that's been zeroed out. So I wanted to ask you about the rationale for that, and also sort of going forward, what our military cooperation with Pakistan might look like in our counterinsurgency cooperation.

SHAPIRO: Well, you know, we took -- you know, and we've been talking with the Pakistanis about the future -- you know, nature of our security assistance, and in one sense we had delivered a significant amount of equipment under the program to help them develop a counterinsurgency capability. And in our internal review, in a time of budgetary pressure, as well as in our discussion with the Pakistanis, we determined that that -- the program had accomplished its objectives and we would focus our assistance elsewhere. And we still have requests for foreign military financing for Pakistan. And, you know, the subject of our discussions now with Pakistan are about, you know, the best use of the -- our foreign military financing to help meet our shared challenges.

REALUYO: One last question. Kevin, very enthusiastic.

QUESTIONER: Kevin Sheehan, Multiplier Capital. One of the few areas of increased defense activity going forward is going to be cybersecurity, which is going to call for a new type of service member, lots more programs, increasing offensive capabilities. What does this mean for the Political-Military Affairs Bureau? Is there some new organization required? Is there some new set of skills that you're going to have to develop in your officers? How are you going to cope with this?

SHAPIRO: It's a great, great question. And, actually, the State Department under Secretary Clinton now has a cyber coordinator who focuses on -- because cyber -- there's the defense aspect, there's the economic aspect, there's the legal aspect. There are so many different issues that cut across so many different equities, that it was determined that it was important to have a coordinator. So we feed into that coordinator on these types of issues.

So, for example, my organization provides a political foreign policy advisor to the CYBERCOM commander which ensures we stay well linked. When it comes to DOD planning, I have an office in my Bureau -- Policy and Plans Office which helps coordinate state input into DOD planning.

So that's sort of my piece of it, but all these various issues and the crosscutting way they interact, it did require the State Department to create a new organization that -- a coordinator that works with all the different bureaus which have equities in cyber. And it's -- you're absolutely right that there's a lot of issues related to cyber. And, you know, we feed into the cyber coordinator's efforts.

REALUYO: We have time for one last question. Here, in the second row, right here. Very patiently waiting.

QUESTIONER: Thank you. Diane Barberchek (ph) with the Center for Naval Analysis. You talked a lot about security assistance with high-profile countries and situations, but I was wondering what you think the most important country with respect to security assistance relationship is that's not on most people's radar screens right now?

SHAPIRO: Well, I would say not necessarily a country, but I think one of the great success stories is our assistance to AMISOM which was the organization that was involved in the fighting in Somalia. And so -- and that was a case -- and it's a real model for us. That was a case where we didn't have U.S. soldiers on the ground fighting al-Shabab, but we used our security assistance to help other countries in the fight against al-Shabab. And now -- and it was successful. Al-Shabab, you know, is on the run.

And it could provide a real model for Mali. In a similar way, we don't want to put U.S. soldiers on the ground, you know, in Mali, but we can provide the assistance to the surrounding nations to have the capacity to be able to counter the extremists in Northern Mali.

REALUYO: Great. With that, I'd like to thank all the participants, reminding you that you're all on the record. And please -- ask you to join me in thanking and congratulating the assistant secretary on this tenure. (Applause.)

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