A Conversation with Raymond E. Mabus

Monday, March 28, 2011

Secretary of the U.S. Navy Raymond E. Mabus discusses the operations of the U.S. Navy as it responds to high-end combat, builds partnerships, and implements humanitarian assistance and disaster relief programs around the world.

GUY WYSER-PRATTE: Good evening ladies and gentlemen, and welcome to today's meeting of the Council on Foreign Relations.

I would ask you please as a reminder to turn off your cell phones. Even the vibrate mode is picked up by our very sensitive audio equipment. So please, this is your opportunity to turn them off.

Also, a reminder that this meeting is on the record.

I'm also asked, a little housekeeping detail here, to remind you that the next council meeting will be on Wednesday, March the 30th, entitled "The Mobile Revolution: Driving the Next Wave of Productivity and Growth."

It's a real honor to have with us this evening Raymond Mabus, the U.S. secretary of the Navy. He is a man of many talents, having had a very distinguished career.

He not only has three degrees, one of which is -- (inaudible) -- from Harvard, he was a U.S. Navy surface warfare officer aboard the cruiser Little Rock. He was the state auditor for the state of Mississippi. In 1988, he was the youngest governor ever of the state of Mississippi.

In 1994, he was the ambassador to the kingdom of Saudi Arabia. I'm sure that's going to spur a few questions tonight. He was the CEO of a company called Foamex which he brought back from the brink. It was in bankruptcy, and he made it profitable in record time.

And now he's the secretary of the Navy. He has a budget of $150 billion and is responsible for 900,000 sailors and Marines. Reporting to him, for all you folks who are not familiar with the chain of command, the Chief of Naval Operations Admiral Roughead and the Commandant of the Marine Corps General Amos report to the secretary of the Navy.

Mr. Secretary, welcome to the Council on Foreign Relations.


NAVY SECRETARY RAY MABUS: Thank you, Guy Wyser-Pratte, for that great introduction. It is no accident, I think, that my introducer, and as successful a person as Guy, is a Marine. You are never a former Marine. Once a Marine, always a Marine. But he left the Marine Corps as a captain, just as I left the Navy as a lieutenant junior grade.

John Kennedy said one time, he went from being a lieutenant JG to commander in chief with no increase in technical skill. (Scattered laughter.) I feel pretty much the same way. So I'm very, very happy to be with you.

Just a little factoid about Marines and how successful they tend to be. Of the Fortune 500 companies, 163 CEOs are Marines. And unlike Guy, very few of them were officers. Most were enlisted Marines.

The only other person I want to point out today is my daughter, Annie, who is here. She is a freshman at NYU. (Applause.)

All you have to do is look at the headlines to see what the Navy and Marine Corps have been doing recently. We are in Japan and off its coast. We are off the coast of Libya. And we have Marines in combat in Afghanistan.

Just those three operations involve 35 ships and 45,000 sailors and Marines. If you also count the other things that are going on on a day-to-day basis around the world, we are doing partnership stations off of South America and Africa and the South Pacific.

We do humanitarian assistance and disaster relief all over the world. The Navy and Marines were the first responders in Japan, in Pakistan earlier this year, in Haiti and in my home state after Katrina. We are the most flexible and the most formidable expeditionary fighting force the world has ever known.

We can take the same equipment, the same people and do very, very different missions. In fact, the carrier Ronald Reagan was headed across the Pacific to do combat air support over Afghanistan when the tsunami -- the earthquake and subsequent tsunami struck on March the 11th. Without pausing, it pivoted and became a humanitarian assistance and disaster relief platform, using exactly the same people, using exactly the same equipment that they had been using.

The Essex amphibious ready group was training in Indonesia. They moved to Japan. Another amphibious ready group was in the Arabian Gulf and came around to the Mediterranean where they met up with a different group of Marines from the ones they had brought over, because the ones they had brought over were in Afghanistan, and they now are in the Mediterranean off the coast of Libya.

And its their Harriers and their Ospreys that have been flying some of the no-fly zone, and who rescued the Air Force pilot whose plane went down for mechanical reasons.

Our submarines and our surface ships have been firing Tomahawks to establish the internationally recognized no-fly zone now.

So we are forward deployed, we're also flexibly deployed. And I think the headlines represent why we need a global fleet, why we need this ability to be able to do everything, from high-end combat, through partnership building, through disaster relief and humanitarian assistance, and why we have to be so flexible, because we simply do not know what the next thing coming over the horizon will be.

We -- and the main purpose of my visit here, we are also fighting another battle, but one that can't be won with just the munitions or the skill of our fleet. Very simply put, we as a nation and we as a military rely far too much on foreign sources of fossil fuels. And it's dangerous in a lot of ways.

Number one, we would not let the countries we but fossil fuels from build our ships, our aircraft, our ground vehicles. But by buying the fuel from them, we give them a say on whether those ships said, whether those aircraft fly, whether those ground vehicles operate.

Second is, every time the price of oil goes up $1 a barrel, it costs the Navy $31 million. So from the first of the year, the price of oil, on average, has gone up $18 a barrel. Those over a half a billion dollars more we're paying this year for fuel than we had been paying.

And in these days of continuing resolutions and very tight budgets, that's half a billion dollars we don't have to buy equipment, to do all the other things that we need to do.

So because of those things, because it's a strategic issue in that we are buying fuel from potentially or actually volatile places on earth, because, as a tactical reason, ships are the most vulnerable when they're being refueled -- the Cole was in Aden to get fuel when it was attacked. And I'm going to talk about the Marines in a minute in terms of their tactics and fuel.

But because of that, a year and a half ago, I set out five energy goals for the Navy and Marine Corps. And we're going to meet these goals, the most important of which is that, by no later than 2020, at least half of all energy that the Navy uses, both afloat and ashore, will come from non-fossil-fuel sources.

Now, we already have a head start. Seventeen percent of our energy today comes from nuclear, because all our carriers, all our submarines are nuclear power. But we are looking at all sorts of other things, and we are making a lot of progress.

We have already flown an FA-18 Hornet on biofuels, on a 50/50 camelina and av-gas mix. We call it the "Green Hornet." And I understand they made a movie about it, or something.

It went 1.7 Mach. The engine didn't notice the difference.

We have certified our helicopters on algae-based biofuel. We have certified our swift boats. We are working on our guided missile destroyers and other surface combatants right now.

Ashore, we are looking at and have signed a contract for much, much larger -- solar. We are looking at geothermal, hydrothermal, wave, solar, wind, anything. We're pretty neutral about what kind of alternate power. We have a few rules. One is, it can't take anything out of food production. Two is, it's got to be a drop in fuel, because we have more than half the ships that we're going to have in 2020 in our fleet today, and more than half the aircraft that we're going to have, today.

And by the way, the Navy has 288 ships in our battle fleet. We have more than 3,600 aircraft. And for a seagoing service, interestingly enough, we have 3.3 million acres of land and 72,500 buildings.

So we're going down one road of alternative fuels. We're going down another simultaneously of just being more efficient with the fuels that we use.

We have launched the first hybrid ship, the USS Makin Island. Tom Friedman called it the "Prius of the Seas." It's got an electric drive for speeds of under 12 knots, a regular diesel for speeds of over 12 knots.

In its first voyage -- it was built in my home state of Pascagoula, Mississippi. In its first voyage from Pascagoula, down around South America, to San Diego, it saved almost $2 million in fuel cost, and that was at the old fuel prices. At the old fuel prices that were in effect last fall, it was going to save one-quarter of a billion dollars in fuel over the lifetime of that ship.

We're now beginning work to retrofit our other surface combatants with those electric drives.

The Marines, as Marines often do, are leaders in this. The Marines have established two expeditionary forward operating bases, experimental expeditionary forward operating bases, one at Quantico, Virginia, one at Twentynine Palms, California, looking for expeditionary energy, because the thing we import the most into Afghanistan is fuel.

Every 50 convoys we lose a Marine guarding those convoys, either killed or wounded. And so the Marines tactically know that they have to do something, and they are moving out incredibly rapidly and incredibly well.

They know that fuel to Afghanistan is expensive in so many ways. One is, it's expensive in Marine lives. Two, just getting it there. You've got to go across one ocean or the other, put it on a truck, either take it up and then across the Hindu Kush or down through the northern distribution network in Russia and across the (Amu Darya ?) River to get it there. And so it's very expensive by the time it gets to a Marine front-line unit.

And it's expensive because it takes Marines from doing what Marines are supposed to do, what they were sent there to do, which is fight or engage or rebuild.

So the Marines, the very first unit that they put some of this experimental alternate fuel products with, was 3rd Battalion, 5th Marines. 3rd Battalion, 5th Marines went into Afghanistan last fall, and they went to Sangin. That's where some of the heaviest fighting is in Afghanistan.

I went to Sangin at Christmas, and that was the first forward operating base that I stopped at. And when we landed, there was a fight going on, there was a firefight, some number of hundred yards outside the wire. They said 500; it sounded a little bit closer than that.

But in the midst of this fight, I got briefed by a lieutenant on what they were doing on energy. They've cut their overall fossil fuel use by 20 percent. But much more impressive than that, they've got two combat outposts that uses no fossil fuel energy. Their other combat outposts have cut their fossil fuel usage by 90 percent or more.

A foot patrol today uses roll-up flexible solar panels. They put them in their packs, and they head out on patrol. One hundred eight-two Marines in a company -- in the mid '90s, they would have carried nine radios with those 182 Marines. Today they carry 224.

By using those portable roll-up flexible solar panels and sticking them in their pack, they're saving 700 pounds of batteries. And they're also not having to be resupplied every other day.

So they're out there using solar power, recharging their radios, recharging their GPS, recharging the small electronics that are the source of so much of our combat power today, with no resupply and no fossil fuels.

Those are some of the things that we have been doing, and we're going to create a market for alternative fuels. We're doing it because it makes us better warfighters. We're doing it for strategic reasons; we're doing it for tactical reasons. But overall, we're doing it because energy is fundamentally a national security item.

And it's not just for us. As I have traveled, one of the first things that gets brought up is energy security, because more and more countries are figuring out and are concerned about the fact that energy can be used as a weapon against them.

And even if you -- the second thing that I get asked about when I go is, even if you have your own supplies of fossil fuel, because of the president asking me to come up with a long-term restoration plan for the Gulf after the Deepwater Horizon spill, they know that even if you have reserves, they're getting to be more and more difficult to get at, we're going to deeper water, we're going into places that are more dangerous like the Arctic, and things can go wrong, as they did with Deepwater Horizon, with tremendous environmental and economic results.

I think the Navy can lead, and the military has led over and over again when we have changed technologies. You don't have to look any further than the Internet or flat-screen TVs to see things that the military has done.

The Navy has had a history of leading in energy change. We went from sail to coal in the 1850s. We went from coal to oil in the early part of the 20th century. We went to nuclear in the 1950s. Every single time -- every single time -- there were people who said, you are going to fail, you are trading one very certain form of energy with all the infrastructure that goes with it, for another very uncertain form of energy. And every single time they've been wrong. And they're going to be wrong again.

The federal government uses about 2 percent of all the fossil fuels used in America. DOD uses 90 percent of that. The Navy and Marine Corps, more than one-third of what DOD uses. So the Navy and Marine Corps use about 1 percent of all the fossil fuel used.

To paraphrase the movie "Field of Dreams," if the Navy comes, they will build it. We have found two obstacles. One is infrastructure, and one is cost. But if you look at just the small amounts that we are buying today for test purposes, the price of biofuels that we've been buying has come down 50 percent last year; it's on track to be cut in half again this year.

We are working with a lot of people. We're working with the Department of Agriculture. We're working with the Department of Energy. We're working with the Small Business Administration. We're meeting with venture capitalists. We're meeting with private equity firms. Because we are going to create a market.

And I think that it will begin to move us toward a clean energy economy. It will begin to create new jobs here in the U.S. And it will make us better stewards of this planet.

Those are all great things to do. But most importantly, it will make us better sailors, better Marines, better fighters and better able to defend the vital interests of this country.

So we're doing what we've always done -- innovate, be flexible, take whatever comes over the horizon and be able to deal with it. The Navy and Marine Corps have done that successfully for 235 years. We're going to continue to do it. We will innovate, we will be flexible, and we will come out the other side victorious.

Thank you very much.


WYSER-PRATTE: Mr. Secretary, whereas you might think my questions might concentrate on the Marine Corps, I'd like to start with the Navy.

One of the goals is to demonstrate the Great Green Fleet of 2012 and its planned deployment for 2016. Are you going to be on track? And what is going to be the composition of that Great Green Fleet as far as fuel consumption?

MABUS: The Great Green Fleet is going to be a carrier strike group. The carrier, which is nuclear, a submarine, which is nuclear, but all its surface ships and aircraft, which burn conventional fuel. And it's going to run on a mixture of biofuels, at least 50 percent biofuels, and normal fuels.

So we're going to demonstrate it next year. We're that close. And we're going to send it on deployment in, as you pointed out, in 2016.

The one hurdle that a lot of research has been done on right now, and which I'm confident science will find an answer to, is right now, biofuel does not have enough lubricating materials to use 100 percent. Once that hurdle is overcome, you can use 100 percent biofuels and no fossil fuels of any kind.

WYSER-PRATTE: You've shown great interest in what the Marines are doing in Helmand province. There's also a cottonseed oil project up there that you've been concentrating on. Would you tell us about that please?

MABUS: We've got an old Soviet cottonseed oil plant in Helmand, in the Helmand province, and the Marines have been buying the cottonseed oil for use as fuel in their ground vehicles. It does a couple of things. One, it gets the Marines fuel. But two is, it gives Afghan farmers a cash crop to use instead of poppies, because the Helmand River Valley is one of the poppy center points of Afghanistan.

And so we've been working very hard on that. As you can imagine, it's had some bumps and some ups and downs. But there have been a couple of Marines who have taken that as a project, and it's going pretty well right now.

Getting the cottonseed factory reestablished was interesting with the Soviet equipment. But we are now using some of that cottonseed oil for fuel for the Marine ground vehicles.

WYSER-PRATTE: What is the effectiveness of this fuel when it gets cold?

MABUS: Cottonseed oil has some viscosity issues. The other biofuels that I've been talking about -- camelina-based, which is a mustard seed, inedible, you can grow it in rotation with other crops, algae-based, the next generation which is something called electrofuel, which doesn't involve oxygen to make the fuel, none of those has viscosity issues. They act exactly like fossil fuels in an engine.

WYSER-PRATTE: It's an interesting project.

How are you succeeding with the private sector, Mr. Secretary, to engage them in creating a market for these alternative fuels?

MABUS: There are a lot of people working on this, and a lot of very smart people, and a lot of very creative people. And what we're trying to do as we meet with venture capitalists, as we meet with private equity, as we meet with some of these firms that are looking at various kinds of fuel is to say, here's our market. And if you can show us that you've got a usable product or that you want to demonstrate, I mean, we can use our bases as test beds for you.

But if you can show us a usable product, we can sign a fairly long-term contract, which will allow investors to make the capital investments to do the infrastructure and things like refineries that will have to be done, but to ensure that they will get a payback at the end.

Right now, we've got a five-year limitation on fuel, buying fuel. We have a 30-year -- we can sign up to 30-year contract with the approval of secretary of Defense; 10 years through my office, but 30 years on power. So if you are not buying fuel, if you're actually buying energy, we can sign a very, very long-term contract for that.

And so for some of our shore installations, looking at stuff like solar or geothermal, hydrothermal, actual energy, we're looking at some longer-term things so that, again, people can make the capital investment with a, you know, if their product works, a defined payout over time.

WYSER-PRATTE: And you've actually gotten the private sector to think about the design and the procedures that the military is using to fashion some of their own products, I take it.

MABUS: We have. One of the things we've been doing is we've been working with the Small Business Administration, because a lot of these ideas are coming out of very small companies. And evidently, it is hard to navigate federal procurement regulations, particularly in the Department of Defense. And so we've set up a website called Green Biz, and you can go there and see every single alternative-fuel contract that we're working on or project that we want to see adopted, so that people can have a one-stop shop there.

I've also set up an Energy Office in my office that reports directly to me. And we're working with both the folks who are designing these things, but also the people who finance them, to get them from the venture level, over the so-called valley of death, to profitability and to sustainability over time.

And we think we're -- we know we're making a lot of progress, and we think we're getting very close to being able to have things like biofuel, solar, wind, very competitive in terms of price with our current form of energy use.

WYSER-PRATTE: And how is the cooperation with the other services in this whole quest for independence on energy?

MABUS: Well, obviously, the Navy and Marine Corps are way ahead. (Laughs.) I do have to brag on, though, that the Air Force has moved out, the Army is doing some things. But what we're trying to do now is not replicate effort. What we're trying to do now is use best practices among the services so that we're not all trying to do the same thing.

But we have the most aggressive goals, and I think we're going to meet those goals. And part of it is because of the nature of who we are, because we are so expeditionary, because we are so forward deployed. And we need this sort of expeditionary energy more than almost anybody else.

WYSER-PRATTE: We live in a strange world right now where you have disruptions all over the planet, basically. Do we have any contingency plans that you can tell us about, if there are any real energy disruptions that could affect our efficiency as an operating force?

MABUS: Well, I think I just spent my whole speech telling you about the contingency plan. The main reason we're doing this is because of those shocks that can happen. And it's, one, supply shock because some of the places are actually volatile now, such as Libya. The other, though, is price shock, which, when you have something like that happen, you see the price of oil spike, and the resulting budget hit that we take.

We're also -- we want to go to something that is homegrown, that is less vulnerable to the supply shock. And also to begin to move toward the new energy economy that the president has been talking about for a long time. You know, to -- if the military creates a market, very often the civilian sector follows, because we are able to use energy, to use these new technologies in ways you really can't, early in the process, do it on the private side or on the civilian side.

We in the Navy can do it very differently from a governor or a mayor, for example, because of the way our bases are structured or our ships are structured. One of the sayings is, we defend a democracy, but we are not one. We can mandate how things are done.

And for example, we are building every building now to at least LEED silver standards. You know, most of them are higher than that, but that's -- you can mandate that. And we are driving down the price at the same time so that building some of these buildings to those standards are no more costly than they would be to just put up in the ordinary course of events.

WYSER-PRATTE: As far as short-term shocks, which is really what I was getting at --

MABUS: Well, in terms of short-term shocks, I mean, we -- that is what makes us vulnerable, that is what makes us vulnerable as a fighting force, and makes us vulnerable in the way we defend this country. And we've simply got to move off of it. We are too vulnerable right now.

WYSER-PRATTE: Would we use the Strategic Petroleum Reserve if we got disruption right now?

MABUS: That's a decision that would be made if something like that happened. And it would depend on a lot of factors. But I'm confident we can do our job. But what I'm more confident of is that we can do it more certainly if we do move off of any reliance or as much reliance as possible on foreign sources of oil.

WYSER-PRATTE: Maybe this is a question more for Agriculture, but there's been a lot of second-guessing about what we've been using to produce synthetic fuels by using corn, for instance, which has done nothing but drive up the price of food. Should we have been using sugar cane rather than corn?

MABUS: Well, when we looked at it, one of the things that we have looked at is to make sure that no crop land is taken out of food production, for example. Corn ethanol takes about eight-tenths of a gallon of gasoline to make a gallon of ethanol. And you really don't make that up in volume.

It's also, as you pointed out, raised the price of food and taken a lot of land out of food production for ethanol production.

So the things that we're looking at -- camelina, which is inedible and can be grown in rotation in all 50 states, all 50 states can grow camelina. Algae, which, you know, unless you were like me who's a bachelor in law school and probably don't eat -- (laughter) -- or at least intentionally, algae can be grown in great quantities without taking up any sorts of (debt ?) and without increasing the cost of food.

This new process that's sort of early in the development, electrofuels is done by a very small organism that does not need oxygen, that basically ingests various forms of energy and excretes gasoline.

Finally, the Naval Research Lab has just gotten a patent on making fuel from organic material on the sea bottom, using hydrogen in water.

And so one of the main limiting factors we have now, for example, in unmanned underwater vehicles is energy storage and usage. And these things need to be out for weeks or months, not hours. And so the battery technology we have right now simply can't do it. One of the possible uses for this new patent is that an unmanned underwater vehicle could simply go to the bottom of the ocean, burrow down in the organic matter there, and use the hydrogen from the water to refuel itself.

Now, as an English major, I've just exhausted all my scientific knowledge about how that works. (Laughter.) But as I said, you've got a lot of people thinking about a lot of interesting things, and I don't think it's our job to pick winners. It's our job to say, here's the market, give us your best ideas, your best technology, and we'll make them profitable.

WYSER-PRATTE: I would now like to open the discussion to members of the council. And I would, again, quickly review the ground rules. You must wait for the person to come by with the microphone. And please stand, identify yourselves, and please try to limit it to one question.

The gentleman here.

QUESTIONER: I'm Gary MacDougal. I listened with great interest, your goal of establishing half biofuels by 2012. Is that what you said?

MABUS: No. Half non-fossil fuels by 2020.


MABUS: So nine years from now.

QUESTIONER: But the demonstration will be in 2012.


QUESTIONER: And you went through the whole talk without exploring the economics of the biofuels that you have selected. You talked about the problems with ethanol, which people are finally figuring out that that's a wasteful thing and something we shouldn't be doing. Now it's a political problem. But you haven't said anything about the economics of your biofuels, and if camelina, for example, becomes your principle biofuel, how many acres of camelina have to exist in the country? What are the economics of it?

And do the tax credits and all of the politically correct stuff that went on for ethanol, does that have to go on in order to produce your biofuels? Because I don't know when you set this goal whether to smile or be terrified. (Laughter.)

MABUS: Me either. To answer the different parts of your question, the economics of whatever biofuel we end up using, and it may be a mixture of different biofuels, I mean, we're absolutely neutral in what we use, what we're seeing right now, it's not cost-competitive with fossil fuels. But just in the very limited amounts we have bought, it came down in 2010, the price of the biofuel, the algae-based biofuel, for example, came down by 50 percent. And it is on track to come down, be cut in half again.

We think we're relatively close to when we can get biofuels, for example, on an absolute -- absolutely even and competitive basis price wise, economically with fossil fuels, particularly if the price of fossil fuels continues to rise.

But even if they don't, we're confident that we are relatively close to that day.

In terms of some of the other technologies that we're looking at primarily for land-based things, solar today is competitive with fossil fuel-based electricity in California and Florida. If the price of conventionally based power, electricity, goes up half a percent a year over the next five years, which is a little less than the historic norm, but if it goes up that much, about half the country will be competitive. I mean, absolutely competitive. If it goes up 1 percent a year over the next five years, then the whole country, all 50 states, will be competitive in terms of solar.

We have one base today, Twentynine Palms, which is selling energy back to the grid because of geothermal activity. And we are -- so we're looking at geothermal for some of our bases. We're looking at things like hydrothermal and wave action, and a lot of our bases obviously are on the ocean.

And so it's not just biofuels. But in terms of biofuels, in terms of the Great Green Fleet and the things we're we're going to use to fly our aircraft, the things that we'll use to power our surface ships, most of that will be biofuels. And we think that we're getting pretty close to the economics of making -- of biofuels being very competitive.

Because we don't have extra money in these very tight economic times, it has to be competitive for us to do this. We're not going to pay extra.

And in answer to the last part of your question, no, you don't have to have the subsidies to do that. However, I would point out that we are subsidizing fossil fuels to some large extent right now. And so if you don't have the subsidies for biofuels, it takes even more of an effort to get it to where fossil fuels are.

WYSER-PRATTE: The lady there.

QUESTIONER: Thank you very much. Carole Brookins. Your case is very compelling, and I think you have presented it very eloquently. Could you -- I just want to follow up on the last point you made about that we're subsidizing fossil fuels. What approximately is the cost for the Navy to defend the sea lanes from the Persian Gulf or the Arabian Gulf, annually?

MABUS: Boy -- (laughter) -- I don't know. I mean, we never break it out that way. We always have a carrier and sometimes two in the Arabian Gulf. We have between three and six ships fighting pirates off the Horn of Africa, coming out of the Persian Gulf or out of the Red Sea.

We always have an amphibious ready group, which is a big-deck amphibious LHA or LHR -- LHA or LHD, along with two smaller amphibious ships, an LPH and an LSD.

Now, in the -- usually in the Arabian Gulf, they are the theater reserve for Afghanistan right now. But those are also very mobile.

We are also, you know, things like we are the first phase of the phased adaptive ballistic missile defense approach that the president has adopted, our Aegis destroyers and cruisers off the coast of Israel, around Europe, off the coast of Japan and Korea, to protect against North Korea and Iranian potential missiles.

So I'm not sure how you would add it up, but we do spend a lot of money in that part of the world.


QUESTIONER: In changing the subject just a little bit, you're in a very international role. And obviously, you've had background in the Middle East which is a big theater for you guys, and in the U.S. Another area of the world that's credibly important is Asia. Is there -- do you have a background in Asia? Have you done things in Asia in the past that would help on the engagement process with that part of the world?

MABUS: Thank you. Yes, I -- when I was a junior in college, I took my first trip to Asia, went to Japan and took a ship across the Sea of Japan and went on the Trans-Siberian Railroad all the way around the world. I went to China first in 1978 before relations were normalized and been back more than two dozen times since then.

Since I've been secretary, I've made three Asian trips. And you're absolutely correct. And Secretary Gates made a speech at West Point about a month ago now, where he said, if you look at where the potential interest of the United States is going to be, it's going to be in the Western Pacific, and it's going to be sea based. Because as I said in my talk, we can take our ships, we can take our Marines almost anywhere and not take up an inch of anybody else's land, and we carry our gun with us. We don't have to go home. We've got missiles in the tubes. We've got Marines fully armed and embarked so that we can do almost anything when we get there.

But you're absolutely right that the Pacific, as you look toward the future, is going to consume a lot of our attention.

Today we have 11 aircraft carriers; six are in the Pacific, five are stationed in the Atlantic. And so we're already very forward deployed. We have an aircraft carrier in Japan. We have a lot of our ships and a lot of our Marines in Hawaii and in Japan and Okinawa. So we are -- we have a significant presence in the Pacific now. But I think that as you look toward the future and as the attention moves from Central Asia, as we begin to come out of Afghanistan, that that's one of the places that we will be the most engaged and pay the most attention to.

WYSER-PRATTE: The gentleman in the back.

QUESTIONER: First of all, on behalf of my people in Japan, I would like to thank the Navy for your dedication, especially on the Operation Tomodachi, i.e., Operation Friendship, you're deploying in the northern part of Japan.

I'm Hajime Matsuura, I'm a senior columnist of -- Sankei News, a major -- one of the major news agencies in Japan.

I'm interested in the cost-and-effect performance, economics, of what you're deploying and the Operation Tomodachi right now. Given that your budget situation is also in crisis, I think the (situation ?) will definitely will lagger (ph), maybe will continue, at least for a year or so. And are you expecting any kind of refund from -- refinance from the Japanese government on the cost of your operation at this point? If not, how would you persuade the Congress?

MABUS: Well, right -- we -- the president makes humanitarian decisions like that when we need to make that decision independently of budget considerations. As I said, we have assets forward deployed, so we're close. We had a carrier strike group in the region, we've got an amphibious ready group stationed on Okinawa, so we brought them forward.

You know, we're going to do whatever is needed for however long it is needed, as requested by the government in Japan. I think the debate on how we pay for it is and ought to be a separate debate. But when something like this happens, particularly to a close friend, how can you not go? How can you not offer aid?

And I saw it very firsthand in Mississippi when Katrina hit. The Navy and the Marine Corps were the first people in, or among the first people in, with amphibious ships to help us.

The last thing I'll say -- and I'm getting a little off your question -- but these are some of the most flexible things we have. Our amphibious ships have the largest hospital capability, for example, except for our hospital ships. And they don't need a port to go into.

I went to Haiti and visited the Marines down there. The port was destroyed in Port-au-Prince, so the Marines just do what Marines do. They went and found a beach and went ashore and started giving aid immediately.

The other thing that the Marines did was evidently a lot of people crowded around them at the very beginning, wanting aid, obviously. Some Marine stood up and said, OK, we're here to help, but the one thing we're going to demand is order and politeness, so line up. And if a Marine told me to line up, I'd pretty much line up. (Laughter.) And every day after then, people showed up and lined up to get the aid.

So I mean, it's what Marines do, it's what the Navy does. And we're glad to be of help. And our sympathies go out to all the families and all the people of Japan for your tremendous, tremendous suffering and tremendous loss.

WYSER-PRATTE: Sir. The gentleman in front, right here.

QUESTIONER: I'm Matt (Miller ?). You've talked a lot about the modernization of the physical assets of the Navy. How about the human assets? I gather the Navy's demographic has changed dramatically. Could you talk a little bit about the gender balance in the Navy and Marines, presumably, both at the enlisted and the officer corps level? And with the 900,000 people in the Navy, is your recruitment stable, is it getting more difficult, is it getting easier potentially? Talk a little bit about that.

MABUS: OK. This is the most resilient force we've ever had. Our recruiting is at record levels; our retention is at record levels. In fact, the Marines, I have to shut off recruiting about halfway through the year because they get enough. And these are folks signing up, knowing they will serve two combat tours if they go into the Marines.

The level and the tempo of deployment has been very high for a decade, and we've put a lot of stress on the force. But as I said, it's the most resilient force I've ever seen, and their families are as well.

There's another saying that you recruit a sailor or Marine, you reenlist a family. And we are seeing record levels at both of those.

We are ever mindful, though, of the stresses that are put on this force. We are making a very specific effort on things like suicide prevention, on things like sexual assault prevention.

The Navy is about 20 percent female, both the enlisted and officer. I announced last year that women will be serving on submarines for the first time. And the first group has finished nuclear power school, is now in submarine school, and will report to the fleet in November or December of this year. We couldn't go to sea today without the female members of our service.

We are also seeing that, as women get promoted to very high rank, that we're getting more retention of younger women who see a road to the top.

We've just appointed our first strike group commander Nora Tyson -- Rear Admiral Nora Tyson -- to a strike group. We've also got our first amphibious ready group head, also a rear admiral.

So as various glass ceilings are broken, you're seeing younger women being more willing to stay with the service.

We're also trying to be a very good and family-friendly place to work in terms of we're seeing more and more two-service-member families, in terms of how their orders are cut, in terms of keeping the family together, in terms of family programs when one or both members are deployed somewhere overseas.

So I think that the health of the force is incredibly, incredibly good, particularly given the stress that it's been under.

Last thing, I'll tell you a quick story. I announced that women would be serving on submarines. I got no pushback. I mean, practically none. Nobody said, you know, don't do this.

About a month later, the chief of Naval Operations announced that there would be no more smoking on submarines. (Laughter.) And there was a lot of pushback, because about 40 percent of submariners smoke. And it stopped the 1st of January this year.

I was in Seattle, looking at some of our bases there, and I went on a morning TV show. And the person asking me questions had a list of questions. And he was looking at one while I would be answering the one before. And evidently, I finished one too quick, and he looked down, and he looked up, and he said, tell me about this policy of not allowing women to smoke on submarines. (Laughter.)

So I had to fess up on that one.

WYSER-PRATTE: The lady here. Sorry, you're next. The lady in front.

QUESTIONER: Hi. KT McFarland, FOX News, and proud Navy mom. You talked about the particular vulnerability the Navy has with energy, but you also have a particular vulnerability with cyber. Can you talk to us about how you see the threat, and what are you doing about it?

MABUS: Sure. It's one of the emerging areas of warfare. And that's what it is. We are doing a lot of things about it. One is, we've stood up 10th Fleet, which is the Cyber Command. And it fits right into the U.S. Cyber Command, the DOD-wide cyber.

The chief of Naval Operations has also combined, in Navy lingo, into and (in six ?), so all intelligence, all communications, all sensors have been combined into one organization so that we've got a unity. No matter where the information is coming from, we've got to -- we've got one chain of command looking at it.

Cyber is -- increasingly, we have so many things that are networked now. And it's great in one sense in that you can use all different spatial elements, you know, whether from space or in the air, sea, undersea, working together, you can use weapons systems together, you can queue from one place and shoot from another because of the network.

Also, just on much more prosaic things, we do most of our communicating to the fleet, because of the age, by social media now. And I still sign out things called (all outs ?), which are sort of historic, I guess I can say, relic. They're all capitals. They're all capitals. They don't have any punctuation, because they used to go out by teletype.

And now, you know, if you really want to announce something to the fleet as a whole, you do social media to get the word out very quickly to most people.

But because of all that, we have the largest intranet in the world; Navy and Marine Corps intranet is the biggest in the world. We are vulnerable to cyber. That's the bad news.

The good news is, I think we've recognized that. We've certainly -- we're taking aggressive steps to defend our networks, to defend our individual seats on those networks, and to make those networks as secure as possible.

But there are all sorts of issues that you have to deal with. I mean, some legal issues that nobody has come up with a good answer to yet is, when does a cyber attack equate an act of war? When is a cyber attack an act of war? And when is it justified in doing a normal so-called kinetic attack in response to a cyber attack?

We're in for new territory here, and a lot of the rules are still being developed. But are, I think, in the military, and particularly in the Navy with this chief of Naval Operations, very far ahead. The Marine Corps also has stood up a Cyber Command, also together with the Navy. They're co-located so that we are -- all our doctrine, all our network protection, all the things that we are doing, we're doing across those two services and working with Army and Air Force at the same time.

And you can't just stop with the military; you've got to go to our contractors as well, because they are involved in our networks, too. So I think we're doing a lot of things. But I think we have to do a lot of things because of the level of risk that cyber poses to us.

WYSER-PRATTE: We have time for one more question. The lady in the back.

QUESTIONER: Hello, Mr. Secretary. I'm Kassia Yanosekof with Tana Energy Capital. And we talked about biofuels, but I'm wondering if you could comment on your vision for the Navy's future as it pertains to power. And I'm particularly interested in nuclear. Certainly, the Navy has been a leader in developing the nuclear industry in the United States. How are you seeing that in the future, both in terms of the risk, but also in light of the innovations that are happening in small-scale modular nuclear?

MABUS: Well, as I said, all of our subs, all of carriers are nuclear now, and will be as far into the future as you can see. The Navy is very good at nuclear seagoing vessels.

We used to have some surface combatants which were nuclear. Cruisers were nuclear. The last USS Mississippi was nuclear. The next USS Mississippi, which will be launched this year, is also nuclear, but it's a submarine.

But those surface combatants have all been retired. For us to do nuclear on surface ships, for us to afford the upfront cost, oil has to be at somewhere between 150 (dollars) and $200 a barrel over a sustained amount of time for it to make economic sense for us to do nuclear on surface combatants.

We are -- as I said, we're very neutral in terms of shore-based things, in terms of what we use. If nuclear is a part of that answer, that's fine. And I know that we are looking at some of the small nuclear things, partly because we already have the security on our bases that we could use those things.

But no decision has been made on that. But I know that we will use at least as much nuclear in the future as we are using today, which is about 17 percent of all Navy energy use is nuclear today.

WYSER-PRATTE: Mr. Secretary, our pumpkins have arrived. (Laughs.) I want to thank you on behalf of the council for coming to see us this evening. (Applause.)






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