Fixing the Crisis in Diplomatic Readiness

Monday, January 5, 2009

Background Reading:
A Foreign Affairs Budget for the Future: Fixing the Crisis in Diplomatic Readiness
A Report by the American Academy of Diplomacy and the Stimson Center - October 2008

Background Reading:
A Foreign Affairs Budget for the Future: Fixing the Crisis in Diplomatic Readiness
A Report by the American Academy of Diplomacy and the Stimson Center - October 2008

RICHARD GARDNER: Good evening, everybody. Welcome to this session on fixing the crisis in diplomatic readiness. Kindly turn off your cell phones. And this is an on-the-record meeting.

One of the main purposes tonight is to present an important report, copies of which have been made available to you, a foreign affairs budget for the future. And its been given to several of us. I think we've made sure that it has been put in the hands of the secretary of State-designate.

And it begins on the first page with the following, very provocative sentence -- and I think Hillary Clinton will -- her attention will be grabbed by this sentence -- "Currently, the secretary of State lacks the tools, people, competencies, authorities, programs and funding to execute the president's foreign policy." Wow.

Now, if you think this is a new problem and you want to blame George Bush for it, let me remind you that in the year 2000, there was a similar report by a panel on which I had the privilege of serving, called the Overseas Presence Advisory Panel which said "the United States' overseas presence, which has provided the essential underpinnings of U.S. foreign policy for many decades, is in a state of crisis." Nothing new here.

I had the privilege of writing a Foreign Affairs article in 2000 called "The One Percent Solution" bemoaning the fact that we spent 1 percent of the national budget on foreign affairs -- State Department budget, foreign aid, everything -- 1 percent. Still true.

I pointed out also that the ratio between defense-related spending and foreign-affairs spending was 16, 18-to-1. Still true.

So we have this report, and we hope things are going to change with a new president who has committed himself to revive American diplomacy and to restore the balance between soft power and hard power.

And to tell us how to do this, we have tonight a really extraordinary group. And you know who they are, so I'm not going to take a lot of time describing their backgrounds. But I'll tell you a little bit how we're going to organize this.

Tom Pickering, who's been undersecretary of State of Political Affairs and ambassador to everywhere -- (laughs) -- chairman of the Board of the American Academy of Diplomacy, is going to begin by giving us an overview of this problem and focus then on the core diplomatic functions of the State Department.

Tom Boyatt, who has been the project director for this important effort, is going to talk about diplomatic training and public diplomacy.

Ron Neumann, who is president of the American Academy of Diplomacy, under whose auspices this report has been written, is going to talk about development aid and the increasingly important stability and reconstruction function of the U.S. government.

And finally, my own friend Gordan Adams, professor of international relations, American University, is going to talk about shifting responsibilities now in the Defense Department to the State Department.

And each are going to talk for five minutes, then I'll pose one or two questions to them, and we'll open it up to all of you. I see here an incredible number of experts on foreign affairs, and we want to make most use as we can of the expertise in this room.

Tom, define the problem for us, and give us a summary of the main recommendations.

THOMAS PICKERING: Thank you, Richard. Thank you for having us all.

Thank you, all, for coming out.

It must be a terrifically slow night in New York to have this kind of draw at the Council on Foreign Relations.

Thank you, Richard Haass, for sponsoring us here, to give us an opportunity to do what we have been doing around the country is talking about the serious crisis in diplomacy.

Richard has, more than I could, defined the problem for you. And I'm not going to add a great deal. We are extremely short on well-qualified people. We are not able to fund critical programs in areas like public diplomacy and other questions that will be covered by each of us individually. And it means that the next secretary of State will be a day late and several dollars short if this is not rectified.

And we have put together a proposal that we think will help the State Department in all of its aspects -- AID, public diplomacy, stabilization and reconstruction, core skills and diplomacy in the State Department, security assistance -- get well.

This is an idea that the gentleman to my left, Tom Boyatt, came up with about six or eight months ago when we began to look around at the plethora of studies floating down on Washington and at the notion that diplomacy was going to be the centerpiece for the next administration in dealing with the myriad of foreign affairs problems and who was going to provide the recommendations on how this new diplomacy could be put in place, funded, developed and put at the service of the country. And that's essentially what we did.

The Una Chapman Cox Foundation funded the study. We worked in close concert with the Stimson Center in Washington, where Gordan Adams was in residence. We organized the study around several groups. The key was a series of experienced people, led by and working closely with Gordan, all of whom had had intense and deep budgeting experience in the agencies in which they worked across the full range of the foreign affairs function.

The Academy of Diplomacy helped by bringing together a major steering group which included not just academy members, former senior American diplomats, but representatives of the military services, of the Defense Department and of other agencies of government and some serious and significant outsiders, but including a former director or administrator of AID and so on, to help with the key questions as the budget people began to address this question.

We put together a red team composed purely of academy members who, at each stage of the study, provided outside advice and information on things that we should look at that we might have overlooked as we went ahead.

The task was simply to remedy the hollowing out of our diplomatic service in all of its various aspects across the board, particularly finding and funding the right people to find the right sort of capacities for the future, as Dick clearly made evident to you just a moment ago.

The history of this was that we were down at least 20 percent by 9/11. Secretary Powell, through tremendous efforts, established 1,000 new positions for the State Department, which were immediately swallowed by Iraq and Afghanistan. And so we were no further ahead.

So the task was a very significant one. And it was in that sense that the study came forward, unique because this is the first study that any of us have known of that has taken a very solid and in-depth look with a high level of expertise at what's really required in the budgetary area to help the State Department move ahead to the future.

It is a study which only began with the study itself and which will continue and is continuing in our outreach to the country. It is a study which involved the Congress intensively in the steering group and in most of the work that we put together. It was a study in which the State Department, although it will never admit to it, was deeply involved with us in putting together the recommendations. And it's a study that was built on Secretary Gates' numerous cries for help from the civilian side of the government in putting together the necessary teams to deal with the problems of the future.

It's a study where we have now reached out in over one dozen times across the country to audiences, like yours here, to explain what we had in mind and why we are putting it together.

Let me just provide some brief overview of what the study itself recommends in terms of getting well in the central area of the traditional functions of the State Department. Overall, the recommendation is for, roughly, 5,000 new people to be onboard in the expanded State Department -- if I can put it that way -- AID and public diplomacy and so, between now and 2014. This will require an additional $3.2 billion in budget by the year 2014 in order to fund these sorts of recommendations.

It provided for another slightly over 1,000 people above current levels for the core work of the State Department by 2014. It's a study which, interestingly enough, the present administration -- and I am really slim on my kudos to the present administration, but with all respect to Tom Boyatt sitting next to me, who has a different view of the world -- but Secretary Rice has already introduced into the budget which is well on the way to passage the first traunch of 1,000 people against the 5,000 we're recommending. So this has bipartisan support and bipartisan commitment.

GARDNER: Excuse me. Well on the way to passage in what sense?

PICKERING: Well on the way to passage in a sense it's in conference.

MR. : It is in conference informally by the House and the Senate. The House didn't have a full bill. The Senate had a full bill. They've conferenced it, and it will go into the omnibus in January.

MR. : It's in the omnibus, and the omnibus is probably going to be passed.

PICKERING: We expect to be passed.

The 1,000 additional people in core diplomacy represent about a $500 million commitment by 2014. Many of these people will be doing the traditional work of the State Department, including, obviously, negotiation and representation. The study itself was based on the notion that we should be represented in all capitals overseas, that we have an expanded engagement in many countries, including much more outreach to people at what I would call the working level and to the public beyond, that we should in fact find a way, as was recommended in another study on which we drew heavily, the "Embassy of the Future" report, to deal with security problems, not on the basis that we can avoid every security problem but we can manage the risks. And there are some important ideas in there for training and for other kinds of activities to manage the risk to move this particular process ahead.

It is obviously very important that we provide more training. And Tom is going to pick up at this stage on training and talk about that and, as you advertised, some of the other issues that the study itself has come forward with.

And so let me without further adieu turn it over to Tom.

BOYATT: Thank you, (Don Tomas ?).

On the way in, I and my colleagues had the pleasure of chatting briefly with Ted Sorenson, which was a lot of fun. And during that period, Ted launched a couple of "Sorensonisms" which put me in a very good mood and moved me to counter with what -- it's a "Boyattism" but I think it's in the Sorenson tradition.

We're talking tonight about budgets. There's nothing in the world more boring than budgets. And so we have the same problem as Elizabeth Taylor's fourth husband. (Laughter.) We know what's expected of us, but how in the world do we make it interesting? Thank you, Ted.

In that connection and talking about language training, I will just tell you one quick war story. In November of 1967, as was their want, the Greek Cypriots and the Turk Cypriots were at each other's throats on Cyprus. Turkish fighter planes were flying overhead. They were threatening an invasion. Rauf Denktas, the natural leader of the Turkish community, had been captured by the Greek army, which meant he was that far from being shot while trying to escape.

And we were trying to negotiate some kind of a compromise on the ground in Nicosia. I was the political consular, and I was a Greek -- and to some extent still am -- language officer. And on my staff, I had a Turkish language officer. We had to go back and forth between the lines in the process of working out this negotiation which involved Cyrus Vance who had come galloping to the rescue as a special adviser to Lyndon Johnson. But we had to get through the lines.

And that meant that we had to speak Greek and Turkish. Well, that was a different era. In the '60s, we were trained and we had the resources. And we managed to talk ourselves back and forth between the Greek Cypriot and the Turk Cypriot centuries. And you may not know this, but the most dangerous weapon in the world is a third-world conscript with an automatic weapon.

And in the end, we negotiated a compromise under the terms of which Denktas was released free, alive and well into the Turk Cypriot community, and a negotiation was begun between the Greek Cypriots and the Turk Cypriots, Glafkos Klerides and Rauf Denktas, who had been set free. And the mainland Greeks and Turks withdrew most of their soldiers from the island.

Well, if we had not had that language capability, we would not have been able to do what we did. And if we had not been able to do that, I'm not sure that there would have been a solution to that particular Cyprus crisis.

And while it didn't solve the Cyprus crisis long term, it did put into action a negotiating mechanism which lasted 40 years and is still alive to this day and provided a lot of employment to U.S. diplomats over a 40-year period, including one gentleman in this room, Richard Haass, who was a young diplomat who dealt with the Cyprus problem about, I don't know, 10 years after we did. Richard, the truth is that neither you nor I solved the Cyprus problem, but then neither did anyone else. (Laughs.)

Training -- well, we have to have it. And Tom mentioned that we have a 20 percent staff shortage right now as we're here. And what that means is every time we take somebody out of the line to teach them something -- Urdu, Chinese, management skills, whatever it is -- we're taking a line officer out of a job that needs to be done. And so until we have enough people to do what needs to be done, training is going to be a problem, a serious problem.

Recently, the Government Accountability Office -- they've changed their name again, the GAO -- did a report comparing the number of language-capable officers who were occupying positions that were language designated, language required. And the deficit was 30 percent.

Can you imagine -- and look, language is our basic weapon. If we can't speak the languages to the places where we go, our utility is reduced by half, and the danger to us is doubled. Can you imagine what the reaction of the American people would be if 30 percent of our military forces could not fire a weapon? The people would be horrified, and they should be horrified at the status of our diplomatic establishment today. And the only way that we can deal with this is by training.

And in respect of that, what we are recommending, over a five-year period but front-end loaded, is an increase of 1,287 positions which are not involved in accomplishing work that we need to do, they are involved in training the people that we need to train to do the work that we need to do.

And that would be 334 new positions for language training, 205 for professional education, other training, 160, civil service training, 254. In transit -- we're a worldwide service. At any given moment, a percentage of our establishment is on the move, and we have to cover for that in training, 199 positions, and for temporary duty, both in the sense of being assigned to a temporary position and in the sense of filling in for somebody that's been jerked over to Afghanistan or Iraq for temporary duty, we need those positions as well. That adds up to that figure, which would cost $309.8 million annually after a five-year buildup.

With respect to public diplomacy, the --

MR. : (Off mike.)

BOYATT: Pardon?

MR. : (Off mike.)

BOYATT: With respect to public diplomacy, the personnel situation is even worse than it is in the core diplomacy. It's about a 25 percent shortage. There are 25 fewer public diplomats today than there were in the late '80s. And the only way to fill that is to hire those people and train them and get them out on the line. That will require 487 positions between the 2010 and 2014 budgets as well as 369 locally employed staff.

We are recommending increases in current academic exchanges of 100 percent, double them, international visitor grants by 50 percent and youth exchanges by 25 percent.

In addition, we are recommending a serious increase in PD capacity over the Internet, both in English and in foreign languages. We are a quite long way behind there, and we need to fill that gap.

There are other elements that we are recommending that the next administration consider, but the ones that I've mentioned to you are our bottom line.

And I'll leave it there and turn it over to you.

GARDNER: Okay. Ron, tell us about reconstruction and development assistance.

RONALD NEUMANN: You know, we never discussed which of these areas was in worse shape. That would be an interesting comparison.

I get to talk about, one, AID which is really a contender for the bottom of the barrel, and another, reconstruction and stabilization, which is a capacity that we've never had.

In the field of foreign assistance, I imagine that many of you have heard stories and complaints about the problem we have with contractors. But what you may not realize is that we have so shrunk the staff of U.S. Agency for International Development that they no longer have a capacity to actually do anything.

I first visited Afghanistan as a young man in 1967. When I returned as ambassador in 2005, AID was 90 percent smaller than it had been in 1967 --

GARDNER: Under your dad.

NEUMANN: -- under my father. Well, he didn't have the whole AID. But you know, in 1967, we had an AID that built roads. We now have five engineers worldwide in AID.

So now, if you want to build a road, the only thing you can do is pay a big, expensive contractor to do that. And you have to compete that contract. In the provincial reconstruction teams, these mixtures of military and civilians that we have in now, I think, 26 or 27 -- it was 25 provinces when I left Afghanistan, I had one AID officer in all but a couple of those, both -- where we had teams run by Norwegians and Lithuanians and Swedes and the 11 provinces where we had American teams.

But that one AID officer, first of all, had to have some leave, so -- but in reality, we would only staff that position for 10 months out of the 12 in a year, which is scarcely a serious way to fight a war. And the AID officer could not contract anything directly -- he could only refer projects back -- so it's no wonder that the military was eating our lunch because we had no capacity to eat it ourselves.

In short, AID needs to be rebuilt. It cannot do everything, it cannot have every person. But what has happened over the years as AID has shrunk is that it uses increasingly amounts of money which you think are being allocated for programs in order to hire the people to run the program so that -- for instance, when we had about $100 million for the provincial reconstruction teams and we were spending about 16 million (dollars) of that for salaries and support and the air support we needed to get supplies to those people and move them around, it was a pain but it was 00 you know, 16 out of 100 is not a big cut.

When that program went down to under 50 million (dollars), It was still costing us about 16 million (dollars) to run the staff and support the program because that didn't change very much.

So you have an illusion when you pass AID's budget that you're putting a certain amount of money into programs, but in fact, an enormous amount of what you're passing in the Congress for a program has to go to hire people who aren't in your central budget so that you can execute the program.

So what we've recommended there is another 1,250 people, again, by our magic date of 2014. We've recommended offsetting some 700 of those by taking positions now that are these kind of personal contracts and moving them into the career ranks because we're paying in other parts now. We first were slow to get people because we have to hire them, and then we lose them because they're there for a couple of years.

About half the people I had in the provincial reconstruction teams were people that we had hired on contract. Now, they were mostly excellent people. I had one woman officer who continued to go with the Special Forces to visit projects when the Canadians closed down all travel of their civilian diplomats because one of their diplomats had been killed. She actually got bombed twice in the convoy. She kept the work moving, and she had a phenomenal knowledge of tribes in southern Afghanistan.

And when she left there, she had to go look for a job because she was a contract employee. So that -- we just lost all that experience plus the time we took to hire the person, in microcosm. That's why we're recommending that we move a lot of these jobs into the permanent staff so that we keep that expertise.

The other piece that I'm talking about is the business of stabilization and reconstruction; that is, when you get into a situation, whether it is a Somalia or an Iraq or a Grenada or a Haiti, and you find you're now on the ground and you can't leave for a while, where are the civilians?

I remember talking to a three-star general who said to me, you know, I did this in Grenada and I did it in Panama and I did it in Iraq, and each time I looked around and I said these are really civilian jobs, not just because they ought to do them but because they have the expertise to do them. And I said, where are the civilians who can help him? And they weren't there.

So what we have is a pattern in which we first blunder around and then we learned and then we recruit and then we proceed to forget everything we've learned and do away with the capacity to repeat the job so that we can then blunder around again.

Now, one can have an interesting argument or discussion about whether we ever ought to be in countries doing these jobs. But the lesson of the last 20 years of administrations of both parties of presidents determined not to be involved in this way is that we will be involved again. I think that the lessons simply cannot be (docked ?).

And so what has happened is a recommendation which has been put forward by the administration to create a capacity for stabilization and reconstruction. And that is basically a recommendation which we ourselves have endorsed in this study. And what it would do, in a nutshell, is it would create about 500 permanent slots plus some for training and two levels of -- a reserve that is one within the U.S. government of personnel on tap to be mobilized and a second of professionals with the right kinds of experienced engineers, police, sanitation in the larger civilian community that, like the military Reserve, can be mobilized in a time of crisis.

And we've recommended there an initial cut to start that process. That is also in the administration's budget. There is actually some funding in the supplemental budget that was passed that allows us to get off the ground. But in fact, this new capacity needs to be developed because I think we can be sure, however much we might think it advisable or ill-advised, that we will be in such situation again.

What is up to us as a country to choose is whether we will have some capacity when we get on the ground to have learned from the past and do things a little bit better. And that is one that we recommend very strongly be supported.

And with that point, I'm going to pass to Gordan because I'm trying to stay within these time limits.

GORDAN ADAMS: Thanks, Ron.

Well, Richard, thank you very much for organizing this here. I really appreciate it.

And I want to thank this row of ambassadors that I am on the podium with here. Ambassador Gardner, it was a pleasure to see you again and for chairing us, and Ambassador Pickering for stewarding and shepherding the task force that worked on this, and Ambassador Boyatt for ably steering us in the right direction every time we went off track and managing the project, and Ambassador Neumann for keeping us organized functionally.

And I'm not an ambassador.

NEUMANN: You control the money.

ADAMS: Well, I'm not even honorable, truth be known, because I'm a budget guy. So I'm about as dishonorable and corrupt a person as you can possibly find in the United States government and possibly one of the most boring. Who the heck knows? I mean, if budgets are truly boring.

And what's interesting to me, I think, and exciting about working on this study is that for me it was entering further into a field that I really only came to know when I went to the Office of Management and Budget as associate director back in 1993 and then suddenly landed on my desk not only the responsibility for Defense, which I had been on a steady diet of for 20 or 25 years, but foreign affairs and all of the international relations activities of the United States government from the Office of Management and Budget area of responsibility.

And what I discovered was what an enormous diaspora of organizations and talent we had in the international affairs community in the United States government. So much of a diaspora I like to call it the only place at which all of these pieces came together in one integrated way turned out to be at my desk, which was quite frustrating and quite time consuming at the same time.

So having been responsible for about 90 percent of the dollars in my area of responsibility in Defense, about 90 percent of my problems -- or as it would be called, the (New Yorksaurus ?) -- was over in the functional area of 150, or international affairs because the institutions were weak, because they were chaotic, because they were diasporas spread about.

And having had that experience, I kind of reassigned my own intellectual responsibilities, after that responsibility, to saying it was important to think about ways in which we could rebalance the toolkit of American statecraft because for me, that's what we're talking about here is how do we rebalance the toolkit.

And that means, right now, a strengthening in ways that -- much more dramatic ways than we've done before, the civilian tools. And my particular responsibility here is to talk about strengthening in the area of authorities. We've got some money recommendations in here as well.

But for the secretary of State and the foreign policy institutions to be able to -- (background noise) -- responsibilities in the way in which they would like to become accustomed, we're going to have to think, too, about the way in which authorities have been distributed in the United States government, particularly in recent years as we have encountered the kind of situations that Ron was just talking about.

It's quite startling to note that back in 1998 when the United States government reported its accounting for how much of development assistance was provided by which agencies of government in the United States, some 6 (percent) or 7 percent of the total reporting to the Development Assistance Committee of the OECD in Paris was delivered by the Department of Defense.

In 2007, 18 percent of the development and security assistance of the United States government is provided directly by the Department of Defense. It was 22 percent two years before that. So there's been a substantial shift in the oeuvre de pois, if you will, of effort in American government. So part of what we're talking about in this study is, how do we begin to redefine and reassign authorities in -- between the Department of Defense and the Departments of State and the Agency for International Development.

The reason that that shift took place over the last few years is largely because of what has been known until recently in Washington as the GWOT -- I don't know what the new label is going to be -- but primarily, Iraq, Afghanistan and operations against terrorist organizations. And that has meant a substantial expansion of the military activities that are directly providing both security and economic assistance to other countries.

And as that has begun to happen, the Department of Defense has developed an architecture of programs that are new to the Department of Defense in terms of providing something other than combat services, if you will, one of which -- you've heard of many of these, and I won't give you too much of a discharge of alphabet soup here, but the Commanders Emergency Response Program in Iraq and Afghanistan, or CERP as it's known, which provides what is, by and large, development and humanitarian assistance; economic assistance in Iraq and Afghanistan, a growing training-and-equip program for militaries and security forces of other countries called a Section 1206 program that's for the part of the Defense Authorization Act that authorizes the program; coalition support funds which are funding that we provided largely in the form of reimbursement or budget support to governments in Iraq, Afghanistan and Pakistan for supporting operations against terrorist organizations; a Section 1207 program which was really quite startling. This is a program -- again, Section 1207 of the National Defense Authorization Act -- that allows the Defense Department to reimburse the State Department for projects the State Department for projects the State Department is conducting of a more developmental nature or training nature in other countries, particularly in the areas of reconstruction and stabilization.

And all of these authorities have developed and exist now in law for the Department of Defense, but they are not State Department authorities. They do, however, have parallels in existing State Department programs, in development assistance, economic support funds, foreign military financing, peacekeeping operation funding, the operations of the Office of Foreign Disaster Assistance. There are many pieces in this diaspora I talked about who do things similar to what these authorities are now doing under the auspices of the Department of Defense.

And Secretary Gates, whose support I have enormously welcomed for improving and strengthening the civilian capacity of the United States government, has also sought to make all of these authorities permanent law, global in their application and to provide larger funding for them.

We look in this in this report, and the first question, of course, is, why has this happened? Well, it has happened because of the nature of the situations we found ourselves in. The possibility of flexible and fast action which exists more in the military instruments of statecraft than it does in the civilian instruments of statecraft. They are flexible, they move quickly; these are very flexible authorities; and because the Defense Department doesn't find it as hard as the State Department and AID to raise the money to do these things. These are rather small programs in a $700 billion Defense budget that can be rather large in a $35 billion State Department-AID budget.

So that's why it has happened. The problem, of course, is that in many of these areas these are not core skills of the military and they are skills that exist in -- (background noise) -- in the civilian institutions. A further problem is that by repeatedly saying let Defense do it, we further weaken the capacity of the civilian agencies of government to do the job.

And finally (willieu nillieu ?) it means we put an increasingly uniformed face on America's global engagement, which has an upside, they're effective, and a downside, they're in uniform. And from another country's perspective, that can be problematic.

So what we have suggested in the report is that the secretary of State should have the policy and the budgetary responsibility for these kinds of programs. It would remain true that because they have on-the-ground capability, in many cases, the Defense Department and the uniformed military would implement these programs. Diplomats are not natural military trainers, soldiers tend to be.

So you would retain the kind of relationship we've had historically in the United States government where State shapes -- defines the policy, chooses the countries, works on the budget, and the Department of Defense and the services are the implementers.

So what we recommend in the report is that over time we should transition these authorities back to State, but do it over time because we have to, at the same time, strengthen the capabilities of State to carry them out. We recommend, for example, adding 50 POLMIL officers, political-military officers, to the Department of State as part of our personnel increase.

And then the secretary of State would be responsible for budgetary and policy responsibilities for these programs, and the Defense Department would be the implementer, recognizing that in some areas the Department of Defense is involved in combat operations or the environment is not secure enough to allow a diplomat or an AID provider to step in and do this job, retaining authorities for areas of combat operations with the Department of Defense. And there's a total budget shift involved here of about $785 million.

Thank you.

GARDNER: Okay. Now, we've had some very important, specific proposals. Allow me to try to pull all this together with some big, round numbers. And I'm going to put one big question to you, and then we'll open it up to the audience.

We have a gross domestic product of about $15 trillion. It's going down fast -- (laughter) -- but roughly $15 trillion. We have a federal budget of about 3 trillion (dollars).

Now, Gordan, you're the numbers cruncher. If I don't get this quite right -- these are round numbers, $3 trillion national budget.

Of that, about 1.8 trillion (dollars) are mandatory payments, we can't change them, for Social Security, Medicare, the interest on the national debt, veterans benefits, which leaves about 1.2 trillion (dollars) for discretionary spending. Of that, defense-related stuff is about 700 billion (dollars). So that leaves about 500 billion (dollars) for everything else.

Of that, the international account is 39 billion (dollars), but 5 billion (dollars) of that is military aid, so strike that. That's, you know, about 34 billion (dollars), for the foreign affairs account.

Of that, the State Department is 10 billion (dollars). The 3 billion (dollars) of that is paying our dues to the U.N. and peacekeeping, 3 billion (dollars) of that is for international institutions, peacekeeping. So that's 7 billion (dollars) to run the State Department and pay the Foreign Service officers and everybody to run things.

By the way, in that 7 billion (dollars) is 500 million (dollars) for public diplomacy, for the Fulbright Program and the visitors programs which are vitally important. I think -- as you say, I think you're recommending a doubling and tripling of those.

The foreign aid is about 24 billion (dollars). That's for development assistance, both bilateral and contributions to local lateral institutions.

PICKERING: International --

GARDNER: International bank-related stuff, yeah.

Okay. So that's where we are.

Now, question -- we're talking about 34 billion (dollars) out of this huge budget. And yet, these reports have been made over the years, and we haven't been able to increase the 1 percent for foreign affairs. A new president comes in, Hillary Clinton takes your wonderful report over there. And the president calls in his Office of Budget and Management and says, what do you think about this? He says, no way, fellas. I mean, the Congress isn't going to go for this. Mr. President, we're adding $1 trillion of spending in this economic crisis. Our procurement budget in Defense in already underfunded with all these big weapons programs. How do you propose to do what hasn't been done in the last 20 years, to change the 1 percent? It's a problem. How do you do it?

PICKERING: Let me begin. Look at the problem the other way. We just spent $700 billion to try to find an answer to our economic crisis. And in fact, we're still in search of the answer, and the news tells us we're about to go to another $800 billion.

We are recommending a total increase of $3.286 billion by 2014 --

GARDNER: How much now?

PICKERING: -- $3.286 billion.

GARDNER: A little over 3 billion (dollars).

PICKERING: A little over $3 billion.

GARDNER: This whole thing is about $3 billion?

PICKERING: Exactly. The whole thing is about $3 billion. Now, the world's wealthiest country cannot afford $3 billion to avoid the kinds of wars that have now ballooned -- you have the official Defense Department budget which is the schedule budget but you don't have the supplementals. With the supplementals, we're easily looking at almost $1 trillion in the Defense budget.

So our view is that the rounding errors in the Defense Department budget are more than sufficient to fund the kind of program that we have put forward.

GARDNER: Let me interrupt you for a second. You said $3 billion, but the president-elect has proposed to double foreign aid. And of course, he's pulled back a little bit on that.

PICKERING: Well, I mean, I think, more power to him. I'd love to see him double foreign aid. And I'd love to see him pay for it --

GARDNER: It's more than $3 billion.

PICKERING: No, the kind of -- we are recommending in our report $3.286 billion to provide the personnel necessary to carry out the president's foreign policy as we currently see it plus some add-on on critical programs which Tom Boyatt has just mentioned in public diplomacy. So we are not recommending large increases.

Now, if you're going to put a 25 (percent) to 50 percent increase in foreign aid, of course, you're going to have to pay for it. You're going to have to pay for the people to do that. So my view is that this is a relatively minuscule suggestion to do a great deal. After all, if diplomacy is effective, we can avoid military engagements. And the relationship in numbers, in savings, gets to be close to 1,000-to-1 if you want to make a monetary case, a budgetary case for that particular issue.

THOMAS BOYATT: Can I add to what my (cocaillo ?) has said. We have taken -- this report, for us, is a political action document, and we have taken it to both campaigns. We've taken it to all of the committee chairmen, both authorizers and appropriators, both houses, both parties, and nobody has thrown us out of the office yet.

In fact, on the day that the Senate was debating TARP I, Tom Pickering and a couple of others called on Patrick Leahy, who is the chairman of the State Department subcommittee, appropriator, and Judd Gregg and, you know --

PICKERING: He was a -- he --

(Cross talk.)

BOYATT: (Laughs.) Yes.

PICKERING: We pulled him out of the negotiation.

BOYATT: Yes. And you know, we thought that our meetings would be canceled. They weren't. Both of these distinguished gentlemen, who are appropriators now, came up off the floor and talked to us. And they talked to us in the sense of we have a problem here, we're not doing enough diplomacy, too much of our diplomacy is militarized. We have to do something about this. So this is not dead on arrival on the Hill.

With respect to the president, I think I could say what Susan Rice told me in July, long before -- well, Senator Obama was still a senator. She said, you're preaching to the choir. We want to do this. Senator Obama is committed to a 25 percent increase which I didn't know because I hadn't read all of his speeches, a 25 percent increase in the Foreign Service, without being specific about exactly what that meant.

But that's significant, Richard.

And you know, when you spend your life in Washington, you can sense when the planets and stars align on a certain idea or conflict or policy. And the stars are aligned on the proposition that we need to do more on the soft side of our national security, we need to do more on diplomacy. Well, let me tell you, it's not just an issue of ideas and policies and decisions. It's an issue of people.


Now we open it up to the audience.

Gary Sick over there. Could you -- wait until you get the microphone. Identify yourself, and pose your question. One question per person.

QUESTIONER: Gary Sick, Columbia University. I was just curious. Many of us who have been out in the field at one time or another had a -- have fond memories of USIA and those libraries that were in various places. And I wondered whether all of your, you know, cumulated experience whether you found that to be a cost-effective investment or whether there was any thought given to actually recreating that institution which was done away with so, you know, badly at one point along the way.

BOYATT: We included that, Gary, as a suggestion, not a requirement.

NEUMANN: Not the institution, the libraries.

BOYATT: The -- hang on, I've got it here.

NEUMANN: While Tom finds the figures, let me just say, generally, across the board in the study, we tried to stay away from questions of institutional formation and organization, which have been done extensively in multiple reports over the years, usually without a conclusion. But we stayed away from them specifically because our feeling was that when you go into these theoretical debates of organization, you often don't emerge again to discuss dollars.

So we tried to focus on what are the current missions -- what are the people you need to do them, no matter how organized. And within that context --

BOYATT: Within that context, we did recommend that the new administration consider the reestablishment of 40 American cultural centers which are what we all knew as the USIA libraries around the world. And it would make specific sense to do it in countries that are considered targets of transformational diplomacy.

PICKERING: In addition, Gary, we recommended that about 20 of these centers in Latin America, which have been completely privatized, receive additional government backing and support so they can expand their work and capacity.

GARDNER: I see Bruce Gell (ph) -- (inaudible) -- ambassador. Take the microphone. I know you've given a lot of thought to this Bruce.

QUESTIONER: First of all, I'd like to just say that it was a great effort and a very expensive one to do this report. And it's a very detailed report. But from my point of view, a very fundamental problem exists and leads to a question. It sounds very much to me like what's wrong with our current education problem and policy. And if you talk to the educators, what you hear is we need more teachers and more money. And in this particular program, it's we need more people and we need more money.

My question is this. When the State Department includes what they need more than almost anything today is to have someone who can speak fluent Urdu or Farsi or one of the more exotic languages of that area, and they need $100,000 in order to get that individual. And they go to the private sector to find that 100,000 (dollars) and they don't find it, and the United States suddenly is in a position where we are waiting for something to happen.

With all the money that the State Department is spending on other things, it raises the question, isn't your problem that you're spending your money incorrectly? That your example of being you hire someone to do public diplomacy, he or she has to spend two years as a consular officer before they can even start to do public diplomacy. And if that is one of the specifics, are there not other things that are being done now, which reflect what you've been doing, for years and years and years, which require rethinking of what the role of the State Department is? That's my question.

GARDNER: We'll all go at it. Go ahead.

Ron, you begin.

NEUMANN: Okay. There are certainly things where we could do something better. I do think, first of all, with some exceptions, it is not possible to substitute too many academic programs and language training for what we're doing because very few of them are as intensive and as focused on getting somebody out the door in a relatively short time to converse.

There are some things we could be doing better. Arabic, we could use some more university education, frankly.

But the problem on language training specifically is that unless you have the bodies to devote to the training, whether you do it in the private sector or in the public sector, you can't make the body available in the first place. And our society does not produce enough qualified people, who are linguists, who also have the other skills that we need in the diplomatic arena.

Other countries can and have, in some cases, required a different level of language for entry. We've not found that to be workable for a lot of reasons that go beyond this study.

But the reason we have this shortage now -- I mean, there probably are multiple reasons, there are probably improvements around the edge. But you can't take the bodies and put them in training because they have the -- (inaudible) -- meeting them out in the field. You can't ever get there, even if you shift the monetary resources around.

So for instance, this year, each regional bureau, I guess, the functional as well, are being told freeze 10 percent of your positions, just don't even fill them, because we don't have the bodies.

I went by the South Asia Bureau where I had spent a year getting 19 PRT positions language designated to get pushed through and -- (inaudible) -- speakers into them. And two of the positions that bureau is freezing right now are language-training positions on the desperate hope that when the next year's cycle comes around they'll find somebody who speaks one of those languages that they can assign because they can't afford to train them. It's not the money they can't afford, it's they don't have -- they've got to leave something empty that they can't fill.

And so they're betting (on the come ?) that they'll find somebody a year from now while leaving a training slot empty so that they can fill a slot in the field.

PICKERING: Let me just --

GARDNER: Very quickly because we have a couple of more questions.

PICKERING: The American business community has been on the back of the State Department for the last five years because of the problems with bringing foreigners in on visas. And you know and I know the results of 9/11 are to be more careful and more scrupulous about it. So who's going to issue the visas if we don't have consular officers? So they're all very high priority.

I don't know whether it's become clear to you or not. The State Department has no special allocation of people in training. Whenever it trains somebody, as Tom said a while ago, they have to be pulled out of the front line, and they cannot be replaced because there is no money to fund the position to replace them.

So we are suggesting 1,000 positions for a combination of training, transfers and other requirements in the Foreign Service to begin that process. That costs money. You don't get 1,000 positions if you don't get the funding to hire the people to fill those positions. But that's the only way.

And you compare it with the military. Thank God, when they're not in combat they're training full time. But in effect, they don't have the problem of pulling people out of the front line to go to training because they maintain at least one brigade back for every two they have going forward. So we need to have that same capacity.

GARDNER: Sir, yes, over there, yes.

QUESTIONER: Richard Tolman, Corporate Perspectives and Columbia University. I've been involved in my life in two major corporate turnarounds. Some work better than others. And the thing that always struck me was the problem of culture. Without the skills and the culture in the host organization, you really can't make the changes you want to make.

So my first question has to do with, does the State Department, is its culture so hollowed out that many of these new areas, public diplomacy and stabilization, will turn out to be ineffectual and difficult to actually carry out because we don't have the folks there to manage it?

The worst of all worlds will be to have sort of a public diplomacy Katrina occur in the next administration.

The second point that I have has to do with --

GARDNER: One question.

QUESTIONER: Well, the point of the second thing -- culture -- and the second part of the problem is organization. I think you've dealt with this issue of how to do it from the point of the view of the State Department. But I've talked with the military people here and other places. I'm told very often that the strength of their organization is they now have geographic commands and they're able to make organizational trade-offs, of course, around the different forces.

If we were talking about United States public diplomacy as opposed to Department of State public diplomacy, is there an organizational issue here that we haven't addressed, or at least that we haven't heard from tonight?

Thank you.

BOYATT: There's some confusion in your question, I think. We're not just talking about public diplomacy. We're talking about diplomacy broadly defined. And we break that down into these six segments that (Don Tomas ?) talked about, one of which is public diplomacy, one of which is classical diplomacy, one of which is development diplomacy, stabilization, (training ?) and the rest. It's not, you know, an either-or situation.

If you want to know what -- and this is a problem for us. The culture of -- the State Department is just a bureaucracy. It's an organization chart. The Foreign Service is 6,500 people, two-thirds of whom, at any given moment, are overseas. Our culture is driven by what we do in those embassies and consulates, and there's some 269 of them in 189 countries.

That's what drives our culture. It's the culture of achieving something overseas. That's the culture. And part of that of what you achieve is public diplomacy, part of what you achieve is the negotiation and representation, classical diplomacy.

Another part of what you achieve is development. If you happen to be the ambassador in Colombia, as I was for three years, what you try to achieve is some management over the supply of drugs to the -- you know, there are sorts of things out there that are driven by the overseas culture of the foreign affairs people who are in an embassy.

And in that world, it's we live with danger, and we live with unpleasant environments. And we are now living without enough people to do what we're supposed to do, and we intend to change that. But if you want to get at the culture, then you have to understand that foreign policy and diplomacy is not a Washington phenomenon, it's an overseas phenomenon.

NEUMANN (?): But the training is a key piece of it.

BOYATT: Oh, yeah.

NEUMANN (?): If you're going to take on a more active role, we're already doing it, in part. I was doing a lot of it in Afghanistan. But if we're going to manage new skills and expanded skills, then we do need to train as people move up. And so if we don't balance the increase in function with the increase -- and numbers with the increase in training, then we will have the problem you talk about. We'll do it badly.

GARDNER: Okay, we have only five minutes left. I see about 12 hands, so I'm in a difficult position.

Let me suggest maybe we just have three or four questions, one after the other, and then we have a final round.

Nick Platt (ph), Ted Sorenson and then -- we'll see. Go ahead.

QUESTIONER: I've been a language officer and I've been a Foreign Service officer and I've been an ambassador and I've been a member of the academy and so on and so forth. This panel knows exactly what to do and knows just how to advise the president. And it's a very modest proposal.

But the problem is the Foreign Service has never had a domestic constituency. This has been at the root of our inability to get the kind of funding that we have needed.

So my question is this. We talk about public diplomacy. We all know what that means. But has any thought been given to explaining the role of diplomacy to the American public?

GARDNER: Okay. Ted.

QUESTIONER: I'm Ted Sorenson at Paul Weiss. In the budget appropriation process, is it carved in stone as to whether it is the Congress or the executive branch that allocates certain functions either to the State Department, which is puny, or to the Defense Department which is swollen? I'm thinking, for example, of military sales and assistance and of military protection for diplomats, such as the ludicrous contract given to the -- what were they called -- Blackwater people who clearly didn't understand American diplomacy or anything resembling it.

GARDNER: All right. Maybe two more and then we -- yes, over there. Go ahead. I can't -- I think it's somebody I know, but I can't -- oh, yes.

(Cross talk, laughter.)

QUESTIONER: You couldn't see me. (Laughs.) It's Wendy Luers, Foundation for a Civil Society. This is not a rhetorical question. People have been trying to solve the problem with USAID, moving it around, making it a separate place, bringing it into State. And the revolving door that you were talking about is also a natural revolving door into the budget and proposal departments of all of the contractors that are getting these contracts.

Does your report propose where AID is going to sit and what is the line of command to it? And secondly, how do you propose to change that culture?

GARDNER: Last question.

Bill Vanden Hill, will you ask a question? And then --

(Cross talk.)

QUESTIONER: I think Ambassador Boyatt was correct in saying the stars are in alignment. What you're echoing is what everyone is talking about, an economic crisis and jobs, it seems to me. And it seems to me that you have one constituent that you really have to appeal to because you have the opportunity of having one of the most effective, powerful political advocates for your cause in exactly the right position, the next secretary of State.

GARDNER: At exactly the right time.

QUESTIONER: I would like to ask whether or not you have presented your cause to the secretary-designate. And in doing so, do you intend to add more women to the (advocacy ?) group? (Laughter.)

BOYATT: All right. I will ignore the ad hominem -- (inaudible). (Laughs.)

GARDNER: If we don't close this in three minutes, I'll be criticized by the management for having exceeded our time. But do you want to respond, any of you?

BOYATT: I want to say something to Vanden Hill.

GARDNER: All right. Okay.

BOYATT: The answer to your question is yes. And it is our intention that -- Nick, things have happened since your day. We have a political action committee now. We have a program, and we've taken this report that we've made to you to 15 cities all over the United States. And that's just the beginning. We're going to do 15, maybe 30 more, depending on how long the money lasts.

And you know, with our political action committee, we don't give hundreds of millions, but we give the maximum every year, year after year, shooting with a rifle to the chairman and ranking members, 50-50 to each party, on the committees that matter to us. So we're beginning to have a constituency in that sense. We're working on it, we're building it.

If, as I fully expect, the secretary of State decides on a very robust budget for 2010, 2011, 2O12, we will give her 110 percent support, and we'll do it publicly, we'll do it on the Hill, and we'll do it with our money. And I think that it's going to carry the day regardless of what happens in the domestic sphere.

QUESTIONER: (Off mike.)

BOYATT: Pardon?

QUESTIONER: (Off mike.)

BOYATT: Well, we've met with the transition team. And there's sort of a prohibition against her meeting with people until she's confirmed.

PICKERING: And that's standard Bill, and I think we have every expectation we're going to have an opportunity to make a presentation to her and, we hope, her key people. And that we can expect a kind of support because we think she is the kind of secretary who is going to want to have these kind of activities. Just exactly what you said.

When the AID is now reporting to the secretary of State, we didn't recommend changing the boxes or changing structure. We recommended how to get well in terms of carrying out the president's foreign policy within the current restraints that are there or the current authorities that are there with some changes which Gordan mentioned.

We think in fact that this is a reasonable structure. We think that the process can go ahead. Our problem is that AID has gone from 6,500 officers 20 years ago to 2,000. And it is a contract management agency, and it very dearly needs more people working on its own roles to get its job done effectively.

NEUMANN: Just two last comments maybe. And Gordan, you might want to pick up on the AID question, particularly.

There is a time lag, in addition to the reasons I spoke about, for not getting into institutional change, whether AID should be a Cabinet department, whether USIA should be reconstituted.

We were trying to look at where we need to be in five years and the ramp-up to get there. If you make a decision today to establish a new department, by the time you have done it and budgeted it, you're two years out --

PICKERING: At least.

NEUMANN: -- before it comes into being, before it is staffed and has people. So our view was we stay away from those discussions because, first of all, they tend to mire you in a discussion from which you never get back to being able to do the job under any structure. And secondly, because there is enough time in those kind of discussions that if you have an institutional change, you can adapt, what we're talking about, to the new institution. But you can't do it the other way around.

GARDNER: Okay. We're losing our distinguished group because -- (laughter) -- Tom has to --

BOYATT: The sheriff's on the way.

GARDNER: The sheriff's on the way. As we close, I remind you of another very good document that was made available to you tonight. It is this article in the current issue of Foreign Affairs by J. Anthony Holmes, "Where are the Civilians?" And in it, you'll find the following sentences. The number of lawyers at the Defense Department is larger than the entire U.S. diplomatic corps. And there are more musicians in the military band than there are U.S. diplomats. We are hoping that as a result of this report and this meeting tonight, that situation will change.

Thank you, all, very much. (Applause.)







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