International Security Partnerships and Our Shared Responsibility: A Conversation with Janet Napolitano

TERRY MORAN: There we go.

And welcome to the Council on Foreign Relations meeting with Department of Homeland Security Secretary Janet Napolitano.

I'd like to welcome also CFR's national members here who are participating in this meeting via a password-protected teleconference. We'll see how well that password protection works.

Now one thing -- and this is an excellent reminder to me as well -- we're going to turn these off altogether, not just onto vibrate, because it will -- the radio signal will interfere with the broadcast. So please turn off all cellphones.

This meeting is on the record. That is a reminder to everyone.

And before we begin, I just wanted to look ahead on the council's schedule. On December the 14th there's an upcoming meeting you may be interested in, The Geopolitics of the Arctic, with Scott Borgerson and Paula Dobriansky. For more information on the upcoming events, look at the insert in the program today.

And it is my pleasure and privilege to introduce our speaker today. It's a -- it's a very good time to hear from Janet Napolitano because she's just returned to the United States. Janet Napolitano is the third secretary of the Department of Homeland Security, the department obviously founded after 9/11, tasked with keeping us all safe and secure. She's the 21st governor of Arizona. And as I say, she's just returned from a whirlwind trip to Paris, where she was participating in the G-6 plus one interior ministers and security ministers meeting, and then a trip to the Gulf at -- in Doha, Dubai and Abu Dhabi. And she'd like to talk about the role of international partnerships in homeland security.

Janet Napolitano. (Applause.)

JANET NAPOLITANO: Thank you. Well, thank you very much. Good morning to everybody. Thanks, Terry, and thanks to the Council on Foreign Relations for having this session here today.

I'm excited to join you. I've just returned, as was said, from a very productive trip to Europe and to the Middle East where we advanced a number of critical issues with our partners.

And one of the questions I am frequently asked, when people hear I have been overseas, is, what exactly does the Homeland Security Department do abroad? And the answer is, quite frankly, a huge amount, because in today's world, the nexus between homeland security and security abroad cannot be decoupled. We live in a globalized world. It is connected by complex networks in which the movement of people and goods and ideas never stops. And threats to our domestic security both physical and economic do not recognize national boundaries. It's -- the interconnected nature of travel and trade and commerce means that a vulnerability or gap across the globe can impact security thousands of miles away.

So whether it's a printer cartridge from Yemen, a traveler from Nigeria, an unregistered boat coming from Central America, the threats and the opportunities from all corners of the world are my daily work. Our domestic security, thus, is inextricably linked to the rest of the world. It is a shared responsibility among governments, the private sector, individuals and communities. It is a global enterprise.

And the challenges faced by the United States in this regard are not unique to us. Interior ministers, home secretaries and other security officials around the world confront them. The shared challenges present a chance to build mutually beneficial partnerships and to leverage resources to strengthen the safety and security of peoples around the world. This is particularly true where mutual economic opportunity can be enhanced by shared security responsibility.

Let me put some granularity on this. Let me give you some examples of multilateral initiatives we have undertaken over the past several years.

One, we have been working closely with the International Civil Aviation Organization, ICAO, and many other international partners on an initiative to strengthen the global aviation system against ever-evolving terrorist threats. This effort culminated last year with the adoption by 190 countries at the ICAO triennial assembly on a declaration of aviation security, which, in effect, laid a new foundation for a global aviation security system.

At the same time, for more than a year now the Department of Homeland Security has been leading a global supply chain security initiative to protect the vast amounts of goods and commerce that traverse the globe every day and that drive our global economy. We work closely with the World Customs Organization, the International Maritime Organization and ICAO.

And what do these initiatives look like in practice? It means that the WCO, at the United States' urging, has created something called Program Global Shield that enables customs services around the world to alert each other to suspicious shipments of precursor chemicals used to make explosives. We've made dozens of seizures in this regard, stopping just last year 33 metric tons.

When it comes to securing the global supply chain, our work was already under way when we saw the attempted terrorist attacks on cargo operations out of Yemen in October of 2010. Following that incident, the director of the TSA, John Pistole, and a team of inspectors immediately went to Yemen to assess cargo security and to see how we could help make it more secure. We have provided threats not -- or training -- excuse me -- not only to Yemen but indeed around the world to help secure the cargo network. Along with -- those are just two examples, but along with these multilateral initiatives, we have worked on a bilateral basis with many countries around the world. And as was mentioned, the trip I just took provides an illustration of how these multilateral and bilateral relationships work.

At the G-6 plus one meeting, which brings together DHS and our counterpart ministries from Europe's top six countries, its largest countries, we made great progress on concluding an agreement with the Europeans on information sharing about passenger travel, known colloquially as PNR, passenger name records. These are records that we use to analyze travelers boarding flights to the United States from abroad and to make sure that passengers are not susceptible to doing harm to aviation or to the homeland.

We also made, on the same trip, important progress on key bilateral agreements with countries in the Middle East. In Qatar, we signed an aviation agreement to strengthen our ability to combat transnational crime and other threats while facilitating travel and international trade. We established common objectives on security and trade in two unique ways.

First, we've agreed with Qatar to have the Department of Homeland Security, the United States, put customs and immigration officers in the Dubai airport or the Doha airport to advise Qatari law enforcement officials on the admissibility of passengers into the United States prior to boarding and traveling to our country. If a passenger is determined to be (inadmissible ?), our agents will provide that information to the Qatar officials and they in turn can prevent the -- a passenger from traveling at all. We have similar agreements with nine other countries, but this is the first of two such agreements now in the Middle East.

Second, we agreed to pilot the use of global entry, which is CBP's trusted travelers program, to expedite the entry into the United States for a limited number of vetted Qatari citizens. Again, there are similar arrangements with five other countries, notably Canada and Mexico, but this is the first such agreement in the Middle East.

With these two agreements, we will better secure our country and better facilitate lawful travel and trade with Qatar.

In the UAE, we met with the crown prince of Abu Dhabi -- this was the third time I'd been to Abu Dhabi, actually, as secretary -- we reached a similarly mutual beneficial set of agreements. As in Doha, we agreed to place our customs and immigration officers at Abu Dhabi airport to advise Emirati law enforcement officials about the admissibility of passengers. We also signed a letter of intent to commence the process of establishing preclearance in Abu Dhabi.

Preclearance allows passengers and their luggage heading to the United States to be fully screened by our customs and immigration officials before boarding the plane in their country of origin, allowing us effectively to push our borders outward while facilitating a more beneficial customer and traveler experience.

The issues tackled in these sorts of meetings obviously represent only a fraction of the work we do overseas. I haven't talked about the work we're doing on cybersecurity, on human trafficking, on emergency response, our extensive collaboration with a number of countries, from Mexico to India, but I think the important conclusion is that there is a new paradigm in how our country engages with our foreign partners, an engagement driven by the mutual opportunity to enhance security and to promote economic benefits at the same time.

Every refinement on how we share information, every efficiency we gain in screening for high-risk travelers helps us get out of the way of legitimate travel and trade and facilitate the work that must go on around the world, because if perceived security hassles discourage people from coming to the United States to do business and to spend money, we lose out and, in today's world, we simply cannot afford to do that.

Other opportunities for these types of mutually beneficial engagement agreements exist across the homeland security enterprise. Cybersecurity in particular continues to emerge as a shared concern across nations, while combatting transnational crime, human trafficking and other law enforcement issues obviously requires international cooperations.

We will continue to work across the globe. Indeed, immediately upon my return, I joined President Obama and Canadian Prime Minister Harper to announce the Beyond the Borders Action Plan, which DHS has had a key role in shaping and will have a primary role in implementing. Canada is our largest trading partner, and this action plan will further strengthen coordination with the combination of security and the facilitation of trade and commerce across the border.

So this new paradigm, the engagement at the interior, home secretary level, the merger of security interests with travel and trade and commercial interests becomes, I believe, the new future of homeland security. And in the end I think it will help make us even more secure.

So I will stop talking there, Terry, and let's have some conversation.

Thank you all very much. (Applause.)

MORAN: Well, that gives us a lot to talk about. A new paradigm for engaging international partners on these issues -- and I want to ask about that in kind of a general sense. Some of the partnerships that you're developing are not with traditional historically close allies. You're branching out, it sounds like. What are the benchmarks that you look for in an international partnership that you know the governments are going to be able to do the job? Let me put it colloquially: How do you know who you can trust?

NAPOLITANO: Well, first of all, we work closely -- there's a lot of work that goes on before we would enter into an agreement. There's -- and that work, ongoing, develops that sense of trust.

As I mentioned, this was my third time in Abu Dhabi. It's the kind of relationship where you know each other by name; you call each other on the phone in between trips; when they're in Washington, they visit, and likewise the reverse. So part of it is at the personal level. Part of it obviously is at the diplomatic level. We work closely with the State Department. And then we often, in these agreements, do a pilot first before we go into full implementation just to make sure that everybody has a common understanding, that we know what is expected of us, they know what is expected of them. And then we go into full implementation.

So for example, the new agreement with the UAE -- we will begin first with putting immigration and customs officials in the airport at Abu Dhabi, and then we'll move into full pre-clearance. And pre-clearance -- you know, it -- this is -- this is a big deal. We don't have pre-clearance in many places around the world. To be able to take travelers and, in effect, enter them into the United States before they board a plane abroad is a -- is a huge step forward in really facilitating that international engagement.

MORAN: OK, these issues can occasionally become political issues --

NAPOLITANO: Really? (Laughter.)

MORAN: -- and even get demagogued out there sometimes. But let me ask that -- you can imagine parts of the -- our political spectrum who just don't like the sound of that, that we're going to pre-clear people out of parts of the world which we've seen as sources of violent extremism, international terrorism. How do you put those minds or those arguments to rest?

NAPOLITANO: Well, first of all, the standards and requirements for pre-clearance are quite stiff. And it's not as if we are not physically there. We are physically there. It's our system that is being deployed. But it's being deployed earlier in the process. It's being deployed overseas.

We've had pre-clearance. We have it in some very unusual places, in some respects. I think we have it in Bermuda. We have it in -- at Shannon and Dublin airports in Ireland. But this was -- in terms of us looking across the globe and seeing where we really want to not just facilitate travel, but know who's traveling, these countries in the Gulf and in the Middle East are key partners. And it's advantageous to them. It's advantageous to us. It allows us to find a smart middle ground -- or common ground, better said, where our interests coincide. And that in and of itself helps build a stronger strategic partnership.

MORAN: How will you know it succeeds?

NAPOLITANO: Well, we will -- I think we'll see travelers move to the pre-cleared routes. I think -- I think that'll be the easiest way to see because they'll recognize that having pre-cleared abroad so that when you get off of that 13-hour flight and land at Dulles or JFK, you don't have to wait in lines -- I think most travelers would view that as an advantage. So I think you'll measure it by how travel routes adjust.

MORAN: Mmm hmm. Let me ask you question that I know the secretary of Department of Homeland Security always gets. But you're here, so why not. What keeps you up at night right now? As you look at the raft of endeavors and of programs that you're undertaking to address threats and problems, what keeps you up at night?

NAPOLITANO: Well, I think -- you know, the things I know about don't keep me up, because they're being handled. It's the -- it's the things you don't know about but can imagine, where you're trying to really think your way through and be proactive -- that can -- that can engage you in some nighttime thinking. So the known/unknown, as has been said before, is something I think anyone in a position like this one has to -- has to be concerned with.

MORAN: Privacy, which was a big issue in the agreement that you reached with the G-6 plus one, and more broadly than that, for a lot of people in a lot of countries around the world, there's this sense of the encroaching eyes of government on us at every single stage.

NAPOLITANO: Yeah.

MORAN: You get that all the time. So what do you say as you reach these agreements, push our borders and the United States' way of doing things out into countries which have different traditions and values, perhaps? Is big sister watching?

NAPOLITANO: I think "big sis" is my moniker in the Drudge Report. (Laughter.) So I knew I'd actually made it when I had my own name in the Drudge Report. You know, that's the standard.

The PNR agreement is a good example of this. PNR agreement is actually -- will be with the EU; and it's the post-Lisbon Treaty EU, which means we've had to negotiate with the commission. We've now finished an agreement, and initialed it with the commission. We anticipate it to be improved by the council next week on the 13th, and then we will have to go and have it ratified by the European Parliament. We have been the lead negotiator for the U.S. on this agreement. And one of the key sticking points has been data privacy protection, which is one of the fundamental rights in the Charter of Rights in the EU.

You know, there -- you know, one of the key things we've had to do is to educate our EU partners that the United States values privacy, too, and we value our personal information. We just have different legal systems by which to address them. And in the new PNR agreement, I think we've reached accommodation with the EU privacy interests, consistent with the way the United States handles privacy and data protection issues.

And at the same time, by being able to exchange PNR and have that agreement in place, we will have one of the more effective and important tools available to us to know about the international travel of potential terrorists, transnational criminals and the like.

I could mention Najibullah Zazi, David Headley are just two of the individuals that we have helped identify through the PNR data.

MORAN: For every Najibullah Zazi or David Headley, the horror stories are out there that there's a David Headley who's not the David Headley you want.

NAPOLITANO: Right, right.

MORAN: How long does his personal information, his data remain in data banks that he might rightly feel violate his privacy?

NAPOLITANO: Under the new agreement, the travel information remains six months, and then there's a tiered system by which it is anonymized but is available to be retrieved on an as-needed basis. So what we've done is kind of look at it from a -- what do you need from a law enforcement perspective, a security perspective and a privacy perspective. And the EU negotiators felt that was a reasonable way to approach a problem. I think it's reasonable as well, obviously.

MORAN: And that gets us to terrorism, violent extremism. The threat is of a different nature now. Ten years ago, obviously, al-Qaida had a country to operate from. Their capacities have been degraded. And you have almost a kind of spread of the threat down to individual lone wolves, as you say.

How significant a threat is that, the individual traveler, the individual lone wolf terrorist? And what kind of systems can defend against that?

NAPOLITANO: Well, I think, you know, what we try to do is maximize the ability to protect global systems, to protect the global aviation system, the global maritime system, the cargo system. It's obviously something that one country cannot do by itself. That's why you have to have international engagement. You have to have standards. You have to do capacity building in this regard. It's obviously something that will never be a hundred percent guarantee, but to the extent that we can strengthen these international partnerships, really deal with the mutually beneficial common ground of smart security, smart commercial progress, it heightens our ability to protect the global systems.

You know, we all know that one plane going down would be a disaster in terms of loss of life and property, but it also would have a huge economic impact, both direct and indirect. Thus, you know, that's why you can within nine months knit together 190 countries to come together and say these are the new standards that we are going to abide by, and agree to an implementation plan and a set of criteria and capacity-building initiatives that countries like the United States can help provide.

NAPOLITANO: So do you feel that the Department of Homeland Security and the defenses that were established after 9/11 to respond to al-Qaida, a coherent transnational terrorist organization -- do they meet today's threat?

NAPOLITANO: Yeah, because they've evolved. I mean, we have not been stagnant in the post-9/11 world. We've built on -- the department built on the work of my two predecessors. We've built on our greater knowledge and maturity in the whole area of security.

I'll give you an example. TSA, which was basically stood up from nothing after 9/11, had the premise, you know -- and had to, really -- that all travelers will be treated alike. And as we have grown and matured, as technology has gotten better, we've been able to say, no, it's time to move to a more risk-based attempt. You have to do it slowly because of the nature of our adversary, but you can let kids keep their shoes on, you can start moving toward trusted-traveler programs where people can go in different lines. I think we'll be looking at some other efforts to limit the amount of what's known in the trade as divestiture, things you have to take off before you can clear the airport lines. You will all appreciate this as you travel over the holidays. But you won't see that over this holiday, but you will begin to see pilots and things of that nature as we move forward.

And that's a big philosophical change, right? The underpinning has changed to be a risk-based approach as opposed to treat-everyone-alike approach. As we mature, as we grow, we move in that direction, and our international partners do, as well.

MORAN: Well, there is a kind of cartoon version of TSA which you see out there, the "don't touch my junk" version of what Americans have to go through. How big of a problem -- how big of a hurdle is that when you're dealing with international partners, that they see American air security as too intrusive, as that cartoon version? Is that a problem?

NAPOLITANO: No, it really hasn't been. In fact, many European countries are installing and deploying the same kinds of security regimes we do. Why? Because they've been threatened. We do it because not only have we been attacked by air, but we continue to see threats in that regard. There's nothing that happens in the air environment that's not responsive to a threat.

What we're trying to do now is say, all right, we need to take care of security, but we also need to be able to move, you know, 1.5 (million) to 2 million people a day through the nation's 400-plus airports. How do we do that most effectively? How do we fund research that will help us over the long haul, over the long term, speed up passenger travel? How do we make sure that the cargo that's going in that passenger hold is safe and secure?

It's a combination of many layers. It's information gathering, it's analysis, it's intelligence sharing, it's different modes of looking at cargo and people as they even enter the perimeter of an airport, up to and including the last step, basically, being the actual gate.

MORAN: Let's talk about cargo. For years it's been seen as a potential vulnerability, the sheer scale of cargo that goes around the world and the potential for attacks based in it. Let me ask it this way: Why haven't there been cargo-based terrorist attacks, given how little cargo is actually screened?

NAPOLITANO: Well, there have been attempts. And the next time you see a toner cartridge coming out of Yemen, you might want to check twice. And indeed one of the risk factors we now look for is, is this the kind of cargo you would anticipate coming out of Yemen? And I think there have been attempts.

One of the things that we are working toward is really, just as in the passenger environment, where we're going to move more toward risk-based, cargo as well, merging our C-TPAT program -- which is basically a pre-screening program for cargo; a trusted shipper program, as it were -- with European definitions of the same -- you know, as cargo moves around the globe, working with countries around the globe in the same fashion, so that when you see cargo palletized from shippers who've been moving that kind of cargo for years, you know, you might put it over here, always with a certain amount of random checking just to be sure, and you know, the single drop or the unusual piece of cargo from an unusual place -- focusing your security resources there, all the while merging -- finding that sweet spot between security and travel and commerce.

And again, all countries of the world have an interest in that. So it gives the United States an opportunity to engage at an entirely different level.

MORAN: And you mentioned the private sector. When you're talking about securing the global supply chain, shippers -- now, they -- this has not historically been a concern of that industry. Is that a problem at all, getting private corporations on board to go through these procedures, to harden up their defenses on this?

NAPOLITANO: Oh, they're -- they are very supportive of this. Why? Because as we do this -- for example, as we work toward a truly global supply chain security system, we can harmonize things. We can reduce paperwork. We can reduce the amount of human intervention that has to occur as cargo moves from place of origin to ultimate place of intended delivery.

So for them, I think they see it as a way to reduce, ultimately, the travel cost, the transaction cost they incur moving -- filling out the form in one country that asks for the same information, but in a different way just a few yards away as they enter another country -- so harmonizing those entry and exit procedures and information, requiring more information to be not only delivered electronically, but well in advance of when the cargo actually is moving so that you don't wait till something shows up at a border in order to make sure it clears the customs side and the security side.

MORAN: So you haven't seen a resistance on the part of the private sector?

NAPOLITANO: No, they want us to move faster, yeah. And I tell them we're moving as fast as we can. This is a -- not an easy task to take hundreds of nations, all of whom have an interest and a sovereign interest in some of these issues, and harmonize their requirements.

MORAN: How about the other issues that you raised -- cybersecurity. This is obviously a huge issue for this country and others. How do the international partnerships work in an area where it is so hard, where there isn't national territory in cyberspace?

NAPOLITANO: You know, after the U.S.-EU summit in Lisbon in November of 2010, one of the deliverables out of that was a cyber working group. And indeed, there's been a lot of work done in U.S.-EU on cybersecurity since then, including participation in some joint scenario tabletop-type exercises involving cyberintrusions, disruptions and attacks.

So there are some of those international engagements that have begun, but it would be premature for me to say they are where they need to be. We know this is an area of growing interference, attack. It's not just potentially dangerous from a security standpoint, but from a commercial standpoint. The theft of intellectual property that occurs online is a huge economic issue, particularly for the United States, where your economy is so based on innovation and creativity, being the first in the world to develop something new. And if that can just be stolen online, that's a deficit for us.

So I think that as we move forward, the whole cybersecurity realm will be such a key, key international issue even though we are Homeland Security.

MORAN: And how do you differentiate between the threat in cyberspace from random hackers, or even extremist groups, and nation-states, when you think about Russia and Georgia, when you think about China?

NAPOLITANO: I think the issue of attribution is a very troublesome one. Obviously, you know, the Department of Defense takes the view, and rightfully so, that we need a Cyber Command and that when they are nation-state actors, that is -- that's just another theater that needs to be dealt with. And we work -- we work with them. But much of what we see, of course, isn't attributed to nation-states per se -- at least not at this point -- and we have to deal with it as an individual or a group actor that may be located in an international environment or use the resources that are located internationally.

For example, you may have a -- an actor or actors located in one country. They are facilitating crimes in another. The ISP may be located somewhere totally different. So just the whole chain of things that are involved in cyber, in cybercrime, in cybersecurity and cyberspace -- very complicated, very fast.

MORAN: And one of those cyber crimes, which -- and actually gets into another area, and that is the exploitation of children --

NAPOLITANO: Right.

MORAN: -- online and, beyond that, human sex trafficking of women and children -- this is a problem that President Bush tried to put on the international agenda at a speech at the United Nations General Assembly, and it just seems to get worse.

NAPOLITANO: Yeah, we -- actually ICE, which is Immigration and Customs Enforcement, has been doing a lot of work on the international exploitation of children via the Internet. We've taken down some major rings; but, again, this is a problem.

You know, the demand unfortunately is international in nature, so the crime itself becomes international in nature. And it is something that the interior ministers, the home ministers, whatever -- we have been really struggling with on how best to deal with it.

MORAN: How high a priority is it?

NAPOLITANO: Always a priority. These are terrible cases, and the victims are younger and younger each day.

MORAN: And when you look at all of these areas, do you see -- do you see it as essentially exporting United States standards -- the United States way of doing things, the borders of the United States or is there a new multilateral standard emerging on these issues?

NAPOLITANO: I -- you know, it's a -- it's -- I think U.S. standards can help inform what needs to happen, but other countries have other ways, sometimes better ways, cheaper ways, to get to the same result.

And so, when we think about this, we think about it in many layers; we think about it bilaterally and multilaterally. We think about it not just as moving the borders of the United States outward, but welcoming people and travel and trade earlier in the global process.

MORAN: Want to ask about something in the news right now. It's a little off -- off there, but the drone that went down in Iran reminds us, I think, that this is a technology which is going to spread, by hook or by crook and by the nature of technology, and represents a significant homeland security threat to us, I'd imagine. Do you look at that at all -- at the next decade of drone technology and how it might spread, how it might miniaturize? Do you think about that at all?

NAPOLITANO: Sure. And it goes into the "what keeps you up at night" question that you asked earlier, which is to say, that we know new technologies, new devices are developed each day. They have been used to great effect by the United States abroad, but you have to anticipate that the reverse could also be true. And so we work not just among the community of nations, but across the federal government as well, with all of our sister agencies on problems of that sort.

MORAN: OK. Well, we're going to go to questions now. And what I'd like to ask is that -- wait for the microphone -- there are people with microphone(s) around. So, when you -- when you do stand up to speak, introduce yourself, please, and your affiliation into the microphone.

So let's take some questions here.

We'll start right here.

QUESTIONER: Allen Wendt. Madam Secretary, forgive me if my question seems a bit down in the weeds, but recently a European friend of mine related a horrible experience he had coming into JFK Airport -- not so much the procedures themselves, but the fact that only four out of something like 14 booths were functioning, out of all proportion to the number of travelers. And about a year ago, there was a similar experience covered by a column in the Financial Times related to Dulles Airport --

NAPOLITANO: Yeah.

QUESTIONER: -- all having to do with manning rather than the procedures themselves. Is there anything that can be done to make this experience for foreign nationals a little less disagreeable?

NAPOLITANO: Yeah, in fact, I think I know -- I probably could tell you the exact day he was traveling. And here's the problem, simply put, from a management standpoint: You -- these airports were built and designed well before current security needs and well before the big wide-body planes. And what we have -- we have huge rush hours there, all the planes from Europe arrive around the same time, et cetera, they flood the area, and then there's a dead period. From a staffing perspective, that is difficult.

But we know it, and we need to staff appropriately. We are -- we now get kind of daily readouts of what the wait times are. We have worked to increase staffing both at JFK, Dulles, I think Atlanta. LAX has been another airport where we have wait times that we think are unacceptable. So we're doing our best, and we'll continue to work on those -- on those lines.

But again, to the -- to the point, when we can do pre-clearance, for example, we -- every time we do pre-clearance, every time we expand Global Entry, which is the international -- basically, it's a card that you can get that allows you to basically circumvent the line here and go right on through -- every time we expand those programs, we take pressure off of those lines. And that will be an advantage to us all.

MORAN: Hmm, OK.

Right here, then.

QUESTIONER: Good morning, Madam Secretary. David Trulio, Raytheon Company. I'm also a senior fellow at the Homeland Security Policy Institute. I was hoping you could share with us your latest sense of counterterrorism cooperation with India in terms of progress and challenges going forward. Thank you.

NAPOLITANO: Yeah, in fact, I was just in India. One of the deliverables out of the meeting between the prime minister and the president, of course, was a homeland security dialogue. So we have sent teams there to work jointly on passenger travel, on counterterrorism, on countering violent extremism, on police training, on all of those kinds of elements, cybersecurity being another one.

I would venture to say that there's a lot of work left to be done. Part of it is because of the nature of India. It's a big, complicated country, a very different sort of bureaucratic structure than we have. But I think, as we saw with the attack on Mumbai and other issues in India, they have key terrorism issues that we can, I think, provide assistance on. And likewise, when we talk about finding that sweet spot between security protection and commerce, India is a great example where I think we can have an even more robust relationship than we have right now.

QUESTIONER: Madam Secretary, Christopher Graves with Ogilvy. Beyond the discipline and rigor of security, it must demand more and more creativity and innovation. So two questions related to that, so that you might speak more freely: What country or countries do you think are absolutely leading the way in security creativity and innovation, and why? What are they doing? And how do you foster that at the department?

NAPOLITANO: I actually think we're one of the leaders in the creativity and innovation. And one of the questions I get all the time is why don't we do things the way Israel does them, for example at their airport. And we do some things that are common. We look at what they do. But realize that Israel has basically one international airport, and they process about 50,000 passengers a day. We have hundreds, and we process in the millions. So the scalability issues are quite different. And that means because we have a lot more large and complex system, we have to be thinking differently all the time.

But in the sense of innovation and creativity, we're constantly looking at ways to better allow -- better enable us to identify who may be a traveler or what may be a piece of cargo that is of risk to us. We sponsor basic research and support it in terms of screening, sensing devices and the like, also in terms of how better to spot behaviors that could be indicators of potential violent activity.

One of the regrets I have in the budget process that we are in is the support for this kind of research is consistently getting cut down because it doesn't produce an immediate effect. I mean, the research cycle was longer.

But I believe that as we continue to knit together commercial and security issues, that that technology and that kind of creativity is going to be necessary moving forward. So we've really been in a fight over on the Hill with the Congress explaining why it is that a department called Homeland Security has to have a hefty research budget associated with it.

MORAN: Let's go to the back here, back there.

QUESTIONER: Madam Secretary, obviously your department deals with active shooters.

MORAN: I'm sorry, who are you with?

QUESTIONER: Mike Levine with Fox News.

MORAN: Thank you.

Obviously your department handles issues of active shooters; wondering what your assessment is of the Virginia Tech response yesterday. And do you think anything can be done about these lone wolves and active shooters?

NAPOLITANO: Well, first of all, let's take a moment to extend our sympathies to the -- to the family and colleagues of the officer who was killed. It was a horrible crime. We see them -- I saw them when I was a prosecutor, I saw them when I was a governor; we see them now.

It's probably too soon to assess the response at Virginia Tech. You need to let the -- let things settle and it really go minute by minute. But at least superficially, it looks like it was very strong and very effective. And I'm sure there will always -- there will always be things you can do better. But from the outside, at least -- at least initially it looks like a very good and strong, effective response.

In terms of prevention, one of the things we constantly work on is how do you identify what are the -- what are the behaviors, the techniques, the things that would enable us, a local police officer or someone to say that this person is getting ready to go -- to go nuts.

So we had, for example, the gun shop owner in Killeen, Texas, who saw this odd behavior of a -- of a customer and what he was buying and alerted law enforcement and probably prevented another massacre at Fort Hood. And in this instance, who knows what tip offs there would have been.

But one of the things we focused on when I talked in my little preparatory remarks about shared responsibility internationally, security is also a shared responsibility within the United States, and it's a shared responsibility with local police officers, but it's also a shared responsibility with the citizenry at large. And that's the genesis of the whole "See Something, Say Something" regime. So you're trying to at least increase the likelihood that you can pick up somebody before they start shooting, but it's very, very difficult.

MORAN: Great.

Right here then. Sure.

QUESTIONER: Thank you. Ted Alden with CFR. I want to second your evaluation on the -- on the expansion of pre-clearance, which I think very much is a big breakthrough and one that was a long time coming. A lot of resistance historically from Customs and Border Protection to expansion of pre-clearance -- and as I understand the concern, it's largely over arrest authority: What do you do in a situation where you've got somebody who's in effect probing? They come into pre-clearance, the Customs agent begins to ask questions. They get nervous. They say, ah, ah, I've changed my mind; I don't want to come into the United States, and thereby begin to kind of probe what the potential weaknesses are at entry.

If you don't have the authority in that kind of situation to arrest or detain that kind of person, what's the level of risk there? How did you get around it in this case? Because historically it's been a big concern about expansion of pre-clearance despite all the benefits that you -- that you rightly laid out.

NAPOLITANO: Right, right. Well, from a security standpoint, if they don't come into the U.S., you know, that's -- you know, that may be a good thing. But part of it is exchanging information with the authority of the country of origin, right? And part of what makes pre-clearance work is having that good information sharing arrangement that goes along with it.

MORAN: Back there.

QUESTIONER: Madam Secretary, Rob Bonner; good to see you.

NAPOLITANO: (Yes, indeed ?).

QUESTIONER: I thought, from what I've read, that the -- in terms of the U.S.-Canada Beyond the Borders Action Plan, there were some very major breakthroughs with respect to the mutual security of Canada and the United States, and dare I say, perimeter security will be enhanced, I believe.

I had a specific question, not to get too much in the weeds, but it is about reverse inspections at the land borders between Canada and the United States, something that's been very, very difficult to -- to effectuate. But I understand that that is now contemplated within the action plan, that there will be reverse inspection, where U.S. CBP officers will be in Canada in terms of people and goods that are heading toward the U.S. border, and the Canadian border agency will be in the U.S.

My specific question is, how does it look in terms of actually getting reverse inspection implemented? Where do you think it might be implemented initially? And what do you see as the timeline?

NAPOLITANO: Well, first of all, I think the notion of perimeter security is a huge deal, taking -- again, taking pressure off the actual land border itself, working very closely with Canada, which has been a great partner in this effort. In fact, the meeting I will go to right after this will involve rail travel between the two countries and how we facilitate that.

With respect to the particular issue you raised, we are going to pilot it first in the Vancouver corridor. That will start very shortly. We will see how that goes first, and then we'll look at expansion to some of the other major land routes.

But, you know, I hesitate to give you a firm timeline now, because everybody will write it down, and then if you don't meet it, you know, you're late. But so you've got to take it one step at a time. But the Vancouver area is a very -- you know, very frequently traveled area, so I think it was a good place to pick for a starting point.

MORAN: Yes, sir.

QUESTIONER: Kevin Sheehan, Multiplier Capital. Madam Secretary, while the intelligence community, DOD and the rest of government under your department's leadership are getting very well organized to confront the cyberthreat, it's very difficult for the private sector to achieve the same level of organization. Could you speak a bit about the partner -- the private partnership programs that are in process now with the ISPs and where those programs might be going?

NAPOLITANO: Well, there's a lot going on in the cyber world with the ISPs and with other private-sector partners, particularly in the 18 so-called critical sectors of the economy that have security implications and economic implication, telecommunications, utilities and the like. You know, I could give you the alphabet soup of partnerships. There's a lot of them. Quite frankly, I would like to see some of these things over time consolidated because they're a little atomized, in my judgment, but what we all are striving for is, again, that sweet spot where the business interests of the private sector merge with the security interests of the Department of Homeland Security.

So we will continue to work in that regard together, because the United States, like many other countries, the actual critical infrastructure within the nation is not controlled by the government, it is controlled by the private sector.

QUESTIONER: Is there a special challenge in dealing with that industry because of the culture, the very libertarian and wide-open culture?

NAPOLITANO: Oh, yeah. Well, cyber is -- you know, first of all, hiring personnel is a challenge. The young "cybergeeks," if I can use that phrase -- (laughter) -- you know, they don't think about coming to work for the Department of Homeland Security as their first employment opportunity. Now, I try to make it as attractive as possible. I tell them they don't have to wear a tie, you know -- (laughter) -- they can have -- you know, they can telecommute, all that kind of stuff.

But I think right now there is a huge demand both on the defense and on the civilian side for cyberpersonnel to deal with some of these security issues. And that world is changing so rapidly, almost by the time we talk about a particular phenomenon it's already out of date. So from the management perspective, my number-one thing right now is hiring.

MORAN: Right in the middle there.

QUESTIONER: Thank you. My name is Yoneyama (ph) from -- (inaudible) -- Company, a Japanese multinational. After the Korea and the Panama, Colombia FTA, now the Obama administration is trying for TPP, Trans-Pacific Partnership, for a better flow of people, commodity and money. And it's named 21st century high standard trade deal. How is your department going to have a say into the standard in terms of security versus commerce?

And also, if you could, could you address your exchange with China in terms of security and also commerce?

NAPOLITANO: Well, on TPP, I anticipate that what will happen is that primarily CBP, but also ICE and TSA, will have a very vital role in what the standards and requirements are moving forward, just as we have in other similar global arrangements that the United States has.

With respect to China, we have done some bilateral operations and some bilateral initiatives. We did -- and have reached an agreement on intellectual property protection with China. It remains to be seen whether and how that will actually be implemented, but at least on paper, we have one. We have done some exchanges. We have done some things that are of a training exchange in nature, but I would venture to say that there's probably a lot more that we could do at the bilateral level with China.

MORAN: OK. All the way in the back there.

QUESTIONER: Mike Ahlers with CNN. Thanks for taking our questions. The -- after the toner cartridge threat about a year ago, DHS announced a goal of inspecting 100 percent of inbound -- of cargo on inbound international passenger flights to the U.S. That goal has been changed, at least the deadline's been changed. Has the goal also been changed? Do you intend to inspect 100 percent of inbound cargo or screen it? And will that comply with the congressional requirement?

NAPOLITANO: Yeah, what we're doing is obviously inspecting a hundred percent of high-risk cargo and screening a hundred percent of all cargo on international passenger flights, and we can give you the exact -- you know, when -- you know, what timelines and things of that nature.

The whole hundred percent label that was initially required in statute is something that we've been talking with Congress about not just in terms of air cargo, but cargo in general because it really is not practicable, and there are other ways to reach the same security objective. We have the security objective. The issue is, does a 100 percent screening mandate actually further your way to meet the objective, or by doing layers of security and doing some other things, can you -- can you actually reach the objective more quickly? We think the latter, but it does require Congress to rethink the statute a bit. So we are working with them on that.

MORAN: OK.

Right up here, this gentlemen.

QUESTIONER: Madam Secretary, Herb Richardson with AREVA. And first let me compliment you on probably running one of the most complex and difficult organizations in the government.

AREVA is an international energy company, and we have people all over the world. One of the initiatives that DHS has done is to reach out to industry, such as ours, and offer an opportunity to evaluate vulnerabilities that exist at our various site locations in the U.S., which is an excellent thing to do. The question I have is will that exist for those individuals -- U.S. citizens that we're sending overseas, such as India -- will you be providing or will DHS provide that same vulnerability assessment from a physical security standpoint to protect our U.S. citizens in the various countries overseas?

Secondly, now that the Obama administration has appointed DHS as the lead in cybersecurity, will you be also providing vulnerability assessments from a cybersecurity standpoint?

NAPOLITANO: And the answer to that is I don't know. I think that we are obviously interested in doing so. I don't know that that will be the first thing that we do. Right now our key initiatives are based on securing the U.S. government networks and making sure that they are as -- can be free from intrusion or, if intruded upon, that there's an immediate ability to detect, patch, repair, whatever. So with respect to vulnerability assessments, I cannot tell you whether there will be an actual product or initiative in that regard, at least in the near term.

MORAN: OK, we have -- we have time for one more question. And I'd just like to remind everybody that this meeting has been on the record. And then at the conclusion of our meeting, Secretary Napolitano, we'd all just stay seated so she can get out to your next --

NAPOLITANO: To the next interview.

MORAN: -- your next interview.

NAPOLITANO: OK.

MORAN: That's it -- that's it, exactly.

So one more question is what we have time for. Who's the lucky one? There we go, right there.

QUESTIONER: Thank you. Madam Secretary, my name is -- (inaudible). Would you elaborate how the cut in the budget affects your department?

NAPOLITANO: Well, we're still waiting for our FY '12 budget. And my understanding from the appropriators is that they are near an agreement for us. I think, you know, one of the areas that is likely to be most impacted, the area of grants that we can provide to states and localities for things like disaster response, first responder training and the like, I have some real concerns about that because states and localities themselves are cutting those budgets.

And this is really a national capacity we need to have, which is to say, if there's a disaster anywhere, be it, you know, mother nature, a major earthquake, a hurricane that hits land or a terrorist incident, we need to be able to have that security safety net. So -- but I do think the grants are likely to take -- to take a hit.

Another area that I think -- and hopefully will be restored from the House number was the whole area of research, as I mentioned earlier. You know, I believe that technology is going to help us solve some of our more difficult problems in the area where we're trying to have security and smooth commercial operations co-exist, and that research cycle needs constant feeding. So I would hate to see that cut off in the name of the budget, because I think that would be a little penny-wise and pound-foolish.

We have to do a better job of educating the members of the Congress about why it is that this research is valuable for the taxpayer. So we're working on that. But I'm hopeful the FY '12 budget will do that.

With respect to FY '13, we are now in that process with OMB, and those budget numbers will come out in the normal course of business and you'll see them shortly. But, you know, we're all under the same pressure, and that is, in an era of constrained fiscal resources, making sure that we are spending dollars wisely and well.

And that goes back to this -- the program today, which is to say that in the area of homeland security, the more we can smooth business processes, the more we can work globally, the more we can harmonize requirements, the more we can reduce burdens on travel and commerce but at the same time enhance our security, that is a net positive for the United States. And it's a new way for us to engage with countries around the world. And I'm hopeful and anticipate that the budget will support those efforts.

MORAN: And just a quick follow-up on that. How much would sequestration, should it happen, impact homeland security?

NAPOLITANO: We're not even talking about sequestration. (Laughter.)

MORAN: And there you go.

NAPOLITANO: There it is.

MORAN: Madam Secretary, thank you very much for a really interesting and informative discussion.

NAPOLITANO: Thank you all very much. (Applause.) Thank you.

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THIS IS A RUSH TRANSCRIPT.

TERRY MORAN: There we go.

And welcome to the Council on Foreign Relations meeting with Department of Homeland Security Secretary Janet Napolitano.

I'd like to welcome also CFR's national members here who are participating in this meeting via a password-protected teleconference. We'll see how well that password protection works.

Now one thing -- and this is an excellent reminder to me as well -- we're going to turn these off altogether, not just onto vibrate, because it will -- the radio signal will interfere with the broadcast. So please turn off all cellphones.

This meeting is on the record. That is a reminder to everyone.

And before we begin, I just wanted to look ahead on the council's schedule. On December the 14th there's an upcoming meeting you may be interested in, The Geopolitics of the Arctic, with Scott Borgerson and Paula Dobriansky. For more information on the upcoming events, look at the insert in the program today.

And it is my pleasure and privilege to introduce our speaker today. It's a -- it's a very good time to hear from Janet Napolitano because she's just returned to the United States. Janet Napolitano is the third secretary of the Department of Homeland Security, the department obviously founded after 9/11, tasked with keeping us all safe and secure. She's the 21st governor of Arizona. And as I say, she's just returned from a whirlwind trip to Paris, where she was participating in the G-6 plus one interior ministers and security ministers meeting, and then a trip to the Gulf at -- in Doha, Dubai and Abu Dhabi. And she'd like to talk about the role of international partnerships in homeland security.

Janet Napolitano. (Applause.)

JANET NAPOLITANO: Thank you. Well, thank you very much. Good morning to everybody. Thanks, Terry, and thanks to the Council on Foreign Relations for having this session here today.

I'm excited to join you. I've just returned, as was said, from a very productive trip to Europe and to the Middle East where we advanced a number of critical issues with our partners.

And one of the questions I am frequently asked, when people hear I have been overseas, is, what exactly does the Homeland Security Department do abroad? And the answer is, quite frankly, a huge amount, because in today's world, the nexus between homeland security and security abroad cannot be decoupled. We live in a globalized world. It is connected by complex networks in which the movement of people and goods and ideas never stops. And threats to our domestic security both physical and economic do not recognize national boundaries. It's -- the interconnected nature of travel and trade and commerce means that a vulnerability or gap across the globe can impact security thousands of miles away.

So whether it's a printer cartridge from Yemen, a traveler from Nigeria, an unregistered boat coming from Central America, the threats and the opportunities from all corners of the world are my daily work. Our domestic security, thus, is inextricably linked to the rest of the world. It is a shared responsibility among governments, the private sector, individuals and communities. It is a global enterprise.

And the challenges faced by the United States in this regard are not unique to us. Interior ministers, home secretaries and other security officials around the world confront them. The shared challenges present a chance to build mutually beneficial partnerships and to leverage resources to strengthen the safety and security of peoples around the world. This is particularly true where mutual economic opportunity can be enhanced by shared security responsibility.

Let me put some granularity on this. Let me give you some examples of multilateral initiatives we have undertaken over the past several years.

One, we have been working closely with the International Civil Aviation Organization, ICAO, and many other international partners on an initiative to strengthen the global aviation system against ever-evolving terrorist threats. This effort culminated last year with the adoption by 190 countries at the ICAO triennial assembly on a declaration of aviation security, which, in effect, laid a new foundation for a global aviation security system.

At the same time, for more than a year now the Department of Homeland Security has been leading a global supply chain security initiative to protect the vast amounts of goods and commerce that traverse the globe every day and that drive our global economy. We work closely with the World Customs Organization, the International Maritime Organization and ICAO.

And what do these initiatives look like in practice? It means that the WCO, at the United States' urging, has created something called Program Global Shield that enables customs services around the world to alert each other to suspicious shipments of precursor chemicals used to make explosives. We've made dozens of seizures in this regard, stopping just last year 33 metric tons.

When it comes to securing the global supply chain, our work was already under way when we saw the attempted terrorist attacks on cargo operations out of Yemen in October of 2010. Following that incident, the director of the TSA, John Pistole, and a team of inspectors immediately went to Yemen to assess cargo security and to see how we could help make it more secure. We have provided threats not -- or training -- excuse me -- not only to Yemen but indeed around the world to help secure the cargo network. Along with -- those are just two examples, but along with these multilateral initiatives, we have worked on a bilateral basis with many countries around the world. And as was mentioned, the trip I just took provides an illustration of how these multilateral and bilateral relationships work.

At the G-6 plus one meeting, which brings together DHS and our counterpart ministries from Europe's top six countries, its largest countries, we made great progress on concluding an agreement with the Europeans on information sharing about passenger travel, known colloquially as PNR, passenger name records. These are records that we use to analyze travelers boarding flights to the United States from abroad and to make sure that passengers are not susceptible to doing harm to aviation or to the homeland.

We also made, on the same trip, important progress on key bilateral agreements with countries in the Middle East. In Qatar, we signed an aviation agreement to strengthen our ability to combat transnational crime and other threats while facilitating travel and international trade. We established common objectives on security and trade in two unique ways.

First, we've agreed with Qatar to have the Department of Homeland Security, the United States, put customs and immigration officers in the Dubai airport or the Doha airport to advise Qatari law enforcement officials on the admissibility of passengers into the United States prior to boarding and traveling to our country. If a passenger is determined to be (inadmissible ?), our agents will provide that information to the Qatar officials and they in turn can prevent the -- a passenger from traveling at all. We have similar agreements with nine other countries, but this is the first of two such agreements now in the Middle East.

Second, we agreed to pilot the use of global entry, which is CBP's trusted travelers program, to expedite the entry into the United States for a limited number of vetted Qatari citizens. Again, there are similar arrangements with five other countries, notably Canada and Mexico, but this is the first such agreement in the Middle East.

With these two agreements, we will better secure our country and better facilitate lawful travel and trade with Qatar.

In the UAE, we met with the crown prince of Abu Dhabi -- this was the third time I'd been to Abu Dhabi, actually, as secretary -- we reached a similarly mutual beneficial set of agreements. As in Doha, we agreed to place our customs and immigration officers at Abu Dhabi airport to advise Emirati law enforcement officials about the admissibility of passengers. We also signed a letter of intent to commence the process of establishing preclearance in Abu Dhabi.

Preclearance allows passengers and their luggage heading to the United States to be fully screened by our customs and immigration officials before boarding the plane in their country of origin, allowing us effectively to push our borders outward while facilitating a more beneficial customer and traveler experience.

The issues tackled in these sorts of meetings obviously represent only a fraction of the work we do overseas. I haven't talked about the work we're doing on cybersecurity, on human trafficking, on emergency response, our extensive collaboration with a number of countries, from Mexico to India, but I think the important conclusion is that there is a new paradigm in how our country engages with our foreign partners, an engagement driven by the mutual opportunity to enhance security and to promote economic benefits at the same time.

Every refinement on how we share information, every efficiency we gain in screening for high-risk travelers helps us get out of the way of legitimate travel and trade and facilitate the work that must go on around the world, because if perceived security hassles discourage people from coming to the United States to do business and to spend money, we lose out and, in today's world, we simply cannot afford to do that.

Other opportunities for these types of mutually beneficial engagement agreements exist across the homeland security enterprise. Cybersecurity in particular continues to emerge as a shared concern across nations, while combatting transnational crime, human trafficking and other law enforcement issues obviously requires international cooperations.

We will continue to work across the globe. Indeed, immediately upon my return, I joined President Obama and Canadian Prime Minister Harper to announce the Beyond the Borders Action Plan, which DHS has had a key role in shaping and will have a primary role in implementing. Canada is our largest trading partner, and this action plan will further strengthen coordination with the combination of security and the facilitation of trade and commerce across the border.

So this new paradigm, the engagement at the interior, home secretary level, the merger of security interests with travel and trade and commercial interests becomes, I believe, the new future of homeland security. And in the end I think it will help make us even more secure.

So I will stop talking there, Terry, and let's have some conversation.

Thank you all very much. (Applause.)

MORAN: Well, that gives us a lot to talk about. A new paradigm for engaging international partners on these issues -- and I want to ask about that in kind of a general sense. Some of the partnerships that you're developing are not with traditional historically close allies. You're branching out, it sounds like. What are the benchmarks that you look for in an international partnership that you know the governments are going to be able to do the job? Let me put it colloquially: How do you know who you can trust?

NAPOLITANO: Well, first of all, we work closely -- there's a lot of work that goes on before we would enter into an agreement. There's -- and that work, ongoing, develops that sense of trust.

As I mentioned, this was my third time in Abu Dhabi. It's the kind of relationship where you know each other by name; you call each other on the phone in between trips; when they're in Washington, they visit, and likewise the reverse. So part of it is at the personal level. Part of it obviously is at the diplomatic level. We work closely with the State Department. And then we often, in these agreements, do a pilot first before we go into full implementation just to make sure that everybody has a common understanding, that we know what is expected of us, they know what is expected of them. And then we go into full implementation.

So for example, the new agreement with the UAE -- we will begin first with putting immigration and customs officials in the airport at Abu Dhabi, and then we'll move into full pre-clearance. And pre-clearance -- you know, it -- this is -- this is a big deal. We don't have pre-clearance in many places around the world. To be able to take travelers and, in effect, enter them into the United States before they board a plane abroad is a -- is a huge step forward in really facilitating that international engagement.

MORAN: OK, these issues can occasionally become political issues --

NAPOLITANO: Really? (Laughter.)

MORAN: -- and even get demagogued out there sometimes. But let me ask that -- you can imagine parts of the -- our political spectrum who just don't like the sound of that, that we're going to pre-clear people out of parts of the world which we've seen as sources of violent extremism, international terrorism. How do you put those minds or those arguments to rest?

NAPOLITANO: Well, first of all, the standards and requirements for pre-clearance are quite stiff. And it's not as if we are not physically there. We are physically there. It's our system that is being deployed. But it's being deployed earlier in the process. It's being deployed overseas.

We've had pre-clearance. We have it in some very unusual places, in some respects. I think we have it in Bermuda. We have it in -- at Shannon and Dublin airports in Ireland. But this was -- in terms of us looking across the globe and seeing where we really want to not just facilitate travel, but know who's traveling, these countries in the Gulf and in the Middle East are key partners. And it's advantageous to them. It's advantageous to us. It allows us to find a smart middle ground -- or common ground, better said, where our interests coincide. And that in and of itself helps build a stronger strategic partnership.

MORAN: How will you know it succeeds?

NAPOLITANO: Well, we will -- I think we'll see travelers move to the pre-cleared routes. I think -- I think that'll be the easiest way to see because they'll recognize that having pre-cleared abroad so that when you get off of that 13-hour flight and land at Dulles or JFK, you don't have to wait in lines -- I think most travelers would view that as an advantage. So I think you'll measure it by how travel routes adjust.

MORAN: Mmm hmm. Let me ask you question that I know the secretary of Department of Homeland Security always gets. But you're here, so why not. What keeps you up at night right now? As you look at the raft of endeavors and of programs that you're undertaking to address threats and problems, what keeps you up at night?

NAPOLITANO: Well, I think -- you know, the things I know about don't keep me up, because they're being handled. It's the -- it's the things you don't know about but can imagine, where you're trying to really think your way through and be proactive -- that can -- that can engage you in some nighttime thinking. So the known/unknown, as has been said before, is something I think anyone in a position like this one has to -- has to be concerned with.

MORAN: Privacy, which was a big issue in the agreement that you reached with the G-6 plus one, and more broadly than that, for a lot of people in a lot of countries around the world, there's this sense of the encroaching eyes of government on us at every single stage.

NAPOLITANO: Yeah.

MORAN: You get that all the time. So what do you say as you reach these agreements, push our borders and the United States' way of doing things out into countries which have different traditions and values, perhaps? Is big sister watching?

NAPOLITANO: I think "big sis" is my moniker in the Drudge Report. (Laughter.) So I knew I'd actually made it when I had my own name in the Drudge Report. You know, that's the standard.

The PNR agreement is a good example of this. PNR agreement is actually -- will be with the EU; and it's the post-Lisbon Treaty EU, which means we've had to negotiate with the commission. We've now finished an agreement, and initialed it with the commission. We anticipate it to be improved by the council next week on the 13th, and then we will have to go and have it ratified by the European Parliament. We have been the lead negotiator for the U.S. on this agreement. And one of the key sticking points has been data privacy protection, which is one of the fundamental rights in the Charter of Rights in the EU.

You know, there -- you know, one of the key things we've had to do is to educate our EU partners that the United States values privacy, too, and we value our personal information. We just have different legal systems by which to address them. And in the new PNR agreement, I think we've reached accommodation with the EU privacy interests, consistent with the way the United States handles privacy and data protection issues.

And at the same time, by being able to exchange PNR and have that agreement in place, we will have one of the more effective and important tools available to us to know about the international travel of potential terrorists, transnational criminals and the like.

I could mention Najibullah Zazi, David Headley are just two of the individuals that we have helped identify through the PNR data.

MORAN: For every Najibullah Zazi or David Headley, the horror stories are out there that there's a David Headley who's not the David Headley you want.

NAPOLITANO: Right, right.

MORAN: How long does his personal information, his data remain in data banks that he might rightly feel violate his privacy?

NAPOLITANO: Under the new agreement, the travel information remains six months, and then there's a tiered system by which it is anonymized but is available to be retrieved on an as-needed basis. So what we've done is kind of look at it from a -- what do you need from a law enforcement perspective, a security perspective and a privacy perspective. And the EU negotiators felt that was a reasonable way to approach a problem. I think it's reasonable as well, obviously.

MORAN: And that gets us to terrorism, violent extremism. The threat is of a different nature now. Ten years ago, obviously, al-Qaida had a country to operate from. Their capacities have been degraded. And you have almost a kind of spread of the threat down to individual lone wolves, as you say.

How significant a threat is that, the individual traveler, the individual lone wolf terrorist? And what kind of systems can defend against that?

NAPOLITANO: Well, I think, you know, what we try to do is maximize the ability to protect global systems, to protect the global aviation system, the global maritime system, the cargo system. It's obviously something that one country cannot do by itself. That's why you have to have international engagement. You have to have standards. You have to do capacity building in this regard. It's obviously something that will never be a hundred percent guarantee, but to the extent that we can strengthen these international partnerships, really deal with the mutually beneficial common ground of smart security, smart commercial progress, it heightens our ability to protect the global systems.

You know, we all know that one plane going down would be a disaster in terms of loss of life and property, but it also would have a huge economic impact, both direct and indirect. Thus, you know, that's why you can within nine months knit together 190 countries to come together and say these are the new standards that we are going to abide by, and agree to an implementation plan and a set of criteria and capacity-building initiatives that countries like the United States can help provide.

NAPOLITANO: So do you feel that the Department of Homeland Security and the defenses that were established after 9/11 to respond to al-Qaida, a coherent transnational terrorist organization -- do they meet today's threat?

NAPOLITANO: Yeah, because they've evolved. I mean, we have not been stagnant in the post-9/11 world. We've built on -- the department built on the work of my two predecessors. We've built on our greater knowledge and maturity in the whole area of security.

I'll give you an example. TSA, which was basically stood up from nothing after 9/11, had the premise, you know -- and had to, really -- that all travelers will be treated alike. And as we have grown and matured, as technology has gotten better, we've been able to say, no, it's time to move to a more risk-based attempt. You have to do it slowly because of the nature of our adversary, but you can let kids keep their shoes on, you can start moving toward trusted-traveler programs where people can go in different lines. I think we'll be looking at some other efforts to limit the amount of what's known in the trade as divestiture, things you have to take off before you can clear the airport lines. You will all appreciate this as you travel over the holidays. But you won't see that over this holiday, but you will begin to see pilots and things of that nature as we move forward.

And that's a big philosophical change, right? The underpinning has changed to be a risk-based approach as opposed to treat-everyone-alike approach. As we mature, as we grow, we move in that direction, and our international partners do, as well.

MORAN: Well, there is a kind of cartoon version of TSA which you see out there, the "don't touch my junk" version of what Americans have to go through. How big of a problem -- how big of a hurdle is that when you're dealing with international partners, that they see American air security as too intrusive, as that cartoon version? Is that a problem?

NAPOLITANO: No, it really hasn't been. In fact, many European countries are installing and deploying the same kinds of security regimes we do. Why? Because they've been threatened. We do it because not only have we been attacked by air, but we continue to see threats in that regard. There's nothing that happens in the air environment that's not responsive to a threat.

What we're trying to do now is say, all right, we need to take care of security, but we also need to be able to move, you know, 1.5 (million) to 2 million people a day through the nation's 400-plus airports. How do we do that most effectively? How do we fund research that will help us over the long haul, over the long term, speed up passenger travel? How do we make sure that the cargo that's going in that passenger hold is safe and secure?

It's a combination of many layers. It's information gathering, it's analysis, it's intelligence sharing, it's different modes of looking at cargo and people as they even enter the perimeter of an airport, up to and including the last step, basically, being the actual gate.

MORAN: Let's talk about cargo. For years it's been seen as a potential vulnerability, the sheer scale of cargo that goes around the world and the potential for attacks based in it. Let me ask it this way: Why haven't there been cargo-based terrorist attacks, given how little cargo is actually screened?

NAPOLITANO: Well, there have been attempts. And the next time you see a toner cartridge coming out of Yemen, you might want to check twice. And indeed one of the risk factors we now look for is, is this the kind of cargo you would anticipate coming out of Yemen? And I think there have been attempts.

One of the things that we are working toward is really, just as in the passenger environment, where we're going to move more toward risk-based, cargo as well, merging our C-TPAT program -- which is basically a pre-screening program for cargo; a trusted shipper program, as it were -- with European definitions of the same -- you know, as cargo moves around the globe, working with countries around the globe in the same fashion, so that when you see cargo palletized from shippers who've been moving that kind of cargo for years, you know, you might put it over here, always with a certain amount of random checking just to be sure, and you know, the single drop or the unusual piece of cargo from an unusual place -- focusing your security resources there, all the while merging -- finding that sweet spot between security and travel and commerce.

And again, all countries of the world have an interest in that. So it gives the United States an opportunity to engage at an entirely different level.

MORAN: And you mentioned the private sector. When you're talking about securing the global supply chain, shippers -- now, they -- this has not historically been a concern of that industry. Is that a problem at all, getting private corporations on board to go through these procedures, to harden up their defenses on this?

NAPOLITANO: Oh, they're -- they are very supportive of this. Why? Because as we do this -- for example, as we work toward a truly global supply chain security system, we can harmonize things. We can reduce paperwork. We can reduce the amount of human intervention that has to occur as cargo moves from place of origin to ultimate place of intended delivery.

So for them, I think they see it as a way to reduce, ultimately, the travel cost, the transaction cost they incur moving -- filling out the form in one country that asks for the same information, but in a different way just a few yards away as they enter another country -- so harmonizing those entry and exit procedures and information, requiring more information to be not only delivered electronically, but well in advance of when the cargo actually is moving so that you don't wait till something shows up at a border in order to make sure it clears the customs side and the security side.

MORAN: So you haven't seen a resistance on the part of the private sector?

NAPOLITANO: No, they want us to move faster, yeah. And I tell them we're moving as fast as we can. This is a -- not an easy task to take hundreds of nations, all of whom have an interest and a sovereign interest in some of these issues, and harmonize their requirements.

MORAN: How about the other issues that you raised -- cybersecurity. This is obviously a huge issue for this country and others. How do the international partnerships work in an area where it is so hard, where there isn't national territory in cyberspace?

NAPOLITANO: You know, after the U.S.-EU summit in Lisbon in November of 2010, one of the deliverables out of that was a cyber working group. And indeed, there's been a lot of work done in U.S.-EU on cybersecurity since then, including participation in some joint scenario tabletop-type exercises involving cyberintrusions, disruptions and attacks.

So there are some of those international engagements that have begun, but it would be premature for me to say they are where they need to be. We know this is an area of growing interference, attack. It's not just potentially dangerous from a security standpoint, but from a commercial standpoint. The theft of intellectual property that occurs online is a huge economic issue, particularly for the United States, where your economy is so based on innovation and creativity, being the first in the world to develop something new. And if that can just be stolen online, that's a deficit for us.

So I think that as we move forward, the whole cybersecurity realm will be such a key, key international issue even though we are Homeland Security.

MORAN: And how do you differentiate between the threat in cyberspace from random hackers, or even extremist groups, and nation-states, when you think about Russia and Georgia, when you think about China?

NAPOLITANO: I think the issue of attribution is a very troublesome one. Obviously, you know, the Department of Defense takes the view, and rightfully so, that we need a Cyber Command and that when they are nation-state actors, that is -- that's just another theater that needs to be dealt with. And we work -- we work with them. But much of what we see, of course, isn't attributed to nation-states per se -- at least not at this point -- and we have to deal with it as an individual or a group actor that may be located in an international environment or use the resources that are located internationally.

For example, you may have a -- an actor or actors located in one country. They are facilitating crimes in another. The ISP may be located somewhere totally different. So just the whole chain of things that are involved in cyber, in cybercrime, in cybersecurity and cyberspace -- very complicated, very fast.

MORAN: And one of those cyber crimes, which -- and actually gets into another area, and that is the exploitation of children --

NAPOLITANO: Right.

MORAN: -- online and, beyond that, human sex trafficking of women and children -- this is a problem that President Bush tried to put on the international agenda at a speech at the United Nations General Assembly, and it just seems to get worse.

NAPOLITANO: Yeah, we -- actually ICE, which is Immigration and Customs Enforcement, has been doing a lot of work on the international exploitation of children via the Internet. We've taken down some major rings; but, again, this is a problem.

You know, the demand unfortunately is international in nature, so the crime itself becomes international in nature. And it is something that the interior ministers, the home ministers, whatever -- we have been really struggling with on how best to deal with it.

MORAN: How high a priority is it?

NAPOLITANO: Always a priority. These are terrible cases, and the victims are younger and younger each day.

MORAN: And when you look at all of these areas, do you see -- do you see it as essentially exporting United States standards -- the United States way of doing things, the borders of the United States or is there a new multilateral standard emerging on these issues?

NAPOLITANO: I -- you know, it's a -- it's -- I think U.S. standards can help inform what needs to happen, but other countries have other ways, sometimes better ways, cheaper ways, to get to the same result.

And so, when we think about this, we think about it in many layers; we think about it bilaterally and multilaterally. We think about it not just as moving the borders of the United States outward, but welcoming people and travel and trade earlier in the global process.

MORAN: Want to ask about something in the news right now. It's a little off -- off there, but the drone that went down in Iran reminds us, I think, that this is a technology which is going to spread, by hook or by crook and by the nature of technology, and represents a significant homeland security threat to us, I'd imagine. Do you look at that at all -- at the next decade of drone technology and how it might spread, how it might miniaturize? Do you think about that at all?

NAPOLITANO: Sure. And it goes into the "what keeps you up at night" question that you asked earlier, which is to say, that we know new technologies, new devices are developed each day. They have been used to great effect by the United States abroad, but you have to anticipate that the reverse could also be true. And so we work not just among the community of nations, but across the federal government as well, with all of our sister agencies on problems of that sort.

MORAN: OK. Well, we're going to go to questions now. And what I'd like to ask is that -- wait for the microphone -- there are people with microphone(s) around. So, when you -- when you do stand up to speak, introduce yourself, please, and your affiliation into the microphone.

So let's take some questions here.

We'll start right here.

QUESTIONER: Allen Wendt. Madam Secretary, forgive me if my question seems a bit down in the weeds, but recently a European friend of mine related a horrible experience he had coming into JFK Airport -- not so much the procedures themselves, but the fact that only four out of something like 14 booths were functioning, out of all proportion to the number of travelers. And about a year ago, there was a similar experience covered by a column in the Financial Times related to Dulles Airport --

NAPOLITANO: Yeah.

QUESTIONER: -- all having to do with manning rather than the procedures themselves. Is there anything that can be done to make this experience for foreign nationals a little less disagreeable?

NAPOLITANO: Yeah, in fact, I think I know -- I probably could tell you the exact day he was traveling. And here's the problem, simply put, from a management standpoint: You -- these airports were built and designed well before current security needs and well before the big wide-body planes. And what we have -- we have huge rush hours there, all the planes from Europe arrive around the same time, et cetera, they flood the area, and then there's a dead period. From a staffing perspective, that is difficult.

But we know it, and we need to staff appropriately. We are -- we now get kind of daily readouts of what the wait times are. We have worked to increase staffing both at JFK, Dulles, I think Atlanta. LAX has been another airport where we have wait times that we think are unacceptable. So we're doing our best, and we'll continue to work on those -- on those lines.

But again, to the -- to the point, when we can do pre-clearance, for example, we -- every time we do pre-clearance, every time we expand Global Entry, which is the international -- basically, it's a card that you can get that allows you to basically circumvent the line here and go right on through -- every time we expand those programs, we take pressure off of those lines. And that will be an advantage to us all.

MORAN: Hmm, OK.

Right here, then.

QUESTIONER: Good morning, Madam Secretary. David Trulio, Raytheon Company. I'm also a senior fellow at the Homeland Security Policy Institute. I was hoping you could share with us your latest sense of counterterrorism cooperation with India in terms of progress and challenges going forward. Thank you.

NAPOLITANO: Yeah, in fact, I was just in India. One of the deliverables out of the meeting between the prime minister and the president, of course, was a homeland security dialogue. So we have sent teams there to work jointly on passenger travel, on counterterrorism, on countering violent extremism, on police training, on all of those kinds of elements, cybersecurity being another one.

I would venture to say that there's a lot of work left to be done. Part of it is because of the nature of India. It's a big, complicated country, a very different sort of bureaucratic structure than we have. But I think, as we saw with the attack on Mumbai and other issues in India, they have key terrorism issues that we can, I think, provide assistance on. And likewise, when we talk about finding that sweet spot between security protection and commerce, India is a great example where I think we can have an even more robust relationship than we have right now.

QUESTIONER: Madam Secretary, Christopher Graves with Ogilvy. Beyond the discipline and rigor of security, it must demand more and more creativity and innovation. So two questions related to that, so that you might speak more freely: What country or countries do you think are absolutely leading the way in security creativity and innovation, and why? What are they doing? And how do you foster that at the department?

NAPOLITANO: I actually think we're one of the leaders in the creativity and innovation. And one of the questions I get all the time is why don't we do things the way Israel does them, for example at their airport. And we do some things that are common. We look at what they do. But realize that Israel has basically one international airport, and they process about 50,000 passengers a day. We have hundreds, and we process in the millions. So the scalability issues are quite different. And that means because we have a lot more large and complex system, we have to be thinking differently all the time.

But in the sense of innovation and creativity, we're constantly looking at ways to better allow -- better enable us to identify who may be a traveler or what may be a piece of cargo that is of risk to us. We sponsor basic research and support it in terms of screening, sensing devices and the like, also in terms of how better to spot behaviors that could be indicators of potential violent activity.

One of the regrets I have in the budget process that we are in is the support for this kind of research is consistently getting cut down because it doesn't produce an immediate effect. I mean, the research cycle was longer.

But I believe that as we continue to knit together commercial and security issues, that that technology and that kind of creativity is going to be necessary moving forward. So we've really been in a fight over on the Hill with the Congress explaining why it is that a department called Homeland Security has to have a hefty research budget associated with it.

MORAN: Let's go to the back here, back there.

QUESTIONER: Madam Secretary, obviously your department deals with active shooters.

MORAN: I'm sorry, who are you with?

QUESTIONER: Mike Levine with Fox News.

MORAN: Thank you.

Obviously your department handles issues of active shooters; wondering what your assessment is of the Virginia Tech response yesterday. And do you think anything can be done about these lone wolves and active shooters?

NAPOLITANO: Well, first of all, let's take a moment to extend our sympathies to the -- to the family and colleagues of the officer who was killed. It was a horrible crime. We see them -- I saw them when I was a prosecutor, I saw them when I was a governor; we see them now.

It's probably too soon to assess the response at Virginia Tech. You need to let the -- let things settle and it really go minute by minute. But at least superficially, it looks like it was very strong and very effective. And I'm sure there will always -- there will always be things you can do better. But from the outside, at least -- at least initially it looks like a very good and strong, effective response.

In terms of prevention, one of the things we constantly work on is how do you identify what are the -- what are the behaviors, the techniques, the things that would enable us, a local police officer or someone to say that this person is getting ready to go -- to go nuts.

So we had, for example, the gun shop owner in Killeen, Texas, who saw this odd behavior of a -- of a customer and what he was buying and alerted law enforcement and probably prevented another massacre at Fort Hood. And in this instance, who knows what tip offs there would have been.

But one of the things we focused on when I talked in my little preparatory remarks about shared responsibility internationally, security is also a shared responsibility within the United States, and it's a shared responsibility with local police officers, but it's also a shared responsibility with the citizenry at large. And that's the genesis of the whole "See Something, Say Something" regime. So you're trying to at least increase the likelihood that you can pick up somebody before they start shooting, but it's very, very difficult.

MORAN: Great.

Right here then. Sure.

QUESTIONER: Thank you. Ted Alden with CFR. I want to second your evaluation on the -- on the expansion of pre-clearance, which I think very much is a big breakthrough and one that was a long time coming. A lot of resistance historically from Customs and Border Protection to expansion of pre-clearance -- and as I understand the concern, it's largely over arrest authority: What do you do in a situation where you've got somebody who's in effect probing? They come into pre-clearance, the Customs agent begins to ask questions. They get nervous. They say, ah, ah, I've changed my mind; I don't want to come into the United States, and thereby begin to kind of probe what the potential weaknesses are at entry.

If you don't have the authority in that kind of situation to arrest or detain that kind of person, what's the level of risk there? How did you get around it in this case? Because historically it's been a big concern about expansion of pre-clearance despite all the benefits that you -- that you rightly laid out.

NAPOLITANO: Right, right. Well, from a security standpoint, if they don't come into the U.S., you know, that's -- you know, that may be a good thing. But part of it is exchanging information with the authority of the country of origin, right? And part of what makes pre-clearance work is having that good information sharing arrangement that goes along with it.

MORAN: Back there.

QUESTIONER: Madam Secretary, Rob Bonner; good to see you.

NAPOLITANO: (Yes, indeed ?).

QUESTIONER: I thought, from what I've read, that the -- in terms of the U.S.-Canada Beyond the Borders Action Plan, there were some very major breakthroughs with respect to the mutual security of Canada and the United States, and dare I say, perimeter security will be enhanced, I believe.

I had a specific question, not to get too much in the weeds, but it is about reverse inspections at the land borders between Canada and the United States, something that's been very, very difficult to -- to effectuate. But I understand that that is now contemplated within the action plan, that there will be reverse inspection, where U.S. CBP officers will be in Canada in terms of people and goods that are heading toward the U.S. border, and the Canadian border agency will be in the U.S.

My specific question is, how does it look in terms of actually getting reverse inspection implemented? Where do you think it might be implemented initially? And what do you see as the timeline?

NAPOLITANO: Well, first of all, I think the notion of perimeter security is a huge deal, taking -- again, taking pressure off the actual land border itself, working very closely with Canada, which has been a great partner in this effort. In fact, the meeting I will go to right after this will involve rail travel between the two countries and how we facilitate that.

With respect to the particular issue you raised, we are going to pilot it first in the Vancouver corridor. That will start very shortly. We will see how that goes first, and then we'll look at expansion to some of the other major land routes.

But, you know, I hesitate to give you a firm timeline now, because everybody will write it down, and then if you don't meet it, you know, you're late. But so you've got to take it one step at a time. But the Vancouver area is a very -- you know, very frequently traveled area, so I think it was a good place to pick for a starting point.

MORAN: Yes, sir.

QUESTIONER: Kevin Sheehan, Multiplier Capital. Madam Secretary, while the intelligence community, DOD and the rest of government under your department's leadership are getting very well organized to confront the cyberthreat, it's very difficult for the private sector to achieve the same level of organization. Could you speak a bit about the partner -- the private partnership programs that are in process now with the ISPs and where those programs might be going?

NAPOLITANO: Well, there's a lot going on in the cyber world with the ISPs and with other private-sector partners, particularly in the 18 so-called critical sectors of the economy that have security implications and economic implication, telecommunications, utilities and the like. You know, I could give you the alphabet soup of partnerships. There's a lot of them. Quite frankly, I would like to see some of these things over time consolidated because they're a little atomized, in my judgment, but what we all are striving for is, again, that sweet spot where the business interests of the private sector merge with the security interests of the Department of Homeland Security.

So we will continue to work in that regard together, because the United States, like many other countries, the actual critical infrastructure within the nation is not controlled by the government, it is controlled by the private sector.

QUESTIONER: Is there a special challenge in dealing with that industry because of the culture, the very libertarian and wide-open culture?

NAPOLITANO: Oh, yeah. Well, cyber is -- you know, first of all, hiring personnel is a challenge. The young "cybergeeks," if I can use that phrase -- (laughter) -- you know, they don't think about coming to work for the Department of Homeland Security as their first employment opportunity. Now, I try to make it as attractive as possible. I tell them they don't have to wear a tie, you know -- (laughter) -- they can have -- you know, they can telecommute, all that kind of stuff.

But I think right now there is a huge demand both on the defense and on the civilian side for cyberpersonnel to deal with some of these security issues. And that world is changing so rapidly, almost by the time we talk about a particular phenomenon it's already out of date. So from the management perspective, my number-one thing right now is hiring.

MORAN: Right in the middle there.

QUESTIONER: Thank you. My name is Yoneyama (ph) from -- (inaudible) -- Company, a Japanese multinational. After the Korea and the Panama, Colombia FTA, now the Obama administration is trying for TPP, Trans-Pacific Partnership, for a better flow of people, commodity and money. And it's named 21st century high standard trade deal. How is your department going to have a say into the standard in terms of security versus commerce?

And also, if you could, could you address your exchange with China in terms of security and also commerce?

NAPOLITANO: Well, on TPP, I anticipate that what will happen is that primarily CBP, but also ICE and TSA, will have a very vital role in what the standards and requirements are moving forward, just as we have in other similar global arrangements that the United States has.

With respect to China, we have done some bilateral operations and some bilateral initiatives. We did -- and have reached an agreement on intellectual property protection with China. It remains to be seen whether and how that will actually be implemented, but at least on paper, we have one. We have done some exchanges. We have done some things that are of a training exchange in nature, but I would venture to say that there's probably a lot more that we could do at the bilateral level with China.

MORAN: OK. All the way in the back there.

QUESTIONER: Mike Ahlers with CNN. Thanks for taking our questions. The -- after the toner cartridge threat about a year ago, DHS announced a goal of inspecting 100 percent of inbound -- of cargo on inbound international passenger flights to the U.S. That goal has been changed, at least the deadline's been changed. Has the goal also been changed? Do you intend to inspect 100 percent of inbound cargo or screen it? And will that comply with the congressional requirement?

NAPOLITANO: Yeah, what we're doing is obviously inspecting a hundred percent of high-risk cargo and screening a hundred percent of all cargo on international passenger flights, and we can give you the exact -- you know, when -- you know, what timelines and things of that nature.

The whole hundred percent label that was initially required in statute is something that we've been talking with Congress about not just in terms of air cargo, but cargo in general because it really is not practicable, and there are other ways to reach the same security objective. We have the security objective. The issue is, does a 100 percent screening mandate actually further your way to meet the objective, or by doing layers of security and doing some other things, can you -- can you actually reach the objective more quickly? We think the latter, but it does require Congress to rethink the statute a bit. So we are working with them on that.

MORAN: OK.

Right up here, this gentlemen.

QUESTIONER: Madam Secretary, Herb Richardson with AREVA. And first let me compliment you on probably running one of the most complex and difficult organizations in the government.

AREVA is an international energy company, and we have people all over the world. One of the initiatives that DHS has done is to reach out to industry, such as ours, and offer an opportunity to evaluate vulnerabilities that exist at our various site locations in the U.S., which is an excellent thing to do. The question I have is will that exist for those individuals -- U.S. citizens that we're sending overseas, such as India -- will you be providing or will DHS provide that same vulnerability assessment from a physical security standpoint to protect our U.S. citizens in the various countries overseas?

Secondly, now that the Obama administration has appointed DHS as the lead in cybersecurity, will you be also providing vulnerability assessments from a cybersecurity standpoint?

NAPOLITANO: And the answer to that is I don't know. I think that we are obviously interested in doing so. I don't know that that will be the first thing that we do. Right now our key initiatives are based on securing the U.S. government networks and making sure that they are as -- can be free from intrusion or, if intruded upon, that there's an immediate ability to detect, patch, repair, whatever. So with respect to vulnerability assessments, I cannot tell you whether there will be an actual product or initiative in that regard, at least in the near term.

MORAN: OK, we have -- we have time for one more question. And I'd just like to remind everybody that this meeting has been on the record. And then at the conclusion of our meeting, Secretary Napolitano, we'd all just stay seated so she can get out to your next --

NAPOLITANO: To the next interview.

MORAN: -- your next interview.

NAPOLITANO: OK.

MORAN: That's it -- that's it, exactly.

So one more question is what we have time for. Who's the lucky one? There we go, right there.

QUESTIONER: Thank you. Madam Secretary, my name is -- (inaudible). Would you elaborate how the cut in the budget affects your department?

NAPOLITANO: Well, we're still waiting for our FY '12 budget. And my understanding from the appropriators is that they are near an agreement for us. I think, you know, one of the areas that is likely to be most impacted, the area of grants that we can provide to states and localities for things like disaster response, first responder training and the like, I have some real concerns about that because states and localities themselves are cutting those budgets.

And this is really a national capacity we need to have, which is to say, if there's a disaster anywhere, be it, you know, mother nature, a major earthquake, a hurricane that hits land or a terrorist incident, we need to be able to have that security safety net. So -- but I do think the grants are likely to take -- to take a hit.

Another area that I think -- and hopefully will be restored from the House number was the whole area of research, as I mentioned earlier. You know, I believe that technology is going to help us solve some of our more difficult problems in the area where we're trying to have security and smooth commercial operations co-exist, and that research cycle needs constant feeding. So I would hate to see that cut off in the name of the budget, because I think that would be a little penny-wise and pound-foolish.

We have to do a better job of educating the members of the Congress about why it is that this research is valuable for the taxpayer. So we're working on that. But I'm hopeful the FY '12 budget will do that.

With respect to FY '13, we are now in that process with OMB, and those budget numbers will come out in the normal course of business and you'll see them shortly. But, you know, we're all under the same pressure, and that is, in an era of constrained fiscal resources, making sure that we are spending dollars wisely and well.

And that goes back to this -- the program today, which is to say that in the area of homeland security, the more we can smooth business processes, the more we can work globally, the more we can harmonize requirements, the more we can reduce burdens on travel and commerce but at the same time enhance our security, that is a net positive for the United States. And it's a new way for us to engage with countries around the world. And I'm hopeful and anticipate that the budget will support those efforts.

MORAN: And just a quick follow-up on that. How much would sequestration, should it happen, impact homeland security?

NAPOLITANO: We're not even talking about sequestration. (Laughter.)

MORAN: And there you go.

NAPOLITANO: There it is.

MORAN: Madam Secretary, thank you very much for a really interesting and informative discussion.

NAPOLITANO: Thank you all very much. (Applause.) Thank you.

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