FROM: U.S. DEPARTMENT OF DEFENSE
Presenter: Senior Defense Officials July 31, 2013
Defense Department Background Briefing on the Strategic Choices and Management Review in the Pentagon Briefing Room
GEORGE LITTLE: Thanks to those of you who stayed behind. Wanted to -- I'll let my colleagues introduce themselves in a minute, but this is a backgrounder on the Strategic Choices and Management Review. And my colleagues will be on background as senior defense officials. Would all of them go ahead and introduce --
SENIOR DEFENSE OFFICIAL: (off mic)
SENIOR DEFENSE OFFICIAL: (off mic)
SENIOR DEFENSE OFFICIAL: (off mic)
MR. LITTLE: Great. So with that, I don't think we have any opening remarks. I think we have about 20 minutes, a hard stop at 4 o'clock for some other meetings. So why don't we go straight to questions? Go ahead.
Q: The -- one of the options for the size of the Army that was covered in this review was 420,000 to 450,000, I believe. It said that the -- it had been determined that the strategy could be carried out with that sized Army. Does that mean that, regardless of what happens with sequestration, the Army is likely to fall to that level?
SENIOR DEFENSE OFFICIAL: So, I mean, I think it's fair to say that, just as the secretary said in his -- in his remarks, that coming out of the war in Afghanistan, this is a -- this is an opportunity to relook at the force that we need. And one area that we do think we can look at is the size of the ground force. And so we've asked the Army to take a look at what size they can achieve within the fiscal guidance that we have given them, as they build their budget. And so that'll determine what level we come out at.
Q: So the -- the Army's assessment will determine that level?
SENIOR DEFENSE OFFICIAL: Well, the Army will bring in a proposed budget and a proposed level that they can operate in, and then we will do an assessment in the fall where we look to see what the impacts are, what were the tradeoffs that they made, if they preserved structure. What were the other things they did within their budget to trade off against that?
Q: So I don't understand, though, what in the opening statement that that meant. Because that 420,000 to 450,000 to five tactical squadrons and C-130s of the Air Force seem to be presented separately from the two choices under the sequester. So it seems like -- I read that as, going forward, we have to look at -- that there will be a cut, and we don't know where between 420,000 and 450,000 it will be, but it will be somewhere between those numbers, which is a substantial cut from 490,000. So is that correct? The future will be somewhere between 420,000 and 450,000, as opposed to 490,000?
SENIOR DEFENSE OFFICIAL: Yeah, I mean, that's certainly what we expect to come out of the budget. It's been part of the deliberation that we did in the Strategic Choices and Management Review. It's certainly conversations we've had with the Army, as they looked at that themselves and what they would have to live with, with a smaller budget. So I think that's our expectation it's where they will -- they will be.
And, again, the reason those were called out separately is the first thing we did was to try to live with all of the tenets that are currently in the defense strategic guidance and -- and so what we did was we asked, are there any places in the budget where we can find either forces or some modernization efforts that we don't need? And what we identified was we thought we could take some -- reduce some of the -- of the ground forces and the tactical aircraft.
Q: (off mic) what areas of risk did you identify going from 490,000 down to 450,000, or areas, missions that we wouldn't likely do under the lower scenario?
SENIOR DEFENSE OFFICIAL: So, actually, as -- (inaudible) -- pointed out, that level is really most closely aligned with the current strategy. And in the current strategy already, we're looking at level of COIN in the future and coming out of large-scale, irregular warfare COIN, where you do require large numbers or sustained -- over many years -- large-scale rotations. So really coming out, that's -- that's really where it's -- it's aligning more closely with the strategy we have.
Q: (off mic) Is it a reflection that the Army would be less of a player in the pivot/rebalance to Asia than the Air Force or the Navy?
SENIOR DEFENSE OFFICIAL: I wouldn't say that that's necessarily true. I think it's more reflective, as -- (inaudible) -- I think both indicated, it's more reflective of trying to refine the alignment between the joint force and the defense strategic guidance that came out a year-and-a-half ago that did -- you know, we've gotten out of Iraq. We're drawing down in Afghanistan. As -- (inaudible) -- said, we don't envision doing large-scale, multi-year stability operations.
So it's more reflective of that than it would be, you know -- I think, you know, we would -- we would say we're -- we've just put in a four-star, you know, Army commander in Asia Pacific and we anticipate having them a role, most of the Asian nations have substantial ground forces, and we think the Army can make a good contribution there.
Q: When you were looking at this review, you said that you were looking at, you know, immediate things we could do with force structure that were excess now, as well as modernization programs. The fact that you didn't call out any specific programs for cancellation, does that mean that you didn't find any weapons programs that were bloated, you know, or unnecessary or -- or that could be done without or redundant?
SENIOR DEFENSE OFFICIAL: Right, we looked at -- we looked at -- we looked for any redundancy, certainly, within our program set. And so I won't deny that there are programs that are -- that look very similar in both the Air Force and Navy, but they do support different mission sets. And so it's not -- it's not a redundancy, so much as a very similar program being developed in multiple services for very good reasons.
So -- and I would say, yes, we did not find any particular capabilities that we thought we could do away with under the current strategy. It's a pretty -- still a pretty ambitious strategy that we've set for ourselves.
Q: How is sequestration being implemented with '14? I mean, cutting 10 percent across, are you doing targeted cuts? How are you going to get that implemented? Because the secretary keeps saying it's the law, it's the law, so you're doing it, right?
SENIOR DEFENSE OFFICIAL: So -- so that's -- that's still to be determined. That is -- that is, what -- what does our FY '14 budget actually look like under execution? Our undersecretary for comptroller is working closely with the services now to understand how we would execute that. A lot of that depends on what the rule sets are, which we don't know yet, as -- (inaudible) -- said. There's still tremendous amount of uncertainty.
Under sequestration, in FY '13, it was a very simplistic, across-the-board cut. We did exclude military personnel from those cuts. And so the -- we'll have a rule set for FY '14. If there's more flexibility, we won't take across-the-board cuts. And in fact, the letter that the secretary sent over to Chairman Levin and Senator Inhofe does talk about the fact that we'd like flexibility to distribute the cuts a little bit --
Q: Does the '15 budget reflect sequestration? Or -- or --
SENIOR DEFENSE OFFICIAL: We haven't -- we haven't built the '15 budget yet.
MR. LITTLE: And just to clarify for people, the Strategic Choices and Management Review looked at FY '15 to '19, not at FY '14 execution under sequestration.
Q: On force structure, could you sort of explain the -- the reasoning behind reducing C-130 fleets, the fleet size?
SENIOR DEFENSE OFFICIAL: It's -- it's a question purely of what's required. We looked very closely at their day-to-day requirements. We looked at warfighting requirements under the different operating plans that we have, the different scenarios that we expect to have, and we just ask, is there sufficient capacity? Are there other opportunities to cut? And what we have identified within the SCMR was there were opportunities to take reductions here.
Q: (off mic) you look at more specific -- I mean, is this related to the drawdown of the war in Afghanistan and -- and what exactly went into your thinking, in terms of that specific (off mic)
SENIOR DEFENSE OFFICIAL: So I -- I think to a great extent, and I know -- (inaudible) -- worked more closely in this area during the review, but even with the demand signals that we have today, there's excess capacity within the C-130 fleet. And we could -- we could take reductions there.
So it's not that we are looking at -- you know, there will be -- we do expect future reductions. But even modeling the demand signals that we have today, there's excess.
Q: So one last question. I know that this isn't a definite decision, but when do you foresee those reductions happening?
SENIOR DEFENSE OFFICIAL: It's all part of the budget process, and the '15 budget would give the first glimpse as to what our decisions are. Again, these aren't -- none of these are decisions. I want to emphasize that. This is to give the secretary a sense of -- and the deputy secretary a sense of the choices that they could make and to try to meet different fiscal targets. And so you'd have to wait until the '15 budget to see what our -- what we actually do in that area.
Q: Can I clarify one figure that the secretary laid out? He talked about this $30 billion to $35 billion shortfall in the first five years of sequestration. Is that every year, $30 billion to $35 billion? Or is that cumulative over five years?
SENIOR DEFENSE OFFICIAL: It's -- it's $30 billion to $35 billion in '14 and '15. It gets a little bit better as we continue through the BCA period. And toward the end of it, we find a sufficient savings to actually close on the full sequestration number.
SENIOR DEFENSE OFFICIAL: Based on the -- based on the SCMR --
SENIOR DEFENSE OFFICIAL: Based on the SCMR.
SENIOR DEFENSE OFFICIAL: -- which is what we're talking about today.
Q: So in '14 and -- and '15, say the target's $55 billion. Even if you did the most draconian cuts, you'd still only save like $15 billion? You'd have in excess of $35 billion in each year? Is that --
SENIOR DEFENSE OFFICIAL: That's what -- yeah, so it's $15 billion to $20 billion, I think, roughly the numbers that we would see in '14 and '15. And, again, that's partly because -- and the secretary emphasized this point -- the strategic choices that we make, the drawdown in forces, whether it's Army or naval forces, does take time to deliver savings. And so those savings accrue much later. Even some of the compensation savings can -- there are cumulative effects that make the total savings larger. So what we see in the near years is that the strategic decisions we just begin on provide very small numbers of savings.
SENIOR DEFENSE OFFICIAL: But we have to separate, again, the SCMR from '14 and what might happen with a continuing resolution or some other (off mic)
SENIOR DEFENSE OFFICIAL: That's right, yes.
Q: So if I -- if I hear you right, even if you do the worst case, you're going to save maybe $15 billion for '14, $15 billion for '15, and you've got this remaining $30 billion to $35 billion that you have to account for somewhere in your force? That's -- that's the issue?
SENIOR DEFENSE OFFICIAL: That's the -- that's the shortfall that he was referring to, right. So it's -- so the Strategic Choices and Management Review, the options that we teed up, totaled in those -- in those first couple of years only $15 billion to $20 billion. And so the rest will -- and it's not actually very different than what we're seeing in FY '13, some of the same cuts.
Q: (off mic)
Q: (off mic)
MR. LITTLE: About five more minutes.
Q: On the strategic choices, I never quite understood the previous responses. Is the rebalance to the Pacific, is that in jeopardy in a worst-case scenario?
SENIOR DEFENSE OFFICIAL: We -- as you all know, the rebalance to Asia Pacific is central to our strategy. And we are committed to sustaining that effort in a very significant way. Under, you know, the worst case, sequestration becomes permanent over a 10-year period, the SCMR, I think, points us in the direction that it would be very challenging to implement that exactly as how it was originally conceived. But we are prioritizing the rebalance as we -- as we went through FY '13, as we look to FY '14 execution. We are prioritizing that to -- because we think it's such an essential part of our strategy.
Q: Can I just ask you to follow up on the question of the tactical air squadrons? I mean, if you -- how -- can you walk us through your thinking on having excess capacity there at a time when, you know, Russia and China are known to be developing their own fifth-generation fighters? You know, there's been a lot of discussion with that. How would that unfold if you're going to reduce tactical air squadrons? I mean, what do you take out? And is -- you know, and how do you justify that, given the threat that we're always hearing about?
SENIOR DEFENSE OFFICIAL: Do you want to take (off mic)
SENIOR DEFENSE OFFICIAL: I can -- I can address that. Even despite sequestration, we've continued to always refine the strategy. The strategy we have now, the defense strategic guidance, has a defeat and a deny aspect to it. And as we review Air Force -- U.S. Air Force capability, we look at how many squadrons are required to execute that strategy. We continue to refine that.
As we've worked through it and as we've looked at what is required to defend the homeland, what is required by our best projection to counter the threat, we do believe there is some room for some reductions. Again, that's always risk when you take reductions, as you work through. But as we assessed it and as we looked at it, that was one area where we thought we could minimize the risk and still squeeze some force structure.
Q: How does that -- how do you --
MR. LITTLE: I think (off mic)
Q: How does the F-35 --
MR. LITTLE: (off mic) I've got -- I've got limited time here for other folks. Kate?
Q: With the consolidation of combatant commands, could you identify which combatant commands make the most sense for consolidation under sequestration? And does any consolidation make sense, even without sequestration?
SENIOR DEFENSE OFFICIAL: (off mic) do you want that?
SENIOR DEFENSE OFFICIAL: Yeah, I can -- I can take that, as well. We're -- we're still working through if it makes sense, to borrow your words, to consolidate, and the secretary and the chairman definitely want some options brought forward. We haven't completed our review, but we have to look at the missions and how we would adjust and align missions first.
We need to work through, are there real savings there? And we've got an ongoing effort to take a look at infrastructure, for example, in Europe to see what -- what is there and what could be consolidated.
But part of it, as well, is not just the joint combatant command, but the subordinate commands under it. And we've asked the services to take a hard look at that as they build their -- their POMs to come into the department. We've asked them to take a really hard look at, where could they consolidate and streamline those three- and four-star commands to get savings?
Q: So have you guys looked at the active-reserve component force mix? And where is the most efficient way to place the key equipment by service, TACAIR, stuff like that?
SENIOR DEFENSE OFFICIAL: Yeah, so -- very much the active-reserve mix was part of what we did. The analysis took into account the mix that we currently have today and what it might look like under reduced structure. Of course, we get different access to those, so were able to model the access rates to the different components, as well.
And, I mean, both components play a role across all the services and by force elements. They all play different roles, when I look at the -- the active versus the guard and reserve.
So the mix question is a complicated question. There's certainly cost elements to that, there's -- but there's also access. There's training, their ability to respond, all of which play into that. And so I think the short answer really is that we're going to continue to look at the proper balance between the active and reserve, even under reduced fiscal levels, because it's a way we have to get to a balanced budget.
Q: But to follow up on that, on the ground forces, it does sound like what the secretary said today indicates a potential recalibration of less active-duty. He didn't note any cuts to the reserve component. Is that fair to say, that it looks like -- that the active-duty will take potentially a brunt of the cuts?
SENIOR DEFENSE OFFICIAL: I would say at this point, all options are on the table. In fact, in the Strategic Choices and Management Review, we teed up reductions in both components for the secretary to think about.
MR. LITTLE: We've got time for one or two more questions. Yes, sir?
Q: On civilian workforce, I know you've got the 20 percent reduction in headquarters components. Did you get any more specific on reshaping or resizing the civilian workforce in any more detailed way? Is there a target, either civilians or contractors?
SENIOR DEFENSE OFFICIAL: I'm not sure -- (inaudible) -- go ahead.
SENIOR DEFENSE OFFICIAL: I mean, we looked at a wide range of options, and we still are looking at a wide range of options. There are several ideas out there that could generate some savings. One of them is to take a look at our civilians and see if there's any opportunities to put some downward pressure on matching -- or make sure we're matching the appropriate seniority to the job at hand. So we're taking a look at some of that.
We're also taking a look at paying compensation just like we are for military. And, you know, are there areas where we could actually generate some savings for -- on the civilian side? And as we -- as we work through, depending on the level of budget we have, we'll have to work through whether we'll be required to push harder on the overall size of our civilian workforce.
MR. LITTLE: (off mic) questions.
Q: Back to the guard and reserve, on the five TACAIR squadrons and C-130s, did you look at which -- which component those cuts would come from? And on the tactical squadrons, did you look at which airframes those could possibly be?
SENIOR DEFENSE OFFICIAL: I imagine we made specific choices because we had to cost these, as well. Again, that's now over to the -- over to the Air Force, over to the services to think about what's the proper balance, what's the proper choice, as they look at drawing down. And, again, it's up to five -- I think the secretary announced -- tactical aircraft reductions, but it's not -- not our decision yet, not in finality in the -- in the budget.
SENIOR DEFENSE OFFICIAL: And the SCMR was -- to answer the first part of your question, the SCMR was not specific about which units we were aggregating the assessment.
MR. LITTLE: And final question goes to (off mic)
Q: Can you elaborate on how far into the future you'd have to backload the cuts to make them strategically executable? And also, what's the way ahead for the QDR?
SENIOR DEFENSE OFFICIAL: You want to (off mic) (Laughter.)
SENIOR DEFENSE OFFICIAL: Yeah, so we didn't -- we didn't attempt to come up with an optimal profile that would give us the best strategic outcome over -- over a 10-year period or a 20-year period for the department. You know, what -- we looked at fundamentally those three budget profiles. And the president's budget does very much align well with the defense strategic guidance, and the sequestration clearly does not.
The in-between budget was purely just a look at, you know, is there -- is there something in between? But there are impacts. I mean, we talk -- we call it bending the strategy, but there are certainly elements of the strategy that are affected, not to the point that we would consider it a break, but it's -- I wouldn't -- I don't want to call that optimal in any sense. But that was not the goal of the strategic choices review, was to come up with any sort of optimal profile.
MR. LITTLE: All right. Thank you, everyone. Speaking of --
Q: On the QDR?
MR. LITTLE: Oh, QDR, okay.
SENIOR DEFENSE OFFICIAL: As the secretary said, we will be -- I think the QDR is a lot -- will build on the SCMR process. It's going to be starting in early fall. And that will be a place where we will be able to look in more detail at how to shape those recommendations that we would bring forward to the president, as the secretary talked about, in terms of, you know, we -- we don't yet have a certainty on what the resource picture will look at, so we will be, I think, using the QDR process to look more -- you know, we looked at sort of the illustrative options in the SCMR, and the QDR will be a chance to sort of look at that in more detail and develop recommendations for the president, as he thinks about the '15 budget and beyond.
MR. LITTLE: Thanks for your time, everyone. Appreciate it.
Thursday, August 1, 2013
UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT FOR WEEK ENDING JULY 27, 2013
UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
SEASONALLY ADJUSTED DATA
In the week ending July 27, the advance figure for seasonally adjusted initial claims was 326,000, a decrease of 19,000 from the previous week's revised figure of 345,000. The 4-week moving average was 341,250, a decrease of 4,500 from the previous week's revised average of 345,750.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending July 20, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 20 was 2,951,000, a decrease of 52,000 from the preceding week's revised level of 3,003,000. The 4-week moving average was 3,026,000, a decrease of 500 from the preceding week's revised average of 3,026,500.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 279,869 in the week ending July 27, a decrease of 60,084 from the previous week. There were 312,931 initial claims in the comparable week in 2012.
The advance unadjusted insured unemployment rate was 2.3 percent during the week ending July 20, a decrease of 0.1 percentage point from the prior week's revised rate. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,927,554, a decrease of 126,553 from the preceding week's revised level of 3,054,107. A year earlier, the rate was 2.5 percent and the volume was 3,246,888.
The total number of people claiming benefits in all programs for the week ending July 13 was 4,695,366, a decrease of 154,140 from the previous week. There were 5,964,451 persons claiming benefits in all programs in the comparable week in 2012.
No state was triggered "on" the Extended Benefits program the week ending July 13.
Initial claims for UI benefits filed by former Federal civilian employees totaled 2,279 in the week ending July 20, a decrease of 31 from the prior week. There were 2,222 initial claims filed by newly discharged veterans, a decrease of 188 from the preceding week.
There were 20,008 former Federal civilian employees claiming UI benefits for the week ending July 13, an increase of 266 from the previous week. Newly discharged veterans claiming benefits totaled 35,010, a decrease of 1,464 from the prior week.
States reported 1,564,517 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending July 13, a decrease of 49,668 from the prior week. There were 2,532,828 persons claiming EUC in the comparable week in 2012. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending July 20 were in Puerto Rico (4.9), New Jersey (3.6), Connecticut (3.5), Alaska (3.4), California (3.4), Pennsylvania (3.4), New Mexico (3.2), Nevada (2.9), Virgin Islands (2.9), Illinois (2.8), New York (2.8), Oregon (2.8), and Rhode Island (2.8).
The largest increases in initial claims for the week ending July 20 were in California (+7,723), Missouri (+635), Kansas (+427), Illinois (+383), and Maine (+136), while the largest decreases were in New York (-14,966), Pennsylvania (-8,817), Alabama (-6,019), Georgia (-5,504), and Wisconsin (-3,324).
SEASONALLY ADJUSTED DATA
In the week ending July 27, the advance figure for seasonally adjusted initial claims was 326,000, a decrease of 19,000 from the previous week's revised figure of 345,000. The 4-week moving average was 341,250, a decrease of 4,500 from the previous week's revised average of 345,750.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending July 20, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 20 was 2,951,000, a decrease of 52,000 from the preceding week's revised level of 3,003,000. The 4-week moving average was 3,026,000, a decrease of 500 from the preceding week's revised average of 3,026,500.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 279,869 in the week ending July 27, a decrease of 60,084 from the previous week. There were 312,931 initial claims in the comparable week in 2012.
The advance unadjusted insured unemployment rate was 2.3 percent during the week ending July 20, a decrease of 0.1 percentage point from the prior week's revised rate. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,927,554, a decrease of 126,553 from the preceding week's revised level of 3,054,107. A year earlier, the rate was 2.5 percent and the volume was 3,246,888.
The total number of people claiming benefits in all programs for the week ending July 13 was 4,695,366, a decrease of 154,140 from the previous week. There were 5,964,451 persons claiming benefits in all programs in the comparable week in 2012.
No state was triggered "on" the Extended Benefits program the week ending July 13.
Initial claims for UI benefits filed by former Federal civilian employees totaled 2,279 in the week ending July 20, a decrease of 31 from the prior week. There were 2,222 initial claims filed by newly discharged veterans, a decrease of 188 from the preceding week.
There were 20,008 former Federal civilian employees claiming UI benefits for the week ending July 13, an increase of 266 from the previous week. Newly discharged veterans claiming benefits totaled 35,010, a decrease of 1,464 from the prior week.
States reported 1,564,517 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending July 13, a decrease of 49,668 from the prior week. There were 2,532,828 persons claiming EUC in the comparable week in 2012. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending July 20 were in Puerto Rico (4.9), New Jersey (3.6), Connecticut (3.5), Alaska (3.4), California (3.4), Pennsylvania (3.4), New Mexico (3.2), Nevada (2.9), Virgin Islands (2.9), Illinois (2.8), New York (2.8), Oregon (2.8), and Rhode Island (2.8).
The largest increases in initial claims for the week ending July 20 were in California (+7,723), Missouri (+635), Kansas (+427), Illinois (+383), and Maine (+136), while the largest decreases were in New York (-14,966), Pennsylvania (-8,817), Alabama (-6,019), Georgia (-5,504), and Wisconsin (-3,324).
EXPORT-IMPORT BANK CHAIRMAN HOCHBERG ON SUCCESS IN GLOBAL MARKET
FROM: U.S. EXPORT-IMPORT BANK
Ex-Im Bank Chairman Outlines How American Exporters Can Remain Competitive Despite Unprecedented Challenges
In Annual Competitiveness Report, Hochberg Describes Path to Success in Tough Global Market
Washington, DC – Today, Export-Import Bank Chairman Fred P. Hochberg outlined the unprecedented challenges facing our nation’s exporters in a keynote address at the Center for American Progress. During his speech, Hochberg spoke about how U.S. companies are often forced to go head-to-head with foreign governments who offer attractive financing, provided a strong defense of Ex-Im Bank, and outlined how U.S. companies can succeed in an increasingly competitive global environment.
Excerpts from Hochberg's speech
“American products are the best in the world. And on a level playing field, they often come out on top. But, today more than ever, foreign governments are willing to do whatever it takes to close a sale – putting massive resources behind their chosen exporters, which are often state-owned enterprises.”
“In this year’s competitiveness report, we found that China, Korea, Japan and others are ramping up government export support… Yet, here at home, Congress has required the Treasury Department to begin negotiations with our competitors to end export credits…To end export credits when our competitors are playing by a completely different set of rules…This would be a self-inflicted wound our economy cannot sustain.”
“Make no mistake, foreign governments would love to see Ex-Im go out of business and swoop in and snatch the $50 billion worth of exports we financed last year. They would love to have those 255,000 American jobs for themselves. Failing to reauthorize our charter next year is a particularly bad idea in light of the growth of the global middle class and the unprecedented competition America faces from Asia and Russia, among many others.”
Key findings from Ex-Im Bank's Competitiveness Report
Commercial bank capacity has declined and cost of funds has increased worldwide since the global financial crisis, shifting the volume of demand from commercial lenders to export credit agencies (ECAs).
The global financial crisis has altered the landscape, affecting economic progress in Europe while manufacturing prowess has vastly improved in Asia. Many Asian countries have ambitious export plans to gain market share and the financing that goes along with it.
U.S. exporters compete in many markets and sectors that other countries have targeted as a “national interest,” either explicitly as part of their national policy, or implicitly by making available a range of official financing tools intended to maximize the flow of national benefits.
More and more financing is being offered outside of OECD guidelines. But it’s not just interest rates. It is open season on other inducements as non-OECD countries continue to use financing to sway purchase decisions.
About Ex-Im Bank
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. In the past five years (from Fiscal Year 2008), Ex-Im Bank has earned for U.S. taxpayers nearly $1.6 billion above the cost of operations. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.
Ex-Im Bank Chairman Outlines How American Exporters Can Remain Competitive Despite Unprecedented Challenges
In Annual Competitiveness Report, Hochberg Describes Path to Success in Tough Global Market
Washington, DC – Today, Export-Import Bank Chairman Fred P. Hochberg outlined the unprecedented challenges facing our nation’s exporters in a keynote address at the Center for American Progress. During his speech, Hochberg spoke about how U.S. companies are often forced to go head-to-head with foreign governments who offer attractive financing, provided a strong defense of Ex-Im Bank, and outlined how U.S. companies can succeed in an increasingly competitive global environment.
Excerpts from Hochberg's speech
“American products are the best in the world. And on a level playing field, they often come out on top. But, today more than ever, foreign governments are willing to do whatever it takes to close a sale – putting massive resources behind their chosen exporters, which are often state-owned enterprises.”
“In this year’s competitiveness report, we found that China, Korea, Japan and others are ramping up government export support… Yet, here at home, Congress has required the Treasury Department to begin negotiations with our competitors to end export credits…To end export credits when our competitors are playing by a completely different set of rules…This would be a self-inflicted wound our economy cannot sustain.”
“Make no mistake, foreign governments would love to see Ex-Im go out of business and swoop in and snatch the $50 billion worth of exports we financed last year. They would love to have those 255,000 American jobs for themselves. Failing to reauthorize our charter next year is a particularly bad idea in light of the growth of the global middle class and the unprecedented competition America faces from Asia and Russia, among many others.”
Key findings from Ex-Im Bank's Competitiveness Report
Commercial bank capacity has declined and cost of funds has increased worldwide since the global financial crisis, shifting the volume of demand from commercial lenders to export credit agencies (ECAs).
The global financial crisis has altered the landscape, affecting economic progress in Europe while manufacturing prowess has vastly improved in Asia. Many Asian countries have ambitious export plans to gain market share and the financing that goes along with it.
U.S. exporters compete in many markets and sectors that other countries have targeted as a “national interest,” either explicitly as part of their national policy, or implicitly by making available a range of official financing tools intended to maximize the flow of national benefits.
More and more financing is being offered outside of OECD guidelines. But it’s not just interest rates. It is open season on other inducements as non-OECD countries continue to use financing to sway purchase decisions.
About Ex-Im Bank
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. In the past five years (from Fiscal Year 2008), Ex-Im Bank has earned for U.S. taxpayers nearly $1.6 billion above the cost of operations. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.
FTC ACTS AGAINST SPAM AND ROBOCALLING OPERATIONS
FROM: FEDERAL TRADE COMMISSION
FTC Acts Against Spam Text and Robocalling Operations
Case Continues FTC Crackdown on "Free Gift Card" Scammers
The Federal Trade Commission has moved to shut down an international network of scammers that sent millions of unwanted text messages to consumers, using the lure of “free” gift cards and electronics to entice consumers into an elaborate scheme designed to take their money and target them for illegal robocalls.
In its complaint, the FTC alleges that scammers sent unwanted text messages to consumers, many of whom had to pay for receiving the texts. The messages promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Walmart and Target.
Consumers who clicked on the links in the messages found themselves caught in a confusing and elaborate process that required them to provide sensitive personal information, apply for credit or pay to subscribe to services to get the supposedly “free” cards. In addition, consumers’ phone numbers were signed up to receive unwanted automated telemarketing calls, also known as robocalls.
This complaint builds on a nationwide sweep conducted by the Commission in March to crack down on scammers who use these spam text messages to deceive consumers.
The FTC complaint names nine defendants who allegedly were involved in various aspects of the operation in violation of the FTC Act and the Telemarketing Sales Rule. It seeks injunctions against the defendants preventing them from continuing their alleged deceptive and unfair practices as well as requiring them to pay monetary relief.
According to the complaint, when consumers followed the links included in the unwanted messages, they were directed to sites that collected a substantial amount of personal information, including in some instances health information, before being allowed to continue toward receiving the supposed gift cards. In many cases, the information was requested under the guise of being shipping information for the supposed gift cards. The Commission alleges that in addition to selling the information for marketing purposes, the defendants also made unwanted automated telemarketing calls to consumers selling products such as home security, satellite television and travel services.
Once consumers entered their personal information, they were directed to another site and told they would have to participate in a number of “offers” to be eligible for their gift card. In some cases, consumers were obligated to sign up for as many as 13 of the offers. These offers frequently included recurring subscriptions for which consumers were required to provide credit card information and pay up front for “shipping and handling” charges. In other cases, they required consumers to submit applications for credit that would be reflected in their credit reports and possibly affect their credit score.
In most, if not all, instances, it would be impossible for a consumer to receive the allegedly “free” merchandise without spending money, according to the complaint.
The defendants in the case are Acquinity Interactive, LLC, located in Deerfield Beach, Fla.; 7657030 Canada Inc., located in Kirkland, Quebec, and also doing business as Acquinity Interactive; Garry Jonas, an officer of Acquinity Interactive; Revenue Path E-Consulting Pvt Ltd, located in Pune, India; Revenuepath Ltd, registered in Nicosia, Cyprus; Worldwide Commerce Associates, LLC, registered in Las Vegas, Nev., and also doing business as WCA; Sarita Somani, an officer of the Revenue Path defendants and Worldwide Commerce Associates; Firebrand Group S.L., LLC, registered in Las Vegas, Nev.; and Matthew Beucler, an officer of Firebrand.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
FTC Acts Against Spam Text and Robocalling Operations
Case Continues FTC Crackdown on "Free Gift Card" Scammers
The Federal Trade Commission has moved to shut down an international network of scammers that sent millions of unwanted text messages to consumers, using the lure of “free” gift cards and electronics to entice consumers into an elaborate scheme designed to take their money and target them for illegal robocalls.
In its complaint, the FTC alleges that scammers sent unwanted text messages to consumers, many of whom had to pay for receiving the texts. The messages promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Walmart and Target.
Consumers who clicked on the links in the messages found themselves caught in a confusing and elaborate process that required them to provide sensitive personal information, apply for credit or pay to subscribe to services to get the supposedly “free” cards. In addition, consumers’ phone numbers were signed up to receive unwanted automated telemarketing calls, also known as robocalls.
This complaint builds on a nationwide sweep conducted by the Commission in March to crack down on scammers who use these spam text messages to deceive consumers.
The FTC complaint names nine defendants who allegedly were involved in various aspects of the operation in violation of the FTC Act and the Telemarketing Sales Rule. It seeks injunctions against the defendants preventing them from continuing their alleged deceptive and unfair practices as well as requiring them to pay monetary relief.
According to the complaint, when consumers followed the links included in the unwanted messages, they were directed to sites that collected a substantial amount of personal information, including in some instances health information, before being allowed to continue toward receiving the supposed gift cards. In many cases, the information was requested under the guise of being shipping information for the supposed gift cards. The Commission alleges that in addition to selling the information for marketing purposes, the defendants also made unwanted automated telemarketing calls to consumers selling products such as home security, satellite television and travel services.
Once consumers entered their personal information, they were directed to another site and told they would have to participate in a number of “offers” to be eligible for their gift card. In some cases, consumers were obligated to sign up for as many as 13 of the offers. These offers frequently included recurring subscriptions for which consumers were required to provide credit card information and pay up front for “shipping and handling” charges. In other cases, they required consumers to submit applications for credit that would be reflected in their credit reports and possibly affect their credit score.
In most, if not all, instances, it would be impossible for a consumer to receive the allegedly “free” merchandise without spending money, according to the complaint.
The defendants in the case are Acquinity Interactive, LLC, located in Deerfield Beach, Fla.; 7657030 Canada Inc., located in Kirkland, Quebec, and also doing business as Acquinity Interactive; Garry Jonas, an officer of Acquinity Interactive; Revenue Path E-Consulting Pvt Ltd, located in Pune, India; Revenuepath Ltd, registered in Nicosia, Cyprus; Worldwide Commerce Associates, LLC, registered in Las Vegas, Nev., and also doing business as WCA; Sarita Somani, an officer of the Revenue Path defendants and Worldwide Commerce Associates; Firebrand Group S.L., LLC, registered in Las Vegas, Nev.; and Matthew Beucler, an officer of Firebrand.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
SECRETARY OF DEFENSE HAGEL'S STATEMENT ON STRATEGIC CHOICES AND MANAGEMENT REVIEW
FROM: U.S. DEPARTMENT OF DEFENSE
Statement on Strategic Choices and Management Review
As Delivered by Secretary of Defense Chuck Hagel, Pentagon Press Briefing Room, Wednesday, July 31, 2013
Good afternoon.
I want to make some remarks about our Strategic Choices Management Review, which I directed about four months ago, and Sandy Winnefeld, who as you all know is the Vice Chairman of the Joint Chiefs, is here and will add his comments, as well.
The Chairman is in Arizona, where he has just recently welcomed his eighth grandchild, so he's doing important business, as he is taking care of twin boys who are 2 years old. So he is testing his Chairmanship and his ability in that regard. So that's why General Dempsey is not with us today.
So I'll begin, and then Admiral Winnefeld will add his thoughts. And we'll take some questions. And if you all want to go deep, deep down into what I'm going to talk about, then we have some of our budget and financial analysts here to go as deep as you want to go on what I'm going to talk about here in the next few minutes. So, thank you for giving me some time today.
Earlier today, I briefed key congressional committee leaders on the findings of DoD's Strategic Choices Management Review. And this afternoon, as I've said, I want to talk about these findings and clarify the major options and the difficult choices that we have ahead.
I directed the Strategic Choices and Management Review four months ago to help ensure the Department of Defense is prepared in the face of unprecedented budget uncertainty. Although DoD strongly supports the President's Fiscal Year 2014 request and long-term budget plan for the entire federal government, the deep and abrupt spending cuts under sequestration that began on March 1st of this year, are, as you all know, the law of the land. Sequestration will continue in the absence of an agreement that replaces the Budget Control Act.
The purpose of the Strategic Choices and Management Review, which was led by the Deputy Secretary of Defense, Ash Carter, with the full participation of General Dempsey and Admiral Winnefeld, the Service Secretaries and the Service Chiefs, was to understand the impact of further budget reductions on the Department and develop options to deal with these additional cuts. It had three specific objectives:
Help DoD prepare for how to deal with sequestration if it continues in Fiscal Year 2014;
Inform the fiscal guidance given to the military services for their F.Y. 2015 through 2019 budget plans;
And, third, anchor the upcoming Quadrennial Defense Review, which will assess our defense strategy in light of new fiscal realities and the many threats and complexities and uncertainties of this new century.
The Strategic Choices and Management Review did not produce a detailed budget blueprint. That was not the purpose of the review. It generated a menu of options, not a set of decisions. These options were built around the potential budget scenarios:
First, the President's F.Y. 2014 budget, which incorporates the carefully calibrated and largely back-loaded $150 billion reduction in defense spending over the next 10 years.
Second, the Budget Control Act sequester-level caps, which would cut another $52 billion from defense spending in Fiscal Year 2014, with $500 billion in reductions for the DoD over the next 10 years.
And third, an "in-between scenario" that would reduce defense spending by about $250 billion over the next 10 years, but would be largely back- loaded.
It's important to remember that all these cuts are in addition to the $487 billion reduction in defense spending over the next decade required by the initial caps in the Budget Control Act of 2011, which DoD is currently implementing. If sequester-level cuts persist, DoD would experience nearly $1 trillion in defense spending reductions over the next ten years.
To help DoD balance strategic ends, ways and means under these budget scenarios, the Strategic Choices and Management Review scrutinized every aspect of DoD's budget, including contingency planning, business practices, force structure, pay and benefits, acquisition practices, and modernization portfolios. Everything was on the table.
As I discussed last week at the VFW Convention in Louisville, four principles helped guide this review:
First, prioritizing DoD's missions and capabilities around our core responsibility of defending our country;
Second, maximizing the military's combat power by looking to reduce every other category of spending first;
Third, preserving and strengthening military readiness;
And, fourth, honoring the service and sacrifice of DoD's people and their families.
Those principles, and a rigorous review process, resulted in packages of options that included management efficiencies and overhead reductions, compensation reform, and changes to force structure and modernization plans.
Allow me to share with you some of the options the review identified in each of the areas I've just mentioned.
First, management efficiencies and overhead reductions. A tenet of the review was what we need to focus on is maximizing savings from reducing DoD's overhead administrative costs and other institutional expenses.
For several years, DoD has been paring back overhead. About $150 billion in five-year efficiency reductions were proposed by Secretary Gates. An additional $60 billion in savings were identified by Secretary Panetta. And I submitted a $34 billion savings package in our latest budget. DOD is continuing to implement these efficiency campaigns, but despite much progress, as well as good efforts and intentions, not every proposal has generated the savings we expected or gained the support of Congress – most notably, our request for a Base Realignment and Closure round.
The review showed that DoD will have to do more in this area, much more, even though it is getting more difficult to find these cuts, and it can take years for significant savings to be realized. After considering the results of the review, I determined that it is possible and prudent to begin implementing a new package of efficiency reforms now – ones that should be pursued regardless of fiscal circumstances.
Some of these management efficiencies and overhead reductions include:
Reducing the Department's major headquarters budgets by 20 percent, beginning with the Office of the Secretary of Defense, the Joint Staff, Service Headquarters and Secretariats, Combatant Commands, and defense agencies and field activities. Although the 20 percent cut applies to budget dollars, organizations will strive for a goal of 20 percent reductions in government civilians and military personnel.
Reducing the number of direct reports to the Secretary of Defense by further consolidating functions within OSD, as well as eliminating positions and;
Reducing intelligence analysis and production at combatant command intelligence and operation centers, which will also foster closer integration and reduce duplication across defense enterprises.
These management reforms, consolidations, personnel cuts, and spending reductions will reduce the Department's overhead and operating costs by some $10 billion over the next five years and almost $40 billion over the next decade. They will make the Department more agile and more versatile.
Past efficiency campaigns have shown that implementation can be very challenging, so effective follow-through is critical, if savings targets are to be realized. This is especially true of OSD reductions. I've asked Deputy Secretary Carter to identify someone from outside DoD who is deeply knowledgeable about the defense enterprise and eminently qualified to direct implementation of the OSD reductions and report to the Deputy Secretary.
In addition to the measures I've described, the review identified additional consolidations and mission reductions that could be required, if sequester-level caps are imposed over the long term. These measures include consolidations of regional combatant commands, defense agency mission cuts, and further IT consolidation.
These changes would be far-reaching and require further analysis and consideration. Though defense bureaucracies are often derided, the fact is that these offices perform functions needed to manage, administer, and support a military of our size, complexity, and global reach.
Even over the course of a decade, the cumulative savings of the most aggressive efficiency options identified by the review are $60 billion. That's a small fraction of what is needed under sequester- level cuts. We will have to look elsewhere for more savings.
The review also confirmed that no serious attempt to achieve significant savings can avoid compensation cuts, which consume roughly half of the DoD budget. If left unchecked, pay and benefits will continue to eat into our readiness and modernization. That could result in a far less capable force that is well-compensated, but poorly trained and poorly equipped.
Any discussion of compensation should acknowledge the following:
No one in uniform is overpaid for what they do for this country;
People are DoD's most important asset; and we must sustain compensation packages that recruit and retain the finest military in the world.
The significant military pay and benefit increases over the last decade reflected the need to sustain a force under considerable stress, especially the Army and Marines, during the height of the Iraq and Afghan campaigns.
One post-9/11 war is over, and the second, our nation's longest war, is coming to an end.
Overall, personnel costs have risen dramatically, some 40 percent above inflation since 2001. The Department cannot afford to sustain this growth.
Reflecting these realities, the President's Fiscal Year 2014 budget included a package of modest compensation-related reforms that have the strong support of our uniform leadership. Congress has signaled its opposition to some of these proposals, including modest increases in TRICARE fees for working-age retirees. But given our current fiscal situation, DoD has no choice but to consider compensation changes of greater magnitude for military and civilian personnel.
The review developed compensation savings options that we believe would continue to allow the military to recruit and retain the high-quality personnel we will need. If we were to pursue these options, we would need Congress's partnership to implement many of them. Examples include:
Changing military health care for retirement -- for retirees to increase use of private-sector insurance when available;
Changing how the basic allowance for housing is calculated, so that individuals are asked to pay a little more of their own housing costs;
Reducing the overseas cost-of-living adjustments; and
Continuing to limit military and civilian pay increases.
Many will object to these ideas, and I want to be clear that we are not announcing any compensation changes today. Instead, I've asked Chairman Dempsey to lead an effort with the Service Chiefs and the Senior Enlisted Advisers to develop a package of compensation proposals that meet savings targets identified in the review – almost $50 billion over the next decade – and still enabled us to retain and recruit the high-quality force. We would begin implementing this package in the Fiscal Year 2015 budget. Senior OSD staff will lead a similar review for civilian pay and benefits.
The review also identified more sweeping changes to meet sequester-level targets, such as eliminating civilian pensions for retired military personnel serving in civilian government service, ending subsidies for defense commissaries, and restricting the availability of unemployment benefits. This package would yield savings of almost $100 billion over the next decade, but would have a significant impact on our service members and our workforce. But a sequester-level scenario would compel us to consider these changes, because there would be no realistic alternative that did not pose unacceptable risks to national security.
The efficiencies in compensation reforms identified in the review – even the most aggressive changes – still leave DoD some $350 billion to $400 billion short of the $500 billion in cuts required by sequestration over the next ten years. The review had to take a hard look at changes to our force structure and modernization plans.
The President's Defense Strategic Guidance anchored this effort. The goal was to find savings that best preserve the tenets of the President's strategy, such as strategic deterrence, homeland defense, and the rebalance to the Asia Pacific. The review concluded we should not take reductions proportionately across the military services. Instead, the options we examined were informed by strategy, and they will guide the services as they build two sets of budgets for F.Y. 2015 through 2019, one at the President's budget level and one at sequester-level caps.
While we want to preserve flexibility for each military service to develop the best force possible, given reduced resources, the review identified areas where we have excess capacity to meet current and anticipated future needs. In particular, the analysis concluded that we can strategically reduce the size of our ground and tactical air forces – even beyond the current drawdown.
I've not made any program or force structure decisions, and more analysis will be required before the decisions are made. But with the end of the war in Iraq, the drawdown in Afghanistan, and a changing requirement to conduct protracted large-scale counterinsurgency operations, it makes sense to take another look at the Army's force structure – which is currently planned to reach 490,000 in the active component and 555,000 in the reserves.
One option the review examined found that we could still execute the priority missions determined by our defense strategy, while reducing Army end strength to between 420,000 and 450,000 in the active component and between 490,000 and 530,000 in the Army Reserves. Similarly, the Air Force could reduce tactical aircraft squadrons – potentially as many as five – and cut the size of the C-130 fleet with minimal risk.
In the months ahead, I will work closely with Chairman Dempsey and each of the Service Chiefs to reach agreement on the proper size of our armed forces, taking into account real-world needs in a dangerous world.
A modest reduction in force structure, when combined with management efficiencies and compensation reforms, would enable us to meet the $150 billion in savings required by the President's budget proposal while still defending the country and fulfilling our global responsibilities. We can sustain our current defense strategy under the President's budget request.
Significant reductions beyond the President's plan would require many more dramatic cuts to force structure. The review showed that the "in-between" budget scenario we evaluated would "bend" our defense strategy in important ways, and sequester-level cuts would "break" some parts of the strategy, no matter how the cuts were made. Under sequester-level cuts, our military options and flexibility will be severely constrained.
Given that reality, the review examined two strategic approaches to reducing force structure and modernization that will inform planning for sequester-level cuts. The basic tradeoff is between capacity – measured in the number of Army brigades, Navy ships, Air Force squadrons, and Marine battalions – and capability – our ability to modernize weapons systems and to maintain our military's technological edge.
In the first approach, we would trade away size for high-end capability. This would further shrink the active Army to between 380,000 to 450,000 troops, reduce the number of carrier strike groups from 11 to 8 or 9, draw down the Marine Corps from 182,000 to between 150,000 and 175,000, and retire older Air Force bombers. We would protect investments to counter anti-access and area-denial threats, such as the long-range strike family of systems, submarine cruise missile upgrades, and the Joint Strike Fighter, and we would continue to make cyber capabilities and special operations forces a high priority.
This strategic choice would result in a force that would be technologically dominant, but would be much smaller and able to go fewer places and do fewer things, especially if crisis occurred at the same time in different regions of the world.
The second approach would trade away high-end capability for size. We would look to sustain our capacity for regional power projection and presence by making more limited cuts to ground forces, ships, and aircraft. But we would cancel or curtail many modernization programs, slow the growth of cyber enhancements, and reduce special operations forces.
Cuts on this scale would, in effect, be a decade-long modernization holiday. The military could find its equipment and weapons systems – many of which are already near the end of their service lives – less effective against more technologically advanced adversaries. We also have to consider how massive cuts to procurement and research and development funding would impact the viability of America's private-sector industrial base.
These two approaches illustrate the difficult tradeoffs and strategic choices that would face the Department in a scenario where sequester-level cuts continue. Going forward in the months ahead, DoD – and ultimately the President – will decide on a strategic course that best preserves our ability to defend our national security interests under this very daunting budget scenario.
The balance we strike between capability, capacity, and readiness will determine the composition and the size of the force for years to come. We could, in the end, make decisions that result in a very different force from the options I've described here today. Our goal is to be able to give the President informed recommendations, not to prejudge outcomes. Regardless, the decision-making process will benefit from the insights of this review provided.
In closing, one of the most striking conclusions of the Strategic Choices and Management Review is that if DoD combines all the reductions I've described, including significant cuts to the military's size and capability – the savings fall well short of meeting sequester-level cuts, particularly during the first five years of these steep, decade-long reductions.
The reality is that cuts to overhead, compensation, and forces generate savings slowly. With dramatic reductions in each area, we do reach sequester-level savings, but only toward the end of a 10-year timeframe. Every scenario of the review examined showed shortfalls in the early years of $30 billion to $35 billion.
These shortfalls will be even larger if Congress is unwilling to enact changes to compensation or adopt other management reforms and infrastructure cuts we've proposed in our Fiscal Year 2014 budget. Opposition to these proposals must be engaged and overcome, or we will be forced to take even more draconian steps in the future.
A lot has been said about the impact of sequestration. Before this review, like many Americans, I wondered why a 10 percent budget cut was, in fact, so destructive. Families and businesses trim their costs by similar projections. But this analysis showed in the starkest terms how a 10 percent defense spending reduction causes the reality in a much higher reduction in military readiness and capability. Unlike the private sector, the federal government, and the Defense Department in particular – simply does not have the option of quickly shutting down excess facilities, eliminating entire organizations and operations, or shutting massive numbers of employees – at least not in a responsible, moral, and legal way.
The fact is that half of our budget – including areas like compensation, where we need to achieve savings – are essentially off- limits for quick reductions. Given that reality, the only way to implement an additional, abrupt 10 percent reduction in the defense budget is to make senseless, non-strategic cuts that damage military readiness, disrupt operations, and erode our technological edge. We have already seen some of the significant effects of the $37 billion reduction occurring in this Fiscal Year – including halting all flying for some Air Force squadrons, canceling ship deployments, ending Army Combat Training Center rotations for brigades not deploying to Afghanistan, and imposing furloughs for 650,000 DoD civilians.
In Fiscal Year 2014, this damage will continue if sequestration persists. DoD is now developing a contingency plan to accommodate the $52 billion sequester-level reduction in Fiscal Year 2014, which I outlined in a letter this month to Senate Armed Services Committee Chairman Levin and Ranking Member Inhofe. Congress will need to help us manage these deep and abrupt reductions responsibly and efficiently.
The bold management reforms, compensation changes, and force structure reductions identified by the Strategic Choices and Management Review can help reduce the damage that would be caused by the persistence of sequestration in Fiscal Year 2014, but they won't come close to avoiding it altogether.
The review demonstrated that making cuts strategically is only possible if they are "backloaded." While no agency welcomes additional budget cuts, a scenario where we have additional time to implement reductions – such as in the President's budget – would be far preferable to the deep cuts of sequestration. If these abrupt cuts remain, we risk fielding a force that over the next few years is unprepared due to a lack of training, maintenance, and the latest equipment.
And as I mentioned last week at the VFW Convention, a top priority in future-year budget plans is to build a ready force, even if that requires future reductions in force structure. No matter the size of our budget, we have a responsibility to defend the country and America's vital interests around the world. That means crafting the strongest military possible under whatever level of resources we are providing.
DoD has a responsibility to give America's elected leaders and the American people a clear-eyed assessment of what our military can and cannot do in the event of a major confrontation or a crisis after several years of sequester-level cuts. In the months ahead, we will continue to provide our most honest and best assessment. And the inescapable conclusion is that letting sequester-level cuts persist would be a huge strategic miscalculation that would not be in our country's best interests. While I've focused today on the impact to DoD, sequester-level cuts would equally harm other missions across the government to support a strong economy, which, as is always the case, supports a strong national defense. And this will be important, because providing that support through that economy to our servicemembers, veterans and their families is part of our overall readiness and capabilities and capacity responsibilities. DoD depends on a strong education system to maintain a pool of qualified recruits. We rely on domestic infrastructure that surrounds our bases and installations. And we count on scientific breakthroughs funded by research and development grants and a strong manufacturing base to maintain our decisive technological edge. All of these areas are threatened by sequestration.
It is the responsibility of our nation's leaders to work together to replace the mindless and irresponsible policy of sequestration. It is unworthy of the service and sacrifice of our nation's men and women in uniform and their families. And even as we confront tough fiscal realities, our decisions must always be worthy of the sacrifices we ask America's sons and daughters to make for our country.
Statement on Strategic Choices and Management Review
As Delivered by Secretary of Defense Chuck Hagel, Pentagon Press Briefing Room, Wednesday, July 31, 2013
Good afternoon.
I want to make some remarks about our Strategic Choices Management Review, which I directed about four months ago, and Sandy Winnefeld, who as you all know is the Vice Chairman of the Joint Chiefs, is here and will add his comments, as well.
The Chairman is in Arizona, where he has just recently welcomed his eighth grandchild, so he's doing important business, as he is taking care of twin boys who are 2 years old. So he is testing his Chairmanship and his ability in that regard. So that's why General Dempsey is not with us today.
So I'll begin, and then Admiral Winnefeld will add his thoughts. And we'll take some questions. And if you all want to go deep, deep down into what I'm going to talk about, then we have some of our budget and financial analysts here to go as deep as you want to go on what I'm going to talk about here in the next few minutes. So, thank you for giving me some time today.
Earlier today, I briefed key congressional committee leaders on the findings of DoD's Strategic Choices Management Review. And this afternoon, as I've said, I want to talk about these findings and clarify the major options and the difficult choices that we have ahead.
I directed the Strategic Choices and Management Review four months ago to help ensure the Department of Defense is prepared in the face of unprecedented budget uncertainty. Although DoD strongly supports the President's Fiscal Year 2014 request and long-term budget plan for the entire federal government, the deep and abrupt spending cuts under sequestration that began on March 1st of this year, are, as you all know, the law of the land. Sequestration will continue in the absence of an agreement that replaces the Budget Control Act.
The purpose of the Strategic Choices and Management Review, which was led by the Deputy Secretary of Defense, Ash Carter, with the full participation of General Dempsey and Admiral Winnefeld, the Service Secretaries and the Service Chiefs, was to understand the impact of further budget reductions on the Department and develop options to deal with these additional cuts. It had three specific objectives:
Help DoD prepare for how to deal with sequestration if it continues in Fiscal Year 2014;
Inform the fiscal guidance given to the military services for their F.Y. 2015 through 2019 budget plans;
And, third, anchor the upcoming Quadrennial Defense Review, which will assess our defense strategy in light of new fiscal realities and the many threats and complexities and uncertainties of this new century.
The Strategic Choices and Management Review did not produce a detailed budget blueprint. That was not the purpose of the review. It generated a menu of options, not a set of decisions. These options were built around the potential budget scenarios:
First, the President's F.Y. 2014 budget, which incorporates the carefully calibrated and largely back-loaded $150 billion reduction in defense spending over the next 10 years.
Second, the Budget Control Act sequester-level caps, which would cut another $52 billion from defense spending in Fiscal Year 2014, with $500 billion in reductions for the DoD over the next 10 years.
And third, an "in-between scenario" that would reduce defense spending by about $250 billion over the next 10 years, but would be largely back- loaded.
It's important to remember that all these cuts are in addition to the $487 billion reduction in defense spending over the next decade required by the initial caps in the Budget Control Act of 2011, which DoD is currently implementing. If sequester-level cuts persist, DoD would experience nearly $1 trillion in defense spending reductions over the next ten years.
To help DoD balance strategic ends, ways and means under these budget scenarios, the Strategic Choices and Management Review scrutinized every aspect of DoD's budget, including contingency planning, business practices, force structure, pay and benefits, acquisition practices, and modernization portfolios. Everything was on the table.
As I discussed last week at the VFW Convention in Louisville, four principles helped guide this review:
First, prioritizing DoD's missions and capabilities around our core responsibility of defending our country;
Second, maximizing the military's combat power by looking to reduce every other category of spending first;
Third, preserving and strengthening military readiness;
And, fourth, honoring the service and sacrifice of DoD's people and their families.
Those principles, and a rigorous review process, resulted in packages of options that included management efficiencies and overhead reductions, compensation reform, and changes to force structure and modernization plans.
Allow me to share with you some of the options the review identified in each of the areas I've just mentioned.
First, management efficiencies and overhead reductions. A tenet of the review was what we need to focus on is maximizing savings from reducing DoD's overhead administrative costs and other institutional expenses.
For several years, DoD has been paring back overhead. About $150 billion in five-year efficiency reductions were proposed by Secretary Gates. An additional $60 billion in savings were identified by Secretary Panetta. And I submitted a $34 billion savings package in our latest budget. DOD is continuing to implement these efficiency campaigns, but despite much progress, as well as good efforts and intentions, not every proposal has generated the savings we expected or gained the support of Congress – most notably, our request for a Base Realignment and Closure round.
The review showed that DoD will have to do more in this area, much more, even though it is getting more difficult to find these cuts, and it can take years for significant savings to be realized. After considering the results of the review, I determined that it is possible and prudent to begin implementing a new package of efficiency reforms now – ones that should be pursued regardless of fiscal circumstances.
Some of these management efficiencies and overhead reductions include:
Reducing the Department's major headquarters budgets by 20 percent, beginning with the Office of the Secretary of Defense, the Joint Staff, Service Headquarters and Secretariats, Combatant Commands, and defense agencies and field activities. Although the 20 percent cut applies to budget dollars, organizations will strive for a goal of 20 percent reductions in government civilians and military personnel.
Reducing the number of direct reports to the Secretary of Defense by further consolidating functions within OSD, as well as eliminating positions and;
Reducing intelligence analysis and production at combatant command intelligence and operation centers, which will also foster closer integration and reduce duplication across defense enterprises.
These management reforms, consolidations, personnel cuts, and spending reductions will reduce the Department's overhead and operating costs by some $10 billion over the next five years and almost $40 billion over the next decade. They will make the Department more agile and more versatile.
Past efficiency campaigns have shown that implementation can be very challenging, so effective follow-through is critical, if savings targets are to be realized. This is especially true of OSD reductions. I've asked Deputy Secretary Carter to identify someone from outside DoD who is deeply knowledgeable about the defense enterprise and eminently qualified to direct implementation of the OSD reductions and report to the Deputy Secretary.
In addition to the measures I've described, the review identified additional consolidations and mission reductions that could be required, if sequester-level caps are imposed over the long term. These measures include consolidations of regional combatant commands, defense agency mission cuts, and further IT consolidation.
These changes would be far-reaching and require further analysis and consideration. Though defense bureaucracies are often derided, the fact is that these offices perform functions needed to manage, administer, and support a military of our size, complexity, and global reach.
Even over the course of a decade, the cumulative savings of the most aggressive efficiency options identified by the review are $60 billion. That's a small fraction of what is needed under sequester- level cuts. We will have to look elsewhere for more savings.
The review also confirmed that no serious attempt to achieve significant savings can avoid compensation cuts, which consume roughly half of the DoD budget. If left unchecked, pay and benefits will continue to eat into our readiness and modernization. That could result in a far less capable force that is well-compensated, but poorly trained and poorly equipped.
Any discussion of compensation should acknowledge the following:
No one in uniform is overpaid for what they do for this country;
People are DoD's most important asset; and we must sustain compensation packages that recruit and retain the finest military in the world.
The significant military pay and benefit increases over the last decade reflected the need to sustain a force under considerable stress, especially the Army and Marines, during the height of the Iraq and Afghan campaigns.
One post-9/11 war is over, and the second, our nation's longest war, is coming to an end.
Overall, personnel costs have risen dramatically, some 40 percent above inflation since 2001. The Department cannot afford to sustain this growth.
Reflecting these realities, the President's Fiscal Year 2014 budget included a package of modest compensation-related reforms that have the strong support of our uniform leadership. Congress has signaled its opposition to some of these proposals, including modest increases in TRICARE fees for working-age retirees. But given our current fiscal situation, DoD has no choice but to consider compensation changes of greater magnitude for military and civilian personnel.
The review developed compensation savings options that we believe would continue to allow the military to recruit and retain the high-quality personnel we will need. If we were to pursue these options, we would need Congress's partnership to implement many of them. Examples include:
Changing military health care for retirement -- for retirees to increase use of private-sector insurance when available;
Changing how the basic allowance for housing is calculated, so that individuals are asked to pay a little more of their own housing costs;
Reducing the overseas cost-of-living adjustments; and
Continuing to limit military and civilian pay increases.
Many will object to these ideas, and I want to be clear that we are not announcing any compensation changes today. Instead, I've asked Chairman Dempsey to lead an effort with the Service Chiefs and the Senior Enlisted Advisers to develop a package of compensation proposals that meet savings targets identified in the review – almost $50 billion over the next decade – and still enabled us to retain and recruit the high-quality force. We would begin implementing this package in the Fiscal Year 2015 budget. Senior OSD staff will lead a similar review for civilian pay and benefits.
The review also identified more sweeping changes to meet sequester-level targets, such as eliminating civilian pensions for retired military personnel serving in civilian government service, ending subsidies for defense commissaries, and restricting the availability of unemployment benefits. This package would yield savings of almost $100 billion over the next decade, but would have a significant impact on our service members and our workforce. But a sequester-level scenario would compel us to consider these changes, because there would be no realistic alternative that did not pose unacceptable risks to national security.
The efficiencies in compensation reforms identified in the review – even the most aggressive changes – still leave DoD some $350 billion to $400 billion short of the $500 billion in cuts required by sequestration over the next ten years. The review had to take a hard look at changes to our force structure and modernization plans.
The President's Defense Strategic Guidance anchored this effort. The goal was to find savings that best preserve the tenets of the President's strategy, such as strategic deterrence, homeland defense, and the rebalance to the Asia Pacific. The review concluded we should not take reductions proportionately across the military services. Instead, the options we examined were informed by strategy, and they will guide the services as they build two sets of budgets for F.Y. 2015 through 2019, one at the President's budget level and one at sequester-level caps.
While we want to preserve flexibility for each military service to develop the best force possible, given reduced resources, the review identified areas where we have excess capacity to meet current and anticipated future needs. In particular, the analysis concluded that we can strategically reduce the size of our ground and tactical air forces – even beyond the current drawdown.
I've not made any program or force structure decisions, and more analysis will be required before the decisions are made. But with the end of the war in Iraq, the drawdown in Afghanistan, and a changing requirement to conduct protracted large-scale counterinsurgency operations, it makes sense to take another look at the Army's force structure – which is currently planned to reach 490,000 in the active component and 555,000 in the reserves.
One option the review examined found that we could still execute the priority missions determined by our defense strategy, while reducing Army end strength to between 420,000 and 450,000 in the active component and between 490,000 and 530,000 in the Army Reserves. Similarly, the Air Force could reduce tactical aircraft squadrons – potentially as many as five – and cut the size of the C-130 fleet with minimal risk.
In the months ahead, I will work closely with Chairman Dempsey and each of the Service Chiefs to reach agreement on the proper size of our armed forces, taking into account real-world needs in a dangerous world.
A modest reduction in force structure, when combined with management efficiencies and compensation reforms, would enable us to meet the $150 billion in savings required by the President's budget proposal while still defending the country and fulfilling our global responsibilities. We can sustain our current defense strategy under the President's budget request.
Significant reductions beyond the President's plan would require many more dramatic cuts to force structure. The review showed that the "in-between" budget scenario we evaluated would "bend" our defense strategy in important ways, and sequester-level cuts would "break" some parts of the strategy, no matter how the cuts were made. Under sequester-level cuts, our military options and flexibility will be severely constrained.
Given that reality, the review examined two strategic approaches to reducing force structure and modernization that will inform planning for sequester-level cuts. The basic tradeoff is between capacity – measured in the number of Army brigades, Navy ships, Air Force squadrons, and Marine battalions – and capability – our ability to modernize weapons systems and to maintain our military's technological edge.
In the first approach, we would trade away size for high-end capability. This would further shrink the active Army to between 380,000 to 450,000 troops, reduce the number of carrier strike groups from 11 to 8 or 9, draw down the Marine Corps from 182,000 to between 150,000 and 175,000, and retire older Air Force bombers. We would protect investments to counter anti-access and area-denial threats, such as the long-range strike family of systems, submarine cruise missile upgrades, and the Joint Strike Fighter, and we would continue to make cyber capabilities and special operations forces a high priority.
This strategic choice would result in a force that would be technologically dominant, but would be much smaller and able to go fewer places and do fewer things, especially if crisis occurred at the same time in different regions of the world.
The second approach would trade away high-end capability for size. We would look to sustain our capacity for regional power projection and presence by making more limited cuts to ground forces, ships, and aircraft. But we would cancel or curtail many modernization programs, slow the growth of cyber enhancements, and reduce special operations forces.
Cuts on this scale would, in effect, be a decade-long modernization holiday. The military could find its equipment and weapons systems – many of which are already near the end of their service lives – less effective against more technologically advanced adversaries. We also have to consider how massive cuts to procurement and research and development funding would impact the viability of America's private-sector industrial base.
These two approaches illustrate the difficult tradeoffs and strategic choices that would face the Department in a scenario where sequester-level cuts continue. Going forward in the months ahead, DoD – and ultimately the President – will decide on a strategic course that best preserves our ability to defend our national security interests under this very daunting budget scenario.
The balance we strike between capability, capacity, and readiness will determine the composition and the size of the force for years to come. We could, in the end, make decisions that result in a very different force from the options I've described here today. Our goal is to be able to give the President informed recommendations, not to prejudge outcomes. Regardless, the decision-making process will benefit from the insights of this review provided.
In closing, one of the most striking conclusions of the Strategic Choices and Management Review is that if DoD combines all the reductions I've described, including significant cuts to the military's size and capability – the savings fall well short of meeting sequester-level cuts, particularly during the first five years of these steep, decade-long reductions.
The reality is that cuts to overhead, compensation, and forces generate savings slowly. With dramatic reductions in each area, we do reach sequester-level savings, but only toward the end of a 10-year timeframe. Every scenario of the review examined showed shortfalls in the early years of $30 billion to $35 billion.
These shortfalls will be even larger if Congress is unwilling to enact changes to compensation or adopt other management reforms and infrastructure cuts we've proposed in our Fiscal Year 2014 budget. Opposition to these proposals must be engaged and overcome, or we will be forced to take even more draconian steps in the future.
A lot has been said about the impact of sequestration. Before this review, like many Americans, I wondered why a 10 percent budget cut was, in fact, so destructive. Families and businesses trim their costs by similar projections. But this analysis showed in the starkest terms how a 10 percent defense spending reduction causes the reality in a much higher reduction in military readiness and capability. Unlike the private sector, the federal government, and the Defense Department in particular – simply does not have the option of quickly shutting down excess facilities, eliminating entire organizations and operations, or shutting massive numbers of employees – at least not in a responsible, moral, and legal way.
The fact is that half of our budget – including areas like compensation, where we need to achieve savings – are essentially off- limits for quick reductions. Given that reality, the only way to implement an additional, abrupt 10 percent reduction in the defense budget is to make senseless, non-strategic cuts that damage military readiness, disrupt operations, and erode our technological edge. We have already seen some of the significant effects of the $37 billion reduction occurring in this Fiscal Year – including halting all flying for some Air Force squadrons, canceling ship deployments, ending Army Combat Training Center rotations for brigades not deploying to Afghanistan, and imposing furloughs for 650,000 DoD civilians.
In Fiscal Year 2014, this damage will continue if sequestration persists. DoD is now developing a contingency plan to accommodate the $52 billion sequester-level reduction in Fiscal Year 2014, which I outlined in a letter this month to Senate Armed Services Committee Chairman Levin and Ranking Member Inhofe. Congress will need to help us manage these deep and abrupt reductions responsibly and efficiently.
The bold management reforms, compensation changes, and force structure reductions identified by the Strategic Choices and Management Review can help reduce the damage that would be caused by the persistence of sequestration in Fiscal Year 2014, but they won't come close to avoiding it altogether.
The review demonstrated that making cuts strategically is only possible if they are "backloaded." While no agency welcomes additional budget cuts, a scenario where we have additional time to implement reductions – such as in the President's budget – would be far preferable to the deep cuts of sequestration. If these abrupt cuts remain, we risk fielding a force that over the next few years is unprepared due to a lack of training, maintenance, and the latest equipment.
And as I mentioned last week at the VFW Convention, a top priority in future-year budget plans is to build a ready force, even if that requires future reductions in force structure. No matter the size of our budget, we have a responsibility to defend the country and America's vital interests around the world. That means crafting the strongest military possible under whatever level of resources we are providing.
DoD has a responsibility to give America's elected leaders and the American people a clear-eyed assessment of what our military can and cannot do in the event of a major confrontation or a crisis after several years of sequester-level cuts. In the months ahead, we will continue to provide our most honest and best assessment. And the inescapable conclusion is that letting sequester-level cuts persist would be a huge strategic miscalculation that would not be in our country's best interests. While I've focused today on the impact to DoD, sequester-level cuts would equally harm other missions across the government to support a strong economy, which, as is always the case, supports a strong national defense. And this will be important, because providing that support through that economy to our servicemembers, veterans and their families is part of our overall readiness and capabilities and capacity responsibilities. DoD depends on a strong education system to maintain a pool of qualified recruits. We rely on domestic infrastructure that surrounds our bases and installations. And we count on scientific breakthroughs funded by research and development grants and a strong manufacturing base to maintain our decisive technological edge. All of these areas are threatened by sequestration.
It is the responsibility of our nation's leaders to work together to replace the mindless and irresponsible policy of sequestration. It is unworthy of the service and sacrifice of our nation's men and women in uniform and their families. And even as we confront tough fiscal realities, our decisions must always be worthy of the sacrifices we ask America's sons and daughters to make for our country.
ASSOCIATE ATTORNEY GENERAL WEST DELIVERS REMARKS ON JUVENILE JUSTICE AND DELINQUENCY
FROM: U.S. DEPARTMENT OF JUSTICE,
Associate Attorney General Tony West Delivers Remarks at the Meeting of the Coordinating Council on Juvenile Justice and Delinquency Prevention
~ Friday, July 26, 2013
Thank you for your leadership, Bob.
The Attorney General regrets that he is not able to join us for today’s meeting; he very much wanted to be here as he has in been in the past, and asked me to convey his deep appreciation for all the critical work that the Council does for children and families. As you all know, as both the Attorney General –as someone who has been a prosecutor, a judge, and most importantly, a father – the well-being of our nation’s youth has been and remains one of his top priorities.
As part of his Defending Childhood Initiative, the Attorney General’s Task Force on Children Exposed to Violence recommended the creation of a task force specifically devoted to American Indian and Alaska Native children in order to address the complex and unique needs of American Indian and Alaska Native communities. I am pleased to report that the creation of the Task Force on American Indian/Alaska Native Children’s Exposure to Violence is fast becoming a reality.
Building on the work of the original and successful Defending Childhood Task Force and efforts across the Department of Justice in Indian country, the American Indian and Alaska Native Task Force will consist of two groups – an Advisory Committee and a Federal Working Group.
The Advisory Committee will consist of non-federal experts that will convene to examine the pervasive problems associated with American Indian and Alaska Native children’s exposure to violence. This committee will act in accordance with the Federal Advisory Committee Act and OJJDP will soon engage in a member selection process. In addition, OJJDP has already issued a solicitation seeking technical assistance and other support for the Advisory Committee of the Task Force.
The applications for this solicitation are due to OJJDP by this Monday, July 29, 2013.
The Federal Working Group consists of federal officials with experience in Indian country and children exposed to violence, including U.S. Attorneys with Indian country in their districts, our National Indian Country Training Coordinator Leslie Hagen, and representatives from OJP, the Office of Tribal Justice – including its director Tracy Toulou, and the Department of Interior.
Importantly, the Federal Working Group, which has already convened on multiple occasions, will simultaneously implement policy and programmatic changes in the near-term for the benefit of American Indian and Alaska Native children exposed to violence.
The Working Group has already identified gaps and needs where we can get to work immediately – such as the provision of adequate educational services in BIA juvenile detention facilities – and once the Advisory Committee convenes, it will provide additional recommendations on a rolling basis so that the Federal Working Group begin addressing identified issues immediately. This will be a very active Task Force that will move with the sense of urgency this vexing problem demands.
And both the Advisory Committee and the Federal Working Group will review the recommendations from the Report of the Attorney General’s National Task Force on Children Exposed to Violence to determine how they may be applied in Indian Country and where there may be areas for further exploration as it relates to American Indian and Alaska Native children’s exposure to violence.
We anticipate that the Advisory Committee will convene hearings and listening sessions throughout the United States and prioritize consultation with American Indian and Alaska Native youth. During these events, the Advisory Committee will explore ways to improve the identification, screening, assessment, and treatment of American Indian and Alaska Native children traumatized by violence. It will also identify ways American Indian and Alaska Native communities can overcome the impact of violence. In addition, the Advisory Committee will examine the needs of children living in urban or rural settings outside of reservations and villages and pay special attention to issues of trauma that children may experience who have been incarcerated in state, tribal, and federal judicial systems.
Together, the Advisory Committee and the Federal Working Group will form a single Task Force committed to addressing and improving the lives of American Indian and Alaska Native children exposed to violence. I am hopeful that we will engage in fruitful discussions with Tribal leaders and their communities on how best to combat the violence that is so harmful to American Indian and Alaska Native children and their families.
I look forward to hearing from our trusted Council partners about the implementation of the Advisory Committee’s recommendations and will continue to update you on the Task Force’s progress at future meetings.
Now to the primary focus of this Council meeting. We have with us three distinguished panelists who will provide their insights on the recently published National Academy of Sciences (NAS) report “Reforming Juvenile Justice: A Developmental Approach.” Thank you for joining us today.
You will hear remarks from OJJDP Administrator Bob Listenbee more specific to this panel, but before I turn the meeting back to Bob, I wanted to highlight that the findings and recommendations of this NAS report are closely aligned with this Council’s ongoing work related to the Defending Childhood Initiative, as well as major Department of Justice priorities, such as addressing racial and ethnic disparities in the juvenile justice system and enhancing youth access to qualified legal counsel.
I note that the NAS report makes major findings and recommendations on the critical importance of fairness in the juvenile justice system and the need for juvenile courts to ensure that youth “are represented by properly trained counsel and have an opportunity to participate in proceedings.” Attorney General Eric Holder continues to work to ensure that the promise of the U.S. Supreme Court decisions, Gideon and In Re Gault, becomes a reality for youth involved in the nation’s juvenile and criminal justice systems. I look forward to learning more today about how the findings of this critical report can inform the initiatives of the Department of Justice and our federal partners.
Associate Attorney General Tony West Delivers Remarks at the Meeting of the Coordinating Council on Juvenile Justice and Delinquency Prevention
~ Friday, July 26, 2013
Thank you for your leadership, Bob.
The Attorney General regrets that he is not able to join us for today’s meeting; he very much wanted to be here as he has in been in the past, and asked me to convey his deep appreciation for all the critical work that the Council does for children and families. As you all know, as both the Attorney General –as someone who has been a prosecutor, a judge, and most importantly, a father – the well-being of our nation’s youth has been and remains one of his top priorities.
As part of his Defending Childhood Initiative, the Attorney General’s Task Force on Children Exposed to Violence recommended the creation of a task force specifically devoted to American Indian and Alaska Native children in order to address the complex and unique needs of American Indian and Alaska Native communities. I am pleased to report that the creation of the Task Force on American Indian/Alaska Native Children’s Exposure to Violence is fast becoming a reality.
Building on the work of the original and successful Defending Childhood Task Force and efforts across the Department of Justice in Indian country, the American Indian and Alaska Native Task Force will consist of two groups – an Advisory Committee and a Federal Working Group.
The Advisory Committee will consist of non-federal experts that will convene to examine the pervasive problems associated with American Indian and Alaska Native children’s exposure to violence. This committee will act in accordance with the Federal Advisory Committee Act and OJJDP will soon engage in a member selection process. In addition, OJJDP has already issued a solicitation seeking technical assistance and other support for the Advisory Committee of the Task Force.
The applications for this solicitation are due to OJJDP by this Monday, July 29, 2013.
The Federal Working Group consists of federal officials with experience in Indian country and children exposed to violence, including U.S. Attorneys with Indian country in their districts, our National Indian Country Training Coordinator Leslie Hagen, and representatives from OJP, the Office of Tribal Justice – including its director Tracy Toulou, and the Department of Interior.
Importantly, the Federal Working Group, which has already convened on multiple occasions, will simultaneously implement policy and programmatic changes in the near-term for the benefit of American Indian and Alaska Native children exposed to violence.
The Working Group has already identified gaps and needs where we can get to work immediately – such as the provision of adequate educational services in BIA juvenile detention facilities – and once the Advisory Committee convenes, it will provide additional recommendations on a rolling basis so that the Federal Working Group begin addressing identified issues immediately. This will be a very active Task Force that will move with the sense of urgency this vexing problem demands.
And both the Advisory Committee and the Federal Working Group will review the recommendations from the Report of the Attorney General’s National Task Force on Children Exposed to Violence to determine how they may be applied in Indian Country and where there may be areas for further exploration as it relates to American Indian and Alaska Native children’s exposure to violence.
We anticipate that the Advisory Committee will convene hearings and listening sessions throughout the United States and prioritize consultation with American Indian and Alaska Native youth. During these events, the Advisory Committee will explore ways to improve the identification, screening, assessment, and treatment of American Indian and Alaska Native children traumatized by violence. It will also identify ways American Indian and Alaska Native communities can overcome the impact of violence. In addition, the Advisory Committee will examine the needs of children living in urban or rural settings outside of reservations and villages and pay special attention to issues of trauma that children may experience who have been incarcerated in state, tribal, and federal judicial systems.
Together, the Advisory Committee and the Federal Working Group will form a single Task Force committed to addressing and improving the lives of American Indian and Alaska Native children exposed to violence. I am hopeful that we will engage in fruitful discussions with Tribal leaders and their communities on how best to combat the violence that is so harmful to American Indian and Alaska Native children and their families.
I look forward to hearing from our trusted Council partners about the implementation of the Advisory Committee’s recommendations and will continue to update you on the Task Force’s progress at future meetings.
Now to the primary focus of this Council meeting. We have with us three distinguished panelists who will provide their insights on the recently published National Academy of Sciences (NAS) report “Reforming Juvenile Justice: A Developmental Approach.” Thank you for joining us today.
You will hear remarks from OJJDP Administrator Bob Listenbee more specific to this panel, but before I turn the meeting back to Bob, I wanted to highlight that the findings and recommendations of this NAS report are closely aligned with this Council’s ongoing work related to the Defending Childhood Initiative, as well as major Department of Justice priorities, such as addressing racial and ethnic disparities in the juvenile justice system and enhancing youth access to qualified legal counsel.
I note that the NAS report makes major findings and recommendations on the critical importance of fairness in the juvenile justice system and the need for juvenile courts to ensure that youth “are represented by properly trained counsel and have an opportunity to participate in proceedings.” Attorney General Eric Holder continues to work to ensure that the promise of the U.S. Supreme Court decisions, Gideon and In Re Gault, becomes a reality for youth involved in the nation’s juvenile and criminal justice systems. I look forward to learning more today about how the findings of this critical report can inform the initiatives of the Department of Justice and our federal partners.
TWO COLLEGE FRIENDS SENTENCED TO 16 MONTHS IN PRISON FOR ROLES IN INSIDER TRADING SCHEME
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Former Investment Banker and His College Friend Sentenced to 16 Months in Prison for Insider Trading Scheme
The Securities and Exchange Commission announced that on July 23, 2013, investment bank analyst Jauyo "Jason" Lee, 29, of Palo Alto, Calif., and his college friend Victor Chen, 29, of Sunnyvale, Calif., were sentenced to 16 months in prison for their roles in an insider trading scheme. The Honorable Richard Seeborg, of the U.S. District Court for the Northern District of California, also sentenced Lee and Chen to two years of supervised release following their incarceration and ordered that restitution and forfeiture be considered at a subsequent hearing. Chen paid $610,099 in forfeiture prior to sentencing. Lee and Chen both pleaded guilty on April 16, 2013, to one count of conspiracy to commit securities fraud and one count of securities fraud.
The criminal charges filed by the U.S. Attorney for the Northern District of California arose out of the same facts that were the subject of a civil action that the SEC filed against Lee and Chen on September 27, 2012. The SEC's complaint alleged that Lee, who worked in the San Francisco office of Leerink Swann LLC, gleaned sensitive, nonpublic information about two upcoming deals from unsuspecting co-workers involved with those clients and by reviewing various internal documents about the transactions, which involved medical device companies. Lee tipped Chen, his longtime college friend with the confidential information, and Chen traded heavily on the basis of the nonpublic details that Lee had a duty to protect. Chen made more than $600,000 in illicit profits, which was a 237 percent return on his initial investment. Bank records reveal a pattern of large cash withdrawals by Lee followed by large cash deposits by Chen, who then used the money for the insider trading.
According to the SEC's complaint, Lee was first privy to information about Leerink's client Syneron Medical Ltd., which was negotiating an acquisition of Candela Corporation in 2009. He later learned that Leerink's client Somanetics Corporation was in the process of being acquired by Covidien plc. in 2010. As Lee collected nonpublic details about each of the deals, he communicated with Chen repeatedly and exchanged dozens of phone calls and text messages. Some of the calls took place from Lee's office telephone at Leerink. Lee had a duty to preserve the confidentiality of the information that he received in the course of his employment at Leerink.
The SEC alleged that in the days leading up to the public announcements of each of these deals, Chen made sizeable purchases of stock and call options in Candela and Somanetics and made unusual trades in the securities of each of these acquisition targets. Chen had never previously bought securities in these companies, yet he suddenly spent a significant portion of his available cash to buy the Candela and Somanetics securities. Chen proceeded to sell most of his Candela and Somanetics holdings once public announcements were made about the transactions. Because Chen made some of his trades in his sister Jennifer Chen's account, the SEC's complaint also names her as a relief defendant for the purposes of recovering the illegal profits in her account.
As a result of their conduct, the SEC's complaint charged Lee and Chen with violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The complaint sought disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and permanent injunctions against Lee and Chen. The SEC's case remains pending.
Former Investment Banker and His College Friend Sentenced to 16 Months in Prison for Insider Trading Scheme
The Securities and Exchange Commission announced that on July 23, 2013, investment bank analyst Jauyo "Jason" Lee, 29, of Palo Alto, Calif., and his college friend Victor Chen, 29, of Sunnyvale, Calif., were sentenced to 16 months in prison for their roles in an insider trading scheme. The Honorable Richard Seeborg, of the U.S. District Court for the Northern District of California, also sentenced Lee and Chen to two years of supervised release following their incarceration and ordered that restitution and forfeiture be considered at a subsequent hearing. Chen paid $610,099 in forfeiture prior to sentencing. Lee and Chen both pleaded guilty on April 16, 2013, to one count of conspiracy to commit securities fraud and one count of securities fraud.
The criminal charges filed by the U.S. Attorney for the Northern District of California arose out of the same facts that were the subject of a civil action that the SEC filed against Lee and Chen on September 27, 2012. The SEC's complaint alleged that Lee, who worked in the San Francisco office of Leerink Swann LLC, gleaned sensitive, nonpublic information about two upcoming deals from unsuspecting co-workers involved with those clients and by reviewing various internal documents about the transactions, which involved medical device companies. Lee tipped Chen, his longtime college friend with the confidential information, and Chen traded heavily on the basis of the nonpublic details that Lee had a duty to protect. Chen made more than $600,000 in illicit profits, which was a 237 percent return on his initial investment. Bank records reveal a pattern of large cash withdrawals by Lee followed by large cash deposits by Chen, who then used the money for the insider trading.
According to the SEC's complaint, Lee was first privy to information about Leerink's client Syneron Medical Ltd., which was negotiating an acquisition of Candela Corporation in 2009. He later learned that Leerink's client Somanetics Corporation was in the process of being acquired by Covidien plc. in 2010. As Lee collected nonpublic details about each of the deals, he communicated with Chen repeatedly and exchanged dozens of phone calls and text messages. Some of the calls took place from Lee's office telephone at Leerink. Lee had a duty to preserve the confidentiality of the information that he received in the course of his employment at Leerink.
The SEC alleged that in the days leading up to the public announcements of each of these deals, Chen made sizeable purchases of stock and call options in Candela and Somanetics and made unusual trades in the securities of each of these acquisition targets. Chen had never previously bought securities in these companies, yet he suddenly spent a significant portion of his available cash to buy the Candela and Somanetics securities. Chen proceeded to sell most of his Candela and Somanetics holdings once public announcements were made about the transactions. Because Chen made some of his trades in his sister Jennifer Chen's account, the SEC's complaint also names her as a relief defendant for the purposes of recovering the illegal profits in her account.
As a result of their conduct, the SEC's complaint charged Lee and Chen with violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The complaint sought disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and permanent injunctions against Lee and Chen. The SEC's case remains pending.
Wednesday, July 31, 2013
PRESS BRIEFING ON THE 1230 REPORT ON PROGRESS IN AFGHANISTAN
FROM: U.S. DEPARTMENT OF DEFENSE
Presenter: Acting Assistant Secretary of Defense for Asia Pacific Security Affairs Dr. Peter Lavoy and Deputy to the Special Representative to Afghanistan and Pakistan Jarrett Blanc
July 30, 2013
Department of Defense Press Briefing on the July 2013 Section 1230 Report, "Progress Toward Security and Stability in Afghanistan" in the Pentagon Briefing Room
ACTING ASSISTANT SECRETARY OF DEFENSE PETER LAVOY: It's a pleasure to be here. It's a pleasure to talk about this report that is coming out today. And it's a pleasure to be here joined by my colleague, the deputy SRAP [Special Representative for Afghanistan and Pakistan], Jarrett Blanc from State Department. The State Department's input to the 1230 report is very important, it's very critical, and they're a good partner on this effort, as well as on everything else.
Let me make a few introductory remarks and then get into questions that you might have about the report or about issues that have occurred subsequently in Afghanistan.
Going back, you'll recall that we undertook military operations in Afghanistan because the country was the base for terrorists who attacked the United States on 9/11. Let's not forget that. That's why we went there. And we've made tremendous progress.
And you know personally that we don't feel under the same kind of threat today in the United States and elsewhere in the world, many parts of the world, than we did over a decade ago. And it's because of the sacrifices we've made in and around Afghanistan to diminish that terrorist threat and the hard work of American men and women, our coalition partners, and Afghans and others in the region.
The progress we've made in Afghanistan really would have been practically unimaginable five years ago. In fact, I came to Washington about five years ago, and I couldn't imagine that we'd be in the situation we are today. And it really is a situation -- I think we're very near to achieving the objectives we set out at that time before.
Back then, five years ago, in 2008, it was questionable whether the government would survive. Elections were coming up in a year, in 2009. Would these elections occur? Would they be peaceful? Would you have a new representative government coming in? We're asking similar questions today about elections that will be occurring next year.
The ISAF surge over the past three years has put the Afghan government firmly in control of all of Afghanistan's major cities and provincial capitals and has driven the insurgency into the countryside. That wasn't the situation five years ago. So this document is a six-month snapshot, if you will, from October 2012 to March 2013 and documents the progress and, frankly, the challenges that we experience in that time period, but, again, I wanted to put that in brief historical perspective.
The tasks that we have today is to consolidate the gains that we've made, to support the ANSF, to pressure the remnants of Al Qaida, and to create sustainable security and stability, so that Afghanistan is never again used as a platform for international terrorists.
I'd like to highlight three themes that emerged from this report. First, the conflict in Afghanistan had shifted -- shifted during this time period, again, October '12 through March 2013, into a fundamentally new phase. It's a phase marked by the United States and its ISAF partners moving into a support role, moving away from the leading combat instrument in the country, changing our mission from counterinsurgency to one of supporting the Afghan army and the Afghan police from a train, advise and assist role. That's a fundamental shift.
And what we've seen since the cutoff of information in March 2013 is this year's fighting season in Afghanistan, the first fighting season where the ANSF were fully out in the lead throughout their country, providing security for Afghans. And they've done a good job.
And I'm happy to talk about the situation after the cutoff of information in this report if you'd like to get into that, too. But what you know now is that ISAF hardly conducts any combat missions anymore. Their operational role is primarily focused on that train, advise and assist, although we do remain -- we do continue to do some counterterrorism operations and force protection operations ourselves.
The second major trend or theme that emerged in this time period was the incredible improvement of the ANSF itself, the growth of professionalism and patriotism and a very capable Army and police force. These are developments that, again, were hard to imagine. People questioned whether they were achievable goals, and we set about developing these goals back in 2009. But I think that the evidence that we've identified -- and, again, what we've seen to date -- has proven that the ANSF, which basically went through a phase of growing, getting to an end strength of close to the authorized level of 352,000 forces combined army and police, now focusing on quality, demonstrating combat proficiency, and doing the other things that modern militaries do, that we're seeing them do this, but, again, in a way where they are proud of their work, the country is proud of their capability and their performance, they are increasingly patriotic, they're not animated by local ethnic or tribal allegiances, but really by a sense of the whole of Afghanistan. And they've -- the army, I think, has emerged into the strongest institution in the entire country.
The third trend is a -- really, the operational reflection of that second point, is that as they've gone out and taken on the lead for security in the country, they've performed very, very well. They've been tested. The Taliban have targeted the ANSF. The Taliban have tried to identify weaknesses of the ANSF. They've tried to intimidate the ANSF. They target, they overrun checkpoints, but -- and the vast majority of the cases, the army or the police get back to those checkpoints, retake the territory lost, and hold those positions.
Now, they've suffered a lot of casualties. Today, the ANSF probably suffers more than 30 to 1 ISAF casualties. So that's a significant change in that ratio of casualties over the last couple of years, as they've moved into the lead of security. Despite that, they are doing a very good job there. They're a very resilient force, and they're out there really providing the security of the population.
I'd like to identify three challenges that we see going forward and really focus on three key strategic questions and then turn it over to you for questions that you might have to Jarrett and myself. I think -- and the questions that really focus on this year, 2013, next year, 2014, and then, finally, 2015.
I think the biggest question this year -- and I think we already have the answer to this -- can the Afghan security forces actually provide for the security of their population? Here we have an unqualified yes. It's an affirmative answer. They are securing the cities and the villages in the country.
Now, to be honest, they have lost some territory in the rural areas, where they have limited reach, and the Taliban have retaken some areas, northern Helmand, in particular, but generally in the areas of priority, in the populated areas, they've really done a very, very good job. So that's the answer yes to that question.
The second issue in 2014 -- obviously, the key strategic event next year will be the presidential elections in April 2014. So the question for the Afghan security forces, will they be able to secure that election? And I think right now, it's a little early to tell, but my sense is that the answer will, indeed, be yes again.
Right now, the level of preparations for securing that election, not to mention the other issues that Jarrett can talk about in terms of electoral preparations, were farther ahead of where we this time before the 2009 elections.
The other issue is that the ANSF is really taking on this mission as a matter of pride and priority to secure these elections. And you have -- a final factor is you have -- I think in April 2014, you'll have about 425,000 security forces in country, the vast majority of them being ANSF, a small minority being ISAF, compared to about 250,000 that were in Afghanistan that were tasked with securing the 2009 elections. So you have a strength now to do this, as well as a focus and a level of preparation that you didn't have before. So going forward, I think -- I'd like to say that I think that strategic issue, the answer is likely to be yes.
And then the final issue -- and it's really one for that transition period of 2014 to 2015 -- is whether we can succeed in transitioning to a much smaller Western or coalition presence, U.S. presence and transition over to ANSF to really take on the sovereign responsibility for the country. And, again, it's early to see. I think there are a number of challenges. There are a number of risks to that. And those are ones that we're -- we're definitely focused on here in the department and elsewhere in the U.S. government.
So with that as a general orientation, I open it up to questions for us.
COLONEL STEVE WARREN: We'll start off with Bob Burns from Associated Press.
Q: Hello, thanks for doing this. Particularly thanks for doing it on the record. It's a good change from...
ACTING ASST. SEC. LAVOY: Don't make me regret it, Bob. (Laughter.)
Q: On your point you made earlier about the improved or greater national allegiance of the ANSF, there's a section in the report that describes cease-fire deals that are being done on -- in some local areas between Afghan units and insurgent groups and other kinds of accommodations being made with the Taliban. You described -- the report describes this as a developing issue that requires monitoring. On the one hand, it says it's not a major problem, but it can have negative effects. It seems a bit of a wishy-washy approach to explaining what's going on there. Could you elaborate a bit more on -- is this a new development? And since March when this report cuts off, has it been happening more often, less often?
ACTING ASST. SEC. LAVOY: I think it's not at all a new -- a new element. I mean, going back into Afghan history, there have always been, you know, vigorous fighting, then followed by peace arrangements, cease-fires, and then new -- hopefully new political understandings.
Even with ISAF forces, I think it's been actually more problematic at times, where we found out subsequently that some unit has cut some -- made some arrangement with local -- the local population, possibly including the Taliban. That's been problematic. We don't see that occurring as much today.
Look, the -- the Afghans are providing security for their own population. They need to get along with that population. They need to have an understanding with the population. They're not a foreign force. They're not a force liberating that population. They're protecting the population. So there needs to be understandings.
I think generally this is desirable. It depends on the specifics -- and I can't really get into those specifics now of particular cases, but I think on the whole, as we said in this, maybe it sounds wishy-washy, but as we said, it does deserve, you know, close attention, generally can be positive. If deals are cut for the wrong reasons, that could be negative.
And ultimately, stability and peace will be achieved in Afghanistan by these deals being cut, either from the center or, you know, in regions. So I don't really see this as a particularly problematic trend. And, frankly, it is a traditionally Afghanistan trend.
Q: Is it gaining momentum in more recent months?
ACTING ASST. SEC. LAVOY: Yeah, I really can't tell you. I haven't -- I don't have the evidence of that. I mean, it's something that we're looking at and -- you know, the next time we're together, I'd be happy to follow up with you about that.
COL. WARREN: So we'll go to Tony next.
Q: A question on page two. You had this interesting sentence that beyond December '14, ANSF will still require substantial training, advising and assistance, including financial support to address ongoing shortcomings. It's never addressed again in the full report. What's the implication there for U.S. forces to -- the size of U.S. forces or the need for U.S. forces post-2014? As you know, there's been some debate about a zero option. This sort of knocks that -- knocks the legs out of that option, it seems, but I wanted to get your view.
ACTING ASST. SEC. LAVOY: Okay, well, thanks for that question. Let me explain the information in there in that sentence and put it in perspective. As I mentioned very briefly, we've seen a really rapid, remarkable development of the Afghan national security forces. Initially, the focus was just simply trying to recruit and field a force of people with adequate literacy and training to do the job. We succeeded in that phase. Then the focus was improving the quality and the combat performance effectiveness of that force, and that's being proven this year.
The phase that we're really focused on now is the sustainability of the force. Will that force -- will there be some institutions, whether at the core level or the ministerial level, that makes sure that people get their paychecks, that -- you always the soldiers to get their paychecks on time -- to make sure that they're fed, to make sure that fuel contracts are developed. These are the kind of functional skills and capabilities that Afghans are still developing today.
And we envision that it will take a period of time before they can adequately fully have sovereign ownership of all those skill sets, including well beyond the 2014 date. That's why, as we've looked at a number of options that we've prepared in this building, in concert with our interagency partners for interagency consideration, these have taken into account the train, advise and assist functions, in addition to our own U.S. counterterrorism mission set going forward. But these would focus less on combat proficiency and really focus more on these functional skill developments at the -- at the core and then ministerial level. We envision that will take a period of time.
So you also asked about the zero option. In one of these cases have we developed an option that is zero. Now, if we don't get the permission of the Afghan government in the form of a bilateral security agreement, then we're not going to be able to continue this job of working with ANSF. And so then you end up with zero.
Q: Just -- to follow up, though, this does portend the use -- U.S. troops in some form, some form or number, staying beyond 2014 to help with these sometimes mundane, but vital functions?
ACTING ASST. SEC. LAVOY: That's correct. And that is our intention.
Q: Thank you.
COL. WARREN: We'll go to Phil, and then in the back.
Q: Just a quick follow-up, before that, you said whether -- assessing whether the gains that have been made are sustainable, it doesn't just depend on whether there is a force, but it depends on the size or the structure of that force. Can you explain a bit about how the size and the structure, particularly the structure of that force, matters when assessing whether the gains of the war can be (OFF-MIC)
ACTING ASST. SEC. LAVOY: Yeah. Now, when you say that force, you're referring to ISAF or U.S. forces?
Q: (OFF-MIC)
ACTING ASST. SEC. LAVOY: Yeah, it will matter. But we're also looking at a moving target. The ANSF -- we're seeing for the first time their performance on the battlefield as the lead combat instrument, security instrument in the country. So our calculations on what will be required beyond 2014 will probably vary after the end of this fighting season than they -- compared to when we first thought about this issue a year ago or even before. So we're anticipating -- making anticipations on the requirements, on the needs of the Afghan national security forces, and these have changed over time, because you've been looking at a moving target. We have much more fidelity today than we had over a year ago, let's say.
As you know, the president has not made a decision on what that force will be. And the president's wanted to look -- wants to look at a number of factors that will take place this year currently and possibly going into the future and see how -- and particularly the key factor is the performance of the Afghan national security forces. So taking into account all of these factors, there will be a decision on what forces appropriate to the tasks at hand.
Q: Thank you, sir. Thank you. Raghubir Goyal from India Globe and Asia Today. My question is that things are not going very well in the region, especially in Afghanistan, according to Afghan people, because they have been suffering for the last 30-plus years civil wars, Taliban wars, Al Qaida wars, and so on. My question is that Afghanistan will be going elections next year, so will be India, or in India could be earlier, and also Pakistan -- now they had just elections and new prime minister.
My question is that, can you have stability and peace like they had in the '70s and a fruitful country of Afghanistan without the cooperation of Pakistan? Because the Taliban is still in Pakistan. Now they are fighting in Syria and other countries. What that's saying is -- and they are waiting when the U.S. and NATO forces leave Afghanistan and they will focus their fighting in Afghanistan, because what they're saying is they have not learned anything but to kill people and fight.
My question is here, what role do you think Pakistan will play and what role India will play in the region, sir?
ACTING ASST. SEC. LAVOY: I think both Pakistan and India will play and ought to play very important, significant roles going forward in Afghanistan. Those countries and other immediate and nearby neighbors of Afghanistan are affected by the security conditions in Afghanistan. Borders, as you know, are very porous in this part of the world. They're affected by it, and they in turn affect security and political developments inside Afghanistan.
This is a very interdependent region, if you will, from that point of view. And what you have today is a growing sense, as you indicated, of insecurity throughout the region, in central Asia, even north of there, Russia and other places in China, but most acutely in Pakistan and India.
There's a fear in India that there will be what is called as a surplus terrorism. After there is some stability in Afghanistan, where will these terrorists go? Will they target India?
They have the exact same fears in Pakistan. Pakistan is now facing a very vibrant insurgency in its country. They're about 150,000 Pakistani military in western Pakistan fighting this insurgency. They're concerned that if there is further instability in Afghanistan, this could heighten the insurgency, be motivational or provide some safe haven for insurgents to come over into Pakistan.
So everyone in the region has these concerns. And I think -- and this is really something where my diplomatic colleagues are taking the lead -- is to try to harmonize the policies of each of the countries in the region to try to achieve a common end purpose, a common situation of peace and stability in Afghanistan and, more broadly, throughout the region. And there are challenges, but generally I think it's going well.
Q: Just a quick follow, sir, quickly, recently there have been very high-level visits to India (inaudible) Secretary Hagel recently and then Secretary Kerry and now recently Vice President Biden. And they were all talking about the security and U.S.-India relations, military-to-military, and so forth, and also, of course, Afghanistan. What do you think now there is a firing going on, on the India-Pakistan border, heavy fighting in the region of Kashmir? What do you think will escalate? Or what U.S. -- been talking to India when they were visiting or they're -- are they talking about these problems on the border?
ACTING ASST. SEC. LAVOY: Well, it's really for the countries in the region to manage their own relationships. These are the countries that are most directly affected. And the situation -- we view the situation in Kashmir as a bilateral situation for India and Pakistan to sort out.
And regrettably, there has been violence in -- along the line of control in Kashmir for many years, for many decades now, and that's very, very regrettable. But, again, we believe -- you mentioned earlier that, with the election of President Nawaz Sharif, there have been overtures made by the Pakistanis to the Indians and vice versa to try to normalize the situation economically and reach some kind of political understanding. And I know we in the U.S. government fully support those efforts.
COL. WARREN: Blue tie, state your name and organization?
Q: Dion Nissenbaum with the Wall Street Journal. One of the weakest links in the effort has been corruption, as you know. And the report goes into a fair amount of detail about corruption at the regional level by a corrupt network running out of Kabul International Airport. I imagine Shafafiyat and those efforts are winding down, how concerned are you that as the ISAF efforts winds up, that corruption could overwhelm the efforts to reform the ANSF? And are you seeing it increase as ISAF winds up its efforts?
ACTING ASST. SEC. LAVOY: Corruption is a critical concern. It has been -- it remains one. And it probably will be a concern going forward. There is some -- I'm not trying to justify it, but there historically has been level of influence-peddling, what we would call corruption, in this country. There are certain socially accepted standards that differ, obviously, from our standards.
But then there's clearly abusive corruption, very corrosive, toxic corruption that's taking place. And it is a priority. What's very heartening to us is that this is a priority for the Afghan ministerial leadership that we deal with. Secretary Hagel's counterparts are the minister of defense and the minister of interior. And in their conversations and other DOD officials with these individuals, they've identified anti-corruption as a priority for them.
They've changed out leaders. B.K. Mohammadi, the minister of defense, has made a really deliberate effort after he took over to change out leaders, to improve not only performance and the quality of forces under new leadership, but to root out corruption, which does have many negative consequences, if you allow it to fester.
COL. WARREN: Let's go to Thom Shanker, and then we'll finish with Gordon Lubold.
Q: (OFF-MIC) on March 31st, which is the fighting season hadn't really gotten underway. All of us in this room understand the tyranny of deadlines, don't get me wrong. But if your deadline were today, are there any trends, especially among the security forces, that you would capture in this report in light of the current fighting season?
ACTING ASST. SEC. LAVOY: Yeah, I'd say -- I'd probably point to three trends, and I did allude to them. Number one, the security forces are out there doing the security job. This was kind of a question mark before this fighting season, because this is the first fighting season where the Afghan -- where the Afghan army and the police were actually in the lead. And they've acquitted themselves very, very well. As I mentioned, they've taken a lot of casualties. They've been tested by the insurgents, but they've done a good job standing up to those threats. So that's number one.
Number two -- and this is a challenge they're working through -- when they were partnered with American forces, they -- and ISAF forces -- they were partnered with the best military forces in the world. They were partnered with -- with units that had the best enabling support, whether it's mobility getting into a place, whether it's intelligence that gives you time-sensitive targeting on the threats, whether it's situational awareness, whether you know that there are other threats that could be emerging. And then after an engagement, how to get out of their mobility, to get out of there and medevac, getting people -- giving them that golden hour to get treatment. They're used to the state-of-the-art health care.
As we've pulled back and now Afghans are taking over not only lead for combat, they are now in the lead for getting their people around the country. They're in the lead for identifying -- you know, using their intelligence, analyzing their -- infusing and analyzing their intelligence, identifying targets, conducting the operations, designing the operations, and getting their people out of there.
So this has been a bit of an adjustment. I think generally it's been positive, but it's an adjustment away from U.S.-ISAF state-of-the-art standards in all these to something that's different in other cases. In many cases, they're finding local solutions that work just as well for their needs. They're finding local hospitals that they can take wounded soldiers to.
The third trend is also a bit of a challenge, but it's an anticipated and, frankly, a desirable challenge to have. It's the trend of the Afghans developing those functional capacities to provide for the logistical support of their troops, to provide for the human capital management, for managing the contracts and finances and budgeting and so forth. This is -- these are good problems to have.
Before, as I mentioned, we were concerned about fielding the force. Then we were concerned about the operational capacity and wherewithal of the force. Now we're concerned about these functional enabling attributes. This is a good problem. Again, as I said, our theme was we can really imagine having these challenges now. We thought we'd still be mired in some of those other challenges.
So going forward, I think the questions are, can the Afghan forces be able to sustain themselves at standards and with the kind of capacities that they can keep without being dependent on us?
COL. WARREN: So, last question from Gordon at Foreign Policy.
Q: Back to the 2014 question, the commitment of troops after 2014, as you know, there's a frustration that the administration hasn't articulated any number. And the zero option and all that aside, I'm curious -- you know, there's frustration from the Hill, from allies, from inside this building, why can't the administration say, "Here's our range," barring anything coming up, as you mentioned? Is there a point of diminishing returns in terms of holding out on this number and not just throwing it out there and saying, "This is what we're probably going to do at this point"? And also, are you confident that April will -- the elections will happen in April?
ACTING ASST. SEC. LAVOY: Well, it's hard to be confident about events that will happen months into the future. And I would just like to take your last question, make a point, and fully agree with the significance of that election. As you look forward, the -- another strategic risk, this -- this gentleman mentioned the neighborhood. I think that is a strategic risk. If the neighbors can't get along, that could undermine the security gains in Afghanistan.
The other strategic risk, if the political transition does not occur effectively, you could have a fragmentation of elite consensus in the country, political consensus, that could have reverberations in the military forces. It is a multi-ethnic, multi-tribal military force. And so to some extent, like military forces in every country in the world, the cohesion of the force is largely dependent on the political cohesion of the society. And the election could open up schisms that would be problematic, if the -- if the political transition doesn't take place well.
So now only do -- are we very hopeful that the election will take place and doing everything we can, particularly Jarrett and my colleagues over at State Department, who have the lead in the U.S. government for supporting the Afghans in that, to support them in this election, but it does have a very strong impact on the security forces.
And then you asked the other question on our presence in -- decision-making about our presence to Afghanistan post-2014. It's a critical issue. It's something that, you know, we get asked about by countries, leaders of countries all around the world. The U.S. does have a position of leadership. It's had a position of leadership in Afghanistan. It does today. And it's likely to have that position of leadership in the future.
We want to make sure that the decisions that -- that are reached are sound and based on full information in a very dynamic environment and something that, you know, Americans can know are the right decisions to provide for that continuing security in the region so that our interests are protected, so that the terrorist threat to the United States, which has diminished significantly in the last decade, will continue to diminish and will not reoccur in the future.
COL. WARREN: Thank you guys very much.
Presenter: Acting Assistant Secretary of Defense for Asia Pacific Security Affairs Dr. Peter Lavoy and Deputy to the Special Representative to Afghanistan and Pakistan Jarrett Blanc
July 30, 2013
Department of Defense Press Briefing on the July 2013 Section 1230 Report, "Progress Toward Security and Stability in Afghanistan" in the Pentagon Briefing Room
ACTING ASSISTANT SECRETARY OF DEFENSE PETER LAVOY: It's a pleasure to be here. It's a pleasure to talk about this report that is coming out today. And it's a pleasure to be here joined by my colleague, the deputy SRAP [Special Representative for Afghanistan and Pakistan], Jarrett Blanc from State Department. The State Department's input to the 1230 report is very important, it's very critical, and they're a good partner on this effort, as well as on everything else.
Let me make a few introductory remarks and then get into questions that you might have about the report or about issues that have occurred subsequently in Afghanistan.
Going back, you'll recall that we undertook military operations in Afghanistan because the country was the base for terrorists who attacked the United States on 9/11. Let's not forget that. That's why we went there. And we've made tremendous progress.
And you know personally that we don't feel under the same kind of threat today in the United States and elsewhere in the world, many parts of the world, than we did over a decade ago. And it's because of the sacrifices we've made in and around Afghanistan to diminish that terrorist threat and the hard work of American men and women, our coalition partners, and Afghans and others in the region.
The progress we've made in Afghanistan really would have been practically unimaginable five years ago. In fact, I came to Washington about five years ago, and I couldn't imagine that we'd be in the situation we are today. And it really is a situation -- I think we're very near to achieving the objectives we set out at that time before.
Back then, five years ago, in 2008, it was questionable whether the government would survive. Elections were coming up in a year, in 2009. Would these elections occur? Would they be peaceful? Would you have a new representative government coming in? We're asking similar questions today about elections that will be occurring next year.
The ISAF surge over the past three years has put the Afghan government firmly in control of all of Afghanistan's major cities and provincial capitals and has driven the insurgency into the countryside. That wasn't the situation five years ago. So this document is a six-month snapshot, if you will, from October 2012 to March 2013 and documents the progress and, frankly, the challenges that we experience in that time period, but, again, I wanted to put that in brief historical perspective.
The tasks that we have today is to consolidate the gains that we've made, to support the ANSF, to pressure the remnants of Al Qaida, and to create sustainable security and stability, so that Afghanistan is never again used as a platform for international terrorists.
I'd like to highlight three themes that emerged from this report. First, the conflict in Afghanistan had shifted -- shifted during this time period, again, October '12 through March 2013, into a fundamentally new phase. It's a phase marked by the United States and its ISAF partners moving into a support role, moving away from the leading combat instrument in the country, changing our mission from counterinsurgency to one of supporting the Afghan army and the Afghan police from a train, advise and assist role. That's a fundamental shift.
And what we've seen since the cutoff of information in March 2013 is this year's fighting season in Afghanistan, the first fighting season where the ANSF were fully out in the lead throughout their country, providing security for Afghans. And they've done a good job.
And I'm happy to talk about the situation after the cutoff of information in this report if you'd like to get into that, too. But what you know now is that ISAF hardly conducts any combat missions anymore. Their operational role is primarily focused on that train, advise and assist, although we do remain -- we do continue to do some counterterrorism operations and force protection operations ourselves.
The second major trend or theme that emerged in this time period was the incredible improvement of the ANSF itself, the growth of professionalism and patriotism and a very capable Army and police force. These are developments that, again, were hard to imagine. People questioned whether they were achievable goals, and we set about developing these goals back in 2009. But I think that the evidence that we've identified -- and, again, what we've seen to date -- has proven that the ANSF, which basically went through a phase of growing, getting to an end strength of close to the authorized level of 352,000 forces combined army and police, now focusing on quality, demonstrating combat proficiency, and doing the other things that modern militaries do, that we're seeing them do this, but, again, in a way where they are proud of their work, the country is proud of their capability and their performance, they are increasingly patriotic, they're not animated by local ethnic or tribal allegiances, but really by a sense of the whole of Afghanistan. And they've -- the army, I think, has emerged into the strongest institution in the entire country.
The third trend is a -- really, the operational reflection of that second point, is that as they've gone out and taken on the lead for security in the country, they've performed very, very well. They've been tested. The Taliban have targeted the ANSF. The Taliban have tried to identify weaknesses of the ANSF. They've tried to intimidate the ANSF. They target, they overrun checkpoints, but -- and the vast majority of the cases, the army or the police get back to those checkpoints, retake the territory lost, and hold those positions.
Now, they've suffered a lot of casualties. Today, the ANSF probably suffers more than 30 to 1 ISAF casualties. So that's a significant change in that ratio of casualties over the last couple of years, as they've moved into the lead of security. Despite that, they are doing a very good job there. They're a very resilient force, and they're out there really providing the security of the population.
I'd like to identify three challenges that we see going forward and really focus on three key strategic questions and then turn it over to you for questions that you might have to Jarrett and myself. I think -- and the questions that really focus on this year, 2013, next year, 2014, and then, finally, 2015.
I think the biggest question this year -- and I think we already have the answer to this -- can the Afghan security forces actually provide for the security of their population? Here we have an unqualified yes. It's an affirmative answer. They are securing the cities and the villages in the country.
Now, to be honest, they have lost some territory in the rural areas, where they have limited reach, and the Taliban have retaken some areas, northern Helmand, in particular, but generally in the areas of priority, in the populated areas, they've really done a very, very good job. So that's the answer yes to that question.
The second issue in 2014 -- obviously, the key strategic event next year will be the presidential elections in April 2014. So the question for the Afghan security forces, will they be able to secure that election? And I think right now, it's a little early to tell, but my sense is that the answer will, indeed, be yes again.
Right now, the level of preparations for securing that election, not to mention the other issues that Jarrett can talk about in terms of electoral preparations, were farther ahead of where we this time before the 2009 elections.
The other issue is that the ANSF is really taking on this mission as a matter of pride and priority to secure these elections. And you have -- a final factor is you have -- I think in April 2014, you'll have about 425,000 security forces in country, the vast majority of them being ANSF, a small minority being ISAF, compared to about 250,000 that were in Afghanistan that were tasked with securing the 2009 elections. So you have a strength now to do this, as well as a focus and a level of preparation that you didn't have before. So going forward, I think -- I'd like to say that I think that strategic issue, the answer is likely to be yes.
And then the final issue -- and it's really one for that transition period of 2014 to 2015 -- is whether we can succeed in transitioning to a much smaller Western or coalition presence, U.S. presence and transition over to ANSF to really take on the sovereign responsibility for the country. And, again, it's early to see. I think there are a number of challenges. There are a number of risks to that. And those are ones that we're -- we're definitely focused on here in the department and elsewhere in the U.S. government.
So with that as a general orientation, I open it up to questions for us.
COLONEL STEVE WARREN: We'll start off with Bob Burns from Associated Press.
Q: Hello, thanks for doing this. Particularly thanks for doing it on the record. It's a good change from...
ACTING ASST. SEC. LAVOY: Don't make me regret it, Bob. (Laughter.)
Q: On your point you made earlier about the improved or greater national allegiance of the ANSF, there's a section in the report that describes cease-fire deals that are being done on -- in some local areas between Afghan units and insurgent groups and other kinds of accommodations being made with the Taliban. You described -- the report describes this as a developing issue that requires monitoring. On the one hand, it says it's not a major problem, but it can have negative effects. It seems a bit of a wishy-washy approach to explaining what's going on there. Could you elaborate a bit more on -- is this a new development? And since March when this report cuts off, has it been happening more often, less often?
ACTING ASST. SEC. LAVOY: I think it's not at all a new -- a new element. I mean, going back into Afghan history, there have always been, you know, vigorous fighting, then followed by peace arrangements, cease-fires, and then new -- hopefully new political understandings.
Even with ISAF forces, I think it's been actually more problematic at times, where we found out subsequently that some unit has cut some -- made some arrangement with local -- the local population, possibly including the Taliban. That's been problematic. We don't see that occurring as much today.
Look, the -- the Afghans are providing security for their own population. They need to get along with that population. They need to have an understanding with the population. They're not a foreign force. They're not a force liberating that population. They're protecting the population. So there needs to be understandings.
I think generally this is desirable. It depends on the specifics -- and I can't really get into those specifics now of particular cases, but I think on the whole, as we said in this, maybe it sounds wishy-washy, but as we said, it does deserve, you know, close attention, generally can be positive. If deals are cut for the wrong reasons, that could be negative.
And ultimately, stability and peace will be achieved in Afghanistan by these deals being cut, either from the center or, you know, in regions. So I don't really see this as a particularly problematic trend. And, frankly, it is a traditionally Afghanistan trend.
Q: Is it gaining momentum in more recent months?
ACTING ASST. SEC. LAVOY: Yeah, I really can't tell you. I haven't -- I don't have the evidence of that. I mean, it's something that we're looking at and -- you know, the next time we're together, I'd be happy to follow up with you about that.
COL. WARREN: So we'll go to Tony next.
Q: A question on page two. You had this interesting sentence that beyond December '14, ANSF will still require substantial training, advising and assistance, including financial support to address ongoing shortcomings. It's never addressed again in the full report. What's the implication there for U.S. forces to -- the size of U.S. forces or the need for U.S. forces post-2014? As you know, there's been some debate about a zero option. This sort of knocks that -- knocks the legs out of that option, it seems, but I wanted to get your view.
ACTING ASST. SEC. LAVOY: Okay, well, thanks for that question. Let me explain the information in there in that sentence and put it in perspective. As I mentioned very briefly, we've seen a really rapid, remarkable development of the Afghan national security forces. Initially, the focus was just simply trying to recruit and field a force of people with adequate literacy and training to do the job. We succeeded in that phase. Then the focus was improving the quality and the combat performance effectiveness of that force, and that's being proven this year.
The phase that we're really focused on now is the sustainability of the force. Will that force -- will there be some institutions, whether at the core level or the ministerial level, that makes sure that people get their paychecks, that -- you always the soldiers to get their paychecks on time -- to make sure that they're fed, to make sure that fuel contracts are developed. These are the kind of functional skills and capabilities that Afghans are still developing today.
And we envision that it will take a period of time before they can adequately fully have sovereign ownership of all those skill sets, including well beyond the 2014 date. That's why, as we've looked at a number of options that we've prepared in this building, in concert with our interagency partners for interagency consideration, these have taken into account the train, advise and assist functions, in addition to our own U.S. counterterrorism mission set going forward. But these would focus less on combat proficiency and really focus more on these functional skill developments at the -- at the core and then ministerial level. We envision that will take a period of time.
So you also asked about the zero option. In one of these cases have we developed an option that is zero. Now, if we don't get the permission of the Afghan government in the form of a bilateral security agreement, then we're not going to be able to continue this job of working with ANSF. And so then you end up with zero.
Q: Just -- to follow up, though, this does portend the use -- U.S. troops in some form, some form or number, staying beyond 2014 to help with these sometimes mundane, but vital functions?
ACTING ASST. SEC. LAVOY: That's correct. And that is our intention.
Q: Thank you.
COL. WARREN: We'll go to Phil, and then in the back.
Q: Just a quick follow-up, before that, you said whether -- assessing whether the gains that have been made are sustainable, it doesn't just depend on whether there is a force, but it depends on the size or the structure of that force. Can you explain a bit about how the size and the structure, particularly the structure of that force, matters when assessing whether the gains of the war can be (OFF-MIC)
ACTING ASST. SEC. LAVOY: Yeah. Now, when you say that force, you're referring to ISAF or U.S. forces?
Q: (OFF-MIC)
ACTING ASST. SEC. LAVOY: Yeah, it will matter. But we're also looking at a moving target. The ANSF -- we're seeing for the first time their performance on the battlefield as the lead combat instrument, security instrument in the country. So our calculations on what will be required beyond 2014 will probably vary after the end of this fighting season than they -- compared to when we first thought about this issue a year ago or even before. So we're anticipating -- making anticipations on the requirements, on the needs of the Afghan national security forces, and these have changed over time, because you've been looking at a moving target. We have much more fidelity today than we had over a year ago, let's say.
As you know, the president has not made a decision on what that force will be. And the president's wanted to look -- wants to look at a number of factors that will take place this year currently and possibly going into the future and see how -- and particularly the key factor is the performance of the Afghan national security forces. So taking into account all of these factors, there will be a decision on what forces appropriate to the tasks at hand.
Q: Thank you, sir. Thank you. Raghubir Goyal from India Globe and Asia Today. My question is that things are not going very well in the region, especially in Afghanistan, according to Afghan people, because they have been suffering for the last 30-plus years civil wars, Taliban wars, Al Qaida wars, and so on. My question is that Afghanistan will be going elections next year, so will be India, or in India could be earlier, and also Pakistan -- now they had just elections and new prime minister.
My question is that, can you have stability and peace like they had in the '70s and a fruitful country of Afghanistan without the cooperation of Pakistan? Because the Taliban is still in Pakistan. Now they are fighting in Syria and other countries. What that's saying is -- and they are waiting when the U.S. and NATO forces leave Afghanistan and they will focus their fighting in Afghanistan, because what they're saying is they have not learned anything but to kill people and fight.
My question is here, what role do you think Pakistan will play and what role India will play in the region, sir?
ACTING ASST. SEC. LAVOY: I think both Pakistan and India will play and ought to play very important, significant roles going forward in Afghanistan. Those countries and other immediate and nearby neighbors of Afghanistan are affected by the security conditions in Afghanistan. Borders, as you know, are very porous in this part of the world. They're affected by it, and they in turn affect security and political developments inside Afghanistan.
This is a very interdependent region, if you will, from that point of view. And what you have today is a growing sense, as you indicated, of insecurity throughout the region, in central Asia, even north of there, Russia and other places in China, but most acutely in Pakistan and India.
There's a fear in India that there will be what is called as a surplus terrorism. After there is some stability in Afghanistan, where will these terrorists go? Will they target India?
They have the exact same fears in Pakistan. Pakistan is now facing a very vibrant insurgency in its country. They're about 150,000 Pakistani military in western Pakistan fighting this insurgency. They're concerned that if there is further instability in Afghanistan, this could heighten the insurgency, be motivational or provide some safe haven for insurgents to come over into Pakistan.
So everyone in the region has these concerns. And I think -- and this is really something where my diplomatic colleagues are taking the lead -- is to try to harmonize the policies of each of the countries in the region to try to achieve a common end purpose, a common situation of peace and stability in Afghanistan and, more broadly, throughout the region. And there are challenges, but generally I think it's going well.
Q: Just a quick follow, sir, quickly, recently there have been very high-level visits to India (inaudible) Secretary Hagel recently and then Secretary Kerry and now recently Vice President Biden. And they were all talking about the security and U.S.-India relations, military-to-military, and so forth, and also, of course, Afghanistan. What do you think now there is a firing going on, on the India-Pakistan border, heavy fighting in the region of Kashmir? What do you think will escalate? Or what U.S. -- been talking to India when they were visiting or they're -- are they talking about these problems on the border?
ACTING ASST. SEC. LAVOY: Well, it's really for the countries in the region to manage their own relationships. These are the countries that are most directly affected. And the situation -- we view the situation in Kashmir as a bilateral situation for India and Pakistan to sort out.
And regrettably, there has been violence in -- along the line of control in Kashmir for many years, for many decades now, and that's very, very regrettable. But, again, we believe -- you mentioned earlier that, with the election of President Nawaz Sharif, there have been overtures made by the Pakistanis to the Indians and vice versa to try to normalize the situation economically and reach some kind of political understanding. And I know we in the U.S. government fully support those efforts.
COL. WARREN: Blue tie, state your name and organization?
Q: Dion Nissenbaum with the Wall Street Journal. One of the weakest links in the effort has been corruption, as you know. And the report goes into a fair amount of detail about corruption at the regional level by a corrupt network running out of Kabul International Airport. I imagine Shafafiyat and those efforts are winding down, how concerned are you that as the ISAF efforts winds up, that corruption could overwhelm the efforts to reform the ANSF? And are you seeing it increase as ISAF winds up its efforts?
ACTING ASST. SEC. LAVOY: Corruption is a critical concern. It has been -- it remains one. And it probably will be a concern going forward. There is some -- I'm not trying to justify it, but there historically has been level of influence-peddling, what we would call corruption, in this country. There are certain socially accepted standards that differ, obviously, from our standards.
But then there's clearly abusive corruption, very corrosive, toxic corruption that's taking place. And it is a priority. What's very heartening to us is that this is a priority for the Afghan ministerial leadership that we deal with. Secretary Hagel's counterparts are the minister of defense and the minister of interior. And in their conversations and other DOD officials with these individuals, they've identified anti-corruption as a priority for them.
They've changed out leaders. B.K. Mohammadi, the minister of defense, has made a really deliberate effort after he took over to change out leaders, to improve not only performance and the quality of forces under new leadership, but to root out corruption, which does have many negative consequences, if you allow it to fester.
COL. WARREN: Let's go to Thom Shanker, and then we'll finish with Gordon Lubold.
Q: (OFF-MIC) on March 31st, which is the fighting season hadn't really gotten underway. All of us in this room understand the tyranny of deadlines, don't get me wrong. But if your deadline were today, are there any trends, especially among the security forces, that you would capture in this report in light of the current fighting season?
ACTING ASST. SEC. LAVOY: Yeah, I'd say -- I'd probably point to three trends, and I did allude to them. Number one, the security forces are out there doing the security job. This was kind of a question mark before this fighting season, because this is the first fighting season where the Afghan -- where the Afghan army and the police were actually in the lead. And they've acquitted themselves very, very well. As I mentioned, they've taken a lot of casualties. They've been tested by the insurgents, but they've done a good job standing up to those threats. So that's number one.
Number two -- and this is a challenge they're working through -- when they were partnered with American forces, they -- and ISAF forces -- they were partnered with the best military forces in the world. They were partnered with -- with units that had the best enabling support, whether it's mobility getting into a place, whether it's intelligence that gives you time-sensitive targeting on the threats, whether it's situational awareness, whether you know that there are other threats that could be emerging. And then after an engagement, how to get out of their mobility, to get out of there and medevac, getting people -- giving them that golden hour to get treatment. They're used to the state-of-the-art health care.
As we've pulled back and now Afghans are taking over not only lead for combat, they are now in the lead for getting their people around the country. They're in the lead for identifying -- you know, using their intelligence, analyzing their -- infusing and analyzing their intelligence, identifying targets, conducting the operations, designing the operations, and getting their people out of there.
So this has been a bit of an adjustment. I think generally it's been positive, but it's an adjustment away from U.S.-ISAF state-of-the-art standards in all these to something that's different in other cases. In many cases, they're finding local solutions that work just as well for their needs. They're finding local hospitals that they can take wounded soldiers to.
The third trend is also a bit of a challenge, but it's an anticipated and, frankly, a desirable challenge to have. It's the trend of the Afghans developing those functional capacities to provide for the logistical support of their troops, to provide for the human capital management, for managing the contracts and finances and budgeting and so forth. This is -- these are good problems to have.
Before, as I mentioned, we were concerned about fielding the force. Then we were concerned about the operational capacity and wherewithal of the force. Now we're concerned about these functional enabling attributes. This is a good problem. Again, as I said, our theme was we can really imagine having these challenges now. We thought we'd still be mired in some of those other challenges.
So going forward, I think the questions are, can the Afghan forces be able to sustain themselves at standards and with the kind of capacities that they can keep without being dependent on us?
COL. WARREN: So, last question from Gordon at Foreign Policy.
Q: Back to the 2014 question, the commitment of troops after 2014, as you know, there's a frustration that the administration hasn't articulated any number. And the zero option and all that aside, I'm curious -- you know, there's frustration from the Hill, from allies, from inside this building, why can't the administration say, "Here's our range," barring anything coming up, as you mentioned? Is there a point of diminishing returns in terms of holding out on this number and not just throwing it out there and saying, "This is what we're probably going to do at this point"? And also, are you confident that April will -- the elections will happen in April?
ACTING ASST. SEC. LAVOY: Well, it's hard to be confident about events that will happen months into the future. And I would just like to take your last question, make a point, and fully agree with the significance of that election. As you look forward, the -- another strategic risk, this -- this gentleman mentioned the neighborhood. I think that is a strategic risk. If the neighbors can't get along, that could undermine the security gains in Afghanistan.
The other strategic risk, if the political transition does not occur effectively, you could have a fragmentation of elite consensus in the country, political consensus, that could have reverberations in the military forces. It is a multi-ethnic, multi-tribal military force. And so to some extent, like military forces in every country in the world, the cohesion of the force is largely dependent on the political cohesion of the society. And the election could open up schisms that would be problematic, if the -- if the political transition doesn't take place well.
So now only do -- are we very hopeful that the election will take place and doing everything we can, particularly Jarrett and my colleagues over at State Department, who have the lead in the U.S. government for supporting the Afghans in that, to support them in this election, but it does have a very strong impact on the security forces.
And then you asked the other question on our presence in -- decision-making about our presence to Afghanistan post-2014. It's a critical issue. It's something that, you know, we get asked about by countries, leaders of countries all around the world. The U.S. does have a position of leadership. It's had a position of leadership in Afghanistan. It does today. And it's likely to have that position of leadership in the future.
We want to make sure that the decisions that -- that are reached are sound and based on full information in a very dynamic environment and something that, you know, Americans can know are the right decisions to provide for that continuing security in the region so that our interests are protected, so that the terrorist threat to the United States, which has diminished significantly in the last decade, will continue to diminish and will not reoccur in the future.
COL. WARREN: Thank you guys very much.
MARKETERS CHARGED BY FTC WITH DECEIVING BUSINESSES INTO PURCHASING CREDIT/DEBIT CARD PROCESSING FEES
FROM: FEDERAL TRADE COMMISSION
FTC Charges Marketers with Deceiving Small Businesses into Buying Credit/Debit Card Processing Services and Equipment
The Federal Trade Commission has charged an operation that sells credit and debit card payment processing services to small businesses with violating federal law. The defendants allegedly made false and unsubstantiated claims and failed to disclose material facts to storefront businesses and sole proprietorships before they applied for services and equipment to process credit and debit card payments. The FTC seeks to halt the allegedly illegal practices and return money to victims.
The defendants are Merchant Services Direct LLC (MSD), also doing business as Sphyra Inc.; Boost Commerce Inc.; Generation Y Investments LLC; Kyle Lawson Dove; and Shane Patrick Hurley. The Washington State Attorney General’s Office has simultaneously filed an action against these defendants in the Superior Court for Spokane County, Washington.
According to the FTC’s complaint, as an “independent sales organization” (ISO), MSD sells to small local businesses the ability to accept credit and debit card payments. The businesses pay fees whenever their customers pay with a credit or debit card.
As alleged in the complaint, MSD sales agents typically call small businesses and lead them to believe they are associated with the businesses’ current card processor, Visa or MasterCard, or their bank. The sales agents allegedly promise substantial savings on credit and debit card processing. They specify a much lower rate than the businesses currently pay, and quote one fee, a fixed per-transaction cost, without mentioning all the other fees the businesses will have to pay. Merchants who ask if there are other fees allegedly are told there are none.
According to the FTC’s complaint, MSD agents also dupe customers into leasing new card processing terminals for two to four years, falsely claiming their current “swipe” terminals are outdated or incompatible with its services. Sometimes they even claim the terminals are free. Agents persuade merchants to sign fine-print, binding contracts on the spot by telling them the documents are merely applications – a ruse made easier, according to the FTC, by the fact that the contracts are labeled “applications.” Merchants are often falsely told they can cancel any time. Many victims discover their new lease obligation only after being billed, still owing the balance of their previous lease, which can be thousands of dollars.
Defendants also tout on various versions of their website “Guaranteed Lowest Rates,” claiming merchants could “save 30%” with “whole sale [sic] processing” or have “anywhere from 20% to 30% savings when switching to” MSD. In fact, according to the FTC, there are no wholesale rates, as third parties process card payments, not MSD. As alleged in the complaint, those who call MSD’s customer service department reach employees who either do not help them or say they will waive fees or provide refunds but don’t. Customers who were promised they could cancel the “applications” they signed with no penalty are charged substantial cancellation fees, according to the FTC’s complaint. Generally, only in response to complaints filed with the Better Business Bureau and state attorneys general have the defendants refunded money or waived fees.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Eastern District of Washington. In addition to filing the lawsuit, the FTC has sought a court order immediately halting the unlawful practices along with an order freezing the defendants’ assets and appointing a receiver over the corporate defendants.
The FTC acknowledges the assistance of the Washington State Attorney General’s Office and the Better Business Bureau of Eastern Washington, North Idaho, and Montana.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
FTC Charges Marketers with Deceiving Small Businesses into Buying Credit/Debit Card Processing Services and Equipment
The Federal Trade Commission has charged an operation that sells credit and debit card payment processing services to small businesses with violating federal law. The defendants allegedly made false and unsubstantiated claims and failed to disclose material facts to storefront businesses and sole proprietorships before they applied for services and equipment to process credit and debit card payments. The FTC seeks to halt the allegedly illegal practices and return money to victims.
The defendants are Merchant Services Direct LLC (MSD), also doing business as Sphyra Inc.; Boost Commerce Inc.; Generation Y Investments LLC; Kyle Lawson Dove; and Shane Patrick Hurley. The Washington State Attorney General’s Office has simultaneously filed an action against these defendants in the Superior Court for Spokane County, Washington.
According to the FTC’s complaint, as an “independent sales organization” (ISO), MSD sells to small local businesses the ability to accept credit and debit card payments. The businesses pay fees whenever their customers pay with a credit or debit card.
As alleged in the complaint, MSD sales agents typically call small businesses and lead them to believe they are associated with the businesses’ current card processor, Visa or MasterCard, or their bank. The sales agents allegedly promise substantial savings on credit and debit card processing. They specify a much lower rate than the businesses currently pay, and quote one fee, a fixed per-transaction cost, without mentioning all the other fees the businesses will have to pay. Merchants who ask if there are other fees allegedly are told there are none.
According to the FTC’s complaint, MSD agents also dupe customers into leasing new card processing terminals for two to four years, falsely claiming their current “swipe” terminals are outdated or incompatible with its services. Sometimes they even claim the terminals are free. Agents persuade merchants to sign fine-print, binding contracts on the spot by telling them the documents are merely applications – a ruse made easier, according to the FTC, by the fact that the contracts are labeled “applications.” Merchants are often falsely told they can cancel any time. Many victims discover their new lease obligation only after being billed, still owing the balance of their previous lease, which can be thousands of dollars.
Defendants also tout on various versions of their website “Guaranteed Lowest Rates,” claiming merchants could “save 30%” with “whole sale [sic] processing” or have “anywhere from 20% to 30% savings when switching to” MSD. In fact, according to the FTC, there are no wholesale rates, as third parties process card payments, not MSD. As alleged in the complaint, those who call MSD’s customer service department reach employees who either do not help them or say they will waive fees or provide refunds but don’t. Customers who were promised they could cancel the “applications” they signed with no penalty are charged substantial cancellation fees, according to the FTC’s complaint. Generally, only in response to complaints filed with the Better Business Bureau and state attorneys general have the defendants refunded money or waived fees.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Eastern District of Washington. In addition to filing the lawsuit, the FTC has sought a court order immediately halting the unlawful practices along with an order freezing the defendants’ assets and appointing a receiver over the corporate defendants.
The FTC acknowledges the assistance of the Washington State Attorney General’s Office and the Better Business Bureau of Eastern Washington, North Idaho, and Montana.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
RECENT U.S. NAVY PHOTOS FROM AFGHANISTAN
FROM: U.S. NAVY
U.S. Navy Seabees replace the tire on equipment on Camp Leatherneck in Helmand province, Afghanistan, July 18, 2013. The Seabees are assigned to the Naval Mobile Construction Battalion 15. U.S. Navy photo by Petty Officer 1st Class Daniel Garas
A U.S. Navy Seabee dumps dirt into the back of a truck along a fence line on Camp Leatherneck in Helmand province, Afghanistan, July 18, 2013. U.S. Navy photo by Petty Officer 1st Class Daniel Garas.
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