SENIOR ADMINISTRATION OFFICIAL HAS BRIEFING ON PEOPLES REPUBLIC OF KOREA

The following excerpt is from a U.S. State Department e-mail

"Background Briefing on the Democratic People's Republic of Korea

Special Briefing

Senior Administration Official, Office of the Spokesperson

Washington, DC

February 29, 2012

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MODERATOR: Well, thank you all for joining us today. I hope you all have a copy of the statement that we released at about 9:15 this morning on the recent U.S.-DPRK bilateral discussions. Here to give you a little bit more background on where we are in those conversations and on the statement that we released, and also on the statement that was released by the North Koreans at about the same time, we have two senior Administration officials. For your records, the Senior Administration Official Number One is [Senior Administration Official One], who is [position withheld]. Senior Administration Official Number Two is [Senior Administration Official Two] who is [position withheld].

[Senior Administration Official One], our Senior Official Number One, is going to make a relatively full opening statement, and then we’ll go to your questions, and both officials will be available to answer the questions.
Why don’t we go ahead to Senior Official Number One?

SENIOR ADMINISTRATION OFFICIAL ONE: Thank you very much, [Moderator], and hello to everybody. I want to go a little long initially, not least because this topic is a bit complex, but also I think I can get at and anticipate some of your questions. But then I’m happy to take on whatever you want to throw at us.
And it’s a bit scripted, but I want to get this right, so let me just launch into it by saying that since taking office, the President has been consistent in signaling that we will respond positively if North Korea chooses the path of negotiation, cooperation, and denuclearization. After the really tough sanctions that were put in place by the UN Security Council and the North Koreans announced that they wanted to return to Six-Party Talks, talks that they had previously abandoned, we and our allies made clear that North Korea needed to take a number of steps that would demonstrate their seriousness of purpose. We were firm that we were only interested in credible negotiations leading to the denuclearization of the Korean Peninsula. The North couldn’t be allowed to walk away from their Six-Party commitments, to launch missiles, to further their ICBM program, to conduct a nuclear test, roll out a uranium enrichment program, to attack the ROK, and then simply expect us to come back to Six-Party Talks on their terms.
The pre-steps, as we’ve called them, that we insisted on and to which they have now agreed in their unilateral statement begin the process of walking back these provocative actions. This agreement opens the door to serious negotiations to achieve irreversible steps by North Korea toward denuclearization and to meeting their other commitments and international obligations.
Now, the President and the Secretary of State also have long made clear America’s clear concern for the welfare of the North Korean people. Following an assessment last summer of humanitarian needs in North Korea, the U.S. put forward a proposal designed to feed babies, to feed mothers, to feed the elderly - which is to say the most at-risk marginalized population of North Koreans. These are people whom the regime either cannot or has chosen not to feed. And the plan to provide nutritional assistance included monitoring requirements designed to ensure that the right type of food gets to the right people.
Until our meeting last week in Beijing, the North Koreans had declined to allow the program to go forward. They demanded large quantities of rice and grain that could be, in our view, diverted to elites or to the military. They’ve now dropped those demands and agreed to allow our program to move forward as proposed, with an understanding, as always would be the case, that further assistance would be based on verified need. This progress today is a direct result of close coordination with our key partners. Close coordination with the Republic of Korea deprived the North of the chance to drive a wedge between us or to weaken our strong alliance. As we move forward with the DPRK, we will continue to place great emphasis on the need for the North to pursue rapprochement and reconciliation with the South through sustained and substantive inter-Korean contacts.
The same is true of Japan. We have – which, of course, is North Korea’s other neighbor – we have stayed in very close touch with the Government of Japan and, as always, have forcefully raised with the North Koreans, and we did so in Beijing, the abductions issue with the North Koreans.
Now finally, kind of a note of caution about all this stuff because I really don’t want to oversell this. As positive as these very modest steps are, what they do is they merely unlock the door to the resumption, eventually, of Six-Party talks. We’ve consistently said - we’ve made clear - that we’re not interested in talks just for the sake and for the forum of talks. The next step on this process going forward from today is to work with each and every one of our Six-Party partners in order to set the stage for real and lasting progress in the multilateral phase. We have – we believe that it’s important to translate this initial sign of Pyongyang’s seriousness of purpose into substantive and meaningful negotiations on denuclearization that get at the entirety of the North’s nuclear program and secures steady progress toward complete and verifiable dismantlement of the North’s entire program. And that’s my paid political announcement at the top.
I do want to just add one quick word on a couple of topics to anticipate, and that is that I haven’t mentioned the Chinese and Russians. They’re vital here. We have now twice - in just the couple of months that the Special Representative for North Korea Policy has been in this job - been to Beijing to consult with Wu Dawei, Ambassador Wu Dawei, who is the longstanding chairman of the Six-Party process, and others including the foreign minister of the PRC, on how best to deal with the challenges we face. And Special Representative for North Korea Policy also been to Moscow to discuss these matters with Deputy Foreign Minister Morgulov and indeed have spoken with him just in recent hours.
Secondly, quickly, on the IAEA and next steps, it will be up to the North Koreans – and we were quite explicit in our understandings at Beijing – up to the North Koreans to get in touch with the IAEA to discuss next steps. We will see how long that process takes. We hope it happens relatively quickly. We’ve already alerted Director General Yukiya Amano and his staff to the steps that we are taking. And we look forward – and I think this is a very important part of the announcements made today in particular by the North – a very important part of how we will ensure that going forward North Korea abides by the unilateral undertakings that they’ve made.
Anyway, I apologize for being longwinded, but there are a lot of moving parts here. I wanted to get it all out there. I know you’ve got a lot of questions. So, [Moderator], back to you.

MODERATOR: Thank you, [Senior Administration Official One]. Operator, let’s go to the first question, please.

OPERATOR: Thank you. To ask your question over the phone, please press * then 1. You will be announced prior to asking your question. To withdraw any question, press *2. Also, please limit to one follow-up question. Again, please press * then 1 for your question.
Our first question is from Elise Labott with CNN. Your line is open.

QUESTION: Hi, [Senior Administration Official One]. Thanks for doing this. I was wondering if you can talk about the kind of sequencing of this. Like, is it – are they going to get all the food assistance at once? Do they have to take – let some inspectors in first, stop a certain amount of uranium enrichment? Is it going to be a step-by-step thing?

And then also maybe your colleague from USAID can talk about the monitoring and how you make sure it gets to the right people, how much food do they get, where it is shipped, those type of – is it going to be warehoused anywhere? How do you – the monitoring and all that. Thank you.

SENIOR ADMINISTRATION OFFICIAL ONE: Okay, sure. Thanks, Elise. On sequencing, there are details that remain to be worked out. You can see that these are fairly spare unilateral statements that we’ve put forward, and the main overall point going forward is that we will be, as I think the Secretary said on the Hill today, sort of watching very carefully and measuring how North Korea comports itself in carrying forward its commitments.
On the specific issue, we, of course, would like to see IAEA monitors get back in country to Yongbyon to get eyes on both the uranium and plutonium aspects of the program at Yongbyon as soon as possible. It’s up to the North to do the first reach-out to Director General Amano and the safeguards folks in Vienna. I have no doubt that there will be some tough negotiations going forward in terms of precise sequencing. No doubt there will likely be an insistence on the North Koreans’ part on a certain amount of – let’s call it simultaneity in some of this.
So I wouldn’t look for people to be in motion right away here. I think it’s going to take a little bit of time to get straight on these modalities for the IAEA to work out with the North some of these issues of which – whether it’s the right foot or the left foot that goes forward first. But again, the broader point, we’ll be watching and we’ll be measuring and we’ll be, of course, working with the North Koreans and working with the IAEA to make sure that that’s all set up properly and that that goes forward as soon as possible.
Let me turn it over to Senior Official Number Two to address the nutritional assistance bit.

SENIOR ADMINISTRATION OFFICIAL TWO: Thanks. Elise, the plan that we’ve put in front of the North Koreans is – I can just outline as follows. What we’ve proposed is the regular delivery of about 20,000 tons a month over the course of 12 months. And we’re talking about foods that would be appropriate for young children, in particular those under five or six years old, pregnant woman as well because we want to make sure we address the sort of the first 1,000 days as the Administration has wanted to focus on.

QUESTION: This is the Plumpy – this is that Nut’Plumpy stuff, right, in the bars and stuff?

SENIOR ADMINISTRATION OFFICIAL TWO: We’re going to have things like corn-soy blend, we will have vegetable oil, some pulses, and then there will be probably a modest amount of the ready-to-use therapeutic foods depending upon the number of children that we see with acute malnutrition. So that will be there is necessary or be available if necessary.
But you had asked whether monitoring would come first. And in the case of the nutrition program, we have said that our partner organizations will have to be fully operational – meaning fully in place on the ground with their offices functioning – before the food will begin to arrive and will begin to be distributed, because it’s very important that we maintain – or that we can demonstrate that the program is well managed because that’s critical to maintaining the support for the program.
But if – just to be clear, if we are successful in finalizing the details that I’ve just laid out, this will be the most comprehensively monitored and managed program since the U.S. began assistance to the DPRK in the mid 1990s.

QUESTION: Thank you.

MODERATOR: Operator, let’s go to the next question, please.

OPERATOR: Thank you. The next question is from Matthew Pennington with Associated Press
.
QUESTION: Hello, [Senior Administration Officials One and Two]. Thanks a lot for doing this. My first question
was: In the North Korean statement, they specify that they’ve agreed to a moratorium on the uranium enrichment, but they don’t seem to allude to the plutonium program at all, which you say will also be open to monitoring. I’m just wondering why there’s – why there is that difference, and if there is any doubt at all in your mind that they’ve agreed to both aspects of that.
And also, what further hurdles need to be sort of breached before the Six-Party Talks can resume now, because it appears that they’ve met the pre-steps. So what further needs to be done? Thanks.
SENIOR ADMINISTRATION OFFICIAL ONE: Thanks a lot, Matt. But anyway, two quick things: One is, on the – on their omission in their own unilateral statement of what we’ve said about the – their undertaking to confirm the disablement of the 5 megawatt reactor and the associated facilities, that is our understanding. The negotiating record’s clear on that. We did talk about that. We expect that the IAEA will also confirm the disablement of that reactor and associated facilities. I can’t speak to why they didn’t include it; these were, after all, unilateral statements that each side made, and that is an issue that we will clearly have to come back on. But there’s no doubt in our mind that they’ve agreed to that, and we will expect that that will be addressed, though I have to say that job one here is this new uranium enrichment facility that’s been revealed to the world. So that, first and foremost, is what we want to get at.

In terms of hurdles going forward to Six-Party, or why can’t we just rush right back to Beijing and sit down together and lights, cameras, action on Six-Party - look, a couple of things. One is we need to see how this goes forward. We’re going to be watching, we’re going to be measuring, we’re going to be working with the North Koreans, but it’s going to take some time for these particular unilateral undertakings – let’s call it the Leap Day Deal here – to play out and to pan out. And I think that’s important. And measuring how they implement this will be important, I think, to helping us gauge whether they and we are ready to go back to Six-Party, number one.
Number two, the truth is we’ve been around the Six-Party block before. It has a history of ups and downs, sometimes more downs than ups. You all – many of you know the history of it. We’re determined to properly prepare any Six-Party round. We’ve made no commitment, at this stage, to going back to Six-Party. And that’s because we will need any number of consultations with the other parties in the Six-Party geometry. Why? Because we need to make sure that we have a winning strategy for not simply sitting down at the table at the Diaoyutai Guesthouse in Beijing, but being able to stand up from the table with something meaningful and something lasting, a process that can deal with the concerns that all of us have with regard to North Korea. That’s going to take some time.

A final thing is we will need to be able to signal to the North Koreans in a solid fashion, an undivided fashion, what will be on the table at Six-Party, and what can’t be on the table at Six-Party. We can’t allow the same patterns of the past repeat themselves. We can’t allow wasting arguments on topics that are irrelevant to the main challenges we face. And that’s simply going to take a long time to work out.

QUESTION: Okay, thanks.
MODERATOR: Okay, operator, let’s go to the next question.

OPERATOR: Thank you. Our next question is from Ai Awaji with Jiji Press. Your line is open.

QUESTION: Hi. Thanks for doing this. North Koreans said in their own statement that they would implement moratorium as long as the talks continue. Is that your understanding, and if not, is that acceptable?

SENIOR ADMINISTRATION OFFICIAL ONE: Yes. Another good question. The – listen, I think that that particular statement that’s included in their unilateral statement out of Pyongyang is simply a recognition of a fact. These steps – this gives me a chance to say something important about what these steps are and aren’t. These are reversible steps that they’ve committed to. There shouldn’t be any kind of doubt about that or debate about that. And the point of these steps is to show – is for the North Koreans to show that they’re serious in making good on their undertakings.

So that’s what’s – so I think when we say that – when they say that the moratorium will only be in place as long as we’re engaged in these meaningful talks, I think that that’s true of how North Korea acts and behaves under any circumstances anyway. Because these are reversible steps, they can always come around to side – to sort of, let’s say, flip a switch and go in a different direction. And that would be a missed opportunity for them, and that would obviously make it impossible to go back to Six-Party. And that would be too bad because there is a different future available to the North Koreans. We’ve made it clear to them, if they go down that path of peace, engagement, and meeting the concerns of the international community, they can have a very different future. They can be lashed up with the international community in a positive way that can be of benefit to them. And so I think that language is simply a somewhat explicit statement of what would be the case under any circumstances.
MODERATOR: Good. Operator, let’s go to the next one. Thank you.

OPERATOR: Thank you. Our next question is from Kaho Iguminiti with NHK.

QUESTION: Hi, [Senior Administration Official One], thanks for doing this. Two questions. You mentioned that the North Koreans dropped their demands to want rice and grains. Can you confirm when this happened? Was this after the meeting in Beijing or during the meeting? And my second question is something about your schedule to meet with the North about the nutritional aid.

SENIOR ADMINISTRATION OFFICIAL ONE: Sure.

QUESTION: Do you have any dates? Yeah, thank you.

SENIOR ADMINISTRATION OFFICIAL ONE: Sure, sure, sure. Yeah, Kaho, I’m glad you’re on the call. Look, here’s what I’m not going to do, and I hope you all will give me a little slack here. I don’t want to get into the tick-tock of these negotiations and when particular sides said certain things, when particular sides fell off of certain things or dropped particular demands. I don’t think that’s useful. I think – I want to look forward. Rather than dissect what happened in Beijing or before, and talk about who faced down whom here, that’s sort of not the issue.
The point is we have this modest but important, as I call it, Leap Day Deal, and we now need to go forward with it. And frankly, one must give the North some credit for, so soon after the transition, reaching out to do this. So I apologize for not giving you some of that color about the negotiations and when they dropped their demands, but I’m just going to kind of steer clear of that.
Now, in terms of the schedule for the next little bit of this, which will be when Senior Official Number Two reengages with the North Koreans to finalize the nutritional assistance agreement, maybe – I guess maybe the best thing is if I could buck it over to Senior Official Number Two, and you want to say a word about that?

SENIOR ADMINISTRATION OFFICIAL TWO: Yeah. Thanks, [Senior Administration Official One]. We’re ready to meet as soon as we can iron out the timing and the location for that next meeting. And that is not finalized at this moment, but there are no plans to delay. We’re ready to go.

MODERATOR: Good. Operator, let’s go to the next question. Thank you.

OPERATOR: Thank you. Our next question from Shaun Tandon with AFP.

QUESTION: Yeah, thanks for doing this call. A bit of a broader question: This obviously comes just a couple of months after the death of Kim Jong-il. Just wanted to see what sign, if any, you saw on continuity on the North Korean side, what this – what if anything this says about the transition and how it’s going in Pyongyang.

SENIOR ADMINISTRATION OFFICIAL ONE: Sure. We spoke to this a little bit, actually, on the days we were discussing this in Beijing. I think this – well, a couple of things. One is we were sitting across from essentially the same North Korean negotiators who have been at this in some cases, for – well, for decades. In particular, First Vice Foreign Minister Kim Kye Gwan, who is a veteran North Korean negotiator and has seen lots of guys like us come and go, and many of his team are familiar faces. So the people were the same.

The way that they presented the issues was quite familiar to us. The basic arguments they used, the requests they were making of us, the rationale that they were employing – and here is the point. I think that’s important because I think it shows that the new, call it, administration in Pyongyang is picking up where the previous one left off. And that’s great; that’s good. And they’re doing it within the 100-day mourning period that’s self-declared in North Korea. So it shows that they’re interested with some alacrity to reach out, to get back to the table, and begin to try to make diplomatic progress, and I think that’s a positive sign.

So I think overall, you – what we are seeing is a sign of continuity. I think overall, the early stages of this transition have been relatively uneventful as soon as near as we can divine what’s happening inside North Korea. So that’s about as far as we could go, not being in Pyongyang, but rather being in Beijing and talking to, as I say, a fairly familiar cast of North Korean negotiators.

QUESTION: Thanks.

MODERATOR: Good. Operator, we’ll take two more. Can you cue up the next one, please?

OPERATOR: Certainly. Our next question is from William Wan with Washington Post.

QUESTION: Hi. Thanks so much for doing this, [Senior Administration Official One]. Shaun actually asked my main question just a – Un. I don’t know if you have anything to add in terms of what the – if you – if there was any talk of Un or if you got any sense of how much of the decision was made by him and how much was of this collective leadership.

And then the other question I had was just how much of this was a surprise. It seemed like there was a lot of waiting for a while, knowing you – how long it would take to get back to the table. How much of this move is a surprise in the nine weeks since the death of Kim Jong-il?

SENIOR ADMINISTRATION OFFICIAL ONE: Right. Yeah. Was it a surprise? Well, in terms of to what extent was Kim Kye Gwan improvising, that’s not typically the way North Korean negotiators operate. I mean, they’re a disciplined bunch. He’s an experienced guy. He would have come with a set of redlines and instructions, actually not so much unlike us, I have to say. So our kind of working assumption is that what he brought to the table with us and where we ended up were all very much sanctioned by the center in Pyongyang.
I mean, I think they regard this – they take this stuff seriously, and at senior levels these decisions are made. I can’t tell you what their intramural decision-making process is. I don’t think anybody knows. But I would imagine that the leadership, whether collective or a regency or Kim Jong-un acting alone, not sure was very much informed, involved, engaged, and calling the shots, though Kim, I’m sure, had some tactical running room.
And remember that we went into extra innings. The thing was – we thought it would probably take just a day, the Thursday, and then…

And remember that we went into extra innings. The thing was – we thought it would probably take just a day, the Thursday, and then followed by a very substantive dinner, so sort of three sessions on the Thursday of something on the order of six and a half hours. It went over – it bled over into the Friday. We – for a couple of hours, so they had time to go back to Pyongyang and to seek further guidance, and I’m certain they would have done that.
Now, give me again your second question, the surprise question?

QUESTION: Oh, just whether – how – just that it seemed like everyone was waiting for a while, not knowing how long it would be.

SENIOR ADMINISTRATION OFFICIAL ONE: (Inaudible) yeah, yeah, yeah. Well, I don’t – I wouldn’t call it a surprise, and I’ll tell you why. Because we have been in touch with the North through – episodically through the New York channel since, quite literally, 24 hours after the announcement of the death of King Jong-il back in mid-December, and we were beginning to pick up signals from them in these fairly frequent communications that there was a continuity in their approach.

Obviously, there was a bit of a dramatic moment for those of us working this for the United States Government where we were signaling to them that we were available and we’ll need to get back and hoping that – and that our positions hadn’t changed, hoping we could find a way to do that. And as is always the case, one moment it was something that seemed absolutely impossible and out of the question, and then literally a day or two later, a switch had been flicked, and they were ready to go, and that was some weeks ago. So – and some were surprised, because it’s a guessing game with North Korea. Some were thinking that their transition would last a long time as the last one did 17-some years ago and that it would take a while. But as it happened, they were quite quick to make a decision to get back to the table with us.

MODERATOR: Great. Operator.

OPERATOR: Thank you. We have time for one final question from Andrew Quinn with Reuters.

QUESTION: Hi, [Senior Administration Official One]. It’s Andy Quinn here. I have one for you and then a quick one for [Senior Administration Official Two], if I may. For you, I’m just wondering if you could talk a little bit about the South Korean side of this equation. One of the preconditions that seems to have dropped off is the notion of a North Korean apology for the corvette and the island. Is that no longer a requirement, or do you feel that they’ve sort of, by their actions, made clear that they are not going to do that sort of thing anymore?
And for [Senior Administration Official Two], I was wondering, your – the needs assessment mission was almost about nine months ago, and we’ve never seen the results of what they found there. Can you tell us what their assessment was of North Korea’s food needs then and what’s the possibility or probability that those needs had changed in the intervening time since that mission went? Thank you.

SENIOR ADMINISTRATION OFFICIAL ONE: Okie doke. Let me, Andy, take your question on South Korea, and I just do want to take the occasion to reiterate how knit up we have been. The South Koreans were co-architects of this whole pre-steps approach and plan. And I think I’ve said it already, but that we went directly from Beijing to Seoul to report, and I would point you in the direction of their statement welcoming this result as indications of how closely coordinated we are with South Korea. I think, to be totally fair to them, it’s – that’s the sort of question that you need to put to them, but I would – about the – I guess the preconditions, as you put it, though I don’t think I would accept the premise that that – it was necessarily always a precondition. But the point is South Korea has been steady, solid, and sure on the point that job one is denuclearization overall, getting at that existential threat on the peninsula, starting a process toward denuclearization, and we hope eventually a complete and irreversible dismantlement, disablement of the North Korean nuclear program. And they’ve been with us, and we’ve been joined together on that. And as far as the – your question on the sinking of the Cheonan and the shelling of Yongpyong and so forth, I really do think that’s a question that you need to put to them.
We – the final thing I’ll say is we’ve told the North – we said it more than once in Beijing, that it’s vital, it’s essential that the North takes steps to improve North-South relations. That’s got to happen before there’s any fundamental change in certainly the U.S.-DPRK relationship, and we fully expect that those steps will be taken in a context of any return to Six-Party talks.

MODERATOR: That concludes this background briefing. I’m sorry, Andy, did you have a follow-up?

QUESTION: There was the second half.

MODERATOR: I’m sorry. [Senior Administration Official Two], I apologize. I’m jumping right in on you.

SENIOR ADMINISTRATION OFFICIAL TWO: That’s not a problem. Andy, you’re right. The original assessments that were done by the UN and by the NGOs and then by the U.S. Government were done last year, and so there is an issue of whether or not the information is old. But let me just say when we – when our team looked at the situation in the summer of last year, early summer of last year, we concluded that our focus should be on chronic malnutrition that’s contributing to sort of widespread stunting among the population, in particular the young children. And so that makes up the sort of the foundation of our new program. It’s a distinctly new program in that we’re looking at a nutritional focus on those populations – kids and pregnant women – who benefit the most by having an appropriate diet. So that’s where we settled on the need to do a 240,000-ton program. We felt that was the right size.

In the meantime, we’ve had the WFP/FAO crop assessment in November that’s continued to talk about chronic malnutrition, extensive chronic malnutrition among those populations I just described. And in January of this year, UNICEF did a survey along four of the provinces in North Korea and identified that over 80 percent of the children were malnourished. So I’m not saying those are definitive, but to us they are consistent with what we see as a chronic problem that we’re going to be trying to address with this nutrition program, and so we’ll continue to validate that if and when we get the program started. But we think that the foundation for our plan is pretty strong.

SENIOR ADMINISTRATION OFFICIAL ONE: Thanks very much, [Senior Administration Official Two]. Can I just jump on that while we’re still on food? Because I just want to hammer home sort of one point here. Whenever I see these headlines that this is a food-for-nukes deal, I wince, because it’s really important to be clear that the United States doesn’t link the provision of humanitarian assistance, in this case nutritional assistance, to essentially political questions, this issue of, in this case, these nuclear pre-steps. What we have – we haven’t done it, but the North has, because they, I think, take a very transactional approach to this stuff. And the one and only statement that they issued after the death of Kim Jong-Il on the U.S.-North Korea relationship, made pretty crystal clear that they saw this as a transaction and that for that for their own reasons, their own purposes, they needed to have this linkage to be able to say, I think, that they had received something for taking the steps that they’re taking. But our position on this remains clear that we don’t link the two at all.
And I don’t know, [Senior Administration Official Two], do you want to say anything else finally about that? Because that seems to be a subject that is on many minds, and I know – I just want us to be clear on it.

SENIOR ADMINISTRATION OFFICIAL TWO: Yeah, [Senior Administration Official One]. All I think I would say is that I’ve been working on the program, humanitarian assistance to North Korea, for basically the 15 years that we’ve – the U.S. has been engaged in this. And in this case, we have – we’ve made a very concerted effort to keep the negotiations very separate. Bob King and I have always engaged independently of any other discussions, and we’ve always focused on what terms we need to ensure that the program addresses the needs of the targeted groups and is something that we can justify and defend here in the United States.

MODERATOR: Very good. I think that concludes this background briefing."

STATE DEPARTMENT REBUKES SYRIA'S DENIAL OF VISIT BY UN UNDERSECRETARY-GENERAL VALERIE AMOS

The following excerpt is from a U.S. State Department e-mail:

"Statement by Ambassador Susan E. Rice, U.S. Permanent Representative to the United Nations, on the Syrian Government's Denial of Travel by the UN Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator

Susan E. Rice
U.S. Permanent Representative to the United Nations
U.S. Mission to the United Nations 

New York, NY

February 29, 2012

FOR IMMEDIATE RELEASE

It is shameful that the Syrian government has denied UN Under-Secretary-General Valerie Amos admission to Syria, as promised.

The Under-Secretary-General should have been able to negotiate urgently needed humanitarian access for relief organizations to operate safely in the midst of desperate shortages of food, medical care and basic necessities. Rather than meeting the needs of its people, the barbaric the Syrian government is preparing its final assault on the city of Homs. Meanwhile, food shortages are reported to be so severe that people, especially children, will soon start dying of hunger. Water and electricity have been cut. Doctors, aid workers and journalists continue to be targeted. Even the Syrian Red Crescent has been prevented by Syrian forces from evacuating the injured. The Assad regime's callous disregard for the needs of its people is not surprising, but it is reprehensible."

SEC MAKES REMARKS AT CREDIT SUISSE GLOBAL EQUITY TRADING FORUM

The following excerpt is from the SEC website:

“Remarks at the Credit Suisse Global Equity Trading Forum
Commissioner Daniel M. Gallagher
Miami Beach, FL
February 17, 2012
Thank you, John [Anderson], for that very kind introduction. I am pleased to be here today.
Before I continue, I need to provide the standard disclaimer that my comments today are my own, and do not necessarily represent the positions of the Commission or my fellow Commissioners.

The broad topic of this conference is “Seeing Beyond,” and this theme is particularly relevant given the focus of my discussion this morning--Dodd-Frank, with a special emphasis on the Volcker Rule. Indeed, for the financial services industry, not just in the U.S. but worldwide, it is very difficult to “see beyond” Dodd-Frank. The largest financial reform law in 70 years has and will continue to impose massive costs on market participants, and will reconfigure the financial services industry worldwide, but the amount of these costs and the scope of this reconfiguration are still highly uncertain.

18 months on, regulators are still working to implement Dodd-Frank, and most, if not all, of the new regulatory undertakings are very much works in progress. Regulators are therefore in a difficult position, because the markets and the public need regulatory guidance and certainty, but that certainty can and should not come at the cost of hasty and ill-considered regulatory initiatives that will damage the real economy that Dodd-Frank ostensibly is designed to protect.

At the SEC, we face this tension every day. Dodd-Frank requires more than 100 rulemakings and studies from the agency. Among these rulemakings, Dodd-Frank mandates that the agency build regulatory infrastructures from scratch in several areas, including the OTC derivatives market, in conjunction with the CFTC; the registration and oversight of municipal advisors; and the registration and oversight of hedge funds and private equity funds. The sheer breadth of rulemaking for the agency argues for a general approach that is systematic yet incremental: particularly in areas where we are creating new regulatory paradigms, we should strive to build a solid foundation, and develop the regulatory regime over time as the markets and our expertise in those markets develop.

It is also important to remember, as we implement Dodd-Frank, what the law did and didn’t do, particularly as it relates to the SEC. Critically, it did notchange the fundamental mission of the agency. Our mission was and still is to protect investors, maintain fair and efficient markets, and promote capital formation. Dodd-Frank did not make us a banking or safety and soundness regulator. We still regulate markets that are risky, and where the taking of risk is critical to capital allocation and the healthy functioning of these markets and the broader economy. Moreover, in terms of the additional responsibilities given to the SEC, both in those areas we traditionally oversee and those that we don’t, Dodd-Frank reinforced Congress’s nearly 80-year commitment to a strong, vibrant, expert and independent equity markets regulator.

Which brings me to the Volcker Rule. I can think of no better topic to address today. It is not only timely--the comment period to the proposal closed this week, to great fanfare in the press--but it may, perhaps more than any other rule regulators are promulgating under Dodd-Frank, have a dramatic impact on world markets and U.S. competitiveness. Moreover, the heart of the Volcker Rule deals with a topic about which the SEC traditionally has--among all the regulators writing rules in this space--the most experience and expertise in regulating. For those reasons--because it is potentially so significant and because it implicates areas of the SEC’s core competence, it is a perfect case study for how to think about approaching Dodd-Frank rulemaking and the SEC’s role in that rulemaking. Indeed, Volcker is especially important to the major U.S. investment banks which until the financial crisis were subject primarily to SEC oversight. Now, as a result of the financial crisis, the survivors are all within bank holding companies.
I want to begin by talking a bit about the statute and the proposed rules. Section 619 of the Dodd-Frank Act,1 commonly known as the “Volcker Rule” even though it is a statutory provision, imposes two significant prohibitions on banking entities and their affiliates. First, the Rule generally prohibits banking entities that benefit from federal insurance on customer deposits or access to the discount window, as well as their affiliates, from engaging in proprietary trading. Second, the Rule prohibits those entities from sponsoring or investing in hedge funds or private equity funds. The Rule identifies certain specified “permitted activities,” including underwriting, market making, and trading in certain government obligations, that are excepted from these prohibitions but also establishes limitations on those excepted activities. The Volcker Rule defines--in expansive terms--key terms such as “proprietary trading” and “trading account” and grants the Federal Reserve Board, the FDIC, the OCC, the SEC, and the CFTC the rulemaking authority to further add to those definitions.

The statute also charges the three Federal banking agencies, the SEC, and the CFTC with adopting rules to carry out the provisions of the Volcker Rule. It requires the Federal banking agencies to issue their rules with respect to insured depositary institutions jointly and mandates that all of the affected agencies, including the Commission, “consult and coordinate” with each other in the rulemaking process. In doing so, the agencies are required to ensure that the regulations are “comparable,” that they “provide for consistent application and implementation” in order to avoid providing advantages or imposing disadvantages to affected companies, and that they protect the “safety and soundness” of banking entities and nonbank financial companies supervised by the Fed.

In October of last year, the Commission jointly proposed with the Federal banking agencies a set of implementing regulations for the Volcker Rule,2with the CFTC issuing a substantively identical set of proposals last month. The proposed rules, which were issued prior to the beginning of my tenure as a Commissioner, are designed to clarify the scope of the Volcker Rule’s prohibitions as well as certain exceptions and limitations to those exceptions as provided for in the statutory text. The proposing release includes extensive commentary designed to assist entities in distinguishing permitted trading activities from prohibited proprietary trading activities as well as in identifying permitted activities with respect to hedge funds and private equity funds. In addition, the release includes over 1,300 questions on nearly 400 topics--you can see why I and my colleague Commissioner Troy Paredes thought that commenters needed 30 extra days when the comment period extension was granted in December.

The proposed implementing rules are designed to clarify the scope of the Volcker Rule’s prohibitions on proprietary trading and hedge fund or private equity fund ownership and identify transactions and activities excepted from those prohibitions, as well as the limitations on those exceptions. For example, the proposed rules would except from the prohibition on proprietary trading transactions in certain instruments--such as U.S. government obligations--as well as certain activities, such as market making, underwriting, risk-mitigating hedging, or acting as an agent, broker, or custodian for an unaffiliated third party. The proposed rules would also establish a three-pronged definition of “trading accounts” which would include exceptions from that definition such as repurchase and reverse repurchase agreements and securities lending transactions, liquidity management positions, and certain positions of derivatives clearing organizations and clearing agencies.
The proposed rules would require a banking entity to establish an internal compliance program designed to ensure and monitor compliance with the prohibitions and restrictions of the Volcker Rule. The rules would require firms with significant trading operations to report certain quantitative measurements designed to aid regulators and the firms themselves in determining whether an activity constitutes prohibited proprietary trading or falls under an exception to that prohibition, such as the exception for market-making transactions. Finally, the proposed rules would set forth activities exempt from the general prohibition on investments in hedge funds and private equity funds: for example, organizing and offering a hedge fund or private equity fund with investments in such funds limited to a de minimis amount, making risk-mitigating hedging investments, and making investments in certain non-U.S. funds.

As I mentioned earlier, the Volcker Rule comment period ended earlier this week.
Although it would of course be premature to share my thoughts on the proposed rules today, based on just a quick review of many substantial comment letters--more than 100 of which were filed just this week--it appears that many of my fears about the effect of the proposed rules on the proper functioning of global markets and the competitiveness of the U.S. financial industry might be well-founded.
Here are a few lines from comment letters:

From a major investment bank: “The list of undesirable consequences is long and troublesome. We share the view, already noted by others, that the Proposal would reduce market liquidity, increase market volatility, impede capital formation, harm U.S. individual investors, pension funds, endowments, asset managers, corporations, governments, and other market participants, impinge on the safety and soundness of the U.S. banking system, and constrain U.S. economic growth and job creation.”3
From a major coalition of financial services trade groups: “Many commenters, including customers, buy-side market participants, industrial and manufacturing businesses, treasurers of public companies and foreign regulators--constituencies with different goals and interests--have agreed that the Proposal would significantly harm financial markets. They point to the negative impacts of decreased liquidity, higher costs for issuers, reduced returns on investments and increased risk to corporations wishing to hedge their commercial activities.”4
From a Fortune 50 corporation: “Although we appreciate the Agencies' efforts to strike the correct balance in the Proposed Rule, we are concerned that the sweeping effects of the Proposed Rule and the narrowness of the exceptions to it would have a substantial and negative impact not only on banks and the broader financial services industry, but also on industrial and other non-financial businesses, and ultimately the real economy.”5
From a large foreign bank: ”We are concerned that certain key aspects of the Proposed Rule are deficient and will lead to a significant negative impact on the efficient functioning of the U.S. and international financial systems, with a particularly disruptive effect on the capital markets.”6
And we have also received very interesting comment from our foreign regulatory counterparts from around the world. In a comment letter filed in December, the Japanese FSA and the Bank of Japan discuss “the importance of taking due account of the cross-border effect of financial regulations and the need to collaborate with the affected countries” and express their concerns over “the potentially serious negative impact on the Japanese markets and associated significant rise in the cost of related transactions for Japanese banks” that they believe would arise from the extraterritorial application of the Volcker Rule. They specifically cite the adverse impact they believe the Rule would have on Japanese Government Bonds, adding, “We could also see the same picture in sovereign bond markets worldwide at this critical juncture.” 7

Last month, British Chancellor of the Exchequer George Osborne wrote to Fed Chairman Bernanke to express his belief that the proposed rules would result in the withdrawal of market making services for non-U.S. debt, making it “more difficult and costlier” for banks to trade non-U.S. sovereign bonds on behalf of clients. Citing the harm that would arise from the potential reduction of liquidity in sovereign markets, he proposed that the U.S. and the U.K. “launch a more active dialogue” on the Rule and its potential impact on markets outside the U.S. 8

Bank of Canada Governor Mark Carney--who was recently named Chairman of the G-20’s Financial Stability Board--has stated that he and other Canadian officials have “obvious concerns” about the proposed rules. He cited the lack of clarity in the proposed rules’ definitions of “market making” versus “proprietary trade,” and the effect the rules would have on non-U.S. government bond markets. In addition, he criticized what he viewed as the Rule’s “presumption” that trades are proprietary, stating that any such presumption “should go in reverse.”9

Lastly, Michel Barnier, the European Commissioner for Internal Markets and Services, has written to Fed Chairman Bernanke and Treasury Secretary Geithner that “[t]here is a real risk that banks impacted by the rule would also significantly reduce their market-making activities, reducing liquidity in many markets both within and outside the United States.”10
To be fair, these are just a few select quotes from commenters who have provided significant and detailed comments on a variety of issues, and there is broad comment generally on the range of issues presented by the rule proposal. However, these comments are very different from the garden variety comments we usually see in our rulemaking. Those usually go something like: “We applaud the Commission’s efforts to do X. . .” I am not hearing any clapping in these quotes. And that’s because the consequences to world markets of getting it wrong are so significant.

This brings me back to thinking about the role of the SEC in this rulemaking, our role generally as a markets regulator, and how, if we at the SEC play our role properly, we can and should ensure that the Volcker Rule meets the aims of Congress without destroying critically important market activity explicitly contemplated by the statute.

In particular, although commenters have raised many concerns about the proposal, including significant issues surrounding extraterritoriality, I want to focus on the skills that the SEC can bring to bear in sorting through the difficult questions posed by distinguishing between permitted trading activities and prohibited proprietary trading activities.

In her Opening Statement introducing the joint rule proposals at an SEC Open Meeting last October, Chairman Schapiro praised the collaborative effort among the five agencies involved in the drafting process, noting that it involved “more than a year of weekly, if not more frequent, interagency staff conference calls, interagency meetings, and shared drafting.”11 It is telling, however, that in his recent testimony before a House Financial Services Subcommittee, CFTC Chairman Gensler, noting his agency’s role as a “supporting member” in the rulemaking process, stated, “The bank regulators have the lead role.”12

I think, however, that both the statute and our expertise compel the SEC to play a strong and vigorous role in the rulemaking. The Volcker Rule applies to “banking entities” and their affiliates, affecting a wide range of financial institutions regulated by the five different agencies. Regardless of the nature of the regulated activities, however, the Rule addresses a set of activities--the trading and investment practices of those entities--that fall within the core competencies of the SEC. Indeed, the Rule expressly envisions that quintessential market-making activity continue within these firms.

By taking a leadership role, the SEC can also ensure that the final rule is consistent with our core mission of protecting investors, maintaining fair and efficient markets and promoting capital formation. These considerations, coupled with the expertise that the SEC brings to the table, should ensure that the bank regulators’ focus on safety and soundness and Dodd-Frank’s overarching focus on managing systemic risk (although many have argued whether the statute will in the end reduce such risk), are balanced by legitimate considerations of investor protection and the maintenance of robust markets.
Senator Jeff Merkley, cosponsor of the Volcker Rule, wrote this week: “Put simply, the Volcker rule takes deposit-taking, loan-making banks out of the business of high-risk, conflict-ridden trading.” 13 In essence, a main goal of the Volcker Rule is a return to the Glass-Steagall division between commercial and investment banking. But, it bears mentioning that the major investment banks that became part of bank holding companies during the 2008 crisis don’t meet this profile: they are not buying lottery tickets with their depositors’ money, because their business models are not premised on taking deposits. They provide services to clients and the objective should be for them to provide the services that they have traditionally provided, that market participants count on, while fulfilling the statutory imperative to ban proprietary trading.

I want to turn to another point I made at the beginning of my remarks, but which I think is an appropriate guiding principle as we undertake not only our consideration of the Volcker Rule but also other significant rulemaking mandated under Dodd-Frank. The aggregate impact of the rulemakings we and our fellow regulators are promulgating is massive, the costs are enormous, and we are doing so at a time when our economy is still hopefully limping towards recovery. These factors all argue for an approach that is careful, systematic, but most importantly regulatorily incremental. It is important to remember that regulators’ authority and oversight responsibilities do not end when final rules are promulgated, and that continued oversight will ensure that regulators can refine and improve the rules as markets organize and develop in response to the rules we write. Importantly, we can and should recalibrate the rules as markets develop and regulators learn more and gather and analyze relevant data. We must avoid regulatory hubris and should not regulate--particularly where the changes are so novel or comprehensive--with the belief that we completely understand the consequences of the regulations we may impose. In many of these areas, including Volcker, missing the mark could have dire and perhaps irreversibly negative consequences.

Before I end, I also wanted to touch on one last regulatory issue, which is surprisingly not a Dodd-Frank rulemaking but which has received quite a bit of attention recently, and that is the possibility of a new proposal to regulate money market funds.

I say “surprisingly not in Dodd-Frank” because, in a 2350-page lawostensibly devoted to solving for systemic risk, Congress did not address money market funds and they are, according to various speeches and news articles, considered a continuing systemic risk notwithstanding significant money market reforms approved by the SEC in 2010.

Any effort to reconsider the SEC’s oversight of money market funds should be guided by the same principles outlined above. First, we should ensure that any prospective reforms in this are consistent with the core missions of the agency to protect investors, maintain fair and efficient markets and promote capital formation. Second, we should consider such proposals carefully, but ultimately we need to let empiricism and not guesswork guide our decision-making.

Last year I posed two questions: “First, for what specific problems or risks are we trying to solve? And second, do we have the necessary data that will allow us to regulate in a meaningful and effective way?” Indeed, I have further refined these simple queries to be even more straightforward: What data do we have that clearly demonstrates the need for reform above and beyond that imposed in 2010? This question has yet to be answered for me, although I understand the Staff is working on it. I anticipate working closely with the economists in the Division of Risk, Strategy and Financial Innovation as they analyze the available data. Only by continuing such a data-driven analysis can we determine if money market fund investors are exposed to unnecessary risk. We also, of course, need to fully understand the impact of any action we could take on the capital formation process and the fair and the efficient functioning of the markets.
Thank you for your patience and for having me here today. I would be happy to answer any questions you may have.”

CHURCH PASTOR GOES TO PRISON FOR MEDICARE FRAUD

Monday, February 27, 2012
“Los Angeles Church Pastor Sentenced to Serve 36 Months in Prison for $14.2 Million Medicare Fraud Scheme
WASHINGTON – A former Los Angeles church pastor, who owned and operated several fraudulent durable medical equipment (DME) supply companies with her husband, was sentenced today to serve 36 months in prison for her role in a $14.2 million Medicare fraud scheme, the Department of Justice, FBI and Department of Health and Human Services (HHS) announced.

Connie Ikpoh, 49, also was sentenced today by U.S. District Judge Terry J. Hatter for the Central District of California to three years of supervised release and ordered to pay $6.7 million in restitution jointly and severally with her co-conspirators.

In August 2011, a jury found Ikpoh, a nurse who also worked at two Los Angeles-area hospitals, and her husband, Christopher Iruke, 61, and one of their employees, Aura Marroquin, guilty of conspiracy and health care fraud offenses following a two-week trial in Los Angeles.

According to evidence presented at trial, Ikpoh and Iruke were pastors at Arms of Grace Christian Center, a Los Angeles church where Ikpoh and Iruke also operated Pascon Medical Supply, a fraudulent DME supply company.   Ikpoh and Iruke hired several church members at Arms of Grace to assist them with running Pascon and three other fraudulent DME supply companies, Horizon Medical Equipment and Supply Inc., Contempo Medical Equipment Inc. and Ladera Medical Equipment Inc.   The trial evidence showed that Ikpoh owned and operated Horizon.   Ikpoh and Iruke used Iruke’s sister Jummal Joy Ibrahim as a straw owner of Contempo and Ladera.

According to the trial evidence, Ikpoh, Iruke, Marroquin and their co-conspirators used fraudulent prescriptions and documents that Ikpoh and Iruke purchased from a number of illicit sources to bill Medicare for expensive, high-end power wheelchairs and orthotics that were medically unnecessary or never provided.   Each power wheelchairs cost approximately $900 per wholesale, but were billed to Medicare at a rate of approximately $6,000 per wheelchair.  Witness testimony established that Ikpoh and Iruke hid the money they used to pay for these fraudulent prescriptions by writing checks to a company called “Direct Supply,” a fictitious company that Iruke created in the name of an Arms of Grace church member.   Iruke cashed the checks that he and Ikpoh wrote to Direct Supply and used the money to purchase the fraudulent prescriptions.

Witnesses who sold the fraudulent prescriptions and documents that Ikpoh, Iruke  and their co-conspirators used to defraud Medicare testified that they and others paid cash kickbacks to street-level marketers to offer Medicare beneficiaries free power wheelchairs and other DME in exchange for the beneficiaries’ Medicare card numbers and personal information.   These witnesses testified that they and their associates used this information to create fraudulent prescriptions and medical documents, which they sold to Iruke and the operators of other fraudulent DME supply companies for $1,100 to $1,500 per prescription.

After Iruke purchased the prescriptions, the trial evidence showed that Ikpoh used the prescriptions at Horizon to bill Medicare primarily for power wheelchairs.   In fact, the trial evidence showed that approximately 85 percent of Horizon’s business was power wheelchairs, and that Ikpoh submitted more than $3.2 million in claims to Medicare.   Medicare paid Ikpoh more than $1.6 million on these claims.   Witnesses who worked at Horizon testified that if Medicare refused to pay Horizon for a power wheelchair, Ikpoh required the witnesses to take back the power wheelchairs from the Medicare beneficiaries.

The trial evidence showed that Ikpoh was also involved with operating Contempo and Ladera.  Ikpoh represented herself to state inspectors as Contempo’s manager and appeared on Ladera’s corporate filings with the state.   Moreover, witness testimony established that Ikpoh ran the companies when Iruke visited Nigeria and that she and one of her co-defendants, Darawn Vasquez, who was also a church member at Arms of Grace, withdrew money from the Contempo bank account to pay for fraudulent prescriptions.

Witness testimony established that in August 2009, law enforcement agents visited Contempo and Ladera and questioned Marroquin and Vasquez about fraud occurring at the companies.  Within a few weeks of the agents’ visit, Iruke closed Contempo and Ladera, which prompted agents to serve Iruke and his and Ikpoh’s attorneys with subpoenas for the companies’ files.  Instead of producing the files, Iruke directed that the files be brought to an auditorium used by Arms of Grace, where Ikpoh, Iruke, Marroquin and others altered and destroyed documents within the files to remove evidence of the fraud scheme.   Law enforcement agents found Marroquin with these files when they arrested her.

Evidence introduced at trial showed that as a result of this fraud scheme, Ikpoh, Iruke, Marroquin and their co-conspirators submitted more than $14.2 million in fraudulent claims to Medicare and received approximately $6.7 million in reimbursement payments from Medicare.  The evidence showed that Ikpoh and Iruke diverted most of this money from the bank accounts of the supply companies to pay for the fraudulent prescriptions and documents, which Iruke purchased to further the scheme, and to cover the leases on their Mercedes vehicles, home remodeling expenses and other personal expenses.

Vasquez and Ibrahim pleaded guilty to conspiracy and false statement charges in February 2011 and March 2011, respectively, and are awaiting sentencing.   On Dec. 9, 2011, Judge Hatter sentenced Marroquin to time served and three years of supervised release.   On Jan. 9, 2012, Judge Hatter sentenced Iruke to serve 180 months in prison and three years of supervised release.

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Special Agent in Charge Glenn R. Ferry of the Los Angeles Region for the HHS Office of the Inspector General (HHS-OIG); and Assistant Director in Charge Steven Martinez of the FBI’s Los Angeles Field Office.

The case was prosecuted by Trial Attorney Jonathan Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Kirman of the Central District of California. The case was investigated by the HHS-OIG with assistance from the California Department of Justice.  The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.”

U.S. AVIATION AND MISSILE COMMAND QUEST TO FIGHT CORROSION

Corrosion engineer Nancy Whitmire goes over the findings of a corrosion test with Steve Carr, the program manager for the Aviation and Missile Command's Corrosion Program. The test involved coating metal coupons with different finishes and then placing them in an accelerated corrosion chamber to determine the amount of corrosion that would develop in a sand and salt environment.

The above picture and following excerpt is from the Department of Defense Armed with Science website:

“REDSTONE ARSENAL, Ala. — Scott Reis is on a mission.
An anti-corrosion mission, that is.
He and fellow Aviation and Missile Research Development and Engineering Center employees carry out the mission of the Aviation and Missile Command’s Corrosion Program Office to promote corrosion prevention programs for a wide range of AMCOM systems. They study the way metals, coatings and finishes develop corrosion; engineer design and materials solutions for corrosion issues in the field; train Soldiers on how to prevent equipment corrosion; and tout the ill effects of corrosion on the Army’s missile and aviation systems.

Those ill effects are staggering in terms of capabilities lost, and the cost of repairing or replacing equipment due to corrosion. At AMCOM, an estimated $1.6 billion a year is spent combating corrosion issues. The U.S. General Accounting Office estimated the cost of corrosion to the Department of Defense at between $9 billion and $20 billion annually.
“Problems with corrosion represent 20 percent of AMCOM’s total annual maintenance program,” Steve Carr, AMCOM’s corrosion program manager, said.
“Corrosion continues whether there is a war or not. It’s an issue of concern because of the need in the field for performance reliability.”

In recent years as corrosion has become a top concern within the Department of Defense and even Congress, AMCOM has focused squarely on corrosion issues, developing new procedures and techniques to combat corrosion, studying how different system designs and materials can encourage or discourage corrosion, and working to make Soldiers aware of corrosion effects. Its Corrosion Program Office, which employs more than 40 civilians, is equipped with laboratories and machinery to study corrosion issues. Recently the program moved into its new offices in building 7631 on Line Road near Gate 3.
For Reis, combating corrosion in one particular missile system — the Patriot — is a personal commitment. He retired in 2009 as a chief warrant officer 3 after a career operating and supporting the missile system.
“I really believe in the Patriot missile system and I want it to be successful and ready to fire when it’s needed,” the senior engineer analyst said.

Reis is a member of a team of corrosion program employees who assess corrosion issues in the field that are affecting the Patriot missile, write corrosion checklists for each piece of equipment related to the Patriot, and then teach Soldiers how to prevent that corrosion.
“We take pictures of corrosion on Patriot equipment, and then we show this in the classroom. If we can train the Soldiers on how to take care of the equipment, and they follow through with that training and work to prevent corrosion, then we can reduce the number of issues we have with corrosion on equipment,” Reis said.

Reis was joined by corrosion program employees Courtney Guasti, Terry Williams and Stephen Coons on a 26-day deployment in 2011 to the Southwest Asia countries of United Arab Emirates, Qatar, Bahrain and Kuwait to conduct corrosion assessments of about 200 pieces of equipment and to train more than 170 Soldiers of the 69th Brigade, Air Defense Artillery, about corrosion prevention at four Patriot missile locations.
“Corrosion affects missiles, aviation and supplies,” he said. “Dehumidification facilities and airtight storage facilities can assist with preventing corrosion. But a lot of the units, especially those deployed, don’t have the facilities and tools to prevent corrosion.
“And that issue is compounded because the shelf life of today’s equipment has to be longer. Equipment that once lasted 10 years now has to last 20 years. The number one thing is mission readiness. In general, Soldiers don’t worry about corrosion. But looking to the future 20 years down the road, minor corrosion now means mission equipment later that can’t perform.”

The teaching team emphasizes to Soldiers that it only takes one day a month to prevent corrosion. Besides instruction, they leave each unit with corrosion prevention/repair kits.
“If they follow the instruction, mission readiness ratings will go up,” Reis said. “Equipment will look better and run better. Preventing corrosion in the Patriot system is especially important because its life has been extended to 2042. There will be no new equipment. So, what can we do to help prolong the life of equipment?”
With that in mind, Reis will continue to be part of a team that pinpoints the 15 Patriot units stationed at Fort Bliss and Fort Hood, Texas; Fort Sill, Okla.; Fort Bragg, N.C.; and in Korea, Germany, Okinawa and Southwest Asia.
Corrosion prevention has been an Army concern ever since the development of ballistic missiles.

“Corrosion prevention was a very serious consideration for missile systems because we wanted high reliability. The systems had to be stored over long periods of time and still have high reliability,” said Carr, who began working on corrosion issues at Redstone as a young materials engineer 30 years ago.

“Corrosion problems can make a system unreliable and not operational. So, we reverse engineered the designs for missile systems so that we could study corrosion and how it affected the system, and so we could develop corrosion prevention and control processes.”

Although most think of corrosion as only affecting metals, it can also affect plastics, polymers, sealants and all materials that go into the manufacturing of any piece of equipment. Besides the Patriot missile, Carr spent the early part of his career studying corrosion on many different missile systems, including Chaparral, Hawk, TOW and Javelin.

“Materials, finishes and design all affect corrosion,” Carr said. “We study corrosion on different kinds of steels and metals, the impact of corrosion on bare metals versus finished metals, and how system designs can prevent water entrapment.”

The Army’s corrosion program was active until about 1990, when budget cuts led to the end of the formal program. Carr and others who studied corrosion prevention issues continued their work through the program management offices at Redstone.
“But in the mid-1990s, there were so many corrosion issues on vehicles in the Pacific Rim. Doors, floorboards, batteries, everything was getting corroded. There was a lot of high level Army attention brought to the issue and, in 1998, the Army restarted its corrosion program with the Tank and Automotive Command taking the lead,” Carr said.
Also, between the ending of Desert Storm in 1991 and the beginning of Operation Iraqi Freedom in 2003, “lots of things were coming back for reset, and corrosion was a major issue. It began getting a lot of attention,” Carr said. “After Desert Storm, missiles had to be de-milled because of corrosion. Desert Storm really affected aviation and missiles. Extensive corrosion required de-mil or repair. It was a major impediment.”
By 2001, AMCOM officially set up its corrosion program with Carr as its program manager. Under then Maj. Gen. Larry Dodgen, AMCOM formed a partnership with Naval Aviation to study corrosion.
“Dodgen’s last action (as commander of AMCOM) was to set up this partnership to look at the aircraft coming back for reset and doing assessments of corrosion issues and coming up with solutions,” Carr said. “In 2004, we spent a lot of time looking at aircraft, and identifying several key corrosion issues and solutions.

“At about the same time, Congress signed the National Defense Appropriations Act with the requirement to start a corrosion program to determine the impact of corrosion throughout the Department of Defense.”

Other AMCOM commanders also gave corrosion a top priority.
During the command of then Maj. Gen. Jim Pillsbury, who consequently gave program funding to corrosion prevention in 2004, AMCOM tackled a major corrosion issue involving deployed aircraft shipped back to the states. Many were in good condition before shipment, but then had corrosion problems once they were back in the U.S.
“All the aircraft coming back were required to be shrink-wrapped, and the CH-47s (Chinook) were shrink-wrapped and stored on the top deck of a ship,” Carr said. “The ship went through a storm and the shrink wrap was torn. Saltwater was trapped inside the shrink wrap, and it created rust.

“Even the Black Hawks, Apaches and Kiowas that were shrink wrapped and shipped below deck had condensation and water entrapment inside the shrink wrap. Gen. Pillsbury asked for the study, and we ended up getting rid of shrink wrap and now all helicopters must ship under deck. We found that even in Kuwait, helicopters that were shrink wrapped would sit in 140 degree weather before getting shipped. The shrink wrap wasn’t well done because in that kind of heat you can’t touch the aircraft while you wrap it. So, water would get inside while the helicopters sat there and mildew would grow.”
Another major corrosion case involved 12 Patriot launchers in Korea that had to be shipped back to the U.S. for corrosion overhaul and repair at a cost of $4 million. In 2005, AMCOM spent $17.4 million in corrosion maintenance costs on Patriot, putting the system in the AMCOM top 10 for average corrosion cost and in the AMCOM top 20 for total corrosion cost.

Since then, corrosion issues have been given high visibility throughout DoD. There have been 30 DoD forums on the subject to develop policies for corrosion prevention, to study the cost of corrosion, and to conduct corrosion technology demonstration projects that show corrosion issues and solutions.

At AMCOM, another direct result of corrosion studies was to develop a conductive antenna gasket for the Chinook and Black Hawk helicopters to prevent corrosion from occurring between the aircraft’s antenna and the body of the aircraft, which caused communication problems. In 2008, AMCOM’s Corrosion Program became a Corrosion Center of Excellence for the Program Executive Office for Aviation.

“Now we have corrosion technology demonstration validation teams, corrosion unit assessment teams and non-destructive testing assessment teams that go out all over the world to study, assess and resolve corrosion issues,” Carr said. “We provide corrosion awareness and prevention training, and corrosion repair kits to Soldiers. We are providing training and technology for Soldiers so they can take care of equipment in the field.”
With existing systems, the corrosion program works to make modifications that reduce corrosion issues. With new systems, the program’s engineers are involved in the design and acquisition process to minimize corrosion issues before a new system is even built. The corrosion program is involved in addressing corrosion issues on three levels — research and development, acquisition and sustainment.
“We are involved in both acquisition and sustainment. We can do better with our processes and our technologies, but we can never totally prevent corrosion. But if it is addressed in sustainment and if equipment is taken care of properly, it can be minimized,” Carr said.

“Helicopters designed 50 years ago didn’t have the technology and knowledge we have today to address corrosion in the design. There is nothing we can do about that but work to sustain and prevent corrosion problems. But in the systems we are designing today, we need to really address corrosion issues because once they are acquired those systems will impact the Army for years.”

And to better help Carr and his employees in the battle against corrosion, Congress passed a law that requires the Department of Defense to have an organized effort to prevent and mitigate corrosion, and to ensure all major acquisitions are designed with a corrosion prevention control plan and a corrosion prevention action team.
“Those two things are in place for the life of the system,” Carr said. “And the team works to revise designs and oversee sustainment so that new technologies can be incorporated to address corrosion issues during the lifetime of the system.”
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WHITE HOUSE ADVISER'S REMARKS AT U.N. REGARDING WOMEN'S POLITICAL PARTICIPATION

The following excerpt is from a U.S. State Department e-mail:

Remarks by Valerie Jarrett, Senior Advisor to President Barack Obama and Chair of the White House Council on Women and Girls, at a "Strengthening Women's Political Participation" Event at the U.S. Mission to the UN

Valerie Jarrett, White House Senior Adviser

New York, NY

February 28, 2012

---

AS DELIVERED

Good afternoon, good afternoon. Thank you, Melanne for that very kind introduction, and for your extraordinary leadership, in a rather short tenure, you have already improved the lives of women not just in the United States, but of course, around the world. So thank you— for everything that you do each and every day.
I also want to thank Ambassador DiCarlo for welcoming us here today, of course my dear friend Susan Rice for her extraordinary leadership here at the U.S. Mission to the United Nations.
I also want to acknowledge our cosponsors for this extraordinarily important discussion, the Government of India. And we have just heard from Secretary Gangadharan of India, and India has taken extraordinary strides to further women's political participation, and we look forward to continuing to partner on this issue with you.
I also want to thank our panelists, who I had the chance to meet very briefly before we began today.
And finally, I want to acknowledge our public delegates. They are a truly remarkable group of women–and for the first time a man–all who are doing extraordinary work in rural communities, both in the United States and around the world. And if I could ask them to stand for a quick moment and be recognized.
[Applause]
As we kick-off this important discussion about the political participation of women, I’d like start by sharing with you my story that led me to public service.
When I graduated from law school, I was the first lawyer in my family, and I practiced law for six years at two of the top law firms in Chicago. I had moved up to the 79^th floor of the Sears Tower, which is a great, beautiful office building in Chicago, and I had a fabulous view of Lake Michigan. To any outside observer, it would appear that my dream had come true.
But after my daughter Laura was born, I began to ask myself some tough questions: Did I truly have passion for my work? Was I making a valuable difference in the lives of others? Did I feel a sense of accomplishment at the end of each day? And the toughest question– when my daughter grew older, would she be proud of me? I knew that my family and many of my peers thought I had it all, but I still remember when I admitted tearfully to myself that I was miserable.
All too often we don’t trust that tiny voice inside of us, particularly women, especially when those we love or respect disagree with us. Well, because I did, I had the courage to take a giant leap of faith and join local government in Chicago. I moved into a tiny cubicle with a office window, I won’t even call it an office—a cubicle window facing an alley. But I have to share with you, from that first day, I felt that I was a part of something larger than myself—something truly important, and I learned so many lessons working for local government in Chicago—looking directly into the faces and hearts of the people whose lives government touched essentially each and every day. It was that path that led me here today as a senior advisor to President Obama, and I assure you that if I had stayed in my law firm, you would not have invited me here to speak today.
My parents raised me to believe that if I worked hard and I focused on my goals, there were no limits to what I could accomplish. My responsibility as the Chair of the White House Council on Women and Girls is to help ensure that all women and girls have that same opportunity.
I’m proud to be here today on behalf of President Obama who shares these goals. His steadfast commitment to improving the lives of women and girls really stems directly from his life experiences. As some of you know, the President’s mother was a researcher, and an expert in international development. She supported women entrepreneurs in countries around the world. The President recalls her telling him, “You can tell how far a society is going to go by how it treats its women and girls. And if they’re doing well, then their society is going to be doing well as well.”
Growing up, President Obama also saw women in his life struggle to be recognized and valued. His mother struggled to make ends meet and depended on food stamps for a period in her life when she was having trouble putting food on the table and taking care of the President and his sister. His grandmother, who helped raise him, became the vice president of a bank where she worked, but after that, she hit a glass ceiling. And in fact, for nearly two decades, men who she trained, leapfrogged above her for promotions.
When the President’s two daughters were young, he saw how challenging it was for our First Lady to balance the demands of her career with her family.
The President’s dream is for his daughters to grow up in a world where they can compete on an even playing field. A world where women have access to equal education, equal pay, and equal opportunity.
The President is determined that America will do our part to help empower women.
As Melanne mentioned, under the national action plan that the President created by executive order in December of 2011, all representatives of the United States government who serve in conflict areas will be responsible for making sure that women are a part of the peacemaking process.
USAID has launched a women’s leadership fund, and the State Department has created an initiative for women in public service. And last year, here at the UN, Secretary Clinton signed a new Declaration on Women’s Participation.
These are just a few of the many steps that we are taking, and we’re absolutely committed to do more. During President Obama’s address to the 2011 UN General Assembly, he reaffirmed his commitment to increasing women’s participation, and called upon member states to announce, within the next year, the steps that they are taking to break down economic and political barriers for women and girls. As a part of our contribution to this effort, the United States introduced the UNGA Third Committee resolution on “Women and Political Participation,” which calls on all states to end discriminatory laws and actively promote and protect human rights for women to take a part in public life.
This resolution was adopted with over 130 co-sponsors, and I think that’s terrific news. This week, we’re looking forward to identifying new partners who will help us deliver on the President’s challenge, and join us in our commitment to women around the world.
This is not just the right thing to do. It’s the smart thing to do. We know women’s participation affects global stability. It affects national security. And as we pursue our broader foreign-policy goals, it’s imperative that we incorporate the perspective of women.
The President intends to lead by example here in the United States, by harnessing the extraordinary talents of women and girls, as we create an America that’s built to last.
Over the last three years, I have met so many amazing women who have deeply inspired me to work harder and harder on their behalf, including three remarkable women that I met when the President gave his State of the Union just a month or so ago.
First, there was Lori Kilker, a chemist from Brighton, Colorado. Last October, the Equal Opportunity Employment Commission investigated sex discrimination at her former employer, and she was awarded back wages that she so rightly deserved.
There was Jackie Bray, a single mother from North Carolina. Jackie was laid off from her job last January, but because of her ambition and determination, she enrolled at a community college, mastered new skills, searched until she found a job, and is now a process operator at an energy hub in Charlotte, North Carolina.
And finally, Mahala Greer, a student at the University of Colorado-Denver. She majors in English, and she will teach in a public school next year. However, when she graduates in May, she’ll have more than $35,000 in student loans.
Lori, Jackie, and Mahala each have the kind of determination, resilience, and optimism that enables countless Americans to make a real difference in our country, and honor the promise that no matter who you are, or where you come from, you can make it if you try.
I believe these women remind us of the millions of women around the country and around the world who have limitless potential, limitless potential. And they also remind us, that as they work hard to reach that potential, government can and should play a vital role in helping them succeed.
This is why the very first bill that the President signed, when he came to office, was the Lily Ledbetter Fair Pay Act, which helps protect women and their right to equal pay for equal work so that people like Lori have a remedy to discrimination.
It’s why the President has taken steps to increase student loan awards, and reduce repayments, in order to make college more affordable for young people like Mahala.
And it’s why he has invested in science and technology and engineering and math for young girls, so that more women have the capability to compete for jobs like Jackie, the jobs of the 21^st Century.
And it’s why he’s promoted workplace flexibility so that parents can successfully balance their careers with their families. It’s why he has committed his administration to ending domestic violence and human trafficking. And it’s why he signed the Affordable Care Act that provides for health insurance for all people of the United States and it prohibits insurance companies from discriminating against women and provides women with the kind of preventive care that they need without (inaudible), so that we don’t have to choose between paying our rent and taking care of our health
He has placed women in many of the highest positions within his administration including the Secretary of State, the UN Ambassador, the Secretaries of Homeland Security, Health and Human Services, and Labor. Nearly 50 percent of his appointees to district courts are women, by far the highest percentage of any President in American history. He has already appointed two women to the Supreme Court, including our first Latina. And he has recently nominated the first woman to be a four-star general in the history of the Air Force.
The President knows that empowering women is key to the competitiveness of our country. When women succeed, society succeeds.
When the President congratulated the 2011 winners of the Nobel Peace Prize, he said, “When women and girls have the opportunity to pursue their education and careers of their choosing, economies are more likely to prosper. And when women assume their rightful place as equals—in the halls of government and at the negotiating table, and across civil society—governments are more effective, peaceful resolution of disputes are more lasting, and societies are more likely to meet the aspirations of all of their citizens.”
That’s a goal that I know we are all here to share.
There is much work left to do, so we must be vigilant, and continue to challenge ourselves to develop new strategies to improve the quality of life for women and girls.
If you represent an NGO, you have the power to lift up women’s voices from rural Oklahoma to Punjab. If you are part of the private sector, you can reinforce Women’s Empowerment Principles launched by UN Women, by committing your company to action. And if you’re a delegate here on behalf of your government to the CSW, then I reiterate President Obama’s challenge from the general assembly – let’s work together to take tangible steps, sustainable steps— to increase the number of women who participate in public life.
I began today by talking about my daughter Laura who is now twenty-six. I know that’s hard to believe I can have a twenty-six year old daughter. I will digress because everybody always jokes about the President’s grey hair, mine’s not so funny.
I’m just as committed as ever to doing work that makes her proud, committed to ensuring an easier path for her and for her children.
If we remain dedicated to our goal, we can and we will continue this progress, each and every day. We can give women opportunities that were out of reach for their mothers and their grandmothers. And we can leave behind a world that is more fair, more safe, more just, and more prosperous than the one we inherited.
Thank you very much.

SECRETARY OF DEFENSE PANETTA ENTITLEMENTS AND HIGHER TAXES

The following excerpt is from the Department of Defense American Forces Service:

"Panetta Urges Congress to Put All Federal Spending on Table

By Jim Garamone
American Forces Press Service

WASHINGTON, Feb. 28, 2012 - The responsibility to reduce the deficit cannot be borne by defense alone, Defense Secretary Leon E. Panetta told the Senate Budget Committee today.

Panetta detailed President Barack Obama's fiscal 2013 defense budget request, which puts the department on the road to reduce spending by $487 billion over the next 10 years.

Along with Army Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, Panetta told the senators that the Pentagon is ready to do its part in reducing the record deficit. But the secretary, who has federal budget experience going back to the 1960s, had a warning for the committee.

"No budget can be balanced on the back of discretionary spending alone," he said. "Based on my own budget experience, I strongly believe that all areas of the federal budget must be put on the table -- not just discretionary, but mandatory spending and revenues. That's the responsible way to reduce deficits and the responsible way to avoid 'sequester' provisions contained in Title 3 of the Budget Control Act."

Sequestration would mandate another $500 billion in cuts over nine years from defense alone. The secretary called the provision a "meat ax" approach to fiscal policy, and said it would cause tremendous harm to America's national security posture.

"These cuts would, in fact, hollow out the force and inflict severe damage to our national defense," he said. Panetta stressed that it is not a question of choosing between fiscal responsibility and national security.

"While I understand the differences, there should be consensus on one thing: that the leaders of both the legislative and executive branches of government have a duty to protect both our national and fiscal security," the secretary said. "I fundamentally do not believe that we have to choose between fiscal discipline and national security. I believe we can maintain the strongest military in the world and be part of a comprehensive solution to deficit reduction."

The president's proposal does that, he said. Dempsey agreed.

"This budget represents a responsible investment in our nation's security," the chairman said. "It strikes a purposeful balance between succeeding in today's conflicts and preparing for tomorrow's. It also keeps faith with the nation and with the source of our military's greatest strength, ... America's sons and daughters who serve in uniform."

The proposal is firmly based in strategy, Dempsey said, noting that the Defense Department conducted a strategy review and used its conclusions to inform all budget decisions. Even without fiscal constraints, he told the panel, the department would have performed this new strategy review to incorporate the lessons of 10 years of war.

The military is at a strategic turning point, Panetta told the senators.

"We agreed that we are at a key inflection point," he said. "The military mission in Iraq has ended. We are still in a very tough fight in Afghanistan. But 2011 did mark significant progress in trying to reduce violence and transitioning to an Afghan-led responsibility."

A responsible cut considers the changes in the world, the secretary said, including operations that resulted in deposing Moammar Gadhafi in Libya and counterterrorism operations around the world that have decimated al-Qaida. "But even though we have had these successes," he added, "unlike past drawdowns where threats receded, we still face an array of security challenges."

Panetta noted that U.S. troops are in combat in Afghanistan, and that terrorists remain a problem in Pakistan, Somalia, Yemen and North Africa. "There's still a proliferation of weapons of mass destruction in the world," he said. "Iran and North Korea continue to undermine stability in the world. There is continuing turmoil in the Middle East."

Rising powers in Asia and growing concerns about cyber intrusion and attacks also must be dealt with, Panetta said. "We must meet these challenges," he told the senators. "We must meet these threats if we are to protect the American people."

Panetta recited the guidelines used to form the budget, a recitation he said is fast becoming a mantra to him. "No. 1, we wanted to maintain the strongest military in the world," he said. "No. 2, we did not want to hollow out the force. And lastly, of course, we didn't want to break faith with the troops and their families, those that have had to be deployed time and time and time again over 10 years of war."

The defense funding request is for a baseline budget of $525.4 billion for fiscal 2013 and an additional $88.5 billion in war funding. The $487 billion in savings over 10 years comes from four areas of the defense budget: efficiencies, force structure reductions, procurement adjustments and compensation, Panetta said.

The secretary told the senators that the force of the future will be smaller and leaner, but more flexible, more agile and more technologically advanced.

"In order to ensure an agile force, we made a conscious choice not to maintain more force structure than we could afford to properly train and properly equip," he said. "We are implementing force structure reductions consistent with the new strategic guidance for a total savings of about $50 billion over the next five years."

The Army will go from 562,000 to 490,000 soldiers by 2017. The Marine Corps goes from about 202,000 to 182,000 Marines.

"We're reducing and streamlining the Air Force's airlift fleet," Panetta said. "In addition, the Air Force will eliminate seven tactical air squadrons but retain a robust force of about 54 combat fighter squadrons and enough to, obviously, maintain air superiority and strategic airlift that we need." The Navy will retire seven cruisers that have not been upgraded with ballistic missile defense capability, he added.

The strategy calls for the department to focus on the Middle East and the Asia-Pacific region, Panetta said. "To this end," he told the panel, "the budget does maintain our current bomber fleet. It maintains our aircraft carrier fleet. It maintains the big-deck amphibious fleet that we need. And we do enhance our Army and Marine Corps force structure presence, both in the Pacific, as well as in the Middle East."

But the United States is a global power, and American presence is needed in all regions of the world, he said. "We recommend building innovative partnerships and strengthening key alliances and partnerships in Europe, in Latin America and in Africa," he added. "This strategy makes clear that even though Asia-Pacific and the Middle East represent areas of growing strategic priority, the United States must work to strengthen its key alliances, to build partnerships."

Defense planners are looking at rotational deployments to sustain a U.S. presence elsewhere in the world, the secretary said.

The world is uncertain, and the strategy calls for a military that can confront and defeat aggression from any adversary, any time and anywhere, Panetta said.

"We have to have the capability to defeat more than one enemy at a time," he said. "In the 21st century, we have to recognize that our adversaries are going to come at us using 21st century technology. So we must invest in space, in cyberspace, in long-range precision strike capabilities and in special operations forces to ensure that we can still confront and defeat multiple adversaries."

But it all comes back to trying to cut the deficit on the back of defense, Panetta said, getting a bit heated in discussing this aspect.

"This Congress proposed, as part of the Budget Control Act, a trillion dollars in savings off the discretionary budget," he said. "You can't meet the challenge that you're facing in this country by continuing to go back at discretionary spending. That's less than a third of federal spending.

"Now, ... if you're not dealing with the two-thirds that's entitlement spending, if you're not dealing with revenues and you keep going back to the same place, frankly, you're not going to make it, and you will hurt this country," he continued. "You're going to hurt this country's security not only by cutting defense, but very frankly, by cutting discretionary spending that deals with the quality of life in this country."

STATE DEPARTMENT FACTS ABOUT TUNISIA

The following excerpt is from the U.S. State Department website:

“Overview of U.S. Economic Assistance to Tunisia
Fact Sheet Office of the Spokesperson Washington, DC
February 25, 2012
As Tunisia’s brave citizens chart a new democratic future, they continue to set an example for the region and the world. The United States remains committed to working with the government and people of Tunisia as they pursue a more peaceful, prosperous and democratic future. - Hillary Rodham Clinton, October 24, 2011

Tunisia has inspired the world with its peaceful, steadfast march toward a more democratic, prosperous society. As Tunisia continues in this critical phase of its history, the United States remains a committed partner in working with the Tunisian government, private sector, and civil society to develop institutions of governance, and in laying the economic foundations for Tunisia to thrive as a 21st century democracy.
Since the Revolution, the United States has committed approximately $190 million in total assistance to support Tunisia’s transition, focusing heavily on technical and financial assistance to Tunisia’s economy and private sector. In addition, the U.S. Overseas Private Investment Corporation is working to invest roughly $150 million in Tunisia. We seek to ensure all of our aid is economically and socially inclusive, with elements specifically targeting the interior parts of the country. Specifically, U.S. assistance responds to Tunisian requests to promote fiscal stabilization; expand economic and employment opportunities throughout the country, particularly for youth; and encourage investment and growth-minded reforms. Highlights of our ongoing work in these areas include:
Promoting Fiscal Stabilization
Sovereign Loan Guarantee – The United States will extend a guarantee for international loans or bonds that the Tunisian government will issue to raise funds to support its stabilization and economic reform plans. The U.S. Congress has appropriated $30 million for this purpose, which can support several hundred million dollars in new financing for the Tunisian government. Technical discussions are continuing with the goal of finalizing a loan guarantee agreement in the next few months.
Expanding Economic and Employment Opportunities
Middle East and North Africa (MENA) Incentive Fund – The U.S. is requesting from Congress a $770 million fund to support Tunisia and other transitioning MENA states in their plans to spur economic growth and inward investment, as well as to expand private-sector job and skills training opportunities, and build effective, democratic governance.
Information Communications Technology Sector Development - With an initial $ 8 million, this program will position Tunisia’s ICT sector as a catalyst for private-sector growth and job creation. The program will support a range of ICT enterprises from export-oriented medium enterprises to small firms and start-ups. As envisioned, the project will train and support thousands of Tunisians across several skill sets and job-placement initiatives.
Return of the Peace Corps - Twenty Peace Corps Volunteers will be on the ground in Tunisia by September 2012. These volunteers will provide English language training and youth skills development to help prepare Tunisian students and professionals for future employment, build local capacity, and foster citizenship awareness at the grassroots level.
Eight New Tunisian-American University Linkages - Building on the success of five ongoing university linkages facilitated by grants from the U.S. Embassy in Tunis, the U.S. plans establish eight additional linkages between U.S. and Tunisian higher education institutions in 2012. Two of these linkages will focus on business and entrepreneurship skills critical to building a globally competitive Tunisian economy, and will include a new joint dual-degree program between the Tunisian Business School and a U.S. partner institution, as well as a new tourism management curriculum at the Higher Institute of Djerba.
Youth Entrepreneurship and Employability - The United States is providing assistance to more than 4,500 Tunisian youth in market-relevant skills training, job placement, and access to start-up business resources. For example, the Education for Employment Foundation (EFE)— a network of locally-run not-for-profit organizations that equips the region’s youth with skills and tools to enter the work force—will place hundreds of their trainees in permanent jobs while providing employability, professional skills, and entrepreneurship training to an additional 500 university students.
Women’s Entrepreneurship Program – The United States continues to work with women entrepreneurs, providing them with the resources to enable them to contribute to Tunisia’s economic development and to the direction of the country’s overall development. The U.S. will partner with Microsoft Corporation, other technology companies, and eight local Tunisian women’s organizations to provide technological, social media, entrepreneurship and leadership training to 1,200 women entrepreneurs to help develop their businesses.
Encouraging Investment and Growth-Minded Reforms
OPIC Franchise Facility, Clean Energy & SME Financing – A $30 million franchising facility, financed through the Overseas Private Investment Corporation (OPIC), will provide working capital to Tunisian franchisees interested in working with American, European, and Tunisian franchisors. Ultimately these franchises will create an estimated 10,000 local jobs for Tunisians. OPIC is also providing U.S. companies with incentives to invest in Tunisia’s renewable energy sector, notably wind and solar. In addition, OPIC recently approved $52.5 million in financing to Tunis-based Tuninvest for their Maghreb Private Equity III fund.
Tunisian-American Enterprise Fund – In February 2012, the United States secured formal authority from the U.S. Congress to establish the Tunisian-American Enterprise Fund with an initial capitalization of $20 million. The fund help foster stronger investment ties between Tunisian and American United States, will leverage other investors, and will help Tunisians launch the small and medium enterprises that will be engines of long term growth.
Millennium Challenge Corporation (MCC) Threshold Program – In February 2012, the United States and Tunisia formally launched the first phase of Tunisia’s MCC Threshold Program, in which both sides will jointly identify Tunisia’s primary constraints to economic growth. This analysis will inform the design of the $20-30 million program, which will target policy and/or institutional reforms to increase economic growth. MCC expects to complete the analysis by July and have the Threshold Program ready to submit for Board approval by December 2012.”

SECRETARY OF STATE HILLARY CLINTON'S SPEECH IN MOROCCO

The following excerpt is from the U.S. Department of State

“Remarks With Moroccan Minister of Foreign Affairs Saad-Eddine Al-Othmani After Their Meeting
Remarks Hillary Rodham Clinton
Secretary of State Rabat, Morocco
February 26, 2012

FOREIGN MINISTER AL-OTHMANI: (In Arabic.)

SECRETARY CLINTON: Thank you so much, Minister, for the warm words and the gracious welcome. It is wonderful to be back in Rabat. So much has changed since my last visit to Morocco two years ago, but what has not changed is our commitment to our partnership and friendship, which goes back to 1777 when Morocco became the very first country to recognize our new nation. And the United States and Morocco have been allies and partners ever since. We collaborate on everything from trade and economic development to joint military exercises and counterterrorism efforts. So we had a long agenda today, and I would very much look forward to continuing our conversation in Washington when the minister is able to come.

I want to say a few words about two issues in particular that are of great concern to the American and Moroccan people. First, Syria. I thank the foreign minister for the important role that Morocco has played, first within the Arab League and second within the Security Council. Morocco is in a unique position to help shape the international community’s efforts, and it is imperative that we continue working today. I visited with the minister first in London about Syria. And then in Tunis, we attended together the Friends of Syria meeting.

And I want to reiterate my message to those Syrians who still support Assad, especially members of the Syrian military and business community: The longer you support the regime’s campaign of violence against your brothers and sisters, the more it will stain your honor. If you refuse, however, to prop up the regime or take part in attacks on your fellow citizens, your countrymen and women will hail you as heroes. Assad would have the Syrian people believe that it is only terrorists and extremists standing against the regime, but that is wrong. So many Syrians are suffering under this relentless shelling. All Syrians should be working together to seek a better future. That is what we hope for the Syrian people. That is what Morocco has led us in the international community in trying to achieve.

There are three areas where concrete action is needed: providing immediate humanitarian assistance to the Syrian people, increasing the pressure on the regime to assault its own brutal assault – to stop its brutal assault on its own people, and helping to prepare for a democratic transition. And I look forward to working closely with the foreign minister on all of these issues in the days ahead.

And what’s so exciting about being here in Morocco is that Morocco stands as an example, as a model of what can be achieved. Moroccans are strengthening their own democracy. Young people are having a say in their own future. His Majesty King Mohammed VI has begun the process of reform. We see women’s rights protected and expanded, a more transparent and accountable government, establishing the Arab world’s very first truth commission on human rights.
So Mr. Minister, on behalf of my government, let me congratulate your government and His Majesty on the successful constitutional referendum and parliamentary elections that occurred during this momentous last year. The Moroccan constitution provides for an independent judiciary. It contains new protections for freedom of thought, expression, and other universal rights. I was just briefed by the new speaker of the parliament, who advised me that Morocco now has more women in public office than any other Arab country. And frankly, the percentage is as good as we have in our own country in terms of women’s representation in the parliament.

But Morocco understands, as does the United States, that democratic reform takes constant effort and unending attention. It has to lead to the institutionalizing of democratic habits and practices, and of course to tangible improvements for the Moroccan people. And we stand with the government and people of Morocco as they continue this absolutely historic effort.

Let me close with a word about the Western Sahara. The United States continues to support efforts to find a peaceful, sustainable, mutually agreed upon solution to that conflict. U.S. policy toward the Western Sahara has remained constant for many years. We have made clear that Morocco’s autonomy plan is serious, realistic, and credible, and that it represents a potential approach that could satisfy the aspirations of the people in the Western Sahara to run their own affairs in peace and dignity. And we continue to support the negotiations carried out by the United Nations, and encourage all parties to work toward a resolution.

So again, Minister, thank you for hosting me and my delegation here today, and I look forward to working closely with you as we continue to move our countries toward even more productive partnership and friendship. Thank you, sir.

FOREIGN MINISTER AL-OTHMANI: Thank you. Thank you very much.

QUESTION: (In Arabic.)

SECRETARY CLINTON: No. Our policy on Western Sahara has not changed. We continue to (inaudible) efforts to find a peaceful, sustainable, and mutually agreed solution to the conflict that respects the fundamental human rights of all parties. We commend the UN envoy, Mr. Ross, for his continued leadership of the negotiating process. And we know that Morocco’s newly elected and appointed government leaders are fully engaged in pushing this process forward to an effective resolution. And as I said in my remarks, we think Morocco’s autonomy plan is serious, credible, and realistic.
And we also are pleased to see positive actions like Morocco and Algeria’s biannual intergovernmental meetings. They are a step in the right direction. We want to see both countries expand cooperation and constructive dialogue. That is the message I delivered in Algeria at the highest levels of the Algerian Government. I shared that with the meetings I had today here in Morocco because I think it’s, in today’s world, very much in the interests of Morocco and Algeria to work together on as many areas of agreement as possible. It’s good for the two countries, it’s good for the Maghreb, it would be good for economic development, it would be good for security, so we want to see that kind of continued progress between Algeria and Morocco.

QUESTION: (Inaudible) questions for you, Mrs. Secretary of State. First one is: What’s going to be of the Moroccan prisoners that are still held in Guantanamo Bay? And the second one is: Do you think that the political changes that Morocco has undergone in the recent months meet the United States’s criteria of democracy and political reforms?
SECRETARY CLINTON: Well, as to the first question, we remain in constant consultation with the government officials here in Morocco, and we are continuing to discuss that matter with them.

In regard to your second question, we are very pleased at the progress we have seen in Morocco. We applaud the millions of Moroccans who participated in last November’s parliamentary elections. It was exciting to see Moroccan men and women take part in this democratic process. And we are ready to work, as I enjoyed today, with the new government, with the new parliament, because there’s no denying Morocco has made significant progress along the path of democratic reform, and not only with an election, because after all, one election is not democracy. It takes a lot of hard work to establish a democracy. But the significant constitutional reform that has gone on under the leadership of His Majesty King Mohammed VI has led to the voters of Morocco approving a constitutional referendum. And the building blocks are all in place.

We understand. We’ve been at the business of democracy for 236 years. And we know how hard it is, and it does not happen overnight. It takes time and it takes the participation of every Moroccan. It doesn’t end when the votes are counted. It doesn’t end when the winners are announced, it’s not a spectator sport – for some, but not for others. Everyone has to be involved, and we think that the Moroccan experience is a very good model for others who are also seeking to have their own democratic reforms.

QUESTION: Madam Secretary, if I may. The – as you know, the trial of the foreign and Egyptian NGOs (inaudible) apparently, and was postponed for two months. What happens to the Americans who have been at the Embassy now for several weeks? And more broadly, what does it say about the political transition underway in Egypt, about relations with the United States, and the question of American military aid? Thank you.

SECRETARY CLINTON: Well, Steve, we are evaluating the outcomes of the legal proceedings today. We’ll have more to say after we have finished that analysis and gathered as much information as possible, because you’re right, it was a challenging procedure. But I will wait to comment further until I am fully briefed and have reached my own understanding of what was and was not decided today.

QUESTION: I have two final questions. First question is that (inaudible) in London and Tunisia and Algeria (inaudible), and what’s going (inaudible) from this region to bring (inaudible) back to Syria? And the second question is: What kind of (inaudible) could you (inaudible)? And the last one is: What (inaudible) U.S. presume to (inaudible) and bring more (inaudible)?

SECRETARY CLINTON: Well, those are three good questions. (Laughter.) With respect to the first question, Morocco and the United States are already cooperating very closely together, as we have done on many issues between ourselves but now are doing in the Security Council. Morocco provided the leadership for the resolution that was presented. Morocco has done a great deal to reach out and consult with other countries about the way forward. So we are working very closely together, and I think the minister and I are committed to looking for solutions.

Secondly, we’ve discussed at length security in the Maghreb and the Sahara, because we know that it’s difficult to develop the way you wish to and have the kind of future that people in Morocco deserve if you don’t have security. And so we already cooperate very closely, and we’re looking to expand that cooperation. And we also believe we have to bring in more countries to be part of the discussion – the Maghreb countries, the (inaudible) countries. So we’ve been discussing ways we might do that.

And finally on business and economic relations, everywhere I go in the region and beyond, people ask me if they could have a free trade agreement like Morocco and if they can have a Millennium Challenge grant like Morocco. And I tell everyone, we did not give that to Morocco; Morocco earned it. Morocco demonstrated what it takes to be in a free trade agreement and to meet the very high standards of the Millennium Challenge Corporation. So we discussed – the minister and I together and over lunch ways that he and I, along with other officials and under the work of the prime minister here and President Obama in our country, encourage more investment and more business in Morocco. And we will take steps to try to do that.

QUESTION: Madam Secretary, I just want to follow up on Steve’s question, briefly. One is, do you know where the Americans are, or where are they, why were they not in the courtroom this morning? And does your answer to his question mean that there is no – there’s not yet any implication for the American assistance, that you are going to (inaudible) – that this decision to adjourn does not put that in jeopardy?
Then in Syria, I’d just like get your thoughts on – why is this so difficult? If it’s raining, you put up and umbrella. Why is – here you have a situation in which civilians are being killed. There is no shield or protection being offered to them.
And then lastly, on Afghanistan --

SECRETARY CLINTON: (Laughter.)

QUESTION: This not a good –

SECRETARY CLINTON: Why don’t we throw in Latin America and – (laughter).

QUESTION: Honestly

.
SECRETARY CLINTON: Honestly (inaudible).

QUESTION: Well, I was only going to ask you two. Anyway, Afghanistan, it’s been a bad week. There’s another incident today in which some military trainers were injured. What is this – isn’t this a – hasn’t this (inaudible) the entire view as mission there? And how concerned are you about how things go forward? Thank you.

SECRETARY CLINTON: Well, if I can even remember all of your questions, I’ll try to answer them briefly. With respect to Egypt, I’m not going to add to what I’ve already answered because this is a fluid situation and there are a lot of moving parts that have to fully understand before I go any further than I have.

With respect to Syria, we have a very strong international group of friends of the Syrian people, and we understand how challenging the situation is when you have a government willing to shell their own people with heavy artillery, use tanks against their own cities, destroy homes, refuse to let the humanitarian workers in to remove bodies, to provide medical care. These are the kinds of terrible actions that deserve the condemnation of every country in the world. And we are consulting closely with those who are looking for ways of alleviating the suffering, first and foremost; of increasing the pressure on Assad and the people around him, because we continue to believe that those around Assad are quite concerned about the brutal attacks going on. We’re appealing to members of the Syrian army to put the people of their country first before a family or a political party. And we are pushing hard for a plan that would lead to a political transition. We welcome the help of those who are supporting the Syrian regime. We think that it would be appropriate for them to use whatever influence they have to at least get the humanitarian assistance in.
And finally on Afghanistan, Matt, look, we deeply regret the incident that has led to these protests. We are condemning it in the strongest possible terms, but we also believe that the violence must stop and the hard work of trying to build a more peaceful, prosperous, secure Afghanistan must continue.

QUESTION: (In Arabic.)

SECRETARY CLINTON: We certainly did discuss people to people relations because we believe strongly that the relationship between the American and the Moroccan people is the bedrock of our relationship. Government officials like myself come and go, but the underlying relationship between our people is what is enduring for now 235 years. So we want to increase people to people exchanges, business exchanges. There’s an excellent new program that we are very impressed by that we helped to start along with Moroccan business and government leaders to encourage entrepreneurship among Moroccans, particularly young people.
So there is a full range of such exchanges. Our ambassador and our Embassy have such a list. But we’re always looking for new ideas, and I would welcome any that any Moroccan might have.
Thank you.”