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As we work around the world to promote and defend our national interests and ideals, the United States and our friends and allies face many challenges. At our overseas missions and Washington bureaus, our foreign policy professionals work together with their interagency partners to address challenges as diverse as the proliferation of weapons of mass destruction, the global threat of terrorism, weak and poor governance, the irresponsible behavior of some governments, and the spread of poverty, disease, and environmental degradation.

As reported last year, the Department of State, in conjunction with the U.S. Agency for International Development (USAID) fundamentally reorganized the way it plans, budgets, and manages foreign assistance to achieve greater integration and focus. This reform is taking root in our increased capability to use foreign assistance more efficiently and more effectively not only to further our foreign policy goals and bolster our national security, but also to reduce poverty and improve people?s lives around the world.

Some of our accomplishments in FY 2007 are outlined below:

• The Department of State led the ?civilian surge? component of President Bush?s ?New Way Forward? strategy, more than doubling our Provincial Reconstruction Team (PRT) presence in Iraq. PRTs not only helped increase local and provincial governance capacity in Iraq but also fostered political accommodation among Iraq?s ethnic and sectarian groups at the local level in parallel with Embassy Baghdad?s efforts to promote national reconciliation.
  
• With a new Palestinian Authority government committed to peace, recognition of Israel, and a two-state solution, the Department advanced bilateral talks and established a foundation for peace in the Middle East.
  
• The U.S. Government?s response to the global challenge of HIV/AIDS and investment in the President?s Emergency Plan for AIDS Relief have enabled us to build networks in developing nations that are saving lives in the face of a devastating international health crisis.
  
• The United States committed to strengthen energy security and effectively address climate change at home and abroad. We are fully engaged in the United Nations Framework Convention on Climate Change and the development of an environmentally effective and economically sustainable framework to address climate change.
  

The Department of State and USAID work closely together to meet the global challenges of the twenty-first century. I am pleased to offer this summary of key performance, budget, and financial information and provide a statement of assurance that the data herein are complete and reliable. This report documents the value of our investments as the Department of State and USAID engage in an extraordinary partnership to transform our world for the better through diplomacy and development.

Condoleezza Rice Secretary of State February 1, 2008

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