MR. CROWLEY: Good afternoon and welcome to the Department of State. It is budget day in Washington, D.C., and it’s an unusual budget week because you’ll have today the presentation of the President’s Budget for Fiscal Year 2012. At the same time, Congress is continuing to review the continuing resolution regarding funding for FY 2011. But certainly, recent events, particularly with respect to Egypt, point out the need for a vigorous, substantial foreign assistance and diplomatic budget to serve the national interests of the United States around the world.
And here to describe our 2012 State Department and USAID budget is our Deputy Secretary Tom Nides. We’re going to do this today in, like, three pieces. We’ll have Secretary Nides with us for about 20 minutes on camera, and then we’ll turn it over to the budgeteers, [Senior State Department Officials One, Two, and Three], who will go through the intricacies and deep dive of the budgets. And then after that we’ll take a filing break and then go through other subjects of the day. But to start off, Deputy Secretary Tom Nides.
DEPUTY SECRETARY NIDES: Thank you, P.J. Let me get situated here. Good afternoon. There is – let me tell you, there’s probably no better way to know a organization than just in six weeks into a new job I get to stand up and explain its budget. So I hope you’ll understand that.
DEPUTY SECRETARY NIDES: Thank you very much. Appreciate that. My wife said the same thing to me this morning. (Laughter.)
So with that, I am pleased to present the 2012 budget for the Department of State and USAID. We’re here to discuss with just one percent of the federal budget, how State and USAID prevents conflicts abroad, promotes prosperity at home, and delivers real results for the American people, and more importantly, how State Department and the USAID advance our national security.
In the private sector, we often talk about ROI, a return on investment. From countering extremism in Yemen, to serving alongside our troops, to training (inaudible) police force, what we do is critical to our national security. With an investment of just one percent of the federal budget, the men and women of the State Department and the USAID deliver remarkable returns.
We recognize this request comes in difficult budgetary assignment and environment. This is a lean budget for lean times. We have made painful but responsible choices. We’ve scrubbed the entire budget for savings. We’ve eliminated foreign assistance and programs in several countries. We’ve reduced development assistance by over half in 20 others. We’ve cut funding in Europe and Eurasia by 15 percent. We’ve even managed to identify over $100 million in administrative savings through more efficient travel and procurement.
In the wake of the first Quadrennial Development & Diplomacy Review, better known as the QDDR, we’ve aggressively sought to find new efficiencies and to change the way we do business. The QDDR recommends that we move forward on an integrated national security budget. This budget represents our assessment of the funding we need to use civilian power to advance America’s security and accomplish our mission – no more and no less.
This year, for the first time, our request is divided into two parts. The first part is very familiar to all of you. It’s our core budget. It’s our foreign assistance and operations budget. This represents our ongoing investment to advance American security and economic interests. It supports our presence in about every nation in the world. Our core budget request for 2012 is $47 billion.
The second part is our extraordinary temporary costs in Iraq, Afghanistan, and Pakistan, as our civilian employees take on more responsibilities. For the first time, OMB is presenting our war funding as they do with the Department of Defense, in a separate account called OCO, Overseas Contingency Operations. This will allow for a full transparency and a unified approach for the costs we believe are not part of our core budget. The State and USAID OCO request for 2012 is $8.7 billion, which I’ll come back to in greater detail in a moment.
Finally, I’m sure some of you will be confused with a comparison to last year’s budget. I assure you, you are not alone. Here’s why. Congress hasn’t finalized funding levels for 2011. Instead, we’re operating under a continuing resolution, basically an extension of our 2010 operating levels. To complicate things even further, in 2010 there were a number of supplemental spending bills and adjustments. So to anchor our conversation today, we’ve created a single chart that lays out the relevant points of comparison between 2010, ’11, and ’12.
Our core 2012 request of $47 billion supports our diplomatic and development experts in 190 countries. It represents a 1 percent increase over our comparable 2010 levels, less than the rate of inflation. And make no mistake – even without the extraordinary war costs, the core budget is part of the U.S. Government’s national security budget. It stabilizes conflict zones, it reduces the threat of nuclear weapons, it restores old alliances, it supports democratic transitions, it counters extremism, it opens global markets, and it protects citizens abroad.
It accomplishes this by investing in four principle areas. First, we devote 23 percent or $11 billion of our $47 billion core budget to prevent conflict, foster economic security, and support fragile states. As we all know, this is a complex and interconnected and fast-changing world. We need the capacity to prevent conflicts and stabilize fragile states.
For an example, this money funds development, humanitarian and military efforts in Yemen and Somalia. We’re working to prevent these countries from becoming safe havens for terrorists. It supports intensive American diplomacy in Sudan, where the government peacefully accepted a vote many said would lead to war. And it sustains peacekeeping missions all over the world. And it funds non-war-related economic assistance to the frontline states of Iraq, Afghanistan, and Pakistan.
Second, we spend 16 percent or approximately $7.4 billion of the $47 billion of our core budget to keep – to support key allies and partners. This includes over $3 billion for Israel and a strong support for West Bank and Jordan. It funds support for nations recovering from conflicts like Liberia and emerging partners like Indonesia. It funds military-to-military partnerships in over 70 countries, and in Egypt, it gives us the funds to respond as situations evolve.
Third, we invest 31 percent or approximately $14.6 billion of the $47 billion of our core budget to advance human security. We have targeted disease, hunger, and climate change. These challenges not only threaten the security of individuals across the world; they plant seeds for future conflict. We invest $8.7 billion in the global health programs. This includes money to fund treatment and prevention of HIV/AIDS through the continued support of the Bush Administration’s PEPFAR program. And it funds our fight against malaria and tuberculosis.
We’re investing over a billion one in food security, another cornerstone of global security, and $650 million to respond to climate change. These are two whole-of-government efforts against serious and growing threats. This budget also reflects $4 billion in humanitarian assistance for victims of war, refugees, and survivors of natural disasters.
Fourth and finally, we spend 30 percent or approximately $14 billion of our $47 billion core budget to strengthen and sustain our diplomatic and development presence. We fly the flag at embassies and consulates in 190 countries. In each of these countries, we are serving Americans, advancing our security and promoting our economic interests. Our political officers work with foreign governments and monitor elections and promote democracies and human rights. Our economic officers open markets, promote U.S. exports, and champion American companies. Our development officers are improving lives and driving growth.
And since taking this job, I’ve learned just how much our consular officers do to help the American people. Last year, they issued 14 million passports and assisted in 11,000 inter-country adoptions. And I was amazed to learn that they worked on over a thousand, 1,100 new child abduction cases, which actually helped to return 485 children to their parents. However, we remain severely understaffed, so we’re asking for just a 1 percent increase in the State Department’s Foreign Services officers. We note some of the hiring we hope to make will just have to wait. Unfortunately, too many of our embassies are falling apart. Too many are vulnerable to terrorism and other threats. This budget includes funding to protect our diplomats and modernize our embassies.
Together, these four areas make up our core budget. I said earlier the sum of our costs in Iraq, Afghanistan, and Pakistan fund our enduring presence in those countries – in sum, our extraordinary and temporary war costs. So this year, we’re taking a more unified and transparent approach. The President’s budget includes the State Department’s war costs along with the Department of Defense in the OCO budget request.
Our OCO request represents a small fraction of the total U.S. Government’s war costs of over $126 billion. But if you asked your – our commanders on the ground, they would tell you how vital our civilian missions are. As the military transitions to the State Department and USAID, the total costs to the American taxpayers will drop dramatically. The overall Pentagon savings is $45 billion this year from 2010 levels, while our war costs – war-related expenses are rising by less than $4 billion. As Secretary Clinton says, every business owner she knows would gladly invest $4 to save 41.
The Iraq portion of the 2012 OCO request for the State and USAID is $5.2 billion. I’ve just returned from Iraq last week where I saw the remarkable sacrifices our soldiers and civilians are making. We have to use this moment to help Iraq emerge as a stable, strategic partner. These funds let us work throughout the country, especially in key strategic areas like Kirkuk and Mosul, to diffuse crises and find long-term solutions. The Department of State is ready to take the lead from the military. We’re ready to take on new responsibilities. But we need the support and the resources to do the job. Our OCO budget includes programs to train Iraq police and assist Iraqi security forces. Again, both of these programs were previously led by the Pentagon.
The Afghanistan and Pakistan portion of the 2012 OCO’s request for State and USAID is $3.5 billion. These funds support civilians who are vital to our strategy. We’ve already surged civilians in Afghanistan. Now, our challenge is to sustain our presence and build on our military gains and show results. We’re working to give General Petraeus and Ambassador Eikenberry the support they need to execute our strategy. This budget requests funding for 1,500 civilian staffers. Two years ago, we had 320.
Taken together, our core enduring budget and the extraordinary temporary war costs, funded through our OCO budget, represents a commitment to develop and exercise civilian power as part of America’s leadership in the world. We recognize, as these are exceptionally tight times, with the resources outlined in this budget, the State Department and USAID can continue to protect our interests, project our values, promote growth, and above all, serve our national security.
So with that, I’ll take a couple of your questions.
QUESTION: Can I just ask – neither of the figures that you gave, the core or the OCO, is actually the Function 150 budget, is it?
DEPUTY SECRETARY NIDES: We only focus on the State and USAID’s budget. There’s obviously a 150 number, which these guys can give the direct total numbers of this as well.
QUESTION: But isn’t the Function 150 all the State Department and all international operations?
DEPUTY SECRETARY NIDES: We’re laying out just –
QUESTION: I know, and I understand what you’re laying out right now –
DEPUTY SECRETARY NIDES: No, I said --
QUESTION: -- but in terms of the actual – what the money that the State Department and AID are going to spend, isn’t the Function 150 line, isn’t that what it is?
DEPUTY SECRETARY NIDES: Sure. I mean, I think we can give the – we give – we’ll give you the numbers.
QUESTION: Right. But so, this is not the entire international operations budget –
DEPUTY SECRETARY NIDES: This is not the full 150 account; you are right. It is State and USAID’s budget.
QUESTION: Okay. So I guess we can wait to go –
DEPUTY SECRETARY NIDES: Yeah, you can go into the – they’ll give you all the information you need, absolutely.
QUESTION: Okay, that’s fine. I’m done.
MR. CROWLEY: Mary Beth and then Josh.
QUESTION: Can you talk about aid for Egypt in the 2012 budget, and has it been altered in any way to reflect the developments going on in Egypt now?
DEPUTY SECRETARY NIDES: The budget request for 2012 is a 1.57 billion for the full allocation. The military portion of that is 1.3 billion, and 250 million is economic assistance, which is the same as last year. And obviously, we are willing and ready to help the Egyptian people. As it relates to 2011, we’ll have funds available as well until we hear exactly what the Egyptian people will need. We’ll then communicate that to the Congress for the authorization.
QUESTION: So would that come out of 2011 money, or would that –
DEPUTY SECRETARY NIDES: That will come out of 2011 money. This is for 2012. The budget numbers is 2012 numbers, which is the $1.5 billion.
MR. CROWLEY: Josh.
QUESTION: Thank you, sir. In the summary documents released by the White House this morning, it said that your 2012 request will cut Foreign Military Financing, eliminate it completely for five countries, and IMET funding for nine countries. Can you talk about the thinking behind eliminating those 14 accounts and walk us through –
DEPUTY SECRETARY NIDES: Sure. These guys will walk through the actual individual countries. Generally, listen, we had to make tradeoffs. As you know, Secretary Clinton gave us very clear – the one reason we are basically flat to 2012 from 2010 is we had to cut some things to grow other things. So we made some very serious and very concrete decisions about how we prioritize. In those priorities, you’ll be able to get exactly which countries we did and which countries did not.
QUESTION: Peter (inaudible), Interfax. Do you plan to cut or increase the support for democracy in Russia?
DEPUTY SECRETARY NIDES: I don’t have exactly the Russian numbers, and they’ll be able to give those to you in a minute.
MR. CROWLEY: (Inaudible) in the next (inaudible).
QUESTION: What about Mexico? Do you have any amount?
QUESTION: Can we go back to understanding that you’re going to get – that other people will get into details?
DEPUTY SECRETARY NIDES: Yes.
QUESTION: A broader question – on that last chart, since you don’t know what the 2011 numbers are going to be – right?
DEPUTY SECRETARY NIDES: That is probably a true statement.
QUESTION: In fact, if we don’t go from 2010 – the enacted 2010 – if we go from the 2011 request, this is actually a decrease in funding, not a – correct?
DEPUTY SECRETARY NIDES: Oh, absolutely. No, no, let’s be clear. If, in fact, the numbers that they are talking about on the Hill today of the numbers that potentially could be cut --
QUESTION: No, no, no, I’m just talking about what the request was.
DEPUTY SECRETARY NIDES: Sure. Absolutely. That’s what I’m saying.
QUESTION: This is a decrease even --
DEPUTY SECRETARY NIDES: From ’11. Without question.
QUESTION: Okay. So if --
DEPUTY SECRETARY NIDES: Absolutely.
QUESTION: Now, the Secretary – this Department has just released a letter the Secretary sent to --
DEPUTY SECRETARY NIDES: For Congressman Rogers, Chairman Rogers.
QUESTION: Exactly. Talking about the 16 percent. So if they go to that 16 percent then, this becomes --
DEPUTY SECRETARY NIDES: It’s almost 20 percent.
QUESTION: This becomes a rather significant increase over the 2011 budget.
DEPUTY SECRETARY NIDES: Well, but --
DEPUTY SECRETARY NIDES: Well, as my mother used to say, I hope we all have that problem. I think the reality is I think right now we are, one, if the 2011 numbers, if currently what we requested in 2011 gets cut below the FY10 numbers, we’d have a substantial – almost a 20 percent reduction in the budget of the State Department and USAID. I don’t think anyone believes that is what we should be doing, at least certainly the people in this building and what we are doing around the world. Obviously, we’ll be very much focused on what’s going to happen on Capitol Hill, but this purpose of this discussion is to talk about 2012’s budget. But there’s no question we’re very concerned about what could happen in 2011.
QUESTION: So given all that and the uncertainty, isn’t it kind of pointless to talk about percentage increases and decreases, since you have no idea what the baseline is going to be? I mean, if you go back two years ago, the situation was totally changed. So I mean, it was totally different. So if you’re – for the purposes of argument here in this briefing, if you want to look at it from the 2010 enacted, I mean, times have changed.
DEPUTY SECRETARY NIDES: Oh, I think – I’ll be – listen, I think your point is well taken. I think that if you look at what our numbers are compared to – let’s do either one. Let’s look at 2012 compared to 2010. We’re basically flat to 2010. If you look at what we requested in 2011, we’re down from 2011 what we might possibly get. So either way you cut this, the reality is this budget reflects very tight budgeting to reflect what we believe are reprioritizations for the Department of State.
MR. CROWLEY: Goyal, we’ll take one more.
QUESTION: Thank you.
MR. CROWLEY: And if it’s specifically (inaudible) --
QUESTION: Yes, thank you.
MR. CROWLEY: -- (inaudible) to these guys.
QUESTION: No, it’s about the – what I’m asking you, sir, quickly that as far as foreign aid is concerned, U.S. is giving to a number of countries. Is it worth of giving to some countries, because there is some even anti-U.S. demonstrations in some of the countries and Amnesty International and even the Pakistanis are saying the aid you are giving to Pakistan is not going to the people?
DEPUTY SECRETARY NIDES: Listen, I think that the amount of money that we’re giving reflects what we believe not only are the priorities for this Department, the priorities for what we believe that we need to do to keep ourselves safe here at home, this is a national security budget. We’re making the decision to give these funds both on military aid and economic assistance for one reason and one reason only, which is our national security.
MR. CROWLEY: Okay. Thank you, sir.
DEPUTY SECRETARY NIDES: Thank you.
QUESTION: Thank you.
MR. CROWLEY: We’ll take a moment, break down the cameras, and then we’ll continue the deep dive into the actual numbers.