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CNN Live Event/Special

Rice Confirmation Hearings Part 3

Aired January 18, 2005 - 14:29   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


TONY HARRIS CNN ANCHOR: And welcome back, everyone. From the CNN Center in Atlanta, this is LIVE FROM. I'm Tony Harris.
BETTY NGUYEN, CNN ANCHOR: And I'm Betty Nguyen. Here's what's all new this half hour.

Live pictures now from Washington, D.C., and a little music to boot. President Bush will join actor Kelsey Grammer and singer Gloria Estefan and others at the first event of the inauguration week, which is a salute to the American military. We'll have more on that in a moment. But first, here's what's happening in the news.

HARRIS: Checking the headlines this hour, the situation in Iraq is much of the focus today as senators quiz Condoleezza Rice at her confirmation hearing. Rice, President Bush's national security adviser, is expected to be confirmed as secretary of state. In her opening remarks today, Rice said the United States must use diplomacy to help create a balance of power in the world that favors freedom.

Those hearings are set to resume in the next few minutes. When they do, we will take you there.

A Catholic archbishop held captive in Iraq was set free today. His release came just today after he was kidnapped in Mosul. The Vatican says the archbishop was released without ransom being paid.

Also in Iraq, a video surfaced today showing eight Chinese men who had been kidnapped. An Arabic speaker on the tape demands that the Chinese government declare it will not allow citizens to work for Americans in Iraq. A Chinese embassy official in Baghdad says the men apparently never worked in Iraq, but had traveled in an unsuccessful search for a job.

Attorney General John Ashcroft has announced the first U.S. criminal charges in the federal investigation of the United Nations Oil-for-Food Program for Iraq. An Iraqi-American pleaded guilty today to charges in the case. Authorities say he conspired to act as an agent for Saddam Hussein by accepting millions of dollars in compensation and negotiating with a U.N. official to let Iraq sell oil despite international sanctions.

NGUYEN: President Bush says he doesn't regret his controversial line that other nations were, quote, with us or against us in the war on terror. But in a preinaugural interview today with CNN senior White House correspondent John King, the president admitted being too blunt with language like dead or alive and bring it on.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've got to win. And we've got to make it clear that people have to make a choice. And I will continue to be straightforward and plainspoken about my view that freedom is necessary for peace and that everybody deserves to be free. But you're right, some of my language, in the first four years, was, you know, had an unintended consequence. And I'm mindful of that.

(END VIDEO CLIP)

NGUYEN: We're going to break in right now and take you to that live event in Washington, this preinaugural event, which is a salute to the military. Here's the president now.

UNIDENTIFIED FEMALE: My name is Sarah Griffiths-Diese (ph), and this is my...

(SHOUTING)

UNIDENTIFIED FEMALE: My name is Sarah Griffiths-Diese, and this is my 5-week-old son, Charlie, and his grandfather, Captain Bill Griffiths (ph), was killed in action in Vietnam January 24, 1970, the day after my sister was born.

UNIDENTIFIED FEMALE: Hi, my name is Jasmine Reed. I lost my father, Captain Joseph Oliver Reed III (ph) on April 14, 1996.

UNIDENTIFIED MALE: My name is Barksdale Watkins (ph), my brother, Lieutenant Colonel Williams R. Watkins III, was killed in action during the Iraqi liberation on April 7, 2003.

UNIDENTIFIED FEMALE: My name is Nikki Dos (ph). My husband, Captain Eric Rusas (ph), was also killed in action while we were deployed together during Operation Iraqi Freedom on April 7, 2003.

UNIDENTIFIED MALE: My name is Stefan Acevedo (ph). I lost my father, Commander Joseph Acevedo, on April 13, 2003, in Bahrain.

UNIDENTIFIED MALE: My name is Rick Bruckenthal (ph), my son, Damage Controlman (ph) Nathan Bruckenthal, was killed in action in the Persian Gulf on April 24, 2004.

Will you all rise now. Please follow me in the Pledge of Allegiance.

I pledge allegiance to the flag of the United States of America, and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

(MUSIC)

NGUYEN: OK, we are going to break in from this event and take you now, also in Washington, to those confirmation hearings for Condoleezza Rice. Let's take a listen. SEN. LISA MURKOWSKI (R-AK), FOREIGN RELATIONS CMTE.: ... was greatly welcomed. And it was a chance for me to speak to some of the issues that, as a new member to this committee, were important to just, kind of, have that discussion and get on the table.

One of the issues that is really quite paramount in Alaskans' mind is the situation over in North Korea. Our proximity in that region is one that causes us to look very carefully at what is happening in North Korea and what is happening particularly with the nuclear weapons program over there.

I'm heartened to hear from the media reports that North Korea appears willing to restart the six-party talks. And again, I think Alaskans are anxious to know that there will be success there.

Looking beyond the talks and further down the road, I'm curious to know your views on a future North Korea.

We recognize that for these past many years, about 60 years or so, under the reign of Kim Il Sung and Kim Jong Il, an entire generation of North Koreans, including their military leaders, have basically been brainwashed into believing that their military can defeat the armed forces of any country in this world.

And this raises considerable concern in the event of a regime change about who has control over the North Korean military and what actions that military or an individual commander might take.

So as the administration moves forward in these six-party talks, what steps will you take to develop the relationships with North Korea's future leadership?

RICE: Well, thank you very much, Senator Murkowski.

We did have an opportunity to talk about a number of issues. And I recognize the importance of this issue to everyone, because obviously North Korea is a very dangerous power and one that has been intent on seeking weapons of mass destruction, and particularly nuclear weapons.

Let me start by just saying that it is important to repeat that North Korea should understand fully that we have a deterrent against any North Korean action or attempts at action, because we have a very strong alliance with South Korea, a very technologically sophisticated alliance that is getting more so with the changes that we are discussing with the South Koreans about how to realign military forces on the peninsula.

And we do have, as you mentioned, a very active diplomacy now through the six-party talks, which brings all of the neighborhood together to say to the North Koreans, "You do not have a choice. If you intend to a be part of the international system, you have got to give up your nuclear weapons programs."

And that's an important innovation, because it speaks, in a part, to the broader question of how we manage a problem like North Korea in the neighborhood.

It is not something that the United States wants to have to do unilaterally. It's something that we're much better off doing with South Korea, with Japan, with Russia, and most especially with China, which is playing an important role in the six-party talks, and it needs to continue to play an active role.

This is a very closed and opaque society that we're dealing with when we're dealing with North Korea. It is a sad thing that there probably is no more desperate population than the population of North Korea in terms of starvation, in terms of repression.

The United States has no problem with the people of North Korea, and in fact, we have consistently been a large food aid donor to North Korea, because we do not want the people of North Korea to suffer.

It doesn't have to be this way. There is another path, and we've made clear to the North Korean regime that the president of the United States has said, and that the United States has no intention to attack North Korea, to invade North Korea, that multilateral security assurances would be available to North Korea, to which the United States would be party, if North Korea is prepared to give up its nuclear weapons program, verifiably and irreversibly.

So we will continue to work on that issue.

It is very hard actually to make contact with the North Korean people at all. But to the degree that we can, through South Korean contacts, try to encourage the North Korean people that there might be a better future for them, I think that is an important thing to do.

But our goal now has to be to make the six-party mechanism work for dealing with the North Korean nuclear program and then hopefully for dealing with the broader problem of managing this dangerous regime.

I hope that they will follow through and that indeed they do intend to restart the six-party talks. We have an offer on the table that we put there in the last round of the six-party talks.

RICE: It was an offer that I think all other parties thought moved the ball forward.

We've heard nothing really from North Korea, and I hope that they will actually act because we've found that their words are not always completely reliable.

MURKOWSKI: We also had a chance to talk a little bit about the Arctic Council. This is probably not a question that you're going to get from anybody else on this panel, so I will take the time to ask it. I know that my colleague here from Florida is not going to ask it, so I will.

(LAUGHTER)

But one of the things that I hope to achieve or to work on during my time here on the Foreign Relations Committee is to raise my colleagues' and the rest of the United States' awareness of -- and just really the knowledge of the Arctic regions.

And there's a lot of focus right now on what's going on up north because of the climate change. We're wondering whether or not this is a permanent event or whether it's just part of a natural cycle.

But we do know that it's a reality. We do know that it will have an impact on our lands, particularly up north. And what we're seeing is there's a potential for increased circumpolar maritime commercial activity, which is going to impact our northernmost boundaries, as well as substantial new scientific exploration in the Arctic region.

Now, along with the Arctic nations, the U.S. is a member of the Arctic Council, which was formed to address the common problems of the many Arctic nations. And so far as I can tell, our role, the U.S. role, within this council has been underutilized in furthering our relationship with our Arctic neighbors.

So my question to you at this time is: What role do you see for international institutions like the Arctic Council in U.S. foreign policy, and how can we use our Arctic location to further this country's interests?

RICE: It's a very important point that I'd like to make about the broader question that you asked.

And I do think that on issues of this kind, we can work both internationally and regionally, in a sense, the most interested and affected countries.

I would like to spend some time talking with you about what more we might do in the Arctic Council.

I know we've been supportive of the Arctic Council and members, but perhaps there is more that we can do.

It speaks -- for instance, you mentioned the global environmental issues like climate change. We have a lot to offer in terms of the science and the technology, and we ought to be and are trying to develop relations with others who are interested in harnessing that science and that technology to deal with some of the environmental challenges that we have.

And so I very much look forward to talking with you about what role we can play. There's some important countries that probably share interests. For instance, the Russians would probably share interests, and this is another area for potential cooperation.

And so I look forward to having a chance to look at what more we can do.

MURKOWSKI: I think it is an opportunity for us. And it's something that needs to be cultivated in order to work to our advantage.

So I do look forward to that opportunity with you.

Very general, this might be a softball to you, but how is the administration working to improve the role of women in the Middle East and elsewhere in the world?

RICE: Well, in fact, it may be one of the most important things that we do over the next few years.

We've already tried to do a lot. I think there's no doubt that the Afghanistan situation, which was really one of the true horrors houses for women, and I know that Senator Boxer and others were very involved in trying to promote the cause of women in Afghanistan, well, we promoted the cause by the overthrow of the Taliban. It's a remarkable thing that the first person to vote in Afghanistan was a young woman.

RICE: It's a remarkable thing that women can now see a doctor without a male relative's permission, that they can no longer be punished for letting one little hair show out from under the veil, that women are taking their rightful place in Afghan society.

And I think it is in their documents, like their new constitution, that women are considered equal citizens.

That may seem like a small thing, but in a region of the world where women have been anything but equal citizens, to have that enshrined in the Afghan constitution -- and it's in the TAL, or the Transitional Administrative Law for Iraq -- these are important steps forward for women.

We've also been very outspoken about the need of every society to make sure that women's rights are protected. It is a part of the agenda in the Broader Middle East Initiative, where clearly countries are going to move at different speeds on this issue, but where you have to put on the agenda that you cannot function as a modern society if half your population is essentially kept out of the political process.

And we are particularly interested in women's education, the education of girls, which in some of these societies, stops when girls are 10 or 11 years old. Pressing the case for the education of girls is an important part of what we're doing, helping to empower women politically through political activity and civil society activity.

And we've done more than just in the Middle East, which is to be very active on, for instance, the trafficking in persons initiative, which benefits women because very often the people who are trafficked, particularly for sex crimes, are women.

And the president went to the United Nations, put this on the agenda. We've gotten a resolution about it.

RICE: And we are prosecuting people here and pressing countries to prosecute people on this very terrible crime.

Finally, I would just mention the HIV/AIDS initiative, which has a mother-to-child transmission element as well as helping caregivers, who many times are women, to deal with the travails of dealing with relatives with AIDS, preventing further infections, many of whom would be women.

This is a broad agenda of helping women. And it is in our moral interest, of course, to do so, but it's also in the interest of these societies, economically and in terms of modernity, that women take a rightful place and are fully contributing to the prosperity of these societies.

MURKOWSKI: Thank you. Appreciate that.

SEN. RICHARD G. LUGAR (R-IN), CHAIRMAN, FOREIGN RELATIONS CMTE: Thank you very much, Senator Murkowski.

Senator Nelson?

SEN. BILL NELSON (D-FL), FOREIGN RELATIONS CMTE: Thank you, Mr. Chairman.

Dr. Rice, Senator Dodd and Chafee and I just returned from visiting with four Latin American presidents in their respective countries. And we are certainly of one mind that we need to be more engaged in the region.

When a leader such as Chavez in Venezuela starts lurching to the left, and yet we have a dependency there of some 13 percent to 15 percent of our daily consumption of oil coming from Venezuela, clearly one part of our foreign policy ought to be that we ought to start planning on weaning ourselves from that dependence, not even to speak of the global dependence that we now have on foreign oil.

But here's one right in our neighborhood. And Chavez has threatened, from time to time, that he was going to cut it off.

Now, that's a hollow threat because there are no refineries that, outside of the Gulf coast, that can do it, although it would take them a year, maybe two, to build those kind of refineries if, for example, they struck a deal in China to take his oil.

We clearly urge you that we need a Latin American policy that will get us engaged a lot more. And then, in the places where we see the presidents of those countries really trying to do something, and, in fact, having an effect, such as Toledo in Peru, such as Paraguay, such as Argentina's beginning to have some economic uplift, that if America is more engaged, it's going to be some wind under their wings. And it's going to help stem that if a Chavez continues to go leftward, that we will enable those other countries, who are more centrist, to corral him in or at least have a chance of doing it.

So that's a little message that I bring you from the activities of the last week.

Now, elsewhere in the hemisphere -- and you can appreciate this since I represent the state of Florida -- Haiti is a disaster. And it's going to continue to be a disaster until we get engaged and do something seriously, along with particularly the other nations of the Western Hemisphere, financially and politically to help them.

I've had a difference of opinion with the administration. And I think you did have a policy of regime change. And although Aristide was a bad guy -- you know, it's kind of hard to say we support democracy and elections and then we go and push him out. But that's done.

Looking forward, we're getting close to the authorized support now under the U.N. peacekeeping force of 6,700 military and 1,600 civilian police. Do you think that's an adequate number?

RICE: Well, I believe that the number that has been determined -- 6,700 or so, led by Brazil, as a stabilization force now, after the initial stabilization was done by the United States and the French and others, is judged to be adequate to the task.

The question has really been about more of what can that force do. And I think the expansion of it, of a more aggressive stance by that force in going into areas that are particularly violent and dealing with the violence and the militias in those areas is probably really the question that we have to deal with.

I'm glad, Senator, you mentioned the police forces, because in the long run, what really will help Haiti is that it needs a professional civilian police force that can be counted on to enforce law, not to break law. And we have, as you well know, dispatched civilian police trainers from the United States and from other places to try and engage in that activity.

But I agree completely. Unfortunately, Haiti seems to be a place where natural and manmade disasters have come together in a really terrible way for the Haitian people.

They do have a new chance now. They have a transitional government that is trying to arrange elections in the fall. We need to support that process.

And we have had a successful donor conference recently with a $1 billion commitment, the United States is about $230 million of that.

And so...

NELSON: The problem is they never follow through.

RICE: Senator, I agree. We have to press very hard on people to follow through on the pledges that they make. That's a problem worldwide.

NELSON: And this has been going on for 200 years of Haiti's history.

Now, when the U.N. comes up for reauthorizing, in the Security Council, that peacekeeping force, what's going to be your posture about considering an expansion of that peacekeeping force?

This is a country of 7.5 million and a lot of them are outside in those areas that are now defoliated, thus, the mud, the slides after the storms and so forth.

RICE: Senator, we've been focused now on trying to stabilize the situation with the stabilization force that is there. The Brazilians have done a fine job of leading that.

And I just might mention that this is the first time that a lot of those countries, many of whom are from the hemisphere, have actually done peacekeeping in the Western Hemisphere.

And so this is a step forward for the neighbors to embrace Haiti in the way that they have.

What more will be needed, I have to demure. I think we need to look at the situation.

But for now, I think we're in the right place in terms of peacekeeping forces.

We have been concerned about what missions they were prepared to take on. And that is being resolved. And there is a more aggressive posture.

And we really have to put a major effort into the civilian police development.

We also -- as you are absolutely right, people pledge; they don't follow through. And we have money to put Haitians to work. We have money to help restart the Haitian economy, but we've got to follow through.

NELSON: Well, then I want to suggest something to you. And it's a bill that is sponsored by one of our Republican colleagues, Mike DeWine of Ohio. And it's called the HERO Act, which is an acronym.

But what it does is it allows textiles to come in, like we already have in the Caribbean Basin Initiative in other areas in the Caribbean, but it allows it for Haiti. And then they can come duty free into the U.S. It would foster an economic uplift by creating jobs.

But we can't get the administration to support it. It's a Republican senator's bill.

RICE: Senator, I think we believe at this point that the best course with Haiti is to work with them to take full advantage of the Caribbean Basin Initiative, to work with them on job creation through some of the programs that we have out of our economic support fund for Haiti.

They will benefit in a secondary way from what happens in Central America with trade, if CAFTA can be passed.

And so at this point, we think we have the right tools. We just have to make it work.

I understand fully the concerns about Haiti both from a humanitarian point of view and also from a stability point of view. And we probably dodged a bullet in the earlier days with the ability to get Aristide out peacefully, because he had lost the ability to control that country, to govern authoritatively in that country.

But we have a lot of work ahead of us in Haiti. I'd be the first to admit it.

NELSON: Madam Secretary-designate, you can make a difference. If you'll jump on that horse and ride it and keep on it over the next four years of your tenure, it'll start to pay huge dividends.

And nobody's done that. We go in and we fix a problem, then we turn around and we leave it, and so do the other nations, and then Haiti just goes back into chaos.

Let me shift to the other side of the globe: Iran. What specific steps will you advocate to stop Iran's nuclear program?

And I'm talking about beyond the noise that we hear from Europe. This senator doesn't think that's going to cut it.

RICE: Well, Senator, this is a problem that we're trying to approach both multilaterally and through some bilateral pressure.

And we were the first to really put the Iranian nuclear program on the table when the president did his speech, his State of the Union speech, and identified the Iranian nuclear program.

I can remember back in the early days, Senator, people didn't take nearly as seriously that Iran was actually trying to, under cover of its nonproliferation treaty access to civilian nuclear energy, to build a nuclear weapons program. I think people now, because of Iranian behavior, are very skeptical and suspicious of what the Iranians are doing.

NELSON: Are you ready for sanctions?

RICE: Well, we already have an awful lot of sanctions on Iran unilaterally. There's really not terribly much more we can do. But I do...

NELSON: How about getting Europe to go along?

RICE: Well, Senator, I would take as a first step that if the Iranians do not show that they're going to live up to their international obligations, that we refer them to the Security Council. That has been our policy, that when you're in violation of your obligations under the NPT, that you get referred to the Security Council.

And the IAEA has been, I think, documenting that the Iranians have not been serious about their obligations.

So at some point, that may be exactly where we need to go.

We are making some progress in unifying people's view of what the Iranians are doing and putting pressure on the Iranians. We do work with the E.U.-3 to try to help them formulate a strategy that would really hold Iran accountable, not just take Iran's word for it.

And we've made some progress in getting people who engage in bilateral assistance with Iran to be more cognizant of some of the proliferation risks. For instance, the Russians who have a civilian nuclear power program with Iran and their reactor at Bushehr, now say to the Iranians that you will have to return the fuel, in other words, close the fuel cycle and sign the additional protocol.

Those are all positive steps. We need to continue to take those.

But Senator, the spirit of your question is that, at some point, Iran has to be held accountable for its unwillingness to live up to its international obligations. And I could not agree more.

NELSON: Hopefully sooner than later.

RICE: I could not agree more.

LUGAR: Thank you very much, Senator Nelson.

Senator Alexander?

SEN. LAMAR ALEXANDER (R-TN), FOREIGN RELATIONS CMTE: Thank you, Mr. Chairman.

Dr. Rice, welcome and congratulations, and thank you for being here today.

I apologize to you. I missed part of the hearing, because I was at another hearing for Mike Leavitt, who has been nominated to the Department of HHS. But is wasn't a total loss, because we were talking about early childhood education, and I was able to remind your new colleague in the Cabinet that you began piano lessons at age three and that that is a good sign for early childhood education, to have that kind of example here.

I have three questions to ask. They are all subjects that have come up before in one way or the other. And I thought I'd ask them all at once and then give you a chance to comment on them, because they are interrelated. One is about Iraq. One is looking beyond Iraq, and one is to return to the subject that you said almost every Senator had mentioned to you -- Senator Coleman has done some work on, especially on this committee, and that has to do with visas of foreign students (UNINTELLIGIBLE) effect on our higher education system. I want to think about that in a little different way.

Question number one, about Iraq: Some colleagues have suggested and asked you about an exit strategy.

I don't think we need an exit strategy. I think we need a success strategy.

But I would suggest -- and my question is this -- that after the election that we might take a more realistic and perhaps a different view of how we define success.

And so my question is: How many American lives, how long are we willing to take? How much money are we going to spend?

What is the definition of success in Iraq? It's one thing to give people their freedom. It's quite another to help build a stable, pluralistic, democratic society. What are the limits on that? That's the first question.

Second question: This is beyond Iraq. I know your conversations with the president are between the two of you, but perhaps you can talk about this in a general way.

You're the secretary of state. President Bush is president. You're sitting around in a National Security Council meeting in a year or so and someone suggests that we have a circumstance in a Middle Eastern country, some other country, where we need to change a regime, we need to engage in nation building again. What kind of advice would you give the president about what lessons we've learned from Iraq and the other examples of nation building that he ought to consider before he commits us again to one more nation building?

I've heard strong words today about Iraq. I wasn't here, but I would have voted to give the president authority to go to Iraq. I think he made a reasonable decision to go.

The war was a stunning success, and, in my view, there have been a series of miscalculations since then. You, yourself, have used words like "adjustments."

I think it's a sign of strength for us when we look back, we see something that we could do better, that we recognize that, learn from that and go ahead.

So I'm asking, if we were to consider nation building again -- and we've done it many times since World War II -- what are the lessons for the president?

And my own view of that is that there's more than one way to implement the "city on the hill" moral mission that we have in this country to spread freedom around the world. One way is to change a regime and try to make a country more like ours. Another way might be to celebrate our own values and strengthen ourselves and be a good example, and by doing that, to spread freedom.

You, yourself mentioned -- and this leads me to my third point -- the example of foreign students here. All of us, when we travel, we see ministers, we see citizens, business people who have been in this country and who have carried our message, our values, our principles back more effectively than almost anything we can think of. In fact, I think perhaps our most effective method of foreign policy has been our programs that have admitted so many students from around the world to the United States.

But there's another aspect of that as well. The number of foreign students attending our major universities, especially the graduate programs in our major research universities such as the one you were provost, Stanford, has dropped dramatically. Applications to American graduate schools declined 28 percent last year. Those from China fell 45 percent; from India, 28 percent.

There are several reasons for that. One is that India, China, Germany, Great Britain, all are seeing a brain drain to the United States. We talk a lot about outsourcing of jobs. We have an insourcing of brains.

That drop of foreign students, of brain power, hurts our ability to keep our technological edge, and it is of great concern to me over the next ten years.

So I'm not just looking at spreading our values around the world. I'm looking very much in our own self-interest in another way, which is what can we do to make certain that we pay more attention, for example, to making sure that students who are here or researchers who have already cleared the visa process don't have to go home for a month to reapply for the same kind of visa.

So my questions related are: One, what is our success strategy for Iraq?

Number two, based on the lessons for Iraq, what advice would you give our president about some things he might want be to consider in terms of the amount of money, the amount of time, the amount of troops we might have to expend or sacrifice in any future nation-building exercise? What have we learned in Iraq?

And number three, what can we do to help you in your new role to make it easier for foreign students to come here, both so we can spread our values around the world and so we can take advantage of their brain power to create jobs for us in the United States?

RICE: Thank you, Senator. Let me take the first of those. And I'll try to segue as you did so well into the second.

I do think that in Iraq, you were right. What we need is a success strategy, not be an exit strategy. And that's a very good way to talk about it.

The success here is going to be that Iraqis are in charge of their own future and recognize that it is really up to them to make that future one that is inclusive of all of the divisions that have bedeviled Iraq, that we've given them the capability to defend themselves, principally from internal insurgency, but also to give them the ability that their neighbors will understand that Iraq is a stable place, that it is a unified Iraq.

One of the obligations, by the way, that we undertook when we decided to change the regime in Iraq was that we'd be concerned about the territorial integrity of Iraq. And we have to keep that obligation.

And finally, that they are beginning the process towards the stabilization of the their economy so that the economy could support those first two: a political process and a military insecurity process.

I can't give a time line, but I think we will know when the Iraqis are able to have in place institutions, no matter how fragile and no matter how young, where they're actually beginning to try to solve their own problems within those institutions.

RICE: Now, they're not going to solve them perfectly. They're not probably going to solve them the way that we might necessarily. But you see, step by step over the last year or so, the Iraqis taking more and more responsibility for solving their own political problems.

And I would take, for example, what has been going on with the Kurds about provincial elections in Kirkuk. They have been resolving that among themselves. That's an important political process.

On the security side, I think it's going to be somewhat clearer. They may need the help of multinational forces for a while, but ultimately, Iraqis have to be willing to defend and fight for their own freedom. And they are showing a desire to fight and defend their own freedom.

We have to get them the capacity to do it. And I took note of what Senator Biden and Senator Hagel and others said this morning -- Senator Kerry -- about the need to make sure we're training forces in the right way, that we accelerate that training. I do look forward to General Luck's coming back and letting us know what the next phase ought to be.

We face changing circumstances here, but I put a lot of emphasis on getting those security forces trained and then finally helping them economically.

So it isn't that we have to see an Iraq that is a fully democratized, mature economy, fully able to deal with all of its divisions. That's going to take a very, very, very long time. What we have to see is that they've been launched on a path to be able to achieve that, that that path is one that is clear ahead for everybody, and where they are taking advantage of that path.

And I think we will start to see that after these elections, when (ph) I think they're thinking in those ways.

Senator, I've thought 1,000 times about how one thinks about nation-building, something that I famously said we probably wouldn't be involved in. We have been. And it's turned out that we've had to be, because our security depends on states that can function, on not having failed states in the midst.

We learned the dangers of an Afghanistan that people left alone after the Soviets left, and we left it as a place that became a terrorist haven. We can't make that mistake again.

One of the important lessons that we've learned is that the skills needed to help reconstruct and stabilize a country and put it on a path to stable nationhood are skills that we haven't really had to use in a very long time, maybe since World War II. And one of the reasons that I'm so supportive of this new Office of Reconstruction and Stabilization is I think it starts to give the State Department a focus for those skills.

We find ourselves trying to help people create police forces. We find ourselves trying to help people create independent judiciaries that are not going to be wracked by corruption. We find ourselves giving technical assistance on currency. We find ourselves giving people advice about how to start up a ministry in many of these places.

We can learn, from the experiences that we've had in Afghanistan and in Iraq, how to put those skills together in a more permanent way and how to be more predictive of what might be needed in places that we know we're going to have to engage in this kind of activity.

The office that is there now, I think, needs to look at what is going to be needed in Liberia, what is going to be needed in Sudan, and start to put together those skills now so that you have a civilian counterpart to what our military often does in providing immediate stabilization.

Otherwise, we have to depend on the military to do it, and that's not always the best answer. I can tell you how incredibly supportive the uniformed military and the Defense Department are of this idea of an Office of Reconstruction and Stabilization, because they want and understand that the State Department needs to have the kind of expertise that we need to do this.

Finally, just on the visa issue, I will be coming back to you on exactly this.

I'm, of course, an academic. I was provost of Stanford University. We had a large foreign student population.

It was one of the best things for the foreign students, and it was one of the best things for our students too, because they engaged people from other places, as students, not as Chinese or not as Russians, but as students.

RICE: They were all in a common enterprise.

It changes the way we think about people. It changes the way they think about us.

I have gone abroad so many times and sat and heard the prime minister describe how many American universities his people have come from.

And you know what's really remarkable about it? It's not just from Stanford or Harvard or Yale, but it's also from universities like I went to, the University of Denver or Texas A&M or Nebraska or, I'm sure, Tennessee. And that's invaluable.

And so I will be coming back to you, because these numbers are disturbing and we need to do something to reverse the trend. ALEXANDER: Thank you, Mr. Chairman.

I'd like to ask to put my entire statement in the record.

And if I may just underscore, I just want to emphasize the point, with all the discussion about visas, that we're not just talking about some good will gesture to the world. We're basically talking about recruiting the most talented people in the world who have helped us create our very high standard of living so that 5 percent or 6 percent of people in the world have 25 percent or 30 percent of all the money. That's one of the things we're talking about here.

And we're going to lose our capacity to do that to some degree if we don't solve this problem.

Thank you, Mr. Chairman.

LUGAR: Thank you very much, Senator Alexander.

As you can tell, Dr. Rice, the committee is fortunate to have people who have served as governors of the states, members of the Cabinet.

But the visa issue was a part of our hearings during last year. Senator Alexander played a leading role in that in the follow-up with a round-table group.

It's a very serious issue with the bureaucracy of our country because of homeland security and other purposes has (ph) its points. But we're losing ground. And the committee takes this very seriously. I'm sure you do from your background at Stanford and elsewhere.

And so I appreciate his bringing this up and likewise your reiterating the reconstruction idea, which could be called nation- building or reconstruction, but nevertheless so important. And the progress you're making there, I think, is critical.

Let me just now call upon Senator Obama for his initial 10 minutes of questioning.

SEN. BARACK OBAMA (D-IL), FOREIGN RELATIONS CMTE: Thank you very much, Mr. Chairman.

Thank you, members of the committee, Dr. Rice.

First of all, let me say how grateful I am to have the opportunity to serve on this committee. I know that it has a wonderful reputation for bipartisanship. And that, I think, is partly due to the excellence of the chairman and the ranking member and the degree to which you both work together extremely closely.

So I'm looking forward to my service here.

Dr. Rice, it's wonderful to see you here. And I've been very impressed, obviously, with your mastery of the issues. Since it's the day after King's birthday, obviously, 20 or 30 years ago, it's unlikely that I'd be sitting here asking you questions. And so I think that's a testimony to how far we've come, despite how far we still have to go.

And I think everybody rightly is extraordinary impressed with your credentials and your experience in this field.

I've got three areas I'd like to explore that have already been touched on to some degree. I want to try to see if I can knock out all three of them with the time that I have remaining.

The first has to do with the issue of nuclear proliferation, which has already been discussed. But I think it's important to note that in the midst of what was sometimes a very divisive campaign, there was strong agreement between President Bush and Senator Kerry that our number one priority, that our single greatest challenge is keeping nuclear weapons out of the hands of terrorists.

And there has been enormous leadership on the part of this committee, and Senator Lugar in particular, working with former Senator Nunn, to move the process forward of securing nuclear material in the former Soviet Union.

I am still concerned that less nuclear material, as I understand it, has been secured from the former Soviet Union in the two years after September 11 than the two years prior to September 11. Now, it may just be that there was low-hanging fruit initially and it starts getting harder as time goes by.

But I'm also concerned of the fact that we've never fully funded, it appears to me, the Nunn-Lugar program.

I know that Senator Lugar is going to be presenting an amendment that gives your office more flexibility in this area. I'm hopeful that I'm going to have the opportunity to work with him and my colleagues on this piece of legislation.

I guess my question is: How are you going to use this flexibility? Number one, are you going to be seeking full funding?

Number two, beyond the existing mechanisms to lock down existing nuclear material, what else are we doing, for example, to make sure that Pakistan has a mechanism in place to ensure that those nuclear weapons or that technology is no longer drifting off into the hands of hostile forces?

RICE: Thank you.

First of all, on nuclear proliferation, let me just say that broadly, our strategy has been really threefold: first of all, to be very concerned about the loopholes in the Non-Proliferation Treaty. The Non-Proliferation Treaty is in trouble, because there are countries that have signed onto it and then are using the access to civilian nuclear power to really pursue nuclear weapons programs. Iran is a prime example of that. The president has made a number of proposals -- Senator Lugar has -- we've talked about this -- to close the fuel cycle, to make it not possible for countries to enrich uranium or other fuels to the point that they're left with the fuel, but rather to get a fuel supply from the fuel suppliers that are out there.

And it's a proposal that has met with some resistance, but it's something that we're continuing to work on. Clearly, we have to make the proliferation problem somewhat easier by not having countries that are suspect with access to the fuel supply.

OBAMA: Can I interrupt just real quickly?

RICE: Sure.

OBAMA: Is the resistance on those reforms coming simply from countries that are in the midst of development or are we also seeing resistance from allies like France and Germany and others that already have existing nuclear capacity?

RICE: The resistance really is coming from countries that we think have no intention of building a nuclear weapon but who want to maintain the access to their entire civilian nuclear cycle.

So we've had to talk with some countries about the fact that, yes, under the Non-Proliferation Treaty countries have access to this, but when you get a country that is cheating under that access, that maybe for those countries you shouldn't have the access.

So this is a discussion. We got a one-year moratorium on enriching and reprocessing, and we'll try to keep pressing forward.

Secondly, we've been very aggressive on what is a really bad problem, which is nuclear entrepreneurship, the kind of A.Q. Khan factor, these black market entrepreneurs who are selling nuclear secrets, selling, in fact, the whole little kit, if you will.

And the takedown of the A.Q. Khan network is really one of the most important things that we've done. It will give us information on how this works. We have to put this one out of business, and we have to work to see if there are others.

This has all been helped by what happened in Libya, where a country voluntarily gave up its weapons of mass destruction in hopes of a better relationship with the international community. And we have to try and incent (ph) that kind of behavior on countries that have pursued weapons of mass destruction.

And then, finally, you mentioned -- I should also mention the Proliferation Security Initiative, which, of course, helps us to interdict dangerous cargo. So it's a broad program.

But the Nunn-Lugar piece of this is very important. As I said, as an old Soviet specialist, I know a good bit about the dangers there. We have tried to fund it at levels that are adequate to do the work at hand. And you mentioned the securing before 2001 and the securing afterwards. Some of that is exactly as you mentioned, low- hanging fruit. Some of it is that there's a kind of schedule for which sites get secured when.

What we have done is to go to the Energy Department and ask them to prioritize, to try to get the most important sites secure in the earliest time.

And the timetable has been collapsed to one where, if we keep to schedule, we should be able to secure all materials within the next four years.

So we're making some progress.

We need to work harder on the bureaucratic impediments to this. There are impediments on both sides.

OBAMA: But my understanding, though, is also that at the current schedule we'd be stretching this process out for potentially 13 years, as opposed to four. Collapsing it will require a little more aggressive movement on the part of the State Department.

And I recognize this is difficult. Russia may not always be entirely interested in moving this along as quickly as possible.

But it strikes me that, with the expertise we have on this committee, this is something we would like to work on aggressively.

RICE: And we should certainly work on (UNINTELLIGIBLE)

We do, by the way, have a collapse scheduled for four years. We will see what it takes to get that done.

But I appreciate the interest in this. This is something we should work very carefully on.

OBAMA: The second question I have -- and this is something that I think repeatedly comes up as I travel to Illinois. I suspect this is true everywhere, and that is the enormous strain that is being felt by our National Guardsmen and reservists in Iraq.

And I did a calculation -- or my staff did -- that I think if Illinois was a country, we'd be 4th or 5th in size of -- as a coalition partner. I think that may be true, in fact, to just the National Guard, alone.

Now, I recognize you're not up for confirmation as secretary of defense, presumably, at some point I'll have the opportunity to ask Secretary Rumsfeld about some of these questions.

But I am concerned about this notion that was pursued by Senator Biden and others that we've made significant progress in training troops. Because it seems to me that in your response to Senator Alexander that we will not be able to get our troops out absent the Iraqi forces being able to secure their own country, or at least this administration would not be willing to define success in the absence of such security.

I never got quite a clear answer to Senator Biden's question as to how many troops -- Iraqi troops -- don't just have a uniform and aren't just drawing a paycheck, but are effective enough and committed enough that we would willingly have our own troops fighting side-by- side with them.

The number of 120,000 you gave, I suspect, does not meet those fairly stringent criteria that Senator Biden was alluding to.

I just want to make sure, on the record, that you give me some sense of where we're at now. You may not have all of the answers, but I'd like to at least get a better sense of that.

RICE: The number that we consider trained is 120,000.

It's a little hard to give a number for exactly the criteria that you are talking about, because a lot of this is a matter of what you experience when these forces actually go into difficulty.

We have had -- and everybody understands that we have had problems with people leaving, people deserting. We've had problems with people not coming back. And we've had problems with particularly some of the police forces who are, frankly, undermanned. And one of the things -- are undersuppplied.

We are dealing with the structure of the police forces by trying to go to more commando units that are more heavily armed for what is now contact with insurgences, not just what your average beat cop can do.

The Iraqi forces have fought pretty well in a number of places. The forces that have fought best are the ones that have clear leadership by Iraqis.

And this has caused us to focus more on the need for leadership, for coherent leadership for these forces, and I mean leadership of units, not leadership in the broad sense.

And so the Iraqis themselves are spending more time vetting people, experienced leaders who can be brought back to give structure and morale to these people. They're considering the policy of putting some of our people in as really almost mentors with these forces -- really paying more attention to their capability to fight as integral units, not just the numbers of people that we're training.

And I think that's going to be responsive to some of the concerns. And one of the points that General Luck will look at is how well that process is going and what more we need to do.

But the numbers are 120,000. When they are tested, some perform well and some don't.

We have to recognize that this is a very tough environment even for the best-trained forces.

OBAMA: Ours.

RICE: Even for our forces. And while we want to accelerate the training of the forces, we don't want to do what we did in an earlier cycle, I think, which was to accelerate it to the point that we put unprepared forces on the field.

So it's a complicated issue. But I think we're trying to work our way through it. We've tried adapt to what are really changing circumstances and changing demands for the Iraqi security force personnel.

OBAMA: Mr. Chairman, I know my time up. I would just make this note, that if our measure is bring our troops home and success is measured by whether Iraqis can secure their own circumstances, and if our best troops in the world are having trouble controlling the situation with 150,000 or so, it sounds like we've got a long way to go.

And I think part of what the American people are going to need is some certainty, not an absolute timetable, but a little more certainty than is being provided, because right now, it appears to be an entirely open-ended commitment.

RICE: Senator, if I may just -- to that point, I want to be understood that we are always looking to complete the job, but of course to get our forces home as soon as possible.

And it will be a function of our -- their capability and our ability to help them. But there's at least some hope that Iraqis may, themselves, fight this fight somewhat differently and somewhat better because it's their fight.

I was asked once: Why are Iraqis better in certain situations than even the best-trained coalition forces? And of course, an Iraqi knows whether that's a Syrian or Saudi or Iraqi. They are of the country, of the culture, and they're fighting for their own freedom.

And so one of the standards of success is really that the Iraqis are fighting for their freedom. Even if they're not fully able yet to secure themselves, that they are fighting for their freedom. And I think we are seeing very strong signs of that in the country.

LUGAR: Thank you very much, Senator Obama.

I would just want to underline the senator's point, and you have in your own way, Dr. Rice.

But I know when Prime Minister Allawi was here he told some of us around this table that by the time of the election, their officers in (UNINTELLIGIBLE) country, about a year from now, there'll be at least 200,000 people, who are both police force and national guard, who would be capable, who can, in fact, patrol the streets, could control the country. And then he assured us there will be a good election, unlike what we are likely to see on January 30th. So from the Iraqis' standpoint, they come out with this (ph) -- I'm just wondering if it's not possible for us to devise, between you and you us, some sort of metrics that are more satisfying than the large spread we have between Senator Biden's questions and Senator Obama's follow-up of 4,000 and 120,000.

As you point out, of the 120,000, it's very difficult to determine how well-trained, how many weeks, what kinds of staying power, whether they're (ph) overwhelmed. And we appreciate that.

But since the issue is so critical, with regards to, as Allawi said, the negotiation and with us as to how rapidly we withdraw in a seemly (ph) and secure way. This is going to be up front with the American people for quite sometime.

Now, I think we can probably do better with the question. It's very difficult to do so in this dialogue, because it's not really clear all of the criteria of training and capability.

But I'd just ask you to think through this a little bit, and we will too, creatively, maybe through hearings or through studies of some sort.

Because I think some measurement, almost the way we were gauging the electrical power output for a while, or how much oil was finally being produced, there have to be some indicators that give sense of progress and hope and what have you to this.

RICE: Thank you, Senator.

LUGAR: Senator Sununu, I congratulate you on your co- chairmanship with Senator Biden, of a very successful observation effort.

SEN. JOHN E. SUNUNU (R-NH), FOREIGN RELATIONS CMTE: Thank you, Mr. Chairman.

And I suppose it's largely due to the fact that you chose me. So I'm very grateful for that.

(LAUGHTER)

Dr. Rice, in your remarks, you mentioned that the United States has a role to play in providing assistance to the new Palestinian leadership. And in our meetings last week, with both Abu Mazen and Abu Allah (ph), it was emphasized that in structuring the Palestinian security forces, one of the biggest needs was money to deal with the pension issues and payment issues.

Do you intend to recommend a financial assistance package for the new Palestinian leadership to restructure their security forces? And is it likely that that request would be part of a supplemental budget early in the year?

RICE: Thank you, Senator. I will look with others when I get to State at precisely how we might fund the obligations that I'm sure we're going to have to undertake to help the Palestinians in this important period of time.

Clearly, the training of the security forces is going to be critical. They've got to fight terrorism. They've got to have trained security forces to do it. It will be a good investment to train those forces.

I would just note that we have, through indirect assistance, through the United Nations, through nongovernmental organizations, provided a good deal of funding to Palestinian reconstruction, Palestinian humanitarian needs. We also have -- the president approved the funding of $20 million in direct support to the Palestinians just recently to help with their election.

So there is a fund flow, and we will look at what more we need.

I would hope that some of this would be funded by their Arab neighbors. I have to say that if people really want a peace, if the countries in the neighborhood, as they come and tell me and they come in to tell the president, they tell Secretary Powell all the time, "We have got to have peace; you've got to work on behalf of the Palestinians," then there are a number of their neighbors who could really afford to help fund some of these efforts.

And I'm sure that I will be actively seeking their support, because that is one thing that the neighbors could do for the Palestinian people.

SUNUNU: Well, that was my second question, is what can the Arab states do to help. Obviously, with $45 or $50 a barrel oil, the economies there and the revenue base there is much stronger than it has been in past years.

Is there any specific role that you see for the Arab states in addition to financial resources?

One of the issues that was raised in some of our meetings were perhaps the opportunity to assist in the training of the security forces.

And let me be clear, there are two different steps to this. One is restructuring the security forces, which will take resources and funding in and of itself, and a lot of political will. And then the second step would be the training of security forces.

Is there a particular partner in the region that you think might be best suited to that training role?

RICE: Yes, it appears to me that both the Egyptians and the Jordanians will probably have a role to play. They've played that role before in various ways.

And we have had extensive conversations with them, at other times, about playing that role at the conference in Aqaba. And we would want to get them involved.

The Egyptians, of course, also have a role to play in helping stabilizing the Gaza, as the Israeli forces withdrawal. And we have talked with them about that.

There are other roles that we need the Arab states to play. And I think the most important is, as I mentioned earlier, you can't insight hatred against Israel and say you want a two-state solution. It's just got to stop. They've got to stop it in their media. They've got to stop it in their mosques, because it is a message that is inciting the people who want to destroy the chances for peace between Israel and Palestine -- a Palestinian territory.

So we sent that message. And it was probably little noticed, but when we went to Sharm el-Sheikh, the Arabs actually issued a very good statement. And it was on behalf of Arab states, the Arab League, and it was a very good statement. We will be going back to them to remind them of that statement and to ask them to live up to it.

SUNUNU: In addition to the value of that statement, I would mention that one of the things that came up, time and again, was the impact that your visit had on the area and the importance of that kind of high-level engagement.

I know you answered some questions with regard to a special envoy. It's something that you have supported in concept.

But I would just underscore the value of that high-level engagement, whether it's through a special envoy or your personal commitment.

You mentioned Egypt and Jordan, so a third question has to do with public diplomacy.

You mentioned it in your remarks. It's obviously a goal that's shared by most everyone on this committee, to focus on public diplomacy, and even reform some of our efforts in that area.

I believe one of the areas of public diplomacy that has been a success story is that of the American University in Beirut, the American University in Cairo, what it has done for both students in the region and American students seeking to broaden their educational base.

I have had suggested to me the initiative of developing an American University in Amman. And I was curious what you thought of that objective, and what kind of support you might lend to such an effort.

RICE: Well, thank you.

I will certainly look at it. I haven't taken a look at that and I'd like to have a chance to do that.

But I have to say that the two universities that you mentioned have been really extremely important in helping to create a link between the United States and these important countries and in providing a place for moderation in these societies.

And so it's certainly the kind of thing that we should look at.

We have to look, overall, at what I like to call a conversation, not a monologue. It's one thing to get your message out, which is how we often think about it, but it's also important to engage other cultures.

And I would hope that that includes, on the part of the United States, a renewed commitment to the training of Americans in critical languages like Arabic and Farsi and other languages and in the study of those cultures.

I was a Soviet specialist, and learned Russian at a time when a lot of us were told that was a good thing to do for the well-being of the country. And we linked our cultural awareness and linguistic awareness to the broader question of how we secured ourselves and how we won the war of ideas.

And we have to do that again.

There are too few of us who are able to engage those societies on their own terms.

SUNUNU: Finally, I'd like you to talk a little bit about the Mideast partnership.

This is a new way of looking at financial assistance. It's obviously consistent with the goals that you spoke about in your remarks today -- economic liberalization, political reform.

Do you believe that MEPI, as implemented to date, has been successful? Is it a model that we ought to seek to reproduce elsewhere?

And how do we ensure that an approach like MEPI and the funding commitment made through the Mideast partnership isn't duplicative of efforts within USAID or other State Department programs?

RICE: On the broader question, there needs to be very close coordination between USAID and the State Department. And I think that that has gotten better, just watching it from the outside. I will obviously know more as I get to the inside.

But I really do think that Andrew Natsios and Rich Armitage and Colin Powell have worked very closely together to make sure that all of our resources are going in a way that is not duplicative to further our goals.

I am a supporter of MEPI. I think that it is a part of the concrete things that we can do to change the environment in the Middle East. And its focus on good governance, as well as liberalization of economies at the same time that assistance is flowing is a very important innovation.

It's also behind the Millennium Challenge Account approach, where I think we now have a consensus about foreign assistance, that foreign assistance has to be a two-way street, that it's not just money going into a country, but it is -- a country has to be devoted to fighting corruption, to liberalizing the economy, to good governance, to spending money on health care and education for the people or it's not going to succeed.

And that kind of compact between donor and donee is the future wave, I believe, for foreign assistance.

And so we do have other initiatives that push in the same direction.

I might just mention also, Senator, that we hope in the Middle East to be able to take advantage of free trade as a tool both to encourage peaceful liberalization between the countries of the region, but also with us.

And so Bob Zoellick has been putting free trade agreements in place in a lot of places in the Middle East and looking to the day that we might have a Middle East free trade area.

SUNUNU: I want to note, for the record, that was question number five, (UNINTELLIGIBLE) Jordanian free trade and obviously the initiatives from Iraq that have been undertaken.

And I certainly encourage you to continue along that line. I think in the long term, the issues that have been stressed within part of the Mideast partnership, that is economic liberalization and the trade liberalization that comes along with that, will do far more for economic growth and development as any short-term assistance we might provide.

That short-term assistance is important, especially in areas like restructuring the Palestinian security forces. I don't think that could happen in the short term without some outside assistance. But in long term, economic growth development opportunity, it's really going to be determined by the macroeconomic policy and trade policy that are chosen by our partners.

Thank you, Mr. Chairman.

LUGAR: Thank you very much, Senator Sununu.

Senator Martinez?

SEN. MEL MARTINEZ (R-FL), FOREIGN RELATIONS CMTE: Mr. Chairman, thank you very much.

It's a great honor to be a part of your committee. I want to thank you and ranking member Biden for the warm welcome. And I look forward to working with you and the other members.

I'm particularly honored today to have the opportunity to participate in the confirmation of Dr. Rice, someone I came to know as a colleague and friend and our work together in the administration. And I can certainly recall many moments in which her steady leadership and her steady hand were felt. From those early days of our administration when an American airplane was down off the coast of China, to the tumultuous days after 9/11 when good, steady leadership was needed, Dr. Rice was there providing it to the president, each and every day.

I know that in all of my interactions with her, I've always found her to be, not only extremely competent, but a person of great personal integrity. And I'm extremely proud to be in support of her confirmation.

We've talked a little bit about Latin America, Dr. Rice, an area that's of great interest.

I share with Senator Dodd and Senator Nelson the anxiety that we have about the need for us to be more engaged in the region. You hear it from all their leaders when you travel there. You also just know that it is an area that begs for our participation and engagement in a more direct way than we've had in the last several years.

MARTINEZ: There are some signs that are troubling to me. And I know we've talked about Venezuela. I want to go back into Venezuela for a moment, because it seems to me that over the last -- well, first of all, Venezuela is a government that purportedly was elected through a democratic process, however, anything but a democratic governance is what takes place there today.

I'm troubled by the recent events where property has been expropriated, inflammatory statements, as Mr. Chavez travels the world, that he continues to make against the United States, which was a pattern of his throughout the time of his governance; his close relationship with another negative force in the region, with the government of Cuba and Fidel Castro himself.

It really does raise in my mind some serious skepticism about our ability to work with him or his commitment to true democracy and pluralism within his own country.

In addition to that, we now know recently that Mr. Chavez has initiated conversations with Russia about the major purchase of arms. It sounds to be something in the order of $5 billion. It would be a terribly destabilizing effect in the region. He's talking about purchasing MiG-29s, advanced jet fighters, as well as a large, large number of AK rifles and other military equipment. He's already purchased helicopters.

This would create, I think, a tremendous imbalance in the region in terms of the potential to trigger an arms race in a region that frankly does not need one.

And also I greatly concern myself with the continuing friction that appears to exist -- or actually doesn't appear -- in fact exists between Venezuela and its neighboring country Colombia.

I know in Columbia, we've tried to support President Aribe and his fight against the narcoterrorists.

And so my question to you would be: How you do you view the government of President Chavez, the kind of threat that it represents to stability in the region as well as to his neighbor in Colombia, and his continuing pattern of association and relationship with some of the worst characters in the world, including Fidel Castro?

RICE: Thank you, Senator.

I think that we have to view, at this point, the government of Venezuela as a negative force in the region: negative in terms of its effect on its neighbors, as you have outlined; negative in embracing the only undemocratic government in the region -- as I said, the only place there's an empty chair in the OAS is Cuba -- negative in the sense of what he is doing inside of his own country to suppress opposition. And it's a very, very serious matter.

We can, I think, work with others to expose that and to say to President Chavez that this kind of behavior is really not acceptable in this hemisphere that is trying to make its way toward a stable democratic future.

Democracy has a lot of challenges in Latin American. It has challenges of new, fragile institutions that have come into being over the last less than two decades. It has the challenges of trying to bring economic prosperity to very poor populations. It has the challenge of trying to integrate into the political system people who have long been shut out of that political system, like indigenous peoples.

It has a lot of challenges. In some places, it has the challenge of terrorism and narcotrafficking, like Colombia.

I do want to say that President Uribe has been very tough on narcotrafficking and terrorism, and we've supported him. And I think he's making some progress.

It has places like the Andean region, which we've supported through extension of Andean trade preferences and through working on the Andean initiative.

We are engaging and need to engage more this very vital region. It has a lot of challenges. It has a lot of promise.

But I would have to say that at this point one would have to judge the insolence of Venezuela's government as negative, and it's too bad because it has been a longstanding good relationship with the United States. And we have great affection for the Venezuelan people.

I just think that right now it's a pretty negative influence.

MARTINEZ: As it relates to Cuba, I know that the president put forth a very broad policy toward Cuba in May of this year, which included, among other things, a really strong outreach to the dissident community within Cuba and providing encouragement and assistance so that this budding group of people could continue to thrive, understanding that they operate under tremendous difficult circumstances, as we know from the continuing human rights oppression in Cuba and political prisoners like Dr. Oscar Elias Biscet and others who continue to unjustly be imprisoned.

I wondered if you could speak to the implementation of the recommendations of the Commission on a Free Cuba, which, obviously, some of them have been already taken place. But I'm particularly concerned about whether there will be, within the State Department, someone that you will task to be a point person in the continuity of this and in the ensuring of the implementation of all of its different points, including in this the obvious need for there to be a continuing flow of information to the Cuban people.

I was delighted when Ranking Member Biden mentioned that when he saw Lech Walesa, the first thing he said was not solidarity, but it was Radio Free Europe. I think that Radio and TV Marti can have that same freeing potential for the people of Cuba, if we can break through the jamming that continues to be there because of Castro's fear of his own people hearing just free news and information.

Can you help me by giving me some assurance that there will be someone to ensure the carrying out of this, by having a point person so assigned and a continued commitment to Radio and TV Marti, and the platform that we're talking about having a dedicated opportunity to pierce the jamming by ways in which we've done it recently and in ways that I think would help the people of Cuba to get free information?

RICE: The information flow to Cuba is a very important tool for us, because Castro would like nothing better than to have his people shut off from information.

And Radio Marti and TV Marti, of course we've been very supportive. We've been flying (UNINTELLIGIBLE). We're looking at how best to extend that and make certain that we can continue to do that.

I don't know about the structure just yet, but I can assure you there will be very close attention to the implementation of the commission's recommendations.

We've already made a lot of progress with immigration, with homeland security.

Castro, I think, is feeling some of that, where we are beginning to make it not possible for him to skim money off of monies that people send for humanitarian or family reasons, or travel, to fuel his dictatorial regime.

The day that the people of Cuba are finally free is going to be a great one for the Western Hemisphere, and the commission recommendations were intended to try and hasten that day and also to try to prepare the ground for a peaceful transition. And it's a very important goal. And you can be certain that we'll pay extremely close attention to it.

MARTINEZ: You have in the past and I know you will in the future. RICE: Thank you.

MARTINEZ: Shifting to the Middle East, I had the opportunity to travel there recently, and also saw the Palestinian election take place.

One of the great concerns that seems to be there, as we look to a peace process, is the continued instability in southern Lebanon, the fact that the United Nations resolutions have never been implemented, Syria has never really left the region, the Lebanese government has never really taken over the southern part of Lebanon. And this continues to exacerbate the inability of Israel to not suffer the terrorist attacks, which then creates more instability in the region.

Do you think there would be an opportunity for us to more forcefully assert the need for that resolution to be observed by Syria and Lebanon?

RICE: Absolutely, Senator.

The Resolution 1546, which we and the French co-sponsored, to put the Syrians on notice that the world expected them to observe the legitimate sovereignty of Lebanon, to begin to remove their forces, to stop terrorism from there, I think was a very important achievement.

Secretary General Annan has appointed someone to keep on top of the implementation of that resolution, and that's also very important.

Lebanon can be one of the democratic strongholds in the Middle East. And so we need to pay attention to what is going on in Lebanon.

And if I just might say one line about Syria as well, I think that it's fair to say that the Syrian government is behaving in a way that could unfortunately lead to long-term bad relations with the United States.

It is incumbent on Syria to respond, finally, to the entreaties of the United States and others about their ties to terrorism, about the harmful activities that are taking place from Syrian territory into Iraq, and to act on a number of the steps that were first outlined to them by Secretary Powell, almost three years ago and then by Deputy Secretary Armitage, just very recently.

And so this is an important issue with Syria. And I just want to thank the Congress. We do have, thanks to the Syrian Accountability Act, some tools, but we will have to mobilize them, because Syria should not be, but is thus far not a constructive force.

MARTINEZ: Thank you.

LUGAR: Thank you very much, Senator Martinez.

At this point, I want to have a little discussion. I will not let this become a full-scale debate.

But I want to survey what is possible with the committee, this afternoon, in the hearing. And so I'm going to ask each member who is assembled for some estimate of how many minutes the member would require in raising additional questions.

And we'll try to total that up and come to some to idea, then, of whether we might complete our work this afternoon and, in fact, have a vote on confirmation. Or if that's not in the cards, we'll proceed in regular order so that members have the opportunity to ask the questions that we'd promised everyone they could ask.

RICE: And Senator, I'm willing to stay here longer than the afternoon, if you need me today.

LUGAR: Well, you may be more prepared than all of our members.

(LAUGHTER)

But nonetheless, we'll not debate that either in terms of eagerness.

(LAUGHTER)

But let me just ask Senator Hagel.

SEN. CHARLES HAGEL (R-NE), FOREIGN RELATIONS CMTE: (OFF-MIKE) 10 minutes.

LUGAR: About 10 minutes.

Senator Chafee?

SEN. LINCOLN D. CHAFEE (R-RI), FOREIGN RELATIONS CMTE: (OFF- MIKE) five.

LUGAR: All right.

Senator Coleman?

SEN. NORM COLEMAN (R-MN), FOREIGN RELATIONS CMTE: (OFF-MIKE) five. But I'd forgo my five if we came to some consensus that we could vote on this this afternoon.

LUGAR: I see. (UNINTELLIGIBLE) flexible.

Senator Voinovich?

SEN. GEORGE V. VOINOVICH (R-OH), FOREIGN RELATIONS CMTE: Ten.

LUGAR: Senator Martinez?

MARTINEZ: Sir, I'm also (UNINTELLIGIBLE) be very flexible.

(LAUGHTER)

LUGAR: All right, well, I read that as somewhere between 30 and 40 minutes...

(LAUGHTER)

... plus or minus a few.

Senator Biden?

SEN. JOSEPH R. BIDEN JR. (D-DE), FOREIGN RELATIONS CMTE: I have at least 10 minutes.

LUGAR: Senator Sarbanes?

SEN. PAUL S. SARBANES (D-MD), FOREIGN RELATIONS CMTE: Another round.

LUGAR: All right. Another 10.

Senator Dodd?

SEN. CHRISTOPHER J. DODD (D-CT), FOREIGN RELATIONS CMTE: (OFF- MIKE)

LUGAR: All right.

Mr. Feingold?

SEN. RUSSELL D. FEINGOLD (D-WI), FOREIGN RELATIONS CMTE: Ten minutes.

LUGAR: Senator Boxer?

SEN. BARBARA BOXER (D-CA), FOREIGN RELATIONS CMTE: (OFF-MIKE) two rounds.

LUGAR: Two hours?

BOXER: Two rounds.

(LAUGHTER)

LUGAR: Two rounds.

BOXER: I don't want two hours.

LUGAR: All right. Very good.

Senator Obama?

(CROSSTALK)

LUGAR: All right. Well, that would be at least 70 minutes or so, it looks like.

And, Senator Murkowski, how many more minutes would you like to question the witness?

SEN. LISA MURKOWSKI (R-AK), FOREIGN RELATIONS CMTE: I think it can be done in 10. LUGAR: Another 10. All right.

Well, it appears probably we have at least two hours of work ahead of us, maybe more. And let me just mention, the distinguished ranking member, because of an important commitment, will need to leave about 6:00 or thereabouts.

BIDEN: Mr. Chairman, I do have a longstanding commitment at 6. I assumed we'd go two days. But I want to make it clear, if in fact the committee has exhausted its questions in the time frame of 6 o'clock or 7 o'clock, I would leave my proxy with my colleague, if he would be still here, or with you, to vote my proxy.

I have no objection to proceeding, assuming every member is satisfied they've had their questions answered. And I'm sure the witness would be delighted to not have to be back tomorrow, although we enjoy her company greatly and expect her back many times.

RICE: Many times.

BIDEN: So I have no objection as long as the chairman understands my constraint is at about 10 minutes of 6 I'm going to have to leave for a longstanding commitment.

DODD: Mr. Chairman, I might just (UNINTELLIGIBLE) a wise thing to proceed in this way, but I would hope, because in terms of the nominee's responses and so forth, you may find members needing more time than they've indicated to you here...

LUGAR: Could be.

DODD: ... in good faith it would be improper for us to assume that she might be able to stay (UNINTELLIGIBLE) the two hours left and we'd be sort of failing in our commitments to you if we discovered that we needed more time to pursue some issues maybe a little more aggressively.

LUGAR: I understand that. And the chair will not be unreasonable in keeping the hearing going forever, would try to gauge what is doable.

Now, if at some point it appears still we're raising good questions but we're not going to conclude, then I would ask for members' cooperation to come back tomorrow morning at 9 o'clock again, and hopefully under those circumstances perhaps to have a vote on the nomination before noon, so that we would then compact our efforts, perhaps, and thus leave afternoons available, for the nominee and for ourselves. But if that doesn't work, why, we reserve the afternoon also.

But one option or another probably will work out. And that's why I just took the time at this juncture.

We've had wonderful attendance.

As you've noticed, Dr. Rice, all 18 members have been present; they've all taken at least 10 minutes, some a few more, as the case may be...

(UNKNOWN): (OFF-MIKE) excites you.

LUGAR: And there is deep interest in this. And that is evidenced by the attendees at the hearing who have come to hear you. And we've had standing room only -- you cannot see this -- but I can testify throughout the hearing, all told.

Well, we'll proceed now. We'll say a 10-minute round. Members need not use all 10 minutes, if they are disposed to stop short of that.

Let me begin by saying, Dr. Rice, that I submitted a question to you, and I appreciated your response endorsing my initiative for an institute at the National Endowment for Democracy on the free press.

It appears to me that given both public and private sectors working together in the National Endowment seemed to me to be a good framework for this. We can make some headway on the public diplomacy initiatives that you have expressed today, and enlist both parties, Republicans and Democrats, through the Republican institute and the Democratic institute, and others who are affiliated with that.

So I'll not take time to question you, but I just wanted to note that I appreciated very much that endorsement. And I mention it because of your strong advocacy today of public diplomacy, the need for us to get our message out.

RICE: Thank you, Senator.

LUGAR: Let me ask also about Ukraine in this respect: We've had a dramatic chain of events, and they are by no means at conclusion; the story evolves there. But it is clear that President Yushchenko will have numerous hurdles in front of him.

It would be helpful, in my judgment, if we could have the administration's support of legislation repealing Jackson-Vanik restrictions for Ukraine. Do you have an opinion on that initiative?

RICE: We support the repeal of...

LUGAR: For Ukraine.

RICE: For Ukraine at the time that it's appropriate. Yes.

LUGAR: I appreciate that. And you may be able to help us determine in the timetable when it is appropriate and to work with us on that legislation so that there are not hitches or misunderstandings with the government that we are trying to assist there.

Senator Biden has indicated an appropriate and timely call from our former colleague, Senator Danforth, our ambassador of the United Nations with regard to Sudan.

And I had the privilege of visiting with him, in the last few days over the telephone, on the specific issues that, now with peace between the North and the South, there is, in fact, the need still for peacekeepers, African troops, essentially. And about $250 million, he estimated would be required to pay for that peacekeeping effort by these troops.

In addition, to these commitments, he feels that we have made as part of the carrots of the carrots and stick (ph) business of about $500 million in development aid to the government of Sudan.

Now, Senator Danforth is concerned about both sums, the $250 million and the $500 million and the incorporation by the department of this in our foreign assistance budget or wherever it may be appropriate, perhaps, in the defense budget, for all I know.

But have you given thought to how we are going to meet the Sudan commitments?

RICE: Senator, I need to look at precisely how we will meet the commitments.

We have been aware of the commitments that we have, and we will do it through some combination of funding accounts.

As to the peacekeepers, I think our goal right now is to convince the Sudan government that the A.U. needs to have the full 3,300 complement, not just 1,100. And we're working very hard on that.

But we recognize the commitments that we've made on...

LUGAR: So they still need to be convinced that they need 3,300 peacekeepers.

RICE: Right. That's right.

LUGAR: Well, that's a very important factor, but still important we succeed, I think, in having an appropriate amount, not only to gel together the success thus far, but obviously with Darfur still in some jeopardy, and as Senator Danforth has told this committee, a lot of guilt on all sides, both sides, multiple sides in that situation.

Now, that leads me then to the question, of course, sadly enough, he also, I'm sure, informed Senator Biden as he did me, that he will be leaving his post today.

RICE: Yes.

LUGAR: And so, once again, we have a very important diplomatic assignment that requires a nominee.

I would just request that you work closely with colleagues in the White House and with the president to forward a nominee quickly, because, as we went through this progression with ambassador Negroponte's nomination, the committee moved rapidly to have a hearing almost before the ambassador might have been prepared for it, as well as the department, with all of the paperwork that needs to be done.

And then likewise with Senator Danforth, recognizing that at this particular crucial time an ambassador to the U.N. from the United States is so important.

So I know that that's on your mind.

RICE: Yes, indeed.

LUGAR: But I wanted to take the occasion of the hearing to underline it.

RICE: Thank you.

LUGAR: I want to mention in Venezuela, as others have already, that we do have a very, very heavy oil traffic with Venezuela that's mutually beneficial.

However, given all the difficulties and vagaries of the situation, I just simply want to ask: Is there a contingency plan in the event of another suspension of oil exports from Venezuela?

Because even the hint of this, or labor difficulties in Venezuela, causes spikes in the oil futures markets. These bring speculation and higher gas prices for Americans all over, and they see us, as constituents, and ask, "What are you going to do about it?"

Now, Nigeria sometimes is responsible, as they have problems quite apart from the Middle East and the normal suspects. But with Venezuela do we have, really, some contingency plan of what to do with this 13 percent of the oil that we require?

RICE: Well, we're certainly hoping that the government of Venezuela realizes, as you said, the mutual beneficial nature of this.

I think that it was Senator Nelson who mentioned the fact that some 80 percent of Venezuelan exports in oil are actually to us.

So it is mutually beneficial. Obviously, we have to prepare for a disruption. That's why we have a Strategic Petroleum Reserve.

And the long-term goal, of course, is to have an energy policy that lessens our dependence on foreign supply.

But I would hope that the Venezuelan government, whatever our differences and difficulties, would understand that this is economically a mutually beneficial relationship.

LUGAR: Well, as you take hold, would you just take under advisement the need maybe for a more explicit plan and, perhaps through the appropriate departments in the Department of State, work with the subordinates that you will have? Because it just seems to me something here is going to be required beyond the hope, eventually, for an energy plan or the various contingencies that we have thus far.

I just wanted to touch on Iran briefly, to indicate that there has been enormous, not only press comment, but among academicians, about the extent of our participation with the Europeans in negotiations with Iran or with the IAEA. And from time to time, (UNINTELLIGIBLE) it appeared that the Europeans or Ambassador Baradei negotiate various things and then we make, sort of, an editorial comment about it, but are not exactly around the table at the same time, are not lifting in the same way.

I'm just wondering: Are you examining, really, what our role ought to be in these ongoing negotiations so that, in fact, they are more successful, that they have greater staying power, and the Europeans, as well as the U.N., have greater confidence that our heft is behind this situation?

RICE: Well, we're certainly working very closely with the Europeans. And with the IAEA, we're full participants as members of the board in the processes that the IAEA is going through.

Obviously, we need to keep reviewing the situation. But I think that we believe at this point that there is a path ahead. If the Europeans are unable to get satisfactory understanding with the Iranians about their international obligations, I think we have to go back and look at the process that was prescribed, which is that this would go to the Security Council and we would go from there.

Nobody is saying that there have to be sanctions right away or anything of the sort, but we are saying that Iran has to be held to account for its international obligations.

LUGAR: Well, indeed that has been our policy. I once again just am hopeful, and I see an opportunity, with the Europeans here, as we begin to meld together perhaps strategies for the future in the Middle East, some possibilities for more cooperation, for more mutual assistance in this process, in addition to, as you say, our thought that responsibility means they've got to do this or that or face the U.N.

Ultimately, they might face the Security Council and not much might come of it. And so the importance of the negotiations I think you understand better than any of us.

Now, I just see (UNINTELLIGIBLE) once again possibilities of working with Great Britain, with France, with others who have been doing more heavy lifting here.

RICE: Thank you.

LUGAR: Now, finally, in May the Non-Proliferation Treaty review conference is going to take place in New York. May is at least four months away, but what sort of preparations will the administration be making for that conference and what sort of objectives will we have at that point?

RICE: Well, we will try at that conference to work with others to try and address some of the loopholes that are there in the NPT. And I think the big one, of course, is this issue of civilian nuclear use being used to cover...

LUGAR: This loop that you mentioned earlier. RICE: ... nuclear programs, this fuel cycle loop.

LUGAR: Yes.

RICE: And we have some proposals we're working. There's a proposal for a special committee on compliance, which I think is a good proposal, and we probably can work that out.

But the NPT needs some repair, and we will try and press this agenda at the conference.

I have to say that the leadership of the IAEA has also been interested, when I've talked to Mr. ElBaradei about this, in trying to pursue some of these problems, too, because they know that without a sound NPT, we have one hand tied behind our backs.

LUGAR: Thank you.

Senator Biden?

BIDEN: Thank you very much.

Dr. Rice, I'm going to ask several questions.

And if we can both get right to it, it'll keep me from a second round. That may be an incentive.

First of all, I'd like to ask you, very briefly, about Iraq.

In my last trip to Iraq, I was surprised at how frequently -- and I'm not exaggerating, my colleagues may have found the same thing, I think they did -- how many people asked us, including our own military, "Are we staying?" How many times I heard the question from Iraqis, as well as our own military, are we staying or is the administration's exit strategy an election, January, end of January, we declare election, Allawi or whomever is elected turns and say, we want you out, and we leave. We declare that Saddam has been defeated, we've eliminated weapons of mass destruction or there are none there to begin with, and we've done our job, and we leave.

Can you tell this committee whether or not it's the administration's position to see through the process until the election that's due at the end of 2005?

RICE: Well, it is certainly this administration's intention to see that process through.

I think what that means for our force levels, we'll have to see, as we've been talking about Iraqi forces. But there's no doubt that we believe strongly that they're on a path here, and we have to help them through that path.

BIDEN: Do you see any possibility -- everything is possible -- do you see any reasonable possibility that the United States would withdraw the bulk of its forces before the end of 2005? RICE: I can't judge that, Senator Biden, but I will say that we're going to try to help the Iraqis get this done. And what force levels we need to get it done, we'll just have to keep to get it done.

BIDEN: I think it'd be a useful thing, upon consideration, once you're sworn in, for somebody to tell the American people what to expect, so they have some honest sense, I mean, a sense of an honest assessment of what is likely.

Every single military person I've spoken with in my trips to Iraq says we need a minimum of 150,000 troops at least for the next year and possibly beyond that, that there's no reasonable possibility, no matter how well we train Iraqis, that we would be able to draw down in any significant way. Some are drawing down the 12,000 we put in for the election, so that we're in -- I don't mean that in a negative way, to help the election, I don't mean our election, the election.

And so I that hope there'll be an attempt on the part of the president to try to just give his best judgment to the American people of what is expected of them.

Because I think they're prepared to do anything that's asked of them. But I don't think they're prepared to continue not to know, not to have some honest sense of what may be expected of them.

Because I expect you're going to have to come back for tens of billions of dollars, this year. And I know we'll go through the game of -- I know Iraq's not part of our budget. It's that magic thing, that we never know -- have any idea what we're going to spend, even though we know exactly how much it costs to maintain x-number of troops in Iraq.

It's just fascinating -- it's like Democrats talking about revenue enhancements, Republicans talking about Iraq up there in the sky somewhere and we don't have to include it in the budget, like the Lord almighty may come down and pluck it from the Earth and drop it on Mars.

But I just think we need a little more candor. I hope you'll focus on that a little bit.

Iran: Seymour Hersh wrote in the New Yorker that the quote, "hawks in the Pentagon, in private discussions, have been urging a limited attack on Iran, because they believe it could lead to the toppling of the religious leadership," end of quote.

I'm not asking you whether there's any discussion about an attack. But do you believe that it is possible to topple, quote "the religious leadership in Iran," and by any short-term military action? And is that a goal, not militarily, is it a goal of the United States to change the regime in Iran?

RICE: The goal of the administration is to have a regime in Iran that is responsive to concerns that we have about Iran's policies, which are about 180 degrees antithetical to our own interests at this point. That means that the regime would have to deal with its nuclear weapons obligations, deal with the fact that there are Al Qaeda leaders who have been there, deal with the fact that they're supporting Hezbollah and terrorism against -- and Palestinian rejectionists against the Middle East peace process. That's what we're seeking.

I do want to say that the Iranian people, who are among some of the most worldly, in a good sense, that we know, do suffer under a regime that has been completely unwilling to deal with their aspirations, and that has an appalling human rights record.

BIDEN: One of the things -- if I can stick on the nuclear side of this equation for a minute -- one of the things that I've found -- I may be mistaken, but I think Senator Hagel may have found when we were -- there were a lot of feelings coming out, we talked to you about it in detail, from the Majlis and members who were viewed as at least modern and not clerical, not necessarily pro-Western -- was I didn't find a lot of distinction between, quote, "Iranian democrats," with a small "d," and the ayatollahs on the issue of whether Iran, quote, "was entitled to be a nuclear power."

The arguments I would get would be -- even from people we would not consider hardliners -- was that, "We're in a dangerous neighborhood. We believe Israel has nuclear weapons. Russia has nuclear weapons. Pakistan has nuclear weapons. India has nuclear weapons. Others are seeking nuclear weapons. Why are we not entitled to nuclear weapons? And there's no umbrella or guarantee coming from any nuclear power for us."

So do you think if there was a regime change, that is, assume that the reform movement had been successful, assume that instead of toppling of those elected officials in genuinely held democratic elections, assume instead of them being thrown out, assume that they had prevailed and the religious leadership had been defeated politically in Iran, do you think Iran would forego its nuclear aspirations?

RICE: I really don't want to speculate. I think it's the kind of thing that we don't know.

I do think that we're sending a message, the world is sending a message to Iran that Iran cannot be a legitimate participant in the international system, in international politics, and pursue a nuclear weapon. And I would hope that that would have an effect on whatever regime there is in Iran.

BIDEN: And you did it very successfully, along with our European friends who had initiated it, with regard to Gadhafi.

(LIVE EVENT INTERRUPTED)

JUDY WOODRUFF, CNN ANCHOR: We're cutting away briefly from the Condoleezza Rice confirmation hearings to take you to an event in downtown Washington.

(BEGIN LIVE EVENT)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Please be seated, it may be a long speech.

(LAUGHTER)

BUSH: Whether you serve in the Army, the Navy, the Air Force, Marines or Coast Guard, each of you has stepped forward to serve. You have risked your lives in faraway mountains and arid deserts, in perilous skies and on the high seas to defend liberty and to free those trapped by tyranny. As I prepare to take the oath of office, I want you to know how grateful I am for your service and sacrifice and how proud I am to be your commander-in-chief.

And I am really proud of our first lady, my wife. I love her dearly. I appreciate so very much the service and advice and friendship of our Vice President Dick Cheney. Like me, he married well. It's good to see my mother and father. Secretary Rumsfeld, thank you for your great service to our nation. And it's good to see Joyce.

I appreciate the military commanders who are here. I want to thank the members of my administration who have joined us, members of Congress, members of the active military, wounded troops, Congressional Medal of Honor recipients, family members of our fallen soldiers, thank you so much for being here today. Our troops watching from Baghdad, Iraq and Bagram Air Force Base in Afghanistan, God bless you all.

I thank Kelsey Grammer, what a fine man. I appreciate his patriotism and being the emcee of this fantastic event. I want to thank all the other entertainers who have taken of their time to entertain our troops. And really to say what they're doing here is to say thank goodness for your service.

You know, the inauguration of a president is a great moment in the life of our country. With an election behind us, the American people come together in unity to celebrate our freedom. A presidential inauguration is a testament to the power of democracy, a symbol of our confidence in the popular will and a sign of hope for freedom-loving people everywhere.

We're blessed to live in hopeful times when the promise of liberty is spreading across the world. In the last four years more than 50 million people have joined the ranks of the free. The people of Afghanistan have thrown off an outlaw regime and chosen a president in the first free elections in that nation's 5,000-year history. And in coming days the Iraqi people will have their chance to go to the polls to begin the process of creating a democratic government that will answer to the people instead of to a thug and a tyrant.

These are landmark events in the history of liberty and none of it would have been possible without the courage and the determination of the United States armed forces.

Through your service and sacrifice in the war on terror, you're making America safer. You're making America safer for not only those of us who live today, but for future generations of Americans. Your sacrifice has made it possible for our children and grandchildren to grow up in a safer world. Many here today have endured long separations from your families. We understand that and we thank you for that. Some are preparing to do so. Others have suffered terrible injuries, wounds you will carry with you for the rest of your lives.

Still others have lost loved ones in this struggle, heroes who gave their lives so that we might live in freedom. We hold them in our hearts. We lift them up in our prayers. We're grateful to you and we're grateful to your families who love and support you. Your families miss you and they worry about you and they pray for you. Always wondering where you are and if you're safe. By their sacrifice, they also serve. Our nation is grateful to our military families.

Those who wear a uniform have given much and much more will be asked of you in the months and years ahead. In Afghanistan and Iraq the liberty that has been won at great cost now must be secured. We still face terrorist enemies who wish to harm our people and are seeking weapons that would allow them to kill on an unprecedented scale. These enemies must be stopped and you are the ones who will stop them. The road ahead will be difficult and dangerous, but we can proceed with courage and with confidence.

History moves toward freedom because the desire for freedom is written in every human heart. And the cause of freedom is in the best of hands, the hands of the United States armed forces. And so thank you for your service. Thank you for your sacrifice. May God bless you and may God bless your families and may God continue to bless the United States of America.

WOODRUFF: President Bush at an event at the MCI Center here in Washington. An event emceed by Kelsey Grammer. The president thanking all the men and women in the armed forces of the United States. We are watching President Bush, Mrs. Bush and other members of the administration at this event two days before President Bush takes the oath of office to begin a second term. We're going to take a short break. Our coverage of Condoleezza Rice's confirmation hearings to be the next secretary of state, that continues in just a moment.

(COMMERCIAL BREAK)

WOODRUFF: President Bush's nominee to be secretary of state, Dr. Condoleezza Rice, undergoing hearings at the Capitol, the Senate Foreign Relations Committee, this is the second round of questions from the senators. We'll resume our live coverage.

(BEGIN LIVE EVENT)

RICE: Again, I think this is an area where I would hope to have considerable input from members of the committee.

HAGEL: I think you will not have to ask twice on that. You've received some indication of this committee's interest. And I think under Chairman Lugar and Senator Biden's leadership, it has been a high priority over the last few years. And needs to be revisited.

I think the entire committee is very pleased that you have put this on your list, on your agenda, as a high priority.

The United Nations: It was mentioned here earlier during our hearing, but in particular, what types of reform at the United Nations would you be looking for and will you help lead?

RICE: We are digesting the high-level panel report at this point. And we're going to put a lot of attention on consultations with countries around the world about that report.

It's something that I've discussed with Kofi Annan, and he's asked of us, to make an effort.

Obviously, there are two kinds of reforms, simply those that will make the U.N. work better in terms of management. And we've long had an interest in those. I think we need to pursue them.

We also obviously want the U.N. to have the kinds of structure and tools that it needs to face the threats and the opportunities of the 21st century.

I know there's a lot of discussion of Security Council reform. I don't think we have any particular perceived wisdom right now on how to do that, except to say that there needs to be a look at where we are in terms of the representation in the U.N. bodies of countries that are contributing a lot.

Even outside of the United Nations, there are a number of rising influential democracies like India, and Brazil, and South Africa that we just need to be working more with on all kinds of issues. And I hope that we can pursue that at the same time we look at what the structure of the U.N. may look like.

HAGEL: Thank you.

There's been considerable discussion today about proliferation of weapons of mass destruction, in particular nuclear proliferation; little conversation so far about bioterrorism.

Do you think it would be in our interest to initiate an effort to develop some kind of an international model, using CDC, Centers for Disease Control, as an example where all nations could in some way work together through that international body, not unlike some of the Non-Proliferation Treaty efforts, although we're seeing, I think, necessary refinements and probably reforms in that, if that can happen.

(UNINTELLIGIBLE) If you would speak to that kind of an idea about maybe a CDC International model for bioterrorism.

RICE: It's an interesting idea, Senator. We should certainly explore it.

Homeland Security people have had some discussions with their counterparts around the world about the bioterrorism threats, because it's obviously one of those threats that could be borderless and quite stateless. And so we have had some discussions of that.

But a more concentrated international effort that deals with all of the elements of bioterrorism detection, prophylactic efforts that might be undertaken and then, heaven forbid, consequence management, I think this is something that should be put on the international agenda. And we'll look at various ways to do that.

HAGEL: Thank you.

Mr. Chairman, thank you.

LUGAR: Thank you very much, Senator Hagel.

Senator Sarbanes?

SARBANES: Thank you very much, Mr. Chairman.

Dr. Rice, I'm going to run through a series of questions, and maybe we can move very quickly. And then I want to come back to economic questions, as well.

First of all, how much -- if you were secretary of state, do you understand discretion or authority you would have in filling positions within the State Department?

RICE: I work very closely with presidential personnel. But I have to say that the folks have been very understanding of the fact that I have to have a team that is a team that I can work with, and it's my team.

SARBANES: But your selections have to clear presidential personnel?

RICE: Well, these are presidential appointments, at least the ones that are presidential appointments.

SARBANES: And you don't, in effect, have a -- I know it's all been written so often about how close you are to the president, you don't have, as it were, the kind of vote of confidence or commitment, do you, from the president that you can go ahead and fill these positions yourself?

RICE: Senator, it's been just very easy to work through presidential personnel. It's just not been an issue.

SARBANES: Well, if it were an issue, though, you don't have that kind of commitment. Is that correct?

RICE: These are appointments by the president. And so I think it's a perfectly appropriate role.

SARBANES: All right, I understand the answer.

My next question is: I've always been curious of the rationale why a national security adviser will not appear before the Congress to testify and answer questions, but goes on the news programs or appears at the press club or, I mean, you can just go right down the list, and at the end of it, says, "Now I'm open to take your questions," and then proceeds to answer questions on the public record and in front of the public. Now why shouldn't the national security -- what is the rationale for that? Why don't they respond to the Congress?

RICE: Well, the rationale, Senator, has been a couple things. First of all, that there is a separation of powers and the president's staff is to him in the executive branch a private counsel. When you go...

SARBANES: Well, it's not very private counsel when you go on the national media shows, appear publicly and answer questions in that forum.

I'd have a little more understanding of the rationale if you didn't do that, if you said, "Well, you know, we give private advice to the president, and that's our role, and that's where we communicate to."

But you depart from that and you go outside, in very public fora, and make these appearances and answer questions, and won't come to the Congress.

RICE: Senator, it's a longstanding practice of every national security adviser. I have actually been here to answer questions of the whole committee at one point, but also senators and groupings of senators, but not in testimony.

It's a line that national security advisers have kept, as private advice to the president, as presidential staff. And national security advisers have also of course gone on television and made public appearances.

But in terms of the line between the executive and the legislature, the president's staff has simply not been subject to congressional testimony.

SARBANES: Well, what's your position, if you were the secretary of state, on appearing before the Congress? How can we be confident that you would engage in frequent, thorough and meaningful consultations with this committee?

RICE: Well, Senator, I would no longer be staff to the president. If I'm confirmed, I'll be the secretary of state. And that is a Cabinet officer who has been confirmed by this body. And it seems to me at that point it is not only perfectly appropriate, but only right that the secretary of state and other members of the Cabinet, as well as other members of the State Department, respond positively to requests to testify whenever possible.

SARBANES: Is it your view then that the secretary of state would not invoke executive privilege in testimony before the Congress?

RICE: Well, I believe that the secretary of state would come and testify before the Congress and testify fully.

Whether a secretary of state might choose to keep private some conversation that that person has had with the president or not, I think that's another matter.

But certainly the secretary of state would appear before this body and others, on a regular basis.

SARBANES: What's your sense of your responsibilities, if you were the secretary of state, to deal with the Congress in either a nonpartisan or bipartisan manner, however one wants to describe it.

And I'm prompted to ask that question by the fact that you did, at one point, make a rare trip to Capitol Hill for separate closed- door briefings with Republicans and Democratic lawmakers. I don't know if you recall that.

You met with Republican representatives for well over an hour and did not meet with the House Democrats. You met only with the Republican members of the House.

You came to the Senate side, had a lengthy meeting with Senate Republicans and then a very brief meeting with Senate Democrats, cut short by a vote that was scheduled by the leadership, I guess.

But in any event, there was a marked difference in the extent of the meeting and the consultation between Republicans and Democrats. Presumably as secretary of state, you wouldn't intend for anything of that sort to happen, I would take it.

RICE: Senator I will conduct this in a completely bipartisan way.

Let me just say that I will check, but I believe that we've generally offered to both sides of the aisle and both houses. And I was prepared to stay in that Senate meeting as long as desired.

But as you said, it was cut short by a vote.

SARBANES: And what about the House side?

RICE: I believe we offered. But I will check to see. Because it was my view that the national security adviser also needed to deal in a bipartisan way. And I believe I've dealt with members of the committee, Democrat and Republican.

SARBANES: Ordinarily at the start of each new Congress, the administration conducts a review of signed treaties to determine which ones to send as priorities for Senate advice and consent or ratification.

The administration did not submit a treaty priority list to this committee in the 108th Congress. Are there plans or intentions to send up a list of treaty priorities to this new Congress?

RICE: There are plans to do so, Senator. We will. SARBANES: You plan to do that?

RICE: We plan to do that, yes, sir.

SARBANES: Let me ask you, to come back to the economic questions, do you think it's to America's advantage for the dollar to be the world's main reserve currency?

RICE: Senator, I'm going to demure here. I will think these questions better asked of the Treasury.

I have a strong interest in our economic well-being. I have a strong interest in what I can do as secretary of state to promote our economic well-being, particularly through free trade and through the establishment of good partners in trade and a level playing field in trade, but I really don't feel that I should comment on currency matters.

SARBANES: Well, it goes back to our discussion this morning. I frankly concluded that round with some concern, because you kept talking about the president's economic team as though that's something separate and apart from the concerns or the responsibilities of the secretary of state. Even though at one point you stipulated that the strength of America's economy is fundamental to its ability to assert strength in the world

And these all play together. And I mentioned this book this morning, this "The United States of Europe: The New Superpower and the End of American Supremacy." And one of the points made in that book is that the euro was specifically designed to challenge the global hegemony of the dollar.

And of course we've seen the value of the euro rise very substantially in recent times. In fact, we now know, in 2001, Middle Eastern oil producing countries kept 75 percent of their currency reserves in dollars. That figure is now 60 percent. It's dropped substantially, with much of the rest of it in euros. And Chinese and Russian central bankers are also shifting their reserves. Does this cause you some concern?

RICE: Senator, there are many reasons for what has happened to the relationship between the euro and the dollar. But again, I really think it best that I not comment on currency matters.

I will do what I can as secretary of state to try to enhance the prospects for a strong American economy. I think I can do that principally through the promotion of free trade, through the promotion of a level playing field, in using the diplomacy to carry economic messages, when we need to do, as we've done, for instance, with the Chinese on intellectual property rights.

I'll be an active and interested participant. But there are some matters that I really feel are best left to the Treasury, and that's the commentary on the currency.

SARBANES: Last month, China's president, Hu Jintao, embarked on a 12-day tour of Latin America. He wound up making commitments to invest $30 billion in the region. China is now Brazil's second largest trading partner and Chile's largest export market.

In trade, technology, investment, education and culture, China has been displacing the United States all across Asia. And it's now starting to do the same in America's backyard. Are you concerned about this expansive China?

RICE: Well, this is an area that I think bears some watching and some activity. And I would work very carefully and very closely with those in trade and economics to try and deal with this.

We do face a rising China. There's no doubt about that. And the way that we've tried to deal with the fact that China's economic strength is growing and that China's influence is growing along with its economic strength and its penetration of markets and its own markets are growing exponentially, is to embed China in the World Trade Organization and to make certain that it lives up to the rules of a rule-based international economic system.

And we have a lot of work to do, because China is not always completely attentive to some of its obligations under the World Trade Organization.

The other thing we can do, Senator, is that we can assert our still-considerable global reach and our still-considerable regional influence, through organizations like APEC, which we attend and which we are nurturing and which we are pushing forward with a very active agenda.

We have had problems with ASEAN because of the presence of Burma, but we have had meetings and discussions with the countries of ASEAN.

I was in China, Japan and South Korea in June of this past year, and I will say that I think most of the countries of Asia look to us to continue to be a major influence and an active player in Asia, because they don't want to see China "supplant," quote/unquote, the United States.

We also have to remember that the Chinese economy, for all of its vigor and all of its robustness, is still a developing economy whose size is not going to approach the size of the American economy for quite a long time. It is a China that is dealing with tremendous difficulties with inequities between its interior regions and its coastal regions.

It is still a developing economy. And while it is a huge market and is doing very well in our own markets, I think it's important to recognize that it is at a different stage of its economic development than the United States.

SARBANES: Well, it's interesting, because they seem to be doing pretty well, if that's the case.

Our accumulated debt to foreign investors is now 28 percent of our gross domestic product. That's nearly double the share of four years ago. And most of it is being funded by borrowing from foreign central banks, primarily those of Japan and China.

In fact, it's staggering, the increase of foreign official assets in the United States, this run-up, China and Japan.

Mr. Chairman, in closing, I just note that in the 1990s, you know, the U.S. admonished Mexico and Argentina to get their economic houses in order. This month, the Chinese premier gave Washington a similar lecture.

And we just -- by not taking the important corrective measures we need to take with respect to our economy, we're allowing them to run up these balances and increasingly, or as I said this morning, dependent on the kindness of strangers. We're in their hands.

And I can't help but believe that that will be brought to bear in other areas of the relationship, U.S.-China, if and when it becomes relevant.

RICE: Senator, I agree with you, and I think the president would agree, that the issue is for the U.S. economy to be as strong as it possibly can and as competitive as it possibly can. And there are a lot of measures being undertaken to do that.

My role, I think, will be to try and enhance our economic growth and our economic strength through our openness in trade, but also by making certain that those with whom we trade are dealing with us on a level playing field. And I'll be completely dedicated to that.

SARBANES: Thank you, Mr. Chairman.

LUGAR: Thank you very much, Senator Sarbanes.

Let me just indicate, Dr. Rice, that I appreciate the point you're making as to what the scope of the State Department may be and your role and what have you, but I would have to agree with Senator Sarbanes, the issue that he's touching upon, and this should be the subject for a couple of days of good hearings, is profoundly important. It finally comes down to how we're going to pay for our foreign policy.

We really have, it seems to me, a critical juncture, given the circumstances of the foreign exchange situation, our own exchange rates and so forth.

So I suppose we're taking advantage of the fact that you are perceived as a supercompetent person and perhaps prepared to take all of this on in behalf of the president.

But I would encourage you to visit with the president about this, you probably have, because I'm sure we'll all be getting back to it again and again. We'll not be able to solve it today, but I would just underline that there are some dynamics here that all of us find difficult to comprehend: the growth of China, the growth of India as economies, a third of the population of the world going out now to try to find energy resources everywhere, sort of sucking up the resources of the world. So this is good for the soybean farmers of Indiana, and we're grateful for everything that comes along that way. But it's going to be tough with regard to energy and other things.

So I don't want to occupy any more -- take more time. But I just am moved by what Senator Sarbanes is saying, because he works over in the Banking Committee, other members of this committee are active in that area. And we have sort of interchanged disciplines in our own way, as you do.

But please, if you can, take under advisement at least our conversation today.

RICE: Absolutely. Thank you, Senator. I will.

LUGAR: Senator Chafee?

CHAFEE: Thank you, Mr. Chairman.

And I agree with your comments and Senator Sarbanes' comments also about concern, the financial issues, particularly the rise of the euro and the potential for OPEC to move in that direction. It could be alarming.

Thank you for your time. Your stamina and your breadth of knowledge are both remarkable.

In fact, at the lunch, we were joking that we were going to find an obscure country to ask you about, but we agreed it would be futile. You'd know all about it.

I'd like to follow up on some of Senator Biden's comments about -- it seems to be a hypocritical approach to our foreign policy in some ways, in particular how we deal with some of those democracies such as Russia, Senator Biden said, uneven or undemocratic, or some of the -- Turkmenistan, Uzbekistan, Tajikistan, even President Musharraf, and then on the other hand have a completely different view of, say, Iran.

As Senator Biden was saying, it seems we magnify our differences on one hand, and on the other hand we magnify our similarities.

In particular, after having just come back from South America and meeting with President Chavez, here he has been going before his people, high, high turnout, just had a referendum, and as one of the people from our embassy said, "He cleaned their clocks and kicked their butts." It seems to say derogatory things about him may be disrespectful to him but also to the Venezuelan people. How do you react to that?

RICE: I have nothing but good things to say about the Venezuelan people. They are a remarkable people.

And if you notice, Senator Chafee, I was not making derogatory comments, I was simply recognizing that there are unhelpful and unconstructive trends going on in Venezuela in policies. This is not personal.

CHAFEE: And there aren't in Tajikistan, Uzbekistan and Russia and Pakistan?

RICE: And we speak out about those as well.

But some of this is a matter of trend lines and where countries have been and where they are now going.

CHAFEE: Are their governments unconstructive?

RICE: Well, the Russian government is not unconstructive in a lot of areas. It's quite constructive in many areas. It's been more constructive on Iran in recent years. It is constructive, to a certain extent, in trying to deal with the kind of Nunn-Lugar issues that we've talked about. It's been constructive in Afghanistan. It's constructive on a number of areas.

But that doesn't excuse what is happening inside Russia where the concentration of power in the Kremlin to the detriment of other institutions is a real problem. And we will continue to speak to the Russians.

I think we do have to remember that it is also not the Soviet Union. The Russians have come quite a long way from where the Soviet Union was, and we need to always keep that in mind when we judge current policies. But where they're going is simply not very good. It is something to be deeply concerned about, and we will speak out.

Countries are going to move at different speeds on this democracy test. I don't think there's any doubt about that. But what we have to do is we have to keep this item on the agenda, we have to continue to press countries about it.

We have to support democratic forces and civil society forces wherever we can. I would just note that Ukraine, I visited in 2001, not long after I'd become national security adviser, and I, frankly, when this happened in Ukraine, was pretty stunned by how effective civil society was and how effective the Ukrainian people were in making their voices known.

Some of that is because we and the E.U. and others have spent time developing civil society, developing political opposition, working with people, not to have a specific candidate in any of these countries, but to have a political process that's open. And we have to do more of that.

We're going to spend some $43 million this year, I believe that's the number, on Russian institutions trying to help with the development of civil society there. We need to do more of that kind of thing. Because while we put it on the agenda, while we confront the governments that are engaged in nondemocratic activities, we also have to help the development of civil society in opposition.

CHAFEE: You and Senator Boxer were having a little bit of a debate over credibility. And to me it seems as though trust is built with consistency. Is it possible for you to say something positive about the Chavez administration?

RICE: It's pretty hard, Senator, to find something positive. Let me say this...

CHAFEE: I understand that -- after Tajikistan, Pakistan, Russia, it seems as though, as I say, magnifying our differences to some countries and magnifying our similarities with others.

And as I said, I think trust is built with consistency. I don't see consistency in some of your comments.

RICE: The state of affairs in the Western Hemisphere is such that we've had democratic revolutions in all of these places and we don't want to see them go back. We have some places where the democratic revolution is still to take place. And we just have to understand that there are differences in that regard.

But I have said, we hope that the government of Venezuela will continue to recognize what has been a mutually beneficial relationship on energy and that we can continue to pursue that.

We certainly hope that we can continue to pursue counterdrug activities in the Andean region, and Venezuela participates in that.

But I have to say that for the most part, the activities of the Venezuelan government in the last couple of years have been pretty unconstructive.

(LIVE EVENT INTERRUPTED)

WOODRUFF: Dr. Condoleeza Rice in the chair before the Senate Foreign Relations Committee where she began eight hours this morning at 9:00 Eastern, answering questions on everything from Russia to the Middle East. Most of the questions earlier in the day on Iraq, most of them polite. The toughest questioning from California Democrat Barbara Boxer who challenged Dr. Rice on her credibility.

We'll have much on the hearings coming up on WOLF BLITZER REPORTS, coming up in just a moment on CNN. We'll take a short break, he'll be right back.

(COMMERCIAL BREAK)

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Aired January 18, 2005 - 14:29   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS CNN ANCHOR: And welcome back, everyone. From the CNN Center in Atlanta, this is LIVE FROM. I'm Tony Harris.
BETTY NGUYEN, CNN ANCHOR: And I'm Betty Nguyen. Here's what's all new this half hour.

Live pictures now from Washington, D.C., and a little music to boot. President Bush will join actor Kelsey Grammer and singer Gloria Estefan and others at the first event of the inauguration week, which is a salute to the American military. We'll have more on that in a moment. But first, here's what's happening in the news.

HARRIS: Checking the headlines this hour, the situation in Iraq is much of the focus today as senators quiz Condoleezza Rice at her confirmation hearing. Rice, President Bush's national security adviser, is expected to be confirmed as secretary of state. In her opening remarks today, Rice said the United States must use diplomacy to help create a balance of power in the world that favors freedom.

Those hearings are set to resume in the next few minutes. When they do, we will take you there.

A Catholic archbishop held captive in Iraq was set free today. His release came just today after he was kidnapped in Mosul. The Vatican says the archbishop was released without ransom being paid.

Also in Iraq, a video surfaced today showing eight Chinese men who had been kidnapped. An Arabic speaker on the tape demands that the Chinese government declare it will not allow citizens to work for Americans in Iraq. A Chinese embassy official in Baghdad says the men apparently never worked in Iraq, but had traveled in an unsuccessful search for a job.

Attorney General John Ashcroft has announced the first U.S. criminal charges in the federal investigation of the United Nations Oil-for-Food Program for Iraq. An Iraqi-American pleaded guilty today to charges in the case. Authorities say he conspired to act as an agent for Saddam Hussein by accepting millions of dollars in compensation and negotiating with a U.N. official to let Iraq sell oil despite international sanctions.

NGUYEN: President Bush says he doesn't regret his controversial line that other nations were, quote, with us or against us in the war on terror. But in a preinaugural interview today with CNN senior White House correspondent John King, the president admitted being too blunt with language like dead or alive and bring it on.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We've got to win. And we've got to make it clear that people have to make a choice. And I will continue to be straightforward and plainspoken about my view that freedom is necessary for peace and that everybody deserves to be free. But you're right, some of my language, in the first four years, was, you know, had an unintended consequence. And I'm mindful of that.

(END VIDEO CLIP)

NGUYEN: We're going to break in right now and take you to that live event in Washington, this preinaugural event, which is a salute to the military. Here's the president now.

UNIDENTIFIED FEMALE: My name is Sarah Griffiths-Diese (ph), and this is my...

(SHOUTING)

UNIDENTIFIED FEMALE: My name is Sarah Griffiths-Diese, and this is my 5-week-old son, Charlie, and his grandfather, Captain Bill Griffiths (ph), was killed in action in Vietnam January 24, 1970, the day after my sister was born.

UNIDENTIFIED FEMALE: Hi, my name is Jasmine Reed. I lost my father, Captain Joseph Oliver Reed III (ph) on April 14, 1996.

UNIDENTIFIED MALE: My name is Barksdale Watkins (ph), my brother, Lieutenant Colonel Williams R. Watkins III, was killed in action during the Iraqi liberation on April 7, 2003.

UNIDENTIFIED FEMALE: My name is Nikki Dos (ph). My husband, Captain Eric Rusas (ph), was also killed in action while we were deployed together during Operation Iraqi Freedom on April 7, 2003.

UNIDENTIFIED MALE: My name is Stefan Acevedo (ph). I lost my father, Commander Joseph Acevedo, on April 13, 2003, in Bahrain.

UNIDENTIFIED MALE: My name is Rick Bruckenthal (ph), my son, Damage Controlman (ph) Nathan Bruckenthal, was killed in action in the Persian Gulf on April 24, 2004.

Will you all rise now. Please follow me in the Pledge of Allegiance.

I pledge allegiance to the flag of the United States of America, and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

(MUSIC)

NGUYEN: OK, we are going to break in from this event and take you now, also in Washington, to those confirmation hearings for Condoleezza Rice. Let's take a listen. SEN. LISA MURKOWSKI (R-AK), FOREIGN RELATIONS CMTE.: ... was greatly welcomed. And it was a chance for me to speak to some of the issues that, as a new member to this committee, were important to just, kind of, have that discussion and get on the table.

One of the issues that is really quite paramount in Alaskans' mind is the situation over in North Korea. Our proximity in that region is one that causes us to look very carefully at what is happening in North Korea and what is happening particularly with the nuclear weapons program over there.

I'm heartened to hear from the media reports that North Korea appears willing to restart the six-party talks. And again, I think Alaskans are anxious to know that there will be success there.

Looking beyond the talks and further down the road, I'm curious to know your views on a future North Korea.

We recognize that for these past many years, about 60 years or so, under the reign of Kim Il Sung and Kim Jong Il, an entire generation of North Koreans, including their military leaders, have basically been brainwashed into believing that their military can defeat the armed forces of any country in this world.

And this raises considerable concern in the event of a regime change about who has control over the North Korean military and what actions that military or an individual commander might take.

So as the administration moves forward in these six-party talks, what steps will you take to develop the relationships with North Korea's future leadership?

RICE: Well, thank you very much, Senator Murkowski.

We did have an opportunity to talk about a number of issues. And I recognize the importance of this issue to everyone, because obviously North Korea is a very dangerous power and one that has been intent on seeking weapons of mass destruction, and particularly nuclear weapons.

Let me start by just saying that it is important to repeat that North Korea should understand fully that we have a deterrent against any North Korean action or attempts at action, because we have a very strong alliance with South Korea, a very technologically sophisticated alliance that is getting more so with the changes that we are discussing with the South Koreans about how to realign military forces on the peninsula.

And we do have, as you mentioned, a very active diplomacy now through the six-party talks, which brings all of the neighborhood together to say to the North Koreans, "You do not have a choice. If you intend to a be part of the international system, you have got to give up your nuclear weapons programs."

And that's an important innovation, because it speaks, in a part, to the broader question of how we manage a problem like North Korea in the neighborhood.

It is not something that the United States wants to have to do unilaterally. It's something that we're much better off doing with South Korea, with Japan, with Russia, and most especially with China, which is playing an important role in the six-party talks, and it needs to continue to play an active role.

This is a very closed and opaque society that we're dealing with when we're dealing with North Korea. It is a sad thing that there probably is no more desperate population than the population of North Korea in terms of starvation, in terms of repression.

The United States has no problem with the people of North Korea, and in fact, we have consistently been a large food aid donor to North Korea, because we do not want the people of North Korea to suffer.

It doesn't have to be this way. There is another path, and we've made clear to the North Korean regime that the president of the United States has said, and that the United States has no intention to attack North Korea, to invade North Korea, that multilateral security assurances would be available to North Korea, to which the United States would be party, if North Korea is prepared to give up its nuclear weapons program, verifiably and irreversibly.

So we will continue to work on that issue.

It is very hard actually to make contact with the North Korean people at all. But to the degree that we can, through South Korean contacts, try to encourage the North Korean people that there might be a better future for them, I think that is an important thing to do.

But our goal now has to be to make the six-party mechanism work for dealing with the North Korean nuclear program and then hopefully for dealing with the broader problem of managing this dangerous regime.

I hope that they will follow through and that indeed they do intend to restart the six-party talks. We have an offer on the table that we put there in the last round of the six-party talks.

RICE: It was an offer that I think all other parties thought moved the ball forward.

We've heard nothing really from North Korea, and I hope that they will actually act because we've found that their words are not always completely reliable.

MURKOWSKI: We also had a chance to talk a little bit about the Arctic Council. This is probably not a question that you're going to get from anybody else on this panel, so I will take the time to ask it. I know that my colleague here from Florida is not going to ask it, so I will.

(LAUGHTER)

But one of the things that I hope to achieve or to work on during my time here on the Foreign Relations Committee is to raise my colleagues' and the rest of the United States' awareness of -- and just really the knowledge of the Arctic regions.

And there's a lot of focus right now on what's going on up north because of the climate change. We're wondering whether or not this is a permanent event or whether it's just part of a natural cycle.

But we do know that it's a reality. We do know that it will have an impact on our lands, particularly up north. And what we're seeing is there's a potential for increased circumpolar maritime commercial activity, which is going to impact our northernmost boundaries, as well as substantial new scientific exploration in the Arctic region.

Now, along with the Arctic nations, the U.S. is a member of the Arctic Council, which was formed to address the common problems of the many Arctic nations. And so far as I can tell, our role, the U.S. role, within this council has been underutilized in furthering our relationship with our Arctic neighbors.

So my question to you at this time is: What role do you see for international institutions like the Arctic Council in U.S. foreign policy, and how can we use our Arctic location to further this country's interests?

RICE: It's a very important point that I'd like to make about the broader question that you asked.

And I do think that on issues of this kind, we can work both internationally and regionally, in a sense, the most interested and affected countries.

I would like to spend some time talking with you about what more we might do in the Arctic Council.

I know we've been supportive of the Arctic Council and members, but perhaps there is more that we can do.

It speaks -- for instance, you mentioned the global environmental issues like climate change. We have a lot to offer in terms of the science and the technology, and we ought to be and are trying to develop relations with others who are interested in harnessing that science and that technology to deal with some of the environmental challenges that we have.

And so I very much look forward to talking with you about what role we can play. There's some important countries that probably share interests. For instance, the Russians would probably share interests, and this is another area for potential cooperation.

And so I look forward to having a chance to look at what more we can do.

MURKOWSKI: I think it is an opportunity for us. And it's something that needs to be cultivated in order to work to our advantage.

So I do look forward to that opportunity with you.

Very general, this might be a softball to you, but how is the administration working to improve the role of women in the Middle East and elsewhere in the world?

RICE: Well, in fact, it may be one of the most important things that we do over the next few years.

We've already tried to do a lot. I think there's no doubt that the Afghanistan situation, which was really one of the true horrors houses for women, and I know that Senator Boxer and others were very involved in trying to promote the cause of women in Afghanistan, well, we promoted the cause by the overthrow of the Taliban. It's a remarkable thing that the first person to vote in Afghanistan was a young woman.

RICE: It's a remarkable thing that women can now see a doctor without a male relative's permission, that they can no longer be punished for letting one little hair show out from under the veil, that women are taking their rightful place in Afghan society.

And I think it is in their documents, like their new constitution, that women are considered equal citizens.

That may seem like a small thing, but in a region of the world where women have been anything but equal citizens, to have that enshrined in the Afghan constitution -- and it's in the TAL, or the Transitional Administrative Law for Iraq -- these are important steps forward for women.

We've also been very outspoken about the need of every society to make sure that women's rights are protected. It is a part of the agenda in the Broader Middle East Initiative, where clearly countries are going to move at different speeds on this issue, but where you have to put on the agenda that you cannot function as a modern society if half your population is essentially kept out of the political process.

And we are particularly interested in women's education, the education of girls, which in some of these societies, stops when girls are 10 or 11 years old. Pressing the case for the education of girls is an important part of what we're doing, helping to empower women politically through political activity and civil society activity.

And we've done more than just in the Middle East, which is to be very active on, for instance, the trafficking in persons initiative, which benefits women because very often the people who are trafficked, particularly for sex crimes, are women.

And the president went to the United Nations, put this on the agenda. We've gotten a resolution about it.

RICE: And we are prosecuting people here and pressing countries to prosecute people on this very terrible crime.

Finally, I would just mention the HIV/AIDS initiative, which has a mother-to-child transmission element as well as helping caregivers, who many times are women, to deal with the travails of dealing with relatives with AIDS, preventing further infections, many of whom would be women.

This is a broad agenda of helping women. And it is in our moral interest, of course, to do so, but it's also in the interest of these societies, economically and in terms of modernity, that women take a rightful place and are fully contributing to the prosperity of these societies.

MURKOWSKI: Thank you. Appreciate that.

SEN. RICHARD G. LUGAR (R-IN), CHAIRMAN, FOREIGN RELATIONS CMTE: Thank you very much, Senator Murkowski.

Senator Nelson?

SEN. BILL NELSON (D-FL), FOREIGN RELATIONS CMTE: Thank you, Mr. Chairman.

Dr. Rice, Senator Dodd and Chafee and I just returned from visiting with four Latin American presidents in their respective countries. And we are certainly of one mind that we need to be more engaged in the region.

When a leader such as Chavez in Venezuela starts lurching to the left, and yet we have a dependency there of some 13 percent to 15 percent of our daily consumption of oil coming from Venezuela, clearly one part of our foreign policy ought to be that we ought to start planning on weaning ourselves from that dependence, not even to speak of the global dependence that we now have on foreign oil.

But here's one right in our neighborhood. And Chavez has threatened, from time to time, that he was going to cut it off.

Now, that's a hollow threat because there are no refineries that, outside of the Gulf coast, that can do it, although it would take them a year, maybe two, to build those kind of refineries if, for example, they struck a deal in China to take his oil.

We clearly urge you that we need a Latin American policy that will get us engaged a lot more. And then, in the places where we see the presidents of those countries really trying to do something, and, in fact, having an effect, such as Toledo in Peru, such as Paraguay, such as Argentina's beginning to have some economic uplift, that if America is more engaged, it's going to be some wind under their wings. And it's going to help stem that if a Chavez continues to go leftward, that we will enable those other countries, who are more centrist, to corral him in or at least have a chance of doing it.

So that's a little message that I bring you from the activities of the last week.

Now, elsewhere in the hemisphere -- and you can appreciate this since I represent the state of Florida -- Haiti is a disaster. And it's going to continue to be a disaster until we get engaged and do something seriously, along with particularly the other nations of the Western Hemisphere, financially and politically to help them.

I've had a difference of opinion with the administration. And I think you did have a policy of regime change. And although Aristide was a bad guy -- you know, it's kind of hard to say we support democracy and elections and then we go and push him out. But that's done.

Looking forward, we're getting close to the authorized support now under the U.N. peacekeeping force of 6,700 military and 1,600 civilian police. Do you think that's an adequate number?

RICE: Well, I believe that the number that has been determined -- 6,700 or so, led by Brazil, as a stabilization force now, after the initial stabilization was done by the United States and the French and others, is judged to be adequate to the task.

The question has really been about more of what can that force do. And I think the expansion of it, of a more aggressive stance by that force in going into areas that are particularly violent and dealing with the violence and the militias in those areas is probably really the question that we have to deal with.

I'm glad, Senator, you mentioned the police forces, because in the long run, what really will help Haiti is that it needs a professional civilian police force that can be counted on to enforce law, not to break law. And we have, as you well know, dispatched civilian police trainers from the United States and from other places to try and engage in that activity.

But I agree completely. Unfortunately, Haiti seems to be a place where natural and manmade disasters have come together in a really terrible way for the Haitian people.

They do have a new chance now. They have a transitional government that is trying to arrange elections in the fall. We need to support that process.

And we have had a successful donor conference recently with a $1 billion commitment, the United States is about $230 million of that.

And so...

NELSON: The problem is they never follow through.

RICE: Senator, I agree. We have to press very hard on people to follow through on the pledges that they make. That's a problem worldwide.

NELSON: And this has been going on for 200 years of Haiti's history.

Now, when the U.N. comes up for reauthorizing, in the Security Council, that peacekeeping force, what's going to be your posture about considering an expansion of that peacekeeping force?

This is a country of 7.5 million and a lot of them are outside in those areas that are now defoliated, thus, the mud, the slides after the storms and so forth.

RICE: Senator, we've been focused now on trying to stabilize the situation with the stabilization force that is there. The Brazilians have done a fine job of leading that.

And I just might mention that this is the first time that a lot of those countries, many of whom are from the hemisphere, have actually done peacekeeping in the Western Hemisphere.

And so this is a step forward for the neighbors to embrace Haiti in the way that they have.

What more will be needed, I have to demure. I think we need to look at the situation.

But for now, I think we're in the right place in terms of peacekeeping forces.

We have been concerned about what missions they were prepared to take on. And that is being resolved. And there is a more aggressive posture.

And we really have to put a major effort into the civilian police development.

We also -- as you are absolutely right, people pledge; they don't follow through. And we have money to put Haitians to work. We have money to help restart the Haitian economy, but we've got to follow through.

NELSON: Well, then I want to suggest something to you. And it's a bill that is sponsored by one of our Republican colleagues, Mike DeWine of Ohio. And it's called the HERO Act, which is an acronym.

But what it does is it allows textiles to come in, like we already have in the Caribbean Basin Initiative in other areas in the Caribbean, but it allows it for Haiti. And then they can come duty free into the U.S. It would foster an economic uplift by creating jobs.

But we can't get the administration to support it. It's a Republican senator's bill.

RICE: Senator, I think we believe at this point that the best course with Haiti is to work with them to take full advantage of the Caribbean Basin Initiative, to work with them on job creation through some of the programs that we have out of our economic support fund for Haiti.

They will benefit in a secondary way from what happens in Central America with trade, if CAFTA can be passed.

And so at this point, we think we have the right tools. We just have to make it work.

I understand fully the concerns about Haiti both from a humanitarian point of view and also from a stability point of view. And we probably dodged a bullet in the earlier days with the ability to get Aristide out peacefully, because he had lost the ability to control that country, to govern authoritatively in that country.

But we have a lot of work ahead of us in Haiti. I'd be the first to admit it.

NELSON: Madam Secretary-designate, you can make a difference. If you'll jump on that horse and ride it and keep on it over the next four years of your tenure, it'll start to pay huge dividends.

And nobody's done that. We go in and we fix a problem, then we turn around and we leave it, and so do the other nations, and then Haiti just goes back into chaos.

Let me shift to the other side of the globe: Iran. What specific steps will you advocate to stop Iran's nuclear program?

And I'm talking about beyond the noise that we hear from Europe. This senator doesn't think that's going to cut it.

RICE: Well, Senator, this is a problem that we're trying to approach both multilaterally and through some bilateral pressure.

And we were the first to really put the Iranian nuclear program on the table when the president did his speech, his State of the Union speech, and identified the Iranian nuclear program.

I can remember back in the early days, Senator, people didn't take nearly as seriously that Iran was actually trying to, under cover of its nonproliferation treaty access to civilian nuclear energy, to build a nuclear weapons program. I think people now, because of Iranian behavior, are very skeptical and suspicious of what the Iranians are doing.

NELSON: Are you ready for sanctions?

RICE: Well, we already have an awful lot of sanctions on Iran unilaterally. There's really not terribly much more we can do. But I do...

NELSON: How about getting Europe to go along?

RICE: Well, Senator, I would take as a first step that if the Iranians do not show that they're going to live up to their international obligations, that we refer them to the Security Council. That has been our policy, that when you're in violation of your obligations under the NPT, that you get referred to the Security Council.

And the IAEA has been, I think, documenting that the Iranians have not been serious about their obligations.

So at some point, that may be exactly where we need to go.

We are making some progress in unifying people's view of what the Iranians are doing and putting pressure on the Iranians. We do work with the E.U.-3 to try to help them formulate a strategy that would really hold Iran accountable, not just take Iran's word for it.

And we've made some progress in getting people who engage in bilateral assistance with Iran to be more cognizant of some of the proliferation risks. For instance, the Russians who have a civilian nuclear power program with Iran and their reactor at Bushehr, now say to the Iranians that you will have to return the fuel, in other words, close the fuel cycle and sign the additional protocol.

Those are all positive steps. We need to continue to take those.

But Senator, the spirit of your question is that, at some point, Iran has to be held accountable for its unwillingness to live up to its international obligations. And I could not agree more.

NELSON: Hopefully sooner than later.

RICE: I could not agree more.

LUGAR: Thank you very much, Senator Nelson.

Senator Alexander?

SEN. LAMAR ALEXANDER (R-TN), FOREIGN RELATIONS CMTE: Thank you, Mr. Chairman.

Dr. Rice, welcome and congratulations, and thank you for being here today.

I apologize to you. I missed part of the hearing, because I was at another hearing for Mike Leavitt, who has been nominated to the Department of HHS. But is wasn't a total loss, because we were talking about early childhood education, and I was able to remind your new colleague in the Cabinet that you began piano lessons at age three and that that is a good sign for early childhood education, to have that kind of example here.

I have three questions to ask. They are all subjects that have come up before in one way or the other. And I thought I'd ask them all at once and then give you a chance to comment on them, because they are interrelated. One is about Iraq. One is looking beyond Iraq, and one is to return to the subject that you said almost every Senator had mentioned to you -- Senator Coleman has done some work on, especially on this committee, and that has to do with visas of foreign students (UNINTELLIGIBLE) effect on our higher education system. I want to think about that in a little different way.

Question number one, about Iraq: Some colleagues have suggested and asked you about an exit strategy.

I don't think we need an exit strategy. I think we need a success strategy.

But I would suggest -- and my question is this -- that after the election that we might take a more realistic and perhaps a different view of how we define success.

And so my question is: How many American lives, how long are we willing to take? How much money are we going to spend?

What is the definition of success in Iraq? It's one thing to give people their freedom. It's quite another to help build a stable, pluralistic, democratic society. What are the limits on that? That's the first question.

Second question: This is beyond Iraq. I know your conversations with the president are between the two of you, but perhaps you can talk about this in a general way.

You're the secretary of state. President Bush is president. You're sitting around in a National Security Council meeting in a year or so and someone suggests that we have a circumstance in a Middle Eastern country, some other country, where we need to change a regime, we need to engage in nation building again. What kind of advice would you give the president about what lessons we've learned from Iraq and the other examples of nation building that he ought to consider before he commits us again to one more nation building?

I've heard strong words today about Iraq. I wasn't here, but I would have voted to give the president authority to go to Iraq. I think he made a reasonable decision to go.

The war was a stunning success, and, in my view, there have been a series of miscalculations since then. You, yourself, have used words like "adjustments."

I think it's a sign of strength for us when we look back, we see something that we could do better, that we recognize that, learn from that and go ahead.

So I'm asking, if we were to consider nation building again -- and we've done it many times since World War II -- what are the lessons for the president?

And my own view of that is that there's more than one way to implement the "city on the hill" moral mission that we have in this country to spread freedom around the world. One way is to change a regime and try to make a country more like ours. Another way might be to celebrate our own values and strengthen ourselves and be a good example, and by doing that, to spread freedom.

You, yourself mentioned -- and this leads me to my third point -- the example of foreign students here. All of us, when we travel, we see ministers, we see citizens, business people who have been in this country and who have carried our message, our values, our principles back more effectively than almost anything we can think of. In fact, I think perhaps our most effective method of foreign policy has been our programs that have admitted so many students from around the world to the United States.

But there's another aspect of that as well. The number of foreign students attending our major universities, especially the graduate programs in our major research universities such as the one you were provost, Stanford, has dropped dramatically. Applications to American graduate schools declined 28 percent last year. Those from China fell 45 percent; from India, 28 percent.

There are several reasons for that. One is that India, China, Germany, Great Britain, all are seeing a brain drain to the United States. We talk a lot about outsourcing of jobs. We have an insourcing of brains.

That drop of foreign students, of brain power, hurts our ability to keep our technological edge, and it is of great concern to me over the next ten years.

So I'm not just looking at spreading our values around the world. I'm looking very much in our own self-interest in another way, which is what can we do to make certain that we pay more attention, for example, to making sure that students who are here or researchers who have already cleared the visa process don't have to go home for a month to reapply for the same kind of visa.

So my questions related are: One, what is our success strategy for Iraq?

Number two, based on the lessons for Iraq, what advice would you give our president about some things he might want be to consider in terms of the amount of money, the amount of time, the amount of troops we might have to expend or sacrifice in any future nation-building exercise? What have we learned in Iraq?

And number three, what can we do to help you in your new role to make it easier for foreign students to come here, both so we can spread our values around the world and so we can take advantage of their brain power to create jobs for us in the United States?

RICE: Thank you, Senator. Let me take the first of those. And I'll try to segue as you did so well into the second.

I do think that in Iraq, you were right. What we need is a success strategy, not be an exit strategy. And that's a very good way to talk about it.

The success here is going to be that Iraqis are in charge of their own future and recognize that it is really up to them to make that future one that is inclusive of all of the divisions that have bedeviled Iraq, that we've given them the capability to defend themselves, principally from internal insurgency, but also to give them the ability that their neighbors will understand that Iraq is a stable place, that it is a unified Iraq.

One of the obligations, by the way, that we undertook when we decided to change the regime in Iraq was that we'd be concerned about the territorial integrity of Iraq. And we have to keep that obligation.

And finally, that they are beginning the process towards the stabilization of the their economy so that the economy could support those first two: a political process and a military insecurity process.

I can't give a time line, but I think we will know when the Iraqis are able to have in place institutions, no matter how fragile and no matter how young, where they're actually beginning to try to solve their own problems within those institutions.

RICE: Now, they're not going to solve them perfectly. They're not probably going to solve them the way that we might necessarily. But you see, step by step over the last year or so, the Iraqis taking more and more responsibility for solving their own political problems.

And I would take, for example, what has been going on with the Kurds about provincial elections in Kirkuk. They have been resolving that among themselves. That's an important political process.

On the security side, I think it's going to be somewhat clearer. They may need the help of multinational forces for a while, but ultimately, Iraqis have to be willing to defend and fight for their own freedom. And they are showing a desire to fight and defend their own freedom.

We have to get them the capacity to do it. And I took note of what Senator Biden and Senator Hagel and others said this morning -- Senator Kerry -- about the need to make sure we're training forces in the right way, that we accelerate that training. I do look forward to General Luck's coming back and letting us know what the next phase ought to be.

We face changing circumstances here, but I put a lot of emphasis on getting those security forces trained and then finally helping them economically.

So it isn't that we have to see an Iraq that is a fully democratized, mature economy, fully able to deal with all of its divisions. That's going to take a very, very, very long time. What we have to see is that they've been launched on a path to be able to achieve that, that that path is one that is clear ahead for everybody, and where they are taking advantage of that path.

And I think we will start to see that after these elections, when (ph) I think they're thinking in those ways.

Senator, I've thought 1,000 times about how one thinks about nation-building, something that I famously said we probably wouldn't be involved in. We have been. And it's turned out that we've had to be, because our security depends on states that can function, on not having failed states in the midst.

We learned the dangers of an Afghanistan that people left alone after the Soviets left, and we left it as a place that became a terrorist haven. We can't make that mistake again.

One of the important lessons that we've learned is that the skills needed to help reconstruct and stabilize a country and put it on a path to stable nationhood are skills that we haven't really had to use in a very long time, maybe since World War II. And one of the reasons that I'm so supportive of this new Office of Reconstruction and Stabilization is I think it starts to give the State Department a focus for those skills.

We find ourselves trying to help people create police forces. We find ourselves trying to help people create independent judiciaries that are not going to be wracked by corruption. We find ourselves giving technical assistance on currency. We find ourselves giving people advice about how to start up a ministry in many of these places.

We can learn, from the experiences that we've had in Afghanistan and in Iraq, how to put those skills together in a more permanent way and how to be more predictive of what might be needed in places that we know we're going to have to engage in this kind of activity.

The office that is there now, I think, needs to look at what is going to be needed in Liberia, what is going to be needed in Sudan, and start to put together those skills now so that you have a civilian counterpart to what our military often does in providing immediate stabilization.

Otherwise, we have to depend on the military to do it, and that's not always the best answer. I can tell you how incredibly supportive the uniformed military and the Defense Department are of this idea of an Office of Reconstruction and Stabilization, because they want and understand that the State Department needs to have the kind of expertise that we need to do this.

Finally, just on the visa issue, I will be coming back to you on exactly this.

I'm, of course, an academic. I was provost of Stanford University. We had a large foreign student population.

It was one of the best things for the foreign students, and it was one of the best things for our students too, because they engaged people from other places, as students, not as Chinese or not as Russians, but as students.

RICE: They were all in a common enterprise.

It changes the way we think about people. It changes the way they think about us.

I have gone abroad so many times and sat and heard the prime minister describe how many American universities his people have come from.

And you know what's really remarkable about it? It's not just from Stanford or Harvard or Yale, but it's also from universities like I went to, the University of Denver or Texas A&M or Nebraska or, I'm sure, Tennessee. And that's invaluable.

And so I will be coming back to you, because these numbers are disturbing and we need to do something to reverse the trend. ALEXANDER: Thank you, Mr. Chairman.

I'd like to ask to put my entire statement in the record.

And if I may just underscore, I just want to emphasize the point, with all the discussion about visas, that we're not just talking about some good will gesture to the world. We're basically talking about recruiting the most talented people in the world who have helped us create our very high standard of living so that 5 percent or 6 percent of people in the world have 25 percent or 30 percent of all the money. That's one of the things we're talking about here.

And we're going to lose our capacity to do that to some degree if we don't solve this problem.

Thank you, Mr. Chairman.

LUGAR: Thank you very much, Senator Alexander.

As you can tell, Dr. Rice, the committee is fortunate to have people who have served as governors of the states, members of the Cabinet.

But the visa issue was a part of our hearings during last year. Senator Alexander played a leading role in that in the follow-up with a round-table group.

It's a very serious issue with the bureaucracy of our country because of homeland security and other purposes has (ph) its points. But we're losing ground. And the committee takes this very seriously. I'm sure you do from your background at Stanford and elsewhere.

And so I appreciate his bringing this up and likewise your reiterating the reconstruction idea, which could be called nation- building or reconstruction, but nevertheless so important. And the progress you're making there, I think, is critical.

Let me just now call upon Senator Obama for his initial 10 minutes of questioning.

SEN. BARACK OBAMA (D-IL), FOREIGN RELATIONS CMTE: Thank you very much, Mr. Chairman.

Thank you, members of the committee, Dr. Rice.

First of all, let me say how grateful I am to have the opportunity to serve on this committee. I know that it has a wonderful reputation for bipartisanship. And that, I think, is partly due to the excellence of the chairman and the ranking member and the degree to which you both work together extremely closely.

So I'm looking forward to my service here.

Dr. Rice, it's wonderful to see you here. And I've been very impressed, obviously, with your mastery of the issues. Since it's the day after King's birthday, obviously, 20 or 30 years ago, it's unlikely that I'd be sitting here asking you questions. And so I think that's a testimony to how far we've come, despite how far we still have to go.

And I think everybody rightly is extraordinary impressed with your credentials and your experience in this field.

I've got three areas I'd like to explore that have already been touched on to some degree. I want to try to see if I can knock out all three of them with the time that I have remaining.

The first has to do with the issue of nuclear proliferation, which has already been discussed. But I think it's important to note that in the midst of what was sometimes a very divisive campaign, there was strong agreement between President Bush and Senator Kerry that our number one priority, that our single greatest challenge is keeping nuclear weapons out of the hands of terrorists.

And there has been enormous leadership on the part of this committee, and Senator Lugar in particular, working with former Senator Nunn, to move the process forward of securing nuclear material in the former Soviet Union.

I am still concerned that less nuclear material, as I understand it, has been secured from the former Soviet Union in the two years after September 11 than the two years prior to September 11. Now, it may just be that there was low-hanging fruit initially and it starts getting harder as time goes by.

But I'm also concerned of the fact that we've never fully funded, it appears to me, the Nunn-Lugar program.

I know that Senator Lugar is going to be presenting an amendment that gives your office more flexibility in this area. I'm hopeful that I'm going to have the opportunity to work with him and my colleagues on this piece of legislation.

I guess my question is: How are you going to use this flexibility? Number one, are you going to be seeking full funding?

Number two, beyond the existing mechanisms to lock down existing nuclear material, what else are we doing, for example, to make sure that Pakistan has a mechanism in place to ensure that those nuclear weapons or that technology is no longer drifting off into the hands of hostile forces?

RICE: Thank you.

First of all, on nuclear proliferation, let me just say that broadly, our strategy has been really threefold: first of all, to be very concerned about the loopholes in the Non-Proliferation Treaty. The Non-Proliferation Treaty is in trouble, because there are countries that have signed onto it and then are using the access to civilian nuclear power to really pursue nuclear weapons programs. Iran is a prime example of that. The president has made a number of proposals -- Senator Lugar has -- we've talked about this -- to close the fuel cycle, to make it not possible for countries to enrich uranium or other fuels to the point that they're left with the fuel, but rather to get a fuel supply from the fuel suppliers that are out there.

And it's a proposal that has met with some resistance, but it's something that we're continuing to work on. Clearly, we have to make the proliferation problem somewhat easier by not having countries that are suspect with access to the fuel supply.

OBAMA: Can I interrupt just real quickly?

RICE: Sure.

OBAMA: Is the resistance on those reforms coming simply from countries that are in the midst of development or are we also seeing resistance from allies like France and Germany and others that already have existing nuclear capacity?

RICE: The resistance really is coming from countries that we think have no intention of building a nuclear weapon but who want to maintain the access to their entire civilian nuclear cycle.

So we've had to talk with some countries about the fact that, yes, under the Non-Proliferation Treaty countries have access to this, but when you get a country that is cheating under that access, that maybe for those countries you shouldn't have the access.

So this is a discussion. We got a one-year moratorium on enriching and reprocessing, and we'll try to keep pressing forward.

Secondly, we've been very aggressive on what is a really bad problem, which is nuclear entrepreneurship, the kind of A.Q. Khan factor, these black market entrepreneurs who are selling nuclear secrets, selling, in fact, the whole little kit, if you will.

And the takedown of the A.Q. Khan network is really one of the most important things that we've done. It will give us information on how this works. We have to put this one out of business, and we have to work to see if there are others.

This has all been helped by what happened in Libya, where a country voluntarily gave up its weapons of mass destruction in hopes of a better relationship with the international community. And we have to try and incent (ph) that kind of behavior on countries that have pursued weapons of mass destruction.

And then, finally, you mentioned -- I should also mention the Proliferation Security Initiative, which, of course, helps us to interdict dangerous cargo. So it's a broad program.

But the Nunn-Lugar piece of this is very important. As I said, as an old Soviet specialist, I know a good bit about the dangers there. We have tried to fund it at levels that are adequate to do the work at hand. And you mentioned the securing before 2001 and the securing afterwards. Some of that is exactly as you mentioned, low- hanging fruit. Some of it is that there's a kind of schedule for which sites get secured when.

What we have done is to go to the Energy Department and ask them to prioritize, to try to get the most important sites secure in the earliest time.

And the timetable has been collapsed to one where, if we keep to schedule, we should be able to secure all materials within the next four years.

So we're making some progress.

We need to work harder on the bureaucratic impediments to this. There are impediments on both sides.

OBAMA: But my understanding, though, is also that at the current schedule we'd be stretching this process out for potentially 13 years, as opposed to four. Collapsing it will require a little more aggressive movement on the part of the State Department.

And I recognize this is difficult. Russia may not always be entirely interested in moving this along as quickly as possible.

But it strikes me that, with the expertise we have on this committee, this is something we would like to work on aggressively.

RICE: And we should certainly work on (UNINTELLIGIBLE)

We do, by the way, have a collapse scheduled for four years. We will see what it takes to get that done.

But I appreciate the interest in this. This is something we should work very carefully on.

OBAMA: The second question I have -- and this is something that I think repeatedly comes up as I travel to Illinois. I suspect this is true everywhere, and that is the enormous strain that is being felt by our National Guardsmen and reservists in Iraq.

And I did a calculation -- or my staff did -- that I think if Illinois was a country, we'd be 4th or 5th in size of -- as a coalition partner. I think that may be true, in fact, to just the National Guard, alone.

Now, I recognize you're not up for confirmation as secretary of defense, presumably, at some point I'll have the opportunity to ask Secretary Rumsfeld about some of these questions.

But I am concerned about this notion that was pursued by Senator Biden and others that we've made significant progress in training troops. Because it seems to me that in your response to Senator Alexander that we will not be able to get our troops out absent the Iraqi forces being able to secure their own country, or at least this administration would not be willing to define success in the absence of such security.

I never got quite a clear answer to Senator Biden's question as to how many troops -- Iraqi troops -- don't just have a uniform and aren't just drawing a paycheck, but are effective enough and committed enough that we would willingly have our own troops fighting side-by- side with them.

The number of 120,000 you gave, I suspect, does not meet those fairly stringent criteria that Senator Biden was alluding to.

I just want to make sure, on the record, that you give me some sense of where we're at now. You may not have all of the answers, but I'd like to at least get a better sense of that.

RICE: The number that we consider trained is 120,000.

It's a little hard to give a number for exactly the criteria that you are talking about, because a lot of this is a matter of what you experience when these forces actually go into difficulty.

We have had -- and everybody understands that we have had problems with people leaving, people deserting. We've had problems with people not coming back. And we've had problems with particularly some of the police forces who are, frankly, undermanned. And one of the things -- are undersuppplied.

We are dealing with the structure of the police forces by trying to go to more commando units that are more heavily armed for what is now contact with insurgences, not just what your average beat cop can do.

The Iraqi forces have fought pretty well in a number of places. The forces that have fought best are the ones that have clear leadership by Iraqis.

And this has caused us to focus more on the need for leadership, for coherent leadership for these forces, and I mean leadership of units, not leadership in the broad sense.

And so the Iraqis themselves are spending more time vetting people, experienced leaders who can be brought back to give structure and morale to these people. They're considering the policy of putting some of our people in as really almost mentors with these forces -- really paying more attention to their capability to fight as integral units, not just the numbers of people that we're training.

And I think that's going to be responsive to some of the concerns. And one of the points that General Luck will look at is how well that process is going and what more we need to do.

But the numbers are 120,000. When they are tested, some perform well and some don't.

We have to recognize that this is a very tough environment even for the best-trained forces.

OBAMA: Ours.

RICE: Even for our forces. And while we want to accelerate the training of the forces, we don't want to do what we did in an earlier cycle, I think, which was to accelerate it to the point that we put unprepared forces on the field.

So it's a complicated issue. But I think we're trying to work our way through it. We've tried adapt to what are really changing circumstances and changing demands for the Iraqi security force personnel.

OBAMA: Mr. Chairman, I know my time up. I would just make this note, that if our measure is bring our troops home and success is measured by whether Iraqis can secure their own circumstances, and if our best troops in the world are having trouble controlling the situation with 150,000 or so, it sounds like we've got a long way to go.

And I think part of what the American people are going to need is some certainty, not an absolute timetable, but a little more certainty than is being provided, because right now, it appears to be an entirely open-ended commitment.

RICE: Senator, if I may just -- to that point, I want to be understood that we are always looking to complete the job, but of course to get our forces home as soon as possible.

And it will be a function of our -- their capability and our ability to help them. But there's at least some hope that Iraqis may, themselves, fight this fight somewhat differently and somewhat better because it's their fight.

I was asked once: Why are Iraqis better in certain situations than even the best-trained coalition forces? And of course, an Iraqi knows whether that's a Syrian or Saudi or Iraqi. They are of the country, of the culture, and they're fighting for their own freedom.

And so one of the standards of success is really that the Iraqis are fighting for their freedom. Even if they're not fully able yet to secure themselves, that they are fighting for their freedom. And I think we are seeing very strong signs of that in the country.

LUGAR: Thank you very much, Senator Obama.

I would just want to underline the senator's point, and you have in your own way, Dr. Rice.

But I know when Prime Minister Allawi was here he told some of us around this table that by the time of the election, their officers in (UNINTELLIGIBLE) country, about a year from now, there'll be at least 200,000 people, who are both police force and national guard, who would be capable, who can, in fact, patrol the streets, could control the country. And then he assured us there will be a good election, unlike what we are likely to see on January 30th. So from the Iraqis' standpoint, they come out with this (ph) -- I'm just wondering if it's not possible for us to devise, between you and you us, some sort of metrics that are more satisfying than the large spread we have between Senator Biden's questions and Senator Obama's follow-up of 4,000 and 120,000.

As you point out, of the 120,000, it's very difficult to determine how well-trained, how many weeks, what kinds of staying power, whether they're (ph) overwhelmed. And we appreciate that.

But since the issue is so critical, with regards to, as Allawi said, the negotiation and with us as to how rapidly we withdraw in a seemly (ph) and secure way. This is going to be up front with the American people for quite sometime.

Now, I think we can probably do better with the question. It's very difficult to do so in this dialogue, because it's not really clear all of the criteria of training and capability.

But I'd just ask you to think through this a little bit, and we will too, creatively, maybe through hearings or through studies of some sort.

Because I think some measurement, almost the way we were gauging the electrical power output for a while, or how much oil was finally being produced, there have to be some indicators that give sense of progress and hope and what have you to this.

RICE: Thank you, Senator.

LUGAR: Senator Sununu, I congratulate you on your co- chairmanship with Senator Biden, of a very successful observation effort.

SEN. JOHN E. SUNUNU (R-NH), FOREIGN RELATIONS CMTE: Thank you, Mr. Chairman.

And I suppose it's largely due to the fact that you chose me. So I'm very grateful for that.

(LAUGHTER)

Dr. Rice, in your remarks, you mentioned that the United States has a role to play in providing assistance to the new Palestinian leadership. And in our meetings last week, with both Abu Mazen and Abu Allah (ph), it was emphasized that in structuring the Palestinian security forces, one of the biggest needs was money to deal with the pension issues and payment issues.

Do you intend to recommend a financial assistance package for the new Palestinian leadership to restructure their security forces? And is it likely that that request would be part of a supplemental budget early in the year?

RICE: Thank you, Senator. I will look with others when I get to State at precisely how we might fund the obligations that I'm sure we're going to have to undertake to help the Palestinians in this important period of time.

Clearly, the training of the security forces is going to be critical. They've got to fight terrorism. They've got to have trained security forces to do it. It will be a good investment to train those forces.

I would just note that we have, through indirect assistance, through the United Nations, through nongovernmental organizations, provided a good deal of funding to Palestinian reconstruction, Palestinian humanitarian needs. We also have -- the president approved the funding of $20 million in direct support to the Palestinians just recently to help with their election.

So there is a fund flow, and we will look at what more we need.

I would hope that some of this would be funded by their Arab neighbors. I have to say that if people really want a peace, if the countries in the neighborhood, as they come and tell me and they come in to tell the president, they tell Secretary Powell all the time, "We have got to have peace; you've got to work on behalf of the Palestinians," then there are a number of their neighbors who could really afford to help fund some of these efforts.

And I'm sure that I will be actively seeking their support, because that is one thing that the neighbors could do for the Palestinian people.

SUNUNU: Well, that was my second question, is what can the Arab states do to help. Obviously, with $45 or $50 a barrel oil, the economies there and the revenue base there is much stronger than it has been in past years.

Is there any specific role that you see for the Arab states in addition to financial resources?

One of the issues that was raised in some of our meetings were perhaps the opportunity to assist in the training of the security forces.

And let me be clear, there are two different steps to this. One is restructuring the security forces, which will take resources and funding in and of itself, and a lot of political will. And then the second step would be the training of security forces.

Is there a particular partner in the region that you think might be best suited to that training role?

RICE: Yes, it appears to me that both the Egyptians and the Jordanians will probably have a role to play. They've played that role before in various ways.

And we have had extensive conversations with them, at other times, about playing that role at the conference in Aqaba. And we would want to get them involved.

The Egyptians, of course, also have a role to play in helping stabilizing the Gaza, as the Israeli forces withdrawal. And we have talked with them about that.

There are other roles that we need the Arab states to play. And I think the most important is, as I mentioned earlier, you can't insight hatred against Israel and say you want a two-state solution. It's just got to stop. They've got to stop it in their media. They've got to stop it in their mosques, because it is a message that is inciting the people who want to destroy the chances for peace between Israel and Palestine -- a Palestinian territory.

So we sent that message. And it was probably little noticed, but when we went to Sharm el-Sheikh, the Arabs actually issued a very good statement. And it was on behalf of Arab states, the Arab League, and it was a very good statement. We will be going back to them to remind them of that statement and to ask them to live up to it.

SUNUNU: In addition to the value of that statement, I would mention that one of the things that came up, time and again, was the impact that your visit had on the area and the importance of that kind of high-level engagement.

I know you answered some questions with regard to a special envoy. It's something that you have supported in concept.

But I would just underscore the value of that high-level engagement, whether it's through a special envoy or your personal commitment.

You mentioned Egypt and Jordan, so a third question has to do with public diplomacy.

You mentioned it in your remarks. It's obviously a goal that's shared by most everyone on this committee, to focus on public diplomacy, and even reform some of our efforts in that area.

I believe one of the areas of public diplomacy that has been a success story is that of the American University in Beirut, the American University in Cairo, what it has done for both students in the region and American students seeking to broaden their educational base.

I have had suggested to me the initiative of developing an American University in Amman. And I was curious what you thought of that objective, and what kind of support you might lend to such an effort.

RICE: Well, thank you.

I will certainly look at it. I haven't taken a look at that and I'd like to have a chance to do that.

But I have to say that the two universities that you mentioned have been really extremely important in helping to create a link between the United States and these important countries and in providing a place for moderation in these societies.

And so it's certainly the kind of thing that we should look at.

We have to look, overall, at what I like to call a conversation, not a monologue. It's one thing to get your message out, which is how we often think about it, but it's also important to engage other cultures.

And I would hope that that includes, on the part of the United States, a renewed commitment to the training of Americans in critical languages like Arabic and Farsi and other languages and in the study of those cultures.

I was a Soviet specialist, and learned Russian at a time when a lot of us were told that was a good thing to do for the well-being of the country. And we linked our cultural awareness and linguistic awareness to the broader question of how we secured ourselves and how we won the war of ideas.

And we have to do that again.

There are too few of us who are able to engage those societies on their own terms.

SUNUNU: Finally, I'd like you to talk a little bit about the Mideast partnership.

This is a new way of looking at financial assistance. It's obviously consistent with the goals that you spoke about in your remarks today -- economic liberalization, political reform.

Do you believe that MEPI, as implemented to date, has been successful? Is it a model that we ought to seek to reproduce elsewhere?

And how do we ensure that an approach like MEPI and the funding commitment made through the Mideast partnership isn't duplicative of efforts within USAID or other State Department programs?

RICE: On the broader question, there needs to be very close coordination between USAID and the State Department. And I think that that has gotten better, just watching it from the outside. I will obviously know more as I get to the inside.

But I really do think that Andrew Natsios and Rich Armitage and Colin Powell have worked very closely together to make sure that all of our resources are going in a way that is not duplicative to further our goals.

I am a supporter of MEPI. I think that it is a part of the concrete things that we can do to change the environment in the Middle East. And its focus on good governance, as well as liberalization of economies at the same time that assistance is flowing is a very important innovation.

It's also behind the Millennium Challenge Account approach, where I think we now have a consensus about foreign assistance, that foreign assistance has to be a two-way street, that it's not just money going into a country, but it is -- a country has to be devoted to fighting corruption, to liberalizing the economy, to good governance, to spending money on health care and education for the people or it's not going to succeed.

And that kind of compact between donor and donee is the future wave, I believe, for foreign assistance.

And so we do have other initiatives that push in the same direction.

I might just mention also, Senator, that we hope in the Middle East to be able to take advantage of free trade as a tool both to encourage peaceful liberalization between the countries of the region, but also with us.

And so Bob Zoellick has been putting free trade agreements in place in a lot of places in the Middle East and looking to the day that we might have a Middle East free trade area.

SUNUNU: I want to note, for the record, that was question number five, (UNINTELLIGIBLE) Jordanian free trade and obviously the initiatives from Iraq that have been undertaken.

And I certainly encourage you to continue along that line. I think in the long term, the issues that have been stressed within part of the Mideast partnership, that is economic liberalization and the trade liberalization that comes along with that, will do far more for economic growth and development as any short-term assistance we might provide.

That short-term assistance is important, especially in areas like restructuring the Palestinian security forces. I don't think that could happen in the short term without some outside assistance. But in long term, economic growth development opportunity, it's really going to be determined by the macroeconomic policy and trade policy that are chosen by our partners.

Thank you, Mr. Chairman.

LUGAR: Thank you very much, Senator Sununu.

Senator Martinez?

SEN. MEL MARTINEZ (R-FL), FOREIGN RELATIONS CMTE: Mr. Chairman, thank you very much.

It's a great honor to be a part of your committee. I want to thank you and ranking member Biden for the warm welcome. And I look forward to working with you and the other members.

I'm particularly honored today to have the opportunity to participate in the confirmation of Dr. Rice, someone I came to know as a colleague and friend and our work together in the administration. And I can certainly recall many moments in which her steady leadership and her steady hand were felt. From those early days of our administration when an American airplane was down off the coast of China, to the tumultuous days after 9/11 when good, steady leadership was needed, Dr. Rice was there providing it to the president, each and every day.

I know that in all of my interactions with her, I've always found her to be, not only extremely competent, but a person of great personal integrity. And I'm extremely proud to be in support of her confirmation.

We've talked a little bit about Latin America, Dr. Rice, an area that's of great interest.

I share with Senator Dodd and Senator Nelson the anxiety that we have about the need for us to be more engaged in the region. You hear it from all their leaders when you travel there. You also just know that it is an area that begs for our participation and engagement in a more direct way than we've had in the last several years.

MARTINEZ: There are some signs that are troubling to me. And I know we've talked about Venezuela. I want to go back into Venezuela for a moment, because it seems to me that over the last -- well, first of all, Venezuela is a government that purportedly was elected through a democratic process, however, anything but a democratic governance is what takes place there today.

I'm troubled by the recent events where property has been expropriated, inflammatory statements, as Mr. Chavez travels the world, that he continues to make against the United States, which was a pattern of his throughout the time of his governance; his close relationship with another negative force in the region, with the government of Cuba and Fidel Castro himself.

It really does raise in my mind some serious skepticism about our ability to work with him or his commitment to true democracy and pluralism within his own country.

In addition to that, we now know recently that Mr. Chavez has initiated conversations with Russia about the major purchase of arms. It sounds to be something in the order of $5 billion. It would be a terribly destabilizing effect in the region. He's talking about purchasing MiG-29s, advanced jet fighters, as well as a large, large number of AK rifles and other military equipment. He's already purchased helicopters.

This would create, I think, a tremendous imbalance in the region in terms of the potential to trigger an arms race in a region that frankly does not need one.

And also I greatly concern myself with the continuing friction that appears to exist -- or actually doesn't appear -- in fact exists between Venezuela and its neighboring country Colombia.

I know in Columbia, we've tried to support President Aribe and his fight against the narcoterrorists.

And so my question to you would be: How you do you view the government of President Chavez, the kind of threat that it represents to stability in the region as well as to his neighbor in Colombia, and his continuing pattern of association and relationship with some of the worst characters in the world, including Fidel Castro?

RICE: Thank you, Senator.

I think that we have to view, at this point, the government of Venezuela as a negative force in the region: negative in terms of its effect on its neighbors, as you have outlined; negative in embracing the only undemocratic government in the region -- as I said, the only place there's an empty chair in the OAS is Cuba -- negative in the sense of what he is doing inside of his own country to suppress opposition. And it's a very, very serious matter.

We can, I think, work with others to expose that and to say to President Chavez that this kind of behavior is really not acceptable in this hemisphere that is trying to make its way toward a stable democratic future.

Democracy has a lot of challenges in Latin American. It has challenges of new, fragile institutions that have come into being over the last less than two decades. It has the challenges of trying to bring economic prosperity to very poor populations. It has the challenge of trying to integrate into the political system people who have long been shut out of that political system, like indigenous peoples.

It has a lot of challenges. In some places, it has the challenge of terrorism and narcotrafficking, like Colombia.

I do want to say that President Uribe has been very tough on narcotrafficking and terrorism, and we've supported him. And I think he's making some progress.

It has places like the Andean region, which we've supported through extension of Andean trade preferences and through working on the Andean initiative.

We are engaging and need to engage more this very vital region. It has a lot of challenges. It has a lot of promise.

But I would have to say that at this point one would have to judge the insolence of Venezuela's government as negative, and it's too bad because it has been a longstanding good relationship with the United States. And we have great affection for the Venezuelan people.

I just think that right now it's a pretty negative influence.

MARTINEZ: As it relates to Cuba, I know that the president put forth a very broad policy toward Cuba in May of this year, which included, among other things, a really strong outreach to the dissident community within Cuba and providing encouragement and assistance so that this budding group of people could continue to thrive, understanding that they operate under tremendous difficult circumstances, as we know from the continuing human rights oppression in Cuba and political prisoners like Dr. Oscar Elias Biscet and others who continue to unjustly be imprisoned.

I wondered if you could speak to the implementation of the recommendations of the Commission on a Free Cuba, which, obviously, some of them have been already taken place. But I'm particularly concerned about whether there will be, within the State Department, someone that you will task to be a point person in the continuity of this and in the ensuring of the implementation of all of its different points, including in this the obvious need for there to be a continuing flow of information to the Cuban people.

I was delighted when Ranking Member Biden mentioned that when he saw Lech Walesa, the first thing he said was not solidarity, but it was Radio Free Europe. I think that Radio and TV Marti can have that same freeing potential for the people of Cuba, if we can break through the jamming that continues to be there because of Castro's fear of his own people hearing just free news and information.

Can you help me by giving me some assurance that there will be someone to ensure the carrying out of this, by having a point person so assigned and a continued commitment to Radio and TV Marti, and the platform that we're talking about having a dedicated opportunity to pierce the jamming by ways in which we've done it recently and in ways that I think would help the people of Cuba to get free information?

RICE: The information flow to Cuba is a very important tool for us, because Castro would like nothing better than to have his people shut off from information.

And Radio Marti and TV Marti, of course we've been very supportive. We've been flying (UNINTELLIGIBLE). We're looking at how best to extend that and make certain that we can continue to do that.

I don't know about the structure just yet, but I can assure you there will be very close attention to the implementation of the commission's recommendations.

We've already made a lot of progress with immigration, with homeland security.

Castro, I think, is feeling some of that, where we are beginning to make it not possible for him to skim money off of monies that people send for humanitarian or family reasons, or travel, to fuel his dictatorial regime.

The day that the people of Cuba are finally free is going to be a great one for the Western Hemisphere, and the commission recommendations were intended to try and hasten that day and also to try to prepare the ground for a peaceful transition. And it's a very important goal. And you can be certain that we'll pay extremely close attention to it.

MARTINEZ: You have in the past and I know you will in the future. RICE: Thank you.

MARTINEZ: Shifting to the Middle East, I had the opportunity to travel there recently, and also saw the Palestinian election take place.

One of the great concerns that seems to be there, as we look to a peace process, is the continued instability in southern Lebanon, the fact that the United Nations resolutions have never been implemented, Syria has never really left the region, the Lebanese government has never really taken over the southern part of Lebanon. And this continues to exacerbate the inability of Israel to not suffer the terrorist attacks, which then creates more instability in the region.

Do you think there would be an opportunity for us to more forcefully assert the need for that resolution to be observed by Syria and Lebanon?

RICE: Absolutely, Senator.

The Resolution 1546, which we and the French co-sponsored, to put the Syrians on notice that the world expected them to observe the legitimate sovereignty of Lebanon, to begin to remove their forces, to stop terrorism from there, I think was a very important achievement.

Secretary General Annan has appointed someone to keep on top of the implementation of that resolution, and that's also very important.

Lebanon can be one of the democratic strongholds in the Middle East. And so we need to pay attention to what is going on in Lebanon.

And if I just might say one line about Syria as well, I think that it's fair to say that the Syrian government is behaving in a way that could unfortunately lead to long-term bad relations with the United States.

It is incumbent on Syria to respond, finally, to the entreaties of the United States and others about their ties to terrorism, about the harmful activities that are taking place from Syrian territory into Iraq, and to act on a number of the steps that were first outlined to them by Secretary Powell, almost three years ago and then by Deputy Secretary Armitage, just very recently.

And so this is an important issue with Syria. And I just want to thank the Congress. We do have, thanks to the Syrian Accountability Act, some tools, but we will have to mobilize them, because Syria should not be, but is thus far not a constructive force.

MARTINEZ: Thank you.

LUGAR: Thank you very much, Senator Martinez.

At this point, I want to have a little discussion. I will not let this become a full-scale debate.

But I want to survey what is possible with the committee, this afternoon, in the hearing. And so I'm going to ask each member who is assembled for some estimate of how many minutes the member would require in raising additional questions.

And we'll try to total that up and come to some to idea, then, of whether we might complete our work this afternoon and, in fact, have a vote on confirmation. Or if that's not in the cards, we'll proceed in regular order so that members have the opportunity to ask the questions that we'd promised everyone they could ask.

RICE: And Senator, I'm willing to stay here longer than the afternoon, if you need me today.

LUGAR: Well, you may be more prepared than all of our members.

(LAUGHTER)

But nonetheless, we'll not debate that either in terms of eagerness.

(LAUGHTER)

But let me just ask Senator Hagel.

SEN. CHARLES HAGEL (R-NE), FOREIGN RELATIONS CMTE: (OFF-MIKE) 10 minutes.

LUGAR: About 10 minutes.

Senator Chafee?

SEN. LINCOLN D. CHAFEE (R-RI), FOREIGN RELATIONS CMTE: (OFF- MIKE) five.

LUGAR: All right.

Senator Coleman?

SEN. NORM COLEMAN (R-MN), FOREIGN RELATIONS CMTE: (OFF-MIKE) five. But I'd forgo my five if we came to some consensus that we could vote on this this afternoon.

LUGAR: I see. (UNINTELLIGIBLE) flexible.

Senator Voinovich?

SEN. GEORGE V. VOINOVICH (R-OH), FOREIGN RELATIONS CMTE: Ten.

LUGAR: Senator Martinez?

MARTINEZ: Sir, I'm also (UNINTELLIGIBLE) be very flexible.

(LAUGHTER)

LUGAR: All right, well, I read that as somewhere between 30 and 40 minutes...

(LAUGHTER)

... plus or minus a few.

Senator Biden?

SEN. JOSEPH R. BIDEN JR. (D-DE), FOREIGN RELATIONS CMTE: I have at least 10 minutes.

LUGAR: Senator Sarbanes?

SEN. PAUL S. SARBANES (D-MD), FOREIGN RELATIONS CMTE: Another round.

LUGAR: All right. Another 10.

Senator Dodd?

SEN. CHRISTOPHER J. DODD (D-CT), FOREIGN RELATIONS CMTE: (OFF- MIKE)

LUGAR: All right.

Mr. Feingold?

SEN. RUSSELL D. FEINGOLD (D-WI), FOREIGN RELATIONS CMTE: Ten minutes.

LUGAR: Senator Boxer?

SEN. BARBARA BOXER (D-CA), FOREIGN RELATIONS CMTE: (OFF-MIKE) two rounds.

LUGAR: Two hours?

BOXER: Two rounds.

(LAUGHTER)

LUGAR: Two rounds.

BOXER: I don't want two hours.

LUGAR: All right. Very good.

Senator Obama?

(CROSSTALK)

LUGAR: All right. Well, that would be at least 70 minutes or so, it looks like.

And, Senator Murkowski, how many more minutes would you like to question the witness?

SEN. LISA MURKOWSKI (R-AK), FOREIGN RELATIONS CMTE: I think it can be done in 10. LUGAR: Another 10. All right.

Well, it appears probably we have at least two hours of work ahead of us, maybe more. And let me just mention, the distinguished ranking member, because of an important commitment, will need to leave about 6:00 or thereabouts.

BIDEN: Mr. Chairman, I do have a longstanding commitment at 6. I assumed we'd go two days. But I want to make it clear, if in fact the committee has exhausted its questions in the time frame of 6 o'clock or 7 o'clock, I would leave my proxy with my colleague, if he would be still here, or with you, to vote my proxy.

I have no objection to proceeding, assuming every member is satisfied they've had their questions answered. And I'm sure the witness would be delighted to not have to be back tomorrow, although we enjoy her company greatly and expect her back many times.

RICE: Many times.

BIDEN: So I have no objection as long as the chairman understands my constraint is at about 10 minutes of 6 I'm going to have to leave for a longstanding commitment.

DODD: Mr. Chairman, I might just (UNINTELLIGIBLE) a wise thing to proceed in this way, but I would hope, because in terms of the nominee's responses and so forth, you may find members needing more time than they've indicated to you here...

LUGAR: Could be.

DODD: ... in good faith it would be improper for us to assume that she might be able to stay (UNINTELLIGIBLE) the two hours left and we'd be sort of failing in our commitments to you if we discovered that we needed more time to pursue some issues maybe a little more aggressively.

LUGAR: I understand that. And the chair will not be unreasonable in keeping the hearing going forever, would try to gauge what is doable.

Now, if at some point it appears still we're raising good questions but we're not going to conclude, then I would ask for members' cooperation to come back tomorrow morning at 9 o'clock again, and hopefully under those circumstances perhaps to have a vote on the nomination before noon, so that we would then compact our efforts, perhaps, and thus leave afternoons available, for the nominee and for ourselves. But if that doesn't work, why, we reserve the afternoon also.

But one option or another probably will work out. And that's why I just took the time at this juncture.

We've had wonderful attendance.

As you've noticed, Dr. Rice, all 18 members have been present; they've all taken at least 10 minutes, some a few more, as the case may be...

(UNKNOWN): (OFF-MIKE) excites you.

LUGAR: And there is deep interest in this. And that is evidenced by the attendees at the hearing who have come to hear you. And we've had standing room only -- you cannot see this -- but I can testify throughout the hearing, all told.

Well, we'll proceed now. We'll say a 10-minute round. Members need not use all 10 minutes, if they are disposed to stop short of that.

Let me begin by saying, Dr. Rice, that I submitted a question to you, and I appreciated your response endorsing my initiative for an institute at the National Endowment for Democracy on the free press.

It appears to me that given both public and private sectors working together in the National Endowment seemed to me to be a good framework for this. We can make some headway on the public diplomacy initiatives that you have expressed today, and enlist both parties, Republicans and Democrats, through the Republican institute and the Democratic institute, and others who are affiliated with that.

So I'll not take time to question you, but I just wanted to note that I appreciated very much that endorsement. And I mention it because of your strong advocacy today of public diplomacy, the need for us to get our message out.

RICE: Thank you, Senator.

LUGAR: Let me ask also about Ukraine in this respect: We've had a dramatic chain of events, and they are by no means at conclusion; the story evolves there. But it is clear that President Yushchenko will have numerous hurdles in front of him.

It would be helpful, in my judgment, if we could have the administration's support of legislation repealing Jackson-Vanik restrictions for Ukraine. Do you have an opinion on that initiative?

RICE: We support the repeal of...

LUGAR: For Ukraine.

RICE: For Ukraine at the time that it's appropriate. Yes.

LUGAR: I appreciate that. And you may be able to help us determine in the timetable when it is appropriate and to work with us on that legislation so that there are not hitches or misunderstandings with the government that we are trying to assist there.

Senator Biden has indicated an appropriate and timely call from our former colleague, Senator Danforth, our ambassador of the United Nations with regard to Sudan.

And I had the privilege of visiting with him, in the last few days over the telephone, on the specific issues that, now with peace between the North and the South, there is, in fact, the need still for peacekeepers, African troops, essentially. And about $250 million, he estimated would be required to pay for that peacekeeping effort by these troops.

In addition, to these commitments, he feels that we have made as part of the carrots of the carrots and stick (ph) business of about $500 million in development aid to the government of Sudan.

Now, Senator Danforth is concerned about both sums, the $250 million and the $500 million and the incorporation by the department of this in our foreign assistance budget or wherever it may be appropriate, perhaps, in the defense budget, for all I know.

But have you given thought to how we are going to meet the Sudan commitments?

RICE: Senator, I need to look at precisely how we will meet the commitments.

We have been aware of the commitments that we have, and we will do it through some combination of funding accounts.

As to the peacekeepers, I think our goal right now is to convince the Sudan government that the A.U. needs to have the full 3,300 complement, not just 1,100. And we're working very hard on that.

But we recognize the commitments that we've made on...

LUGAR: So they still need to be convinced that they need 3,300 peacekeepers.

RICE: Right. That's right.

LUGAR: Well, that's a very important factor, but still important we succeed, I think, in having an appropriate amount, not only to gel together the success thus far, but obviously with Darfur still in some jeopardy, and as Senator Danforth has told this committee, a lot of guilt on all sides, both sides, multiple sides in that situation.

Now, that leads me then to the question, of course, sadly enough, he also, I'm sure, informed Senator Biden as he did me, that he will be leaving his post today.

RICE: Yes.

LUGAR: And so, once again, we have a very important diplomatic assignment that requires a nominee.

I would just request that you work closely with colleagues in the White House and with the president to forward a nominee quickly, because, as we went through this progression with ambassador Negroponte's nomination, the committee moved rapidly to have a hearing almost before the ambassador might have been prepared for it, as well as the department, with all of the paperwork that needs to be done.

And then likewise with Senator Danforth, recognizing that at this particular crucial time an ambassador to the U.N. from the United States is so important.

So I know that that's on your mind.

RICE: Yes, indeed.

LUGAR: But I wanted to take the occasion of the hearing to underline it.

RICE: Thank you.

LUGAR: I want to mention in Venezuela, as others have already, that we do have a very, very heavy oil traffic with Venezuela that's mutually beneficial.

However, given all the difficulties and vagaries of the situation, I just simply want to ask: Is there a contingency plan in the event of another suspension of oil exports from Venezuela?

Because even the hint of this, or labor difficulties in Venezuela, causes spikes in the oil futures markets. These bring speculation and higher gas prices for Americans all over, and they see us, as constituents, and ask, "What are you going to do about it?"

Now, Nigeria sometimes is responsible, as they have problems quite apart from the Middle East and the normal suspects. But with Venezuela do we have, really, some contingency plan of what to do with this 13 percent of the oil that we require?

RICE: Well, we're certainly hoping that the government of Venezuela realizes, as you said, the mutual beneficial nature of this.

I think that it was Senator Nelson who mentioned the fact that some 80 percent of Venezuelan exports in oil are actually to us.

So it is mutually beneficial. Obviously, we have to prepare for a disruption. That's why we have a Strategic Petroleum Reserve.

And the long-term goal, of course, is to have an energy policy that lessens our dependence on foreign supply.

But I would hope that the Venezuelan government, whatever our differences and difficulties, would understand that this is economically a mutually beneficial relationship.

LUGAR: Well, as you take hold, would you just take under advisement the need maybe for a more explicit plan and, perhaps through the appropriate departments in the Department of State, work with the subordinates that you will have? Because it just seems to me something here is going to be required beyond the hope, eventually, for an energy plan or the various contingencies that we have thus far.

I just wanted to touch on Iran briefly, to indicate that there has been enormous, not only press comment, but among academicians, about the extent of our participation with the Europeans in negotiations with Iran or with the IAEA. And from time to time, (UNINTELLIGIBLE) it appeared that the Europeans or Ambassador Baradei negotiate various things and then we make, sort of, an editorial comment about it, but are not exactly around the table at the same time, are not lifting in the same way.

I'm just wondering: Are you examining, really, what our role ought to be in these ongoing negotiations so that, in fact, they are more successful, that they have greater staying power, and the Europeans, as well as the U.N., have greater confidence that our heft is behind this situation?

RICE: Well, we're certainly working very closely with the Europeans. And with the IAEA, we're full participants as members of the board in the processes that the IAEA is going through.

Obviously, we need to keep reviewing the situation. But I think that we believe at this point that there is a path ahead. If the Europeans are unable to get satisfactory understanding with the Iranians about their international obligations, I think we have to go back and look at the process that was prescribed, which is that this would go to the Security Council and we would go from there.

Nobody is saying that there have to be sanctions right away or anything of the sort, but we are saying that Iran has to be held to account for its international obligations.

LUGAR: Well, indeed that has been our policy. I once again just am hopeful, and I see an opportunity, with the Europeans here, as we begin to meld together perhaps strategies for the future in the Middle East, some possibilities for more cooperation, for more mutual assistance in this process, in addition to, as you say, our thought that responsibility means they've got to do this or that or face the U.N.

Ultimately, they might face the Security Council and not much might come of it. And so the importance of the negotiations I think you understand better than any of us.

Now, I just see (UNINTELLIGIBLE) once again possibilities of working with Great Britain, with France, with others who have been doing more heavy lifting here.

RICE: Thank you.

LUGAR: Now, finally, in May the Non-Proliferation Treaty review conference is going to take place in New York. May is at least four months away, but what sort of preparations will the administration be making for that conference and what sort of objectives will we have at that point?

RICE: Well, we will try at that conference to work with others to try and address some of the loopholes that are there in the NPT. And I think the big one, of course, is this issue of civilian nuclear use being used to cover...

LUGAR: This loop that you mentioned earlier. RICE: ... nuclear programs, this fuel cycle loop.

LUGAR: Yes.

RICE: And we have some proposals we're working. There's a proposal for a special committee on compliance, which I think is a good proposal, and we probably can work that out.

But the NPT needs some repair, and we will try and press this agenda at the conference.

I have to say that the leadership of the IAEA has also been interested, when I've talked to Mr. ElBaradei about this, in trying to pursue some of these problems, too, because they know that without a sound NPT, we have one hand tied behind our backs.

LUGAR: Thank you.

Senator Biden?

BIDEN: Thank you very much.

Dr. Rice, I'm going to ask several questions.

And if we can both get right to it, it'll keep me from a second round. That may be an incentive.

First of all, I'd like to ask you, very briefly, about Iraq.

In my last trip to Iraq, I was surprised at how frequently -- and I'm not exaggerating, my colleagues may have found the same thing, I think they did -- how many people asked us, including our own military, "Are we staying?" How many times I heard the question from Iraqis, as well as our own military, are we staying or is the administration's exit strategy an election, January, end of January, we declare election, Allawi or whomever is elected turns and say, we want you out, and we leave. We declare that Saddam has been defeated, we've eliminated weapons of mass destruction or there are none there to begin with, and we've done our job, and we leave.

Can you tell this committee whether or not it's the administration's position to see through the process until the election that's due at the end of 2005?

RICE: Well, it is certainly this administration's intention to see that process through.

I think what that means for our force levels, we'll have to see, as we've been talking about Iraqi forces. But there's no doubt that we believe strongly that they're on a path here, and we have to help them through that path.

BIDEN: Do you see any possibility -- everything is possible -- do you see any reasonable possibility that the United States would withdraw the bulk of its forces before the end of 2005? RICE: I can't judge that, Senator Biden, but I will say that we're going to try to help the Iraqis get this done. And what force levels we need to get it done, we'll just have to keep to get it done.

BIDEN: I think it'd be a useful thing, upon consideration, once you're sworn in, for somebody to tell the American people what to expect, so they have some honest sense, I mean, a sense of an honest assessment of what is likely.

Every single military person I've spoken with in my trips to Iraq says we need a minimum of 150,000 troops at least for the next year and possibly beyond that, that there's no reasonable possibility, no matter how well we train Iraqis, that we would be able to draw down in any significant way. Some are drawing down the 12,000 we put in for the election, so that we're in -- I don't mean that in a negative way, to help the election, I don't mean our election, the election.

And so I that hope there'll be an attempt on the part of the president to try to just give his best judgment to the American people of what is expected of them.

Because I think they're prepared to do anything that's asked of them. But I don't think they're prepared to continue not to know, not to have some honest sense of what may be expected of them.

Because I expect you're going to have to come back for tens of billions of dollars, this year. And I know we'll go through the game of -- I know Iraq's not part of our budget. It's that magic thing, that we never know -- have any idea what we're going to spend, even though we know exactly how much it costs to maintain x-number of troops in Iraq.

It's just fascinating -- it's like Democrats talking about revenue enhancements, Republicans talking about Iraq up there in the sky somewhere and we don't have to include it in the budget, like the Lord almighty may come down and pluck it from the Earth and drop it on Mars.

But I just think we need a little more candor. I hope you'll focus on that a little bit.

Iran: Seymour Hersh wrote in the New Yorker that the quote, "hawks in the Pentagon, in private discussions, have been urging a limited attack on Iran, because they believe it could lead to the toppling of the religious leadership," end of quote.

I'm not asking you whether there's any discussion about an attack. But do you believe that it is possible to topple, quote "the religious leadership in Iran," and by any short-term military action? And is that a goal, not militarily, is it a goal of the United States to change the regime in Iran?

RICE: The goal of the administration is to have a regime in Iran that is responsive to concerns that we have about Iran's policies, which are about 180 degrees antithetical to our own interests at this point. That means that the regime would have to deal with its nuclear weapons obligations, deal with the fact that there are Al Qaeda leaders who have been there, deal with the fact that they're supporting Hezbollah and terrorism against -- and Palestinian rejectionists against the Middle East peace process. That's what we're seeking.

I do want to say that the Iranian people, who are among some of the most worldly, in a good sense, that we know, do suffer under a regime that has been completely unwilling to deal with their aspirations, and that has an appalling human rights record.

BIDEN: One of the things -- if I can stick on the nuclear side of this equation for a minute -- one of the things that I've found -- I may be mistaken, but I think Senator Hagel may have found when we were -- there were a lot of feelings coming out, we talked to you about it in detail, from the Majlis and members who were viewed as at least modern and not clerical, not necessarily pro-Western -- was I didn't find a lot of distinction between, quote, "Iranian democrats," with a small "d," and the ayatollahs on the issue of whether Iran, quote, "was entitled to be a nuclear power."

The arguments I would get would be -- even from people we would not consider hardliners -- was that, "We're in a dangerous neighborhood. We believe Israel has nuclear weapons. Russia has nuclear weapons. Pakistan has nuclear weapons. India has nuclear weapons. Others are seeking nuclear weapons. Why are we not entitled to nuclear weapons? And there's no umbrella or guarantee coming from any nuclear power for us."

So do you think if there was a regime change, that is, assume that the reform movement had been successful, assume that instead of toppling of those elected officials in genuinely held democratic elections, assume instead of them being thrown out, assume that they had prevailed and the religious leadership had been defeated politically in Iran, do you think Iran would forego its nuclear aspirations?

RICE: I really don't want to speculate. I think it's the kind of thing that we don't know.

I do think that we're sending a message, the world is sending a message to Iran that Iran cannot be a legitimate participant in the international system, in international politics, and pursue a nuclear weapon. And I would hope that that would have an effect on whatever regime there is in Iran.

BIDEN: And you did it very successfully, along with our European friends who had initiated it, with regard to Gadhafi.

(LIVE EVENT INTERRUPTED)

JUDY WOODRUFF, CNN ANCHOR: We're cutting away briefly from the Condoleezza Rice confirmation hearings to take you to an event in downtown Washington.

(BEGIN LIVE EVENT)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Please be seated, it may be a long speech.

(LAUGHTER)

BUSH: Whether you serve in the Army, the Navy, the Air Force, Marines or Coast Guard, each of you has stepped forward to serve. You have risked your lives in faraway mountains and arid deserts, in perilous skies and on the high seas to defend liberty and to free those trapped by tyranny. As I prepare to take the oath of office, I want you to know how grateful I am for your service and sacrifice and how proud I am to be your commander-in-chief.

And I am really proud of our first lady, my wife. I love her dearly. I appreciate so very much the service and advice and friendship of our Vice President Dick Cheney. Like me, he married well. It's good to see my mother and father. Secretary Rumsfeld, thank you for your great service to our nation. And it's good to see Joyce.

I appreciate the military commanders who are here. I want to thank the members of my administration who have joined us, members of Congress, members of the active military, wounded troops, Congressional Medal of Honor recipients, family members of our fallen soldiers, thank you so much for being here today. Our troops watching from Baghdad, Iraq and Bagram Air Force Base in Afghanistan, God bless you all.

I thank Kelsey Grammer, what a fine man. I appreciate his patriotism and being the emcee of this fantastic event. I want to thank all the other entertainers who have taken of their time to entertain our troops. And really to say what they're doing here is to say thank goodness for your service.

You know, the inauguration of a president is a great moment in the life of our country. With an election behind us, the American people come together in unity to celebrate our freedom. A presidential inauguration is a testament to the power of democracy, a symbol of our confidence in the popular will and a sign of hope for freedom-loving people everywhere.

We're blessed to live in hopeful times when the promise of liberty is spreading across the world. In the last four years more than 50 million people have joined the ranks of the free. The people of Afghanistan have thrown off an outlaw regime and chosen a president in the first free elections in that nation's 5,000-year history. And in coming days the Iraqi people will have their chance to go to the polls to begin the process of creating a democratic government that will answer to the people instead of to a thug and a tyrant.

These are landmark events in the history of liberty and none of it would have been possible without the courage and the determination of the United States armed forces.

Through your service and sacrifice in the war on terror, you're making America safer. You're making America safer for not only those of us who live today, but for future generations of Americans. Your sacrifice has made it possible for our children and grandchildren to grow up in a safer world. Many here today have endured long separations from your families. We understand that and we thank you for that. Some are preparing to do so. Others have suffered terrible injuries, wounds you will carry with you for the rest of your lives.

Still others have lost loved ones in this struggle, heroes who gave their lives so that we might live in freedom. We hold them in our hearts. We lift them up in our prayers. We're grateful to you and we're grateful to your families who love and support you. Your families miss you and they worry about you and they pray for you. Always wondering where you are and if you're safe. By their sacrifice, they also serve. Our nation is grateful to our military families.

Those who wear a uniform have given much and much more will be asked of you in the months and years ahead. In Afghanistan and Iraq the liberty that has been won at great cost now must be secured. We still face terrorist enemies who wish to harm our people and are seeking weapons that would allow them to kill on an unprecedented scale. These enemies must be stopped and you are the ones who will stop them. The road ahead will be difficult and dangerous, but we can proceed with courage and with confidence.

History moves toward freedom because the desire for freedom is written in every human heart. And the cause of freedom is in the best of hands, the hands of the United States armed forces. And so thank you for your service. Thank you for your sacrifice. May God bless you and may God bless your families and may God continue to bless the United States of America.

WOODRUFF: President Bush at an event at the MCI Center here in Washington. An event emceed by Kelsey Grammer. The president thanking all the men and women in the armed forces of the United States. We are watching President Bush, Mrs. Bush and other members of the administration at this event two days before President Bush takes the oath of office to begin a second term. We're going to take a short break. Our coverage of Condoleezza Rice's confirmation hearings to be the next secretary of state, that continues in just a moment.

(COMMERCIAL BREAK)

WOODRUFF: President Bush's nominee to be secretary of state, Dr. Condoleezza Rice, undergoing hearings at the Capitol, the Senate Foreign Relations Committee, this is the second round of questions from the senators. We'll resume our live coverage.

(BEGIN LIVE EVENT)

RICE: Again, I think this is an area where I would hope to have considerable input from members of the committee.

HAGEL: I think you will not have to ask twice on that. You've received some indication of this committee's interest. And I think under Chairman Lugar and Senator Biden's leadership, it has been a high priority over the last few years. And needs to be revisited.

I think the entire committee is very pleased that you have put this on your list, on your agenda, as a high priority.

The United Nations: It was mentioned here earlier during our hearing, but in particular, what types of reform at the United Nations would you be looking for and will you help lead?

RICE: We are digesting the high-level panel report at this point. And we're going to put a lot of attention on consultations with countries around the world about that report.

It's something that I've discussed with Kofi Annan, and he's asked of us, to make an effort.

Obviously, there are two kinds of reforms, simply those that will make the U.N. work better in terms of management. And we've long had an interest in those. I think we need to pursue them.

We also obviously want the U.N. to have the kinds of structure and tools that it needs to face the threats and the opportunities of the 21st century.

I know there's a lot of discussion of Security Council reform. I don't think we have any particular perceived wisdom right now on how to do that, except to say that there needs to be a look at where we are in terms of the representation in the U.N. bodies of countries that are contributing a lot.

Even outside of the United Nations, there are a number of rising influential democracies like India, and Brazil, and South Africa that we just need to be working more with on all kinds of issues. And I hope that we can pursue that at the same time we look at what the structure of the U.N. may look like.

HAGEL: Thank you.

There's been considerable discussion today about proliferation of weapons of mass destruction, in particular nuclear proliferation; little conversation so far about bioterrorism.

Do you think it would be in our interest to initiate an effort to develop some kind of an international model, using CDC, Centers for Disease Control, as an example where all nations could in some way work together through that international body, not unlike some of the Non-Proliferation Treaty efforts, although we're seeing, I think, necessary refinements and probably reforms in that, if that can happen.

(UNINTELLIGIBLE) If you would speak to that kind of an idea about maybe a CDC International model for bioterrorism.

RICE: It's an interesting idea, Senator. We should certainly explore it.

Homeland Security people have had some discussions with their counterparts around the world about the bioterrorism threats, because it's obviously one of those threats that could be borderless and quite stateless. And so we have had some discussions of that.

But a more concentrated international effort that deals with all of the elements of bioterrorism detection, prophylactic efforts that might be undertaken and then, heaven forbid, consequence management, I think this is something that should be put on the international agenda. And we'll look at various ways to do that.

HAGEL: Thank you.

Mr. Chairman, thank you.

LUGAR: Thank you very much, Senator Hagel.

Senator Sarbanes?

SARBANES: Thank you very much, Mr. Chairman.

Dr. Rice, I'm going to run through a series of questions, and maybe we can move very quickly. And then I want to come back to economic questions, as well.

First of all, how much -- if you were secretary of state, do you understand discretion or authority you would have in filling positions within the State Department?

RICE: I work very closely with presidential personnel. But I have to say that the folks have been very understanding of the fact that I have to have a team that is a team that I can work with, and it's my team.

SARBANES: But your selections have to clear presidential personnel?

RICE: Well, these are presidential appointments, at least the ones that are presidential appointments.

SARBANES: And you don't, in effect, have a -- I know it's all been written so often about how close you are to the president, you don't have, as it were, the kind of vote of confidence or commitment, do you, from the president that you can go ahead and fill these positions yourself?

RICE: Senator, it's been just very easy to work through presidential personnel. It's just not been an issue.

SARBANES: Well, if it were an issue, though, you don't have that kind of commitment. Is that correct?

RICE: These are appointments by the president. And so I think it's a perfectly appropriate role.

SARBANES: All right, I understand the answer.

My next question is: I've always been curious of the rationale why a national security adviser will not appear before the Congress to testify and answer questions, but goes on the news programs or appears at the press club or, I mean, you can just go right down the list, and at the end of it, says, "Now I'm open to take your questions," and then proceeds to answer questions on the public record and in front of the public. Now why shouldn't the national security -- what is the rationale for that? Why don't they respond to the Congress?

RICE: Well, the rationale, Senator, has been a couple things. First of all, that there is a separation of powers and the president's staff is to him in the executive branch a private counsel. When you go...

SARBANES: Well, it's not very private counsel when you go on the national media shows, appear publicly and answer questions in that forum.

I'd have a little more understanding of the rationale if you didn't do that, if you said, "Well, you know, we give private advice to the president, and that's our role, and that's where we communicate to."

But you depart from that and you go outside, in very public fora, and make these appearances and answer questions, and won't come to the Congress.

RICE: Senator, it's a longstanding practice of every national security adviser. I have actually been here to answer questions of the whole committee at one point, but also senators and groupings of senators, but not in testimony.

It's a line that national security advisers have kept, as private advice to the president, as presidential staff. And national security advisers have also of course gone on television and made public appearances.

But in terms of the line between the executive and the legislature, the president's staff has simply not been subject to congressional testimony.

SARBANES: Well, what's your position, if you were the secretary of state, on appearing before the Congress? How can we be confident that you would engage in frequent, thorough and meaningful consultations with this committee?

RICE: Well, Senator, I would no longer be staff to the president. If I'm confirmed, I'll be the secretary of state. And that is a Cabinet officer who has been confirmed by this body. And it seems to me at that point it is not only perfectly appropriate, but only right that the secretary of state and other members of the Cabinet, as well as other members of the State Department, respond positively to requests to testify whenever possible.

SARBANES: Is it your view then that the secretary of state would not invoke executive privilege in testimony before the Congress?

RICE: Well, I believe that the secretary of state would come and testify before the Congress and testify fully.

Whether a secretary of state might choose to keep private some conversation that that person has had with the president or not, I think that's another matter.

But certainly the secretary of state would appear before this body and others, on a regular basis.

SARBANES: What's your sense of your responsibilities, if you were the secretary of state, to deal with the Congress in either a nonpartisan or bipartisan manner, however one wants to describe it.

And I'm prompted to ask that question by the fact that you did, at one point, make a rare trip to Capitol Hill for separate closed- door briefings with Republicans and Democratic lawmakers. I don't know if you recall that.

You met with Republican representatives for well over an hour and did not meet with the House Democrats. You met only with the Republican members of the House.

You came to the Senate side, had a lengthy meeting with Senate Republicans and then a very brief meeting with Senate Democrats, cut short by a vote that was scheduled by the leadership, I guess.

But in any event, there was a marked difference in the extent of the meeting and the consultation between Republicans and Democrats. Presumably as secretary of state, you wouldn't intend for anything of that sort to happen, I would take it.

RICE: Senator I will conduct this in a completely bipartisan way.

Let me just say that I will check, but I believe that we've generally offered to both sides of the aisle and both houses. And I was prepared to stay in that Senate meeting as long as desired.

But as you said, it was cut short by a vote.

SARBANES: And what about the House side?

RICE: I believe we offered. But I will check to see. Because it was my view that the national security adviser also needed to deal in a bipartisan way. And I believe I've dealt with members of the committee, Democrat and Republican.

SARBANES: Ordinarily at the start of each new Congress, the administration conducts a review of signed treaties to determine which ones to send as priorities for Senate advice and consent or ratification.

The administration did not submit a treaty priority list to this committee in the 108th Congress. Are there plans or intentions to send up a list of treaty priorities to this new Congress?

RICE: There are plans to do so, Senator. We will. SARBANES: You plan to do that?

RICE: We plan to do that, yes, sir.

SARBANES: Let me ask you, to come back to the economic questions, do you think it's to America's advantage for the dollar to be the world's main reserve currency?

RICE: Senator, I'm going to demure here. I will think these questions better asked of the Treasury.

I have a strong interest in our economic well-being. I have a strong interest in what I can do as secretary of state to promote our economic well-being, particularly through free trade and through the establishment of good partners in trade and a level playing field in trade, but I really don't feel that I should comment on currency matters.

SARBANES: Well, it goes back to our discussion this morning. I frankly concluded that round with some concern, because you kept talking about the president's economic team as though that's something separate and apart from the concerns or the responsibilities of the secretary of state. Even though at one point you stipulated that the strength of America's economy is fundamental to its ability to assert strength in the world

And these all play together. And I mentioned this book this morning, this "The United States of Europe: The New Superpower and the End of American Supremacy." And one of the points made in that book is that the euro was specifically designed to challenge the global hegemony of the dollar.

And of course we've seen the value of the euro rise very substantially in recent times. In fact, we now know, in 2001, Middle Eastern oil producing countries kept 75 percent of their currency reserves in dollars. That figure is now 60 percent. It's dropped substantially, with much of the rest of it in euros. And Chinese and Russian central bankers are also shifting their reserves. Does this cause you some concern?

RICE: Senator, there are many reasons for what has happened to the relationship between the euro and the dollar. But again, I really think it best that I not comment on currency matters.

I will do what I can as secretary of state to try to enhance the prospects for a strong American economy. I think I can do that principally through the promotion of free trade, through the promotion of a level playing field, in using the diplomacy to carry economic messages, when we need to do, as we've done, for instance, with the Chinese on intellectual property rights.

I'll be an active and interested participant. But there are some matters that I really feel are best left to the Treasury, and that's the commentary on the currency.

SARBANES: Last month, China's president, Hu Jintao, embarked on a 12-day tour of Latin America. He wound up making commitments to invest $30 billion in the region. China is now Brazil's second largest trading partner and Chile's largest export market.

In trade, technology, investment, education and culture, China has been displacing the United States all across Asia. And it's now starting to do the same in America's backyard. Are you concerned about this expansive China?

RICE: Well, this is an area that I think bears some watching and some activity. And I would work very carefully and very closely with those in trade and economics to try and deal with this.

We do face a rising China. There's no doubt about that. And the way that we've tried to deal with the fact that China's economic strength is growing and that China's influence is growing along with its economic strength and its penetration of markets and its own markets are growing exponentially, is to embed China in the World Trade Organization and to make certain that it lives up to the rules of a rule-based international economic system.

And we have a lot of work to do, because China is not always completely attentive to some of its obligations under the World Trade Organization.

The other thing we can do, Senator, is that we can assert our still-considerable global reach and our still-considerable regional influence, through organizations like APEC, which we attend and which we are nurturing and which we are pushing forward with a very active agenda.

We have had problems with ASEAN because of the presence of Burma, but we have had meetings and discussions with the countries of ASEAN.

I was in China, Japan and South Korea in June of this past year, and I will say that I think most of the countries of Asia look to us to continue to be a major influence and an active player in Asia, because they don't want to see China "supplant," quote/unquote, the United States.

We also have to remember that the Chinese economy, for all of its vigor and all of its robustness, is still a developing economy whose size is not going to approach the size of the American economy for quite a long time. It is a China that is dealing with tremendous difficulties with inequities between its interior regions and its coastal regions.

It is still a developing economy. And while it is a huge market and is doing very well in our own markets, I think it's important to recognize that it is at a different stage of its economic development than the United States.

SARBANES: Well, it's interesting, because they seem to be doing pretty well, if that's the case.

Our accumulated debt to foreign investors is now 28 percent of our gross domestic product. That's nearly double the share of four years ago. And most of it is being funded by borrowing from foreign central banks, primarily those of Japan and China.

In fact, it's staggering, the increase of foreign official assets in the United States, this run-up, China and Japan.

Mr. Chairman, in closing, I just note that in the 1990s, you know, the U.S. admonished Mexico and Argentina to get their economic houses in order. This month, the Chinese premier gave Washington a similar lecture.

And we just -- by not taking the important corrective measures we need to take with respect to our economy, we're allowing them to run up these balances and increasingly, or as I said this morning, dependent on the kindness of strangers. We're in their hands.

And I can't help but believe that that will be brought to bear in other areas of the relationship, U.S.-China, if and when it becomes relevant.

RICE: Senator, I agree with you, and I think the president would agree, that the issue is for the U.S. economy to be as strong as it possibly can and as competitive as it possibly can. And there are a lot of measures being undertaken to do that.

My role, I think, will be to try and enhance our economic growth and our economic strength through our openness in trade, but also by making certain that those with whom we trade are dealing with us on a level playing field. And I'll be completely dedicated to that.

SARBANES: Thank you, Mr. Chairman.

LUGAR: Thank you very much, Senator Sarbanes.

Let me just indicate, Dr. Rice, that I appreciate the point you're making as to what the scope of the State Department may be and your role and what have you, but I would have to agree with Senator Sarbanes, the issue that he's touching upon, and this should be the subject for a couple of days of good hearings, is profoundly important. It finally comes down to how we're going to pay for our foreign policy.

We really have, it seems to me, a critical juncture, given the circumstances of the foreign exchange situation, our own exchange rates and so forth.

So I suppose we're taking advantage of the fact that you are perceived as a supercompetent person and perhaps prepared to take all of this on in behalf of the president.

But I would encourage you to visit with the president about this, you probably have, because I'm sure we'll all be getting back to it again and again. We'll not be able to solve it today, but I would just underline that there are some dynamics here that all of us find difficult to comprehend: the growth of China, the growth of India as economies, a third of the population of the world going out now to try to find energy resources everywhere, sort of sucking up the resources of the world. So this is good for the soybean farmers of Indiana, and we're grateful for everything that comes along that way. But it's going to be tough with regard to energy and other things.

So I don't want to occupy any more -- take more time. But I just am moved by what Senator Sarbanes is saying, because he works over in the Banking Committee, other members of this committee are active in that area. And we have sort of interchanged disciplines in our own way, as you do.

But please, if you can, take under advisement at least our conversation today.

RICE: Absolutely. Thank you, Senator. I will.

LUGAR: Senator Chafee?

CHAFEE: Thank you, Mr. Chairman.

And I agree with your comments and Senator Sarbanes' comments also about concern, the financial issues, particularly the rise of the euro and the potential for OPEC to move in that direction. It could be alarming.

Thank you for your time. Your stamina and your breadth of knowledge are both remarkable.

In fact, at the lunch, we were joking that we were going to find an obscure country to ask you about, but we agreed it would be futile. You'd know all about it.

I'd like to follow up on some of Senator Biden's comments about -- it seems to be a hypocritical approach to our foreign policy in some ways, in particular how we deal with some of those democracies such as Russia, Senator Biden said, uneven or undemocratic, or some of the -- Turkmenistan, Uzbekistan, Tajikistan, even President Musharraf, and then on the other hand have a completely different view of, say, Iran.

As Senator Biden was saying, it seems we magnify our differences on one hand, and on the other hand we magnify our similarities.

In particular, after having just come back from South America and meeting with President Chavez, here he has been going before his people, high, high turnout, just had a referendum, and as one of the people from our embassy said, "He cleaned their clocks and kicked their butts." It seems to say derogatory things about him may be disrespectful to him but also to the Venezuelan people. How do you react to that?

RICE: I have nothing but good things to say about the Venezuelan people. They are a remarkable people.

And if you notice, Senator Chafee, I was not making derogatory comments, I was simply recognizing that there are unhelpful and unconstructive trends going on in Venezuela in policies. This is not personal.

CHAFEE: And there aren't in Tajikistan, Uzbekistan and Russia and Pakistan?

RICE: And we speak out about those as well.

But some of this is a matter of trend lines and where countries have been and where they are now going.

CHAFEE: Are their governments unconstructive?

RICE: Well, the Russian government is not unconstructive in a lot of areas. It's quite constructive in many areas. It's been more constructive on Iran in recent years. It is constructive, to a certain extent, in trying to deal with the kind of Nunn-Lugar issues that we've talked about. It's been constructive in Afghanistan. It's constructive on a number of areas.

But that doesn't excuse what is happening inside Russia where the concentration of power in the Kremlin to the detriment of other institutions is a real problem. And we will continue to speak to the Russians.

I think we do have to remember that it is also not the Soviet Union. The Russians have come quite a long way from where the Soviet Union was, and we need to always keep that in mind when we judge current policies. But where they're going is simply not very good. It is something to be deeply concerned about, and we will speak out.

Countries are going to move at different speeds on this democracy test. I don't think there's any doubt about that. But what we have to do is we have to keep this item on the agenda, we have to continue to press countries about it.

We have to support democratic forces and civil society forces wherever we can. I would just note that Ukraine, I visited in 2001, not long after I'd become national security adviser, and I, frankly, when this happened in Ukraine, was pretty stunned by how effective civil society was and how effective the Ukrainian people were in making their voices known.

Some of that is because we and the E.U. and others have spent time developing civil society, developing political opposition, working with people, not to have a specific candidate in any of these countries, but to have a political process that's open. And we have to do more of that.

We're going to spend some $43 million this year, I believe that's the number, on Russian institutions trying to help with the development of civil society there. We need to do more of that kind of thing. Because while we put it on the agenda, while we confront the governments that are engaged in nondemocratic activities, we also have to help the development of civil society in opposition.

CHAFEE: You and Senator Boxer were having a little bit of a debate over credibility. And to me it seems as though trust is built with consistency. Is it possible for you to say something positive about the Chavez administration?

RICE: It's pretty hard, Senator, to find something positive. Let me say this...

CHAFEE: I understand that -- after Tajikistan, Pakistan, Russia, it seems as though, as I say, magnifying our differences to some countries and magnifying our similarities with others.

And as I said, I think trust is built with consistency. I don't see consistency in some of your comments.

RICE: The state of affairs in the Western Hemisphere is such that we've had democratic revolutions in all of these places and we don't want to see them go back. We have some places where the democratic revolution is still to take place. And we just have to understand that there are differences in that regard.

But I have said, we hope that the government of Venezuela will continue to recognize what has been a mutually beneficial relationship on energy and that we can continue to pursue that.

We certainly hope that we can continue to pursue counterdrug activities in the Andean region, and Venezuela participates in that.

But I have to say that for the most part, the activities of the Venezuelan government in the last couple of years have been pretty unconstructive.

(LIVE EVENT INTERRUPTED)

WOODRUFF: Dr. Condoleeza Rice in the chair before the Senate Foreign Relations Committee where she began eight hours this morning at 9:00 Eastern, answering questions on everything from Russia to the Middle East. Most of the questions earlier in the day on Iraq, most of them polite. The toughest questioning from California Democrat Barbara Boxer who challenged Dr. Rice on her credibility.

We'll have much on the hearings coming up on WOLF BLITZER REPORTS, coming up in just a moment on CNN. We'll take a short break, he'll be right back.

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