11:00 A.M. EDT
THE WASHINGTON FOREIGN PRESS CENTER, WASHINGTON, D.C.
ASSISTANT SECRETARY SHAPIRO: Thank you all for coming. I know it’s a busy news time, so appreciate your taking the time out.
As you may know, this is my final week as Assistant Secretary of State for Political-Military Affairs. I’ve served in the position almost four years. I joined the Department with Secretary Clinton in January 2009, was confirmed for this position in June of 2009, and am leaving this week.
And it’s certainly been an eventful four years. While we have had crises to respond to, partnerships to build and strengthen, we’ve also simultaneously sought to improve the way we in the U.S. Government operate. The range of issues that we have engaged in is substantial, and I believe we’ve significantly grown the capacity of the Political-Military Affairs Bureau and done a tremendous job in demonstrating the value we both within the State Department and to our interagency partners.
And when I travel abroad, I often have to explain what the Political-Military Affairs Bureau is to my counterparts because they don’t have a counterpart bureau for me to interact with. The Political-Military Affairs Bureau is considered the principal link between the State Department and the Department of Defense. And under our system, it’s the Secretary of State who authorizes arms sales, Secretary of State who oversees security assistance. So the Political-Military Affairs Bureau has the technical expertise and the global perspective to administer the Secretary’s authority. And so when I visit foreign countries, I’m often dealing with both the Foreign Ministry and the Defense Ministry, because they don’t have one single counterpart for me to deal with.
Over the last four years, we’ve had a number of accomplishments. One of the biggest accomplishments has been the way we’ve improved the relationship between the State Department and the Department of Defense. One of the major points of emphasis for Secretary Clinton when she came into office was the need for an integrated approach to foreign policy, one that would leverage all the tools at our disposal. And the Political-Military Affairs Bureau has played a fundamental role in turning this idea of smart power into a reality.
The collaboration between State and DOD is truly unprecedented. I believe there has been a sea change in the State-DOD relationship. And it is the Political-Military Affairs Bureau, as the principal link between State and Defense, which as at the forefront to try to make interagency collaboration a reality.
We’ve dramatically increased the number of personnel exchanged between departments. We signed a formal memorandum of understanding between State and DOD in January of 2012, and it greatly expanded our Foreign Policy Advisor Program [POLAD], which will provide senior Foreign Service officers to DOD commanders, including having the first ever State Department foreign policy advisor serve on the staff of the Chairman of the Joint Chiefs of Staff.
We’ve also created the innovative Global Security Contingency Fund, which is a new joint State-DOD administered security assistance fund that will better allow the United States to respond to urgent and emerging challenges. It also creates a framework of cooperation, closer – for closer cooperation with DOD.
We transitioned from a military-led engagement to the Department of State civilian-led engagement in Iraq. And in many respects, my time as Assistant Secretary coincided with the new chapter in U.S.-Iraqi bilateral relations, a chapter in which the State Department will play a greater role, especially in the area of security assistance.
We’ve also had to deal with the changing geopolitical environment over the past four years. And the Political-Military Affairs Bureau has been at the center of the U.S. response to the so-called Arab Spring. We’ve had to carefully calibrate our security cooperation to the region in response to the Arab Spring.
Also during this last four years, we completed the largest arms sale in history to Saudi Arabia while also ensuring that we maintained our commitments to Israel and to Israel’s Qualitative Military Edge. For some three decades, Israel has been the leading beneficiary of U.S. security assistance through the Foreign Military Financing program, or FMF. And the Obama Administration has been proud to carry on the legacy of robust U.S. security assistance for Israel. Indeed, we are carrying this legacy to new heights at a time when Israel needs our support to address the multifaceted threats it faces. And despite these challenging budget times, the President, in his most recent trip to Israel, reaffirmed that our commitment to Israel is unshakable.
The Bureau also led the U.S. Government’s response to stop [man-portable air-defense systems] MANPADS proliferation in Libya, and is focused on conventional weapons proliferation throughout the Middle East.
Somali piracy, is another area where we’ve made a lot of progress. And I testified before the House Transportation Committee last week on our efforts on counter-piracy. And when I first began this job, Somali piracy was spiraling out of control. Attacks were escalating, and pirates were spinning operations far into the Indian Ocean. This Bureau has taken the lead in coordinating and developing the U.S. response to this seemingly intractable problem. And now after years of hard work, building a novel international forum and pursuing innovative partnerships and policies, pirate attacks have plummeted. The last successful pirate attack on a major commercial vessel occurred on May 10th of last year. We’ve essentially put Somali pirates out of business.
Asia rebalance: PM has played an essential role in the so-called pivot or rebalance. The Bureau has been instrumental in enhancing our security partnerships in Asia and with new and emerging powers such as India. Our foreign military sales to India have grown from virtually zero in 2008 to more than $8 billion.
We also convened the first-ever political-military dialogue with India. This was significant. Actually, it was not the first ever; it was the first political-military dialogue with them in about five or six years. And it was significant because we were able to help our Indian counterparts work through the challenges of our interagency cooperation on national security issues. Indian officials’ remarks – Indian officials have remarked that one of the – that this dialogue is especially helpful in helping coordinate between the various interagency partners in India.
Our outreach to Asia was also reflected in my travel. I’ve traveled to the East Asia Pacific Region more than I ever anticipated when I took this job. While not surprisingly the number one region for my travel was the Middle East, after that Asia came second. And I visited more than 10 different countries in the East Asia and Pacific. And Australia – had numerous trips for the two [Australia-United States Ministerial Consultation] AUSMINs that I attended. I also attended trilateral talks there with Japan, and I also did a bilateral visit as well.
We’ve built and strengthened security partnerships around the world. In an era of tighter budgets, it’s critical that we strengthen the security capabilities of our allies and partners, and my Bureau has been instrumental in enhancing our security partnerships in the Middle East, Asia, and with new emerging powers such as India and Brazil. I’ve traveled to more than 40 countries and taken about 40 official trips, and in every place that I went, seeking to build and strengthen security partnerships.
Countries now want to partner with the U.S., and we’ve seen it in the tremendous growth of U.S. defense trade. 2012 was the largest year in history of foreign military sales, amounting to nearly $70 billion in calendar year 2012. To put that in perspective, in 2011 we broke the previous record at around $30 billion. We also completed the UK and Australia defense trade treaties, which will help our defense industry and make these partnerships even closer. We’ve also processed more than 85,000 licenses for direct commercial sales, the most ever.
And while the defense trade is growing, we’ve also focused on enforcement of our defense trade laws. Our compliance offices work hard to ensure that companies are compliant with U.S. law, and their diligence resulted in the largest settlement in U.S. history, with BAE.
While my Bureau may have been busier than ever, that hasn’t stopped us from working to improve the way the U.S. Government operates, and we have taken on the monumental effort of reforming the U.S. export controls system. Every president since Kennedy has tried, but this Administration is actually getting it done. We had just actually put out a Media Note that notes that we have moved the first items – we have issued the Federal Register notice announcing new regulations to move items from the U.S. Munitions List [USML] to the Commerce Control List [CCL] in two out of the 19 categories the USML, aircraft parts and gas turbine engines. Thousands of licenses from just those two categories alone will move from the USML to CCL. As we work our way through additional categories over the coming weeks and months, more and more licenses will eventually move from the U.S. State Department’s Munitions List to the Commerce Department’s Control List.
So that’s just a brief summary of how I’ve spent my time. And happy to talk about anything else that you’d like to delve deeper into.
MODERATOR: Okay. As we move to the Q-and-A portion of the event, please state your name and publication for the transcript. And please look out for the microphone, which could be coming from either side.
Right out here to Dmitry.
QUESTION: Thank you. Dmitry Kirsanov with Itar-TASS. Thank you, sir, for coming over to brief us before you move to greener pastures. (Laughter.) Thanks a lot for our good friends at the FPC for arranging this.
I wanted to ask you about the U.S.-Russian Military Technical Cooperation Group – working group created in December as part of the Bilateral Presidential Commission. I would like you to talk a little bit about the activity and mandate and the agenda for the group. It’s being co-chaired by your deputy, Beth McCormick, as far as I understand.
ASSISTANT SECRETARY SHAPIRO: Yes.
QUESTION: And I also would like to know what the prospects are now for the Bilateral Military Technical Cooperation Agreement between the U.S. and Russia. Thank you.
ASSISTANT SECRETARY SHAPIRO: As you pointed out, the inaugural meeting of the Military Technical Cooperation Working Group with Russia was held in December 2012. And this was formed under the Bilateral Presidential Commission. And it’s really designed to define future expectations for military – for this Military Technical Working Group. And it was also designed to share insights on how our acquisition and export systems functioned during the defense cooperation acquisition forum meeting.
We designed it to be an open and transparent forum for the central management and oversight of military technical cooperation projects; to discuss the legal, regulatory, and contractual issues associated with such projects; to explore potential commercial ventures in support of defense requirements; and to discuss key aspects of weapons transfers to third countries. The forum may also feature other exchanges and discussions that have a military and financial component, such as arms disposal.
We are continuing to discuss Russia’s proposal of a three-part military-technical cooperation package as well as coordinating feedback on the latest draft of the Defense Technology Cooperation Agreement.
MODERATOR: Okay. Come down front here.
QUESTION: Thank you, Secretary. Congratulations on your achievements in the past four years.
ASSISTANT SECRETARY SHAPIRO: Thank you.
QUESTION: My name is Bingru Wang with Hong Kong Phoenix TV. I actually have a couple of questions. The first is: Could you please update us on the arms sales to Taiwan, especially F-16C/D?
ASSISTANT SECRETARY SHAPIRO: Well – and this will, I know, prove frustrating to you, but we don’t comment on arms sales until they’re ready to be announced. And that’s just a general rule.
So, we’ve had two robust arms sales packages to Taiwan during the Obama Administration’s first term. The latest arms sales package included the refurbishment of the F-16A/Bs. And we have no further announcements regarding any further arms sales packages, except to say that no decision has been made one way or the other on the – on future potential sales regarding F-16C/Ds.
QUESTION: (Inaudible) China just released the defense white paper, and for the first time, and it gave us more details of the [table and organization] TOA size and makeup of China’s armed forces. Do you think that China is showing more transparency as you always called for?
ASSISTANT SECRETARY SHAPIRO: Well, I will be frank that I have not reviewed the report as I pack up the boxes. But what I will say is you’re correct that we have been calling for more transparency from the Chinese. We’ve called for greater military-to-military dialogue and discussions. And I know that General Dempsey will be traveling to China to urge the further development of military-to-military dialogue. We think it’s important to have that dialogue in order to lessen the chance of miscalculation, to keep the channels of communication open.
So, yes, we’re calling for more dialogue; we’re calling for more transparency. Whether this particular report demonstrates that or not, I’ll leave to my colleagues at the Department – the experts at the Department of Defense to offer a fuller assessment.
QUESTION: Finally, I know you previous – in past four years, you had dialogues with your Chinese counterparts.
ASSISTANT SECRETARY SHAPIRO: Yes.
QUESTION: But after this defense white paper released, the U.S. media is saying – actually, China is still challenging the U.S. leadership in Asia Pacific. So, in the future, how do you think you and our Chinese counterparts can defuse the tension?
ASSISTANT SECRETARY SHAPIRO: Well, I did go to China last fall, and – to look for ways – areas we could cooperate. For example, counter-piracy is an area where we have common interests and we can work together. Peacekeeping is another example where we had discussions about ways in which we could cooperate on peacekeeping. And the idea is that we do have common interests where we can work together, and where we do have those common interests we should try and build those bridges.
Our goal not to have an adversarial relationship with China. We – the purpose of our policy in Asia is to strengthen our relationship with our partners. It’s not directed at any one country. And going forward, we are hoping that – to encourage the Chinese to play – as they’re becoming a global power, to accept the responsibilities that go along with being a global power. And you see that in Secretary Kerry’s recent visit to China to talk about the North Korea crisis. So we would like to work with the Chinese on North Korea and on our other issues where we have common interests, and to establish – and to bring them into the international community as a rising global power and assume some of the responsibilities that go along with being a rising global power, and work together on addressing those concerns.
MODERATOR: Right there.
QUESTION: Hello, Mr. Secretary. Andrea Shalal-Esa with Reuters. I wanted to ask you follow-up question on the Chinese question, and then a more general question. On the Chinese issue, can you talk a little bit about what your piece of the puzzle was in terms of space and cyber conversations, and establishing those dialogues with China? And then I’ll just wait.
ASSISTANT SECRETARY SHAPIRO: Space and cyber not directly in the P-M bailiwick. Space is handled by Frank Rose in our Arms Control Bureau. And cyber, we actually now have a cyber coordinator at the State Department who has been there for a couple years, who coordinates all the different cross-cutting issues that cyber presents. So there’s not just security issues, but there are economic issues, privacy issues, that come into play.
So our role in cyber has been to make sure that State and DOD are well synced, particularly as DOD engages in its own cyber planning. So I – my organization finds the foreign policy advisor to the – who’s the Senior Foreign Service officer to the commander of [U.S. Cyber Command] CYBERCOM. When there is joint planning efforts, my Policy and Plans office is making sure the State Department issues are being considered in DOD’s planning efforts regarding cyber. So – but the broader cyber relationship is handled by our cyber coordinator.
QUESTION: And then just a general question about the increasing role or importance of the work that you’ve been doing, though – be continuing in the kind of shrinking budget environment. A lot of the U.S. defense companies are now looking overseas for – to sort of offset some of the declines that are happing in U.S. and European defense demand. Do you see that this trend is going to continue, or do you think that it’s probably already peaked a little bit and it’s going to go down? Or – so just that general complex.
And then also in India, I know that it was a big setback that India kicked the U.S. companies out of the fighter competition. Do you see that being revisited at some later point?
ASSISTANT SECRETARY SHAPIRO: You ask a lot of different questions. Regarding the U.S. – and if I don’t get to them all, you can remind me what I’ve forgotten. The – on defense trade in this budget environment, there’s a couple of different issues that the current budget environment impacts in the defense trade. One is obviously there’s going to be less defense spending. And defense companies that want to preserve their manufacturing base will often look overseas in order to continue to preserve that base.
The other issue, of course, is that we in the United States want to encourage our partners to do more so we don’t have to do as much. So – but encouraging our partners to do more means that they need the capability to do more. And so we will be looking to help our partners develop the capacity and capability to take on missions that we don’t necessarily want to do.
And so, for example, our experience in – with [the African Union Mission in Somalia] AMISOM, where we provided support to the countries who were fighting in Somalia, there were no U.S. boots on the ground doing the fighting, but we were able to provide security assistance to those countries, and al-Shabaab is on the run. And it provides a potential model for Mali as well for this to help the surrounding countries.
On the defense trade, I think that what we’re seeing is that overseas demand in certain regions remains strong, Middle East and Asia. Europe demand is going down, so a lot of the European defense companies will be competing with U.S. defense companies where the markets are. So competition will be fierce, and so – and U.S. defense companies will – who – some of whom are sophisticated internationally – others may not be. They’ve been working with the Pentagon for a while, and they now need to address the realities of the international market.
In the international market, as – and I’ve given speeches about this – often the decisions regarding a security relationship is not done the way the Pentagon does it, where they have a lit of requirements and they see what meets the requirements and conduct a competition. Other countries view this as often a part of the relationship with the United States, and so they make their – or other countries. So there are other factors that often come into play in their decision-making process.
So – and so U.S. defense companies will have to adjust to that reality. It’ll require the U.S. Government to continue to advocate on behalf of U.S. companies. And that was – economic diplomacy was a big hallmark of Secretary Clinton’s tenure, which Secretary Kerry is continuing. And indeed, I – for the first time as Assistant Secretary, the Political-Military Affairs Bureau was sending either myself or my deputies to the major air shows. And I went to Aero India and flew in an F-18 while the Ambassador flew in an F-16. And I went to Dubai Air Show, and I went to the Paris Air Show. I went to the Singapore Air Show. And this was because we were – those air shows are – bring people together who are customers for – potentially for U.S. defense products. And we’re – there are companies where – have been approved for U.S. Government advocacy, we want to advocate on their behalf. So it will require the U.S. Government to make an effort on behalf of the U.S. defense companies as well. So – but you’re quite right that this is a new world, where international sales will be increasingly important. At the same time, it will – the competition will be increasingly fierce.
On India, I wouldn’t say we were kicked out. I would say there was a selection process where they made determination to down-select the two and eventually to select the Rafale. I, like others, have been reading in the Indian press various rumors about that transaction. We have no official communication from the Indian Government that there will be a reopening of that competition. And obviously, if there was a reopening, the U.S. companies would have to consider whether they wanted to participate. But again, we have not seen any official announcement from the Indian Government. And all I’ve been seeing is some reports in the defense trade press that there may be some problems. And so – and we don’t have any confirmation of that.
So – but I would say on India, that while that fighter competition loss was disappointing, we have made tremendous progress in the defense trade relationship. As I mentioned, we were at zero in 2008; now we’re at 8 billion, and we think there’s going to be billions dollars more in the next couple years. So we are on track. And Ash [Ashton] Carter, the Deputy Secretary of Defense, is heading up a defense trade initiative with India, which we think is making some good progress and will, hopefully, lead to even a greater pace of additional defense trade with India.
MODERATOR: Okay. We’re going to – sure, yeah.
QUESTION: (Inaudible.) Sorry, just a real quick follow-up on the issue of these sort of challenges in the foreign trade sector: Does the – does sequestration tie your hands in terms of being able to do that advocacy for U.S. companies? I mean, travel is limited, there’s not a lot – there’s no U.S. planes going to Paris this summer.
ASSISTANT SECRETARY SHAPIRO: Well, I will say that representatives from the Political-Military Affairs Bureau are planning to attend Paris. And – or from this – and so – and I will say, though, that certainly sequestration does make it – you have to be very cautious in your – with your budget. And that may mean that we are conservative in the number of air shows that we attend because of travel costs. Paris is the immediate one, and we are planning to send someone. And again, this is not about a – just a trip to Paris. This is where the major defense contractors are, and a lot of customers are. And it’s an opportunity to advocate on behalf of the U.S. companies.
The other impact of sequestration in terms of our defense trade will be on the licensing side. While we’re not planning to furlough anyone, for sensitive licenses we rely on the Department of Defense to have the technical expertise to advise on technology security issues. And if they’re forced to furlough as a result of sequestration, their response times to our requests to that information will increase, which means we won’t be able to come to a decision on licenses that are held up because of the backlog at DOD caused by the furlough.
And so right now, we – one of the great sort of revolutions since 2007 in the State Department’s handling of licenses is that we have reduced the processing times so that now we’re averaging about 17 days per license. It used to be 40 or more days – 40, 60 days it used to be. We’re at about 17 days. Obviously, the most sensitive licenses take a little bit more time, but that’s pretty good. And – however, if the Department of Defense has a backlog caused by furloughs caused by sequestration, those processing times are likely to increase. And again, at a time when we’re trying to increase our defense trade, that’s not the best signal to send.
MODERATOR: Okay. At this time, we’ll break away and take a question from New York. Please go ahead, New York.
QUESTION: Thank you for briefing. I’m [Tuyen Quang Le] from Vietnam News Agency. Could you brief me some information about the U.S. arms sales to some ASEAN country like the Philippines or Indonesia or Vietnam? So some --
ASSISTANT SECRETARY SHAPIRO: Well, as I mentioned, Asia has been a particular focus of mine in this position, and I think it’s something that illustrates the changes in the U.S. geopolitical vision. When the Political-Military Affairs Bureau was created, it was during the Cold War. So my predecessors who I spoke to, many of them, before I took the job, they focused on Russia. They focused on arms control and nonproliferation issues. Cold War ends, and in 1990 Iraq invades Kuwait, and the focus is on Middle East issues. One of my predecessors talked about how he spent most of his time in the job negotiating access agreements for the – in the run-up to the first Gulf War. And then, of course, we had 9/11, Afghanistan, Iraq, and the Political-Military Affairs Bureau was consumed by that.
Now we’re moving to a rebalance to Asia, and so I’m spending – I spent a lot of my time on Asian issues, and I think my successors will as well.
In terms of arms sales to the region, I mean, we’ve – we provide foreign military financing to the Philippines, and we’ve transferred Naval – a Coast Guard cutter was transferred to the Philippines. We have provided support – counterterrorism support. And now we’re – they – we are now shifting our focus. Because the Philippines have developed their own capacity to handle counterterrorism, we’re shifting our focus to helping improve their maritime capability at a time of increasing concerns about maritime security in that part of the world.
We had in Indonesia – President Obama announced during his visit that we would be providing F-16s – excess F16s to Indonesia, which was a marquee sale in our defense trade relationship.
Vietnam, we are exploring what might be possible in the relationship. One of the great, I think, advances that we have made during my tenure has been in the political-military dialogue that was established with Vietnam before I started, but I did three of them. And each one, the discussions became better and more robust. And I think that it shows that there is real potential in the U.S.-Vietnam political-military relationship. And right now we still have a policy that we won’t sell lethal arms sales to Vietnam, but there’s still a lot we could work together that doesn’t necessarily have to be lethal. And so we are exploring that potential and those possibilities.
So, Singapore obviously an important partner that – there’s been a number of arms sales to Singapore during my tenure, and I’ve made a couple trips there as well.
So that’s just a general sense that we’ve got a lot going on. There’s other countries that we have a lot going on with who I haven’t mentioned, but that’s just off the top of my head.
MODERATOR: Okay. Are there any other questions?
QUESTION: Well, one of the other countries that the U.S. has a very strong relationship with in Asia is South Korea.
ASSISTANT SECRETARY SHAPIRO: Yes.
QUESTION: There is an active fighter competition there underway as well. Do you – what are you hearing now in terms of when that will – announcement will come? Do you think they’ll be on track to do that this year as anticipated? And do you see potential for additional sales?
And then just one quick follow-up on India: So, in addition to the Air Force competition, the Indian Navy was also looking at some fighter planes. Do you know anything more on the status of that? (Inaudible) specifically on India, there was always this question of whether they would be eligible and interested in buying the F-35.
ASSISTANT SECRETARY SHAPIRO: On India, I don’t have the latest update on their naval fighter competition. The F-35, this – I know that Deputy Secretary of Defense Carter was asked about this a while ago. There was report that came out that said that there might be down the road some potential for it, but certainly no decision has been made regarding sale on F-35 to India, and it’s something down the road we might talk about, but we’re not – it’s not something that we’re discussing right now.
On Korea, on the fighter competition, obviously we think that we have capable aircraft which could fill South Korea’s defense needs. And in terms of the timing, I don’t have a definitive answer for you on that, although obviously we’re prepared to advocate on behalf of selecting a U.S. platform.
MODERATOR: Okay. Are there any final questions? If there are no more questions, this event is now concluded. Thank you all.
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