>> over the summer there was a significant strike -- spike. they had control of that. we went by several channels politically, through iraq, then iran, and then it stopped. there is no question that iran can control this. they are shipping efp's and iram's in particular, and they are getting bigger and bigger. there's a great downside potential for destabilizing iraq. i think that the prime minister is concerned about that as well. in that regard, on the one hand is up to them. it is clear that they want to do it, they can do it. they have been warned consistent with what the secretary has said about the network. that if they keep telling your troops, it will not be just something that we will sit idly by and watch. >> my time is up. i appreciate your answer. looking at troop levels of would say that it is in our national interest to have a government in iraq but is independent of iran and we do not allow them to be in a situation where a run has a greater influence that we would want to give them in terms of our posture towards iran. i am hopeful that we would take that into consideration to make sure that we have enough troops to secure iraq. >> thank you, mr. chairman. we all sound like a broken record. here is the real deal. admiral mullen has been an incredible leader for the military. your family has been terrific. i have what i -- not always like your answers, but i have never doubted that you have given us your most honest assessment of any question being put your way. that is all but we can ask for, as united states senators. that kind of forthright, this is not always easy, real good information. sustainability. something that as we have developed in this military, counterinsurgency strategy, i think that the military has done a good job of figuring out how we work with the counter insurgency situation. i am not sure that we focus enough on sustainability. we have got a country, afghanistan, that has without our help, somewhere between 2 billion in $3 billion in gdp. they are giving $16 billion per year because of foreign aid. there are two parts to sustainability. the first is what we're doing for the armed forces. the second is what we're doing for infrastructure. i have yet to have anyone swing to me how they afford it. they cannot. they cannot afford the economy that we've built for them. we built them in military university and it will cost $40 million per year just to maintain and operate. there gdp foreign-aid bill must be sufficient to operate that. and the other part, before either of you respond is the infrastructure. who did the sustainability analysis on the power plant? how do we spend 300 million taxpayer dollars for a budget for a power plant that they cannot afford to operate well, even with that the gdp that they have with our aid. it is sitting there as a $300 million generator that is used every once in a while when there is a problem with the electricity that they are buying. they are purchasing electricity at a much cheaper cost than it would be to operate the power plant that we built for them. i am very worried that we are throwing money that is just not sustainable. that is the ultimate insult, i think, to the men and women who risked their lives. >> we talked about this earlier. this is a critical issue that we understand. there is a lot of detailed work on it right now. it is not finished. this is not something where i can say that this is the answer. but we recognize that $12 billion per year is not anything close. it has got to be changed dramatically. and it needs to be shared. this is not just the u.s. burden in the long run. it needs to be shared with other partners, from an international perspective. we just got them to a point where we started to build them up. your questions are valid. we are asking them of ourselves, from an infrastructure standpoint. but i do not associate their gdp this year with what is going to be forever. there is an opportunity to develop. a question that i think that afghan seniors are starting to understand. the government, to some degree. i would hope that there would have the answers over the next couple of months. questions like the one that you raised will have a better perspective on. i do not know enough about the electric plant in kabul. at the same time, we are looking at it. the president has tasked us with looking at this infrastructure along with -- along lines that you are talking about. plus the state department and other agencies as well. >> secretary, we have spent $70 billion on reconstruction and development. this is not the ongoing training of the military. none of our military operations on the ground. i do think that it is important that you require, and that both your replacement and you, secretary panetta, require the senior leadership of all of the military in the pentagon to be the confecting commission report. it is an eye opening piece of work done by a very credible and a bipartisan organization made of a lot of expertise. it is really frustrating when you realize how fast, lose, and sloppy we have played with this money. i need to know, right now, who is making the decision on the $400 million. i do not know if the american people are aware that for the first time in history our defense department has asked for a reconstruction fund. i remember that it was described to me as broken windows and storefronts. now, for the first time, we have in iraq reconstruction fund as part of the defense budget. i do not know what the thought process was. what i do not like about that is giving everyone the opportunity to blur the line as to who is in charge of this reconstruction into his making these decisions about adequate security for us to begin to invest harder and taxpayer dollars in these projects. i am not confident about the project approval by a light of things that have been built but have been a giant waste of money. >> i do not disagree with anything that you have said. my job is that we look at all of those issues. based on the budget constraints we are seeing, we cannot afford to operate that way. we will have to look at reconstruction and every area to determine just exactly what is needed, are we doing this right, are we getting the best bang for the buck? on the whole issue of sustainability of the force, looking at the an extinct -- an acceptable cost of $12 billion per year, by virtue of looking at infrastructure, we do not have to build the level of infrastructure in afghanistan to be built in this country. we can find savings. we can find savings in other areas to try to reduce those costs. we will have to implement much better discipline to make sure that we are not only accountable to you, but to the american people. >> i just want to circle back and make sure that these funds, i hope that someone is tasked with going back to iraq and trying to document the differences that were made. i do not think that we should hold on to the notion that we have to spend a huge amount on building schools, health centers, hospitals, and roads. that the american people have to spend a lot of money on that under the rubric of a counterinsurgency. i want to make sure that that strategy has been borne out as successful. frankly, i have not seen the documentation. >> certainly, we can do the work. going back to the origins serp, there were certainly projects that were more expensive than others. the best majority of it, particularly at the heart of the surge, was turned to enable young soldiers in the field -- it was not just windows and servers. it was a lot of things that made a difference. while it may not be documented to the degree it needs to be, there is no question in my mind that it was significant in turning the tide in getting iraq to where we are right now. >> thank you, mr. chairman. >> thank you, senator. >> secretary panetta, first, let me thank you for your very forthright comments on the dangers of excessive budget cuts. i, as well, am very concerned about the possibility of the sequestered. i think it would be the height of irresponsibility for congress to allow that kind of indiscriminate, automatic cut to take place. particularly since it is so disproportionately part of the department of defense. that is just wrong. it troubled me when it was included in the debt package. i had a hard time deciding to vote for the package because of that. i very much appreciate your putting this committee on notice about how devastating it would be if that were going to affect. i want to begin by thanking you for that. i would also be remiss if i did not thank you for your more than -- i think it is 40 years of service. it has been such a great pleasure to work with you. not only in your current position, but when you were the chief of naval operations. i appreciate all the to have done for the navy, for the country, and working with us in such a collaborative way. compare i want to follow up on the issue of iranian imports in iraq. funny and very concerned that with the withdrawal of our forces, and the shrinking of hours of -- civilian presence as well, that we are creating a vacuum that iran is rushing to fill. we have seen a steadily increasing flow of arms, money, and training to the shiite militias. particularly in southern iraq. my fear is that there will be some in iraq who will use those strength and malicious -- militias to exert power and the exact change outside of the newly established political channels in southern iraq. so, admiral mullen, i would start with you. what concrete steps are we taking to counter that malign influence in iraq? i know that we made it clear verbally that it is unacceptable. both of you have. but what are we doing about it? what can we do about it? >> talking about the political channel, which for temporary effect, it was shot down significantly from world war one. the general is not sitting back at all in terms of operations. and our support for security forces, along the lines that you talk about, senator collins and his group are obviously not insignificant. but they are out fliers. something from the standpoint of this being an area that you want to focus on. i know that the prime minister very much understands this. i get a piece about the vacuum. but at some point in time, iraq has to take charge of its own. iran is not going away. they have had influence on that border to the cell forever. over the course of my time in that region, there is a sort of understanding, up two. , that at some point in time the iraqis will say that that is enough. i am hard pressed to believe, having fought for what they fought for, that they will sacrifice their sovereignty to this country. the backgrounds are deep and very contentious, historically. iraq has to take concrete steps. clearly, they are consumed with political battles right now, figuring out how they will move forward to include that kind of balance. i do not know if it is next year or the year after that, but iraq will have to figure that out. that is part of what must be tied to the strategic relationship that we have. they know, from a strategic level, that we will be there with them in support. certainly, we want to continue to push back on and on in every single way. >> senator, when i last went, it was right in the middle of when we were taking heavy casualties. i made it clear that that was unacceptable. as the admiral has pointed out, we do have encouraging results. the prime minister indicated his concern and they made it clear to iran that that had to stop. it's very important message to the iranians. secondly, they conducted operations against those groups as well, to make it clear that we are not a point to give them a free license to be able to conduct those kinds of attacks. the combination of that, in terms of what was taking place, it was made clear that this was a temporary thing and that iran would come back to try to do the same thing. the prime minister understands that this country cannot allow iran to be able to conduct of that kind of influence within his country, providing those kinds of weapons, and undermining his government. i think he gets that. we will have to continue taking the right steps. iran needs to understand that we're going to be a round, while making it clear to them that we will not simply -- simply ignore what they're doing. >> another traveling player that we have all discussed, pakistan providing safe haven and undermining the efforts in afghanistan. senator gramm and i are both members of the appropriations committee. last night, we met late and approved the foreign operations bill. placing several conditions and restrictions on the counterinsurgency capabilities. one of them is that the secretary of state must certify that pakistan is cooperating with u.s. efforts against the huckabee network and other terrorist groups. mr. secretary, do you support putting that kind of restriction on pakistan? >> i will let the state department replied to you directly. but as far as i am concerned, anything that we cannot tolerate, i think it would be important to do. >> thank you. i had a feeling that we might defer to the state on that. the best way to send a strong message is to condition abundance. admiral mullen, a successful transition in afghanistan depends in part on the asking of forces willingness and motivation to fight for their own country. i know that you told me of a four but attrition in the afghan national security forces continues to run very high. as much as 32% each year. between january and june of this year, there were more than 24,000 afghan soldiers that when a wall. what troubles me is that that is more than twice as many as for the same time one year ago. to meet, that does not represent progress. the department of defense noted that if levels of attrition seemed to continue for five months, there is significant risk to the projected growth. what efforts have been undertaken to increase the long term commitment amongst afghans? after all, as with iraq, ultimately both of these countries' citizens are going to have to take responsibility for their own security. >> that was not that long ago that we had those kinds of numbers. i think you have seen the attrition rate in the police come down to meet our goal. i know that on the side of the army this is an issue that they address regularly. some of it got better compared to how we pay them. but it still is as you describe, a significant issue approaching roughly 30% per year. we do find an awful lot of afghan soldiers that want to be there and who want to provide for their country. there are clearly a lot to do not have that message. yet we need to continue to work, as i know it is. my counterpart there, they continue to work very specific way clearly, it is a significant risk factor. i have not seen, nor has any commander told me about the strategy of risk. something that we can continue to address overtime. >> thank you both. >> good morning, gentlemen. i know that this is one of those mornings where lot has happened. engaging in a dialogue with both of you, in your testimony you said that we needed to be framed the line of questioning about sanctions. and how sanctions and reductions for military to pakistan might hinder the mission. broadly, commenting further on that relationship. >> we have indicated, with regard to assistance to pakistan, that it is conditioned on several things that we have to pay attention to. one, are they cooperating when it comes to going after targets in al qaeda? in my prior position we identified a series of targets that remained. i think that that is kind of one test. second, have we taken action regarding the safe havens? dealing with the economies? that is another area in which we have got to say that you have got to take steps to be able to stop that from happening. thirdly, that we would like, frankly, for them to continue efforts to go after terrorists that are threatening them. to their credit, they took action in south waziristan. they took a lot of casualties. i commend them for the action that they did, but frankly, we have to continue pressure on those terrorists. terrorism is as much a threat for them as it is for the united states. it is very important that they cannot choose between terrorists. if you are against terrorism, you are against all terrorists. something we have made clear time and again. >> i would not try to expand the discussion beyond where the secretary mentioned, including in the framework. i went to south waziristan in 2008. one of the things that i address to the political and military leadership, including the deputy at the cia, i believe that the ii has to shift its -- isi has to shift its fundamental focus. they are the ones to implement, i would argue, as a part of government policy, the support of extremists. we have had our challenges with their organization. in many ways they support terrorism partners. the national strategy, because of the way that they live, has got to fundamentally shift, i believe. they will probably be the last ones to shift. how quickly it can be done, certainly that is an open question. i think that we need to listen to them. this country is generally in decline. although the financial situation is generally better than one year ago. how is the economy doing? is there a way to open up the market as they look to the future, would they like to say -- kashmir actually unlocks the whole region as an enormously difficult problem, from my perspective. it has got to be pressure that needs to be brought to bear on solving that problem as well. one of the things that i get constantly is that their number one crop cotton. they cannot market that beyond the security issues. there is no place, there is a chairman for accountability, it is a terribly corrupt country, a series of things that we need to listen to that will not be solved overnight. they have, quite frankly, supported us to significantly impact al qaeda. they are pretty choosy about the terrorists that they support with us. and the ones that they will not support. >> thank you. that comprehensive overview, and i would not want to pin you down, but at times it appears the pakistani leadership is playing the role of arsonist and firemen. the economic policy change regarding their textiles, and they're part of congress, let me move in the time that i have remaining. we have reports of fraud, waste, and abuse on contracts in iraq and afghanistan. wartime contract is not a surprise to youtube. -- u two. at the same time, we have to be careful that we do not put in place the good projects that are under way. mr. secretary, what other steps will we take? >> there were actually some pretty good recommendations. i would ask people to put forward those recommendations. without burdening the operation with additional bureaucracy, the fact is that in the contracts themselves, that is the first point where if you put in the right requirements and do immediate oversight at that point, it assures you that the contract is being handled right. my goal is to try to put those into effect. frankly, that kind of waste, that kind of loss, is something that is a entitlement. >> when general petraeus took over their, he actually put in place a navy to star admiral that had done his work in iraq forum, running a task force over the course of six months 8 months, attacking this issue. she came up with many good recommendations. those are being implemented against existing contracts. some of them were canceled as a result of that, as we recognize that we were feeding the enemy in too many places. dramatically increasing the number of contracts over the number of years, contract oversight expertise in our own department, which we have devastated in the '90s, putting back into place individuals but to be superseded. we all realize that this is an area where we are feeding the fight against us. >> that