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CNN LIVE EVENT/SPECIAL

Bremer Testifies Before Senate Appropriation Committee

Aired September 22, 2003 - 14:33   ET

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

MILES O'BRIEN, CNN ANCHOR: And without further adieu, let's get right to Capitol Hill, the Hart Office Building, the Senate Appropriations Committee. The civilian administrator of Iraq, L. Paul Bremer, is testifying before the Senate Appropriations Committee. Let's listen to his prepared remarks.
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L. PAUL BREMER, CIVILIAN ADMINISTRATOR OF IRAQ: ... with forces smaller than the Army of the Potomac.

They did all this while absorbing and inflicting minimal casualties. Iraqis understood that we tried to spare the innocent. After the first days of the war only those citizens of Baghdad living close to obvious targets feared our bombing.

Mr. Chairman, I know you and all Americans hate waking up to hear a newscast that begins, "Last night another American soldier was killed in Iraq." Well, my day starts eight hours earlier than yours, and I'm among the first to know of those deaths, and no one regrets those deaths more than I do.

But these deaths, painful as they are, are not senseless. They are part of the price we pay for civilization, for a world that refuses to tolerate terrorism and genocide and weapons of mass destruction.

Those who ambush coalition forces like those responsible for this morning's suicide bombing in Baghdad and those who ambushed governing council member Akila al-Hashimi on Saturday are trying to thwart constitutional and democratic government in Iraq. They are trying to create an environment of insecurity. Mr. Chairman, they are in a losing battle with history.

President Bush's vision, in contrast, provides for an Iraq made secure through the efforts of Iraqis. In addition to a more secure environment, the president's plan provides for an Iraqi economy based on sound economic principles, bolstered by a modern, reliable infrastructure. And finally, the president's plan provides for a democratic and sovereign Iraq at the earliest reasonable date.

If we fail to recreate Iraq with a sovereign democracy sustained by a solid economy, we will have provided the terrorists with an incredible advantage in their war against us. Terrorists love state sponsors, countries that provide them with cash, arms, refuge, a protected place to rest and plan future operations. Saddam's Iraq was one of those countries.

If terrorists cannot find a congenial state sponsor, they thrive in chaotic environments with little or no effective government. When militias, warlords and communities war with each other, terrorists are right at home. Think back on the Lebanon we knew in the 1980s.

Either outcome or some combination of both is possible in Iraq if we do not follow up on our military victory with the wherewithal to win the peace.

The opposite is also true: creating a sovereign, democratic constitutional and prosperous Iraq deals a blow to terrorists. It gives the lie to those who describe us as the enemies of Islam, enemies of the Arabs or enemies of the poor. That is why the president's $87 billion request has to be seen as an important element in the global war on terrorism.

Mr. Chairman, our national experience teaches us how to consolidate a military victory. We didn't have that experience 85 years ago, when we emerged victorious from the First World War. Many had opposed that war, wished to shake the Old World dust off their boots and solve the problems here at home. We had spent and lent a lot of money. The victors celebrated their victory, mourned their dead and demanded the money they were owed.

Mr. Chairman, we know the results of that policy. Extremism bred in a swamp of despair, bankruptcy and unpayable debts gave the world fascism in Italy and Nazism in Germany. The result was another world war.

After that conflict, we showed that we had learned that military victory must be followed by a program to secure the peace. In 1948, our greatest generation recognized that military victory was hollow if democracy was not reinforced against tyranny and terrorism.

Democracy could not flourish unless Europe's devastated economies were rebuilt. That generation responded with the boldest, most generous, most most productive act of statesmanship in the past century, the Marshall Plan. Winston Churchill called it, "The most unsordid act in history."

The Marshall Plan, enacted with overwhelming bipartisan support, set war-torn Europe on the path to a freedom and prosperity which Europeans enjoy today. After a thousand years as a cock pit of war, Europe became the cradle of peace in just two generations.

The $20.3 billion in grants to Iraq the president seeks as part of this $87 billion supplemental bespeak grandeur of vision equal to the one which created the free world at the end of the Second World War.

Iraqis living in freedom with dignity will set an example in this troubled region which so often spawns terrorists. A stable, peaceful, economically productive Iraq will serve America's interests by making America safer. There are a few things I'd like to point out about this $87 billion request. No one part of this supplemental is dispensable and no part is more important than the others. This is a carefully considered request.

This request is urgent, Mr. Chairman. The urgency of military operations is self-evident. The funds for non-military action in Iraq are equally urgent.

Most Iraqis welcomed us as liberators and we glowed with pleasure at that welcome. Now, the reality of foreign troops on the streets is starting to chafe. Some Iraqis are beginning to regard us as occupiers and not liberators. Some of this is inevitable, but faster progress on reconstruction will help.

Unless this supplemental passes quickly, Iraqis face an indefinite period with blackouts eight hours daily. The link to the safety of our troops is indirect but very real. The people who ambush our troops are small in number and don't do so because they have undependable electrical supplies. However, the population's view of us is directly linked to their cooperation in hunting down those who attack us.

Earlier progress gives us an edge against the terrorists. We need to emulate the military practice of using overwhelming force in the beginning. Incrementalism and escalation are poor military practice and they are a poor model for economic assistance.

This money will be spent with prudent transparency. Every contract of the $20 billion for Iraq will be competitively bid. That the money be granted and not loaned, Mr. Chairman, is essential. Initially, offering assistance as loans seems attractive, but once again we must examine the facts and the historical record.

Iraq today has almost $200 billion in debt and reparations hanging over it as a result of Saddam's economic incompetence and aggressive wars. Iraq is in no position to service its existing debt, let alone take on more.

Mountains of unpayable debt contributed heavily to the instability that paved Hitler's path to power. The giants of the postwar generation recognized this, and the Marshall Plan assistance was overwhelming in the form of grant aid.

Turning to the specifics of the supplemental request, the president's first priority is security: security provided by Iraqis and to Iraqis. That security extends to our forces and changes Iraq from a logistics and planning base for terrorists into a bulwark against them.

The president's supplemental seeks $5.1 billion for three pillars of security.

The first pillar is public safety. If Congress agrees to the president's request, we will spend just over $2 billion for police and police training, border enforcement, fire and civil defense, public safety training and a communications network to draw all of these together. Already, Mr. Chairman, 40,000 police are on duty throughout Iraq, and our plan will double this number in the next 18 months.

National defense forces are the second pillar of this security. The president seeks another $2 billion for a new three-division Iraqi army and a civil defense corps. The first battalion of the new Iraqi army will graduate on schedule October 4th. By next summer, Iraq will have 27 battalions trained.

The third pillar is a justice system to rein in the criminal gangs, revenge seekers and others who prey on Iraqis every day and make them fear that they will never know the quiet enjoyment that so many of us take for granted. To fund this justice system, the president requests approximately $1 billion for technical assistance to investigate crimes against humanity, to provide security for witnesses, judges and prosecutors, and to construct prisons sufficient to house an additional 16,000 inmates.

This security assistance to Iraq benefits the United States in four ways. First, Iraqis will be effective. As talented and courageous as the coalition forces are, they can never replace an Iraqi policeman who knows his beat, knows his people, their customs, rhythms and language. Iraqis want Iraqis providing their security and so do we.

Second, as these Iraqi security forces assume their duties, they replace coalition forces in the roles that generate frustration, friction and resentment: things like conducting searches, manning checkpoints, guarding installations.

Third, this frees up coalition forces for the mobile, sophisticated offensive operations against former regime loyalists and terrorists for which they are best suited.

And finally, these new Iraqi forces reduce the overall security demands on coalition forces and speed the day when we can bring our troops home.

Now, security is the first and indispensable element of the president's plan for Iraq. It is not, however, by itself sufficient to ensure success, because a security system resting only on arms is a security system that will fail.

Recreating Iraq as a nation at peace with itself and with the world, an Iraq that terrorists will flee rather than flock to, requires more than people with guns.

A good security system cannot persist on the knife edge of economic collapse. When Saddam scurried away from coalition forces, he left behind an economy ruined not by our attacks, but by decades of neglect, theft and mismanagement.

Imagine the effect on the economy of operating without a budget for a quarter-century. Saddam, who came to power in 1979, Mr. Chairman, never prepared a national budget. Ill-conceived and clumsily executed policies left Iraq with an oil industry starved nearly to death by under-investment, thousands of miles of irrigation canals so weed-clogged as to be almost useless, and an electrical system that can at best meet only two-thirds of demand.

Reflect, Mr. Chairman, if you will, on that last item, as millions of households, including my own, this past week discovered, it is almost impossible to live in the modern world without dependable electricity. Think of what we would be asking of Iraq were we to suggest they fashion a new economy, a new democracy, while literally in the dark eight hours a day.

The Iraqis must refashion their economy. Saddam left them a Soviet-style command economy. That poor model was further hobbled by cronyism, theft and pharaonic self- indulgence by Saddam and his intimates.

The good news is that important changes have already begun. The Iraqi minister of finance yesterday announced a set of market-oriented policies that is among the world's boldest. These policies include a new central bank law which grants the Iraqi central bank full legal independence, makes price stability the paramount policy objective, gives the central bank full control over monetary and exchange rate policy and broad authority to supervise Iraqi banks. This is rare enough anywhere in the world and unique in that region.

The Iraqi Government Council proposed, and on Thursday, Mr. Chairman, I had the great joy to sign into law, a program opening Iraq to foreign investment. Foreign firms may now own wholly opened owned companies or buy 100 percent of Iraqi businesses. Under this law, foreign firms receive national treatment and have an unrestricted right to remit profits or capital.

Iraq's new tax system is admirably straightforward. The highest marginal tax rate, as announced by the minister of finance yesterday, on personal and corporate income tax is -- get this -- 15 percent.

Tariff policy is equally simple. There is a two-year reconstruction tariff of 5 percent on all but a few imports. Foreign banks are free to enter Iraq and will receive equal treatment with Iraqi banks. On October 15th, Iraq will get a new dinar, a new currency, which will float against the world's currencies.

Iraq's pro-growth policy should bring real sustained growth and protect against something we've all seen and regretted in the past: economic assistance funds disappearing into a morass of poverty.

Mr. Chairman, the Iraqi government has put into place the legal procedures for encouraging a vibrant private sector, but those policies will come to nothing if Iraq must try to establish itself on an insufficient and unreliable electrical grid, or in a security environment that puts a stick in the spokes of the wheel of commerce.

Iraq, in short, cannot realize its potential to return quickly to the world stage as a responsible player without the services essential to modern society.

We have made significant progress restoring these essential services. The widely predicted humanitarian crisis did not occur. There was no major flow of refugees. All of Iraq's 240 hospitals and 90 percent of its health clinics are open today. There is adequate food and there is no evidence of epidemic.

We have cleared thousands of miles of irrigation canals so that farmers in these areas have more water than they've had for a generation. Electrical service will reach pre-war levels within a month.

But the remaining demands are vast and that is why the president is requesting almost $15 billion for infrastructure programs in Iraq.

Here are some of the main areas in which the president plans to use the supplemental to bring essential services to the Iraqi people: $5.7 billion for the electrical system; $2.1 billion for the oil infrastructure; $3.7 billion for potable water, sewer systems and related public works; $3.7 billion for water resources, transportation, telecommunications, housing and construction, health and private sector development.

Mr. Chairman, on another front there is already good news. The democratization of Iraq, on which so much global attention is focused, is further advanced than many people realize. Encouraging a quick political transformation, we have laid out a clear seven-step process leading to sovereignty. Three of the seven necessary steps have already been completed.

First, an Iraqi Governing Council, the most broadly representative governing body in Iraq's history, took office in July. In August, the governing council took the second step by naming a preparatory committee to determine the mechanism for writing Iraq's new constitution. Earlier this month, the governing council appointed ministers to run the day-to-day affairs of Iraq. The fourth step will be writing a constitution, which sets the framework for all that follows.

This will occur after the Iraqi Governing Council decides how to act on the recommendations of the preparatory committee.

This constitution, Mr. Chairman, will be written by Iraqis and for Iraqis.

The fifth step, the constitution will be ratified by a popular vote of the entire adult population. This will give Iraq its first popularly approved constitution.

O'BRIEN: We have been listening to L. Paul Bremer, the civilian administrator for Iraq before the Senate Appropriations Committee, beginning a Congressional gauntlet to pursue the effort of obtaining $87 billion asked for by the Bush administration in order to rebuild Iraq and to maintain the forces on the ground there.

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