SECRETARY ALBRIGHT: Good afternoon. I am very pleased today to have received the report of the Overseas Presence Advisory Panel. This group is chaired by Lewis Kaden, and comprised of distinguished representatives from the government and the private sector. It was established at my direction last spring, as part of our effort to re-examine the role of US missions abroad in the aftermath of the Africa embassy bombings.

The panel's mission was to recommend criteria for the location, size and composition of overseas posts, taking into account factors such as our foreign policy goals and our security and resource needs.

I want publicly to thank Chairman Kaden, and the members of his committee, for their hard work and skill in preparing this report. The Department and our nation are indebted to them for the serious and comprehensive way they have undertaken an extremely complex task.

The issues they have sought to address are familiar. We've been working, throughout this decade, to adapt our foreign policy institutions to a new era, in which the international political lineup has changed, security threats are unpredictable, more and more federal agencies are represented overseas, and the use of modern technology is essential.

We've responded by undertaking a historic reorganization: stressing the protection of our people, improving training, upgrading communications, emphasizing public diplomacy and reaching out to groups -- such as this panel -- for independent and expert advice.

Throughout, we have worked hard, within the Administration and with Congress, to obtain the resources we need to advance America's interest around the world. And for this reason, I welcome the panel's stress on the urgency of improving our capital plant; the importance of investing in human resources; and the indispensable nature of universal representation, which is our on-the-ground diplomatic presence around the world.

I also agree -- strongly -- with the panel's focus on the need to assure stronger inter-agency teamwork, under our Chiefs of Mission abroad and the President and the Department of State here at home. I hope those who read the report will note especially the dismay with which panel members responded to the substandard condition of many of our overseas facilities, and also their emphasis on improving our employees' quality of life. Certainly the status quo is not acceptable. We need more resources to support our people, operations and programs. These are investments that will pay large dividends rapidly, in the form of better services to our citizens and greater protection for American interests.

I am encouraged, therefore, that the administration and Congress have made enormous progress towards agreement on a foreign operations budget for Fiscal Year 2000. The bill approved this morning by the House of Representatives will address our most urgent current needs.

However, we have not finished our work. We still have to complete work on the

State-Justice-Commerce Appropriations Bill, which basically provides funds for our personnel, training, and our infrastructure requirements, which are exactly the kinds of points that have been so starkly highlighted in the Advisory Panel's report. Also, as you know, it is that bill which contains the money that we owe the United Nations: our arrears. Let me just say, again, how essential it is that we get that money.

From the time that I was Ambassador to the United Nations, where we were already in debt, and we had been stressing the need for reform, I have been working on this subject. I have worked with Congress in order to help the legislation that, in fact, set forward the framework for reform, the Helms-Biden legislation. This last year I approved additional changes in that legislation, so that our funding could go forward, and we have worked very hard to meet every conceivable benchmark.

In fact, I'm happy to announce that our representative, Susan Shearhouse, has been elected to the UN -- this budget oversight body, the ACABQ -- which is one of the things that was listed as necessary by Congress in order for the money, were it to be voted, to actually be turned over. So we have done that.

But every year that I have worked on this, whether as UN Ambassador and now as Secretary of State with Ambassador Holbrooke, what has happened is that we have gotten the money voted, and then a tiny minority has held up money which is essential for our national security.

Now, I have stated, over and over again, that -- when I testified -- that the issue of family planning is a serious and important issue, and there are different views on both sides. They are legitimate views but they should be discussed separately. They should not be attached to a piece of legislation which brings money that we need for our national security.

As a result of the work of the House, we now do have money for our bilateral programs. But multilaterally, where we need to deal with programs like Iraq and Kosovo and East Timor, we cannot influence the debate if we do not have money. We cannot use the United Nations peacekeeping forces as force multipliers, and sharing our burden, if we do not contribute our money.

And so I once again call on Congress. It is now in their hands to provide the money for our national security, by voting the State-Justice-Commerce Appropriations Bill, which provides the infrastructure here and for our United Nations dues. I don't feel too strongly about that, as you can see.

In the months ahead, we will be studying, carefully, the Advisory Panel's innovative recommendations, and will work with Congress and colleagues in the Executive Branch to find the best ways to implement them. I would hope that some of the recommendations, such as increasing the use of very small posts in certain countries, can be acted upon quickly. Others, especially those requiring substantial resources, will obviously take more time.

Before closing, let me say once again, how truly grateful I am to Chairman Kaden and his panel for the great public service they have performed. They have taken on an especially hard task, and done it well, and with promptness rarely seen in this city. I am sure that the recommendations they have made will be a major factor in our planning and operations for years to come.

Now I am delighted to invite Lew Kaden to take the podium to summarize the results of his panel's work, and to respond to any questions that you might have.

Thank you very much.

MR. KADEN: Thank you, Madame Secretary. As I said a few minutes ago, when we presented the report formally to Secretary Albright, it was a pleasure for all of us to work on this panel. We had excellent panel members; we approached the job seriously; and we appreciated the opportunity she, and the rest of the Administration, gave us to work on these important issues.

Let me just make four points about the work of this panel, and then I'll be happy to respond to questions. The first is that our conclusion is clear about the importance of these activities. The work our government's representatives do overseas is, if anything, more important today than it was in prior periods. That may seem self-evident, but there are many in our society and our community who think that the end of the Cold War, the communications revolution, the opening up of markets and political systems around the world, meant that face-to-face diplomacy was no longer as necessary; that on-the-ground presence in countries around the world was not so important.

We reached just the opposite conclusion after visiting countries and posts around the world, and talking to literally hundreds of people involved in this enterprise. And that is that the result of these changes have increased the complexity of the agenda. Diplomacy no longer involves interacting on a government-to-government basis, and writing lengthy reports analyzing political or other issues, and sending them back to your colleagues in Washington.

Today, diplomacy means interacting on the ground in an active, aggressive way, with groups and individuals in the civil society, as well as throughout the government; attacking an array of problems on the foreign policy agenda; building global alliances and environmental or trade policy; promoting US products and services around the world -- something that we increasingly do well, but ten years ago was a serious debate about whether we should be doing at all -- building rule-of-law institutions.

One lesson that we discovered had come out of the Asian financial crisis: that a little more resources put into helping countries, with emerging open market economies, build the systems for accounting standards, securities regulation, banking oversight, would have had a tremendous payoff in avoiding the kind of cost to our economy that comes from a crisis of the sort we experienced a couple of years ago. That just means a few individuals with the right background, scattered in appropriate places around the world.

So the agenda is broad. The challenge is different than it used to be. It requires people representing us with the right skills, the right tools, the right facilities, the right degree of security, to do the job. And based on that conclusion, we then assessed where we are and, as you see in the report, what the report says is that we are perilously near a state of crisis.

These activities are not performed in a modern way. We have many talented and dedicated people, but we are not giving them either the measure of security, the facilities, the tools, the technology, the talents, the training --across the board -- to do the job in an effective way. And that is true, while some progress has been made, when measured against the effort that other large-scale organizations are doing around the world, or other governments are doing who have representation around the world. This is an area in substantial need of improvement. That's our second point.

Third, we lay out an aggressive agenda for reform. We don't expect everyone to embrace every piece of this program, but the pieces all fit together. And let me just run through them very quickly. First, we build on the work that Admiral Crowe did in the security study, following the bombings in East Africa. When we ask men and women to serve overseas, our first obligation, if they are to perform their important mission, is to assure them that the government has done everything they can, so that they will do their work and their families will conduct their lives overseas with as much security and protection as possible.

That does not mean that we put security ahead of mission. These are functions to be performed, and the mission comes first. There are risks in performing that mission. Indeed, if you or your colleagues serve overseas as journalists there are risks in doing your job. You can't perform that job locked behind a fortress or behind secure gates.

So the answer is not to say, "Our people are secure because they're in a fortress," but rather to say, "We've provided them the training, the procedures, the facilities, that are necessary to be as secure as they can be given the nature of their function."

Second, we think there are too many people serving overseas, not just from the State Department, but across the array of government agencies. We should have a leaner, more agile, better functioning, better trained force, representing the 30 agencies who do work overseas. That's an inter-agency problem. The State Department alone can not solve it. No single department can solve it.

We have proposed an inter-agency process, created by the President with his authority behind it, chaired by the Secretary of State, including the relevant agencies who use this platform that will go, embassy by embassy, creating a right size and shape, matching up personnel staffing patterns with the mission priorities that those posts have. And we think that process can produce not only a better force but, in many cases, a leaner, more agile force. Some of the numbers of people we have, particularly in Western European capitals, grown up over the years; they are nice places to live; there are lot of agencies that want to sent people there; but we can actually achieve significant savings through this right-sizing process.

Third, technology. It is a disgrace -- and the report says this in no uncertain terms -- that our personnel, representing 30 agencies, cannot communicate either with each other or with other posts around the world or with the government back in Washington, the way my organization and probably your organizations take for granted.

In the unclassified environment, a connection by an Internet-based e-mail system would provide the capacity for this kind of communication. But we should not be deceived. This is not a technological challenge. It is not expensive, and it is not technologically difficult to do it in a properly secured way. It's a cultural issue, and all of you are familiar with the literature: When you provide technology to communicate across departmental or agency lines and around the world, you break down hierarchies. You break down barriers of disciplined cones. And that is something that probably should happen, if you're going to build a knowledge-based system that is fast-enough moving to respond to the kinds of issues that we ask our representatives to deal with. But the creation of this technology platform is a critical problem and we are lagging well behind other large-scale organizations around the world.

Fourth, the Secretary mentioned the talent and human resources issues. This is actually an area where Under Secretary Cohen has initiated some reforms, based on a survey that was done, by the McKinsey company, of attitudes of talented young Foreign Service officers. But it applies across the government. We don't have the recruitment, training, promotion, evaluation systems, that match those of a first-class organization in the government, and we ought to have them. Because the consequence of not having them is that the most talented young people, who come out of graduate school and are attracted to public service, attracted to the Foreign Service for all the right reasons, then get frustrated and discouraged by rigid requirements, by excessive regulation, by time-in-grade rules that prevent rapid promotion, by evaluation procedures that are not meaningful. We propose reforms across the array.

That's just a flavor. One final one: We propose a completely new way of conducting the buildings and grounds function, now the functions of FBO. We suggest -- and this is based on extensive discussion around Washington and around the world -- this is not a core competence of the State Department. It has not performed up to appropriate standards. Some of it is lack of resources, but some of it is a lack of capacity and professional standards. But there are other problems as well. The cost is not fairly shared among all the agencies who use the platform. The other agencies who use the platform are not sufficiently involved in the process of planning and design.

So we propose taking this function out of the Department, putting it in a new government-chartered corporation: We call it an Overseas Facilities Authority; giving it a broader array of financing tools so it can have more predictable funding year to year through a combination of rents charged to the users, access to the federal financing bank, as well as the appropriations and use of fees for consular and other services.

This will be a controversial proposal, particularly in this building. But we emphasize that it is not taking away the Secretary's statutory responsibility over the policy decisions. It is, rather, creating a more professional mechanism to do a job that this country has a lot of expertise doing: building and maintaining buildings. Our government has 12,000 facilities around the world. It's a huge job, and it's not being performed today up to the standards we should want.

Finally on implementation, this cannot happen unless there is a partnership between the Congress, the White House and the Cabinet. The Secretary has an important role in leading the implementation of certain of these provisions. We have an implementation timetable in the back of the book, but there is also important functions for the President and the Congress as well. And we suggest that both branches of government get together, and build some momentum behind this change -- become champions of change in the next year, so that the reform program has begun in a way that encourages the next Administration, after the 2000 election, to carry it forward.

I'll be happy to respond to any questions.

MR. RUBIN: I should explain that Under Secretary Pickering and Under Secretary Cohen will be available too, if you have any questions.

MR. KADEN: Yes, I should say that both Under Secretary Pickering and Under Secretary Cohen were enormously helpful to the panel as it did its work. Thank you.

QUESTION: The report refers to decrepit facilities. How widespread is this problem? Is there any way you could quantify it?

MR. KADEN: I don't know if I can quantify it around the world. Some of the pictures are in the report. But I think those of us, for example, who visited our facilities in Beijing, one of the most important bilateral relations in the world, thought that it was past time to bring those facilities up to standard.

The same is true in Moscow. The same is true throughout the new countries that were formerly part of the Soviet Union. That's a special challenge, because the government had to create embassies overnight in those countries. There are pictures of Kiev, which is called the folding chair embassy, because it takes place essentially in containers and trailers and cubicles in which you have to move folding chairs to get to your place of work. But there are many other examples around the world as well.

QUESTION: Let's talk a moment about security of US embassy facilities and other US facilities overseas. Are there currently any of our facilities that are under -- that are at say a threat con alpha or -- that's the term that the Pentagon uses -- are under high alert? And who are the potential perpetrators? Who can you say -- besides bin Laden, are there any other organizations that are trying to go after US facilities specifically?

MR. KADEN: I'm going to ask Under Secretary Cohen to address that. But let me just say, from the panel's perspective, that one of our observations and conclusions was that it is no longer possible to predict, with accuracy, tiers of threats, or where a threat is likely to arise. It's the nature of the world, and the nature of the terrorist threat, that that is inherently unpredictable. And; therefore, one has to take the right measures, in terms of training and procedures and physical facilities, to provide a proper level of security everywhere in the world.

UNDER SECRETARY COHEN: I think both Tom and I will answer that. As to the security conditions of our buildings overseas, those of you who read Admiral Crowe's report, know that he talked about the need for new embassies simply for security, let alone the ability to operate effectively. We were very heartened to get a $1.4 billion emergency supplemental last year, and we have been able to use that around the world for upgrading security. And that would include the kinds of things that you see around this building -- bollards, alarms, additional training, additional security officers, a whole array of things I won't go into.

So I think, as I've talked to our people overseas, they all feel more secure. We do live in an insecure environment, and we do need additional resources for new buildings. And I'll let Tom talk about the different threats.

UNDER SECRETARY PICKERING: Let me say, first, that I thought Lew Kaden did an excellent job both in summarizing the report, but even more importantly, the new nature of the threat. In fact, as we have all seen from the bombings last year, there is a tendency of the threat to go where the threateners believe we are weakest. And so we can no longer afford to have a three-, four-, five-tiered system and have any confidence in fact that we will be able to provide the security. And Bonnie has outlined precisely what we're doing.

The threat sources come from multiple areas. The good news is, I think, that our intelligence community is doing a strong and significant job in finding ways to alert us to these threats. The bad news is we never know -- and they never know in the intelligence community -- what we miss, and we have to therefore have strong facilities, strong programs of protection, good training, increased resources to deal with all of those questions which are a primary issue.

The Secretary, I thought, briefed you all very well. Security is a major share of what we need to do to deal with the problems that both Admiral Crowe and now Lew Kaden have identified for us in our overseas presence. It is not the only requirement, but resources are quite critical in making all of that happen. And many of us in the Department -- I would suppose I can speak for the Foreign Service on this -- are delighted that the Secretary, Secretary Albright, has taken the time and the effort to put the attention into these issues.

I'm delighted that people have come from the private sector, and as former government employees to do this and the security part is very important. I am reminded of the fact that there is a character who says, "I am from the government and I'm here to help you." We now have people who are from the private sector who are here to help us, and this is an important turnabout, but very significant.

QUESTION: Are there ongoing plots against US facilities that you could say anything about?

UNDER SECRETARY PICKERING: I spoke from this platform after the bombings in Nairobi and Dar es Salaam, and I related the fact that we had any one day a significant number. Unfortunately, that continues, in terms of the intelligence and the other information we have, and of course we're not here to provide you particulars to draw a road map for those who would attack us as to precisely how best to do that.

QUESTION: Following that, Secretary Pickering, all this is well and good, but you still need money from Congress to get it and, as the Secretary previously said, you're having enough trouble getting it for UN arrears and other programs. When you're going to go up and ask for more money so that people won't be in folding chair embassies, what's there to suggest you'll get a better response than you've gotten so far?

UNDER SECRETARY PICKERING: First, I'd like to say, you get it; we aren't getting it. That is, you get the problem; we aren't getting the money. And that's critical and I think it's important today that there is a fortunate conjunction of events, in a sense that this report was ready and presented, at a time when the issues which it's highlighting are issues currently before the Congress, and on which, as the Secretary has made clear, the Congress does not seem to be facing up to what we believe are its serious responsibilities to deal with this set of problems, despite the fact that the President is presenting budget after budget to deal with this set of issues.

We believe it's extremely important, because as we look at the issues, Lew Kaden is right: Mission is extremely important. We're performing a mission that, in every sense of the word, affects, for example, 30 percent of the new jobs in this country; a tremendous amount of our national security effort. If we were not the front-line national security agency, the military and the other parts of our government, unfortunately, I believe, would have even more to do than they've had to do, because of our inability using our front-line security agency, the Department of State, to resolve those problems.

Our national prosperity increasingly depends upon foreign trade. We, and others who work in this field, hopefully will make foreign trade work better for Americans and for American jobs. I could go on, now, for a whole hour on this. I won't but you know, I believe because you've been in this room long enough to understand how important this issue is to our national existence, and to our national security, and to our national prosperity. If we do not have the resources to deal with those problems, then that is a perfect example of penny-wise, pound-foolish.

UNDER SECRETARY COHEN: I would just like to add something on the resources, because after the bombing the same question came up and we did get tremendous bipartisan support for an emergency supplemental then. We have, on the security part, gotten additional support so far this year, but often these budget battles are seen as this week's news and this year's news, and what we're really talking about for the State Department is a long-term commitment on the part of the Administration, whatever Administration, and Congress. Admiral Crowe called for over a billion dollars a year for ten years. This is a long-term problem, and we don't need this year's budget; we need budget support every year for the next decade.

QUESTION: A question for both Under Secretaries -- actually, painting my colleague's question a little darker,: this report calls for a lot of spending but also offers some savings. How optimistic are you that the Congress won't say, "Aha, this confirms our worst suspicions," and take away the savings and not give any of the funding?

UNDER SECRETARY COHEN: Well, that would be awfully short-sighted for America. I think that that's the point that the report has made, and that Tom has made. This is not an agency that can afford to lose any money and do its job for this country.

UNDER SECRETARY PICKERING: I would just add that there is a rhythm in this kind of effort, that often it takes an investment to be able to save funding. Nevertheless, the report has pointed out a disproportion in some areas that needs to be looked at, and I believe the Secretary is determined to lead her Cabinet colleagues into that kind of an examination. Because as you know, while this department is responsible, and is the lead for the President on all of these issues, the bulk of the representatives of the United States now residing overseas tend to represent a congeries -- a collection of other departments and other agencies.

So our coordinating role here is tremendously important, and our ability to make sure that the foreign policy speaks with one voice, and our actual role in many areas. But we also have to work with other departments and agencies in a cooperative effort, as Chairman Kaden has said, to make this work. And we are looking at budgets as a whole and the government effort as a whole in the effort to try to find ways to provide the savings that will, I hope, also be matched by the interest on the part of the Congress in doing the job right which -- in my view -- will also mean that in many areas, as the report points out, we will have to increase the investment.

MR. KADEN: Let me just make one point on it. The principal theme of this report is not more money; it's that the government has to do a better job conducting and organizing these activities. I think, in fact, the resources and the support will come, if there's evidence that the Administration is becoming champions of change and improvement in this area. I doubt very much that the Congress will deny them the support, for example, to build an appropriate technology platform.

But so long as you have separate departments, seeking resources for their own self-contained technology platform, leaving circumstances in which people can't talk from one room to another, or from one post to another, I think the argument for more resources is likely to fall flat. So this has got to be a partnership, between those who want the investment, and those who are seeking to implement the reforms.

QUESTION: To one very, very brief question which is not meant to be obnoxious, but do you have any idea how much it costs to put together this commission's report? It seems like you've shuttled 25 people around to some pretty exotic places.

MR. KADEN: There was a specific appropriation that included this study and others, and we did have consultants and other expenses. I'm sure we can get you the figure, but it was a substantial undertaking, and it probably cost a couple of million dollars.

QUESTION: And the second question is for the Under Secretaries: I find it a little bit surprising that you get up and say that you're delighted, you and the Secretary, about this wonderful report which basically says that you're doing a lot things very badly. You have outmoded administrative and human resource practices; you're using obsolete information technology. Surely not all of this is Congress' fault. Why are you applauding a report that says, basically, that the State Department isn't doing its job very well?

UNDER SECRETARY COHEN: Let me start, and I'm sure Tom will build on this. The problem that this commission addressed is not a problem that occurred in the last year or two years; it has occurred over a long time. And I think what Secretary Albright, and I think the department and the country, we're fortunate to have a Secretary who had served at the UN and knew the State Department well, so that reform at the State Department has been one of her top priorities since she came in. She has worked on the integration with the other agencies that this report calls for. I think ACDA and USIA integration are excellent examples of that.

In terms of the platform, we have rolled out over the last two years a modern technology platform in over 200 posts worldwide, and in some of these countries, that is really quite a feat. In addition, we have gone from an F from Congressman Horne to an A in technology preparedness. She has responded to the McKinsey study with a number of personnel reforms. So we are in the process of making changes, and this report, I think, encourages us to continue in that direction.

QUESTION: Right, but you've successfully -- I mean you've defended yourself and this administration over the last -- at least this Secretary of State, but there are foreign service officers who have been here much longer than this Administration or this Secretary of State, exactly. So you say, all right, well over the last two years we've gone from an F to an A, but two years ago you were at an F, and there were a lot of people in this building two years ago who are still here now, who obviously, apparently weren't doing their jobs.

MR. RUBIN: Why don't we let Under Secretary Pickering who actually can speak to those.

UNDER SECRETARY COHEN: I was just going to say, let me turn it over to Tom Pickering.

UNDER SECRETARY PICKERING: Let me say two or three things. First, we asked for a serious report, we expected a serious report, and we did not set the guidelines. We asked the report to address the issues.

Secondly, if we thought we were doing perfectly, we wouldn't have touched a report. So we expected to have clear advice on areas where we could change and improve. I think Bonnie has made that clear. We welcome that. That is not an issue we want to sweep under the rug or hide from.

There is no question at all for any of us -- and I've been back here since 1996 -- that we had problems, that things needed to be addressed, that Secretary Albright wanted to do it. She wanted the help of a wise, clear-eyed, outside-inside group to help us do that. So there is no reason why I should apologize to you for our effort to find out what's wrong and make change, and to do it as quickly as we can.

Secondly, it is true that we have systemic problems and difficulties; all departments do. I think we're different from some, in a sense that we do public reports on the subject, which we take seriously and then try to implement, and I refer you to the Crowe Report.

The third point I can tell you is, having been in this department for more years than most of you have been alive -- and I don't apologize for that -- I want to tell you that some of the systemic problems also come from the fact that we don't have resources for training; we don't have resources for appropriate recruitment; we have not kept up to date with the movement of technology. And some of that may have been bad administration and bad practice, but a lot of it also was -- frankly -- I was in the days when every year there was a 10 percent cut, hell or high water. We have gone in 1985 to the present with about a 25 percent reduction, overall, in where our budget has come.

So I don't excuse all of these problems, but I have to tell you that some of them, at least, are still resource connected, and that that's important. But if we cannot do better, both with the resources that we have and the resources we hope by doing better to get, then obviously we deserve to continue to be criticized.

MR. KADEN: I would also just make one point. These recommendations are not directed solely at the State Department. Many of the reforms will have to be initiated and led by the President and the White House, because they do cover the whole government. We approached this as a report about the job the US Government as a whole is doing.

QUESTION: The question goes to all of you. I'm a little confused about how bad -- how much fat there is, among the various embassies and consulates that you visited. I just heard Secretary Cohen say that one of the things that the State Department has done well, and has been applauded for, is personnel reform. Does that apply at all to your report, if you could just elaborate?

MR. KADEN: I think the report does say that, based on the McKinsey study, Under Secretary Cohen and Secretary Albright have initiated a series of reforms. The report emphasizes how important that area is, how much faster the pace of the reform has to be, how it has to apply across the government, not just to the Foreign Service under the State Department's jurisdiction.

On the question of size and savings, we obviously didn't have the means or the resources to tell you how many people should serve in London or Paris or Beijing, or any of the 157 other embassies. But we believe, based on our study and our perception, that properly equipped with the right tools, the right training, the right technology, our force could be leaner, faster moving, better adapted to the issues and challenges of today, and there would, over time, be significant savings in that. That's why our proposal was to create this -- to have the President create this inter-agency right-sizing committee, and charge them with examining all 160 embassies over the course of three years. Hopefully, they would start with some of those.

But this was really triggered in our mind by the comments we received from Admiral Crowe and Ambassador Rohatyn, both of whom ran large posts in Western Europe, and served on the panel, and from Ambassador Holbrooke based on his experience in Germany. And all three of them said that one of their frustrations was, they thought there were too many people serving under them in those posts, and they didn't have a proper governmental mechanism for right-sizing. And we then began to talk to ambassadors in medium-sized posts, and some smaller posts, and we detected some of the same theme.

So we use as examples how much money you would save by a 10 percent reduction, but maybe the result of the right-sizing would be more than that.

QUESTION: If your recommendations are implemented, how long do you think it would take to shape things up?

MR. KADEN: We urge that that right-sizing process be done over the course of three years; in other words, a third of the posts each year for three years.

QUESTION: (Inaudible) -- it out if all of your recommendations -- and I recognize that one of the major recommendations had already been put forward by Admiral Crowe, but if all of your recommendations were put into effect linking various computers, how long would it take?

MR. KADEN: Well, I think on the technology side, we say within a year, in the unclassified environment, you should be able to create a common technology platform, Internet-based. In the classified environment where the problems are more intricate, we suggest that the planning start with a target of having a program to put before the Congress in two years.

UNDER SECRETARY PICKERING: Could I just say two or three things? I think that it is important to recognize that, in this particular endeavor, there are also places where the report notes that we may have to have increases.

Secondly, never having had the pleasure of leading a large post in Western Europe, I can still tell you that in my own review of various other posts I've had, I agree with the general point: that presence -- and a lot of it inter-agency presence -- needs to be carefully reviewed. There is not a good system for doing that, and it needs to be put against the major foreign policy missions that the Secretary of State believes have to be carried out.

And I think it's important to do this. This report gives us a method for doing it. As Lew said just a moment ago, it doesn't attempt to do it itself.

I think that, finally, this report has different time scales. A very significant time scale comes out of the Crowe report, repeated in this report, that we can use $1.4 billion effectively each year for the next ten years, to deal with our security problem. It give you a sense of the difficulty with which we will all have to live for the next ten years, and in which we have been living for a long period of time.

But I think it is important to understand that the value of this report is that it has a whole series of steps, interrelated, that will be implemented over differing periods of time, related to, I think, the difficulty of getting the job done, the difficulty of getting the resources, and the importance of the job in terms of how they see our overseas presence.

QUESTION: Is there anything in the report that you all dispute?

MR. RUBIN: If we did, we wouldn't tell.

MR. KADEN: Let me just add one point to Under Secretary Pickering's observations. Some of it is not just reducing the number of people, but changing the skill set: changing the type of people. I mentioned the example of people with the capacity to aid countries in building institutions for rule of law, including on the economic side, as well as the individual rights or administration of justice side.

Another example, which we discussed at length with Director Freeh at the FBI, is that, in many cases where FBI resources are growing fast, there needs to be a re-balancing of resources, between liaison and relationship-building, working on institutional issues within the host country that improve both our capacity and theirs in the law enforcement, as opposed to what I would call the cops and robbers assignment: how many crooks have you caught this week.

That's the kind of change in skill set and profile that's part of the right-sizing effort, matching up priorities and mission with personnel.

QUESTION: Both Under Secretaries, do you agree that there are too many personnel overseas, particularly as regards State Department people, in total?

UNDER SECRETARY PICKERING: I will take a flier at this. My feeling is, with consistent 10 percent reductions, with recent approval of congressional increases, particularly in the security area of more personnel, we can all talk about the differences over the mix. I think that there are still shortages on the State Department side, that will need to be corrected, and that will involve both the question of the mix and total overall numbers.

I believe in other areas I could find plenty of places to make contributions. Other agencies may feel the same way. It's going to be a tough and difficult problem. It has never been easy, but it is extremely important that this report calls upon the Secretary to lead an effort to deal with it.

QUESTION: On balance, do you think the report is correct in saying that there could be a beneficial cut in personnel, particularly the State Department personnel?

UNDER SECRETARY PICKERING: I believe it's true in some areas. I believe, however, that our resources in the department have been stretched enough, for us to look at reallocating resources at the moment as an important priority, and that we need to get the mix and the balance right.

UNDER SECRETARY COHEN: I don't think it's right that the report says that there are too many State Department people overseas.

QUESTION: That was my question.

UNDER SECRETARY COHEN: All right. Well, I wanted it to be clear for everybody. I totally agree with Tom. It is really a question of the mix. When you go overseas, particularly to these new posts that Mr. Kaden talks about, or you go to our Africa posts, you see that they are really desperate for trained personnel. And so I think it is a question of the mix, and other agencies will be looking also.

I should mention that the Secretary has sent this report today, with a letter, to the other Cabinet Secretaries who have people who serve overseas, indicating that she will be calling people together in the January timeframe, to come up with a process for looking at our representation overseas, as the report suggests.

QUESTION: Mr. Secretary, do you agree that this report and increasing security fundings are due to one man, only one man, Usama bin Ladin, who is making life miserable at diplomatic embassies around the world?

UNDER SECRETARY PICKERING: No. Obviously we have, unfortunately, a large and deep and continuing amount of concern with his activities, which we are continuing to work very hard against. But there are, as I said earlier, unfortunately, other sources of concern which we follow very carefully and we will continue to do so.