Remarks by Secretary of Defense Leon Panetta and Secretary of State Hillary Clinton at the Euro-Atlantic Security Community Initiative and Keynote Session, Bayerischer Hof, Munich, Germany

                AMBASSADOR WOLFGANG ISCHINGER:  This is, I think, a very unusual first time at the Munich Security Conference.  We've had, of course, a very long tradition of the U.S. secretary of defense speaking in Munich.  We've had a very new tradition of the U.S. secretary of state speaking in Munich.  That's what happened last year.  But unless (inaudible) otherwise, I don't think (inaudible) I don't think that we've ever had both of them here at the same time, simultaneously sitting on the podium. 

                So a warm welcome to both of you.  We understand that by showing up here together you're telling us something, and I think you have decided to do this in the order that you will speak first.  So it's my pleasure to welcome for the first time the new secretary of defense of the United States, Leon Panetta.  

                You have the floor, sir.  

                SECRETARY OF DEFENSE LEON PANETTA:  Thank you very much, Wolfgang. I appreciate the introduction.  It is a distinct honor for me to be here in Munich, and to be among so many distinguished leaders from Europe, from the United States and from around the world.  As the son of Italian immigrants, I am always honored to come back to my roots in Europe. 

                 I'm particularly pleased to be able to appear alongside Secretary Clinton, who has been on this stage so long and has worked together and tirelessly with our European allies and partners to strengthen our mutual international security. 

                 Today I'd like to discuss how we in the United States see our relationship with Europe evolving in light of the new strategic guidance for defense that was released just this last month by the U.S. Department of Defense.  The reason we developed this guidance is clear.  We are at a strategic turning point after both a decade of war and a decade in which there has been very substantial growth in the U.S. defense budget.  And like most nations on this continent, America faces a fiscal crisis that has resulted in legislatively mandated defense budget reductions of $487 billion over 10 years. 

                 And as difficult and tough as it is to achieve these savings, we view this as an opportunity to shape the U.S. military force, a force we need not just for now but in the future.  By implementing this new guidance, we will ensure that the United States military remains the strongest in the world and is fully capable of defending the interests of the United States and the interests of our allies. 

                 We do not want to repeat the mistakes of past drawdowns by cutting across the board and hollowing out the force.  And unlike past drawdowns, when threats that we were confronting receded, we still confront a number of serious threats in the world.  There is still a war in Afghanistan.  We confront the threat of terrorism, nuclear proliferation in North Korea and Iran, turmoil in the Middle East, rising powers, cyber attacks.  We designed a strategy to deal with these threats. 

                 Let me summarize the key elements of the new U.S. defense strategy.  First, the United States military will be smaller and we will be leaner.  That was something, frankly, that was going to happen under any circumstances by virtue of the drawdown that we were involved in.  But what we wanted to stress was a force that would be agile, that would be flexible, that would be rapidly deployable, and that would be technologically advanced.  It must be a cutting edge force for the future.

                 Second, we will enhance our presence in Asia Pacific and the Middle East, where we see the greatest challenges and the greatest opportunities in the 21^st century.  Third, we will maintain a robust presence in Europe and elsewhere in the world by investing in existing alliances, by helping to make them stronger, by developing new partnerships, and by developing new innovative rotational deployments that will give us the capability to have a presence not only in Europe, but in Africa and Latin America and elsewhere.

                 Fourth, we will ensure that we can quickly confront and defeat aggression from any adversary, any time, any place.  It is essential that we have the capability to deal with more than one adversary at a time, and we believe we have shaped a force that will give us that capability.

                 And fifth, we will protect and prioritize key investments – key investments in technology and new capabilities from special operations forces to cyber and space and unmanned systems, as well as our capacity to surge, adapt and grow as needed.  That means we must maintain a strong National Guard and a strong Reserve and a strong economic base.

                 For Europe, the U.S. defense strategy reaffirms the lasting strategic importance of the transatlantic partnership with the United States.  Although it will evolve in light of strategic guidance and the resulting budget decisions, our military footprint in Europe will remain larger than in any other region in the world.  That's not only because the peace and prosperity of Europe is critically important to the United States, but because Europe remains our security partner, our security partner of choice for military operations and diplomacy around the world.  We saw that in Libya last year and we see it in Afghanistan every day. 

                 Drawing on the lessons of a decade of war, a robust and effective network of alliances and partnerships is absolutely an essential element of this strategy's vision for the future U.S. military.  As part of the strategy, we are therefore deeply committed to strengthening transatlantic security partnerships and institutions, including NATO. 

                 Much as changing physical and strategic realities have offered the United States the opportunity to build a force for the future, I believe that today's strategic and fiscal realities offer NATO the opportunity to build the alliance we need for the 21^st century, an alliance that serves as the core of an expanding network of partnerships across the globe in support of common security objectives.  But it is an alliance that remains rooted in the strong bonds of transatlantic security cooperation and collective defense.

                 Let me lay out how we intend to strengthen transatlantic security cooperation by describing what European allies and partners can expect from the United States and our new defense strategy.  First, we will focus on the most pressing security challenges by investing in ballistic missile defense capability for Europe in response to the emerging threats beyond Europe.

                 As part of the European Phased Adaptive Approach and NATO's missile defense capability, we have established a radar system in Turkey.  We will be stationing SM-3 missiles in Romania and Poland.  And we will deploy four BMD – ballistic missile defense-capable ships, Aegis ships to Rota, Spain.  President Obama has made clear that the United States is firmly committed to building a missile defense system in Europe.  The new defense strategy and our budget priorities reflect that commitment.

                 Second, we will invest in shared capabilities that will ensure NATO remains the strongest and most capable military alliance on earth.  To address intelligence surveillance and reconnaissance shortfalls, some of which the Libya operation exposed, NATO has agreed as of yesterday to fund the new Alliance Ground Surveillance system.

                 I want to thank the secretary general and all of my fellow defense ministers in NATO for having made that very important decision, that is in many ways the foundation of smart defense.  For that reason, we in the United States have protected funding for AGS in our new defense budget. 

                 Safeguarding critical capabilities was a core objective of our budget and strategy review of the United States, and it is important that we send a strong message that we remain committed to this system and bolstering NATO's cutting edge capabilities. 

                 Third, we will employ innovative approaches to strengthen security cooperation, even as we reduce the numbers of U.S. troops and dependents that are permanently stationed in Europe.  We will maintain two brigades garrisoned in Europe in addition to moving forward with the missile defense deployments that I've already detailed, establishing an aviation detachment in Poland and taking steps to enhance the responsiveness of special operations forces in the region.

                 As we reduce the end strength of our land forces overall, we will remove two heavy, fixed brigades that are currently garrisoned in Europe – two brigades that, I might point out, have spent most of their time in the war zone and not here.  We selected these legacy brigades for transition because they are the least adaptive to the complex challenges we face and we expect to face alongside our European partners.

                 We made this decision only after ensuring that our force posture adjustments will not weaken our ability to meet our commitment to the security of Europe or our Article 5 responsibilities. 

                 Today, I can announce that the United States will make a new commitment to the security of our NATO partners by reinvigorating our contribution to the NATO Response Force that we value so much.  The NRF was designed to be an agile, rapidly deployable, multinational force that can respond to crises when and where necessary.  The United States had endorsed the NRF but has not made a tangible contribution due to the demands of the wars – until now.

                 In the coming months, we will identify a U.S.-based brigade from which we will provide the United States land force contribution to the NATO Response Force, and we will rotate a battalion-sized task-force to Germany for exercises and training.  Not only will this open up new opportunities for U.S. troops to train and exercise with our European counterparts, it will ensure NATO has the capability to conduct expeditionary operations in defense of our common interests.  But to fully realize the goal of a strong and agile NRF, we need the support of other Alliance members.   

                 In all, the steps Europe can expect from the United States amount to a vote of confidence from Washington in the future of the Alliance, especially in a period of fiscal austerity.  Let me now suggest the steps that Europe can take in order to cast a similar vote of confidence.  

                 First, we must all continue to invest in national defense and in shared responsibilities and capabilities of NATO in order to best manage the security challenges of the future.  Approaches like "Smart Defense" help us spend together sensibly – but they cannot be an excuse to cut budgets further.  This is the view that I shared with my fellow NATO defense ministers this week, noting that as we move towards the Chicago summit, Smart Defense should be part of a longer-term plan to invest in a NATO force for 2020 that is fully trained and fully equipped to respond to any threat and defend our common interests. 

                 Second, what emerged from a series of meetings with my NATO counterparts this past week was a recommitment to finishing the job in Afghanistan.  Our bottom line, as the foreign minister pointed out, is in together, out together.  As an Alliance, we are fully committed to the Lisbon framework and transitioning to Afghan control by 2014. 

                 Our discussions included considerations of how ISAF will move from the lead combat role to a support, advise and assist role as Afghan Security Forces move into the lead.  We hope Afghan forces will be ready to take the combat lead in all of Afghanistan some time in 2013, as we complete the final tranches of areas that we transition to Afghan control.  But, of course, ISAF will continue to be fully combat capable.  And we will engage in combat alongside the Afghans as necessary thereafter. 

                 We are making progress in Afghanistan.  As General Allen pointed out in a report to my NATO colleagues, violence is down, the insurgents have lost momentum.  The transition to Afghan security responsibility has begun.  The second tranche of areas that was transferred to Afghan control represents the fact that over 50 percent of the Afghan population is now under Afghan control and security. 

                 The key to the success of this transition rests on a continued commitment by the international community to the long-term development of the Afghan National Security Forces.  To sustain sufficient security, the ANSF requires adequate financial support, support that is consistent with our commitments that have been made, commitments made by the international community at the Bonn Conference last December. 

                 I recognize – I know that we face intense pressure to reduce the support given the budget constraints that we all face and that all ISAF nations are facing.  But even as we will work to find ways to reduce ANSF costs over time, and we will – and we have – we cannot shortchange our commitments.  We cannot shortchange the security that must be provided by the Afghan army now and in the future.  We cannot count on other nations to fill the gaps.  We must do everything we can to support this force. 

                 Over a decade of war from the mountains of Afghanistan to the shores of Tripoli, this alliance has proven its relevance in the security challenges of the 21^st century.  We have in many ways moved closer to realizing a vision for the Atlantic community that was articulated by President John F. Kennedy.  He indicated this vision nearly 50 years ago in the same year of the first-ever Munich security conference. 

                 In 1962, President Kennedy envisioned that one day the United States could partner with a revitalized Europe, and I quote, "on a basis of full equality in all the great and burdensome tasks of building and defending a community of free nations," unquote. 

                 We are closer than ever to achieving that vision.  But to do that, we must meet the great and necessary tests of the 21^st century together.  And we must draw strength from our common values, our common interests and our common purpose to forge a better and a safer world and to give our children a better life.  That is our dream.  It is also our mission. 

                 Thank you very much. 

                 SECRETARY OF STATE HILLARY CLINTON:  Thank you very much. This is a first, with both Secretary Panetta and I here together. But I think that it speaks volumes about the importance that we place on this conference, Wolfgang, and on the significance of the alliance that has grown so strong over the last 50 years. It is also a great personal pleasure for me to be back in Munich with so many colleagues and friends. I wish to thank one of them, my friend, the Foreign Minister, Westerwelle, for his important comments. And I also wish to thank the presentation by Sam Nunn and Igor Ivanov on the Euro-Atlantic Security Initiative that I think holds great promise for us all if we heed the words that it contains.

                 This gathering, as Leon just said, founded at the height of the Cold War, has become an important symbol of our commitment to stand together as a transatlantic community. And we come to Munich each year, not only to advance our shared values, our shared security, and our shared prosperity, but to take stock of where we stand in the efforts to forge that union between us, and also to lift up our heads and look around the world at the global security situation. That calling is no less powerful today than it was 50 years ago.

                 Now, I have heard all the talk about where Europe fits in to America's global outlook. And I have heard some of the doubts expressed. But the reality couldn't be clearer. Europe is and remains America's partner of first resort. I have now traveled to Europe 27 times as Secretary of State. President Obama has visited 10 times. And wherever America is working to prevent the spread of nuclear weapons, to fight disease, to help nations on the difficult journey from dictatorship to democracy, we are side by side with our friends in Europe.

                 In fact, I would argue the transatlantic community has never been more closely aligned in confronting the challenges of a complex, dangerous, and fast-changing world. The breadth and depth of our cooperation is remarkable. You know the litany. In Libya, NATO allies came together with Arab and other partners to prevent a catastrophe and to support the Libyan people. In Afghanistan, with nearly 40,000 European troops on the ground alongside our own, we have built and sustained NATO's largest-ever overseas deployment. And we will continue to support the Afghans as they assume full responsibility for their own security by the end of 2014.

                 As Iran continues to defy its obligations, America, Europe, and other partners have put in place the toughest sanctions yet. And we are also pursuing diplomacy through the E3+3 track, because Europe is vital to both halves of that dual-track strategy. And as a tyrant in Damascus brutalizes his own people, America and Europe stand shoulder to shoulder. We are united, alongside the Arab League, in demanding an end to the bloodshed and a democratic future for Syria. And we are hopeful that at 10:00 a.m. Eastern Standard Time in New York, the Security Council will express the will of the international community.

                 As Secretary Panetta just made clear, our commitment to European defense is just as deep and durable as our diplomacy. At this year's NATO summit in Chicago, we will update our alliance to keep it strong for the 21st century. So when President Obama says that "Europe remains the cornerstone of our engagement with the world," those aren't just reassuring words. That is the reality.

                Today's transatlantic community is not just a defining achievement of the century behind us. It is indispensable to the world we hope to build together in the century ahead. Here in Munich, it is not enough to reaffirm old commitments. The world around us is fast transforming, and America and Europe need a forward-leaning agenda to deal with the challenges we face. Let me just briefly discuss five areas in particular that will require a greater collective effort.

                 First, we have to finish the business our predecessors started, and build a Europe that is secure, united, and democratic. And we heard the ICI Report that sets forward some very specific steps we could take together. From day one of this Administration, we have worked closely together to transform strategic relations with Russia, while standing firmly behind both our principles and our friends. This approach has yielded results, but we need work to sustain it. And this is not the only place in our community where we need to overcome mistrust. As long as important conflicts remain unresolved in Eastern Europe, the Balkans, the Caucasus, and the Mediterranean, Europe remains incomplete and insecure. Even as we grapple with a wider global agenda, we cannot lose sight of the challenges closer to home.

                 And let me underscore the word "trust". We heard it from Igor Ivanov, we heard it from Guido Westerwelle, and I think it deserves repeating. We have to do more together to build a sense of trust and to overcome mistrust among us. That will have to be one of our strategic imperatives, if we expect to address successfully the issues ahead.

                 Second, because the strength of our alliance depends on the health of our economies, security and prosperity are ultimately inseparable. That means we need a common agenda for economic recovery and growth that is every bit as compelling as our global security cooperation. We recognize that Europe's most urgent economic priority is the ongoing financial crisis. As you probably know, we have been dealing with one of our own. And although we get good news from time to time, as we did yesterday with jobs figures and drops in unemployment, we know we have a ways to go, as well. We remain confident that Europe has the will and the means not only to cut your debt and build the necessary firewalls, but also to create growth, to restore liquidity and market confidence.

                 As Europe emerges from economic crisis, we have to work harder to reinforce each other's recoveries. As deep as our economic relationship is, it has not yet lived up to its potential. I speak often about economic statecraft, because I think we cannot talk about what must be done in the 21st century without recognizing that our economic strength lies at the core of everything we are able to do to advance our values, to protect our interest, to create the security architecture that will sustain stability, going forward. The new U.S.-EU High-Level Working Group on Jobs and Growth created by President Obama and his European counterparts should be at the forefront of our efforts to put our people back to work.

                 And also, America and Europe can and should be trading more with each other and with the rest of the world. That means we also need to be focused on promoting our economic values. Too often, American and European companies face unfair practices that tilt the playing field against us: favoritism for state-owned enterprises, barriers to trade emerging behind borders, restrictions on investment, rampant theft of intellectual property. Together, America and Europe need to instill that all nations must respect the rules of the road that guarantee fair competition and market access. And above all, we need to remember that our investment in global leadership is not the cause of our fiscal problems. And pulling back from the world will not be the solution.

                 Third, in a time of tight budgets we need to ensure that our security alliance is agile and efficient, as well as strong. That is what Secretary General Rasmussen calls "smart defense": Joint deployment of missile defenses, the commonly-funded Alliance Ground Surveillance program, Baltic air policing, and a reinvigorated NATO response force. These are practical ways to provide security while minimizing cost to any one nation.

                 We also need to build our capacity to work with partners such as Sweden, Japan, Australia, members of the Arab League, and many others. And this will be a focus of our efforts in Chicago to ensure that NATO remains the hub of a global security network with a group of willing and able nations working side-by-side with us.

                 Fourth, our shared values are the bedrock of our community. We need to vigorously promote these together around the world, especially in this time of transformational political change. In the Middle East we have a profound shared stake in promoting successful transitions to stable democracies. We are making the Deauville Partnership a priority during America's G8 presidency this year. And to make good on its promise, we will be putting forward an ambitious agenda to promote political and economic reform, trade, investment, regional integration, and entrepreneurship to help people realize the better future they have risked so much to have.

                 Just as the impetus behind the Arab Spring has extended beyond the Middle East, so much our work. We have to help consolidate democratic gains in places like Cote d'Ivoire and Kyrgyzstan, and support democratic openings in Burma, and wherever people lack their rights and freedom. At the OSCE, the Community of Democracies, and elsewhere, we need to align all of the tools we have to further our values and goals.

                 America and Europe have more sophisticated tools than ever to support and reward those who take reforms, and to pressure those who do not. And wherever tyrants deny the legitimate demands of their own people, we need to work together to send a clear message: You cannot hold back the future at the point of a gun.

                 Of course, it is not credible to preach democracy elsewhere unless we protect and promote it ourselves within our community. The trappings of democracy are not enough. We need a vibrant free press, clean and transparent elections, an independent judiciary, a healthy political opposition, and protection for women, religious, and ethnic minorities. We must protect democratic rights and freedoms wherever they are endangered, including here in Europe.

                 Fifth and finally, we have to reach out to emerging powers and regions. The world we have worked together to build is changing. There are new centers of wealth and power, and fewer problems can be addressed decisively by America and Europe alone. So we have a challenge to make the most of this critical window of opportunity, to enlist emerging powers as partners, and strengthening a global architecture of cooperation that benefits us all.

                 I am glad that Europe's engagement in the Asia Pacific is on the agenda here in Munich, because we need to reach out together to regions already playing a growing role in world affairs. Now, a great deal has been said about the importance of a rising Asia Pacific for the United States. But not nearly enough has been said about its importance for Europe. America and Europe need a robust dialogue about the opportunities that lie ahead in the Pacific-Asia region. And we are building one here today. Taken together, all of these elements point to a larger enduring truth: When Americans envision the future, we see Europeans as our essential partners. There is no greater sign of our confidence and commitment than just how much we hope and need to accomplish with you.

                 We have not sustained the most powerful alliance in history by resting on our laurels. Our predecessors planned for the future together. They acted on the belief that America, Europe, and like-minded nations everywhere are engaged in a single common endeavor to build a more peaceful, prosperous, secure world. That is as true today as it ever was. And in this time of momentous change, let us have that same spirit guide us as we chart our path forward together.

                 Thank you.

                 AMBASSADOR ISCHINGER:  Thank you, Secretary Clinton.  Thank you Secretary Panetta. (Inaudible). I will start this question and answer session, by reading a question from someone you know well, Paul Kaiser, sitting somewhere here, from Harvard.  This question is – I think it's addressed to the secretary of defense, I imagine --  "Is the U.S. posture during the Libya crisis of, quote, 'leading from behind,' unquote, and relying on allies to assume the main share a pattern likely to remain, question mark.  I think that goes to you, Leon. 

                 SEC. PANETTA:  Look, in the world that we're dealing with, with the myriad of threats that I outlined, whether it's terrorism, whether it's war in Afghanistan, or whether it's threats from Iran, North Korea, turmoil in the Middle East, I think we need to have a broad and flexible approach to dealing with each of those crises.  We can't just rely on one mode to be able to confront the conflicts in today's world.  Libya, it worked to have NATO come together.  It was effective.  It was successful.  But it doesn't necessarily mean that that particular model might apply if we had to go to war in North Korea or if we had to confront a threat elsewhere. 

                 I think the most important thing the United States has done in developing our defense strategy is to maintain our capability to be able to engage in a broad way, depending on what crisis is, what the threat is.  So if we need land forces to confront land forces, we have to take the lead on that.  We have the capability to do that.  If we have to deal with someone trying to close the Straits of Hormuz, we have the naval and Air Force capability to be able to do that.  We can do that in conjunction with NATO, or we can do it on our own. 

                 We need to maintain a full, flexible, agile, and strong defense in every way, and that means working with NATO, but at the same time, understanding that all of us have to have the capability to deal with threats as they emerge. 

                 AMBASSADOR ISCHINGER:  Thank you very much.  The next question goes to Secretary Clinton, but I can't read this properly.  It comes from Stefan Kornelius   Could somebody give a microphone to Stefan over there and we'll invite him to present his question himself. 

                 Q:  (Inaudible) Secretary Clinton, a question of Afghanistan and the emerging probable negotiating process with the Taliban, the first steps have been made. Is the administration prepared in a confidence-building measure and think of releasing detainees from Guantanamo as (inaudible). 

                 SEC. CLINTON:  Well, I am not going to go into any details about what we are or are not prepared to do, because we are just at the beginning of this process of exploration whether or not there is an opportunity to bring about an end to the conflict through a political solution. But this is, first and foremost, an Afghan-led and Afghan-owned process. We support the Afghan Government in its efforts to work with the representatives of the Taliban and other insurgent groups, to see whether there is common ground on which to build enough trust -- to go back to that word again -- to have a resolution.

                 There are certain conditions that certainly the United States would look to. We would expect anyone who was engaged in such talks to: renounce violence, to be prepared to lay down arms and enter the political process, if that is what they were to seek, to have their views known within the Afghanistan political system; to renounce all ties with al Qaeda because of the history with the Taliban -- that is a very important issue to the Afghans, to us, to NATO-ISAF; and to agree to abide by the constitution of Afghanistan.

                 So, there will continue to be all kinds of speculation about what is or is not happening. But I think it is important to say of course we are exploring whether there is a way forward in partnership, and with the lead of the Afghans themselves.

                 AMBASSADOR ISCHINGER:  Thank you.  Because we're running out of time, I'll call on two more.  If you could, be brief, first one is a member of German Bundestag (inaudible) Stinner and the second is Francois Heisbourg, over there. So we go to (inaudible) Stinner first. 

                 Q:  Yes, thank you very much.  Because we're short of time, I would like to use English.  The question goes to Mr. Panetta, Secretary Panetta.  It's about missile defense.  This morning, we heard a very interesting presentation by Senator Nunn and I – I'm understanding at least (inaudible) from him and from you.  I see a difference in tonality.  Senator Nunn, to a very large extent (inaudible) the political issue to which we got to come to terms with Russia.  You more or less concentrate on the technical aspect of defending ourselves, which is (inaudible) of course. 

                 But would you subscribe to the ideas of Senator Nunn that (inaudible) most political importance to come to terms with Russia and that we have to take into consideration the political and psychological concerns of Russia? 

                 And the last question (inaudible) is Russia fears that the missile defense will undermine their capability to defend themselves.  I think it's unjustified as far as it goes from phase one to three.  With regards to phase four, operating probably by 2020, I see that this phase four will indeed or eventually indeed undermine Russia (inaudible).  To what extent are you willing to subscribe (inaudible) and what do you think about Russia's concerns here?  Thank you very much. 

                 SEC. PANETTA:  I greatly respect the work that Senator Nunn has done and frankly, I don't see a contradiction here.  I think to engage in what Senator Nunn wants to do, to be able to reach out, to develop, to find the communication, relationships that are important to trying to prevent war in the future, I think that's absolutely essential.  But I also think that you could do that from a position of strength, not a position of weakness.  And therefore, I think we have to continue to build our defenses.  We have to continue to be able to deploy that which we think is important to the defense of Europe, and we intend to do that. 

                 Now, we do not view, very frankly, the ballistic defense system that we're trying to develop here as in any way a threat to Russia.  We've made that clear time and time again.  We'll continue to make it clear to Russia.  And we hope that ultimately we can resolve those issues so that we can proceed in a way that represents the defense of Europe, not a threat to Russia, but the defense of Europe. 

                 AMBASSADOR ISCHINGER:  Thank you.  And the last question goes to Francois Heibbourg, from Paris. 

                 Q:  Yes, Secretary Panetta, in the very substantial changes in the American defense posture, which you announced recently, your starting points are defense budget reductions which do not take into account sequestration.  Am I right in assuming that sequestration would (inaudible) would not need to be taken into account if, for example, President Obama were reelected and the balance of the Congress would change, but if one assumes that, does that mean that there would be no further defense cuts beyond those upon which you have based the announcements and the change of defense posture?  Because the difference between a world with sequestration and a world without sequestration is about half- a-trillion dollars of defense spending. 

                 SEC. PANETTA:  Sequestration, for those of you that are not familiar with that term, is a crazy formula that was developed by some of our colleagues in the Congress that essentially said, if they didn't reach a number of savings to be achieved, and it's done with this committee, the Supercommittee that had been appointed.  The committee was to achieve, at least, I think about $1 trillion (inaudible) in savings, and if they did not achieve at least that amount, then automatically a cut across the board would take place of that amount.  And for defense, that represents a virtual double of the cuts that we would confront. 

                 As the president has pointed out and I've emphasized, we are not paying attention to sequester.  Sequester is crazy.  And therefore, you know, I'm going to urge and we strongly urge the Congress to be able to come forward and try to de-trigger that amount because, frankly, it's not only the amount, but it's the way it would be done.  The formula is built into sequester.  It would cut across the board and, as I said, it would virtually devastate our national defense.  And for that reason, we're saying no, we are not planning on sequester taking place.  If sequester happened, I'd have to throw – the strategy that I just developed, I'd have to throw that out the window.  And I think that would be dangerous for America and would be dangerous for the world. 

                 With regards to the future, obviously, we'll continue to work.  I think we've developed a very strong strategy for the future.  I think the strategy that was developed with the service chiefs – I developed it with the service chiefs, with the under secretaries of defense.  It was a unified effort to establish a strategy that would give us a defense not only now, but in the future, and make it one that would be agile and flexible for the future. 

                 We think we want to stick to that because it is important for the United States to set a strategy and a consistent strategy so that the world understands where we're going in defense not just now, but in the future. 

                 AMBASSADOR ISCHINGER:  Let us all thank our two secretaries (inaudible).