GENERAL JOHN KELLY:  Well, before I get to my 40 minutes or so of opening comments, I got to tell you, I just had the pleasure of having lunch on the West Coast with Secretary Panetta.  A couple of weeks ago, I was out on the West Coast, we met up for just a simple lunch, and he asked me about the press corps and said, if you ever see them, say hello.  So hello to all of you from Uncle Leon. (Laughter.)

 

Great, great guy.  And I'm not kidding.  He treasured or valued the relationship he had while he was here.

 

I don't have much to say on opening, just simply -- just came from the Hill.  I testified before the SASC.  And the issues that came up there revolved primarily around drugs and the flow of drugs up from -- up from Latin America.  And, of course, that's a big part of what I do.  It's one of the three things I do the most.

 

And the second thing I do the most is engagement with kind of a small "e," primarily because I have very few assets to work with.  And then the third thing -- and it's -- we can certainly talk about it, but it's -- you know, it's a no-fail mission, and that's Guantanamo, and I run that -- ultimately, I'm responsible to the president for what goes on down there.

 

So on the Hill, they talked -- we talked about drugs.  We talk about the lack of assets to get after some of the things that we work against in Latin America.  And drugs is a big part of that.  And also other players in the region, the three obvious ones -- and asked about last year, asked about this year -- China is a big player, increasingly a big player, Russia, increasing, and there are some -- some low-level Iranian activity, as well as some fairly low-level, for lack of a better term, Islamic extremism, something we watch, but not particularly -- watch hard, but not particularly concerned about.

 

So with that, I'll just kind of open it up and -- please.  Yes, ma'am?

 

Q:  General Kelly, you talked a lot about lack of assets responding to some questions from the committee, but I'm wondering if you could maybe expand a little bit and clarify what you don't have that you think you need and how specifically sequestration would affect that.

 

GEN. KELLY:  Yeah.

 

Q:  Because you talked about being unable to get at 80 percent of the drugs coming out of Colombia.  Do you have sort of a broader number, broader percentage on all of the drugs coming out of South America as a whole?

 

GEN. KELLY:  Well, as you know, the COCOMs get what the services can give us, and, of course, all of the assets that the COCOMs are provided are -- are prioritized out of this building, and it goes up, of course, through the secretary of defense, and whether I get X, Y or Z is entirely up within that process.

 

So if the -- if the services are hurting, which they are, for assets, then I'm hurting because of the five overseas geographical CINCs, six geographical CINCs, COCOMs, including NORTHCOM, I'm -- of the five overseas combatant commands, I am certainly the least priority and have been for some time, for a lot of different reasons.

 

So if the services are -- have a finite number of assets and there are other higher priority parts of the world, then those other parts of the world get it.  I'm not complaining.  I'm not criticizing.  That's just -- that's just the way it is.  However, without assets, certain things will happen.  Much larger amounts of drugs will flow up from Latin America.  We'll do less and less engagement with our friends and partners in the region.  And, by the way, most of the countries in Latin America and the Caribbean that I work with are, in fact, friends and partners.  

 

There's a few that didn't get the memo on things like, oh, I don't know, democracy and respect for women and human rights and -- and open press.  I know that's probably -- you can't believe that there's a country out there that doesn't believe in a free and open press, but there are some.  And so we don't work with them, because they don't want to work with us, and that's their -- that's their issue.  And I don't try.

 

But of the countries that are down there, most of them want us in their lives, want to partner with us, don't ask for very much in terms of money or things like that, but just a little -- a little advice here, there and everywhere.  And I can tell you, the engagements for me, they're very, very valuable.

 

But as an example, I might send four, six, I don't know, Air Force technicians, U.S. Air Force technicians to a partner country, Air Force base for a couple of weeks, and they'll maybe help them set up a maintenance management system, or I'll send a small number of, say, Army dentists and a couple doctors to Honduras, and they'll move around Honduras for two or three weeks, pull teeth, you know, inoculate people.  Veterinarians we'll send down from the -- from the military.

 

So these things happen in relatively large numbers, although I'd be lying to tell you that we haven't really dropped off in the numbers in the last year, but these are the kind of engagements that work for me.  We do send -- not combat for sure -- there's no combat there to speak of -- we do send like, say, U.S. Marines down to advise and train on some, say, jungle techniques or something, or U.S. Special Forces Command troops to go down there and do similar things, but the overwhelming number of the engagements are what I would consider to be phase zero engagements, not focused on a kinetic kind of threat, but simply on how to make them a better military.

 

And, oh, by the way, it all begins and ends with human rights.  I don't care if we send a JCET down there from Special Operations Command to work with their special operations soldiers or we send four Air Force technicians down from the United States.  They talk going in and coming out and everything in between about human rights and how serious certainly I take human rights.  And in spite of the fact I might be able to work with some countries, I won't, and this is my message to them, unless they are serious about human rights.  

 

Q:  Well, just -- can I just follow up?  I just wanted to get at the drug -- the drug issue.  You said if you had 16 ships, you'd be able to do more.  If you look at your estimate that 80 percent of the drugs get through from Colombia, what would that -- what would 16 ships do for you?  Or...

 

GEN. KELLY:  Yeah.  I'm kind of mandated by -- by the president to work within the interagency -- and, again, this is not just a DOD thing, this is FBI, DEA, State Department, Commerce, Treasury, unbelievable efforts by a lot of great people, but we've been told to reduce the amount of drugs that come up from Latin America by at least 40 percent.  And the thinking there is, if you can -- if you can take that much off the table, then you reduce their profits by so much that these very well-organized today cartels that are really international businesses, they just have no regulations other than -- and they have no point other than profit.  

 

If you can take a certain amount of the drugs off the market, then those cartels will increasingly be less effective.  The networks might break down.  A lot of individual effort may be -- maybe the -- maybe there will be spike in inter-cartel fighting or whatever. 

 

So to do that, I need -- my estimate is I need 16 vessels.  I don't need aircraft carriers, and I don't need even warships, but I need 16 vessels from which to fly a helicopter, because that's the end game.  That's a law enforcement end game, by the way.  I'm in support of law enforcement.

 

By title 10 responsibilities are to detect and monitor the flow.  We do that superbly.  I have very, very good clarity on the flow of drugs as it comes out of Latin America, Central America.  The end game part of that is a law enforcement end game, read Coast Guard or read DEA or FBI.  Now, frequently, the end game might be from a U.S. military helicopter, but on that helicopter is a law enforcement guy or gal, which makes it a law enforcement effort.  And the same thing on U.S. Navy ships.

 

I've got to mention, though, for a second, all of this starts with the Colombians and the unbelievable heroic efforts that they put into reducing the amount of coca in the cocaine trade, the amount of coca that's not harvested, the number of jungle labs that they -- they get to and destroy, the 200 or so tons of cocaine that they get before it ever leaves the -- ever leaves for the United States.  The next in that series is Panama.  Unbelievable partners in all of this.  They do great, great, great work, and then the next step, of course, is Honduras, Guatemala, El Salvador.

 

But what I need to see that is good intel, which I have.  I need ISR platforms to track these -- the movement.  Most of the movement comes by sea.  Most of the movement is in smaller boats, very fast, carrying three to five tons of cocaine.  I need ISR to see that and then to vector either a Panamanian coast guard, coastal patrol craft, a Colombian coastal patrol craft, Honduran, Guatemalan, you get the point, or even Mexican.  Even though Mexico is not in my zone, the JIATF-South, the interagency task force that works for me, looks all the way up to the -- all along the coast of Mexico. 

 

Long answer.  Sorry.

 

Q:  So what does it mean -- what fewer assets do you have now?  And what's going to be the translation in narcotics...

 

(CROSSTALK)

 

GEN. KELLY:  Yeah, in -- in order to, we think, estimates done before I took command, that 16 ships -- 16 vessels that, again, don't have to be warships, 16 vessels that can -- you know, I can put a helicopter on or to have a helicopter -- by the way, last -- there's three European partners I have to -- or two European partners and another Western Hemisphere partner, Canada, U.K., the Dutch, and the French all contribute to this.  And typically or occasionally we'll have a vessel in the Caribbean.

 

So as I said, I don't need a warship.  I need a ship, something that floats, with a helicopter.  So when -- last year, the Dutch had an oiler in the Caribbean and had a helicopter on it, did great work for us, working under our direction, not command, but direction.  We think it takes 16 of those things to accomplish the 40 percent mission.  That includes Coast Guard.  Anything that floats with a helicopter on it.

 

I have one Navy ship there now.  I'm lucky to have one Navy ship.  I have four Coast Guard cutters.  Two of them are doing what I would say is -- you know, the Coast Guard is such a multifaceted, multi-missioned organization, but two of the cutters are over in the West Indies, over towards Haiti and Dominican Republic, on drug patrol, but also doing things with migrant ops from Haiti and kind of normal Coast Guard things, if you will.

 

On the -- on the isthmus, going up where most of the drugs, cocaine, flows, to include heroin and methamphetamines, the Coast Guard, a couple of cutters, one Navy ship, U.S. Navy ship, and I've got a Canadian ship there now.  But if I had 16 ships, I could so much more.

 

So let me go back to last year's take.  Last year, we got 132 tons of cocaine on the high seas.  That was done by, on average, having three, three-and-a-half, maybe, ships on station day-to-day, different ships, not always the same ship, but three ships, 132 tons.  The year before that, we took 153 or 154 tons.  Why less this year than last year?  Less assets.  It's just -- it's almost a scientific equation.  More assets, more tonnage.

 

And the other aspect of this thing, of course, is the -- what comes out of the United States is about $85 billion in profit from the drug trade, much of it from what's imported into the country, not all, but much of it, what's imported into the country.  And the end result in our own country, which is devastating, was 40,000 people a year die from drugs in America, year after year after year.

 

The heroin epidemic all of a sudden has been discovered outside of the inner cities and outside of working-class neighborhoods, because now there's a heroin epidemic in the suburbs and in the nicer parts of our cities, and even Hollywood stars, such as they are, getting -- dying of heroin overdoses.  So all of a sudden, the country seems to have discovered that there's a heroin epidemic.

 

Heroin consumption in even the nicest neighborhoods in the United States is up 65 percent to 80 percent in the last several years.  It's massive.  Cheap, very powerful.  It's not your grandfather's heroin.  It's very, very different.  And it all comes up through Latin America.  The vast majority of heroin that comes into America today is -- the poppies are grown in Latin America.  Once again, the Colombians are getting after that, heroically.  The Guatemalans, the -- you know, where the poppies are grown, then it's actually turned into heroin overwhelmingly in Mexico and then moves up in the United States.

 

And methamphetamines used to be, you know, locally produced in these little, you know, hotel kind of labs, now produced into large quantities, high quality, if you will, in -- in Mexico, Latin America, and moved up into the United States.  It's all about the U.S. drug consumption.

 

Sir?  Sorry, I don't know what the protocol is, so...

 

Q:  Sir, going back to sort of the assets you may need in the region, has there -- has there been any thought within the command or within JIATF-South for trying to open up another forward-operating location?  I mean, you lost the one in (inaudible) several years ago.  I think there's Comalapa and Curacao, those are the only two left.  You know, with these ships, is that something that kind of goes in tandem?

 

GEN. KELLY:  It's a great question.  Right now, we fly -- the ISR airplanes, such as they are, and we fly DOD -- Navy P-3s are the backbone of that.  And when I say backbone, you've only got one vertebrae.  But the backbone flying out of El Salvador, border -- border protection, P-3s.  Once again, this is not just a DOD effort.  In fact, it's with DOD as in support of law enforcement.  But their P-3s fly out of El Salvador.  We used to fly out of Ecuador.  They told us to go home.  We're also flying aircraft out of Curacao, Dutch -- not a possession anymore, but Dutch relationship within the Dutch kingdom.  J-STARs, things like that, the bigger birds fly out of -- fly out of places like Curacao, all of that work.

 

So we're in good shape that way.  We fly out of Soto Cano in Honduras, as well, periodically, and we'll be picking that up.  I made a commitment to the Honduran president recently that we would work with them within our laws and the restrictions that I have in terms of working with some of these countries -- within our laws and within the restrictions put on me, we will re-double and even triple our efforts to try to help Honduras in this drug fight that is, you know, directly because of our drug consumption.  And that's a country that's got an existential threat right now, and that is all brought to them by -- by American drug consumption to a very, very large degree.

 

But, anyways, so the -- we're in pretty good shape on aircrafts, so we don't -- we don't need to shift too much on aircraft.  The ships, when they come down, they -- they spend most of their time at sea, of course, doing the drug mission, but periodically we'll pull into Panama, again, a super partner, pull into Cartagena, Colombia, a super partner.  So we have enough places where we can stop with the ships.

 

But at the end of the day, we don't want the ships in port.  We want them at sea.  And that's what they spend most of their time doing.  By the way, some of those ships are increasingly stopping in ports in Honduras, again, my commitment to the Honduran government to try to get serious and help him and his country get free of this -- of this drug cancer that's really hurting them.

 

Q:  So there's no plans, discussions, negotiations to move this location in Honduras into a full-fledged (OFF-MIC)

 

GEN. KELLY:  No, no.  

 

Yes, sir?

 

Q:  Yeah, General, you said you have good clarity on the flow.  Is that basically what you were talking about from the P-3s?

 

GEN. KELLY:  Yeah, the -- the human intelligence -- I've got a lot of things.  I've got, obviously, the entire U.S. intelligence community and all that that represents.  So I've got that working for me.  Now, it's not totally focused by no means in my part of the world, but we get enough -- there's enough that falls off the table that I can use.

 

As we pick up these drug traffickers on the high seas and bring them into the U.S. court system, they're very cooperative.  So that's my human intelligence.  I've got radars that are positioned actually in the United States -- and don't ask me how they work, but I've got three locations in the United States that I can see electronically just about everything that moves in the Caribbean.

 

Q:  Is that the one in Key West?

 

GEN. KELLY:  Not at Key West.  That's where the -- that's where the tactical fusion center is, JIATF-South.  I've got one in Texas, one in Virginia, and one in -- used to be Puerto Rico.  But in any event, I can see air traffic, so as -- as an aircraft, as an example, in all of the -- all of the cocaine that comes out of Latin America that's flown comes out of Venezuela, assuming there are clandestine airfields.  They take off at a certain time, fly a certain flight profile.  We know exactly who they are when they take off.  So when they come out of Venezuela, we can see them all the way to Honduras.  And when I say -- when I say see, I mean by -- by radar.  And we can tip off the Colombians or tip off the Hondurans, "Here they come."

 

The Honduran right now have a limited ability to respond to that, but they're working at it, and they do okay.  And they're trying.  And that's the point.  

 

As far as the vast majority of the drugs, it comes up in the speedboats.  We call them go-fasts.  They come out of mostly Colombia.  Some of it comes out of Ecuador.  And they just -- they're carrying three to five tons of coke, and they just make a beeline -- they try to get lost in the -- close in, you know, boats and shipping and whatnot along the littorals, and then they make it to -- and do their offload on the north coast of Honduras.

 

I can see them come -- my intel tells me when they're leaving.  And then if I have the ISR assets, I can put the ISR assets up, P-3s, and I can then follow them and then we'll vector a Navy ship, a Coast Guard cutter, a partner ship, "Here he is, this is where he is right now, get your helicopter up."  The helicopter goes, finds him, vectored in there by the ISR.  And then basically at that point, when they see the helicopter, they stop, throw their telephones over the side, and then wait to be picked up.  And that's how it works.

 

(CROSSTALK)

 

Q:  ... what intel do you have on -- on the flow out of -- out of your area to Africa and (OFF-MIC) that was a concern last year.

 

GEN. KELLY:  Yeah.  There's three cocaine -- using cocaine, because it's -- all of the heroin that's produced in -- in my part of the world feeds the American habit, and in methamphetamine.  All the cocaine produced in the world goes to -- is out of three countries.  The number-one producer is Peru.  Peru, like Colombia, heroically trying to get at this, and we work closely with them.

 

The number-two producer is Bolivia.  They don't seem to have much interest in stemming the flow, and that's their business.  The number-three producer used to be the number-one producer, is -- is Colombia.  All of the Colombian production, such as it is, comes to the -- or flows to the United States.  

 

The production out of the other two countries goes into mostly Brazil, transits through Brazil -- Brazil, by the way, has unfortunately become quite a cocaine-consuming country -- but most of it by tonnage is moving through either Brazil and Argentina and then Africa and to Europe.  

 

And to give you just kind of an idea on the cost, and if they were real good businessmen, they -- they wouldn't ship through the United States, because the profits are -- although they're great, but a kilo of cocaine, depending on where it's sold and all of that in the United States, kind of -- kind of wholesale value is about $40,000.  The same kilo, if it gets to Asia, anywhere else, almost, certain Western Europe, Asia, Australia, China, about $250,000.

 

And so there's big, big, big money in that flow out of -- out of Bolivia and Peru through Brazil onward to Latin America -- I mean, to -- to Europe and Africa and the Middle East.  We -- we have -- we've been very effective in the last couple of years knocking this flow down on the isthmus side.  Even with a few assets we have, we're very, very good, because the intelligence is so good.

 

What we've noticed now is, they're businessmen, and they're very, very good.  And these are not -- when you think cartels, think international corporations with international distribution networks.  These are not, you know, the old cocaine cowboy days of the '80s.  These guys and gals are very, very, very good.  And they make so money, their biggest problem is laundering money, not -- their biggest problem is not getting drugs into the United States.  Their biggest problem is, how do you launder $85 billion in profits?

 

I tell people frequently, when we get -- when NORTHCOM or SOUTHCOM, rather, gets -- captures money, we just weigh it.  We don't even count it, turn it over to the government agency, and then they'll count it.  And we only get a fraction.

 

But what we've seen now is an increase in the flow up the West Indies onward to one of two locations, either to Dominican Republic, great ally, by the way, in everything that we do, and then they ship it, they -- the cartels -- then ship it onward to Europe, or if -- what's priceless to them, if it can get into Puerto Rico, and Puerto Rico is -- is having a real problem, the increased amount of cocaine -- Puerto Rico is not in my part of the world, if you will.  It's in NORTHCOM.  But obviously, I care about it.  If they can get into Puerto Rico, it's in the states.  Once it's in Puerto Rico, there's no customs, they can ship it by -- they can put it in post office.  They can send it by mail or they can ship it anywhere they want.  There's no customs, so there's -- once they're in -- once it's in Puerto Rico.

 

I know that the -- NORTHCOM is very aware of this.  I know that the federal authorities are very aware of this.  But we've seen a real increase in the flow in that direction, towards Dominican Republic and -- and Puerto Rico, not nearly as much as still is going up the isthmus, the Central American isthmus, but you can see the way they -- they adjust to -- where we're successful, they'll adjust and find -- find the gaps.  And now we're looking harder and harder over in that part of the world, putting assets -- again, once again, I can see it, figuratively speaking.  I can see the flow.  I just don't have end game assets, and end game assets means U.S. military/law enforcement/the whole interagency team.

 

Q:  What's the worst-case scenario (OFF-MIC) sequestration for this (OFF-MIC) let's say you don't get the 16 ships, you get -- what's the...

 

GEN. KELLY:  Well, I could get zero.  And what...

 

Q:  What does it come down to per ship, in terms of narcotics (OFF-MIC)

 

GEN. KELLY:  We figure 20 tons or so on average of -- from one ship for one year.  And all of this, by the way, I think I spend 1.5 percent of the entire U.S. government's counternarcotics budget.  And I get the overwhelming tonnage.  I, the interagency that I work with in the Caribbean, Latin America, gets last year 132 tons.  The entire take from the U.S. border and all the law enforcement efforts in the United States, spending billions of dollars, gets a fraction of that much.

 

And where we -- where we operate on the high seas, it's virtually zero violence.  Zero profit, obviously, coming out for the cartels.  Zero impact on Honduras and Guatemala, in Belize and in Mexico, and super efficient.

 

In the back here?

 

WARREN:  Hey, sir, we're running a little long on time, so this will have to be your last question.

 

GEN. KELLY:  Okay, sure.

 

Q:  Could you give a -- sorry (OFF-MIC) Air Force Magazine.  Could you give a situation report update on what your assessment of the situation in Venezuela is?  Are there any contacts, senior government officials?  What are our allies saying to you about the stability in the country?

 

GEN. KELLY:  Venezuela, that's a great question.  I mean, I -- as a SOUTHCOM commander, we have zero mil-to-mil -- military-to-military relations.  That's because of what they want.  Very few military officers in Venezuela of any rank have any recollection of working with the U.S. military.  Those that do, frankly, I think, are -- well, they're probably retired by now, but certainly have great memories of working with us.

 

So we don't have any mil-to-mil with them.  You know, I'm, as the SOUTHCOM commander, looking at it, watching it.  We're in contact with the Department of State.  We're in contact with the embassy.  I just talked to the embassy charges -- we don't have an ambassador there -- just the other night here in Washington, and a couple of weeks -- or a week before that, just gave him a call, hey, we're looking -- how things going?  How are you feeling?  What's your temperature?

 

So that's kind of where we are.  We're just -- you know, we're just watching and waiting and -- you know, just hoping that the Venezuelan people work it out.  I mean, they did elect the current government democratically, so it's up to them, I think, to sort this thing out.  Obviously, it's a bad news story.  The citizens there are -- are increasingly, I think, desperate in terms of the economy and in terms of just things that they need, staples of life. 

 

The real shame of it is, of course, they have the second-largest oil reserves in the world.  If it -- if it continues to degrade, I'm -- here's where I am concerned.  There are many, many countries in Latin America that take virtually free fuel, Petrocaribe, that Chavez and now Maduro provides, Venezuela, Colombia, Jamaica -- not Colombia, Venezuela, Cuba, Haiti, places like that.  These small, small countries rely on -- on the oil more or less free.  Their economies would, I think, collapse if they didn't get the oil.

 

So if we see a continued degradation -- you know, right now, I think the inflation rate is 56 percent.  That is impossible to sustain that in any economy.  So if he starts to -- if they make a decision to stop the flow of relatively or all but free oil to these smaller economies, and those economies fail, then that -- that would have certainly a migration impact, and you know where they're coming, and -- and particularly Cuba.  I mean, Cuba is very dependent on the Petrocaribe, as is Nicaragua, and if that was turned off, I think there would be some real repercussions economically.  But, again, I'm -- I'm a military guy and -- just a simple military guy trying to do a job.  I don't understand the economy -- economic thing very well.

 

But we're watching.  And I just wish the Venezuelan people well.  I don't know if that answers your question, but...

 

Q:  So there are no serious threats to the U.S. interests or citizens in the country as of yet?

 

GEN. KELLY:  In -- in their...

 

Q:  In Venezuela.

 

GEN. KELLY:  There's a lot of -- yeah, there's a lot of U.S. citizens there.  Most of them are kind of family members and things like that.  Of course, the real Venezuelan community up actually in Miami, where I live, and they're very, very active and supportive.  But we'll just have to see where this thing goes.

 

But the embassy is relatively small right now.  There's not many people there.  They've really turned their back on any real interaction with the United States.  I think we're down to 100 or so official embassy people there.  So, you know, they're -- and they seem to be fairly content with watching it on TV and hoping for the best for the Venezuelan people.

 

Yeah.  Okay, thanks a lot.  I really enjoyed it, as always.  Let me shake a few hands here.  Good to see you.