so my question is, when were you notified there was a threat to the capitol? >> i was notified, i believe, essentially immediately as it happened. >> as what happened? >> as he landed. >> to me, it just seems like it would be all hands on deck when you get an e-mail like this and you have the website to go to, that bells should be ringing, sirens should be blaring, within your chain of command as to, this is pretty damn important. excuse my language. but it is. and so what i worry about is that whoever got this information just said, ah, you know, we get this stuff all the time. well, this is fairly specific. would you not agree? >> fairly specific. and obviously unique in that regard. obviously didn't say -- the time that it was happening but one could reason that -- >> you read it, fairly obvious in the report, it gives his phone number so you can contact me, wasn't like he was just, you know, leaving something. because when was -- let me ask you this. the sergeant in arms. when was he notified of this e-mail? >> we made notifications to the sergeant in arms immediately. i don't recall. i can go back and check. when he was -- when they were appraised of the e-mail and the phone call. because we gave them a timeline of what happened. within -- very quickly after the event i gave them a timeline of all the things that happened -- >> chief, did he get a copy of this e-mail? >> did the sergeant at arms get a copy? i know i gave them a timeline. i don't know that the e-mail itself was attached. but we gave them a synopsis report very close to the event -- >> we had the sergeant at arms in here and asked him questions about this. obviously we're concerned and we don't want to get into any of the classified portion of it. >> right. >> that i would hope we could do at a later date. i sat on armed services so we have a lot of classified sessions afterwards. but my question -- the sergeant at arms was very -- i don't think he was vague on purpose, but based upon what you're saying, is he didn't relate any of this like it's in this e-mail to us. and so i'm concerned about that. and that's why, if you didn't notice him with this e-mail, i think that's problematic, at least for the sergeant at arms. and i can't speak for him. so i yield back. i see i'm out of time. thank you. >> i thank the gentleman. we can have a second round of questions. i'd like to now recognize mr. davis. >> thank you, madam chairman. before i go into the questions i had, i just want to piggy back on something that my colleague mr. nugent was talking about with this e-mail. you know, we're concerned. that e-mail was very, very specific. how many, on average, e-mails like that do you get a day? >> about gyrocopters? >> about threats. >> not many gyrocopter e-mails -- >> you don't get specific e-mails like that -- >> we get a lot of letters, calls, various types of threats or matters of direction is what we call them. if they're not -- they all fall under the threat category. we get probably a couple thousand of those a year. >> a year? >> from all, you know -- of all types, shapes and sizes. >> but chief, you don't get a lot of specific ones like doug hughes is flying a gyrocopter today on the capitol lawn, right? >> we don't get many about gyrocopters landing on the capitol lawn, no, sir. >> that's the first time i've seen that e-mail in our packets and it is specific enough to i think warrant issues. that went to the public information officer? is that a generic account? does that go to somebody that monitors that on a regular basis? >> no, it went to our lieutenant who's in charge of that office, and then as i mentioned we got a call -- >> is that lieutenant -- did that lieutenant immediately turn that information around? >> she sent it i think within five or six or seven minutes to our investigators. >> but still, you mention in your testimony, you mention here today in the questions, that you didn't learn about this until it was happening. >> yes. >> we did miss a little bit of the timeline. has that pio been notified that you may want to act a little more quickly on such specific information? >> we've discussed the matter, yes. >> is that pio going to be disciplined? >> she won't be disciplined but we have discussed the matter. >> it gets to my main point. look, we understand -- i will bet you common sense will prevail and no officer will ever leave a firearm in a toilet-covered dispenser again in the capitol complex. we will likely not see any gyrocopters try and land on the lawn. because we're reactive. and i know -- hopefully you didn't have to put a specific provision in your training manual about not leaving firearms in toilet cover dispensers. but that's a reaction. what is the capitol police doing to be more proactive? what can we do to simplify the contact process so that all of us on capitol hill understand what's actually happening? what can we do, what can you do as capitol police, to simplify the notification process when you get a specific e-mail like my colleague mr. nugent just read to the committee? how do we make things more simple so that we don't just have you come in to react to a certain situation, or in this case, multiple situations? >> the notification process was something that needed to be fixed and resolved. i guess never letting a good crisis go to waste. the next day, the deputy chief and i met and we directed that immediate notifications go out to you about incidents up here. there was a fairly antiquated bureaucratic, overly complicated notification process. we've bypassed that and directed that notifications go out and i'll apologize in advance if you get too many notifications now. but i would rather you be notified than not be notified and that your complaint is that you got too much information than not. so we immediately fixed that literally the next day in terms of that notification process. >> so you fixed those certain situations to react to the gyrocopter incidents and leaving a firearm at certain facilities incidents. are there any other issues you're looking at overall within the capitol police to be more proactive to maybe look at simplifying your protocols and your training methods to ensure that we don't even have these situations again? >> well, i can tell you from 40 years of doing this, i hate to say this, there's probably going to be some other incident of somebody doing something. but what we have done is i mentioned we've clarified the training. we've added more training to make sure we're discussing it every time officers qualify, which is twice a year. then we've added online training. as it relates to gyrocopters and uavs and those kinds of things we have new training we just put online. i think we're one of the few agencies that did that. as i mentioned we have other agencies mirroring that training to make them aware of those kinds of things. that's an awareness piece of what to do when you see a uav or drone or those kinds of things. that's kind of a fairly unique episode. >> well, chief, it looks like my time's expired. let me end by saying this. i hope you understand that all of us around this committee, we want to work with you. i'm brand new to the committee. unlike my colleagues who mentioned earlier that they haven't had a chance to really work with you. but we're all here to be an asset to what you're trying to do. the men and women who protect this capitol complex and the tourists who come and visit on a regular basis do a great job. we want to help you help them and help you succeed in your job. so use us to be helpful. use us to help create more proactive procedures and policies. and i look forward to working with you. thank you. >> yes, sir, thank you. >> thank the gentleman. the chair now recognizes mr. walker. >> thank you, madam chairman. chief dine. i believe this is the third hearing i've been part of on the house oversight and homeland security, maybe we've even had a classified hearing or two. i do want to zero in and basically two questions today. and i want to start with going back to your notes on page 5. it says, february 2014, the department fully implemented its new digital encrypted radio system without issues or communications service interruptions. it also says, this new radio system provides coverage to the capitol complex and is now available in areas that previously did not receive radio communications. i'm on page 5. here's the important part. it says, it also has allowed for greater interoperability. to date the department has ability to conduct interoperative communication radio bridges with over a dozen other agencies. this allows both parties to communicate directly on each other's radio systems in order to broadcast critical information in a timely manner. according to my timeline it looks to be about 23, 24 months. can you tell me, was that radio system in play and were these agencies interacting as far as when they first found out over those 24 minutes? >> we did interact, i believe. but we did not use the radio system for this particular incident. it is interoperable. we have interoperability with the d.c. police, u.s. park police, secret service, fbi, s.w.a.t. team, a number of other agencies. >> can you tell me, did you use telephone? what -- this looks like it's a state-of-the-art, realtime -- >> it was. as i think we discussed in some of the other hearings, if i recall correctly, an officer from park police saw the gyrocopter and i believe a secret service officer may have. they made their notifications. they also made notifications to the people that oversee the nrrcc -- >> sure. right. >> we actually were not notified till we saw -- >> with my colleague, mr. davis was just talking about it. if we have this kind of technology, i don't understand when there's not kind of an all points bulletin going on throughout all these agencies. i'm assuming these are two-way radios. >> yes, sir. >> all right. let me move to my next question here. you also talked about -- i guess you've been here about two and a half years. from what i've read and heard you're doing a fine job. there is a communication concern. and you said your goal was to provide i believe "better communication." i admire and i appreciate that goal. but can you give me some of the action steps that you might say, this is how we can implement better communication from our department to yours, and after you finish that response, i'll yield back to the chairwoman, thank you. >> first of all, as i mentioned we're going to do a better job communicating with you of notifications. i am personally going to do a better job meeting with and communicating with you. and i look forward to that. internally, though, it is really important that we communicate with our whole department. and i was talking to a young officer a month or so ago one night in the evening, around kind of all hours of the day and night. and the officer said something that was pretty brilliant. because things get -- go out in the media, there's discussion. and he said to me, he said, chief, sometimes then all we know is what we read, because we don't hear what the whole other side is or what the department's side is. and, you know, sometimes you learn the best things from the officers on the ground. and i've never forgotten that, having been a police officer for now -- in a couple of weeks it will be 40 years. so we need to get our message out to our people when there's a story to tell about what happened and what happened right and what happened wrong and what the actual story is. so we are going to be putting out more messages on that regard. and having more interactions with our people at all levels. >> thank you, chief. madam speaker, yield back. >> i thank the gentleman. chief, i have a couple other questions i think as well before we conclude here. one is, going back to my homeland security, mr. walker and i both sit on that committee also. when you go to the southern border you're looking at rheostats there, eye in the sky, very sophisticated technology. they're utilizing it. in many cases it's already surplus stuff from the department of defense. things that -- equipment that has had -- been extremely effective in theater, whether you're trying to, say, secure a border between afghanistan and pakistan or the rio grande or what have you. it's the eye in the sky. and so just the ability to be looking at something like that, i think we can say this publicly, when you're looking at this gyrocopter it is difficult for radar to pick up various things, right? technology is exploding every day, whether it is uavs, whether it is drones. i mean, they're going to be using drones to deliver your taco here pretty soon. this is what's coming. how can you be able to assess use ing technology that is available as quickly as you can? this kind of equipment is very expensive as well, though again, i mean that's the expense of it is something you have to take into consideration but you need to tell us or ask us, because we're the ones that have to get money, make the priorities of what we're doing and what we're spending money on to keep the capitol and the campus here secure, but, really much of this equipment is already, i think, unless the cbp has got most of the good stuff but it is something that you may want to take a look at. it is incredibly effective. i've been in the stations the ground stations. it is unbelievable how clearly you can see from high distances everything that is going on and the ability then to immediately using communications to tell the -- again the boots on the ground, look this is happening. you don't just have to patrol looking for something, this is happening here, now, go there. it's unbelievable technology that, again, i'm a layman, but it seems to me that's something you can utilize here. >> yes, ma'am, we are looking at that. we had a briefing this morning, and i look forward to briefing you in a confidential setting about some of the things we're looking at, and you already know what they do for you, but there's a lot of technology out there that we're working on at every level with pretty much every agency in the country. we're part of that effort to make sure that we are in on what's needed. the gap, frankly, where the gap needs to be closed is once you -- once the vehicle is identified, then what do you do about it? that's essentially what happened here. even if we knew it was coming, then do you determine, you know, what's the action taken once you've identified it? clearly, earlier we know about it, the better we can make plans for evacuations, how we make the systems now, and whether any use of force by us or dod plays a main role is appropriate. you're right. early identification is critical. >> and i don't think i'm speaking out of turn here, obviously, the bad guys know we have the equipment. it's not like it's a secret, right? we utilize it. the other question i would ask you, because this is something that's been talked about quite a bit, i said in my opening statement that obviously we all recognize the challenges that are being faced by police departments across the country. because of a number of reasons, various incidents that happened recently. what's your thought about body cameras? there's been a lot of talk about whether or not it's a good thing, whether it's an expenditure of funds that is worthwhile or it's not to help the police. does it not? does it help the -- does it help all the way around to be able to demonstrate exactly what had happened there? i think the capitol police don't use them now and i don't know if there's been some thought given to whether or not you're interested in pursuing that. what's your thought about the body cameras? i know there's talk about that. >> there is a lot of talk about it. i want the committee to know we are oppressed by that. i'm communicating with chiefs around the country regularly, conferences, forum, police executive research firm located here in washington, d.c., they take a leadership role in that. they put out, basically, i think one of the reports on the use of body cameras an how those are implemented, working with chiefs who have implemented them. i think they're a good tool. i would opine that, like any piece of technology, they are not a panacea. what's concerning a little is we think future to some next piece of technology, are we going to get to the point where a police officer without a body camera, police officer's testimony is worthless? that's concerning to me, frankly. having done this for so long, but do i think it's a potentially useful tool? yes. we are monitoring that very closely to see if it's something that would be appropriately utilized here. there is a lot of privacy questions about what happens to the information, how it is protected, and those kinds of things that while there's best practices opinions about that, have not been fully determined. that's a debate going on here in washington, d.c. what happens to the videos. do they end up on youtube? those kinds of things, but we are closely monitoring. i've read the report, so i'm up to date on, i think, you know, where things are relating to the technology. >> okay. i would just say in regards to that, if you come to the conclusion or recommendation that that's something you want to pursue, again you can make a proposal to us. and i mean we want to be your advocate, if we can are looking for. the last question, and i'm not sure that if you don't want to answer the question, you don't have to. but i do want to -- i mentioned in my opening statement, i personally have some question, consternation about the current wiring diagram for your management structure. i don't care whether it's you or who the next person will be. just because the way the capital police board is -- the construct of it, as i said, it's been in existence for a very long time, and i think it probably has worked well. on the other hand, the largest room is always room for improvement, and it is 2015 so we have to think about whether or not having the sergeant of arms in the senate, the house, and architect of the capital deciding who is going -- i mean, hiring, firing, disciplining, whatever. you have three bosses. you know, i have 750,000 bosses. you have three. i mean, that's got to be a very difficult thing. i'm just not sure it receivers serves us as well as it could. i'm not sure if i'm really asking you to ask your bosses what you think about that structure, but i certainly throw it out to the committee members as well to digest it all a bit. and i think we may want to think about if that's adequate or whether or not we could improve that. if you'd like to comment, you can. if you don't want to, you don't have to. >> well, i would just say that i think that the board, the board wears several hats, and i work with them in both of those arenas. they wear their hats in individual as sergeant of arms or house or senate or architect. we work with them, their staffs, individually, each and every day in terms of all the issues we deal with individually for their entity. and while i'm at it, we also work closely with you and your staffs and while -- we appreciate the oversight that you and your staffs and all the committees provide to us, and i rely on the outstanding people i have that have done that, but that's no excuse for me personally not meeting with you, which i look forward to doing. we have interaction with the staff, and often, they are buffers. as a police -- then they wear a police board hat where extensively they come together as cohesive entity to give guidance and direction and oversight, so we work with them, i guess, on several levels, and i'll leave it at that. >> very well. any other questions? mr. ranking member? >> yeah, just quickly, madam chairman. thank you for having the hearing because i get the opportunity to meet the chief of police of capitol hill. i do need to get to know you better for a lot of reasons. i work here. i'm worried for the people who visit here, but you come to my city in 2016. coming to philadelphia for a convention there, and i want to get to know you better. there's logistics there, field philadelphia is a unique place. everybody's in charge, everybody's smarter than everybody else, so i want to fill you in on that and make sure you don't step on land mines while you're there. i do need to get to know you better, and you need to get to know me and the committee better. thank you for having this hearing and i yield back the balance of my time. >> thank you very much. i'm certain you'll have the chief bring in a patch to the cheese burger -- cheese -- >> well, i feel the same. this person is also the biggest around and also a major law enforcement supporter. closes down the shop three or four times a year for two days. he keeps it open, but all the proceeds goes to the police officers, up to a couple million dollars. >> wow. >> it was worth it. i was proud to bring the chief of police down there, the patch on the wall, put it in the middle of the many, many other patches. come down, and i'll fatten you up with a cheese steak. >> i appreciate that. >> gentleman from florida. >> i have a comment about philadelphia in passing, been there for a lot of navy-army games, there's a couple places with great cheese steak, but i know the one you're talking about. chief, i would just say that, you know, in reading your response and all that, i think, if you follow through with those things, that'll be a good thing, but you hit on something, though, that's near and dear to my heart, you talked to one of your guys on the street. i found, you know, and i'm sure you did too, management by walking around, you do -- it's nothing against the command staff, but i used to have my command staff say, boss, how do you know that? and it's amazing things that you'll hear from those folks that actually do the job. command staff is great, but, you know, they have their reasons to do whatever to insulate you and i think it's real important that if you're not having town hall meetings with your folks, you ought to. it's a great opportunity. the unions, you know, i had the union for my sworn patrol officers and below sergeant, and they were actually my best ally in dealing with issues with benefits and salaries. i would just say that's something you can really, really encourage. so, with that, i yield back. >> thank you, gentleman. miss lofgren. >> this is helpful and hopeful to have a follow-up meeting soon for the other issues to discuss confidentially and would like to raise in a less public setting because of security reasons. i would like to, at that time, to discuss with the chief efforts to provide security outside of the capitol, in our district offices, and also what -- how we're using security to sort through the incoming. because there is a lot of -- if you get, you know, a thousand e-mails a day, there's a way to mine that using technology to sort through what's likely to be a problem and what isn't. and i don't know if that's done at this point, but that's something i want to explore further. with that, i'll yield back. >> i thank the gentle lady and the committee members. pardon me? second that? very good. i thank all the committee members, obviously, chief, we had excellent attendance here with an engaged group of members with questions and concerns, and everyone asked them very well, and your testimony was good, and your answers as well, although, i think some of us are still scratching our head a little bit about some of the things, but i will say if there's a take away from the hearing that you can see very clearly, the members of congress just have the utmost respect for the united states capitol police, and the jobs that -- you're here representing your force of almost 2,000 folks here. some of your staff and your folks are here today, and we tell you that in all sincerity. we thank you each and every day. there are so many incidents as i mentioned in the opening statement that we never hear about. you never hear about these things, but they are just handled. they are handled. we are very, very appreciative of the willingness and everybody comes to work willingly each and every day to protect this campus, and as i said, most importantly, all the americans here, and we do, as a committee, stand ready to continue to work shoulder to shoulder with you and your entire force on our common goal, just keeping ourselves secure and keeping this campus secure and protecting democracy and freedom and liberty, all of those things. i thank you very much, and without objection, i will also mention that all members will have five legislative days to submit to the chair additional written questions for the witness, which we'll forward and ask him to respond promptly as he could so that that answer is made part of the record as well. without objection, the hearing is adjourned, thank you. thank you. later today, an event looking at the role women play in peace building and development in africa. the ambassadors to the u.s. from rwanda and mozambique will take part. we'll have live coverage at 3:00 p.m. eastern here on c-span3. on april 9th, 1865 confederate general robert e. lee met ulysses s. grandparent at appomattox courthouse and surrendered his army. other confederate armies were still active in the field, lee's surrender effectively ended the civil war. tonight on c-span3, beginning at 8:00 p.m. eastern the events that marked the 150th anniversary of of the event held last month in appomattox. south korea ambassador to the u.s. ahn ho-young talked about trade with the u.s. last week at an event put together by the korea economic institute. this is about 50 minutes. good afternoon, i'm the president and ceo of career economic institute of america. welcome you this afternoon for what should be a very interesting exchange on issues involving the future of free trade in east asia, from china to tpp with a question mark meaning going beyond even tpp. this is going to be an interesting forum, and we welcome you here this afternoon it's my opportunity to introduce to you the ambassador and then dr. lee from the korea institute for international economic policy. when they finish, we'll need hopefully 10 minutes for questions. and then troy will be bringing up the first panel. my opportunity to meet the ambassador goes back to about a year before he became the ambassador. i was in seoul in i believe it was in june of 2012 i had a very interesting conversation, little did i realize that he would become the u.s. ambassador to korea. little did he realize he would become the korean ambassador to the united states. and when he found out, he was so excited because i spent a good hour with him and learned a lot about the tremendous background the deep background that he has in international trade. he will be our first speaker. he'll be followed by dr. lee. dr. lee is the president of the korea institute for economic policy. long, long background in international trade. he's also korea's sherpa to the g-20. he wears many hats, tremendous background, in trade and international diplomacy. ambassador lee, the podium is yours. [ applause ] >> thank you so much. can you hear me? it's such a warm day, and i should congratulate you and thank you for bringing the heat and bringing the humidity in coming to this get together thank you so much. there are so many people i should be thanking. donald manzullo for organizing this very timely meeting. and i should be thanking dr. il huong for coming from korea to here today. i have to tell you, and you will agree with me. thank you so much. having said that. this is something we were chatting just before coming in, with some of the panelists. the timing of this seminar. i've been ambassador in this town for about two years now. and then the issue of trade and issue of trade policy has been never higher interest in issue of trade and issue of trade policy has never been never higher in this town for the past two years. now we all understand what is happening in congress. we hear all the things about white house. how hard white house is deploying all the resources it has in order to have it happen. and then all this economics and all the -- they are continuing to educate us with the wonderful board of international trade. so as i observe all of these developments and listen to all those discussions, then i just ask myself this question, which is when i'm korean ambassador in washington, d.c., and between korea and united states, of course we have something called chorus. chorus fta. korea chorus fta. does chorus can make a contribution to the ongoing deliberations to the ongoing discussions here in this town, what is your answer? my answer is yes. resounding yes. the reason i say that, is because it's very simple. it's already three years that korea u.s. fta entered into force. and during those three years it's been working very, very, very well. i said very, very, very, right? three times. why? because i try to look at trading goods. trading goods, in korea and the united states, it is increasing very, very impressively. for example, when it comes to pharmaceuticals, increased by more than 100%. when it comes to automobiles. here i should be very careful. why? because there's james coming from ford. so i should be very careful. but for the past three years the expert of automobiles from the united states to korea, it increased by 140%. and then if you look at some of the agriculture products the other day, i was coming to visit somewhere in california on agriculture town, and i was meeting with the members of the chamber of commerce. and then there was an expert on orange and he said ambassador, mr. ambassador, i'm so happy because my orange being exported to korea, it increased by 50% last year. and then there was another grower, and said my export to korea it increased by 70%. wherever i go in this country, then i hear all those wonderful things, and then as i told you, my first very that goes for trading goods, and it is increasing very, very impressively. last year u.s. export to korea, it increased by 9%. what is happening? korea, in fact is the sixth largest trading partner for the united states. we caught up after -- we used to be seventh largest. and we caught up with one country and we became the sixth largest trading partner for the united states. do you know which country used to be the sixth largest? just ahead of korea? it used to be uk. so we become the second largest trading partner for korea. second very goes to trade and services. and when it comes to trade and services i don't have to remind you that you in the united states are the most competitive provider of service and trade. you wouldn't be surprised but there is a trade surplus in favor of the united states by $10 billion. and then it is increasing very impressively again. so that is my second very. my third very that goes to investment. investment from korea into the united states, it used to be far smaller than investment from united states to korea. but they change it. since some time like 2005-2006. so last year, korean export to -- korean investment in the united states, it was $3 billion larger than u.s. investment in korea. so all these things are happening. and to a large extent i think it is because of korea-u.s. fta. which entered into three years ago. so as korean ambassador here in washington, d.c. i'm very encouraged by all these developments but at the same time more importantly i hope that korea-u.s. fta could in fact serve as a best-case scenario in the ongoing deliberations and discussions in this town about trade and trade policy. and what we are doing today, thanks to the arrangement by honorable manzullo and my colleagues at kei, and the top-notch panelists here in washington, d.c., i think it will be a good occasion where we can just spread the words about how well korea-u.s. fta is working and will continue to work in the days to come. thank you so much. [ applause ] >> okay. i've prepared a presentation because being an economist i need to talk about numbers and it's best to show charts rather than just talk. the issue i'm going to cover all related to trade but there are a couple of other things i would like to touch base on. as i was traveling around i noticed there is a misperception of what is going on in korea. so i've prepared some issues that i'd like to clarify for the sake of communication between korean and united states, relating to external issues that korea is facing at the moment which are not easy to address. so let's -- let me talk about the rising surplus which many people are talking about including people in the united states. as you can see, the surplus largely attributed to the growing trade surplus in korea. so the net services are still negative but not large relative to the overall trade growth. we did a structure using the arrow of decomposition trying to figure out what is contributing to the growing current account surplus. i'm not going to bother you with the details but the bottom of this, essentially, there are key factors like the slower world trade, terms of trade, effect exchange rate. this is domestic demand, dd and other unidentified issues. but in the last couple of years we found in terms of trade and domestic demand to be the major contributor to the growing account surplus in korea. so here i'm showing you the same chart, but just cut for three years for clarification. and here we are missing actually the other component because the sharp drop in oil prices also contributing to growing account surplus. but domestic demand has contributed significantly. the exchange rate in terms of contribution has been very small except for one quarter and another quarter earlier on which i will come back to later. we asked why domestic demand in korea was slowing. and the answer is that we have poor growth in consumption, particularly private consumption. now private consumption has now falling below 50% on top of that you have the government consumption which is about 15% and of course investment which accounts for about 30% which relative to our history is not high. and it's not actually holding up well. given the sluggish growth in consumption and investment that is 95% of domestic demand and that is slowing and not growing very rapidly. i show you the nominal growth in consumption versus the inflation rate. and the consumption has been almost flat for the last ten years. this is a fact that not many people outside of korea knows. oops. you know, don't be discouraged about this chart. i'm not going to explain all this. the point i tried to make here is the macro approach that we used to use to assess the external balance. and the point i'm trying to make here is that the situation is difficult to solve through macroeconomic policy situation. neither the macroeconomic policy, exchange interest rates, are actually having a notable impact on domestic demand and the fiscal policy has only a very short term impact and reverts back to very slow growth. i did a decomposition and looked at the impulse response function and we found that after the crisis, meaning the 2008 global financial crisis, you can see a 1% standard deviation of korea's short term interest rate has hardly any impact on the domestic demand. this can be explained in many different ways but i have just prepared a couple. first one is on consumption. it seems that interest rate is not impacting consumption much because it seems to affect private sector's balance sheets, interest rate affects private sector balance sheet on the to the extent that the overall growth in consumption is not picking up even though we have a large, notable output gap and inflation is very on a declining trend. and recent moves on the interest rate has not really had any impact. and on investment, as you know, if the policy rate goes down, which is very short term, the maturity structure on the long term is influenced term premium. but long term interest rate which is key for investment pick up is not affected by korea's short term policy rate but u.s. long term rates. this is the problem that we face in korea. so investment follows u.s. monetary policy rather than korea monetary policy. this is shown here clearly. the two things aligning. this one is korea's long term interest rate. this is u.s. long term interest rate measured at ten-year t-bond and the correlation has gone up to 80.8. whereas before it was about half. and even the country risk premium seems to be collapsing. this is just a general trend in tandem with the global mispricing of risk, generally. short term correlation with the point that i mentioned, the short term interest rate in korea, three-month cd which has decent transmission working from the policy rate and the ten-year korea interest rate correlation is almost zero. there is no pass through on investment. then what about the exchange rate? we look at the exchange rate again. exchange rate has only very minor impact. but if you look at this at the 90% confidence interval, we have to reject it as not a hypothesis which means that exchange rate does not have an impact on the current account surplus. but then that said if we look at by region it's different depending on who our trading partners is. in the united states where most of the trade is on the final product goods it does have some impact at the beginning and dies down very quickly. whereas in japan we have a different type of relations with japan. we have large deficit with japan because we import intermediate goods and capital goods with japan but to the united states we export most of the final goods. there the dynamics is different because the initial impact on the exchange for depreciation is a drop in the trade deficit because we import a lot of stuff. as that filters through the production then it has slight positive impact. but again at 90% confidence interval we have to reject both of this tests. another reason the exchange rate doesn't have much impact on the current account surplus is because here you can see. this is korea, has the largest component in intermediate products import and exports as part of the global value chain. this component essentially is a component that we -- i forgot which one is which. here, used in third country exports. these are the intermediate products that we export and the third countries who import them use them as import for exports. and this is import used in exports meaning our aggregate exports we use this much intermediate products that is produced outside of korea and it's largest. if you have this mix of intermediate goods coming in and out, korea being the most fully integrated into the global value chain then the exchange rate has obviously very little meaning and impact. then we looked at what is affecting the exchange rate in korea. we did some analysis with a log difference in key variables, reserves for one and other control variables and found that reserve is significant and not terms of trade but all price seems to be very significant in terms of impacting the exchange rate in korea for obvious reason and with the right science. so what that means is that -- if the reserve goes up, for whatever reason, obviously because intervention plus other stuff, then the exchange rate, you know, appreciates less. if oil price goes up, the exchange rate depreciates. that's the relationship. but then here again, we divided the relationships into two periods. one is be pre-crisis, and the post-crisis. and the gaps between this line and the shaded line are the extent to which reserve accumulation has affected the exchange rate determination. if you see the large gaps here, this means the exchange rate could have appreciated by this amount had intervention not taken place. so this period overall you can see that the intervention or the accumulation of reserve has prevented the exchange rate to appreciate relative to what the market would have determined. but on the other hand if you look at the post-crisis period we don't have that space any more. so already for the last five years or so, the exchange rate factor has been market determined because the gaps except for let's say one or two occasions it's essentially market-determined exchange rate. and this illustrate in a graphical way the point i was just making. in the last three years i looked into the periods through the arrow of decomposition which i showed at the beginning which had an impact on the current account surplus and i identified two periods. and that's here, this period, and this period. and during this period where the economic surplus surged no other movements in the capital accounts. you can see the reserve accumulation was flat or declined slightly but the exchange rate depreciated because the u.s. dollar in nominal effective terms depreciated which essentially means because of the capital account movements the u.s. dollar depreciated and the korean yuan also depreciated at the same time influencing the current account surplus. these are sort of some underlying factors or analysis behind the growing account surplus and the bottom line is we don't know what to do about this. at least from the macroeconomic policy perspective. so if any of you have an answer, please let me know. then there are a few other related global economic issues that korea is facing at the moment partly related to trade and partly not. and the first point is the huge global liquidity stock and this is particularly an issue for korea. in particular, if you look not only this, this is the bank balance sheet which is much easier to control and to monitor. we have to throw in growing non-bank to non-bank cross-border liabilities which continues to grow. this is much more difficult to monitor. in addition to this we have now increasing financial products that are linked through options with financial price developments in advanced economies. so, for example, we have notes in korea, products that are linked to the u.s. stock market for example and you know it's a general view that the u.s. stock market is overvalued. if normalization leads to sort of a correction in the stock market in the united states without having any notable cross-border liabilities in a large part -- not large but some part of the korean financial market will be affected. but even abstracting from that you can see the growing non-bank to non-bank transactions are still continuing to grow now. why is this a problem? this is a problem because korea is one of the six countries that's part of advanced economies, is identified by the financial openness index as having an open capital account. but doesn't have a convertible currency. so that's a problem because being part of the oecd means it's relatively large. it's financial market is open but doesn't have a capital -- currency convertibility. in other words, the yuan is not internationalized at all. so we have to rely 100% on reserves and the exchange rates of course. and given the magnitude of the amount of capital flows or the stock changes that i've just shown you, once they -- a shift in sentiment, you essentially had it. even during the global financial crisis, as you know, the imf, if i remember correctly we were saying that the korea reserves was too high relative to its fundamentals. and it found -- we found out painfully for the second time in the last 15 years or so that it was not adequate enough and we had to resort to the fed for assistance. and here, it shows part of the story why we have this global liquidity problem. this is a chart prepared by eis which i copied and pasted. you can see the economy balance sheets growing. this was 2.5 in 2000. it's now 10.5 or almost 11. $8.5 trillion increase in central bank balance sheets. in emerging economy balance sheet increased by 7.5 trillion. why is this relevant? why is this comparison relevant? because for a country with a currency that is convertible, central bank balance sheet is equivalent to a central bank balance sheet in emerging economies that do not have convertible currency through the fx market. if you have a convertible currency and your economy is big you can expand liquidity without any concern you might face an fx restraint. if you don't the scope of your expansion is limited to how much reserves you hold and therefore what actually has happened is that as countries with convertible currencies increased the central bank balance sheets emerge economy central bank balance sheet also increased the a lesser extent but with similar sort of intent. here you can see the effects of reserve increased by 6 trillion. so 7.5 trillion expansion in central bank balance sheet of which 6 was from intervention in the fx market. and depending how much sterilization they undertook that has an impact on domestic liquidity in emerging economies. you can see the 7.5 increase in emerging economy is not really large if you consider that 8.5 trillion increase in advanced economies balance sheet. korea, on the other hand, is average in terms of this increase because the increase is 2.5 in reserve accumulation which is about similar. and also in percent of gdp it's holding at around 25% of gdp which is similar or slightly below the average emerging economies. so the point i'm trying to make here is that while i've shown that intervention has prevented the yuan from further appreciation, korea needed to increase international reserves in tandem with what was going on in the rest of the world. and this is another problem that we face in korea and that's aging. and this is a calculation that i -- most of this calculation i did myself. so if there is any mistake it's my fault and nobody else's. i did this calculation on the basis of simple assumptions. permanent income hypothesis and optimizing over 80 years and so on. and what i essentially generate is that korea at the moment should have current account surplus that is about 5% of gdp which is what we have at the moment. u.s. should have had a current account surplus in the past decade and now start generating a deficit from now on. but u.s. have been reserved. so that's a problem. and this is just simply looking from a population dynamics point of view. but even though on surface this looks okay for korea, if you look at the details, we have a problem also here. of the 5% surplus that we generate in the current account most of that comes from non-households. and households only 5% of the total saving and that's the problem. essentially you need to pay the households. the pension has to be paid later on, and it has to come from either the government office or household savings. household savings is extremely low at the moment. that's another problem we face. to the extent that, if you look at the very come plekts dynamics going on in terms of the global population, and the fact that we actually have not fully operational international monetary system, and i'm not going to go into details as to why, this creates a problem in terms of how do we actually define the right amount of global imbalance. s minus i -- as you know it's wrong to say any imbalance is bad. we need imbalance. for example, we have imbalance with japan because we import raw materials. we have surplus with china because we export more. so imbalance should be there. but the question is how much is the right amount? and that's something that we have to figure out. particularly given that the international monetary system is not really giving us a market-determined amount. and just in a nutshell, advanced economies equivalent to emerging economy conversion policy and this is just economic theory. i looked at the exchange rate in general just trying to figure out whether korea's exchange rate is okay relative to other countries development and what you see here is there is essentially three different types of groups of countries and this is a very simple analysis grouping. look at currencies against the dollar and you can see that these are countries whose currencies strengthened over the last couple of decades. and it's china, slightly. and this is in nominal terms. it doesn't reflect the inflation differentials or productivity differentials or the relative effective exchange rate. and then currencies that depreciated against the dollar. and then we have the rest. most of currencies remain broadly stable. it's volatile but it's relatively stable vis-a-vis the dollar. japan, malaysia, and also korea and as well as europe. look here, you look at this, this is the nominal and real effective exchange rate of the u.s. in the first half of the u.s. dollar depreciated in effective terms and the korea yuan appreciated in this period. and at the crisis, korean yuan because the economy received a big shock depreciated a lot and started appreciating again. and the dollar remained stable and recently has started to strengthen largely probably due to europe. so now let's me turn to of course, fta which is ambassador has elaborated. i will show you supplementary data only. just to have the perspective talking about. share of imports from u.s. and korea to each other's country. u.s. import to korea is only 3% of korea's total gdp -- korea's gdp. whereas korea's export to the u.s. on average is less than .4% of u.s. gdp. you hardly notice it in a sense. even though it is growing in terms of scale because the u.s. economy is simply so large that even though korea's export to the u.s. is growing you hardly notice it. so let's have the right perspective first. the second is, fdi from selected asian economies from the united states. this is australia and singapore. this is japan. and the rest is relatively small. why am i showing you this chart? i'm showing you this chart because there is a huge scope still left for cooperation between korea and the united states and korus is just the beginning. and just given this scope even if in the coming near future if the u.s. only slightly switches its investment strategy, it can very rapidly increase investment to korea because the relative size is so different. and exports to united states and exports to korea from each country it's very skewed. essentially here, machinery and transport equipment and the rest is all here. same for exports to korea by u.s. again, huge scope for these products to start increasing. we should also try to diversify. we started with these. it's fine, but i think it's a huge scope to expand. u.s. korus in terms of merchandise trade. we started out with 2.6% share. now it's 3. it's growing despite the lowing exports. u.s., 8.5, 8.6, meaning imports from the u.s. imports has been declining but the share is increasing and it's only been three years and it's too early to make any quantitative assessment. but you can see the impact starting to have a notable impact on the data. utilization ratio. utilization ratio of exports in korea. only 44%. a huge scope for further utilization. imports 61%, slightly higher than exports. so we are making more use of the korus fta for imports from united states than exports to united states. a notable progress in agricultural products here -- this is average because it is relatively volatile. you can see a 35% increase in agriculture exports from the u.s. to korea. the largest contribution is coming from livestock. 123% increase. and this is the charts. in services, here, you can see, korea benefitted from transportation, u.s. in intellectual property rights and the slight drop in services is because the u.s. started establishing legal consulting offices in korea. that is being produced in korea in house. i'm not going to go into details but let me make this point that the u.s. fta and our institution is responsible to make the assessment of all our ftas. i can assure that korea's fta with the u.s. is the most extensive and the highest level of fta that korea has engaged in. and particularly it's not only limited to the trade areas and reduction in tariff which was more the historic and traditional ones but this is a new type of fta that is probably to come in the future. and, thus, assessment on korus fta is we have laid the basis for the economic cooperation in the next decades to come, particularly in services and also in investment. and as you can see here, investment is now starting to expand. the agreement into implementation. so we should wait at least another couple of years to see the full impact of services, leave alone the trade side even though we have already seen a lot of beef being consumed in korea. finally, again i'm not going the go through all this list, but these are some of the key legal laws that we are passing. we have passed and we are still to pass after the korus fta. this is still in the making. and i'm very hopeful given the scope of the fta and the high standards that we have agreed, that the fta -- korus fta probably have the highest impact, the strongest impact that korea has in terms of balance as well as in a regional fta that we have ever had. okay. thank you. [ applause ] the ambassador unfortunately has to leave a little bit early so dr. lee you're going to have to answer all the questions. but first of all, i've been a beef producer for years and i want to thank the koreans for eating my beef. thank you very much. any questions for dr. lee? who's got the second question? okay. here we are. do you want to come up, please? and could we get the mic over here? come over here. >> thanks very much. [ inaudible ] i was hoping to ask this question to the ambassador. -- >> i can pass the question on to >> answer it in a somewhat different way. thank you for that detailed presentation. hopefully those charts which are illegible for any of us here will be available on your website. it is good data and i would like to use it. but the question is this, there has been a lot of discussion in the -- over these last several months the debate in this country about tpa and all the rest about how if we don't move forward on the tpa then china gets to make the rules instead of the u.s. in the context of let's say the data you have been showing and the rsep negotiations and the china-korea fta, i wonder if you can explain more concretely, what does that mean, what leverage might the u.s. have in that particular area about, quote, setting the rules, in the cross-pacific with tpp that would not happen if tpp does not happen? in your mind when you hear that argument what comes to your mind? it would be interesting to get a perspective from a korean about the economic implications of that foreign policy argument. >> okay. i pass on the question to the ambassador. but i also give you my take.r3 okay. the way i look at this is as follows. if you look at chinese economy, the chinese economy is now also facing its own problems. the way going forward and maintaining the economic growth in china is actually starting to gain -- make gains in efficiencies and that requires, essentially more transparent rules and market regulations and the chinese knows about this and that is why they are engaged in the anti-corruption drive and so on. for korea we have a very similar economic problem on our hands because essentially as i mentioned to you, we ask that to get benefit from integrated into the world through the chains but it's only the large and efficient smes that take advantage of this. so our investment abroad is much larger than inward investment and thus we have a huge unemployment problem in korea, similar in the united states. the only way to address this is two ways, one is to make smes much more productive. and also have a much greater transparency and global standards in all market regulations that we have. so that foreign investment actually -- if companies may find it much easier to invest in korea. from our institution's point of view, we have found that the impact from tariff reduction by joining tpp and the accumulative rule of origin and addressing the global ball effect and all this is notable but it's not really make or break issue. for me, the main gain, the key gains from joining tpp is actually adopting the rules. it's a mega fta. it's adopting -- introducing the rules into korea that's international standards. and through which we can actually also address vested interest groups resistance to changes in korea. so given there is a huge need not only in korea but in china and also ems as they move up into higher income standards there is increasing greater demand for efficiency gains and the only way you can actually make that happen is to have very efficient rules, transparent rules and international rules. so i don't think -- whether tpp is passed in the u.s., which i'm not arguing for or against at all and also whether rsep goes through or not one thing is clear is the direction. and the direction not only in asia but i think globally is the standards that one is trying to hope to gain in the tpp is the standard that all countries will probably will be seeking for. be it within tpp or not. so that would be my answer to your question. >> if domestic consumption rates are low and savings rates are low, investment rates are low, what are people doing with their money in korea? >> sorry? >> what are people doing with their money? korea if saving and investment are all low. where is the money going? is there a program designed to increase domestic consumption? >> yes. well -- by the way, i quit my job as g-20 shopper last month. and i feel much freer to talk about these issues. so what i say is not official. we -- the question that you posed is actually a question that we have been addressing at the g-20 level because at least 18 countries of the g-20 face exactly the same challenge. so it's not a korea-specific issue but it's a global issue. and it will take me a long time to go through all this logic. but essentially the bottom line is, one, you have globalization. you have innovation. particularly, labor-saving innovation. you have partial labor mobility and full capital mobility and if you put that all together and you have the safe havens where you can expand the global value chain but you can store your profit wherever you pay least taxes. so if you combine all this you get the result that you not desire. and korea, at the g-20 level we just addressed the problem you tax wherever you generate income and we trying to address antitrust issues. at the individual country level i think they also need to strengthen competition laws and regulatory framework we have to make more transparent. that is the point i was trying to make early on. all these things are being addressed under the korea three-year plan that was announced last year. >> let's take one more question. okay. dr. lee, thank you very much for -- i found that interesting. hard at times to follow but as a package it made sense. >> thank you. >> thank you very much. appreciate it. thank you. [ applause ] live today on the c-span networks, we'll join the heritage foundation for the update on the global response to ebola and the defense department's role in fighting the disease live on c spanchts 2. here on c-span3 at 3:00, live coverage of the u.s. institute of peace and their discussion about women's leadership in africa. co-hosted with the african union and the african ambassador group. later, a look at the population in prison in the united states with the national academy of sciences taking an in-depth look at the growth of incarceration and their report examining the origins and impact of having so many people in prison in the u.s. live at 3:00 eastern over on c-span. we're back on the road to the white house, vermont independent senator bernie sanders in burlington, vermont, on a campaign stop as he runs for the democratic presidential nomination. his remarks at 6:00 p.m. eastern, also on our companion network c-span. this summer book tv will cover book festivals from around the country and top non-fiction authors and books. weekend we're live at book expo america in new york city where the publishing industry showcases upcoming books. in the beginning of june, live for the printer's row index pulitzer prize winning author lawrence wright. near the end of june watch for the annual roosevelt reading festival from the roosevelt presidential library. in july, the harlem book fair with author interviews and panel discussions. at the beginning of september, live from the nation's capital for the nation's book festival celebrating its 15th year. that's a few of the events this summer on book tv. a look u.s. strategy andn iraq and syria with two who say obama's current plan is failing. the hearing was held as isis took control of the iraqi town of ramadi. senator john mccain chairs the committee. senator jack reed is the ranking member. this is about 2 1/2 hours. >> now that senator ernst is here, we can begin. the committee meets today to receive testimony on u.s. policy in iraq and syria. i want to thank each of our expert witnesses for appearing before us today on this critical and complex topic. before i go any further, the secretary of defense and the chairman of the joint chiefs were invited to appear admittedly by very short notice. we will be asking them to appear after the recess is over, depend depending on whether the bill is on the floor or not. we certainly would like to mary from the secretary of defense and the chairman of the joint chiefs today we have general jack keane chairman of the instituted for the study of war. general keen,ane you're pleased you can take time from your duties on fox news to being with us today. dr. freg kagan -- that's a joke. dr. fred kagan director -- dr. freg kagan, the director of the critical threats project at the american enterprise institute colonel derrick harvey, u.s. army retired director of the global initiative for civil society and conflict at the university of south florida. and brian katulis, seen year fellow at the center for american progress. could i point out for the benefit of my colleagues that general keane and dr. kagan were key elements and individuals who went over to the white house in 2006 to talk to then president george w. bush concerning the need for a surge that the strategy in iraq was failing at that time, and they were two of the major architects, and i know they'll give credit to many others, but two of the major architects of the surge which turned out to be at great sacrifice of american blood and treasure, a success. the black flags of isil are flying over yet another major city ramadi, the capital of the anbar province and reports overnight suggest isil controls the syrian city of palmyra as well. this hearing is not about the fall of any one city as important as those losses are, but rather what these defeats have revealed about the limitations of an overly constrained american air campaign, the weaknesses of iraqi forces the growing mall line row of iran and the ineffectiveness and inadequacy of u.s. military support for our iraqi and syrian partners. most concerning it highlights the shortcomings of the administration administration's indecisive policy inadequate commitment and incoherent strategy. this misguided approach has failed to stop, if not foster the expansion of isil to a dozen countries. the las of ramadi, once the symbol of iraqis working together with brave young americans in uniform to defeat al qaeda must be recognized as a significant defeat. isil's victory gives it the appearance of strength an boosts its ability to recruit more fighters while reenforcing iran's narrative that only if and its proxies can rescue iraq. american supplied military equipment is another setback for united states and further undermines our credibility as a reliable strategic partner in the region. yet the obama administration seems unwilling or unable to grasp the strategic significance as isil terrorists ransacked ramadi, by the way the pentagon's news page ran a story with the headline, quote, strategy to defeat isil is working. secretary of state john kerry said ramadi was a mere, quote, target of opportunity. two days ago when a relief should have been well under way, a correct and incoherent strategy that is woefully underresourced, white house press secretary josh ernest said are we going to light our hair on fire every time there's a setback. i would point out for my colleagues that maybe his hair isn't on fire, but there are bodies on fire in the streets of ramadi as we speak. the disaster of ramadi should lead to a complete over all of u.s. strategy. the president has stated quote our goal as degrading and ultimately destroying isil. neither strategy or resource support this goal. our efforts in iraq may be aggravating the conditions that gave rise to isil in the first place by arriving on brutal iranian backed shia militias. at best this increases iran's mall lining influence at worse. it reenforces isil's rhetoric that it is the only force against sectarian iranian backed militia. president obama has cleverly maneuvered us into the position that sunni iraqis that we think we support iran and shia iraqis thif we support is linchts. . the situation is far worse than syria. the iran backed assad regime together with iranian proxies like hezbollah continues the slaughter that has killed more than 200,000 syrians and displaced ten million more. despite this tragedy the add straks has defined its policy in syria more by what it will not do rather than by the end state we aim to achieve. although the u.s. military train and equip program for forces is finally providing assistance to vetted fighters, the administration still has not decided whether it will defend syrian opposition against assad's barrel bombs upon their return to syria. refusing to support the forces we train is not only ineffective, it is immoral. while it's still unclear what president obama is willing to do in syria, it is clear our partners do not draw confidence from statements of what we will not do. ramadi's fall should lead our nation's leaders to reconsider its indecisive policy and incoherent strategy that has enabled ice sill's expansion strengthened iran and harmed america's credibility. what we desperately need is a comprehensive strategy the decisive application of an increased but still limited amount of u.s. military power and concerted effort by the iraqi government to equip train and' equip sunni forces. a strategy supported by adequate resources and, most of all, a leadership and resolve of the president to succeed. i look forward to hearing from our witnesses today on these important questions. senator reed? >> first, let me thank the chairman for calling this timely and very important hearing and thank senator nelson for acting as ranking member today. i have two appropriations committee markup and i apologize i cannot be here. with that, with your permission mr. chairman i'll yield to senator nelson. >> thank you mr. chairman. what i'm going to do is put my statement in the record so we can get on to it. but what you underscore is certainly accurate. the fall of ramadi. what is the abadie government going to do? do they have the capability of getting sunnis to come in and take up the fight against isis? so we need, as you all testify to us how far are we along in implementing the counter-isis campaign in iraq and what has the abadie government done to i'm power the sunni tribes tory sift isis? what does ramadi mean about retaking mosul? will these events force iraq's political leadership to overcome their differences in their attempts at government. so with those questions, thank you, mr. chairman. >> thank you senator nelson. palmyra is one of the historic places on earth. as it's being threatened now, we know what isis does to these antiquities. we're about to unfortunately see another destruction of an obviously irreplaceable historic heritage site that would be another great tragedy along the line of the destructions of the buddhist statues years ago. >> general keane we'll begin. >> thank you chairman mccain, ranking member reed and senator nelson distinguished members of the committee. appreciate you inviting me back to testify. i was here a few months ago dealing with global security challenges facing the united states. i must say i was pretty impressed with the bipartisan support tore the challenges our country is facing and the way you're willing to work together to come to grips with it. i'm honored to be here with my distinguished colleagues. i know fred kagan and derrick harvey very well. they're long and close associates. as much as fred and i may have had impact on the previous administration in changing the strategy, and there were others working towards that end as well derrick harvey sitting here was the catalyst for understanding the enemy and he was pushing against the intelligence group, that existed at the time and defined that enemy better than anybody did in this town. that was the beginning of understanding what was happening to us wierks it was happening and what fred and i thought we could realistically do about it. i'm honored to be here with all of them. i've got some maps up there you may want to use to get a reference. it's always good to see where things are happening to understand the scale and magnitude. approximately nine months ago, the president announced the united states -- >> general, give me a second. >> approximately nine months ago the president announced united states public policy that, along with our coalition partners, united states would degrade and ultimately destroy isis. weeks later he changed destroy to defeat. a strategy was crafted to accomplish this objective which consisted among some things as humanitarian assistance undermining the isis ideology, providing military assistance to our iraqi partners to include air strikes into syria and assisting the iraqi government politically to move toward a more representative government which actually obviously led to a change in governments. i cannot address undermining the ideology and finances in this testimony. it's beyond my expertise. while there has been some progress and some success, looking at this strategy today, we know now that the conceptual plan is fundamentally flawed. the resources provided to support iraq are far from adequate. the timing and urgency to provide arms equipment and training is insufficient. as such, we're not only failing we are in fact, losing this war. more over, i can say with certainty that this strategy will not defeat isis. as to the concept isis who is headquartered in syria recruits trains and resupplies in syria, controls large swaths of territory in syria. and you can look at your map there and take a look at that to include the entire euphrates river valley in syria from iraq to the turkish border. connects now to the euphrates river valley in anbar province which leads to the suburbs of bagdad and is currently expanding to the west as far as damascus. they just seized, as the chairman mentioned, palmyra city and palmyra air base in central syria, aligning the central east-west cory door from iraq all the way to homes in the west and syria. and yet, and yet we have no strategy to defeat isis in syria. we have no ground force which is the defeat mechanism. yes, we have air power and despite the success at kobani and, yes we have degraded isis control in syria and killed many isis powers, but air power would not defeat isis, it has not been able to deny isis freedom of maneuver and the ability to attack at will. syria is isis' sanctuary. we cannot succeed in iraq if isis is allowed to maintain that sanctuary in syria. we need a strategy now to defeat isis in syria. as you can see on the map that deals with the global rings -- take a look at that -- many isis -- on that isis map, isis is expanding beyond iraq and syria into sinai yemen libya and afghanistan. this is where they actually have people on the ground and they've actually provided resources and they actually have a contract written and signed with the people on the ground who are affiliated with them. they're also inspiring and motivating radical sympathizers throughout the world depicted in that map on yellow as we are painfully aware of in europe and in the united states and australia. yet, there is no strategy with our allies to counter that expansion. i would go further to say there is no strategy to counter the destabilization of the middle east. as to iraq, it certainly makes sense to assist iraq in reclaiming lost territory and avoid deploying u.s. ground combat units. however, isis despite some setbacks, is on the offense with the ability to attack at will anyplace any time and particularly the fall of ramadi has exposed the weakness of the current iraq strategy. it is more than just a setback. politically, the administration deserves credit for ushering out the maliki government and bringing in abadie government. but is undermines by maliki who remains a nefarious character and others within abadie's own party. abadie is unduly influenced by iran and the united states is not nearly as consequential as it should be. a u.s. objective should be politically to reduce iran's influence. we need a focused diplomatic and political effort with the abadie government, with the best people we have available to do it. militarily, clearly the iraqi army is a serious problem. while some have fought heroically, many have not. there are serious leadership discipline morale and competence issues. this will take time to fix. but if we believe that iraq is important to u.s. security, then we must help them fix it. it will take many more trainers and a much more concerted effort to put in the best leaders available. the sunni tribal force is almost non-existent, yet we can't reclaim the sunni territory that has been lost particularly anbar province and mows all and we cannot hold the territory after we have reclaimed it if we don't have a sunni tribal force. the abadie government must authorize this force and the united states should arm equip an train it. they must know that the iraqi government and the united states is behind them. right now they know the iraqi government is not. their families are being killed by the hundreds, eventually by the thousands and they are disillusioned by the united states in terms of its lack of support. the peshmerga are skilled, willed, they will fight. they need arms and they need advisers down at the fighting level to help call in air strikes. the shia militia are largely protecting bagdad. most of what isis owns is sunni territory. if we use the shia militia to reclaim that tear tory and hold it iran has undue influence politically in iraq as a result of it and the sunni people will suffer under the hand and the gun of the shia militias. we must, in fact reduce their influence. the role of advisers advisers are only at brig ged headquarters and above. this is flawed. they must be with the forces fighting at least at the battalion level which is what we do in the past to successfully. advisers, as the name implies, help units plan and execute and also builds their confidence in themselves. they're also forward air controllers and can direct air power as well as attack helicopters. the war in iraq is largely close combat urban warfare which demands the bombs be guided from our airplanes to the ground by people on the ground. 75% of the sorties that we're currently running with our attack aircraft come back without dropping bombs, mostly because they cannot acquire the target or properly identify the target. forward air controllers fix that problem. special operation forces direct action teams should be employed not as an exception which is what we successfully saw this last weekend in syria with the raid, but routinely in iraq and syria against the isis leadership and critical infrastructure, similar to what we have done in iraq and afghanistan in the past during the surges when fred and i were there as well as colonel harvey we averaged -- the surges in iraq and afghanistan, we averaged between eight and ten of these operations a night. in fact, when the ubl raid was taking police in pakistan, there were nine of these going on in afghanistan that very night. we should also do large-scale raids. what does that mean? we should use elements like rangers to conduct attacks at night over critical infrastructure to kill isis fighters who are difficult to dig out with air power at altitude. these are surprise attacks. they're not intended to stay. they're in and out one night. we stay at most a couple days defending on how much of a fight we're getting into. we desperately need enablers to assist the iraqi forces. this is crucial help that helps them succeed on the battled field. we have some but have to ramp it up. increased uabs, not to assist air power which we're currently doing in terms of surveillance but to assist ground forces. that's a different application and a different type of uav. we need attack aviation, ap patchy helicopters c-130s. we need increase u.n. and control headquarters to increase the role of trainers advisers and others i'm suggesting here. ofb yously what i am suggesting is increased political and military involvement in iraq. while i believe we can still do this without u.s. and allied combat brigades it is much more time now than what it was nine months ago. i believe we have to do some serious contingency planning for the introduction of ground combat brigades, both u.s. and app allied. finally, we need to get past our political psychosis on iraq which is defined by the questions, should the united states have gone into iraq in 2003? should the united states have left iraq in 2011? while they were crucial u.s. policy decisions there is much to learn from them and we have, we've got to get past it. isis is much more than iraq. our forces should be -- our focus should be what the president started out with defeating isis. that will take political will and war is a tested of wills. it will take accepting risk. it will take accepting casualties. it will take focus, and it will take increased u.s. resources, and it will take honest evaluations and assessments. what i fear is this. i hear a disturbing and frightening echo of the summer of 2006 when administration senior government -- when a different administration senior government officials and military senior generals came before this committee, and in the face of compelling evidence that our strategy in iraq was failing, these officials looked at you and defended that strategy and told you that over all the strategy was succeeding. you and your predecessors took a strong bipartisan exception to those opinions. many as a result of it wanted to give up on iraq. others wanted to do something about fixing the problem. i hope you choose the latter and get on with helping to fix the problem. and i look forward to your questions. thank you. >> dr. kagan. >> mr. chairman senator nelson, thank you very much for calling this hearing and thanks so many of you for attending. it shows a sense of urgency about the problem on the part of this committee that it's hard to detect in the rest of the administration. i'm very grateful to the committee as always for the opportunity to speak, but for the attention that it's trying to focus on this problem. i receive every day superb daily rollout of activities from my team and the team at the institute for the study of war. i can't read it all anymore. it's too long. it's too long because the region is engulfed in war. it's sort of hard to tell that from the isolated headlines that pop up and fade away. but this is the regional war. this is the beginning of the regional war. it can get a lot worse, but this is a war that is becoming a sectarian war across the region. tls a war between saudi arabia and -- there are some people who think it's a good thing that the saudis and others are acting independently. i would suggest they take a look at the historical efficacy of saudi military forces and ask themselves if they think that's really a read we want to rest our weight on. i think we can focus too heavily on what the iraqi security forces are doing or not doing as we have in the past. they're not doing enough. prime minister abadie is in a box. we have helped put him there with our policies. so it's not sufficient just to look at and criticize what the iraqis are doing. we really do need to look in a mirror and look at what we're doing or not doing. as i follow the daily reports, i see a coherent enemy strategy across the region. i see deliberate enemy operations which you can actually depict on a map and i comment to you -- terrific report -- isis captures ram mad different which has old-fashioned military map showing the isis maneuvers because they're maneuvering. this isn't a terrorist organization. this is an army conducting military maneuvers on an operational level with a great deal of skill. it's not an accident that ramadi fell over the weekend and palmyra fell yesterday. it is not an accident that there were isis attacks in bay gee and at the refinery, a prison break in diyala threats against the pilgrimage in bagdad and then ramadi was decisively attacked and taken. this was a coherent campaign plan and a very intelligent one very well executed. this is a serious threat. what i can't discern from the daily operations, let alone from the statements of the administration is any coherent american strategy to respond to this threat. i want to talk about the threat for a minute. isis is one of the most evil organizations that has ever existed in the world. we really have to reckon with that. this is not a minor annoyance. this is not a group that maybe we can negotiate with down the road some day. this is a group that is committed to the destruction of everything decent in the world, and the evidence of that is the wanton destruction uncalled for even by their own etiology frankly, of antiquities thousands of years old that represent the heart of the emerge ens of human civilization in the west. this is a group that sells captives into slavery, a major source of financing for them actually. this is a group that engages deliberately in mass rape. this is a group that conducts mass murder, and this is a group calling for and condoning, supporting and encouraging lone wolf attacks and it will soon i think not just be lone wolf attacks in the united states and the west. this is a group of unfathomable evil and unfortunately they are extremely effective, and they have a degree of military capability not terrorist capability, that we have not seen before in an al qaeda organization. this is not something where we should be spectators. this not something where we should say, as some people do let them just kill each other. this is unacceptable from a moral perspective and u.s. national security perspective to just watch a group like this succeed in this way. i want to make the point that, of course any criticism of the white house today is received at least from our side is received as a part san attack. and i want to make the point that, if that was the case, then i must have been a democrat in 2006 because we in 2006 because we were attacking the bush administration with the senator -- with the chairman and a number of other members of the committee aggressively or more aggressively than any way we critiqued the white house. the fact is it was failing as it was failing in 2006 only we're in a much worse strategic position today than we ever were in just 2006 because it's not just iraq. i note that to speak of the issue of urgency the iranians seem to feel a certain sense of urgency as well. and their minister of defense was in baghdad over the last few days signing defense cooperation agreements ostensibly but working to coordinate iraqy support on the ground. the former supervisor was in damascus and beirut talking with assad no doubt coordinating plans to, i assume maintain and increase the military deployment of hezbollah forces in syria and possibly ask assad what his plan is given the circumstances. those are very senior leaders. i don't notice that we have senten senior members of rank to speak with and no one to speak with effectively in syria. senator nelson asked about what this means for the down per-isis campaign. it means that the campaign that has been described by the administration and our general officers is completely derailed. i do not believe that there is any reasonable prospect that it will be possible to retake mosul this year. i think the fight for ramadi will be hard enough. i think operations in and around ramadi have demonstrated that the iraqi forces at current u.s. level support are not capable of dpeenlding their territory against isis attack let alone clearing a major isis safe haven. so our campaign strategy is completely derailed in my view. i think it was a campaign strategy as the chairman pointed out that was going to be limited to any extent because it was only going to be addressed but effectively untouched. but such as it was, it's over. my colleague derrick harvey will speak in somewhat more detail about what types of troops and neighbors are required. i agree with general keane. i agree to put a number on the table. i think we need to have 15,000 to 20,000 soldiers in iraq. i think anything less than that is simply unserious and i think we really need do that because i think otherwise we're looking at an isis state that is going to persist. we're looking at an isis state that's going to continue to governor territory, that's going to simply have resources that with cannot let an evil vary tight have and i think it is a major u.s. national security priority respond to it since it's become clear it's nothing for the iraqi. two points. one is you cannot argue for a forceful strategy in iraq and defend the sequester. our armed forces have been seriously damaged by the sequester. it needs to be removed immediately. in fact, the armed forces budget needs to be increased. the longer this president refuses to address it, the worse it's going to be when we become engaged. we need to be preparing for that now. and lastly we need to be strengthening our abilities to. this is not the moment to see what the enemy is doing. this is the moment to be engaged wise reform of oversight of the intelligence community and so it is ironic that one of your colleagues spent yesterday arguing for the elimination of a program important to our national security. so i think there are things that the administration can do and things that congress can do but it's going to be a tough fight. and i theyank the committee for listening to me this morning. >> colonel harvey. >> mr. chairman, senator nelson and members of the committee thank you for having me here. i appreciate the opportunity. i want to begin focusing on the islamic state and the trends in iraq. i believe that even before the fall of ramadi the best that could be said is that baghdad was holding the line. even with the success in tikrit there's great difficulty in holding that terrain, and even in areas that had been cleared earlier, isis has worked their way back in. they just changed their profile went to ground, and now they're in fill traiting back in and conducting attacks and rebuilding their capabilities. over the past month they've continue dodd shaping operations in the baghdad area, western baghdad. in one day just a couple of days ago there were eight ieds, two v-bads and several small arms skirmishes in baghdad itself. that's to say nothing about what's going on in abu ghraib and other areas around baghdad. they continue to hold the line along the kurdish front in the anyone i va area around mosul and they've expanded successfully in other areas, particularly in syria. they're very good at doing shaping operations. they are taking advantage of their interior lines of their communication. they are well armed, well resourced, and well led. i think the fall of ramadi should lead to questions about the progress asserted by the pentagon and the administration. there are two strategically important arab cities in iraq. mosul, the second largest city, which was a former oughtman capital and ramadi which is the largest geographic province and isis controls it but it's in syria. isis has momentum which is important for rallying arabs who may be on the fence in this fight. who could aid with foreign fighting recruitment and some funding. without an alternative, sunni arabs, tribes and units in the region without someone to protect and lead them are going to fall into the camp of the islamic state, particularly as this campaign becomes increasingly polarized and the movement of shia militias into anbar province is going to contribute to this polarization. and i fully expect that the islamic state in the near future will try to conduct operations to further inflame this fight. that is part of their major strategy, to polarize this fight between the different communities. now, i would note that isis has many challenges and weaknesses, but the problem is that isis is not losing. i believe that the u.s. has continued to underestimate the islamic state, which i suspect shows a lack of understanding about this islamic state its capeths, strengths, and weaknesses and how they've seen a fight and path to victory. we receive this story before. it's like deja vu to me. we focus too much on our own opportunistic, programs and budgets, but we're not focusing on the impact of the enemy and the enemy has a vote. from public statements we're not looking at the right things. from the metrics and majors that are asserted by the military the pentagon are not really appropriate. the number of air strikes is interesting but irrelevant. what is the effect on the enemy and its capacity to fight. stating that isis has lost 25% o the territory it conquered is interesting but it's really not relevant because isis did not control some of the other areas, but they're still there. they're contesting and they're rebuilding and they're shaping. nope, that is a false metric that has been put out. striking oil infrastructure in syria is a good thing but it's been degraded. the enemy has a vote. their efforts there have been complicated. they've reduced their production, but they've adapted and creative lyly developed things such as air dryers to make a defined product. it is crude, yet it is a sophisticated adaptation and crude is still going to turkey and they're producing enough fuel for their own requirements. they're still earning millions of dollars every month from oil in syria. it's been degraded, but i think the lower cost of oinl the markets has had just as much of an impact as any operations we've conducted. and, again, they have adapted. the same for funding and foreign fighter flow. they are still very resilient and adapive in working around the actions that have been taken. and the actions have been taken on foreign fighter flow and going after finances have been week and not very assertive, not well resourced. and i'll talk more about that. isis is celebrating at a hybrid war. they're adapting conducting terroristic techniques, depending on the terrain. it shows they can hold key terrain, fight hard and sin kron nice operations across space and time and they respond with agility to secure tactical and operation advantages and overmatch as we saw in ramadi. they are very effective. they are well led. they are skilled, and they have professional quality leadership and command and control. and they know the geography

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