American Enterprise Institute

May 13, 2008

[Edited transcript from audio tapes]

1:45 p.m.	Registration
2:00	Introduction:	Thomas Donnelly, AEI
		Kimberly Kagan, Institute for the Study of War
2:10	Speaker:	Colonel H. R. McMaster (U.S. Army), International Institute of Strategic Studies
2:40	Discussant:	Michèle Flournoy, Center for a New American Security
	Moderator:	Thomas Donnelly, AEI
4:00	Adjournment

Proceedings:

Thomas Donnelly:  All right, ladies and gentlemen.  This edition of Fred Kagan’s West Point Office Hours is called to order or H.R.’s homies or exactly – ah – this is truly an occasion where it’s fair to say that the guest of honor needs no introduction.  H.R. may regret that it puts a high burden of proof on him to entertain an audience that knows him very, very well but it’s my pleasure.  My name is Tom Donnelly.  I work here at AEI as resident fellow in Foreign and Defense Policy Studies and in conjunction with Kim Kagan and the Institute for the Study of War, we’re very pleased to host this forum. 

Our guest of honor today is Col. H.R. McMaster.  He does truly need no introduction and Kim will say a few more words about what he’s going to talk about today but to say that H.R. is both the epitome of a warrior scholar is faint praise.  He’s been a decorated officer in a number of combat situations and engagement throughout his career.  He is the author of arguably the most influential book on civil military relations of the past generation for better or for worse.  And he continues to be an influential force both as a tactical troop leader and as an intellectual. 

So it is a genuine honor for both of us to host him.  And we’re also lucky enough to have my friend and colleague, former colleague Michèle Flournoy from the Center for a New American Security, who will act as our first interrogator interlocutor of H.R.  So the panel will just sort of proceed across the desk here as we go forward.  At this point, I would just like to keep this going and hand over to Kim for a few more framing remarks.

Kimberly Kagan:  Thank you very much Tom and thanks all of you for being here today and special, special thanks to H.R. McMaster and Michèle Flournoy for joining us on this occasion.  I am pleased that AEI and the Institute for the Study of War can host H.R. and Michèle on this panel and help all of us to think more about the situation on the ground in Iraq as it is now and how that is likely to shape events over the next six or eight months.

H.R. has recently come back from Iraq.  He is here speaking as himself and not the representative of any government agency or entity.  But since he has been to Iraq several times over the past year working on projects at the strategic level and because he has such a strong vision of the operational and tactical levels of war from his experience as a brigade commander with the Third ACR in Tal Afar, I really wanted him to help us understand the political situation that we are now facing in Iraq. 

The sorts of developments that we’ve seen accelerating over the past several months as the Maliki government has almost unlocked the deadlock that it had been in before and the Iraqi political dynamic has grown infinitely more fluid. And we’ve seen this not only with the passage of legislation but also with the conduct of Iraqi military operations in Basra, Sadr City and Mosul.  And so I’ve asked H.R. to come in and talk about the government of Iraq, Iraq’s Shiite, the Iraqi security forces, what has happened over the past few months and to ask him – to give us that background in an effort to understand where we can and should head over the next six months.  So with that I will turn this panel over to H.R.

H.R. McMaster:  Well, thanks so much for the kind introduction especially for the privilege of being here and to do this under the auspices of two institutions that have helped us so much I think, to think about the very complex situation in Iraq.  I often say that anybody who says they have figured out doesn’t know enough about it, so I guess the first qualifier would just be to say that Iraq is as complex as ever.  There are all sorts of factors interacting that really make the future very difficult to predict but I think that we can say now looking back over the last year or so that things have really changed in a pretty fundamental way and in a way that I think is consistent with our interests, with the coalition’s interests and I would say, consistent with the interests of the Iraqi people as well. 

There are so many people out here from whom I’ve learned over the years especially on this panel so I wanted to be as brief as I can and I thought the best way to frame this would be to talk about what I think are maybe two fundamental or basic or general misconceptions about the situation in Iraq that really undermines our ability to think clearly about the problems that we face there.  And then consider about ten things that have changed in the last year and then maybe just a few comments about what’s coming up, but just introduce these as things that we can maybe discuss as we get into the Q&A and we hear from – certainly hear from Michèle before that.

The first misperception I think is that violence in Iraq occurs primarily because we’re there.  And I think that this really, you know, is kind of a hubristic interpretation of events there on our part.  I mean, things happen in Iraq because we’re fighting determined enemies who were pursuing objectives and strategies that are inimical to our interests.  Those who were fighting us and Iraqi security forces and murdering innocent civilians there view the achievement of an outcome in Iraq consistent with our interests as inimical to their interests.  And who is this enemy and why are they doing what they’re doing I think is an important thing for the American people to understand and for us maybe to talk about more.

The two prominent enemies who have been fighting there had been Al-Qaeda in Iraq and, of course, as you know there had been this alliance of convenience between elements of the former regime have allied with sort of nationalist resistance elements and so forth, all under this one large umbrella organization of Al-Qaeda in Iraq and of course that’s fragmented over the last years, one of the changes that we could talk about. 

But we ought to be cognizant of what their objectives are and what their strategy and of course their objectives are to gain control of the country, to deny the majority of Iraqi people a say in really what kind government they have and they want to do that by pursuing a strategy of inciting a civil war.  And then using the chaos associated with sectarian and ethnic conflict to establish control of certain portions of the country and then use those as bases for further attacks throughout the country, actually throughout the region.  And this is in essence the strategy that they are pursuing very vigorously up through the reinforced security effort in Iraq that began about a year ago.

And then there’s also what I would just lump together in sort of a – maybe this is the best construct – but Iranian-supported militias.  And those include elements that includes Jaysh al-Mahdi, special group elements of Jaysh al-Mahdi, elements of the Bader Organization Corps and other groups that Iran has backed.  And I think for this specific purpose in terms of Iran’s goal of keeping Iraq very weak and I think what Iran has been able to do previously, it has been able to portray their motives and Iraq is defensive.  Telling their Iraqi friends in each of these groups as they support others who are fighting against the groups that – some of the groups which they are supporting – by saying well, you know, if we don’t do this or if we don’t have this kind of violence, if we don’t have various militias attacking U.S. forces, the U.S. could attack us. 

Well, I think what’s happening and this is one of the fundamental changes, is that the true intentions of Iran had been exposed and are more easily understood not just by us but also by the Iraqi people as really offensive in nature and really trying to keep Iraq deliberately weak so they have a weakened dependent government that has to look to them for support while at the same time they create organizations external to the government, political movements and especially militias, that can be turned against the government they ostensibly support, the Iranians ostensibly support, if the Iraqi government turns hostile to their interests.

So I think by understanding the enemies that we’re facing in Iraq, we can understand better the stakes and then also this leads to kind of a second broad misinterpretation – is that there tends to be this belief that progress in Iraq ought to be linear.  That we ought to be able to progress from where we are now in Iraq linearly to our objectives. 

And I think again this is sort of a one-sided understanding of the war and we don’t emphasize as we should the continuous interaction with these enemies I’ve mentioned, other destabilizing factors in Iraq that make linear progress in this war or, for that matter, in any war, impossible.  So I think what we ought to maybe understand better is the nature of the conflict and I think what we’ve understood better over the last year is how the conflict has evolved over time. 

People have made arguments that well, the old strategy was bad, the new strategy is good.  Well, the old strategy might have been good for the old conflict but maybe we didn’t keep up with the evolving nature of the conflict as we should and the real story though I think is that we made the adjustments that were necessary to recognize that this is an insurgency.  This is an insurgency that has grafted on to it an internal terrorist problem and a transnational terrorist problem.  It is also an ethno sectarian conflict, what we call the communal struggle for power and survival or power and resources, if you want the more moderate version. 

It also has an external dimension including external support for both the insurgency and for militias, which is another big dimension of the communal struggle.  And all of these factors were interacting in a country that was essentially, at least in 2003, a collapsed or failed state and I think now could be characterized still as a weak state.

So, understanding the nature of the conflict, those various components and then understanding as well that the nature of the conflict shifts over time and whereas we may have had what was predominantly an insurgency problem in 2003, 2004 and 2005, we had in 2006 and in 2007 what became predominantly a problem with communal struggle or civil war, if you prefer that term.

So what has changed since that time?  And this is usually the topic that I just like to introduce.  I think what had happened, the situation that we confronted last year and people like Doug Olivine here was the chief of plans in Baghdad and did a brilliant job in integrating the additional forces into the Baghdad area.  It was a conflict that had evolved beyond the strategy that we were pursuing at the time. 

So the strategy of rapid transition to Iraqi security forces did not take into account the fact that this had become a sectarian struggle and then our actions in transitioning rapidly were essentially enabling one side in the civil war, or you could say to a certain degree that was happening, and may have been exacerbating the conflict and handing over prematurely to an Iraqi government that in the middle of this cycle of sectarian conflict lacked the capacity but also the willingness to do what was necessary to reduce the violence.

And Al-Qaeda, you could say, had succeeded.  I mean, this was not something that just happened naturally.  This is another misperception, maybe a lesser included misperception that the Iraqis just – they never go along with each other, they’re just going to fight each other, it’s an intractable problem but we have to recognize that this was a situation deliberately incited by our enemies and this has been Al-Qaeda’s strategy since the end of 2003 – to pit Iraq’s communities against them.  And then once they have started that cycle of sectarian violence to accelerate that cycle of sectarian violence such that the country would descend into chaos and they could use that chaotic environment again to establish a degree of control.

Obviously this was a humanitarian crisis in this period from ’06 to ’07 and this is when – this just happen to be when Ambassador Crocker and General Petraeus came in.  There was a decision obviously to reinforce the security effort and the Ambassador and the Commander developed first a political strategy to serve as the foundation for all other activities and actions within Iraq. 

Those actions which with we are most familiar are the security actions but there were other critical actions in terms of developing Iraqi institutional capacity and also economic development, rule of law, security sector reform and really influencing not only key actors within Iraq but broadly throughout the region, to reinforce a movement toward political accommodation and ending the violence.  So we could talk more about that strategy if you want.  That would be looking back and I know that we wanted to look forward a little bit more.

So what’s changed?  Iraq’s communities have largely stopped shooting at each other.  That has been an achievement of the physical security efforts of our forces and I would highlight very courageous and determined Iraqi security forces who took extraordinary risk to make that happen and have fought in a determined way to make that happen.  What we have seen is a result of people stopping shooting each other, which is the first step in getting people to talk to each other, I guess.  There has been some real bottom up movement toward the political accommodation I mentioned just a moment ago. 

And what we are seeing now I think is some top down movement toward political accommodation as well and we could talk specifically about how some of the political dynamics over the last couple of months have created a condition from maybe movement toward political accommodation at the national level.  But what has happened and I think we can see this now in retrospect is that political accommodation at the local level has placed some social pressure on the Iraqi government to move in the same direction or key actors within the Iraqi government who represent portions of the communities who were fighting each other.

The effect on Iraqi society, the third thing that has changed I think, is a rekindling of hope.  Iraq - I would say it would not be unfair to say - the situation was descending into chaos and the situation was feeding on itself about a year ago and this rekindling of hope has led to a situation where Iraqis are getting more off the ethno-sectarian narrative and talking more about some of the cross-cutting issues.  Security is one of those, obviously.  Delivery of basic services is one of those.  The employment problem is one of those.  A better life for their children is one of those cross-cutting issues. 

And we begin to see now a lot more discussion on these issues that are not really based in that ethno sectarian narrative which had dominated everything else, I think, it’s fair to say about a year ago.  I think there’s also recognition related to that.  Instead of fighting over the existing pieces of the pie, that this pie could get very big as Iraq realizes that it controls some significant resources that it can use to address the needs of their population and to grow the kind of society that want in the future.

I think the fourth big thing is Al-Qaeda is on its way to defeat.  And this has had a big effect.  Maybe we don’t realize some of the second and third order efforts.  I mean, defeating Al-Qaeda in Iraq is a good thing in and of itself.  The effect it has on the Iraqi people is also a good thing.  But what effect that has on reducing the justification for militias is immensely important. 

And I think it has been the effectiveness of operations against Al-Qaeda which has allowed the Iraqi government to have the kind of support it needs in going after the militia problem.  Because militias can no longer say I’m a protector of your community.  You put up with my thuggery or else there’ll be mass murder attacks in the marketplace tomorrow.  That justification has been removed and now the militias are something that can be put on the agenda of the Iraqi government.  We can work together to extend the government’s writ into these areas that have been controlled by militias.

And so what this has is it has the effect together – the effect against Al-Qaeda and the militias – of lifting the pall of fear off of these communities.  Once you lift the pall of fear off of communities, they are no longer intimidated, coerced by either Al-Qaeda or militia.  You have a great deal of freedom of action in other areas.  You can begin to move toward political accommodation because you know somebody who is an extremist who controlled your community will not cut your throat if you say publicly I think we ought to reconcile with the tribe down the street. 

It also allows people to become participants in their own security and in civil society and in Iraqi security forces.  One of the things I think is often overlooked is that Iraqi security forces became unbalanced during this period of accelerating sectarian violence.  One of the reasons was the lack of security in the Sunni Arab communities, where people, if they had joined the police, if they had joined the Army, not only would they have been killed but their families would have been killed by Al-Qaeda who controlled these areas.  So this improvement of security also has the sort of second and third order effect on security sector reform, rebalancing the security forces.  That’s point number four.

Point number five would be the militias are increasingly discredited, its linked to the point made earlier just like Al-Qaeda was rejected from the communities in which they were operating, we are now seeing militias rejected by the populations in which they had been operating.  A friend of mine who writes about these things has said that everybody has to sweep in front of their own house in Iraq, and we’re now able to see within the Shiite community that kind of sweeping in front of the house that the Sunni community was able to do with improved security by legitimate, trusted security forces operating in areas which had been previously safe havens for either Al-Qaeda or for militias.

When I traveled through the south on a last couple of visits, what I heard – and this is again on the point of militias being increasingly discredited, and this is from Iraqi Shiite leaders who were saying things like Iran is the true occupier of Iraq.  They would say jokingly that the Iranians are now all Iraqi nationalists, which is a thinly-veiled swipe at some of the militias in some of these areas. 

And so whereas before about a year ago, you wouldn’t really hear Iraqi leaders, especially in these areas in the south, offering criticism of Iran and the parties and communities within Iraq who were playing host to Iranian influence but you hear that almost all the time now among Shiite Arab leaders.  And also a connection to Iran, and this again affects the militias, is becoming a liability much like being connected to Al-Qaeda was a liability for so-called resistance movements in the Sunni Arab community.  These are again changes that I’ve seen in the last year.

The contradictions of Iranian policies I’ve mentioned at the beginning have been exposed and Iraqis have to deal with them now.  They have to deal with them again partly because of that pressure on the political parties, who are embarrassed by the connections to Iran and what Iran is doing.  So the sixth thing is, no big surprise, the exposure of Iranian activity and Iran’s true intentions.  There are some people in this room who have been way ahead on that and I think we’ve been way ahead on it but of course I think we recognize the fact, our government, our military, that the key thing is to work with Iraqis on this problem and here you have effort between us and Iraq leaders is critical to addressing the destabilizing actions and influence of Iran in Iraq.

Now related to that, point seven is that U.S. intentions are much more clear to Iraqis.  One of the things we were transitioning is it turns out too rapidly, not to blame anybody for that, but I mean, interaction with the enemy is that we also were vacating the battleground of perception.  And Iraqis were confusing our activities with our intentions as we left them behind and their neighborhoods were taken over by terrorists and militias who were victimizing the people in those neighborhoods.  So people were thinking, you know, maybe America wants us to fail. 

And also, of course, the enemies’ propaganda whether it’s Al-Qaeda or the militias, is they try to blame people other than themselves for their own murderous and oppressive acts.  So you had this really strange situation where you have Al-Qaeda conducting mass murder attacks and saying, you know, the Americans made me do that or the Jaysh al-Mahdi controlling basic services in Sadr City in effect controlling the $800 million budget of the Baghdad Ahmanat and then saying, well, you know, we have better basic services here if it wasn’t for the Americans. 

Because we have vacated those battlegrounds of perception essentially, as well as physical battlegrounds, we lost a lot of ground.  But by going back in there by the courage, determination, compassion that our soldiers demonstrated alongside Iraqi security forces, that helped clarify our intentions.  And the risks that we took to save Iraqi people’s lives, to make their lives better, registered with them and then removed, I think, a key element of the enemy’s propaganda from their retinue or what they are able to say about us to discredit our efforts.

The eighth thing – Iraqis understand their responsibilities.  The Iraqi leadership that we spoke with as part of our project, I was there with Patrick Fine here from AID who gives the real expertise on our project.  What we heard invariably from every Iraqi we spoke to is we understand this is our problem.  We have to be more effective.  We have to improve the delivery, what our government delivers.  We have to be able to improve basic services, set conditions for economic growth and development, address the employment issue. 

Whereas, before a year ago as Iraq was descending into chaos, people were thinking we maybe need to capture a state institution to use that against this other particular sect in the upcoming civil war that’s going to get really bad or they were thinking, you know, well this is an American problem.  They should have provided this or not providing but now Iraqi leaders are acknowledging those responsibilities, which is significant because they are not blaming others.  They are open to technical assistance, as a result of that, they want help, international help, our help to get better.  It also opens the door for reform within the ministries.  These ministries in particular that were battlegrounds in this communal struggle - the Ministry of Transportation, the Ministry of Health, the Ministry of Interior, the Ministry of Agriculture.  There is a nascent but important and I think determined effort underway to reform these ministries.  And I think that is related to point number nine which is really a commitment across all these communities to battle it out on the political battleground rather than at the end of a gun. 

This is true I think you can say broadly across the Sunni Arab community as increasingly even among the Sunni Turkmen community.  I think there is a recognition within the offices of the Martyr Sadr as an example that if they don’t participate, they will be the big losers much like the Sunni Arab parties were big losers in January of 2005.  So if we can shift the battleground to the political battleground, help Iraqis shift it themselves, that’s what I think sustainable stability or sustainable security in part looks like. 

And so, what is coming up in that connection obviously is provincial elections, provincial elections that are conducted in a way that corruption or coercion does not skew the results to a degree that they are discredited.  The people feel they have a voice, that they have representatives they can point to to represent their interests.  And then I think, what else do you see, what else had changes where you see in the last few months, is the cutting of deals.  If you support me on this, we’ll go back to the old interpretation of the oil law, as an example. 

I mean, these sorts of deals are being made and when those deals are being made you don’t want to be the last guy left without a deal.  If the price of coming to the table is stop armed opposition and start talking and start thinking about how we can share power and resources in such a way that benefits all communities, and as we know this has not been a part of Iraq’s political culture ever, ok? But I think just there is a movement that direction because of the exigencies in the situation and Iraqis’ understanding that if they don’t move in this direction, it could be disastrous for the people they represent.

And then the tenth thing I would say is Iraqi security forces continue to reform and expand and there’s a slower degree of improvement in the area of rule of law which is, as you know has been a problem from the beginning but there have been some noble efforts there and some efforts that could be scaled up in that area.  I’m sorry I’ve gone on way too long, but those are the ten things I think that have changed in the last year and a couple of the misperceptions up front so enough fodder hopefully for Michèle to lend more clarity to those fragment of thoughts.  Thank you.

Michèle Flournoy:  Thank you for a tour de force explanation of how things have evolved in the last year particularly but even more broadly.  I wanted to put a couple of ideas on the table for you to respond to but also then to look forward a bit as to some implications we might draw for what should happen in the next six to eight months.

First of all, I wanted to ask how many of the types of progress that you see are dependent on either calculations of parties or other factors that are potentially perishable.  I mean, this was a real theme in General Petraeus’ testimony that there has been real progress but some of this is perishable, it’s fragile, it’s not a given unless its underwritten by further political accommodation, particularly top down.  We’ve seen a lot of bottom up but particularly top down accommodation.  And I’m going to return to that as a theme.

The second thing, and this is from the trip that Kim and Fred and I and others took in February, one of the disturbing observations…well, actually hopeful from a U.S. perspective, disturbing from the Iraqi perspective, was that as things have progressed and many of these attitude changes had occurred, the legitimacy or the credit legitimacy associated with the progress was accruing to the coalition not to the Iraqi government.  And classic counter-insurgency theory tells us that the name of the game is building capacity and legitimacy of the host nation government. 

And until we can essentially affect that transfer so that the Iraqi people see their own government providing services, their own government taking the necessary risks and steps, their own government deserving their loyalty and legitimacy, that’s the real long pole in the tent.  One of the things I would like you to comment on is whether you see any progress in that direction because I think that would be very important indicator.

The third thing I would like to put on the table is if things are as you described them, which I think is likely to be true, to me it seems then we have a very critical window of opportunity on this administration’s watch in the next six to eight months because we are at a point of particular leverage.  If senior parties inside the Iraqi government are in fact becoming more open to political accommodation than they have been in the past, if we are in fact in the middle of negotiating a strategic framework agreement with the Iraqis, that essentially sets the terms of our relationship in many dimensions going forward. 

And if in principle every single request that the Iraqis make of us is in principle a point of leverage for us to ask for something in return, then we have a particular window of opportunity to use the leverage we have to push the political accommodation that will consolidate the security gains that we’ve seen. 

And so, let me give you an example.  Perhaps the most important area that the Iraqis want promises from us is in the area of security systems and security guarantees, and particularly long term assistance to the Iraqi army and Iraqi security forces.

One of the things that we’ve identified as a key element of political accommodation is greater integration of Sunnis, particularly Sons of Iraq but particularly Sunni communities into the security forces.  Let’s make the ISF look like the Iraqi population.  Let’s achieve a sort of demographic complexion that’s similar to the Iraqi population as a whole.  One of the things that we could do to use that area of leverage in the SFA is to say, look, we are willing to make a commitment to assist you but only if you integrate more Sunnis into the force.  That’s the kind of linkage that I think we need to be thinking about in a whole host of areas. 

And as we think about other key measures on political accommodation, whether it’s a holding of free and fair provincial elections, whether it’s fair implementation of de-Baathification and amnesty laws, whether its enacting a hydrocarbons legislation that ensures equitable distribution of resources, whether it’s more effective and equitable spending of the capital budget, I mean, you could go down the list and there are points of leverage that we could be using to push the Iraqis harder. 

Now, in the past several people have said, you know, the government is too weak to be pushed.  But a lot of what I took from what you’re describing is strengthening of some of these parties to be able to be pushed on some of these issues.  And so I’d love your reaction to that.

The other issue I wanted to put on the table for discussion is our own transition.  The fact that we are heading into the first wartime transition in the United States in a very long time and there given a vital interest at stake in Iraq in the region, given the complexity and the dynamism of the situation, it’s a very dicey time to have a hand off, the administration admits that.  That said, I think both the outgoing and the incoming administration have a strong, mutual interest in a very careful and smooth hand off. 

Unfortunately, the way we usually do transitions does not augur well.  Usually we have little interaction between departing and incoming officials.  People don’t pay any attention to the transition documents that the old guard wrote for them.  The confirmation process is so slow that there’s this prolonged nobody-home phenomenon.  I think the best transition on recent record was that the President had 20 foreign appointees in place by April 1st.  Not terribly promising when you’re overseeing two wars.

So it’s going to require a degree of preparation on the part of the Executive Branch, the military and the Congress to make sure that this transition is handled in a different way.  And I think on the Executive side, it’s everything from actually developing a transition plan where you have an interagency plan that tries to maximize stability during the transition period, stability in Iraq.  It means working very carefully with Congress to say there are certain critical jobs in Iraq and overseeing Iraq from Washington that we can’t wait months to have confirmed and filled. 

We’ve got to have an expedited process to get those people in place and so forth.  There’s probably a lot of information sharing that should go on between the current administration and even candidates now in terms of building depth of knowledge on Iraq, among their advisors, so people are actually ready to receive the hand off when they come in.  I think we have to identify key positions that are going to change over and hand tool transitions.  You don’t want an en masse transition, particularly in Baghdad.  If you’re going to have the military transition this fall, let’s make sure the civilian side of the transition doesn’t happen until much later.  You want to be staggering the change-out of key personnel. 

So there’s a whole host of issues.  Military needs to be planning for the different scenarios of drawn down.  I think it’s understood that we’ve hit our peak in terms of military presence.  We will come down to 15, whether there’s a further reduction on this administration’s watch will remain to be seen.  I think that just given the supply side, strains on the force, you’ll see some kind of additional drawdown sometime in the next year. 

What are the key factors that should drive that?  What are the key decisions that a new president needs to make?  How does the military think about overwatch?  Does that change the mix of required capabilities that are going to need to be prepared to be sent over in the next year?  And so on.  So there’s this whole host of transition issues that I think are worth putting on the table from what needs to happen in Washington to ensure that we handle a very dynamic and complex and high stakes situation in Iraq as well as we can possibly handle it.  So let me stop there and turn it back over to our moderator.

Thomas Donnelly:  Thank you very much to everyone.  I propose that we proceed in the following way.  H.R., if you have some thoughts about Michele’s comments, this would be a good moment to do that and then I’ll turn to Kim to exercise the co-moderators prerogative.  I have a question or two that I would like to ask and then we’ll go to general questions.  Kim and I will try to be as brief as possible so as many people can participate and I will have some directions about the open session when we get there.  First of all, H.R.

H.R. McMaster:  Some quick ones, those are great observations.  In terms of the perishable conditions, I think it is related to the point I made in the beginning about the misperception.  The war in Iraq doesn’t end if we leave prematurely.  It gets worse.  I think we’ve got a glimpse of that before.  The key is answering the question how resilient is it?  Can it be maintained?  Have we sustained the effort and are stabilizing efforts in Iraq long enough so that that kind of confidence building from the top down reinforces the kind of bottom political accommodation that has occurred. 

In terms of credit going to the U.S. and how there is a concern, there is definitely a concern.  Where you typically found that happens is in areas that have been or where communities have been pitted against each other in sectarian or ethnic violence in particular, they will say American army can come in, no Iraqi army, no police because they fear that the Iraqi army and the police will be agents of one sect or another and will make the situation worse.  Once U.S. forces come in alongside Iraqi army and they build confidence in the Iraqi army, then people will say, Iraqis will say at that local level, bring on the Iraqi army but keep the police out. 

Once the police are reconstituted and confidence is rebuilt in the police, then things are stable and you have a situation where you have police backed up by army, then it is more resilient.  I think it’s also tied to the question of provincial elections, having people in at the provincial level, that people have confidence and they feel that they represent them.  Has there been any evidence of Iraqis really being able to deliver more rather than the coalition? 

I think the execution of provincial budgets is a great example of that and how that has allowed provincial governments to begin to deliver basic services in a way that rekindles a sort of confidence in the government itself.  This has to be probably reinforced.  It has to be matched by also progress in budget formulations, execution within the line of service ministries, which are very centralized and operate through Director General of the provincial down at the district levels and so forth.  So that is one example of something that could be reinforced.  And some of the AID programs just take a long time to see bear fruit or starting to bear fruit and there’s an effort on the way now to refocus those on some of the critical Iraqi systems and institutions to help the government perform better.

And then, gosh, let me see, there’s one other point I want to make real quick.  On the soft and transition points of leverage, okay, this has always been I think our effort.  To recognize it, we have to influence the situation in Iraq in such a way that Iraqis can stop the sectarian violence.  They can get over what was a humanitarian crisis, begin to move toward stability.  It’s obviously not a good thing to publicize your influence strategy, you know, whether it’s a regional one or a specific one internal to Iraq. 

The Crisis Group reports that came out recently, they do very good work.  I always admire very much what the International Crisis Group does.  They recommended essentially something that I would say was in many ways strikingly consistent with what we’ve been trying to do over the last couple of years, in the last year, certainly, and a half.  So I think just because it may not be publicly discernible doesn’t mean it’s not happening and it hasn’t been obviously occupying the efforts of senior people in our government but obviously, I mean, Ambassador Crocker and General Petraeus, in terms of using leverage and influence to help move the communities to a political accommodation. 

Can more be done at the national level and what else should be done?  I defer to you guys on that question because it does get into policy issues at times as you mentioned in connection with the SOFA and strategic framework agreement and everything else.  But thanks, those are great issues that you raised, Michele.

Kimberly Kagan:  Michèle and H.R., those were terrific comments and they provoke a lot of thoughts but I’m going to limit myself to just one question.  We spoke about Iraq as a vital national interest, both of you have done that.  And we are talking about what we need to do next in order to consolidate the progress that we’ve made on the ground in 2007 and early 2008.  Michèle, the assumption that seem to underline many of your comments was that the Iraqi government needs to take actions in order to consolidate the progress, that progress is perishable without that and I would like to ask, what does the United States need to do to consolidate the progress on the ground positing that the Iraqis have some role to play, presumably if Iraq is a vital national interest so too does the United States.

Michèle Flournoy:  I would say that we have vital national interests in Iraq and the region and I would articulate them as first denying any safe haven for the export of terrorism from Iraq.  Second, preventing return to civil war that could draw the larger region and destabilize the region.  And third, I think a moral obligation and moral interest in preventing genocidal levels of violence.  And I think that ultimately preventing, at the minimum, preventing Iraq as a failed state, maximally seeing Iraq become a secure and stable state is key to achieving our interests in the broader region.  So that’s what I meant by saying we have vital interest there. 

I think the U.S., for its part, needs to do a couple of things.  One is we need to ensure that we stay committed to assisting Iraq build its capacity to safeguard its own security and stability if they are willing to take the steps necessary for political accommodation.  And that’s a big if.  That’s why I think one of the things I think our strategy needs to be in the future is (a) more focused on what our interests are at stake.  Let’s put the aspirational rhetoric aside and get down to basics of what are the bottom line floor, no kidding, U.S. interests that we have to protect.

And two, make our engagement and support much - use the conditionality to push not just Malaki, I don’t think we can just focus on Malaki but all of the parties that have to come to the table, use that to push them towards the very hard choices that they have to make for political accommodation.  Because I do believe we’re at a point where - first of all and we could debate this – I don’t think the U.S. Army and the U.S. military writ large has another surge in it.  So there are limits to what we can do in terms, without making political decisions I don’t think anybody is going to make like a draft or mobilizing the entire National Guard, etc.  We can’t grow the Army fast enough to make, you know, to get there in the near term, etc.

So I think that the only way we’re going to lock in these security gains is through political accommodation.  So I’m looking for ways that we can be more effective.  I understand it’s been happening in spades at the tactical level.  It’s been happening in spades out of the Embassy and MNF-I.  It has not been pushed at the national policy level to put our entire heft in hard bargaining to push for a political accommodation.  That’s my judgment.  Because I do think that we are at a high point of our leverage and that’s actually going to go down over time.  So, I’m looking – the core of U.S. strategy for me is how do you use that leverage more effectively while we have it.

Thomas Donnelly:  Actually, I’d like to pick it, some of the same issues.  No, I hope this is not – I hope this is enlightening rather than confrontational and I hope I’m going to try to open up a door through which H.R. can join the conversation.

I guess my thought would be that the SFA, we are kind of treating that as a 50-meter target because we have a short window of – because you know, we have to do something about it fairly quickly.  And even the famous CNAS three prevents definition of our long-term interests as, as you rightly said, a minimum threshold.  We have yet to define for ourselves what we’d like this strategic partnership to be like in the slightly longer term. That is, in part a failure of the current administration.  If it has a vision, it’s keeping it well-concealed and there may be some domestic political calculation behind that but my thought would be is that talking about it now is actually an opportunity and rather do it with more time rather than less. 

So I would just toss out again, what we think are partnership with a more stable, more solid central Iraqi government would mean to us not simply for internal stability in Iraq but for the regional and Long War calculus needs to be better defined.  And to try to offer H.R. an opportunity to get himself in trouble on this, going to your point about how our intentions are clear to the Iraqis, I would just ask for a spot report on how the Iraqi government and Iraqi leaders more broadly view this process of the SFA and what they think they would like to – what their longer term vision of the partnership is and how our actions will either clarify or obfuscate our intentions to the Iraqi leadership.

H.R. McMaster:  Okay, I’ll take a stab both of these – Kim’s question and Tom’s question.  First, what else should we do?  I think refocus, reinvigorate, maybe refine our technical assistance efforts with the Iraqi government.  I mean, the guy to really to talk about this is Patrick Fine, on how to do that but we have great people in Iraq who are working to do that everyday and their efforts are beginning to bear fruit and I think in many ways, we’re pushing on an open door in terms of Iraqi willing to accept that kind of assistance, not just from us but also from the international community.  So we focus on helping the Iraqi government put its resources to work for its people. 

Also, I would focus on not disengaging prematurely as Michèle mentioned from the beginning before the kind of confidence has been built between Iraqis and their government, Iraqis and their own security forces.  And I would also focus on really what are the key conditions for having sustainable stability within the country and we can list those if everyone wants to talk about those more in the future and work with Iraqis to develop specific plans to achieve specific objectives that deal with governmental performance, security sector reform, rule of law, and so forth and begin to work on some of the things together and with key international community actors who are willing to assist more as well.  And they’re doing quite a bit that doesn’t get publicized already.

And then one thing to get to Michele’s point on the Iraqi government and top down.  The institutions of the Iraqi government are still recovering from the sectarian conflict.  And so part of this is going to be reform within the ministries to make sure that the people who are in charge of key functions within those ministries, within the government broadly, have the interest of all Iraqis at heart.  The Iraqi government is beginning to work on that.  That’s one of the key things that we could help them with or that really they’re going to have to do themselves fundamentally. 

And then, the best pressure on Iraq in terms of leverage to put on them for reform is going to come from Iraqis themselves.  Now, what you see is you see that happening already.  Who really were desperate to get rid of the militias in Basra?  The people were.  And who were they calling on their cell phones everyday?  The people within the Iraqi government, Iraqi security forces to do something about the problems in their neighborhoods.

So one of the key things I think that will be important to watch over this year is the development of newly elected provincial governments and how that helps increase social pressure on the Iraqi government at the center to provide better services for those provincial governments.  We’ve also seen that work very in places like Anbar, where there was improved security, a functioning provincial government that then lobbied successfully its own government to get the resources it needed to begin the capital spending and improve basic services, improve the lives of their people.  So that could be something we could facilitate more, it’s that kind of pressure from Iraq’s own people toward political accommodation.

And then, Tom, I’m going to disappoint you because, you know, I’m not going to bother with the SOFA or anything and I shouldn’t comment on it because it’s a policy issue and so, sorry.

Thomas Donnelly:  Shoot!  Michele, you want to try to get him in trouble one more time or should we go to general questions?  Okay.  We will probably have a lot of questions.  The AEI ground rules, of course, are please identify yourselves for purposes of the transcript.  Wait for the microphone to arrive and make your statement in the form of a question.  Sir, I saw you first.

Demetri Sevastopulo: Hi, Demetri Sevastopulo of the Financial Times.  Could you give us a little bit more detail on what you think Iran is actually doing in Iraq.  Because when you talk to senior military leaders in Washington, they say it’s very difficult to know if it’s increased or decreased.  They say it’s not clear whether Basra is just exposed with everything already or whether they are doing more than they were a year ago.  And we get very little evidence.  So what have you actually seen?

H.R. McMaster:  Well, I think it’s pretty clear.  I mean, the evidence is really, you know, every time I see and I see a lot of my friends in the press room, you know I love it, I would never criticize the media.  But this sometimes happens in the media when you see the word “alleged” in front of when you know in line of Iranian activity, I was just want to say, come on, man.  Because you know if I was, as an Army Colonel to say something, to make a statement about that, there would always be some sort of effort to confirm what I’m saying. 

In the case of what Iran is doing in Iraq, it is so damn obvious to anybody who wants to look into it, I think, that is drop the word “alleged” and say what they’re doing, which is, we know for a fact organizing and directing operations against the government of Iraq and against our forces – the government of Iraq forces and our forces – we know they have done that, certainly in the past.  We know that they are supplying them with weapons and the most effective weapons that they used to attack the Iraqi people and our forces and these include the long-range high payload rockets that have been coming in from Iraq as well as the explosively formed projectile roadside bombs that come from Iran. 

We know that they have trained forces in the employment of these munitions - and in pretty large numbers.  We know that they were concerned that their maligned hand being obvious in Iraq would alienate their Arab neighbors so they try Arabize these efforts by using Lebanese Hezbollah for a lot of the training but it’s a pretty cosmetic shift that they’ve made in some portions of the training. 

We know for a fact that they have directed assassination operations.  They have a reputation of being some of the best assassins in the world.  They’ve trained Iraqis to do that.  They’ve trained them in skills not only for roadside bombs and in long-range rockets but also in snipers and other skills used to intimidate or kill individuals.  And we know that they have been sort of backing all horses to destabilize the situation and we know that their support is continued to key Badr officials who are in influential positions who remain on the payroll of Iran and to advance the interests of Iran and, in some cases, to provide leadership for other militia organizations that are stood up.

We know that they ostensibly have supported this government but have armed, equipped and trained a militia that has been attacking the very government they ostensibly support.  And this is not just something in Basra, this is last year.  This is in Nasariyah, this is Samwa, this is in Diwaniyahm, this is in Amarah and it was in Karbala in August 26th and 27th of last year.  And now again in Basra.

So I think it’s very obvious.  Now on this specific question you have - has it increased or has it decreased?  I think it’s very clear that what Iran has done over the last year is try to develop a considerable latent capability that it could turn on in short notice.  And I think that it may have been that this bold and very quick action by the Prime Minister in Basra foiled what was to be perhaps a much larger and coordinated effort, maybe even coordinated with efforts in other places in the region, like what we’re seen happening right now in Lebanon.

So, anyway, I think it’s very obvious what they’re doing.  I think it’s very obvious to Iraqis, it certainly is.  The Iraqis I’ve spoken to are incensed about it and I think it’s no longer alleged.  Yes?

Demetri Sevastopulo:  If it’s been going on for so long, why is it you said earlier that the Iraqis are only recently starting to talk about Iranian involvement?  Why did it not bother them before?

H.R. McMaster:  Now, that’s a great point.  Part of the reason is the intimidation factor.  We know that Iran had really been able to establish a pretty high degree of control over some key officials, you know, provided them protection.  And then also some assassination cells and elements of militia that would kill anybody who made a statement against Iranian interests.  So what I think what has happened is Iran has so blatantly undermined the security situation and it’s so clear now that they want to keep Iraq as a weak, failing state, is what they would like I think, dependent on them for support that many more Iraqis now are disavowing connections to Iran and providing more space, more physical space in terms of intimidation.  There’s more sort of a political space to address this issue than there had been previously. 

And then also, if you remember Iran was a big supporter of the militias which before and this goes back to the effective operations against Al-Qaeda and the importance of it, those militias were justified in large measure because of the perception that they were protectors against these Takfirists and Salafi jihadistss who play with Al-Qaeda, and the Baathists, the former regime.  So all these, what Iran could do was raise the specter of terrorist attacks against Shiite communities as a justification for its support in nefarious activities.  Now, the contradiction of what they’ve been doing is much more obvious to many more people than it had been previously.

Kimberly Kagan:  I actually would just like to follow up that for a moment because at The Institute for the Study of War we’ve been tracking Iranian influence in Iraq through open sources since this time last year if not before.  And I do just want to point you to some references where you can find fully documented reports on what the Iranians had been doing in Iraq and you can make your own conclusions about their efforts.  They’re on our website, wwww.understandingwar.org and you can find them in our Iraq Report 6:  Iran’s Proxy War.  You can find them in some of the recent materials that Marisa Cochrane, our research coordinator, has produced on Special Groups activity in Northeast Baghdad. 

In fact, she had tracked at the beginning of this year an uptick in Special Groups activity in Northeast Baghdad in part by the bringing in of weapons caches and their discovery and in part by the activities of their network and it seemed to us, at ISW, that that was perhaps a sign that Iran and Special Groups intended to escalate later in the year.  And that these actions that we’ve taken both in Northeast Baghdad, Sadr City and down in Basra were, in fact, a response to an escalation on the part of the Iranians.  So, I refer you to our website for that issue.

Thomas Donnelly:  Okay, my method is going to be as follows:  I’m going to take a couple from this section of the room then we’re going to move to the middle section of the room and then I’ll try the back and we’ll go in groups of two, and if we have more time, we’ll cycle through again.  So I’ll take the gentleman at the back of the table. 

Tony Sinnott:  Hello, Col. McMaster, I’m Tony Sinnott.  As you know, we’ve worked together for some time at U.S. Central Command.  I’m now with Enterra Solutions International.  I’ll preface my question.  I would suggest that Iraqi stability in a region like the Middle East, much like the Middle East must somehow stem from ties to the stronger external nation and if not the U.S. then somebody.  But the U.S. normally has strong ties with countries with whom they have commercial interests ahead of political and military ties.  This is our history, anyway.  You mentioned that it’s time for us or collectively, I think, generically for the Iraqis to help put their resources to work for their people.  And you also mentioned deals. 

Now, in a different context, is Iraq ready to put the $30 billion surplus to work for its people?  Are they capable of administering?  Have we made that progress?  And then furthermore, are they ready for commercial relationships?  And we, at least in parts of Iraq, see normal commercial activity start to flourish to help create a broader stability and shift the focus of community leaders and those who control resources and influence over the factions and sects as the sectarian groups over toward pursuing their own best interests which is a long term prosperous future as opposed to the violence.  Do you think they are ready or will they be ready anytime soon?

Thomas Donnelly:  Is there a response?

H.R. McMaster:  No, no, it’s okay.  A couple of members on our team would be much better to answer that question but I would say that there already is some direct investment coming into the country; it’s now increasing.  The efforts of Paul Brinkley, for example, and his group and being able to sort of look for the real viable opportunities and publicize those, have been really paying off. 

There are some large development projects that are under negotiation now and the various committees within the counsel of representatives and within, I guess, the Council Minister Secretariat have been able to give the kinds of assurances to some investors that they can make some significant investments in infrastructure.  You know that there are some strategic projects that are underway that are now being able to accelerated based on improved security.  So I would say yes the conditions are set for investors to begin to look at the situation and look at – if they can take the risks necessary but I think there are certainly some tremendous opportunities.

In terms of the Iraqi government’s ability to put the $30 billion surplus to work, there are some things that they’re going to have to look at, inoculating the economy against such disease, the possibility of potentially establishing an oil fund for that purpose.  The government’s own strategic projects that they may want to undertake: accelerating archaic certification for their airports, port rehabilitation, rail transportation, transportation networks.  Those sorts of things would be good investments for the Iraqi government as well. 

But yes, I think the potential does exist.  There is still a professional class in Iraq as you know.  There has been a tremendous loss of expertise.  People have had to flee the violence, as many people have been killed and caught up in the violence.  But there still is a professional class of what are called Directors General there who, with some assistanc, could execute the budget in such as way to improve basic services and set conditions for economic growth and development. 

There are other things that could be done and again, I’m looking at the real expert over here, Patrick Fine, but expansion of small and medium enterprise funds and especially a capital and special small and medium enterprise and also micro financing.  There is a huge demand for that kind of capital.  There has been tremendous success in payback rates for example, USAID’s programs are like at 98% payback rate, and if that could be expanded to small and medium enterprise, which the government is looking at now for example, they’re going to put a significant amount of money, much more than we would put against that.  I think it would have a high payoff as well in terms of jump-starting economic growth at the local level and addressing the employment issue.

Michèle Flournoy:  H.R. is just giving you the glass half full.  I’m by nature an optimist but let me give you the glass half empty picture.  We’re talking about a society that has endemic corruption.  No viable banking system.  Inadequate financial infrastructure to really support large scale foreign investment.  Absence of the sort of legal structures in place to ensure rule of law in financial transactions and investment for foreigners, etc. 

This is going to be a very long-term project.  Getting to the kind of, you know, the commercial side of the vision which brings me back to how do you buy time.  And the way you buy time is through political accommodation.  Piecemeal by piecemeal.  Every bit buys a little bit more time.  It’s so difficult to get to Tom’s very important strategic question of what’s the long term vision because the long term vision, what’s realistic depends on those interim choices of how much accommodation is really possible and how much things like corruption can be overcome.  How much of that structure can be put in place?  So I keep circling back to the immediate questions of political accommodation to buy us time for these very long term projects like really building up the economic side of the relationship.

Thomas Donnelly:  Okay, my one final comment then is, all that stuff would be – I think Michele’s description is correct but in really hard-headedly analyzing what the American interest is, a security interest can be enough.  I mean, the American involvement in the Philippines for example wasn’t exactly anything that made anybody wealthy in a significant way.  So I think we are able to do things that are hard to do that involve a long-term engagement driven primarily only by a security or strategic interest so that can be an adequate basis for long term engagement.  Although more is better and a prosperous Iraqi society would be in our strategic interest. 

Again, just to return, I’m going to go one question at a time but again now work the middle section of the room.  Fred, I promise that we will not leave the room without you getting your question in but just to give the illusion of impartiality, I’m going to – and I saw a hand right there in the middle.

Mark Lavin: Great.  Thank you, sir.  Brave Rifles by the way.  My name is Mark Lavin.  I’m a Congressional fellow working on the House Oversight on Government Reform Minority Staff.  The question I have for you, sir, was the two organizations are actors in Iraq as our adversaries.  How do we define their centers of gravity but also how do we define for them that golden bridge that they can cross over and how do they define our center of gravity?

H.R. McMaster:  I saw Jeremy Pam in the back too.  Did I get all that development language right, Jeremy and Patrick?  Okay, those are the two guys who you really ought to ask any development questions to, Tony or anybody else.  They’re the real experts, I was just kind of acting as a cipher for those guys.  Okay, great questions.  Our center of gravity, I mean popular support obviously in a counter-insurgency type of environment and what they’re trying to do is gain some degree of popular support sponsorship among the communities in which they operate.  They need some kind of freedom of movement and they need safe haven and support bases.  These are you might call decisive points for this particular enemy. 

I think for some of them it’s critical that they retain some degree of external support for their operations.  For example, Al-Qaeda still needs to tap into the so-called foreign fighter terrorist supply network though Syria.  They also need to be able to access some of the considerable funds available in the external regime of Saddam Hussein in Damascus and in Amman, Jordan, UAE and other places to continue finance the effort for those who are operating under Izzat Ibrahim al-Duri and Muhammad Youssef Ahmed’s wings of the former Baathist regime but are still funding Al-Qaeda activities as an example.  So those are three things.  Any extra support, safe havens, support basis and freedom of movement being one.  And then, any kind of support from the population.

The golden bridge is political participation, you know.  If you want to participate in the future of this country in a way that allows you to represent the interests of your community in the political process, that door is open.  There are provincial elections coming up.  Also many of these factions, for example if you look at the Office of the Martyr Sadr representation, the Council of Representatives, they are represented within the government.  They do have representation within the city government of Baghdad and the provincial government.  They control resources that they could use if they chose to do so to actually improve the lives of people rather than to focus on a militia type of approach to advancing their interests, which is obviously utterly failing to improve the lives of their people.  Thanks, Mark.  Veterans.

Thomas Donnelly:  That was a great regimental moment.  This gentleman here.

Pete Chutley:  I’m Pete Chutley from Brookings.  I’d like to ask you a question about one variable that hasn’t surfaced yet, which is American public opinion and I’m speculating here but let me jump to a conclusion.  The American public opinion no longer supports this effort and they want to get out.  And all of you talk about time, giving the Iraqi government more opportunities and so on.  I think come January the public pressure, this is speculation on my part, to get out strong and quickly will be irresistible.  And so then, what happens? 

I mean, how is that going to be turned around?  I can’t see Crocker and Petraeus coming back here, let’s say in the fall, giving a glowing report and suddenly a majority of the American public says, oh, we changed our mind.  I mean, this is like Vietnam in maybe ’70-’71.  They want to get out.

Michèle Flournoy:  Actually I’ve looked pretty closely at the polling.  The latest polling says two things:  The American people do eventually want to get out of Iraq, but the second thing is they care about how we get out.  They don’t want to get out in a way that creates chaos, civil war or further damage to U.S. interests in the region.  They want to get out carefully and prudently.  So I think that there is a glide slope but they are not – they don’t want to rush to the door, if rushing to the door actually does further damage to our interests. 

So, I do think that that is a very real constraint that the next president has to work within and part of why I am more minimalist in defining our objectives is that I am aware of that and I think what we have to convince people of is that we have to do this, manage this over time in a way that safeguards our most essential interests.  And that means we can’t leave tomorrow but it also means we can’t stay forever.  And what this is about is managing a phased transition over time in a way that safeguards our interests while still reducing the level of costs that we’re bearing as a nation.

I think we have to look at the reasons why public opinion is the way it is.  And I have also been watching the polls and I’ve also noticed that they’ve shifted over the course of the past year and that it has mattered a lot.  Whether the United States is actually winning or losing on the ground in Iraq.  And there is one vision of Iraq that we have, all of us as an American public, that developed over the course of 2006 where it did seem to us almost as if the violence were random and that the enemy situation was out of control and that our troops were able to do nothing. 

What we have seen over the course of the past year, year and a half is an extraordinary transition in what U.S. forces have been able to achieve.  It is not surprising to me that the public is behind on understanding what’s going on on the ground.  As it is, and almost certainly as it has to be, that’s why we have both military and civilian folks on the ground evaluating the situation every day. 

But we don’t make our foreign policy on the basis simply of American public opinion.  We make it on the basis of U.S. national interests.  And it’s up to our policymakers to make a decision about what our national interests are, how to pursue them, how to explain to the American people what’s actually going on on the ground and also to explain to them the cost and consequences of premature withdrawal of U.S. forces, quick disengagement within Iraq and also the opportunities that come with engagement in Iraq over time as a lever against growing Iranian influence in the region, Iranian nuclear weapons programs, the Hezbollahization of not just southern Iraq, which I think we may have arrested in some degree by our current military operations, but also coordination between Hezbollah in Lebanon, Syria, Iraq and Iran.  All sorts of things that will over time compromise U.S. national interests and which in the end I don’t think the American people would like.

Thomas Donnelly:  I’d like to try to – if there are any hands in the far back of the room, I don’t have my glasses on so – thanks.

Alyson Slater [phonetic]:  Hi, my name is Alyson Slater.  I’m about to graduate from SAIS Johns Hopkins and I have a Fulbright Fellowship to study Iraqi refugees outside of the country.  You mentioned a little bit about the humanitarian part of this.  What I’d like to know a little bit about is the people part of this and specifically what we can do outside of the country especially with women immigrants, because that’s what I’m going to be studying, to woo them back into the country.  Thanks.

H.R. McMaster:  There are better people to talk to than me about this and they probably would be some of our aid officials and people who were working in the countries were Iraqis have gone to seek refuge.  But I would just say that there are programs that we could do outside of the country that could equip people so that when they come back into Iraqi society that they are able to integrate more easily in terms of employment, skills that could be developed there. 

The other thing would just be that to make sure that the host countries, the countries in which these refugees are living now are able to provide for them in terms of the basic services.  The best thing to do for them obviously in the long term is to have security in Iraq so they can return to their families and their homes and build the kind of lives they want in their own country.  There has been some halting in initial movement back of some of the refugees within the region. 

There are a lot of displaced people within Iraq as well as you know and that’s where we can have a higher degree of control working with the Iraqi government to provide the services to alleviate their suffering and so forth.  Iraqis tend to flee mainly along kinship lines whenever they can and settle with families in other parts of the country.  But you’ll know more about that and it’s noble work that you’re doing and wish you all the best.

Thomas Donnelly:  Okay, you guys had your chance.  Fred, we’ll start here with you and then again we’ll go across the room as time permits.

Fred Kagan:  Thanks for your great presentation.  Michele, I have a question.  I’d like to follow up on a point that you made that I thought was very interesting.  You highlighted the coming six, eight months as being a really pivotal time when our influence is at its peak in many respects and after that it will wane.  I’m not sure that I agree with you entirely on how narrow that window is but certainly we have an opportunity now.  One of the things that’s been a little bit disappointing to watch I think for many of us after the military surge was we’ve been saying, okay, where’s the nonmilitary surge?  Where is the civilian surge?  Where is the reconstruction surge and so forth? 

And it seems to me that if we identify this as a critical period, then this would [audio glitch] with the nonmilitary effort as well.  And this is something where it’s not just a question of what the administration does because unfortunately we’re now having debates on Capitol Hill about whether we are going to charge the Iraqis for gas we burn rather than about how we are going to provide assistance to maximize our leverage.

So, my question to you is, granted that the administration obviously needs to do everything in it’s power to take advantage of this opportunity, isn’t it time for Congress as well to move beyond the degree of partisanship that’s characterized this debate and actually try to recommit, at least with the soft power part of this, to see if we can take advantage of this opportunity that you’ve identified?

Michèle Flournoy:  That’s a great question.  One of the things that we are doing some work on – how to manage this transition – and one of the things that we’ve looked at is – is now a good time to actually form a bipartisan group that would certainly be in part appointed by the administration, part appointed by the majority in Congress to try to come to some bipartisan consensus on key issues that will enable a smoother transition and a longer term vision of how we’re going to manage the eventual drawn down of U.S. forces while still maintaining the engagement that we need to safeguard our interests. 

I think that dialogue is desperately needed, I mean, realistically at the height of an election season, I don’t think it’s likely to happen.  It may perhaps after the election this can be a transition activity that we can engage in.  But I do think that in addition to the administration really using this period to not sort of – not go quiet or not sort of go into a coasting mode but to really work this with some sense of urgency includes not only using our leverage in negotiations more effectively but also to the extent we can surge additional nonmilitary resources into country particularly now that some of the politics within the ministries are starting to sort themselves out. 

Now is a really good time to have more advisors in country advising those ministries in getting started.  The problem is that there just hasn’t been a whole lot of success finding the right people and getting them to Iraq in any kind of the numbers that are needed given the scale of the problem.

Thomas Donnelly:  Can I do a redirect on that.  The logic of this idea is very compelling but I think at this point one just has to ask the practical question, how much really of a surge capacity outside the military, which was hard enough to do, and given the sort of description of things like getting the Sadrists out of the Interior Ministry or the things that really only the Iraqis can do for themselves.  Can we define this in a little bit more tangible sense of what the art of the achievable is in the next six or eight, I mean, and I think that suggest of advisors is a step in that direction but I’d like to know more.

Michèle Flournoy:  Right.  Here I think quality may matter more than quantity.  This is not - first of all, we as a country have not invested in deployable civilian operational capacity and now we’re paying for that because we don’t have it in an amount that we needed, and that’s a question for the future.  There are plenty of examples where the right – a very skilled person placed in the right place can have huge impact.  I would note the new U.N. representative in Iraq, De Mistura, one individual who can, is a game changer for the U.N.’s funds in Iraq. 

You can think of in other former operations the impact that a person like Bob Oakley had, one senior diplomat, on the whole course of the entry into Somalia without a shot fired.  I mean, and you can find people in the Embassy now, David Biers on Article 140, absolutely the right guy doing the right stuff.  But I don’t think that really this has been an area of focus for the administration to say here is a key issue where I need movement. 

Who is the absolutely right senior person in the U.S. government that I can have the president call to say I really need you to go work this problem and bring every skill you have and every experience you have to this.  We have not seen that level of commitment which baffles me frankly because this is the legacy of this administration and why are those stops not being pulled out at this critical moment.  I don’t see it and I don’t understand why it’s not happening.

Kimberly Kagan:  I’d like to make one more comment on this issue.  I’ve had the privilege of traveling to Iraq three times over the past year.  The first time H.R. was my escort officer and boy, that was fun, it was this time last year.  Then again in July 2007 and then the most recent time with Michèle in February 2008.  And we can talk about civilian surge and we should talk about civilian surge but the truth of the matter is that what are civilians can do in country depends in part upon what our military presence is in country. 

And I am so worried that we look at civilian surge as a way of replacing military force that we failed to see the synergy that is evident on the ground now that was not evident a year ago in May.  That comes from having a large substantial troop presence dispersed throughout the country, partnered at echelon with Iraqi security forces and also with Iraqi national and provincial government, making it possible to identify problems up and down through society and have a military chain of command talking to civilian counterparts at national, provincial and local echelons in order to get problems solved.

And one my greatest concerns is that as we talk about civilian surge and as we talk about draw down to 15 brigades and below 15 brigades, we actually diminish substantially, almost exponentially our capacities to perform these negotiations because we can no longer have as much partnership between Multinational Corps Iraq, for example, and its Iraqi national components.  We can no longer have as much integration between our division headquarters and provinces as those division headquarters take on new responsibilities in areas previously controlled by our allies. 

And likewise at the local level, our brigade commanders have been, in a certain sense, the focus for integrating our national level efforts that General Petraeus and General Odierno and General Austin have been participating in with the provincial and the local efforts.  We’re going to lose eyes and ears every time we draw down a brigade and every time we remove a headquarters.  And I think we mustn’t look at civilian surge as a way of replacing military forces but rather as a way of working synergistically with our military forces.

Thomas Donnelly:  H.R., have you got any thoughts?

H.R. McMaster:  No, those are great discussions.

Thomas Donnelly:  Okay.  Any thoughts about again, are there areas that are critical in the next six or eight months that if there were civilians are to speak really – what should they be focused on?

H.R. McMaster:  Obviously, again, the tremendous experts on our team, Jerry Pam and Patrick Fine and one of the things that I’ve learned from these two guys from the beginning our efforts, early in our efforts is the key is to put Iraqi leaders, institutions and systems at the center of our advisory effort.  And we’re making that shift now but we need to do it in sort of a more focused manner and this is something that the Ambassador is working on with the whole advisory tentacle and assistance efforts in Iraq right now. 

To give you a quick thinker’s, you know the history is important in this, initially when the Iraqi state collapsed in 2003, having been hallowed out by Saddam and then after the regime collapsed, we in a sense substituted for the Iraqi essentially directed Baath party system by creating at the local level neighborhood councils, district councils and also provincial councils.  And then because the Iraqi their system was broken and Iraq was not generating revenue, could not put that revenue to work, we compensated for that by providing American funding at the local level based on those leaders’ priorities.  So then what we were in a sense doing is empowering these governmental bodies that we helped Iraqis form in the very early days.

Now, what is happening is the Iraqi government is building institutional capacity at the center, has access to these revenues.  Now, the revenue is flowing through not what we helped create but flew through the directors general of each of the service ministries, down to the provincial level, down to the district level.  We just hadn’t paid a whole heck of a lot of attention to them in the past. 

So now we have an opportunity to help Iraqis make their systems work to formulate their budgets, execute their budgets, undertake at least the beginning of civil service reform, which I learned is a really long thing to do in our group - right, Patrick?  But at least that’s removing those employees off the rolls especially if those employees are collecting a salary so that they can be militiamen and work against the government.  That would be a good first step, and then also hiring the qualified people who are still out there.  Mosul, for example, needs engineers.  Guess what?  There’s a great university there that cranks up a lot of engineers every year. And they’re unemployed.  So if you can get the Ministry of Municipality and Public Works to execute their budget and empower the local government down at the minister level in Mosul to hire these people, then suddenly, you can create the scopes that work, bid out the contracts, get reconstruction going in such a way that addresses needs of the population.  It creates the kind of positive momentum that allows people to come together as well, that’s one of the effects.  Anyway, that’s the main thing.  Six to eight months would be: help Iraqi institutions and leaders make their systems work.

Michèle Flournoy:  I’ll comment on this.  This is one of the reasons why I really think this concept of over watch and what it looks like different stages needs to fleshed out because people tend to think of it as the you know, the Iraqi security forces stand up, we stand up.  As you think about it as over watch, you’d have to think about how are we going to enable critical civilian efforts that we have to continue on our side, whether it’s in Baghdad or in provincial capitals, etc. 

And so the marrying of the civilian and military efforts has got to be really well thought through as we start eventually pulling out of leading population, security and counterinsurgency missions and stepping more of an over watch role.  Because we’re still going to have American civilians on the ground doing very important things and we’ve got to have a concept for how we’re going to move them, protect them, enable them and also how that presence is going to change over time.

Thomas Donnelly:  I thought overwatch was just for our support.  We’re heading the home stretch, so I’m to start taking questions in twos.  A very patient gentleman here and Tom Ricks.  So we’ll take two questions.

Male Voice:  Col. “promotable” McMaster.

Thomas Donnelly:  That list has not been released yet to my knowledge.

Male Voice:  I figured I’d ask you a question about history.  Tal Afar, the U.S. military under your direction did a very good job there.  It was written about in newspapers and prominent magazines, the President cited in a speech yet U.S. military effort in Iraq didn’t pick up on it, with the exception I would say of Col. McFarlan in Ramadi.  Why is that?

Thomas Donnelly:  And a second question here, Charlie.

Stanley Kober: Stanley Kober with the Cato Institute.  Back to Iran, you said there’s a process of escalation.  Escalation sometimes leads to outright war.  What if that were to occur?  How would that affect the situation?

H.R. McMaster:  Besides job security for me, is that -?  Well, the first thing I have to say on Tal Afar..ah man, I can’t believe you baited me like that.  Actually, I don’t think that’s the case.  I would just differ you on that.  I mean, I think that there lots of units that conducted extremely effective counterinsurgency efforts in other areas of country waiving for us.  If you remember Mosul was destabilized in September of 2004 and this brigade under Bob Brown, striker brigade with a lot of reinforcements, Iraqi reinforcements primarily, did a brilliant job of stabilizing a city of two and a half million people. 

Now Mosul is still a problem.  Guess why?  It goes back to this interaction, it is an important city to the enemy.  And I think a lot of, and this has been a debate, and if you guys have been following this on the blogs or anything, I just get it when I hear about it periodically.  I haven’t been able to read all of it but there’s this debate about whether there was really a break in a revision of our counter-insurgency approach that centered on Tal Afar.  I would say that really it had a lot to do with the resources that were available for commanders. 

I mean, we were able to request resources that we thought were necessary to stabilize our area and conducting effective counter-insurgency campaign and we got those resources.  We got reinforcement with the Second Battalion 325th Parachute Infantry Regiment.  They just did a brilliant job with us.  We also received Iraqi reinforcements and Iraqi emergency response unit from Mosul and an additional brigade of Iraqi army.

So we were able to secure the population, defeat the enemy in their area of operation, secure the population, set conditions for economic growth and development and then work with Iraqi leaders to make those improvements in security sustainable through effective security sector reform, reconstitution of police forces, all those sorts of things.

So I don’t think it was unique in that we were doing something that had not been done before, nothing was new or novel as you know better than anybody, as a student of history, that these were just general counter-insurgency approaches, modified obviously to unique ethnic sectarian political travel dynamics in Iraq and in our area of operations.  On Iran, one of the –

Kimberly Kagan: The big “what if?”  I think you ask a very good question and I do just want to point out that there is difference between the strategy and the operational concept we’ve been pursuing since say January 2007 and the one that we were pursuing before.  The change to counter-insurgency missions has been key and essential for creating population security and for making possible the ten precise points that H.R. made earlier in here.  But it has also been incredibly important that we’ve had synchronized theater-wide efforts coordinated by General Odierno at Corps and also by General Petraeus at force.

And so, although H.R. has done wonderful things in Tal Afar, and although we have seen in the past some incredible operations by our truly talented junior officers, I do think that 2007 is the first year in which we had commanders who truly looked at a theater-wide problem and developed a theater-wide solution, focusing first and foremost on Baghdad and the enemy belt surrounding the city and then projecting forces outward from Baghdad, north and south.  What I’m concerned about is that we’re almost leaving off in the middle of these operations.  We have chased AQI up to Mosul in a series of operations that’s more brilliant than any I’ve seen in U.S. history, since, well really the Second World War.

We have actually chased and fought Special Groups into a position where they have much, much less leverage and much more difficulty than they did a year ago today.  And as a student of military history, I would say that what I would love to see are successive operations up in Mosul and down in Basra.  And I think we’re beginning that now and I think that we will watch over the next several months the fruition of that theater-wide strategy that helps actually to turn the kinds of tactical successes that H.R. had in Tal Afar and that our other junior commanders have had now throughout Iraq into operational level  success and into strategic success.  And we know that we are achieving strategic success as we defeat enemy group and actually turn the Iraqi government into the sorts of negotiations that may ultimately allow us to become an effective strategic partner with the Iraqis in the region rather than a band-aid on a hemorrhaging situation.

Thomas Donnelly:  And now Iran?

H.R. McMaster:  I would just point out a sort of ironic -or paradoxical situation I guess would be a better word choice - Iran says that what it’s trying to do in terms of supporting violence in Iraqi is to avoid a confrontation with the United States yet these actions obviously put it on a collision course.  So I think it’s clear that it’s in nobody’s interest for there to be a expanding conflict, a regional conflict, leaders have made that very clear and so I think, you know, that’s all I can really say about it. 

I mean, obviously it we are not doing anything to inspire Iran providing militias with ammunitions that attack Iraqi people, the Iraqi government and our forces.  So it’s a, obviously this is a clear choice that someone within that Iranian military and political hierarchy has decided to do.

Thomas Donnelly:  If I could just jump in on the sort of a question of the lessons of Tal Afar for the Iraq mission, I would say there is almost a more critical but still unanswered question about whether both the Army and U.S. military at large have figured out how much counter-insurgency to allow for in long-term defense planning and I think it’s a serious question that could be reasonably answered both ways. 

But it does serve to remind us that what the immediate lessons are of the success of operations in Tal Afar when translated unto a larger stage, can get deluded or become more opaque the higher up the food chain or the broader the aperture that one looks at things.  I thought there were a couple of questions here.  I think we have about 10 more minutes for questions and I will save just a few minutes for final comments.  So we’ll take both, these two questions here and then I’m going to try to get the one in the back.

Yochi Dreazen: Hi, Yochi Dreazen from The Wall Street Journal.  One of the other factors that brought violence down obviously in the last year or two years is that mixed communities have become homogenous, so places where you have seemliness between sects, where that could have been a source of friction, they have now separated themselves out further.  I’m curious, do you think the new normalcy is that you have homogenized communities, provincial elections perhaps even reify that further.  Or do you think that you begin to see these communities reintegrate themselves?  And if the latter, what do you think are the possible sources of friction and difficulty as that process unfolds?

Nancy Youssef: I’m Nancy Youssef from the MacLatchy Newspapers.  I have a question for you about the current Sadr City offensive.  Where does that offensive ,which was pushed by Nouri al-Malaki, fit into this broacher idea of reconciliation and improvement in the security situation and what are some of the risks in executing it given that so much of the violence that we’ve come to know in Iraq has been spurred by outbreaks of violence in Sadr City?

H.R. McMaster:  I’ll take a quick crack at these two.  First of all, that is the reason why some of the violence has decreased along some of these fault lines within Baghdad.  Doug Altman would know even more about this in terms of several months ago how some of these communities began to reintegrate.  And I’ve just been reading a lot of the press accounts of Sadiyah, for example, as being one of the neighborhoods where people are coming back together.  I think it has to be for it to success. 

It can’t be sort of these homogenized pockets because as you know, Iraq is kind of a crazy quilt of ethnicities and religious sects.  You know there is a high degree of intermarriage within tribes, for example.  And really the key factor that pitted these communities against each other were not just their ethnic or their sectarian identity, it was extremists who were able to operate with relative impunity within these areas to pit these communities against each other through violence and then citing reprisals that led to a kind of a cycle of destructive violence. 

So what are the points of friction as they get reintegrated.  A lot of it had to do with property claims and whose house is whose.  My limited experience has been that Iraqis sort that out better than anybody.  I mean, they can figure out by getting, you know, the Muktars, the Sheikhs together, how to broker this but the conditions had to be set security-wise first, which is the biggest obstacle to overcome.  And that really is that you have security forces in place that are trusted by both communities. 

And there is a certain degree of redundancy there within those security forces or checks maybe between local police forces and Iraqi army forces which may not be directly from those communities and also the back up effect of a Iraqi backing up for these such that the forces that are now securing these communities and people move back in, not only have the strength to deal with current threat but where we’re operating right next to them, but also can deal with intensified enemy actions that are almost certain to come as we reduce our effort and as the communities begin to move back in together.

The other key thing is to bring community leaders together and create some kind of mediating mechanism or forum for them to meet with on a regular basis to talk about their grievances and stress these cross cutting issues to get them off the ethno-sectarian narrative. 

Another key thing to do to make it more permanent is to, as we’re talking about earlier, get the Iraqi government should be able to provide the basic services on a nonsectarian basis.  And then when people have certain needs, the communities would fall in on themselves, they won’t go to the Imam or the Sheik, they’ll be able to go to their government who is providing security and services for all the communities in a particular neighborhood or district or something at the provincial level.  So those are just some quick thoughts on that. 

On the Sadr offensive I wish I could comment authoritatively on it but I’m just reading the reporting myself.  It’s been in the press since I left and immediately since I left on the first of May so it’s kind of dated almost by now.  But I do know that there was a dual effort, a military and security effort as well as a political effort led by the Prime Minister’s office.  And there had been a great deal of response to that political effort in the form of, you know, sheiks and community leaders from Sadr city in particular, coming to meet with the Prime Minister, meeting with Iraqi security forces on the group to try to come to some kind of an agreement that would allow the government to establish control in an area that had become a safe heaven and support base for actions directed against the government of Iraq. 

And so, the key thing I think would be to extend the writ of the Iraqi government, not just security but also services and capital spending and all the things that Sadr City needs desperately, health care, to Sadr City in a way that has not been possible before based on the capture of that ground by these criminal gangs in that neighborhood.

Thomas Donnelly:  We have actually two at the back side of the room and those will be our final two questions and then we will have a very brief wrap up comments by the panel.

Jason Campbell:  Hi, Jason Campbell with Brookings.  I’d be interested in getting your impressions on the extent to which the Iraqi leadership and even some of our adversaries in Iraq, are following the developments of the U.S. presidential election and how much importance are they putting in its outcome given the obvious disparity in the proposed plans by the candidates.

Hee Seok Chae:  Hee Seok Chae. I heard that in Southeast Asia there is a deluge of cash money and sometimes business money, you’re going to find it very tough even to have a hotel reservation.  I remember that in the Gulf War there was a peace dividends so that allies participate in the war expense but so far as I know, I think this war, Iraqi war, the U.S. solely maybe just spend the all-time expenses.

And I wonder whether there is a some review and analysis of the investment on the war vis-a-vis the returns and whether this war had really the national product like, you know, gross national product effect, like some production effect or national disruption maybe just a declining effect, whether such kinds of analysis and review is done.  What kind of return we can get by this war and whether there will be some kind of long-term effect that this war might contribute to the decline of the, like British Empire, or other Roman Empire.

Thomas Donnelly:  All right, Michele, choose which one of those questions do you prefer to answer first.

Michèle Flournoy:  On the cost the war I would just say that I do think the accumulating cost of the war has certainly affected American public opinion and I think that while there may be some variation in public opinion with what is actually happening on the ground in Iraq, I actually think there’s a larger issue where when you poll Americans about their top national security concerns, Iraq is no longer number one on the list, it’s no longer number two on the list.  I think it may be three or four. 

But number one is now energy security and it’s actually tied for number one with the threat of WMD terrorism.  And so, I think part of what’s happening is Americans are saying we want to open the aperture.  We want to look at a broader range of risks and balance our investment globally across the range of risks we have to deal with and certainly we have interests in Iraq and we need to safeguard those but we also have other interests elsewhere that need to be balanced and we’re worried about strategic exhaustion. 

We’re worried about putting too much into the basket of Iraq.  And I think that is a much larger influence on the polling and public opinion than the weekly ups and downs of what people read in the newspaper in terms of how things are unfolding in Iraq.

Kimberly Kagan:  We’ve got a double pass.  I actually would like to address that very same issue.  I think that we have entered a very dangerous discourse here in Washington where we talk about the cost and benefit of war as if it were a monetary figure.  As if the cost of war and if the benefits can be measured by the amount of income that the United States spends on the effort and the amount of return that it brings in.  I, for one, am extremely discouraged about the rise of this in the public discourse, in Congress and in the presidential debates. 

It seems to me that we are not in Iraq for the purpose of making money nor should we be in Iraq for the purpose of making money nor is it the purpose of Iraq to offset the costs of our entry into Iraq for the purpose of establishing security and creating the conditions for a wider relationship between Iraq and the United States.  That is not a cost that it is fair financially to ask the Iraqis to bear nor is it right. 

That smacks me as a Roman historian, as imperialism through and through and I don’t approve.  I actually think that the United States should pursue its interests based on what its interests are and what accrues to the United States in terms of its global needs, its global honor, its global prestige and also its security against global threats, which is the issue that Michèle brought up.

We actually have enormous global risks and challenges.  I think we have throughout our history and we have a tendency to compartmentalize what happens in one theater with what happens in another.  And to think that it is important to reallocate forces, effort, money from Iraq to other theaters because we have not perhaps been investing the same sort of attention in those theaters.  But I would submit that in fact there is a huge amount of global risk involve