As you suggested in your invitation letter, it is a timely moment to assess the health of the overall trans-Atlantic relationship. While we are seriously concerned by differences between the U.S. and some European countries on the best way to achieve our agreed goal of Iraqi disarmament, it is also fair to say there are many areas in which the U.S.-European relationship is as strong as ever.

Our European Allies and friends are vital partners in the campaign against global terrorism. We are opening new markets for U.S. goods and services and addressing barriers to American exports and investment. We have achieved important milestones in our relationship with Russia. Progress in the Balkans is ongoing. Our efforts continue to promote regional stability in Cyprus, Northern Ireland, and Nagorno-Karabakh.

Europe is changing in momentous and important ways. Thus, our relationship with Europe will continue to evolve as we adapt to, and in some cases participate in, these changes. Both NATO [North Atlantic Treaty Organization] and the EU [European Union] are expanding eastward, bringing in countries that are embracing democracy and market economies. These twin expansions bring us closer to President Bush’s vision of a Europe whole, free, and at peace. The invitees bring a new perspective and a new energy to the EU and NATO.

These expanded boundaries challenge European nations to build a new concept of themselves. They challenge the U.S. to work constructively with this new reality.

The tensions with some of our traditional Allies are acute, but our longer-term common interests remain. Our economic relationship with Europe amounts to about $2 trillion in trade and investment. Millions of travelers cross the Atlantic each year. We cooperate closely on matters of regional and global significance, from trafficking in persons, to trade liberalization, to terrorism financing. Europe remains our most important partner in promoting human rights; Europe joins us in seeking peace in the Middle East and supporting development in Africa.

We recognize that the bonds forged so firmly in the Second World War and the Marshall Plan's reconstruction of Europe are matters of history to the younger generation of Western Europeans. For those in Central Europe, Russia, and Eurasia, however, Cold War traditions of conflict and confrontation are legacies they would like to leave behind. The Secretary, Department principals, my colleagues in EUR [Bureau of European and Eurasian Affairs], and our Embassies abroad are actively using public diplomacy and other tools to reach both of these generations, in order to lay the groundwork for strong and vibrant U.S.-European relations for decades to come.

Iraq

The most pressing challenge for U.S.-European relations today is how to ensure that the Iraqi regime of Saddam Hussein complies with the requirements of more than 17 UN Security Council resolutions and fully disarms. Plainly, there is sharp disagreement among European and Eurasian countries about how to enforce compliance with the Security Council.

Some European countries, especially the United Kingdom, Spain, and Bulgaria, agree with us that Saddam Hussein has missed his final opportunity to disarm. They and others understand that the international community must be prepared to back up its writ with the use of force, as anticipated by UNSCR [United Nations Security Council Resolution] 1441. A number of countries in Central Europe and Eurasia have pledged forces and specialized units to the coalition we have assembled.

At this juncture, however, other European countries -- notably UNSC members France, Germany, and Russia -- favor giving the inspection process more time. These countries generally acknowledge that the Iraqis engaged only in limited and truculent compliance, but hope that more time and intensified inspections can achieve results. The German Government insists that force should not be used under any circumstances.

We believe that, in the absence of a genuine commitment by the Iraqi regime to disarm, more time for inspections or more inspectors -- as proposed recently by France -- will not solve the fundamental problem of Iraqi non-compliance. We know what genuine disarmament looks like. We have seen it in Ukraine and in Kazakhstan. Governments that accept the priority of disarmament don't dribble out concessions. They take on obligations and make commitments willingly, and they list their weapons sites freely.

We welcome expressions of support for our policy on Iraq from a number of European leaders. This includes the January 30 letter signed by eight European leaders (from the Czech Republic, Denmark, Hungary, Italy, Poland, Portugal, Spain, and the U.K.) and the February 5 statement by the "Vilnius 10" (Albania, Bulgaria, Croatia, Estonia, Latvia, Lithuania, Macedonia, Romania, Slovakia, and Slovenia). We also appreciate the statement of the EU Summit on Iraq on February 17, emphasizing the focus must be on Iraqi compliance with UNSCR 1441.

In the United Nations, we are working intensively with the U.K. and Spain to ensure broad support for our draft resolution. We would like to see the Iraqi threat addressed through the Security Council, thus strengthening its credibility.

Should military action against Iraq take place, we are seeking the broadest possible international coalition. We have held private talks with many European governments about possible coalition action. In a number of cases, acting on a bilateral basis, we have requested and obtained base access and overflight and transit clearances. Some countries are already committed to providing military forces to participate. Should military action prove necessary, we would also look to our Allies and friends in Europe for post-conflict support, including humanitarian assistance and reconstruction.

NATO

For over fifty years, the United States and its European Allies have been joined in a common cause through NATO. We have been working hard since the September 11th [2001] attacks to transform the Alliance to address these new security threats. The Summit meeting of heads of state and government in Prague last November represented an historic milestone in this process. Mr. Chairman, I would like to take this opportunity to congratulate you on your chairmanship of the NATO Parliamentary Assembly and to thank you for your advocacy of U.S. interests in that organization. I also want to applaud your deep engagement at Prague and your continuing support for NATO’s transformation.

At the Prague Summit, NATO members agreed on an ambitious program proposed by the U.S. to develop "New Capabilities, New Members and New Relationships" to transform the Alliance. Our European Allies agreed to improve their military capabilities, through resource pooling and specialization, helping NATO to undertake collective action against the new threats that we face around the globe. The Allies also endorsed a U.S. proposal to establish a NATO Response Force, which will give the Alliance a cutting-edge land, air, and sea capability. We agreed to streamline the NATO command structure to make it more lean, efficient, and responsive to today's threats. Work on implementing our new capabilities initiative is well underway.

Our decision to invite seven new members to join the Alliance will extend the zone of NATO security and stability from the Baltic to the Black Sea, helping to further secure a Europe that is whole, free, and at peace. We are pleased that each of the seven invitees has already made significant military contributions to the war on terrorism and we will look to them to provide specialized niche capabilities to the Alliance in the future.

Prague also celebrated the establishment of a new relationship between NATO and Russia. NATO states and Russia are working together in the NATO-Russia Council as equal partners on selected projects aimed at expanding and deepening our mutual cooperation. Current projects are focused on peacekeeping, civil emergency planning, non-proliferation, and missile defense. I am pleased to report that so far the NATO-Russia Council has been relatively successful. Russian participation has been constructive and cooperative. As this process continues, we will seek ways to broaden and deepen the NATO-Russia relationship. The NATO-Ukraine Action Plan agreed at Prague provides a roadmap which, if implemented by Ukraine, will draw Ukraine closer to the Alliance and bolster internal reforms.

It is a source of some regret that last month some Allies chose, at least initially, to confuse the obligation of the Alliance to provide purely defensive assistance to Turkey with the broader debate over the question of what we should be doing about Iraq in the UN and elsewhere. This is not the first time NATO has experienced disagreement on a difficult and important issue. One only has to think back to the debate over the INF [intermediate-range nuclear force] deployment in the 1980s. The fact is that NATO remains the fundamental means by which the Allies guarantee their common security and the indispensable defense link that binds North America to Europe.

NATO is also outward looking. The Euro-Atlantic Partnership Council and Partnership for Peace are important tools in enhancing cooperation with the Eurasian countries. Given the increased importance of Central Asia and the Caucasus as frontline states in the war on terrorism, we would like to see NATO do more to reach out to these countries.

EU

While NATO forms the foundation of the trans-Atlantic security framework, our relations with the EU underpin our economic and political relationship with Europe. The European Union has become increasingly important to our interests. As the only entity on the world stage with an ability similar to ours to project economic, political, and cultural power, the EU has an important influence on the environment both within and beyond Europe.

Some observers suggest the gulf dividing the U.S. and EU has never been wider. Iraq, Israeli-Palestinian issues, Kyoto, ICC [International Criminal Court], steel, FSC [foreign sales corporation], beef hormones, and biotech are the most contentious issues. Putting the situation into context, we have been here before, with the Soviet pipeline, Helms-Burton, and ILSA [Iran Libya Sanctions Act]. Our common interests, bonds, and values proved stronger than these divisions. For all the differences, our areas of common belief and objectives with the EU remain greater than with any other potential partner. A perception of fundamental divergence is neither in our interest nor accurate.

Over $500 billion in trade between the U.S. and EU takes place each year, creating jobs and boosting growth on both sides of the Atlantic. We are also each other’s largest foreign investors, and those flows continue. The vast majority of trade and investment occurs without headlines, without rancor, without dispute. At the Doha meeting of the WTO [World Trade Organization], the U.S. and the EU came together to launch a new round and provide new momentum for free trade. At the last U.S.-EU Summit, we agreed to develop a Positive Economic Agenda. This is a mechanism to find common approaches to regulatory issues across a broad range of sectors, and to advance our active dialogue on access to financial markets. While these efforts hopefully will minimize areas of future trade disputes, where we have disagreements now, such as over agricultural biotechnology, we are pressing the EU to open its markets to us without delay. We will use all available tools, including where appropriate the WTO, to protect our interests.

Increased U.S.-EU cooperation receives little publicity in non-economic areas. In counterterrorism, we negotiated an agreement that facilitates the exchange of information between EUROPOL and U.S. law enforcement. We have concluded negotiations toward a Mutual Legal Assistance Treaty/Extradition Treaty, which must now enter the approval process. Coordinated U.S. and EU diplomacy and assistance have been key to Balkans stabilization. In Afghanistan, we jointly prevented a humanitarian crisis, and we continue to work together to build democratic government, infrastructure, and jobs. Another example of EU-U.S. cooperation is the joint application of visa restrictions on the leadership of the secessionist Transnistria regime in Moldova. Together, we are sending a strong signal to the Tiraspol regime that it must negotiate seriously to bring this longstanding issue to a rapid settlement.

The accession of ten new countries to the European Union in 2004 is a significant EU achievement. It has also been a longstanding U.S. policy objective. EU enlargement will cement these nations, most of which were members of the former Soviet bloc, into the West. The accession process and adherence to the EU’s body of law will also improve and standardize regulations, resulting in better business climates, improved human rights standards and treatment of minorities, and stronger capacity for law enforcement cooperation.

We are also working with the EU to encourage more engagement with the nations of the Caucasus and Central Asia, all of whom will become Europe's "new neighbors" after EU enlargement. We are seeking EU political engagement as well financial support for the kinds of reforms that will make these nations stable, democratic, and prosperous members of Europe.

Finally, we support the EU's efforts to establish a European Security and Defense Policy that is closely coordinated with NATO, and that would allow the EU to take on tasks such as peacekeeping and other humanitarian missions in which NATO decides not to be engaged. We were pleased that in December last year the long-standing impasse over the participation of non-EU NATO Allies in ESDP operations was resolved. Since that time, NATO and the EU have been working to finalize other elements of "Berlin Plus" arrangements that will set out the basic elements of cooperation between NATO and the EU. We expect that the Berlin Plus package will be completed in the next few weeks. Once all arrangements are in place and NATO decides to end Operation ALLIED HARMONY, we will welcome the EU's assumption of that mission at the request of the Macedonian government.

The OSCE

For the United States, the OSCE [Organization for Security and Cooperation in Europe] serves as an invaluable forum for protecting security, economic well-being, and human rights and democratization throughout Europe, the Caucasus, and Central Asia. Let me recognize the U.S. members of the OSCE Parliamentary Assembly from this Chamber, who have also used the OSCE with profound impact to advance U.S. values and interests.

The OSCE is engaged in improving the lives of citizens in numerous countries, with programs that range from election observation, to police training, to promoting civil society. OSCE human rights rapporteurs serve as beacons of credibility and frankness. This spring, at our urging, the OSCE will tackle the troubling increase in anti-Semitic violence throughout Eurasia with a special meeting on anti-Semitism.

In the aftermath of September 11, our partners at OSCE have also focused on combating terrorism. Through the OSCE we are assisting our most critical partners -- the Central Asian and Caucasus nations -- in the war against terrorism to address an entire agenda of measures that will help secure their regions and all of Europe against the threat of terror.

Counterterrorism Cooperation

A year and a half after September 11, our European and Eurasian allies continue to be strong supporters in the war against terrorism. Most European countries, especially our NATO partners, acted quickly to participate in Operation Enduring Freedom (OEF) in Afghanistan and the follow-on International Security Assistance Force (ISAF). The U.K. in particular played a central role with the U.S. in rooting out the Taliban and al-Qaida from Afghanistan. Although the countries of Central Asia are not part of the jurisdiction of this subcommittee, they are part of my bureau, so I wanted to note their important contribution to OEF as well, both in hosting coalition bases and in working with us on infrastructure improvements.

The nations of Europe and Eurasia continue to play a vital role in rebuilding a secure and democratically governed Afghanistan, with contributions of funds, military assets, supplies, humanitarian aid, and infrastructure development. There are 18 European coalition partners with forces deployed in Afghanistan, with either ISAF or in support of OEF. European countries have contributed air, sea, and land assets, and have placed elite troops on the ground. European units are taking part in maritime interdiction operations. All of the countries that have led ISAF are from the European region.

Afghanistan must one day be able to ensure its own security, and to that end, European partners are center stage in building the Afghan National Army (ANA). The ANA now consists of seven combat battalions, with one more in training. Our European partners have trained four of these battalions. A number of European countries have provided equipment valued at over $20 million.

Afghanistan’s shattered infrastructure is another essential element in reconstruction and security. The European Union earmarked $93 million for road reconstruction in Afghanistan for the next two years. European countries both donated and transported large amounts of humanitarian relief and reconstruction supplies. It has been a united effort in every sense.

In Georgia, Russian bombings of northern Georgia beginning in 2000 were a clear and unacceptable violation of Georgian sovereignty. Russia accused the Georgian Government of failing to control Georgia's territory in the Pankisi Gorge and allowing the region to become a safe-haven for criminals, terrorists, and Chechen rebels. The Russians were demanding action against terrorism.

Our immediate response was to draw a clear "red line" against any further violation of Georgian territory. We made clear to the Georgian Government that it could not allow its territory to act as a safe-haven for terrorists and urged its support for the global war on terrorism. We made clear to the Russian and Georgian Governments that Georgia should be left to resolve the problems within its own territory.

As part of our effort to help Georgia develop the capabilities necessary to face this problem and protect its territory, we developed the Georgia Train and Equip Program (GTEP), which began in May 2002. GTEP is designed to assist Georgia in border security, anti-terrorism, crisis response, and military reform. The goal of the program is to train four Georgian Army light infantry battalions and a mechanized company team. Selected elements of the Georgian Border Guards and other security forces are participating with the goal of providing greater interoperability with MOD [Ministry of Defense] in time of crisis. In December 2002, the program graduated its first combat battalion, which is now ready for deployment against international terrorists on Georgian territory. In our view, the program is successfully addressing the need to enhance Georgia’s security and guarantee its sovereignty.

Efforts by coalition partners have helped thwart impending terrorist actions against the United States. Our European counterparts are sharing law enforcement and intelligence information, conducting investigations into the September 11 attacks, and strengthening laws to aid the fight against terrorism. Additionally, we are working with the OSCE to improve the capacity of member states to fight terrorism.

In Greece, several members of the November 17 terrorist group are now standing trial. In February the authorities arrested four suspected members of the Revolutionary People’s Struggle (ELA), another domestic terrorist group.

European police and intelligence agencies have also provided unprecedented practical help in investigating and bringing terrorists to justice, denying financing to terrorists and their supporters, and strengthening security against terrorist attacks. Many European and Eurasian countries have joined with us to place several individuals/entities on the asset freeze list maintained by the UN’s 1267 Sanctions Committee.

On the Eurasia front, Russia has been generous in its support for the coalition, from OEF planning to intelligence exchanges to support in the UN. It has also changed its financial enforcement infrastructure to block terrorist assets. Armenia, Azerbaijan, and Georgia have also provided vital support in the war against terrorism. They have offered unequivocal political and military support, are playing critical roles in OEF, and have provided vital intelligence and law enforcement cooperation and information sharing on terrorist groups and assets.

Given the importance of European opinion in our counterterrorism efforts, we plan to enhance public diplomacy efforts to boost support for our policies and actions. We will reach out to the diverse Muslim communities in both Europe and Eurasia in an effort to improve the image of the U.S.

Russia

Over the past year we continued to develop strong cooperation with Russia. Our relationship covers a broad spectrum. On strategic issues, we reached agreement with Russia last May on the Moscow Treaty, radically reducing strategic offensive weapons. We are pleased that the Senate ratified this treaty last Thursday.

Russia continues to be a key partner in the global war on terror, and we have cooperated in important ways on key regional problems, such as supporting the Middle East Peace Process in the “Quartet” and defusing tensions between India and Pakistan. On some other international issues, Russia’s support has not been as solid. Thus far they have not been helpful on Iraq in the UN as noted earlier. And we are urging Russia to engage more actively on the D.P.R.K. nuclear problem.

In law enforcement matters, new Russian legislation on money laundering helped remove it from the Financial Action Task Force’s list of countries of concern. Yet corruption remains a serious problem.

We strongly support democratization and economic reform in Russia, largely through U.S. assistance under the FREEDOM Support Act. There have been major advances in democratic freedoms in Russia, such as the introduction of jury trials and reform of the criminal code. But media freedom continues to be a problem, while the freedom of foreign clergy to enter Russia became a problem last year.

This year we are witnessing what may be the first serious effort at a solution to the Chechnya conflict, beginning with a constitutional referendum slated for March 23. We are concerned over the security and political conditions under which the referendum is being held. However, we hope this can be the basis for a political solution to that tragic conflict. As indicated by our February 28 designation of three Chechen organizations as terrorists, there are definitely terrorist elements among Chechen fighters. But our broader policy on the Chechnya conflict remains unchanged. In addition to seeking a political solution, the Russian Government needs to exercise greater discipline over its forces, and there must be meaningful accountability for human rights violations committed by Russian forces against civilians.

In economic matters, the Russian Government has made progress on market reforms. Large Russian companies are adopting more Western practices and becoming more transparent. But much remains to be done -- the government must provide a more welcoming environment for investors, crack down on corruption, continue reforms and enforcement of the rule of law, improve IPR [intellectual property rights] protection, uphold court decisions, support the growth of small and medium enterprises, and pursue the breakup of monopolies. WTO accession for Russia remains a priority, as this will be a major force for reform. As we move to expand U.S.-Russian economic relations, there is a natural fit between Russia's desire to play a greater role in providing oil and gas to global energy markets and our interest in diversifying supply.

Jackson-Vanik graduation remains an Administration priority. The law has achieved its purpose, and we now have other more effective tools to manage the U.S.-Russian trade relationship.

Ukraine

Our relationship with Ukraine has gone through a difficult period. President Kuchma's authorization of the Kolchuga transfer to Iraq has eroded trust. Yet Ukraine remains strategically important; its future will have a significant impact on the future of its neighbors and Europe as a whole. Despite the Kolchuga authorization and serious concerns about democracy and human rights, we are convinced that we must maintain our broad-based engagement with all segments of Ukrainian society, and especially with those promoting political and economic reform. This is in our long-term interest -- and Ukraine’s. Our agenda supports Ukraine's integration into European and Euro-Atlantic institutions. Whatever limitations Ukraine’s leadership has demonstrated to date in fostering economic and political change, a new generation of leaders is waiting in the wings for a chance to give reform new impetus.

Our goal is to confront bilateral problems and find practical solutions that can inject positive momentum into the relationship. We plan to pursue reform of Ukraine's export control regime as a way to prevent future Kolchuga episodes. We have offered U.S. assistance for this purpose. Outstanding questions on Kolchuga remain and might never be fully answered. For now, we believe we should concentrate our energies in helping to implement reforms that will head off proliferation problems.

We continue to shift assistance resources from programs benefiting the central government to those that more directly support civil society. One of our particular areas of focus is media freedom, which we believe has been under attack in Ukraine and which will be crucial in helping to ensure free and fair presidential elections in 2004. We will be watching closely the Ukrainian authorities’ treatment of independent journalists and media outlets, particularly as the 2004 elections draw closer.

We will continue to deepen the good cooperation we have with Ukraine on strategic issues. The Ukrainian authorities have indicated that they are actively considering deploying a Nuclear, Biological, and Chemical (NBC) defense battalion to the Gulf, in case frontline states are targets of attack by Iraq’s weapons of mass destruction. Ukraine has also stood shoulder to shoulder with us in the war on terror. They have allowed more than 5,000 overflights connected with Operation Enduring Freedom, and have fully equipped a battalion in the Afghan National Army.

We also want Ukraine's help in solving the Transnistria conflict in Moldova -- one of Ukraine's neighbors. Ukraine has an important role to play, both as a constructive mediator in the ongoing Transnistria political settlement talks and as a partner for Moldova in increasing security along their common border.

Turkey

Among our priorities in Europe is our relationship with Turkey. As a key NATO ally located at the crossroads between Europe and Asia, Turkey is always a top priority. We have strongly supported EU membership for Turkey, and have worked hard with them in an effort to resolve the Cyprus issue.

Right now, the focus is on Iraq. We are seeking Turkish cooperation because the northern option can help shorten an eventual war, leading to fewer casualties and lower economic costs to all. On March 1, the Turkish Parliament did not approve permitting U.S. troop deployments to Turkey for a possible conflict with Iraq. This can be attributed, in part, to polling data indicating 90-95 percent of the Turkish public is opposed to war in Iraq. In addition, there was a lack of unity in the ruling party. This is a setback with regard to planning for Iraq, but we are consulting with the Turks on next steps in the spirit of the strategic partnership between our countries.

Both we and the Turks have very serious concerns over economic costs to Turkey of a war, as in 1991. Turkey also cites to us concern over northern Iraq, including Kurdish ambitions and the status of the oil fields. Turkey feels that ethnic Turkomen are not sufficiently represented in the Iraqi opposition leadership, and we are working to resolve this issue.

We still hope we will be able to stage a northern option through Turkey. We are discussing options with the Turkish authorities. In any case, we are also making clear that Turkey must not move into Iraq unilaterally.

In addition to ongoing discussions on Iraq, we are working with Turkey and international financial institutions to bolster the Turkish economy. Turkey must take adequate measures to get back on track with its IMF [International Monetary Fund] reform program.

The Balkans

Our goal and that of the Balkan governments is to promote democracy, market orientation, regional stability and peace, and integration into NATO and the European Union. While challenges remain, there is progress. International troop levels are down. Refugee returns are up. Zagreb and Belgrade successfully negotiated an end to their dispute over the Prevlaka Peninsula without international mediation. Economic growth in the region was good at around four percent last year. There have been a number of successful elections in the region. The United States' level of involvement is decreasing as our European partners are picking up more diplomatic and military responsibility for the region.

The overall military presence in the region has been reduced significantly, with our European Allies now comprising over 80 percent of the forces there. SFOR [Stabilization Force in Bosnia and Herzegovina] has declined from its peak strength of approximately 60,000 to 12,000; KFOR [Kosovo Force] from its peak strength of approximately 50,000 to 25,000.

NATO’s presence in the region remains under periodic review to ensure that our forces are adequate but not excessive in light of conditions on the ground. The Alliance should continue to play a role in the international community’s efforts in the region by gradually shifting its focus from stabilization to long-term engagement through institutions like the Partnership for Peace. Meanwhile, we are working closely with the EU and with NATO to pursue the European Union’s offer to take on the military mission in Macedonia, once the important details, as envisaged in the "Berlin Plus" agreement, are worked out and NATO has decided to end its Operation ALLIED HARMONY.

The democratic process is taking root. Elections were held in Serbia and Montenegro, Kosovo, Bosnia, Albania, and Macedonia, and were considered free and fair by international observers -- although not all ended in a conclusive result.

Providing real opportunities for refugee and IDP [internally displaced persons] returns is important for long-term stability and European integration. Refugee returns to Bosnia have gained their own momentum, and minority returns to Kosovo have outpaced minority departures. Still, refugee returns to Kosovo and Croatia have been disappointing overall, and we need to continue to press for progress.

Many countries in the region are reliable and vigorous partners in the global war on terrorism and have taken close and cooperative steps with us to combat proliferation and the gray arms trade.

Despite these positive developments, challenges remain. We seek to help resolve remaining post-conflict issues -- including war criminals and refugee return -- while we encourage the post-Communist transition through political and economic reform. We are focused significantly on building the rule of law through our assistance under the Support for East European Democracy (SEED) Act. It is particularly important to address ineffective law enforcement, corruption, and porous borders, which make the region attractive for organized crime, trafficking, political extremism, and terrorist activity, and unattractive for legitimate investment and entrepreneurship. We continue to work closely with the countries of Southeast Europe, our European Allies, and the international community as the region moves towards European integration. Much progress has been made since Milosevic presided over wars, ethnic cleansing, and the forced displacement of approximately four million people. But U.S. engagement in the region -- in partnership with our European Allies -- will be needed for some years to come.

Regional Stability: Cyprus, Northern Ireland, Caucasus, Baltics

Outside the Balkans, we are promoting regional stability in other areas. In Cyprus, we have strongly supported the efforts of the UN Secretary General to achieve a settlement before Cyprus signs the EU accession treaty April 16 so Greek Cypriots and Turkish Cypriots would enjoy the benefits of EU membership. We were deeply disappointed that the Secretary General's talks with the two leaders in The Hague did not result in an agreement to put his plan to referenda in both communities. We regret in particular that Mr. Denktash refused to allow the Turkish Cypriots to decide for themselves on their future. Despite this setback, the U.S. remains committed to seeking a just and durable settlement to the Cyprus problem.

In Northern Ireland, we wholeheartedly support the U.K. and Ireland in their efforts to push the peace process to a new level of stability. Prime Ministers Blair and Ahern have just concluded marathon sessions in this regard with the parties. Northern Ireland Assembly elections have been rescheduled from May 1 to May 29 to give time for reflection and discussion within the parties and communities. We urge the leaders, communities, and people of Northern Ireland to seize this opportunity to build on the success of the Good Friday Agreement.

In the Caucasus, the United States serves as a Co-Chair along with France and Russia of the OSCE Minsk Group. In this role, the U.S. continues to pursue actively a comprehensive, mutually acceptable settlement to the conflict between Armenia and Azerbaijan over Nagorno-Karabakh. With presidential elections in both countries this year, neither side currently is willing to make the politically difficult compromises necessary to negotiate a peace agreement. However, the Co-Chairs continue their efforts in the hope that the Armenian and Azerbaijani leaderships can find the political will needed to reach a permanent solution to this conflict.

Regarding the conflict in Abkhazia, the U.S., as a member of the UN Secretary General’s Friends of Georgia Group (FOG), continues to work with France, Germany, Russia, and the U.K. to pursue a comprehensive, negotiated settlement that respects Georgia’s territorial integrity.

At the other corner of Europe, we have been promoting regional cooperation in Northern Europe under the Northern Europe Initiative and the U.S. Baltic Charter. Active U.S. engagement in Northern Europe will continue as the Baltic states move into NATO and the EU and the region becomes more prosperous and secure. We are crafting an updated U.S. approach that recognizes much has been achieved in the Nordic-Baltic area through multilateral cooperation, and builds on this success. We anticipate focusing on three major substantive areas: political security; healthy societies/healthy neighborhoods; and our trade, investment, economic, and business ties.

Global Issues

As NATO and other European institutions enlarge, we have been acutely aware that a Europe whole, free, and at peace can function only if it is truly a community of shared values. For that reason, the United States has pressed hard for continuing progress on issues left unresolved from the Holocaust, World War II, and the Communist era. We have encouraged property restitution, we recently assumed the Chair in Office of the International Task Force on Holocaust Education, and we have strongly supported the holding this year of an OSCE Specialized Meeting on Anti-Semitism.

Enhanced defense and security cooperation and intelligence sharing must be buttressed by societies committed to democratic principles such as those in the Final Act in the Conference on Security and Cooperation in Europe. A number of European countries have concluded agreements with us under Article 98 of the International Criminal Court (ICC), ensuring that U.S. citizens would not be surrendered to the ICC. Moreover, we are continuing efforts with our trans-Atlantic partners to address problems that respect no borders, such as HIV/AIDS and infectious disease, narcotics trafficking, and environmental degradation.

We are working with our partners in Europe and Eurasia to combat the growing problem of trafficking in persons. This grave, transnational human crime is something we can only eliminate by working together. Governments from Western Europe to Central Asia have passed important legislation to outlaw trafficking and have cooperated with each other on the prosecution of these traffickers. We are also encouraging prevention of trafficking through public awareness and protection of victims, both in destination countries and upon return to home countries. We have encouraged governments and NGOs [non-governmental organizations] -- both integral partners in this fight -- to share expertise and resources to respond to the criminal aspect of this tragedy as well as the needs of the victims. Most recently, we concluded the congressionally mandated international conference on sex trafficking here in Washington, DC. Over 300 participants from the region attended.

Success in addressing transnational problems is more important than ever in pursuing America’s trans-Atlantic agenda. Stable countries able to withstand terrorist and other threats are based on respect for the rule of law, human rights, religious freedom, and open media. Stable countries have vibrant civil societies. They are committed to the principles of free market economies.

Resources

On the management side, we are also addressing the needs of our diplomats who represent us overseas. Appropriate and secure facilities are critical to operational success. We continue our work with the Bureau of Overseas Building Operations to press forward with building projects in our region. In FY 2003 we expect that four new Embassy compounds will be occupied and four new projects initiated. As our nation’s priorities and policies develop and change, it is essential that adequate funding be made available to allow flexibility in our building plans. Rightsizing and controlling growth are an integral part of our facility planning process.

As we further engage on the war on terrorism and as the number of EU and NATO members and aspirants continues to grow, Mission activities and workloads increase commensurately. Through the Secretary’s Diplomatic Readiness Initiative (DRI), additional staff are being deployed to posts throughout the region. In January the DRI provided 23 positions for EUR, and we expect to receive additional positions when the FY 2003 phase of the DRI is fully implemented.

We have a highly dedicated group of people working in our missions. They are keenly aware that their contributions to promote U.S. interests are important, particularly during these challenging times. Heightened worldwide tensions have increased the need for contingency planning and actions, taxing already strained resources. Despite facing greater personal security concerns for themselves and their families, employee morale overseas is good. It is essential, however, that we continue to support our staff and their families with improved workplaces and housing and through incentives and other means of recognition.

The entire State Department is carrying out this important work around the world. To do the job effectively, we need adequate resources. I appreciate your taking the time to listen to my testimony today, and I will be pleased to address your questions.