Mr. Chairman, Members of the Committee, I am delighted to be here today to review with you the Administration's goals for U.S.-European relations, including Russia and the Caucasus.

President Bush said last August in Warsaw that the Administration seeks a Europe "whole, free, and at peace." This is even more vital to America's national security in the aftermath of September 11th. The imperative for closer coordination has opened up new opportunities to achieve our goals in Europe and Eurasia. We are cooperating more broadly to combat terrorism. We are pursuing a deeper relationship with Russia. We are advancing throughout the region respect for democracy, the rule of law, human rights, and free market economies.

We know who our friends are when the chips are down and we need help. By this measure, we have friends in Europe. Following September 11th our European partners offered critical assistance in military deployments to Afghanistan. They cracked down on terrorist activities in their territory. European and U.S. soldiers are working side-by-side in Afghanistan. Last week, German and Danish troops suffered fatalities while trying to disarm abandoned ordnance in Kabul. Europe and the U.S. are partners in every sense.

Recently, a few European leaders have expressed concerns about U.S. "unilateralism." Some wonder about our long-term goals in the War on Terrorism and our intentions regarding pariah states such as Iraq. We take these concerns seriously. But we must put them in perspective. Europeans speak as our coalition partners. They are vulnerable to the same dangers that we are. As one European explained it: "September 11th was an attack on all of us. We want to be involved in the solution." As Secretary Powell says constantly, the U.S. will continue to engage vigorously with our European partners. Our policies have not changed. We will remain in close touch. U.S.-European relations remain steadfast.

We are reinvigorating our partnership with the European Union. Counter-terrorism is front and center. In December Secretary Powell signed an agreement with EUROPOL. We are aiming next for an agreement on judicial cooperation. There is potential for progress on non-proliferation, intelligence sharing, asset freezes, and uprooting terrorist networks. We are taking joint action against terrorist organizations.

The U.S. and EU economies are increasingly integrated. Trade and reciprocal foreign investment rise each year, doubling since 1990. The U.S. supports a fair, open international trading system. We worked with the EU on a successful launch of the new WTO Round at Doha. We pursue vigorously the resolution of U.S.-EU trade disputes. We will continue to promote U.S. business and economic interests in resolving outstanding disagreements, not just on steel, but on Foreign Sales Corporation tax, biotechnology and beef hormones. Europeans have reacted strongly to the President's decision to impose temporary safeguards on steel. We will work with our European friends and other steel producing countries to address the heart of this problem: excess global capacity in steel production. Our goal is that transatlantic trade solidify all aspects of our relationship, including security.

Our European friends and allies share our concern about the need to accord recognition to surviving Holocaust victims within their lifetimes. In the past eight months, the German foundation "Remembrance, Responsibility and the Future" distributed more than $1.1 billion [$1,100 million] to 600,000 former slave and forced laborers as provided under the July 17, 2000 agreements. The payment of insurance claims is a difficult issue. We will continue to work with the International Commission on Holocaust Era Insurance Claims and other involved parties to resolve outstanding procedural problem. We are engaged on property restitution. In this regard, the International Task Force on Holocaust Education, Remembrance and Research is an important focus. The foundation's board of trustees is working on criteria for projects of the Future Fund. The interest on the endowment will be used to combat racism and hatred.

NATO remains the cornerstone of transatlantic security. In the aftermath of September 11th, Allies invoked NATO's Article 5 collective defense commitment for the first time in history. Our Allies have provided invaluable support to the anti-terrorist effort. This includes force deployments, intelligence sharing, and extensive law enforcement assistance. Allies recognize that we must intensify this cooperation to address the threats of terrorism and Weapons of Mass Destruction. That is among our goals for the Prague Summit next November.

The September 11th attacks and continued terrorist threats have underscored the need for NATO to improve its ability to meet new challenges to our common security. Allies recognized this threat in the 1991 Strategic Concept. They reinforced it at the Washington Summit in 1999. When President Bush meets with Allied Leaders in Prague, NATO is expected to approve a program of action to enhance its ability to deal with these threats. It is vital that our European Allies, who have not followed through on all the commitments made in NATO's Defense Capabilities Initiative, refocus and reprioritize their efforts to address the growing capabilities gap within NATO. Thus, the development of new capabilities is one of our priorities for the Prague Summit next November.

A second key goal for Prague is the addition of new members to the Alliance. Continued NATO enlargement will reinforce the strength and cohesion of states committed to our values. It will bolster our own defense. We are looking closely at values issues among aspirant countries. We will evaluate candidates on their ability to further NATO's principles and contribute to the security of the North Atlantic area. An inter-agency team recently visited each of the nine countries participating in the Membership Action Plan for frank discussions of their progress toward these goals. As we approach these historic decisions, we look forward to a close dialogue with the Congress. Our goal is to forge a united U.S. approach to enlargement and a solid consensus within the Alliance.

We also hope to advance new relationships at the Prague Summit. Foremost among these is a constructive NATO-Russia relationship, which I will address later. NATO's continued outreach to Partnership for Peace member states has overcome entrenched hostility and historical divisions. Through its unique Partnerships, NATO remains the only institution that can unite the continent in security cooperation. NATO remains the indispensable nexus for broadening and deepening Euro-Atlantic security, democracy, free markets, and the rule of law. At Prague, we intend to continue building closer links with Russia, Ukraine, and all of NATO's Partners.

As NATO further evolves, we will work to strengthen Alliance links between those Partners who are not yet ready or do not seek NATO membership. Many of our Partners, such as the Nordic countries and Ireland, have contributed significantly to NATO's efforts in the Balkans. They have reached out to the states of the former Soviet Union. We will continue to work closely with these Partners to improve interoperability and capabilities of all NATO's Partners.

Most recently, our Central Asian and Caucasus Partners have stepped forward to play critical roles in the anti-terrorist effort. We intend to energize all elements of the Partnership for Peace at NATO to engage Central Asian and Caucasus Partners. Working with our Allies and more advanced Partners, we hope to increase, coordinate and target assistance to the Central Asian and Caucasus states. We believe PfP programs should address issues that have the greatest appeal to these countries. These include terrorism, border security, and civil emergency planning. We will continue to support the development of democracy and market economic institutions to help ensure the viability of our security partnerships with these countries. We look to the OSCE to play an increasing role in this regard.

We continue to support a European Security and Defense Policy that strengthens NATO while increasing the EU's ability to act where NATO as a whole is not engaged. At the same time, the broader value of close NATO-EU cooperation is nowhere more evident than in Southeast Europe, where NATO and the EU have worked closely to prevent instability, overcome violence and begin to build a lasting peace. The Macedonia peace settlement is a model of our collective ability to draw on the unique strengths of these organizations in a common effort.

Key to a Europe "whole, free and at peace" is a more stable, democratic and prosperous Southeast Europe. Despite the region's great strides since the Dayton Peace Accords, governments still have much to do. Working in partnership with the U.S. and the Europeans, these nations must complete reform efforts and establish an environment conducive to prosperity. Corruption, insufficient border controls and weak export control regimes contribute to trafficking throughout the region -- in arms, drugs and people. Work in these areas also contributes to our global counterterrorism efforts.

NATO and its partners in SFOR and KFOR still have a role to play, as does the German-led NATO "Task Force Fox" in Macedonia. Our vision is that the U.S. and the international community deal with this region "normally" -- without troops on the ground and through trade and investment rather than aid. We are mindful that we came into this region together with our Allies and we should go out together.

Our engagement with Southeast Europe is changing. We continue to support economic reform and regional trade development, supported by a Southeast Europe Trade Preferences Act (SETPA). We are encouraging further integration of the region with Europe. We promote rule of law, cooperation with the International Criminal Tribunal, and ethnic tolerance. With success, our European partners and we have been able to reduce force levels in Bosnia. We anticipate that NATO Military Authorities will recommend further reductions in Bosnia and Kosovo. The EU will take over the UN's police mission in Bosnia at the end of the year. The international community recently agreed to a blueprint for streamlining and downsizing its presence in Bosnia. The creation of a government in Kosovo will allow the transfer of many responsibilities from the international community to local democratically elected authorities. In Macedonia, the close and continuing cooperation between the EU, NATO and the OSCE is a model for transatlantic cooperation in crisis management. Task Force Fox is small. It is of limited duration and made up almost entirely of Europeans.

A critical element of achieving the President's vision of a Europe "whole, free and at peace" is the resolution of regional and ethnic conflicts in Europe and neighboring Eurasia. We are pleased by progress in the Cyprus talks. We will encourage the leaders on the island to achieve a final settlement in the coming months. The Good Friday Accord is being implemented in Northern Ireland. We will work to solidify the role of the police force there. Cooperation among all factions is crucial. In Northern Europe, we will continue to work with our Nordic Allies and friends and our Baltic and other regional partners, including Russia. It is vital that we reinforce ten years of progress in a region of shared values. Opportunities for economic progress good neighborly relations and democratic institution building are beginning to outweigh the challenges.

OSCE remains a vital element in our engagement with Europe. It is the pre-eminent multilateral institution for upholding democracy, human rights and the rule of law. It undertakes early warning measures, conflict prevention, and post-conflict rehabilitation. OSCE also implements valuable programs to counter corruption and trafficking, and strengthen the rule of law through police training and judicial reform. Its broad membership allows it to operate throughout Europe and Eurasia.

The OSCE has said it will begin to play a role in the war against terrorism. The OSCE can encourage European and Eurasian countries to adhere to the principles of UN Resolution 1373. It will continue to be central to development of pluralistic societies in the Balkans, including solidifying the Framework Agreement in Macedonia. Implementation of CFE commitments will be an ongoing OSCE oversight responsibility. The organization can offer opportunities for cooperative engagement with Russia and the European Union.

The OSCE plays a critical role in our effort to promote democracy, human rights and rule of law throughout Eurasia. It is working to restore territorial integrity in Moldova. In Belarus, we work with the OSCE and our European partners to urge the Lukashenko regime to adopt OSCE standards of behavior and come out of its self-imposed isolation. Unfortunately, the regime shows no inclination to do so thus far. In Moldova, we work through the OSCE and with key players to resolve the separatist conflict in Transnistria and reincorporate that region into Moldova. Ukrainian involvement is important on this issue and in the region generally. Ukraine's influence is a potential force for regional stability and European integration. Ukrainian success in political and economic reform will fulfill that country's European aspirations and will inspire other post-Soviet states to follow the same path.

In the Caucasus, we are working with Armenia and Azerbaijan to resolve their conflict over Nagorno-Karabakh. We seek a comprehensive settlement through the Minsk Group peace process. Georgian sovereignty is important to the Administration. We are proposing a program to develop Georgia's internal capacity to deal with terrorism now and in the future. We also are working to support the development of democracy and human rights in the Caucasus.

Bilateral U.S.-Russia cooperation is unprecedented. Counterterrorism collaboration is central to this effort, although not the sole focus. The U.S. and Russia are cooperating more closely in intelligence sharing, nuclear weapons reduction, and resolution of Eurasian regional conflicts. We are working together in the fight against HIV-AIDS and other infectious diseases, organized crime and narcotics trafficking. We hope to expand the economic and commercial component of the relationship. While we broaden this new cooperation with the Russians, we have not forgotten the difficult issues. We continue to press our concerns over issues such as the conduct of Russian forces in Chechnya and threats to media freedom in Russia as a whole.

Russia's cooperation with us and our Allies in the war on terrorism also reflects the opportunity to bring Russia closer to NATO. We are working with our Allies on arrangements for a new NATO-Russia body that would focus on concrete, practical projects of mutual benefit. Russia would participate in this "NATO-Russia Council" -- which would focus on issues with potential for cooperative initiatives -- as an equal. The deepening of the Russia-NATO relationship will not be allowed to undercut NATO's ability to decide and act on its own. Russia would not get a veto over the ability of NATO's 19 Allies to act on their own. The NAC will continue to meet and make decisions as it always has. The mechanisms and substance of such arrangements are still being worked out. I pledge to keep the Committee apprised of progress. Moreover, I want to reiterate President Bush's and Lord Robertson's pledges not to give Russia a veto over NATO operations. This is not a backdoor to membership. This is an opportunity for Russia to develop a new relationship with NATO that would advance not only our interests but also its.

In the spirit of new U.S.-Russia cooperation, we believe it is time to move beyond the Cold War. Russia has made significant progress on religious freedom and emigration. Therefore, the President is pursuing the removal of Russia and eight other Eurasian countries from the application of Jackson-Vanik legislation. We hope that Congress will pass legislation to "graduate" Russia from Jackson-Vanik before the President visits Moscow this spring. The President and Secretary Powell appreciate the support of many Members of this committee in this endeavor.

Success in addressing transnational problems is more important than ever in pursuing America's transatlantic 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. The Administration's attention of these values with our European and Eurasian friends is even more critical as we pursue the War on Terrorism with our coalition partners. 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. Moreover, we are continuing efforts with our transatlantic partners to address problems that respect no borders, e.g., HIV/AIDS and infectious disease, narcotics trafficking and environmental degradation.

Critical to the promotion of our policies in Europe and Eurasia is the use of Public Diplomacy. Training programs and exchanges offer an accurate portrayal of American views, values and traditions. Such people-to-people ties will help bind the nations of Europe and Eurasia with the United States, thereby enhancing the transatlantic relationship and American security.

Now I will be pleased to address your questions.