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Clinton, Senators Stress Mideast Energy, U.S. Strategic Stakes

Secretary of State Hillary Clinton and lawmakers from both parties said unrest roiling the Middle East will affect U.S. energy policy and national security, as the top U.S. diplomat urged senators to meet her agency’s budget request for the next fiscal year.

The administration has asked Congress for $47 billion of funding for the State Department’s regular programs in fiscal 2012, which starts Oct. 1. The administration seeks an additional $8.7 billion of temporary funding for operations in Afghanistan, Pakistan and Iraq.

Senator Richard Lugar, the senior Republican on the Senate Foreign Relations Committee, pointed to rising oil prices in the wake of Libyan unrest and urged Clinton to diversify trade routes and boost energy trade with non-Middle Eastern nations.

The committee’s Democratic chairman, Massachusetts Senator John Kerry, said the future of U.S. national security rests in part on its response in the Middle East today. Kerry and Clinton both said the U.S. response to events in that region will be hampered under a Republican proposal to cut the administration’s request by 16 percent.

“Now would be absolutely the wrong time to pull back,” Clinton said.

Kerry called for forceful action on Libya, and said the Senate may consider a bipartisan aid package for the Arab world “to assist in this monumental and uplifting transformation.” Committee spokesman Frederick Jones said discussions on an aid plan had just begun and it wasn’t yet settled whether new funds would be used. Kerry also called for the imposition of a no-fly zone over Libya.

“I think we are a long way from making that decision” about a no-fly zone, Clinton told the committee.

‘Lean Budget’

Clinton defended her department’s budget request, describing it as “a lean budget for lean times.”

Republican Senator Robert Corker of Tennessee told Clinton her department’s budget would likely be cut because he and his colleagues in Congress “haven’t shown the knowledge or the courage to deal with” escalating costs of Medicare and Social Security “that are basically crowding out your programs.”

Clinton has said the deficit, projected to reach $1.6 trillion this year, also represents a threat to U.S. stability.

Lugar told Clinton that volatile energy prices are threatening the U.S. economic recovery. “We’re living in an age of extreme vulnerability to oil-supply disruptions from war, instability, terrorism, or embargo,” Lugar said.

He urged the top U.S. diplomat to put the State Department to work on boosting energy trade with “reliable and transparent partners like Canada, in place of shaky and sometimes hostile suppliers.”

Oil Surges

Crude oil surged above $100 a barrel today, in part on concerns that unrest curbing exports from Libya will spread to other countries in the region. Crude oil for April delivery rose $2.09, or 2.1 percent, to $101.76 a barrel at 12:06 p.m. on the New York Mercantile Exchange.

Kerry said that the Republican-suggested budget cut, which would target foreign aid and global health programs, “does violence to the Judeo-Christian ethic by which so many people claim to lead their lives.”

“These cuts are not abstractions,” Kerry said. “These are people. Cutting these programs will do almost nothing to rein in our budget deficit, but it will cost thousands of lives.”

‘Straight Realpolitik’

“Let’s talk straight realpolitik,” Clinton said. “We are in a huge competition” for global influence and global markets. She described countries circling around huge new oil discoveries in the south Pacific. “China is there every day, figuring out how they’re going to come in behind us, come in under us,” she said.

She also said the U.S. had to do more to communicate its values and spread its influence to the rest of the world through government-backed media, such as Al-Hurrah Television, which broadcasts in the Arab world.

“We are engaged in an information war and we are losing that war,” she said. China and Russia have started multi- language television networks, she said, even as the U.S. cuts back in this area. “We are paying a big price” for dismantling international communications networks after the end of the Cold War, Clinton said.

‘Monumental’ Transformation

In the Middle East, which is “vital” to national security, Kerry said he was convinced that “a significant financial commitment by the U.S. to assist in this monumental and uplifting transformation is key to its long-term outcome and our relationship to it.”

While the U.S. must function on a tighter budget, the country faces a choice, Kerry said. “We can either pay now to help brave people build a better, democratic future for themselves, or we will certainly pay later with increased threats to our own national security.”

To contact the reporter on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net.

To contact the editor responsible for this story: Mark Silva msilva34@bloomberg.net

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