President's FY 2027 Budget Request for Department of State

The United States Senate Foreign Relations Committee will come to order.

Right now.

Uh, it wasn't orderly to begin with, but it's orderly now, thanks to our uh good crew. And uh we welcome here, as always, uh our Secretary of State, Marco Rubio, a uh distinguished alumni of this committee, and I know he's always glad to come back here. and uh visit with us. Uh we uh Marco we haven't haven't had this kind of excitement since you've been here last time. I know you think this is the way it is every time but it's not. So uh in any event uh we're glad to have you. Um uh for the uh information of the committee, the secretary has four hearings in these two days, so uh we have negotiated a hard stop at twelve thirty. To that end uh we'll use the usual uh array of the way we do things here and that is uh uh first of all um I will uh um make an opening statement and then I'll yield to Senator Shaheen and then we'll turn the floor over to Senator Rubio then we'll do a uh five uh uh minute round of questions uh based on uh arrival time so uh with that uh Secretary it's good to see you here again um uh though you're not on the Hill often A lot has changed obviously since the last time you testified on the President's International Affairs Budget last year. The department has undergone a major reorganization making it uh operate more efficiently and more in line with America's interests uh as uh we discussed before you even took the job and uh that's uh been uh being executed I think uh quite well. At long last uh foreign governments are being uh encouraged and when necessary pushed to live up to their responsibilities to respond. to the needs of their own citizens. America will stand up uh by our allies and provide life-saving assistance to people in their hour of need, but we are not the world's ATM. And so the department is testing new ways of providing strategic assistance and breaking the cycle of dependence on aid. Renewed emphasis on trade over uh aid will help the American people and lift up countries around the world. This is American generosity and ingenuity uh in action. Through this budget the administration is holding UN organizations to account, badly badly overdue, and alongside to master walls making sure American values are leading in international organizations. Uh you've made securing the Western hemisphere a top policy and budget priority, uh and have successfully reduced illegal immigration uh at the southern border to the lowest level in half a century that has not gone unnoticed. You've helped curb the trafficking of uh illegal fentanyl into the United States, saving countless lives. The budget prioritizes countering China's unfair trade practices, expanding military and malign influence operations around the world, and uh which posed some of the greatest threats in modern history to the American people. At the same time, you've been working to ensure these efforts are strategic, targeted and effective, and we appreciate that. The administration has also taken care to ensure taxpayer dollars don't go to those who are unable uh who are able but unwilling to pay for their own defense. Through concerted effort by you and your colleagues, our NATO allies have increased their defense spending and have committed to reach the five percent by uh twenty thirty five. This is a major change from the way you and I used to deal with this for the decade uh, uh or more before this. Together uh we need to create a next generation NATO that is stronger, more interoperable, and takes advantage of the industrial potential of American and European uh economies. We also must continue to coordinate with our European partners, as they take greater responsibility for suppress- for supporting Ukraine and work with our partners to deny Russia strategic gains. The administration has priorit- prioritized efforts to end conflicts in Africa, which undermine uh decades of investment in economic growth and global health security. All is not well there. The latest Ebola outbreak in eastern Congo, now affecting the entire region, highlights how conflict and humanitarian crises abroad threaten the health and security of the American people here at home. I know the department is working hard to protect us from this threat, and I look forward to hearing how the budget supports these efforts. And of course the administration has taken decisive action to protect American citizens from the threat posed uh by Iranian uh nuclear capabilities, and ambitions. On behalf of the American people, thank you for your hard work on that. Yeah, you and I have been through this before and we know how difficult it is. Change is hard, but it is also necessary. Your efforts to make the State Department more responsive to the needs of the of Americans will help us all, meet the challenges of the twenty-first century. I look forward to discussing how the budget will further those efforts. With that, I will turn it over to the distinguished ranking member, Senator Shaheen.

Well, thank you, Mister Chairman. Um, good morning, Secretary Rubio. Mister Secretary, you were a senator. You sat on this committee. You sat on the Intelligence Committee. You know as well as anyone that effective American foreign policy requires a strong partnership with Congress. Allies need to know that our commitments can stand the test of time, and that only happens if Congress is brought into the discussion. Congress cannot be a partner if it's kept in the dark. I have a long list of unanswered requests sitting on your department's desk. And, Mister Chairman, I'd like to ask that these letters be submitted for the record.

They'll be submitted.

Thank you. I've requested a briefing on changes to US forced posture in Europe. And after thirty-three days, we still have no response. We've requested a briefing from the Iran war on displacement. After ninety days, we still have no response. We've asked for a briefing on Ukraine on a number of issues. After one hundred and eighty days, we still have no response. We've asked for a briefing on lifting Milorad-Dodek's sanctions. And after two hundred and twenty-five days, we still have no response. We've asked for a briefing for the US agency for global media. No response after three hundred and forty-four days. The Romanian visa program termination. We've followed up five times over four hundred and thirty-five days and we've still gotten no response. In January, when you were before this committee, I asked if you would report to this committee once an audit system was in place to track Venezuelan oil revenues. You said, and I quote, "Oh, absolutely, yeah." We are still waiting. And when you do notify Congress, it's to inform us of decisions you have already made. That is not consultation, as you well know. That is not advice and consent. Congress has been clear on a bipartisan basis, we do not want to cede ground to China. Yet this administration is closing consulates and cutting funding in the Indo-Pacific. The same pattern extends to global health. USAID supported Ebola detection and prevention activities in DRC and Uganda for years. And we can see in this poster, even Elon Musk admitted that one of the things we accidentally canceled very briefly was Ebola prevention. Well those programs were dismantled. And today we have to screen for Ebola at Dallas airport, rather than in the DRC and Uganda, more than seven thousand miles away. You're asking for a forty-four percent reduction in the State Department budget. That includes eliminating funding to the World Health Organization. It includes eliminating all disease-specific funds

Mm.

in the middle of an Ebola crisis that's affecting Americans. Yet, no one from your department can explain to us why this is a good idea. You sent Congress one notification saying you needed nineteen billion dollars to close out USAID. Then you sent another saying you needed some of that money to respond to disease outbreaks. Congress has asked for an explanation and we still have not received one. The same pattern extends to our alliances. I just returned from a bipartisan delegation to the Arctic. We are on the verge of losing the very alliances that we have built for decades because the president manufactured a crisis over Greenland. And nowhere is that clearer than with Russia. In twenty seventeen, you wrote as a senator that Vladimir Putin will never be a trusted ally or a reliable constructive partner. But since taking office, you, the president, the vice president, Steve Witkoff, not one of you has been to Ukraine. And yet, your envoys talk to Putin on a regular basis. The president has invited him, given him the red carpet treatment on American soil. But yet you won't come up here and brief Congress on any of it. And decisions Congress has made on Russia have been systematically undermined. Congress passed support for Ukraine. The administration has slow-walked it. And instead of sanctioning Russia, the administration issued oil licenses that have sent billions to Moscow. Congress is asked what this approach has produced. Russia has conducted five times more drone strikes on Ukraine since twenty twenty-four. More U. S. businesses are being directly targeted than at any point in this conflict. And Russia is providing targeting intelligence to help Iran hit our facilities and personnel in the Middle East while we're helping them fund this war. When I talked to my constituents, they asked for economic relief at home, not regime change in Havana or Caracas or Tehran. Instead, you sent Congress a war powers notification saying we are not in active hostilities with Iran. While the US was conducting strikes against Iran and Iran was bombing US embassies and bases throughout, the Middle East. That was not consultation. It was an attempt to avoid answering to this committee and this Congress about this war. Congress has asked basic questions about the war. Why are roughly half of our Patriot interceptor stockpiles gone? Why does the Strait of Hormuz remain closed? Why is gas up a dollar fifty? Why did thirteen American service members lose their lives in this war? Congress deserves to know why and Americans deserve to know why. Mister Secretary, You would not have stood for this kind of stonewalling by the administration when you were a senator. And you certainly shouldn't stand for it as Secretary of State and National Security Advisor. Thank you, Mister Chairman.

Thank you, Senator. We'll now proceed to a uh round of uh five minute questions. I'm sorry. We'll try. W- w- Did did you wanna do, we talked about that uh,

Do you want one?

eh? We actually talked about that, but he thought that questioning might be easier. Why don't you go ahead, Nils?

I have it in writing. You want me to read it?

Give us your best shot.

Okay, well, uh, well, thank you for having me here. There'll be a lot to talk about today, and I just wanna remind everybody, you know, our our foreign policy is one, uh, that's solely focused on the national interest of the United States of America, on the defense of our country, both its military defense and our security, but also our economic security and the vibrancy of our economy, our sovereignty and our future. Uh, we believe that America should lead the world, and I believe that we are, and it will have a very good story to tell about that. American leadership, however, should always be on behalf of the American interests. Uh, I say this because I think over a period of time in our foreign policy we lost focus on that. Uh, the reality of it is that our foreign policy first and foremost must always be what is in the national interest of the United States of America. And determining the national interest of oft- oftentimes requires us to make pragmatic decisions. Sometimes in foreign policy, the choices are not between a good choice and a bad choice. It's between two less than ideal choices, and you're trying to figure out which one of these two choices is the one that is best for the United States and least harmful to our interests. And that plays out every single day. That said, we remain the world's sole global superpower, the most powerful country on earth. We have the largest economy. We have the most formidable and powerful military, ever known to man, by the way. Our dollar remains the reserve currency of the world. Our language is used extensively throughout the world, uh, to transact all sorts of business and many of our engagements. But all of this means very little if that power is not used to protect the people who built it the people who it is meant to protect. I also remind everybody the United States government is not a charity. We are not here to play social worker, we are here to win. We are here to win on behalf of the American people and on behalf of the national interest to win for our country to win for the people of America, uh to win for the things that are important for our future and that's what we exist to do. The State Department exists to carry out the foreign policy of the United States both in diplomacy and in aid. in a way that furthers the national interest and helps the American people. And it's guided every decision that's been made since January of twenty twenty five. Um, I'll give you a perfect examples in our own Western hemisphere, an area that this committee and many of its members long argued as I did, has long been neglected and not p- paid attention to. We now have in this hemisphere a coalition of friendly countries over a dozen, who have aligned to work on not just the issues of security that we all have in common, but also economic prosperity that go hand in hand. It's an amazing story that basically other than Nicaragua, other than Cuba, obviously other than Venezuela, this remains with some challenges. And and of course Brazil, although they're in the midst of an election cycle, and and to some extent the current government in Colombia as well, at least the president's been problematic. But generally speaking, it is now a region filled with American allies, American friendly leaders, and an America friendly direction. Now obviously we have to operationalize that into action after twenty years of neglect in which China and other global powers have intruded in our Western hemisphere to the detriment not just of American national interest but to the detriment in our view of the people of those countries as well. So um these are important achievements and one that I'm very happy about. I'm also happy about the way we've transformed foreign aid. In any transition there will be, you know, uh bumps in the road, but largely speaking, if you think about how those programs that existed in the past were failing us, the old model had to be replaced. And the the foreign assistance that remains is being brought under the direction of the State Department. So we're not just providing money, we are also seeking outcomes. It's not just how much money you spend on a program, it's whether you're getting outcomes from it. But it's also being guided through, with our strategic view in mind. And that means that we are able to provide aid, not just all over the world, but specifically targeted at those most in needs and those places around the world most important to the national interest of the United States. That will remain our guiding principle, that's been our guiding principle on our reforms. So you know, the the I I would just, I mean there's we can get into a lot of these details in our questions. The bottom line is that all this and more is a reflection uh of this belief that I outlined at the outset and that is that foreign policy cannot be separated from economic policy from border policy from energy policy from any of these other spheres that are critical to our national interest a country that cannot build ships or produce medicine or control immigration or access vital resources, cannot defend its people, cannot defend its interests, and cannot defend its way of life. So our foreign policy continues to be reoriented around the real foundations of national strength. This budget is yet another step, I believe, in that direction. Obviously, the appropriators here will have a huge say on the outcome of what that budget ultimately looks like, uh as uh we don't anticipate that for the first time in modern history, Congress will just take up our budget and pass it. We think it'll go through some substantial reforms along the way and we look forward to engaging you like we did last year to produce what we think is a very good spending build.

Thank you uh, Sepitere Rubio. Um we will now uh do a round of questions uh, five minute questions uh based on uh order of uh attendance. And uh I'm gonna start and I'm gonna uh say thank you for the work you've done with respect to Ron uh we all all of us that have worked on this for years know how frustrating that is. how difficult it is to work with this regime uh who've uh sponsored terrorism, kidnapping and killed thousands of Americans for the last forty-seven years. Thank you for doing something about it. I know you and the president are doing all you can to insure that this comes to a close sooner rather than later. I wonder if you could give us a at least a brief update on where we are.

Yeah. Well, fir first let me remind everybody that while I've not been before this committee since I believe February when we briefed on the Venezuela operation, I have appeared on multiple occasions here. both in my role as National Security Advisor and Secretary of State in both all Senate briefings multiple times gang of eight briefings gang of sixteen briefings. Um so we've talked about this topic uh with some of you in those settings in the past or you've heard from us. L- let me just lay the predicate here, okay. Iran's desire to build a nuclear weapon was going to be built, was going to be effectuated behind a conventional shield. They were going to build for themselves so many missiles, so many drones, so many conventional weapons, including a navy, that at that point there's nothing you could do about it. What they tried to do is they were gonna try to build a conventional shield and hide behind that conventional shield and basically say to the world, if you come and do anything about our nuclear program, we will overwhelm you with missiles, we will overwhelm you with drones, and we will overwhelm you with our navy, and you will not win. You will not be able to do anything about it. They were seeking that point of immunity, which is why the president chose to act to deny them that point of immunity. Operation Epic Fury, some of you didn't like it, some of you did, was highly successful in achieving its military objectives, which is dramatically reducing the defense industrial base of Iran, the ability to build these missiles and and to build these drones, especially the missiles program, substantially degraded. A substantial percentage, and I'll leave the exact numbers to the Department of War, cuz I'm not a general and I'm not here to speak as a military planner, but a substantial degradation in the number of launchers that they have as well. They still have a lot of drones because these are easy to make. We all know it's not an Iran challenge, this is a global challenge. And it's playing out every single day around the world. I mean, Mexican cartels are using UAVs against each other. And we should imagine at some point may even use it against our own, against our interest. So, thi- this is a pervasive problem around the world. The economics of it is something we have to solve for. But nonetheless, even their drone building capability has been eroded. Today there is no Iranian navy. There is no such thing. There's a bunch of Boston whalers with machine guns on them, but there is no navy. There is no Iranian navy. It lies at the bottom of the ocean and will assume uh uh within a number of years be prime fishing spots, because they'll turn into reefs. So my whole point is that the the the Iranian conventional shield has been substantially erode eroded. Now, in the aftermath of that two things have happened. The first is they entered into a ceasefire. They agreed, we agreed to stop. But part of that agreement is that they would reopen the straits. They did not. At which point the president decided, and I think appropriately, we can't have a world in which Iran, only Iranian ships get through the straits. And so if they're gonna sh- if they're gonna shut down the straits for everybody we're gonna shut down the straits for them. And we have done that through a very effective blockade and by the way through the seizure of sanctioned ships in the Indo-Pacific as well. The cost to Iran every single day and lost revenue is in the millions, hundreds of millions of dollars that they are losing in lost revenue, that they're not generating as a result of that. Now, we are in talks, and I say talks because talks with Iran are not like talks with Switzerland, okay. They're very different. They require the use of intermediaries, unfortunately. But there is the prospect before us, which could happen today, it could happen tomorrow, it could happen next week, that for the first time, certainly in, in my memory, they have agreed to negotiate aspects of their nuclear program that just a month ago or just a m- a year ago, they were refusing to even mention, much less enter into discussions about. That is not a guarantee that ultimately it will lead to a deal that's acceptable to the Senate or acceptable to the American people. But we'll be able to engage them in a process to truly test the proposition of how far they're willing to go. Complicating that process unfortunately, is their internal regime is somewhat fractured in the sense of it takes days to get responses from their system. we can go into more depth in your follow-up questions. But um, but we're hopeful that something like that could happen, in which the straits would reopen, we would enter into a period of negotiations on very specific topics, delineated negotiations, in the hope of reaching an outcome that's acceptable to us, and something they would be able to do as well. If it doesn't work out, then obviously we still have a problem, uh, with respect to um, their nuclear ambitions. But what they won't have is the conventional shield to hide behind any longer.

The Thank you uh Secretary, I um I'm gonna ask one more question, hopefully this'll shorten it as we go around, there'll be more questions obviously on that topic, but um I know you just got back from China not long ago, could you give us a quick update on the uh state of uh US China relations?

Yeah look I mean China and the United States are the two largest economies in the world, the two most powerful militaries in the world, the Chinese government and the US government have to speak. I mean there's really it's not a choice here. uh, we we have to have some measure of communication if for nothing else in order to de-escalate potential points of conflict that could lead to something broader. There are obviously very significant irritants in our relationship with China. Some of these are long-term problems that we know we're going to have to address. And so what we're trying to do is man- manage a period of strategic stability, while recognizing that there are areas of our relationship in which we are going to have struggles not just for years but perhaps for decades. We recognize this. But I think as much as anything else, we have to recognize that the United States and China have to be able to have points of dialogue and speak to one another, uh as I said, for uh for no other reason than to be able to have a communication channel. I think in our meetings it was abundantly clear which are the areas that we do not have strong alignment or agreement on. We understand that there are areas in which long-term we're gonna have some real challenges, whether it's supply chains, put it to you this way, let's leave China aside for a moment. The United States, and I would argue the world, cannot depend on one country for ninety percent of anything, especially ninety percent of things that are critical to our economies, to our, not just, from our weapons systems to our pharmaceuticals. We just can't live in a world in which we rely on anybody for ninety percent of what we get in one sole source that could be cut off at any time as leverage against us, or punishment, or in a time of conflict. And so we are actively searching and have plans in place and that we're implementing these to diversify where we get critical minerals, where we get our

Thank you, uh, Secretary, and I think, uh, Thank you, uh, Secretary, and I think, uh, your comments about the uh supply chain and the critical minerals and everything else that's in the bottleneck uh the these are things that are relatively new to us they've always been there but covid uh underscored that and then of course the ukraine war brought it out even more and appreciate your remarks i think everybody at this dais knows we are as a nation looking at that with that senator scheen

thank you mr. chairman um mr. secretary at this budget hearing last year you testified that no one had died as a result foreign aid cuts. Um sadly I think we're seeing in real time that that's not true today. There are more than a thousand cases, more than two hundred Ebola related deaths, and as we know um one of the entities that is a critical global health tool is GAVA, particularly during a disease outbreak. It plays a role in distributing Ebola vaccines and it has committed up to forty million dollars to develop a for the current Ebola strain that has no vaccine right now. So. How are you making sure that Secretary Kennedy, who has been sitting on those funds for months now, is going to release them so that they can go to help develop a vaccine to address the Ebola outbreak?

Yeah. Um, uh, well, a couple points on on Gavi, I would say that the president had asked uh that we allow Secretary Kennedy to play a leading role on the Gavi decision because of his strongly held views with regards to vaccine safety, and he wanted them to conduct some reforms. Um, I actually talked to Senator Schatz about this last week as well, and um, so we're, the State Department's going to be re-engaging. I'm not here to tell you we're gonna yank this thing and h we're not gonna listen to his points of view, but the State Department will is, uh m- a few weeks ago made the decision that we were going to re-engage on this issue of Gavi. Uh, respecting, you know, what HHS views on it are as well, and we wanna take their input, but we'd like to get this issue resolved. and an outcome that's acceptable uh both to Congress and and also to our goals on global health. So uh it is an issue, as I said, I wouldn't use the word defer, but we have certainly allowed him to to uh play a leading role in determining what we're gonna do next. But uh right now we're sort of at a stage where we we are going to re-engage the we need to drive this to an outcome.

Um, I couldn't agree more, and so do you commit to using the two billion dollars that Congress has appropriated for global health to actually help fund global health security?

Well, we do fund glo- global health security beyond GAVI, by the way, and we can talk about that, we can talk about the Compacts, I think thirty-two that we've now entered into with countries all over the world. Uh, we have a new agreement with the UN, um, uh, th- as well that they're very happy with. Uh, the global fund, uh, we've hit our cap. We are at our, our thirty-three percent and we've actually been able to attract additional donors from around the world to contribute to it. On this specific item, I would say Uh, we intend to f- to get this resolved. We wanna get this resolved. It's an important part of our matrix.

Good. Thank you. We will we will follow up and I hope you will share with this committee as soon as you get it resolved. Um, I wanna go to oil s- Russian oil sanctions and general licenses because President Trump gave Russia a lifeline, allowing it to sell oil globally through licenses issued by the Treasury Department. Um, while I think the administration should have known that the Iran war would make Russian oil more desirable. They decided to remove the stigma on that oil and give an extra windfall of cash to Putin. So, can you let us know whether you believe or whether you will support extending those licenses when that license when it comes back up mid-June?

Yeah, a couple points. First of all, that those though uh the two things have happened. The one is the actually the US, US production and US playing a role in the global energy supply has increased. I think we had our largest amount of exports from the United States we've ever seen, so we've also benefited from this and our energy dominance has really come into play. The Russian waivers were a decision, these are the the policy, the underlying policy remains on the sanctions. What has changed is these time-limited extensions to sort of try to

Right, I understand that.

alleviate the global, right, but the problem we're facing too is there's a contagion potential, and that is that at some point w we can do strategic reserves, we can do some of the um other things that we've done to sort of alleviate global supply, but at some point you have to insure, this is not so much for us, at the end of the day our economy is not in need of it, but there are other economies around the world that have benefited from this, so these are time-limited extensions that ultimately at some point will expire.

Well, we've we've certainly benefited China and Russia's economy.

Well, China doesn't, I mean China refines oil.

Or t

They import a lot, but they refine oil. And they they

Yes, but but they also benefit from Russian oil. But my question for you is can you commit not to extend the general license again when it expires on June seventeenth?

Well, that ultimately is a decision that's made by Treasury, but I will tell you it depends on the circumstances at the time. We would like to end it as soon as we possibly can because the underlying policy of this country has been to sanction their oil. These were time-limited waivers for the purpose of opening up more global supply.

I I understand that, but if we continue to extend them they're not time-limited. I I wanna get a final question in on food for peace, because as you know the closure of the Strait of Hormuz has deepened the humanitarian needs in food in secure countries, such as Sudan, South Sudan, um and yet in your opening statement you said that our aid targets those who are most in need, but I think it's very concerning that the country selection process Food for Peace, which I understand is led by the Department of State, includes only two priority countries from world food program, hunger hot spots. That's Haiti and the Democratic Republic of the Congo. So the question I have is why are we adding countries that aren't facing acute food insecurity, like El Salvador, Guatemala and Rwanda? Why are we not helping countries who are facing acute, well, famine in some cases, Sudan, Gaza, Afghanistan, Nigeria, Syria, Somalia, these are all countries that are have humanitarian crises, and yet we're helping countries that don't have acute food dense

Yeah. Well, so a couple points.

security.

First of all, on Gaza we have spent hundreds of millions of dollars, including after the ceasefire, in providing through the Wor- World Food Program and other entities, and we continue to do so. I think if we're not the world's largest donor I'd be surprised. cuz it's a massive amount of money that we've provided through those mechanisms of various means. On the point of sell of Sudan in particular, the complication in Sudan, which I wish were different, and we're very involved in this, I mean we, I had a meeting on Sudan yesterday. The problem in Sudan has largely not been our unwillingness to provide funds, we are willing to and to step forward and we have the flexibility to what we've been able to do with foreign aid to surge up that. It's been distribution, it's been the ability to get that, so as an example in these conversations we're having between the warring sides, One of the things we're trying to identify is four safe spots where people can go receive humanitarian care uh assistance where we can actually have the outside groups the NGOs the uh international organizations that we contract with, have the ability to go in and actually deliver the food without having their trucks hijacked or blown up or their workers killed. That's been the fundamental challenge in Sudan is distribution. The distribution is being threatened because we don't have conditions on the ground that allow for it and so to allocate money towards something that we can't distribute is unwise until we have that in place. That's deeply tied to the ability to have a peace deal, which I can tell you has been very frustrating. On the one hand with Sudan, we had a donor conference in Berlin in April.

I I I don't wanna interrupt you, Mister Secretary, but I'm out of time and it doesn't explain why we are providing food for countries that don't are not insecure. I appreciate the challenges in Sudan. We have those challenges in many places. But because we have dismantled the distribution network when we eliminated USAID, I AID we've exacerbated those challenges in countries around the world, and we are not providing the help based on humanitarian needs, and that's my concern. Thank you, Mr. Chairman.

Senator Ricketts.

Thank you very much, Mr. Chairman, and Miss Secretary of State, thank you for uh being here, really appreciate, good to see you. Communist China is trying to win the AI race. And they will use it, for example, to dominate our military if they're able to do that. and so many other ways. A a world where Communist China is dominant and AI is very bad for the United States and for the entire world. That's why it's critical that us and our allies cannot lose this race. Semiconductor supply chains, particularly semiconductor manufacturing equipment SMEs are critical to winning this competition. It's one area that Beijing is spending billions and billions of dollars to be able to produce chips in China and they've failed to be able to produce those high-end chips so far. President Trump understands this better than anyone because the Trump administration was the first to utilize export controls on SMEs to slow down, communist China's advanced chip making industry. Since that time, key allies and partners have also imposed controls on SMEs to China. However, their controls have not been as restrictive as US controls, and this has allowed certain foreign countries to backfill the Chinese market with critical dual dual use tool tools. Uh, Secretary Rubio, do you agree that export controls on SMEs are critical to maintaining our technological advantage over Communist China?

It is. Uh, it's actually where it's most critical is in the high-end, um, the areas, you know, that are not legacy, that are broader than and and that allow for that. I think on the broader point of AI, we share your view. One of the initiatives that I think uh Jacob Halberd's done a great job with, State Department is Pacsilica, in which we signed up all these countries around the world. I think we're up to thirteen or fourteen and, including ourselves and others who hope to join as well, in which we can create this global consortium for all of the elements of the I s- I AI supply uh uh needs. It's not just the innovation, it's obviously access to the minerals and the critical elements necessary in order to produce these chips and all the things that it will take to lead the world in AI. I think it is safe to say the United States right now is a global leader on AI. I think it is also wise to say that that lead is not um is not irreversible.

Not permanent.

It's uh it has to be sustained, and there will be a real challenge in sustaining it. Um and we're gonna have to b stay focused on it. The good news is I do think we have a system of global alliances that view it the way we do. And we wanna lead on it because it's not just about leading the technology in AI, it's about also leading in the standards that will govern how AI is used. Uh I don't wanna monopolize this conversation on point but it's one that I think the Senate should think about, because I know we're starting to think about it. AI will have very positive impacts on on our economy and societies. It will also have some down, some some detriments. It will go at, there will be white-collar jobs in this country that that will be impacted. And I think we have to start thinking not simply about the impact that AI will have on those jobs, but the societal pressures that that will create, not just in the United States, but in economies all over the world. It much like industrialization and and and automation did, it will make the worker more efficient and more valuable, but it will eliminate some jobs and those jobs will have to be replaced with new jobs or new skills. That's not just an an economic issue, that is a political issue. That over time could destabilize societies all over the world. And and we so we have to start thinking about AI in those terms as well.

You mentioned our allies, shouldn't they have to follow the same sort of standards US companies do when we're limiting the amount limiting the semi-manufacturing equipment that's going to communist China?

Yeah.

And that's our hope, is that we can create people that that that we can create a coalition of nations that understand the danger in this. And and they're running through the same, some are better than others, but they're running through the same prob problems that we run into, and that is companies ultimately want to sell to the markets, and China's a large market. But I agree, and that's one of the goals behind Paxillica, is to create unanimity and or consensus behind that thinking.

Well, so, Mr. Secretary, that's why I reci recently introduced the Match Act with Senators Kim, Risch and Schumer to level the playing field. This bill would pro- uh provide the State Department with the leverage in ongoing negotiations with our allies to align those controls. And if agreement cannot be reached, it would ensure that foreign companies cannot sell the very choke point technologies that we have restricted. So I hope you'll uh support that as we uh move forward on it. Uh, one other thing I just want to hit before my time runs out here is that I was co-sponsor of a bill to create the US Foundation for National Security and Counterterrorism. This is a foundation that would be a public-private partnership. It would help counter traffickers and insurgents operating in ungoverned spaces around the developing world such as Africa. Uh the State Department, however, has not um for over a year and a half now launched this foundation and I encourage you to uh work expeditiously to implement it. I think this is something that as we're talking about, especially the continent of Africa, could be very helpful to making sure that we're not only helping, uh, conserve the environment and helping animals, it's bad for terrorists. Thank you, Mr. Chairman.

Thank you, sir.

And look at that, I kept it in my time.

Good job. Can you do as well, Senator Murray?

Do my best. Uh, thank you, Mr. Chairman. Uh, thank you, Mr. Secretary, for being with us today. Um, despite the differences that existed between Republicans and Democrats prior to this administration on how to approach Iran's nuclear program the theory was basically the same, that we were gonna impose um significant harm on the Iranian economy in order to force them to the table to negotiate. Um what is happening now is fundamentally different. This war and the administration's decision to blockade has now held the entire world economy and the US economy hostage to the ability to negotiate an agreement with Iran. This is why the entire country is seized by the question of when there will be an agreement,

Agreement, yeah, that comes.

because apparently until there is an agreement, the Strait of Hormuz remains closed. There is a cost to the Iranian economy, but now there is a devastating cost to the US economy. It has been

I didn't have a score.

indecipherable, the information coming from the administration, especially in the past several weeks, as We get signals that a deal is imminent. The president said yesterday he's bored by the negotiations. He doesn't care whether we get a deal.

Oh, very roughly for a picture.

Um, I think it's really important for us to understand what your bottom lines are, what you're asking for in this negotiation, um, what commitments you need Iran to make in order for you to release the blockade, and we hope for them to release the blockade as well. Um. So, give us a little insight into what your bottom lines are.

Waste. Yeah. A little energy.

What is going to get the Strait reopened? Because this is kind of the only question that matters for American consumers right now. And every day we get wildly different signals from the president as to whether he even is engaged in this question, as to whether the Strait is gonna reopen.

Yeah, I think your question gets right to the heart of the matter, so I think That's a, it's a good question. The, the, f- let me, let me first bifurcate two things. The only reason there's a blockade, the only reason why there's a US blockade is because Iran has closed the, they're firing on commercial ships. And they've mined large segments of Hormuz international waters. And so the blockade is only against Iranian ships. And it's very simple. The notion is, if, uh, if no one's ships are gonna get out, then Iran's ships aren't gonna get out either. It's, we can't live in a world in which they get to close the straits and tell everybody pay us a toll or we'll blow you up. But their ships get to go out unfettered. So that's the reason why there's a blockade. There wouldn't have been a blockade if Iran had agreed to do what they said they would do when the ceasefire kicked in, which is they were gonna open the straits. So let me just focus on the straits for a moment. Number one, what they're doing is unlawful and illegal. There isn't a country on earth, other than Iran, and maybe Oman that flirted with it, who's in favor of what Iran is doing in the straits. The Chinese are against it. The Russians are against it. Everyone is against it. The whole world is against it. So Condition number one is they have to reopen the straits, and reopening the straits means the following, ships can sail through international waters the way they can do through other choke points around the world without being fired upon without paying a toll. That's condition number one.

But the strait is the strait is closed because of our decision to invade Iran. This is a consequence of our military action. So I I guess I'm not interested in litigating that question. We all know why the strait is closed, because you took military action against Iran and we knew ahead of time that that would be their likely response. The question is how are we gonna get it reopened? Are you gonna drive a bargain that is so tough and so hard that the Strait remains closed? So w- how are we gonna get it open?

Uh, well, the first thing, that is a predicate to anything else happening, the Straits have to be reopened. So the way to think about it is this, if Iran wants to be able to move its oil again through the Strait, they will have to reopen the Straits. If they refuse to do so, then we have other options available to us, but we would prefer to negotiate the opening of this. Which means the follow-

Okay, so tell us about the negotiations. What do you need from them in order to get the strait reopened? We need the strait reopened tomorrow.

Well, what needs to happen is very simple. They need to s- they need to announce that they will no longer fire on commercial ships that are going through or threaten to fire on ships, because in many cases ships just won't move. They won't go, not because they got fired on, but because of the risk of being fired upon. And so they have to announce very clearly, the straits are now open, we're not charging a toll, we will help remove the mines that they put in there, and they will not

But the president says they also need to make commitments on their nuclear program. That's what I'm asking. What com- what commitments do they need to make in order

Oh, I see what you're saying. Okay.

for the Strait to be reopened and for our black-chain again?

Well, the second thing they have to agree to as part of this is, so in addition to the Straits, that's the predicate that opens the door to phase two. Phase two is they have to commit to very specific negotiations on highly enriched the disposition of the highly enriched uranium that still is buried deep in a mountain somewhere they have to they have to ins- they have to agree on negotiating severe if if uh and long-term limitations and or cancellation of enrichment activity in their country.

In the second sec- in the second phase of negotiations.

Well that would obviously these are highly technical matters, so I don't think you could work those out in five days. You'd that would require a team of experts to meet over a thirty, sixty, ninety day period and work out the details, but they have to commit to their willingness to do that. For example, they have to commit to say, we will dispose of the enriched uranium and the question now is what are the mechanisms by which we do so?

Fin- fin- final question,

We c- that that can be negotiated.

in order to get to that second phase, are you willing to release sanctions or release frozen money that uh the United States is withholding from Iran?

No. Right now, everything that's been discussed with them is that any sanctions relief, now remember sanctions come, there's international sanctions, there's congressional sanctions, there's executive sanctions, so some we can release and some we cannot. But any sanctions relief is condition-based, which means it has to be in return for the reason why those sanctions were put in place in the first. Thank you, Mr. Chairman. Thank you, Mr. Chairman.

And Secretary Rubio, it's good to see you here. I want to commend you and the administration for actually implementing a foreign policy that advances America's interest. Thank you. If we could, I'd like to start with the Philippines, an area that we know very well. It's a geographic center of the Indo-Pacific region. It's an area that is along critical sea lanes where a tremendous amount of world trade and energy uh commerce actually move a strong alliance with the Philippines, clearly is in US national security interest, it leads and supports freedom of navigation. Um, it also helps us deliver regional stability along the South China Sea, very critical area, particularly in the face of a very aggressive posture that the Chinese have adopted. I wanna recognize my colleague, Senator Kaine, who's worked with me to put in place the Philippines Enhanced Resilient Act, Resilience Act. That's five hundred million dollars of FMF grants. It's a billion dollars of loan and loan guarantees per year to strengthen the Philippines' in the United States alliance to make us more interoperable and more capable. Um, Mister Secretary, I'd just like to get your comments, your vision on the role the Philippines and the United States alliance.

It's actually I spoke to President Marcos on Sunday and um I have lot have had multiple engagements with them at a personal level. We've had visits. A couple good points here. The the first is we've actually entered into agreement with them in which they're I believe it's an old US military facility inside the Philippines that will now serve as sort of a I think it's a four thousand acre Um.

I'm very familiar with the area.

Yeah, you know it, and uh that we'll be able to do a lot of our activities together with regards to our joint interest in developing on AI and high-tech and diversifying and helping diversify their economy. The second is to continue with our defense commitments that we've made to them, and the ability to interoperate uh joint exercises which we've done now multiple times over the last year. Obviously we're very concerned with Scarborough.

Mm-hmm.

We've seen in recent days and we've demarched and made a very clear note. Uh this this issue came up uh during the first uh meeting with the Chinese, it's come up in every engagement I've had with the Chinese and it's come up again now, very recently, through diplomatic channels and that is uh we're very concerned about recent activity, once again near Scarborough um uh and the build-up of infrastructure that appears to uh be exerting you know territorial claims that we have long argued are not valid. This is one of those irritants in the long term that I think we'll continue to have to manage, but I view the Philippines as a critical partner and I think over the last I would say couple of years, our relationship with them, particularly under their new administration, has dramatically improved our ability to work with the Philippines jointly, on on a number of topics of interest.

Well, I wanna commend you the the four thousand acre Luzon corridor uh is anchored by the Subic Bay Project which when I was ambassador to Japan worked very hard to get that back for America and I see that as a tremendous opportunity for us to deepen our economic ties and of course that has as you mentioned earlier, a tremendous national security.

Yeah, can I just add one point? There is you know, some desire during their chairmanship this year of ASEAN that the to to reach a sort of uh code of conduct understanding uh in in the Indo-Pacific.

Mm-hmm.

And while I understand that desire, I just want you to know and perhaps many of you can help us in making this point, a bad code of conduct agreement is worse than no code of conduct agreement at all. And I think that's very important because they are under a withering constant pressure in the region to agree to a code of conduct in the region that I think would be detrimental would set a um would set a a a precedent that I think is very dangerous in the long so we'd love to see one but it has to be a good one, we don't think that's possible under current conditions, and a bad one is worse than none at all.