21ST CENTURY SECURITY THREATS STATEMENT OF ADMIRAL JOSEPH W. PRUEHER, U.S. NAVY COMMANDER IN CHIEF UNITED STATES PACIFIC COMMAND BEFORE THE COMMITTEE ON ARMED SERVICES UNITED STATES SENATE POSTURE HEARING MARCH 5, 1998 Mr. Chairman and members of this Committee, on behalf of the men and women of the United States Pacific Command, thank you for this opportunity to present my perspective on security in the Asia-Pacific region. Executive Summary Financial crisis. As this Committee is fully aware, Asia is in the midst of a serious financial crisis. Some might even say it is a broader economic crisis. It is important that this financial crisis also be understood in security terms. We have seen early signs of instability in Indonesia and have concerns about the situation in other countries as well. As President Clinton said in his State of the Union address, a secure, stable Asia is in America's interest. Our military presence and our military-to- military contacts throughout the region undergird overall security and stability in the region. Security alliance with Japan. Our alliance with Japan continues to be the most important U.S. security relationship in the region. The signing of the revised Guidelines for U.S.Japan Defense Cooperation in 1997 enhances this relationship. Japanese host-nation support for U.S. forces is a critical part of U.S. military presence in Asia and meets Congressional goals for burden-sharing. China. China's growing economic and military power is a major issue for regional leaders. The past year brought improvements in U.S.-China relations. Carrying out the policies of the Secretary of Defense and, in conjunction with the Chairman of the Joint Chiefs of Staff, U.S. Pacific Command worked successfully to improve our military-to-military relationship with the People's Liberation Army. Our goal is to lay a foundation for a relationship based on mutual understanding, trust, and increased openness. Along with the U.S., China will play an enormous role in determining if the next century is one of conflict or cooperation. On the subject of Taiwan, we recognize from China's perspective this is a core sovereignty issue, while China recognizes that the United States is committed to the peaceful resolution of Taiwan issues. I am personally optimistic for the growth of the U.S.-China relationship; however, we must continue to deal with China from a position of strength, combined with respect, and not have unrealistic expectations. This is a long- haul process. Korean peninsula. The Korean peninsula remains a volatile flashpoint. U.S. and South Korean troops would be in harm's way in the first hour of a conflict but are key to rapid conflict resolution. Our 37,000 troops stationed on the Peninsula and our alliance with the Republic of Korea have deterred North Korea from offensive action for 45 years. U.S. forces on the Peninsula, coupled with our reinforcement capabilities and ROK forces, are adequate for this task. The goal is eventually to facilitate a non-cataclysmic end to this situation. We must stay the course of deterring conflict, providing food aid, engaging in four-party talks, and supporting the Korean Peninsula Energy Development Organization, particularly in light of North Korea's continued economic deterioration. Readiness and OPTEMPO. U.S. Pacific Command's forward-deployed forces are ready to execute assigned missions, but significant deficiencies exist under a "two major theater wars" scenario. In 1997, U.S. Pacific Command Navy, Air Force, Army, and Marine Corps components all reported shortages of personnel in some units. Although components have overcome these problems in the short term, readiness for deployed forces is increasingly achieved at the expense of non-deployed forces. Currently, some forces required for long-term commitments in the Asia-Pacific area of responsibility are positioned in the Persian Gulf. Any reduction in personnel, equipment, or funding would significantly erode our capabilities in the Pacific. With some minor exceptions, we have been able to manage the operational tempo (OPTEMPO) for forces under U.S. Pacific Command, because we are accountable for and can trade off between training and operations. There are no firm indicators that the forces are "wearing out." 1997 IN THE ASIA-PACIFIC REGION Five developments stand out for their impact on U.S. security interests in Asia.in 1997: --The Asian financial crisis was the most significant development this past year. It began in July with the sharp decline of the Thai baht. The currencies of other nations followed suit shortly thereafter. Serious debt servicing problems in several Southeast Asian nations and South Korea-brought on economic uncertainty and concern about potential instability. --The food crisis in North Korea reached new levels and continued to draw international attention, resulting in unprecedented interventions by nongovernmental organizations. The aid that North Korea received did not address the underlying causes of the food shortage. The crisis will likely occur again in 1998 and in the years ahead and increases the potential for future instability on the Peninsula. --Factional fighting erupted in Cambodia in July 1997, reversing earlier democratic trends. The Association of Southeast Asian Nations (ASEAN) postponed indefinitely Cambodia's entry into ASEAN and is trying to conduct negotiations to resolve the situation. The outcome remains uncertain. --In September, the United States and Japan agreed to a complete revision of the Cold War-era Defense Guidelines. The revised agreement builds upon our existing security relationship and includes enhancements in bilateral planning and Japan's rear area support. The revised Guidelines significantly improve our ability to meet regional security challenges. --At the October summit in Washington, DC, China and the United States committed to forging a "constructive strategic partnership." On the military side, DoD concluded a Military Maritime Consultative Agreement, our first bilateral military agreement with China. U. S. PACIFIC COMMAND STRATEGY IN ACTION Theater Strategy In support of the President's National Security Strategy, Pacific Command is striving to achieve a stable, prosperous, and democratic Asia-Pacific community in which the United States is a player, partner, and beneficiary. Our military strategy derives from two fundamental premises. The first is a notion of confluence, that the political, economic and military aspects of security are interdependent, and cannot be advanced separately. Second, security, especially military security, undergirds the stable conditions that are prerequisite for economic growth and prosperity. U.S. Pacific Command's strategy consists of three levels of activities and operations: --Peacetime engagement --Crisis response --Fight and win a major regional conflict If we are engaged in the region in peacetime and our actions backed by credible, combat-ready forces, our strategy is able to respond to crises, prevent wars, and enhance stability. In 1997, this strategy meant that U.S. Pacific Command forces were extensively involved in sustaining the military component of American engagement in Asia, as part of the Administration's overall engagement program in Asia. In spite of Asia's current economic difficulties, the investments our nation is making in Asia's security and stability have yielded tangible benefits to the United States. Responses to Asia's Financial Crisis East Asia's serious financial crisis has implications for security and stability in the region. The near-term security impact will include slowdowns in the modernization of Southeast Asian militaries, reductions and cancellations in scope of some training exercises, possible reductions in funding of the Korean Peninsula Energy Development Organization, and pressure to reduce host nation support: Beyond these immediate effects, we are watchful for early signs of instability including civil disturbances, labor disputes, increased ethnic rivalries, and some increases in anti-American rhetoric. The U.S. government is responding to the financial crises in a number of ways. U.S. Pacific Command is taking steps to maintain the visibility of American military presence and contact with our military counterparts, especially in Southeast Asia. We have realigned our engagement programs and are directing resources to the maximum extent to lower-cost, higher-impact activities. Security Alliance With Japan Japan remains our foremost security partnership in Asia. With the support of the Hashimoto government, we have made great strides to bolster this relationship over the past year. The new Defense Guidelines signed in September strengthened our alliance and enabled the U.S. and Japan to engage in bilateral planning for crises in areas surrounding Japan. The new Guidelines agreement is essential to maintenance of peace and security in the region. Japan continues to host about 54,000 U.S. military personnel. In spite of the fiscal constraints of a slowing economy and a reduced defense budget, Japan's generous host nation support continues to meet congressional goals for burden sharing. Funding reductions in Japan's voluntary Facilities Improvement Program have had some impact; however, the impact has been minimal as construction projects have been carefully prioritized through close coordination of U.S. Forces Japan and the Government of Japan. At the bottom line, the Government of Japan continues to provide exceptional facilities and support for U.S. military personnel and their dependents. U.S. Pacific command continues to work closely with the Government of Japan in implementing the Special Action Committee on Okinawa (SACO) Final Report and minimizing the impact of U.S. military presence on the people of Okinawa. While we have made significant progress in most areas, the return of Marine corps Air Station Futenma is a difficult and exceptionally complex challenge. We remain flexible as to the type of replacement facility, as long as it maintains the critical military functions and capabilities of Futenma. Military-To-Military Relations with China China's regional and global influence will likely grow as its economy grows and the People's Liberation Army (PLA) fields a more modern force. Owing to its non-convertible currency, China has been largely insulated thus far from the direct effects of the region's financial crisis. Although china's growing power is high on the list of concerns of regional leaders, China is not a direct threat to the United States today. The PLA can project military power only to a limited extent beyond China's borders but has the potential to attain a regional power projection capability in the period beyond 2015 and then only with many correct decisions and full funding. The tension between China and Taiwan has lessened in the past two years. From China's perspective Taiwan is a core sovereignty issue. The U.S. is committed to "one China" as defined in the three joint communiques, on the other hand, China recognizes that the United States is also committed to the peaceful resolution of Taiwan issues. it is in no one's interest to bring the issue back to crisis levels. It is important to further develop the u.S.-China relationship in a realistic way. China has an important role in peaceful resolution of regional issues including not only Taiwan, but also the South China Sea and the Korean Peninsula. Proper, balanced management of u.S.-China-Japan relations will be key to regional peace and security. We need to continue to encourage steps in the evolution of bilateral and multi-lateral relations, together with dialogue and mechanisms to address the issues effectively. Conducted in conjunction with OSD efforts, U.S. Pacific Command's military-to-military contacts with the PLA are an important part of overall U.S. engagement with China. Contacts in 1997 included hosting visits by the Chief of PLA General Staff, General Fu Quanyou, and the Deputy Chief of PLA General Staff, Lieutenant Wu Quanxu. The PLA hosted visits to China by the Commander-in-Chief, U.S. Pacific command and the Commander-in-Chief, U.S. Pacific Fleet. The U.S. Navy conducted a ship visit to Qingdao while the PLA Navy conducted its first-ever ship deployment to the United States. Although falling short of the level of openness we seek to establish, the PLA did show us a nuclear-powered submarine as well as the flight test center at Cangzhou. Pacific Command opportunities for dialogue with President Jiang Zemin and all senior PLA leadership have been excellent. Secretary of Defense Cohen included me also on his January 1998 trip to China in which we toured Beijing's air defense center and met with President Jiang Zemin. U.S. Pacific Command's goals in building this relationship with the PLA are two-fold: to build understanding and trust, and to increase openness. Laying this foundation for the future enhances our understanding of China's military intentions and capabilities while giving us the opportunity to increase Chinese appreciation for U.S. forces stationed in the region. We are building this relationship from a position of both strength and mutual respect. it will take continuous work over a long haul. For this reason, it is important to include younger generations of officers in future military-to-military contacts to capitalize on long-term working relationships, a point on which the PLA leaders agree. Deterrence On The Korean Peninsula The Korean peninsula remains a volatile flashpoint where U.S. troops and citizens would be in harm's way on the first hour of a conflict. The North Korean economy has continued to deteriorate. North Korea is now dependent on international aid to feed its people. The regime has agreed to engage in four-party talks aimed at formally ending the Korean War and appears to be honoring the terms of the Agreed Framework. This past year also yielded an agreement with North Korea to accelerate the recovery of unaccounted-for American servicemen from the Korean War. Meanwhile, the Republic of Korea (ROK) is coping simultaneously with the Asia financial crisis and the transition to new political leadership. Kim Dae Jung, the new President, has already voiced support for U.S. military presence in Korea into the foreseeable future . Ensuring that ROK military preparedness is not seriously weakened by ROK economic difficulties is the next challenge. Despite the economic problems, the ROK has pledged to maintain host nation support at previously agreed-to levels. Secretary Cohen's recent visit moved this cause forward. While we remain hopeful that four-party talks will reduce tensions on the peninsula, military prudence dictates maintaining U.S. forces in Korea and our security alliance with the ROK to deter any hostile moves by the North. In my view, reconciliation is in everyone's best interest as a first step in the long-term process of resolving the situation on the peninsula. Economic, political, and cultural differences built up during fifty years of separation and mistrust will not be overcome easily. The United States and China have key roles to play, but the two Koreas will ultimately determine the pace of the process. Lastly, our forces in Korea require the continued use of anti- personnel landmines (APLs). APLs are critical in current plans to deter or halt an attack, to reduce casualties, and to reduce the risk of humanitarian disaster that would result from combat in and around Seoul until the situation on the peninsula is resolved or new technologies are developed, APLS should remain an integral part of U.S. forces on the peninsula as specified in the President's policy directive on this issue. Joint Task Force Bevel Edge in Thailand Thailand is an important treaty ally and security partner. Thailand is important both for its location in Southeast Asia and as a strategic bridge to the Persian Gulf. Thailand is one of the nations in Southeast Asia most affected by the financial crisis. U.S. Pacific Command maintains close relations with the Thai military. This relationship yielded tangible benefits in July 1997 when fighting erupted between rival political factions in Cambodia. U.S. Pacific Command temporarily staged a small special operations force package, Joint Task Force BEVEL EDGE, in Thailand in preparation for a possible evacuation of American citizens from Cambodia. Approval for this deployment was simplified and expedited because of the strength of our working relationship with the Thai military. This is a good example of the yield from our engagement program. Fire-fighting in Indonesia The United States has a special interest in a stable Indonesia. With the world's fourth largest population, including the world's largest Islamic population, and a location astride shipping lanes linking Asia to the Arabian Gulf, Indonesia is strategically important. Events in Indonesia affect the rest of the region. Indonesia's importance to the United States is especially significant in light of China's growing power and Indonesia's key role in the Association of Southeast Asian Nations (ASEAN) and the ASEAN Regional Forum (ARF). Indonesia has been hit especially hard by the financial crisis. 1997 also brought drought and major forest fires to parts of Indonesia and Malaysia, leaving large swaths of Southeast Asia blanketed in smoke and haze. Deployment of Air National Guard C- 130s from Wyoming to Indonesia to fight these fires made a significant contribution towards controlling the fires and brought the United States an enormous amount of good will. Engagement Dividends in Singapore Singapore is another Southeast Asian nation with which the United States is comprehensively engaged. Singapore is a strong proponent of U.S. military presence in the region. Among the many ties that the Department of Defense and other U.S. government agencies maintain with Singapore, forces assigned to U.S. Pacific Command train regularly with Singapore's defense forces. I met with Singapore's senior defense officials on several occasions in 1997, further cementing the bilateral relationship. American military engagement with Singapore paid off in January 1998 when Singapore announced its intention to give the U.S. Navy access to the pier being built at Changi Naval Base. This pier will accommodate our Navy's largest aircraft carriers. Access to this pier will help sustain American military presence in the region. A New Visiting Forces Agreement with the Philippines The Republic of the Philippines is a treaty partner and occupies a geographically important position in the region. The recently negotiated Visiting Forces Agreement (VFA) is critical to continued engagement with the Philippine armed forces. We anticipate the Philippine Senate will ratify the agreement later this year. Notwithstanding current limitations, we strive to maintain contacts with the Philippine military. An example of this is the Philippine Army joining U.S. Army Pacific in co-hosting the annual Pacific Armies Management Seminar (PAMS) in Manila in March 1998. Forty-one countries are attending, including China, Vietnam, and India. Defense Cooperation with Australia Australia remains a staunch ally, friend, and vocal supporter of U.S. presence in Asia. Pacific Command has an excellent military- to-military relationship with the Australian defense establishment. Australia is modernizing and reducing her forces, implemented defense efficiencies, and remains dedicated to maintaining interoperability with U.S. forces. Modest Contacts with India India is an emerging regional power with great potential in the coming century. India has been successful in liberalizing its economy over the last five years and has begun to expand ties with East and Southeast Asia. Though frequently overlooked because of our tendency to focus on the India-Pakistan situation, India also looks towards China as a principal security concern for the future. These concerns have been made clear during recent security discussions with Indian officials. For now, however, India and the Indian military are focused inwardly. U.S. Pacific Command maintains modest levels of contact with the Indian military. Cooperation on the "Full Accounting" Mission Cooperation from Vietnam, Laos, and Cambodia in support of Joint Task Force Full Accounting's mission continues to be good. Indeed, the increased contact brought about by the Prisoner of War/Missing in Action (POW/MIA) issue has helped pave the way for further engagement with Vietnam and Laos. Looking Ahead I would like to highlight several policy issues affecting the future of security and stability in the Asia-Pacific. First, despite Asia's economic turmoil, the fundamentals of U.S. security policy remain sound. U.S. economic, diplomatic, and security interests overlap and require an integrated approach to policy in the region. Stable conditions resulting from security will be the foundation upon which Asia's economic recovery will be built. Second, U.S. forward-deployed forces in Asia remain the linchpin of regional security and stability. U.S. Pacific Command participated extensively in the Quadrennial Defense Review, which reaffirmed the importance of maintaining about 100,000 military personnel in Asia. The United States should continue to maintain about 100,000 personnel-but more importantly, the capabilities that this number represents forward deployed. This number is a gauge by which nations in Asia measure U.S. commitment. Third, it is important that the Department of Defense continue to build its military-to-military relationship with China. This relationship provides a means of dialogue between our nations and gives U.S. military leaders insights not otherwise available. Fourth, on the Korean peninsula, the aim is to bring about a non- cataclysmic resolution. Neither a lash-out nor a total collapse of the North is in U.S. or ROK interests; either would negatively affect security and stability on the Peninsula and in the region. Food aid and four party-talks are two ways to engage North Korea to achieve the peaceful end-state we are after. At the same time, we must encourage the ROK to maintain current levels of military preparedness and host nation support at agreed-upon levels. Fifth, as the nations of Southeast Asia struggle through the current financial crisis, 'it is manifestly in U.S. strategic interests to remain engaged with them. Assuring them of U.S. interest in Southeast Asia's security and stability ultimately serves long-term U.S. economic, diplomatic and security interests. From a military perspective, International Military Education and Training (IMET) -- especially for Indonesia, Thailand, Malaysia, and the Philippines--is one of our nation's most important means of influencing future leaders. I appreciate the dilemmas at stake in this issue, but especially in light of Asia's current financial crisis, restricting IMET limits our ability to achieve our nation's goals-a secure, prosperous, and democratic Asia-Pacific region. Sixth, I would like to highlight the strategic importance of Guam. Guam was and is a strategic bridge supporting the deployment of forces to the Persian Gulf for military operations against Iraq and would be essential to combat operations on the Korean peninsula. As this Committee decides how much military infrastructure our nation must maintain, it is important that Guam be understood as a vital bridge linking CONUS-based forces and U.S. strategic interests in Asia. Seventh, an increase in Congressional delegations hosted by U.S. Pacific Command on their way to and from Asia was a welcome trend in 1997, an indication that Congress recognizes the region is important to the United States. I urge members of Congress to visit Asia and see for themselves the range of economic, diplomatic, and security interests the United States has in the region. My Asian counterparts and their civilian bosses share this view. Eighth, we urge your support for ratification of the U.N. Convention on Law of the Sea. Maintaining freedom of navigation is critical to regional security and economic development. Some Asia-Pacific nations assert excessive maritime claims that challenge this freedom. Participation in the Law of the Sea Convention will allow us to participate in negotiations to resolve these claims, add credibility to our stated policies and interpretations, and preserve navigation rights vital to executing our missions. Finally, a comment on "prudent risk." In the ideal world, CINCs would both be all wise and would have enough resources to deal with every conceivable contingency that might arise. Of course, we don't live in that ideal world and our nation's resources are not that large, but they are mostly sufficient. Although the world is not free of danger and conflict, there is evidence of a "strategic pause" following the end of the Cold War. In this environment, CINCs must be willing to weigh their instincts to avoid risk against the associated costs and accept some prudent level of risk. The nation and our national leaders must also accept "prudent risk." Resourcing The Strategy Our nation's security strategy in the Asia-Pacific region yielded tangible results in the past year. The coordinated efforts of many people throughout the Department of Defense other U.S. government agencies made this strategy effective. Due to the economic turmoil in the region, it is essential that we sustain this strategy of preventive defense in the year ahead. Trained and equipped combat-ready forces make the strategy credible. Adequate resources are essential to sustaining these forces and the effectiveness of the strategy. Force Disposition Today The forces assigned to U. S. pacific command are adequate to execute assigned missions today and are arrayed in two major zones spanning the Pacific and Indian oceans: --Approximately 100,000 personnel are forward-deployed in Asia, principally in Japan, Korea, Guam, and Diego Garcia. These forces include the 7th Fleet, 8th U.S. Army, III marine Expeditionary Force, 5th Air Force, 7th Air Force, 13th Air Force, the 1st Battalion of the 1st Special Forces Group (Airborne) and other joint special operations forces, maritime prepositioned ships, and Army-and Air Force prepositioned stocks. --Approximately 200,000 personnel are stationed in Hawaii, Alaska, and the West Coast of the United States. These forces include the 25th Infantry Division, 3rd Fleet, I Marine Expeditionary Force, 1st Brigade of the 6th Infantry Division, 11th Air Force, I Corps Headquarters, and designated units and individuals of the Army, Air Force, Navy, and Marine Corps Reserve, and Army and Air National Guard. Readiness and OPTEMPO Although U.S. forces deployed in the Pacific are ready to conduct assigned missions, I would like to bring some readiness issues to the Committee's attention. U.S. Pacific Command has reported significant deficiencies in six of the eight measured functional areas for a "two major theater wars" scenario: (1) command, control, communications, and computer systems; (2) logistics and sustainment; (3) intelligence, surveillance, and reconnaissance; (4) mobility; (5) infrastructure; and (6) special operations. We have addressed specific deficiencies in these areas through the Joint Requirements Oversight Council and the Senior Readiness Oversight Council. Significant investment will be required to overcome these deficiencies. From the perspective of the U.S. Pacific Command Army, Navy, Air Force, and Marine Corps components, personnel shortages are the principal readiness concern, though pockets of lower levels of readiness exist due to equipment shortage and availability. --U.S. Pacific Fleet reported that personnel shortages have affected forward-deployed naval force readiness. Though command attention has caused recent improvements, in the near term (May 1998), 58 of 623 Chief Petty Officer billets will be "gapped." Junior enlisted manning at sea, currently at 81 percent, was recently only 73 percent, down from 92 percent four years ago. Pacific Fleet is currently short over 1900 sailors in key technical ratings. In addition, there are backlogs in aircraft engines and aircraft intermediate and depot level maintenance, particularly for the S-3B. --U.S. Pacific Air Forces (PACAF) reported an Air Force-wide decline in pilot retention, a serious manning problem which cannot be corrected in the near term. PACAF aircraft maintenance statistics indicate the beginning of a decline in aircraft mission capable rates. The PACAF F-16 cannibalization rate is 15.9 percent, compared to 6.6 percent in fiscal year 1995, due to lack of spare parts. --U.S. Army Pacific (ARPAC) reported shortfalls in infantrymen and "low-density/high-demand" specialties such as engineers, communications specialists-, intelligence analysts, and mechanics, though these shortfalls will be corrected by the end of the fiscal year. Slower modernization of some lower-profile equipment, such as 2%-ton trucks, is causing increased maintenance difficulties, though this will be corrected in fiscal year 1999 with the delivery of new vehicles. --U.S. Marine Forces Pacific (MARFORPAC) reported shortages of personnel in each major reporting unit, primarily in communications, intelligence, air traffic control, air support, infantry, landing support specialists, and vehicle mechanics. Although components have mitigated the impact of these problems in the short term, readiness for deployed forces is being achieved at the expense of non-deployed forces. Maintaining adequate readiness requires predictable funding and investments both to bolster deficient areas and operate to meet our commitments. In the near term, timely passage of supplemental appropriations for unfunded contingency requirements, such as in Bosnia and the Arabian Gulf, is critical to sustain readiness. Without this relief, OSD has decided that Services will have to absorb costs from operations and maintenance accounts to the detriment of readiness. OPTEMPO has not been a major problem in U.S. Pacific Command. With minor exceptions, U.S. Pacific Command's components are staying within OPTEMPO goals established by service headquarters. Units that have exceeded or are forecasted to exceed goals- include two MARFORPAC infantry battalions and a Marine F-18 squadron, PACAF's F-15E squadron and one F-16C squadron, and two ARPAC battalions. There are no firm indications that the force is "wearing out." However, people are working hard and there is no sign of let-up in the workload. Improvements to Warfighting Capability U.S. Pacific Command's resource priorities were submitted to the Joint Requirements Oversight Council earlier this fiscal year. We have given the highest priority to the readiness of personnel and equipment; second, to near-term force improvements and upgrades to existing systems; third, to joint, multiservice, and multi- national systems which enhance warfighting capability and interoperability with our friends and allies; and fourth, to new, long-term recapitalization. I would like to highlight two new capabilities that are important to U.S. Pacific Command's long-term warfighting capabilities. --Theater missile defense. With North Korea developing long-range ballistic missiles, the differences between theater missile defense and national missile defense are blurring. Nations such as China and India are actively developing new ballistic missiles. There is a need to keep Pacific geographic and geopolitical considerations in mind as we develop missile defenses. --Chemical and biological defenses. North Korea is assessed to have the capability to manufacture, deploy, and employ chemical and possibly biological weapons. It is prudent to assume that North Korea would use chemical weapons in any conflict on the Korean peninsula. In conjunction with U.S. Forces Korea, U.S. Pacific Command has generated a list of near-term fixes to close the gap in our capability to defend against chemical and biological attacks. Quadrennial Defense Review and National Defense Panel U.S. Pacific Command endorses the Quadrennial Defense Review modernization strategy, which attempts to balance near-term readiness and future capabilities. The command also supports the National Defense Panel's conclusion that breadth of capability will be as important as depth for long-term readiness and modernization and that reductions in infrastructure are necessary to help fund modernization. Investments in People Investments in people and training are as important as new technologies. Adequate funding for compensation, medical, retirement, housing and other quality-of-life programs is necessary to attract and retain the skilled personnel upon which our forces depend. Readiness to respond rapidly in support of military contingency operations should be the principal guide as the military health system is reformed. Training and force protection are quality-of-life concerns as well as readiness issues. U.S. Pacific Command has developed plans of action to reduce vulnerability to terrorism and is steadily working requirements through the Services. Service military construction plans provide appropriately for warfighting infrastructure and improvements to quality-of- life. Asia-Pacific Center for Security Studies The Asia-Pacific Center for Security Studies (APCSS) is rapidly becoming a key part of U.S. Pacific Command's engagement strategy. In January 1998, APCSS hosted a timely conference on economics and security in Asia, bringing together experts from business, academia, and the U.S. military to discuss the origins of Asia's financial crisis and the implications for security and stability. Similar conferences have examined peacekeeping, humanitarian support, and environmental issues. The conference program complements the Center's primary academic organization-the College of Security Studies-that draws together future military and civilian leaders from around the region to explore national perspectives on regional security issues. The Asia-Pacific Center is an excellent investment in regional security. New Headquarters A new headquarters building for U.S. Pacific Command staff is required. The headquarters facility the staff is in today is a 45-year old hospital building that has deteriorated beyond the point of maintainability. The engineering estimate is for $75 Million for repair alone. To meet the demands of 21st century operations this command must have a modern, efficient facility, one that our taxpayers can be proud of, and one they can afford. Funding is in the FYDP for this headquarters building. Conclusion Last year I concluded that while not conflict-free, the Asia- Pacific region was at peace. This year the region is closer to the margins of general peace. The financial crisis could lead to broader economic and security problems. As military professionals, we are paid to be pessimists and expected to keep our powder dry. However, this charter does not keep us from being optimists about the future of the AsiaPacific region. I am convinced that by working in a forehanded way and respecting legitimate views, and by maintaining a position of strength, we can best contribute to peace, stability, and prosperity. The continued support of Congress and the American people in these endeavors is vital and appreciated. With your support and the cooperation of our friends and allies, the United States will continue to successfully advance our national interests in the Asia-Pacific region.