Tuesday, March 28, 2000 - 2:02 p.m. EST
MR. BACON: Good afternoon. Welcome.
Let me bring you up to date on the final days of Operation Atlas Response, which we deployed to Mozambique to deal with the floods there.
We are in the process of redeploying the nearly 700 people who took part in Operation Atlas Response. There are nine C-130s and six helicopters that we sent down to South Africa and Mozambique.
I think it's very impressive what they accomplished in a short period of time; between March 9th and the present, they moved 1.5 million pounds of cargo, transported about 1,200 passengers, and flew more than 500 sorties.
They are in the process now of redeploying to their European bases and will do that by the middle of next week, provided that the floods continue to subside, allowing aid to reach people by roads. If there is a problem, obviously we can reconsider. But we are in the process now of handing over the entire aid operation to nongovernment and government organizations in place in Mozambique.
Q: Ken, hasn't there been a problem there though, just in the last few days, with accidents and transportation problems with trucks and things -- that would suggest requiring some more air support?
MR. BACON: Well, we have been working very closely with the government, and my understanding is that we have agreed to this pull-out. If there is a problem getting aid through and people are suffering, then we would reconsider that. But this is a redeployment plan that's been worked out with the government of Mozambique.
Q: Did they ask them to leave or suggest it or -- did the government of Mozambique suggest it?
MR. BACON: Well, we have worked out this plan with them. I think they always assumed that we would leave, when the floods are over -- and the floods were over. I don't think they anticipated or wanted to have a permanent U.S. military relief operation taking place in their country.
Q: Do you have a cost estimate?
MR. BACON: I don't have a cost estimate at this time, but when it's completely over, we'll try to get one for you. And the U.S. government as a whole has contributed a fair amount of money. It seems to me that several weeks ago we estimated that the military cost would be around $20 million, but it could well have exceeded that, and we'll try to get you a better reading on that.
I'd like to say welcome to a bunch of students from Miami University in Ohio, which is the university of General Joseph Ralston, among other great people in the country. Welcome.
Tomorrow here at 1:30, the Air Force will hold a briefing on what it calls the "Ranch Hand" study, which is a study of Vietnam veterans who participated in the Air Force program to spray Agent Orange in Vietnam. This is a study that's been going on for a number of years, and an Air Force official will come and bring you up to date on their latest findings. His name is Dr. Michalek, and he has been working on this study since 1978. It's a study that involves more than -- it involves, I think, 1,000 veterans of the Air Force, plus 1300 in a control group, and they've been comparing their health profiles over the last decade or more. That's tomorrow at 1:30.
Finally, this is Heather French Day, Miss America Day, in the Pentagon. Miss America will meet with Secretary Cohen at 5:45 to give a brief report on her project, which is to work on behalf of homeless veterans.
With that, I'll take your questions.
Q: Ken, on Kosovo, have there been any requests yet for U.S. troops, any additional U.S. troops? If not, do you anticipate any? And do you anticipate sending additional troops to Kosovo?
MR. BACON: Well, we have not had a request, so it's hard to say whether we anticipate sending additional troops for Kosovo outside of what goes in the normal ebb and flow. My understanding is that NATO continues to look at requirements and it should complete a study in the next several days and send it to SHAPE for more refinement.
NATO will then have to consider the recommendations. And if they are developed into a series of requests for more people, the request will be put out to the individual countries. That has not happened yet.
Q: Would the United States consider sending additional troops in if they were to go to a place like Mitrovica, or only to go to the American sector?
MR. BACON: Well, Charlie, I think that question is a very good question, but it's premature, because we have to wait and see how the NATO study comes out.
Q: I've been reading about Dynamic Response on KFOR's website, and it seems a little different from what you guys initially have described. If I remember correctly, it was described as an opportunity to exercise going through Macedonia and deploying into Kosovo. But what it says they're doing now is actually manning checkpoints and doing the work. Could you explain that?
MR. BACON: Sure. They are doing that, but they're doing it for a relatively short period of time. They're practicing doing the types of tasks that they would actually do if called upon to deploy as part of the Strategic Reserve.
Q: Okay, if I put on my cynical hat, that looks like a temporary increase in troops in Kosovo. Talk me out of it.
MR. BACON: Well, it's an exercise that has a discrete period of time, that began yesterday, on the 27th, and they will be out sometime in early April, as I understand it. So it's basically an exercise to test their ability to deploy, to carry out some tasks, and then to redeploy. And the whole exercise is supposed to be over on April 10th. So in the course of that, in order to deploy, they have to show that they can actually get to some place, and the place they chose to go is in Kosovo; the place they chose to do some tasks is in Kosovo, and then they'll come out.
Q: And so any incidental manpower that they happen to be offering the peacekeepers is accidental and a function of the exercise, that's not intended?
MR. BACON: Well, it's intended that they have an exercise in Kosovo. But this isn't -- should not be seen as a temporary reinforcement of the troops in Kosovo. This was planned a long time ago, and it's an exercise involving the Strategic Reserve, which in this case is the 24th Marine Expeditionary Unit. And there are also some Argentine paratroopers, some troops from the Netherlands, from Poland, and from Romania.
And they're carrying out this exercise and then redeploying.
Q: Would you comment on reports in the British press today that there was a plot last week to kill Wes Clark and George Robertson, and that they altered their plans going into Kosovo as a direct result of what I believe is being called "credible and specific threats"?
MR. BACON: No.
Q: Did it happen? Did they alter --
MR. BACON: They went to Kosovo. They arrived at one of their destinations quite late, and they did that for operational reasons. And I don't have anything more to say about it.
Q: Not for security reasons?
MR. BACON: Operational reasons.
Q: Which include security reasons?
MR. BACON: It -- under a broad construct, it could include security or other reasons.
Q: And --
Q: So -- sorry.
Q: When there are threats to U.S. officials -- for example, to the president -- it was acknowledged that there was a threat to the president on his subcontinent trip. No such acknowledgement in this case?
MR. BACON: I've said all I'm going to say.
Q: Different subject?
MR. BACON: Sure.
Q: Congress is continuing to express its concern about oil prices and gasoline prices. And Senator Warner has talked several times about the need for Secretary Cohen to get involved in the whole issue of high oil prices. And I was wondering what the secretary's plans are to get involved in this whole issue of high oil prices, because many in Congress are beginning to ask the question why there's such a vast U.S. military presence in the Persian Gulf, essentially being there to defend this oil price structure, and they'd like the secretary to get involved. Does he have any plans to discuss this with his counterparts in the Middle East?
MR. BACON: As I said last week, he is going to the Middle East next week, and this is one of the things he will discuss with his counterparts. I think the U.S. government position on this is very clear. We've been talking with members of OPEC, asking them to increase their production, so that oil prices can come down.
But I think the secretary's views on this are threefold:
The first are that we are in the Middle East to protect our own national security interest, not primarily to protect countries in the Middle East. We're there to protect our own national security interest.
Two, that to the extent that higher oil prices do threaten the economic stability of the West, it is a security issue for the West, as well as a security issue for the Middle East.
And three, that we must always balance, as a country, our demand for oil with needs to look for ways to conserve oil at the same time, that we have a responsibility to be as conservation-oriented as possible.
This is an issue of national concern -- the high energy prices. Secretary Cohen will, of course, discuss it with his counterparts, but he won't be the first, because this has been brought up before by the secretary of Energy and by others.
Q: So in other words, just to make sure I understand, the secretary of Defense will be asking Persian Gulf nations to increase their oil production?
MR. BACON: The secretary will be expressing our national view, which is we want them to increase oil production, which should lead to a decrease in oil prices.
Indeed, the future markets have already reflected an expectation that oil prices will come down, in that future prices on a barrel of oil have fallen in the last week or so. Now, what the secretary will do will go over there and stress the importance of the message that has already been delivered by others in the government that it's time for OPEC to increase its production.
Q: Ken, last week when you talked about this, you had mentioned that you might have some new statistics for us on Iraqi smuggling and the extent to which maybe that's impacting the market. If you had them, I think you were going to give us some statistics on the increase in Iraqi oil smuggling. You weren't sure whether you would have them available or not.
MR. BACON: Well, I don't. I don't have them available, but there has been a sharp increase in Iraqi smuggling that has really tracked the increase in oil prices.
You have to remember why Iraq goes to the trouble of smuggling oil out. It does it because the revenues from smuggled oil are not monitored by the U.N. under the oil-for-food program. The oil that is sold under the oil-for-food program generates a pot of money which is monitored by the U.N. Some of that money goes to pay the costs of U.N. operations in Iraq or for monitoring Iraq. The rest is supposed to go to food and medicine and other humane, worthy projects not into Saddam Hussein's palaces or weapons programs. The money that is earned through smuggling can go directly into Saddam Hussein's pockets for modernizing his palaces, for trying to buy weapons on the black market, or do other things to redevelop his military capability.
The Maritime Interdiction Operation continues. It is frankly quite a difficult operation, because much of the smuggling occurs in the shadow of the Iran; in other words, in Iranian territorial waters, and we can't go in to the territorial waters of other countries. If they get out into international waters in the Gulf, then we can interdict them and we attempt to do that.
There has been in March, the first half of March -- that is, thorough March 15th -- 100 queries of ships as part of the Maritime Interdiction Operation. There have been 19 boardings and four ships have been diverted.
That is, we have reason to believe that they are smuggling Iraqi oil out of Iraq for the benefit of the Baghdad regime.
Q: Through March 15th --
MR. BACON: Through March 15th.
Q: From what --
MR. BACON: The first 15 days of March.
Q: Do the allies worry that if they really crack down on Iraqi oil smuggling it would just tighten the market further and keep prices up?
MR. BACON: This is a very small percentage of the market. We're talking about trickles.
Q: How much of the cargo was seized?
MR. BACON: Pardon?
Q: How many ships -- the cargo of how many of those ships were seized?
MR. BACON: I'm afraid I don't know how much was seized. These tend to be relatively small ships, though. And the -- I don't have figures on the amount that's been seized, but it's not a small amount. I mean, it's not a large amount. This is -- I mean, you really should look at this in terms of trickles compared to the amount of oil that's flowing through pipelines and into tankers every day.
Q: Is the government of Iran providing any assistance to this operation other than use of their territorial waters? We're just talking about tankers --
MR. BACON: Well, I think -- my impression is they're probably well paid for the use of their territorial waters. But no, I think they're just allowing people to -- they're clearing people to go into their territorial waters and sort of hug the coastline.
Q: How does that fit into the broader U.S. effort to improve relations with Iran? Is it a point of friction --
MR. BACON: There are -- it is one of the complications in our efforts to improve relations with Iran.
Q: Ken --
MR. BACON: It is not as big a complication as the other three issues that we're trying to resolve. The reason, a reason to improve relations with Iran is to be able to have a dialogue with them on issues we care about. One of the issues we care about is to stop smuggling that violates the U.N. Security Council resolutions. But I think Secretary Albright made it extremely clear in her speech two weeks ago that we have to get over three more fundamental hurdles before we can improve our relations with Iran -- she was very, very explicit about this -- and that is, Iran's support of terrorism, its opposition to the Middle east peace process, and its program to build weapons of mass destruction. Those obstacles remain in our efforts to improve relations with Iran. This is also an irritant, but I wouldn't rank it in the same category as those three obstacles I listed.
Q: Ken, has there been any increase in the number of ships or aircraft that we're devoting to the effort to find and stop these ships? And if so, how much?
MR. BACON: It's episodic. We have surges from time to time. We've had one just recently, I think it just ended, and that's an effort to query or board more ships. But basically in all of calendar year 1999 we queried 2,400 ships, we boarded 700, and we diverted 19 in all. Now, when I say "we", it's us and allies. We have support from other countries in doing this. We don't do it all alone. And, of course, the ships are diverted to local ports in the UAE or Oman or other places. So we have to operate with the cooperation of countries in the area.
Q: Ken, at any one time, roughly how many ships do we have involved in this effort?
MR. BACON: I'd say at any one time it's one or two ships, generally.
Q: Ken, let me go back to the topic of OPEC oil prices. It has been said over the weekend by some OPEC nations that the price of oil could drop and stabilize at around $25 a barrel. Would the United States like to see, one, that particular price stabilize, something lower stabilize, or what? What would be our wish?
MR. BACON: It's not my job to speak for the United States on oil prices. That's somebody else's job. We've made it very clear that we think that the current high oil prices expose our economy to some risk. We would like the oil prices to come down. And we've been talking to members of OPEC about that. And the OPEC ministers are meeting even as we talk in Vienna and trying to agree on a production increase that would bring oil prices down.
Q: Would the United States like to see oil prices stabilize at some point?
MR. BACON: The United States would like to see lower oil prices. And obviously, we'd like to see lower oil prices, and the lower the better, from our standpoint.
Q: At what price per barrel does the Pentagon build its budget to? Because I gather that the Pentagon is the largest user of, I think, oil --
MR. BACON: Well, it varies, of course, because we don't make up oil prices, we relate them to the market prices.
We do have sort of a somewhat strange way of handling oil prices in our budget, and --
Q: In the 2001 budget, did -- what target number did they use?
MR. BACON: I don't know what target number we used in the 2001 budget. It was probably the oil price at the time and -- with some reasonable projection of what it would be.
But let me just tell you that the supplemental appropriations bill that's now before Congress includes $1.56 billion to pay for higher oil prices. And that would cover oil price increases in three fiscal years, 1999, 2000, and 2001. And the reason for that is that the way the military sells oil to -- the way the Defense Department -- the Defense Logistics Agency sells oil to military users is at a fixed price for a year. So if the price they sell it at turns out to be high, then turns out to be higher than what they're paying for oil, they end up with a surplus, which is used to reduce the selling price the next year. If the price at which they sell it turns out to be too low -- in other words, lower than market prices -- they run a deficit, and then they have to make that up from Congress. But for their own internal accounting purposes, they increase the price of oil the next year to cover that.
Just to give you an example, they sell oil at a stabilized price, make it available to the military at a stabilized price of $26.04 per barrel this year, when in fact they have to buy it at about $31 a barrel. So they have this gap to make up. But the reason they do that is to provide budgeting certainty to the services, so when they calculate what they have to pay for oil over the course of a year, they can have some stability in their own budgeting.
Q: And "they" -- is that Defense Logistics Agency?
MR. BACON: Defense Logistics Agency.
Q: And how much -- what's the annual budget for -- do you know -- this year for oil expenditures? The 1.56 billion will be added to that, but what do you spend about --
MR. BACON: I don't know. We'll find out. [The cost to the Defense Department for buying and maintaining fuel products is budgeted at $4,000.7 million for FY 2000 and $3,351.3 million for FY 2001.]
Q: Ken, speaking of the supplemental, what's the prospects of getting a supplemental as soon as the secretary had said you need it?
MR. BACON: Well, that's really up to Congress. We've made it very clear in letters to the congressional leaders that this is going to become a readiness issue. Congress is always interested in maintaining readiness, and the easiest way for them to maintain readiness right now is to pass the supplemental before the April recess. That's what we're hoping for. The House is supposed to act on the supplemental, I believe, tomorrow, and then it will go to the Senate.
And we hope that the Senate will pass it as quickly as possible.
Secretary Cohen sent a letter last week -- I think you can get this letter -- this is one to Trent Lott, but he also sent one to -- as well as -- he sent one to Senator Lott and Senator Daschle, and then he sent them to the speaker of the House and the minority leader in the House.
Q: Can I do one other quick topic, completely different?
MR. BACON: Sure.
Q: The Wall Street Journal's story today on the Pentagon and the FDA, talking about trying to utilize expired drugs -- can you explain at all what the next step is and what happens now with the Pentagon or the military in this big surplus of expired drugs that it has? Will it now be able to use them? Will it be able to save any money by not having to purchase new drugs?
MR. BACON: Well, this is actually an extremely interesting topic. The military buys about $1.2 billion of prescription and non-prescription drugs every year, and of course we have a need to stockpile some of these drugs in more reserve stocks, in case we have to draw on them in huge volume.
In 1985 the Air Force went to the Food and Drug Administration and asked them if they, the FDA, could check the expiration date of some of the drugs it had in its stockpile, to find out if the drugs were safe and potent beyond the expiration date set by the manufacturers. The FDA did this and found basically that the expiration dates tended to be very conservative, and as a result, many of these drugs could have a much longer shelf life than the manufacturers said.
So starting in 1985, the military has been extending the shelf life of its drugs that have been tested, sometimes by the manufacturer, sometimes by the FDA, but always with FDA supervision and compliance. So this has been an FDA-monitored program that's been going on since 1985, and it's produced very significant savings.
In fiscal 1998, the last year for which I have full figures, the military spent $664,000 -- that is, to have drugs retest, to have their expiration -- the potency and sterility and safety of the drugs tested -- to see if it was possible to extend their shelf life.
And we saved -- the military as a whole saved $49.3 million. Cost, $664,000 for testing. Savings by extending the expiration date was $49.3 million in fiscal 1998.
So this has been an ongoing program since 1985, and we follow the rules laid down by the FDA. I guess I would point out two things. Even though we spend a large amount of money, $1.2 billion a year, on prescription and non-prescription drugs, of course many of those drugs are used to take care of families, retirees and others as part of our health care program. Our stocks, the prepositioned war reserve stocks, are approximately $87 million worth of drugs. So there's a much smaller group kept -- much smaller number of drugs kept on the shelf as part of the prepositioned war reserve stocks. But this is a program that has worked extremely successfully. And as you could see from the Wall Street Journal article, the lives of some of these drugs have been extended by four, five, six years.
Q: Do you have any information on what's going to happen to this U.S. Army sergeant who was assigned to the White House communications unit, who has apparently been arrested for allegedly selling or giving away telephone -- long distance access codes? Is that something that's going to fall under the Uniformed Code of Military Justice, or is that being handled in the civilian courts? Do you know? Are you familiar with this case?
MR. BACON: My assumption is, because he's an active-duty member of the military, it will be handled under the Uniformed Code of Military Justice, which can deal --
Q: That's my assumption as well, but yesterday when the White House announced this, they seemed to working through somehow the civilian courts. He was arraigned in Prince George's County, Maryland, and it was a warrant handed down by prosecutors in New York. It just struck me as curious. You don't know anything --
MR. BACON: You seem to know more about this than I do, so I'll retract my previous answer and let you answer your own question.
Q: Well, I didn't know whether there was some preliminary process or whether it was going to be --
Q: (Off mike.) (Laughter.)
MR. BACON: Maybe I'll turn over the briefing to Jamie McIntyre of CNN.
Q: One little cleanup. Is there further information on our black-powder guy who was driving through the parking lot last week, or is that a closed case, the one who wanted to be a security guard?
MR. BACON: Well, he was arraigned, and I haven't heard back from the FBI on that. We'll check with Glenn Flood or Sue Hansen and see if we have more information.
Q: You're not going to hire him.
MR. BACON: No, we decided not to hire him. It was a bold move, but we decided not to hire him.
Q: Thank you.
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