Secretary of State Hillary Clinton is in Berlin today and was supposed to meet with the other representatives of the Middle East Quartet: Russia, the U.N., and the EU. But the meeting was cancelled after the Obama administration successfully scuttled a European plan to issue a statement that included specifics of a final agreement for the Israel-Palestinian conflict.

German officials said the meeting was cancelled due to "scheduling difficulties," but U.S. and Israel officials told The Cable that the meeting was scuttled over disagreements regarding the EU draft statement, which would have set terms on matters such as borders, security, and settlements.

"A regularly scheduled quartet meeting got hijacked by the Europeans who are getting increasing frustrated and want to tackle final status issues," said former Middle East negotiator Aaron David Miller, now with the Wilson Center. "If the U.S. wants to get involved, they will do a lone ranger on this one. We will decide what constitutes our policy positions."

The Obama administration dispatched National Security Council Senior Director David Hale to the Middle East last week to deal with the issue, multiple officials confirmed. He met with both Palestinian and Israel leaders, as well as a representative of each of the Quartet members.

For the Obama administration, Hale's effort was a success on two counts. The White House was able to avoid another domestic political problem by acting swiftly to prevent an uproar by pro-Israel community in Washington; and Obama was able to bide time in advance of a major speech on the Middle East he is preparing to make in the coming weeks.

"We're always open to new ideas and new approaches. But fundamentally, we know what needs to be done, which is to get the parties together, to get them talking about these core issues so that they can resolve them in a fashion that's sustainable and appropriate to both sides," State Department spokesman Mark Toner said on Thursday.

Around Capitol Hill, some pro-Israel offices were already warning the State Department that they should not repeat their approach from February, when U.N. Ambassador Susan Rice initially offered to endorse a U.N. Security Council presidential statement criticizing Israeli settlement activity, causing domestic political uproar. That statement never came to a vote and the administration ultimately vetoed a U.N. Security Council Resolution criticizing Israel.

"This is a positive change, because at the last go around, the administration was less clear with America's intent to veto the anti-Israel resolution," said former AIPAC spokesman Josh Block, now a senior fellow with the Progressive Policy Institute. "They've come to a place where there's a recognition that they need to be cautious about the process. And by acting as part of the part of the Quartet, they've done a smart thing. Whether it represents a shift of policy in the long term, it's too early to tell."

The White House is now busily working out the details of its new approach to advancing the dormant Middle East Peace process. Senate Foreign Relations Committee Chairman John Kerry (D-MA) spilled the beans at the Brookings U.S. Islamic Forum in Washington on Tuesday, when he said that President Barack Obama will offer a new template to advance the peace process ahead of Israeli Prime Minister Bibi Netanyahu's trip to Washington in May to attend the annual AIPAC conference.

Kerry also criticized the administration's entire strategy for Middle East peace up to now. "I was opposed to the prolonged effort on the settlements in a public way because I never thought it would work and, in fact, we have wasted a year and a half on something that for a number of reasons was not achievable," he said.

Block called Kerry's rebuke of the administration's previous policy, "an unusual moment of honesty in Washington."

Clinton confirmed on Tuesday night that Obama will make a major speech on the Middle East, including the Israeli-Palestinian conflict, in her remarks to the same Brookings forum. The Israel section of Clinton's speech was not in the version mailed to reporters earlier in the day, suggesting she added it in response to Kerry's remarks.

Clinton said that the status quo in the Israeli-Palestinian conflict was "no more sustainable than the political systems that have crumbled in recent months."

Analysts and policymakers are looking to the early fall as a deadline for some progress on the Middle East peace process. September was the original deadline the administration gave for a final settlement framework agreement and that's when the Palestinians plan to push for a vote at the U.N. General Assembly recognizing them as an independent state.

But Miller said progress before then isn't likely for three reasons: The Israeli government is not in a position to make the concessions needed to restart direct talks; the Obama administration has no real strategy for getting back to direct talks; and the Palestinian government is divided into two opposing camps.

"You put all these things together and you have a pretty bleak picture."

Obama has had on his desk for months now a set of parameters he could wrap into a speech that would break new ground to guide negotiations, Miller said, but the president hasn't wanted to get ahead of the parties. The speech could be risky for Obama if he fails to chart a clear path forward -- or if that path isn't followed by the Israelis or Palestinians.

"When you don't have a policy or you have a bad policy, the pressure grows to give a speech. But a speech that doesn't have legs could be a real liability," he said.

The State Department wants to shift resources toward supporting civil society development in Tunisia, but the top senator on the Foreign Relations Committee is refusing to allow State to transfer money away from an education program in the Middle East for that purpose.

In the wake of the democratic revolutions sweeping the region, the State Department is rapidly trying to reevaluate its approach to Middle East democracy promotion. But without a budget for fiscal 2011, and with no idea of what awaits their budget in fiscal 2012, State is being forced to move money around to speed funds to the Arab countries that are trying to make the difficult transition to democracy.

Three weeks ago, the State Department's Middle East Partnership Initiative sent Congress what's known as a "congressional notification," requesting permission to shift $29 million in funds from other programs in the region. State wants to shift $20 million to democracy promotion efforts in Tunisia and around the region. Another $7 million would go supporting rule of law and political development programs in the Middle East. $1 million would go to youth councils in Yemen.

In order to fund these initiatives, $10 million would be taken away from the "Tomorrow's Leaders" program, which provides scholarships for Arab youth to attend college at three U.S.-accredited universities in the Middle East.

Three powerful GOP congressional offices initially objected to State taking the funds away from the "Tomorrow's Leaders" program. The lawmakers holding up the money were House Foreign Affairs Committee Chairwoman Ileana Ros-Lehtinen (R-FL), House Appropriations State and Foreign Ops Chairwoman Kay Granger (R-TX), and Senate Foreign Relations Committee ranking Republican Richard Lugar (R-IN).

The Cable confirmed on April 1 that the three committee members had placed "informational holds" on the reprogramming request. That means they sent additional questions back to State about why the money was being taken from the universities, whether State had tried to find the money elsewhere, and whether another source of the money could be found.

On April 4, Ros-Lehtinen and Granger's office told The Cable that they had lifted their holds, but still thought the State Department's request lacked detail.

"State's original justification for the reprogramming was vague, and additional information was requested," said Ros-Lehtinen spokesman Brad Goehner. "As soon as the information was provided, Chairman Ros-Lehtinen authorized the funds to go through."

"We had some outstanding questions about how the State Department was making its reprogramming decision and we now feel those questions have been addressed," a Granger aide told The Cable.

That leaves Lugar's office as the only one keeping the funds from being disbursed. Lugar spokesman Mark Helmke told The Cable that Lugar is unhappy with how State is dealing with the overall regional response, not just this specific reprogramming request.

"Senator Lugar continues to have a number of questions about the administration's strategy for the upheavals across North Africa and the greater Middle East," said Helmke. "Lugar is concerned the administration is just reacting to events without a plan on where we are going. Democracy building in Tunisia is a good thing. But so are scholarships. How does this re-programming affect other projects in Egypt and elsewhere? The lack of a clear end game strategy for Libya, and the refusal to gain congressional authority, only add to Lugar's concerns."

A Lugar committee staffer told The Cable that Lugar would allow State to move enough money to fund the Tunisia program, but not all the programs in the request. Lugar will also not allow, for now, State to take the money from the educational program.

"We are doing due diligence on this, it's pretty routine, making sure they are not robbing Peter to pay Paul, or rushing money out the door without a solid plan," the staffer said. "If [the educational program] is the only place to find money to respond to Tunisia, or to the many urgent needs in the Middle East and North Africa, the [State] Department should make that case."

The three universities that run the Tomorrow's Leaders program are the American University in Cairo, the American University in Beirut, and the Lebanese American University.

The American University of Beirut (AUB) is represented in Washington by William Hoffman, a registered lobbyist for the university who has been in contact with these GOP offices to make the case for defending the funds. According to the website Opensecrets.org, Hoffman's firm Gryphon International was paid $144,000 by AUB in 2010 and has been working for the university, its only client, for several years.

In an interview with The Cable, Hoffman confirmed he had been in contact with both Lugar and Granger's office recently to make the case for the education money.

"The issue is how do we best promote democracy building and sustainable economic development in the Arab world. People with very good intentions can disagree about the best way to do that, but it's certainly my feeling that you can hardly do better than to provide American-style education," Hoffman said. "There is a tendency in government to look at short- term, rather than long-term goals and in some cases that can be a mistake."

The State Department announced on Tuesday that it has decided to apply the recently passed Iran sanctions legislation to the Belarusian company Belorusneft. But GOP senators monitoring the implementation of the law said the move was marginal and unsatisfactory.

The action prevents Belorusneft, a subsidiary of the government-owned conglomerate Belneftekhim, from seeking any loans or doing any business in U.S. financial markets. The sanction was implemented under the Iran Sanctions Act (ISA) of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010. In a press release, the State Department focused on Belorusneft's 2007 $500 million contract with the NaftIran Intertrade Company (NICO), which is also being punished under U.S. sanctions.

"Since President Barack Obama signed CISADA into law on July 1, 2010, Iran's ability to attract new investment to develop its oil and natural gas resources, and to produce or import refined petroleum products, has been severely limited," the release said. "The State Department's direct engagement with companies and governments to enforce CISADA is raising the pressure on the Government of Iran."

State Department spokesman Mark Toner said on Wednesday that, in practical terms, the action prohibits Belorusneft from seeking assistance from the Export-Import Bank of the United States, obtaining U.S. government export licenses, obtaining private U.S. bank loans exceeding $10 million, and securing any procurement contracts with the U.S. government.

Belarusneft, the largest oil company in Belarus, hasn't actually tried to apply for any of those things, but Toner explained that the new announcement "also sends a message to our partners in Europe as well that this is a company that we've decided to sanction. And I'm sure they have access or would seek access into European markets." Toner didn't say if State was pushing the EU to follow suit.

Three senior senators who have been intimately involved in the Iran sanctions law and its implementation immediately shot off a letter to Secretary of State Hillary Clinton, obtained by The Cable, criticizing today's announcement as too weak.

"We are writing to express our disappointment with today's announcement that the administration designated only one additional entity for violating U.S. sanctions with regard to Iran," wrote Sens. Jon Kyl (R-AZ), Mark Kirk (R-IL), and Joe Lieberman (I-CT). "We do not believe this represents full compliance with the sanctions regime put in place by Congress."

These senators have long been calling for the administration to penalize companies that hail from other countries, especially China.

"It appears that Chinese firms in the energy and banking sectors have conducted significant activity in violation of U.S. law," ten senators wrote to Clinton on March 10. "We cannot afford to create the impression that China will be given free rein to conduct economic activity in Iran when more responsible nations have chosen to follow the course we have asked of them. We are sure you agree."

The State Department's Bob Einhorn briefed senators on Capitol Hill on this very issue on March 11, but a senior GOP senate aide told The Cable that the meeting was disappointing.  

The GOP senate offices in question see today's designation as marginal, especially as the parent company, Belneftekhim, was already sanctioned by the U.S. government in 2007 through Executive Order 13405, which targeted firms connected to President Alexander Lukashenko for human rights violations, and three other subsidiaries were sanctioned in 2008.

"It's a complete disappointment," one senior GOP aide told The Cable. "You would have thought they had already found a way to only designate the lowest hanging fruit when they sanctioned NICO. Alas, they found a lower hanging fruit."

A different senior GOP aide said the move sends the signal that the Obama administration only has the willingness to punish Iranian companies such as NICO and companies from other states that doesn't have close or critical relations with, such as Belarus.

"While the administration is patting itself on the back for its empty action today with Belarus, we can hear the sighs of relief coming from Tehran, Beijing, Ankara and Geneva where bankers, gasoline traders, and oil and natural gas financiers just realized that the Obama administration isn't serious about stopping Iran's nuclear weapons program," the aide said.

Mark Dubowitz, executive director and head of the Iran Energy Program at the Foundation for the Defense of Democracies, told The Cable  that today's announcement "is a step in the right direction for both human rights and national security, but it's only a small and incremental one."

"The administration should be praised for moving against the energy lifeblood of both Belarus and Iran, two regimes which savagely repress their own people," he said. "But this was only a borderline meaningful designation since Belneftekhim and three other subsidiaries are already subject to designations. While a designation against this fourth subsidiary is helpful, the time for incrementalism is long past as Iran drives towards a nuclear weapon."

At the start of this week, the consensus around Washington was that military action against Libya was not in the cards. However, in the last several days, the White House completely altered its stance and successfully pushed for the authorization for military intervention against Libyan leader Col. Muammar al-Qaddafi. What changed?

The key decision was made by President Barack Obama himself at a Tuesday evening senior-level meeting at the White House, which was described by two administration officials as "extremely contentious." Inside that meeting, officials presented arguments both for and against attacking Libya. Obama ultimately sided with the interventionists. His overall thinking was described to a group of experts who had been called to the White House to discuss the crisis in Libya only days earlier.

"This is the greatest opportunity to realign our interests and our values," a senior administration official said at the meeting, telling the experts this sentence came from Obama himself. The president was referring to the broader change going on in the Middle East and the need to rebalance U.S. foreign policy toward a greater focus on democracy and human rights.

But Obama's stance in Libya differs significantly from his strategy regarding the other Arab revolutions. In Egypt and Tunisia, Obama chose to rebalance the American stance gradually backing away from support for President Hosni Mubarak and Zine el-Abidine Ben Ali and allowing the popular movements to run their course. In Yemen and Bahrain, where the uprisings have turned violent, Obama has not even uttered a word in support of armed intervention - instead pressing those regimes to embrace reform on their own. But in deciding to attack Libya, Obama has charted an entirely new strategy, relying on U.S. hard power and the use of force to influence the outcome of Arab events.

"In the case of Libya, they just threw out their playbook," said Steve Clemons, the foreign policy chief at the New America Foundation. "The fact that Obama pivoted on a dime shows that the White House is flying without a strategy and that we have a reactive presidency right now and not a strategic one."

Inside the administration, senior officials were lined up on both sides. Pushing for military intervention was a group of NSC staffers including Samantha Power, NSC senior director for multilateral engagement; Gayle Smith, NSC senior director for global development; and Mike McFaul, NSC senior director for Russia. . 

On the other side of the ledger were some Obama administration officials who were reportedly wary of the second- and third-degree effects of committing to a lengthy military mission in Libya. These officials included National Security Advisor Tom Donilon and Deputy National Security Advisor Denis McDonough. Defense Secretary Robert Gates was also opposed to attacking Libya and had said as much in several public statements.

Not all of these officials were in Tuesday night's meeting.

Secretary of State Hillary Clinton called into the meeting over the phone, a State Department official confirmed. She was traveling in the region to get a first-hand look at how the new U.S. Middle East strategy is being received across the Arab world. Denied a visit with Egyptian youth leaders on the same day she strolled through Tahir Square, Clinton may have been concerned that the United States was losing the battle for the hearts and minds of the Arab youth at the heart of the revolution.

When Clinton met with the G8 foreign ministers on Monday, she didn't lay out whether the United States had a favored response to the unfolding crisis in Libya, leaving her European counterparts completely puzzled. She met Libyan opposition leader Mahmoud Jibril in Paris but declined to respond positively to his request for assistance. This all gave the impression that Clinton was resisting intervention. In fact, she supported intervention, State Department official said, but had to wait until the Tuesday night meeting so that she didn't get out ahead of U.S. policy.

At the end of the Tuesday night meeting, Obama gave U.S. Ambassador to the United Nations Susan Rice instructions to go the U.N. Security Council and push for a resolution that would give the international community authority to use force. Her instructions were to get a resolution that would give the international community broad authority to achieve Qaddafi's removal, including the use of force beyond the imposition of a no-fly zone.

Speaking before the U.N. Security Council following Thursday's 10-0 vote, Rice made the humanitarian argument that force was needed in Libya to prevent civilian suffering.

"Colonel Qaddafi and those who still stand by him continue to grossly and systematically abuse the most fundamental human rights of Libya's people," Rice said. "On March 12, the League of Arab States called on the Security Council to establish a no-fly zone and take other measures to protect civilians. Today's resolution is a powerful response to that call-and to the urgent needs on the ground."

U.N. Secretary General Ban Ki-Moon also said on Thursday that the justification for the use of force was based on humanitarian grounds, and referred to the principle known as Responsibility to Protect (R2P), "a new international security and human rights norm to address the international community's failure to prevent and stop genocides, war crimes, ethnic cleansing and crimes against humanity."

"Resolution 1973 affirms, clearly and unequivocally, the international community's determination to fulfill its responsibility to protect civilians from violence perpetrated upon them by their own government," he said.

Inside the NSC, Power, Smith, and McFaul have been trying to figure out how the administration could implement R2P and what doing so would require of the White House going forward. Donilon and McDonough are charged with keeping America's core national interests more in mind. Obama ultimately sided with Clinton and those pushing R2P -- over the objections of Donilon and Gates.

Congress was not broadly consulted on the decision to intervene in Libya, except in a Thursday afternoon classified briefing where administration officials explained the diplomatic and military plan. Rice was already deep in negotiations in New York.

Obama's Tuesday night decision to push for armed intervention was not only a defining moment in his ever-evolving foreign policy, but also may have marked the end of the alliance between Clinton and Gates -- an alliance that has successfully influenced administration foreign policy decisions dating back to the 2009 Afghanistan strategy review.

"Gates is clearly not on board with what's going on and now the Defense Department may have an entirely another war on its hands that he's not into," said Clemons. "Clinton won the bureaucratic battle to use DOD resources to achieve what's essentially the State Department's objective... and Obama let it happen."

UPDATE: A previous version of this story stated that Vice President Joseph Biden pushed for the imposition of a no fly zone in Libya. Friday afternoon, a senior White House official told The Cable that, in fact, Biden shared the same concerns of Gates, Donilon and McDonough and that those concerns have been addressed by the policy announced by the president. 

The wide-ranging sanctions law passed by Congress and signed into law by President Barack Obama last July calls for the administration to punish companies from third-party countries that are still doing business in Iran. However, U.S. senators still aren't sure whether the administration will follow through with this punishment, especially when it comes to companies in China.

A bipartisan group of 10 U.S. senators, led by Sens. Jon Kyl (R-KY) and Robert Menendez (D-NJ), wrote to Secretary of State Hillary Clinton on Thursday to demand an update on the State Department's investigation into these companies' ongoing business with the Iranian regime. Their letter was subsequently obtained by The Cable. Deputy Secretary of State James Steinberg announced that State's investigation began on Sept. 29, which means that law requires the results to arrive by March 29, the senators wrote.

"It appears that Chinese firms in the energy and banking sectors have conducted significant activity in violation of U.S. law," the senators stated. "We cannot afford to create the impression that China will be given free rein to conduct economic activity in Iran when more responsible nations have chosen to follow the course we have asked of them. We are sure you agree."

The State Department's Bob Einhorn is briefing senators on Capitol Hill on this very issue on Friday, a senior GOP Senate aide told The Cable.

In remarks at the Carnegie Endowment for International Peace on Wednesday, Einhorn addressed the issue directly, saying that "we continue to have concerns about the transfer of proliferation-sensitive equipment and materials to Iran by Chinese companies, there is substantial evidence that Beijing has taken a cautious, go-slow approach toward its energy cooperation with Iran."

That explanation won't be enough to satisfy the senators' demands for more active confrontation if Chinese companies are indeed flouting sanctions.

One of the main concerns on Capitol Hill is that as countries pull out from Iran, other countries will take over contracts, thereby nullifying the effect of the sanctions -- a practice known as "backfilling."

For example, the administration and Congress worked hard to convince Japan and South Korea to impose unilateral measures against Iran. However, there's particular concern that China firms will simply come in and take over those contracts.

Kyl and Sen. Chuck Schumer (D-NY) sent a letter to Clinton last October on this very issue, noting reports that China National Petroleum Company (CNPC) replaced the Japanese firm Inpex and agreed to invest around $2 billion to develop Iran's South Azadegan oil fields last year.

One week later, the Government Accountability Office (GAO) released a report that identified 16 companies that sold petroleum products to Iran between Jan. 1, 2009, and June 30, 2010. Of those 16, the GAO reported that five have shown no signs of curtailing business with Iran. Three of those companies are based in China, one in Singapore, and one in the UAE.

Other lawmakers who have pressed the administration to enforce Iran sanctions against China include Sens. Joe Lieberman (I-CT), Susan Collins (R-ME), Mark Kirk (R-IL), and Rep. Howard Berman (D-CA).

"Clearly, Congress -- on both sides of the aisle -- is losing patience and expects the administration to act," said Josh Block, a senior fellow at the Progressive Policy Institute and former spokesman for AIPAC. "If not, what kind of message are we sending to these companies in China and Venezuela and Turkey and elsewhere -- and their governments -- that are helping Iran break international isolation?"

Libyan Ambassador to the United States Ali Aujali, who joined the opposition in the early days of the crisis, issued an urgent plea for the United States to take more aggressive actions against the Libyan government in an interview with Foreign Policy today.

Aujali strongly supported the implementation of a no-fly zone over Libya, calling it "a historic responsibility for the United States." He also criticized the arguments about the risks of no-fly zone, which have been made by U.S. Defense Secretary Robert Gates and other military officials. "When we say, for example, that the no-fly zone will take a long time, that it is complicated -- please don't give this regime any time to crush the Libyan people," he said.

The ambassador, who began his diplomatic career four decades ago, raised the flag of the Libyan opposition over the ambassador's residence in Washington after resigning last week.  He told Foreign Policy that he decided to resign following Saif al-Qaddafi's speech on Feb. 21, in which Qaddafi's favored son warned protesters of "rivers of blood" if they did not cease their demonstrations.

Aujali warned that further delay in organizing an international response raised the risk that Qaddafi would be able to reconstitute his strength.  "Time means losing lives, time means that Qaddafi will regain control," he said. "He has weapons, he has rockets with about 450 kilometers' distance, and we have to protect the people. These mercenaries now are everywhere."

Aujali said that the Qaddafi regime's strategy was now to cut off the liberated Libyan cities from each other, in order to prevent them from uniting their forces and from sharing arms and supplies. With Qaddafi's forces gathered in the south of Libya and Tripoli, he said that the regime's strategy was now to mount a major strike on the northwestern cities of Misurata and Zawiyah, while also continuing the crackdown against protesters in the capital of Tripoli.

Soldiers and mercenaries loyal to Qaddafi have recently attacked Zawiya and the strategic oil town of Brega. Reports suggest that the anti-Qaddafi forces have managed to hold both towns, but have still been unable to mass a large enough force that could threaten Qaddafi's stronghold in Tripoli. Aujali referred to the possibility that Libya could be approaching a long-term stalemate as "the most dangerous thing" for the country. "We are one nation, we are one people, our capital is Tripoli, and we will fight for our unity," he said.

The Obama administration first appeared poised to cut off ties with Aujali following his resignation, after State Department spokesman P.J. Crowley told reporters on March 1 that the ambassador "no longer represents Libya's interests in the United States." The State Department appeared to reverse that decision, however, as officials there told The Cable yesterday that Aujali was still regarded as their top interlocutor at the Libyan embassy.

Aujali said that he protested the initial decision, accusing the Obama administration of encouraging the Libyan people to rise up against Qaddafi but then maintaining relations with his government. However, he said he was encouraged by the State Department's subsequent affirmation of his position, as well as President Barack Obama's strong condemnation of Qaddafi yesterday.

The ambassador made the case that, with the Libyan opposition fully engaged in organizing the revolt against Qaddafi, Libyan diplomats who have broken with Qaddafi "have to be recognized as the legitimate representatives of the new Libya," or the movement will have no voice overseas.

The Libyan charge d'affaires is still loyal to Qaddafi and working out of the embassy. Aujali, meanwhile, is working out of his residence. However, he claimed that the embassy was "under my control." Aujali chalked up some staffers' unwillingness to break with Qaddafi to the fact that some still have family in areas controlled by the regime, but also said they "have to go back" to Libya if they are unwilling to adapt to the new political order. "Let them fight with Qaddafi if they are really sincere in what they are doing," he said.

Aujali, played an important role in guiding Libya's rapprochement with the West over the past decade, and said that he had hoped his efforts would help convince Qaddafi to allow more freedoms in the country. As relations with the United States began to normalize after 2003, Aujali said, "I thought maybe the man [Qaddafi] will change, he will feel more safe...then there will be a chance for reform in Libya."

However, just the opposite happened. Once Qaddafi was no longer under threat from the United States, Aujali said, he felt that he had a freer hand to crack down on his own people. "The way he treats his people, the way he punishes people, the way he kills his people -- it is only Mussolini and Hitler who have done that," he said.

David Kenner is an associate editor at Foreign Policy.

The calls are increasing in Washington for the Obama administration to take new, stronger measures to punish the Libyan government led by Col. Muammar al-Qaddafi for atrocities and to protect Libyan civilians.

Sens. John McCain (R-AZ) and Joe Lieberman (I-CT) implored Obama on in a press conference to establish a no-fly zone in Libya, abandon its recognition of the Qaddafi government, transfer recognition to a transitional government formed by the rebels as soon as possible, and provide the opposition with support, including weapons.

"The government of Libya, epitomized by Muammar Qaddafi is massacring some of his people. There is very little doubt about Mr. Qaddafi's commitment to remaining in power no matter how much blood has to be shed," McCain said on behalf of both senators at a Friday press conference in Jerusalem.

"When a government massacres its own people, it loses its legitimacy. So, we should no longer recognize the existing government of Libya."

Lieberman added that the no-fly zone should be organized by NATO and he compared the ongoing killing of civilians in Libya to the genocide perpetrated by Serbia during the 1990s that eventually resulted in a NATO bombing campaign.

"I think in that sense it is very important that we not just make statements about the massacre that is occurring in Libya but that we lead an international coalition to do something," Lieberman said. "What is happening in Libya today reminds me what happened in the Balkans in the 1990s. We in the United States decided that we could not simply stand by and watch a government massacre its people."

Back in Washington, Vice President Joseph Biden lamented on Thursday that NATO intervention in the Balkans didn't come sooner, when it could have saved more lives. 

"It's amazing how in the Balkans it took so long," Biden told an audience at the Holocaust Memorial Museum. "First, we must recognize early indicators of potential atrocities and respond accordingly, rather than waiting until we are confronted by massacres like those in Rwanda or in Srebrenica."

Former State Department Policy Planning Chief Anne-Marie Slaughter also compared the violence in Libya to the Balkans and the 1994 Rwandan genocide in a Thursday tweet.

"The international community cannot stand by and watch the massacre of Libyan protesters. In Rwanda we watched. In Kosovo we acted," Slaughter tweeted.

Also on Friday, a bipartisan group of senior mostly-Republican foreign policy experts penned an open letter to President Barack Obama, urging him to make good on his Nobel Peace Prize acceptance speech, when he said, "Inaction tears at our conscience and can lead to more costly intervention later."

The experts asked Obama to call on NATO to urgently develop plans to establish an air and naval presence in Libya, freeze all Libyan government assets in the U.S. and Europe, consider halting Libyan oil imports, pledge to hold Qaddafi responsible for any atrocities, and speed humanitarian aid to the Libyan people.

"With violence spiraling to new heights, and with the apparent willingness of the Qaddafi regime to use all weapons at its disposal against the Libyan people, we may be on the threshold of a moral and humanitarian catastrophe," the experts wrote. "Inaction, or slow and inadequate measures, may not only fail to stop the slaughter in Libya but will cast doubt on the commitment of the United States and Europe to basic principles of human rights and freedoms."

The letter was signed by several senior GOP former officials, including Elliott Abrams, Paul Wolfowitz, Bill Kristol, Eric Edelman, Eliot Cohen, Jamie Fly and Scott Carpenter, human rights activities David Kramer and Neil Hicks, and Clinton administration official John Shattuck.

"The United States and our European allies have a moral interest in both an end to the violence and an end to the murderous Libyan regime. There is no time for delay and indecisiveness," they wrote. "The people of Libya, the people of the Middle East, and the world require clear U.S. leadership in this time of opportunity and peril."

Full text of the letter after the jump:

Read on

There's a raging debate on Capitol Hill surrounding huge cuts to foreign aid funding proposed in the House Republicans' latest spending bill. But several senators are looking to add a generous foreign aid package for Israel, Egypt, Jordan, and other Middle Eastern countries when the bill comes over from the House.

"A [continuing resolution] that had full year funding for the troops plus an Egypt, Israel, and Middle East stability package of full year funding would send the right signal from the United States," Sen. Mark Kirk (R-IL) told The Cable in an exclusive interview.

The current version of the continuing resolution, which is needed to keep the government running past March 4, is being debated in the House now. It proposes significant cuts in the State Department and foreign assistance budgets below what the president requested for fiscal 2011, which began last October.

Kirk said several senators on both sides of the aisle supported the new Middle East Stability funding package, which would fully fund foreign aid accounts for a host of countries in the region at the level requested by the president and pay for the wars in Iraq and Afghanistan as well.

"There's not a need to fund the full foreign assistance program but there is a need for Egypt, Israel, and Jordan related programs to receive full funding for fiscal 2011 right now. This is being discussed and I strongly support it," Kirk said.

Back in the House, there is plenty of support for funding Israel aid, which totals about $3 billion per year, but some Republicans are looking to restrict aid to other Middle East countries, such as Egypt. House Foreign Affairs Chairwoman Ileana Ros-Lehtinen (R-FL) has argued that further funding should be withheld from Egypt unless they exclude Islamist groups such as the the Muslim Brotherhood, from participating in the new government.

Rep. Howard Berman (D-CA), the ranking Democrat on the House Foreign Affairs Committee, told The Cable in an exclusive interview that new funding for Egypt was needed to bolster secular and moderate political groups that have been marginalized over the past decades under the old Egyptian regime.

Berman supports increased funding for U.S.-based organizations that promote civil society in Egypt, such as the National Democratic Institute, the International Republican Institute, the National Endowment for Democracy, and the State Department's Bureau of Democracy, Human Rights and Labor.

"We need to educate [moderate Egyptian political groups] on how to communicate, how to build a political party, how to organize. There's a way to do that without choosing who you want but giving the secular parties some skills and some resources to get going," Berman said.

Berman said that increased aid to Egypt now should not be held up due to concerns about the Muslim Brotherhood, which he argued is not going to be particularly interested in NDI or IRI programs anyway.

"America can't decide who participates, we shouldn't, and to the extent we try to too clumsily, we are going to hurt the cause we all share," Berman said. "Mubarak is the one who drew the line, ‘it's either me or the Muslim Brotherhood.' Our job is to create an alternative."

If groups have a chance to organize, the vast majority of the Egyptian population will not be receptive to the Muslim Brotherhood's agenda, Berman said. That doesn't mean, however, that he takes the threat posed by Islamist groups in Egypt lightly.

The Obama administration was caught by surprise on Thursday night when President Hosni Mubarak spoke to the Egyptian people and initially declined to step down as leader of the country. Following the speech, Defense Secretary Robert Gates and Joint Chiefs Chairman Adm. Mike Mullen quickly phoned their counterparts in the Egyptian military.

Today, the military assumed control of the Egyptian government and Vice President Omar Suleiman announced in a recorded statement that Mubarak had stepped down from the presidency. "Secretary Gates spoke with [Defense Minister] Field Marshal Mohamed Hussein Tantawi again last night," Pentagon press secretary Geoff Morrell confirmed to The Cable.

"It was his fifth phone conversation with the Egyptian defense minister since the situation in Egypt began."

Captain John Kirby, spokesman for the Joint Chiefs, confirmed to The Cable that Mullen called Egyptian Army Chief of Staff Lt. Gen. Sami Anan following the Mubarak speech. Mullen and Anan have spoken four times since Jan. 25, and the last call before Thursday night was on Saturday, Feb. 5, Kirby said.

Both Morrell and Kirby declined to give details on the substance of the calls.

Press secretary Robert Gibbs told reporters on Friday morning that President Barack Obama did not call Mubarak after the speech. The last reported call between Vice President Joseph Biden and Suleiman was Feb. 8, when Biden pressed Suleiman to expand his dialogue with opposition groups.

The Gates and Mullen phone calls are emblematic of the sustained but quiet engagement with their military counterparts that the Pentagon has been undertaking throughout the crisis. That effort has been especially important in recent days, as the military's role has increased and its allegiances have come under closer scrutiny.

The Pentagon even sent out a quiet request to scores of U.S. military officers last week, asking them to contact any Egyptian military members they might know through past associations at American military colleges, the Washington Post reported.

The officers weren't told to deliver any specific messages. The outreach has been rather about collecting information from the Egyptian military and making sure that the military-to-military relationship remained intact, a Pentagon official said, adding that similar outreach has occurred between the Pentagon and its interlocutors in other countries, including Israel.

The White House and the State Department have disagreed on how much pressure to place on Mubarak and Suleiman. The Pentagon has sided mostly with State, arguing for more support of existing Egyptian institutions of power, especially the military. Some observers see the Pentagon as inclined to favor supporting the Egyptian military due its own interests and natural institutional biases.

"The Pentagon is simply so used to letting the Egyptian military have what they want," said one former U.S. official who dealt with the Pentagon on Egypt. "The Pentagon has wanted to keep their involvement at a strictly military-to-military level. So they are reluctant to be part of diplomacy at the top level, but insistent in being engaged in their own diplomacy for their own interest."

Regardless, the direct intervention of top Pentagon and U.S. military officials at key times throughout the crisis may have influenced the Egyptian military's behavior at key junctures, such as when the Egyptian military was implicated in the crackdown of journalists and human rights activists last weekend. Pentagon officials believe their outreach contributed to the relative restraint of the Egyptian Army.

It's unclear whether Gates and Mullen's telephone diplomacy last night actually influenced the events that unfolded only hours later. But the Pentagon's relationships with the Egyptian military are now among the most crucial avenues of communication and influence for U.S. policy toward Egypt going forward.

The White House and the State Department have been sending out different messages over the past few days regarding the U.S. position on Egypt. The seeming disparity between the focus and tone of remarks by officials from each part of the government has the Washington community wondering if there's a rift between Pennsylvania Avenue and Foggy Bottom and who's really in charge.

Internal disagreements on how closely to align the United States with Egyptian Vice President Omar Suleiman and his self-interested reform process emerged into public view last weekend, when Secretary of State Hillary Clinton told the Munich Security Conference that the U.S. is calling on the international community to support the process initiated by Suleiman. Clinton also had to distance herself from the comments of the State Department's chosen "envoy" Frank Wisner, who called for Mubarak to stay in power when he spoke at the conference in Munich.

Then, three days later, Vice President Joseph Biden spoke with Suleiman and gave him a list of further steps the U.S. wants him to take to open up the process, clearly expressing the official administration position that Suleiman's process is not acceptable in its current form.

On a conference call with reporters Wednesday, the NSC's Ben Rhodes said that the White House and the State Department have been "very closely aligned" and said that the difference between what Clinton said in Munich and what Biden told Suleiman three days later was a reflection of the changing circumstances on the ground.

"[Clinton] was just stating [in Munich] the matter of fact that Vice President Suleiman is the person conducting these negotiations for the government... Our response on Monday and Tuesday was in reaction to [Suleiman's] statements and it was to say that those statements alone were insufficient because they didn't constitute concrete action," Rhodes said. "I think it's entirely consistent to again state support for a process of negotiation... but to then hold the government accountable in terms of identifying the kinds of steps that we believe need to take place and that the Egyptian people are calling for."

Clinton's deputy chief of staff and new director for policy planning, Jake Sullivan, argued that the White House and the State Department have been aligned on the three core principles the U.S. government has been advocating for throughout the crisis: non-violence, respect for universal rights, and the need for political change.

"The theory of the case has remained consistent...and it's something on which the Secretary, the president and all of the other national security team members have been aligned on. And that's been true in the true public messaging. It's been true in the private messaging as well, " Sullivan said. "The situation is changing day by day even as we maintain the same basic core to our approach."

Experts close to the administration agreed with that to some degree, but said that mixed messaging from State and the White House was muddying communication of those core principles. The biases are based in institutional cultures, they said, and the gaps between the two camps are real.

"You had a similar dynamic in the later years of the Bush administration. There was President Bush and [NSC senior director] Elliott Abrams at the White House still trying to push the freedom agenda and Condoleezza Rice at the State Department very much trying to play it down," said Michelle Dunne of the Carnegie Endowment for International Peace. "The messages out of the administration have been extremely confusing and I think they realize that."

Abrams told The Cable that there are probably divisions in both places. "Where the State Department came out of its internal debate is in one place, where the White House has come out is in a different place," he said. "In the end it's about winning the hearts and minds, not of the Egyptian people, but of Obama, Biden, Clinton and Gates."

Deeper down in the administration, several official are playing influential roles in how the policy is being formed on each side. On the White House side, NSC Director Dan Shapiro, NSC Senior Director Samantha Power, and Rhodes have been leading the White House's outreach with the foreign policy expert community and held their latest meeting with experts on Tuesday.

Attendees reportedly included Dunne, Abrams, WINEP's Scott Carpenter, New America's Steve Clemons, CSIS's Jon Alterman, USIP's Dan Brumberg, Johns Hopkins' Fouad Ajami, and Human Rights Watch's Tom Malinowski.

Inside the State Department, Clinton is being advised on Egypt by several officials who have deep experience with Egypt, including Undersecretary of State for Political Affairs Bill Burns, who had suggested Wisner be sent to Cairo to deal with Mubarak, and Jeffrey Feltman, the assistant secretary of state for Near East Affairs, among others.

"The people whispering in her ears are people like Bill Burns, who is preoccupied with most often trying to save us from ourselves," Carpenter told The Cable. "Burns is legitimately concerned with how this all unfolds, but his interest is in preserving as much of the status quo with the current government of Egypt as possible. Meanwhile, the White House is saying that it's in our interest to build a new relationship because if we don't it's going to lead to something worse when the next government comes. So that leads them to conclude that they have to save State from themselves."

Feltman, a former ambassador to Lebanon, is increasingly seen as someone who understands the wider risks to U.S. foreign policy of being tougher on Suleiman and President Hosni Mubarak but is nevertheless looking for creative ways to square that circle.

"Some people on the inside say ‘Thank God for Feltman,'" because he's trying to prepare State for a changed relationship with Egypt after Mubarak leaves and trying to look over the horizon, Carpenter said.

On the specific policy toward Egypt, the difference between the current thinking at the White House as opposed to at the State Department surrounds exactly how much leeway Suleiman should have in setting up the committees that will negotiate and then oversee the political reform process leading up the elections.

On his blog the Washington Note, Clemons wrote that a senior White House official told him they want to see the emerging transitional process look like a "potluck dinner," where everyone brings their own ideas and has real power off the bat, rather than a hosted "dinner party" where Suleiman decides the guest list, the agenda, and thereby the results.

"The State Department is advocating a hosted dinner, where the power still resides with the incumbents," Clemons told The Cable. "That's not good enough for the White House."

Uber-diplomat Frank Wisner won't be making any public remarks on the crisis in Egypt anytime soon; the Obama administration has directed him to steer clear of the press following his command performance in Munich, where he went off the reservation of the Obama administration's policy and forced the administration to distance itself from him and his remarks.

Wisner is back in New York at his day job at Patton Boggs, the lobbying law firm where he has worked since February 2009. He had a busy week, which began Jan. 31 with being dispatched by the Obama administration to deliver a direct message to Egyptian President Hosni Mubarak. He reportedly delivered Obama's tough message that Mubarak must start the transition of power "now." The week ended with him telling the entire Munich Security Conference, which included Secretary of State Hillary Clinton in the audience, that Mubarak must stay in power to oversee changes in government.

"I believe that President Mubarak's continued leadership is critical -- it's his chance to write his own legacy," Wisner told the conference.

The remarks were so far off of the administration's message, which at this moment is that it's not the U.S. government's place to weigh in on Mubarak's future, that Clinton was forced to clarify on the plane ride home that Wisner was a private citizen and in no way spoke on behalf of the U.S. government.

But was the State Department even aware of what Wisner was going to say in Munich? "He did not give us a heads-up," a State Department official told The Cable.

Wisner was suggested for the "envoy" assignment to talk with Mubarak by Undersecretary of State for Political Affairs Bill Burns, two administration officials confirmed. Burns is the highest-ranking Foreign Service officer at State and has known Wisner for decades.

Inside the administration's policy process on Egypt, Burns is a key player, having been U.S. ambassador to Jordan and assistant secretary of state for Near Eastern affairs. He wrote a book called Economic Aid and American Policy Toward Egypt, published in 1985, just before Wisner was named ambassador to Cairo.

But Wisner's embrace of Mubarak goes even further than Burns's position. "The implication that Bill agrees with [Wisner's] public statements since [Wisner's trip to Cairo] … is just plain wrong," an administration official told The Cable.

State Department spokesman P.J. Crowley said on Monday that the administration knew about Wisner's work for the lobbying firm Patton Boggs, which does business in Egypt, and that his long relationship with Mubarak was an asset, not a detraction.

"We're aware of his employer.… And we felt that he was uniquely positioned to have the kind of conversation that we felt needed to be done in Egypt," Crowley said.

A spokesman for Patton Boggs told the New York Times that Patton Boggs was not doing significant work on behalf of the Egyptian government and that Wisner "has no involvement and has not had any involvement in Egyptian business while at the firm."

The White House on Monday argued that Wisner dutifully completed his assigned task in Cairo, which was "to deliver a specific, one-time message to President Mubarak," National Security Council spokesman Tommy Vietor told The Cable.

"He is not and was not a U.S. envoy. He was not sent to negotiate. He is an individual who has a long history with President Mubarak and thus could deliver a clear message. He spoke to President Mubarak once, reported on his conversation, and then came home," Vietor said.

Nevertheless, don't expect the Obama administration to send any more one-off, high-level envoys anytime soon.

"We are completely confident in our ability to communicate directly with the government of Egypt at the White House, State Department, Pentagon and through our embassy," Vietor said.

CORRECTED: A previous version of this story incorrectly stated that Patton Boggs was part of the PLM Group, a lobbying entity comprising firms led by Tony Podesta, Bob Livingston, and Toby Moffet. Patton Boggs is not part of the PLM group, which has lobbied extensively on behalf of the Egyptian government.

When the Hisham Mubarak Law Center in Cairo was raided by state security forces on Thursday, Human Rights Watch researcher Daniel Williams was swept up in the arrests. But before he was carted off to prison, Williams had the presence of mind to call a friend in Cairo and leave his cell phone line open, to broadcast the raid as it unfolded.

The Law Center is a hub and meeting space for various human rights and civil society groups in Egypt and has been amazingly active since the protests began Jan. 25. On Thursday morning, a joint squad of police and military personnel in their respective uniforms raided the Center, interrogated all inside, and forcibly transported dozens of Egyptians and foreigners alike to an unknown detention facility, where Williams remains now.

Before his cell phone was confiscated, the person on the other end of the line, who must remain anonymous for his own safety, heard the violent details of the incident. Police and army personnel were heard ordering the activists up against the wall, started yelling at them, and then claimed they were there to protect them from the pro-regime thugs who were assembled and chanting just outside the doors and who harassed the activists as they were escorted from the building.

"We could let you go out in the crowd and they will kill you or you can come with us," the police and army personnel said, according to Human Rights Watch Washington Director Tom Malinowski, who has been working furiously to try to free Williams and the others arrested in Thursday's crackdown by coordinating efforts with administration officials and human rights groups in Washington and Cairo.

Following the on-site interrogations, the police and army personnel accused all the Egyptians working at the Law Center of being affiliated with Hamas and accused all the foreigners at the Center of being affiliated with Israeli intelligence service Mossad.

"So it's a Hamas-Mossad conspiracy apparently," Malinowski told The Cable with a sigh.

Meanwhile, human rights groups in Washington have been working closely though a stream of emails and phone call with the Obama administration to share information, coordinate action, and press the Mubarak regime to halt the arrests and release the imprisoned activists and journalists.

Primarily, this effort by the administration is run out of the U.S. embassy in Cairo, where Ambassador Margaret Scobey has taken the lead on maintaining ties to Egyptian non-governmental organizations and political opposition groups, instructing her staff to reach out to them to make sure they are safe and sharing information about what's going on. There are also officials in the State Department and the National Security Council who have longstanding ties with these groups and are working the phones on a constant basis, an administration official said, declining to provide details of those interactions.

"The Obama administration has raised with the Egyptian government the need to release people who have been detained for peaceful activism or journalism," Malinowski said. The list of foreign journalists reported to be under arrest is changing moment to moment.

For those in the human rights community who have been watching the crisis in Egypt descend into violence, the regime is clearly responsible.

"What we've seen in the last 24 hours is a counter attack by the ruling party and security apparatus of Egypt, which may be willing to concede Mubarak but isn't willing to concede the dictatorship," said Malinowski. "These thugs are part of the ruling party's army, they deploy it routinely on election days to intimidate voters and they deployed it yesterday as well."

The reported direct involvement of the Egyptian military in the raids is unsettling because until yesterday, the military had been largely neutral in the clashes between the pro-Mubarak and anti-regime groups. But it's not known if they are totally complicit in the crackdown or if they are participating in order to prevent the police from becoming too brutal.

The Obama administration is working hard behind the scenes, especially through senior defense officials including Defense Secretary Robert Gates, to impress upon the Egyptian military the need to protect protestors and support a peaceful government transition. Joint Chiefs Chairman Adm. Michael Mullen spoke Wednesday with Egyptian Army Lt. Gen. Sami Enan about the clashes and the military's role.

"He assures me that they're very focused on this, and they will continue to be a stabilizing influence within their country," Mullen said after the call. "So far, the Egyptian military have handled themselves exceptionally well."

But in light of the raid on the Law Center, human rights activists are no longer sure the military is neutral.

"The military's stance toward yesterday's counterattack is ambiguous," Malinowski said. "But as bad as things are, they would be worse if not for the pressure the administration has been putting on the military."

Meanwhile, the Egypt Working Group, a bipartisan team of experts that has been advising the administration, issued a new statement on Thursday calling on the White House to make clear that military aid to Egypt will be suspended if the military fails to protect peaceful protests and the transition doesn't start promptly -- as the administration has demanded.

For those who are working to secure the safety of activists like Williams, how the Egyptian military acts during these crackdowns will expose what their true motivations are going forward.

"This is an important part of the larger picture that the administration is looking at. It's one test of whether the regime, which includes the military, is in fact heeding President Obama's call for transition to orderly democracy."

A top State Department official in Tunis pledged full American support for the Tunisian drive to hold free elections on Wednesday, but also sought to distance the U.S. position on Tunisia from other mass protests in the region, such as the ongoing unrest in Egypt.

"What happened in Tunisia strikes me as uniquely Tunisian. That the events that took place here over the past few weeks derive from particularly Tunisian grievances, from Tunisian circumstances by the Tunisian people," Assistant Secretary of State for Near East Affairs Jeffrey Feltman said at a press conference.

He called for free and fair elections in Tunisia and pledged both American and international support to set them up.

"The United States stands with the people of Tunisia. This is an exciting and unprecedented moment in Tunisia's history with great challenges but also great opportunities for the Tunisian people to chart their own course," he said.

Feltman allowed that there are some fundamental similarities with regard to human rights.

"The challenges that are faced here are in some cases shared. And we think governments everywhere should be finding ways to permit peaceful assembly, freedom of speech, freedom of the media in order to give people a say in how they are governed and to give them a stake in the future," he said.

Feltman's remarks echo Secretary of State Hillary Clinton's latest statement, which also calls on the Egyptian government to stop harassing protesters, but doesn't call on the Egyptian government to let them participate in a real election process.

"It is important that the government listens to the concerns of those demonstrating and respects rights of freedom of assembly and expression," she said. "Openness, transparency and political freedom are important tenets of stability. We urge the government and demonstrators to seek a peaceful way forward."

The Obama administration's support for Tunisians' right to self determination was on display during last night's State of the Union speech by President Obama, a speech in which he didn't mention Egypt at all.

"We saw that same desire to be free in Tunisia, where the will of the people proved more powerful than the writ of a dictator. And tonight, let us be clear: the United States of America stands with the people of Tunisia, and supports the democratic aspirations of all people," said Obama.

The White House issued a statement from Press Secretary Robert Gibbs at about 11:30 PM, after the president's speech had concluded, expressing U.S. support of Egyptians right to peaceful assembly, but without any call for free and fair elections.

"The Egyptian government has an important opportunity to be responsive to the aspirations of the Egyptian people, and pursue political, economic and social reforms that can improve their lives and help Egypt prosper. The United States is committed to working with Egypt and the Egyptian people to advance these goals," the statement read.

During a Wednesday morning roundtable, State Department Policy Planning Director Anne Marie Slaughter explained the seeming disparity by noting that there was consistency in the sense that both stances include a respect for "universal values."

"That means we are strongly supportive of the Tunisians in the effort to achieve democracy, it also means we are not imposing our values on countries around the world," she said.

The New America Foundation's Steve Clemons said that the George W. Bush administration, despite that it outwardly advocated for democratic change in the Arab world, might have taken a similar stance as the Obama administration has on Egypt.

"The notion that we're somehow in the streets with every potential freedom movement would be a mistake in foreign policy," he said. "If this administration was out there calling for regime change in Egypt, I think that would be a huge mistake."

Rajiv Shah, head of the U.S. Agency for International Development (USAID), has a message for those in Congress who want to slash development and foreign-aid budgets: Cuts will undermine U.S. national security.

On the heels of a major speech on the coming reforms to America's premier development agency, Shah sat down for an exclusive interview with The Cable to explain his vision for making USAID more responsible and accountable, an effort he said will require increased short-term investment in order to realize long-term savings.

But if Congress follows through on a massive defunding of USAID as the 165-member Republican Study Group recommended yesterday, it would not only put USAID's reforms in jeopardy, but have real and drastic negative implications for American power and the ongoing missions in Afghanistan and Pakistan, according to Shah.

"That first and foremost puts our national security in real jeopardy because we are working hand and glove with our military to keep us safe," said Shah, referring to USAID missions in Afghanistan, Iraq, Pakistan, Yemen, the Horn of Africa, and Central America, and responding directly to congressional calls for cuts in foreign aid and development.

The RSC plan calls for $1.39 billion in annual savings from USAID. The USAID operating budget for fiscal 2010 was approximately $1.65 billion. The RSC spending plan summary was not clear if all the cuts would come from operations or from USAID administered programs. 

"That would have massive negative implications for our fundamental security," said Shah. "And as people start to engage in a discussion of what that would mean for protecting our border, for preventing terrorist safe havens and keeping our country safe from extremists' ideology … and what that would mean for literally taking children that we feed and keep alive through medicines or food and leaving them to starve. I think those are the types of things people will back away from."

The interests between the development community and U.S. national security objectives don't always align, and this tension is at the core of the debate on how to reinvigorate USAID. Short-term foreign-policy objectives sometimes don't match long-term development needs, and U.S. foreign-policy priorities are not made with development foremost in mind.

But Shah's ambitious drive to reform USAID seems to embrace the idea that development investments can be justified due to their linkage with national security. He is preparing to unveil next month USAID's first ever policy on combating violent extremism and executing counterinsurgency. He also plans to focus USAID's efforts on hot spots like Afghanistan, Pakistan, Sudan, and parts of sub-Saharan Africa, while transitioning away from other countries that are faring well and downgrading the agency's presence in places like Paris, Rome, and Tokyo.

Shah pointed out that Defense Secretary Robert Gates, Joint Chiefs Chairman Adm. Mike Mullen, and ISAF Commander Gen. David Petraeus have all come out in strong support of increasing USAID's capacity to do foreign aid.

"In the military they call us a high-value, low-density partner because we are of high value to the national security mission but there aren't enough of us and we don't have enough capability," he said. "This is actually a much, much, much more efficient investment than sending in our troops, not even counting the tremendous risk to American lives when we have to do that."

For those less concerned with matters of national security, Shah also framed his argument for development aid in terms of increased domestic economic and job opportunities: If we want to export more, we need to help develop new markets that are U.S.-friendly.

"If we are going to be competitive as a country and create jobs at home, we cannot ignore the billions of people who are currently very low income but will in fact form a major new middle-class market in the next two decades," he said.

One of the main criticisms of USAID both on Capitol Hill and elsewhere is that the agency has been reduced over the years to not much more than a contracting outfit, disbursing billions of dollars around the world to organizations that have mixed performance records. In Shah's view, if Congress wants USAID to eliminate waste, fraud, and abuse, it has to increase the agency's operating budget and allow the agency to monitor contracts in-house.

"It was the Bush administration that helped launch the effort to reinvest in USAID's capabilities and hiring and people, and the reason they did that is they recognized you save a lot more money by being better managers of contracts," Shah said. "We have a choice. We have a critical need to make the smart investments in our own operations … which over time will save hundreds of millions of dollars, as opposed to trying to save a little bit now by cutting our capacity to do oversight and monitoring."

Shah wouldn't comment on the latest and greatest USAID contracting scandal, where the agency suspended contractor AED from receiving any new contracts amid allegations of widespread fraud. But he did say that his office would be personally reviewing large sole-source contracts from now on, requiring independent and public evaluations, and that more corrective actions are in the works.

"I suspect you'll see more instances of effective, proactive oversight that in fact saves American taxpayers significant resources," he said.