The State Department and USAID are facing their toughest budget season ever as the GOP looks to international affairs accounts for major cuts. But the new Deputy Secretary of State for Management Tom Nides said that the State Department's argument this year will be that international affairs spending is crucial for America's national security and therefore can't be sacrificed.

"Taxpayers want to understand where our money is going. Our view of this is very simple, it is a national security budget," Nides told The Cable in an exclusive interview in his new office on the 7^th floor of State's Foggy Bottom headquarters. "Our budget should be looked upon no differently than the department of defense's budget. The DOD budget is a national security budget, the State Department and USAID, likewise."

The Obama administration has long considered State and USAID spending part of the "security" budget, a view that congressional Republicans don't share. Secretary of State Hillary Clinton has been calling for a unified budget that would combine the Pentagon and State Department budgets into one big account, but that idea has yet to gain traction.  

Some senior lawmakers, such as House Appropriations State and Foreign Ops subcommittee ranking Democrat Nita Lowey (D-NY) and Senate Appropriations State and Foreign Ops subcommittee ranking Republican Lindsey Graham (R-SC), have been arguing that certain parts of the foreign aid budget are certainly crucial to national security, especially the programs in Afghanistan, Iraq, and Pakistan.

Nides argues that all the funding should now be defended on national security grounds -- regardless of whether or not they are directly related to countries where the United States has troops on the ground.

"Let's be clear, the State Department and USAID have a national security mandate. We are helping countries through Feed the Future, Global Health Initiatives, climate change, economic support funding -- we're doing that because we're building up these countries to be more self reliant and have stronger economies. By doing that, that helps our national security," Nides said.

Already, the Obama administration has subjected the State Department to a disproportional amount of cuts compared to other departments when making budget deals with congressional Republicans. State's fiscal 2011 budget was cut by $8 billion in the budget deal the administration struck in April to avoid a government shutdown.

Meanwhile, the long-term budget announced in April by House Budget Chairman Paul Ryan (R-WI) would cut the budget for international affairs and foreign assistance by 29 percent in 2012 and 44 percent by 2016 -- while increasing the defense budget by 14 percent over the same timeframe.

Administration officials believe their $53 billion fiscal 2012 budget request reflects their first ever Quadrennial Diplomacy and Development Reivew (QDDR), an effort modeled after the Pentagon's QDR, and aligns resources with national security objectives while making tough choices in a difficult fiscal climate.

But there are signs that State is already thinking about giving up some authorities that it struggled to take from the Pentagon as part of the QDDR's overall drive to put diplomats and civilians back in charge of foreign policy. For example, State gave back control of the Pakistani Counterinsurgency Capability Fund (PCCF) in the 2011 budget deal in order to take that money off of its ledger. Nides said that was a one-time deal and State would take back that program next year.

"Fiscal year 2011 was an extraordinary year. The transfer back of [PCCF] funding for fiscal year 2011 [to the Pentagon] was just for fiscal year 2011 only. We don't believe it's an ongoing policy decision," he said.

He also pledged to keep a robust civilian presence in Afghanistan going forward, despite that Clinton recently said that the buildup of civilians there has peaked.

"We've got to keep all this in perspective. There are 100,000 military boots on the ground. We had 300 [civilians in Afghanistan], we're now at approximately 1,140 civilians. It's not easy to sustain the level of civilians in a voluntary situation of the level of talent that we need. Over time, we will see a leveling off to a more normalized number of diplomats," said Nides.

Of the 1,140 civilians in Afghanistan now, about 500 are from State, 300 are from USAID, and the rest come from various other government agencies.

Overall, State will continue to make the argument that international-affairs spending comprises only 1 percent of the federal budget and helps produce new economies that can become markets for American companies and goods.

But the main focus will be to identify America's diplomats and development experts and the front line soldiers in the ongoing battle to keep the country safe and secure, especially as instability due to food shortages and economic turbulence increases around the world.

"You have hungry people, which destabilizes your country. You have a destabilized country, all sorts of bad things happen. State and USAID work to prevent that," Nides said. "This is a very important frame and a very important view.

GOP presidential hopeful Tim Pawlenty will deliver a major address on foreign policy on Tuesday in what his top aides are billing as a rebuttal to what they see as President Barack Obama's flawed May 19 speech on the Middle East.

All the Republican presidential candidates are being forced to sharpen their foreign policy chops as the primary race heats up, but Pawlenty has been vocal on several key foreign policy issues for some time. His campaign may for now be light on foreign policy infrastructure, but it's heavy on policy positions and ideas, several of which he plans to lay out tomorrow morning when he addresses the Council on Foreign Relations in New York.

"There's a frustration the governor feels with President Obama, that there's no strategic coherence to his foreign policy. Whether it's the Arab Spring, the Middle East peace process, Iran, or Syria there's an ad hoc approach to what they're doing.  And the learning curve never seems to get flatter," Pawlenty's senior foreign policy advisor Brian Hook told The Cable.

"The governor's speech will set forth a strategically coherent approach to the Middle East and he will discuss a better way forward in the Middle East peace process."

Pawlenty will lay out a set of principles that the United States should adhere to in the Arab-Israeli peace process.

Pawlenty will also put forth his own views tomorrow for how the United States should respond to the Arab Spring. He will divide the countries of the region into categories -- those that are struggling for democracy, entrenched monarchies, anti-U.S. regimes such as Syria and Iran, and Israel. He will then argue that there's no one-size-fits-all solution for the problems plaguing the Middle East.

Hook, a former assistant secretary of State for International Organization Affairs, also worked as an advisor to two U.S. ambassadors: Zalmay Kalizad and John Bolton. He emphasizes that on foreign policy, Pawlenty is a "Reagan Republican" when it comes to the broad strokes.

On specific issues such as the president's approach to Israel, U.S. policy toward Iran, or U.S.-Russia relations, Pawlenty often shares the views of leading GOP hawks in the Senate such as Sens. John McCain (R-AZ), Lindsey Graham (R-SC), and Joe Lieberman (I-CT). But Pawlenty doesn't want to be identified as a neoconservative, and doesn't want his views to be tied to those senators in particular.

"I wish you could think of another way to describe this wing of the party, other than McCain and Lindsey Graham. I love John, but that's like saying we're embracing Nelson Rockefeller on economics," Pawlenty joked during his interview with Bloomberg News.

The other major foreign policy voice so far in Pawlenty's campaign is former Minnesota congressman and campaign co-chair Vin Weber, who was a member of the neoconservative group Project for a New American Century and an early supporter of the invasion of Iraq

But Hook said Pawlenty's foreign policy identity is his own.

"Governor Pawlenty believes in an exceptional America. He believes that a President must provide strong and decisive leadership to the forces of democracy, and President Obama has repeatedly failed at this basic task," he said.

Pawlenty mostly sticks to that forward-leaning approach, particularly in regard to Obama's intervention in Libya, a topic that he will also address on Tuesday. Pawlenty was among the first to call for a no-fly zone over Libya and for  Muammar al-Qaddafi to go, but he's not satisfied with the way the Obama administration has handled the war.

"A quick, decisive decision by Obama in days, not weeks, to impose a no-fly zone would have given us a very different result. But once the president of the United States says that Qaddafi must go, you just can't let him sit there indefinitely and thumb his nose at us. He's a third-rate dictator who has American blood on his hands," he said.

Pawlenty's staff is aware that there is a fractious internal debate going on inside the GOP on foreign policy. The influx of Tea Party candidates in Congress has conflated foreign policy with calls to slash the budget, and  candidates like Mitt Romney and Jon Huntsman are now questioning the continued commitment to Afghanistan. But Pawlenty is unmoved by the politics of the moment.

"Some foreign policy positions are not politically popular today, but the governor bases his decisions on principle and American values -- not what the polls say this week or next," Hook said.

President Barack Obama and Israeli President Shimon Peres discussed how the Israeli-Palestinian peace process fits into the wave of democratization sweeping through the Arab world during a working lunch and then a 40 minute one-on-one meeting on Tuesday..

"We had an extensive discussion about what's happened in the Middle East," Obama said at a press conference after the meetings. "I think he and I both share a belief that this is both a challenge and an opportunity; that with the winds of change blowing through the Arab world, it's more urgent than ever that we try to seize the opportunity to create a peaceful solution between the Palestinians and the Israelis."

At the working lunch, Obama was joined by Secretary of State Hillary Clinton, National Security Advisor Tom Donilon, NSC Chief of Staff Brooke Anderson, NSC Senior Director Dennis Ross, incoming U.S. Ambassador to Israel Dan Shapiro, Special Envoy for Middle East Peace George Mitchell, and NSC Senior Director Puneet Talwar.

Both presidents expressed the opinion that bringing the Arab-Israeli conflict to a resolution would help the United States and Israel support democratic change in the Middle East.

"We see it as a clash between generations, a clash between those who want democracy and those who want to go backwards," an Israel official who was present at the lunch told The Cable. "One of the ways to make sure the right side wins is if there could be progress in the peace process."

The most immediate issue for Israel how to set good relations with the next government in Egypt. Obama said the two presidents discussed ways for both countries to support Egypt's economic development as a means of supporting the Egyptian youth. Peres believes restarting the Israeli-Palestinian peace process would also help Israel navigate its changing relationship with Egypt.

"Peres' message is that Palestinians and Israel now have a common interest to get to negotiations, because both sides want Egypt to continue to support the peace process," the Israel official said.

But Obama, following the breakdown of the direct negotiations he and Clinton worked so hard to push forward in 2010, warned Peres that he would only try again if he first saw increased commitment from both parties.

"Obama said he's willing to help, he's willing to push forward, but... he wants to see that a serious effort is being made and then he will add his weight," the official explained.

Obama and Peres also addressed the issue of Iran at their meetings. Peres noted that dealing with Iran is also a moral issue, because the Islamic Republic heads the anti-democratic camp in the region. The two presidents also agreed on continuing cooperation on missile defense against the Iranian threat and the necessity of maintaining economic sanctions on Tehran. .

According to the Israeli official, Peres told Obama that Israel is increasingly concerned about the flow of Russian strategic weaponry into the region and said that Israel wants to purchase an additional 20 F-35 fighter jets.

U.S. officials at the lunch raised the touchy issue of continued Israeli settlement building, but Peres didn't give any ground.

"Look, our policy hasn't changed," the official said, referring to Peres's position. "We have our differences with the administration but this has been our policy all along. We don't agree on everything."

Peres also asked Obama to consider clemency for convicted Israeli spy Jonathan Pollard, and he reminded the U.S. president that he has an open invitation to visit Israel whenever he wants.

Obama acknowledged both points but gave "no sort of reply one way or the other," the official said.

Following two days of intensive discussions in Brussels, NATO has agreed to support -- but not command -- operations in Libya. Meanwhile, France has proposed a high-level international "political steering committee" to actually run the war. But does the Obama administration support that idea?

"NATO has now decided to launch an operation to enforce the arms embargo against Libya," NATO Secretary General Anders Fogh Rasmussen said in a statement from Brussels on Tuesday evening. He said U.S. Admiral James Stavridis was activating NATO ships and aircraft to "monitor, report and, if needed, interdict vessels suspected of carrying illegal arms or mercenaries."

NATO has also "completed plans to help enforce the no-fly zone" that will be brought into force "if needed, in a clearly defined manner," to support the effort to protect the Libyan people," Rasmussen said.

Rasmussen didn't say whether NATO would perform the command-and-control function of the no-fly zone, something that Turkey has objected to because the "all necessary measures" language of Security Council Resolution 1973 includes the bombing of Libya. France objected to NATO being in command of the war operations on a day-to-day basis and has now proposed a new "political steering committee," made up of foreign ministers from the United States, European, and Arab states, to oversee the war.

A French diplomat told The Cable that the details of the proposal would be worked out over the next few days. "It was always understood that there would be two stages of operations. The one that started on Saturday and a second phase in which NATO would play a role," the French diplomat said.

French Foreign Minister Alain Juppé announced on Tuesday that the British are in agreement with the proposal but the French government has not said anything about the position of the Obama administration.

So is the Obama administration on board? White House spokesman Tommy Vietor did not respond to a request for comment on the French proposal. Obama spoke with Sarkozy Tuesday and "the two Presidents agreed on the means of using NATO's command structures to support the coalition," the French government said in a read out.

It's not clear how the French steering committee would be in operational control of the war, but the proposal includes that the committee would be in charge of the "strategic decisions" involving military action, the diplomat said.

If enacted, the proposal would allow President Barack Obama to fulfill his pledge to transfer leadership of the war out of American hands within "a matter of days," as he said Monday.

The French position is that the steering committee idea would allow NATO to bring its military capabilities to bear without putting an exclusively Western label on the military intervention. Qaddafi has called the campaign a "colonial crusade" by western nations.

"The only constraint is that we need to keep the Arabs involved," the French diplomat said. "In order to do that we need to use NATO capabilities and we need to [provide so that] Arab countries stay involved."

The NATO meetings on Monday were contentious. The French and German representatives reportedly stormed out of the meeting, albeit for very different reasons. France was upset at Rasmussen for openly criticizing France in the meeting and questioning their reliability as an ally. Germany is opposed to the military intervention altogether.

"We do not want to be sucked into a position of eventually seeing German soldiers fighting in Libya," Germany's foreign minister Guido Westerwelle said.

"There was confusion yesterday but we are safely now going in the right direction," the French diplomat reported.

Our sources also report that Washington has made it clear that they want to see the transfer of leadership for the Libya mission leave U.S. hands by the end of the week. Whether the Obama administration and the Defense Department are comfortable with a French led international steering committee making decisions about the actions of U.S. military forces remains to be seen.

The Empire State Building will be lit up red, white, and blue tonight, in commemoration of the 50^th anniversary of President John F. Kennedy's creation of the Peace Corps.

"Life in the Peace Corps will not be easy," Kennedy said on March 1, 1961. "But if the life will not be easy, it will be rich and satisfying. For every young American who participates in the Peace Corps -- who works in a foreign land -- will know that he or she is sharing in the great common task of bringing to man that decent way of life which is the foundation of freedom and a condition of peace."

Kennedy set a goal of recruiting 500 Peace Corps volunteers that year. In 2011, the Peace Corps has 8,675 volunteers who serve in 77 countries. Its alumni include author Paul Theroux (Malawi, 1963-65), Chris Matthews (Swaziland, 1968-70), Sen. Chris Dodd (Dominican Republic, 1966-68), former Secretary of Health and Human Services Donna Shalala (Iran, 1962-64), Assistant Secretary of State Johnnie Carson (Tanzania, 1965-68), former U.S. Ambassador to Iraq Christopher R. Hill (Cameroon, 1974-76), and four other members of Congress.

Tonight's commemoration in New York City kicks off over 4 months of Peace Corps events, culminating in a featured program at the Smithsonian Folklife Festival on June 30 to July 11.

The Peace Corps received $400 million in fiscal 2010 from Congress, and has been largely immune from the slash-and-burn mood of many House Republicans, who have proposed large cuts in rest of the international affairs budget. The House GOP's version of funding for the rest of fiscal 2011 would keep the organization's funding at 2010 levels.

In addition to its alumni representation on Capitol Hill, the Peace Corps has been able to stay out of the budget debate -- in part because the organization is spread out over the country and therefore has advocates in many districts. The Obama administration has asked for $439.5 million for fiscal 2012, but the debate over that request has yet to begin.

Secretary of State Hillary Clinton issued a statement today praising the Peace Corps' role in preparing people for careers in diplomacy and development.

"Every day, I work with dedicated colleagues at the State Department and USAID, many of whom paved the foundation for their careers in the Foreign Service and Civil Service with their years in the Peace Corps," she said. "The Peace Corps taught them compassion, patience, and continues to bridge cross-cultural divides."

Sargent Shriver, the Peace Corps' first leader, died in January. Here's a video of then Senator Kennedy pitching his idea to University of Michigan students on Oct. 14, 1960, about three weeks before he was elected President.

Vice President Joseph Biden argued on Thursday for forceful and early international intervention to prevent governments from committing atrocities, but didn't explicitly make the case for such intervention in Libya.

"I got in trouble when I said, during the Bosnia crisis, coming back from meeting Milosevic... that when a state engages in atrocity, it forfeits its sovereignty," Biden told an audience at the Holocaust Memorial Museum in Washington, D.C., where he was speaking at an event honoring the late Congressman Tom Lantos.

"And it was viewed at the time as somehow being contrary to the notions of the principles of the United Nations Charter that you forfeit your sovereignty," Biden said. "I remember the first person to call me as I was being roundly criticized was Tom Lantos, [who said,] ‘Keep it up, Joe.'"

Biden lauded the Obama administration for creating a senior-level position inside the National Security Council to coordinate what he referred to as new, stronger policies on preventing, identifying, and responding to mass atrocities and genocide.

"Too often in the past, these efforts have come too late, after the best and least costly opportunities to prevent them have been missed," Biden said. "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."

He referenced the same two examples of genocide that Anne-Marie Slaughter, former top aide to Secretary of State Hillary Clinton, referred to when calling for international intervention in Libya. Biden criticized the international community for waiting so long to stop the killing of civilians in those cases.

"It's amazing how in the Balkans it took so long," Biden said. "Our administration also believes that holding perpetrators of mass atrocities accountable is an essential component of our prevention efforts. And that's why we have to reinvigorate efforts to bring some of the worst war criminals to justice."

While Biden lamented the international community's slow response to past instances of atrocities, he didn't explicitly name Libya's Col. Muammar al-Qaddafi as a candidate for such a response or explain how the administration's atrocity prevention policy would be applied in the current Arab world crisis. Rather, he repeated the administration's message that the international community must uphold three overarching principles with regards to Libya: an end to violence, protection of universal rights, and progress toward political reform.

"The Holocaust and the legacy are not only a part of our country's history, this country's history, but they continue to inform our approach to events today. They stiffen our resolve and our conscience, God willing, in the face of atrocities wherever and whenever they occur," Biden said.

He also quoted Lantos on the issue.

"‘The veneer of civilization is paper-thin,' Lantos often said. We are the guardians, and we can never rest."

The Obama administration is considering a range of options for pressuring the Libyan regime to stop massacring civilians -- including sanctions, asset freezes, and perhaps even the establishment of an international no-fly zone. But according to a senior NSC official, armed intervention in Libya is not on the table.

A host of top U.S. military officials held a secret day-long meeting with Pakistan's top military officers on Tuesday in Oman to plot a course out of the diplomatic crisis that threatens the U.S.-Pakistan relationship.

The United States was represented by Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, Gen. David Petraeus, commander of International Security Assistance Force (ISAF), Adm. Eric Olson, commander of U.S. Special Operations Command, and Marine Corps Gen. James Mattis, commander of U.S. Central Command, Stars and Stripes reported. The Pakistani delegation included Gen. Ashfaq Parvez Kayani, Pakistan's chief of army staff, and Maj. Gen. Javed Iqbal, director general of military operations.

The meeting was planned long ago and covered various aspects of the U.S.-Pakistani relationship, but a large portion was dedicated to the diplomatic crisis surrounding Raymond Davis, the CIA contractor who was arrested in Lahore, Pakistan, last month after fatally shooting two armed Pakistani men.

"Where do you go to think seriously and bring sanity to a maddening situation? Far from the madding crowd to a peaceful Omani luxury resort of course. So that's what the military leadership of the US and Pakistan did," wrote Gen. Jehangir Karamat in a read out of the meeting obtained by The Cable and confirmed by a senior Pakistani official. Karamat is a former chief of Pakistan's army, and also served as Pakistan's ambassador to the United States from 2002 to 2004.

"The US had to point out that once beyond a tipping point the situation would be taken over by political forces that could not be controlled," Karamat wrote about the meeting, referring to the reported split between the CIA and the Pakistani Inter-services Intelligence (ISI) that erupted following the Davis shooting.

In Oman U.S. officials implored the Pakistani military to step up its involvement in the Davis case, following the Pakistani government's decision to pass the buck to the judicial system on adjudicating Davis' claim of diplomatic immunity. However, their concerns also went beyond this most recent diplomatic spat.

"[T]he US did not want the US-Pakistan relationship to go into a free fall under media and domestic pressures," Karamat wrote. "These considerations drove it to ask the [Pakistani] Generals to step in and do what the governments were failing to do-especially because the US military was at a critical stage in Afghanistan and Pakistan was the key to control and resolution."

"The militaries will now brief and guide their civilian masters and hopefully bring about a qualitative change in the US-Pakistan Relationship by arresting the downhill descent and moving it in the right direction."

A senior Pakistani official confirmed the accuracy of Karamat's analysis to The Cable. The official said that the Davis incident would hopefully now be put on a path toward resolution following a feeding frenzy in the Pakistani media, which has reported on rumors of an extensive network of CIA contract spies operating outside of the Pakistani government's or the ISI's knowledge.

"The idea is to find a solution whereby the Davis incident does not hijack the U.S.-Pakistan relationship," the official said. The most probable outcome, the official explained, is that Davis would be turned over to the United States, following a promise from the U.S. government to investigate the incident.

The United States would also compensate the families of the two Pakistani men killed by Davis, and a third man who died after two other U.S. embassy personnel ran him over while racing to the scene of the shooting. Negotiations between U.S. officials and the family members are already underway, the official said.

Shuja Nawaz, director of the South Asia Center at the Atlantic Council, said that it was the responsibility of the Pakistani Foreign Ministry, led until recently by Shah Mahmood Qureshi, to resolve the Davis case. Qureshi was removed as Foreign Minister after reportedly refusing to go along with the government's plan to grant Davis immunity.

"It's really the Foreign Ministry's responsibility," said Nawaz, "But in the absence of action by the civilian government, if the military can help persuade them to resolve this matter and find the way, that's all for the better."

But once the Davis case is resolved, there's still much work to be done in repairing the relationship between the CIA and the ISI. The ISI is widely suspected of airing its anger with the CIA in both the Pakistani and U.S. media. The latest example was Wednesday's Associated Press story that featured a never-before released ISI "statement" that said the Davis case was putting the entire ISI-CIA relationship in jeopardy.

The CIA and the ISI are talking, the Pakistani official said, but the path toward reconciliation will be a long one.

"It's a spy game being played out in the media and the CIA has told the ISI to cut it out," the official said. "The relationship remains testy. But after the meeting between Mullen and Kayani the likelihood of some resolution has increased."

Inside the Pakistani government, the Davis case has exacerbated internal tensions between the civilian government, led by President Asif Ali Zardari, and the ISI. Pakistani news agencies have been reporting that the Pakistani embassy in Washington has approved hundreds of visas for American officials without proper vetting, increasing the ease with which covert CIA operatives could enter the country.

Pakistan's Ambassador to Washington Husain Haqqani has denied that any visas had been issued from his embassy without proper authorization. An analysis of Pakistani visas granted to U.S. government employees, conducted by the Pakistani government, shows there has been no significant increase in the number of visas issued since 2007.

Regardless, the gentlemen's agreement between the ISI and the CIA that the two organizations would keep each other informed on each other's actions in Pakistan has now broken down.

"It's a vicious circle. Davis was in Pakistan because Pakistan can't be trusted. But Davis getting caught has increased the mistrust," the Pakistani official said. "Their interests are no longer congruent. Eventually the ISI and the CIA will have to work out new rules of engagement."

As protests rage in Bahrain and Libya, the U.S. government's stance toward democracy in the Arab world is evolving, even in Congress. On Wednesday, the top Democrat on the House Armed Services Committee said that the United States must abandon its decades-old habit of supporting autocrats.

"The old days of ‘as long as we can make a positive relationship with the autocrat who's running the place, then we are friends with the country' are dead and gone," Rep. Adam Smith (D-WA) told a group of reporters over breakfast on Wednesday.

"We have to be much more interested in trying to get the actual populations in those countries to be supportive of us," Smith said. "What we have to start thinking about in the foreign policy establishment is what shifts in our foreign policy do we need to make to target the populations."

Smith said that over the last decades, the U.S. policy of supporting regimes that abused power turned many Arabs against the United States and bolstered often violent opposition movements, some of which could now be poised to take power.

"It was a long term bad strategy... We were winning the battle but losing the war," Smith said. "There's a reason we opted in the past for the ‘Let's just make friends with the autocrat' approach. It's much easier."

But Smith, who represents the district where the U.S. Army base of Fort Lewis is located, defended military aid to countries including Jordan, Pakistan, and Israel as useful tools of American influence.

Smith also said that military aid to Cairo must continue while the Egyptian military undertakes the process of reform. "Where Egypt is concerned, it's going to depend on what their government ultimately looks like," Smith said. "Right now, today? Yes."

Smith admitted the difficulty of supporting popular Arab movements while also defending U.S. interests, laying out several concerns he had about the largest and most organized Egyptian opposition group -- the Muslim Brotherhood.

"One of the things to understand about [the Muslim Brotherhood's approach in Egypt... their ultimate goals haven't changed," Smith said. "I don't think the people of Egypt want to trade one totalitarian group for another... we have a definite interest in making sure that doesn't happen."

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 new fiscal 2012 budget request for the State Department and USAID made some tough choices, including ending or cutting foreign assistance to dozens of countries and delaying the goal of increasing the number of foreign service officers by 25 percent for years. But those cuts could be become much more drastic when Congress takes its turn slashing diplomacy and development funding for next year.

"We recognize that these are exceptionally tight times. With the resources outlined in this budget, the State Department and USAID can continue to protect our interests, project our values, promote growth, and above all, serve our national security," Deputy Secretary of State Thomas Nides told reporters at Monday's State Department budget briefing.

Development advocates praised the Obama administration's new budget request, arguing that it tackled the issue of government waste while still protecting the diplomatic and development programs that are crucial to U.S. national security. But they also warned the request may be dead on arrival in Congress.

"After two years of planning, review and reform, the Obama team has readied itself to make the best case possible for a robust international affairs budget," wrote Anne Richard, vice president of the International Rescue Committee, on the Stimson Center's budget blog.

"The good news: the departments and agencies that run these programs are better prepared than ever before to justify their budgets.  The bad news: that may not matter."

The State Department is comparing its fiscal 2012 budget request numbers to fiscal 2010 levels because Congress has not passed a fiscal 2011 budget, even though the fiscal year began Oct. 1. The government has been running on a continuing resolution (CR) since then, which will expire March 4. The House unveiled an extension for the CR, which would provide funding for the rest of the fiscal year. Under the CR, State and foreign operations would receive $44.9 billion in fiscal 2011.

Secretary of State Hillary Clinton met with House Speaker John Boehner (R-OH) on the Hill on Monday morning and emerged from the meeting expressing grave concerns about the House's plans to slash fiscal 2011 spending for diplomacy and development in the 2011 CR, which would set a lower baseline for the 2012 budget as well.

"We would be forced to scale back significantly our mission in the frontline states of Iraq, Afghanistan, and Pakistan, where we work side by side with the American military. We would also be required to roll back critical health, food security, climate change, border security, and trade promotion efforts abroad as well," Clinton said. "We certainly understand the tight budget environment... But the scope of the proposed House cuts is massive."

In a Monday letter to House Appropriations Committee chairman Harold Rogers (R-KY), Clinton wrote that the proposed cuts, "will be devastating to national security, will render us unable to respond to unanticipated disasters, and will damage our leadership around the world."

A news release by House Appropriations State and Foreign Ops subcommittee Chairwoman Kay Granger (R-TX) praised the $44.9 billion figure and said it was a reduction of $3.8 billion, or 8 percent from total 2010 appropriations and a reduction of $11.7 billion, or 21 percent, from the president's 2011 budget request. Granger and GOP congressional leaders are promising to cut Obama's 2012 request even further.

Granger's Democratic counterpart, Rep. Nita Lowey (D-NY), issued a statement on Monday railing against the House Republicans' bill, hammering home the argument that diplomacy and development funding are key to national security.

"Even in these difficult economic times, we cannot afford to enact broad and haphazard cuts to key pillars of our national security. We must not allow our response to an economic challenge to create a national security crisis," Lowey said.

The entire State Department and USAID fiscal 2012 budget request, which can be found here, seeks just over $47 billion, which the Office of Management and Budget notes is a 1 percent increase over fiscal 2010 levels. The president is requesting a grand total of $50.9 billion for U.S. diplomacy and development efforts, after accounting for programs outside State and USAID, such as the Peace Corps, the Broadcasting Board of Governors, and the Millennium Challenge Corporation. That's $3.7 billion -- or 6.7 percent less -- than the $54.6 billion that was requested for the same accounts in fiscal 2011.

Obama is also requesting $8.7 billion in supplemental funding for the State Department and USAID in fiscal 2012, so that they can take on increased roles in Iraq, Afghanistan, and Pakistan. This represents a $2.3 billion increase over the fiscal 2011 request.

"We had to make tradeoffs. We had to cut some things to grow other things," Nides said. "The amount of money we are requesting reflects what we believe are the priorities for this department... This is a national security budget."

The State Department and USAID's plan to increase its cadre of foreign service officers by 25 percent, which was supposed to be completed in fiscal 2012, will now be delayed until at least fiscal 2014.

The administration eliminated or scaled back requested funding for dozens of small foreign assistance programs around the world. The request would eliminate funding for bilateral programs for six countries: North Korea, Tonga, Kuwait, Qatar, Saudi Arabia, and the UAE, for a total savings of $4.5 million. The funds allocated for North Korea -- which was being used to fund non-governmental organizations, not the North Korean government -- could still come out of general funds.

International Military Education and Training (IMET) program funding in the budget was abandoned for nine countries: Equatorial Guinea, Iceland, Kuwait, Madagascar, Qatar, Russia, Saudi Arabia, Somalia, and the UAE. These cuts represent a savings of under $1 million. Foreign Military Financing was eliminated in the request for Chile, Haiti, East Timor, Malta, and Tonga, for a savings of about $5 million.

"We're trying to move our budget toward less very small programs, because we are going to have less money down the road to allocate and we want to make sure we allocate it to the highest priorities," a State Department official said. "So the savings from these cuts are very small but you have to start somewhere."

Funding requested for Mexico assistance is $335 million, $250 million less than fiscal 2010, $282 million of which is designated for the Merida initiative. $400 million is requested for aid to Columbia. Both of these accounts were reduced because the programs are being transferred to more local control, a State Department official said.

Big cuts were proposed to development assistance to over 20 countries, including many in Europe, Eurasia, and Central Asia.

"Countries like Albania, Macedonia, Montenegro, Serbia, Cyprus, Poland, are all countries that we think we just can't afford to give the kind of assistance we have in the past," a State Department official said. "We can't fund everything, everywhere, any longer."

The administration requested $1.55 billion in aid to Egypt and $100 million in aid for the Lebanese Armed Forces, both at about the same levels as fiscal 2010.

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.

Congress is out ahead of the administration in calling for Egyptian President Hosni Mubarak to step down and for the United States to cut off military aid to his regime. But while some believe the White House is using Congress to send Mubarak tough messages they don't want to -- or can't -- send themselves, it appears that Congress is reacting to events independently from the administration.

Thursday evening, all 100 senators passed a resolution that calls on Mubarak to immediate transfer power to an interim caretaker government, for that government to immediately begin a transparent process toward a free election, for the presence of international election monitors on the ground in Egypt, and "expresses deep concern over any organization that espouses an extremist ideology, including the Muslim Brotherhood."

The resolution was led by two unlikely bedfellows, Senate Foreign Relations Chairman John Kerry (D-MA) and Senate Armed Services Committee ranking Republican John McCain (R-AZ).

Congress's stance is markedly more assertive than that of the Obama administration, which still won't publicly call for Mubarak to leave office immediately. And the administration is not going anywhere near making comments about the Muslim Brotherhood.

Experts said the administration actually benefits from having a Congress that sends stronger messages and places outside pressure on the Egyptian government.

"Whether it's a conscious or unconscious, there's a useful good cop bad cop element to all this. The administration doesn't have to overtly threaten aid to the military, but it's very useful for the Egyptian military to know that their aid could be cut off," said the Brookings Institution's Robert Kagan. "I wouldn't be surprised if the administration, without engineering this, welcomes the pressure from Congress."

But both the White House and the Senate argue strenuously that any benefits from this dual messaging are purely accidental, and Congressional moves such as the Kerry-McCain resolution are not being coordinated with the White House.

"This legislation was crafted by Senators Kerry and McCain without input from the White House," National Security Staff spokesman Tommy Vietor told The Cable.

"The White House was not consulted. The resolution was the product of an agreement between Senator Kerry and Senator McCain," SFRC spokesman Frederick Jones said to The Cable.

Even Kerry's Feb.1 op-ed in the New York Times, which was also out ahead of the administration's message at that time in calling for Mubarak to step aside, was not coordinated with the White House, Jones insisted.

So what about McCain's call on Wednesday for Mubarak to step aside now? At the time, due to McCain's meeting with Obama earlier that day, that seemed like an idea coordinated with the White House. But no, both sides insist that was not a move planned in conjunction with the White House.

"Senator McCain has been closely monitoring the situation in Egypt and the region as a whole - its McCain being McCain," said McCain spokeswoman Brooke Buchanan, who pointed out that McCain sponsored a similar resolution last year with Sen. Russ Feingold. The Cable reported this week that resolution died during the lame duck session.

There are other signs that Capitol Hill's tough message on Egypt is not following a White House lead. On Thursday, Sen. Patrick Leahy (D-VT), the chairman of the Senate Appropriations Subcommittee on State and Foreign Ops, declared that U.S. aid to Egypt was on hold until the crisis gets sorted out.

"The fact of the matter is, there's not going to be further foreign aid to Egypt until this gets settled," Leahy told Congressional Quarterly. "Certainly I do not intend to bring it through my committee."

That's exactly the opposite of the message administration officials are sending to Egypt, considering that they are depending on their relationship with the Egyptian military to provide leverage in helping guide the crisis back to some measure of stability.

"We will evaluate the actions of the government of Egypt in making and reviewing decisions about aid. That continues," White House spokesman Robert Gibbs said on Feb. 3.

The administration's position on aid to Egypt was supported on Thursday by Sen. Lindsey Graham (R-SC), who is expected to become the next ranking Republican on Leahy's subcommittee. On the Senate floor on Thursday, Graham asked lawmakers to "consider the consequences of such an action. Give the Egyptian people a chance to work this out."

Experts who are in touch with the administration agree that while the administration has been consulting with Capitol Hill, the notion that the two branches are working together on coordinating the U.S. government's message to Egypt just isn't true.

"Congress is just being Congress," said the New America Foundation's Steve Clemons.