The State Department formally rolled out a new plan today for how it will tackle economic, energy, and environmental issues -- by combining them all into one bureaucratic structure.

Undersecretary Bob Hormats is the leader of the newly expanded "E" team in Foggy Bottom, making him the undersecretary for economic growth, energy, and the environment. Before today, Hormats was the undersecretary for economic, energy and agricultural affairs. The change moves several offices under Hormats' umbrella, and also places him in charge of two new offices that never existed before.

Hormats is now in charge of three bureaus led by assistant secretaries and their teams: the Bureau of Oceans and International Environmental and Scientific Affairs (OES), led by Assistant Secretary Kerri-Ann Jones, the Bureau of Economic and Business Affairs (EB), led by Assistant Secretary Jose Fernandez, and the brand new Bureau of Energy Resources (ENR), led by State's Coordinator for International Energy Carlos Pascual, pending the confirmation of an assistant secretary. 

The new "E" family will also, for the first time, include the Office of the Science and Technology Advisor, led by E. William Colglazier, and a new Office of the Chief Economist, which will be led by someone who hasn't been hired yet - interviews are ongoing.

Hormats could have as many as 150 to 200 new people under his leadership, but the changes are basically cost neutral. The idea is to combine these three bureaus into a cohesive team, which can take advantage of the increasing overlap between energy policy, environmental policy, and the economy.

"If this was only moving the bureaucratic boxes around it wouldn't be worth the effort," Hormats told The Cable in an interview. "This really responds to Secretary Clinton's challenge to break down silos and to create greater efficiencies within the State Department and focus attention in developing economic statecraft."

The changes in the State Department's bureaucracy were spelled out in the Quadrennial Diplomacy and Development Review, which was released last year, but also fits perfectly into Secretary of State Hillary Clinton's new favorite initiative, "Economic Statecraft," as laid out in her speech in October.

"America's economic strength and our global leadership are a package deal," Clinton said. "A strong economy has been a quiet pillar of American power in the world. It gives us the leverage we need to exert influence and advance our interests. It gives other countries confidence in our leadership and a greater stake in partnering with us."                               

Hormats said the State Department was currently evaluating several ways in which the new offices could work together. For example, the United States could use economic strategies to promote access for U.S. energy technology companies in Africa, he said. The environmental experts could also chip in to make sure development in the African energy sector is ecologically sound.

Another initiative State is thinking about, Hormats said, is an effort to strengthen science and technology cooperation with the European Union in areas such as nanotechnology, smart grids, and electric cars. The idea is to play a role in setting industry-wide standards for new green technologies, helping U.S. businesses establish an international foothold in these emerging industries.

The conventional wisdom is that environmental and business objectives are at odds with each other, but Hormats is aiming to disprove that. He made the case that environmentally conscious companies are more energy efficient, and therefore more economically successful. President Barack Obama's Energy and Climate Partnership of the Americas is an existing example of this type of thinking, and a project that will be managed in his shop.

Hormats has also been meeting over several months with environmental groups to assure them that their concerns will not be made subservient to the overwhelming drive to seek economic gains and greater energy independence.

"The last thing we want to do is make the environmental bureau a subsidiary of the economic or energy bureaus," Hormats said. "The goal is to find synergies among co-equals. That's the key."

For the third time in two years, hundreds of Chinese officials are meeting with hundreds of their U.S. counterparts to discuss dozens of bilateral topics in dozens of meetings. After the first day of the two-day event, there aren't any new bilateral agreements to announce, and officials say there aren't any expected soon.

"Now more than ever, with two years of dialogues behind us, success depends on our ability to translate good words into concrete actions on the issues that matter most to our people. So as we begin this third round, we will keep that goal in clear focus," Secretary of State Hillary Clinton said in her Monday morning remarks at the opening of the U.S.-China Strategic and Economic Dialogue, which is being held at various locations in downtown Washington.

She praised the new high level participation of senior officials from China's People's Liberation Army and rattled off a long list of issues that would be discussed, including: military-to-military relations, the situation in the Middle East, the need to rebalance the global economy, Iran sanctions, the North Korean nuclear crisis, and human rights.

Vice President Joseph Biden delivered the strongest message on Chinese human rights practices in his Monday morning remarks, when he said, "We have vigorous disagreement in the area of human rights."

"We've noted our concerns about the recent crackdown in China, including attacks, arrests and the disappearance of journalists, lawyers, bloggers and artists," Biden said. "I recognize that some in China see our advocacy [on] human rights as an intrusion and Lord only knows what else.  But President Obama and I believe strongly, as does the secretary, that protecting fundamental rights and freedoms such as those enshrined in China's international commitments, as well as in China's own constitution, is the best way to promote long-term stability and prosperity of any society."

Jeffrey Bader, the recently departed senior director for Asia at the National Security Council, wrote in a Brookings Institution policy brief that the dialogue "was not conceived as a mechanism to deal with bilateral crises or to produce specific ‘deliverables,' but to develop a richer, more intensive dialogue between senior officials on the two sides than would be possible in the usual quick in-and-out visits, and to break down bureaucratic stovepipes among agencies, particularly on the Chinese side, not accustomed to coordinating effectively with each other."

On Sunday, Clinton awarded Bader the Secretary's Distinguished Service Award, standing alongside Chinese State Councilor Dai Bingguo.

Critics of the Obama administration's China policy see the event as yet another example of the administration placing style over substance, and raising expectations of progress in the U.S.-China relationship without delivering results.

"By far the most important economic issue for America and China is the related imbalances in our economies," wrote the Heritage Foundation's Derek Scissors. "The U.S. recognized this several years ago and has repeatedly raised the matter. Result: Both economies are now more imbalanced than when the dialogue began. The main reason is simple: Neither country wants to bear the pain of rebalancing. Instead, they take to telling the other side why it should rebalance."

A senior administration official, speaking to reporters after the conclusion of the first day's meetings, said that the primary discussion of tough economic issues will be held on Tuesday.

"Tomorrow the focus is on how the U.S. and China can rebalance our economies so we can strengthen our recoveries. Monetary and exchange rate policies are certainly be a focus of those discussions," the official said. But he warned not expect any major announcements. "[The Chinese currency] is not moving enough and no one's satisfied, but it's appreciated more than 5 percent against the dollar [over the last year]," he noted.

Undersecretary of State for Economic, Energy, and Agricultural Affairs Robert Hormats took the Chinese to task for their policy of giving regulatory, financial, and legislative support to state-owned enterprises.

"The biggest challenge in addressing these issues effectively is forging a common understanding that state-controlled competition is not competition, and that competitiveness cannot be bestowed by decree. The trade distortions created by the ‘China Model' are disadvantageous to our U.S. companies trying to compete for opportunities around the world, and a direct threat to U.S. jobs and competitiveness," Hormats said.

And Deputy Secretary of State James Steinberg told an audience at the Center for Strategic and International Studies on Monday afternoon that climate change, specifically short-term climate change forces, was a major topic of discussion between Energy Secretary Stephen Chu and his Chinese counterparts.

As for the military component of the talks, Assistant Secretary of State Kurt Campbell told reporters last week that the United States intends to engage "not just traditional players in the Foreign Ministry but also other players in the Chinese government, including the military."

Dan Blumenthal, a former China desk officer at the Pentagon and now a senior fellow at the American Enterprise Institute, said that while increased military dialogue and the building of relationships is good, the administration must not depend on such dialogue to halt the growing tension in the bilateral security relationship.

"The Chinese are moving very cautiously, the political leadership in China is very adverse to making any bold decisions, and the PLA has very little interest in talking to us about anything of substance," he said. "The summits matter less than what we are doing on the ground in response to what China is doing."