JEFFREY BROWN: And we come back to the new military strategy and to our interview with Defense Secretary Leon Panetta.
I sat down with him at the Pentagon this afternoon.
Mr. Secretary, welcome.
SECRETARY OF DEFENSE: LEON PANETTA: Good to be with you.
JEFFREY BROWN: The president said today, "We're turning the page on a decade of war."
As you look at the changing world situation now, what war or kind of war are you preparing for?
LEON PANETTA: Well, we are at a strategic turning point.
The president kind of made the point today -- and I think it's true -- we just ended the war in Iraq. We're in a transition course of eventually being able to give the Afghans the ability to handle their own security in Afghanistan. We just completed the NATO mission in Libya. We've made significant progress against terrorism, particularly al-Qaida.
And now we're facing obviously the budget cuts that we have been mandated to do. But it comes at a time when there are a number of other challenges that are out there. This isn't like past drawdowns, where the threats kind of went away.
We're facing still a series of challenges. We're facing terrorism. We're facing threats from countries like Iran and North Korea. We're facing threats with weapons of mass destruction and proliferation of those weapons.
We're facing challenges from rising powers in Asia. And we're facing a situation in the Middle East that continues to be in turmoil. So, what we've got to do is to be able to have a flexible, adaptable, agile force that can deal with a myriad of challenges in today's world. That's what we've got to be able to develop.
JEFFREY BROWN: But you are doing that, of course, admits this fiscal -- all the fiscal constraints.
And you said today that a leaner military with a smaller budget will need some tradeoffs and -- quote -- "some level of additional risk."
Now, what risk are you referring to?
LEON PANETTA: Well, any strategy, particularly a new defense strategy as we are putting in place, is going to involve some risks.
What are the risks? When you're smaller and leaner, you're not going to have that large a presence throughout the world. And so we are going to have to be much more agile, much more flexible in moving forces around. That creates a risk. You have the risk of, you know, our ability to mobilize.
Can we mobilize quickly, effectively enough if we confront another aggressor who is, you know, beginning a war against the United States? Our ability to do that has to be done rapidly. We have got to have a strong National Guard and Reserve.
We have the whole issue of technology. This is going to be a technology-advanced force. It has to be. Can we develop that technology? Can we put it in place? What are the costs associated with developing that technology?
So, as you look at this -- and the other area is partnerships. We have to rely on partnerships, like NATO and others. And yet those countries are facing budget constrictions of their own. So you can see the risks that are out there. We think they're acceptable, but they are risks.
JEFFREY BROWN: If you look in concrete turns, of course, the stance for decades for U.S. policy has been to be able to fight two major wars at the same time. And we have been doing that for the last decade. Is that changing now? Will we no longer be able to do that?
LEON PANETTA: I think the fundamental principle of that construct of being able to fight two wars is, will the United States be able to take on aggression from more than one enemy, be able to confront them, defeat them and win? That's the fundamental question.
JEFFREY BROWN: Is that a semantic difference, or is that a real difference from two -- fighting two major wars at the same time?
LEON PANETTA: No, I think -- I mean, I think that that -- even in that construct of fighting two land wars, the fundamental question is, could we confront two enemies at the same time and be able to win?
If we bring that to the present, we have asked the same question, because that is a major question. The United States has to have the capability to deal with more than one enemy at one time and be able to confront them and win. We think we can do that with the force that we're designing. And that's what counts.
JEFFREY BROWN: So, if the U.S. were forced to confront -- again, I want to put in it in as concrete terms as possible -- Iran on one hand and a threat from North Korea or China at the same time, it would still be possible?
LEON PANETTA: Exactly.
I mean, the best example is, if we were enmeshed in a land war in North Korea, or in the Korean Peninsula, and, suddenly, Iran decided to do something in the of Straits of Hormuz, would we have the capability to be able to confront that threat? The answer is yes.
If there were a threat somewhere else, would we have the capability to confront that? The answer is yes. We have got to be able to have sufficient capability to be able to confront more than one enemy and be able to win. That's the key.
JEFFREY BROWN: Now, both you and the president emphasized the major shift to the Asia-Pacific region.
What -- what exactly does that mean? Does that mean containing China's growing power?
LEON PANETTA: Well, the United States is a Pacific power. And we have always had a presence in the Pacific.
China is a Pacific power as well. And we recognize that. And, frankly, my view is that we need to continue to work with China, continue to build a relationship with China, because they are a power, because our economy -- our economies are related, because there are other relationships that we have in that area.
We have a common interest with China in dealing with the threats that exist in the Pacific, stability of Korea, one example, the whole issue of being able to have commerce move freely through the oceans in that area, the whole issue of nuclear proliferation, the whole issue of dealing with humanitarian crises and disasters.
All of these issues in the Pacific and the possibility that any one of those could develop the kind of challenge that would demand U.S. power being invoked, that's the reason we have got to focus an emphasis on the Pacific region.
JEFFREY BROWN: But when you call for this new emphasis or shift, what would you do now that -- what would you do now that you are not able to do?
LEON PANETTA: I think the most important thing is obviously maintaining our naval presence out in the Pacific, maintaining our military presence. We have a large military presence, obviously, in South Korea.
JEFFREY BROWN: Maintaining or enhancing some of these things?
LEON PANETTA: I think some of this will be enhanced, for example, the announcement that the president made in Australia, where we will have a rotational deployment of Marines in that area.
We're going to look for other opportunities along those lines to be able to enhance our presence, to be able to indicate that we are a Pacific power and we are there to work with the countries in that area to try to maintain the peace.
JEFFREY BROWN: You spoke today of scaling down the size of the Army and Marines, but no specific numbers.
LEON PANETTA: Right.
JEFFREY BROWN: You spoke today of hard choices that would have to be made about -- including weapons systems, but again no specifics.
Can you give me an example of a hard choice that you are facing right now?
LEON PANETTA: Well, there are a lot of hard choices here. When you cut a half-a-trillion dollars from the defense budget, it affects almost every area in the defense budget.
As I indicated today, the specific decisions on the budget are going to be contained in the president's budget. So I'm not going to talk about the specific areas which are still in the process, frankly, of being finalized.
But we have looked at every area of the defense budget, efficiencies, obviously. This is an area that involves this huge department that's here, duplications that are here, tightening the operations up that we have to tighten; secondly, the whole area of modernization, weaponization, procurement, being able to develop the kind of reforms that are necessary in that area in order to save costs, making decisions on weapons that we need with this kind of flexible and agile force that we're going to have.
Compensation. Compensation is an area that's grown by 80 percent in this department. We are going to have to develop some cost efficiencies there as well as we try to maintain faith with the military. And, lastly, force structure -- force structure is going to come down. It was going to come down in any event based on the changes that are taking place out there.
But we are going to have a smaller and leaner force as a result of having to make these decisions.
JEFFREY BROWN: You have some -- you will have and already have some critics who are worried that you're going too far. You will also have those who think you're not going far enough. Why not cut more? You have certain cuts there. Today, you warned again about the possibility of more cuts through the sequestration process.
But there are some who point out that that would even only get you to 2007 budget rates or so. Why not go further at a time like this, when we're able -- when we perhaps are able to?
LEON PANETTA: Exactly because of what I said earlier on, that this country still confronts major challenges in today's world. We are still fighting the war on terrorism. We have got Iran. We have got North Korea. We have got all of these changes that are taking place in the Middle East.
We have got the challenges of dealing with rising powers in Asia. We have got the challenge of, you know, dealing with countries like Russia, rising countries that -- like India and others. All of that represents the kind of challenges that we are going to have to deal with in this world of the 21st century.
For that reason, we've got to be careful how we do this. Now, cutting almost $500 billion is not chump change. The fact is, it's a half-a-trillion dollars coming out of the defense budget. And that's going to impact on a lot of areas in the defense budget.
JEFFREY BROWN: And cutting another $500 billion, you think, is unacceptable.
LEON PANETTA: Well, you know, what I would ask people to do is kind of hold your judgment as to whether or not we ought to cut the defense budget a lot deeper until -- when you see the decisions we are going to have to make in order to be able to achieve $500 billion in defense savings.
JEFFREY BROWN: Well, that is what I want to ask you, because you are speaking big picture today, but you are an old budget hand.
LEON PANETTA: Yes, indeed.
JEFFREY BROWN: A lot of years in Congress. And you know that, once you get to the specific cuts, weapons, programs, everything...
LEON PANETTA: That's right.
JEFFREY BROWN: ... these are hard decisions.
LEON PANETTA: Exactly.
JEFFREY BROWN: These are inevitably political decisions.
And, also, here we are in the midst of a political campaign. So you expect all of this to be fought over?
LEON PANETTA: I don't think there's any question that this is going to be controversial. These are hard choices.
Hard choices on the budget inevitably are not just numbers. They affect people. They affect states. They affect communities.
JEFFREY BROWN: Job, the whole thing, right?
LEON PANETTA: They affect jobs.
All of that is in play here. And, as a result of that, having been a former member of Congress, there are going to be members who are going to be very concerned about the impact this is going to have on their constituencies. I understand that.
But, at the same time, it's the Congress that made the decision that we have to cut the defense budget by almost $500 billion. If that's what they want to do, and they want to do it in a balanced way that protects the defense system for the future, then I urge them to take a look at our larger strategy here, what we've released today, and hopefully be able to work with us to achieve the same kind of balance we're trying to achieve here.
JEFFREY BROWN: All right.
Secretary of Defense Leon Panetta, thanks so much.
LEON PANETTA: Thanks very much, Jeff.