Good morning, ladies and gentlemen. Normally, when you introduce somebody, you read their life history and their CV. But I think our speaker today has a much more distinguished resume. It consists of six years of work, which you can find on the web under the acronym S-I-G-I-R, but which, more than that, has been absolutely critical in helping us shape a meaningful effort inside Iraq, come out of a climate in which we were almost completely unprepared for stability operations and to deal with the social governance, other aspects of aid, to look at civil military programs together. And I think that is one of the more distinguished histories in public service. It is also one which I think is going to be absolutely vital in the years that come. We may remove our forces from Iraq at the end of next year, but the problem of going on with the development of Iraqi security forces, carrying forward the aid programs, shifting from military aid to the police to a state department program, finding new ways to treat Iraq as a full partner. If that is possible with the government, we cannot yet identify. These are challenges which go for at least half a decade. And it is particularly important, I think, that Mr. Bowen is here to be able to talk about lessons. Because whatever happens in Afghanistan if we are successful, the most we can hope for is to begin some kind of limited conditions based withdrawal of troops next year. And that itself is uncertain. But as we look down the line, it is a different country. The lessons here become critical because as far as we can see in the future, we will be paying virtually all the costs of the Afghan security forces. And we will have to sustain a major aid program again, indefinitely into the future. This is not a case where you can point, at least in theory, to oil or some other solution. So we are not talking simply about lessons of the past. We are talking about lessons for the future. And with that, let me introduce Mr. Bowen. Thank you, Tony, for that kind introduction. And thank you all for coming out this morning to discuss an issue that continues to be ripe on the front burner. Indeed, dealt with yesterday on the Hill at a hearing on transition in Iraq. Titled is the State Department Ready to Lead. That's a familiar question. It's a continuing question. And it's a structural question, a question that's critical to my job, my job overseeing the use of taxpayer dollars, $53 billion to date in Iraq, equaled now in Afghanistan. And next year, we'll go up to $71 billion. So how we do this, how the United States government is structured to carry out contingency relief and reconstruction operations, is critical. I'm delighted to be back here at CSIS. I was here last summer as a guest of Ray Dubois here in the back. Pleasure to see you again, Ray. And we were talking about hard lessons, our tone about what happened during the Iraq reconstruction enterprise, good and bad. And it is the body of evidence supporting what I'll have to say today. So it's available on our website, www.cigar.mil. But we've continued to produce important lessons learned work. And this year, we produced Applying Hard Lessons, which is the shape and structure of my talk today, which is entitled From Lessons Learned to Lesson Applied. If we don't apply the lessons of Iraq, if we lose them, as we have, for instance, as we did with respect to Bosnia, a lot of contingency lessons learned there not applied in Iraq rejected to our loss to the loss of taxpayer dollars. Again, a structural question. I'm going to begin by talking about what CIGAR has been doing for the last 6 and 1 half years in Iraq on the grounds across the country, and then a little bit of our results, and then get to those lessons, and then we'll have a Q&A at the end. This organization, Special Inspector General for Iraq Reconstruction, the one I've led for the last 6 and 1 half years, was created by Congress in November of 2003 with the adoption of the Iraq Relief and Reconstruction Fund. 18.4 billion in one fell swoop designed to take Iraq out of its post-war chaos and rubble and put it on its feet as a democracy as an economy. The results have been mixed, as we all know, and not certainly at the level that was envisioned by the Coalition Provisional Authority back in 2003. And the chief reason, of course, has been or was the destabilization of the country by the insurgency in 2004, 2005, 2006. I was with Ryan Crocker this past Monday down at the Bush School where he's the dean talking about these very issues. And as he told me when we were visiting in his office Monday afternoon, Iraq went right to the precipice of total loss back in 2006. When he arrived, he didn't think that we were going to be able to prevail. The surge, of course, in all its pieces, not just the surge of troops, pulled us back from that precipice. But we've had to struggle to spend our money wisely and to try and get this democracy going. And here, six months after an election, it's not functioning very well. There's no prime minister, no presidency, no presidency council. The latest word that I've heard this week is that potentially Adal-Mahdi will be the prime minister, Bahram Saleh as the speaker, and Ayad Alawi as the president. That deal is fairly close.  That, of course, is the central next step that has to happen for Iraq's growth and recovery to evolve. Cigar right now on the ground has 15 auditors, investigators, inspectors, and evaluators in country, another 100 over here in Arlington. And we've been productive for the last six years. 171 audit reports, 151 million recovered or saved, another billion put to better use, 43 indictments, 34 convictions, 150 inspections. We've traveled all over the country and visited every corner. I've been to the Basra Airport and to the PHC in Sulamania, to Mosul, to Anbar, and seen some good projects like the Anbar Judicial Complex and some failures like Kanbani Sadh prison north of Baghdad. Why those failures? Why has there been so much lack of coordination, such a significant lack of coordination? And I would say it's because we've tried to rely on coordination in planning and structuring this reconstruction program rather than a unified integrated entity that is actually accountable, that actually had a plan at the outset that was executable, and that actually had authority to manage diverse reconstruction projects across the spectrum in Iraq. We didn't have that in 2003. We don't have that today. Yesterday's hearing on the Hill was met with a lot of shaking heads from the members because of their concern of the discontinuities between state and DOD's engagement in the transition. And again, that's a familiar theme. There have been a number of hearings about that discontinuity. And ultimately, it will need to be addressed, I believe, by serious meaningful permanent reform that takes us beyond the adhocracy that characterized how the reconstruction program was managed in Iraq and towards something more stable to use an apt term and something that is reliable and applicable in any context, be it as large as Iraq and Afghanistan, which I don't think we'll see again, but perhaps more along the lines of the 15 stabilization and reconstruction operations we've had since the 60s in places like Somalia and certainly Bosnia, the biggest one that we had prior to Iraq. The hard lessons that we pointed out last year begin with one I was alluding to, that security is a prerequisite to any successful large scale reconstruction operation. That seems axiomatic, but not evident in how we acted in Iraq in 2004 and 2005, trying to build the Nazaria water treatment system, a $300 million project state of the art in one of the most dangerous areas in Iraq, the South Central region, back in 2005. We also tried to bring a system that was not well tuned to the capacity of the people that it would serve, that was not shaped to suit the pipeline system that was there at the time. Thus, when it was turned on, finally completed in 2007, it was a bit of a disaster. Pipelines in the street just exploded because they couldn't take the pressure. And then when we visited the site back in 2008, it was operating at 20% because the Iraqis who were assigned to run it didn't know how.  So developing the capacity of the people and being sure that they're properly consulted and that the systems that we bring suit the situation is a second critical lesson, security, matching the capacity, ensuring that soft programs are as emphasized from the outset as hard infrastructure. That certainly wasn't the case in the initial Iraq Relief and Reconstruction Enterprise. When Ambassador Negra Ponte came in, he shifted the emphasis, but it meant the canceling of hundreds of projects and the moving of money around that caused delays and waste that we've seen in Iraq. The most significant lesson, though, from Iraq is the need to develop, as I said at the outset, a single entity within our government that has the duty, the authorization, the appropriation, the responsibility for planning and executing contingency relief and reconstruction operations and being accountable for them. In June of 2004, the system that was adopted in National Security Presidential Directive 36 was an ad hoc system that created succeeding other ad hoc entities, the Iraq Reconstruction Management Office. Some of you remember that, perhaps served in it, the Project and Contracting Office. The first one, ERMO, was within the State Department. The second one was within the Department of Defense, but they both were tasked with managing and overseeing the reconstruction program. And what happened was a certain rivalry and resentment developed between the two of them. Policy with ERMO, money with PCO, state, DOD. It didn't work well. There were things that the ambassador wanted that simply didn't get executed on the DOD side, because PCO reported the Secretary of the Army. It was a DOD-driven fund source, the Iraq Relief and Reconstruction Fund. Alongside it came the Commanders Emerging Response Program, another $3.5 billion. And the state was over here trying to connect. And so over time, they tried to wire up and develop integration. But did it work very well? No. It's building the airplane in flight and with the pilots changing along the way. That obviously caused a lot of waste and created vulnerabilities to fraud. And we continue to uncover those cases. Significant cases just this year in the tens of millions that we were investigating and that DOJ is pursuing. In the handout that some of you, I hope you have, there's a line diagram that I think is exhibit A for why we need the kind of reform of which I'm speaking today. It's the management structure for Iraq Reconstruction back in 2004. And if my verbal description doesn't capture it, that visual will. What I have proposed in applying hard lessons and what the Hill is really, frankly, gaining interest in is something obviously much more streamlined than that, something much more defined. The US Office for Contingency Operations would have the responsibility in theater for contingency relief and reconstruction operations. It would not be a new layer or a development or implementation of a level of bureaucracy that would interfere with either defense or diplomacy. I think that's one of the criticisms and one we have to take on clearly. It would not be a layer because it would bring together the elements that are already out there that aren't integrated, that aren't operating effectively together, and give them a leader, and give them a funding stream, give them a statute, an authorization that clearly delineates what it is they're supposed to do. It would be somewhat like FEMA in that the president would declare the contingency underway, and that would create the jurisdiction of USOCO. And then at the end of the contingency, it would be declared over. And so there would not be, as some of the State Department have feared, this continuing presence of USOCO interfering with diplomatic endeavors. And it would not interfere with defense operations on the ground. Generals would be in charge of combat operations, all security issues. And it would not turn into a longer term development. So it's not development. It's not defense. It's not diplomacy. It's what I call the fourth D. And it is a unique aspect, a unique element, for protecting our national security interests abroad, and one that we're not well structured to do. And the consequences, as I've said, still evident even yesterday on Capitol Hill in talking about who's going to be in charge of what in the course of the transition. The reality is that the administration, specifically Department of State, USAID, and Department of Defense, don't embrace USOCO yet. But they do agree with the problem, as we've diagnosed it, that there has been a complete discontinuity in the oversight of funds, that there aren't enough personnel with expertise trained and ready to go to carry out contingency relief and reconstruction operations. That there has not been an IT system that can keep track of what we've even built. Something as simple as that, one of our first audits identified that problem. And the Iraq Reconstruction Management System was developed. It filled a gap. That's not, again, not the way you're supposed to do this. And it was able to account for 70% of what we built. But imagine that. 30% we don't know where or what or how it was done. And that is a core weakness that's certainly unacceptable, especially when you're spending $50 billion in taxpayer money. Not to mention another 20 in Iraqi money. The Development Fund for Iraq, the United States, has also had responsibility to varying degrees over the last six years. The story there, as a recent audit of ours, indicated is not any better with respect to oversight and management of that reconstruction money. So there are core weaknesses. We know them. You know them. There are the evidences here in hard lessons. What do we do with that? And what does the Congress do that? What does the State Department and Department of Defense, the leaders in these operations do with that? Well, they are moving forward with reforms, but they're not integrated. That's my concern. And it will perpetuate the same kinds of problems that we've seen in the past. The reforms that are in place include the creation of something called SCRS, the State Department's Coordinator for Reconstruction and Stabilization. It is more of a personnel shop. It has pulled together a couple of hundred of experts who are being trained to carry out overseas contingency operations. But are they really being used in that area? The answer is no, not sufficiently. And more to the point, even that program suffers from lack of integration. There's about a third at the State Department, a third at USADE, and a third at the Department of Justice. And they are sort of independent operating entities as well. How many of SCRS individuals are in Iraq? None. How many are in Afghanistan? A handful have been there. How many in Haiti? A handful. So it's not for lack of desire, I think, but it's because of the weak structure. I mean, these individuals have been trained, but they don't have any program authority. They don't have any operational capacity for the necessary funding to get out and do these missions. And as a result, it looks like a tactical USADE enterprise. There's some in Liberia and Peru and Mexico and Bangladesh. That's not supporting a stabilization and reconstruction operation, per se. But it's an important resource. And I would say, bring that personnel body together under one mission, under one leader, USOCO. And then you have the core for beginning a real new approach to contingency relief and reconstruction operations. That's one piece. I think another backbone, or perhaps the backbone for this would be the military civil affairs reservists. In fact, they have played a huge role in Iraq and Afghanistan, most of them deploying several times, but not in any coordinated fashion as part of a stabilization and reconstruction operation. Carried out the DOD mission, but then also been plugged in on a bit of an ad hoc basis in both Iraq and Afghanistan. There is a better way to do that, and that's to bring them within one team, with one leader, integrated with the civilians, the SCRS, and achieve a true civil military operational capability. You've heard the phrase, civilian surge over and over again. I'm afraid it's mostly just that, a phrase. It's not part of an integrated effort to carry out a coordinated stabilization and reconstruction operation. It's a goal. It's a good vision. But the structure is not there. And I think USOCO could be it. One promising step, I think, towards this kind of integration is in the works. Secretary Gates wrote a memo to Secretary Clinton last December proposing joint funding, where both departments would approve, in the security sector, the use of a significant pot of money to address security issues, police training, presumably in other matters, in stabilization and reconstruction operations. I think that's the first step. But again, it's just the funding piece. It doesn't bring together the personnel piece, or the oversight piece, or the planning piece, or the operational piece. The planning is still done through the interagency management system, in which DOD has a fairly limited role. And I think that that system needs to be revised. It's NSC run. It's a coordinated set of staff meetings. But operationally, it doesn't connect well to what's happening on the ground in either Iraq or Afghanistan. So in sum, I think the time is ripe. This is a golden moment, sort of like 1986 at the Pentagon when Goldwater Nichols changed the way DOD fights wars by developing jointness. And jointness integration, those are the watchwords that I think need to characterize whatever reform moves forward. You call it Yusoko, call it whatever, but it needs to bring together incentives, capacities, resources, and authorities into one place so that for the life of a stabilization and reconstruction operation, we know who's in charge. The wartime contracting commission had a hearing in March and brought senior representatives from DOD, USAID, and state, and asked that question. Who's in charge of the Afghanistan reconstruction program? They weren't able to get a good answer. That ought to be an easy answer. That ought to be something that you know well before the first boot sets foot on foreign soil as part of a stabilization operation. And until the administration and the Congress find a solution, I'm afraid we're going to continue to have hearings like the one we had yesterday, wherein the Congress goes away, frustrated, feeling that the lack of integration is just part and parcel of how we carry out these operations. So we'll continue, let me just close by saying that I think there is strong interest, especially in the House, for implementing something like what I've described today. Congressman Carnahan, Chairman Skelton, Chairman Dix have all indicated interest in pushing the debate forward through a bill. And so I don't think it'll be in this Congress but perhaps at the beginning of the next one we may see some meaningful action that will drive this debate and create the possibility for a solution to solving and applying this hardest lesson from Iraq. So thank you for listening and I look forward to your questions and thank you, Tony, for having me. Appreciate it. So I'm going to take the moderator's prerogative and ask you a question before I open things up. Generally, you focused on the need for effective leadership and organization. Let me ask you about two problems that I think most of us who have been in the field have seen continuously now over nine years in two wars. One is that people talk about integrated civil military plans but when you actually read the plan there is a military plan and there is a state of civil concepts which do not reflect in either war any meaningful integration within state or even AID. And it goes on and on and we keep hearing about it changing but it never does. The second thing is we've been at war for nine years and we are still measuring effectiveness largely in terms of what we spent. In Iraq's case there was once a State Department maturity model, it was followed by a State Department stability model and the department has no model. Either an AID or a state for measuring basically what it is doing internally. How do, is that something you can change organizationally or is it simply a basic problem in core competence within the US government? I think as was discussed yesterday at the hearing by a number of members that what was asked of the State Department in Iraq and in Afghanistan was something beyond its core competencies, beyond its prevailing culture. And what that was is overseeing and managing a complex reconstruction program in an unstable environment. That has not been a traditional role for the State Department nor has it been a traditional role for the Defense Department. Both departments have undergone significant evolutions in response to what was encountered in Iraq but because of the Defense Department's really robust planning culture, its response was I think more effective. DOD Directive 3000.05, the Stabilization and Reconstruction Directive that Secretary Rumsfeld signed over five years ago, I think instituted the most significant evolution at the Pentagon in modern times, other than Goldwater Nichols. And it has developed a capacity to do rebuilding and to do peacekeeping of sorts, to perish the word but it is what's been going on to do some nation building in Iraq and Afghanistan. But it's not, as Secretary Gates has said, a core competency or a core mission of the Department of Defense. And he has said he would like to see the State Department resourced and usaged strengthened. But those are long-term plans and those are large requests. It's more than just money. It's about where does this mission fit and who's gonna manage it. And because it's not neither Defense and neither diplomacy nor is it development, it doesn't fit neatly with any existing department. If you place it at USAID, as some have suggested or place it exclusively within DOD, then those particular cultures are going to shape the mission in a way that perhaps deprives it of other inputs that it needs. And that's why I propose USOCO, which would report to both Secretary of State and Secretary of Defense like I do. ECA during the Marshall Plan reported to two secretaries as well. As well, and Paul Hoffman was able to make that work. Back then I think this could work. But I think the long answer to your question to cut to the short conclusion is that the State Department has not had this as a core competency. It's not part of the traditional culture and that to assign exclusively stabilization reconstruction operation mission to them when it's a fundamental civil military mission would not solve the problem. Ladies and gentlemen, let me open things up generally for questions. Let me ask a couple of favors. First, please wait for the microphone. Second, please when you begin, let us know who you are and where you're from. And finally, if the question ended with a question mark and was relatively short, it would probably allow everybody to ask questions during the course of Stuart's presentation. So let me open things up. Who'd like to begin, please. You in the second row, just wait for the mic if you don't have it. Sir George Nuggleson with Strathcorp. Last year at a major conference in the National Press Club, General Tony Zinni was out of it about it's not gonna be fixed. State Department doesn't have the initiative. State Department doesn't have the attitude. By default, the military is gonna have to do the job. They need to be given the resources and given the task. Along the same lines you talked about with the military coming out of Iraq, the military gonna be coming out of Afghanistan with the large presence of State Department and other organizations. Who's gonna support the security, logistics, force protection and communication support? A very tough question. The State Department is asked for 6.3 billion for next year. It got a chunk of that already in the supplemental including 725 million for security. Deputy Secretary Liu, now at OMB. Testified in support of that request that it was a quarter of what he thought they would need. So talking about almost 3 billion just to do security which is about half of their money requested for FY 2011. Is that enough? I don't know. We just don't know what the security situation is going to be. What we do know is the backdrop that the military has provided for movements across the country is going away. It is significantly gone for that matter. It wasn't hard to catch a helicopter to where you needed to go for the last six years. That's changed. And the security situation this summer in Iraq as we saw in Fallujah just a few days ago, very problematic of great concern and certainly raising bad memories about what happened in 2006 after a six month governance gap. Remember there were the last elections were in December 2005. The Maliki government didn't actually fully form until the first week of June of 2006.  That's not quite what's happening now but by any other standard Iraq is a place that would be unsafe for US civilians to operate. We're just adjusted to the conditions there. To answer your question, who's going to provide it? Well, the State Department's going to have to do it. Is three billion going to be enough? They can be able to do their job. And that was an issue that came up yesterday at the hearing as well. Whether civilians are actually going to be able to engage with Iraqis at the provincial level is an open question because of the continuing security concerns. In the back row there, the jubilant. Bill Courtney, retired from the State Department. The administration has been working on a long anticipated PSD-7 on assistance and a quadranial diplomacy and development review. Those would seem to be vehicles to consider the ideas that you have proposed. Are those ideas being considered? Yes, and we met with Ann Marie Slaughter and Secretary Lew and as I mentioned during my talk, they agreed with our diagnosis of sort of the 10 problems that exist regarding the management of stabilization and reconstruction operations. They think USOC is an interesting idea but certainly have not embraced it. And I'm not surprised at that. And as I pointed out in applying hard lessons, to a certain extent this is a turf issue. It's a money issue and it's difficult to find interagency agreement when those issues are at the forefront. I think as with Goldwater Nichols, a solution will have to come from the Congress. Hi, I'm Ellen Lapson from the Stimson Center. As Iraq offices across the system sort of move back to being sort of under regional offices so they're no longer reporting directly to the top, I wonder about the status of this special IG and whether there's any plan eventually to treat Iraq like other countries with respect to sort of under the authority of the normal State Department IG process and whether the mission of your office is essentially that historic period, that huge reconstruction funding that had so many problems that you're so well studied now or whether are you currently serving as a current IG for ongoing activities in Iraq? Yes, well, first of all, first part of your question, we have a closure and transition plan that's underway and SIGIR will conclude by the end of 2012. So lots of work will be still be handed off, especially on the investigative front. We have hundreds of new cases in the pipeline as a result of our forensic auditing review. But other agencies will take those over in 18 months or so. But yes, there's still significant money, 6.3 billion under our Aegis coming into Iraq according to our statutory authority. The money that is appropriated to support the Iraq program is within our jurisdiction. And so we have some very interesting audits coming up in this quarter. For instance, a review of the National Democratic Institutes Management of Grants following our IRI review from this last quarter. We have a review of the special operations, the investment in the Iraqi special operations forces. And we have a kind of closeout audit of how the money that was seized during the invasion, that 1.5 billion, what happened to all of that? How was it used? Was it stewarded properly? So just a good cross-section of the kind of work and the diverse jurisdiction that we have. As part of our last phase, this last 18 months, I've also concluded our inspections regime and began an evaluations regime. And so we're going to, over the next six quarters, issue an evaluation every quarter, looking at big picture issues, outcomes. And our first one will be out at the end of October, an interesting one on big infrastructure projects, specifically looking at the Nazaree water treatment system, the single largest project that we did, 300 million, and Erbil, which was also a top five project. One in Kurdistan, one in the South. And so it'll be an interesting contrast. We've done surveys of the population, trying to get at what effect, what impact did these significant projects have upon the Iraqis themselves and served by them, and have some, I think, some fascinating conclusions for everyone to see when it comes out. Sir, if I may just follow up on Ellen's question. The State Department first had what was called a maturity model, which was more a public relations effort, to prove we had developed Iraq and could leave. Then when that was rejected, they went to a stability model, which was supposed to actually measure and evaluate effectiveness, which is not the function of the State Department IG normally. As I understand it, that stability model essentially is in limbo, which means neither state nor AID will have an internal mechanism for measuring the effectiveness of its aid in civil programs. Is that where we stand at the moment? I think a good answer is found in the reports of the USAID IG's reviews of the CAP, the program, very large civil assistance program, and a number of other grant programs that have spent billions to something called TATWIR in Iraq. And the IG's point is exactly the one you're alluding to, that the emphasis of those programs has been on outputs rather than outcomes, and that the discerning effects, that's sort of the purpose of this aid program, to have a positive effect. Have we had that positive effect? Can we even find out whether we've had that positive effect? I'm afraid those remain question marks. And I think the USAID IG's made, leveled some fair criticism on that front. The lady in the second room. Hi, I'm Alex Boucher, I'm with the Center for Complex Operations at the National Defense University. Are you going to be doing any work on PRTs as part of the upcoming work you just mentioned? We've done a variety of audits of the PRT program, it's winding down, so we don't have anything specific to PRTs on the audit front. We have related issues that PRTs touch that we'll be looking at specifically the QRF program. Quick turnaround projects, sort of the State Department analog to SERP, mostly overseen by PRTs. And we'll have an audit on that either in October or in January. The PRT program is devolving away, as you know, into enduring presence posts. I think there are 14 now, eventually we'll devolve into four enduring presence posts in consulates. The lady in the back there. Nancy Berg from the Project on National Security Reform. I wondered whether it's looking like the Hill is going to be having some ways of looking at this in an integrated fashion. I don't know what your arrangements have been in your current position, but I'm wondering if there's any kind of change that's needed up there to oversee something like this that I think is a wonderful idea, your idea. And I'm also wondering about the budgeting, whether there would be any hope of having some kind of an integrated budget to fund this or whether it has to continue to be stovepiked. On the budget front, I think the step that Secretary Gates and Secretary Clinton are taking on the dual approval for security spending is a good model to expand to a full stabilization and reconstruction operation approach, similar to what DFID does in the United Kingdom using conflict pools. And somewhat analogous to sort of Stafford Act money, you know, how FEMA gets access to its money once a disaster is declared through the Stafford Act. And your point's well taken on the stovepiping, I guess, that you're referring to regarding committee oversight. It, this does merge jurisdictions or bring them into conflict depending on your perspective and whether and where that this reform would unfold, be it in the Foreign Affairs or Armed Services Committee is a question for the members to figure out, but Chairman Skelton and Congressman Carnahan, Chairman of the House Armed Services and a senior member of the House Foreign Affairs are in sync on this point. And Chairman Dix agrees as well, but each of them are struggling with that very point where it fits. So the young lady in the second row. Hi, Cameron Middleton with Barrico Technologies. I just had a question about your comment on IT solutions and sort of jumping off from where we are with the QDDR versus Yusoko debate. Do you think in some level, while this debate continues, it would be helpful for us to push harder for common civil military operating solutions to inject those lessons learned into certain decision makers now to combine what Sidney and Durer and Tabulae, excuse me for asking a question, are already trying to do to help make more informed decision makers by the people who are really at the grassroots levels? Yes, absolutely. If something like Yusoko doesn't happen, then something like what you're describing has to happen. In other words, addressing the 10 problems that are out there that are problems of discontinuity and conflict and weak coordination. If we can't get to integration, the coordination has to improve in IT. And I didn't mention, especially contracting. I mean, the FAR is the governing mechanism, but each agency has its own version of the FAR operative on the ground. And in our second lessons learned report from 2006 on contracting, we recommended the development of a contingency FAR, one that all agencies would use in a stabilization and reconstruction operation that met with pretty much uniform ascent as an idea, but it hasn't been implemented yet. And thus the contracting problems that plagued, I think the early Iraq program still don't what's going on in Afghanistan. And at CSIS and formerly for more years than I care to remember at AID. I was wondering if I could ask you to comment on three themes. The first is your very first point about security being a necessary precondition for reconstruction. Second, the PRT issue. And thirdly, the outcomes question that Tony is asking and that is that we're talking about environments that don't admit of any of these things. And there are conflicting principles that govern these reconstruction efforts in these kinds of insecure military type operations where military needs certain kinds of things, the civilian people need other kinds of things, and the two never quite get joined up. And I wondered if you had any larger comments about how this can work, how can a reconstruction program work, forgetting the organization and the coordination or integration, can you do this kind of thing in an environment in which you have such different tensions between the principles guiding, in effect, the overall effort? Yes, I think you're talking about the tension inherent in coin for the military's approach to stabilizing a hostile environment. And then the stabilization of reconstruction operation, sort of the civil side of that coin, no pun intended. And I think that's going to require planning, joint planning ahead of time. It's not something that you're going to work out on the ground while, as a brigade commander, spends $10 million at SERP in a PRT leader's zone without the knowledge of that PRT leader and then you have a mayor or a provincial council member come knocking on his door saying, when are you going to finish my courthouse? Actually, a real story from Hila that I encountered in one of our PRT reviews. And that's unacceptable, that sort of discontinuity. Even though there was no ill will, it's a function on anyone's part in that discontinuity. There needs to be visibility and systems oversight that avoids creating the confusion on the ground for, in this case, the Iraqis in Hila about what the United States was providing. How do you do that? You have to have a level of integrated planning in place before you get to Hila, before a brigade commander rotates in and is lobbied by the provincial council member to do X, the same thing he lobbied the previous brigade commander on and maybe didn't get, without talking to the PRT leader who didn't have the money and didn't want to do it for whatever reason. There are a lot of moving parts, and it's hard, you're right. I mean, the premise of your question is how do you reconcile these differing departmental approaches and strategies? And I think that's why it requires something new. I think coordination alone hasn't worked sufficiently well. Let me pick up on that. That talks about our internal problems. And in Iraq, your experience was dominated largely by the USAID effort, although you did report on international efforts. When you look at Afghanistan, a very large number of the PRTs are foreign. And you have a situation, basically, where many of the foreign country aid missions do not even talk to their own military, much less to the Afghan government or anything else, and where Yunama, in theory, is in charge of coordinating the aid activity, but has never issued a report on any aspect of aid activity and has never been involved in any effort to audit any aspect of UN operations after nine years of war. If we solve the problem for the US side and we are involved in international coalitions in the future, how do we deal with the reality of the international side? Well, when I briefed the Yusoko concept to Stefan de Mistura when he was head of UNAMI, I think he's in Afghanistan now, his response was basically hallelujah. He said, if this gets before the Congress, call me. I'll come testify in support of it because this is an engagement, an approach that the UN would like to see within the US stabilization reconstruction operations doctrine. Obviously, your point is they're not doing it very well themselves, but I think that Yusoko has enormous potential for generating better planning, better integration, not just domestically but internationally by having a well-developed doctrine, a well-developed planning scheme, sufficient appropriations to support the resources necessary to execute. And one that also, I think, is policy-wise, wisely framed to send a prudent message, so to speak. I mean, the danger here is building or being perceived as building a colonial office of sorts. And obviously, we've got to air far towards the middle. If the colonial is over here and laissez-faire is over here, Yusoko fits somewhere in here. And that's going to require international engagement and explanation and clarity in doctrine to avert misperceptions of that sort. There are three people who have their hands up. Let me ask each of you to just raise the question, sir, if you don't mind. I don't know what your time is. I'm fine. Please, first, the gentleman in the third row there. I'm Will Embry, former Foreign Service Officer, now working for Dynacorp International. I agree with you completely that the only way that Yusoko is going to happen is through Congress. You know, you need a champion. You need a Goldwater and a Nichols. It doesn't sound to me like you found those champions yet. Is that true? Well, Chairman Skelton is a pretty good champion. Mel Carnahan is a very smart guy. And I think fourth on the foreign affairs. But do I don't, you know, Chairman Berman's staff is very intrigued and interested. On the Senate side, we've got a wide range of interests, but we're not as close to a potential bill on that side. I think it will probably start in the House. I mean, there are Congresswoman Granger, Congresswoman Rothman, Congresswoman Moran, a variety of members have expressed strong interests in pushing forward a solution. They are pretty much in universal agreement about the diagnosis of the problem and of the need of some reform. And then I would say interested in Yusoko as a possibility for that. Whatever you want to call it, I'm fine with. It's just there needs to be, as is the title of this talk, an application of lessons learned. Otherwise, it's history. It's not productively applied to how we're going to carry out stabilization operations in the future. And we will. This is, I think, the leading edge of protecting our national security interests abroad in the modern age. The gentleman in the center there. Kai, it's from CNN. Mr. Bowen, thanks so much for this, and thanks for all your years of hard work. Can we just go back one more time to the hearing yesterday and the earlier question. Is the State Department prepared to lead once that military withdrawal deadline occurs? And are you suggesting that state really has to make some hard decisions about scaling back its plans? And what do you think about the alternative argument that they ought to beef up dramatically increase the number of contractors that they'll have on board for security, transportation, et cetera? As was discussed at the hearing yesterday, and as I presented, there's not just one answer to that because there are so many aspects to the question. But the context within which I presented my testimony, I think, is highly relevant. And that is the Iraq program is evolving from a stabilization and reconstruction operation mission to a more regularized foreign aid approach. We're not there yet. $6.3 billion is a huge sums, even in Iraq reconstruction terms, where we spent $53 billion already. But as has been the case throughout the experience in Iraq, the overarching question is security. Will the environment be stable enough to carry out the assistance missions that the State Department and USAID wants to? And as I said earlier, the lack of a coherent and operating leadership within the government, the lack of a prime minister, most specifically, casts a pall over all other questions today in Iraq and raises concerns that the attacks, like we've seen in Fallujah and that we've seen in Baghdad and Anbar and in Diyalla in Mosul over the last six weeks, will continue to increase in frequency and destructiveness. And that's called losing ground. And I think we're still moving forward in Iraq, but not at the pace necessary to secure success. Well, yes, simply because it is the precondition for State Department civilian employees to execute their job. As I said, the military has provided this somewhat invisible backdrop that has enabled movement and engagement with Iraqi provincial councils all across the country. That capacity will now move to contract security. And whether it will be sufficient will be conditions-based. And I have real concerns about that. I think we had a last question on the back over there. Thank you so much. Good morning. My name is Allison Johnson. I'm a former USAID implementer and now work for Northrop Grumman Corporation, building a smart power initiative around supplying contractors for the Department of State, USAID, et cetera, in this field of reconstruction. And I'd like to return to the Inspector General report around the $53 billion that you've been studying to really ask some hard questions about the results, to see if you could provide for the American people a sense of where we are able to stand in the results that were generated. Did you have some kind of measurement that X of the billion, X of the $53 billion generated numbers of jobs or X number of facilities? And then can you compare the numbers for the Department of Defense where the Inspector General referred to about $10 billion this year that they couldn't account for for money spent within the region to see if you had any similar statistics so the American people can have a clear sense of where our tax dollars have gone. Thank you so much. That second point is our recent audit of the development fund for Iraq. Oddly, $9 billion again. Some of you might remember almost they're now urban legend, but the missing $9 billion from our January 2005 audit regarding the CPA's management of funds transferred to the interim government of Iraq for their administration. What we found there was not that it was lost or stolen, but that the accountability measures were very, very weak, that the CPA didn't follow its own rules regarding contracting. And other than a spreadsheet of showing transfers, there was very little to show for results, your first point, about how that money was used. This latest report, sad to say, is an example of a lesson not learned. What happened after the CPA went away, the coalition provisional authority. The government of Iraq agreed that the United States should continue to manage significant billions of dollars in development fund for Iraq for projects and programs, mostly security. And it was the Department of Defense that had charge of that, turns out to be another $9 billion. And it turns out that the required rules for accounting for that money were not followed by DOD. And I'm most concerned about $2.6 billion of that amount that they just didn't follow the rules, but we weren't able to get any documentation for it at all. And so we're still following up. Those are open findings, open recommendations requiring reconciliation of the use of that money. Results, that's why I've created a valuations department within my office. And we're going to be generating every quarter for the next 18 months results-oriented analysis that says, what did the Iraqis get? And what effect did it have upon their living conditions? It's a very important question that needs to be answered before we're done. So I think we have one more question in the back. Yes? Greta Holtz from State. Hi, Greta. In your vision for Yusoko, do you have a vision for weaving in the host government in the planning and looking at what you're doing overseas? I mean, one of the things we learned in Iraq was that the Iraqis weren't in on it from the beginning. It was not going to last. It wasn't going to work. They didn't want it. We wanted it more than they did. So in this model where you have the, I guess, Yusoko organization overseas, is there a vision for having the host government, the central government, as well as perhaps provincial input from the beginning? Yes, absolutely. Greta just got back from managing the PRT program in Iraq for the last year and did a great job over there. It was a pleasure working with you. Yeah, it's a core lesson from the Iraq experience is, and you lived it. You heard it from Iraqis. If you work in Iraq and you talk about the reconstruction program, they come up and say, well, we didn't want most of this, or we didn't want that project. Kanbanesad Prison, $40 million in the desert, wasted north of Baghdad. And the Deputy Minister of Justice, when we interviewed him, said, why'd you build this? We didn't want it. And I don't know what the exact ground truth is on that, because people talk and say what they want late in the game. But nevertheless, what is absolutely true is the need that part of the doctrine of Yusoko, part of the doctrine of stabilization reconstruction operations, has to be that the program that's developed and implemented must fundamentally be shaped by what the coast country's capacities are, first and foremost. In many cases, the Iraqis wanted state of the art. And in a number of cases, we gave it to them. They weren't able to operate it. So you have to build to what they can do. And then rather, frankly, the Uncle Sugar Effect was in full force for a long time over there. They wanted to pay for everything. This is the most generous program in US history until Afghanistan passes it next year. But consultation means intelligent consultation. I guess that's a good corollary. Find out what they want and be sure it's really what they need. And somewhere between wants and needs get to a program that's smart and doable. Do you want to go on, Stuart? Sure, we can continue till we run out. Thank you for taking my question, sir. I'm Ray Denunzi. I'm with the Inspector General for Afghanistan Reconstruction. And I'm very interested in hearing your comment with regard. And this is a follow-on to Greta's question. You spoke about sustainability and capacity and it being a lesson that hasn't been applied all the way back to Bosnia. Obviously, we're facing that in Afghanistan as well. And I'm very interested in your comment with regard to a current consideration of the administration of putting more of the US reconstruction money into the hands of the Afghans and ministry levels and allowing them to make the decisions on what the infrastructure needs are that they have and allowing them to actually marshal those resources to the best of their own capacity. Is that a solution to this problem? Or is that fraught with more issues of accountability for US reconstruction money? Well, as you know and I know and we live, it's the latter. The central prerequisite to that sort of initiative is effective anti-corruption capacities within the host government. It's not the case in Iraq today. Corruption is still a huge issue. And certainly not in Afghanistan, as your reports have shown. And so I think it's fair to say that would be a premature implementation of policy. It'd be nice to go that way. But I think, frankly, that missing $9 billion audit that I referred to earlier, the one from 2005, is an example of throwing money over the fence too soon. Not just money, but billions into the hands of a government that doesn't have the capacity to police itself nor the culture to root out corruption. And I'm not naive enough to think that we're going to change the Bakshi culture. But what we have to be sensitive to is, one, these are taxpayer dollars. So we have a level of stewardship that transcends sort of the policy apparatus in place over there. We have to be able to assure the taxpayers that that money is going to be used properly. And two, we have to then get to a point where grand corruption rather than petty corruption is stamped out.  It's a commission process, frankly, on the ground. But the stealing of hundreds of millions of dollars, as has happened in Iraq and I think in Afghanistan as well, means that we have to be extremely cautious with the taxpayers' money, especially in an era of $15 trillion debt and a recession. Yes? One more in the back. I'm Nina Seraphino with the Congressional Research Service. Forgive me. I don't remember the name of this organization, but in Iraq, under DOD, there is an office that looks into business affairs. And it's being proposed at the same kind of office for Afghanistan. The Task Force for Business Stabilization Operations. There you go. Thank you very much. I'm wondering how you think that worked and whether that's an appropriate activity for DOD? I know General Petraeus is very high on it and believes that it achieved some good outcomes in Iraq. I think there was lots of engagement at the actual, at least from our reporting. And we've reported on TFBSO and our quarterly reports, so if you want to see the charts, you can go to our latest quarterly. But the execution of contracts, which I guess is the metric, since it's really not a business oversight, it's a business stimulation program. The execution of contracts vis-à-vis the level of engagements is a relatively small percentage. I think trying to stand up a democracy, get an economy going, and stabilizing civil society is a multifaceted effort that requires innovation. And I think TFBSO is an innovative, if at the outset, somewhat disruptive effort. I know that within the embassy there were views that that was State Department, within the State Department, so you're just not the DODs. And I think that's one of the issues that Yusoko would address. This is the whole, this is the rub of this entire matter, that these are civil military operations, but these departments are quite different cultures and they haven't traditionally operated quite so closely, ever before, as they have in Afghanistan. And in Iraq, maybe Cords in Vietnam might be a good example of similar engagement. But this seems to be certainly the rule of modern engagement, of protecting our national security interests abroad. And I think we have to thus find something new to address how these interests are effectively integrated, then operationalized. And it begins with planning, and it begins with funding, it begins with authorization, and this sort of planning and authorization can certainly include something like TFBSO within it, rather than having it as some in the State Department viewed it forced upon them. Let me make this the last question, the gentleman in the center, second row. Thank you. Keith Henderson with American University. Pleasure to meet you. Thank you. I teach a course called Global Corruption in the Rule of Law, and I'd like to invite you out to speak to my class sometime. Happy to. I wish you luck on your integrated planning and oversight mission. I have my doubts after having worked in this field for a long time. I work on anti-corruption programs as well. But I'm getting down into the weeds a little bit, but I'm just wondering, especially as a preventive measure, I know you specialize in forensic audits, and what do you see the role, what kind of whistleblower system does Segear have, and what kind of whistleblower system would work in a place like Iraq and Afghanistan? Could that have an impact on your mission if it were improved? Well, we run a hotline, and the hotline has been widely publicized since the inception of the organization, and we've gotten many, many leads from that hotline. The hotline is an all-comers approach, and so over half of those actually don't fit into our jurisdiction or fit into a case. But we have had other whistleblowers come in. Matter of fact, probably our biggest single case, the Stein-Bloom conspiracy in Hilla back in 2004, we put nine people in prison from that about $100 million crime total, came from a whistleblower, walking into our office in the Republican Palace along the Tigris in Baghdad. And actually, the story's in hard lessons. Chapter 21, if you want to read about Stein-Bloom, it's an interesting insight into how corruption happens in a war zone. But whistleblowers, thus, are important to IGs carrying out their mission. And it's been difficult in Iraq because Iraq's a dangerous place, and whistleblowers are afraid. And as I've heard just through the grapevine, people watch our door and keep account of who's going near it. And so it's a fearful place, not our door, but the environment. Because there's still a lot of guns out there. Thank you very much. I thank that all of us appreciate the time, and certainly the depth of information. And ladies and gentlemen, may I? Great. Thank you. Thank you, Tony. And thanks to all of you all for coming out this morning.


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In general, finding the chromatic number of an arbitrary graph is difficult. However, we can try to find upper and lower bounds on the number. Clearly, if the graph has n vertices, the chromatic number must be less than or equal to n. This gives us an upper bound. Can we find a lower bound? Suppose we can find a k coloring of g. Then g is k part height with part vi consisting of all vertices with color i. Note that the subgraph induced by vi is totally disconnected. And this suggests the following definition. A set of points in g is independent if the induced subgraph is totally disconnected. The point independence number is the size of the largest independent set in our graph. So let's try to find an independent set. So again, what we're looking for is some set of vertices that are not connected. We'll talk a little bit later about how you might find independent sets in a graph. But for now, let's set some boundaries. Suppose a graph with n vertices has chromatic number chi g and independence number beta zero. The n vertices of the graph can be partitioned into chi g independent sets. And since each set can have at most beta zero vertices, then the number of vertices must be less than the product of the independence number and the chromatic number. And consequently, we have a lower bound for the chromatic number. So now suppose s is the independent set of beta zero points. Since a subgraph can't require more colors than the graph, the chromatic number of g minus s must be less than or equal to the chromatic number of g itself. And if we give the vertices of s a color different from any in the subgraph g minus s, we'll obtain a coloring of g. And so the chromatic number of g minus s plus one is greater than or equal to the chromatic number of the graph itself. And consequently, but since g minus s has n minus beta zero points, we know the chromatic number must be less than or equal to the number of points. And so, and this gives us an upper bound on a chromatic number. For example, let's find a bound on the chromatic number. So we've already found an independent set with six vertices. So we know the independence number has to be greater than or equal to six. Unfortunately, this place is an upper bound on our lower bound, which won't do us any good. Even if the table and the vase are both higher than the floor, you don't know if the table is higher than the vase or otherwise. On the other hand, our upper bound will be, which gives us an upper bound on the chromatic number. Intuitively, we'd expect the largest independent set to be only a small fraction of the total vertices. So in general, our upper bound will generally be very high. And so can we find a better upper bound? If you will. So let's think about that. Suppose we have a k coloring of a graph. Why would we need k colors? Since we want adjacent vertices to have different colors, one reason might be that there is a vertex with k minus one neighbors. If every neighbor was a different color, the vertex itself would have to be the k-th color. And this suggests that for any graph g, the chromatic number must be less than or equal to the greatest degree plus one. Well, let's prove that. First, we note that the chromatic number of the complete graph on n vertices is in fact the greatest degree plus one. So all we need to prove is that the chromatic number can't be even greater than this amount. So suppose we have a k coloring of g. Consider any vertex with color i. If j is not a color of an adjacent vertex, we can switch the color of v from i to j and still have a coloring. This is something that you should actually prove. So now suppose k is greater than the greatest degree plus one. Consider any vertex colored k. This vertex has at most delta g neighbors. So we can replace color k with some other color with i less than or equal to delta g plus one. Now, in case that's not obvious, remember, concrete never hurts. For example, suppose we have an eight coloring on g where the greatest degree is five and some vertex v uses color eight. Since the greatest degree is five, v has at most five neighbors using at most five different colors. So we can switch color eight to one of the first six colors. You should prove this. What this means is that we can always swap out that k-th color. So if we do this for all vertices colored k, we no longer need the k-th color and we obtain a k minus one coloring. Now, lather, rinse, repeat until k is not greater than delta g plus one. Consequently, every graph has a delta g plus one coloring. While that wasn't what we wanted to prove, remember it's the journey, not the destination, and we did find something useful. Now, to finish our journey, we note that if a graph has a k coloring, then the chromatic number has to be less than or equal to k. And so there's our theorem that any graph g has a chromatic number less than or equal to the greatest degree plus one.


Ond i Weithigodd yn y Jupyter, ynglyn weithi datblygonod landscape fel Brydd rôl y하세요? I'm slightly more, but not terribly many more. Okay, no, that's really good. So I won't ask you how many people have got a Bitcoin account. I certainly don't have one. The interesting thing about blockchain, and very much we heard this in the introduction, it's very much currently over-hyped, overstated, and often very confused topic. And since I've been working in the blockchain area, which is just since about last September, we've been with an IBM, we've really been taking a position of trying to make it real for business, to add business clarity to the discussion, and avoid technical gobbledygook, and really to focus on business networks, and permissioned, closed, and trusted business networks, which is, if you think about it, pretty diametrically opposite to the Bitcoin scenario. So my 10 minutes, I'm going to try and do it without hesitation, deviation or repetition, which is a bit of a joke, if any of you are familiar with that one, and I'm going to be talking about, while our points of view on blockchain, from an IBM point of view, I'm going to be talking about the benefits that accrue for the use of blockchain within a business network, and then end on three use cases, which I'll go through quickly. And again, sorry if I go through this, rattle through this, I will definitely be around and have more detailed discussions about this either at the end or offline as needed. So to understand IBM's point of view, we actually have to look at how businesses work today, and realising that businesses and governments never actually operate in isolation, they're all members of a business network, and the ownership of assets move across that business network in return for payments governed by contracts. And the assets can either be tangible, or they can be such as a house or a car, or they could be intangible such as a bond or a piece of intellectual property or a piece of digital music. But essentially, the way things operate today is each member of the business network keeps their own ledger, so they all have a separate ledger, which they update every time an asset moves into or out of their organisation. And this has been, well, it's been around since about the 13th century, I think it was invented by some monk. It's obviously well proven. However, it's pretty inefficient and it can be thrown to fraud and often results on piling cost on cost, particularly when you start putting regulators and auditors into the loop. So, if we look at a world where blockchain gets involved, now the blockchain architectures, as we heard in the introduction, gives the opportunity for the participants to share a ledger, which is updated every time a transaction occurs automatically by peer-to-peer replication. Now, this is all very well, but clearly if we have in a business network, we need to bring to bear privacy services, which makes sure that participants can only see the parts of the ledger that are relevant to them and no other parts. And also that all transactions that occur within the business network are secure, authenticated and verifiable. Our view of blockchain within a business network also includes the concept of a smart contract, which is basically the consequences of asset transfer, which is essentially encoded and executed automatically with the transaction in the blockchain. We also see that network participants must be able to agree the method of transaction validation, and because it's a closed and trusted network, this can be completely different to what we've seen emerge through the Bitcoin early examples. Now also, government oversight, compliance and audit can also co-exist in this business network, which actually makes those processes much more efficient and easier to implement. As I've mentioned earlier, blockchain is definitely very different from Bitcoin. Bitcoins clearly have been around for some time, and for those of you who are familiar, obviously we'll know that it's an anonymous cryptocurrency. The best way of looking at blockchain is like the underpinning plumbing. It's like the technology underneath Bitcoin, or you could imagine that Bitcoin's like the first use case for blockchain. But as I mentioned earlier, we're much more interested in applying this these days to business networks. So when we applied blockchain like this, we moved from a situation, as I mentioned earlier, that is inefficient, expensive, vulnerable and prone to error, to one where all the transactions are agreed and validated according to a method agreed by all the members of the business network. They can't be messed with once a transaction is committed to the blockchain. There's a digital fingerprint of the previous block in the current block, which means that you can't go back and mess with the blockchain once a transaction is committed into it. It's also final. There's a sense and agreed truth across the business network. So it eliminates things such as disputes on ownership or complexities in asset transfer. That's eliminated as a consequence of using blockchain. So the benefits that accrue are largely free-fold. First of all, this saves time of transaction. So transaction execution times can move from days to matter of minutes or almost to real time. It can also reduce costs through taking out beneficiaries and making things like audit and regulation much more simple. And it can also reduce the risk of cyber crime or cyber fraud or malicious attack in the business network. So those are the key benefits from blockchain. As I mentioned, I wanted to end with three case studies and I'm obviously going to rattle through these because of the time. I've chosen on purpose non-financial case studies because clearly, obviously the financial services sector is the early adopter of the technology without a doubt. But I think there are some really interesting use cases emerging in non-financial sector organisations. Let's start with supply chain or supply chain management. In short, cutting through that, it's basically knowing where your stuff is in the supply chain. Currently, members of the supply chain keep their own records about the assets that they transfer in and out of their organisation. Going all the way through the creation of raw materials all the way through to the consumer. This drives up cost, increases complexity and also gives you some regulatory headaches as you move forward. Now if we had a situation where every participant shared an agreed view of where the assets were across the supply chain in terms of the location and their ownership which was updated every time something changed, this would give you a much more efficient way of managing the supply chain. People would be sure where their stuff was. The whole system would be resilient to error and fraud and indeed cyber attack. So supply chain is the first interesting one. The second one is provenance in systems of value. Now complex systems such as aircraft, it's really quite difficult to track all the different components in the systems of systems that could go to provide an aircraft. So when you need to manufacture and recall due to a problem occurring it's usually quite broad. You have to recall quite a large amount of the fleet because it's so difficult to track these components and build up this chain of provenance. However, if we actually applied a blockchain to this use case we could actually make sure that all the components of the complex system were recorded on the blockchain and that there are no change of ownership or movement through the systems recorded as things change over time which could give much more efficient recalls and recalls much more down to individual subsystems and components. I mentioned aircraft but such prominent systems would also be applicable to things like high value art or jewellery or diamonds and things like that. The final use case that I'd like to go through is good evening for everyone this year. I got started, I hope you don't mind. The final use case that I'd like to go through is asset management. Now asset management is a really interesting topic and it started sometime in the 80s when there were problems with big things like oil rigs and stuff like that and organisations realised that they needed multidisciplinary non-co-located teams to efficiently manage complex assets such as an oil rig or a ship or an aircraft and the blockchain would basically give the capability of sharing all the characteristics of this asset through all the different member teams that are required to maintain that asset through its life cycle. Also this is where smart contracts could come in and that the smart contracts within the asset management blockchain could pre-encode and execute the conditions required to move the asset through its different stages in its life cycle. Now how does this result? It basically results in an improved risk posture for those people managing the asset. They can be much more sure of the information relating to the asset hence be more aggressive in their risk management techniques and also as I mentioned in the other use cases it could reduce costs and improve regulatory oversight in the business network. So those are the three use cases I'd just like to end with a few closing remarks if I may. We actually see open standards open source and open governance being very very important in blockchain fabrics and that's why we were a founder member and major code contributor to the Linux Foundation project the Hyperledger project that was announced just before Christmas. We see interoperability between blockchains as being key as we move forward and again that's why open standards comes in. The other thing to say about it is its technology is very early stage for gestation it's really really new stuff be very very sceptical about whether you've got a blockchain system going into production anytime soon. 2016 without a doubt is going to be the year of the pilot it's going to be when people do first projects, when they do business evaluations of the benefit of blockchain to learn about it to move things forward. So I think that's where we are right now I also think that cloud systems actually lend themselves very much very nicely to rapid prototyping and that's why we've put early releases of the Hyperledger code into our Bluemix cloud platform which people can just go in and play with essentially. Now we're without a doubt that blockchain will transform business and government over time we've spent a lot of time advising customers how to take the first steps towards those transformations but I think it will also help government and business work much more closely together in the future but we very strongly feel for educating oneself about blockchain gaining awareness piloting projects, more baby step projects and the time's not right for regulation yet. So right now it's all about learning and moving forward. Ladies and gentlemen those are my remarks very interested in taking any questions that you've got later thank you very much.