Speaker: If I can, not surprisingly, I would like to start on the topic of Iraq. It has been a bad couple of weeks and a couple of months there. The Al Qaeda link is in Iraq. It is threatening the take over of Fallujah. I want to ask your view in light of your time here, do you think Iraq at this stage is recoverable? Do you think a U.S. Force presence there, had the administration and Iraqi leadership managed to do that, would have made a measureable difference?

General Odierno: First, I don't know, if it is recoverable, how long it would take to recover it. 2010 or 2011, we really bought time and space for the Iraqi people and the government to move forward. Now the security and violence were at significant lows . However we always knew it could end, following the 2010 election, which was a very close election in Iraq, where Maliki's party, which was previously in power, came in a very close second. So as they went through the process of the parliamentary system while building the government to take over, there was hope that there would be great cooperation. We realized then that since it took 6-8 months to form the government, that there were going to be problems in forming the government. So what happened is although they had the time and space to continue because security was good to rebuild the economy and increase oil flow, really they were never able to reconcile between the different groups. So what you saw is the continuing mistrust of the political entities within Iraq.

As that mistrust grew, you saw other factions begin over time, after about a 2-year period, they started to take advantage of that governmental mistrust and exploit the situation, which then created more violence. Some say we came down too hard on the Sunnis, and they had to move more towards Iran. All of those are potential possibilities, but the bottom line is the government in place was not able to come together in order to represent all of the Iraqi people. When that did not happen, they then started to revert back to violence. What it will take is that the politicians to come back together. They have an election coming up this year. How that turns out will probably dictate how well they move forward in Iraq.

We do know that the oil exports have increased significantly. So economically they are actually doing very well. The violence now is driving them to separate each other. For us it is disappointing because we believe we had them in a place where they could move forward. I believe Iraq is in such a strategic place in the Middle East. Just look at it on the map. It is right in the center. It borders Iran, and it borders Kuwait; it borders Jordan; it borders Turkey; it borders Syria. It is in such a key place in the Middle East. I thought it was very important that we would have them move forward as a stable government that is friendly to the United States. They are still friendly towards the United States, but right now the instability in the country is very concerning to all involved.

Speaker: It sounds like you said the key is political agreement. How much of a difference would it make if there were a modest force?

General Odierno: The bottom line is I think it depends on how long you are willing to leave that force there. The security forces were capable and able to do what they needed to do. With political disagreement I am not sure how much it would matter, unless there is a significant amount of U.S. Forces, which was not going to happen. It was time for the Iraqis to take control of their own fate. It was time for them to provide the security. We had built the security force. They had the capability to do that. In my mind, I am not sure it would have made much of a difference if there were a small force on the ground. What it would provide is confidence. Maybe it would have allowed us to put a bit more pressure on the political entities in order for them to reconcile a little more than they did. Maybe that would have made a difference, but it is hard to say.

Speaker: On several tours there you lost good men and women. You know the frustration that has been expressed about particularly the loss of Fallujah. The Marines were involved there. Do you have trouble personally stomaching the losses in territory and the increase in violence since the U.S. has pulled out?

General Odierno: Obviously the war touches all of us personally. We all know people who were killed. We know people who were injured. So obviously I will never forget the costs. Those of us who have to participate in the war understand the costs. That is why we are the ones who hesitate to get involved in wars. We understand the true cost of war. When someone asks me that question, my answer is first the men and women of the military did their job. Thy left Iraq in a place that had peace and that had stability. That gave them the opportunity to move forward. That is what we were asked to do. They should be proud of what they did. They should be proud of what they accomplished. They should be proud of how adaptable they were and how they adjusted to the situation. It is always difficult to explain the costs that were involved in this, especially when it comes to lives. They understood what they were doing. They are proud of what they were doing. They dedicated themselves to that mission, and they did well at it. That is what you have to remember.

You cannot allow the politics and the outcome now to shade your view of what really happened and how successful we were. That is the kind of message I try to pass along. It is difficult for all of us: all of us who spent years and years in Iraq to bring it to a place of success and leaving it at a time when we felt that it was really heading in the right direction, and that it would continue to move forward. So it is difficult for us to watch it now. I think you have to remember the good things that were done and the sacrifices that were made. There is still a lot to play out here. This is going to play out for years yet. I think we still have to watch it and see what the real outcome is.

Speaker: If I can turn to Afghanistan, there was some reporting today that the Obama administration is effectively willing to punt on the Status Forces Agreement there until after Karzai leaves it. They just don't believe they can make that agreement before the April 5th elections. When you look at the situation in Afghanistan, do you worry about the same descent into violence as U.S. Forces draw down and after they leave?

General Odierno: I just returned from Afghanistan on Saturday night. I spent a few days out there. With our efforts there Afghanistan has moved forward quite a bit, especially in the last two years. The Afghan Security Forces are in charge. They are providing security for the nation. So we are in a place now where they have the capability to defend themselves. They are not yet ready to do other things. Their institutions are not yet mature enough to sustain this over a long time. So I think it is important that we stay and help them to establish their institution. That is the kind of thing that we do with training, advising, and continuing to build the underpinnings so they can sustain this for a long period of time. I also think there are some counterterrorism work that would have to be done that we would want to continue to assist them with as they move forward. I would say I think it is important that we stay there. It does not have to be in large numbers, but we have to stay there to support them so they can continue to progress forward.

Afghanistan is a little bit different problem. They do not have the economic underpinnings that Iraq has actually. So that is why it is even more important in my mind that we stay there and continue to move them forward. The one thing that I will say is that the population is a bit more unified. It is a different political landscape. It is not ethnic or sectarian; it is tribal. So it is a different dynamic. So I am not worried about huge divides. The bigger threat to them is that the Taliban would come back and try to take the government back. So I think it is a different situation than you have in Iraq politically. So we want to make sure the Afghan security force has the capability to make sure the Taliban does not come back. I think we are closer to doing that. So I do believe there is room for success there, and I think there is a real chance for success. Again the biggest challenge will be Afghanistan economically because of the lack economic development. It is developing, but it will be a much slower development than in Iraq.

Speaker: With the continuation of the drug trade and the growth of that, is the relationship between the U.S. and Karzai, even though the Karzai government is dysfunctional, but is that broken and unfixable?

General Odierno: No, it is not. I think it is a difficult relationship, as all of these relationships are. It is such a complex political environment. We are on the cusp of elections, which are going to happen in April. So there will be a new president of Afghanistan. We are going to have a transition of power. In my opinion it is more important to focus on that, the fact that you will have a peaceful transition of power following this election that is going to happen in April. That is the key piece. You have an election and a peaceful transition, and that shows the Afghanistan is now moving forward. It is key to not get involved in personalities, which is what I think we are talking about here. It is hard to say why that is happening. I have my theory. There are lots of other theories out there. I would rather not get into that. The important thing is you have this peaceful transition. I think we have the potential to do that.

Speaker: Did you meet with Karzai on that?

General Odierno: I did not.

Speaker: Would you think the relationship would have been better?

General Odierno: When I go over that as Chief of Staff of the Army, I am focused on our military members and what they are doing. I learned as I was Commander in Iraq, you do not need everybody getting involved in the dealings with the government. Let the Ambassador and others do that. That is their job. Let them do that. So I try not to do that. I ensure that we have proper support for our Soldiers on the ground.

Speaker: Moving back to domestic issues and sequestration. Impacts are about half under the budget agreement. You were on the record late last year saying an Army force of 450,000 Soldiers would be too small and at high risk to meet one major war. They were talking about bringing it down by 100,000. Do you still believe that?

General Odierno: Yes I do. I want to be clear on the budget. The bipartisan budget agreement cut sequester in half for one year. It did not cut sequester in half; it helped significantly for this year. We are very thankful for that. It has enabled us to buy back readiness that we were starting to lose. We had a real readiness problem because of sequestration. So we are really thankful for that. It helps a little bit in FY15, but in FY16, it goes right back down to sequestration again. It buys us a little bit more time in order for us to take our end-strength down so we have that match between readiness end-strength and modernization. We have to get that right balance in order for us to be successful as we go forward. We need 3-4 years to do that. My concern is as we are going through that, I am still worried about the fact that right now we have 60,000 Soldiers deployed around the world, with 30,000 in Afghanistan, 20,000 more around the Middle East, and 10,000 in other parts of the world. We have to sustain that and prepare people to be doing that while we are reducing the Force and while we don't have enough money to develop the right readiness. What I am worried about is as we get through this 3-4 year window where we get back in balance, I believe for the Army the end-strength is really too small in order for us to meet the requirements that we might have to conduct in the future. That is my concern and why I am still pressing us to review. I think this is the same for all the services. I am still worried about the end-strength, which really gets us to a size that is a bit too small as I look across the landscape today. The landscape is very uncertain. Frankly it is growing more and more uncertain as every day goes by in many different areas.

Speaker: What is the end stage that you need? What number do you need to be prepared to fight that one major war?

General Odierno: I am on the record as saying at a minimum our end-strength needs to be around 450,0000 in Active; 335,000 in Guard, and about 195,000 in the U.S. Army Reserve. Then we will be able to do it at higher risk, but we should be able to do it. At 420,000, that last 30,000 makes a huge difference in the capability that we have. You have to remember there is a certain cost in the Army. About 20% of our Army that has to be set up just to run the institution in terms of training new Soldiers, training Officers, running the Army. So a 30,000 difference makes a lot of difference in combat operational forces as you get to the end. So I think about 450,000 is right. We can do that with an additional increase in where are from sequestration.

Speaker: You know there is a skeptical view to that in the age of more nimble, more special forces with smaller conflicts and no big occupations. Who really can test the United States at 450,00 or even 420,000? Where do you come up against the worrisome challenge?

General Odierno: We have three or four things going on around the world at once. We don't know. It is easy to say I don't see us having another conflict. I heard that in 1980. I heard that in 1990; and I heard that in 2000. Yet we were constantly engaged. We have had a major deployment of U.S. Forces, specifically Army Forces, in every decade since 1940. I am not yet willing to say we are not going to do that. We have a new young unpredictable leader in North Korea. We are not sure what he might do. As I look across the landscape in the Middle East and what we are watching going on in Syria with a resurgence. There is a Sunni-Shiite divide we are starting to see spread across the Middle East, which is very concerning. We have worries about Iran.

We have worries about the increase in extremism exploiting what we thought was originally going to be a positive movement towards an awakening, which still can be positive. However we are now seeing some of that fall apart. We are seeing extremists still play a role in Libya. We are seeing more violent attacks in Egypt. We are seeing it play out in Syria. We are seeing it play out in Lebanon. We are seeing it play out in Iraq. This is not a time where I can say, "Things are at peace, and we can depend on the fact that we don't need an Army; we can get very small because we are never going to use them." I don't think we should ever take that off the table. It is about deterrence and preparing others not to do things. I think if you get too small you lose your ability to compel and deter those from making bad decisions. That is one of the things I very much worry about. You look at wars throughout history, and it is about miscalculations by leaders who believe that there was not enough capability to go against them or the will to go against them. So it is important that we sustain enough capability to make sure that the people don't miscalculate so we don't go to war.

The problem we have as we talk about this is the Army and our Defense Department is like an insurance policy. The problem with insurance policies are when people first start offering you insurance, you ask whether you really want to pay that much for insurance. Then when you really need it, you say why did you not pay for more. That is kind of the mindset we are in now. People want to say we really don't need to be paying that much. You may not be saying that three to four years from now or two years from now or a year from now. So what we owe to you is that right balance, understanding that we have budget concerns, understanding we have to reduce the budget. So reduce it in such a manner to the right level that still allows us to compel and deter.

Speaker: Do you find that voice is heard on the Hill?

General Odierno: I think it is. This is a very difficult discussion. I think the fact that there is bipartisan agreement at the end of the year is a first step to them recognizing that they need to take a closer look at this. I am hoping that they will again look at it for FY15 and 16 as we move forward. I am not looking at complete restoration from sequestration. There are efficiencies that we have to gain and become more effective. It is important that we do that. I do believe that we have to be careful that we do not get so small and lose capability in all the services that it causes us to be able to lose our ability to compel and deter.

Speaker: If I can pivot for a moment to Asia, to steal the phrase, which has now fallen out of favor. It is a rebalance. (Laughter). What is the Army's role in that? Do you believe that pivot or rebalance is still alive in light of all that is going on and possibility getting dragged back into the Middle East by the events going on there?

General Odierno: I do. Rebalance is the right term. You have to remember over the past 10-12 years, especially for the Army, but really for all the services, because we were fighting two wars, we had a lot of our capability invested in the Middle East. So it is not that we are all of a sudden going to change and move everything over to the Pacific. It is about rebalancing our capabilities back to the Pacific because we had drained the Pacific to fight in the Middle East. Let me give you an example for the Army. We have about 82,000 Soldiers in Pacific Command. During Iraq and Afghanistan, probably half of them were deployed in the Middle East. So what we have done beginning in 2013 is we are no longer using that capability in Afghanistan. So they are now fully assigned and in the Pacific Command region. So we now have 82,000 Soldiers there. In terms of people, it is the most people of the services in PACOM. So they play an important role.

Speaker: Korea, Okinawa?

General Odierno: It is Korea, Hawaii, Alaska and the west coast of the United States are all assigned to PACOM. There are quite a few forces there in Japan. What are we doing? The first thing we have done is the Army increased the U.S. Army Component Commander to a four star command. Why is that so important? We want them to be able to engage with the rest of our partners. 8 out of 10 of the largest land armies in the world are in the Pacific. For 22 out of 24 countries in the Pacific, the Army is the dominant service. It is important for us to engage. It is important for us to build relationships. What are we looking at doing? We are looking at rebalancing the equipment sets, some for humanitarian assistance disaster relief; some to do better training with our partners; some to respond to contingency operations. So we are relooking at that and resetting those so we have the ability to continue to engage in the Asia Pacific region.

It is important because it is important to us economically. It is important to us politically. It is important that we sustain and continue to work with our allies over there as we continue to move forward. The Army plays a role in that just like all the other services do. There is a lot of ocean out there. It takes a lot of maritime presence, but the ability to work with the other armies, to build relationships is incredibly important. The Army also has a big responsibility in setting the theater because we provide a large part of the logistics, a large part of the command and control capability, a large part of the missile defense, a large part of the engineering capability throughout the region in order to support all the services. So for us it really is important as we rebalance towards the Pacific.

Speaker: I spent the last two years in China. There is a perception there that one reason the U.S. could not deliver on the goods even if it wanted to, that it could not afford it, that it is being dragged back into the beast, etc. I know there is push back from people, including yourself. Did you find in your relationships there among our allies, but also our adversaries that people think there is muscle behind the pivot?

General Odierno: I think they are watching very carefully. I think they are watching to see what we do. So that is why it is important for us to designate a four star. That got a lot of people's attention when we did that. It got people's attention. All of the Chiefs of the services have spent a lot of time in the Pacific region. I will only use 10 days, and I will go to China, Japan and Korea for about an 8 day trip, which is a big investment of my time to continue to reinforce the importance of the Pacific and to ensure that the Chinese know that we are there to work them in the Asia Pacific. We all have things that are important to us, and we need to work together. Obviously with Korea and Japan, two of our allies, we just continue to work with them and let them know that we are there to help and work with them as we move forward in the region. I have been to Thailand. I have been to Australia. So it is important that we continue to work those relationships. So I think over time they are going to see that we very serious about this, and that we are going to stay engaged in the Asia Pacific region.

Speaker: I have one last question for you. Because we have had such a collection of stories about failed leadership in the military, including the Army, whether you are talking about sexual harassment. They just released a great study on the cases -- 1,000 sex crimes just in Japan in 2005 and 2013. You have the cheating scandals and undue acceptance of perks etc. I know this is something that you are heavily invested in. Do you believe there is a crisis of leadership?

General Odierno: I do not believe there is a crisis in leadership, but it is something that we have to pay attention to. When I go out and talk, I talk about the importance of the profession of arms. I talk about three things: competence, commitment and character. That is what underpins everything we do. We have to be incredibly competent in what we do because of the trust and what the American people ask us to do. We have to be committed not only to each other, but we have to be committed to the mission. We have to be committed to the institution. We have to be committed to the moral and ethical values of the United States. Then finally is our character. You can be committed and have high competence, but if you do not have the character that is necessary, then in my mind we cannot lead and do the things we are asked to do. So we are focusing on this at every level. We are focusing on this throughout the institution. From the time you are a Lieutenant until you are a General Officer, and from the time you come in as a Cadet, we constantly talk about this. The real issue here is we have some that are not meeting the high standards that we expect of ourselves, but we have many others who are. The large majority of those are meeting those standards. We cannot tolerate those that do not. It is important for us to make it very clear. So we are working very hard to do this. It is also important to have discussions on why this is happening and what we are doing is implementing discussions around the Army on why this is happening and what we can do to fix it. Why do we have these lapses and what can we do to better protect them and prepare them so that this does not happen. For us we really have a campaign inside the Army that is taking a really hard look at this. I really do not think it is something that we have to worry about in the long run, but it is something that we have to pay attention to and correct right now. We are focusing on that.