"The Third U.S. Offset Strategy and its Implications for Partners and Allies"

So I want to briefly discuss some of the security challenges that I know you know we're facing, as well as those of our allies, and especially those of NATO, and how those challenges are informing our fiscal year 2016 budget request which we will deliver to the Congress on the 2nd of February, this coming Monday.

And we began our fiscal year (FY) 2016 budget deliberations this past fall as the international security environment was being shaken by three really large geopolitical surprises, all of which required a robust response. First, as you know, in February and March 2014, Russia used unconventional means to destabilize, illegally occupy and annex Crimea. Russia then sponsored and encouraged separatist activity in eastern Ukraine, violating international law and Ukraine's sovereignty and territorial integrity.

Now, these actions worked to reshape the boundaries of a major European state. I think it shocked everyone, surprised everyone. It shocked everyone in Europe and the United States. And it may herald -- these are early days -- it may herald a period of prolonged and heightened tension with Russia unless Moscow is convinced to change its course.

The second came in June, when ISIL, the Islamic State in Islamic Levant, now called ISIS, launched an offensive out of northeast Syria into Iraq. They quickly routed four Iraqi divisions. They captured Mosul, a large city. They overran al-Anbar province. They effectively erased the border between Syria and Iraq, and threatened Baghdad itself.

Now, the threat to our people and our interests, and as an opportunity to partner with a new, more inclusive Iraqi government, compelled us, the United States and our allies and partners to forge a coalition and to use force in Iraq once again to confront this growing threat.

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