FP’s Situation Report: Congress may be nearing a budget deal; Are gamers terrorists?; Kerry sells Iran pact to the Hill today; Mabus broadens corruption review; Was Chuck Hagel right?; FP.com is new! And a bit more.

By Gordon Lubold

Is Congress nearing a deal on the defense spending bill? Defense News’ Paul McLeary: "A group of Republican and Democratic lawmakers from both houses of Congress has come together to bash out a compromise $607 billion defense funding bill – which includes $527 billion in base funding and $80 billion for the war in Afghanistan – which they will try to pass before current funds run out on Jan. 1. With the House of Representatives preparing to wrap up business for the year on Dec. 13 and the Senate a week later, Congress is in danger of breaking its 51-year string of passing national security bills on time. To get that done, a bipartisan group convened last week to hammer out a National Defense Authorization Act that includes 79 amendments aimed at everything from sexual assault to building infrastructure in Afghanistan to funding for new platforms, like nuclear aircraft carriers and a long-range bomber. There also are provisions for Pentagon-run anti-narcotics programs, assisting the Jordanian armed forces in securing their border with Syria, and cash aimed at the destruction of Syrian chemical weapons stocks." More here.

Ray Mabus wants to look at all Navy contracts in the wake of the one with Fat Leonard. NYT’s Christopher Drew and Danielle Ivory: "Secretary of the Navy Ray Mabus has expanded an internal review of the Navy’s ship-supply contracts, in a new sign that overbilling practices discovered in the Pacific could be occurring worldwide. In a memorandum released Monday, the secretary ordered a high-ranking Navy official to examine how the service awards hundreds of millions of dollars worth of business around the globe. Mr. Mabus also asked auditors to look at how the Navy could better police contractors providing food, tugboats and port security for its vessels.

Mr. Mabus’s action comes after the service suspended two of its biggest supply contractors. Both are under investigation by the Justice Department for inflating their billings by millions of dollars through various schemes, and the Navy has had to scramble to find replacements in some regions." Navy memo here. NYT story here. 

Page One: Spies infiltrate online gaming to collect data on terrorism. The NYT’s Mark Mazzetti and Justin Elliott: "Not limiting their activities to the earthly realm, American and British spies have infiltrated the fantasy worlds of World of Warcraft and Second Life, conducting surveillance and scooping up data in the online games played by millions of people across the globe, according to newly disclosed classified documents. Fearing that terrorist or criminal networks could use the games to communicate secretly, move money or plot attacks, the documents show, intelligence operatives have entered terrain populated by digital avatars that include elves, gnomes and supermodels.

"The spies have created make-believe characters to snoop and to try to recruit informers, while also collecting data and contents of communications between players, according to the documents, disclosed by the former National Security Agency contractor Edward J. Snowden. Because militants often rely on features common to video games – fake identities, voice and text chats, a way to conduct financial transactions – American and British intelligence agencies worried that they might be operating there, according to the papers." Read the rest here. Making Mandela Proud: Obama and Cuba’s Raul Castro shook hands at Mandela’s giant funeral in Soweto, here.

Why is Ted Cruz in Soweto? FP’s John Hudson explains here.

Welcome to Tuesday’s "snowfall is expected to be disruptive" edition of Situation Report where our bottom line when it comes to all that will always be: bring it. If you’d like to sign up to receive Situation Report, send us a note at gordon.lubold@foreignpolicy.com and we’ll just stick you on. And if you like what you see, tell a friend.  And if you have a report you want teased, a piece of news, or a good tidbit, send it to us early for maximum tease, because if you see something, we hope you’ll say something — to Situation Report. And one more thing: please follow us @glubold.

Kerry takes his show to the Hill today to sell the landmark nuclear pact with Iran. FP’s Yochi Dreazen: "…It won’t be easy. President Obama and his top aides have spent weeks making the public case for the agreement in speeches, TV interviews and addresses to influential think tanks. Kerry’s appearance before the House Foreign Relations Committee will mark the first time a senior administration official faces lawmakers who have been harshly critical of the pact since it was announced in Geneva on November 24th  – and who are now looking for ways of rewriting it. The White House says that the pact freezes or rolls back the key elements of Iran’s nuclear effort in exchange for roughly $7 billion in temporary relief from the punishing Western sanctions on Iran. Congressional critics, including the leadership of the House committee that will question Kerry today, argue that the deal allows Iran gives Iran a significant economic boost without requiring Tehran to halt uranium enrichment or dismantle all of the key components of its nuclear infrastructure… In a strange bedfellows alliance, both the administration and the government of Iranian President Hassan Rouhani argue that any new punitive measures would scuttle the current deal and end the negotiations towards a final pact before they even really got underway." Go to foreignpolicy.com for this story this morning.

Hagel urges Pakistani PM Sharif to reopen the supply routes for Afg. WSJ’s Julian Barnes, traveling with Defense Secretary Chuck Hagel: "…For his part, Mr. Sharif pushed Mr. Hagel on the issues of drone strikes in Pakistan’s tribal areas, counterterrorism operations which Pakistan wants ended. Washington is keen to get the often difficult relationship with Pakistan back on track and American officials repeatedly insisted that despite the difficult issues on the table the talks were amicable. Defense officials said Mr. Hagel didn’t threaten to cut off aid, but instead explained to Pakistanis that it would be politically difficult to reimburse them for military expenses if Islamabad can’t reopen the highway linking Kabul to the port of Karachi." More here.

Speaking of the WSJ: "Chuck Hagel was Right," writes WSJ columnist Bret Stephens, from the right: "…The Obama administration’s policy on Iran’s nucleari
zation is containment, not prevention. The secretary of defense let that one slip at his confirmation hearings in January, and the media played it as a stumble by an intellectually overmatched nominee. But it wasn’t a stumble. It was a gaffe-an accidental, embarrassing act of Washington truth telling-by a guy who doesn’t do insincerity nearly as well as his boss. This much was apparent from the revealing performance Barack Obama delivered last week at the Brookings Institution, where he was interviewed by Israeli-American entertainment mogul Haim Saban on the subject of the Iranian nuclear deal." More here.

And one more from the Journal: an op-ed from former Navy Secretary John Lehman, who points out that more than half of the DoD’s active-duty servicemen and women serve in offices on staffs: "…There is one great numerical advantage the U.S. has against potential adversaries, however. That is the size of our defense bureaucracy. While the fighting forces have steadily shrunk by more than half since the early 1990s, the civilian and uniformed bureaucracy has more than doubled. According to the latest figures, there are currently more than 1,500,000 full-time civilian employees in the Defense Department-800,000 civil servants and 700,000 contract employees. Today, more than half of our active-duty servicemen and women serve in offices on staffs. The number of various Joint Task Force staffs, for instance, has grown since 1987 from seven to more than 250, according to the Defense Business Board.

"…The way forward for Republicans is not to default to their traditional solution, which is simply to fight sequester cuts and increase the defense budget. Instead, Republicans should concentrate on slashing and restructuring our dysfunctional and bloated defense bureaucracy. With strong defense chairmen on House and Senate committees already sympathetic to the overhead issue, and a willing secretary of defense, this Congress can do it. That will place the blame for the consequences of sequester and the earlier $500 billion Obama cuts squarely where it belongs, on the president and the Democrats." Read the rest here.

Noting: All of this makes Hagel’s announcement last week that he would cut 200 people – over five years – was, as a cut to headquarters, a bit underwhelming to a lot of observers looking for true shrinkage at the Pentagon.

Smaller IS better: Tom Ricks says make the military better by making it smaller. Preparedness is about adaptability, not readiness in the conventional sense. Ricks: "Want a better U.S. military? Make it smaller. The bigger the military, the more time it must spend taking care of itself and maintaining its structure as it is, instead of changing with the times. And changing is what the U.S. military must begin to do as it recovers from the past decade’s two wars." Read more here.

In the weeds: why are $486 American-paid-for planes sitting in the grass on the side of the tarmac in Afghanistan? Bloomberg’s Tony Capaccio with this exclusive: Sixteen broken-down transport planes that cost U.S. taxpayers at least $486 million are languishing among the weeds, wooden cargo boxes and old tires at Kabul International Airport, waiting to be destroyed without ever being delivered to the Afghan Air Force. The special inspector general for Afghanistan is investigating why the refurbished G222 turboprop aircraft from Finmeccanica SpA’s Alenia Aermacchi North America unit no longer can be flown after logging only 200 of 4,500 hours of U.S.-led training flights and missions required from January to September 2012 under a U.S Air Force contract because of persistent maintenance issues… Asked about the planes after they were photographed at the airport in Afghanistan by a Bloomberg News reporter, Sopko said he also saw them ‘sitting in the weeds’ during a recent visit." More here.

And as long as we’re talking defense industry, there’s this: EADS to cut 5,800 jobs under a restructuring plan, here.

New-and-Improved: FP’s new website, bolder, smoother and mas fun. And our favorite from the FP press release: "visually-arresting content." FP unveiled its redesigned and expanded website yesterday, "built to satisfy the needs of its three million monthly readers worldwide." From the boss: "Our expanded and modernized website presents FP’s readers with a dramatically expanded array of editorial features and tools to help them get the information they want with the least amount of effort," said David Rothkopf, CEO and Editor-at-Large of The FP Group. "Our new site ensures that our readers have access to precisely the content that is of greatest interest to each of them while supporting our advertisers goals of identifying and reaching the audiences they seek in a beautiful, state-of-the-art web environment." The metrics on foreignpolicy.com: 200 million annual pageviews, 3.5 million online monthly readers and 600,000 newsletter subscribers. And so many of them are you! Situation Report is happy to report that we have 52,680 readers every day. We thank you for that and try always to meet your fascinating, enthusiastic and varied expectations. Check out our site – dubya dubya dubya dot foreignpolicy-dot-com (foreignpolicy.com) and enjoy.

When bootstrapping doesn’t work: John Podesta is joining the Obama White House in need of some help from the outside. The NYT’s Jackie Calmes: Mr. Podesta, who has agreed to serve as counselor for a year, led Mr. Obama’s presidential transition in 2008 and has been an outside adviser since then. He also has occasionally criticized the administration, if gently, from his perch as the founder and former president of the Center for American Progress, a center-left public policy research group that has provided personnel and policy ideas to the administration. Word that Mr. Podesta would for the first time join Mr. Obama’s official staff, from people familiar with the discussions, comes as the president is seeking to recover public support and credibility after the flawed introduction in October of the insurance marketplaces that are a key part of his signature Affordable Care Act."

And: "Mr. Podesta, who was Mr. Clinton’s chief of staff during the Monica Lewinsky scandal and the impeachment of Mr. Clinton, also has been at the center of foreign policy and national security debates. In 2009, he accompanied Mr. Clinton to North Korea for negotiations that won the release of two American journalists who had been jailed on spy charges." Read the rest here.

Police are moving on the protesters in Ukraine. BBC: "Ukrainian police have begun moving against protesters in central Kiev, with some protest camps in front of government buildings dismantled. An opposition party said security forces had raided its headquarters. Officials gave protesters until Tuesday to leave. No clashes were reported. Opposition leaders urged supporters to defend Independence
Square, the main protest site. The stand-off follows weeks of unrest after a U-turn on a free-trade deal with the EU. The BBC’s Steve Rosenberg in Kiev says there are far more police in the city centre than on Sunday, when hundreds of thousands of people came out onto the streets." More here.

The WaPo’s Max Fisher uses a map to show you everything you need to know about the protests in Kiev, here.

Former Romney forpol aide Rich Williamson dies at 64. The Daily Beast’s Josh Rogin: The DC foreign policy community reacted with shock and sadness Monday to the unexpected death of Rich Williamson, a long time American diplomat and Republican foreign policy operative, who died Sunday due to complications from a cerebral hemorrhage at age 64. Williamson most recently served as a top foreign policy advisor to Mitt Romney and helped shape the 2012 GOP nominee’s policies on international affairs. But Williamson’s resume also included stints as a diplomat, political candidate, academic, lawyer, human rights activist, and key figure in the foreign policy staffs of leading Republican politicians including Sen. John McCain. Williamson also worked on two presidential campaigns for Ronald Reagan and was a junior staffer in the Reagan White House."

Former U.S. Rep to UNGA Robert O’Brien on Williamson: "The first thing you think about Rich was that they guy was an ardent believer in American exceptionalism. He was also a partisan Republican. He believed in the party… As tough as Rich was, he always did it with a smile, enjoyed the game, and respected his adversaries." The rest of Rogin’s bit here.

The Foreign Policy-U.S. Institute of Peace PeaceGame kicked off yesterday, but what’s a peacegame look like? FP’s Dana Stuster: In policy planning, there’s a lot of effort involved when planning for conflict. Research papers and briefings, certainly, but also "war games" — simulations of conflicts with experts on the various parties to the conflict acting out their roles. If Group A invades and takes this military base, how does Group B respond (or Group C, D, or E)? What if policymakers put as much thought into thinking through diplomatic scenarios as they do war scenarios? That was the question posed by PeaceGame, a simulation of diplomatic efforts around the Syrian civil war organized by the U.S. Institute of Peace and Foreign Policy Monday. The discussion brought together 45 experts, including former ambassadors and State Department officials, academics, and Arab activists, all together representing 19 groups influencing the war. It’s the first of what is planned as a series of similar events. The next one is scheduled for Spring 2014 in the United Arab Emirates. If you’re trying to envision what it was like, imagine a high-level roleplaying game — something akin to Model United Nations or Dungeons & Dragons (with FP CEO David Rothkopf as dungeonmaster). But the level of expertise was something else entirely. Former Assistant Secretary of State P.J. Crowley and Casimir Yost, recently returned from the National Intelligence Council, represented the United States. Read the rest here.