Defense Secretary Leon Panetta came to the aid of former Sen. Chuck Hagel, the man President Barack Obama nominated to succeed him, saying on NBC’s Meet the Press, “The political knives were out for Chuck Hagel” during his confirmation hearing last week.

In nearly eight hours of testimony before the Senate Armed Service Committee on Thursday, Hagel spent much time revising and clarifying his previous remarks – including a spontaneous error at the hearing itself on whether United States policy toward Iran’s nuclear weapons program was one of containment.

Panetta complained that the members of the committee spent too little time questioning Hagel about the current challenges the Defense Department faces, such as looming budget cuts, and spent too much time examining statements Hagel made in the past.

Panetta insisted to NBC’s Chuck Todd that Hagel was “absolutely” prepared to take his place leading the Defense Department.

Panetta’s backing of Hagel was seconded by the chairman of the Joint Chiefs of Staff, Gen Martin Dempsey, who said “in helping prepare him for his confirmation hearings, we had several opportunities to talk about strategy. And I found him well-prepared and very thoughtful about it.”

As the Armed Services Committee prepares to hold a hearing Thursday on last September’s attack on the U.S. diplomatic mission in Benghazi, Panetta said he looked forward “to presenting what we know about what took place.” Congressional Republicans have questioned why there were no U.S. military aircraft or other forces in proximity to Benghazi that could have been dispatched to help defend Ambassador Chris Stevens and other US personnel. Stevens and three others were killed in the attack.

Addressing the Defense Department’s airlift and intelligence-sharing role in assisting the ongoing French military intervention in the North African nation of Mali, Panetta said, “We are now working with France to make sure that al Qaida has no place to hide, even in North Africa.”

Dempsey added that in North Africa “the regimes that you used to maintain control over that space that would, in fact, be part of the solution of keeping al Qaida and its affiliates at bay are no longer there.”

The popular uprisings of the 2011 Arab Spring, Dempsey said, “stripped that away” leaving “ungoverned space” or “a period at which geography is less governed than it used to be.” That lack of control has allowed jihadist groups such as al Qaida in the Islamic Maghreb (AQIM) to flourish.

Turning to Iran and its nuclear program, Panetta said, “The intelligence we have is they have not made the decision to proceed with the development of a nuclear weapon. The regime in Tehran is enriching uranium.  They continue to do that.”

He added, “I can't tell you they are, in fact, pursuing a weapon, because that's not what intelligence says they're doing right now. But every indication is they want to continue to increase their nuclear capability. And that's a concern. And that's what we're asking them to stop doing.”

Vice President Joe Biden said Saturday that the Obama administration is “would be prepared to meet bilaterally with the Iranian leadership,” but that talks would need to be serious, have an agreed-upon agenda, and not be merely an exercise.

On the threat of spending cuts, known in Capitol language as “sequester,” scheduled to start on March 1 that are mandated by the Budget Control Act, Panetta said, “If Congress stands back and allows sequester to take place, I think it would really be a shameful and irresponsible act.”

He added that the spending cuts this year – amounting to about 12 percent of Pentagon outlays apart from overseas operations – would “badly damage the readiness of the United States of America.”

Panetta, who served as head of the Office of Management and Budget under President Clinton and as chairman of the House Budget Committee in the late 1980s, said, “As somebody who's worked with budgets throughout my life, in order to deal with the deficit problem, you've got to deal with entitlements. You have to deal with revenues. And you have to deal with discretionary (spending).”

Although Republicans such as Sen. John McCain of Arizona have accused Obama of failing to take the lead in finding a way to avoid the cuts required by the Budget Control Act, Panetta said, “I think he's pushing as hard as he can…. The president of the United States has indicated the concern about sequester. He's indicated his concern about maintaining a strong national defense.  And he's proposed a solution to this. The ball is in Congress's court. They have got to take action to delay sequester.”

Secretary of Defense Leon Panetta on Friday said America is succeeding in Afghanistan, but warned that enemies are looking for new ways to inflict damage.

"In particular, they have sought to take advantage of a series of troubling incidents involving misconduct on the part of American troops," he said in a speech at Fort Benning, Georgia. "These days, it takes only seconds for one picture to suddenly become an international headline."

Panetta addressed about 1,300 soldiers from the 3rd Infrantry Division's 3rd Heavy Brigade Combat Team.

Relations between the U.S. and Afghanistan have been strained by several recent incidents, specifically the burning of Muslim holy books at a U.S. base and the massacre of 17 civilians, including children, allegedly by Staff Sgt. Robert Bales, who is imprisoned at Fort Leavenworth, Kansas, awaiting trial in the killings. In addition, American troops have been videotaped urinating on the bodies of Afghan militants and shown in photographs posing with the body parts of dead insurgents.

"I know these incidents represent a very, very small percentage of the great work that our men and women do every day across the world," Panetta said, "but these incidents concern me — and all of the Service Chiefs — because they show a lack of judgment, a lack of professionalism, and a lack of leadership on the part of some of our men and women in uniform."

“While these are seemingly isolated events by a few bad apples,” Michael Smith, a professor of communications at La Salle University in Pennsylvania told msnbc.com, “they may come to symbolize America to the Afghan population. If this becomes the case, our mission is doomed and the lives of our troops at greater risk.”

Earlier this week, President Barack Obama made a surprise visit to Afghanistan, where he signed an agreement that spells out a winding down of the war as well as a longtime commitment to staying there.

Though no specifics on the number of troops who will remain in an advisory capacity, perhaps for a decade, were announced, the agreement pledges support after 88,000 combat forces leave Afghanistan in 2014 after what will be 13 years of war.

Related: Troops returning home to strained veterans-affairs system

In the meantime, the United States has said it is committed to stabilizing the Afghan government in the face of a messy insurgency from the Taliban, which hours after Obama’s visit launched a suicide car bomb attack that killed seven people in an a compound housing hundreds of westerners. 

Related: Extreme war stresses to blame in Marine urination video?

According to Anthony H. Cordesman of the Center for Strategic and International Studies in Washington and a former Defense Department intelligence assessment director, concerted communications campaigns to build up the images of American troops and the war effort started at the beginning of the Afghan conflict. The campaigns got a whole new emphasis in 2009 when a leaked report by U.S. and NATO commander Gen. Stanley McChrystal bluntly stated that without more forces and a new counterinsurgency strategy in Afghanistan, failure was likely. The report also said the Afghan government was riddled with corruption.

“Similarly, there has been a consistent effort to provide sensitivity and cultural training to U.S. troops, trying to make them aware trying to make them aware how Afghans see the world and Afghan values,” Cordesman said.

In insurgency campaigns — in Afghanistan’s case the Taliban trying to wrest control from the NATO-backed Afghan government — how civilians perceive each side in a conflict is key to cooperation during the war as well as stability afterward, Cordesman pointed out.

“The history, almost regardless of who does this," he said, "is that very often you get the cultural values wrong. You can’t communicate as well as a movement that is local.”

Speaking to the troops is useful, Cordesman said, but it is not a way of having a large impact on what the Afghans think about Americans in the short run. The Quran burning was a particularly egregious episode culturally — it sparked weeks of violent protests — while urinating on bodies and posing with photographs could be viewed as an act of revenge, which Afghans understand, Cordesman said.

While such incidents are damaging, in the end it will be support for the Afghan government that will allow the United States to claim victory in Afghanistan, Cordesman said.

“It’s not support for us that counts,” he said. “It’s support for them that makes transition to any kind of strategic victory possible.”

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J. Scott Applewhite / AP

Defense Secretary Leon Panetta, right, accompanied by Joint Chiefs Chairman Gen. Martin Dempsey, testifies on Tuesday before the Senate Armed Services Committee.

At a time when President Barack Obama is proposing more than $120 billion in new and enhanced tax incentives for companies to manufacture in America, not overseas, one part of the nation’s industrial base -- a sector where foreigners aren't allowed to fully compete -- is under siege.

Smaller defense budgets proposed by Obama and Defense Secretary Leon Panetta will cancel some made-in-America ships, airplanes and unmanned aerial vehicles and slow down the purchase of others.

The Obama budget also threatens to shut manufacturing and repair facilities, such as the 212-year old Portsmouth Naval Shipyard, which sits on an island between Maine and New Hampshire.

Obama’s budget blueprint calls for defense outlays to drop by 5 percent over the next two years, and fall from 19 percent of federal spending this year to 13 percent by 2022.

In a four-hour hearing before the Senate Armed Services Committee Tuesday, Panetta defended his call for fewer ships, unmanned aerial vehicles, and other hardware.

And he made the case for his proposal for two more rounds of the base realignment and closure (BRAC) process that would close bases and shipyards across America.

But he faced concerns and criticism from both Republicans and Democrats on the committee -- about the threat to blue-collar manufacturing and repair jobs as well to national security.

Sen. John McCain, R- Ariz., told Panetta that “perhaps most disturbing of all” was the fact that at a time when U.S. strategy is increasingly focusing on East Asia and the Pacific, “this budget would reduce shipbuilding by 28 percent.” 

Sen. Roger Wicker, R- Miss., whose state is home to the Ingalls shipyard in Pascagoula, pointed to the 8.3 percent unemployment rate and noted that Obama’s budget proposal has various job creation ideas -- such as transportation infrastructure -- in it.

“It makes no sense to me -- at a time when there is an effort to create more jobs with other spending -- to cut defense spending, which gives us the ‘two-fer’ of protecting the country and protecting the industrial base, which is a whole lot of Americans working to provide us with the infrastructure we need,” Wicker said. “It is a fact, is it not, that this budget will have an adverse effect on our industrial base?”

Panetta replied, “We’ve taken a lot of steps to try to protect against that happening, because we absolutely have to protect our industrial base and those industries that support the defense budget. We can’t afford to lose any more and, for that reason, we design an approach that will keep them in business …”

But keep them in business with fewer manufacturing jobs, Wicker noted.

“There will be, I understand that, and that does have some impact,” Panetta admitted.

Later in the hearing, pressed by Sen. Susan Collins, R-Maine, Panetta said he would make sure that “we keep our industrial base busy, serving our needs.”

“Once that industrial base is gone, you never get it back and once those trained workers go into other fields you’ve lost them forever,” Collins told Panetta. “And that would greatly weaken our capabilities.”

Armed Services Committee members such as Sen. Joe Lieberman, I –Conn., are also opposing delays in building the Virginia-class submarine, which is built in Connecticut and repaired in New Hampshire.

As for closing excess bases and shipyards, Panetta said, “I don’t know of any other way” to cut infrastructure and get the savings needed “without going through that kind of process.”

When Panetta served as a House member from California in 1991, he saw BRAC first hand when the BRAC commission closed Ft. Ord near Monterey, costing more than 16,000 jobs.

“I’ve been through the process; frankly I don’t wish the process on anybody,” he told Sen. Jeanne Shaheen, D- N.H., who was defending the Portsmouth Naval Shipyard. 

“Twenty five percent of my local economy was hit by virtue of a BRAC closure,” Panetta told her. But he said the community did use the closing as an opportunity to develop a college campus.

“I see very little support for the president’s proposal on BRAC,” Collins said, in an interview during a break in the hearing.

“If you look at the GAO reports on the last BRAC round, it has turned out to cost the government money, rather than saving money -- at least for the first five years. So I think there’s a great deal of skepticism both about the savings that would be produced and also whether there really is excess capacity.”

She said she did not think Congress would vote to launch another BRAC round. Portsmouth was on the hit list in 2005, but the BRAC commission overrode the Pentagon recommendation that it be closed. “Tony Principi, the BRAC chairman at the time, described Portsmouth Naval Shipyard as ‘the gold standard in naval yards.’”

The economic impact of closing the shipyard would huge in southern Maine, Collins said: “It’s a major employer in York County and beyond York County. Half the workers are from New Hampshire -- it affects both states”

In bipartisan accord was her Democratic neighbor, Shaheen who said after hearing, “The number one priority is national security. The Portsmouth Naval shipyard was created … because of national security – but there are a lot of good jobs there. To look at the equation without factoring that in, along with costs, would be shortsighted.”

One dissenter on the committee was Sen. Lindsey Graham, R- S.C., who said he did not consider defense manufacturing as “a job creator for America.” He also said he does think it’s necessary to consider another BRAC round -- “as hard as that is for my colleagues.”

Ali Al-Saadi / AFP - Getty Images

A pilot climbs into a U.S. F-16 jet fighter at the al-Asad Air Base in Baghdad, on November 1, 2011.

What started more than eight years ago as a hotly debated attack on Saddam Hussein’s regime is ending as a strategic and business relationship. Even though American troops are leaving Iraq in three weeks, the Iraqi government looks likely to be a good customer for American-made military hardware for years to come, joining other oil-rich governments such as Saudi Arabia and the United Arab Emirates in keeping U.S. manufacturing lines humming.

“The Iraqis are going to have a lot of money and invariably in this somewhat dicey neighborhood, having a lot of money means buying a lot of military equipment. So they are going to be a significant market,” said Gordon Adams, an expert on military budgets who is a professor of international relations at American University.

“The recent decision by the Iraqis to purchase U.S. F-16s, part of a $7.5 billion foreign military sales program, demonstrates Iraq's commitment to build up its external defense capabilities and maintain a lasting military-to-military training relationship with the United States,” Defense Secretary Leon Panetta told the Senate Armed Services Committee last month during a hearing on the future of Iraq.

The Baghdad government has agreed to buy 18 F-16 fighters, made by Lockheed Martin in Fort Worth, Texas.

The sale, worth about $3 billion to the company, illustrates the long time horizon that weapons manufacturing has: the production line for the F-16 started operating in 1976 and with the Iraqi contract and other work will be extended into 2015.

Although first developed for the U.S. Air Force, the F-16 has been sold to and is now flown by air forces in foreign counties from Taiwan to Denmark.

“We're continuing production with the F-16, of course, and that continues to outstrip many people's expectations for more than 30 years in production,” said Lockheed Martin executive Ralph Heath, in a recent conference call for investment analysts. “The end is almost in sight but not quite … .”

“The F-16 program was a program that was developed with the international market in mind from the get-go,” said Adams. “There’s no question from the company’s point of view the international sales of the F-16 and its sister and more expensive F-15 aircraft have always been important. The classic way for them to extend the production line is to get foreign customers and they get a lot of support from the government for trying to seek out those foreign customers.”

The Pentagon announced last week that foreign military sales overseen by the Defense Security Cooperation Agency totaled nearly $35 billion in fiscal year 2011, which ended on Sept 30. The top three customers: Afghanistan, Taiwan and India.

“There is no question that foreign sales are important to the production run” of a plane such as the F-16, Adams said. “The Air Force likes the company to do foreign sales for a couple of reasons: over time it can reduce the cost to the Air Force of buying an airplane.” The other reason the Air Force likes such sales is that it allows for interoperability with foreign militaries during joint exercises and allows the Pentagon “to keep an eye on what other people are doing with equipment…. It allows the U.S. to know what the capabilities of another country are.”

Iraq needs not just fighter aircraft, but an array of other military hardware. “The Iraqi military inventory is pretty thin; most of it we beat the crap out of during the invasion and subsequent hostilities,” Adams said. “Most of the Iraqi inventory is basically gone and they are going to have to re-stock from start to finish. Most of their former Soviet inventory is either gone or wasted, so they are going to have to buy. Being as we were the occupying power and the training power, it is at one level quite logical that we would be maneuvering to sell them our equipment.”

Despite the Dec. 31 exit of American combat troops, the United States will continue to operate ten Office of Security Cooperation base camps in Iraq to deliver military hardware and oversee the foreign military sales program.

“So F-16s get delivered, there's a team there to help new equipment training and helping Iraq understand how to use them to establish air sovereignty, “ Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff told the Armed Services Committee. “Or there's 140 M-1 tanks right now generally located at a tank gunnery range in Besmaya east of Baghdad and the team supporting that training stays on Besmaya.”

Iraq will also need military trainers which U.S. firms such as DynCorp provide to foreign governments. The required training of the Iraqis “does not require U.S. troops. There are numerous firms that will be happy to respond to any requests for proposal from the Iraqi government for properly skilled trainers. The market will respond quickly to Iraqi petro dollars,” said Douglas Ollivant, a former National Security Council official in charge of Iraq policy in both the Bush and Obama administrations.