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[Senate Hearing 109-724]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-724
 
  CURRENT AND PROJECTED NATIONAL SECURITY THREATS TO THE UNITED STATES

=======================================================================

                                HEARING

                               BEFORE THE

                    SELECT COMMITTEE ON INTELLIGENCE
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 2, 2006

                               __________

      Printed for the use of the Select Committee on Intelligence

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
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                    SELECT COMMITTEE ON INTELLIGENCE

           [Established by S. Res. 400, 94th Cong., 2d Sess.]

                     PAT ROBERTS, Kansas, Chairman
          JOHN D. ROCKEFELLER IV, West Virginia, Vice Chairman
ORRIN G. HATCH, Utah                 CARL LEVIN, Michigan
MIKE DeWINE, Ohio                    DIANNE FEINSTEIN, California
CHRISTOPHER S. BOND, Missouri        RON WYDEN, Oregon
TRENT LOTT, Mississippi              EVAN BAYH, Indiana
OLYMPIA J. SNOWE, Maine              BARBARA A. MIKULSKI, Maryland
CHUCK HAGEL, Nebraska                RUSSELL D. FEINGOLD, Wisconsin
SAXBY CHAMBLISS, Georgia

                   BILL FRIST, Tennessee, Ex Officio
                     HARRY REID, Nevada, Ex Officio
                  JOHN W. WARNER, Virginia, Ex Officio
                              ----------                              
             Bill Duhnke, Staff Director and Chief Counsel
               Andrew W. Johnson, Minority Staff Director
                    Kathleen P. McGhee, Chief Clerk

                            C O N T E N T S

                              ----------                              
                                                                   Page

                            FEBRUARY 2, 2006
                           OPENING STATEMENTS

    Roberts, Hon. Pat, Chairman, a U.S. Senator from the State of 
      Kansas.....................................................     1
    Rockefeller, Hon. John D. IV, Vice Chairman, a U.S. from the 
      State of West Virginia.....................................     5

                               WITNESSES

Negroponte, Hon. John D., Director of National Intelligence......     9
    Prepared statement...........................................    26

                   HEARING ON CURRENT AND PROJECTED 
             NATIONAL SECURITY THREATS TO THE UNITED STATES

                              ----------                              

                       THURSDAY, FEBRUARY 2, 2006

                               U.S. Senate,
                  Select Committee on Intelligence,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:10 a.m., in 
room SH-216, Hart Senate Office Building, the Honorable Pat 
Roberts (Chairman of the Committee) presiding.
    Present: Senators Roberts, Hatch, DeWine, Bond, Lott, 
Snowe, Hagel, Chambliss, Warner, Rockefeller, Levin, Feinstein, 
Wyden, Bayh, Mikulski, and Feingold.

       OPENING STATEMENT OF HON. PAT ROBERTS, CHAIRMAN, 
                   A U.S. SENATOR FROM KANSAS

    Chairman Roberts. The Committee will come to order. The 
first order of business is to welcome Senator Feingold as a new 
Member of the Committee. Senator Feingold is a very 
conscientious Member, very hard-working Member, and we're very 
pleased to have him. And I would yield to him at this time, if 
he would like to make a very short statement.
    Senator Feingold. Thank you, Mr. Chairman. I'll just say 
what an honor it is to be on this Committee at any time, but 
particularly in this time in our history with the challenges 
that we face. And I thank you and everybody for their 
courtesies in getting me used to the practices of the 
Committee.
    Thank you, Mr. Chairman.
    Chairman Roberts. I thank the Senator.
    Today the Senate Select Committee on Intelligence meets in 
open session to conduct its annual worldwide threat hearing. 
The Committee always begins the legislative year with an open 
hearing--it's a tradition--so that the public will have the 
benefit of knowing the intelligence community's best 
assessments of the current and projected national security 
threats to the United States.
    Our witness is Mr. John Negroponte, the director of 
national intelligence. Mr. Director, thank you for taking your 
valuable time to come here today. It's a pleasure to have you 
here.
    To assist in fielding the Committee's questions, the 
director is joined at the witness table by: General Michael 
Hayden, the Principal Deputy Director of National Intelligence; 
Mr. Robert Mueller, the Director of the Federal Bureau of 
Investigation; Mr. Porter Goss, the Director of the Central 
Intelligence Agency; and Lieutenant General Michael Maples, the 
Director of the Defense Intelligence Agency; Mr. Charles 
Allen--no stranger to the Committee--the Chief Intelligence 
Officer for the Department of Homeland Security; and Ms. Carol 
Rodley, the Acting Assistant Secretary of State for 
Intelligence and Research.
    And on behalf of the Committee, we thank all of you for 
being here today. Thank you for your perseverance and thank you 
for the job that you're doing.
    Mr. Director, this is your first appearance at the 
Committee's worldwide threat hearing as the head of the U.S. 
intelligence community. I look forward, as do the rest of the 
Members, to your presentation on the community's views 
concerning the many threats our Nation must confront. The 
threat of terrorism is my most immediate concern, as I know it 
is yours.
    The Nation does remain at war with Islamic terrorists who, 
as we all know, on September 11, 2001, murdered 3,000 innocent 
people here on American soil. We must never forget that fact.
    Thankfully, since that day, we have not suffered another 
major attack on our soil. That is due at least in some part--I 
think large part--to the brave and very dedicated men and women 
of our intelligence community, the armed forces and our law 
enforcement agencies who are executing an aggressive and 
forward-leaning counterterrorism policy.
    We should not, however, be lulled in to a false sense of 
security. The terrorists are a patient and determined enemy. As 
Usama bin Ladin's recent audiotape demonstrates, he and his 
terrorist network, while damaged, are still a very real threat 
to America. So when Usama bin Ladin or his No. 2, Zawahiri, or 
Zarqawi in Iraq, does issue a threat, I take it seriously, as 
should we all.
    These are terrorists who have a track record for following 
through on threats no matter how long it takes. Remember, the 
first attack on the World Trade Center was 1993. Eight years 
later came 9/11. Had the terrorists put the bombs that were put 
in the World Trade Center back in 1993 where the grid was, 
6,000 people wouldn't have come out suffering from smoke 
inhalation; they would have not actually have come out.
    So, they do have patience. Our enemies are continually 
probing our defenses and adjusting their tactics in an attempt 
to launch a successful mass casualty attack. We continually see 
the evidence of the training and the commitment and the sheer 
brutality of al-Qa'ida and other terrorist groups. Every 
American should understand our terrorist adversaries. They 
think of us--everybody in this room, all of the people who are 
going to testify, all of the Committee Members--as dust. Now, 
think about that. In their extremist absolutism, our lives and 
the lives of those we hold dear have no value.
    Ladies and gentlemen, to counter this evil, we must remain 
vigilant and forward leaning as we prosecute this war. That 
means we must not only use every lawful means at our disposal 
to protect the American people from another attack, we must 
support the men and women sitting before us here today as they 
lead their respective agencies in a conflict which is often 
fought in the shadows of some of the most dangerous places on 
Earth.
    Along with terrorism, our Nation faces a variety of other 
threats. Last year, I identified North Korea and Iran and 
Communist China and proliferation as primary threats worthy of 
Committee attention. The threat of proliferation and the 
threats posed by Iran and North Korea really go hand in hand. 
The intelligence community assesses that North Korea already 
has nuclear weapons, and Iran, if it continues on its current 
path--and we hope we could see some action by the Security 
Council and others working on this, but they will likely have 
the capability to produce a nuclear weapon within the next 
decade. In addition, there are indications that both Iran and 
North Korea are continuing work on numerous weapon programs, 
including long--range ballistic missiles and advanced 
conventional weapon systems.
    On our side of the world, Latin America continues to 
present a number of challenges, including a trend toward 
socialist anti-American governments, including, most notably, 
Venezuela.
    I'm going to deviate from my remarks, and I apologize to my 
membership, but there are 360 million people in 31 nations that 
comprise the Southern Command, and I must say it is not 
neglect, but maybe benign neglect and in terms of the fact that 
we're stretched so thin. Other than energy, other than 
immigration, other than trade, other than drugs, that part of 
the world really has no affect on the United States, and so 
consequently, I think we must refocus, at least to some degree, 
on the threats that are really threats in the Southern Command.
    For our part, the Committee will continue to examine the 
intelligence community's capabilities against Iran, North Korea 
and other areas of interest. We try to challenge the community 
to think of new ways to penetrate those hard collection 
targets, and they try as well.
    I do not believe the intelligence community is where it 
needs to be. I think most of the people at the table will agree 
with that, but we have made impressive strides in the past few 
years. The threat from communist China is also one which we 
must closely monitor. China has not so quietly emerged as a 
regional power both militarily and also economically. China's 
not the next big thing. They are the big thing.
    While the United States, in general, enjoys good relations 
with China--and we must do that; we must endeavor to do that--
we and our regional allies are given pause by China's often-
aggressive statements in regards to Taiwan, its very dramatic 
investment in offensive military capabilities in a blue-water 
Navy and its questionable counterproliferation record. 
Additionally, China maintains a determined espionage effort 
within the United States, which is aimed at stealing our most 
sensitive weapons' secrets. Harsh words, I intend them to be.
    China's increasing influence in our global affairs is 
undeniable. It is my hope that Beijing will use this increasing 
influence to actually promote stability, curb the nuclear 
ambitions of North Korea and provide greater support to 
counterproliferation and counterterrorism initiatives.
    Now, Mr. Director, I look forward to hearing from you about 
these and the many other threats which face us across the 
globe. I also look forward to the input of the Intelligence 
Agency directors during the question and answer period.
    Once again, it is important to remember that the Nation is 
at war. It is a war which requires aggressive intelligence 
collection and close combat with the enemy. The success of the 
latter often depends entirely on the success of the former.
    Our witnesses today and the men and women whom they lead 
are on the front lines of that war. Unlike us, they are doing 
the fighting and the dying, and they do so to keep us and our 
families safe.
    Although we will never be able to repay them the debt we 
owe, it seems to me that we must provide them with every 
possible advantage, which includes not only adequate resources, 
but also the capabilities and the authorities that they 
require.
    It is also our responsibility to conduct oversight, and the 
Committee meets that responsibility in a number of different 
ways. We receive briefings, we conduct hearings at a rate far 
exceeding any other previous Congress. As a Member of this 
Committee, we will tell you we are very demanding of their 
time. We read and review intelligence reporting and analysis. 
We interview intelligence officials. We travel around the 
world. We meet with people on the front lines in what is truly 
a global conflict. We also, when the Committee so decides, 
conduct investigations and inquiries into specific matters.
    For example, we are presently engaged in the final stages--
let me repeat, the final stages--of our examination of issues 
that are related to prewar intelligence on Iraq. And I hope we 
have that concluded at the earliest possible date. My hope is 
to complete that effort as soon as practical.
    There has also been a great deal of discussion in regard to 
the issue of terrorist surveillance. Senator Rockefeller and I 
have been intimately involved with this issue since we assumed 
our respective positions. We have been conducting oversight 
over this critical capability for almost 3 years now. 
Nonetheless, the minority Members and some in the majority of 
this Committee have requested an opportunity to meet and 
discuss whether the Vice Chairman and my efforts on their 
behalf have been sufficient. I have scheduled such a business 
meeting for February 16. I have assured the Vice Chairman twice 
that the Committee will have an opportunity to express its will 
on this matter, and we will.
    Yesterday, Members had the opportunity to meet with various 
officials of the Justice Department to discuss the legal issues 
associated with terrorist surveillance. I've also scheduled a 
hearing for February 9--I want all Members to note that--when 
we will meet in executive session to hear from Attorney General 
Gonzales and also General Hayden. I hope my actions and my 
words are sufficient to assuage any lingering concerns about 
what we may or may not be doing.
    If any Member wishes to discuss further the Committee 
activities, I'm happy to make arrangements to do so at an 
appropriate time. For now, the Committee turns its attention to 
our annual worldwide threat hearing. Our witnesses are some of 
the Nation's premiere experts on national security matters. 
During this open hearing, I am hopeful that Members will take 
the opportunity to engage this uniquely qualified panel in a 
manner which will educate the American people to the maximum 
extent possible on the global threats faced by our Nation.
    I ask that Members do reserve questions for the closed 
session that will require a discussion of classified or 
sensitive material.
    Before I turn to our Director, I recognize the 
distinguished Vice Chairman for any remarks that he may wish to 
make.

        OPENING STATEMENT OF HON. JOHN D. ROCKELLER IV, 
        VICE CHAIRMAN, A U.S. SENATOR FROM WEST VIRGINIA

    Vice Chairman Rockefeller. Thank you, Mr. Chairman.
    Welcome, Director Negroponte. This is not just your first 
visit at a world threat meeting, but it's your first visit with 
the Committee, and we're happy to see you here, and everybody 
else.
    Americans are presented with sobering information about the 
threats facing our country on a daily basis. They are 
continually reminded that the passage of time since the attacks 
of 9/11 has done little to lower the security threat both here 
and abroad. In the immediate aftermath of 9/11, America moved 
swiftly and decisively against al-Qa'ida in Afghanistan and the 
surrounding region.
    However, at the same time, we were destroying the terrorist 
safe haven in Afghanistan. Our military invasion of Iraq, in 
turn, created a dangerous terrorist environment that did not 
exist prior to the war--a place where Islam's jihadists can 
train on the front line and carry out attacks against American 
and allied troops.
    Our military action in Afghanistan forced bin Ladin and the 
al- Qa'ida leadership to run and hide. We isolated them and 
disrupted their terrorist networks and plots. By invading Iraq, 
however, we gave them not only a target-rich terrorist 
environment, but an effective propaganda tool for fostering 
anti-American, anti-Western sentiment throughout the Muslim 
world. As a result, we are now faced with the disturbing trend 
of autonomous terrorist organizations and groups with little or 
no operational or organizational link to al-Qa'ida carrying out 
murderous attacks against civilians in Spain, Britain, 
Southeast Asia and elsewhere.
    I'm afraid that the gains in Afghanistan have been offset 
by the unintended consequences of our actions in Iraq. We now 
face a more decentralized, but equally lethal terrorist threat 
which cannot be decapitated by the capture of a single 
individual or any specific target. This metastasized threat 
presents a number of operational and political challenges to 
our counterterrorist program, and I'd like to take a moment 
just to speak about one of them.
    The 2004 intelligence reform bill creating the Director of 
National Intelligence position requires the Director to be 
responsible for providing national intelligence to the 
Congress. That's the law. The law requires that the 
intelligence provided by the Director should be timely, should 
be objective and independent of political consideration.
    Now, many of us on this Committee fought hard for the 
inclusion of that phrase ``independent of political 
consideration,'' to have that in the law, because we were 
troubled by what we had found in the Committee's investigation 
into the handling of intelligence on Iraq prior to the war. Of 
specific concern to me was the disturbing pattern by the 
Administration of selectively releasing or declassifying 
intelligence that supported the case to go to war, while 
dismissing or downplaying or simply not acknowledging 
intelligence that undercut claims that Iraq had an active 
nuclear weapons program, that Iraq was assisting al-Qa'ida with 
chemical and biological weapons, or, as the Vice President 
continued publicly assert, that Iraq had a role in the 9/11 
attacks against America.
    To be blunt, Director Negroponte, I have these same 
concerns today.
    I am deeply troubled by what I see as the Administration's 
continued effort to selectively release intelligence 
information that supports its policy or political agenda while 
withholding equally pertinent information that does not do 
that. The question I am wrestling with is whether the very 
independence of the U.S. Intelligence Community has been co-
opted, to be quite honest about it, by the strong, controlling 
hand of the White House.
    Now, let me be specific. The recent revelation that the 
National Security Agency, at the direction of the President, 
has been intercepting phone calls and e-mails within the United 
States without a warrant and in contravention of the Foreign 
Intelligence Surveillance Act for the past 4 years has led 
Members of this Committee to ask some difficult but, frankly, 
necessary questions about the program.
    As you know, this Committee, as the body that oversees and 
annually authorizes our nation's intelligence programs, is 
entrusted with the most sensitive secrets. There are statutory 
requirements placed on you and the heads of the intelligence 
agencies to keep our Committee Members fully informed on these 
matters and activities, including efforts taken to counter the 
terrorist threat facing our nation.
    And yet the White House has laid down the edict to you and 
your principal deputy, Director Negroponte and former NSA 
Director General Hayden, that no one on this Committee other 
than the Chairman and myself can be briefed on the NSA domestic 
spying program. The reasons, we are told, is that the 13 other 
Members of this Committee cannot be trusted to know the details 
of the program.
    This rationale for withholding information from Congress is 
flat-out unacceptable and nothing more than political smoke, in 
this Senator's view. As you, sir, and General Hayden know well, 
every Member of this Committee is given access to operational 
details about each and every signals intelligence collection 
program carried out by the NSA against targets overseas. We're 
all getting it. Much of the staff gets it. We are briefed in 
closed session about ultra-sensitive NSA programs that produce 
unique and invaluable intelligence and, if divulged, literally 
could get people killed. The NSA briefs the Committee on these 
programs not just because the law requires them to do so, but 
because we, as the authorizers of the intelligence budget, need 
to understand the value and risk of what we do to keep America 
safe.
    How can this Committee reconcile this ongoing intimate 
understanding and evaluation of the NSA's overseas activities 
with the wall that the White House has constructed around the 
NSA's warrantless collection of phone calls and e-mails inside 
of the United States? What is unique about this one particular 
program among all the other sensitive NSA programs that 
justifies keeping Congress in the dark?
    It certainly is not that the program is cloaked in heavy 
secrecy. On the contrary, it's become one of the more public 
programs. Since the existence of this program was leaked to the 
press in a most unfortunate fashion in mid-December, the 
President has not only confirmed the existence of the program, 
but has spoken at length about it, repeatedly, characterizing 
not only the target of the intelligence collection, but the 
method employed to collect that information.
    In recent weeks, every senior Administration official, from 
the Vice President to the White House press secretary, has 
voluntarily approached the cameras and microphones to talk 
about this NSA domestic surveillance program. I assume that 
they were not only authorized to discuss the details of this 
classified program, but were in fact directed to do so.
    Last week, the White House carried out a 4-day press 
strategy to saturate the media with speeches and events 
designed to sway public opinions, in my judgment, in support of 
the spying program.
    The second act of this 4-day White House push was a speech 
given by General Hayden before the National Press Club on 
January 23rd, so that he could, in his own words, ``Tell the 
American people what NSA has done and why, and perhaps more 
importantly, what it has not been doing.''
    The General's unusual appearance before the press corps and 
other related public statements give the disturbing impression 
to some that the intelligence community has become a public 
relations arm of the White House in recent weeks on this 
matter.
    Even more troubling are the actions of the intelligence 
community to sidestep our Committee--this is something about 
which we feel very strongly on--with the matter of the NSA 
program. To paraphrase General Hayden's statement before the 
National Press Club, why he has not been before our Committee 
to tell all Members what NSA has been doing and why, I just 
can't justify, balance, or even understand this rationale.
    The NSA's domestic surveillance program is the most openly 
discussed program in the agency's history. Administration 
officials have publicly described in unprecedented fashion and 
detail the scope of the program, who is targeted by the 
program, what type of communications are intercepted, and how 
the information collected has allegedly been used to foil 
plots.
    Director Negroponte, consider this fact. The only NSA 
program the White House has authorized senior intelligence 
officials to discuss publicly is the only NSA program all 
Members of the congressional Intelligence Committees are 
prohibited from knowing about.
    I hope you are struck by this paradox and troubled by its 
implication. You in the intelligence community serve the 
President, to be sure, but Congress, according to the law, is 
an important customer of the intelligence community as well. 
The expectation is that you and all officials of the 
intelligence community are to carry out your duties in a manner 
that is independent of political influences from either end of 
Pennsylvania Avenue. The selective declassification of 
intelligence reform, which has undeniably occurred in recent 
weeks in support of the Administration's defense of the NSA 
programs, hark in fact to the troubling runup to the war in 
Iraq.
    A decision has been made by the White House to overly 
restrict congressional access to key information about the NSA 
program, while at the same time it opens the floodgates of this 
public relations campaign to the American people in support of 
the program.
    I have heard that hundreds, if not thousands, of people at 
NSA, the White House, the Department of Justice and the CIA 
have a working knowledge of the NSA domestic surveillance 
program. And yet the White House position is that if sharing 
the details about the program is carried out with 40 Members of 
the Senate and the House Intelligence Committees, that that's 
an unacceptable risk. I'm sorry, I can't buy into that.
    So, Mr. Director, you don't need to answer now, but do you 
believe that this is so? Do you, General Hayden? A White House 
P.R. campaign is not a substitute for the legal requirement--
legal requirement--to keep the Members of our Committee fully 
informed of intelligence activities.
    Director Negroponte, during the question and answer period 
of this hearing, I want to pursue this matter further with you. 
I will ask for the record who specifically has prohibited you, 
General Hayden, and the NSA Director, General Keith Alexander, 
from appearing before our Committee in closed session and 
providing testimony on the factual aspects of the NSA domestic 
surveillance program, and whether you agree with the basis for 
withholding this information from Congress. I also want to find 
out which person or office describes what aspects of the NSA 
domestic surveillance that can be declassified and released to 
the public.
    In closing, it may be that some Members of Congress, of 
this Committee would indeed support the program if they were 
apprised of its scope and its operational successes. Others 
might oppose it. Either way, Committee Members cannot be put in 
the untenable position of passing judgment on a program that 
they are prevented from understanding. As both a customer of 
intelligence and the body that annually authorizes the 
important programs carried out by you gentlemen and ladies, we 
have a solemn responsibility to make sure that the activities 
that we fund are not only justified but lawful.
    As of today, we cannot make such a determination about the 
NSA domestic surveillance program authorized by the President.
    So, in conclusion, Director Negroponte, we will be 
addressing the threats facing America in your testimony--you 
will be doing that. What is being done to combat these threats 
is a concern shared by all of us. I hope you appreciate why it 
is important for Members of this Committee to fully understand 
the efforts being brought to bear to combat the terrorist 
threat to our Nation, including, but not limited to, action 
taken within our borders.
    Thank you, Mr. Chairman.
    Chairman Roberts. Mr. Director, I am now going to turn to 
you. But let me say that, as I said in my opening statement, 
the Committee will have ample opportunity to discuss this issue 
in full at two business meetings and obviously will conclude 
with the wishes of the Committee.
    And let me say also that my primary concern in this regard, 
this particular issue, is not losing this capability and going 
blind and not being able to continue to prevent attacks on the 
United States and guarantee the safety of the American people.
    Mr. Director.

       STATEMENT OF HON. JOHN D. NEGROPONTE, DIRECTOR OF 
         NATIONAL INTELLIGENCE, ACCOMPANIED BY GENERAL 
        MICHAEL V. HAYDEN, PRINCIPAL DEPUTY DIRECTOR OF 
      NATIONAL INTELLIGENCE; HON. ROBERT S. MUELLER, III, 
        DIRECTOR, FEDERAL BUREAU OF INVESTIGATION; HON. 
PORTER GOSS, DIRECTOR, CENTRAL INTELLIGENCE AGENCY; LIEUTENANT 
               GENERAL MICHAEL D. MAPLES (USA), 
      DIRECTOR, DEFENSE INTELLIGENCE AGENCY; DR. CHARLES 
       ALLEN, CHIEF INTELLIGENCE OFFICER, DEPARTMENT OF 
  HOMELAND SECURITY; AND HON. CAROL RODLEY, PRINCIPAL DEPUTY 
               ASSISTANT SECRETARY OF STATE FOR 
                   INTELLIGENCE AND RESEARCH

    Director Negroponte. Thank you, Mr. Chairman, Vice Chairman 
Rockefeller, members of the Committee. Thank you for the 
invitation to offer my assessment of the threats, challenges 
and opportunities for the United States in today's world. I am 
honored to be the first Director of National Intelligence to 
offer you such an assessment. And I am pleased to note that 
following my oral testimony, I will answer your questions with 
the assistance of those who accompany me here at the witness 
table.
    Let me begin with a straightforward statement of 
preoccupation shared by all of us sitting here before you. 
Terrorism is the preeminent threat to our citizens, to our 
homeland and to our interests abroad. The war on terror is our 
first priority and driving concern as we press ahead with a 
major transformation of the intelligence community that we 
represent.
    We live in a world that is full of conflict, contradictions 
and accelerating change. Viewed from the perspective of the 
Director of National Intelligence, the most dramatic change of 
all is the exponential increase in the number of targets we 
must identify, track and analyze. Today, in addition to hostile 
nation-states, we are focusing on terrorist groups, 
proliferation networks, alienated communities, charismatic 
individuals, narcotraffickers and microscopic influenza.
    The 21st century is less dangerous than the 20th century in 
certain respects, but more dangerous in others. Globalization, 
particularly of technologies that can be used to produce 
weapons of mass destruction, political instability around the 
world, the rise of emerging powers like China, the spread of 
the jihadist movement, and, of course, the horrific events of 
September 11, 2001, demand heightened vigilance from our 
intelligence community.
    This morning, I will discuss, first, global jihadists, 
their fanatical ideology, and the civilized world's efforts to 
disrupt, dismantle and destroy their networks; next, the 
struggle of the Iraqi and Afghan people to assert their 
sovereignty over insurgency, terror, and extremism; next, WMD-
related proliferation and two States of particular concern, 
Iran and North Korea. Then I will discuss issues of political 
instability and governance in all regions of the world that 
affect our ability to protect and advance our interests; and 
last, globalization, emerging powers, and such transnational 
challenges as the geopolitics of energy, narcotrafficking, and 
possible pandemics.
    In assessing these themes, we must all be mindful of the 
old dictum, ``forewarned is forearmed.'' Our policymakers, 
warfighters and law enforcement officers need the best 
intelligence and analytic insight humanly and technically 
possible to help them peer into the onrushing shadow of the 
future and make decisions that will protect American lives and 
interests.
    This has never been more true than now, with United States 
and coalition forces in Iraq and Afghanistan, the citizens and 
fledgling governments they help to protect under attack. 
Addressing threats to their safety and providing the critical 
intelligence of a myriad of tactical and strategic issues must 
be--and is--a top priority for our intelligence community.
    But in discussing all the many dangers the 21st century 
poses, it should be emphasized that they do not befall America 
alone. The issues we consider today confront responsible 
leaders everywhere. That is the true nature of the 21st 
century--accelerating change affecting and challenging us all.
    Now I turn to the global jihadist threat. Collaboration 
with our friends and allies around the world has helped us 
achieve some notable successes against the global jihadist 
threat.
    In fact, most of al-Qa'ida's setbacks last year were the 
results of our allies' efforts, either independently or with 
our assistance. And since 9/11, examples of the high level of 
counterterrorism efforts around the world are many. Pakistan's 
commitment has enabled some of the most important captures to 
date. Saudi Arabia's resolve to counter the spread of terrorism 
has increased. Our relationship with Spain has strengthened 
since the March 2004 Madrid train bombings. The British have 
long been our closest counterterrorism partners--the seamless 
cooperation in the aftermath of the July attacks in London 
reflect that commitment--while Australia, Canada, France and 
many other nations remain stout allies.
    Nonetheless, much remains to be done; the battle is far 
from over. Jihadists seek to overthrow regimes they regard as 
``apostate'' and to eliminate United States influence in the 
Muslim world. They attack Americans when they can, but most of 
their targets and victims are fellow Muslims.
    Nonetheless, the slow pace of economic, social, and 
political change in most Muslim-majority nations continues to 
fuel a global jihadist movement. The movement is diffuse and 
subsumes three quite different types of groups and individuals: 
First and foremost, al-Qa'ida, a battered but resourceful 
organization; second, other Sunni jihadist groups, some 
affiliated with al-Qa'ida, some not; third, networks and cells 
that are the self-generating progeny of al-Qa'ida.
    Al-Qa'ida remains our top concern. We have eliminated much 
of the leadership that presided over al-Qa'ida in 2001, and 
U.S.-led counterterrorism efforts in 2005 continue to disrupt 
its operation, take out its leaders and deplete its cadre.
    But the organization's core elements still plot and make 
preparations for terrorist strikes against the homeland and 
other targets from bases in Pakistan-Afghanistan border area. 
They also have gained added reach through their merger with the 
Iraq-based network of Abu Musaab al-Zarqawi, which has 
broadened al-Qa'ida's appeal within the jihadist community and 
potentially put new resources at its disposal.
    Thanks to effective intelligence operations, we know a 
great deal about al-Qa'ida's vision. Zawahiri, al-Qa'ida's No. 
2, is candid in his July 2005 letter to Zarqawi. He portrays 
the jihad in Iraq as a stepping-stone in the march toward a 
global caliphate, with the focus on Egypt, Syria, Jordan, 
Lebanon, Saudi Arabia, the Gulf States and Israel. Zawahiri 
stresses the importance of having a secure base in Iraq from 
which to launch attacks elsewhere, including the United States 
homeland.
    In bin Ladin's recent audiotape, al-Qa'ida's top leader 
reaffirms the group's commitment to attack our homeland and 
attempts to reassure supporters by claiming that the reason 
there has been no attack on the United States since 2001 is 
that he chose not to do so.
    This week's statement by Zawahiri is another indication 
that the group's leadership is not completely cutoff and can 
continue to get its message out to followers. The quick 
turnaround time and the frequency of Zawahiri statements in the 
past year underscore the high priority al-Qa'ida places on 
propaganda from its most senior leaders.
    Attacking the U.S. homeland, U.S. interests overseas, and 
U.S. allies--in that order--are al-Qa'ida's top operational 
priorities. The group will attempt high-impact attacks for as 
long as its central command structure is functioning and 
affiliated groups are capable of furthering its interests, 
because even modest operational capabilities can yield a deadly 
and damaging attack. Although an attack using conventional 
explosives continues to be the most probable scenario, al-
Qa'ida remains interested in acquiring chemical, biological, 
radiological, and nuclear materials or weapons to attack the 
United States, U.S. troops and U.S. interests worldwide.
    Indeed, today we are more likely to see an attack from 
terrorists using weapons or agents of mass destruction than 
States, although terrorists' capabilities would be much more 
limited. In fact, intelligence reporting indicates that nearly 
40 terrorist organizations, insurgencies or cults have used, 
possessed, or expressed an interest in chemical, biological, 
radiological, or nuclear agents or weapons. Many are capable of 
conducting simple, small-scale attacks, such as poisonings or 
using improvised chemical devices.
    Al-Qa'ida inspires other Sunni jihadists. The global 
jihadist movement also subsumes other Sunni extremist 
organizations allied with or inspired by al-Qa'ida's global 
anti-Western agenda. These groups pose less danger to the U.S. 
homeland than does al-Qa'ida, but they increasingly threaten 
our allies and interests abroad and are working to expand their 
reach and capabilities to conduct multiple and/or mass- 
casualty attacks outside their traditional areas of operation.
    Jemaah Islamiyah is a well-organized group responsible for 
dozens of attacks killing hundreds of people in Southeast Asia. 
The threat of a JI attack against U.S. interests is greatest in 
Southeast Asia, but we assess that the group is committed to 
helping al- Qa'ida with attacks outside the region.
    The Islamic Jihad Union, the IJU, which has allied itself 
with al-Qa'ida, operates in Central Asia and was responsible 
for the July 2004 attacks against the United States and Israeli 
embassies in Uzbekistan.
    The Libyan Islamic Fighting Group, LIFG, was formed to 
establish an Islamic State in Libya, but since the late 1990s 
it has expanded its goal to include anti-Western jihad 
alongside al-Qa'ida. LIFG has called on Muslims everywhere to 
fight the United States in Iraq.
    Pakistani militant groups, primarily focused on the Kashmir 
conflict, represent a persistent threat to regional stability 
and U.S. interests in South Asia and the Near East. They also 
pose a potential threat to our interests worldwide. Extremists 
convicted in Virginia in 2003 of providing material support to 
terrorism trained with a Pakistani group, Lashkar-i-Tayyiba, 
before 9/11.
    New jihadist networks and cells. An important part of al- 
Qa'ida's strategy is to encourage a grassroots uprising of 
Muslims against the West. Emerging new networks and cells, the 
third element of the global jihadist threat, reflect aggressive 
jihadist efforts to exploit feelings of frustration and 
powerlessness in some Muslim communities and to fuel the 
perception that the United States is anti-Islamic. Their 
rationale for using terrorism against the United States and 
establishing strict Islamic practices resonates with a small 
subset of Muslims.
    This has led to the emergence of a decentralized and 
diffused movement with minimal centralized guidance or control 
and numerous individuals and small cells--like those who 
conducted the May 2003 bombing in Morocco, the March 2004 
bombings in Spain, and the July 2005 bombings in the United 
Kingdom. Members of these groups have drawn inspiration from 
al-Qa'ida, but appear to operate on their own.
    Such unaffiliated individuals, groups and cells represent a 
different threat than that of a defined organization. They are 
harder to spot, and represent a serious intelligence challenge. 
Regrettably, we are not immune from the threat of such 
homegrown jihadist cells. A network of Islamic extremists in 
Lodi, California, for example, maintained connections with 
Pakistani militant groups, recruited U.S. citizens for training 
at radical Karachi madrassas, sponsored Pakistani citizens for 
travel to the United States to work at mosques and madrassas, 
and, according to FBI information, allegedly raised funds for 
international jihadist groups.
    In addition, prisons continue to be fertile recruitment 
ground for extremists who try to exploit converts to Islam.
    Now, I wish to turn to the impact of Iraq on the global 
jihad. Should the Iraqi people prevail in establishing a stable 
political and security environment, the jihadists will be 
perceived to have failed and fewer jihadists will leave Iraq 
determined to carry on the fight elsewhere. But we assess that 
should the jihadists thwart the Iraqi efforts to establish a 
stable political and security environment, they could secure an 
operational base in Iraq and inspire sympathizers elsewhere to 
move beyond rhetoric to attempt attacks against neighboring 
Middle Eastern nations, against Europe, and even the United 
States.
    The same dynamic pertains to al-Zarqawi. His capture would 
deprive the movement of a notorious leader, whereas his 
continued acts of terror could enable him to expand his 
following beyond his organization in Iraq much as bin Ladin 
expanded al-Qa'ida in the 1990s.
    The debate between Muslim extremists and moderates also 
will influence the future terrorist environment, the domestic 
stability of key U.S. partners, and the foreign policies of 
governments throughout the Muslim world. The violent actions of 
global jihadists are adding urgency to the debate within Islam 
over how religion should shape government. Growing internal 
demands for reform in many Muslim countries further stimulate 
this debate.
    In general, Muslims are becoming more aware of their 
Islamic identity, leading to growing political activism; but 
this does not necessarily signal a trend toward radicalization. 
Most Muslims reject the extremist message and violent agendas 
of the global jihadists. Indeed, as Muslims endorse democratic 
principles of freedom, equality, and the rule of law and a role 
for their religious beliefs in building better futures for 
their communities, there will be growing opportunities for 
countering a jihadist movement that authoritarianism, isolation 
and economic stagnation.
    Let me turn to the issue of extremism and challenges to 
effective governance and legitimacy in Iraq and Afghanistan. 
The threat from extremism and anti-Western militancy is 
especially acute in Iraq and Afghanistan. In discussing Iraq, 
I'd like to offer, if you will, a balance sheet to give a sense 
of where I see things today and what I see as the trends in 
2006.
    Bold, inclusive leadership will be the critical factor in 
establishing an Iraqi constitutional democracy that is both 
viable as a nation-state and responsive to the diversity of 
Iraq's regions and people.
    Let me begin with some of these encouraging developments 
before turning to the challenges.
    The insurgents have not been able to establish any lasting 
territorial control. They were unable to disrupt either of the 
two national elections held this year or the constitutional 
referendum. They have not developed a political strategy to 
attract popular support beyond their Sunni Arab base. And they 
have not shown the ability to coordinate nationwide operations.
    Iraqi security forces are taking on more demanding 
missions, making incremental progress toward operational 
independence, and becoming more capable of providing the kind 
of stability Iraqis deserve and the economy needs in order to 
grow.
    Signs of open conflict between extreme Sunni jihadists and 
Sunni nationalist elements of the insurgency, while thus far 
still localized, are encouraging and exploitable. The 
jihadists' heavy-handed activities in Sunni areas in western 
Iraq have caused tribal and nationalist elements in the 
insurgency to reach out to the Baghdad government for support.
    Large-scale Sunni participation in the last elections has 
provided a first step toward diminishing Sunni support for the 
insurgency. There appears to be a strong desire among Sunnis to 
explore the potential benefits of political participation.
    But numerous challenges remain. Iraqi Sunni Arab 
disaffection is the primary enabler of the insurgency and is 
likely to remain high in 2006. Even if a broad, inclusive 
national government emerges, there almost certainly will be a 
lag time before we see a dampening effect on the insurgency. 
Insurgents continue to demonstrate the ability to recruit, 
supply, and attack coalition and security forces, and their 
leaders continue to exploit Islamic themes, nationalism, and 
personal grievances to fuel opposition to the government and to 
recruit more fighters.
    The most extreme Sunni jihadists, such as those fighting 
with Zarqawi, will remain unreconciled and continue to attack 
Iraqis and coalition forces. These extreme Sunni jihadist 
elements, a subset of which are foreign fighters, constitute a 
small minority of the overall insurgency, but their use of 
high-profile suicide attacks gives them a disproportionate 
impact. The insurgents' use of increasingly lethal improvised 
explosive devices, and the IED-makers' adaptiveness to 
coalition countermeasures, remain the most significant day-to-
day threat to coalition forces and a complex challenge for the 
intelligence community.
    Iraqi security forces require better command and control 
mechanisms to improve their effectiveness, and are experiencing 
difficulty in managing ethnic and sectarian divides among their 
units and personnel.
    A key to establishing effective governance and security 
over the next 3 to 5 years is enhanced Sunni Arab political 
participation and a growing perception among Sunnis that the 
political process is addressing their interests.
    Sunnis will be focused on obtaining what they consider 
their demographically appropriate share of leadership positions 
in the new government, especially on the Constitutional Review 
Commission. Debates over federalism, central versus local 
control, and division of resources are likely to be complex. 
Success in satisfactorily resolving them will be key to 
advancing stability and prospects for a unified country.
    Although the Kurds and Shi'a have been accommodating to the 
under-represented Sunnis in 2005, their desire to protect core 
interests, such as regional autonomy and de-Ba'athification, 
could make further compromise more difficult.
    In the aftermath of the December elections, virtually all 
of the Iraq parties are seeking to create a broad-based 
government, but all want it to be formed on their terms. The 
Shi'a and the Kurds will be the foundation of any governing 
coalition, but it is not yet clear to us whether they will 
include the main Sunni factions, particularly the Iraqi 
Consensus Front, or other smaller and politically weaker 
secular groups, such as former Prime Minister Allawi's Iraqi 
National List.
    The Sunni parties have significant expectations for 
concessions from the Shi'a and Kurds in order to justify their 
participation and avoid provoking more insurgent violence 
directed against Sunni political leaders.
    During the coming year, Iraq's newly elected leadership 
will face a daunting set of governance tasks. The creation of a 
new, permanent government and the review of the constitution by 
early summer will offer opportunities to find common ground and 
improve the effectiveness and legitimacy of the central 
government. There is a danger, however, that political 
negotiations and deal-making will prove divisive. This could 
obstruct efforts to improve government performance, extend 
Baghdad's reach throughout the country and build confidence in 
the democratic political process.
    Let me focus on one of those tasks--the economy. 
Restoration of basic services and the creation of jobs are 
critical to the well-being of Iraqi citizens, the legitimacy of 
the new government, and, indirectly, to eroding support for the 
insurgency. At this point, prospects for economic development 
in 2006 are constrained by the unstable security situation, 
insufficient commitment to economic reform, and to corruption. 
Iraq is dependent on oil revenues to fund the government, so 
insurgents continue to disrupt oil infrastructure, despite the 
fielding of new Iraqi forces to protect it. Insurgents also are 
targeting trade and transportation. Intelligence has a key role 
to play in combating threats to pipelines, to electric power 
grids, and personal safety.
    Turning now to Afghanistan, like Iraq, Afghanistan is a 
fragile new democracy struggling to overcome deep-seated social 
divisions, decades of repression, and acts of terrorism 
directed against ordinary citizens, officials, foreign aid 
workers, and coalition forces. These and other threats to the 
Karzai government also threaten important American interests 
ranging from the defeat of terrorists who find haven along the 
Afghanistan-Pakistan border to the suppression of opium 
production.
    Afghan leaders face four critical challenges: Containing 
the insurgency, building central government capacity and 
extending its authority, further containing warlordism, and 
confronting pervasive drug criminality. Intelligence is needed 
to assist, monitor, and protect Afghan, coalition, and NATO 
efforts in all four endeavors. The volume and geographic scope 
of attacks increased last year, but the Taliban and other 
militants have not been able to stop the democratic process or 
expand their support base beyond Pashtun areas of the South and 
East. Nevertheless, the insurgent threat will impede the 
expansion of Kabul's writ, it will slow economic development, 
and limit progress in counternarcotics efforts.
    Ultimately, defeating the insurgency will depend heavily on 
continued international aid; on effective coalition, NATO, and 
Afghan government security operations to prevent the insurgency 
from gaining a stronger foothold in some Pashtun areas; and on 
the success of the government's reconciliation initiatives.
    I would like now to turn to the issue of weapons of mass 
destruction and States of key concern, Iran and North Korea. 
The ongoing development of dangerous weapons and delivery 
systems constitutes the second major threat to the safety of 
our Nation, our deployed troops, and to our allies. We are most 
concerned about the threat and destabilizing effect of nuclear 
proliferation. We are also concerned about the threat from 
biological agents or even chemical agents, which would have 
psychological and possibly political effects far greater than 
their actual magnitude. Use by nation-states can still be 
constrained by the logic of deterrence and international 
control regimes, but these constraints may be of little utility 
in preventing the use of mass effect weapons by rogue regimes 
or terrorist groups.
    The time when a few states had monopolies over the most 
dangerous technologies has been over for many years. Moreover, 
our adversaries have more access to acquire and more 
opportunities to deliver such weapons than in the past. 
Technologies, often dual-use, move freely in our globalized 
economy, as do the scientific personnel who design them. So it 
is more difficult for us to track efforts to acquire those 
components and production technologies that are so widely 
available.
    The potential dangers of proliferation are so grave that we 
must do everything possible to discover and disrupt attempts by 
those who seek to acquire materials and weapons.
    We assess that some of the countries that are still 
pursuing WMD programs will continue to try to improve their 
capabilities and level of self-sufficiency over the next 
decade. We also are focused on the potential acquisition of 
such nuclear, chemical and/or biological weapons, or the 
production technologies and materials necessary to produce them 
by states that do not now have such programs, terrorist 
organizations like al-Qa'ida and by criminal organizations, 
either alone or through middlemen.
    We are working with other elements of the U.S. Government 
regarding the safety and security of nuclear weapons and 
fissile material, pathogens, and chemical weapons in select 
countries.
    Our concerns about Iran are shared by many nations, by the 
International Atomic Energy Agency and, of course, Iran's 
neighbors. Iran conducted a clandestine uranium enrichment 
program for nearly two decades in violation of its IAEA 
safeguards agreement and, despite its claim to the contrary, we 
assess that Iran seeks nuclear weapons. We judge that Tehran 
probably does not yet have a nuclear weapon and probably has 
not yet produced or acquired the necessary fissile material.
    Nevertheless, the danger that it will acquire a nuclear 
weapon and the ability to integrate it with ballistic missiles 
Iran already possesses is a reason for immediate concern. Iran 
already has the largest inventory of ballistic missiles in the 
Middle East, and Tehran views its ballistic missiles as an 
integral part of its strategy to deter--and if necessary 
retaliate against--forces in the region, including U.S. forces.
    As you are aware, Iran is located at the center of a vital 
and volatile region. It has strained relations with its 
neighbors and is hostile to the United States, to our friends, 
and to our values. President Ahmadinejad has made numerous 
unacceptable statements since his election, hard-liners have 
control of all the major branches and institutions of 
government, and the government has become more effective and 
efficient at repressing the nascent shoots of personal freedom 
that had emerged in the late 1990s and earlier in the decade. 
Indeed, the regime today is more confident and assertive than 
it has been since the early days of the Islamic Republic.
    Several factors work in favor of the clerical regime's 
continued hold on power. Record oil and other revenue is 
permitting generous public spending, fueling strong economic 
growth and swelling financial reserves. At the same time, Iran 
is diversifying its foreign trading partners. Asia's share of 
Iran's trade has jumped to nearly match Europe's 40 percent 
share. Tehran sees diversification as a buffer against external 
efforts to isolate it.
    Although regime-threatening instability is unlikely, 
ingredients for political volatility remain, and Iran is wary 
of the political progress occurring in neighboring Iraq and 
Afghanistan. Ahmadinejad's rhetorical recklessness and his 
inexperience on the national and international stage also 
increase the risk of a misstep that could spur popular 
opposition, especially if more experienced conservatives cannot 
rein in his excesses. Over time, Ahmadinejad's populist 
economic policies could, if enacted, deplete the government's 
financial resources and weaken a structurally flawed economy. 
For now, however, Supreme Leader Khamenei is keeping 
conservative fissures in check by balancing the various 
factions in government.
    Iranian policy toward Iraq and its activities there 
represent a particular concern. Iran seeks a Shi'a-dominated 
and unified Iraq, but also wants the United States to 
experience continued setbacks in our efforts to promote 
democracy and stability. Accordingly, Iran provides guidance 
and training to select Iraqi Shi'a political groups, and 
weapons and training to Shi'a militant groups to enable anti-
coalition attacks. Tehran has been responsible for at least 
some of the increasing lethality of anti-coalition attacks by 
providing Shi'a militants with the capability to build 
improvised explosive devices with explosively formed 
projectiles similar to those developed by Iran and Lebanese 
Hezbollah.
    Tehran's intentions to inflict pain on the United States in 
Iraq has been constrained by its caution to avoid giving 
Washington an excuse to attack it, also the clerical 
leadership's general satisfaction with trends in Iraq, and 
Iran's desire to avoid chaos on its border.
    Iranian conventional military power constitutes the 
greatest potential threat to Persian Gulf States and a 
challenge to U.S. interests. Iran is enhancing its ability to 
project its military power in order to threaten to disrupt the 
operations and reinforcement of U.S. forces based in the 
region, potentially intimidating regional allies into 
withholding support for U.S. policy toward Iran and raising the 
costs of our regional presence for the United States--for us 
and our allies.
    Tehran also continues to support a number of terrorist 
groups, viewing this capability as a critical regime safeguard 
by deterring U.S. and Israeli attacks, by distracting and 
weakening Israel, and enhancing Iran's regional influence 
through intimidation. Lebanese Hezbollah is Iran's main 
terrorist ally, which, although focused on its agenda in 
Lebanon and supporting anti-Israeli Palestinian terrorists, has 
a worldwide support network and is capable of attacks against 
U.S. interests if it feels its Iranian patron is threatened.
    Tehran also supports Palestinian Islamic Jihad and other 
groups in the Persian Gulf, Central and South Asia, and 
elsewhere.
    Now, turning to North Korea, North Korea claims to have 
nuclear weapons, a claim that we assess is probably true, and 
it has threatened to proliferate these weapons abroad. Thus, 
like Iran, North Korea threatens international security and is 
located in a historically volatile region. Its aggressive 
deployment posture threatens our allies in South Korea and U.S. 
troops on the peninsula.
    Pyongyang sells conventional weapons to Africa, Asia and 
the Middle East, and has sold ballistic missiles to several 
Middle Eastern countries, further destabilizing regions already 
embroiled in conflict. And it produces and smuggles abroad 
counterfeit U.S. currency, as well as narcotics and other 
contraband.
    Pyongyang sees nuclear weapons as the best way to deter 
superior U.S. and South Korean forces, to ensure regime 
security, as a lever for economic gain and as a source of 
prestige. Accordingly, the North remains a major challenge to 
the global nuclear nonproliferation regimes.
    We do not know the conditions under which North Korea might 
be willing to fully relinquish its nuclear weapons and its 
weapons program. Nor do we see signs of organized opposition to 
the regime among North Korea's political or military elite.
    Now let me turn to the issue of governance, political 
instability and democratization. Good governance and, over the 
long term, progress toward democratization are crucial factors 
in navigating through the period of international turmoil and 
transition that commenced with the end of the cold war and that 
will continue well into the future. In the absence of effective 
governance and reform, political instability often compromises 
our security interests while threatening new democracies and 
pushing flailing states into failure.
    I will now review those States of greatest concern to the 
United States, framing my discussion within the context of 
trends and developments in their respective regions.
    First the Middle East. The tensions between autocratic 
regimes, extremism, and democratic forces extends well beyond 
our earlier discussion about Iran, Iraq and Afghanistan to 
other countries in the Middle East. Emerging political 
competition and the energizing of public debate on the role of 
democracy and Islam in the region could lead to the opening of 
political systems and development of civic institutions, 
providing a possible bulwark against extremism. But the path to 
change is far from assured. Forces for change are vulnerable to 
fragmentation and long-standing regimes are increasingly adept 
at using both repression and limited reforms to moderate 
political pressures to assure their survival.
    We continue to watch closely events in Syria, a pivotal--
but generally unhelpful--player in a troubled region. Despite 
the Syrian military withdrawal from Lebanon last year, Damascus 
still meddles in its internal affairs, seeks to undercut 
prospects for Arab-Israeli peace, and has failed to crackdown 
consistently on militant infiltration into Iraq. By aligning 
itself with Iran, the Bashar al-Asad regime is signaling its 
rejection of the Western world. Over the coming year, the 
Syrian regime could face internal challenges as various 
pressures--especially the fallout of the United Nation 
investigation into the assassination of the former Lebanese 
prime minister--raise questions about President Bashar al-
Asad's judgment and leadership capacity.
    Syria's exit from Lebanon has created political 
opportunities in Beirut, but sectarian tensions--especially the 
sense among Shi'a that they are underrepresented in the 
government--and Damascus's meddling persist. Bombings since 
March targeting anti-Syria politicians and journalists have 
fueled sectarian animosities.
    Egypt held Presidential and legislative elections for the 
first time with multiple Presidential candidates in response to 
internal and external pressures for democratization. The 
Egyptian public, however, remains discontented by economic 
conditions, the Arab-Israeli problem, the U.S. presence in 
Iraq, and insufficient political freedoms.
    Saudi Arabia's crackdown on al-Qa'ida has prevented major 
terrorist attacks in the Kingdom for more than a year and 
degraded the remnants of the terror network's Saudi-based 
leadership, manpower, access to weapons and operational 
capability. These developments, the Kingdom's smooth leadership 
transition, and high oil prices have eased, but not eliminated, 
concerns about stability.
    Hamas' performance in last week's election ushered in a 
period of great uncertainty as President Abbas, the Israelis, 
and the rest of the world determine how to deal with a majority 
party in the Palestinian Legislative Council that conducts and 
supports terrorism and refuses to recognize or negotiate with 
Israel. The election, however, does not necessarily mean that 
the search for peace between Israel and the Palestinians is 
halted irrevocably. The vote garnered by Hamas may have been 
cast more against the Fatah than for the Hamas program of 
rejecting Israel. In any case, Hamas must now contend with the 
Palestinian public opinion that has over the years has 
supported the two-state solution.
    Let me turn now to South Asia.
    Many of our most important interests intersect in Pakistan. 
The nation is a frontline partner in the war on terror, having 
captured several al-Qa'ida leaders, but also remains a major 
source of extremism that poses a threat to Musharraf, to the 
United States, and to neighboring India and Afghanistan.
    Musharraf faces few political challenges in his dual role 
as President and chief of the Army Staff, but has made only 
limited progress moving his country toward democracy. Pakistan 
retains a nuclear force outside the Treaty on the 
Nonproliferation of Nuclear Weapons and not subject to full-
scope IAEA safeguards, and has been both recipient and source--
via A.Q. Khan's proliferation activities--of nuclear weapons-
related technologies. Pakistan's national elections scheduled 
for 2007 will be a key benchmark to determine whether the 
country is continuing to make progress in its democratic 
transition.
    Since India and Pakistan approached the brink of war in 
2002, their peace process has lessened tensions, and both 
appear committed to improving the bilateral relationship. A 
number of confidence-building measures, including new 
transportation links, have helped sustain the momentum. Still, 
the fact that both have nuclear weapons and missiles to deliver 
them entails obvious and dangerous risks of escalation.
    Turning now to Eurasia, in Russia, President Putin's drive 
to centralize power and assert control over civil society, 
growing state control over strategic sectors of the economy, 
and the persistence of widespread corruption raise questions 
about the country's direction. Russia could become a more 
inward-looking and difficult interlocutor for the United States 
over the next several years. High profits from exports of oil 
and gas and perceived policy successes at home and abroad have 
bolstered Moscow's confidence.
    Russia probably will work with the United States on shared 
interests such as counterterrorism, counternarcotics and 
counterproliferation; however, growing suspicions about Western 
intentions and Moscow's desire to demonstrate its independence 
and defend its own interests may make it harder to cooperate 
with Russia on areas of concern to the United States.
    Now, let me briefly examine the rest of post-Soviet 
Eurasia, where the results in the past year have been mixed. 
Many of the former Soviet republics are led by autocratic, 
corrupt, clan-based regimes whose political stability is based 
on different levels of repression; yet, at the same time, we 
have seen in Georgia, in Ukraine, and in Kyrgyzstan the 
emergence of grassroots forces for change.
    Central Asia remains plagued by political stagnation and 
repression, rampant corruption, widespread poverty and widening 
socio- economic inequalities, and other problems that nurture 
nascent radical sentiment and terrorism. In the worst, but not 
implausible case, central authority in one or more of these 
States could evaporate as rival clans or regions vie for power, 
opening the door to an expansion of terrorist and criminal 
activity on the model of failed states like Somalia and, when 
it was under Taliban rule, Afghanistan.
    Turning now to Latin America, a gradual consolidation and 
improvement of democratic institutions is the dominant trend in 
much of Latin America. By the year's end, 10 countries will 
have held Presidential elections and none is more important to 
U.S. interests than the contest in Mexico in July. Mexico has 
taken advantage of the NAFTA and its economy has become 
increasingly integrated with the United States and Canada. 
Committed democrats in countries like Brazil and Chile are 
promoting economic growth and poverty alleviation. And, despite 
battling persistent insurgent and paramilitary forces with 
considerable success, Colombia remains committed to keeping on 
a democratic path. Nonetheless, radical populist figures in 
some countries advocate statist economic policies and show 
little respect for democratic institutions.
    In Venezuela, President Chavez, if he wins reelection later 
this year, appears ready to use his control of the legislature 
and other institutions to continue to stifle the opposition, to 
reduce press freedom, and entrench himself through measures 
that are technically legal, but which nonetheless constrict 
democracy. We expect Chavez to deepen his relationship with 
Castro. He also is seeking closer economic, military, and 
diplomatic ties with Iran and North Korea. Chavez has scaled 
back counternarcotics cooperation with the United States. 
Increased oil revenues have allowed Chavez to embark on an 
activist foreign policy in Latin America that includes 
providing oil at favorable repayment rates to gain allies, 
using newly created media outlets to generate support for his 
Bolivarian goals, and meddling in the internal affairs of his 
neighbors by backing particular candidates for elective office.
    In Bolivia, South America's poorest country with the 
hemisphere's highest proportion of indigenous people, the 
victory of Evo Morales reflects the public's lack of faith in 
traditional political parties and institutions. Since his 
election, he appears to have moderated his earlier promises to 
nationalize the hydrocarbons industry and cease coca 
eradication. But his Administration continues to send mixed 
signals regarding its intentions.
    Haiti's interim government is the weakest in the 
hemisphere, and the security climate could continue to 
deteriorate due to slum gang violence. A failure to renew the 
United Nations mandate would greatly increase the risk of a 
complete nationwide breakdown of public order, intensifying 
migration pressures. The perception among would-be migrants 
that the U.S. immigration policy is tough is the most important 
factor in deterring Haitians from fleeing their country.
    Turning now to Southeast Asia. Southeast Asia includes 
vibrant, diverse, and emerging democracies looking to the 
United States as a source of stability, wealth and leadership. 
But it is also home to terrorism, separatist aspirations, 
crushing poverty, ethnic violence, and religious divisions. 
Burma remains a dictatorship, and Cambodia is retreating from 
progress on democracy and human rights that it made in the 
1990s. The region is particularly at risk from avian flu, which 
I will discuss at greater length in a moment. Al-Qa'ida-
affiliated and other extremist groups are present in many 
countries, although effective government policies have limited 
their growth and input.
    The prospects for democratic consolidation are relatively 
bright in Indonesia, the country with the world's largest 
Muslim population. President Yudhoyono is moving forward to 
crack down on corruption, professionalize the military, bring 
peace to the long-troubled province of Aceh, and to implement 
economic reforms. On the counterterrorism side, Indonesian 
authorities have detained or killed significant elements of 
Jemaah Islamiyah, the al-Qa'ida-linked terrorist group, but 
Jemaah Islamiyah remains a tough foe.
    The Philippines remain committed to democracy despite 
political turbulence over alleged cheating in the 2004 
elections and repeated rumors of coup plots. Meanwhile, Manila 
continues to struggle with the 35-year-old Islamic and 
communist rebellions, and faces growing concerns over the 
presence of JI terrorists in the South.
    Thailand is searching for a formula to contain violence 
instigated by ethnic Malay Muslims separatist groups in the far 
Southern provinces. In 2005, the separatists showed signs of 
stronger organization and more lethal and brutal tactics 
targeting the government and the Buddhist population in the 
South.
    Some good news is coming out of Africa. The continent is 
enjoying real economic growth after a decade of declining per 
capita income. The past decade has also witnessed a definite, 
albeit gradual, trend toward greater democracy, openness and 
multi-party elections.
    In Liberia, the inauguration of Ellen Johnson Sirleaf as 
President, following a hotly contested multi-party election, 
was a positive harbinger of a return to democratic rule in a 
battered nation.
    Yet in much of the continent, humanitarian crises, 
instability and conflict persist. Overlaying these enduring 
threats are the potential spread of jihadist ideology amongst 
disaffected Muslim populations and the region's growing 
importance as a source of energy. We are most concerned about 
Sudan and Nigeria.
    The signing of a Comprehensive Peace Agreement in Sudan 
last year was a major achievement, but the new Government of 
National Unity is being tested by the continuing conflict in 
Darfur, and the instability in Chad is spilling over into 
western Sudan, further endangering humanitarian workers and 
assistance supply lines. Gains in stabilizing and improving the 
conditions in Darfur could be reversed if the new instability 
goes unchecked.
    The most important election on the African horizon will be 
held in spring of 2007 in Nigeria, the continent's most 
populous country and largest oil producer. The vote has the 
potential to reinforce a democratic trend away from military 
rule, or it could lead to major disruption in a nation 
suffering frequent ethno-religious violence, criminal activity 
and rampant corruption.
    Speculation that President Obasanjo will try to change the 
constitution so he can seek a third term in office is raising 
political tension and, if proven true, threatens to unleash 
major turmoil and conflict. Such chaos in Nigeria could lead to 
disruption of oil supply, secessionist moves by regional 
governments, major refugee flows and instability elsewhere in 
Africa.
    To one degree or another, all nations are affected by the 
phenomenon known as globalization. I'm turning now to the issue 
of globalization and rising actors. Many see the United States 
as globalization's primary beneficiary, but the developments 
subsumed under its rubric operate largely beyond the control of 
all countries. Small, medium and large States are both gaining 
and losing through technological and economic developments at a 
rate of speed unheard of in human history.
    Such recalibrations in regional and global standing usually 
emerge in the wake of war. But globalization is not a war, even 
though its underside--fierce competition for global energy 
reserves, discrepancies between rich and poor, criminal 
networks that create and feed black markets in drugs and even 
human beings and the rapid transmission of disease--has the 
look of a silent, but titanic global struggle.
    One major recalibration of the global order enabled by 
globalization is the shift of world economic momentum and 
energy to greater Asia, led principally by the explosive 
economic growth in China and the growing concentration of world 
manufacturing activity in and around it. India, too, is 
emerging as a new pole of greater Asia's surging economic and 
political power. These two Asian giants comprise fully a third 
of the world's population--a huge labor force eager for modern 
work, supported by significant scientific and technological 
capabilities, and an army of new claimants on the world's 
natural resources and capital.
    China is a rapidly rising power with steadily expanding 
global reach that may become a peer competitor to the United 
States at some point. Consistent high rates of economic growth, 
driven by exploding foreign trade, have increased Beijing's 
political influence abroad and fueled a military modernization 
program that has steadily increased Beijing's force projection 
capabilities.
    China's foreign policy is currently focused on the 
country's immediate periphery, including Southeast and Central 
Asia, where Beijing hopes to make economic inroads, to increase 
political influence and to prevent a backlash against its rise. 
Its rhetoric toward Taiwan has been less inflammatory since 
Beijing passed its ``anti-secession'' law last spring. China 
has been reaching out to the opposition parties on Taiwan and 
making economic overtures designed to win favor with the Taiwan 
public, although Beijing still refuses to deal with the elected 
leader in Taipei.
    Beijing has also expanded diplomatic and economic 
interaction with other major powers--especially Russia and the 
European Union--and begun to increase its presence in Africa 
and Latin America.
    China's military is vigorously pursuing a modernization 
program--a full suite of modern weapons and hardware for a 
large proportion of its overall force structure; designs for a 
more effective operational doctrine at tactical and theater 
level; training reforms; and wide-ranging improvements in 
logistics, administration, financial management, mobilization, 
and other critical support functions.
    Beijing's greatest challenge is to sustain growth 
sufficient to keep unemployment and rural discontent from 
rising to destabilizing levels and to maintain increases in 
living standards.
    To do this, China must solve a number of difficult economic 
and legal problems. It must improve the education system, 
reduce environmental degradation, and improve governance by 
combating corruption. Indeed, China's rise may be hobbled by 
systemic problems and the Communist Party's resistance to the 
demands for political participation that economic growth 
generates. Beijing's determination to repress real or perceived 
challenges--from dispossessed peasants to religious 
organizations--could lead to serious instability at home and 
less effective policies abroad.
    Turning now to India, rapid economic growth and increasing 
technological competence are securing India's leading role in 
South Asia, while helping India to realize its long-standing 
ambition to become a global power. India's growing confidence 
on the world stage as a result of its increasingly globalized 
business activity will make New Delhi a more effective partner 
for the United States, but also a more formidable player on 
issues such as those before the World Trade Organization.
    New Delhi seeks to play a key role in fostering democracy 
in the region, especially in Nepal and Bangladesh, and will 
continue to be a reliable ally against global terrorism, in 
part because India has been a frequent target for Islamic 
terrorists, mainly in Kashmir. India seeks better relations 
with its two main rivals--Pakistan and China--recognizing that 
its regional disputes with them are hampering its larger goals 
on the world stage. Nevertheless, like China, India is using 
its newfound wealth and technical capabilities to extend its 
military reach.
    On the economic front, as Indian multinational corporations 
become more prevalent, they will offer competition and 
cooperation with the United States in fields such as energy, 
steel, and pharmaceuticals. New Delhi's pursuit of energy to 
fuel its rapidly growing economy adds to pressures on world 
prices and increases the likelihood that it will seek to 
augment its programs in nuclear power, coal technologies, and 
petroleum exploration. Like Pakistan, India is outside the 
nuclear Nonproliferation Treaty.
    Let me turn to the issue of threats to global energy 
security.
    World energy markets seem certain to remain tight for the 
foreseeable future. Robust global economic expansion is pushing 
strong energy demand growth and, combined with instability in 
several oil- producing regions, is increasing the geopolitical 
leverage of key producer states such as Iran, Saudi Arabia, 
Russia and Venezuela. At the same time, the pursuit of secure 
energy supplies has become a much more significant driver of 
foreign policy in countries where energy demand growth is 
surging--particularly China and India.
    The changing global oil and gas market has encouraged 
Russia's assertiveness with Ukraine and Georgia, Iran's nuclear 
brinksmanship, and the populist ``petro-diplomacy'' of 
Venezuela's Hugo Chavez. Russia's recent but short-lived 
curtailment of natural gas deliveries to the Ukraine 
temporarily reduced gas supplies to much of Europe and is an 
example of how energy can be used as both a political and 
economic tool. The gas disruption alarmed Europeans, reminding 
them of their dependence on Russian gas, and refocused debate 
on alternative energy sources.
    Foreign policy frictions, driven by energy security 
concerns, are likely to be fed by continued global efforts of 
Chinese and Indian firms to reach new oil field development 
deals and to purchase stakes in foreign oil and gas properties. 
Although some of these moves may incrementally increase oil-
sector investment and global supplies, others may bolster 
countries, such as Iran, Syria and Sudan, that pose significant 
U.S. national security risks or foreign policy challenges. For 
example, in Venezuela, Chavez is attempting to diversify oil 
exports away from the United States.
    Let me turn now to the security threat from narcotics 
trafficking.
    In addition to the central U.S. national security interest 
in stemming the flow of drugs to this country, there are two 
international threats related to narcotics: First, the 
potential threat from an intersection of narcotics and 
extremism; and second, the threat from the impact of drugs on 
those ineffective and unreliable nation states about which we 
are so concerned.
    Although the worldwide trafficking-terrorist relationship 
is limited, the scope of these ties has grown modestly in 
recent years. A small number of terrorist groups engage the 
services of or accept donations from criminals, including 
narcotics traffickers, to help raise operational funds. While 
the revenue realized by extremists appears small when compared 
to that of dedicated trafficking organizations, even small 
amounts of income can finance destructive acts of terror.
    The tie between drug trafficking and extremism is strongest 
in Colombia and Afghanistan. Both of Colombia's insurgencies 
and most of its paramilitary groups reap substantial benefits 
from cocaine transactions. In Afghanistan, the Taliban and the 
Hizb group gain at least some of their financial support from 
their ties to local opiate traffickers. Ties between 
trafficking and extremists elsewhere are less robust and 
profitable. North African extremists involved in the 2004 
Madrid bombings reportedly used drug income to buy their 
explosives.
    Most major international organized crime groups have kept 
terrorists at arm's length, although some regional criminal 
gangs have supplied fraudulent or altered travel documents, 
moved illicit earnings, or provided other criminal services to 
members of insurgent or terrorist groups for a fee.
    Narcotics traffickers and other organized criminals 
typically do not want to see governments toppled, but thrive in 
States where governments are weak, vulnerable to or seeking out 
corruption and unable or unwilling to consistently enforce the 
rule of law. Nonetheless, a vicious cycle can develop in which 
a weakened government enables criminals to dangerously undercut 
the state's credibility and authority, with the consequence 
that the investment climate suffers, economic growth withers, 
black market activity rises, and fewer resources are available 
for civil infrastructure and governance.
    We are particularly concerned about this cycle in countries 
on the other side of the world, such as Afghanistan, 
Kyrgyzstan, and Burma, and those close to home, such as in 
Haiti, Jamaica, and Mexico. About 90 percent of detected 
cocaine destined for the United States was smuggled through the 
Mexico-Central America corridor, nearly all Mexican heroin is 
for the U.S. market, and Mexico is the primary foreign supplier 
of marijuana and methamphetamine to the United States.
    Let me turn now briefly to the threat from pandemics and 
epidemics.
    In the 21st century, our intelligence community has 
expanded the definition of bio-threats to the United States 
beyond weapons to naturally occurring pandemics.
    The most pressing infectious disease challenge facing the 
United States is the potential emergence of a new and deadly 
avian influenza strain, which could cause a worldwide outbreak 
or pandemic. International health experts worry that avian 
influenza could become transmissible among humans, threatening 
the health and lives of millions of people around the globe.
    There are many unknowns about avian flu, but even the 
specter of an outbreak could have significant effects on the 
international community, on whole societies, military 
operations, critical infrastructure and diplomatic relations.
    Avian flu is not something we can fight alone. An effective 
response to it is highly dependent on the openness of affected 
nations in reporting outbreaks where and when they occur. But 
for internal political reasons, a lack of response capability 
or disinclination to regard avian influenza as a significant 
threat, some countries are not forthcoming.
    In close coordination with the Department of Health and 
Human Services, the intelligence community therefore is 
tracking a number of key countries that are or could be 
especially prone to avian influenza outbreaks and where we 
cannot be confident that adequate information will be available 
through open sources.
    The intelligence community also coordinates closely with 
the Department of Homeland Security and provides input to the 
National Biosurveillance Integration System at the Department 
of Homeland Security.
    In conclusion, each of the major intelligence challenges 
that I have discussed today is affected by the accelerating 
change and transnational interplay that are the hallmarks of 
21st century globalization. As a direct result, collecting, 
analyzing and acting on solid intelligence have become 
increasingly difficult.
    To meet these new and reconfigured challenges, we need to 
work hand-in-hand with other responsible nations. Fortunately, 
the vast majority of governments in the world are responsible 
and responsive, but those that are not are neither few in 
numbers nor lacking in material resources and geopolitical 
influence.
    The powerful critiques of this Committee, the 9/11 
Commission, and the WMD Commission, framed by statute in the 
Intelligence Reform and Terrorism Prevention Act of 2004, and 
taken to heart by the dedicated professionals of our 
intelligence community, have helped make us better prepared and 
more vigilant than we were on that terrible day in September 
2001. But from an intelligence perspective, we cannot rest. We 
must transform our intelligence capabilities and cultures by 
fully integrating them from law enforcement through national 
authorities in Washington to combatant commanders overseas. The 
more thoroughly we do that, the more clearly we will be able to 
see the threats lurking in the shadow of the future and ward 
them off.
    Thank you very much, Mr. Chairman. And now I'd be pleased 
to try and answer any questions which the Committee might have.
    Chairman Roberts. Mr. Director, I asked you to make a very 
comprehensive statement covering all the threats that you think 
endanger our country, not only for the Committee, but for those 
listening, all the citizens of the United States. You have done 
that in a very comprehensive report.
    It is under my understanding under the Geneva Convention, 
under the heading of ``cruel and inhumane punishment'' for 
congressional hearings that last for more than 2 hours, and 
prior to questioning, that it would be the thing to do to 
declare a 5-minute break, which we will do. And we will resume 
immediately at the 5-minute mark to start our questions.
    [The prepared statement of Director Negroponte follows:]
Prepared Statement of Hon. John D. Negroponte, Director of Intelligence
     Chairman Roberts, Vice-Chairman Rockefeller, Members of the 
Committee, thank you for the invitation to offer my assessment of the 
threats, challenges, and opportunities for the United States in today's 
world.
    I am honored to be the first Director of National Intelligence to 
offer you such an assessment, and am pleased to note that following my 
oral testimony, I will answer your questions with the assistance of Mr. 
Porter Goss, Director of the Central Intelligence Agency; Lieutenant 
General Michael D. Maples, Director of the Defense Intelligence Agency; 
Mr. Robert Mueller, Director of the Federal Bureau of Investigation; 
Ms. Carol Rodley, Acting Assistant Secretary of State for Intelligence 
and Research; Mr. Charles E. Allen, Chief Intelligence Officer, 
Department of Homeland Security; and General Michael Hayden, Principal 
Deputy Director of National Intelligence.
    Let me begin with a straightforward statement of preoccupation 
shared by all of us sitting here before you: terrorism is the 
preeminent threat to our citizens, Homeland, interests, and friends. 
The War on Terror is our first priority and driving concern as we press 
ahead with a major transformation of the Intelligence Community we 
represent.
    We live in a world that is full of conflict, contradictions, and 
accelerating change. Viewed from the perspective of the Director of 
National Intelligence, the most dramatic change of all is the 
exponential increase in the number of targets we must identify, track, 
and analyze. Today, in addition to hostile nation-states, we are 
focusing on terrorist groups, proliferation networks, alienated 
communities, charismatic individuals, narcotraffickers, and microscopic 
influenza.
    The 21st century is less dangerous than the 20th century in certain 
respects, but more dangerous in others. Globalization, particularly of 
technologies that can be used to produce WMD, political instability 
around the world, the rise of emerging powers like China, the spread of 
the jihadist movement, and of course, the horrific events of September 
11, 2001, demand heightened vigilance from our Intelligence Community.
    This morning, then, I will discuss:
     Global jihadists, their fanatical ideology, and the 
civilized world's efforts to disrupt, dismantle and destroy their 
networks;
     The struggle of the Iraqi and Afghan people to assert 
their sovereignty over insurgency, terror, and extremism;
     WMD-related proliferation and two states of particular 
concern, Iran and North Korea;
     Issues of political instability and governance in all 
regions of the world that affect our ability to protect and advance our 
interests; and
     Globalization, emerging powers, and such transnational 
challenges as the geopolitics of energy, narcotrafficking, and possible 
pandemics.
    In assessing these themes, we all must be mindful of the old 
dictum: forewarned is forearmed. Our policymakers, warfighters, and law 
enforcement officers need the best intelligence and analytic insight 
humanly and technically possible to help them peer into the onrushing 
shadow of the future and make the decisions that will protect American 
lives and interests. This has never been more true than now with US and 
Coalition forces in Iraq and Afhanistan--and the citizens and fledgling 
governments they help to protect under attack. Addressing threats to 
their safety and providing the critical intelligence on a myriad of 
tactical and strategic issues must be--and is--a top priority for our 
Intelligence Community.
    But in discussing all the many dangers the 21st century poses, it 
should be emphasized that they do not befall America alone. The issues 
we consider today confront responsible leaders everywhere. That is the 
true nature of the 21st century: accelerating change affecting and 
challenging us all.

                       THE GLOBAL JIHADIST THREAT

    Collaboration with our friends and allies around the world has 
helped us achieve some notable successes against the global jihadist 
threat. In fact, most of al-Qa'ida's setbacks last year were the result 
of our allies' efforts, either independently or with our assistance. 
And since 9/11, examples of the high level of counterterrorism efforts 
around the world are many. Pakistan's commitment has enabled some of 
the most important captures to date. Saudi Arabia's resolve to counter 
the spread of terrorism has increased. Our relationship with Spain has 
strengthened since the March 2004 Madrid train bombings. The British 
have long been our closest counterterrorism partners the seamless 
cooperation in the aftermath of the July attacks in London reflected 
that commitment while Australia, Canada, France and many other nations 
remain stout allies. Nonetheless, much remains to be done; the battle 
is far from over.
    Jihadists seek to overthrow regimes they regard as ``apostate'' and 
to eliminate US influence in the Muslim world. They attack Americans 
when they can, but most of their targets and victims are fellow 
Muslims. Nonetheless, the slow pace of economic, social, and political 
change in most Muslim majority nations continues to fuel a global 
jihadist movement. The movement is diffuse and subsumes three quite 
different types of groups and individuals:
     First and foremost, al-Qa'ida, a battered but resourceful 
organization;
     Second, other Sunni jihadist groups, some affiliated with 
al-Qa'ida, some not;
     Third, networks and cells that are the self-generating 
progeny of al-Qa'ida.
    Al-Qa'ida Remains Our Top Concern. We have eliminated much of the 
leadership that presided over al-Qa'ida in 2001, and US-led 
counterterrorism efforts in 2005 continue to disrupt its operations, 
take out its leaders and deplete its cadre. But the organization's core 
elements still plot and make preparations for terrorist strikes against 
the Homeland and other targets from bases in the Pakistan-Afghanistan 
border area; they also have gained added reach through their merger 
with the Iraq-based network of Abu Mus'ab al-Zarqawi, which has 
broadened al-Qa'ida's appeal within the jihadist community and 
potentially put new resources at its disposal.
    Thanks to effective intelligence operations, we know a great deal 
about al-Qa'ida's vision. Zawahiri, al-Qa'ida's No. 2, is candid in his 
July 2005 letter to Zarqawi. He portrays the jihad in Iraq as a 
stepping-stone in the march toward a global caliphate, with the focus 
on Egypt, Syria, Jordan, Lebanon, Saudi Arabia, the Gulf states, and 
Israel. Zawahiri stresses the importance of having a secure base in 
Iraq from which to launch attacks elsewhere, including in the US 
Homeland.
    In Bin Ladin's recent audio tape, al-Qa'ida's top leader reaffirms 
the group's commitment to attack our Homeland and attempts to reassure 
supporters by claiming that the reason there has been no attack on the 
US since 2001 is that he chose not to do so. This week's statement by 
Zawahiri is another indication that the group's leadership is not 
completely cutoff and can continue to get its message out to followers. 
The quick turnaround time and the frequency of Zawahiri statements in 
the past year underscore the high priority al-Qa'ida places on 
propaganda from its most senior leaders.
    Attacking the US Homeland, US interests overseas, and US allies--in 
that order--are al-Qa'ida's top operational priorities. The group will 
attempt high-impact attacks for as long as its central command 
structure is functioning and affiliated groups are capable of 
furthering its interests, because even modest operational capabilities 
can yield a deadly and damaging attack. Although an attack using 
conventional explosives continues to be the most probable scenario, al-
Qa'ida remains interested in acquiring chemical, biological, 
radiological, and nuclear materials or weapons to attack the United 
States, US troops, and US interests worldwide.
    Indeed, today, we are more likely to see an attack from terrorists 
using weapons or agents of mass destruction than states, although 
terrorists' capabilities would be much more limited. In fact, 
intelligence reporting indicates that nearly 40 terrorist 
organizations, insurgencies, or cults have used, possessed, or 
expressed an interest in chemical, biological, radiological, or nuclear 
agents or weapons. Many are capable of conducting simple, small-scale 
attacks, such as poisonings, or using improvised chemical devices.
    Al-Qa'ida Inspires Other Sunni Jihadists. The global jihadist 
movement also subsumes other Sunni extremist organizations, allied with 
or inspired by al-Qa'ida's global anti-Western agenda. These groups 
pose less danger to the US Homeland than does al-Qa'ida, but they 
increasingly threaten our allies and interests abroad and are working 
to expand their reach and capabilities to conduct multiple and/or mass-
casualty attacks outside their traditional areas of operation.
    Jemaah Islamiya (JI) is a well organized group responsible for 
dozens of attacks killing hundreds of people in Southeast Asia. The 
threat of a JI attack against US interests is greatest in Southeast 
Asia, but we assess that the group is committed to helping al-Qa'ida 
with attacks outside the region.
    The Islamic Jihad Union (IJU), which has allied itself with al-
Qa'ida, operates in Central Asia and was responsible for the July 2004 
attacks against the US and Israeli Embassies in Uzbekistan.
    The Libyan Islamic Fighting Group (LIFG) was formed to establish an 
Islamic state in Libya, but since the late 1990s it has expanded its 
goals to include anti-Western jihad alongside al-Qa'ida. LIFG has 
called on Muslims everywhere to fight the US In Iraq.
    Pakistani militant groups--primarily focused on the Kashmir 
conflict represent a persistent threat to regional stability and US 
interests in South Asia and the Near East. They also pose a potential 
threat to our interests worldwide. Extremists convicted in Virginia in 
2003 of providing material support to terrorism trained with a 
Pakistani group, Lashkar-i-Tayyiba, before 9/11.
    New Jihadist Networks and Cells. An important part of al-Qa'ida's 
strategy is to encourage a grassroots uprising of Muslims against the 
West. Emerging new networks and cells--the third element of the global 
jihadist threat reflect aggressive jihadist efforts to exploit feelings 
of frustration and powerlessness in some Muslim communities, and to 
fuel the perception that the US is anti-Islamic . Their rationale for 
using terrorism against the US and establishing strict Islamic 
practices resonates with a small subset of Muslims. This has led to the 
emergence of a decentralized and diffused movement, with minimal 
centralized guidance or control and numerous individuals and small 
cells--like those who conducted the May 2003 bombing in Morocco, the 
March 2004 bombings in Spain, and the July 2005 bombings in the UK. 
Members of these groups have drawn inspiration from al-Qa'ida but 
appear to operate on their own.
    Such unaffiliated individuals, groups and cells represent a 
different threat than that of a defined organization. They are harder 
to spot and represent a serious intelligence challenge.
    Regrettably, we are not immune from the threat of such 
``homegrown'' jihadist cells. A network of Islamic extremists in Lodi, 
California, for example, maintained connections with Pakistani militant 
groups, recruited US citizens for training at radical Karachi 
madrassas, sponsored Pakistani citizens for travel to the US to work at 
mosques and madrassas, and according to FBI information, allegedly 
raised funds for international jihadist groups. In addition, prisons 
continue to be fertile recruitment ground for extremists who try to 
exploit converts to Islam.
    Impact of Iraq on Global Jihad. Should the Iraqi people prevail in 
establishing a stable political and security environment, the jihadists 
will be perceived to have failed and fewer jihadists will leave Iraq 
determined to carry on the fight elsewhere. But, we assess that should 
the jihadists thwart the Iraqis' efforts to establish a stable 
political and security environment, they could secure an operational 
base in Iraq and inspire sympathizers elsewhere to move beyond rhetoric 
to attempt attacks against neighboring Middle Eastern nations, Europe, 
and even the United States. The same dynamic pertains to al-Zarqawi. 
His capture would deprive the movement of a notorious leader, whereas 
his continued acts of terror could enable him to expand his following 
beyond his organization in Iraq much as Bin Ladin expanded al-Qa'ida in 
the 1990s.
    Impact of the Islamic Debate. The debate between Muslim extremists 
and moderates also will influence the future terrorist environment, the 
domestic stability of key US partners, and the foreign policies of 
governments throughout the Muslim world. The violent actions of global 
jihadists are adding urgency to the debate within Islam over how 
religion should shape government. Growing internal demands for reform 
in many Muslim countries further stimulate this debate. In general, 
Muslims are becoming more aware of their Islamic identity, leading to 
growing political activism; but this does not necessarily signal a 
trend toward radicalization. Most Muslims reject the extremist message 
and violent agendas of the global jihadists. Indeed, as Muslims endorse 
democratic principles of freedom, equality, and the rule of law and a 
role for their religious beliefs in building better futures for their 
communities, there will be growing opportunities for countering a 
jihadist movement that only promises more authoritarianism, isolation, 
and economic stagnation.

EXTREMISM AND CHALLENGES TO EFFECTIVE GOVERNANCE AND LEGITIMACY IN IRAQ 
                            AND AFGHANISTAN

    The threat from extremism and anti-Western militancy is especially 
acute in Iraq and Afghanistan.
    In discussing Iraq, I'd like to offer a ``balance sheet'' to give a 
sense of where I see things today and what I see as the trends in 2006. 
Bold, inclusive leadership will be the critical factor in establishing 
an Iraqi constitutional democracy that is both viable as a nation-state 
and responsive to the diversity of Iraq's regions and people.
    Let me begin with some of these encouraging developments before 
turning to the challenges:
     The insurgents have not been able to establish any lasting 
territorial control; were unable to disrupt either of the two national 
elections held this year or the Constitutional referendum; have not 
developed a political strategy to attract popular support beyond their 
Sunni Arab base; and have not shown the ability to coordinate 
nationwide operations.
     Iraqi security forces are taking on more demanding 
missions, making incremental progress toward operational independence, 
and becoming more capable of providing the kind of stability Iraqis 
deserve and the economy needs in order to grow.
     Signs of open conflict between extreme Sunni jihadists and 
Sunni nationalist elements of the insurgency, while so far still 
localized, are encouraging and exploitable. The jihadists' heavy-handed 
activities in Sunni areas in western Iraq have caused tribal and 
nationalist elements in the insurgency to reach out to the Baghdad 
government for support.
     Large-scale Sunni participation in the last elections has 
provided a first step toward diminishing Sunni support for the 
insurgency. There appears to be a strong desire among Sunnis to explore 
the potential benefits of political participation.
    But numerous challenges remain.
The Insurgency and Iraqi Security Forces
    Iraqi Sunni Arab disaffection is the primary enabler of the 
insurgency and is likely to remain high in 2006. Even if a broad, 
inclusive national government emerges, there almost certainly will be a 
lag time before we see a dampening effect on the insurgency. Insurgents 
continue to demonstrate the ability to recruit, supply, and attack 
Coalition and Iraqi Security Forces, and their leaders continue to 
exploit Islamic themes, nationalism, and personal grievances to fuel 
opposition to the government and to recruit more fighters.
    The most extreme Sunni jihadists, such as those fighting with 
Zarqawi, will remain unreconciled and continue to attack Iraqis and 
Coalition forces. These extreme Sunni jihadist elements, a subset of 
which are foreign fighters, constitute a small minority of the overall 
insurgency, but their use of high-profile suicide attacks gives them a 
disproportionate impact. The insurgents' use of increasingly lethal 
improvised explosive devices (LEDs), and the IED makers' adaptiveness 
to Coalition countermeasures, remain the most significant day-to-day 
threat to Coalition forces, and a complex challenge for the 
Intelligence Community.
    Iraqi Security Forces require better command and control mechanisms 
to improve their effectiveness and are experiencing difficulty in 
managing ethnic and sectarian divides among their units and personnel.
Sunni Political Participation
    A key to establishing effective governance and security over the 
next 3 to 5 years is enhanced Sunni Arab political participation and a 
growing perception among Sunnis that the political process is 
addressing their interests. Sunnis will be focused on obtaining what 
they consider their demographically appropriate share of leadership 
positions in the new government--especially on the Constitutional 
Review Commission. Debates over federalism, central versus local 
control, and division of resources are likely to be complex. Success in 
satisfactorily resolving them will be key to advancing stability and 
prospects for a unified country. Although the Kurds and Shia have been 
accommodating to the underrepresented Sunnis in 2005, their desire to 
protect core interests--such as regional autonomy and de-
Ba'thification--could make further compromise more difficult.
    In the aftermath of the December elections, virtually all of the 
Iraq parties are seeking to create a broad-based government, but all 
want it to be formed on their terms. The Shia and the Kurds will be the 
foundation of any governing coalition, but it is not yet clear to us 
whether they will include the main Sunni factions, particularly the 
Iraqi Consensus Front, or other smaller and politically weaker secular 
groups, such as Ayad Allawi's Iraqi National List. The Sunni parties 
have significant expectations for concessions from the Shia and Kurds 
in order to justify their participation and avoid provoking more 
insurgent violence directed against Sunni political leaders.
Governance and Reconstruction
    During the coming year, Iraq's newly elected leadership will face a 
daunting set of governance tasks. The creation of a new, permanent 
government and the review of the Constitution by early summer will 
offer opportunities to find common ground and improve the effectiveness 
and legitimacy of the central government. There is a danger, however, 
that political negotiations and dealmaking will prove divisive. This 
could obstruct efforts to improve government performance, extend 
Baghdad's reach throughout the country, and build confidence in the 
democratic political process.
    Let me focus on one of those tasks--the economy. Restoration of 
basic services and the creation of jobs are critical to the well-being 
of Iraqi citizens, the legitimacy of the new government, and, 
indirectly, to eroding support for the insurgency. At this point, 
prospects for economic development in 2006 are constrained by the 
unstable security situation, insufficient commitment to economic 
reform, and corruption. Iraq is dependent on oil revenues to fund the 
government, so insurgents continue to disrupt oil infrastructure, 
despite the fielding of new Iraqi forces to protect it. Insurgents also 
are targeting trade and transportation. Intelligence has a key role to 
play in combating threats to pipelines, electric power grids, and 
personal safety.
Afghanistan
    Like Iraq, Afghanistan is a fragile new democracy struggling to 
overcome deep-seated social divisions, decades of repression, and acts 
of terrorism directed against ordinary citizens, officials, foreign aid 
workers, and Coalition forces. These and other threats to the Karzai 
government also threaten important American interests--ranging from the 
defeat of terrorists who find haven along the Afghanistan-Pakistan 
border to the suppression of opium production.
    Afghan leaders face four critical challenges: containing the 
insurgency, building central government capacity and extending its 
authority, further containing warlordism, and confronting pervasive 
drug criminality.
    Intelligence is needed to assist, monitor, and protect Afghan, 
Coalition, and NATO efforts in all four endeavors.
    The volume and geographic scope of attacks increased last year, but 
the Taliban and other militants have not been able to stop the 
democratic process or expand their support base beyond Pashtun areas of 
the south and east. Nevertheless, the insurgent threat will impede the 
expansion of Kabul's writ, slow economic development, and limit 
progress in counternarcotics efforts.
    Ultimately, defeating the insurgency will depend heavily on 
continued international aid; effective Coalition, NATO, and Afghan 
government security operations to prevent the insurgency from gaining a 
stronger foothold in some Pashtun areas; and the success of the 
government's reconciliation initiatives.

        WEAPONS OF MASS DESTRUCTION AND STATES OF KEY CONCERN: 
                          IRAN AND NORTH KOREA

    The ongoing development of dangerous weapons and delivery systems 
constitutes the second major threat to the safety of our nation, our 
deployed troops, and our allies. We are most concerned about the threat 
and destabilizing effect of nuclear proliferation. We are also 
concerned about the threat from biological agents--or even chemical 
agents, which would have psychological and possibly political effects 
far greater than their actual magnitude. Use by nation-states can still 
be constrained by the logic of deterrence and international control 
regimes, but these constraints may be of little utility in preventing 
the use of mass effect weapons by rogue regimes or terrorist groups.
    The time when a few states had monopolies over the most dangerous 
technologies has been over for many years. Moreover, our adversaries 
have more access to acquire and more opportunities to deliver such 
weapons than in the past. Technologies, often dual-use, move freely in 
our globalized economy, as do the scientific personnel who design them. 
So it is more difficult for us to track efforts to acquire those 
components and production technologies that are so widely available. 
The potential dangers of proliferation are so grave that we must do 
everything possible to discover and disrupt attempts by those who seek 
to acquire materials and weapons.
    We assess that some of the countries that are still pursuing WMD 
programs will continue to try to improve their capabilities and level 
of self-sufficiency over the next decade. We also are focused on the 
potential acquisition of such nuclear, chemical, and/or biological 
weapons--or the production technologies and materials necessary to 
produce them by states that do not now have such programs, terrorist 
organizations like al-Qa'ida and by criminal organizations, alone or 
via middlemen.
    We are working with other elements of the US Government regarding 
the safety and security of nuclear weapons and fissile material, 
pathogens, and chemical weapons in select countries.
Iran and North Korea: States of Highest Concern
    Our concerns about Iran are shared by many nations, by the IAEA, 
and of course, Iran's neighbors.
    Iran conducted a clandestine uranium enrichment program for nearly 
two decades in violation of its IAEA safeguards agreement, and despite 
its claims to the contrary, we assess that Iran seeks nuclear weapons. 
We judge that Tehran probably does not yet have a nuclear weapon and 
probably has not yet produced or acquired the necessary fissile 
material. Nevertheless, the danger that it will acquire a nuclear 
weapon and the ability to integrate it with the ballistic missiles Iran 
already possesses is a reason for immediate concern. Iran already has 
the largest inventory of ballistic missiles in the Middle East, and 
Tehran views its ballistic missiles as an integral part of its strategy 
to deter--and if necessary retaliate against forces in the region, 
including US forces.
    As you are aware, Iran is located at the center of a vital--and 
volatile--region, has strained relations with its neighbors, and is 
hostile to the United States, our friends, and our values. President 
Ahmadi-Nejad has made numerous unacceptable statements since his 
election, hard-liners have control of all the major branches and 
institutions of government, and the government has become more 
effective and efficient at repressing the nascent shoots of personal 
freedom that had emerged in the late 1990s and earlier in the decade.
    Indeed, the regime today is more confident and assertive than it 
has been since the early days of the Islamic Republic. Several factors 
work in favor of the clerical regime's continued hold on power. Record 
oil and other revenue is permitting generous public spending, fueling 
strong economic growth, and swelling financial reserves. At the same 
time, Iran is diversifying its foreign trading partners. Asia's share 
of Iran's trade has jumped to nearly match Europe's 40-percent share. 
Tehran sees diversification as a buffer against external efforts to 
isolate it.
    Although regime-threatening instability is unlikely, ingredients 
for political volatility remain, and Iran is wary of the political 
progress occurring in neighboring Iraq and Afghanistan. Ahmadi-Nejad's 
rhetorical recklessness and his inexperience on the national and 
international stage also increase the risk of a misstep that could spur 
popular opposition, especially if more experienced conservatives cannot 
rein in his excesses. Over time, Ahmadi-Nejad's populist economic 
policies could--if enacted--deplete the government's financial 
resources and weaken a structurally flawed economy. For now, however, 
Supreme Leader Khamenei is keeping conservative fissures in check by 
balancing the various factions in government.
    Iranian policy toward Iraq and its activities there represent a 
particular concern. Iran seeks a Shia-dominated and unified Iraq but 
also wants the US to experience continued setbacks in our efforts to 
promote democracy and stability. Accordingly, Iran provides guidance 
and training to select Iraqi Shia political groups and weapons and 
training to Shia militant groups to enable anti-Coalition attacks. 
Tehran has been responsible for at least some of the increasing 
lethality of anti-Coalition attacks by providing Shia militants with 
the capability to build IEDs with explosively formed projectiles 
similar to those developed by Iran and Lebanese Hizballah.
    Tehran's intentions to inflict pain on the United States in Iraq 
has been constrained by its caution to avoid giving Washington an 
excuse to attack it, the clerical leadership's general satisfaction 
with trends in Iraq, and Iran's desire to avoid chaos on its borders.
    Iranian conventional military power constitutes the greatest 
potential threat to Persian Gulf states and a challenge to US 
interests. Iran is enhancing its ability to project its military power 
in order to threaten to disrupt the operations and reinforcement of US 
forces based in the region--potentially intimidating regional allies 
into withholding support for US policy toward Iran--and raising the 
costs of our regional presence for us and our allies.
    Tehran also continues to support a number of terrorist groups, 
viewing this capability as a critical regime safeguard by deterring US 
and Israeli attacks, distracting and weakening Israel, and enhancing 
Iran's regional influence through intimidation. Lebanese Hizballah is 
Iran's main terrorist ally, which--although focused on its agenda in 
Lebanon and supporting anti-Israeli Palestinian terrorists has a 
worldwide support network and is capable of attacks against US 
interests if it feels its Iranian patron is threatened. Tehran also 
supports Palestinian Islamic Jihad and other groups in the Persian 
Gulf, Central and South Asia, and elsewhere.

                              NORTH KOREA

    North Korea claims to have nuclear weapons--a claim that we assess 
is probably true--and has threatened to proliferate these weapons 
abroad. Thus, like Iran, North Korea threatens international security 
and is located in a historically volatile region. Its aggressive 
deployment posture threatens our allies in South Korea and US troops on 
the peninsula. Pyongyang sells conventional weapons to Africa, Asia, 
and the Middle East, and has sold ballistic missiles to several Middle 
Eastern countries, further destabilizing regions already embroiled in 
conflict And it produces and smuggles abroad counterfeit US currency, 
as well as narcotics, and other contraband.
    Pyongyang sees nuclear weapons as the best way to deter superior US 
and South Korean forces, to ensure regime security, as a lever for 
economic gain, and as a source of prestige. Accordingly, the North 
remains a major challenge to the global nuclear nonproliferation 
regimes. We do not know the conditions under which the North would be 
willing to fully relinquish its nuclear weapons and its weapons 
program. Nor do we see signs of organized opposition to the regime 
among North Korea's political or military elite.

         GOVERNANCE, POLITICAL INSTABILITY, AND DEMOCRATIZATION

    Good governance and, over the long term, progress toward 
democratization are crucial factors in navigating through the period of 
international turmoil and transition that commenced with the end of the 
cold war and that will continue well into the future. In the absence of 
effective governance and reform, political instability often 
compromises our security interests while threatening new democracies 
and pushing flailing states into failure.
    I will now review those states of greatest concern to the United 
States, framing my discussion within the context of trends and 
developments in their respective regions.

                       MIDDLE EAST AND SOUTH ASIA

    Middle East. The tensions between autocratic regimes, extremism, 
and democratic forces extend well beyond our earlier discussion about 
Iran, Iraq and Afghanistan to other countries in the Middle East. 
Emerging political competition and the energizing of public debate on 
the role of democracy and Islam in the region could lead to the opening 
of political systems and development of civic institutions, providing a 
possible bulwark against extremism. But the path to change is far from 
assured. Forces for change are vulnerable to fragmentation and 
longstanding regimes are increasingly adept at using both repression 
and limited reforms to moderate political pressures to assure their 
survival.
    We continue to watch closely events in Syria, a pivotal--but 
generally unhelpful--player in a troubled region. Despite the Syrian 
military withdrawal from Lebanon last year, Damascus still meddles in 
its internal affairs, seeks to undercut prospects for an Arab-Israeli 
peace, and has failed to crackdown consistently on militant 
infiltration into Iraq. By aligning itself with Iran, the Bashar al-
Asad regime is signaling its rejection of the Western world. Over the 
coming year, the Syrian regime could face internal challenges as 
various pressures--especially the fallout of the U.N. investigation 
into the assassination of the former Lebanese Prime Minister--raise 
questions about President Bashar al-Asad's judgment and leadership 
capacity.
    Syria's exit from Lebanon has created political opportunities in 
Beirut, but sectarian tensions--especially the sense among Shia that 
they are underrepresented in the govenunent--and Damascus's meddling 
persist. Bombings since March targeting anti-Syria politicians and 
journalists have fueled sectarian animosities.
    Egypt held Presidential and legislative elections for the first 
time with multiple Presidential candidates in response to internal and 
external pressures for democratization. The Egyptian public, however, 
remains discontented by economic conditions, the Arab-Israeli problem, 
the US presence in Iraq, and insufficient political freedoms.
    Saudi Arabia's crackdown on al-Qa'ida has prevented major terrorist 
attacks in the Kingdom for more than a year and degraded the remnants 
of the terror network's Saudi-based leadership, manpower, access to 
weapons, and operational capability. These developments, the Kingdom's 
smooth leadership transition and high oil prices have eased, but not 
eliminated, concerns about stability.
    HAMAS' performance in last week's election ushered in a period of 
great uncertainty as President Abbas, the Israelis, and the rest of the 
world determine how to deal with a majority party in the Palestinian 
Legislative Council that conducts and supports terrorism and refuses to 
recognize or negotiate with Israel. The election, however, does not 
necessarily mean that the search for peace between Israel and the 
Palestinians is halted irrevocably. The vote garnered by HAMAS may have 
been cast more against the Fatah government than for the HAMAS program 
of rejecting Israel. In any case, HAMAS now must contend with 
Palestinian public opinion that has over the years has supported the 
two-state solution.

                               SOUTH ASIA

    Many of our most important interests intersect in Pakistan. The 
nation is a frontline partner in the war on terror, having captured 
several al-Qa'ida leaders, but also remains a major source of extremism 
that poses a threat to Musharraf, to the US, and to neighboring India 
and Afghanistan. Musharraf faces few political challenges in his dual 
role as President and Chief of Army Staff, but has made only limited 
progress moving his country toward democracy. Pakistan retains a 
nuclear force outside the Treaty on the Non-Proliferation of Nuclear 
Weapons and not subject to full-scope IAEA safeguards and has been both 
recipient and source--via A.Q. Khan's proliferation activities--of 
nuclear weapons-related technologies. Pakistan's national elections 
scheduled for 2007 will be a key benchmark to determine whether the 
country is continuing to make progress in its democratic transition.
    Since India and Pakistan approached the brink of war in 2002, their 
peace process has lessened tensions and both appear committed to 
improving the bilateral relationship. A number of confidence-building 
measures, including new transportation links, have helped sustain the 
momentum. Still, the fact that both have nuclear weapons and missiles 
to deliver them entails obvious and dangerous risks of escalation.

                                EURASIA

    In Russia, President Putin's drive to centralize power and assert 
control over civil society, growing state control over strategic 
sectors of the economy, and the persistence of widespread corruption 
raise questions about the country's direction. Russia could become a 
more inward-looking and difficult interlocutor for the United States 
over the next several years. High profits from exports of oil and gas 
and perceived policy successes at home and abroad have bolstered 
Moscow's confidence.
    Russia probably will work with the United States on shared 
interests such as counterterrorism, counternarcotics, and 
counterproliferation. However, growing suspicions about Western 
intentions and Moscow's desire to demonstrate its independence and 
defend its own interests may make it harder to cooperate with Russia on 
areas of concern to the United States.
    Now, let me briefly examine the rest of post Soviet Eurasia where 
the results in the past year have been mixed.
    Many of the former Soviet republics are led by autocratic, corrupt, 
clan-based regimes whose political stability is based on different 
levels of repression; yet, at the same time, we have seen in Georgia, 
Ukraine, and Kyrgyzstan the emergence of grassroots forces for change.
    Central Asia remains plagued by political stagnation and 
repression, rampant corruption, widespread poverty and widening socio-
economic inequalities, and other problems that nurture nascent radical 
sentiment and terrorism. In the worst, but not implausible case, 
central authority in one or more of these states could evaporate as 
rival clans or regions vie for power--opening the door to an expansion 
of terrorist and criminal activity on the model of failed states like 
Somalia and, when it was under Taliban rule, Afghanistan.

                             LATIN AMERICA

    A gradual consolidation and improvement of democratic institutions 
is the dominant trend in much of Latin America. By the year's end, ten 
countries will have held Presidential elections and none is more 
important to US interests than the contest in Mexico in July. Mexico 
has taken advantage of NAFTA and its economy has become increasingly 
integrated with the US and Canada. Committed democrats in countries 
like Brazil and Chile are promoting economic growth and poverty 
alleviation. And despite battling persistent insurgent and paramilitary 
forces with considerable success, Colombia remains committed to keeping 
on a democratic path. Nonetheless, radical populist figures in some 
countries advocate statist economic policies and show little respect 
for democratic institutions.
    In Venezuela, President Chavez, if he wins reelection later this 
year, appears ready to use his control of the legislature and other 
institutions to continue to stifle the opposition, reduce press 
freedom, and entrench himself through measures that are technically 
legal, but which nonetheless constrict democracy. We expect Chavez to 
deepen his relationship with Castro (Venezuela provides roughly two-
thirds of that island's oil needs on preferential credit terms). He 
also is seeking closer economic, military, an d diplomatic ties with 
Iran and North Korea. Chavez has scaled back counternarcotics 
cooperation with the US.
    Increased oil revenues have allowed Chavez to embark on an activist 
foreign policy in Latin America that includes providing oil at 
favorable repayment rates to gain allies, using newly created media 
outlets to generate support for his Bolivarian goals, and meddling in 
the internal affairs of his neighbors by backing particular candidates 
for elective office.
    In Bolivia, South America's poorest country with the hemisphere's 
highest proportion of indigenous people, the victory of Evo Morales 
reflects the public's lack of faith in traditional political parties 
and institutions. Since his election he appears to have moderated his 
earlier promises to nationalize the hydrocarbons industry and cease 
coca eradication. But his administration continues to send mixed 
signals regarding its intentions.
    Haiti's interim government is the weakest in the hemisphere and the 
security climate could continue to deteriorate due to slum gang 
violence. A failure to renew the U.N. mandate would greatly increase 
the risk of a complete nationwide breakdown of public order, 
intensifying migration pressures. The perception among would-be 
migrants that the US migration policy is tough is the most important 
factor in deterring Haitians from fleeing their country.

                             SOUTHEAST ASIA

    Southeast Asia includes vibrant, diverse, and emerging democracies 
looking to the United States as a source of stability, wealth, and 
leadership. But it is also home to terrorism, separatist aspirations, 
crushing poverty, ethnic violence, and religious divisions. Burma 
remains a dictatorship, and Cambodia is retreating from progress on 
democracy and human rights made in the 1990s. The region is 
particularly at risk from avian flu, which I will discuss at greater 
length in a moment. Al-Qa'ida-affiliated and other extremist groups are 
present in many countries, although effective government policies have 
limited their growth and impact.
    The prospects for democratic consolidation are relatively bright in 
Indonesia, the country with the world's largest Muslim population. 
President Yudhoyono is moving forward to crack down on corruption, 
professionalize the military, bring peace to the long-troubled province 
of Aceh, and implement economic reforms. On the counterterrorism side, 
Indonesian authorities have detained or killed significant elements of 
Jemaah Islamiya (JI), the al-Qa'ida-linked terrorist group, but JI 
remains a tough foe.
    The Philippines remains committed to democracy despite political 
turbulence over alleged cheating in the 2004 election and repeated 
rumors of coup plots. Meanwhile, Manila continues to struggle with the 
thirty-five year old Islamic and Communist rebellions, and faces 
growing concerns over the presence of JI terrorists in the south.
    Thailand is searching for a formula to contain violence instigated 
by ethnic-Malay Muslim separatist groups in the far southern provinces. 
In 2005, the separatists showed signs of stronger organization and more 
lethal and brutal tactics targeting the government and Buddhist 
population in the south.

                                 AFRICA

    Some good news is coming out of Africa. The continent is enjoying 
real economic growth after a decade of declining per capita income. The 
past decade has also witnessed a definite, albeit gradual, trend toward 
greater democracy, openness, and multiparty elections. In Liberia, the 
inauguration of Ellen Johnson Sirleaf as President, following a hotly 
contested multi-party election, was a positive harbinger of a return to 
democratic rule in a battered nation.
    Yet, in much of the continent, humanitarian crises, instability, 
and conflict persist. Overlaying these enduring threats are the 
potential spread of jihadist ideology among disaffected Muslim 
populations and the region's growing importance as a source of energy. 
We are most concerned about Sudan and Nigeria.
    The signing of a Comprehensive Peace Agreement in Sudan last year 
was a major achievement, but the new Government of National Unity is 
being tested by the continuing conflict in Darfur, and instability in 
Chad is spilling over into western Sudan, further endangering 
humanitarian aid workers and assistance supply lines. Gains in 
stabilizing and improving the conditions in Darfur could be reversed if 
the new instability goes unchecked.
    The most important election on the African horizon will be held in 
spring 2007 in Nigeria, the continent's most populous country and 
largest oil producer. The vote has the potential to reinforce a 
democratic trend away from military rule or it could lead to major 
disruption in a nation suffering frequent ethno-religious violence, 
criminal activity, and rampant corruption. Speculation that President 
Obasanjo will try to change the constitution so he can seek a third 
term in office is raising political tensions and, if proven true, 
threatens to unleash major turmoil and conflict. Such chaos in Nigeria 
could lead to disruption of oil supply, secessionist moves by regional 
governments, major refugee flows, and instability elsewhere in West 
Africa.

                    GLOBALIZATION AND RISING ACTORS

    To one degree or another, all nations are affected by the 
phenomenon known as globalization. Many see the United States as 
globalization's primary beneficiary, but the developments subsumed 
under its rubric operate largely beyond the control of all countries. 
Small, medium, and large states are both gaining and losing through 
technological and economic developments at a rate of speed unheard of 
in human history.
    Such recalibrations in regional and global standing usually emerge 
in the wake of war. But globalization isn't a war, even though its 
underside--fierce competition for global energy reserves, discrepancies 
between rich and poor, criminal networks that create and feed black 
markets in drugs and even human beings, and the rapid transmission of 
disease--has the look of a silent but titanic global struggle.
    One major recalibration of the global order enabled by 
globalization is the shift of world economic momentum and energy to 
greater Asia--led principally by explosive economic growth in China and 
the growing concentration of world manufacturing activity in and around 
it. India, too, is emerging as a new pole of greater Asia's surging 
economic and political power. These two Asian giants comprise fully a 
third of the world's population--a huge labor force eager for modem 
work, supported by significant scientific and technological 
capabilities, and an army of new claimants on the world's natural 
resources and capital.

                                 CHINA

    China is a rapidly rising power with steadily expanding global 
reach that may become a peer competitor to the United States at some 
point. Consistent high rates of economic growth, driven by exploding 
foreign trade, have increased Beijing's political influence abroad and 
fueled a military modernization program that has steadily increased 
Beijing's force projection capabilities.
    Chinese foreign policy is currently focused on the country's 
immediate periphery, including Southeast and Central Asia, where 
Beijing hopes to make economic inroads, increase political influence, 
and prevent a backlash against its rise. Its rhetoric toward Taiwan has 
been less inflammatory since Beijing passed its ``anti-secession'' law 
last spring. China has been reaching out to the opposition parties on 
Taiwan and making economic overtures designed to win favor with the 
Taiwan public although Beijing still refuses to deal with the elected 
leader in Taipei.
    Beijing also has expanded diplomatic and economic interaction with 
other major powers--especially Russia and the EU--and begun to increase 
its presence in Africa and Latin America.
    China's military is vigorously pursuing a modernization program: a 
full suite of modem weapons and hardware for a large proportion of its 
overall force structure; designs for a more effective operational 
doctrine at the tactical and theater level; training reforms; and wide-
ranging improvements in logistics, administration, financial 
management, mobilization, and other critical support functions.
    Beijing's biggest challenge is to sustain growth sufficient to keep 
unemployment and rural discontent from rising to destabilizing levels 
and to maintain increases in living standards. To do this, China must 
solve a number of difficult economic and legal problems, improve the 
education system, reduce environmental degradation, and improve 
governance by combating corruption.
    Indeed, China's rise may be hobbled by systemic problems and the 
Communist Party's resistance to the demands for political participation 
that economic growth generates. Beijing's determination to repress real 
or perceived challenges--from dispossessed peasants to religious 
organizations---could lead to serious instability at home and less 
effective policies abroad.

                                 INDIA

    Rapid economic growth and increasing technological competence are 
securing India's leading role in South Asia, while helping India to 
realize its longstanding ambition to become a global power. India's 
growing confidence on the world stage as a result of its increasingly 
globalized business activity will make New Delhi a more effective 
partner for the United States, but also a more formidable player on 
issues such as those before the WTO.
    New Delhi seeks to play a key role in fostering democracy in the 
region, especially in Nepal and Bangladesh, and will continue to be a 
reliable ally against global terrorism, in part because India has been 
a frequent target for Islamic terrorists, mainly in Kashmir. India 
seeks better relations with its two main rivals--Pakistan and China--
recognizing that its regional disputes with them are hampering its 
larger goals on the world stage. Nevertheless, like China, India is 
using its newfound wealth and technical capabilities to extend its 
military reach.
    On the economic front, as Indian multinationals become more 
prevalent, they will offer competition and cooperation with the United 
States in fields such as energy, steel, and pharmaceuticals. New 
Delhi's pursuit of energy to fuel its rapidly growing economy adds to 
pressure on world prices and increases the likelihood that it will seek 
to augment its programs in nuclear power, coal technologies, and 
petroleum exploration. Like Pakistan, India is outside the 
Nonproliferation Treaty.

                   THREATS TO GLOBAL ENERGY SECURITY

    World energy markets seem certain to remain tight for the 
foreseeable future. Robust global economic expansion is pushing strong 
energy demand growth and--combined with instability in several oil 
producing regions--is increasing the geopolitical leverage of key 
energy producer states such as Iran, Saudi Arabia, Russia, and 
Venezuela. At the same time, the pursuit of secure energy supplies has 
become a much more significant driver of foreign policy in countries 
where energy demand growth is surging--particularly China and India.
    The changing global oil and gas market has encouraged Russia's 
assertiveness with Ukraine and Georgia, Iran's nuclear brinksmanship, 
and the populist ``petro-diplomacy'' of Venezuela's Hugo Chavez. 
Russia's recent but short-lived curtailment of natural gas deliveries 
to Ukraine temporarily reduced gas supplies to much of Europe and is an 
example of how energy can be used as both a political and economic 
tool. The gas disruption alarmed Europeans--reminding them of their 
dependence on Russian gas--and refocused debate on alternative energy 
sources.
    Foreign policy frictions, driven by energy security concerns, are 
likely to be fed by continued global efforts of Chinese and Indian 
firms to ink new oilfield development deals and to purchase stakes in 
foreign oil and gas properties. Although some of these moves may 
incrementally increase oil sector investment and global supplies, 
others may bolster countries such as Iran, Syria, and Sudan that pose 
significant US national security risks or foreign policy challenges. 
For example, in Venezuela, Chavez is attempting to diversify oil 
exports away from the US.

             THE SECURITY THREAT FROM NARCOTICS TRAFFICKING

    In addition to the central US national security interest in 
stemming the flow of drugs to this country, there are two international 
threats related to narcotics: first, the potential threat from an 
intersection of narcotics and extremism; and second, the threat from 
the impact of drugs on those ineffective and unreliable nation states 
about which we are so concerned.
    Although the worldwide trafficking-terrorist relationship is 
limited, the scope of these ties has grown modestly in recent years. A 
small number of terrorist groups engage the services of or accept 
donations from criminals, including narcotics traffickers, to help 
raise operational funds. While the revenue realized by extremists 
appears small when compared to that of the dedicated trafficking 
organizations, even small amounts of income can finance destructive 
acts of terror.
    The tie between drug trafficking and extremism is strongest in 
Colombia and Afghanistan. Both of Colombia's insurgencies and most of 
its paramilitary groups reap substantial benefits from cocaine 
transactions. In Afghanistan, the Taliban and Hizb-i Islami Gulbudin 
gain at least some of their financial support from their ties to local 
opiates traffickers. Ties between trafficking and extremists elsewhere 
are less robust and profitable. North African extremists involved in 
the 2004 Madrid train bombings reportedly used drug income to buy their 
explosives.
    Most major international organized crime groups have kept 
terrorists at arm's length, although some regional criminal gangs have 
supplied fraudulent or altered travel documents, moved illicit 
earnings, or provided other criminal services to members of insurgent 
or terrorist groups for a fee.
    Narcotics traffickers--and other organized criminals--typically do 
not want to see governments toppled but thrive in states where 
governments are weak, vulnerable to or seeking out corruption, and 
unable--or unwilling--to consistently enforce the rule of law. 
Nonetheless, a vicious cycle can develop in which a weakened government 
enables criminals to dangerously undercut the state's credibility and 
authority with the consequence that the investment climate suffers, 
economic growth withers, black market activity rises, and fewer 
resources are available for civil infrastructure and governance.
    We are particularly concerned about this cycle in countries on the 
other side of the world, such as Afghanistan, Kyrgyzstan, and Burma, 
and those close to home, such as in Haiti, Jamaica, and Mexico. About 
90 percent of detected cocaine destined for the US was smuggled through 
the Mexico-Central America corridor; nearly all Mexican heroin is for 
the US market; and Mexico is the primary foreign supplier of marijuana 
and methamphetamine to the US.

                THE THREAT FROM PANDEMICS AND EPIDEMICS

    In the 21st century, our Intelligence Community has expanded the 
definition of bio-threats to the US beyond weapons to naturally 
occurring pandemics. The most pressing infectious disease challenge 
facing the US is the potential emergence of a new and deadly avian 
influenza strain, which could cause a worldwide outbreak, or pandemic. 
International health experts worry that avian influenza could become 
transmissible among humans, threatening the health and lives of 
millions of people around the globe. There are many unknowns about 
avian flu, but even the specter of an outbreak could have significant 
effects on the international economy, whole societies, military 
operations, critical infrastructure, and diplomatic relations.
    Avian flu is not something we can fight alone. An effective 
response to it is highly dependent on the openness of affected nations 
in reporting outbreaks where and when they occur. But for internal 
political reasons, a lack of response capability, or disinclination to 
regard avian influenza as a significant threat, some countries are not 
forthcoming. In close coordination with the Department of Health and 
Human Services, the Intelligence Community therefore is tracking a 
number of key countries that are--or could be--especially prone to 
avian influenza outbreaks and where we cannot be confident that 
adequate information will be available through open sources. The IC 
also coordinates closely with the Department of Homeland Security (DHS) 
and provides input to the national Bio Surveillance Integration System 
at DHS.
Conclusion
    Each of the major intelligence challenges I have discussed today is 
affected by the accelerating change and transnational interplay that 
are the hallmarks of 21st century globalization. As a direct result, 
collecting, analyzing, and acting on solid intelligence have become 
increasingly difficult. To meet these new and reconfigured challenges, 
we need to work hand-in-hand with other responsible nations. 
Fortunately, the vast majority of governments in the world are 
responsible and responsive, but those that are not are neither few in 
numbers nor lacking in material resources and geopolitical influence.
    The powerful critiques of this Committee, the 9/11 Commission, and 
the WMD Commission, framed by statute in the Intelligence Reform and 
Terrorism Prevention Act of 2004 and taken to heart by the dedicated 
professionals of our Intelligence Community, have helped make us better 
prepared and more vigilant than we were on that terrible day in 
September 2001. But from an intelligence perspective, we cannot rest. 
We must transform our intelligence capabilities and cultures by fully 
integrating them from local law enforcement through national 
authorities in Washington to combatant commanders overseas. The more 
thoroughly we do that, the more clearly we will be able to see the 
threats lurking in the shadow of the future and ward them off.
    Thank you very much.

    [Recess.]
    Chairman Roberts. Each Member will be granted 5 minutes, 
and we will do a second round if necessary. And we have a 
closed session at 2:30.
    Mr. Director, last year I asked, the Committee staff to be 
very proactive in trying to examine the intelligence 
community's capabilities to collect and analyze against very 
hard targets--I'm talking about Iran, North Korea, China--on 
the problem of terrorism and also proliferation. They are very 
difficult--I don't have to tell anybody in the panel about 
that--and important intelligence targets, none so more than 
terrorism.
    We've been engaged on these problems. But I also think as 
the DNI, you are the person most responsible for assessing and 
improving the IC's intelligence capabilities. I'd like to hear 
briefly your impressions of our community's intelligence 
capabilities to target terrorists when you became the Director 
of DNI, what you've done since; more especially those hard 
targets that are so hard to penetrate.
    Director Negroponte. Thank you, Mr. Chairman. In brief, the 
hard targets that you mentioned--terrorism, proliferation, some 
of the countries that I was talking about during my testimony--
Iran and North Korea--have the highest collection priority 
throughout the intelligence community. We're embarked on a 
vigorous plan, directed by the President a year or so ago, to 
increase our analytical and collection capability at the CIA 
and in other agencies. And in addition to that, upon the 
recommendation of the Robb-Silberman report and the WMD 
Commission, we have created mission managers for the hard 
target areas.
    So we now have a mission manager for North Korea; we have a 
mission manager for Iran and so forth. Those intelligence 
officials are empowered to bring together the entire 
intelligence community and work on a collaborative basis to 
give those difficult issues the attention they deserve.
    Now, I don't want to leave you with the illusion that this 
is any easier a problem as a result of these efforts, but I 
want to assure you--reassure you--that we are working very, 
very hard on this question of penetrating the hard targets, and 
I'm satisfied that we're making progress.
    Chairman Roberts. Especially in regards to the increase and 
the reference to human intelligence?
    Director Negroponte. Yes, that is a very important area of 
emphasis; I would say, yes, there's been a substantial effort 
in that area----
    Chairman Roberts. Right.
    Director Negroponte [continuing]. Both to increase the 
penetration of the targets and also to increase the base of our 
capabilities by increasing recruitment into our human 
intelligence services.
    Chairman Roberts. All right. Throwing great fear into my 
staff in that I'm going to wing you a question, as opposed to 
one that's prepared, Ms. Rodley, you do a great job over there 
at INR. INR usually comes up with a little bit different 
viewpoint. That's healthy.
    Mr. Allen, you are a veteran in the intelligence community 
and certain to have a great degree of expertise. You are over 
at Homeland Security--the newest of the agencies--that has come 
under a lot of criticism.
    My question is to both of you. What are you doing in 
regards to an everyday kind of situation? And I would apply 
that to General Maples with the DIA and General Hayden in 
regards to what you're doing unless other factors shut you 
down, which I hope is not the case, and then you have the DNI 
here with working groups that you're supposed to coordinate 
that.
    And Mr. Goss, who will be before the Committee very quickly 
to go over his tenure at the CIA, and we worry about loss of 
certain capabilities as well. I worry about the loss of the 
capability that the former NSA director had.
    And then Mr. Mueller, you--if we pass the PATRIOT Act, if 
we don't re-enact these laws, I know that you want to 
basically--to state it as Ronald Reagan did, you know, 
``Congress tear down these walls.'' So we're going to try to do 
that.
    But my question is, information access, where all of you 
share this information and then it is funneled into the 
National Counterterrorism Threat Center so we have a better 
analytical picture, if you will, of the jigsaw puzzle or, say, 
connecting the dots--do you feel in terms of information access 
that you are making progress? We hear it down at the center 
that there's one computer on somebody's desk and then eight 
others underneath somebody else's desk. Where are we on that?
    And I'll ask the Director.
    Director Negroponte. First of all, I do think that we're 
all working against a common enemy here. I believe the effort 
is more integrated than it was before, and I think they do know 
what each other is doing in this core area of interest.
    As far as the integration of information at the National 
Counterterrorism Center, I think that's working apace, and one 
of my significant priorities during the past year has been to 
build that center up, give it a permanent leadership, grow its 
staff--which we are doing--so that it can meet the 
responsibilities that it has to carry out.
    Now, we also have a senatorially confirmed chief 
information officer, and also an information sharing executive, 
and those officials are working together to improve the 
information sharing environment across the intelligence 
community.
    But I believe, Senator, that it's better than it was 
previously, and I think that the dots are being connected. Can 
more be done? Yes, to be sure. But we're working on it.
    Chairman Roberts. So Charlie Allen's left hand knows what 
Ms. Rodley's right hand is doing?
    Director Negroponte. Well, when it relates to a problem 
that they're both commonly concerned with. But I'd be happy to 
let them answer it.
    Chairman Roberts. Well, at any rate, thank you for that 
answer, and I'm glad we're making progress.
    Senator Rockefeller.
    Vice Chairman Rockefeller. Thank you, Mr. Chairman.
    Mr. Director, in Buffalo, New York, on April 20, 2004--I 
would say only 2 years ago--the President of the United States 
made the following statement: He said, ``Anytime you hear the 
U.S. Government talking about wiretaps, it requires''--and he 
paused--``a wiretap requires a court order. Nothing has 
changed, by the way. When we're talking about chasing down 
terrorists, we're talking about getting a court order before we 
do so.'' And that was the end of that phrase.
    My question to you, sir: Was that statement factually 
accurate when the President made it?
    Director Negroponte. Senator, as the Chairman said earlier, 
there's going to be both a briefing by Judge Gonzales to the 
Judiciary Committee next week, as well as a briefing in closed 
session by Judge Gonzales and General Hayden to the Committee 
thereafter, where I think that this question can be thoroughly 
discussed.
    But let me say this about the terrorist surveillance 
program. This is a program that was ordered by the President of 
the United States with respect to international telephone calls 
to or from suspected al-Qa'ida operatives and their affiliates. 
It was therefore ordered in the interest of protecting our 
Nation against an ongoing terrorist threat. This was not about 
domestic surveillance. It was about dealing with the 
international terrorist threat in the most agile and effective 
way possible. But I don't think I want to go into the question 
any further than that in an open hearing.
    Vice Chairman Rockefeller. Well, but we may have more time 
to talk this afternoon, then.
    And, Mr. Director, the Vice President has stated that the 
NSA domestic surveillance program has saved, quote, ``Thousands 
of lives.'' Do you agree with that statement? Are you prepared 
to explain the basis for this claim? Or if you feel that you 
cannot talk in public, would you be willing to talk in closed 
session this afternoon about that?
    Director Negroponte. Certainly it's been an effective and 
important program in dealing with the international terrorist 
threat, which, as I mentioned this morning in my testimony, is 
the most important threat faced by the United States here in 
the homeland and to its interests abroad.
    If I may, I might ask--with your permission, Senator--
General Hayden to elaborate somewhat in reply to the question 
that you have just directed to me.
    Vice Chairman Rockefeller. General.
    General Hayden. Thank you, Senator.
    I've said before that the program has been successful, that 
we have learned information from this program that would not 
have been available to us otherwise.
    Chairman Roberts. General, if you can speak right into the 
microphone. I'm sorry.
    General Hayden. I'm sorry.
    What I've said before is that the program has been 
successful, that we have learned information from this program 
that would not otherwise have been available, that this 
information has helped detect and prevent terrorist attacks in 
the United States and abroad.
    The underlying basis of your question, though, Senator, is 
to put us in a position of proving a negative--proving that if 
we hadn't done this, if we hadn't had this knowledge, if these 
steps hadn't been taken, if these actions had not taken place, 
that something else would not have happened. That's very 
difficult to prove in a strict linear sense.
    Vice Chairman Rockefeller. General, I don't want to 
interrupt, but I only have a short time left. It was the Vice 
President I was quoting, not myself.
    This is to Director Mueller. And good morning to you, sir. 
A January 17, New York Times article quotes former and current 
FBI officials as saying that the Bureau was inundated with 
leads from the NSA domestic surveillance program that required 
hundreds of investigators to check out thousands of tips a 
month. According to officials quoted in the article, the 
information from the NSA program had uncovered no active al-
Qa'ida networks inside the United States planning attacks.
    Now, the President, General Hayden and others have been 
very clear in their public statements that the NSA program 
collects information only against known al-Qa'ida terrorists 
and their associates.
    Without getting into classified specifics, can you confirm 
to the Committee that the investigative leads forwarded by the 
NSA to the FBI related only to known al-Qa'ida terrorists and 
their associates?
    Director Mueller. Yes, let me answer that part of the 
question I feel I can answer, Senator, and that relates to 
leads that come from the NSA. We get a number of leads from the 
NSA from a number of programs, including the program that's 
under discussion today. And I can say that leads from that 
program have been valuable in identifying would-be terrorists 
in the United States, individuals who were providing material 
support to terrorists.
    But we get any number of leads. Most leads that we get, 
whether it be from NSA or overseas from the CIA, ultimately 
turn out not to be valid or worthwhile. But in our view, any 
lead from any source, any legitimate source, is a lead that has 
to be pursued, and we pursue each and every one of them.
    Vice Chairman Rockefeller. My time is up, and I thank you.
    Chairman Roberts. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Director, you didn't mention Vanuatu, an island nation 
in the South Pacific, but you seemed to cover everywhere else. 
And I welcome you.
    To me, just because effective intelligence gathering 
requires a high degree of secrecy, the Bush administration 
can't be excused from reasonable standards of accountability. 
So I have essentially two questions to start with with respect 
to accountability.
    When it's been determined that an American monitored under 
the NSA eavesdropping program is no longer a threat, what is 
done with the information collected on that U.S. person, Mr. 
Director?
    Director Negroponte. Sir, again, I don't think in this 
context----
    Senator Wyden. Well, are there restrictions, are there 
restrictions on how that information is used?
    Director Negroponte. Let me give you a general reply, which 
I think goes to your question. Whether you're talking about one 
program or another with respect to NSA, those programs are 
under the strictest possible oversight.
    They're reviewed legally, with the greatest of care. There 
are very senior managers involved in their administration. And 
as far as American persons or American individuals are 
concerned, protections are taken, should their names come up in 
various kinds of intelligence that is collected, to minimize 
and protect their identities. This has been a standard 
procedure of the NSA for the many, many years that it's been in 
existence.
    General Hayden may want to amplify.
    Senator Wyden. Mr. Director, that answer isn't good enough 
for me. That answer is, essentially, ``Trust us. The Congress 
and the public just have to trust us.'' And Ronald Reagan put 
it very well. He said, ``Trust, but verify.'' And we have no 
way to verify that citizens are being protected the way you 
have outlined it today.
    Now maybe, General Hayden, you want to add to that.
    General Hayden. Well, sir, I'll just add, very quickly, 
this is lawfully acquired signals intelligence. And the body of 
regulations under which NSA operates, day in and day out, in 
terms of protecting U.S. privacy, in terms of protecting 
information to, from or about a U.S. person, apply to the use, 
retention and destruction of that data.
    Senator Wyden. General, there are virtually no rules on 
data mining. You and I have gone into this. This has been 
documented by government auditors. We'll talk more about it 
privately.
    Mr. Director, is it correct that when John Poindexter's 
program, Operation Total Information Awareness, was closed that 
several of Mr. Poindexter's projects were moved to various 
intelligence agencies?
    Director Negroponte. I don't know the answer to that 
question.
    Senator Wyden. Do any of the other panel members know this? 
The press has reported intelligence officials saying that those 
programs run by Mr. Poindexter--I and others on this panel led 
the effort to close them--we want to know if Mr. Poindexter's 
programs are going on somewhere else. Can anyone answer that? 
Mr. Mueller.
    Director Mueller. I have no knowledge of that, sir.
    Senator Wyden. Any other panel members?
    General Hayden. Senator, I'd like to answer you in closed 
session.
    Senator Wyden. All right. I will be asking that question in 
closed session.
    The last question I wanted to ask on this round, Mr. 
Director, deals with Iran--very obviously a serious, serious 
threat.
    Some frame this as a choice between either bombing the 
Iranians or essentially the kind of pitter-patter that goes on 
at the U.N. Some have set it up as those are the choices.
    I'm wondering about whether there are other options, 
particularly economic sanctions. And the one that I would be 
interested in your thoughts on is the idea of freezing new 
foreign investment in Iran, and whether you think freezing new 
foreign investment in Iran would cutoff some of the money that 
they use for their dangerous weapons capability.
    Director Negroponte. Well, sir, my focus is, of course, our 
focus, in the intelligence community, is on evaluating the 
threat--the military threat, the political threat and so forth. 
So as far as recommendations of a particular option with 
respect to policy, I think the question really goes more into 
the area of what policymakers might wish to do.
    But what I would say is clearly Iran is a part of the 
international community. It has important economic 
relationships, whether it's in the oil sector or through 
imports or through a reliance to a certain degree on foreign 
investment, and to the extent that its behavior might 
ultimately bring about some curtailment of those economic 
activities, that, presumably, is one of the factors that Iran 
has to consider as it goes about deciding its policy.
    Senator Wyden. Thank you, Mr. Chairman.
    Chairman Roberts. We will now go to Senator Warner, with 
the exception that I would say that perhaps the Members could 
direct their questions to threats faced by our Nation other 
than the threats that some seem to think are posed by the 
members of the panel.
    Senator Warner.
    Senator Warner. Mr. Chairman, thank you very much.
    I'd like to commend you, Mr. Negroponte, for your 
statement. It was very thorough and comprehensive, and I've had 
the privilege of sitting here for many, many years listening to 
statements, and I would rank yours at the very top. I think it 
reflects the conscious effort that you're making to fulfill 
these brand new challenges, and I hope that it is working to 
your satisfaction.
    Is it likely that you'll come before the Congress for any 
refinements in the existing law in this session?
    Director Negroponte. I don't believe so, Senator, unless 
there's some technical amendment of some kind that we might 
seek. But as far as more substantive ones, my view--and I 
mentioned this to the Committee earlier during my confirmation 
hearing--is I think I ought to deal with the law as it has been 
passed, play the cards that we've been dealt, so to speak, and 
see how it works out. I haven't run into any significant 
roadblocks. I think we're working well together. General Hayden 
has pulled together a program managers' council of all the 15 
that meets twice a month. I think we're working through the 
various issues that the Congress directed us to work through. 
But, obviously, if we run into issues that might require 
legislation in the future, I wouldn't hesitate to bring them 
up.
    Senator Warner. And I think you've forged a respectful and 
strong working relationship with the Central Intelligence 
Agency under its leadership which we all admire.
    Could we put this for record? I see a lot of smiles and 
bowing of heads.
    Director Negroponte. You can't record smiles on the record.
    No, we have an excellent relationship, Mr. Chairman, and we 
meet frequently and speak over the phone even more frequently.
    Senator Warner. Mr. Goss, I think you should be on the 
record on that also.
    Director Goss. I'm pleased to be on the record, Senator, to 
echo exactly those remarks. We have a great working 
relationship.
    Senator Warner. Let me turn to General Maples. I've had a 
great deal of respect for you personally and your distinguished 
career, and now, from an intelligence standpoint, you're 
primarily responsible for the security situation in Iraq and 
Afghanistan and elsewhere in the world.
    Just a historical reference. The actions taken by our 
Government together with coalition forces in Iraq initially 
were the defeat of Saddam Hussein's military forces, which was 
successfully done in a very short period; there followed this 
insurgency, which slowly evolved and then it became a very, 
very significant situation that appears now to still be 
substantial, but contained and being handled by the coalition 
forces.
    A third composition of problems is growing, and it's of 
great concern to me, and that is the combination of the 
criminal elements which are growing, the corruption, the 
payoffs, the graft. All of this is just, in a sense, overlaying 
the courageous work of coalition forces, together with the 
Iraqi forces and the people through their elections.
    It's almost like it's pushing Iraq down into a morass. And 
a lot of the activities of the coalition forces, particularly 
the U.S. forces now, is directly or indirectly dealing with 
these situations. I've been told through my sources that if you 
were to quantify it, the criminal corruption problem now 
equates to the seriousness of the insurgency problem.
    Would you have a view on that?
    General Maples. Thank you, Senator, for your question. In 
directly responding, I'm not sure that the level of criminal 
engagement is at the level of the insurgency, but I think it's 
a very serious problem. And I see that a great deal of the 
violence that we are experiencing in Iraq today does have a 
relation to a criminal element, as opposed to an insurgent 
element with a political purpose. I think that we see that in 
numerous attacks, particularly on contracting vehicles within 
the economy. We see individuals who are being paid very low 
sums of money to place, for instance, IEDs, without a political 
purpose, but, because they receive remuneration for doing that, 
becoming essentially a part of the insurgency.
    Senator Warner. That's fine. Thank you. I want to get one 
further question in.
    General Maples. Yes, sir.
    Senator Warner. But you've documented a response.
    Mr. Ambassador, you said a key to establishing effective 
government and security over the next 3 to 5 years is enhanced 
Sunni Arab political participation and a growing perception 
among Sunnis that the political process is addressing their 
interests. In a sense, that's to try and bring about a 
government of the three principal factions, and it is essential 
to have that foundation in place.
    We're now watching the new government begin to take the 
reins. It's a little early to make any judgments. But this is a 
critical time, and we have a very capable U.S. Ambassador there 
functioning in many ways.
    What is the leverage we can have over a sovereign nation 
like Iraq to bring about this conclusion that you've put in 
here, which is essential to the future success of the coalition 
of nations that have expended so much life and blood and 
treasure to give the Iraqi people back their nation?
    Director Negroponte. First, Senator, I think with respect 
to Sunni participation, I've been encouraged by recent 
developments. I was particularly encouraged last fall when one 
million more Sunnis registered to vote in the constitutional 
referendum than had been registered for the January 30 election 
last year. So that, to me, was a sign of their increased 
participation. Then the fact that they didn't boycott the 
election. And then, following that, the Al Anbar province, 
which is the most predominantly Sunni province in the country, 
had a very high degree of participation in the elections that 
took place on December 15th.
    So I think all of that is a sign that some Sunni, at least, 
are moving away from the course of violence to achieve their 
political aims and are opting for the pursuit of political 
solutions and outcomes. So this is to the good, and I think now 
we have to find ways--we, that is, the Iraqi government and 
ourselves--have to find ways of taking advantage of it.
    What's the leverage that we've got? Well, of course we're a 
good supportive friend of the government of Iraq. We have 
130,000 troops there, and we have a massive economic 
reconstruction and assistance program. So I think that, working 
in partnership with our Iraqi friends, we can dialog 
effectively about their political process, although we have got 
to recognize that the shape that their political process is 
going to take depends, ultimately, on their own decisions.
    Senator Warner. That's true. And our President, in his 
State of the Union, was absolutely consistent on message about 
our determination to see this through. But there has to be 
limitations, and that government, as it's coming into being, 
has to recognize that there are some limitations.
    Director Negroponte. I agree with that.
    Senator Warner. And that's got to be made clear to them. 
They cannot sit there and dither away and put into those 
particular ministries--Homeland Security, Defense and 
otherwise--persons who really don't measure up to the 
capabilities required for the functioning government that they 
need.
    Director Negroponte. I agree. And I think I think our 
Ambassador and the commander of our forces in Iraq are both 
very effective at conveying those kinds of messages.
    Senator Warner. Good. Mr. Goss, do you have a view on that?
    Director Goss. Senator, thank you.
    I do, and I certainly agree. I will assure you that--as 
much as I can say in open session--I would like to reinforce in 
closed session on that point, and it's simply this: I agree 
with your observation that the security elements of that 
country are going to be vital to the opportunity for the 
institutions of democracy and freedom to flourish, and having 
good people who can work in a work in a non-politicized or non-
sectarian way is going to be essential, and I think you put 
your finger on exactly a critical point.
    Senator Warner. Thank you.
    Mr. Chairman, I believe my time is up.
    Chairman Roberts. That is correct.
    Senator Levin.
    Senator Levin. Thank you, Mr. Chairman.
    General Hayden, you made a lengthy speech at the National 
Press Club about the program that the President authorized in 
terms that involved surveillance of communications of American 
citizens. And this is what you said, one of the things you said 
in your speech, that there are no communications more important 
to the safety of this country than those affiliated with al-
Qa'ida with one end in the United States. And I agree with that 
statement. I don't think there is anything more important than 
that we know what is in those communications. It's important we 
know the extent of those communications as well.
    Would you agree with that?
    General Hayden. Absolutely, sir.
    Senator Levin. Can you give us an estimate as to the number 
of such communications which were tracked by NSA last year? 
Just an estimate?
    Chairman Roberts. Can't do that.
    General Hayden. Sorry. Sir, I'd be very uncomfortable doing 
it in an open session, and I don't actually know that number.
    Chairman Roberts. I think that's a question, with all due 
respect, being the one of two here, Senator, who has been 
briefed, that would be better answered in the closed session.
    Senator Levin. Well, Mr. Chairman, the President has said 
in open--very open session--the NSA program is one that listens 
to a few numbers. That's what the President said. Now we want 
to check on that.
    Chairman Roberts. It's highly minimized, I would tell the 
Senator.
    Senator Levin. No, excuse me. I'd rather use these minutes, 
if I could, with our witnesses here.
    Chairman Roberts. I will grant you as much time as 
possible. I'm just trying to be helpful in terms of a 
clarification, so----
    Senator Levin. Thank you. I would really prefer that the 
witnesses try to clarify this. The President of the United 
States----
    Chairman Roberts. Well, then, I won't be helpful.
    Senator Levin. May I continue, Mr. Chairman?
    Chairman Roberts. Certainly.
    Senator Levin. Secretary Chertoff says if you're culling 
through literally thousands of phone numbers, you wind up with 
a huge problem managing the amount of paper. Why is it all 
right for Secretary Chertoff to talk about thousands of phone 
numbers, but you can't give us or won't give us in open session 
an estimate of the number of those communications?
    General Hayden. Senator, as I said, I'd be uncomfortable 
doing it in open session, and I don't know the precise number. 
Your question was----
    Senator Levin. I'm not saying ``precise number.'' I asked 
for an estimate.
    General Hayden. I cannot give you an estimate of the number 
of communications intercepted.
    Senator Levin. Is it a few or is it thousands?
    General Hayden. Sir, I'd be very uncomfortable talking 
about it in open session.
    Senator Levin. Do you know?
    General Hayden. I can't give you a precise--no, sir----
    Senator Levin. I didn't ask for a precise one, General, and 
you keep saying ``precise,'' and I keep saying ``estimate.''
    General Maples, do you know--do you have an estimate as 
to----
    General Maples. Sir, I do not.
    Senator Levin. Do you know, Ambassador Negroponte? Do you 
have an estimate of the number of those communications?
    Director Negroponte. No, sir, I do not.
    Senator Levin. All right. Now do you have an estimate as to 
the number of persons who are members of al-Qa'ida or agents of 
al-Qa'ida or who are members of affiliated organizations to al-
Qa'ida or their agents--because that's the test--whose 
communications have been intercepted, say, in the last year? Do 
you have an estimate of the number of persons?
    General Hayden. Yes, sir, I do know that number, but I'm 
unable to give it in this kind of an environment, sir.
    Senator Levin. All right. Will you give us that, then, in 
closed session?
    General Hayden. Sir, that's part of the briefing that I've 
given to the Chairman and the Vice Chairman in great detail on 
multiple occasions.
    Senator Levin. Will you give us that number in closed 
session, the rest of us that are on the Intelligence Committee?
    General Hayden. Sir, I'm not at liberty to do that.
    Senator Levin. Pardon?
    General Hayden. I'm not at liberty to do that, sir.
    Senator Levin. All right.
    You know, I think the Administration truly wants to have 
this both ways. They want to characterize the program in 
public. The President says there's just a few messages that are 
intercepted.
    The head of Homeland Security says thousands of messages. 
But we're not going to be given even an estimate in public.
    These are the most important communications--in your words, 
General, and I happen to agree with you. I happen to agree with 
you that there are no communications more important to the 
safety of this country than those affiliated with al-Qa'ida; 
and yet the extent of those communications is denied this 
Congress, except for the four people you've talked about, the 
estimate of the number of those communications is denied to the 
American people. I think that is a double standard. I think 
this is another example of where the Administration wants to 
characterize some underlying information but doesn't want to be 
pressed to support those public characterizations. And I think 
it is a denial--I think basically the Administration wants to 
be unchecked, either by a court or by the Congress.
    That's my statement, and I'm not going to ask for an 
answer, because I've got 3 seconds left.
    You gave us the estimate--the Vice President estimated that 
thousands of lives have been saved by this program. General, I 
just want to know, can you estimate the number of lives that 
have been saved by this program?
    General Hayden. I cannot personally estimate the number of 
lives. Again, Senator, as I said, this is about proving a 
negative. I think I mentioned in another forum that if somebody 
had kicked in Mohammed Atta's door in lower Maryland in July of 
2001, it would still be very difficult to estimate the number 
of lives saved.
    Senator Levin. I agree with you, but yet the Vice President 
did that in public, and apparently there's no way to support 
that estimate that I know of or that you know of. And my time 
is up.
    Chairman Roberts. I think that Senator Bond is next.
    I think as to the number of lives that have been saved, it 
might have been how many were on the Brooklyn Bridge if it had 
blown up, or, for that matter, other threats that----
    Senator Levin. I agree with you.
    Chairman Roberts [continuing]. You know, have been 
thwarted.
    I take with great seriousness the questions of the 
distinguished Senator, but basically, certain Members of 
Congress have been informed, including the leadership. And I 
realize that that does not fit the concern of the Senator and 
others, and we will discuss that at two business meetings and 
see where we go with that.
    The other group that is not informed as to these specific 
figures are members of the al-Qa'ida.
    Senator Bond.
    Senator Bond. Thank you, Mr. Chairman.
    Ambassador Negroponte, it's good to have you here today as 
the Director of National Intelligence, along with your key 
leaders, to tell us about the threats worldwide. Although I 
believe that the intelligence reform legislation that created 
your position in 2004 was weak at best, I'm committed to 
working to strengthen your position so that we have one leader 
in charge of our intelligence community, who will be 
accountable, responsible and have the authority to ensure that 
we are far less likely to have the unfortunate intelligence 
efforts that preceded the disaster of September 11.
    We need a strong, active intelligence community in view of 
today's threats, and we need a strong, active leader for that 
intelligence community. And I have confidence that you will be 
up to the task. Secretary Rumsfeld last week told a number of 
us that what he needs most in support for fighting the war on 
terror is good intelligence, and my colleagues and I are 
committed to helping you give that to him.
    Recently I traveled to two areas of the world that I 
consider to be the primary fronts in the war on terror--the 
Middle East and Southeast Asia. In the Philippines, Indonesia, 
Thailand, Iraq, Afghanistan and Pakistan, all our intelligence 
officials to whom I talked relayed to me their grave concerns 
over some recent and unfortunate developments that have 
significantly affected their operations.
    Specifically, newspaper articles concerning the alleged 
detention of individuals by intelligence officials, the debate 
and new legislative restrictions concerning interrogation 
techniques, and the disclosure of the NSA terrorist 
surveillance program have caused our leaders in the field to 
question the support that they believe they once had in 
Washington to act aggressively to pursue every lead that will 
defend ourselves against the next terrorist attack.
    Our leaders in the field relayed to me the difficulty 
they've faced in assuring their intelligence sources that they 
and their families would be protected, particularly in view of 
the perception that has arisen that the United States is a 
Nation that has little regard for classified information, and 
leaks secrets with reckless abandon.
    It's my belief that the recent developments have 
significantly degraded our intelligence capabilities and, thus, 
made America measurably less safe.
    Furthermore, it is abhorrent to me that while we have men 
and women putting their lives on the line in the field--my son 
is a Marine intelligence officer in Iraq--that some are content 
to play politics with our national security. While some are 
thinking about scoring political points on matters of 
intelligence or about trying to make the current Administration 
look bad, I believe we should be focusing on giving the best 
tools to our people in the field--to people like my son and 
others--so they can do their jobs and return home safely.
    I believe we can ensure humane, effective intelligence 
operations consistent with our freedom-loving Americans without 
having to play the blame game and overreacting to isolated 
aberrant incidents, which should be and are being prosecuted 
vigorously by the government, and instead, handcuffing the vast 
majority of our honorable operators abroad.
    I heard a lot of good things from our people in the field. 
We've made tremendous progress, and Americans can be proud of 
what our intelligence people have done in the field. Much of 
what they've done has been classified, so I hope the public 
won't get to know about all of it. But make no mistake, the 
rampant leaking, and uncertainty over detainees and 
intelligence techniques has shaken the confidence of our 
intelligence operators in the field. They're forced to spend 
more time thinking about their own professional liability 
insurance and watching their backs rather than how to exploit 
every possible lead.
    So my question to you, Mr. Director, and to Director Goss, 
is do you agree with the assessment that I've picked up in the 
field? And if you do, how can we, as Members of Congress, and 
how will you, as intelligence leaders in Washington, take 
necessary decisive steps to support our people in the field 
with the confidence that they need to lean forward in their 
intelligence efforts to face the dangerous threats and not to 
return to the risk-aversion that's proven so costly to us in 
the past?
    Director Negroponte. Thank you, Senator.
    First of all, I agree with you that anytime sensitive 
sources and methods are revealed in the public domain, through 
press stories or otherwise, that this carries with it the grave 
danger of prejudicing or adversely affecting our intelligence 
operations, and in many instances lives can be directly at 
stake.
    And I must say that in the 9 months that I've been in this 
job, one of the greatest disappointments that I personally have 
had is experiencing the degree to which people are willing to 
talk about classified matters to the public media. And we've 
got to bring that kind of activity to a stop.
    What are we doing? Well, of course, where there are 
violations of security practices that take place, we're seeking 
to investigate them as vigorously as possible and prosecute 
them, if necessary. I'll certainly ask Mr. Goss to elaborate on 
this, but I think you're right. It is an issue that affects 
both our effectiveness and the morale of our people. But in 
addition to investigating and penalizing those who do carry out 
these kinds of leaks, I think we also have a challenge to the 
leadership of the intelligence community as a whole to try and 
re-instill--and we're working hard on that--a spirit of keeping 
secret what has to be kept secret in our work in intelligence. 
But I defer to Mr. Goss.
    Director Goss. Senator, thank you very much for your 
complimentary remarks about the men and women of the 
intelligence community overseas. I will pass those along. And I 
agree with you, they are fully deserved. I take great pride in 
associating with those people.
    Secondly, I would simply say that it would be inappropriate 
for me to comment on motivation of leaks except as to CIA 
aspects of that. And we, of course, have a vibrant 
counterintelligence capability, which is--with the cooperation 
of Director Mueller and others--we utilize fully.
    I'm sorry to tell you that the damage has been very severe 
to our capabilities to carry out our mission. I use the words 
``very severe'' intentionally. That is my belief. And I think 
that the evidence will show that.
    When I start talking about the disruption to our plans, 
things that we have under way, that are being disrupted because 
of releases to the press or public discussion, when I talk 
about the risks to assets, to sources and methods that are no 
longer viable or usable, or less effective by a large degree, 
when I talk about the erosion of confidence in our working 
partners overseas, I'm stung to the quick when I get questions 
from my professional counterparts saying, Mr. Goss, can't you 
Americans keep a secret? That is not the kind of thing that is 
helpful to building relationships, to doing some of this very 
delicate, hard work that we have to do overseas.
    As to what we're doing about it. I can assure you, we have 
a strong internal program at the Central Intelligence Agency 
under way--has been for some time--to, as the Director of 
National Intelligence, Ambassador Negroponte, has said, to 
remind all of our employees that we are the secret agency of 
the agencies, that we are entrusted with that responsibility 
uniquely, and that the men and women who come aboard are 
advised of that.
    So we have a program of awareness, but we also have an 
investigation of finding out what leakage, if any, is coming 
out of that building. And I'm afraid there is some coming out. 
I also believe that there has been an erosion of the culture of 
secrecy, and we're trying to re-instill that.
    On the external side, I've called in the FBI, the 
Department of Justice. It is my aim and it is my hope that we 
will witness a grand jury investigation with reporters present 
being asked to reveal who is leaking this information. I 
believe the safety of this Nation and the people of this 
country deserve nothing less, and I thank you for your 
question.
    Senator Bond. I thank you, Mr. Director.
    Chairman Roberts. Senator Feingold, and welcome to the 
Committee.
    Senator Feingold. Chairman and Mr. Vice Chairman, again, 
I'm honored to join the Committee. I sought this position for 
one overriding reason. We were attacked on September 11th, 
2001, by terrorists whom we must defeat. And I agree with the 
Ambassador; this fight is our top national priority, and it 
involves not only our military power, but also our diplomatic, 
economic and intelligence capabilities.
    And I have serious concerns about whether this 
Administration is fighting terrorism in an effective global and 
comprehensive manner. By focusing so extensively on Iraq, this 
Administration seems to be pursuing a one- or two-country 
strategy, when al-Qa'ida is actually operating in some 60 
countries around the world.
    So I am concerned about the terrorist threat in places in 
Pakistan, Somalia and other parts of Africa, Southeast Asia and 
elsewhere.
    And I'm concerned that the President has taken the position 
that he can spy on Americans without a warrant, despite a clear 
statutory ban. To just respond a bit to what Senator Bond said, 
I couldn't have any higher regard for the need for secrecy, and 
I agree that it must be dispiriting for our people in the 
intelligence community and the military to suffer from the 
possibility of leaks.
    But these people, who are so dedicated and so brave, also 
have the right to know that there are clear rules, that we're 
still operating under the rule of law, under the Bill of Rights 
and the Constitution. And I bet if you asked them, they'd tell 
you that they care a great deal about that as well.
    Mr. Ambassador, without getting into what the specific 
programs might be, can you assure us today that there are not 
other intelligence collection--and I emphasize collection--
programs that you are aware of and that you are keeping from 
the full Intelligence Committee?
    Director Negroponte. Senator, I don't know if I can comment 
on that in an open session.
    Senator Feingold. Well, we'll pursue it later today.
    Director Negroponte. Yes.
    Senator Feingold. Let me move on to the subject that 
Senator Wyden brought up and that he and I have worked on 
together, this issue of data minding--data mining. I sent you a 
letter on January 23rd, requesting information about the NSA's 
and the intelligence community's possible use of data mining 
technology to analyze telephone and computer communications 
inside the United States. And as I'm sure you know, there have 
been news reports that part of the NSA's domestic surveillance 
program has involved large-scale data mining of domestic 
communications.
    Now I don't expect that you have the detailed answers to 
that letter with you here today. I just want to ask if you 
would commit to me today that you will respond promptly to that 
letter.
    Director Negroponte. Yes, I will, and I believe we have a 
response in preparation, Senator. I was advised of that before 
I came up to the hearing.
    Senator Feingold. Thank you.
    Turning to one of the areas that we were talking about or 
you were talking about in your statement, in your prepared 
opening statement, you included a passing reference to Somalia. 
The 2004 State Department terrorism report states that al-
Qa'ida operatives there pose a ``serious threat'' to American 
interests in the region and that a lack of functioning 
government and a protracted state of violent instability 
contributes to making Somalia a potential launching point for 
terrorist operations elsewhere.
    In your view, have we committed sufficient intelligence 
resources to fully understanding and addressing this threat? Is 
a political solution to Somalia's problems a necessary 
component of our counterterrorism strategy in that region? And 
if so, what are we doing to support such a solution?
    Director Negroponte. On the first part of your question, 
Senator, certainly Somalia is on our radar screen, not only in 
the intelligence community and our diplomatic establishment, 
but also in Central Command. I think it's an issue of concern, 
as a place where there are international terrorists and to 
which international terrorists might gravitate if they were to 
suffer severe setbacks in a place like Afghanistan or Iraq.
    So we're very mindful of that threat. I think we're 
devoting important resources to it, although----
    Senator Feingold. Are they sufficient intelligence 
resources?
    Director Negroponte. Well, they certainly are significant. 
You can never quite do enough, but in the order of priorities 
that we've got, I think we probably have it about right.
    On the question of governance and whether they've got a 
government, they've had sort of an absence of governance for 
the past decade, though sometimes you see some emerging signs 
that they might pull together some kind of a central 
government. But I wouldn't hold my breath. Obviously, if they 
could make improvements in their state of governance, that 
might make it easier to deal with the issue of international 
terrorism. That, after all, is one of the theses of my 
testimony, that governance and these transnational threats can 
be related to each other.
    Senator Feingold. Thank you for your answers.
    Chairman Roberts. Has the Senator concluded?
    Senator Feingold. My time's up. I'd be happy to keep going.
    Chairman Roberts. Oh, we give new Members at least, you 
know, 30 seconds.
    Senator Feingold. Great. I'll take another one.
    The national intelligence strategy released by your office 
last October states, I think quite correctly, that no nation 
can build a safer, better world alone. And the strategy 
involves engaging and invigorating friendly foreign 
intelligence services, and you refer to that in your comments.
    The strategy refers to a strategic plan for our foreign 
intelligence relationships so that these relationships help us 
confront national security threats. I agree, this is a 
critically important task, and it involves a broad range of 
policy considerations.
    Is this strategy being coordinated with the State 
Department? And will you work closely with Congress as you 
develop this strategy?
    Director Negroponte. It certainly is being coordinated with 
the State Department, and we'd be pleased to inform the 
Committee of the steps we've taken thus far and consult with 
you on the way forward.
    Whenever it comes to dealing with foreign countries and 
institutions in those countries, our intelligence agencies work 
closely with the United States Ambassadors there in addition to 
assure the best possible coordination of this so that we don't 
have a dispersion, if you will, of our effort.
    One of my first acts as Director of National Intelligence 
was to designate the CIA station chiefs as my representatives 
in those countries so that we aren't stumbling over each other 
out there, and that we have a focal point for the coordination 
of intelligence relationships with foreign countries in the CIA 
stations.
    Senator Feingold. Thank you again.
    Chairman Roberts. Senator Feinstein, welcome back.
    Senator Feinstein. Thank you very much, Mr. Chairman.
    Mr. Negroponte, I just want to associate myself with the 
comments of our Ranking Member. I serve on both Judiciary as 
well as Intelligence, and what we have seen in the last few 
years is a defined and consistent stonewalling to prevent the 
oversight responsibilities of both Committees from being 
carried out. And I just want you to know that when the Ranking 
Member mentioned that part of the law creating your position 
also was to hold you above any political influence, I think 
that that is something that we feel very strongly, and I want 
personally to make that comment to you.
    The National Security Act specifies that the executive 
branch shall ``ensure that the congressional intelligence 
Committees are kept fully and currently informed of the 
intelligence activities of the United States, including any 
significant anticipated intelligence activity.'' The only 
statutory exemption to this is for especially sensitive covert 
actions, which may be briefed to only eight Members of 
Congress.
    The Administration is increasing the use of these limited 
briefings. My question to you is, who determines what 
information will be briefed to only eight Members of Congress?
    Director Negroponte. Senator, I take very seriously my 
legal obligations under the National Security Act, which 
requires me to keep the congressional Intelligence Committees 
fully and currently informed of intelligence activities, to the 
extent consistent with the protection of sensitive intelligence 
sources and methods or other exceptionally sensitive matters.
    Senator Feinstein. Respectfully, could you answer my 
question, which was, who makes the decision?
    Director Negroponte. It's the President and the Vice 
President, Senator.
    Senator Feinstein. Thank you very much. I just wanted to 
know who makes the decision. Thank you.
    If I could move on, the intelligence reform legislation 
that created your position also set up an effort to finally 
solve some of the information-sharing problems that pre-dated 
September the 11th. I understand that the person appointed by 
the President to lead this effort, John Russack, resigned last 
week. I'm very concerned that this resignation will end any 
momentum on information sharing that had been built up, and 
that the State and local law enforcement will continue to lack 
the information that they need to find and stop terrorists.
    Will the information-sharing effort meet the statutory 
timelines? And will Mr. Russack's departure mean a change in 
direction for the program?
    Director Negroponte. Senator, I think we're striving to the 
best of our ability to meet the timelines that have been set. 
Interim guidelines or an interim report was sent up to the 
Senate late last year. We are taking steps to ensure that this 
information-sharing program continues to have momentum, and you 
can be certain that we will give it the highest attention at 
the leadership of the DNI. General Hayden, my CIO and 
eventually the program manager, when we get a new program 
manager on board, will continue to give this issue very, very 
high priority. And I would expect that--and I would hope that 
progress on this front will accelerate.
    Senator Feinstein. How soon do you believe you'll have 
someone on board?
    Director Negroponte. I've actually identified an 
individual, but it's a question of clearances and just the 
processes that we have to go through to be able to formally 
bring that individual on board.
    Senator Feinstein. And do I understand by your answer that 
this will mean that the program will be carried out in the same 
direction in which it was previously?
    Director Negroponte. Yes. I don't think this is going to 
have any policy implications with respect to the direction in 
which we've been headed.
    Senator Feinstein. Thank you.
    Director Negroponte. You're welcome.
    Senator Feinstein. The President has stated that the NSA 
warrantless electronic surveillance program has been restricted 
to cases where one of the members would reasonably be suspected 
to be an al-Qa'ida link or affiliate. Those were the words that 
have been interchangeably used. I have two questions on this.
    What does it mean to be an al-Qa'ida link or affiliate? How 
is that connection to al-Qa'ida defined?
    And if I've been called by Usama bin Ladin or somebody that 
we know is attached to him, I presume that NSA would call that 
a link to al-Qa'ida; but is anyone I then call linked to al-
Qa'ida automatically and, therefore, electronically surveilled, 
and anyone they call then linked to al- Qa'ida and 
electronically surveilled?
    Director Negroponte. Ma'am, if I may invite General Hayden 
to comment.
    Senator Feinstein. Thank you. That'd be fine.
    General Hayden.
    General Hayden. Yes, ma'am. Thank you. The criteria that 
are used by the analyst--and it is done by the analysts, those 
folks who are most knowledgeable about al-Qa'ida intent, 
behavior, communications and so on--is that this analyst, with 
all the facts available to him or her at the time, OK?--as a 
prudent person would have reason to believe that this 
communicant is affiliated with al-Qa'ida. That's the standard 
that we use, and that's the standard that's drilled into the 
individuals who make those kinds of decisions.
    Senator Feinstein. Thank you. The Attorney General has 
asserted that the President has virtually unchecked authority 
to protect Americans, regardless of a clear statutory record in 
opposition. That legal position would allow the President to 
issue other orders in the name of counterterrorism. Has any 
intelligence agency been authorized to, or has any agency 
carried out, the search of the home of any American suspected 
to be linked to al-Qa'ida without a court warrant?
    Director Negroponte. I think I'd have to defer to our law 
enforcement authorities on this, Senator.
    Senator Feinstein. Thank you.
    Mr. Mueller.
    Director Mueller. Senator, I'm not aware of that happening.
    Senator Feinstein. OK. Has any intelligence agency 
arrested, detained, rendered or otherwise held any American 
suspected to be linked to al-Qa'ida without a court warrant or 
sufficient cause for criminal prosecution?
    Director Mueller. I'm sorry, Senator. Can you repeat that 
question for me?
    Senator Feinstein. Sure. Has any intelligence agency been 
authorized to or has any agency carried out an arrest, 
detention, rendering, or otherwise held any American suspected 
to be linked to al-Qa'ida without a court warrant or sufficient 
cause for criminal prosecution?
    Director Mueller. Well, I mean, I'll try a first response 
to that. That's a very broad question. And looking at all the 
components, there are occasions where, whether it be in the 
criminal arena, the counterterrorism arena, we make arrests on 
probable cause without it going through a magistrate first, 
then you follow up on a complaint. And I believe in the 
instances that, certainly, that I'm aware of, we followed the 
procedures that are appropriate.
    Senator Feinstein. May I ask for the DNI's response, since 
the question had to do with intelligence agencies?
    Director Negroponte. Yes, except my principal concern is 
with the collection and analysis of national intelligence which 
is used for the protection of the homeland. And I'm not aware 
of any such instances. I really am not.
    Senator Feinstein. All right. I'd like to just continue on.
    Director Negroponte. Right.
    Senator Feinstein. Has any intelligence agency been 
authorized to or carried out the killing of anyone on U.S. soil 
based on a link to al-Qa'ida?
    Director Negroponte. I'm not aware of such a situation, 
Senator.
    Senator Feinstein. Mr. Mueller.
    Director Mueller. Senator, I'm certainly not aware of such 
a situation, speaking for the FBI.
    Senator Feinstein. My time is up.
    Chairman Roberts. In a word, yes.
    Senator Feinstein. Thank you.
    Thank you, Mr. Chairman.
    Chairman Roberts. Mr. Wyden.
    Senator Wyden. Thank you very much, Mr. Chairman.
    In open session, Director Negroponte, I wanted to ask you 
about oil, as it relates to terrorists. And here's my concern. 
You go to a gas station in the United States. You pay these 
huge prices. A portion of that eventually finds its way to 
foreign governments, particularly Saudi Arabia. The Saudis hand 
it over to charities, and the charities back-door it to 
terrorists who want to kill law-abiding Americans.
    What is being done to try to deal with this, and 
particularly to stiffen up the Saudi effort to deal with this 
problem, which I think everybody understands is going on. We're 
seeing oil purchases in the United States--they're in effect 
terror attacks. And I'd like to know what is going on with 
respect to forcing the Saudis to crack down on how this oil 
money gets to terrorists who want to kill Americans.
    Director Negroponte. I think, first of all, Senator, since 
some of the egregious terrorist acts that were carried out in 
Saudi Arabia in recent years, I think starting with 2003 
forward, I think there's a much greater awareness of the 
international terrorist threat on the part of the Saudi 
authorities and I think we've seen a really strengthened effort 
to deal with that situation on their part. So I would say that 
cooperation has increased. It's getting better. And we have a 
lot of interchange at all levels--law enforcement, 
intelligence, and so forth.
    Senator Wyden. You no longer think this is a problem?
    Director Negroponte. No, that was going to be my second 
point. I believe there are private Saudi citizens who still 
engage in these kinds of donations. And I think efforts must be 
made and ways have to be found to discourage that kind of 
activity. And I think there are also certain designated 
charities and organizations we actually identify as ones to 
whom monies should not be given.
    So, I think it has been a problem. It's getting better. But 
it continues to need work.
    Senator Wyden. I'm going to ask you about that in the 
private session.
    One other question for you, Mr. Director. There have been 
news reports this week--there was one in Newsweek Magazine--
talking about American officials being in face-to-face talks 
with high-level Iraqi insurgents as part of an effort to look 
at possible ways to get peace in the region.
    My question is, will you confirm what was in the news 
reports this week? And if you will, I particularly want to know 
what is being done to address the concerns that I'm sure Shi'a 
would have about any such talks.
    So, first, will you confirm what's in Newsweek Magazine? 
And second, if this is ongoing--and I will ask you about this 
also in closed session as well--what is being done, at least 
for the public record, to deal with what are certain to be 
Shi'a concerns about any such talks?
    Director Negroponte. Sir, I simply don't have any comment 
on that story.
    But as far as the question of Sunni and Shi'a relationships 
in Iraq, this is a very delicate balance, if you will. I think 
that any efforts to move the political process forward have got 
to be based on a desire to take into account all elements--
Sunni and Shi'a included--of the Iraqi body politic.
    Senator Wyden. Mr. Chairman, my colleagues didn't even get 
one round, and I appreciate your giving me these extra 
questions.
    Chairman Roberts. Senator Rockefeller.
    Vice Chairman Rockefeller. Thank you, Mr. Chairman.
    Director, last year at this hearing, Porter Goss made the 
statement--and I think this is probably the subject which is 
the most scary in all of this area of intelligence and 
international security--that he could not assure the American 
people, you know, that there weren't unaccounted for nuclear 
weapons or derivatives thereof that are housed in Russia.
    Have they been stolen? Have they been sold? It wasn't 
possible really to say, and I think this is a catastrophically 
important matter. The U.S. Department of Energy estimated that 
only 50 percent of the buildings that house fissile materials 
in Russia operate under the highest security standards.
    And what I really just want to know is, from either of you 
gentlemen, whether you feel there has been any improvement in 
that area and if we are working collaboratively, not just Nunn-
Lugar, but in other ways, to try and decrease the number 
available for purchase by terrorists perhaps, probably, these 
nuclear weapons or parts thereof?
    Director Negroponte. If I could invite Director Goss.
    Director Goss. Thank you very much, Mr. Vice Chairman.
    That is correct. Last year, you asked me if I could account 
for all of the unaccounted for nuclear weapons and be sure, 
therefore, that the terrorists did not have access or could get 
one or had one, and I could not give you that assurance and nor 
can I today. But what I can tell you today is I'm a bit more 
comfortable than I was a year ago. I've had a chance to focus 
in on the efforts that we are making and others are making, 
because this is a well-understood threat to the civilized 
world, and I would dare say we're getting a good deal more 
cooperation on this subject than we were before that 
understanding was clear.
    I would also say that this is an item that probably gets 
the loudest alarm bell any time our many collectors work, so I 
am completely satisfied it is attended to. I am not satisfied 
that we have the answer that you and I both--that we'd all like 
to have that we are 100 percent sure because we just aren't.
    Vice Chairman Rockefeller. But you think that the efforts 
not only within our Nation and its national security apparatus, 
but also other parts of the world is stronger in effecting 
results toward diminishing that supply?
    Director Goss. I believe that personally. You know, I 
represent a capabilities organization, but just one of 15. From 
my perspective, we have got a proportionate number that is 
correct focused on that, and I think we are doing better. I 
can't speak for the rest of the community, though.
    Vice Chairman Rockefeller. It's interesting, to do better 
makes me feel good, but it isn't until we get the whole thing 
solved, and of course, that's going to take a lot of work and a 
lot of good faith and a lot of people.
    Director Negroponte. If I could add quickly, Senator,--we 
have created an interagency effort to collect and analyze the 
whereabouts of fissile materials all over the world, and that's 
ongoing on an urgent basis.
    Vice Chairman Rockefeller. And I'm glad to hear that.
    Director, my final question will be to you, and that is, do 
you agree with the statement that I made in my opening remarks 
that our Committee Members and our staff are routinely given 
access to the details of overseas signals intelligence programs 
that are carried out by the NSA?
    Director Negroponte. Yes.
    Vice Chairman Rockefeller. Yes.
    And do you believe that it's appropriate for the Committee 
to have a working understanding of these programs?
    Director Negroponte. I do. Yes.
    Vice Chairman Rockefeller. Why is it that--you know, if I 
had to make my guess--and this is none of my business, and I 
have no proof, and so just take it for what it's worth--that 
the leak which everybody is so properly concerned about 
probably came out of the executive branch of government.
    It surely didn't come out of Chairman Roberts or Jay 
Rockefeller. And my guess would be somewhere in the Department 
of Justice. But just take that for what it's worth.
    Do you really believe that fully briefing the NSA matters 
that we're discussing to 40 members of the Intelligence 
Committees in the Congress represents some kind of an 
unacceptable security risk?
    Director Negroponte. Sir, we're talking about a decision 
that was made long before I arrived in this position. And what 
I was trying to answer to Senator Feinstein earlier was that 
there is a history and a tradition of certain, very small 
number--very limited number--of select sensitive programs that 
the executive branch and the President and the Vice President 
over a period of 50 or 60 years have chosen to limit the 
briefings to a small select group in the Congress, such as the 
leadership of the Congress and the chairmanship and the vice 
chairmen or ranking Members of respective Committees. And that 
is what has been done in this particular instance.
    Vice Chairman Rockefeller. And I understand----
    Director Negroponte. That was the method that was chosen to 
deal with this issue. But there were extensive briefings over 
the lifetime of this program, I think more than 10. And so, you 
know, I think that's how best I can answer that question.
    Vice Chairman Rockefeller. And I understand that, and I'll 
just close with this thought. The top leadership doesn't 
usually go to these meetings. So you're really talking about 
Chairman Roberts and myself and Chairman Hoekstra and Ranking 
Member Harman. And there may be a long history of this. I'm not 
aware of that. But there is no history that comports in any way 
to the intensity of what's happened as a result of 9/11.
    And I just want to make the statement that I think so much 
could be worked out--and so many people would probably agree--
if we felt we were being talked to, as is required by law. The 
Chairman, when he gave his opening statement, talked about 
``lawful.'' And I just really think that the executive branch 
needs to think about the fact that laws are laws, and you are 
specifically placed under a certain law, and others are placed 
under certain laws. And informing the Committee of jurisdiction 
is one of those laws.
    And it simply isn't being done, in an atmosphere where it 
needs to be done, I think, more than ever, in which I would 
disagree with Senator Bond, who--this is not fair, to 
paraphrase him--but to say that if people are asking questions 
about this, that somehow they're taking their eye off what is 
deemed to be the ball--and I think part of the discussion and 
the history and the future of all of this is going to be that 
the executive branch and the legislative branch have to have a 
working relationship that in fact fits into what the laws 
require.
    I think you have nothing to fear from us. You have nothing 
to fear from the House. I think it's almost certain that 
whatever leaks came came from the executive branch, and that's 
always going to be a problem. But I just beg you to consider 
what I say in deep seriousness and deep sincerity.
    Chairman Roberts. I think that the Director of the FBI 
would like to respond.
    Director Mueller. Senator, if I might, being a component of 
the Department of Justice, I want to not leave that remark go 
unaddressed in terms of----
    Vice Chairman Rockefeller. Yeah, I can understand that.
    Director Mueller. And I'm not certain you have a basis for 
pointing a finger. I'm not certain what leak you're talking 
about, and I don't think it's fair to point a finger as to the 
responsibility of the leak, so I did not want to let that go 
unaddressed.
    Vice Chairman Rockefeller. I understand.
    Chairman Roberts. We have Senator Feingold on the second 
round.
    Senator Feingold. Thank you, Mr. Chairman.
    Following up on Senator Feinstein's question, Mr. 
Negroponte, and----
    Chairman Roberts. Oh, sir, I beg your pardon. For some 
reason, I have not recognized the first round appearance of the 
sheriff of the always powerful Senate Agriculture Committee, 
Senator Chambliss.
    Senator Chambliss. Thank you, Mr. Chairman.
    It used to be powerful before you were Chairman in the 
House, and we haven't recovered, but we're getting there.
    [Laughter.]
    Senator Chambliss. I want to follow up on what Senator 
Rockefeller just said, ladies and gentlemen. This issue 
relative to this leak coming out of the executive department or 
the Administration, that's a pretty serious accusation, and, in 
fact, the only known source of any communication from the 
inside has come from an individual, as I understand it, who 
used to work in the program and is not a part of the executive 
branch.
    But I have been very hesitant to talk about the fact--and I 
assume I'm directing this to either you, Director Mueller, or 
Director Goss or Director Negroponte--I've been hesitant to 
talk publicly about the fact that the position of gathering 
intelligence and utilizing very classified and sophisticated 
intelligence has been compromised by not only the leak, 
wherever it came from, but also by the continuing highlighting 
of this issue in the press, and that those folks who continue 
to question this program, those folks who continue to go out 
front and talk in a negative way about this program may be 
aiding and abetting the terrorists.
    And I am extremely concerned about that.
    I understand, Director Goss, that you may have addressed 
this in an earlier response to a question from Senator Bond, 
and I apologize for not being here. But I would like to ask you 
all to comment on that, if you will, as to whether or not our 
position has been compromised, if we have lost any of our 
capability relative to this program as a result of the 
publicity surrounding it.
    Director Goss. Thank you, Senator, very much. It would only 
be appropriate for me to comment about those areas that I have 
accountability and responsibility for. And I was referring to 
leaks that Senator Bond had referred to that went to that area, 
and explained at some length how damaging they have been and 
the steps we are taking to deal with that, and I hope they'll 
be successful steps.
    NSA is not, obviously, in our area, and so I would prefer 
to yield to either Director Mueller, who has the domestic side 
of the argument, or the Director of National Intelligence for 
whoever he would like to appoint to deal with the NSA aspects.
    Senator Chambliss. Sure.
    General Hayden. Senator, it's hard for me to characterize 
in open session. But I did make the comment earlier in another 
environment that some people claim that somehow or another our 
capabilities were immune to this kind of information going out 
into the public domain. And I can tell you in a broad sense 
that is certainly not true.
    Senator Chambliss. The bad guys tend to get information 
that comes out of Congress or out of the American press in real 
time. Is that a fair statement, General Hayden?
    General Hayden. We have been impressed with their ability 
with various Web sites that are generally available and at how 
agile they are in responding to events in this country.
    Senator Chambliss. Yes.
    Director Negroponte, the Secure Border Initiative was 
introduced by the Department of Homeland Security in November 
2005. And this is a comprehensive multi-year plan to secure 
America's borders and reduce illegal immigration, which 
includes increasing the number of Border Patrol agents, as well 
as upgrading technology used in controlling the border, 
increasing manned aerial assets, expanded use of UAVs and next-
generation detection technology.
    Recent reports suggest that smugglers are either disguising 
themselves as Mexican soldiers, or may actually be members of 
the Mexican military. How large of a problem is protecting our 
borders from infiltrators who may be receiving assistance from 
corrupt Mexican authorities, and what is our intelligence 
community doing to identify those collaborators?
    Director Negroponte. With your permission, Senator, perhaps 
I could invite Mr. Allen from the Department of Homeland 
Security to respond to that question.
    Senator Chambliss. Sure.
    Dr. Allen.  Thank you. Thank you, Ambassador Negroponte.
    Senator, on the Strategic Border Initiatives, as you know, 
Secretary Chertoff has a number of multi-functional ways to do 
this. A number of actions are under way.
    I, from an intelligence perspective, am looking at this on 
how to strengthen our intelligence collection on all of our 
borders, wherever they may be. Getting into specifics relating 
to any reported incidents along the border, that's something 
I'd prefer to talk to in a closed session. But I can say this, 
that our borders are being strengthened, whether by land, sea 
or air, and whether north or south, thanks to the procedures 
that are being rapidly put in place under the leadership of 
Secretary Chertoff. I think we can take comfort that we're well 
on our way to taking the kind of measures that the American 
public really wants to see.
    Senator Chambliss. Thank you.
    Thank you, Mr. Chairman.
    Chairman Roberts. It would be the hope of the Chair that we 
could at least allow the witnesses an hour for lunch before we 
go to the closed session.
    So with that in mind, on the second round I recognize 
Senator Feingold.
    Senator Feingold. Thank you, Mr. Chairman. I'm pleased I 
went after my friend, Senator Chambliss, because what I'd like 
to say is the greatest publicizing of this NSA program that 
I've heard was when I sat in front of the President of the 
United States the other night at the State of the Union and 
heard him discussing it in front of the whole world.
    In fact, this is part of a larger effort to discuss this on 
a constant basis and to make it a political issue in front of 
the American people. So I take it his remarks would apply to 
that sort of conduct as well.
    Mr. Negroponte and General Hayden, following up on Senator 
Feinstein's question, have you defined ``al-Qa'ida affiliate'' 
for the purpose of warrantless NSA surveillance? Is it a term 
of art? How are the NSA officials guided on this?
    General Hayden. It's a term of science, Senator. It is a 
specific list of affiliates. There is a burden of proof that 
must be met before an organization is deemed to be affiliated 
with al-Qa'ida. And that work is overseen by the entire 
oversight structure that governs this program within NSA by the 
IG, the general counsel, and by the Department of Justice.
    Senator Feingold. Thank you, General.
    On Pakistan, Mr. Negroponte, the most recent State 
Department country reports on terrorism for 2004 state that al-
Qa'ida continues to hide in Pakistan's federally administrated 
tribal areas of Pakistan. Who wields power in these regions, 
and how has al-Qa'ida managed to stay there for so long? Is 
this region basically a terrorist sanctuary? The report also 
states the Pakistan has pursued a strategy to win the support 
of tribes in the FATA with a combination of negotiations and 
economic investments. Have the Pakistanis achieved any success 
in this regard?
    Director Negroponte. It's a tough area. It's a tough area, 
Senator. And it's an area that historically has sought to 
govern itself, if you will. It's not felt itself an integrated 
part of any country or nation. And a lot of people up there 
take the law into their own hands, I think. But I believe the 
Pakistani Government has done a lot in recent times to 
establish a greater presence there. They've sent their military 
into the region, who operate with greater frequency and have 
taken a large number of casualties, substantial casualties in 
their efforts to impose the writ of the central government.
    So I think the situation there is gradually shifting. But 
it's proven to be a great challenge for the government of 
Pakistan. But I don't doubt their commitment to fighting 
against international terrorists, and we've seen ample evidence 
of that over the past months and years.
    Senator Feingold. On Iraq, you state in your opening 
statement that Iraqi Sunni-Arab disaffection is the primary 
enabler of the insurgency. Can you just say a bit more about 
the range of motivations that inspire the insurgency and the 
extent to which it is motivated specifically by anti-coalition 
sentiment?
    Director Negroponte. Well, I think the fundamental issue 
for those Sunnis who are not international terrorists, who are 
not part of al-Qa'ida or Zarqawi's group, has been a feeling of 
having been disempowered as a result of the fall of Saddam 
Hussein. So I think that probably is the most significant 
motivation--the feeling on the part of many Sunnis that they no 
longer have the position of prominence in the governance of 
their society, of their country that they used to have, and 
their desire to recuperate some of that influence.
    I think what we're seeing happening in Iraq is these 
different political forces and political groups finding the 
right balance among themselves that will permit their society 
to go forward in a peaceful manner. And I think the electoral 
process and the political process that we're witnessing offers 
that opportunity.
    Senator Feingold. Thank you for all your answers, and thank 
you, Mr. Chairman, for the additional time.
    Chairman Roberts. Yes, sir.
    Senator Feinstein.
    Senator Feinstein. Thank you, Mr. Chairman.
    Mr. Negroponte, we have heard allegations that top 
officials in one of the technical intelligence agencies 
explicitly warned contractors not to talk to Congress about 
ongoing programs or risk losing future contract competitions. I 
know this for a fact.
    Are you aware of this? And does Congress have the right, do 
we--in my case an appropriator, as well as an authorizer--have 
the right to talk to the contractor of major technical 
programs?
    Director Negroponte. Senator, I'm not aware of this 
particular situation, but if I may, I would like to know the 
details, so that I can have a look at the matter.
    Senator Feinstein. I will be happy to give you the details. 
Thank you.
    Last year, Admiral Loy, who was present, and I discussed 
border security, particularly the increasing problem of 
penetration of other than Mexicans across our borders, which 
are growing in numbers, and I said at that time that I felt it 
was a major gateway for terrorists to access the United States.
    Do you have ongoing intelligence efforts to prevent this 
from happening? And is there any evidence up to this point that 
it is in fact happening?
    Director Negroponte. I'm going to invite Mr. Allen to 
elaborate, but one thing I would like to say, Senator, is of 
course it's an issue that we're sensitive to, and second, my 
impression is that perhaps our border with Canada has to some 
degree been of a bit greater concern than that with Mexico. 
Although, obviously, we have to watch all of our borders very, 
very carefully.
    But if I could ask Mr. Allen to elaborate?
    Dr. Allen.  Yes, Senator Feinstein, we recognize this 
issue. As you know, we have found a lot of individuals other 
than Mexicans attempting to cross our borders illegally, and 
under Secretary Chertoff's new policy, which is catch-and-
return or deport, this is having I think a salutary effect. 
Now, the Strategic Border Initiative is new, and it's only now 
getting fully under way, and we're very sensitive of the fact 
that people from other areas--from areas where we might expect 
to find members of al-Qa'ida. We are very sensitive to that. We 
work extraordinarily hard on this issue.
    I think terrorists are facing an increasingly challenging 
environment to enter our country, certainly by air and by sea. 
We now need to secure our borders and, as Ambassador Negroponte 
said, we need to work harder.
    Senator Feinstein. If I might suggest to you, the numbers 
in the past 2 years have tripled. They have gone from fiscal 
year 2003, 49,545 to 2005, 155,000. Now these are other than 
Mexicans.
    Dr. Allen.  These are other than Mexicans. We're aware of 
those figures.
    Senator Feinstein. So this indicates to me that whatever 
we're doing is not working because more are coming through than 
ever before.
    Dr. Allen.  We believe we'll see a change in that in the 
coming months, because the catch-and-return policy I think it 
will have salutary effects over time.
    We really do have to work this issue a lot harder, and, as 
it was said earlier, when I answered Senator Chambliss, we're 
using significant new capabilities, including border patrolmen, 
but significant new advanced technologies to try to detect 
people entering our countries, particularly in Texas and 
Arizona.
    Senator Feinstein. Well, thank you very much for that.
    Dr. Allen.  Yes, ma'am.
    Senator Feinstein. Mr. Negroponte, recent media reports 
have spotlighted a number of activities that appear to be 
related to intelligence collection or covert action, but that 
well maybe outside of the official intelligence community's 
channels; for example, military data bases of suspicious 
activity reports called Talons by the Counterintelligence Field 
Activity or CIFA, and second, a Pentagon program to secretly 
pay Iraqi newspapers to run pro-American articles.
    Were these activities subject to your approval and 
oversight?
    General Maples. Ma'am, I don't believe that either of those 
activities would fall into Mr. Negroponte's area. They are 
Department of Defense programs.
    Senator Feinstein. Let me raise this problem, then. They 
should. We appointed you to be the--we didn't appoint you, but 
we created the legislation so that you were the person over all 
intelligence. Now, I know how tough it is, but this gives--if 
you didn't know and you didn't give a go-ahead, it indicates to 
me that for 85 percent of the budget which is defense-related, 
that you're not going to have the controls that you should 
have. You want to comment?
    Director Negroponte. Well, CIFA is within the national 
intelligence program, but as far as specifically directing 
those activities, that has not risen to the level of my office 
and comes under the direction of the Under Secretary of Defense 
for Intelligence. And my understanding, in light of the issues 
that have come up and the controversy and the press attention 
that has been given to CIFA, that Mr. Cambone has ordered a 
complete review of that program from top down.
    Senator Feinstein. Well, will you get the results of that 
review?
    Director Negroponte. Yes, I will get those results.
    Senator Feinstein. Will you be able to play a decision-
making role in that, or does Defense control it?
    Director Negroponte. Well, to the extent that I have 
reporting to me a national counterintelligence executive and 
have a role in counterintelligence, yes.
    Senator Feinstein. Thank you.
    Thank you, Mr. Chairman.
    Chairman Roberts. Let me just say that our staff has been 
briefed by the DOD and that I would encourage the Senator to 
check with staff on both sides, and that we have looked at this 
very carefully, and I think some of the concerns that she has 
raised, which obviously should be shared by everybody, you 
know, have been answered.
    Let me just say this in closing. First, I want to thank you 
for your patience. Second, we are going to welcome you to the 
closed session. Third, I hope you at least get to eat a 
sandwich.
    Let me make an observation. Since the enactment of the 
provision requiring the Intelligence Committees be kept fully 
and currently informed, that the Committees and the 
Presidents--and I use ``the President'' in plural--have always 
managed the delicate process of access to information. To claim 
this situation is somehow different ignores this Committee's 
history and the text of our laws.
    Now, I know this happened under President Carter, I know 
this happened under President Reagan, I know this happened 
under President Bush-one, I know this happened under President 
Clinton, and I know this happened under President Bush. And 
basically the law, at least in the way that I have read it, 
indicates that the executive has the prerogative and also has 
the responsibility of keeping the Congress informed. The 
practice, however, has been that there are certain programs 
that are so highly classified that they are limited to eight--
i.e., the leadership of the House and Senate and also the 
Ranking Member and, in this particular case, the co-Chair and 
the Chair of the Intelligence Committees.
    On some occasions, if it involves the military in some kind 
of a covert operation, the same thing applies to Armed Services 
and the Subcommittee on Armed Services in regards to the 
Subcommittee on Appropriations.
    Now, I know there is a great hue and cry that we make more 
people pregnant with the knowledge, and then, of course, if 
they're pregnant with the knowledge, they will rock the baby, 
as opposed to throwing it out with the bath water. But let me 
say that we did that.
    Immediately after 9/11, we thought it was our obligation on 
the Intelligence Committees, under different leadership at that 
particular time, to have a joint investigation, which we did. 
We even had an independent staff, forcing Members to come to 
the meeting and act as if they were studying for a chemistry 
test during a study hall because we quite never knew what to 
expect. Now, that's sort of telling tales out of school, but I 
didn't think that was a very helpful operation.
    It wasn't any time at all with the joint Committees--and 
I'm not trying to perjure anybody or the Committees or the 
intent of Congress or the integrity of Congress--before we had 
a leak. Now, the leak had nothing to do with 9/11, but boy, it 
sure made the headlines. And the executive made a decision at 
that particular time: I'm not going to--or we are not going to 
share any information or send anybody down to testify further 
if we have leaks of this nature.
    And so the leadership of that Committee, the Joint 
Committee Investigation on 9/11, made a decision--or agreed to 
the executive that there would be an FBI investigation of the 
Committee. At the same time, the Committee was investigating 
the FBI's role in 9/11. So here we were in a joint committee 
investigating the FBI, and then the FBI investigating us and 
asking every Member of the Intelligence Committees--both House 
and Senate--would you take a lie detector test?
    I can't think of anything more ridiculous or silly. I will 
say, as Chairman of this Committee, that if somebody asked me 
to do that, my answer is no.
    And the result was that what we really needed in that 
group--and I'm not comparing that particular group because I 
was a Member of it--and then, of course, everybody said it was 
staff. Members always say that it's staff. And I said that's a 
lot of nonsense. What we ought to do is have Members, when they 
walk out of the room, put duct tape on and have a requirement 
that they at least wear the duct tape for 24 hours.
    Now, that was the worry that happened under this 
Administration, and previous Administrations, when these 
briefings got to a larger group.
    Now, I would agree with Vice Chairman Rockefeller, I don't 
know of anybody on our Committee, I don't know of anybody on 
the House Committee that would willingly or wittingly repeat 
any information that would be so classified that it would 
endanger our country.
    Now, my question is, however, there's been a lot of comment 
about the President, you know, talking about this, the Vice 
President talking about this. It was only after the leak in The 
New York Times, which contained a lot of misinformation, as far 
as I'm concerned, about domestic spying, when we really have a 
threat warning capability--and that's what we're talking about, 
it's more of a military mission than it is any kind of a 
criminal proceeding under FISA. And FISA, by the way, is 
outdated in regards to its context with both the threat and the 
technology. And were we to do that, we would lose not only 
minutes, but hours or days when we have a threat that may 
happen immediately. And it would be an amazing thing to me that 
if we had another attack, the very people that are doing all 
the questioning now would be having you all back up and say, 
``How come you didn't know?''
    Now, my question is basically to General Hayden. What 
happens if you lose this capability, General?
    General Hayden. It's proven to be a very valuable tool for 
that which it was intended--to detect and prevent attacks 
inside the United States, Senator.
    And you're right about the firestorm of misinformation that 
seemed to follow day after day after the original leak was 
reported in The New York Times. I've spoken to this Committee--
I think it was in this room--in October of 2002, talking about 
the line between liberty and security, and how that had to be 
an informed debate by the American people so that we're all 
comfortable about that line.
    And there was so much inaccurate information, 
misinformation and misunderstanding out there that what was 
appearing in the press wasn't informing a debate; it was 
horribly misshaping it. And I don't see how we, as a free 
people, can make a decision in that way.
    Chairman Roberts. Well, I really regret that situation is 
happening, and I know that it is understandable, both on the 
majority side and the minority side, that we have differences 
of opinion. And unfortunately, the climate in the Congress 
today, then, is to ascribe politics as the reason for that. I 
really think people have strong differences of opinion. But 
fortunately or unfortunately, in regards to the number of 
people who are briefed, I think it's basically on the lack of 
information, and the lack of information in regard to exactly 
what this program is.
    And I cannot imagine how anybody who would be receiving a 
call from a terrorist cell, where we have reason to believe 
that they are going to attack the United States, and that 
person happened to be in the United States, that they would 
think their civil liberty was being violated if some 
intelligence or law enforcement person was not monitoring that 
call. It would be indefensible if we did not.
    And in addition, I would only point out that you really 
don't have any civil liberties if you're dead.
    The other thing that I would say is that I want to thank 
you again, all of you, for your dedication, your perseverance, 
for keeping this country safe, as opposed to some, who 
obviously are more worried about you people, apparently, than 
some people who--where we are at war and where we have a threat 
and where we have plots against the United States and where we 
have sleeper cells in the United States. And it could happen at 
any moment. Thank God we have this capability.
    This hearing is concluded.
    Vice Chairman Rockefeller. I need to respond, Mr. Chairman.
    Chairman Roberts. You may respond.
    Vice Chairman Rockefeller. And let me just ask a question 
first to the Director. Is the NSA program a covert action 
program, as defined by the National Security Act?
    Director Negroponte. I don't believe so, sir, no.
    Vice Chairman Rockefeller. And that's what we were told 
yesterday by the folks from Justice, that it is not.
    Now as to the horror of people wanting to do things both 
rigorously, aggressively, using intelligence, in every possible 
way that we can, it does not subtract, however, from two other 
concepts which have kept our Nation viable for many, many, many 
years. And that is that we do things under the law. We do them 
under the law.
    Secondly--and I've made this point many times to the 
Chairman; we've talked about it--there is an instinct readily 
grabbed upon by some that when we ask questions about the 
largest NSA program in history, that somehow we are attacking 
you gentlemen and ladies. Nothing could be further from the 
truth, because the instructions or whatever come from 
elsewhere. That's been stipulated.
    It is simply important that in a democracy we understand 
there are three branches of government. I spend an enormous 
amount of my time--the Chairman's leaving--an enormous amount 
of my time, well over three-quarters, working exclusively on 
this subject in great depth with great intensity, do a lot of 
traveling, and meet the same intelligence folks that Senator 
Saxby Chambliss was talking about, and Kit Bond, I guess it 
was.
    But you cannot equate, and you should not equate, asking 
questions where we are meant to be informed by law, as the 
Intelligence Committees, and we are not, for pursuing that 
effort, because to do otherwise is to say that there's no 
reason for these Committees to exist, and that we should 
disband the Committees, which I am not for doing.
    But do not kid yourselves, gentlemen and ladies. It is 
often said that the Chairman and the Ranking Member of each of 
the Committees are fully briefed, and therefore, you know, 
everything is fine. That's not the way it works, that's not the 
way those meetings work. And General Hayden knows that. They 
don't last long enough, the flip charts are extensive, and 
everybody's in a hurry. The leadership usually doesn't come. 
Chairman Roberts and I do come, as well as the House members; 4 
people out of 535 therefore know about the most extensive and 
aggressive NSA effort in the history of this country.
    I am strongly for the goals. But I want it to be done under 
the law. And so should you. That's what keeps our country 
together.
    Thank you.
    Director Negroponte. If I may just--one sentence, Senator. 
I know the Attorney General will address this next week. But we 
believe that all these activities are being undertaken in full 
compliance with our Constitution and with the laws of our 
country. And that is an oath that each and every one of us at 
this table have undertaken.
    [Whereupon, at 1:50 p.m., the Committee adjourned.]
  

                                  
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