U.S. GOVERNMENT PRINTING OFFICE

65–329 WASHINGTON : 2000

S. HRG. 106–580

CURRENT AND PROJECTED NATIONAL SECURITY

THREATS TO THE UNITED STATES

HEARING

BEFORE THE

SELECT COMMITTEE ON INTELLIGENCE

OF THE

UNITED STATES SENATE

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

ON

CURRENT AND PROJECTED NATIONAL SECURITY THREATS TO THE

UNITED STATES

FEBRUARY 2, 2000

Printed for the use of the Select Committee on Intelligence

(

(II)

SELECT COMMITTEE ON INTELLIGENCE

RICHARD C. SHELBY, Alabama, Chairman

RICHARD H. BRYAN, Nevada, Vice Chairman

RICHARD G. LUGAR, Indiana

JON KYL, Arizona

JAMES M. INHOFE, Oklahoma

ORRIN G. HATCH, Utah

PAT ROBERTS, Kansas

WAYNE ALLARD, Colorado

CONNIE MACK, Florida

BOB GRAHAM, Florida

JOHN F. KERRY, Massachusetts

MAX BAUCUS, Montana

CHARLES S. ROBB, Virginia

FRANK R. LAUTENBERG, New Jersey

CARL LEVIN, Michigan

TRENT LOTT, Mississippi, Ex Officio

THOMAS A. DASCHLE, South Dakota, Ex Officio

BILL DUHNKE, Staff Director

ALFRED CUMMING, Minority Staff Director

KATHLEEN P. MCGHEE, Chief Clerk

(III)

C O N T E N T S

HEARING HELD IN WASHINGTON, D.C.: FEBRUARY 2, 2000

Statement of: Page

Bryan, Hon. Richard H., a U.S. Senator from the State of Nevada ............. 2

Roy, Hon. J. Stapleton, Assistant Secretary of State of Intelligence and

Research ........................................................................................................ 3

Shelby, Hon. Richard C., a U.S. Senator from the State of Alabama .......... 1

Tenet, Hon. George J., Director of Central Intelligence ................................ 10

Wilson, Vice Admiral Thomas R. Wilson, Director, Defense Intelligence

Agency ............................................................................................................ 21

Testimony of:

Roy, Hon. J. Stapleton, Assistant Secretary of State for Intelligence and

Research ........................................................................................................ 47

Tenet, Hon. George J., Director of Central Intelligence ................................ 30

Wilson, Vice Admiral Thomas R. Wilson, Director, Defense Intelligence

Agency ............................................................................................................ 47

(1)

HEARING ON THE WORLDWIDE THREAT FOR

2000

WEDNESDAY, FEBRUARY 2, 2000

U.S. SENATE, SENATE SELECT COMMITTEE ON INTELLIGENCE, Washington, DC.

The Committee met, pursuant to notice, at 10:04 a.m., in Room

SH–216, Hart Senate Office Building, the Honorable Richard C.

Shelby, Chairman of the Committee, presiding.

Committee Members Present: Senators Shelby and Bryan.

Chairman SHELBY. The Committee will come to order.

This is the Committee’s first hearing of the 21st century, and I

want to join with the Committee’s new Vice Chairman, Senator

Bryan, in welcoming our witnesses, as well as the American public,

for this annual assessment of the threats facing our nation.

We have asked our witnesses to focus on those conditions

throughout the world that have fostered, or will foster, threats and

challenges to the security of the United States. We will be concentrating this morning in an open session, and again this afternoon

in a closed session, on conventional as well as unconventional

threats, including threats posed by the proliferation of weapons of

mass destruction and high-technology state-sponsored and nonstate

terrorists.

This hearing is intended to form the backdrop not only for the

Committee’s annual budget authorization process but also for a

comprehensive review of the capabilities of the Intelligence Community and the adequacy of the resources being dedicated to this

very important work.

The dynamic change and uncertainty that characterized the latter part of the nineties will likely continue through the first decade

of the new century because what one of our witnesses calls the engines of turmoil remain largely in place. These ‘‘engines of turmoil’’

include significant transitions in key states and regions throughout

the world, the continued existence of rogue states and terrorist

groups, rapid technological development and proliferation, continuing international criminal activity, and reactions to a perception of U.S. political, economic, military and social dominance.

Together, these factors foster a complex, dynamic and dangerous

global security environment that will spawn crises affecting American interests. If we are to contain, manage and respond appropriately to these threats, we need to understand this challenging

new security environment in the first year of the 21st century. And

nowhere will these challenges be more evident than in the asymmetrical threats to our homeland—in the strategic nuclear missile

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threats from China and Russia, as well as rogue states, and in the

threats posed to U.S. interests around the world by large regionally

ambitious military powers.

While this hearing is designed to address critical threats to our

nation’s security, another matter has come to the public’s attention

and is one that Director Tenet, I believe, should address in more

detail. That matter is the conduct of Mr. Tenet’s predecessor, John

Deutch, and the conduct of senior CIA officials in investigating,

failing to investigate, or possibly impeding the investigation of Mr.

Deutch’s handling or mishandling of classified information.

These are matters, I believe, of the utmost importance. The

American people have a keen interest in the performance of senior

officials charged with upholding our laws and policies with respect

to the protection of classified information, the disclosure of which

would constitute a serious and immediate threat to our national security.

Therefore, I hope that you will take this opportunity to explain,

Mr. Tenet, to the American public today the actions of your predecessor, the investigations into those actions, the actions of other

CIA officials with respect to this investigation, and your own actions in this regard.

With that in mind, the Committee is very pleased to welcome

back the Director of Central Intelligence, Mr. George Tenet. We’re

also pleased to welcome two individuals to their first public appearance before this Committee—the relatively new Director of the Defense Intelligence Agency, Vice Admiral Thomas Wilson, and the

new Assistant Secretary of State for Intelligence and Research,

Ambassador Stapleton Roy.

If there’s no objection, we’ve asked Secretary Roy and Admiral

Wilson to submit their statements for the record, and it will be so

ordered. Director Tenet will then present his oral testimony, after

which I will open the floor for Members’ questions. In the interest

of time, I would ask that members submit any opening statements

for the record, other than Senator Bryan, so that all members will

have ample opportunity to ask questions.

But before calling on you, Director Tenet, let me turn to my colleague and my new Vice Chairman, Senator Bryan.

Vice Chairman BRYAN. Thank you very much, Mr. Chairman.

As you have observed, this is my first roll call with you as the

new Vice Chairman of this Committee, and I look forward to working with you and other colleagues in the Committee in a bipartisan

way in discharging our oversight responsibilities with respect to

the Intelligence Community.

Let me first commend you for the timely manner in which you’re

scheduling the Committee’s annual worldwide threat hearing. As

we both know, because this is an election year, our time schedule

will be compressed. And so I think it’s most important that we get

off as quickly as we can at the beginning of the year and the timing

of this hearing, which was rescheduled through circumstances beyond your control or my control, indicates the manner in which we

tend to approach this responsibility.

The annual worldwide threat hearing is one of the Committee’s

most important. It’s indispensable in helping members frame the

Committee’s approach to intelligence issues in the year ahead. But

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it’s important for another reason. Because this is an open hearing,

the American people themselves will have an opportunity to assess

the seriousness of the threats that face our country, and reach

their own conclusions.

Mr. Chairman, our nation faces numerous threats, albeit qualitatively different than those that we faced during the Cold War.

Rather than the singularly focused threat of the former Soviet

Union, we now face a host of so-called transNational issues and

threats. As the term implies, these threats are not confined to specific countries, but rather cross international borders.

Mr. Chairman, as you and I observed firsthand during our recent

visit to eight African nations, the terrible effects of one of those

transNational threats, in this case terrorism, can be deadly. In

both Kenya and Tanzania, we visited the remains of our embassies,

both of which were the object of viciously destructive terrorist attacks in 1998. Over the last several years, you, Mr. Chairman,

have placed a proper emphasis on the transNational threats, such

as terrorism, weapons proliferation and narcotics, and I very much

look forward to working with you on these and other issues during

the course of the year.

Mr. Chairman, with your indulgence, I’d like to touch on one

more issue, one which you appropriately raised, and I’d like to associate myself with your comments in terms of the recent issue

that has come to light with respect to DCI John Deutch’s handling

of classified information and the misuse of government computers

as reported in the February 1st edition of the New York Times.

I must say that I find this issue extremely troubling. Not only

are the specifics of the case very disturbing; so, too, is the manner

and timing in which this Committee was notified. I look forward

to hearing any comments that the DCI may have on this issue

today, and I am particularly anxious to see the results of the accountability panel’s inquiry into this matter as soon as that panel

has completed its work.

I would also be very interested in whether or not there have been

any morale problems as a consequence of that, because one of the

obvious concerns raised is whether there is a dual standard in dealing with a former DCI and other employees of the agency who

might have been guilty of similar activity.

And finally, I would like to applaud the efforts of the CIA Inspector General, Britt Snider. His investigative report produced on this

matter is both comprehensive and balanced. And again, Mr. Chairman, I look forward to working with you today and throughout the

rest of the year on issues affecting the Intelligence Community.

Thank you.

Chairman SHELBY. Mr. Tenet, you proceed as you wish.

[The prepared statements of Director Tenet, Admiral Wilson, and

Ambassador Roy follow:]

PREPARED STATEMENT OF J. STAPLETON ROY, ASSISTANT SECRETARY OF STATE FOR

INTELLIGENCE AND RESEARCH

Chairman Shelby, Senator Bryan, Members of the Committee, I appreciate this

opportunity to present the views of the State Department’s Bureau of Intelligence

and Research (INR) on current and projected threats to our nation.

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Thanks to our military readiness, our intelligence capabilities, and the effectiveness of our diplomacy, threats to our national existence from nuclear or large-scale

conventional attack remain low.

The threats we face today are less direct and more diffuse. Efforts by countries

to acquire nuclear weapons and ballistic missile capabilities remain of high concern.

International terrorists—Usama bin Ladin’s organization is the most prominent—

threaten Americans at home and around the globe. Narcotraffickers and international criminals endanger our way of life and corrupt governments and societies

everywhere. Globalization has brought manifold benefits, but it has created new

vulnerabilities. ‘‘Soft’’ threats, such as the spread of epidemic disease, environmental

degradation, or conflict over water rights, pose new challenges that we are only beginning to understand.

In addition, the United States must pay special attention to the activities and intentions of states with global reach (Russia and China) and to countries whose behavior poses actual or potential threats to American interests. The latter group includes North Korea, Iran, and Iraq.

THE NUCLEAR THREAT

Only Russia has the unqualified capacity to destroy the United States. Indeed, for

the foreseeable future, Russia’s ability to threaten U.S. territory and overseas interests is greater than all other potential adversaries combined. China is the only other

country that is not an ally of the United States that currently has the capacity to

strike the U.S. homeland with nuclear weapons. Moreover, the aggregate nucleararmed ICBM threat against the United States is declining dramatically as a result

of Russian military choices related to START I and START II and the significantly

reduced size of the Russian economy.

This situation could change for the worse if Moscow (and secondarily, Beijing) concluded that the United States was pursuing interests in fundamental conflict with

their own. Such perceptions could trigger decisions that would significantly increase

the quantitative threat to the United States. Instead of reducing their nuclear warheads to some 1,500, the Russians could halt their decline at or above 2,000 warheads. The Chinese could triple their nuclear deterrent by the end of the decade to

more than 100 ICBM warheads by MIRVing existing ICBMs. Should either (or both)

put their strategic forces on a higher state of alert, their serious early warning deficiencies would increase the danger of accidental launch.

The growing availability of technical information about nuclear weapons and the

increase in well-financed non-state terrorist organizations make the prospect of a

suitcase or cargo ship bomb a significant second order concern. The difficulty of acquiring sufficient fissile materials would be the most important technical factor limiting the ability of such a group to detonate a nuclear device in an American city.

North Korea, with its nascent space launch vehicle/ICBM program and presumed

nuclear potential, is preeminent among emerging Third World nuclear threats.

Given the credibility of U.S. retaliatory capabilities in the face of any nuclear attack

on the American homeland, we would assign the North Korean threat to a tertiary

level. A multifaceted diplomatic effort is under way to eliminate this threat. So far,

this effort has yielded a freeze on activity at declared North Korean nuclear facilities and a moratorium on further space or missile launches.

MISSILES AND MISSILE PROLIFERATION

Ballistic missiles are a special concern, particularly when possessed by countries

with nuclear, chemical, or biological weapons, because of their ability to strike rapidly and penetrate defense. An increasing number of countries are developing capabilities to produce ballistic missiles and/or space launch vehicles; these include potential adversaries like North Korea and Iran, and regional rivals like India and

Pakistan. These capabilities have been increased by technology transfers from other

countries—principally Russia, China, North Korea, and advanced European nations.

This will allow for extended range and improved accuracy of older-generation missiles. Ballistic missiles are unlikely to be used against U.S. territory, but they are

a growing threat to U.S. allies and to U.S. forces deployed abroad.

THE CONVENTIONAL MILITARY THREAT

The threat of a large-scale conventional military attack against the United States

or its allies will remain low for the immediate future. Since the demise of the Warsaw Pact, there has existed no hostile military alliance capable of challenging the

United States or NATO, and none is on the horizon.

Regional tensions and potential conflicts threaten U.S. interests abroad. Progress

toward Middle East peace has reduced the chances of another major war there, but

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it may have increased the determination of regional terrorist groups to derail the

peace process. Iraq threatens regional security by confronting coalition forces and

retaining weapons of mass destruction (WMD) ambitions. Saddam Hussein could

precipitate major crises at any time.

Trends are visible that could increase the conventional military threats. U.S. military dominance and economic, cultural, and technological preeminence have sparked

resentment by potential rivals who do not share U.S. values and are concerned that

the United States will use it global leverage in ways inimical to their interests. This

has prompted them to seek ways to constrain Washington. These countries are not

likely to enter formal defensive alliances, but if they perceive U.S. policies as hostile

to their national interests, they may be increasingly inclined to cooperate militarily,

particularly in the sale of weapons and technologies that might otherwise have been

kept off the market.

TECHNOLOGY DIFFUSION

Accelerating technological progress in an increasingly global economy has facilitated the spread of advanced military technologies once restricted to a few industrialized nations. Chemical and biological weapons will pose a growing threat to U.S.

interests at home and abroad, as the means to produce them become more accessible

and affordable. Such weapons are attractive to countries seeking a cheap deterrent

and to terrorist groups looking for means of inflicting mass casualties. They pose

a potential military threat to U.S. forces abroad and to our homeland.

The critical importance of communications and computer networks to the military

and to almost every sector of the civilian economy has increased U.S. vulnerability

to a hostile disruption of its information infrastructure. Russia, China, and Cuba

have active government IW programs, and a number of other countries are interested in the concept.

TERRORISM, NARCOTICS, AND INTERNATIONAL ORGANIZED CRIME

Terrorism.—The United States remains the number one target of international

terrorism. As in previous years, close to one-third of all incidents worldwide in the

first nine months of 1999—about 90—were directed against Americans. About 60 of

these took place in Latin America and Western Europe, including the murder of

three NGO workers in Columbia.

Increasingly, where attacks occur does not fully reflect the origin of the threat.

The far-flung reach of Usama bin Ladin (UBL) from his base in Afghanistan is reflected in a continuous flurry of threats by his organization on almost every continent. Although we cannot attribute any of last year’s anti-U.S. attacks to him, his

transnational network and the devastating example of his 1998 attacks on our embassies in Kenya and Tanzania make him the primary threat to U.S. interests at

home and abroad. Members of his network and other like-minded radical Mujahedin

are active globally. Bin Ladin funds training camps and participates in a worldwide

terrorist network. But he is not responsible for every Mujahedin attack. The UBL

network is analogous to a large corporation with UBL as a CEO who provides guidance, funding, and logistical support. His supporter, like regional directors or affiliates, are not micromanaged, and may be left to follow separate agendas.

A number of terrorists, including bin Ladin, have evinced interest in acquiring

weapons of mass destruction. So far, Aum Shinriyko, the group responsible for the

1995 subway gas attack in Tokyo, is the only group to use such a weapon on a large

scale.

State sponsorship of terrorism has declined but has not disappeared. Libya last

year surrendered two suspects in the Pan Am 103 case for trial. North Korea recently stated that it ‘‘would not allow terrorism or any support to it.’’ Syria completed a first round of formal peace talks with Israel earlier this month. Cuba no

longer actively supports armed struggle but continues to harbor terrorists. Iraq also

harbors terrorists and may be rebuilding its intelligence networks to support terrorism. Sudan has been a safe haven and logistical hub for numerous international

terrorist groups; the recent political shakeup in Khartoum has yet to result in a noticeable difference. Despite President Khatami’s attempts to distance Teheran from

terrorism, Iran continues to support the use of violence to derail the peace process.

There have been counterterrorism successes over the past year. Jordanian and

Canadian authorities averted possible attacks. The leader of the PKK, a Kurdish

terrorist group, was captured, tried, and convicted. Jordan expelled the political

leadership of the terrorist group Hamas, and Japan passed laws stringently regulating Aum Shinriyko. Seven countries signed the international convention on financing terrorism on the first day it was open for accession.

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Narcotics.—The expanding reach of international drug trafficking organizations

poses a significant security threat to the United States, their primary target.

Abroad, criminal drug gangs suborn foreign officials at all levels, threatening the

rule of law.

Despite antinarcotics successes, notably in Bolivia and Peru, illicit drugs from

Latin America constitute the primary drug threat to the United States. An apparent

improvement in Colombian cocaine-processing efficiency means that traffickers can

direct even more of the drug to U.S. markets. Drugs fund insurgent groups warring

against the Columbian government. Bribery at all levels of officialdom in Mexico

and, to a lesser extent, the Caribbean ensure that drugs reach their target.

Columbia and Mexico have the largest share of the U.S. heroin market, but opium

poppy cultivation in Asia is increasing, particularly in Burma and Afghanistan. Indications are that Burma, after two years of drought reduced opium poppy cultivation, will return to its traditionally high cultivation level. In Afghanistan, production of opium and heroin is a major source of revenue for the ruling Taleban and

a political instrument of bin Ladin to ‘‘corrupt’’ the West.

Crime.—At home and abroad, the activities of international criminals threaten

Americans, their businesses, and their financial institutions. Organized crime has

capitalized on economic liberalization and technological advances to penetrate the

world’s financial, banking, and payment systems. It has become increasingly sophisticated in high-tech computer crime, complex financial fraud, and theft of intellectual property. The cost to U.S. citizens, businesses, and government programs is in

the billions of dollars.

International criminal gangs trade in materials for WMD, sensitive American

technology, and banned or dangerous substances. They also traffic in women and

children, and in illegal visas and immigration. Organized crime groups exploit systemic weaknesses in fledgling democracies and economies in transition.

ECONOMIC THREATS

The international economic outlook is more positive than at any time since the

start of the Asian economic crisis in mid-1997. World economic output is forecast

to rise from 2.5 percent last year to 3.0 percent this year. Despite the impressive

rebound from the economic turmoil of 1997–98, significant vulnerabilities in the

Asian emerging economies could affect U.S. economic and strategic interests. The

recovery of confidence in he currencies and financial markets of Southeast Asia and

South Korea remains fragile, and their banking system are in need of further restructuring. Overall, the danger of a second Asian financial crisis has substantially

diminished. The more cautious and sophisticated approach of foreign investors, the

increase in transparency of financial information, and the region’s dramatic reduction in reliance on short-term debt have all decreased Asia’s susceptibility to a financial panic triggered by the economic problems of one country.

Despite export recovery and high and growing foreign exchange reserves, China

is one of Asia’s soft spots. Growth this year could falter under the weight of deflation. China’s banks are burdened with bad debt. Fresh bankruptcies could require

urgent capitalization and fiscal resources already are stretched thin. Chinese policymakers are concerned about rising unemployment and want to stimulate economic

growth, but they have fewer and fewer options other than painful economic reform.

Latin America should recover from last year’s recession and achieve 3.7% overall

growth. Mexico, Brazil, Chile, and Peru have made difficult policy adjustments that

leave them better positioned to weather external developments. Latin America governments generally remain publicly committed to fiscal austerity, trade liberalization, and low inflation. However, income inequality and the failure of market-oriented policies to dent high poverty levels could decrease stability in countries where

recovery lags.

Economic espionage against the United States is a backhanded tribute to our economic prowess. In particular industries and for particular companies, especially in

vital high-tech sectors, economic espionage can threaten profits and fruits of innovation.

THREATS TO HUMAN RIGHTS, DEMOCRACY, AND HUMANITARIAN INTERVENTIONS

The national security of the United States is tied to political stability, peace, and

democratic governance in other regions. When human rights are systematically

abused, when internal conflicts threaten to spill over into neighboring countries, and

when democratic principles are undermined by coups and/or corruption, like-minded

governments look to the United States to provide leadership, in conjunction with

their own efforts, to address these threats. Most current complex emergencies are

caused by violent ethnic tensions and religious intolerance, often fueled by malevoVerDate 11-MAY-2000 10:07 Aug 16, 2000 Jkt 065329 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 E:\HEARINGS\65329 pfrm04 PsN: 65329
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lent political leaders and militias, that generate large numbers of displaced persons

and atrocity victims. The US Government has led international efforts to mitigate

such destabilizing humanitarian crises—through providing generous refugee assistance, supporting international tribunals that prosecute war criminals, and preventing those security threats from erupting or re-erupting through support for free

and fair elections and for human rights monitoring.

‘‘SOFT THREATS’’

The United States faces a broad array of long-term threats to our national wellbeing. Some of these take the form of episodic natural disasters—floods in Venezuela, earthquakes in Turkey and Taiwan. While the greatest loss of life from natural disasters will continue to be in crowded poor regions, overseas Americans are

often affected, as are governments with which we work to achieve common goals.

Reducing the suffering inflicted by such crises will depend on improving the use of

early-warning information systems and providing prompt humanitarian assistance.

Environmental threats range from toxic spills to global climate change. Environmental contamination can cause severe local problems. Global warming would result

in broader and unpredictable weather fluctuations, altered agricultural production,

and rising sea levels. Each of these regional problems would affect national economic production, food exports and imports, and even international relations as natural resource balances shift within and among countries. A related threat may come

from increasingly resilient bacteria and viruses, which can take advantage of global

linkages, poor sanitation, and urban congestion to spread quickly across continents.

Populations in poor regions continue to grow, even as birthrates decline. This demographic lag ensures that over the next few decades in many poor countries a

growing cohort of young people will be stymied by the lack of economic opportunities, inadequate health care and schools, and crowded living conditions. They may

be inclined to act violently against their governments or be swayed by extremists

touting anti-Western nosatrums. The safety of both overseas and domestic Americans could be harmed by a growing population with dim prospects directing anger

at those perceived to have too much.

COUNTRIES WITH GLOBAL REACH

Russia.—Russia’s ability to project power beyond its borders and to challenge U.S.

interests directly is much diminished. Russia is focused on its own internal problems and aware of its weaknesses and limitations. Nevertheless, Russia remains a

nuclear power with the capability to destroy the United States. It retains the ability

to influence foreign and security policy developments in Europe and, to a lesser extent, around the globe. Its interests sometimes coincide with those of the United

States and our allies, and sometimes not. Regional instability in the former Soviet

Union, in particular in the Caucasus or Central Asia, could impinge on U.S. interests, especially if such instability were to spiral our of control or tempt external

intervention.

The Russian political scene was dramatically altered by the Duma elections in December and Yeltsin’s surprise resignation, but the consequences for Russia’s development as a state remain uncertain. Vladimir Putin, who at 47 represents a younger generation, is riding a wave of popularity based, in part, on his vigorous prosecution of the war in Chechnya. Putin, the odds-on favorite to win the presidency, almost certainly will be a more engaged and predictable leader. He has spoken of the

need for a democratic, market-oriented approach, including political pluralism and

freedom of speech and of conscience, that would revitalize the Russian economy. He

has called for reform and pledged to fight crime and corruption. But Putin has a

security-services background, makes no secret of his belief in a strong state that

plays a guiding role in the economy, and is enmeshed in a system dominated by

a narrow stratum of political and financial elites. For Putin to undertake systematic

and thoroughgoing reform, he would have to move against some of the very people

on whom his power depends.

It is too early to predict how recent leadership changes will affect Russia’s foreign

and security policies. Both Putin and Foreign Minister Ivanov have promised broad

continuity. Russia’s need for integration into international economic and financial

institutions and access to key markets makes a wholesale return to the ideological

confrontation and policy collisions of the Cold War unlikely. But Russia will persist

in efforts to counter what it perceives as U.S. dominance by using the diplomatic

tools at its disposal.

China.—China’s commitment to a multipolar world in which it would have major

global influence means that its interests occasionally lead to rivalry with the United

States, sometimes in concert with Russia or France. China’s increasingly capable

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military forces and economic base, and its network of supporters, especially among

the developing countries, will better enable the PRC to forestall or limit unwelcome

U.S. unilateral and allied actions. This also can translate into opposition to U.S.-

led initiatives at the UN.

The most serious potential threat to the United States would be Chinese military

action, possibly in response to a perceived U.S. challenge to vital PRC interests. Actions that might trigger such a response include implementation of a robust threat

missile defense system that nullified Chinese deterrence or included Taiwan (directly or indirectly) and thus increased prospects for indefinite Taiwan separation

or de jure independence. China’s refusal to rule out use of force and determination

to forestall further steps toward Taiwan separateness or explicit independence, and

in the long term to achieve reunification, jeopardizes peace and security in the Taiwan Strait.

Chinese proliferation behavior is a continuing concern, particularly when it contributes to changes in the balance and threatens U.S. interests in other geographic

regions. China has assisted the missile and nuclear programs of Pakistan, Iran, and

others. China has made progress in adopting international control norms in the nuclear area, but Beijing does not accept all elements of the Missile Technology Control Regime.

The risk of instability within China sparked by social discontent over unemployment, official corruption or malfeasance, religious persecution, violation of human

rights, lack of democratic choices, ethnic discrimination, and other factors remains

real. Should social order decline significantly, U.S. economic interests in China

(trade and investments) would suffer, and the expected increased outflow of Chinese

migrants to the region and to the United States would have a problematic—but not

genuinely threatening—impact on U.S. interests. Should regime failure occur and

result in ineffective government in China, the United States would face serious new

uncertainties in East Asia.

OTHER COUNTRIES AND REGIONS OF CONCERN

North Korea.—The DPRK’s ability to sustain a conflict has continued to decrease

in the past year. Nevertheless, the North’s military still has the capability to inflict

heavy damage and casualties in the opening phases of a war. The political situation

in the North appears stable, with Kim Jong-Il firmly in charge. There is evidence

that in some areas the economic situation is less dire; rather than struggling simply

to keep its head above water, the regime has been able to turn its attention to such

long-term concerns as restoring infrastructure. There are signs that the regime is

examining a range of relatively pragmatic, though still seemingly ad hoc, solutions

to the DPRK’s economic problems. Diplomatically, the North has begun a broad

push to improve relations with developed countries, which it hopes can provide economic assistance. Pyongyang continues to refuse to deal officially with Seoul, but

unofficial contacts—in such fields as the economy, culture, and sports—were carried

out on a fairly large scale last year.

An area of top concern is the North’s development of long-range ballistic missiles

and its ongoing efforts to sell missile technology to countries in the Middle East and

South Asia. North Korea last fall announced it would not launch a satellite or a

long-range missile during high-level U.S.-DPRK talks. But on the question of missile

sales, the North has said only that it would be willing to halt sales under the right

circumstances, a formulation that will require clarification.

Iran.—In addition to posing a threat in the areas of WMD and terrorism, Iran

is perhaps the only major power in the Middle East consistently opposed to the Middle East Peace Process. Deep-seated hostility to the MEPP within conservative circles of the Tehran regime plays a major role in the government’s apparent willingness to support terrorist groups and their attacks against Israel or other parties involved in the process. Although we believe Iranian factions and leaders are not

unanimous in their support for the use of terrorism to effect political ends, so far

this disunity has not resulted in a discernible change of behavior.

How best to deal with the challenges posed by Iran is a continuing source of disagreement with other important countries, including some of our closest allies.

Tehran is well aware of these differences and attempts to exploit them to erode the

effectiveness of U.S. sanctions.

Iraq.—Baghdad’s denunciation of UNSCR 1284 and continued public refusal to

allow weapons inspections to resume indicates Iraq’s intention to ensure that any

future UN inspection presence in Iraq is weak. Over the past year, Iraq’s military

has escalated its challenges to coalition aircraft in the no-fly zones. The regime has

looked for new ways to circumvent UN sanctions, while using proceeds from illegal

smuggling to enhance its military capabilities and enrich Saddam’s family and inner

9

circle. Iraqi media and official rhetoric menacing Kuwait and other Iraqi neighbors

underscore the regime’s continued threat to the region.

Baghdad consistently denounces the MEPP, and appears committed to a position

of stalwart opposition to regional peace. Press reports indicted that the regime seeks

to eliminate opposition figures inside and outside the country, and to target U.S.

facilities such as the Radio Free Europe/Radio Liberty offices in Prague. The regime

hosts several Palestinian rejectionist groups and the Mujahedin-e Khalq, a terrorist

organization.

Europe.—Peace and stability in southeastern Europe remain the paramount

‘‘threat’’ on the continent. The threat from Serbia stems from the undemocratic nature of the regime. Serbia’s autocrat, Milosevic, still holds the critical levers of

power and refuses to meet legitimate demands for democracy. The possibility of further violence from the Milosevic regime, directed at Montenegro or elsewhere, is

undiminished. Milosevic poses a continuing challenge to NATO and to the peace and

security of the region.

Kosovar-Serbian recriminations and retaliatory attacks will continue, and Serbian-Montenegrin tensions will mount as Podgorica and President Djukanovic seek

to carve out an increasingly independent status. Crime and corruption, homegrown

and involving Russian and other groups, will continue to plague parts of Europe—

especially Albania, Bosnia, and other Balkan areas.

More broadly, West European leaders are concerned over potential disruption of

existing arms control regimes and deterrence strategies from U.S. development of

National Missile Defense and the ascent of Vladimir Putin in Russia. European

economies, though improving, remain captive to high unemployment, labor unrest,

pressures to enlarge the European Union, and a single currency (the euro) with only

a one-year track record.

South Asia.—The volatile South Asian region could quickly become embroiled in

serious conflict, probably over the disputed state of Jammu and Kashmir. Last May,

India discovered an incursion from Pakistan into the Kargil sector of Indian Kashmir. In December, Kashmiri militants hijacked an Indian Airlines aircraft on a

flight from Kathmandu to New Delhi. Tension over Kashmir is endemic in the IndoPakistani relationship and can evolve quickly into a full-blown crisis threatening a

wider, and ultimately much more destructive, war between India and Pakistan that

could result in the use of nuclear weapons.

Possession of nuclear weapons by these two adversaries will be a part of the landscape for the foreseeable future. Indeed, such weapons will become more entrenched

in these countries as they develop military doctrine and command and control procedures for their potential use. Both India and Pakistan have made it clear that they

well continue to develop their nuclear weapons and missiles capable of delivering

them. We expect to see more ballistic missile tests in the region; there may be another round of nuclear tests. Pakistan and India might well themselves become

sources of technology for yet other countries bent on acquiring nuclear and missile

capabilities.

Latin America.—A decade into the democracy and market revolution, the vast majority of Latin Americans have experienced little or no improvement in living conditions. Recent economic troubles have fueled unemployment, crime, and poverty, undermining the commitment of many Latin Americans to free-market economic liberalization. While Latin Americans are committed in principle to democracy, many

question how successful democracy has been in their own countries because of slow

progress in alleviating wide social inequities and in curbing corruption. These concerns have raised fears among some observers that disillusioned Latin Americans

will turn to authoritarian governments to improve their economic situations and reduce crime.

That said, Latin American democracies have proved resilient in the face of economic crises, and all ideological alternatives to democratic government remain discredited. Although Ecuador’s fragile democratic institutions are under tremendous

pressure because of its ongoing economic and political crises, recent developments

in that country show that Latin American militaries are fully aware that overt

intervention risks international opprobrium and sanctions, and they will therefore

favor solutions that maintain at least a semblance of constitutional continuity. Another concern is that legitimately elected leaders could assume authoritarian powers

with popular support. Peruvian President Fujimori provided a model with his ‘‘selfcoup’’ in 1992, and Venezuela under President Cha ́

vez bears careful watching. In

none of the other major countries of Latin America—Argentina, Brazil, Chile, Colombia, and Mexico—is democracy threatened in the short or medium term.

In Cuba, an aging Fidel Castro refuses to make concessions toward a more open

political system, and Cuba’s overall human rights record remains the worst in the

hemisphere. There is little sign of significant economic reform. The flow of refugees

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seeking relief from repressive conditions continues. With no real provision for succession—beyond more of the same, with Raul Castro at the helm—the departure of

Fidel could usher in a period of greater instability under a less charismatic leader,

possibly leading to further mass migration and internal violence.

Africa.—African political and economic crises frequently threaten U.S. efforts to

promote democratization, human rights, the rule of law, and economic development.

Crime and terrorism thrive in some of Africa’s unstable and impoverished nations.

Appeals for the United States to assist humanitarian relief programs and peacekeeping operations are strong and growing.

In Angola, the government continues to struggle against UNITA. Renewed fighting, now reaching to the border with Namibia, increasingly entangles Angola’s

neighbors in this decades-long civil war.

A peace agreement for the Democratic Republic of the Congo was signed in

Lusaka in August 1999, but implementation has been slow. Continuing cease-fire

violations, the involvement of neighboring countries, and the injection of arms and

other assistance from outside the region make this conflict potentially the most destabilizing in Africa.

Further east, Burundi faces heightened ethnic tensions. Nelson Mandela chairs a

peace process, but the high degree of distrust among the many factions makes his

task difficult. Renewed genocide in Burundi and neighboring Rwanda remains a

possibility.

Sudan, after 16 years of civil war that has generated an estimated 4 million internally displaced persons and 360,000 refugees, is experiencing renewed tensions

within its governing political elite. It remains a haven for terrorists.

Ethiopia and Eritrea continue to rearm and prepare to resume their conflict over

a disputed border. A renewal of this conflict has the potential to be, by far, the most

lethal in Africa.

In West Africa, Sierra Leone struggles to make a peace process work with UN

support. Its neighbors worry that renewed civil war could adversely affect their stability. The recent coup in Cote d’Ivoire illustrates the fragility of democracy and the

threat inherent in corruption and the exclusion of regional, tribal, and religious

groups from the political process. Good governance alone might not be enough to

prevent conflict. Current levels of economic expansion may be insufficient to cope

with growing populations and a sharp decline in foreign assistance. Poorly implemented reforms could unleash such simmering problems as inter ethnic violence.

In closing, it is worth mentioning that an additional threat to U.S. interests would

be a failure to commit the necessary resources to address the range of threats noted

above. From the perspective of INR, we cannot defend against these many threats

to U.S. interests by force alone, or by acting alone. We need the help of others. The

ability of the United States to carry out a strong, effective diplomacy on behalf of

its interests is an important part of our national security strategy. In this respect,

shortchanging America’s foreign assistance programs, or America’s diplomatic presence overseas (260 missions, representing 30 federal agencies), would represent a

long-term threat to out national interest. What is unique about this particular

threat is that it is one exclusively within the power of the United States to address

and resolve.

PREPARED STATEMENT OF GEORGE J. TENET, DIRECTOR OF CENTRAL INTELLIGENCE

INTRODUCTION

Mr. Chairman, as we face a new century, we face a new world. A world where

technology, especially information technology, develops and spreads at lightning

speed—and becomes obsolete just as fast. A world of increasing economic integration, where a US company designs a product in Des Moines, makes it in Mumbai,

and sells it in Sydney. A world where nation-states remain the most important and

powerful players, but where multinational corporations, nongovernment organizations, and even individuals can have a dramatic impact.

This new world harbors the residual effects of the Cold War—which had frozen

many traditional ethnic hatreds and conflicts within the global competition between

two superpowers. Over the past 10 years they began to thaw in Africa, the

Caucasus, and the Balkans, and we continue to see the results today.

It is against this backdrop that I want to describe the realities of our national

security environment in the first year of the 21st century: where technology has enabled, driven, or magnified the threat to us; where age-old resentments threaten to

spill-over into open violence; and where a growing perception of our so-called ‘‘hegemony’’ has become a lightning rod for the disaffected. Moreover, this environment

of rapid change makes us even more vulnerable to sudden surprise.

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TRANSNATIONAL ISSUES

Mr. Chairman, bearing these themes in mind, I would like to start with a survey

of those issues that cross national borders. Let me begin with the proliferation of

weapons of mass destruction.

Mr. Chairman, on proliferation, the picture that I drew last year has become even

more stark and worrisome. Transfers of enabling technologies to countries of proliferation concern have not abated. Many states in the next ten years will find it

easier to obtain weapons of mass destruction and the means to deliver them. Let

me underline three aspects of this important problem:

• First, the missile threat to the United States from states other than Russia or

China is steadily emerging. The threat to US interests and forces overseas is here

and now.

• Second, the development of missiles and weapons of mass destruction in South

Asia has led to more-advanced systems, and both sides have begun to establish the

doctrine and tactics to use these weapons.

• Third, some countries that we have earlier considered exclusively as weapons

technology importers may step up their roles as ‘‘secondary suppliers,’’ compounding

the proliferation problem even further.

Let’s look at the first issue, the growing threat to the United States. We’re all

familiar with Russian and Chinese capabilities to strike at military and civilian targets throughout the United States. To a large degree, we expect our mutual deterrent and diplomacy to help protect us from this, as they have for much of the last

century.

Over the next 15 years, however, our cities will face ballistic missile threats from

a wider variety of actors—North Korea, probably Iran, and possibly Iraq. In some

cases, this is because of indigenous technological development, and in other cases,

because of direct foreign assistance. And while the missile arsenals of these countries will be fewer in number, constrained to smaller payloads, and less reliable

than those of the Russians and Chinese, they will still pose a lethal and less predictable threat.

North Korea already has tested a space launch vehicle, the Taepo Dong-1 which

it could theoretically convert into an ICBM capable of delivering a small biological

or chemical weapon to the United States although with significant inaccuracies.

Moreover, North Korea has the ability to test its Taepo Dong-2 this year; this missile may be capable of delivering a nuclear payload to the United States.

Most analysts believe that Iran, following the North Korean pattern, could test

an ICBM capable of delivering a light payload to the United States in the next few

years.

Given that Iraqi missile development efforts are continuing, we think that it too

could develop an ICBM—especially with foreign assistance—sometime in the next

decade.

These countries calculate that possession of ICBMs would enable them to complicate and increase the cost of US planning and intervention, enhance deterrence,

build prestige, and improve their abilities to engage in coercive diplomacy.

As alarming as the long-range missile threat is, it should not overshadow the immediacy and seriousness of the threat that US forces, interests, and allies already

face overseas from short- and medium-range missiles. The proliferation of mediumrange ballistic missiles (MRBMs)—driven primarily by North Korean No Dong

sales—is significantly altering strategic balances in the Middle East and Asia.

Mr. Chairman, nowhere has the regional threat been more dramatically played

out than in South Asia. Both Pakistan and India have intensified their missile and

nuclear rivalry. Further nuclear testing is possible and both states have begun to

develop nuclear-use doctrines and contingency planning. This is a clear sign of maturing WMD programs. I will discuss South Asia’s broader problems later in my

briefing.

Mr. Chairman, another sign that WMD programs are maturing is the emergence

of secondary suppliers of weapons technology.

While Russia, China, and North Korea continue to be the main suppliers of ballistic missiles and related technology, long-standing recipients—such as Iran—might

become suppliers in their own right as they develop domestic production capabilities. Other countries that today import missile-related technology, such as Syria and

Iraq, also may emerge in the next few years as suppliers.

Over the near term, we expect that most of their exports will be of shorter range

ballistic missile-related equipment, components, and materials. But, as their domestic infrastructures and expertise develop, they will be able to offer a broader range

of technologies that could include longer-range missiles and related technology.

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Iran in the next years may be able to supply not only complete Scuds, but also

Shahab-3s and related technology, and perhaps even more-advanced technologies if

Tehran continues to receive assistance from Russia, China, and North Korea.

Mr. Chairman, the problem may not be limited to missile sales; we also remain

very concerned that new or nontraditional nuclear suppliers could emerge from this

same pool.

This brings me to a new area of discussion: that more than ever we risk substantial surprise. This is not for a lack of effort on the part of the Intelligence Community; it results from significant effort on the part of proliferators.

There are four main reasons. First and most important, proliferators are showing

greater proficiency in the use of denial and deception.

Second, the growing availability of dual-use technologies—including guidance and

control equipment, electronic test equipment, and specialty materials—is making it

easier for proliferators to obtain the materials they need.

The dual-use dilemma is a particularly vexing problem as we seek to detect and

combat biological warfare programs, in part because of the substantial overlap between BW agents and legitimate vaccines. About a dozen countries either have offensive BW programs or are pursuing them. Some want to use them against regional adversaries, but other see them as a way to counter overwhelming US and

Western conventional superiority.

Third, the potential for surprise is exacerbated by the growing capacity of countries seeking WMD to import talent that can help them make dramatic leaps on

things like new chemical and biological agents and delivery systems. In short, they

can buy the expertise that confers the advantage of technologies surprise.

Finally, the accelerating pace of technological progress makes information and

technology easier to obtain and in more advanced forms that when the weapons

were initially developed.

We are making progress against these problems, Mr. Chairman, but I must tell

you that the hill is getting steeper every year.

TERRORISM

Let me now turn to another threat with worldwide reach—terrorism.

Since July 1998, working with foreign governments worldwide, we have helped to

render more than two dozen terrorists to justice. More than half were associates of

Usama Bin Ladin’s Al-Qa ́ida organization. These renditions have shattered terrorist

cells and networks, thwarted terrorist plans, and in some cases even prevented attacks from occurring.

Although 1999 did not witness the dramatic terrorist attacks that punctuated

1998, our profile in the world and thus our attraction as a terrorist target will not

diminish any time soon.

We are learning more about the perpetrators every day, Mr. Chairman, and I call

tell you that they are a diverse lot motivated by many causes.

Usama Bin Ladin is still foremost among these terrorists, because of the immediacy and seriousness of the threat he poses. Everything we have learned recently

confirms our conviction that he wants to strike further blows against America. Despite some well-publicized disruptions, we believe he could still strike without additional warning. Indeed, Usama Bin Ladin’s organization and other terrorist groups

are placing increased emphasis on developing surrogates to carry our attacks in an

effort to avoid detection. For example, the Egyptian Islamic Jihad (EIJ) is linked

closed by Bin Ladin’s organization and has operatives located around the world—

including in Europe, Yemen, Pakistan, Lebanon, and Afghanistan. And, there is now

an intricate web of alliances among Sunni extremists worldwide, including North

Africans, radical Palestinians, Pakistanis, and Central Asians.

Some of these terrorists are actively sponsored by national governments that harbor great antipathy toward the United States. Iran, for one, remains the most active

state sponsor. Although we have seen some moderating trends in Iranian domestic

policy and even some public criticism of the security apparatus, the fact remains

that the use of terrorism as a political tool by official Iranian organs has not

changed since President Khatami took office in August 1997.

Mr. Chairman, we remain concerned that terrorist groups worldwide continue to

explore how rapidly evolving and spreading technologies might enhance the lethality

of their operations. Although terrorists we’ve preempted still appear to be relying

on conventional weapons, we know that a number of these groups are seeking chemical, biological, radiological, or nuclear (CBRN) agents. We are aware of several instances in which terrorists have contemplated using these materials.

13

Among them is Bin Ladin, who has shown a strong interest in chemical weapons.

His operatives have trained to conduct attacks with toxic chemicals or biological toxins.

HAMAS is also pursuing a capability to conduct attacks with toxic chemicals.

Terrorists also are embracing the opportunities offered by recent leaps in information technology. To a greater and greater degree, terrorist groups, including

Hizballah, HAMAS, the Abu Nidal organization, and Bin Ladin’s al Qa’ida organization are using computerized files, e-mail, and encryption to support their operations.

Mr. Chairman, to sum up this part of my briefing, we have had our share of successes, but I must be frank in saying that this has only succeeded in buying time

against an increasingly dangerous threat. The difficulty in destroying this threat

lies in the fact that our efforts will not be enough to overcome the fundamental

causes of the phenomenon—poverty, alienation, disaffection, and ethnic hatreds

deeply rooted in history. In the meantime, constant vigilance and timely intelligence

are our best weapons.

NARCOTICS

Mr. Chairman, let me now turn to another threat that reaches across borders for

its victims: narcotics. The problem we face has become considerably more global in

scope and can be summed up like this: narcotics production is likely to rise dramatically in the next few years and worldwide trafficking involves more diverse and sophisticated groups.

On the first point, coca cultivation in Peru and Bolivia has continued to decline—

due largely to successful eradication efforts—but that will probably be offset to some

extent by increases in Colombian cultivation. More productive coca varieties and

more efficient processing results in production of cocaine more than two and a half

times that previously estimated.

There is some good news in Colombia. Under President Pastrana’s leadershp, Bogota is beginning to improve on its 1999 counterdrug efforts. In November, Pastrana

approved the first extradition of a Colombian drug trafficker to the United States

since passage of a 1997 law.

On the other side of the world, a dramatic increase of opium and heroin production in Afghanistan is again a cause for concern. This year, Afghanistan’s farmers

harvested a crop with the potential to produce 167 tons of heroin, making Afghanistan the world’s largest producer of opium. Burma, which has a serious drought,

dropped to second place, but will likely rebound quickly when the weather improves.

Explosive growth in Afghan opium production is being driven by the shared interests of traditional traffickers and the Taliban. And as with so many of these crossnational issues, Mr. Chairman, what concerns me most is the way the threats become intertwined. In this case, there is ample evidence that Islamic extremists such

as Usama Bin Ladin uses profits from the drug trade to support their terror campaign.

INTERNATIONAL ORGANIZED CRIME

Mr. Chairman, let me turn now to the related issue of organized crime. Organized

crime has become a serious international security issue. It not only can victimize

individuals, but it also has the potential to retard or undermine the political and

economic development of entire countries, especially newly independent ones or

those moving from command systems to open societies.

The threat is quite apparent in Russia, where it has become a powerful and pervasive force. Crime groups there have been aggressive in gaining access to critical

sectors of Russia’s economy—including strategic resources like the oil, coal, and aluminum industries.

Meanwhile, money is moving out of Russia on a large scale. Russian officials estimate that some $1.5 to $2 billion leaves the country monthly. Most is not derived

from criminal activities but rather is sent abroad to avoid taxation and the country’s

economic instability. Still, Russian officials say that criminal activity may account

for about one-third of the capital flight.

INFORMATION OPERATIONS

Finally Mr. Chairman, before I end this chapter on transnational issues, let me

note the especially threatening nature of a relatively new phenomenon—information

warfare. I say especially threatening because as this century progresses our country’s security will depend more and more on the unimpeded and secure flow of information. Any foreign adversary that develops the ability to interrupt that flow or

shut it down will have the potential to weaken us dramatically or even render us

helpless.

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A surprising number of information warfare-related tools and ‘‘weapons’’ are available on the open market at relatively little cost. Indeed, the proliferation of personal

computers, and the skills associated with them, has created millions of potential ‘‘information warriors’’.

Already, we see a number of countries expressing interest in information operations and information warfare as a means to counter US military superiority. Several key states are aggressively working to develop the IW capabilities and to incorporate these new tools into their warfighting doctrine.

This is one of the most complex issues I’ve put on the table. Mr. Chairman, but,

simply put, information warfare has the potential to be a major force multiplier.

And why is this?

It enables a single entity to have a significant and serious impact.

It is a weapon that ‘‘comes ashore’’ and can effect the daily lives of Americans

across the country.

It gives a force projection capability to those who have never had it before, and

it can be used as an asymmetric response.

It will be a basic capability of modern militaries and intelligence services around

the world in the near future and secondary players not long thereafter.

All of this amounts to one of the ‘‘cutting edge’’ challenges for intelligence in the

21st century. We are working on means of prevention, warning, and detection, but

as in so many areas in the technological age, Mr. Chairman, we are truly in a race

with technology itself.

REGIONAL ISSUES

At this point, Mr. Chairman, I’d like to leave the transnational issues and turn

briefly to some of the regions and critical states in the world.

RUSSIA

We begin with Russia. As you know, we are now in the post-Yeltsin era, and difficult choices loom for the new president Russians will choose in exactly two

months:

He will face three fundamental questions:

First, will he keep Russia moving toward further consolidation of its new democracy or will growing public sentiment in favor of a strong hand and a yearning for

order tempt him to slow down or even reverse course?

Second, will he try to build a consensus on quickening the pace of economic reform and expanding efforts to intergrate into global markets—some Russian officials

favor this—or will he rely on heavy state intervention to advance economic goals?

Finally, will Moscow give priority to a cooperative relationship with the West or

will anti-US sentiments continue to grow, leading to a Russia that is isolated, frustrated, and hostile? This would increase the risk of an unintended confrontation,

which would be particularly dangerous as Russia increasingly relies on nuclear

weapons for its defense—an emphasis reflected most recently in its new national security concept.

As these questions indicate, a new Russian President will inherit a country in

which much has been accomplished—but in which much still needs to be done to

fully transform its economy, ensure that democracy is deeply rooted, and establish

a clear future direction for it in the world outside Russia.

Russian polls indicate that Acting President Putin is the odds on favorite to win

the election—though I must tell you, Mr. Chairman, that two months can be an

eternity in Russia’s turbulent political scene. Putin appears tough and pragmatic,

but it is far from clear what he would do as president. If he can continue to consolidated elite and popular support, as president he may gain political capital that he

could choose to spend on moving Russia further along the path toward economic recovery and democratic stability.

Former Premier Primakov is in the best position to challenge Putin, though he

faces a big uphill battle. He would need the backing of other groups—most importantly the Communists. The Communists, however, have shown their willingness to

deal with Putin’s party in a recent agreement that divided Duma leadership positions between them. Such tactical alliances are likely to become more prevalent as

parties seek to work out new power relationships in the post-Yeltsin era.

At least two factors will be pivotal in determining Russia’s near-term trajectory:

The conflict in Chechnya: Setbacks in the war could hurt Putin’s presidential

prospects unless he can deftly shift blame, while perceived successes there will help

him remain the front runner.

The economy: The devalued ruble, increased world oil prices, and a favorable

trade balance fueled by steeply reduced import levels have allowed Moscow to actuVerDate 11-MAY-2000 10:07 Aug 16, 2000 Jkt 065329 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 E:\HEARINGS\65329 pfrm04 PsN: 65329
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ally show some economic growth in the wake of the August 1998 financial crash.

Nonetheless, Russia faces $8 billion in foreign debt coming due this year. Absent

a new I–M–F deal to reschedule, Moscow would have to redirect recent gains from

economic growth to pay it down, or run the risk of default.

Over the longer term, the new Russian president must be able to stabilize the political situation sufficiently to address structural problems in the Russian economy.

He must also be willing to take on the crime and corruption problem—both of which

impede foreign investment.

In the foreign policy arena, US-Russian relations will be tested on a number of

fronts. Most immediately, Western criticism of the Chechen war has heightened

Russian suspicions about US and Western activity in neighboring areas, be it energy pipeline decisions involving the Caucasus and Central Asia, NATO’s continuing

role in the Balkans, or NATO’s relations with the Baltic states. Moscow’s ties to

Iran also will continue to complicate US-Russian relations, as will Russian objections to US plans for a National Missile Defense. There are, nonetheless, some

issues that could move things in a more positive direction.

For example, Putin and others have voiced support for finalizing the START II

agreement and moving toward further arms cuts in START III.

Similarly, many Russian officials express a desire to more deeply intergrate Russia into the world economy, be it through continued cooperation with the G–8 or

prospective membership in the WTO.

One of my biggest concerns—regardless of the path that Russia chooses—remains

the security of its nuclear weapons and materials. Russia’s economic difficulties continue to weaken the reliability of nuclear personnel and Russia’s system for securing

fissile material. We have no evidence that weapons are missing in Russia, but we

remain concerned by reports of lax discipline, labor strikes, poor morale, and criminal activities at nuclear storage facilities.

THE CAUCASUS AND CENTRAL ASIA

Mr. Chairman, earlier I mentioned the war in Chechnya in the context of Russia’s

domestic situation. Chechnya also has significance for the Caucasus and Central

Asia, a part of the world that has the potential to become more volatile as it becomes more important to the United States.

As you know, the United States has expended great effort to support pipelines

that will bring the Caspian’s energy resources to Western markets. One oil pipeline

is expected to pass through both Georgia and Azerbaijan. Western companies are

trying to construct a gas pipeline under the Caspian Sea from Turkmenistan

through Azerbaijan and Georgia en route to Turkey.

Although many of the leaders in the region through which the pipelines will flow

view the United States as a friend, regime stability there is fragile.

Most economies are stagnating or growing very slowly, unemployment is rising,

and poverty remains high. This creates opportunities for criminals, drug runners,

and arms proliferators. It also means the region could become a breeding ground

for a new generation of Islamic extremists, taking advantage of increasing dissatisfaction.

There is not much popular support for Islamic militancy anywhere in Central Asia

or the Caucasus, but as militants are pushed out of Chechnya, they may seek refuge—and stoke militancy—in the South Caucasus and Central Asia.

THE MIDDLE EAST

Mr. Chairman, let me turn now to another region of the world where vital US

interests are at stake: the strategically important Middle East. Many positive developments are apparent, most notably the new potential for progress on peace. But

if we step back for a moment, it is clear that the Middle East is entering a major

transition in many aspects of its political, economic, and security environment.

In addition to the leadership successions that have begun with the passing of

King Hussein of Jordan, the Amir of Bahrain, and King Hassan of Morocco, there

is the challenge of demographics. Many of the countries of the Middle East still have

population growth rates among the highest in the world, significantly exceeding 3

percent, meaning that job markets will be severely challenged to create openings for

the large mass of young people entering the labor force each year.

Another challenge is economic restructuring. There is a legacy of statist economic

policies and an inadequate investment climate in most countries in the Middle East.

As the region falls behind in competitive terms—despite a few positive steps by

some countries—governments will find it hard over the next 5 to 10 years to maintain levels of state sector employment and government services that have been key

elements of their strategy for domestic stability.

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Finally, there is the information revolution. The rise of regional newspapers, satellite television, and the Internet are all reducing governments’ control over information flows in the Middle East. Islamist groups, among others, already are taking

advantage of these technologies to further their agendas.

What all of this means, Mr. Chairman, is that the Middle East—a region on

which we will depend even more for oil a decade from now (40 percent compared

to 26 percent today)—is heading into a much less predictable period that will require even greater agility from the United States as it seeks to protect its vital interests there.

Iran

Turning now to Iran: Change in Iran is inevitable. Mr. Chairman. The election

of President Khatami reflected the Iranian popular desire for change. He has used

this mandate to put Iran on a path to a more open society. This path will be volatile

at times as the factions struggle to control the pace and direction of political change.

A key indicator that the battle over change is heating up came last July when

student protests erupted in 18 Iranian cities for several days. The coming year

promises to be just as contentious as Iran elects a new Majles (Parliament) in February.

Many Iranians particularly the large cohort of restive youth and students will

judge the elections as a test of the regime’s willingness to accommodate the popular

demand for reform.

If they witness a rigged election, it could begin to radicalize what has so far been

a peaceful demand for change.

Fair elections would probably yield a pro-reform majority, but opponents of

change still exert heavy control over the candidate selection process.

Former President Rafsanjani’s decision to run for the Majles—apparently at the

urging of the conservatives—highlights the leadership’s desire to bring the two factions back to the center. The conservatives are supportive of his candidacy, because

they believe a centrist Rafsanjani is a more trustworthy alternative to the reformers.

Even if the elections produce a Majles dominated by Khatami’s supporters, further progress on reform will remain erratic. Supreme Leader Khamenei and key institutions such as the Revolutionary Guard Corps and the large parastatal foundations will remain outside the authority of the Majles and in a position to fight a

stubborn rearguard against political change.

Moreover, even as the Iranians digest the results of the Majles elections, the factions will begin preliminary maneuvering for the presidential election scheduled for

mid-2001, which is almost certain to keep the domestic political scene unsettled.

The factional maneuvering probably means that foreign policy options will still be

calculated first to prevent damage to the various leaders’ domestic positions. This

will inhibit politically risky departures from established policy. This means that

Iran’s foreign policy next year will still exhibit considerable hostility to US interests.

This is most clearly demonstrated by Tehran’s continued rejection of the Middle

East peace process and its efforts to energize rejectionist Palestinian and Hizballah

operations aimed at thwarting a negotiated Arab-Israeli peace. Iranian perceptions

of increasing US influence in the Caucasus—demonstrated most recently by the

signing of the Baku-Ceyhan pipeline agreement—could similarly motivate Iran to

more aggressively seek to thwart what it regards as a US effort to encircle it to the

north.

Iraq

With regard to Iraq, Saddam faced a difficult start in 1999—including the most

serious Shia unrest since 1991 and significant economic difficulties.

The Shia unrest was not confined to the south but also affected some areas of

Baghdad itself, presenting Saddam’s regime with a major security problem. On the

economic side, to rein in inflation, stabilize the dinar, and reduce the budget deficit,

Saddam was forced to raise taxes, ease foreign exchange controls, and cut nonwage

public spending.

Saddam has, however, shown himself to be politically agile enough to weather

these challenges. He brutally suppressed the Shia uprisings of last spring and early

summer. The regime is still gaining some revenue from illegal oil sales. Increased

access to food and medical supplies through the oil for food program has improved

living conditions in Baghdad.

A major worry is that Iraqi reconstruction of WMD-capable facilities damaged

during Operation Desert Fox and continued work on delivery systems shows the priority Saddam continues to attach to preserving a WMD infrastructure. And Iraq’s

17

conventional military remains one of the largest in the Middle East, even though

it is now less than half the size during the Gulf War.

He can still hurt coalition forces, but his military options are sharply limited. His

continuing challenge to the no-fly-zone enforcement remains his only sustainable

means of engaging US and Uk forces.

In sum, to the extent that Saddam has had any successes in the last year, they

have been largely tactical. In a strategic sense, he is still on a downward path. His

economic infrastructure continues to deteriorate, the Kurdish-inhabited northern

tier remains outside the grip of his army, and although many governments are sympathetic to the plight of the Iraqi people, few if any are willing to call Saddam an

ally.

THE BALKANS

Mr. Chairman, looking briefly at the Balkans—

Signs of positive long-term change are beginning to emerge there as the influence

of the Milosevic regime in the region wanes in the wake of the Kosovo conflict and

a new, more liberal government takes the reigns of power in Croatia. Political alternatives to the dominant ethnic parties in Bosnia also are beginning to develop, capitalizing on the vulnerability of oldline leaders to charges of corruption and economic mismanagement. Despite this progress, there is still a long way to go before

the Balkans move beyond the ethnic hatreds and depressed economies that have

produced so much turmoil and tragedy. Of the many threats to peace and stability

in the year ahead, the greatest remains Slobodan Milosevic—the world’s only sitting

president indicted for crimes against humanity.

Milosevic’s hold on power has not been seriously shaken in the past few months.

He retains control of the security forces, military commands, and an effective media

machine. His inner circle remains loyal or at least cowed. The political opposition

has not yet developed a strategy to capitalize on public anger with Milosevic.

Milosevic has two problems that could still force him from power—the economy

and the Montenegrin challenge. The Serbian economy is in a virtual state of collapse, and Serbia is now the poorest country in Europe. Inflation and unemployment

are rising, and the country is struggling to repair the damage to its infrastructure

from NATO air strikes. The average wage is only $48 a month and even these salaries typically are several months in arrears. Basic subsistence is guaranteed only

by unofficial economic activity and the traditional lifeline between urban dwellers

and their relatives on the farms.

Milosevic’s captive media are trying—with some success—to blame these troubles

on the air strikes and on international sanctions. Nonetheless, as time passes, we

believe the people will increasingly hold Milosevic responsible. Moreover, a sudden,

unforeseen economic catastrophe, such as hyperinflation or a breakdown this winter

of the patched-up electric grid, could lead to mass demonstrations that would pose

a real threat.

For its part, Montenegro may be heading toward independence, and tensions are

certainly escalating as Montenegrin President Djukanovic continues to take steps

that break ties to the federal government. Milosevic wants to crush Djukanovic, because he serves as an important symbol to the democratic opposition in Serbia and

to the Serbian people that the regime can be successfully challenged. Djukanovic

controls the largest independent media operation in Yugoslavia, which has strongly

criticized the Milosevic regime over the past several years for the Kosovo conflict,

political repression and official corruption. Both Milosevic and Djukanovic will try

to avoid serious confrontation for now, but a final showdown will be difficult to

avoid.

Kosovo

Regarding Kosovo, Mr. Chairman, the international presence has managed to restore a semblance of peace, but it is brittle. Large-scale interethnic violence has vanished, but the UN Mission in Kosovo and K–FOR have been unable to stop daily

small-scale attacks, montly by Kosovar Albanians against ethnic Serbs. This chronic

violence has caused most of the remaining 80,000–100,000 Serbs to congregate in

enclaves in northern and eastern Kosovo, and they are organizing self-defense

forces.

The campaign to disarm the former Kosovo Liberation army has had success, but

both sides continue to cache small arms and other ordnance. There is even a chance

that fighting between Belgrade’s security forces and ethnic Albanians will reignite

should Belgrade continue to harass and intimidate the Albanian minority in southern Serbia, and should Kosovo Albanian extremists attempt to launch an insurgency

aimed at annexing Southern Serbia into a greater Kosovo.

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CHINA

Mr. Chairman, let us now turn to East Asia, where China has entered the new

century as the world’s fastest rising power.

The leadership there is continuing its bold, 20-year-old effort to propel the nation’s economy into the modern world, shedding the constrains of the old Communist

central command system. The economy is the engine by which China seeks world

prestige, global economic clout, and the funding for new military strength, thereby

redressing what it often proclaims as a hundred years of humiliation at the hands

of Western powers. Domestically, it also was the engine that Deng Xiaoping and his

successors calculated would enable the Party to deliver on its unspoken social contract with the Chinese people: monopoly of political power in exchange for a strong

China with a higher standard of living for its citizens.

But events conspired last year to tarnish Beijing’s achievements, to remind people

that China had not yet arrived as a modern world power, and to make the leadership generally ill-at-ease:

China put on an impressive display of military might at its 50th anniversary parade in Beijing, but the leadership today sees a growing technological gap with the

West.

Inside China, the image of domestic tranquillity was tarnished by last April’s appearance of the Falungoing religious sect, whose audacious, surprise demonstration

outside the leadership compound call into question the Communist Party’s ability

to offer an ethos that still attracts the Chinese people.

Even the return of Macau in late December—the fall of another symbol of a divided China—was overshadowed by the actions of Taiwan President Lee Teng-hui.

Lee declared last July that his island’s relations with the mainland should be conducted under the rubic of ‘‘state to state’’ rather than ‘‘one China’’.

Lee’s statement has China deeply worried that Taiwan’s return to Beijing rule is

less likely than before. Chinese leaders act as if they believe that, at a minimum,

a show of force is required if they are to preserve any hope of reunification.

Because of this, we see high potential for another military flare-up across the Taiwan Strait this year. The catalyst for these tensions is the Taiwan election on 18

March, which Beijing will be monitoring for signs that a new president will retreat

from Lee Teng-hui’s statements—or further extend the political distance from reunification.

Although Beijing today still lacks the air and sealift capability to successfully invade Taiwan.

China has been increasing the size and sophistication of its forces arrayed along

the Strait, most notably by deploying stort-range ballistic missiles.

China should receive the first of two modern, Russian-built Sovremennyy destroyers later this month; we expect the ship to join the East Sea Fleet, which regularly

conducts operations near Taiwan.

In the coming year, we expect to see an uncertain Chinese leadership launching

the nation deeper into the uncharted waters of economic reform while trying to retain tight grip political control. Thus far, Beijing’s approach has largely succeeded.

But the question remains open whether, in the long run, a market economy and an

authoritarian regime can co-exist successfully.

NORTH KOREA

Looking further east, North Korea’s propaganda declares 1999 the ‘‘year of the

great turnaround.’’ This is a view not supported by my analysts, however. Indeed,

we see a North Korea continuing to suffer from serious economic problems, and we

see a population, perhaps now including the elite, that is losing confidence in the

regime. Mr. Chairman, sudden, radical, and possibly dangerous change remains a

real possibility in North Korea, and that change could come at any time.

The North Korean economy is in dire straits. Industrial operations remain low.

The future outlook is clouded by industrial facilities that are nearly beyond repair

after years of underinvestment, spare parts shortages, and poor maintenance.

This year’s harvest is more than 1 million tons short of minimum grain needs.

International food aid has again been critical in meeting the population’s minimum

food needs.

Trade is also down. Exports to Japan—the North’s most important market—fell

by 17 percent from $111 million to $92 million. Trade with China—the North’s largest source of imports—declined from nearly $200 million to about $160 million, primarily because China delivered less grain.

Kim Chong-il does not appear to have an effective longterm strategy for reversing

his country’s economic fortunes. Kim’s inability to meet the basic needs of his people

and his reliance on coercion makes his regime more brittle because even minor inVerDate 11-MAY-2000 10:07 Aug 16, 2000 Jkt 065329 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 E:\HEARINGS\65329 pfrm04 PsN: 65329
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stances of defiance have greater potential to snowball into wider anti-regime actions.

Instead of real reform, North Korea’s strategy is to garner as much aid as possible

from overseas, and the North has reenergized its global diplomacy to this end. It

is negotiating for a high-level visit to reciprocate Dr. Perry’s trip to P’yongyang. It

has agreed to diplomatic talks with Japan for the first time in several years. It has

unprecedented commercial contacts with South Korea, including a tourism deal with

a South Korean firm that will provide almost $1 billion over six years.

But P’yongyang’s maneuvering room will be constrained by Kim’s perception that

openness threatens his control and by the contradictions inherent in his overall

strategy—a strategy based on hinting at concessions on the very weapons programs

that he has increasingly come to depend on for leverage in the international arena.

Squaring these circles will require more diplomatic agility than Kim has yet to demonstrate in either the domestic or international areas.

EAST ASIA

Mr. Chairman, China and North Korea do not exist in a vacuum. They influence

the policies of other states—including how those states relate to us. Nowhere is this

more true than in East Asia. Let me talk about two trends there that I believe will

affect US interests over the next several years.

The first is the growing concern in the region about China and North Korea.

Leaders in Southeast Asia have long worried about Chinese interference in their internal affairs, but the concerns of these governments and publics also now focus on

China’s growing economic and military power and the potential influence it will provide Beijing. Concerns about North Korea are more varied and localized. Japan

fears North Korea’s expanding missile capabilities, while South Korea—along with

the historical threat of a North Korean invasion—worries that the collapse of the

regime in the North will create humanitarian, economic, and military challenges for

the South.

These concerns create several dynamics. For one thing, they fuel incentives to expand and modernize defense forces. Japan’s interest in building its own satellite imaging system, for example, is a direct result of its concern about North Korea. Vietnam’s recent acquisition of Su-27 aircraft from Russia reflect concerns about China’s

future military might. And Seoul’s attempts to modernize its air force and navy reflect the fact that it is looking beyond North Korea toward potential future threats.

In addition, these concerns reinforce the long-standing desire among almost all

the states of the region for the US to remain engaged militarily. In short, regional

leaders—and most publics—continue to see the US presence as key to East Asian

stability, although I must tell you, Mr. Chairman, that some leaders in the region

have doubts about our staying power there.

The second trend worth noting for you is the continuing pressure in East Asia

for more open and accountable political systems. Over the last 15 years, that pressure brought political change to the Philippines, Thailand, South Korea, Taiwan,

Japan, and most recently Indonesia. Others, including Malaysia and China, are certain to face similar pressure for change in the years ahead as the spread of information technology limits the ability of authoritarian leaders to control the public’s exposure to democracy and to constrain opponents from organizing. These pressures,

of course, create the potential for political instability, particularly if they are resisted by incumbent leaders.

INDONESIA

Mr. Chairman, I’ve mentioned Indonesia a couple of times earlier, so let me take

a moment to say a few words about it. Indonesia is in the midst of a difficult transition to democracy that will have a powerful bearing on the country’s future direction

and perhaps even on its cohesion as a nation. President Wahid is grappling with

a variety of long-standing, intractable issues including communal violence, separatist sentiments, and an economy in distress. At the same time, he is trying to

forge a new role for the Indonesian military—which includes tighter civilian control

and the gradual withdrawal of the armed forces from the domestic political arena—

and create an open, consensual decisionmaking process in a country accustomed to

30-years of one-man rule.

Since his selection to the presidency last October, Wahid has implemented a variety of initiatives designed to set the country on the path to democracy. A popularly

elected president who preaches religious and political tolerance, Wahid has succeeded in forming a viable coalition government drawn from disparate elements. He

is actively supporting a national investigation into alleged human rights abuses by

the Indonesian military in East Timor, and a once muzzled national press is flourVerDate 11-MAY-2000 10:07 Aug 16, 2000 Jkt 065329 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 E:\HEARINGS\65329 pfrm04 PsN: 65329
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ishing. He also is taking steps to improve Jakarta’s bilateral relations with a number of countries and restore Indonesia’s regional prominence, which suffered in the

wake of the Asian financial crisis in 1997 and the domestic political uncertainty that

surrounded the fall of President Soeharto in 1998.

Addressing demands from restive provinces to redefine their relationship with Jakarta is Wahid’s most immediate challenge. Several leaders in the region remain

concerned that Jakarta’s loss of East Timor—coupled with growing separatist tensions and communal violence across the archipelago—could result in the Balkanization of the country over the next several years. The challenges are myriad: in the

west, pressure is mounting from Acehnese separatists who have resisted Jakarta’s

control since the 1950s and began an insurgency in 1976. To the east in Irian

Jaya—recently renamed Papua—there is local resentment of Jakarta’s exploitation

of the province’s natural resources, but the insurgent movement is weak. The nearby Malukus have been wracked by communal violence for the past year; this is

Christian-Muslim violence with an ethnic overlay that may not only be difficult to

pacify, but could ignite sectarian violence elsewhere in the archipelago, testing the

country’s long commitment to religious tolerance. Indonesia’s ASEAN partners particularly fear the refugee and humanitarian crisis that would accompany such

worst-case scenarios.

INDIA-PAKISTAN

Whatever suspicions and fissures exist among states in East Asia, they pale in

comparison to the deep-seated rivalry between India and Pakistan. Mr. Chairman,

last spring, the two countries narrowly averted a full-scale war in Kashmir, which

could have escalated to the nuclear level.

The military balance can be summarized easily: India enjoys advantages over

Pakistan in most areas of conventional defense preparedness, including a decisive

advantage in fighter aircraft, almost twice as many men under arms, and a much

larger economy.

Recent changes in government in both countries add tensions to the picture. The

October coup in Pakistan that brought to power Gen. Musharraf—who served as

Army chief during the Kargil conflict with India last summer—has reinforced New

Delhi’s inclination not to reopen the bilateral dialogue anytime soon.

Pakistanis are equally suspicious of India’s newly elected coalition government in

which Hindu nationalists hold significant sway. Clearly, the dispute over Kashmir

remains as intractable as ever.

We are particularly concerned that heavy fighting is continuing through the winter, unlike in the past, and probably will increase significantly in the spring.

New Delhi may opt to crack down hard on Kashmiri militants operating on the

Indian side of the Line of Control or even order military strikes against militant

training camps inside Pakistani-held Kashmir.

Thus, we must head into the new year, Mr. Chairman, with continuing deep concerns about the antagonisms that persist in South Asia and their potential to fuel

a wider and more dangerous conflict on the subcontinent.

AFRICA

Mr. Chairman, South Asia presents a discouraging picture but it hardly compares

to sub-Saharan Africa, which has been largely bypassed by globalization and the accelerating spread of technology. The region has little connectivity to the rest of the

world—with just 16 telephone lines per 1,000 people—and its battered infrastructure, the population’s limited access to education, and widespread health problems

such as AIDS and malaria have deterred many foreign investors.

One indicator of Sub-Saharan Africa’s marginalization is its infinitesimal share of

world trade in goods and services, which slipped from 2.8 percent in the early 1980s

to just 1.5 percent in recent years.

As Africa’s already small role in the international economy has faded, instability

has intensified. Humanitarian crisis is constant. Since 1995, violent internal unrest

has wracked 15 of the region’s 48 countries, and 19 Sub-Saharan governments have

deployed military forces—as peacekeepers, protectors of beleaguered regimes, or outright invaders—to other African states.

Instability fosters conditions potentially leading to genocide and other massive

human rights abuses. In the Great Lakes region, Congo (K)’s beleaguered government periodically targets Tutsis as suspected saboteurs, while the civil war in Burundi could with little warning degenerate into another round of wholesale ethnic

killings. In Sierra Leone, the rebels who used widespread mutilations of civilians

as a conscious tactic of intimidation are poised to break a tenuous cease-fire and

resume a campaign of terror.

21

Finally, endemic violence and instability increase the danger that criminal and insurgent groups will zero in on individual US citizens as soft targets.

CONCLUSION

Mr. Chairman, this has been a long briefing, and I’d like to get to your specific

questions on these and other subjects. Before doing so, I would just sum it up this

way: the fact that we are arguably the world’s most powerful nation does not bestow

invulnerability; in fact, it may make us a larger target for those who don’t share

our interests, values, or beliefs. We must take care to be on guard, watching our

every step, and looking far ahead. Let me assure you that our Intelligence Community is well prepared to do that.

Thank you, Mr. Chairman. Now, I’d welcome any questions from you and your

colleagues.

PREPARED STATEMENT OF VICE ADMIRAL THOMAS R. WILSON, DIRECTOR, DEFENSE

INTELLIGENCE AGENCY

EXECUTIVE SUMMARY

The dynamic change and uncertainty that characterized the 1990s will likely continue through 2015 because the basic engines of turmoil remain largely in place.

These include: Significant transitions underway in key states and regions such as

Russia, China, North Korea, the Middle East, and Europe; the continued existence

of rogue states, groups, and individuals who do not share our vision of the future;

rapid technology development and proliferation; declining global defense spending;

pressures resulting from uneven demographic and economic developments; evolving

international and regional security structures, institutions, and concepts, including

the growing influence of NGOs; reactions to the perception of western political, economic, military and social dominance; continuing international criminal activity,

particularly the narcotics trade; ethnic, cultural, and religious conflict, and increased numbers of people in need.

These factors create the conditions in which threats and challenges emerge, and

define the context in which US strategy, interests, and forces operate. Collectively,

they foster a complex, dynamic, and dangerous global security environment that will

continue to spur numerous crises, hotspots, and issues affecting US interests. Containing, managing, and responding to these will be a constant challenge.

Beyond this general global turmoil, three specific developments are likely to

present more direct long-term military challenges to US policy and interest:

The asymmetric threat.—Most adversaries recognize our general military superiority and want to avoid engaging the US military on our terms, choosing instead

to pursue a wide variety of initiatives designed to circumvent or minimize our

strengths and exploit perceived weaknesses. Asymmetric approaches will become

the dominant characteristic of most future threats to our homeland and a defining

challenge for US strategy, operations, and force development.

Strategic nuclear missile threats.—We will continue to face strategic nuclear

threats—from Russia and China, and eventually from North Korea and other ‘rogue’

states. While the total number of warheads targeted against us will be much lower

than during the Cold War, the mix of threat nations, force structures, capabilities,

and employment doctrines will complicate the strategic threat picture.

Large regional military threats.—Several potential regional adversaries will maintain large military forces featuring a mix of Cold War and post-Cold War technologies and concepts. Under the right conditions, these regional militaries could

present a significant challenge.

THE GLOBAL SECURITY ENVIRONMENT

To paraphrase the ancient Chinese curse ‘‘. . . we are living in very interesting

times.’’ More than a decade has passed since the end of the Cold War, yet we seem

no closer to the emergence of a new, stable international order. Rather, the complex

mix of political, economic, military, and social factors that have undermined stability during much of the 1990s remain at play. The most important of these include:

Significant continuing uncertainties, especially regarding the future of Russia,

China, Europe, the Middle East, and the Korean peninsula. Developments in each

of these key states and regions will go a long way towards defining the future security environment. But it would be difficult to be highly confident in predicting outcomes.

Rogue states, groups, and individuals (e.g. Iran and North Korea, numerous terrorist and international criminal groups, Usama Bin Ladin, etc.) who do not share

22

our vision of the future and are willing to engage in violence to improve their position and undermine order. Many of these adversaries view the United States as the

primary source of their troubles, and will continue to target our policies, facilities,

interests, and personnel.

Rapid technology development and proliferation—particularly in the areas of information processing, biotechnology, communications, nanotechnology, and weapons.

Technology will continue to have a staggering impact on the way people live, think,

work, and fight. Some aspects of our general military-technological advantage are

likely to erode. Some technological surprises will undoubtedly occur.

Declining global defense spending. The 50% real reduction in global defense

spending during the past decade is having multiple impacts. First, both adversaries

and allies have not kept pace with the US military (despite our own spending reductions). This has spurred foes toward asymmetric options, widened the gap between

US and allied forces, reduced the number of allied redundant systems, and increased the demand on unique US force capabilities. Additional, longer-term impacts—on global defense technology development and proliferation, and on US-allied

defense industrial consolidation, cooperation, and technological competitiveness—are

likely.

Pressures resulting from unfavorable demographic developments. By 2020, developing world population will increase some 25%. Meanwhile, some 20–30 million of

the world’s poorest people move into urban areas each year. These trends will continue to stress the resources, infrastructure, and leadership of states throughout Africa, Asia, and Latin America.

Growing disparities in global wealth and resource distribution. One quarter of the

world’s population (the developed world) controls nearly 80% of today’s wealth and

consumes the great majority of the world’s resources. The numbers will get worse

(from the developing world’s perspective) during the next 15 years, exacerbating

north-south and inter-regional tensions.

Evolving global security structures, organizations, and institutions. The changing

structure, role, adaptability, and influence of familiar Cold War entities—the UN,

NATO, the nation state, etc.—and the increasing presence and impact of NGOs,

brings greater uncertainty to the way policy is made and implemented in the post

Cold War era.

Reaction to ‘‘western dominance.’’ Many individuals, groups, and states fear the

global expansion and perceived dominance of western (and especially US) values,

ideals, culture, and institutions. Efforts to resist, halt, or undo this trend will spur

anti-US sentiments and behavior.

International drug cultivation, production, transport, and use will remain a major

source of instability, both within drug producing, transit, and target countries, and

between trafficking and consumer nations. The connection between drug cartels, corruption, and antigovernment activities (terrorism and insurgency) will increase as

the narcotics trade provides an important funding source for criminal and

antigovernment groups. States with weak democratic traditions and poor economic

performance and prospects will be particularly susceptible. Counternarcotic activities will become more complex and difficult as new areas of cultivation and transit

emerge and traffickers exploit advances in technology, communications, transportation, and finance.

Ethnic, religious, and cultural divisions will remain a motivation for and source

of conflict in much of the world. As the situation in Kosovo demonstrates, ethnicbased conflict is often brutal and intractable.

Increasing numbers of people in need. A combination of factors—many of those

listed above, plus inadequate infrastructure and health facilities, resource shortages,

natural disasters, epidemics, and insufficient local, regional, and global response capabilities—have combined to increase the numbers of people requiring international

humanitarian assistance. According to UN assessments, some 35–40 million people

worldwide needed aid each year during the 1990s, compared to slightly more than

20 million in 1985. Likewise, the number, size, cost, and duration of UN and other

‘‘peace operations’’ have risen significantly since the late 1980s.

These factors create the conditions in which threats and challenges emerge, and

define the context in which US strategy, interests, and forces operate. Collectively,

they foster a complex, dynamic, and dangerous global security environment. A review of just a few of last year’s headlines—Iraq’s continued combativeness, prolonged ethnic tensions in the Balkans and Indonesia, Russia’s ongoing offensive in

Chechnya, North Korea’s intransigence, continued hostility between India and Pakistan, Colombia’s insurgency, and tribal and internecine disputes throughout many

parts of Africa—underscores the point. Moreover, no power, condition, or circumstance is likely to emerge during the next 15 years capable of transcending this

general instability and imposing a new global order. Accordingly, we can expect the

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global dynamic will continue to spur numerous crises, hotspots, and issues that will

directly affect US policy and interests. Containing, managing, and responding to

these will be a constant challenge.

Against this backdrop of general global turmoil, I’d like to focus on three specific

developments that present more direct long term military challenges to US policy

and interests:

The asymmetric threat.—Most adversaries recognized our general military superiority and want to avoid engaging the US military on our terms, choosing instead

to pursue a wide variety of initiatives designed to circumvent or minimize our

strengths and exploit perceived weaknesses. Asymmetric approaches will become

the dominant characteristic of most future threats to our homeland and a defining

challenge for US strategy, operations, and force development.

Strategic nuclear missile threats.—We will continue to face strategic nuclear

threats—from Russia and China, and eventually from North Korea and other

‘‘rogue’’ states. While the total number of warheads targeted against us will be much

lower than during the Cold War, the mix of threat nations, force structures, capabilities, and employment doctrines will complicate the strategic threat picture.

Large regional military threats.—Several potential regional adversaries will maintain large military forces featuring a mix of Col War and post-Cold War technologies

and concepts. Under the right conditions, these regional militaries could present a

significant challenge.

THE GROWING ASYMMETRIC THREAT

Most of the rest of the world believes the United States will remain the dominant

global power during the next 15 years. Foreign assessments generally point to the

following US strengths: our economy weathered the recent global financial crisis in

excellent shape and is uniquely positioned to capitalize on the coming ‘‘high-tech

boom;’’ we are among the world’s leaders in the development and use of the most

important technologies (but civilian and military); we have the world’s best university system and the most fluid and effective capital markets; we spend nearly half

of what the advanced industrial world spends on all types of research and development each year; we retain strong alliances with key nations; and we enjoy unrivaled

‘‘soft power’’—the global appeal of American ideas, institutions, leadership and culture.

Perhaps even more striking, however, is how potential adversaries think about

our military advantage. The superiority of US military concepts, technology, and capabilities has been a key theme in foreign military assessments since Operation

Desert Storm. Moreover, many foreign military leaders and writing express concern

that our conventional warfighting lead will grow, given our doctrinal and resource

commitment to achieving the operational capabilities envisioned in Jointed Vision

2010.

Adversary anticipation of continued US military superiority is the genesis of the

asymmetric challenge. Potential US opponents (from druglords and terrorists to

criminal gangs, insurgents,and the civilian and military leadership of opposing

states) do not want to engage the US military on its terms. The are more likely to

pursue their objectives while avoiding a US military confrontation, and/or to develop

asymmetric means (operational and technological) to reduce US military superiority,

render it irrelevant, or exploit our perceived weaknesses. Asymmetric approaches

are imperative for US adversaries and are likely to be a dominant component of

most future threats.

The asymmetric problem is extremely complex because adversaries, objectives,

targets, and means of attack can vary widely from situation to situation. Moreover,

some developments—such as WMD and missile proliferation, counter-space capabilities, denial and deception operations, etc.—could have both symmetric and asymmetric applications, depending on the context. Recognizing these potential ambiguities, and understanding that many different approaches are possible, I am most

concerned about the following ‘‘asymmetric’’ trends, developments, and capabilities.

Threats to Critical Infrastructure.—Many adversaries believe the best way to

avoid, deter, or offset US military superiority is to develop a capability to threaten

the US homeland. In addition to the strategic nuclear threats discussed below, our

national infrastructure is vulnerable to disruptions by physical and computer attack. The interdependent nature of the infrastructure creates even more of a vulnerability. Foreign states have the greatest potential capability to attack our infrastructure because they possess the intelligence assets to assess and analyze infrastructure vulnerabilities, and the range of weapons—conventional munitions, WMD, and

information operations tools—to take advantage of vulnerabilities.

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The most immediate and serious infrastructure threat, however, is from insiders,

terrorists, criminals, and other small groups or individuals carrying out well-coordinated strikes against selected critical nodes. While conventional munition attacks

are most likely now, over time our adversaries will develop an increased capacity,

and perhaps intent, to employ WMD. They are also likely to increase their capabilities for computer intrusion. Commercial off-the-shelf products and services present

new security challenges and concerns, providing opportunities to develop software

functions allowing unauthorized access, theft and manipulation of data, and denial

of service.

Information Operations.—Information operations can involve many components

including electronic warfare, psychological operations, physical attack, denial deception, computer network attack, and the use of more exotic technologies such as directed energy weapons or electromagnetic pulse weapons. Adversaries recognize our

civilian and military reliance on advanced information technologies and systems,

and understand that information superiority provides the US unique capability advantages. Many also assess that the real center of gravity for US military actions

in US public opinion. Accordingly, numerous potential foes are pursuing information

operations capabilities as relatively low cost means to undermine support of US actions, attack key US capabilities, and counter US military superiority.

The information operations threat continues to spread worldwide, with more mature technologies and more sophisticated tools being developed continuously. However, the level of threat varies widely from adversary to adversary. Most opponents

currently lack the foresight or the capability to fully integrate all information operations tools into a comprehensive attack. Many with limited resources will seek to

develop only computer network attack options—relying on modest training, computer hardware and software purchases, and/or the use of ‘‘hired’’ criminal hackers.

At present, most nations probably have programs to protect their own information

systems, and some—particularly Russia and China—have offensive information operations capabilities. Today, we are more likely to face information operations carried out by terrorists, insurgents, cults, criminals, hackers, and insider individuals

spurred by a range of motivations.

Terrorism.—Terrorism remains a very significant asymmetric threat to our interests at home and abroad. The terrorist threat to the US will grow as disgruntled

groups and individuals focus on America as the source of their trouble. Most antiUS terrorism will be regional and based on perceived racial, ethnic or religious

grievances. Terrorism will tend to occur in urban centers, often capitals. The US

military is vulnerable due to its overseas presence and status as a symbol of US

power, interests, and influence. However, in many cases, increased security at US

military and diplomatic facilities will drive terrorists to attack ‘‘softer’’ targets such

as private citizens or commercial interests.

Terrorism will be a serious threat to Americans especially in most Middle Eastern

countries, North Africa, parts of Sub-Saharan Africa, Turkey, Greece, the Balkans,

Peru, and Colombia. The characteristics of the most effective terrorist organizations—highly compartmented operations planning, good cover and security, extreme

suspicion of outsiders, and ruthlessness—make them very hard intelligence targets.

Middle East-based terrorist groups will remain the most important threat. State

sponsors (primarily Iran) and individuals with the financial means (such as Usama

bin Ladin) will continue to provide much of the economic and technological support

needed by terrorists. The potential for terrorist WMD use will increase over time,

with chemical, biological, and radiological agents the most likely choice.

WMD and Missile Proliferation.—Many potential adversaries believe they can preclude US force options and offset US conventional military superiority by developing

WMD and missiles. Others are motivated more by regional threat perceptions. In

either case, the pressure to acquire WMD and missiles is high, and, unfortunately,

the post Cold War environment is more amenable to proliferation activities. New alliances have formed, providing pooled resources for developing these capabilities,

while technological advances and global economic conditions have made it easier to

transfer materiel and expertise. The basic sciences necessary to produce these weapons are widely understood. Most of the technology is readily available, and the raw

materials are common. All told, the prospects for limiting proliferation are slim, and

the global WMD threat to US-allied territory, interests, forces, and facilities will increase significantly.

Several rogue states will likely acquire nuclear weapons during the next decade

or so, and some existing nuclear states will undoubtedly increase their inventories.

As these trends unfold, the prospects for limited nuclear weapons use in a regional

conflict will rise. So too will the potential for a terrorist or some other sub-national

group to acquire and use a weapon.

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Chemical and biological weapons are generally easier to develop, hide, and deploy

than nuclear weapons and will be readily available to those with the will and resources to attain them. I expect these weapons to be widely proliferated, and they

could well be used in a regional conflict over the next 15 years. I am also concerned

that sub-national groups or individuals will use chemical or biological agents in a

terrorist or insurgent operation. Such an event could occur in the United States or

against US-allied forces and facilities overseas. The planning for such ‘‘smallerscale’’ incidents would be extremely difficult to detect, and consequently, to deter or

warn against.

Theater-range ballistic and cruise missile proliferation is another growing challenge. I expect the numbers of ballistic missiles with ranges between 500 and 3,000

kilometers to increase significantly during the next 15 years and to become more

accurate and destructive. Likewise, the potential for widespread proliferation of land

attack cruise missiles is high. While the types of missiles most likely to be proliferated will be a generation or two behind the global state of the art, states that

acquire them will have new or enhanced capabilities for delivering WMD or conventional payloads inter-regionally against fixed targets. Major air and sea ports, logistics bases and facilities, troop concentrations, and fixed communications nodes will

be increasingly at risk.

The Foreign Intelligence Threat.—Adversaries hoping to employ asymmetric approaches against the United States desire detailed intelligence on US decision-making, operational concepts, capabilities, shortcomings, and vulnerabilities. Consequently, we continue to face extensive intelligence threats from a large number

of foreign nations and sub-national entities including terrorists, international criminal organizations, foreign commercial enterprises, and other disgruntled groups and

individuals. These intelligence efforts are generally targeted against our national security policy-making apparatus, our national infrastructure, our military plans, personnel, and capabilities, and our critical technologies. While foreign states—particularly Russia and China—present the biggest intelligence threat, all our adversaries

are likely to exploit technological advances to expand their collection activities.

Moreover, the open nature of our society, and increasing ease with which money,

technology, information, and people move around the globe in the modern era, make

effective counterintelligence and security that much more complex and difficult to

achieve.

Cover, Concealment, Camouflage, Denial and Deception (C3D2).—Many potential

adversaries—nations, groups, and individuals—are undertaking more and increasingly sophisticated C3D2 activities against the United States. These operations are

generally designed to hide key activities, facilities, and capabilities (e.g. mobilization

or attack preparations, WMD programs, advanced weapons systems developments,

treaty noncompliance, etc.) from US intelligence, to manipulate US perceptions and

assessments of those programs, and to protect key capabilities from US precision

strike platforms. Foreign knowledge of US intelligence and military operations capabilities is essential to effective C3D2. Advances in satellite warning capabilities, the

growing availability of camouflage, concealment, deception, and obscurant materials,

advanced technology for an experience with building undergound facilities, and the

growing use of fiber optics and encryption, will increase the C3D2 challenge.

Counter-Space Capabilities.—The US reliance on (and advantages in) the use of

space platforms is well known by our potential adversaries. Many are attempting

to reduce this advantage by developing capabilities to threaten US space assets, in

particular through denial and deception, signal jamming, and ground segment attack. By 2015, future adversaries will be able to employ a wide variety of means

to disrupt, degrade, or defeat portions of the US space support system. A number

of countries are interested in or experimenting with a variety of technologies that

could be used to develop counter-space capabilities. These efforts could result in improved systems for space object tracking, electronic warfare or jamming, and directed energy weapons.

THE STRATEGIC NUCLEAR THREAT

Russia.—Russian strategic forces are in flux. During the 1990s, force levels were

reduced significantly, and additional reductions are certain during the next 15 year.

But the precise size and shape of Moscow’s future strategic deterrent will depend

on several ‘‘unknown’’ factors, including: future resource levels, arms control considerations, threat perceptions, Russia’s ability to maintain aging force elements, and

the success of strategic force modernization programs. Despite this general uncertainty, I can foresee virtually on circumstance, short of state failure, in which Russia will not maintain a strong strategic nuclear capability, with many hundreds of

warheads and relatively modern delivery platforms capable of striking the United

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States. I say this because even during the past decade, with severe economic constraints and other pressing priorities, Moscow mustered the political will and resources to maintain key aspects of its strategic forces capability, fund several new

strategic weapons programs, and upgrade portions of its strategic infrastructure.

Moreover, strategic forces continue to receive priority today—in terms of manpower,

training, and other resources.

In addition to the changes in strategic force composition, Moscow’s thinking about

the role, utility, and employment of nuclear forces is in flux. The 1999 Draft Russian Military Doctrine provides some insights. In includes a nuclear weapons use

formulation similar to that described in the 1993 doctrinal document, but widens

the theoretical threshold for Russian employment of nuclear weapons during a conventional conflict if the situation becomes ‘‘critical’’ to national security. Russia’s

strategic force posture and strategy will continue to evolve, reflecting the uncertain

political and economic situation, changing Russian perceptions of the international

security environment and strategic threats, and the increased dependence on strategic forces as the ‘‘backbone’’ of Russian military power. This uncertainty in Russian strategic thinking is troubling.

China.—China’s strategic nuclear force is small and dated at present, but Bejing’s

top military priority is to strengthen and modernize its strategic nuclear deterrent.

Several new strategic missile systems are under development, along with upgrade

programs for existing missiles, and for associated command, control, communications and other related strategic force capabilities. In early August 1999, China conducted the first test flight of its DF–31 ICBM. It will be deployed on a road-mobile

launcher and will have the range to target portions of North America. While the

pace and extent of China’s strategic modernization clearly indicates deterrent rather

than ‘‘first strike’’ intentions, the number, reliability, survivability, and accuracy of

Chinese strategic missiles capable of hitting the United States will increase significantly during the next two decades.

Rogue Strategic Forces.—Russia and China are the only potential threat states capable today of targeting the United States with intercontinental ballistic missiles.

However, I am increasingly concerned that more radical hostile nation—particularly

North Korea and Iran—will develop that capability over the next several years. The

growing availability of missile technology, components, and expertise, intense political pressure to acquire longer-range ballistic missiles, the willingness of some

states to take shortcuts and accept more risk in their missile development programs, and our sometimes limited ability to reliably track these protected programs,

are all cause for concern. Moreover, we must assume that any state capable of developing or acquiring missiles with intercontinental range will likely be able to arm

those missiles with weapons of mass destruction.

Whether this broader threat emerges sooner or later, during the next 15 years,

the strategic nuclear environment will become more diverse and complex. This has

significant implications for US strategic force planning, doctrine, deterrence, and

testing.

LARGE REGIONAL MILITARIES

Joint Vision 2010 is the conceptual template for US force development. It envisions a 21st Century ‘‘information age’’ US military that leverages high quality,

highly-trained personnel, advanced technology, and the development of four key

operational concepts—dominant maneuver, precision engagement, full dimensional

protection, and focused logistics—to achieve dominance across the range of military

operations. The United States, and to a lesser extent our closest allies, are moving

steadily toward the capabilities embodied in this vision.

In contrast, most other large militaries will continue to field primarily ‘‘industrial

age’’ forces—generally mass and firepower oriented, employing large armored and

infantry formations, late-generation Cold War (vice 21st Century) technologies, and

centralized, hierarchical command-and-control structures. Over the next 15 years,

many regional states will seek to augment these forces with selected highend capabilities, including: WMD and missiles, advanced C4I systems, satellite reconnaissance, precision strike systems, global positioning, advanced air defense systems,

and advanced anti-surface ship capabilities. It is likely that in any large regional

conflict beyond 2010, US forces will face adversaries who combine the mass and firepower of a late-20th century force with some more-advanced systems and concepts.

On paper, such forces would be hard pressed to match our dominant maneuver,

power projection, and precision engagement capabilities. Most would prefer not to

engage in traditional conventional warfare with the US. But in an actual combat

situation, the precise threat these forces pose will depend on the degree to which

they have absorbed and can apply key technologies, have overcome deficiencies in

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training, leadership, doctrine, and logistics, and on the specific operational-tactical

environment. Under the right conditions, their quantitative capability, combined

with situational advantages—e.g. initiative, limited objective, short lines of communication, familiar terrain, time to deploy and prepare combat positions, and the

skillful use of asymmetric approaches—will present significant challenges to US

mission success. China and Russia at the high end, followed by North Korea, Iran,

and Iraq, are all examples of militaries that could field large forces with a mix of

current and advanced capabilities.

China.—Bejing is modernizing and improving the People’s Liberation Army (PLA)

at a steady pace, consistent with the country’s overall emphasis on general economic

and infrastructure development. During the past year, the PLA has fielded several

new ballistic missiles, agreed to purchase Su–30 FLANKER aircraft from Russia

(delivery within 2 years), and taken delivery of the fourth Russian KILO submarine

and additional indigenous submarines. Just this month, the PLA received the first

two SOVREMENNYY destroyers from Russia, and could field its first airborne early

warning aircraft within the next year or so.

Beyond modernization, the PLA has revised its training program to improve pilot

proficiency, improve its capabilities for engaging stealth aircraft, cruise missiles,

and helicopter gunships, and improve its ability to defend against precision strikes,

electronic jamming, and all forms of reconnaissance. In addition, logistics are being

centralized and modernized across the force. The PLA is also upgrading C4I links

to its forces with satellite dishes, fiber optic, and video links

As a result of these and other developments, China’s capability for regional military operations will improve significantly. By 2010 or so, some of China’s best units

will have achieved a reasonably high level of proficiency at maneuver warfare

(though they will probably not fully master large, complex joint service operations

until closer to 2020). Moreover, by 2015 Chinese forces will be much better

equipped, possessing more than a thousand theater-range missiles, hundreds of

fourth-generation aircraft, thousands of ‘‘late Cold War equivalent’’ tanks and artillery, a handful of advanced diesel and third generation nuclear submarines, and

some 20 or so new surface combatants. China is also likely to field an integrated

air defense system and modern command-and-control systems at the strategic and

operational levels.

The Taiwan issue will remain a major potential flashpoint, particularly over the

near term. As tensions between China and Taiwan remain high, there is an increased risk of small scale military ‘‘incidents’’—intimidating exercises, heightened

force readiness in border regions, accidents involving opposition air or naval forces

in close proximity, etc. It is doubtful, however, unless Taipei moved more directly

toward independence, that China would attempt a larger scale military operation

to attack Taiwan outright. Beijing recognizes the risk inherent in such a move and,

at least for the near term, probably has questions about is military ability to succeed. Nevertheless, by 2015, China’s conventional force modernization will provide

an increasingly credible military threat against Taiwan (though probably not the

large amphibious capability necessary for invasion).

Russia.—Moscow will remain focused on internal political, economic, and social

imperatives for at least the next decade. Meanwhile, Russia’s Armed Forces continue in crisis. The military leadership remains capable of exercising effective control, but there is increased potential for collapse in military discipline, particularly

in the event of a large-scale internal crisis. The Defense Ministry and General Staff

are attempting to cope with broad-based discontent while struggling to implement

much-needed reforms. Compensation, housing, and other shortfalls continue to undermine morale. Under these conditions—chronic underfunding and neglect—there

is little chance that Moscow’s conventional forces will improve significantly during

the next decade.

Beyond that timeframe, the size, characteristics, and capabilities of Russia’s conventional forces could vary widely, depending on the outcome of numerous unsettled

issues. Among the most important of these are the size of Russia’s defense budget,

Russian threat perceptions, the achievement of national consensus on a blueprint

for military reform, and Moscow’s success at restoring the ‘‘intangible’’ components

of military effectiveness (leadership, readiness, morale, sustainment, etc.). Two alternatives seem most likely:

If the Russian military experiences continued underfunding, indecision, and leadership indifference, it will remain chronically weak, and present about the same (or

even a reduced) level of threat to US interests in 2015 as it does today. This alternative becomes more likely the longer Russia’s economic problems persist, defense

budgets decline or remain relatively stagnant, there is no consensus on the direction

for defense reform, and the national leadership continues to neglect the needs of the

military.

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If economic recovery and political stability come sooner rather than later, and the

military receives stable, consistent leadership and resources, Russia could begin rebuilding an effective military toward the end of this decade, and field a smaller, but

more modern and capable force in the 2015 timeframe. This improved force would

be large and potent by regional standards, equipped with thousands of later-generation Cold War systems, and hundreds of more advanced systems built after 2005.

North Korea.—North Korea will remain a challenging dilemma: a ‘‘failing’’ state

with rising internal pressures and limited conventional military capability, but posing an increasing regional and global threat by virtue of its expanding WMD and

long-range missiles. As the pressure builds on the economy, society, and military,

there is increased potential for internal collapse, instability, and leadership change.

North Korea’s capability to successfully conduct complex, multi-echelon, largescale operations to reunify the Korean peninsula declined in the 1990s. This was,

in large measure, the result of severe resource constraints, including widespread

food and energy shortages. Still, Pyongyang has managed to maintain a huge military force numbering over one million personnel. I am most concerned about

Pyongyang’s very large, forward-deployed forces, and its extensive ‘‘asymmetric’’ capabilities—WMD and missiles, underground facilities, and special operations forces.

These capabilities, combined with the time, distance, terrain, and other theater

characteristics, make a Korean war scenario very challenging. War on the peninsula

would be very violent and destructive, and could occur with little warning.

North Korea’s resource difficulties will continue with limited policy changes insufficient to allow a major economic recovery. Nevertheless, Pyongyang will continue

to place a high premium on military power (as a source of leverage in international

and bilateral fora), and will strive, with some limited success, to slow the erosion

of its conventional military forces and to continue to expand its asymmetric capabilities.

Iran.—Iran’s armed forces are embarked on an uneven, yet deliberate, military

buildup designed to ensure the security of the cleric-led regime, increase its influence in the Middle East and Central Asia, deter Iraq or any other regional aggressor, and limit US regional influence. Iran’s leaders seek to dominate the Gulf area,

and, at present, we have major concerns over how Teheran may act to undermine

agreements between Israel and Syria, Lebanon, and the Palestinians. Iran’s conventional land and air forces have significant limitations with regard to mobility, logistics infrastructure, and modern weapons systems. Rivalry and mistrust between

Revolutionary Guards, the regime’s main internal security arm, and the regular

armed forces is serious and hampers effective operations among the nearly half million in the uniformed services. Iran has compensated for these weaknesses by developing (or pursuing) numerous asymmetric capabilities, to include subversion and

terrorism, the deployment of air, air defense, missile, mine warfare, and naval capabilities to interdict maritime access in and around the Strait of Hormuz, and the

acquisition of WMD and longer range missiles to deter the US and to intimidate

Iran’s neighbors.

Iran has a relatively large ballistic missile force, and is likely assembling SCUD

SSMs in the country. Last June, in response to the assassination of a high-ranking

Iranian army general, Iran used SSMs to attack anti-regime Iranians encamped

about 100 kilometers inside Iraq. Teheran intends to develop longer range SSMs capable of striking the entire Arabian Peninsula and Israel.

Iran’s navy is the most capable in the region and, even with the presence of Western forces, can probably stem the flow of oil from the Gulf for brief periods employing KILO submarines, missile patrol boats, and numerous naval mines, some of

which may be modern and sophisticated. Aided by China, Iran has developed a potent anti-ship cruise missile capability to threaten sea traffic from shore, ship, and

aircraft platforms.

Although Iran’s force modernization efforts will proceed gradually, during the next

15 years it will likely acquire a full range of WMD capabilities, field substantial

numbers of ballistic and cruise missiles—including some with intercontinental

range—increase its inventory of modern aircraft, expand its armored forces, and

continue to improve its anti-surface ship capability. Iran’s effectiveness in generating and employing this increased military potential against an advanced adversary will depend in large part on ‘‘intangibles’’—command and control, training,

maintenance, reconnaissance and intelligence, leadership, and situational conditions

and circumstances.

Iraq.—Years of UN sanctions and embargoes as well as US and Coalition military

actions have significantly degraded Iraq’s military capabilities. Overall manpower

and material resource shortages, a problematic logistics system, and a relative inability to execute combined arms doctrine have adversely affected Iraqi military caVerDate 11-MAY-2000 10:07 Aug 16, 2000 Jkt 065329 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 E:\HEARINGS\65329 pfrm04 PsN: 65329
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pabilities. These shortcomings are aggravated by intensive regime security requirements.

Nevertheless, Iraq’s ground forces continue to be one of the most formidable within the region. They are able to protect the regime effectively, deploy rapidly, and

threaten Iraq’s neighbors absent any external constraints. Iraq’s air and air defense

forces retain only a marginal capability to protect Iraqi air space and project air

power outside Iraq’s borders. Although the threat to Coalition Forces is minimal,

continued Iraqi confrontational actions underscore the regime’s determination to

stay the course. Iraq has probably been able to retain a residual level of WMD and

missile capabilities. The lack of intrusive inspection and disarmament mechanisms

permits Baghdad to enhance these capabilities. Lessons learned from survivability

remain the regime’s watchwords.

Absent decisive regime change, Iraq will continue to pose complex political and

military challenges to Coalition interests well into the future. Baghdad’s attempts

to upgrade its military capabilities will be hampered as long as effective UN sanctions remain in place. Reconstitution of strategic air defense assets, WMD, and ballistic missile capabilities remain Baghdad’s highest priorities. Expansion and modernization of ground and air forces are secondary objectives. Over the longer term,

assuming Iraq’s leadership continues to place a high premium on military power,

is able to ‘‘get around the sanctions regime’’ sooner rather than later, and the price

of oil is stable, Baghdad could, by 2015, acquire a large inventory of WMD, obtain

hundreds of theater ballistic and cruise missiles, expand its inventory of modern aircraft, and double its fleet of armored vehicles. While this force would be large and

potent by regional standards, its prospects for success against a western opponent

would depend ultimately on how successful Baghdad was in overcoming chronic

weaknesses in military leadership, reconnaissance and intelligence, morale, readiness, logistics, and training.

OTHER ISSUES OF CONCERN

There are two other nearer term issues—the situation in the Balkans and the continuing rivalry between India and Pakistan—that deserve comment based on their

potential impact on US security interests.

Federal Republic of Yugoslavia.—During 1999, there was great upheaval within

the Federal Republic of Yugoslavia (FRY). Despite remaining nominally part of the

FRY, Kosovo was lost to Serb control during the summer. The year ended with increased tensions between the last two constituent republics of the FRY, Serbia and

Montenegro. President Djukanovic of Montenegro, a long-time political rival of

Milosevic, has moved to redefine relations between the two republics. His program

calls for virtual political, economic, and foreign and defense policy independence of

Montenegro. Predictably, Serbian President Milosevic resists these efforts. Though

the Yugoslav Army maintains a garrison in Montenegro that could easily defeat the

small Montenegrin paramilitary forces, neither side appears ready to force the issue

at this time.

Despite defeat by NATO and the loss of Kosovo, FRY President Milosevic does not

appear in imminent danger of losing his political control. This is probably attributable to the near total lack of unity among the various political opposition parties

within Serbia. There is currently no reason to believe that Milosevic will not serve

his entire term of office, which expires in the summer of 2001.

Kosovo.—Since entering Kosovo, NATO forces have overseen the withdrawal of

Serb forces and the demobilization and disarmament of the UCK. KFOR is in control of the province, but ethnic violence continues, most directed at remaining Serbs

by vengeful Kosovar Albanians. There is no direct military threat to KFOR, but

there is always the possibility that KFOR troops could be caught in ethnic fighting.

The FRY military has reorganized following the loss of Kosovo, but is concentrating

on force and facility reconstitution and does not appear able or willing to attempt

a re-entry into Kosovo.

Bosnia.—International peacekeeping forces in Bosnia continue to operate in a

complex inter-ethnic environment that poses significant challenges to the establishment of a stable and enduring peace. Deep mutual distrust among Bosnia’s ethnic

factions and the legacy of war has created an impetus toward de facto partition of

Bosnia. All three of the Bosnian factions have resisted full implementation of the

Dayton Accords at one time or another. Each ethnic group will only cooperate as

long as its perceived, long-term interests are not forfeited or marginalized. Although

the civilian aspects of Dayton are lagging in their implementation, progress has

been made. We believe the Bosnian factions will continue to generally comply with

the military aspects of the Dayton Accords and SFOR directives, and will not engage

in widespread violence, so long as peacekeeping forces remain credible. Pervasive

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international engagement—both political and economic—will be necessary to prevent a permanent division of Bosnia along ethnic lines.

SFOR is the dominant military force in Bosnia, and the direct military threat facing it remains low. SFOR monitors all factional armies, permitting the entities to

train only with SFOR approval, and keeping all equipment in cantonment sites.

None of the factions will risk taking any kind of overt military action against SFOR.

The Federation Army is receiving assistance from the Train and Equip Program,

which is moving the military balance in its favor. However, the Federation Army

continues to be hampered by the unwillingness of the Muslims and Croats to effectively integrate. The Bosnian Serb Army, which no longer enjoys an overwhelming

superiority in heavy weapons, poses very little threat to SFOR as it is hampered

by its own internal problems such as insufficient funds for training, equipment modernization, maintenance, and personnel.

Participating in refugee resettlement, freedom of movement, and other civil implementation issues may expose SFOR personnel to increased risk. The international

community proclaimed 1999 as a year of refugee returns, and it began to focus on

moving people back to areas where they are ethnically in the minority. An increase

of 40% was realized in minority returns in 1999, but this is a slow and uncertain

process that is marked by occasional incidents of local violence.

India and Pakistan.—The tense rivalry between India and Pakistan remains an

important security concern. Both nations continue to invest heavily in defense and

the procurement of military equipment. At present, each side possesses sufficient

material to assemble a limited number of nuclear weapons, has short-range ballistic

missiles, and maintains large standing forces in close proximity across a tense line

of control. With each viewing their security relationship in zero-sum terms, we remain concerned about the potential, particularly over the near term, for one of their

military clashes to escalate into a wider conflict.

The dispute between India and Pakistan concerning the status of the state of

Jammu and Kashmir is the most likely trigger for war between the two countries.

The state was the site of major fighting in 1947, 1965 and 1971; and again witnessed heavy military action in 1999. With Islamabad and Delhi’s respective positions on Kashmir firmly entrenched, meaningful progress on the issue is unlikely

in the near term.

CONCLUSION

The dynamic change and uncertainty that characterized the 1990s will likely continue through 2015 because the basic engines of turmoil remain largely in place.

The volatile mix of global political, economic, social, technological, and military conditions will continue to bring great stress to the international order. While no Soviet-like military competitor will emerge during this timeframe, the combined impact of numerous local, regional, and transnational challenges presents a formidable

obstacle to our strategic vision.

Most adversaries will attempt to avoid directly confronting the United States military on our terms, choosing instead to pursue a variety of asymmetric means that

undermine our power, leadership, and influence. Strategic nuclear threats will endure through this timeframe, but the mix of adversary strategic doctrines and capabilities will complicate deterrence planning. China, Russia, North Korea, Iran, and

Iraq will maintain relatively large and well-equipped militaries, which could pose

a significant challenge under the right operational conditions.

TESTIMONY OF HON. GEORGE TENET, DIRECTOR OF CENTRAL

INTELLIGENCE ACCOMPANIED BY VICE ADMIRAL THOMAS

WILSON, DIRECTOR, DEFENSE INTELLIGENCE AGENCY; AND

AMBASSADOR STAPLETON ROY, ASSISTANT SECRETARY OF

STATE FOR INTELLIGENCE AND RESEARCH

Director TENET. Thank you, Mr. Chairman.

I appreciate the opportunity to discuss with the Committee our

assessment of the threats facing the United States. But before so

doing, I want to make some brief comments about recent news articles concerning a highly sensitive classified report by the CIA’s Inspector General.

The report, which was provided to the Committee in August of

1999, was critical of an internal investigation of former Director

John Deutch’s mishandling of classified information.

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You and Senator Kerrey have communicated directly with me

about your insistence that classified material be properly handled

and that you will defend any employee of the Intelligence Community who brings instances of mishandling to your attention. You’ve

also asked me to provide you with the results of the accountability

determination when it is completed, and I will certainly do so.

The Inspector General’s report was thorough and its conclusions

and recommendations were sound. The IG report did not conclude

that anyone intentionally impeded the security investigation relating to DCI Deutch. Had the Inspector General any evidence to that

effect, he would have been obliged to refer the matter to the Department of Justice. He did not do so.

At the conclusion of the Inspector General’s investigation last

August, when all of the relevant facts were available to me, I made

the decision to suspend the security clearances of my predecessor,

John Deutch. My action and his response were made public at that

time.

As the IG report documents, the internal investigation took too

long to complete. The process certainly was not perfect, Mr. Chairman, and I fully accept that finding. Yet, once the facts were put

forward by the Inspector General, I did take decisive action.

That said, let me discuss the matters which continue to concern

me and you—threats to our national security. Mr. Chairman, as we

face a new century, we face a new world—a world where technology, especially information technology, develops and spreads at

lightning speed and becomes obsolete just as fast; a world of increasing economic integration, where a U.S. company designs a

product in Des Moines, makes it in Bombay and sells it in Sydney;

a world where nation-states remain the most important and powerful players, but where multinational corporations, nongovernment

organizations, and even individuals can have a dramatic impact.

This new world harbors the residual effects of the Cold War,

which had frozen many traditional ethnic hatreds and conflicts

within the global competition between the two superpowers. Over

the past ten years, they began to thaw in Africa, the Caucasus and

the Balkans, and we continue to see the results today. It is against

this backdrop that I want to describe the realities of our national

security environment in the first year of the 21st century, where

technology has enabled, driven, or magnified the threat to us;

where age-old resentments threaten to spill over into open violence,

and where growing perception of our so-called hegemony has become a lightening rod for the disaffected. Moreover, this environment of rapid change makes us even more vulnerable to sudden

surprise.

Mr. Chairman, let me first talk to you about the proliferation of

the weapons of mass destruction. The picture that I drew last year

has become even more stark and worrisome. Transfers of enabling

technologies to countries of proliferation concern have not abated.

Many states in the next ten years will find it easier to obtain weapons of mass destruction and the means to deliver them.

Let me underline three aspects of this important problem. First,

the missile threat to the United States from states other than Russia or China, is steadily emerging. The threat to U.S. interests and

forces overseas is here and now.

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Second, the development of missiles and weapons of mass destruction in South Asia has led to more advanced systems, and

both sides have begun to establish the doctrine and tactics to use

these weapons.

Third, some countries we have earlier considered exclusively as

weapons technology importers may step up their roles as secondary

suppliers, compounding the proliferation problem even further. We

are all familiar with Russian and Chinese capabilities to strike at

military and civilian targets throughout the United States. To a

large degree, we expect our mutual deterrent and diplomacy to

help protect us from this as, they have for much of the last century.

Over the next 15 years, however, our cities will face ballistic missile threats from a wider variety of actors—North Korea, probably

Iran, and possibly Iraq. In some cases, this is because of indigenous

technological development, and in other cases because of direct foreign assistance. And while the missile arsenals of these countries

will be fewer in number, constrained to smaller payloads and less

reliable than those of the Russians and Chinese, they will still pose

a lethal and less predictable threat.

North Korea already has tested a space launch vehicle, the Taepo

Dong I, which it could theoretically convert into an ICBM capable

of delivering a small biological or chemical weapon to the United

States, although with significant inaccuracies. Moreover, North

Korea has the ability to test its Taepo Dong II this year. This missile may be capable of delivering a nuclear payload to the United

States.

Most analysts believe that Iran, following the North Korean pattern, could test an ICBM capable of delivering a light payload to

the United States in the next few years. Given that Iraq missile

developments are continuing, we think that it, too, could develop

an ICBM, especially with foreign assistance, sometime in the next

decade. These countries calculate that the possession of ICBMs

would enable them to complicate and increase the cost of U.S. planning and intervention, enhance deterrence, build prestige and improve their abilities to engage in coercive diplomacy.

As alarming as the long-range missile threat is, it should not

overshadow the immediacy and seriousness of the threats that U.S.

forces, interests and allies already face overseas from short and

medium-range missiles. The proliferation of medium-range ballistic

missiles, driven primarily by the North Korean No Dong sales, is

significantly altering strategic balances in the Middle East and

Asia. Nowhere has the regional threat been more dramatically

played out than in South Asia. Both Pakistan and India have intensified their missile and nuclear rivalry. Further nuclear testing

is possible, and both states have begun to develop nuclear-use doctrines and contingency planning. This is a clear sign of maturing

WMD programs.

Another sign that WMD programs are maturing is the emergence

of secondary suppliers of weapons technology. While Russia, China

and North Korea continue to be the main suppliers of ballistic missiles and related technology, longstanding recipients, such as Iran,

might become suppliers in their own right as they develop domestic

production capabilities. Other countries that today import missileVerDate 11-MAY-2000 10:07 Aug 16, 2000 Jkt 065329 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 E:\HEARINGS\65329 pfrm04 PsN: 65329
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related technology, such as Syria and Iraq, also may emerge in the

next few years as suppliers.

Over the near term, we expect that most of their exports will be

of shorter-range ballistic missiles-related equipment, components

and technologies. But as their domestic infrastructures and expertise develop, they will be able to offer a broader range of technologies that could include longer-range missiles and related technology. Iran, in the next few years, may be able to supply not only

complete SCUDs, but also Shahab–3s and related technology, and

perhaps even more advanced technologies, if Tehran continues to

achieve assistance from Russia, China and North Korea.

Mr. Chairman, the problem may not be limited to missile sales.

We also remain very concerned that new or non-traditional nuclear

suppliers could emerge from this same pool. This brings me to a

new area of discussion that more than ever we risk substantial surprise. This is not for a lack of effort on the part of the Intelligence

Community; it results from significant effort on the part of

proliferators.

There are four main reasons: denial and deception; the growing

availability of dual-use technology; the potential for surprise is exacerbated, thirdly, by growing capacity of these countries seeking

WMD to import talent that can help them make dramatic leaps on

things like new chemical and biological agents; finally, the accelerating pace of technological progress makes information and technology easier to obtain in more advanced forms than when the

weapons were initially developed.

We are making progress on these problems, Mr. Chairman, but

I must tell you the hill is getting steeper every year.

With regard to terrorism, since July of 1998, working with foreign governments worldwide, we have helped to render more than

two dozen terrorists to justice. More than half were associates of

Usama Bin Ladin’s organization. These renditions have shattered

terrorist cells and networks, thwarted terrorist plans, and in some

cases even prevented attacks from occurring. Although 1999 did

not witness the dramatic terrorist attacks that punctuated 1998,

our profile in the world—thus our attraction as a terrorist target—

will not diminish any time soon.

We are learning more about our perpetrators every day. Bin

Ladin is still foremost among these terrorists because of the immediacy and seriousness of the threat he poses. Everything that we

have learned recently confirms our conviction that he wants to

strike further blows against the United States. Despite some wellpublicized disruptions, we still believe he could strike without additional warning. Indeed, Bin Ladin’s organization and other terrorist groups are placing increased emphasis on developing surrogates to carry out attacks, in an effort to avoid detection.

For example, the Egyptian Islamic Jihad is linked closely to Bin

Ladin’s organization and his operatives located around the world,

including in Europe, Yemen, Pakistan, Lebanon, and Afghanistan.

And now, Mr. Chairman, there is an intricate web of alliances

among Sunni extremists worldwide, including North Africans, radical Palestinians, Pakistanis, and Central Asians. Some of these

terrorists are actively sponsored by national governments that harbor great antipathy for the United States.

34

Iran, for one, remains the most active state sponsor. Although we

have seen some moderating trends in Iranian domestic policy and

even some public criticism of the security apparatus, the fact remains that the use of terrorism as a political tool by official Iranian

organs has not changed since President Khatami took office in August of 1997.

Mr. Chairman, let me move on to narcotics. The problem we face

has become considerably more global in scope and can be summed

up like this: Narcotics production is likely to rise dramatically in

the next few years, and worldwide trafficking involves more diverse

and sophisticated groups. On the first point, coca cultivation in

Peru and Bolivia has continued to decline, due largely to successful

eradication efforts. But that will probably be offset to some extent

by increases in Colombian cultivation. More productive coca varieties and more efficient processing results in production of cocaine

more than two and a half times that previously estimated.

There is some good news in Colombia. Under President

Pastrana’s leadership, Bogota is beginning to improve on its 1999

efforts. In November, Pastrana approved the first extradition of a

Colombian drug trafficker to the United States since the passage

of legislation in 1997.

On the other side of the world, a dramatic increase in opium and

heroin production in Afghanistan is again a cause for concern. This

year Afghanistan’s farmers harvested a crop with the potential to

produce 167 tons of heroin, making Afghanistan the world’s largest

producer of opium. Burma, which has had a serious drought,

dropped to second place but will likely rebound quickly when the

weather improves.

Explosive growth in Afghan opium production is being driven by

the shared interests of traditional traffickers and the Taliban. And,

as with so many of these cross-national issues, Mr. Chairman,

what concerns me most is the way the threats become intertwined.

In this case, there is ample evidence that Islamic extremists, such

as Usama Bin Ladin, uses profits from the drug trade to support

their campaign of terrorism.

Mr. Chairman, my statement goes on to talk about information

operations and organized crime, but let me move to regional issues

in the interest of time. First, let me start with Russia. As you

know, we are now in the post-Yeltsin era, and difficult choices loom

for the new president Russians will choose in exactly two months.

He will face three fundamental questions: First, will he keep Russia moving toward the consolidation of its new democracy, or will

growing public sentiment in favor of a strong hand and a yearning

for order tempt to slow him down or even reverse course?

Second, will he try to build a consensus on quickening the pace

of economic reform and expanding efforts to integrate into global

markets—some Russian officials favor this—or will he rely on

heavy state intervention to advance economic goals? Finally, will

Moscow give priority to a cooperative relationship with the West,

or will anti-U.S. sentiments continue to grow, leading to a Russia

that is isolated, frustrated or hostile? This would increase the risk

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fense, an emphasis reflected most recently in its new National Security Concept.

As these questions indicate, the new Russian president will inherit a country in which much has been accomplished but in which

much still needs to be done to transform its economy, ensure that

its democracy is deeply rooted, and establish a clear future direction for it in the world outside of Russia. Russian polls indicate

that Acting President Putin is the odds-on favorite to win the election, though I must tell you, Mr. Chairman, that two months can

be an eternity in Russia’s turbulent political scene. Putin appears

tough and pragmatic, but it is far from clear what he would do as

president. If he can continue to consolidate a lead in popular support, as president he may be able to gain political capital that he

could choose to spend on moving Russia further along the path of

economic recovery and democratic stability.

Former Premier Primakov is in the best position to challenge

Putin, though he faces an uphill battle. He would need the backing

of other groups, most importantly the communists. The communists, however, have shown their willingness to deal with

Putin’s party in a recent agreement that divided the Duma leadership positions between them. Such tactical alliances are likely to

become more prevalent as parties seek to work out new power relationships in the post-Yeltsin era.

At least two factors will be pivotal in determining Russia’s nearterm trajectory. First, the conflict in Chechnya. Setbacks in the

war could hurt Putin’s presidential prospects unless he can deftly

shift blame, while perceived successes there will help him remain

the front runner. The economy. The devalued ruble, increased

world oil prices and favorable trade balance, fueled by steeply reduced import levels, have allowed Russia to actually show some

economic growth in the wake of the August ’98 financial crash.

Nonetheless, Russia faces an $8 billion in foreign debt coming due

this year. Absent a new IMF deal to reschedule, Moscow would

have to redirect recent gains for economic growth to pay it down

or run the risk of default.

Over the longer term, the new Russian president must be able

to stabilize the political situation sufficiently to address structural

problems in the Russian economy. He must also be willing to take

on the crime and corruption problem, both of which impede foreign

investment.

In the foreign policy arena, U.S.-Russian relations will be tested

on a number of fronts. Most immediately, Western criticism of the

Chechen war has heightened Russian suspicions about U.S. and

Western activity in neighboring areas, be it energy supply decisions

involving the Caucasus in Central Asia, NATO’s continuing role in

the Balkans, or NATO’s relations with Baltic states. Moscow’s ties

to Iran will also continue to complicate U.S.-Russian relations, as

will Russian objections to U.S. plans for national missile defense.

There are, nonetheless, some issues that could improve things

and move them in a more positive direction. Putin and others have

voiced support for finalizing the START II agreement and moving

toward further arms cuts on START III. Similarly, many other

Russian officials express a desire to more deeply integrate Russia

36

into the world economy, be it through continued cooperation with

the G–8, or prospective membership in the WTO.

One of my biggest concerns, regardless of the path that Russia

chooses, remains the security of its nuclear weapons and materials.

Russia’s economic difficulties continue to weaken the reliability of

nuclear personnel and Russia’s system for security fissile material.

We have no evidence that weapons are missing in Russia, but we

remain concerned about reports of lax discipline, labor strikes, poor

morale and criminal activities at nuclear storage facilities.

Mr. Chairman, let me move on to Iran. Change in Iran is inevitable. The election of President Khatami reflected the Iranian popular desire for change. He has used this mandate to put Iran on

a path towards a more open society. This path will be volatile at

times, as the factions struggle to control the pace and direction of

political change. The key indicator that the battle over change is

heating up came last July, when student protests erupted in 18

Iranian cities for several days. The coming year promises to be just

as contentious, as Iran elects a new parliament in February.

Many Iranians, particularly the large cohort of restive youth and

students, will judge the elections as a test of the regime’s willingness to accommodate the popular demand for reform. If they witness a rigged election, it could begin to radicalize what has so far

been a peaceful demand for change. Fair elections would probably

yield a pro-reform majority, but opponents of change still exert

heavy control over the candidate selection process.

Former President Rafsanjani’s decision to run for the Majlis, apparently at the urging of conservatives, highlights the leadership’s

desire to bring the two factions back to the center. The conservatives are supportive of his candidacy because they believe a centrist Rafsanjani is a more trustworthy alternative to the reformers.

Even if elections produce a Majlis dominated by Khatami supporters, further progress on reform will remain erratic. Supreme

Leader Khamenei and key institutions such as the Revolutionary

Guard Corps and the large parastatal foundations will remain outside the authority of the Majlis and in a position to fight a stubborn, rear-guard action against political change.

Moreover, even as the Iranians digest the results of the Majlis

elections, the factions will begin preliminary maneuvering for the

presidential election scheduled for mid–2001, which is almost certain to keep the domestic political scene unsettled. The factional

maneuvering probably means that foreign policy options will still

be calculated first to prevent damage to the various leaders’ domestic positions. This will inhibit politically risky departures from established policy. This means that Iran’s foreign policy next year

will still exhibit considerable hostility to U.S. interests. This is

most clearly demonstrated by Tehran’s continued rejection of the

Middle East peace process and its efforts to energize rejectionist

Palestinian and Hizbollah operations aimed at thwarting a negotiated Arab-Israeli peace.

Iranian perceptions of increasing U.S. influence in the Caucasus,

demonstrated most recently by the signing of the Baku-Ceyhan

pipeline agreement, could similarly motivate Iran to more aggressively seek to thwart what it regards as a U.S. effort to encircle it

from the north.

37

Mr. Chairman, let me move to the Balkans, an important area.

Signs of positive long-term change are beginning to emerge there

as the influence of the Milosevic regime in the region wanes in the

wake of the Kosovo conflict, and a new, more liberal government

takes the reins of power in Croatia. Political alternatives to the

dominate ethnic parties in Bosnia are also beginning to develop,

capitalizing on the vulnerability of old-line leaders to charges of

corruption and economic mismanagement.

Despite this progress, there is still a long way to go before the

Balkans move beyond the ethnic hatreds and depressed economies

that have produced so much turmoil and tragedy. Of the many

threats to peace and stability in the year ahead, the greatest remains Slobodan Milosevic, the world’s only sitting president indicted for crimes against humanity. Milosevic’s hold on power has

not been seriously shaken in the past few months. He retains control of the security forces, military commands, and an effective

media machine. His inner circle remains loyal or at least cowed.

The political opposition has not yet developed a strategy to capitalize on public anger with Milosevic.

Milosevic has two problems that could still force him from

power—the economy and the Montenegrin challenge. The Serbian

economy is in a virtual state of collapse, and Serbia is now the

poorest country in Europe. Inflation and unemployment are rising,

and the country is struggling to repair the damage to its infrastructure from NATO airstrikes. The average wage is only $48 a month,

and even these salaries typically are several months in arrears.

Basic subsistence is guaranteed only by unofficial economic activity

and the traditional lifeline between urban dwellers and their relatives on the farms. Milosevic’s captive media are trying, with

some success, to blame these troubles on the air strikes and on

international sanctions.

Nonetheless, as time passes, our analysts believe that the people

will increasingly hold Milosevic responsible. Moreover, a sudden

unforeseen economic catastrophe, such as hyperinflation or a

breakdown this winter of the patched-up electric grid, could lead to

mass demonstrations that would pose a real threat.

For its part, Montenegro may be heading toward independence,

and tensions are certainly escalating as Montenegrin President

Djukanovic continues to take steps to break ties with the federal

government. Milosevic wants to crush Djukanovic because he

serves as an important symbol to the democratic opposition in Serbia and to the Serbian people that the regime can be successfully

challenged. Djukanovic controls the largest independent media operation in Yugoslavia, which has strongly criticized the Milosevic

regime over the past several years for the Kosovo conflict, political

repression, and official corruption. Both Milosevic and Djukanovic

will try to avoid serious confrontation for now, but a final showdown will be difficult to avoid.

Regarding Kosovo, the international presence has managed to restore a semblance of peace, but it is brittle. Large-scale inter-ethnic

violence has vanished, but the U.N. Mission in Kosovo and KFOR

have been unable to stop daily small-scale attacks, mostly by

Kosovar Albanians against ethnic Serbs. This chronic violence has

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38

gregate in enclaves in northern and eastern Kosovo, and they are

organizing self-defense forces.

The campaign to disarm the former Kosovo Liberation Army has

had success, but both sides continue to cache small arms and other

ordnance. There’s even a chance that fighting between Belgrade security forces and ethnic Albanians will reignite, should Belgrade

continue to harass and intimidate the Albanian minority in southern Serbia, and should Kosovo Albanian extremists attempt to

launch an insurgency aimed at annexing southern Serbia into a

greater Kosovo.

Let me now turn to China, Mr. Chairman. The leadership there

is continuing its bold 20–year-old effort to propel the nation’s economy into the modern world, shedding the constraints of the old

communist central command system. The economy is the engine by

which China seeks world prestige, global economic clout and the

funding for new military strength, thereby redressing what it often

proclaims as 100 years of humiliation at the hands of Western powers. Domestically, it was the engine that Deng Xiaoping and his

successors calculated would enable the party to deliver on its

unspoken social contract with the Chinese people—monopoly of political power in exchange for a strong China with a higher standard

of living for its citizens.

But events conspired last year to tarnish Beijing’s achievements,

to remind people that China had not yet arrived as a modern world

power, and to make the leadership generally ill at ease. China put

on an impressive display of military might at its 50th anniversary

parade in Beijing, but the leadership today sees a growing technological gap with the West.

Inside China, the image of domestic tranquility was tarnished by

last April’s appearance of the Falun Gong religious sect, whose audacious surprise demonstration outside the leadership compound

called into question the Community Party’s ability to offer an ethos

that still attracts the Chinese people.

Even the return of Macao in late December, the fall of another

symbol of a divided China, was overshadowed by the actions of Taiwan President Lee Teng-Hui. Lee declared last July that his island’s relations with the mainland should be conducted under the

rubric of state-to-state rather than one-China. Lee’s statement has

China deeply worried that Taiwan’s return to Beijing is less likely

than before. Chinese leaders act as if they believe at a minimum

a show of force is required if they are to preserve any hope of reunification.

Because of this, we see a high potential for yet another military

flare-up across the Taiwan Strait this year. The catalyst for these

tensions is the Taiwan election on the 18th of March, which Beijing

will be monitoring for signs that a new president will retreat from

Lee’s statements or further extend the political distance from reunification. Although Beijing today still lacks the air and sealift capability to invade Taiwan, China has been increasing the size and

sophistication of its forces arrayed along the strait, most notably by

deploying short-range ballistic missiles. China should receive the

first two Russian-built destroyers later this month. And we expect

the ships to join the East Sea Fleet, which regularly conducts operations near Taiwan.

39

In the coming year, we expect to see an uncertain Chinese leadership launching the nation deeper into the uncharted waters of

economic reform, while trying to retain a tight grip on political control. But the question remains open, Mr. Chairman, whether in the

long run a market economy and an authoritarian regime can coalesce equally.

Mr. Chairman, I want to talk about two more subjects, North

Korea, and India and Pakistan, and we’ll reserve the rest. North

Korea’s propaganda declares 1999 the year of the great turnaround. This is not a view supported by my analysts. Indeed, we

see a North Korea continuing to suffer from serious economic problems, and we see a population, perhaps now including the elite,

that is losing confidence in the regime. Mr. Chairman, sudden radical and possibly dangerous change remains a real possibility in

North Korea, and that change could come at any time.

The North Korean economy is in dire straits. Industrial operations remain low. The future outlook is clouded by industrial facilities that are nearly beyond repair after years of underinvestment, spare-parts shortages and poor maintenance. This year’s harvest is more than one million tons short of the minimum grain

needs. International food aid has again been critical in meeting the

population’s minimum food needs. Trade is also down. Exports to

Japan, the North’s most important market, fell by 17 percent.

Trade with China, the North’s largest source of imports, declined

to $160 million, primarily because China delivered less grain.

Kim Jong Il does not appear to have an effective long-term strategy for reversing his country’s economic fortunes. His inability to

meet the basic needs of his people and reliance on coercion makes

his regime more brittle because even minor instances of defiance

have greater potential to snowball into wider anti-regime actions.

Instead of real reform, North Korean strategy is to garner as much

aid as possible from overseas, and the North has reenergized its

global diplomacy to this end.

It has agreed to diplomatic talks with Japan for the first time

in several years. It has unprecedented commercial contacts with

South Korea, including a tourism deal with a South Korean firm

that will provide almost a billion dollars. But Pyongyang’s maneuvering room will be constrained by Kim’s perception that openness

threatens his control and by contradictions inherent in his overall

strategy, a strategy based on hinting at concessions on the very

weapons program that he has increasingly come to depend on for

leverage in the international arena. Squaring these circles will require more diplomatic agility than Kim has yet to demonstrate in

either domestic or international arenas.

Finally, Mr. Chairman, let me talk about India and Pakistan.

Last spring the two countries narrowly averted a full-scale war in

Kashmir, which could have escalated to the nuclear level. The military balance can be summarized easily. India enjoys advantages

over Pakistan in most areas of conventional defense preparedness,

including a decisive advantage in fighter aircraft, almost twice as

many men under arms, and a much larger economy.

Recent changes in the government of both countries add tensions

to the picture. The October coup in Pakistan that brought General

Musharraf to power, who served as the army chief during the

40

Kargil conflict with India last summer, has reinforced New Delhi’s

inclination not to reopen the bilateral dialogue anytime soon. Pakistanis are equally suspicious of India’s newly elected coalition government, in which Hindu nationalists hold significant sway.

Clearly, the dispute over Kashmir remains as intractable as ever.

We are particularly concerned that heavy fighting is continuing

through the winter, unlike in the past, and probably will increase

significantly in the spring. New Delhi may opt to crack down hard

on Kashmiri militants operating on the Indian side of the line of

control, or even order military strikes against militant training

camps inside Pakistan-held Kashmir.

Thus, Mr. Chairman, we must head into this new year with continuing deep concerns about the antagonisms that persist in South

Asia and their potential to fuel a wider and more dangerous conflict on the subcontinent.

Mr. Chairman, I know this has been a long briefing, and we

skipped over many subjects, and we want to get to your questions.

But before so doing, I would sum it up this way: The fact that we

are arguably the world’s most powerful nation does not bestow invulnerability. In fact, it may make us a larger target for those who

don’t share our interests, our values, and our beliefs. We must take

care to be on guard, watching our every step and looking far ahead.

Let me assure you that our Intelligence Community is well prepared to do just that.

Thank you, Mr. Chairman. Thank you, Senator Bryan.

Chairman SHELBY. Director Tenet, it’s been reported that former

Director Deutch placed highly classified materials on his unclassified home computer, a computer that was connected to the Internet, but that, as far as can be determined, no outsider gained access to this material. That’s what we’ve been told.

Director TENET. Yes, sir.

Chairman SHELBY. Can you assure us that the classified files in

Mr. Deutch’s unclassified computer were not accessed from outside?

Director TENET. Mr. Chairman, we cannot assure you of that

fact. All I can say is we came to a judgment that said we cannot

exclude that possibility. We have no evidence to suggest that that

has occurred. But, I cannot give you assurances.

Chairman SHELBY. You can’t reassure us?

Director TENET. No, sir, I can’t give you a definitive statement

to say it absolutely didn’t happen.

Chairman SHELBY. When evaluating the scope of information potentially compromised by Mr. Deutch to the material disclosed by

Mr. Ames or Pollard, how would you rate it? In other words, was

it sensitive, more sensitive or less sensitive?

Director TENET. Well, Mr. Chairman, we have to make a distinction between espionage cases where people were intending to harm

the United States——

Chairman SHELBY. I know that.

Director TENET [continuing]. And documents that you found on

someone’s computer who was working at home. I don’t think there

is any way.

Chairman SHELBY. But, we are talking about materials, classified materials.

Director TENET. I understand that.

41

Chairman SHELBY. Okay.

Director TENET. In both the case of Ames and in the case of Pollard, we can document the fact that a foreign power had direct access to significant material, including human assets. In this case,

we can’t tell you that any damage has occurred. We don’t exclude

the possibility; I can’t tell you it has or has not occurred. So I don’t

think that that’s a fair comparison.

Chairman SHELBY. You can’t confirm it and you can’t deny it,

right?

Director TENET. You can’t, sir, but I can’t put the Deutch case

in the same context as Pollard or Ames. I don’t think that’s fair.

Vice Chairman BRYAN. Mr. Chairman, I don’t think you got an

answer to your question. I don’t think the Chairman was impugning motives here. He was asking as to the material itself.

Chairman SHELBY. The material, the sensitivity of the material.

Director TENET. As you know, in the report—and I don’t want to

go into it specifically in open session—there was enormously sensitive material on this computer, at the highest levels of classification.

Chairman SHELBY. Highest levels of classified information were

transferred from—to an unclassified——

Director TENET. Sir, the distinction again—and I think we should

let the Inspector General walk you through all this—but there is

a distinction between the transfer and his sitting down at a computer and writing. He basically created all these documents, rather

than transferring files, which is a distinction; there is a difference

there.

Chairman SHELBY. But it was, as you just said, very sensitive

material.

Director TENET. Yes, sir.

Chairman SHELBY. Was Mr. Deutch ever asked to take a polygraph examination concerning the information he took to his home

while Director of CIA?

Director TENET. Mr. Chairman, I’d preferred that you ask the Inspector General and the investigators how they conducted their investigation, rather than me getting into how they did their business.

Chairman SHELBY. Senator Bryan brought this up earlier and I

believe this is about right. It took the CIA almost a year and a half

to notify the Intelligence Committees after the material was discovered on Dr. Deutch’s computers. Why did it take so long to notify

this Committee and why did it take so long to notify the Department of Justice?

Director TENET. Well, sir, I don’t have—there is no excuse for

that. That should have been done promptly. Certainly by the spring

of 1997, when internal reviews had been completed by the Office

of Personnel Security, we should have come to you. But my view

is, is that when you have a case involving the Director, the notification should have been prompt. And there is no excuse for that. And

we should not have assumed that it happened, and it should have

happened.

Chairman SHELBY. Director Tenet, why wasn’t the FBI brought

into the investigation of this early on?

42

Director TENET. Well, Mr. Chairman, remember—and the IG

again should come talk to you about all these facts.

Chairman SHELBY. He’s going to. He’s going to come.

Director TENET. One of the things that he and our internal accountability board is looking at right now is that originally, in fact,

a referral was not made to the Department of Justice. There was

a legal judgment made not to refer the case. Well, we have to get

underneath that.

As you know, subsequently, when we get to the 1998 time period,

the IG did make a referral, the Justice Department did decline to

prosecute, so that the Justice Department did have an opportunity

to play in this case at a later date.

Chairman SHELBY. If you were faced with a similar set of facts

today, involving anyone at Langley, at the CIA, an employee, how

would you react?

Director TENET. Certainly, Senator, I think I would have taken

the same ultimate disciplinary action, which has to be the same for

everybody. In fact, the action we took against the Director was unprecedented in its scope, because we believe that everybody has to

be treated equally, whether at the top of the chain or the bottom

of the chain, so that the men and women who work for us understand that there are not two standards.

Everybody has a right to due process, and process is provided to

everybody, but in essence that would be my answer. Obviously,

there are lessons learned in how we did this, and we’re looking at

all those things as well.

Chairman SHELBY. Senator Bryan.

Vice Chairman BRYAN. Thank you very much, Mr. Chairman.

Let me just pursue the Chairman’s questions for just a moment.

I understand the state of the record. It’s clear there is no evidence—repeat, no evidence—that Mr. Deutch transferred any information to unauthorized personnel. And that is a distinction between the Aldrich and the Pollard matter, as you’ve made clear.

Nevertheless, you have characterized the information that was on

the unclassified computer as highly sensitive. And I take it that we

can get into that in more detail in a closed hearing.

Director TENET. Yes, sir.

Vice Chairman BRYAN. I take it that this is not just something

that people ought not to know about, but this is serious stuff. Is

that a fair generalization?

Director TENET. Yes, sir.

Vice Chairman BRYAN. Very serious stuff. And so, I guess my follow-up questions are twofold. Have you done a damage assessment?

Director TENET. Well, sir, we’ve certainly, I think we—no, not in

a formal way. We have basically fulfilled all the obligations the Inspector General—or are in the process of fulfilling all the obligations the Inspector General imposed on us.

In a formal sense, no, I have not done it a damage assessment

in terms of what the possibility would be.

Vice Chairman BRYAN. I ask that question in the context that,

as I understand it, because this information was on an unclassified

computer, for purposes of our counterintelligence——

Director TENET. Yes, sir.

43

Vice Chairman BRYAN [continuing]. We have to assume that that

information may have been compromised.

Director TENET. Yes, sir.

Vice Chairman BRYAN. If that is the case, then it seems to me

that a damage assessment would be appropriate. And, the followon question to that, it seems to me, is what actions have been

taken in response to that assessment. That is to say, are we changing, making any different responses because of the assumption that

we have to make that this information——

Director TENET. Yes, sir. Well, I’d like to—first, Senator, I think

it’s valid and legitimate to go do a damage assessment. In closed

session, I’d like to walk you through—we can talk about some of

the documents and you’ll see—you’ll get a full sense of the issue

I think in closed session.

Vice Chairman BRYAN. Let me ask you about the accountability

review. Where are we on that? When can we expect to get that?

Director TENET. The Executive Director has completed that review as of yesterday, and he will forward it through the Deputy Director and then on to me. So I hope that we will provide that to

you very quickly.

Vice Chairman BRYAN. And can you give us the scope of the review? Obviously it should include yourself, as well as others, and

does it do that?

Director TENET. Yes, sir. It goes through the entire chain of command, looks at everybody who touched this, looks at their actions,

looks at their judgments and will cover everybody.

Vice Chairman BRYAN. And let me just say, the Chairman raised

the question—I mean, the delay, which you’ve acknowledged is inexcusable, what actions are going to be taken prospectively? The

Committee is entitled to receive this information——

Director TENET. Yes, sir.

Vice Chairman BRYAN [continuing]. As part of its oversight. You

would not deny that. What steps are being taken so that if something like this happens prospectively that the Committee gets an

earlier notification?

Director TENET. Sir, you know that there is a notification process

and policy in place that gives you everything, almost as soon as I

get it. That’s the standard. We need to move. There is no upside

in not bringing you this information. Everybody understands that.

Chairman SHELBY. What happened in this case?

Director TENET. That’s another issue in terms of the accountability. I mean, there are multiple nodes that had a responsibility

to move this information and they understood that, and that’s

something that we’re dealing with.

Vice Chairman BRYAN. And let me say as the new Vice Chairman, not only is the notification important, but the manner in

which we are notified is important. To be presented with some information in the talking points during the course of a hearing is

really not the kind of notification I think the Committee’s entitled

to. You’ve acknowledged and we all understand that this compromise is serious. It strikes me that when we have that kind of

compromise that there needs to be a process by which the Chairman or the Vice Chairman and the staff directors are requested to

have a meeting with you or your authorized representatives to say,

44

‘‘Look, here’s the situation.’’ And I would hope that we would have

that commitment from you.

Director TENET. In fact, Senator, that’s what we do today. Even

on the most sensitive issues, you’re provided written, detailed notifications. There are briefings. I think there’s a process here that’s

working extremely well. It didn’t work in this case as well as it

needed to, but we have a process in place that we pay a lot of attention to, and I think the record’s a good one.

Vice Chairman BRYAN. I think the other question that’s raised

publicly is the treatment in the Deutch case, with reference to referral to the Department of Justice for possible action. The delay

there seems to me to have been excessive. My understanding is

that it is regarded as a very serious offense when information is

mishandled—classified information such as this.

In hindsight, shouldn’t that have been referred to the DOJ earlier for whatever determination they want to make?

Director TENET. Sir, the Inspector General feels so. But there

was a legal judgment made. I’m not a lawyer, but I understand

that there was a debate within the office of the General Counsel

about what the right way to proceed here was. There was a decision not to make the referral. That’s something that we’re looking

at in our own accountability chain to understand why this decision

was made that way.

There was a subsequent decision to refer by the General Counsel

and Justice declined a prosecution. So, we’re looking at all that.

The IG will have a view on that, and we will in terms of our accountability process as well.

Vice Chairman BRYAN. But in hindsight, wouldn’t it have been

better to do so?

Director TENET. Well, of course. In hindsight, of course.

Vice Chairman BRYAN. I mean, because the thrust of what the

article in the newspaper yesterday seems to suggest, in using the

language of impeding, is that the process was deliberately slowed

so that the time period for referral to independent counsel was allowed to expire. I’m not making that assertion, Mr. Tenet. I want

to be clear.

Nevertheless, the actions, or the inactions, do give some arguable

credibility to that position. Could you respond to that?

Director TENET. Sir, the thing that worries me is of course there

was no impeding. There was no intentional effort. The IG didn’t

find that. If he had, we would have had another Justice Department issue. The perception has been created that that’s what happened. I think it was erroneously portrayed in the news piece.

The fact is that this didn’t work as quickly as it should have

worked. We know that now, and we make no excuses. We were in

a period of great transition. We were dealing with a former Director. People were trying to do their best job. At the end of the day,

we now know that we all could have done this better. The entire

system could have performed better.

We take a lot of pride in policing ourselves. You know, some people say, ‘‘Can the CIA police itself?’’ Well, we take a lot of pride

in our own internal accountability and our professional responsibility and conducting ourselves honorably and ensuring that this

Committee and the American people believe that.

45

Anything that detracts from that is not good for me and not good

for my people.

Vice Chairman BRYAN. And I think the final observation that I

would have is certainly the appearance is of a dual standard. That

is to say that the former DCI, an individual who we all know—we

respect his talents and abilities and his contributions. Nevertheless, you cannot escape the conclusion that had this been someone

who was on a lower level in the hierarchy, that different treatment

would be given.

I think that’s damaging to morale within the agency itself because everybody ought to be held to the same standard of accountability.

Director TENET. Well.

Vice Chairman BRYAN. Do you agree with that?

Director TENET. In terms of process, everybody has a right to due

process and I never want to be in a situation where my employees

at the lower ranks feel that the people higher up get any benefits

or privileges.

I will say this. There have been analogous cases to Director

Deutch’s case where we did not take the kind of action we took

against this Director. I believe stronger action was required, because as the leader of the organization, you’re required to act and

behave on the basis of higher standards.

So when we look at punishment, I think that the statement to

everybody ultimately is, we took decisive, tough action against the

former leader of the organization. And that has an impact as well

in the positive, I believe.

Vice Chairman BRYAN. So I take it that your view would be that

within the agency the perception is that the treatment of Mr.

Deutch was comparable that others who might have been guilty of

similar classified violations would have received.

Director TENET. Well, sir, I don’t want to speak for them. I

can’t—you know, I didn’t take a poll after the action to find out

what the constituencies felt, but here’s the message I want to leave

to the men and women that I lead: There is one standard. People

up and down the chain of command will get disciplined. This process—we will ensure that a process is fair, not just for people at the

top but people at the bottom, and everybody gets the same treatment.

And that’s the message I want to leave them with. There are no

distinctions between the top and the bottom, and we run a fair and

honest institution when it comes to disciplining men and women.

Vice Chairman BRYAN. So your own perspective would be that

you have treated others, or the agency has treated others in situations similar to Mr. Deutch, in a comparable fashion?

Director TENET. Yes, sir, although I do feel in his case we went

the extra mile because of his leadership position.

Vice Chairman BRYAN. Mr. Chairman, I thank you. Thank you

very much, Mr. Tenet.

Chairman SHELBY. Director Tenet, is it troubling to you, as it is

to me, that—we know Mr. Deutch, Dr. Deutch we call him. And we

know that he’s done a lot, served this nation in the defense over

at the Pentagon and in the CIA and all this. He has an exemplary

career. But isn’t it troubling to you that someone at the CIA—espeVerDate 11-MAY-2000 10:07 Aug 16, 2000 Jkt 065329 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 E:\HEARINGS\65329 pfrm04 PsN: 65329
46

cially a Director—but anybody that would use unclassified computer to do all these things, not inadvertently, not once, but continuously, to a great extent. Isn’t that troubling? You wouldn’t do

that, would you?

Director TENET. Mr. Chairman——

Chairman SHELBY. Sir, would you do that?

Director TENET. Well, my computer literacy is so low that I probably couldn’t do it. [Laughter.]

But in any event——

Chairman SHELBY. Now I didn’t ask you, could you.

Director TENET. Let me say something serious to you. I wouldn’t

do it, Mr. Chairman. And obviously, there’s no education in the second kick of a mule and everybody’s gotten the picture here. But,

let me say this to you: You know, I took a stern action against

John. He’s obviously my predecessor and my friend. He was sloppy

in what he did. He worked around the clock. He didn’t think about

what he was doing.

Nevertheless, as Director, I believe he should have known better.

And I think, you know, in some way you have a salutary impact

here because everybody understands. We talk about computer security, we talk about electronic means of getting into our databases.

Now it’s shown that this is an important issue that we’re all paying

attention to.

And, you know, one man’s mistake is another man’s stupidity. Of

course, it’s troubling that we’re in this situation. It’s a tough situation for all of us to be in and we took a tough action for it.

Chairman SHELBY. Was he polygraphed regarding any of this?

Do you know?

Director TENET. I don’t, and I’d prefer that you’d talk to the investigators and the folks who——

Chairman SHELBY. We will. You don’t know and you’re not going

to say.

Director TENET. Let’s talk about that later, if we could, sir.

Chairman SHELBY. Do you know if he has ever failed a polygraph

test?

Director TENET. I don’t know that.

Chairman SHELBY. You don’t. We’ll get into it a little later, in

the closed session.

Director TENET. Okay.

Chairman SHELBY. To go back to the counterintelligence threat,

the recent discovery of a Russian listening device inside the State

Department and reports of PRC espionage against the Department

of Energy’s nuclear labs have served all of us as stark reminders

of the continued counterintelligence threat to the U.S. government

facilities and personnel.

The Intelligence Community is currently reviewing, as you well

know, its counterintelligence postures for the 21st century in an exercise dubbed CI–21. The Intelligence Committee will be holding

closed hearings on CI–21, as well as on the State Department bug.

But I think it’s important here today to take the opportunity, while

we’re in open session, to outline the extent of this problem for the

American people who have heard about it.

Director Tenet, which countries are most aggressively engaged in

collection of intelligence against the United States? What are their

47

primary targets—political and diplomatic intelligence, military

plans and defense and technology, economic and industrial secrets?

And to what extent have the traditional threats changed?

Director TENET. Well, Mr. Chairman, let me——

Chairman SHELBY. You can talk about some of it here.

Director TENET. Yes. Let me say this. There are a lot of countries

involved in espionage against the United States—traditional enemies, some friends.

Chairman SHELBY. Sure.

Director TENET. Different motivations. Why do they do it? One,

they want to penetrate the United States government. Two, they

want to get access to your trade secrets and your economic wellbeing. They want to access technology. They want to access what

our private sector does for a living. What we’re trying to do in CI–

21, Louis Freeh and I are trying to design a system that basically

allows us to understand what the most important threats are, and

then allocate people and resources to work against these threats

not just within the government, but also to engage the private sector in a way that it’s never been engaged before, in creating something so that, Mr. Chairman, we’re not talking to you about counterintelligence when we have a case. When we have a case, it’s too

late; it means that something’s already happened.

Chairman SHELBY. Something bad, generally.

Director TENET. Something bad is generally happening. So the

only good news here is there is an arrest, followed by the bad news

of a damage investigation. And what we would like to do is use the

resources in the intelligence and law enforcement communities

proactively, engage analysis and use analytical tools in a way we

haven’t done before, and create something that’s new.

Now, Louis and I are going to brief this. He needs to brief the

Attorney General, I’m going to brief the National Security Adviser.

I think the President has a keen interest in this. And then we will

come forward and give you this new plan that we plan to undertake.

Chairman SHELBY. Sure. I think it’s very important, and the

timeliness couldn’t be better.

Director TENET. Yes, sir.

Chairman SHELBY. Admiral Wilson, do you have any comments

on this threat?

Admiral WILSON. Well, I certainly agree with the threat. And the

world of information superiority being so important, protecting

your own is too often undervalued compared to acquiring others’.

So we would support aggressive moves in counterintelligence improvements.

Chairman SHELBY. Ambassador Roy, I know you are new on this

job. You have served this country with distinction in your ambassadorial post. But over in State, where you are dealing with intelligence and security there, isn’t it troubling to you, the bug and the

penetration somewhat, that was in the paper recently, about the

State Department, out of Russia—probably not shocking?

Ambassador ROY. It is troubling to me. My experience has been

that maintaining the alertness and the procedures that you need

is difficult, because of the human factor, over time. And to protect

secrets properly, you have to maintain the highest standards over

48

time. In that sense, I think that the recent cases have been useful

because they have provided the additional impetus for all of us to

tighten our procedures.

That’s what the State Department has been doing; I am confident that’s what other members of the Intelligence Community

have been doing. In the case of the State Department, I think the

damage assessments are under way, and the probable damage is

limited.

Chairman SHELBY. Admiral Wilson, what’s your assessment of

the performance of the Russian military recently, particularly the

army in their current operation in Chechnya?

Admiral WILSON. Well, first of all, the Chechen situation will not

be solved by military actions alone. It’s been going on for centuries,

and it won’t be solved by military action. The Russians do show a

good ability to move forces to the region; however, they have taken

a high percentage of their ready forces to do so. And, therefore, it

impedes Russian military modernization to any extent that they

could accomplish that in the economic environment that exists

there.

They have used some of the same brute-force tactics that did not

work well earlier in the nineties, in 1996 specifically—of heavy

bombardment of the city and then followed up with infantry and

internal security forces, which are ill-prepared to conduct urban

warfare, which is difficult for any military to conduct.

So the Russian military is not well-prepared for the situation

that they were thrust into. It’s a difficult situation for any military.

They are taking losses, as are the Chechens. And it will not solve

the problem, which will be around for a long time at the current

pace.

Chairman SHELBY. Okay.

Senator Bryan?

Vice Chairman BRYAN. Thank you very much, Mr. Chairman.

Mr. Tenet, returning to you for a moment, I am sympathetic with

the position that you find yourself in, that when you do achieve

success in breaking up terrorist cells or activity, it’s not something

that you can proclaim. Your failures are on the front page of the

morning newspaper and the lead stories on television across the

country. And I think it’s fair to acknowledge that there have been,

as you made oblique reference to in your presentation, that there

have been successes that you’ve briefed the Committee on, and we

applaud those efforts and commend them.

Nevertheless, it appears to me that we may be just chipping

around on the edge. My question: Is there a broader, more systemic

approach that we ought to be undertaking? And if we are doing

that, to the extent that you can do so in an open session, would

you care to respond to that?

Director TENET. Let me handle this in the open, but then I’d like

to talk about it in closed session at greater length. There is— I

don’t want you to think that there is not a systematic effort to look

at a worldwide terrorist infrastructure and think about how you

disrupt or make it more difficult for them to operate. Indeed, what

we learned over the course of the five or six weeks leading up to

the New Year celebrations, on the basis of all the actions we took,

49

we learned that there’s an infrastructure out there that is perhaps

bigger than we anticipated.

And we essentially have undertaken to systematically develop a

strategic plan to attack this infrastructure. And I don’t want to say

more than that. But we look at this not just from an event perspective. I come and tell you two dozen renditions. That’s tactical in nature. There is a strategic outlook about how to do this, not just by

ourselves, but in concert with our allies.

Of course, in terms of the bigger picture, at the end of the day

you’ve got to go back, and we won’t go through what I said about

the Middle East, but you’ve got to go back and look at the economics and demographics of the region of the world that basically is

going to spawn, unless some changes are made, large numbers of

unemployed men to whom bin Ladin’s message resonates, and people like him.

So there are big systemic issues about economic opportunity.

Chechnya is another example, for example. I mean, Afghanistan

was the calling card in the seventies and eighties; Chechnya will

become the calling card of this millennium in terms of where do

terrorists go and train and act. So these conflicts, while we talk

about them from the concept of the Chechens and the Russians,

also turn into spawning grounds of the next generation of people

who try their skills.

Now, that all involves a very intricate strategy that we need to

think about. So, it’s not just what the law enforcement and Intelligence Community does. It’s how we look at a world and regions

of the world where we can strategically use relationships that undermine the terrorists’ ability to operate.

Vice Chairman BRYAN. So you’re really suggesting to us that the

Russian-Chechnyan conflict is, from our point of view, a potential

source of a new generation of terrorists who will learn their

craft——

Director TENET. Yes, sir.

Vice Chairman BRYAN [continuing]. And that long after that conflict may subside—assuming that it does, at least in its present

form—there may be some spin-off implications for us that can be

very troubling.

Director TENET. I think that you should expect that the opportunity the terrorists will take to inject themselves in this, for Muslim reasons and reasons to aid the Chechens, many of whom are

not terrorists, will create a cascading effect of people proving their

mettle on a battleground that they will then come back and test

against us in other places, yes, sir.

Vice Chairman BRYAN. Changing the focus a little bit, Mr. Tenet,

one of my first calls as the new Vice Chairman dealt with a fairly

significant information systems breakdown. I want to speak somewhat obliquely here. My question is, what are we doing to prevent

a recurrence of that? Are there other aspects in the Intelligence

Community, not precisely of this same nature, that are in jeopardy

of a breakdown or a failure of this magnitude? And thirdly, what,

if anything, do you need from us in the Congress to address any

of those concerns?

Director TENET. First, let me say that Mike Hayden has it totally

under control. We did have a problem for a series of days. He did

50

undertake the work-arounds. He did all the right things. He is in

the middle of a lessons-learned. He believes there was no intelligence loss, that we’ve retrieved all that collection and processed

it all. And we are now looking at an after-action with him.

The point I would make is we need to find out what happened.

The point I would make is that we have an infrastructure that is

functioning at near or overcapacity constantly, and we need to ensure that we’re making the right investments and that our leadership is looking at these things as carefully as they need to. And I

think that we are.

And I think the men and women out there did a great job in getting us back up and running without missing a beat. And it was

something that had us all concerned, but handled very well by

General Hayden and the folks at NSA.

Vice Chairman BRYAN. I hope that you will follow up on this and

give us a report. You’re making a critical judgment in terms of personnel and the way it was handled, but to have something of that

magnitude occur for that length of time, had the situation globally

been more——

Director TENET. Yes, sir.

Vice Chairman BRYAN. [continuing]. Volatile it would have been

extremely dangerous in terms of the lack of information that we

were able to gather. And so I would hope that you would report

back to us, once the after-action report is completed, what, if anything, we need to do to help you.

Director TENET. Yes, sir.

Vice Chairman BRYAN. This is not in a critical vein, but to help

you in that.

Director TENET. Right. We will do that.

Vice Chairman BRYAN. Admiral Wilson, if I might just ask you

a question about the situation in Colombia, what is the status with

the guerrilla action there and the government? The DCI made reference to the situation in Colombia, but I don’t really have a sense.

It’s been a few years since I’ve been there and flew into the part

of the country where a lot of the coca is being processed and some

of the plants are grown. Give us your assessment. Are we winning?

Are we losing? Are we holding our own? It looks like more and

more of that country seems to have been taken over, in a de facto

sense, at least, by the guerrilla movements, even though the government itself tends to be more cooperative in terms of extraditions

and other kinds of activity.

Admiral WILSON. Senator, I think that the government of Colombia, and specifically their security force, is enormously challenged

in dealing with the insurgent threat in rural Colombia, which, of

course, is fueled by narcotics and other criminal activity. They’re

trying hard and have made some improvements, but are still challenged by mobility and flexibility and command-and-control and intelligence shortfalls against a difficult adversary.

The rebels, the insurgents, have used the demilitarized zones disproportionately to their advantage in the field of military activity,

and so they continue to be a challenge for Colombian security

forces. The Colombian Army, while it appears able to protect large

cities and the urban environment, is not able to control the countryside where the insurgents operate.

51

So, I think I would say that while they are certainly not winning,

they’re trying very hard to hold their own in a very difficult situation, even as the President tries to put together a political process

that will reach some type of peace agreement in the future with the

insurgents.

Vice Chairman BRYAN. Were you all involved, and if so, what

role did you play in providing the intelligence data needed for the

supplemental appropriation request for Colombia? Were you involved in that process from the intelligence point of view, in terms

of what was needed?

Admiral WILSON. We did provide intelligence associated with

that. Yes, sir.

Vice Chairman BRYAN. And specifically, I mean, some areas that

you felt ought to be included in terms of the request.

Admiral WILSON: Yes.

Vice Chairman BRYAN. You were?

Admiral WILSON: We did, as a community, participate in the exercise.

Vice Chairman BRYAN. I appreciate that. Let me yield back to

the Chairman.

Chairman SHELBY. Thank you, Senator Bryan.

Director Tenet, we all realize we’re going into a closed hearing

later this afternoon and we’ll be able to get into just about everything there. But could you assess here today, to some extent,

what’s the status of Iran’s nuclear weapons program?

Director TENET. Well, we should talk about this behind closed

doors.

Chairman SHELBY. Okay. Could you say here that Russia, the

PRC and other people, other suppliers have given assistance to

their nuclear program?

Director TENET. Let me outline all of that for you behind closed

doors.

Chairman SHELBY. Okay. What about North Korea? Do you believe that North Korea is continuing to work on its nuclear weapons program and related activities, or can you say here, or you’d

rather get into that in a closed session too?

Director TENET. Sounds good to me, Mr. Chairman. [Laughter.]

Chairman SHELBY. Okay, that’s what you’d rather do.

Senator Bryan, do you have any other questions?

Vice Chairman BRYAN. Well, we wouldn’t want to neglect Ambassador Roy. Let me ask you, one of the perennial questions that

comes up every year is the degree of cooperation we get with Mexico, whether we ought to recertify them for compliance. Give us

your take. I mean, I must say that I don’t see a lot of encouraging

news there. Maybe we haven’t focused on some of the areas that

may give some cause for hope. But your analysis there, Mr. Ambassador, if I may.

Ambassador ROY. We think we’re making progress in addressing

a very difficult and complex issue. As you know, it was our success

in attacking the narcotics routes through the Caribbean that resulted in the diversion of those routes to Mexico, and Mexico is now

the principal route through which cocaine from South America enters the U.S. market.

52

We have worked with the Mexican government. They have set up

special police forces. They are using new technology at border

points to try to interdict actions. They have passed new laws which

are designed to improve their ability to get rid of corrupt security

officials. They have focused at senior government levels on the

problem of dealing with corruption at the highest levels of the government that are related to the narcotraffic. This has affected governors in Mexico.

So that on balance, we feel that we are working in the right direction with the Mexican government and are getting a positive

spirit of cooperation from them.

Vice Chairman BRYAN. Well, I hope so. I was in Mexico a few

years ago, and they cited operations where we have very carefully

screened everybody, and they had passed all of the litmus tests,

and this was something that gave us great cause for hope.

I understand now that we have determined that we are going to

abandon that particular effort because the corruption has been so

pervasive. It would appear to be 180 degrees from where we were

a few years ago. I don’t minimize the difficulty of the problem; I

think its tremendous. But I mean—progress—I don’t think that the

American public, Mr. Ambassador, sees great results there.

You know, the amount of narcotics that comes into the United

States, I think, in no way has been abated. I am not suggesting we

ought not to try to interdict that. And you are quite right; the supply route has changed, based upon some of the successes previously

elsewhere in the Caribbean.

Ambassador ROY. Senator, our assessments of the issues you

have just addressed are objective. When we see increases in the

narcotics entering the United States, we say so. But at the same

time, it would be our judgment that the problem would be much

worse if we had not been able to accomplish the progress in working with the Mexican government in addressing these types of

problems that you refer you that we have made.

But it is a constant, and indeed a growing, problem. As you

know, our assessments of the amount of cocaine produced in South

America have risen recently. So I would agree with your assessment that this is a growing threat to our well-being. It’s not one

that we can say we are winning the war against.

Vice Chairman BRYAN. The last question: To what extent has

Mexico’s evolving pluralistic political structure, where they do have

opposition parties who not only can challenge but actually can prevail to what extent is that a factor either that helps or impedes

this effort of trying to get greater cooperation from Mexico and to

ferret out those elements that are part of this pervasive corruption

that makes it so difficult for us? Is that a positive factor, a negative

factor; I mean, politically, how does that play in Mexico? And what

role do the two parties take, the same or different, with respect to

this issue of cooperation with the U.S.?

Ambassador ROY. It’s a mixed picture. We welcome progress toward democratization. But our experience in other countries—I

have personal experience of my own in this respect—is that the

process of democratization brings new problems, even as it enables

the countries to solve old problems. And I think in the case of Mexico a more open political system there is not going to be an

53

unmixed blessing in terms of the efficiency of our antinarcotics operations. But I think it’s an area where we can make progress as

long as we understand the problem and devote the necessary attention and resources, which I think we are doing.

Vice Chairman BRYAN. Gentlemen, thank you very much. I know

we’re going to get into more of these questions in closed session.

Mr. Chairman, thank you very much.

Chairman SHELBY. Thank you.

We’ll conclude this hearing. Thank you all—Admiral Wilson, Director Tenet, Ambassador Roy. The Committee is adjourned.

[Whereupon, at 11:25 a.m., the Committee adjourned.]