```

[Senate Hearing 113-374]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 113-374
 
 CURRENT AND FUTURE WORLDWIDE THREATS TO THE NATIONAL SECURITY OF THE 
                             UNITED STATES 

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 18, 2013

                               __________

         Printed for the use of the Committee on Armed Services
        Available via the World Wide Web: http://www.fdsys.gov/

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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

JACK REED, Rhode Island              JAMES M. INHOFE, Oklahoma
BILL NELSON, Florida                 JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri           JEFF SESSIONS, Alabama
MARK UDALL, Colorado                 SAXBY CHAMBLISS, Georgia
KAY R. HAGAN, North Carolina         ROGER F. WICKER, Mississippi
JOE MANCHIN III, West Virginia       KELLY AYOTTE, New Hampshire
JEANNE SHAHEEN, New Hampshire        DEB FISCHER, Nebraska
KIRSTEN E. GILLIBRAND, New York      LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut      DAVID VITTER, Louisiana
JOE DONNELLY, Indiana                ROY BLUNT, Missouri
MAZIE K. HIRONO, Hawaii              MIKE LEE, Utah
TIM KAINE, Virginia                  TED CRUZ, Texas
ANGUS KING, Maine

                    Peter K. Levine, Staff Director

                John A. Bonsell, Minority Staff Director

                                  (ii)

                            C O N T E N T S

                               __________

                    CHRONOLOGICAL LIST OF WITNESSES

 Current and Future Worldwide Threats to the National Security of the 
                             United States

                             april 18, 2013

                                                                   Page

Clapper, Hon. James R., Jr., Director of National Intelligence...     5
Flynn, LTG Michael T., USA, Director, Defense Intelligence Agency    31

                                 (iii)

 CURRENT AND FUTURE WORLDWIDE THREATS TO THE NATIONAL SECURITY OF THE 
                             UNITED STATES

                              ----------                              

                        THURSDAY, APRIL 18, 2013

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m. in 
room SD-106, Dirksen Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, Reed, Nelson, 
Blumenthal, Donnelly, King, Inhofe, McCain, Ayotte, Graham, and 
Cruz.
    Committee staff members present: Peter K. Levine, staff 
director; and Leah C. Brewer, nominations and hearings clerk.
    Majority staff members present: Richard W. Fieldhouse, 
professional staff member; Creighton Greene, professional staff 
member; Michael J. Kuiken, professional staff member; Jason W. 
Maroney, Counsel; Thomas K. McConnell, professional staff 
member; William G.P. Monahan, counsel; Michael J. Noblet, 
professional staff member; and Russell L. Shaffer, counsel.
    Minority staff members present: John A. Bonsell, minority 
staff director; Adam J. Barker, professional staff member; 
William S. Castle, minority general counsel; Thomas W. Goffus, 
professional staff member; and Daniel A. Lerner, professional 
staff member.
    Staff assistants present: John L. Principato, Bradley S. 
Watson, and Lauren M. Gillis.
    Committee members' assistants present: Carolyn Chuhta, 
assistant to Senator Reed; Mara Boggs and Patrick Hayes, 
assistants to Senator Manchin; Marta McLellan Ross, assistant 
to Senator Donnelly; Karen Courington, assistant to Senator 
Kaine; Steve Smith, assistant to Senator King; Paul C. Hutton 
IV and Elizabeth Lopez, assistants to Senator McCain; T. Finch 
Fulton and Lenwood Landrum, assistants to Senator Sessions; 
Todd Harmer, assistant to Senator Chambliss; Brad Bowman, 
assistant to Senator Ayotte; Craig Abele, assistant to Senator 
Graham; and Brooke Bacak, assistant to Senator Cruz.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody. The committee 
meets this morning to hear from the Director of National 
Intelligence (DNI), the Honorable James R. Clapper, Jr.; and 
from Lieutenant General Michael T. Flynn, USA, Director of the 
Defense Intelligence Agency (DIA), on current and future 
worldwide threats to our national security. The DIA along with 
the National Security Agency, the National Geospatial-
Intelligence Agency (NGA), the National Reconnaissance Office, 
and the intelligence components of the Military Services, are 
parts of the Department of Defense (DOD) that are also elements 
of the Intelligence Community (IC) that Director Clapper heads.
    Director Clapper, while much of the information that you 
provide to policymakers, including Members of Congress, cannot 
be shared with the public because of its sensitivity and 
classification, the people who elected us to serve deserve the 
best information that we can publicly provide them. So we're 
glad that you and General Flynn are with us this morning to do 
just that.
    Among the challenges that we face is a self-inflicted 
wound, one with effects that Director Clapper has rightly said 
amplify the other threats that we confront around the world. 
That challenge is the unprioritized cuts required by 
sequestration. This committee is interested in hearing from 
both of you today about the impact of the fiscal year 2013 
sequestration and the impact that it is having on the IC's 
ability to provide us with the timely and the accurate 
information that we need for our national security.
    This self-inflicted wound is all the more unfortunate 
because our national security professionals already have plenty 
to worry about. As the most open and interconnected society on 
Earth, the United States is uniquely vulnerable to attacks on 
computer networks that are critical to our economy, to the 
provision of public services, and to national security. Hostile 
nations such as Iran and North Korea are clearly trying to 
acquire offensive capabilities in cyber space and are widely 
believed already to be responsible for some such attacks.
    China and Russia possess formidable capabilities for cyber 
theft, such as the theft of valuable intellectual property, as 
well as the more traditional areas of espionage such as spying 
on our military weapons systems, plans, and capabilities. 
China, in particular, appears to observe no limits on the theft 
of American commercial technology. That cyber theft is a threat 
that cannot be tolerated, and I hope we'll hear from our 
witnesses about the extent of the problem and the steps that we 
can and should take to counter it.
    In the Asia-Pacific region, another round of belligerence 
from the dictatorial regime in North Korea has caused concern 
here in the United States and among our allies in the Pacific. 
That regime has announced its intention to resume plutonium 
production, has tested a nuclear device in February that 
appears to have had a greater yield than previous tests, and 
has threatened at any time to launch a missile that could 
further exacerbate tensions.
    We have read about conflicting intelligence assessments of 
North Korea's ability to put a nuclear warhead on a long-range 
missile. We hope our witnesses will be able to clear that issue 
up.
    In the Middle East, Iran continues to flout the 
international community in pursuit of a nuclear program that is 
a significant challenge to our Nation and to most of the world. 
While a diplomatic arrangement in which Iran joins, or rejoins, 
the responsible community of nations remains the preferred 
outcome, obviously, there is a consensus in much of the world 
that a nuclear-armed Iran is not acceptable, and that all 
options must remain on the table to prevent such an outcome. We 
look forward to our witnesses' assessment of Iran's nuclear 
program, the impact of international sanctions on Iran, the 
significance of the upcoming Iranian elections, and related 
issues.
    Yesterday afternoon we received an update from the 
Secretary of Defense and the Chairman of the Joint Chiefs of 
Staff (CJCS) on the situation in Syria. That situation 
continues to grow worse by the day, with an estimated 75,000 
dead and a population of refugees and internally displaced 
Syrians now running in the millions.
    Yesterday the Secretary and the Chairman indicated that 
questions about issues like Syria's use of chemical weapons, 
the nature and composition of the Syrian opposition, and the 
extent of the times between the al Nusra Front and al Qaeda in 
Iraq (AQI) would be better directed to today's witnesses.
    Syria is just one of many Arab or Muslim nations 
experiencing rapid political change and upheaval. While the 
rise of long-oppressed citizens of these nations holds promise, 
we've also seen in Libya, Egypt, Syria, and elsewhere that it 
can also have undesired effects. Our witnesses' assessment of 
this phenomenon and the challenges and opportunities that it 
presents us would be very welcome.
    We've been engaged for more than a decade now in 
Afghanistan and, despite the media's focus on the negative, 
there are real signs of progress. Afghan forces are 
increasingly taking the fight to the Taliban on their own and 
plans to end our major combat presence there by 2014 are on 
track.
    The greatest challenge to Afghanistan's security isn't the 
Taliban, but the Pakistan-based sanctuaries for militant 
extremists launching cross-border attacks into Afghanistan. I 
hope our witnesses can provide us with their assessment of 
whether there is any evidence of a growing Pakistani 
willingness to take action against the Afghan Taliban, which 
has been given sanctuary in Pakistan.
    A common thread connecting many troubled areas of the world 
is illicit trafficking of people, weapons, drugs, and money. 
From weapons trafficking in North Africa that has helped 
empower al Qaeda there to Iran's network of terrorist and 
criminal organizations that enable its reckless pursuit of a 
nuclear weapons capability, those flows directly threaten our 
national security and the world's well-being. Our government 
has not yet fully developed an effective range of tools to 
identify and disrupt such networks, particularly with regard to 
facilitation and financing mechanisms.
    Our witnesses this morning hold vital positions in helping 
us assess, understand, and counter these and other threats. We 
are grateful for your service, for your advice, as we consider 
the President's budget request.
    Before I ask Senator Inhofe for his opening remarks, let me 
remind everyone that if necessary a closed session will be held 
following the open portion of this hearing.
    Senator Inhofe.

              STATEMENT OF SENATOR JAMES M. INHOFE

    Senator Inhofe. Thank you, Mr. Chairman.
    One of the reasons my opening remarks are always shorter is 
because I cross off things that you've already said and that 
dramatically shortens mine, because I am in total agreement 
with your comments, Mr. Chairman, and I thank our witnesses for 
being here.
    The hearing comes at a time when our Nation's security is 
being challenged like never before. When you look around the 
world today, the inability and violence raging throughout North 
Africa, Central Africa, and the Middle East, rising tensions in 
the Korean Peninsula, Iran's pursuit of nuclear weapons and an 
intercontinental ballistic missile (ICBM) to deliver it, and 
the growing cyber threats against our infrastructure, it's hard 
to take seriously the President's claim that the tide of war is 
receding. I'm greatly concerned that such claims underlie the 
foundation of this administration's naive view of the world.
    It's driving the administration's misguided search for a 
peace dividend that I don't believe exists. We went through 
that once before back in the 1990s. I always remember that 
discussion. It's driving drastic cuts to our military that 
undermine readiness and capabilities, and it's driving 
reductions to our nuclear arsenal at a time when our 
adversaries are expanding theirs and we should be expanding 
ours.
    Further, the cuts associated with sequestration are having 
a significant impact on the capabilities and the reach of our 
IC just at a time when we are really needing it the most. 
Director Clapper, when asked about the effects of sequestration 
on the IC, you stated--and I will quote now and I've quoted you 
several times on this; I think it's very profound: ``We're 
cutting real capability and accepting greater risk. For 
intelligence, this is not quite like shorter hours for public 
parks or longer lines at the airports. For intelligence, it's 
insidious. The capability we cut out today, you won't know 
about that until you notice it. The public won't notice it. You 
will notice it only when we have a failure.''
    I believe in that, and that's the reason for this hearing 
today. That's exactly what I'm concerned about. Not only will 
our military be less prepared to deal with growing threats 
around the world, but we know less and less about the true 
nature of these threats as our IC loses capability. We're going 
down a foolhardy and dangerous path. It's out of touch with 
reality and it's making America less safe.
    I look to our witnesses to explain how the current budget 
cuts will impact their ability to understand and accurately 
assess these threats, particularly in places like Africa that 
already suffer from a lack of resources. We've talked about the 
lack of intelligence, surveillance, and reconnaissance (ISR) in 
Africa relative to other continents.
    What this all comes down to is risk, and risk means lives, 
and we're very much concerned about that. As the challenges to 
our security and interests around the world are proliferating, 
we're on track to cut over $1 trillion from our national 
security budget. Contrary to the best wishes of some, the 
threats to our security are growing, not decreasing. Again, the 
issue there does affect American lives.
    So thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Inhofe.
    Director Clapper.

           STATEMENT OF HON. JAMES R. CLAPPER, JR., 
               DIRECTOR OF NATIONAL INTELLIGENCE

    Mr. Clapper. Chairman Levin, Ranking Member Inhofe, and 
distinguished members of the committee:
    We're here to present the 2013 worldwide threat assessment, 
although between the two statements much of this, I think, will 
be repetitive. I'm joined today by my friend and colleague DIA 
Director Lieutenant General Mike Flynn. These remarks and our 
two statements for the record, one from each of us that is 
unclassified, and a much more detailed classified one, reflect 
the collective judgments of the extraordinary men and women of 
the U.S. Intelligence Community.
    As you alluded, the topic that's foremost on the minds of 
the IC leadership this year is sequestration. I raise this in 
this hearing because the effects of sequestration amplify and 
magnify the threats that face this Nation. You haven't seen a 
lot of public discourse on the impact of these indiscriminate 
cuts on intelligence, so let me now be blunt for you and for 
the American people. Sequestration forces the IC to reduce all 
intelligence activities and functions without regard to impact 
on our mission. In my considered judgment as the Nation's 
senior intelligence officer, sequestration jeopardizes our 
Nation's safety and security and this jeopardy will increase 
over time.
    Now, in response to this we started with the premise that 
our mission comes first. Therefore, our two highest priorities 
are: One, to protect our most valuable resource, our civilian 
workforce, so it can focus on the threats we face; and two, to 
support overseas operations.
    Let me emphasize that we're not arguing against taking our 
share of budget reductions. What I am saying is that we must 
adjust to this budget crisis and sustain our vital missions, 
but in doing so accept the inevitable risk that we're 
incurring.
    I must tell you, I've seen this movie before, as Senator 
Inhofe alluded. 20 years ago I served as Director of DIA, the 
job Mike Flynn has now, and we were then enjoined to reap the 
peace dividend occasioned by the end of the Cold War. We 
reduced the IC by about 23 percent. During the mid- and late-
1990s we closed many Central Intelligence Agency (CIA) 
stations, reduced human intelligence (HUMINT) collectors, cut 
analysts, allowed our overhead architecture to atrophy, 
neglected basic infrastructure needs such as power, space, and 
cooling, and let our facilities decay. Most damagingly, we 
badly distorted the workforce.
    All that, of course, was reversed in the wake of September 
11. Thanks to the support of Congress, over the last decade 
we've rebuilt the IC into the premier capability we have today. 
But now if we're not careful we risk another damaging downward 
spiral.
    Just to repeat the quote, unlike more directly observable 
sequestration impacts like shorter hours in the parks or longer 
security lines at airports, the degradation to intelligence 
will be insidious. It'll be gradual and almost invisible, 
until, of course, we have an intelligence failure.
    With that preface as a backdrop, let me turn now to a brief 
wavetop review of global threat trends and challenges, many of 
which, Chairman Levin, you've already alluded to. I will say 
that in my almost 50 years of intelligence, I do not recall a 
period in which we confronted a more diverse array of threats, 
crises, and challenges around the world. To me at least, this 
makes sequestration even more incongruous.
    This year's threat assessment illustrates how dramatically 
the world and our threat environment is changing. Threats are 
more interconnected and viral. Events which at first blush seem 
local and irrelevant can quickly set off transnational 
disruptions that affect U.S. national interests.
    I'd like to turn now to a few of the issues we identify in 
our statements for the record. Our statements this year lead 
with cyber. As more and more state and nonstate actors gain 
cyber expertise, its importance and reach as a global threat 
cannot be overstated.
    This year our discussion of natural resources is also more 
prominent because shifts in human geography, climate, disease, 
and competition for natural resources have huge national 
security implications. Many countries important to the U.S. 
interests are living with extreme water and food stress that 
can destabilize governments, force human migrations, and 
trigger conflicts.
    On the issue of terrorism, the threat from al Qaeda and the 
potential for a massive coordinated attack on the United States 
may be diminished, but the jihadist movement is more diffuse. 
As the President stated on Tuesday about the Boston Marathon 
bombing, we don't know yet whether the attack was planned and 
executed by a terrorist organization, foreign or domestic, or 
if it was an individual act. Lone wolves, domestic extremists, 
and jihad-inspired or affiliated groups are certainly 
determined to attack.
    The turmoil in the Arab world has brought a spike in 
threats to U.S. interests. The rise of new governments in 
Egypt, Tunisia, Yemen, and Libya, along with ongoing unrest in 
Syria and Mali, provide openings for opportunistic individuals 
and groups. In these and other regions of the world, extremists 
can take advantage of diminished counterterrorism capabilities, 
porous borders, easy availability of weapons, and internal 
stresses, most especially a high proportion of unemployed, 
frustrated young males who deeply resent our power, wealth, and 
culture.
    Weapons of mass destruction (WMD) development and 
proliferation is another persistent threat to U.S. interests. 
As you alluded, North Korea has already demonstrated 
capabilities that threaten the United States and the security 
environment in East Asia. North Korea announced in February 
that it conducted a third nuclear test and vowed to restart its 
nuclear reactor at Yongbyon, and last year about this time 
displayed what appears to be a road-mobile ICBM.
    We believe Pyongyang has already taken initial steps 
towards fielding this system, although it remains untested. It 
also used its Taepoedong-2 launch vehicle to put a satellite in 
orbit in December, thus demonstrating its long-range missile 
technology. These developments have been accompanied with 
extremely belligerent, aggressive public rhetoric toward the 
United States and South Korea.
    North Korea has not, however, fully developed, tested, or 
demonstrated the full range of capabilities necessary for a 
nuclear-armed missile. Characterizing such capabilities for us 
in intelligence is a complex and nuanced process requiring 
sophisticated and highly technical analysis. It is indeed 
rocket science. We're dealing with many shades of grey here, 
not black and white.
    I'll digress here briefly to comment on last week's 
revelation of a DIA assessment on North Korean nuclear weapons 
capabilities. The statement in question was one sentence in a 
seven-page classified report and was mistakenly miscategorized 
as unclassified. But this revelation is illustrative of the 
standard dilemma we face in the IC in portraying what we know 
to be fact in contrast to what we attempt to impute from those 
facts.
    We lack uniform agreement on assessing many things in North 
Korea. Its actual nuclear capabilities are no exception. As DIA 
or others in the IC have similar or differing positions, there 
can also be varying degrees of confidence in those positions. 
This is where the subtleties really play havoc with certitude.
    For those looking to find infighting within the IC on North 
Korea, I'm sorry to disappoint. To the contrary, this reflects 
an integrated, collaborative, and competitive analysis process 
that's open to all views.
    We are, by the way, in the process of generating an IC 
assessment on this matter, which will formally engage all 
members of the IC. If we all agree, great. If we don't, that's 
healthy, too. We will clearly portray the various views of the 
community to our consumers, to include Consumer No. 1.
    DIA is a crucial part of the IC and its views are valued 
and respected. I say this having proudly served as its director 
2 decades ago. I have confidence in the agency, its great 
people, and its current Director, Mike Flynn. He and I would 
welcome the opportunity to discuss details of this with you 
further in closed session.
    I make this request in the interest of both protecting the 
fragile intelligence we do have on North Korea as well as 
avoiding further advancement of Kim Jung Un's narrative by yet 
more public discussion and media hyperventilation. As I can 
attest, another hard-won lesson: Adversaries watch these 
proceedings, too.
    Let me again add some historical perspective. While I 
served as Director of NGA in the early 2000s, I put my 
fingerprints on the infamous National Intelligence Estimate on 
WMD in Iraq published almost 10 years ago. Afterwards the 
community was roundly criticized for group-think for not 
vetting sources, for not questioning assumptions, for 
suppressing dissent, and for dismissing alternative views. So 
we've learned some hard lessons from that experience, I can 
assure you. That all said, the IC continues to monitor 
developments in anticipation of North Korea's next provocative 
step.
    Moving elsewhere, Iran continues to develop technical 
expertise in uranium enrichment, nuclear reactors, 
weaponization, and ballistic missiles from which it could draw 
if it decides to build missile-deliverable weapons, nuclear 
weapons. Clearly, Tehran has the scientific, technical, and 
industrial capacity to produce them. So the central issue is 
its political will to do so. Such a decision, we believe, will 
be made by the Supreme Leader and, at this point, we don't know 
if he'll eventually decide to build nuclear weapons.
    The United States and our allies are tracking Syria's 
munitions stockpiles, particularly its chemical and biological 
warfare agents, which are all part of a large, complex, and 
geographically dispersed program. Its advanced chemical weapons 
program has the potential to inflict mass casualties. The 
increasingly beleaguered regime, having found that its 
escalation of violence through conventional means is not 
working, appears quite willing to use chemical weapons against 
its own people. All the worse, nongovernmental groups or 
individuals in Syria could also gain access to such materials.
    We receive many claims of chemical warfare use in Syria 
each day and we take them all seriously and we do all we can to 
investigate them. We can't provide additional details on these 
efforts in this setting, to protect the fragile critical 
intelligence we need to assess the situation, but we certainly 
can talk about this in closed session.
    Looking at geographic threats around the world, some 
nations in the Mideast and North Africa are making progress 
towards democratic rule, but most are experiencing violence and 
political backsliding. In Iran, leaders are exploiting the 
unrest in the Arab world to spread influence and undermine the 
United States and our allies. But Tehran also faces a worsening 
financial outlook and the fall of the Assad regime in Syria 
would be a huge strategic loss for Iran.
    In Iraq, tensions are rising between the majority Shia and 
the minority Sunni, as well as with the Kurds. To this point, 
AQI has not mustered the strength yet to overwhelm Iraqi 
security forces and Iraq is producing and exporting oil at its 
highest levels in 2 decades.
    Islamic actors have been the chief beneficiaries of the 
political openings in Islamist parties in Egypt, Tunisia, and 
Morocco and they'll probably solidify their influence this 
year.
    After more than 2 years of conflict in Syria, the erosion 
of the regime's capabilities is accelerating. We see this in 
its territorial losses, military manpower shortfalls, and 
logistics deficiencies. The opposition is slowly but surely 
gaining the upper hand. Assad's days are numbered. We just 
don't know the exact number.
    The regime's aggressive violence and the deteriorating 
security conditions have led to increased civilian casualties, 
now estimated at at least 70,000. The violence and economic 
dislocation have also led to approximately 3.6 million Syrians 
being displaced and a further 1.3 million refugees having fled 
Syria, which intensifies the pressure on its neighbors.
    Egyptian elections, originally scheduled for this month, 
will now probably be pushed to the fall. The longer they are 
postponed, the greater the potential for more public 
dissatisfaction, even violence in the streets, particularly 
against the backdrop of Egypt's profound economic challenges.
    In sub-Saharan Africa, we're monitoring unresolved discord 
between Sudan and South Sudan, fighting in Somalia, extremist 
attacks in Nigeria, the collapse of governance in northern 
Mali, and renewed conflict in the Great Lakes region. Mali's 
security hinges on France's efforts to undermine terrorist 
networks in the region, as well as by efforts by the African-
led International Support Mission to Mali or by future United 
Nations (U.N.) peacekeeping operations. West African countries 
have deployed troops to help stabilize northern Mali.
    Moving to Asia, the Taliban-led insurgency has diminished 
in some areas of Afghanistan, but it is still resilient and 
capable of challenging U.S. and international goals. The 
coalition drawdown will have an impact on Afghanistan's 
economy, which is likely to decline after 2014. In Pakistan, 
the government has not instituted much-needed policy and tax 
reforms, and the country faces no real prospects for 
sustainable economic growth. On a somewhat more positive note, 
this past year the armed forces continued their operations in 
the Federally Administered Tribal Areas (FATA), which have been 
safe havens for al Qaeda and the Taliban. Pakistan has 
established national provincial assembly elections for May 11 
that will mark an historic first if they transition to the new 
government peacefully.
    In China, last month Xi Jinping became president. His 
country continues to supplement its growing and impressive 
military capabilities by bolstering maritime law enforcement to 
support its claims and the South and East China Seas.
    Russia will continue to resist putting more international 
pressure on Syria or Iran. It will also continue to display 
great sensitivity to missile defense.
    Closer to home, despite positive trends toward democracy 
and economic development, Latin America and the Caribbean 
contend with weak institutions, slow recovery from devastating 
natural disasters, and drug-related violence and trafficking. 
In Venezuela, the presidential election occurred 4 days ago to 
decide a 6-year term in the wake of former President Chavez's 
death in early March. Officially announced results indicate 
ruling party candidate Nicolas Madura won in a narrow victory.
    So in sum, given the magnitude and complexity of our global 
responsibilities, insightful, persistent, and comprehensive 
intelligence, at least in my mind, has never been more 
important or more urgent. So I have trouble reconciling this 
imperative with sequestration.
    With that, I thank you for your attention and now turn to 
General Flynn for his statement.
    [The prepared statement of Mr. Clapper follows:]
            Prepared Statement by Hon. James R. Clapper, Jr.
                              Introduction
    Chairman Levin, Ranking Member Inhofe, and members of the 
committee, thank you for the invitation to offer the U.S. Intelligence 
Community's 2013 assessment of threats to U.S. national security. My 
statement reflects the collective insights of the Intelligence 
Community's extraordinary men and women, whom it is my privilege and 
honor to lead.
    This year, in both content and organization, this statement 
illustrates how quickly and radically the world--and our threat 
environment--are changing. This environment is demanding reevaluations 
of the way we do business, expanding our analytic envelope, and 
altering the vocabulary of intelligence. Threats are more diverse, 
interconnected, and viral than at any time in history. Attacks, which 
might involve cyber and financial weapons, can be deniable and 
unattributable. Destruction can be invisible, latent, and progressive. 
We now monitor shifts in human geography, climate, disease, and 
competition for natural resources because they fuel tensions and 
conflicts. Local events that might seem irrelevant are more likely to 
affect U.S. national security in accelerated timeframes.
    In this threat environment, the importance and urgency of 
intelligence integration cannot be overstated. Our progress cannot 
stop. The Intelligence Community must continue to promote collaboration 
among experts in every field, from the political and social sciences to 
natural sciences, medicine, military issues, and space. Collectors and 
analysts need vision across disciplines to understand how and why 
developments--and both state and unaffiliated actors--can spark sudden 
changes with international implications.
    The Intelligence Community is committed every day to providing the 
nuanced, multidisciplinary intelligence that policymakers, diplomats, 
warfighters, and international and domestic law enforcement need to 
protect American lives and America's interests anywhere in the world.
    Information as of 7 March 2013 was used in the preparation of this 
assessment.
                             Global Threats
                                 cyber
    We are in a major transformation because our critical 
infrastructures, economy, personal lives, and even basic understanding 
of--and interaction with--the world are becoming more intertwined with 
digital technologies and the Internet. In some cases, the world is 
applying digital technologies faster than our ability to understand the 
security implications and mitigate potential risks.
    State and nonstate actors increasingly exploit the Internet to 
achieve strategic objectives, while many governments--shaken by the 
role the Internet has played in political instability and regime 
change--seek to increase their control over content in cyberspace. The 
growing use of cyber capabilities to achieve strategic goals is also 
outpacing the development of a shared understanding of norms of 
behavior, increasing the chances for miscalculations and 
misunderstandings that could lead to unintended escalation.
    Compounding these developments are uncertainty and doubt as we face 
new and unpredictable cyber threats. In response to the trends and 
events that happen in cyberspace, the choices we and other actors make 
in coming years will shape cyberspace for decades to come, with 
potentially profound implications for U.S. economic and national 
security.
    In the United States, we define cyber threats in terms of cyber 
attacks and cyber espionage. A cyber attack is a non-kinetic offensive 
operation intended to create physical effects or to manipulate, 
disrupt, or delete data. It might range from a denial-of-service 
operation that temporarily prevents access to a website, to an attack 
on a power turbine that causes physical damage and an outage lasting 
for days. Cyber espionage refers to intrusions into networks to access 
sensitive diplomatic, military, or economic information.
Increasing Risk to U.S. Critical Infrastructure
    We judge that there is a remote chance of a major cyber attack 
against U.S. critical infrastructure systems during the next 2 years 
that would result in long-term, wide-scale disruption of services, such 
as a regional power outage. The level of technical expertise and 
operational sophistication required for such an attack--including the 
ability to create physical damage or overcome mitigation factors like 
manual overrides--will be out of reach for most actors during this 
timeframe. Advanced cyber actors--such as Russia and China--are 
unlikely to launch such a devastating attack against the United States 
outside of a military conflict or crisis that they believe threatens 
their vital interests.
    However, isolated state or nonstate actors might deploy less 
sophisticated cyber attacks as a form of retaliation or provocation. 
These less advanced but highly motivated actors could access some 
poorly protected U.S. networks that control core functions, such as 
power generation, during the next 2 years, although their ability to 
leverage that access to cause high-impact, systemic disruptions will 
probably be limited. At the same time, there is a risk that 
unsophisticated attacks would have significant outcomes due to 
unexpected system configurations and mistakes, or that vulnerability at 
one node might spill over and contaminate other parts of a networked 
system.

         Within the past year, in a denial-of-service campaign 
        against the public websites of multiple U.S. banks and stock 
        exchanges, actors flooded servers with traffic and prevented 
        some customers from accessing their accounts via the Internet 
        for a limited period, although the attacks did not alter 
        customers' accounts or affect other financial functions.
         In an August 2012 attack against Saudi oil company 
        Aramco, malicious actors rendered more than 30,000 computers on 
        Aramco's business network unusable. The attack did not impair 
        production capabilities.
Eroding U.S. Economic and National Security
    Foreign intelligence and security services have penetrated numerous 
computer networks of U.S. Government, business, academic, and private 
sector entities. Most detected activity has targeted unclassified 
networks connected to the Internet, but foreign cyber actors are also 
targeting classified networks. Importantly, much of the Nation's 
critical proprietary data are on sensitive but unclassified networks; 
the same is true for most of our closest allies.

         We assess that highly networked business practices and 
        information technology are providing opportunities for foreign 
        intelligence and security services, trusted insiders, hackers, 
        and others to target and collect sensitive U.S. national 
        security and economic data. This is almost certainly allowing 
        our adversaries to close the technological gap between our 
        respective militaries, slowly neutralizing one of our key 
        advantages in the international arena.
         It is very difficult to quantify the value of 
        proprietary technologies and sensitive business information 
        and, therefore, the impact of economic cyber espionage 
        activities. However, we assess that economic cyber espionage 
        will probably allow the actors who take this information to 
        reap unfair gains in some industries.
Information Control and Internet Governance
    Online information control is a key issue among the United States 
and other actors. However, some countries, including Russia, China, and 
Iran, focus on ``cyber influence'' and the risk that Internet content 
might contribute to political instability and regime change. The United 
States focuses on cyber security and the risks to the reliability and 
integrity of our networks and systems. This is a fundamental difference 
in how we define cyber threats.
    The current multi-stakeholder model of Internet governance provides 
a forum for governments, the commercial sector, academia, and civil 
society to deliberate and reach consensus on Internet organization and 
technical standards. However, a movement to reshape Internet governance 
toward a national government-based model would contradict many of our 
policy goals, particularly those to protect freedom of expression and 
the free flow of online information and ensure a free marketplace for 
information technology products and services.

         These issues were a core part of the discussions as 
        countries negotiated a global telecommunications treaty in 
        Dubai in December. The contentious new text that resulted led 
        many countries, including the United States, not to sign the 
        treaty because of its language on network security, spam 
        control, and expansion of the U.N.'s role in Internet 
        governance. The negotiations demonstrated that disagreements on 
        these issues will be long-running challenges in bilateral and 
        multilateral engagements.

    Internet governance revision based on the state-management model 
could result in international regulations over online content, 
restricted exchange of information across borders, substantial slowdown 
of technical innovation, and increased opportunities for foreign 
intelligence and surveillance operations on the Internet in the near 
term.
Other Actors
    We track cyber developments among nonstate actors, including 
terrorist groups, hacktivists, and cyber criminals. We have seen 
indications that some terrorist organizations have heightened interest 
in developing offensive cyber capabilities, but they will probably be 
constrained by inherent resource and organizational limitations and 
competing priorities.
    Hacktivists continue to target a wide range of companies and 
organizations in denial-of-service attacks, but we have not observed a 
significant change in their capabilities or intentions during the last 
year. Most hacktivists use short-term denial-of-service operations or 
expose personally identifiable information held by target companies, as 
forms of political protest. However, a more radical group might form to 
inflict more systemic impacts--such as disrupting financial networks--
or accidentally trigger unintended consequences that could be 
misinterpreted as a state-sponsored attack.
    Cybercriminals also threaten U.S. economic interests. They are 
selling tools, via a growing black market, that might enable access to 
critical infrastructure systems or get into the hands of state and 
nonstate actors. In addition, a handful of commercial companies sell 
computer intrusion kits on the open market. These hardware and software 
packages can give governments and cybercriminals the capability to 
steal, manipulate, or delete information on targeted systems. Even more 
companies develop and sell professional-quality technologies to support 
cyber operations--often branding these tools as lawful-intercept or 
defensive security research products. Foreign governments already use 
some of these tools to target U.S. systems.
              terrorism and transnational organized crime
Terrorism
    Terrorist threats are in a transition period as the global jihadist 
movement becomes increasingly decentralized. In addition, the Arab 
Spring has generated a spike in threats to U.S. interests in the region 
that likely will endure until political upheaval stabilizes and 
security forces regain their capabilities. We also face uncertainty 
about potential threats from Iran and Lebanese Hizballah, which see the 
United States and Israel as their principal enemies.
    Evolving Homeland Threat Landscape
    Al Qaeda in the Arabian Peninsula (AQAP). Attacks on U.S. soil will 
remain part of AQAP's transnational strategy; the group continues to 
adjust its tactics, techniques and procedures for targeting the West. 
AQAP leaders will have to weigh the priority they give to U.S. plotting 
against other internal and regional objectives, as well as the extent 
to which they have individuals who can manage, train, and deploy 
operatives for U.S. operations.
    Al Qaeda-Inspired Homegrown Violent Extremists (HVE). Al Qaeda-
inspired HVEs--whom we assess will continue to be involved in fewer 
than 10 domestic plots per year--will be motivated to engage in violent 
action by global jihadist propaganda, including English-language 
material, such as AQAP's Inspire magazine; events in the United States 
or abroad perceived as threatening to Muslims; the perceived success of 
other HVE plots, such as the November 2009 attack at Fort Hood, TX, and 
the March 2012 attacks by an al Qaeda-inspired extremist in Toulouse, 
France; and their own grievances. HVE planning in 2012 was consistent 
with tactics and targets seen in previous HVE plots and showed 
continued interest in improvised explosive devices (IED) and U.S. 
Department of Defense (DOD) targets.
    Core al Qaeda. Senior personnel losses in 2012, amplifying losses 
and setbacks since 2008, have degraded core al Qaeda to a point that 
the group is probably unable to carry out complex, large-scale attacks 
in the west. However, the group has held essentially the same strategic 
goals since its initial public declaration of war against the United 
States in 1996, and to the extent that the group endures, its leaders 
will not abandon the aspiration to attack inside the United States.
    The Global Jihadist Threat Overseas: Affiliates, Allies, and 
        Sympathizers
    In 2011, al Qaeda and its affiliates played little or no role in 
the uprisings in the Middle East and North Africa and, with the 
exception of AQAP, were not well positioned to take advantage of 
events. At the same time, the rise of new or transitional governments 
in Egypt, Tunisia, Yemen, and Libya, and ongoing unrest in Syria and 
Mali, have offered opportunities for established affiliates, aspiring 
groups, and like-minded individuals to conduct attacks against U.S. 
interests. Weakened or diminished counterterrorism capabilities, border 
control mechanisms, internal security priorities, and other 
shortcomings in these countries--combined with anti-U.S. grievances or 
triggering events--will sustain the threats to U.S. interests 
throughout the region. The dispersed and decentralized nature of the 
terrorist networks active in the region highlights that the threat to 
U.S. and Western interests overseas is more likely to be unpredictable. 
The 2012 attack on the U.S. facilities in Benghazi, Libya, and the 2013 
attack on Algeria's In-Amenas oil facility demonstrate the threat to 
U.S. interests from splinter groups, ad hoc coalitions, or individual 
terrorists who can conduct anti-U.S. operations, even in the absence of 
official direction or guidance from leaders of established al Qaeda 
affiliates.

         Al Qaeda in Iraq's (AQI) goals inside Iraq will almost 
        certainly take precedence over U.S. plotting, but the group 
        will remain committed to al Qaeda's global ideology. Since the 
        2011 withdrawal of U.S. forces, AQI has conducted nearly 
        monthly, simultaneous, coordinated country-wide attacks against 
        government, security, and Shia civilian targets. AQI's Syria-
        based network, the Nusrah Front, is one of the best organized 
        and most capable of the Sunni terrorist groups.
         Somalia-based al-Shabaab will remain focused on local 
        and regional challenges, including its longstanding leadership 
        rivalries and its fights against forces from the Somali and 
        Ethiopian Governments and the African Union Mission in Somalia 
        (AMISOM). The group will probably also continue to plot attacks 
        designed to weaken regional adversaries, including targeting 
        U.S. and Western interests in East Africa.
         Al Qaeda in the Land of the Islamic Maghreb's (AQIM) 
        intentions and capability remain focused on local, U.S., and 
        Western interests in north and west Africa.
         Nigeria-based Boko Haram will continue to select 
        targets for attacks to destabilize the country and advance its 
        extreme vision of Islamist rule.
         Pakistan-based Lashkar-e-Tayibba (LT) will continue to 
        be the most multifaceted and problematic of the Pakistani 
        militant groups. The group has the long-term potential to 
        evolve into a permanent and even HAMAS/Hizballah-like presence 
        in Pakistan.
    Iran and Lebanese Hizballah
    The failed 2011 plot against the Saudi Ambassador in Washington 
shows that Iran may be more willing to seize opportunities to attack in 
the United States in response to perceived offenses against the regime. 
Iran is also an emerging and increasingly aggressive cyber actor. 
However, we have not changed our assessment that Iran prefers to avoid 
direct confrontation with the United States because regime preservation 
is its top priority.
    Hizballah's overseas terrorist activity has been focused on 
Israel--an example is the Bulgarian Government's announcement that 
Hizballah was responsible for the July 2012 bus bombing at the Burgas 
airport that killed five Israeli citizens. We continue to assess that 
the group maintains a strong anti-U.S. agenda but is reluctant to 
confront the United States directly outside the Middle East.
Transnational Organized Crime
    Transnational organized crime (TOC) networks erode good governance, 
cripple the rule of law through corruption, hinder economic 
competitiveness, steal vast amounts of money, and traffic millions of 
people around the globe. (Cybercrime, an expanding for-profit TOC 
enterprise, is addressed in the Cyber section.) TOC threatens U.S. 
national interests in a number of ways:
    Drug Activity. Drug trafficking is a major TOC threat to the United 
States and emanates primarily from the Western Hemisphere. Mexico is 
the dominant foreign producer of heroin, marijuana, and 
methamphetamines for the U.S. market. Colombia produces the 
overwhelming majority of the cocaine that reaches the United States, 
although the amount of cocaine available to U.S. consumers has 
substantially decreased in the past 5 years due to Colombian 
eradication and security efforts, U.S. transit zone interdiction and 
capacity-building activities, and warfare among Mexican trafficking 
organizations. However, high U.S. demand--still twice that of Europe--
the capacity of Colombia's remaining drug trafficking organizations, 
and weak penal and judicial institutions suggest that Colombia's 
decades-long struggle with the drug threat will continue for a number 
of years. In addition to the threat inside the United States, the drug 
trade undermines U.S. interests abroad; for example, it erodes 
stability in West and North Africa and remains a significant source of 
revenue for the Taliban in Afghanistan.
    Facilitating Terrorist Activity. The Intelligence Community is 
monitoring the expanding scope and diversity of ``facilitation 
networks,'' which include semi-legitimate travel experts, attorneys, 
and other types of professionals, as well as corrupt officials, who 
provide support services to criminal and terrorist groups.
    Money Laundering. The scope of worldwide money laundering is 
subject to significant uncertainty but measures more than a trillion 
dollars annually, often exploiting governments' difficulties 
coordinating law enforcement across national boundaries. Criminals' 
reliance on the U.S. dollar also exposes the U.S. financial system to 
illicit financial flows. Inadequate anti-money laundering regulations, 
lax enforcement of existing ones, misuse of front companies to obscure 
those responsible for illicit flows, and new forms of electronic money 
challenge international law enforcement efforts.
    Corruption. Corruption exists at some level in all countries; 
however, the interaction between government officials and TOC networks 
is particularly pernicious in some countries. Among numerous examples, 
we assess that Guinea-Bissau has become a narco-state, where 
traffickers use the country as a transit hub with impunity; and in 
Russia, the nexus among organized crime, some state officials, the 
intelligence services, and business blurs the distinction between state 
policy and private gain.
    Human Trafficking. President Obama recently noted that upwards of 
20 million human beings are being trafficked around the world. The U.S. 
State Department and our law enforcement organizations have led U.S. 
Government efforts against human trafficking, and the Intelligence 
Community has increased collection and analytic efforts to support law 
enforcement and the interagency Human Smuggling and Trafficking Center. 
Virtually every country in the world is a source, transit point, and/or 
destination for individuals being trafficked.

         For example, in 2012 a Ukrainian National was 
        sentenced to life-plus-20-years in prison for operating a human 
        trafficking organization that smuggled young Ukrainians into 
        the United States. For 7 years, he and his brothers arranged to 
        move unsuspecting immigrants through Mexico into the United 
        States. With debts of $10,000 to $50,000, victims were forced 
        to live in squalid conditions, enslaved, and subjected to rape, 
        beatings, and other forms of physical attack. Threats against 
        their families in Ukraine were used to dissuade them from 
        attempting to escape.

    Environmental Crime. Illicit trade in wildlife, timber, and marine 
resources constitutes a multi-billion dollar industry annually, 
endangers the environment, and threatens to disrupt the rule of law in 
important countries around the world. These criminal activities are 
often part of larger illicit trade networks linking disparate actors--
from government and military personnel to members of insurgent groups 
and transnational organized crime organizations.
               weapons of mass destruction proliferation
    Nation-state efforts to develop or acquire weapons of mass 
destruction (WMD) and their delivery systems constitute a major threat 
to the security of our Nation, deployed troops, and allies. The 
Intelligence Community is focused on the threat and destabilizing 
effects of nuclear proliferation, proliferation of chemical and 
biological warfare (CBW)-related materials, and development of WMD 
delivery systems.
    Traditionally, international agreements and diplomacy have deterred 
most nation-states from acquiring biological, chemical, or nuclear 
weapons, but these constraints may be of less utility in preventing 
terrorist groups from doing so. The time when only a few states had 
access to the most dangerous technologies is past. Biological and 
chemical materials and technologies, almost always dual-use, move 
easily in our globalized economy, as do the personnel with scientific 
expertise to design and use them. The latest discoveries in the life 
sciences also diffuse globally and rapidly.
Iran and North Korea Developing WMD-Applicable Capabilities
    We assess Iran is developing nuclear capabilities to enhance its 
security, prestige, and regional influence and give it the ability to 
develop nuclear weapons, should a decision be made to do so. We do not 
know if Iran will eventually decide to build nuclear weapons.
    Tehran has developed technical expertise in a number of areas--
including uranium enrichment, nuclear reactors, and ballistic 
missiles--from which it could draw if it decided to build missile-
deliverable nuclear weapons. These technical advancements strengthen 
our assessment that Iran has the scientific, technical, and industrial 
capacity to eventually produce nuclear weapons. This makes the central 
issue its political will to do so.
    Of particular note, Iran has made progress during the past year 
that better positions it to produce weapons-grade uranium (WGU) using 
its declared facilities and uranium stockpiles, should it choose to do 
so. Despite this progress, we assess Iran could not divert safeguarded 
material and produce a weapon-worth of WGU before this activity is 
discovered.
    We judge Iran's nuclear decisionmaking is guided by a cost-benefit 
approach, which offers the international community opportunities to 
influence Tehran. Iranian leaders undoubtedly consider Iran's security, 
prestige and influence, as well as the international political and 
security environment, when making decisions about its nuclear program. 
In this context, we judge that Iran is trying to balance conflicting 
objectives. It wants to advance its nuclear and missile capabilities 
and avoid severe repercussions--such as a military strike or regime 
threatening sanctions.
    We judge Iran would likely choose a ballistic missile as its 
preferred method of delivering a nuclear weapon, if one is ever 
fielded. Iran's ballistic missiles are capable of delivering WMD. In 
addition, Iran has demonstrated an ability to launch small satellites, 
and we grow increasingly concerned that these technical steps--along 
with a regime hostile toward the United States and our allies--provide 
Tehran with the means and motivation to develop larger space-launch 
vehicles and longer-range missiles, including an intercontinental 
ballistic missile (ICBM).
    Iran already has the largest inventory of ballistic missiles in the 
Middle East, and it is expanding the scale, reach, and sophistication 
of its ballistic missile arsenal. Iran's growing ballistic missile 
inventory and its domestic production of anti-ship cruise missiles 
(ASCM) and development of its first long-range land attack cruise 
missile provide capabilities to enhance its power projection. Tehran 
views its conventionally armed missiles as an integral part of its 
strategy to deter--and if necessary retaliate against--forces in the 
region, including U.S. forces.
    North Korea's nuclear weapons and missile programs pose a serious 
threat to the United States and to the security environment in East 
Asia, a region with some of the world's largest populations, 
militaries, and economies. North Korea's export of ballistic missiles 
and associated materials to several countries, including Iran and 
Syria, and its assistance to Syria's construction of a nuclear reactor, 
destroyed in 2007, illustrate the reach of its proliferation 
activities. Despite the Six-Party Joint Statements issued in 2005 and 
2007, in which North Korea reaffirmed its commitment not to transfer 
nuclear materials, technology, or know-how, we remain alert to the 
possibility that North Korea might again export nuclear technology.
    North Korea announced on 12 February that it conducted its third 
nuclear test. It has also displayed what appears to be a road-mobile 
ICBM and in December 2012 placed a satellite in orbit using its Taepo 
Dong 2 launch vehicle. These programs demonstrate North Korea's 
commitment to develop long-range missile technology that could pose a 
direct threat to the United States, and its efforts to produce and 
market ballistic missiles raise broader regional and global security 
concerns.
    Because of deficiencies in their conventional military forces, 
North Korean leaders are focused on deterrence and defense. The 
Intelligence Community has long assessed that, in Pyongyang's view, its 
nuclear capabilities are intended for deterrence, international 
prestige, and coercive diplomacy. We do not know Pyongyang's nuclear 
doctrine or employment concepts. Although we assess with low confidence 
that the North would only attempt to use nuclear weapons against U.S. 
forces or allies to preserve the Kim regime, we do not know what would 
constitute, from the North's perspective, crossing that threshold.
WMD Security in Syria
    We assess Syria has a highly active chemical warfare (CW) program 
and maintains a stockpile of sulfur mustard, sarin, and VX. We assess 
that Syria has a stockpile of munitions--including missiles, aerial 
bombs, and possibly artillery rockets--that can be used to deliver CW 
agents. Syria's overall CW program is large, complex, and 
geographically dispersed, with sites for storage, production, and 
preparation. This advanced CW program has the potential to inflict mass 
casualties, and we assess that an increasingly beleaguered regime, 
having found its escalation of violence through conventional means 
inadequate, might be prepared to use CW against the Syrian people. In 
addition, groups or individuals in Syria could gain access to CW-
related materials. The United States and our allies are monitoring 
Syria's chemical weapons stockpile.
    Based on the duration of Syria's longstanding biological warfare 
(BW) program, we judge that some elements of the program may have 
advanced beyond the research and development stage and may be capable 
of limited agent production. Syria is not known to have successfully 
weaponized biological agents in an effective delivery system, but it 
possesses conventional and chemical weapon systems that could be 
modified for biological agent delivery.
                          counterintelligence
    Foreign intelligence services, along with terrorist groups, 
transnational criminal organizations, and other nonstate actors, are 
targeting and acquiring our national security information, undermining 
our economic and technological advantages, and seeking to influence our 
national policies and processes covertly. These foreign intelligence 
efforts employ traditional methods of espionage and, with growing 
frequency, innovative technical means. Among significant foreign 
threats, Russia and China remain the most capable and persistent 
intelligence threats and are aggressive practitioners of economic 
espionage against the United States. Countering such foreign 
intelligence threats is a top priority for the Intelligence Community 
for the year ahead. Moreover, vulnerabilities in global supply chains 
open opportunities for adversaries to exploit U.S. critical 
infrastructure. (For a discussion of cyber espionage, see the Cyber 
section.)
Threats to U.S. Government Supply Chains
    The United States and other national economies have grown more 
dependent on global networks of supply chains. These web-like 
relationships, based on contracts and subcontracts for component parts, 
services, and manufacturing, obscure transparency into those supply 
chains. Additionally, reliance on foreign equipment, combined with a 
contracting pool of suppliers in the information technology, 
telecommunications, and energy sectors, creates opportunities for 
exploitation of, and increased impact on, U.S. critical infrastructures 
and systems.
    Interdependence of information technologies and integration of 
foreign technology in U.S. information technology, telecommunications, 
and energy sectors will increase the potential scope and impact of 
foreign intelligence and security services' supply chain operations. 
The likely continued consolidation of infrastructure suppliers--which 
means that critical infrastructures and networks will be built from a 
more limited set of provider and equipment options--will also increase 
the scope and impact of potential supply chain subversions.
                              counterspace
    Space systems and their supporting infrastructures enable a wide 
range of services, including communication; position, navigation, and 
timing; intelligence, surveillance, and reconnaissance; and 
meteorology, which provide vital national, military, civil, scientific, 
and economic benefits. Other nations recognize these benefits to the 
United States and seek to counter the U.S. strategic advantage by 
pursuing capabilities to deny or destroy our access to space services. 
Threats to vital U.S. space services will increase during the next 
decade as disruptive and destructive counterspace capabilities are 
developed. In 2007, China conducted a destructive antisatellite test. 
In a 2009 press article, a senior Russian military leader stated that 
Moscow was developing counterspace capabilities.
             natural resources: insecurity and competition
    Competition and scarcity involving natural resources--food, water, 
minerals, and energy--are growing security threats. Many countries 
important to the United States are vulnerable to natural resource 
shocks that degrade economic development, frustrate attempts to 
democratize, raise the risk of regime-threatening instability, and 
aggravate regional tensions. Extreme weather events (floods, droughts, 
heat waves) will increasingly disrupt food and energy markets, 
exacerbating state weakness, forcing human migrations, and triggering 
riots, civil disobedience, and vandalism. Criminal or terrorist 
elements can exploit any of these weaknesses to conduct illicit 
activity and/or recruitment and training. Social disruptions are 
magnified in growing urban areas where information technology transmits 
grievances to larger--often youthful and unemployed--audiences, and 
relatively ``small'' events can generate significant effects across 
regions or the world.
Food
    Natural food-supply disruptions, due to floods, droughts, heat 
waves, and diseases, as well as policy choices, probably will stress 
the global food system in the immediate term, resulting in sustained 
volatility in global food prices. Policy choices can include export 
bans; diversions of arable lands for other uses, such as urban 
development; and foreign land leases and acquisitions. Many resource-
strapped countries have been losing confidence in the global 
marketplace to supply vital resources, and increasingly looking to 
shield their populations in ways that will almost certainly threaten 
global food production. For example, emerging powers and Gulf States 
are buying up arable and grazing land around the world as hedges 
against growing domestic demand and strained resources. Food supplies 
are also at risk from plant diseases that affect grain and oilseed 
crops and from transmittable animal diseases, such as H5N1 and foot and 
mouth disease. At the same time, agricultural inputs--water, 
fertilizer, land, and fuel oil--are becoming more scarce and/or costly, 
exacerbating the upward pressure on food prices.
    In the coming year, markets for agricultural commodities will 
remain tight, due in part to drought and crop failures in the 
midwestern United States last summer. Rising demand for biofuels and 
animal feed exerts particular pressures on corn prices, and extreme 
weather will cause episodic deficits in production. We will also see 
growing demand and high price volatility for wheat. Significant wheat 
production occurs in water-stressed and climate-vulnerable regions in 
Asia, where markets will remain susceptible to harvest shocks. A near-
term supply disruption could result when a plant disease known as Ug99 
stem rust--already spreading across Africa, Asia, and the Middle East--
arrives in South Asia, which is likely to happen within the next few 
years. Wheat production is growing in Eastern Europe, but output is 
variable, and governments have demonstrated a readiness to impose 
export controls.
    Although food-related state-on-state conflict is unlikely in the 
near term, the risk of conflict between farmers and livestock owners--
often in separate states--will increase as population growth and crop 
expansion infringe on livestock grazing areas, especially in sub-
Saharan Africa and Central Asia. Disputes over fisheries are also 
likely to increase as water scarcity emerges in major river basins, and 
marine fisheries are depleted. Shrinking marine fisheries--for example, 
in the South China Sea--will lead to diplomatic disputes as fishermen 
are forced to travel further from shore. In addition, government grants 
of state-owned land to domestic and foreign agricultural developers are 
likely to stoke conflict in areas without well-defined land ownership 
laws and regulations.
    Terrorists, militants, and international crime organizations can 
use declining local food security to promote their own legitimacy and 
undermine government authority. Growing food insecurity in weakly 
governed countries could lead to political violence and provide 
opportunities for existing insurgent groups to capitalize on poor 
conditions, exploit international food aid, and discredit governments 
for their inability to address basic needs. In addition, intentional 
introduction of a livestock or plant disease might be a greater threat 
to the United States and the global food system than a direct attack on 
food supplies intended to kill humans.
Water
    Risks to freshwater supplies--due to shortages, poor quality, 
floods, and climate change--are growing. These forces will hinder the 
ability of key countries to produce food and generate energy, 
potentially undermining global food markets and hobbling economic 
growth. As a result of demographic and economic development pressures, 
North Africa, the Middle East, and South Asia face particular 
difficulty coping with water problems.
    Lack of adequate water is a destabilizing factor in countries that 
do not have the management mechanisms, financial resources, or 
technical ability to solve their internal water problems. Some states 
are further stressed by heavy dependence on river water controlled by 
upstream nations with unresolved water-sharing issues. Wealthier 
developing countries probably will experience increasing water-related 
social disruptions, although they are capable of addressing water 
problems without risk of state failure.
    Historically, water tensions have led to more water-sharing 
agreements than violent conflicts. However, where water-sharing 
agreements are ignored, or when infrastructure development--for 
electric power generation or agriculture--is seen as a threat to water 
resources, states tend to exert leverage over their neighbors to 
preserve their water interests. This leverage has been applied in 
international forums and has included pressuring investors, 
nongovernmental organizations, and donor countries to support or halt 
water infrastructure projects. In addition, some nonstate terrorists or 
extremists will almost certainly target vulnerable water infrastructure 
to achieve their objectives and continue to use water-related 
grievances as recruitment and fundraising tools.
    Many countries are using groundwater faster than aquifers can 
replenish in order to satisfy food demand. In the long term, without 
mitigation actions (drip irrigation, reduction of distortive 
electricity-for-water pump subsidies, access to new agricultural 
technology, and better food distribution networks), exhaustion of 
groundwater sources will cause food demand to be satisfied through 
increasingly stressed global markets.
    Water shortages and pollution will also harm the economic 
performance of important U.S. trading partners. Economic output will 
suffer if countries do not have sufficient clean water to generate 
electrical power or to maintain and expand manufacturing and resource 
extraction. In some countries, water shortages are already having an 
impact on power generation, and frequent droughts are undermining long-
term plans to increase hydropower capacity. With climate change, these 
conditions will continue to deteriorate.
Minerals: China's Monopoly on Rare Earth Elements
    Rare earth elements (REE) are essential to civilian and military 
technologies and to the 21st century global economy, including 
development of green technologies and advanced defense systems. China 
holds a commanding monopoly over world REE supplies, controlling about 
95 percent of mined production and refining. China's dominance and 
policies on pricing and exports are leading other countries to pursue 
mitigation strategies, but those strategies probably will have only 
limited impact within the next 5 years and will almost certainly not 
end Chinese REE dominance. REE prices spiked after China enacted a 40-
percent export quota cut in July 2010, peaking at record highs in mid-
2011. As of December 2012, REE prices had receded but still remained at 
least 80 percent, and as much as 600 percent (depending on the type of 
REE), above pre-July 2010 levels.
    Mines in Australia, Brazil, Canada, Malawi, the United States, and 
Vietnam are expected to be operational in less than 5 years. However, 
even as production at non-Chinese mines come online, initial REE 
processing outside of China will remain limited because of technical 
difficulties, regulatory hurdles, and capital costs associated with the 
startup of new or dormant processing capabilities and facilities. China 
will also continue to dominate production of the most scarce and 
expensive REEs, known as heavy REEs, which are critical to defense 
systems.
Energy
    Oil prices will remain highly sensitive to political instability in 
the Middle East, tensions with Iran, and global economic growth. In 
2012 increasing U.S., Iraqi, and Libyan output, combined with slow 
economic growth, helped ease upward pressure on prices. In the coming 
year, most growth in new production probably will come from North 
America and Iraq, while production from some major producers stagnates 
or declines because of policies that discourage investment.
    Sustained oil prices above $80 per barrel would support the growth 
in North American oil production. That growth is being propelled by the 
production of tight oil, due to the application of horizontal drilling 
and hydrolic fracturing. Many Organization of the Petroleum Exporting 
Countries (OPEC) members are increasingly dependent on high oil prices 
to support government spending. However, the budgets of countries that 
subsidize domestic fuel consumption will come under greater stress with 
high oil prices and rising domestic demand.
    Natural gas prices will remain regionally based, with North 
American consumers probably paying one-third the price of European 
importers and one-fourth that of Asian consumers. With the prospects 
for U.S. liquefied natural gas (LNG) exports made possible by the 
growth in shale gas production, along with other global LNG exports, 
major European and Asian importers probably will continue to pressure 
their suppliers to de-link their prices from oil. Weather, economic 
indicators, and energy policies in Japan probably will have the 
strongest influence on global LNG prices. Australia is poised to become 
a top LNG exporter but faces project cost inflation that could slow 
development.
Climate Change and Demographics
    Food security has been aggravated partly because the world's land 
masses are being affected by weather conditions outside of historical 
norms, including more frequent and extreme floods, droughts, wildfires, 
tornadoes, coastal high water, and heat waves. Rising temperature, for 
example, although enhanced in the Arctic, is not solely a high-latitude 
phenomenon. Recent scientific work shows that temperature anomalies 
during growing seasons and persistent droughts have hampered 
agricultural productivity and extended wildfire seasons. Persistent 
droughts during the past decade have also diminished flows in the Nile, 
Tigris-Euphrates, Niger, Amazon, and Mekong river basins.
    Demographic trends will also aggravate the medium- to long-term 
outlooks for resources and energy. Through roughly 2030, the global 
population is expected to rise from 7.1 billion to about 8.3 billion; 
the size of the world's population in the middle class will expand from 
the current 1 billion to more than 2 billion; and the proportion of the 
world's population in urban areas will grow from 50 percent to about 60 
percent--all putting intense pressure on food, water, minerals, and 
energy.
                      health and pandemic threats
    Scientists continue to discover previously unknown pathogens in 
humans that made the ``jump'' from animals--zoonotic diseases. Examples 
are: a prion disease in cattle that jumped in the 1980s to cause 
variant Creutzeldt-Jacob disease; a bat henipavirus that in 1999 became 
known as the human Nipah Virus; a bat corona virus that jumped to 
humans in 2002 to cause Severe Acute Respiratory Syndrome (SARS); and 
another SARS-like corona virus recently identified in individuals who 
have been in Saudi Arabia, which might also have bat origins. Human and 
livestock population growth and encroachment into jungles increase 
human exposure to crossovers. No one can predict which pathogen will be 
the next to spread to humans, or when or where such a development will 
occur, but humans will continue to be vulnerable to pandemics, most of 
which will probably originate in animals.
    An easily transmissible, novel respiratory pathogen that kills or 
incapacitates more than 1 percent of its victims is among the most 
disruptive events possible. Such an outbreak would result in a global 
pandemic that causes suffering and death in every corner of the world, 
probably in fewer than 6 months. This is not a hypothetical threat. 
History is replete with examples of pathogens sweeping populations that 
lack immunity, causing political and economic upheaval, and influencing 
the outcomes of wars--for example, the 1918 Spanish flu pandemic 
affected military operations during World War I and caused global 
economic disruptions.
    The World Health Organization has described one influenza pandemic 
as ``the epidemiological equivalent of a flash flood.'' However, slow-
spreading pathogens, such as HIV/AIDS, have been just as deadly, if not 
more so. Such a pathogen with pandemic potential may have already 
jumped to humans somewhere; HIV/AIDS entered the human population more 
than 50 years before it was recognized and identified. In addition, 
targeted therapeutics and vaccines might be inadequate to keep up with 
the size and speed of the threat, and drug-resistant forms of diseases, 
such as tuberculosis, gonorrhea, and Staphylococcus aureus, have 
already emerged.
                            mass atrocities
    Mass atrocities continue to be a recurring feature of the global 
landscape. Most of the time they occur in the context of major 
instability events. Since the turn of the last century, hundreds of 
thousands of civilians have lost their lives as a result of atrocities 
occurring during conflicts in the Darfur region of Sudan and in the 
eastern Congo (Kinshasa). Recent atrocities in Syria, where tens of 
thousands of civilians have lost their lives within the past 2 years, 
have occurred against a backdrop of major political upheaval, 
illustrating how most mass atrocities tend to be perpetrated by ruling 
elites or rebels who use violence against civilians to assert or retain 
control. Consistent with this trend, mass atrocities also are more 
likely in places where governments discriminate against minorities, 
socioeconomic conditions are poor, or local powerbrokers operate with 
impunity. In addition, terrorists and insurgents might exploit such 
conditions to conduct attacks against civilians, as in Boko Haram's 
attacks on churches in Nigeria. Less frequently, violence between 
sectarian or ethnic groups can create the conditions for mass 
atrocities.
                            Regional Threats
                      middle east and north africa
Arab Spring
    Although some countries have made progress towards democratic rule, 
most are experiencing uncertainty, violence, and political backsliding. 
The toppling of leaders and weakening of regimes have also unleashed 
destabilizing ethnic and sectarian rivalries. Islamist actors have been 
the chief electoral beneficiaries of the political openings, and 
Islamist parties in Egypt, Tunisia and Morocco will likely solidify 
their influence in the coming year. The success of transitioning states 
will depend, in part, on their ability to integrate these actors into 
national politics and to integrate--or marginalize--political, 
military, tribal, and business groups that were part of or benefitted 
from the old regimes. At the same time, transitions that fail to 
address public demands for change are likely to revive unrest and 
heighten the appeal of authoritarian or extremist solutions.
    Three issues, in particular, will affect U.S. interests:

         Ungoverned Spaces. The struggles of new governments in 
        places like Tripoli and Sanaa to extend their writs, as well as 
        the worsening internal conflict in Syria, have created 
        opportunities for extremist groups to find ungoverned space 
        from which to destabilize the new governments and prepare 
        attacks against western interests inside those countries.
         Economic Hardships. Many states face economic 
        distress--specifically, high rates of unemployment--that is 
        unlikely to be alleviated by current levels of Western aid and 
        will require assistance from wealthy Arab countries as well as 
        reforms and pro-growth policies. Failure to meet heightened 
        popular expectations for economic improvement could set back 
        transitions in places such as Egypt and destabilize vulnerable 
        regimes such as Jordan. Gulf states provide assistance only 
        incrementally and are wary of new governments' foreign policies 
        and their ability to absorb funds.
         Negative Views of the United States. Some 
        transitioning governments are more skeptical than their 
        predecessors about cooperating with the United States and are 
        concerned about protecting sovereignty and resisting foreign 
        interference. This has the potential to hamper U.S. 
        counterterrorism efforts and other initiatives to engage 
        transitioning governments.
Egypt
    Since his election in June 2012, Egyptian President Muhammad Mursi 
has worked to consolidate control of the instruments of state power and 
loosen the Egyptian military's grip on the government. Mursi has taken 
actions that have advanced his party's agenda and his international 
reputation, including his late-2012 role brokering a HAMAS-Israeli 
cease-fire. However, his decree in November 2012 that temporarily 
increased his authorities at the expense of the judiciary angered large 
numbers of Egyptians--especially secular activists--and brought 
protesters back to the streets.
    Quelling popular dissatisfaction and building popular support for 
his administration and policies are critical for Mursi and will have a 
direct bearing on the Freedom and Justice Party's success in upcoming 
parliamentary elections. A key element of Mursi's ability to build 
support will be improving living standards and the economy; GDP growth 
fell to 1.5 percent in 2012 from just over 5 percent in 2010, and 
unemployment was roughly 12.6 percent in mid-2012.
Syria
    Almost 2 years into the unrest in Syria, we assess that the erosion 
of the Syrian regime's capabilities is accelerating. Although the Asad 
regime has prevented insurgents from seizing key cities-- such as 
Damascus, Aleppo, and Homs--it has been unable to dislodge them from 
these areas. Insurgent forces also have been gaining strength in rural 
areas of northern and eastern Syria, particularly Idlib Province along 
the border with Turkey, where their progress could lead to a more 
permanent base for insurgent operations. Prolonged instability is also 
allowing al Qaeda's Nusrah Front to establish a presence within Syria. 
(For details on Syria's weapons and chemical and biological warfare 
programs, see the Proliferation section.)

         Sanctions and violence have stifled trade, commercial 
        activity, and foreign investment, and reduced the regime's 
        financial resources--as many as 2.5 million people are 
        internally displaced and roughly 700,000 have fled to 
        neighboring countries since March 2011. The Syrian economy 
        contracted by 10 to 15 percent in 2012, which has forced the 
        regime to prioritize security spending and cut back on 
        providing basic services, food and fuel, and health and 
        education services for the public.
Iran
    Iran is growing more autocratic at home and more assertive abroad 
as it faces elite and popular grievances, a deteriorating economy, and 
an uncertain regional dynamic. Supreme Leader Khamenei's power and 
authority are now virtually unchecked, and security institutions, 
particularly the Islamic Revolutionary Guard Corps (IRGC), have greater 
influence at the expense of popularly elected and clerical 
institutions. Khamenei and his allies will have to weigh carefully 
their desire to control the 14 June Iranian presidential election, 
while boosting voter turnout to increase the appearance of regime 
legitimacy and avoid a repeat of the disputed 2009 election. Meanwhile, 
the regime is adopting more oppressive social policies to increase its 
control over the population, such as further limiting educational and 
career choices for women.
    Iran's financial outlook has worsened since the 2012 implementation 
of sanctions on its oil exports and Central Bank. Iran's economy 
contracted in 2012 for the first time in more than two decades. Iran's 
access to foreign exchange Reserves held overseas has diminished, and 
preliminary data suggest that it suffered its first trade deficit in 14 
years. Meanwhile, the rial reached an all-time low in late January, 
with the exchange rate falling from about 15,000 rials per dollar at 
the beginning of 2012 to nearly 40,000 rials per dollar, and inflation 
and unemployment are growing.
    Growing public frustration with the government's socioeconomic 
policies has not led to widespread political unrest because of 
Iranians' pervasive fear of the security services and the lack of 
effective opposition organization and leadership. To buoy the regime's 
popularity and forestall widespread civil unrest, Iranian leaders are 
trying to soften the economic hardships on the poorer segments of the 
population. Khamenei has publicly called on the population to pursue a 
``resistance economy,'' reminiscent of the hardships that Iran suffered 
immediately after the Iranian Revolution and during the Iran-Iraq war. 
However, the willingness of contemporary Iranians to withstand 
additional economic austerity is unclear because most Iranians do not 
remember those times; 60 percent of the population was born after 1980 
and 40 percent after 1988.
    In its efforts to spread influence abroad and undermine the United 
States and our allies, Iran is trying to exploit the fighting and 
unrest in the Arab world. It supports surrogates, including Palestinian 
militants engaged in the recent conflict with Israel. To take advantage 
of the U.S. withdrawals from Iraq and Afghanistan, it will continue 
efforts to strengthen political and economic ties with central and 
local governments, while providing select militants with lethal 
assistance. Iran's efforts to secure regional hegemony, however, have 
achieved limited results, and the fall of the Asad regime in Syria 
would be a major strategic loss for Tehran. (For details on Iran's 
weapons programs, see the Proliferation section.)
Iraq
    Since the U.S. departure, the Iraqi Government has remained 
generally stable, with the major parties pursuing change through the 
political process rather than violence. However, there are rising 
tensions between Prime Minister Maliki and Kurdistan Regional 
Government President Masud Barzani and an increase in anti-regime Sunni 
protests since the end of 2012. Maliki is pressing for greater 
authority over disputed territories in northern Iraq, and Barzani is 
pushing forward to export hydrocarbons independent of Baghdad.
    AQI conducted more vehicle and suicide bombings in 2012 than in 
2011, almost exclusively against Iraqi targets. However, AQI and other 
insurgent groups almost certainly lack sufficient strength to overwhelm 
Iraqi Security Forces, which has put pressure on these groups through 
arrests of key individuals.
    Iraq is producing and exporting oil at the highest levels in two 
decades, bolstering finances for a government that derives 90 to 95 
percent of its revenue from oil exports. Iraq increased production 
capacity from about 2.4 million barrels per day in 2010 to roughly 3.3 
million barrels per day in 2012. However, it is still wrestling with 
the challenges of diversifying its economy and providing essential 
services.
Yemen
    We judge that Yemen's new president, Abd Rabuh Mansur Hadi, has 
diminished the power of former President Salih and his family and kept 
the political transition on track, but Salih's lingering influence, 
AQAP's presence, and the tenuous economy are significant challenges. 
Yemen's humanitarian situation is dire, with nearly half of the 
population considered ``food insecure.'' Obtaining foreign aid and 
keeping its oil pipeline open will be crucial to Sanaa's potential 
economic improvement. The next key political milestone will be the 
successful completion of an inclusive National Dialogue that keeps 
Yemen on course for elections in 2014, although some southern leaders 
are threatening non-participation. Hadi's government will also have to 
maintain pressure on AQAP following a military offensive this past 
summer that displaced the group from its southern strongholds.
Lebanon
    Lebanon's stability will remain fragile during the next year 
primarily because of the tensions triggered by the Syrian conflict. We 
expect Lebanon will be able to avoid destabilizing sectarian violence, 
but it is likely to experience occasional, localized clashes between 
pro- and anti-Asad sectarian militias. Thus far, political leaders have 
succeeded in muting popular outrage over the October 2012 bombing that 
killed a popular Sunni figure, and the Lebanese Armed Forces remain 
effective at controlling small-scale violence.
Libya
    Libya's leaders are struggling to rebuild after the revolution and 
the collapse of the Qadhafi regime. The institutional vacuum caused by 
Qadhafi's removal increased terrorist activity and gave rise to 
hundreds of well-armed regional militias, many of which played key 
roles in overthrowing the regime but now complicate Libya's stability. 
The transitional government is struggling to control the militias, but 
it remains reliant on some to provide security in the absence of 
cohesive and capable security institutions. Eastern Libya has been 
traditional hubs of extremists, and if left unchecked by Libyan 
authorities and allied militias, groups operating from there could pose 
a recurring threat to Western interests.
    The government is also working to rebuild its administrative 
capacity as it manages the post-revolutionary transition and is 
overseeing the drafting of a constitution, which will set the stage for 
elections as soon as this year. Libya has quickly resumed high levels 
of oil production, which is critical to rebuilding the economy. As of 
late 2012, it restored crude oil output to near preconflict levels of 
1.6 million barrels per day, but Tripoli will need the expertise and 
support of international oil companies to sustain, if not boost, 
overall supply.
                               south asia
Afghanistan
    The upcoming presidential election is scheduled for April 2014, 
while the International Security Assistance Force (ISAF) is completing 
its drawdown.
    We assess that the Taliban-led insurgency has diminished in some 
areas of Afghanistan but remains resilient and capable of challenging 
U.S. and international goals. Taliban senior leaders also continue to 
be based in Pakistan, which allows them to provide strategic guidance 
to the insurgency without fear for their safety. Al Qaeda's influence 
on the insurgency is limited, although its propaganda gains from 
participating in insurgent attacks far outweigh its actual battlefield 
impact.
    Security gains are especially fragile in areas where ISAF surge 
forces have been concentrated since 2010 and are now transitioning the 
security lead to Afghan National Security Forces (ANSF). The ANSF will 
require international assistance through 2014 and beyond. The Afghan 
National Army and Afghan National Police have proven capable of 
providing security in major cities, nearby rural areas, and key ground 
lines of communication in the vicinity of government-controlled areas. 
The Afghan Air Force has made very little progress. The National 
Directorate of Security remains Afghanistan's premier national 
intelligence service and likely will play a larger role in regime 
security over time.
    In addition, Afghanistan's economy, which has been expanding at a 
steady rate, is likely to slow after 2014. Kabul has little hope of 
offsetting the coming drop in Western aid and military spending, which 
have fueled growth in the construction and services sectors. Its licit 
agricultural sector and small businesses have also benefited from 
development projects and assistance from nongovernmental organizations, 
but the country faces high rates of poverty, unemployment, food 
insecurity, and poppy cultivation.
Pakistan
    Pakistan is preparing for national and provincial assembly 
elections, which must be held no later than May 2013, and a 
presidential election later in the year. Pakistani officials note that 
these elections are a milestone--the first time a civilian government 
has completed a 5-year term and conducted a transfer to a new 
government through the electoral process.
    Islamabad is intently focused on Afghanistan in anticipation of the 
ISAF drawdown. The Pakistani Government has attempted to improve 
relations with Kabul and ensure that its views are taken into 
consideration during the transition period. The military this year 
continued operations in the federally Administered Tribal Areas (FATA) 
and, as of late 2012, had forces in place for an operation against 
anti-Pakistan militants in the North Waziristan Agency of the FATA. 
There were fewer domestic attacks by the Tehrik-eTaliban Pakistan this 
year than in the previous several years.
    Economically, trouble looms. Pakistan, with its small tax base, 
poor system of tax collection, and reliance on foreign aid, faces no 
real prospects for sustainable economic growth. The government has been 
unwilling to address economic problems that continue to constrain 
economic growth. The government has made no real effort to persuade its 
disparate coalition members to accept much-needed policy and tax 
reforms, because members are focused on retaining their seats in 
upcoming elections. Sustained remittances from overseas Pakistanis 
(roughly $13 billion from July 2011 to June 2012, according to 
Pakistan's central bank) have helped to slow the loss of Reserves. 
However, Pakistan has to repay the IMF $1.7 billion for the rest of 
this fiscal year for money borrowed as part of its 2008 bailout 
agreement; growth was around 3.5 percent in 2012; and foreign direct 
investment and domestic investment have both declined substantially.
India
    Both India and Pakistan have made calculated decisions to improve 
ties, despite deep-rooted mistrust. They held a series of meetings in 
the past year and will probably continue to achieve incremental 
progress on economic relations, such as trade, while deferring serious 
discussion on the more contentious issues of territorial disputes and 
terrorism. Even modest progress, however, could easily be undone by a 
terrorist attack against India linked to Pakistan, which could trigger 
a new crisis and prompt New Delhi to freeze bilateral dialogue.
    India will continue to support the current Afghan Government to 
ensure a stable and friendly Afghanistan. India furthered its 
engagement with Afghanistan in 2012 and signed an additional four 
memoranda of understanding on mining, youth affairs, small development 
projects, and fertilizers during President Karzai's visit to New Delhi 
in November 2012. We judge that India sees its goals in Afghanistan as 
consistent with U.S. objectives, and favors sustained ISAF and U.S. 
presence in the country. India will almost certainly cooperate with the 
United States and Afghanistan in bilateral and multilateral frameworks 
to identify assistance activities that will help bolster civil society, 
develop capacity, and strengthen political structures in Afghanistan. 
Moreover, India consistently ranks in the top three nations that 
Afghans see as helping their country rebuild. As of April 2012, India 
ranked as Afghanistan's fifth largest bilateral donor.
    Neither India nor China currently seeks to overturn the strategic 
balance on the border or commit provocations that would destabilize the 
relationship. However, India and China are each increasing their 
military abilities to respond to a border crisis. Both consider these 
moves to be defensive, but they are probably fueling mutual suspicion 
and raising the stakes in a potential crisis. As a result, periodic, 
low-level intrusions between forces along the border could escalate if 
either side saw political benefit in more forcefully and publicly 
asserting its territorial claims or responding more decisively to 
perceived aggression. However, existing mechanisms, as well as a shared 
desire for stability by political and military leaders from both sides, 
will likely act as an effective break against escalation.
                                 africa
    Throughout Africa, violence, corruption, and extremism pose 
challenges to U.S. interests in 2013. As in 2012, Africa's stability 
will be threatened not only by unresolved discord between Sudan and 
South Sudan, fighting in Somalia, and extremist attacks in Nigeria, but 
also by the collapse of governance in northern Mali and renewed 
conflict in the Great Lakes region. Elsewhere, African countries are 
vulnerable to political crises, democratic backsliding, and natural 
disasters. On the positive side, in parts of the continent, development 
is advancing--for example, in Ghana--and, in Somalia, international 
efforts and domestic support are widening areas of tenuous stability.
Sudan and South Sudan
    Sudan's President Bashir and the National Congress Party (NCP) are 
confronting a range of challenges, including public dissatisfaction 
over economic decline and insurgencies on Sudan's southern and western 
borders. Sudanese economic conditions have deteriorated since South 
Sudan's independence, when South Sudan took control of the majority of 
oil reserves. The country now faces a decline in economic growth that 
jeopardizes political stability and fuels opposition to Bashir and the 
NCP. Khartoum is likely to resort to heavy-handed tactics to prevent 
protests from escalating and will pursue a military response to 
provocations by Sudan People's Liberation Movement-North (SPLM-N) 
rebels in Southern Kordofan and Blue Nile States. An uptick in violence 
in Sudan's western Darfur region toward the end of the rainy season in 
October 2012 will probably continue through 2013. Islamist extremists 
remain active in Sudan potentially threatening the security of the 
Sudanese Government as well as U.S. and other western interests.
    South Sudan in 2013 will face issues that threaten to destabilize 
its fragile, untested, poorly resourced government. Festering ethnic 
disputes are likely to undermine national cohesion, and the southern 
government will struggle to provide security, manage rampant 
corruption, and deliver basic services. Despite a series of agreements 
in the wake of Juba's incursion into Sudan in April 2012, controversial 
unresolved disputes, such as the future of Abyei, risk a return to 
conflict between the two countries. Animosity and lack of trust between 
Khartoum and Juba also threaten to undermine the implementation of 
agreements signed in September 2012. South Sudan's economy suffered 
significant setbacks after Juba shut down oil production in early 2012, 
and it will struggle to rebound because unresolved security conflicts 
with Sudan have delayed the restart of oil production, despite a signed 
deal with Khartoum in September 2012. Ethnic conflict in South Sudan is 
likely to continue as the South Sudanese military struggles to disarm 
ethnic militias and provide security across the country. We assess the 
ruling Sudan People's Liberation Movement (SPLM) will continue to turn 
to the international community, specifically the United States, for 
assistance.
Somalia
    Somalia's political transition in 2012 installed new political 
players and degraded the influence of old guard politicians responsible 
for corruption and mismanagement of government resources under the 
transitional government system. The country's nascent institutions, 
ill-equipped to provide social services, along with pervasive 
technical, political, and administrative challenges at the national 
level, will test Mogadishu's ability to govern effectively in 2013. 
Command and control of AMISOM forces and their proxies, along with 
facilitating cooperation between Mogadishu and AMISOM forces operating 
in southern Somalia, will also be distinct challenges for the 
government.
    Al-Shabaab, the al Qaeda-affiliated insurgency that has terrorized 
populations and destabilized the transitional government since 2008, is 
largely in retreat, ameliorating instability and opening space for 
legitimate governing entities to exert control in southern Somalia. 
Despite its fractious state, al-Shabaab continues to plan attacks in 
Somalia and has returned to launching asymmetric attacks in a meager 
attempt to reassert control in key areas, including Mogadishu and the 
port city of Kismaayo. The group also poses a threat to U.S. and 
Western interests in Somalia and regionally, particularly in Kenya, and 
leverages its operatives and networks in these locales for attacks.
Mali
    In January 2012, after the return of heavily armed Tuareg fighters 
from Libya, the secular-based National Movement for the Liberation of 
the Azawad (MNLA) and the extremist Islamist Tuareg rebel group Ansar 
al-Din launched a rebellion against the Malian Government. Following a 
21 March military coup, Ansar al-Din--with help from AQIM--and the MNLA 
quickly drove the Malian military out of the north. After taking 
control of northern Mali, AQIM worked closely with Ansar al-Din and 
AQIM-offshoot Movement for Tawhid and Jihad in West Africa (TWJWA) to 
consolidate gains in the region and impose a hard-line version of 
sharia.
    Armed conflict between Malian Armed Forces and Islamist forces 
renewed in early 2013 when Islamist forces attacked Malian military 
outposts near Islamist-held territory. French forces quickly intervened 
with ground forces and airstrikes, halting AQIM and its allies' 
advances and eventually pushing them out of key northern Malian 
population centers. Regional forces and Chadian troops have begun to 
deploy to Mali, where European Union trainers will begin the training 
cycle of designated forces. Several countries have now offered 
significant contributions to the deploying force but lack adequate 
troops, training, and logistics to provide a capable force.
    Mali's fragile interim government faces an uphill effort to reunite 
the country and hold democratic elections by mid-2013--especially 
elections the north perceives as credible. In addition to planning 
elections, local and regional actors are pursuing diplomatic options, 
including negotiations, to address instability in northern Mali and 
counter AQIM's influence.
Nigeria
    The Nigerian state is acutely challenged by uneven governance, 
endemic corruption, inadequate infrastructure, weak health and 
education systems, and recurring outbreaks of sectarian, ethnic, and 
communal violence. Abuja also faces Boko Haram--a northern Sunni 
extremist group with ties to AQIM--whose attacks on Christians and 
fellow Muslims in Nigeria have heightened religious and ethnic tensions 
and raised concerns of possible attacks against U.S. interests in the 
country. Communal violence is down from last year, but Boko Haram has 
made moves to incite it, and the Nigerian Government is scarcely 
addressing the underlying causes, such as socioeconomic conditions in 
troubled northern Nigeria, despite pledges to do so. In the Niger 
Delta, Abuja is struggling to extricate itself from open-ended 
financial commitments and has not made progress rehabilitating, 
retraining, and reintegrating disgruntled former militants. Militant/
criminal attacks on land-based oil infrastructure in Nigeria's coastal 
areas, along with hijackings, kidnappings, and piracy attacks off the 
coast, continue at a steady pace.
Central Africa
    The Great Lakes region of Central Africa has a total population of 
128 million and includes parts or all of Burundi, Congo (Kinshasa), and 
Uganda. Despite gains in peace and security in the past decade, the 
region endures the chronic pressures of weak governance, ethnic 
cleavages, and active rebel groups. U.S. Government-sponsored modeling 
suggests that Burundi, Congo (Kinshasa), and Uganda are all at risk of 
violent instability during the next year. Rwandan-backed M23 rebels in 
Eastern Congo in 2012 engaged the Armed Forces of Congo and U.N. 
peacekeepers in the worst fighting since 2008, displacing more than a 
quarter-million civilians. Other armed groups will likely increase 
predatory activity, encouraged by Congolese President Kabila's flawed 
election in 2011 and his deteriorating control. Several of these 
nations have become U.S. Government security partners in recent years. 
Ugandan and Burundian troops compose the vanguard of AMISOM, and Rwanda 
is a vital part of the peacekeeping mission in Darfur.
    Since 2008, Uganda has deployed troops across Congo, South Sudan, 
and Central African Republic to pursue Joseph Kony and the Lord's 
Resistance Army (LRA), with U.S. assistance, including approximately 
100 U.S. military advisors. While LRA foot soldiers terrorize civilians 
in the region, Joseph Kony and his top lieutenants evade detection and 
tracking by keeping low profiles and moving in scattered bands across a 
remote region.
                               east asia
China
    Regional Dynamics
    During 2012, Beijing adopted strong, uncompromising positions in 
maritime territorial disputes with several of its neighbors. In each 
case, China sought to expand its control over the relevant territories 
and obstructed regional efforts to manage the disputes. Beijing's 
regional activities appear to be, in part, a response to the U.S. 
strategic rebalance toward Asia-Pacific, which Chinese leaders believe 
is aimed at undermining China's position in the region. Globally, 
Beijing has both assisted and hindered U.S. policy objectives on such 
issues as Iran, Syria, Afghanistan, and North Korea, and it continues 
to expand its economic influence and to try to parlay it into greater 
political influence.
    The leadership transition in Beijing continues to unfold as Chinese 
leaders grapple with a confluence of domestic problems--including 
lagging economic indicators, corruption, and pressure for political 
reform--that are fueling leadership fears about the potential for 
serious domestic unrest.
    The leadership team that is confronting these internal challenges 
is also likely to maintain uncompromising positions on foreign policy 
issues, especially those involving maritime and territorial disputes in 
the South and East China Seas. Meanwhile, China-Taiwan relations 
remained relatively calm in 2012, due in part to the continuity 
provided by Taiwan President Ma Ying-jeou's reelection last January. 
However, progress in cross-strait dialogue almost certainly will 
continue to be gradual, and the cross-strait military and economic 
balance will keep shifting in China's favor.
    Military Developments
    China is pursuing a long-term comprehensive military modernization 
designed to enable China's armed forces to achieve success on a 21st 
century battlefield. China's military investments favor capabilities 
designed to strengthen its nuclear deterrent and strategic strike, 
counter foreign military intervention in a regional crisis, and provide 
limited, albeit growing, capacity for power projection. During 2012, 
China's People's Liberation Army (PLA) introduced advanced weapons into 
its inventory and reached milestones in the development of key systems, 
thereby sustaining the modernization program that has been underway 
since the late 1990s. For example, in August, the PLA Navy commissioned 
the Liaoning, China's first aircraft carrier, which Beijing probably 
sees as a significant step in developing a military commensurate with 
great-power status. Additionally, China has continued to develop 
advanced ballistic missiles.
    Developments in Chinese military capabilities support an expansion 
of PLA operations to secure Chinese interests beyond territorial 
issues. To expand operations--specifically in the Indian Ocean-- China 
is pursuing more effective logistical support arrangements with 
countries in the region. Beijing is also maintaining a multi-ship 
antipiracy task force in the Gulf of Aden for the fourth straight year 
to protect commercial shipping. The task force operates independently 
of international efforts, but is making a tangible contribution to 
protecting shipping through this heavily pirated area.
    China is also supplementing its more advanced military capabilities 
by bolstering maritime law enforcement (MLE) activities in support of 
its territorial claims in the South and East China Seas. In the 
territorial disputes with the Philippines and Japan last year, the 
Chinese Navy stayed over the horizon as MLE vessels provided Beijing's 
on-scene presence and response.
North Korea
    Kim Jong Un has quickly consolidated power since taking over as 
leader of North Korea when his father, Kim Jong Il, died in December 
2011. Kim has publicly focused on improving the country's troubled 
economy and the livelihood of the North Korean people, but we have yet 
to see any signs of serious economic reform.
    North Korea maintains a large, conventional military force held in 
check by the more powerful South Korean-U.S. military alliance. 
Nevertheless, the North Korean military is well postured to conduct 
limited attacks with little or no warning, such as the 2010 sinking of 
a South Korean warship and the artillery bombardment of a South Korean 
island along the Northern Limit Line. (For information on North Korea's 
nuclear weapons program and intentions, see the Proliferation section.)
                           russia and eurasia
Russia
    Domestic Political Developments
    During the next year, Russia's political system of managed 
democracy will come under greater strain as the Kremlin grapples with 
growing social discontent and a society that is increasingly in flux. 
Important sectors of the Russian public are frustrated with the 
country's sluggish economy and are no longer content with a political 
system that lacks any real pluralism and suffers from poor and 
arbitrary governance and endemic corruption. All of these factors 
present Russian President Vladimir Putin with far greater challenges 
than any he faced during his two previous terms in office.
    Putin's return to the presidency in 2012 was intended to restore 
strength and vigor to a system that he believed had weakened under 
President Dmitriy Medvedev. Instead, antipathy over the Putin-Medvedev 
job swap touched off some of the largest political protests Russia has 
seen since the breakup of the Soviet Union. Despite these unprecedented 
protests, the Russian leadership has demonstrated firm resolve to 
preserve the system, while a disparate opposition movement struggles to 
become more cohesive, broaden its base, and build momentum. After 
initially tolerating demonstrations and offering a few political 
reforms in the hope of dividing the opposition, the Kremlin took a more 
aggressive approach, adopting measures to restrict opposition 
activities, such as targeting opposition figures for harassment and 
using legislative and judicial means to confront, intimidate, and 
arrest opponents. These actions have helped to thwart the opposition's 
ability to build momentum and preserve the Kremlin's control of the 
political system, but they have not addressed the sources of bitterness 
and dissatisfaction.
    Foreign Policy
    Russian foreign policy is unlikely to deviate significantly from 
its current course in the next year, but domestic political factors 
almost certainly will exert greater influence on foreign policy. Putin 
is sensitive to any U.S. criticisms of Russian domestic political 
practices, which he perceives as meddling in Russia's internal affairs. 
Nevertheless, he sees benefits in cooperating with the United States on 
certain issues.
    Missile defense will remain a sensitive issue for Russia. Russian 
leaders are wary that in the long run U.S. pursuit of a ``missile 
shield'' will result in systems that enable the United States to 
undercut Russia's nuclear deterrent and retaliatory capabilities. 
Russian leaders also see aspects of U.S. plans for missile defense in 
Europe as serious threats to their core national security interests. 
The Kremlin will continue to look to the United States and our North 
Atlantic Treaty Organization (NATO) partners for guarantees that any 
system will not be directed at Russia. On Syria, Russia is likely to 
remain a difficult interlocutor. The Kremlin will remain focused on 
preventing outside military intervention aimed at ousting the Asad 
regime. Moscow is troubled by the Libyan precedent and believes the 
west is pursuing a reckless policy of regime change that will 
destabilize the region and could be used against Russia. The Russians 
point to the rise of the Muslim Brotherhood in Egypt and the terrorist 
attacks against U.S. diplomats in Libya last September as evidence 
supporting their arguments.
    Moscow is not likely to change its diplomatic approach to Iran's 
nuclear program. Russia argues that confidence-building measures and an 
incremental system of rewards are the best ways to persuade Iran to 
cooperate with the International Atomic Energy Agency. Despite 
disagreements over missile defense and the problems of Iran's nuclear 
program and Syria, Moscow supports U.S.-led NATO military operations in 
Afghanistan. It sees its support of the Northern Distribution Network 
(NDN) as a pillar of U.S.-Russia relations that also helps stabilize 
Afghanistan. Nevertheless, Russia is suspicious of U.S. intentions in 
Afghanistan and wary of any U.S. efforts to maintain a residual 
military presence after 2014 without a U.N. mandate, which could put 
Moscow's cooperation beyond this period in doubt.
    Although the bilateral relationship with the United States will 
remain important for Russia, Moscow is most likely to focus its foreign 
policy efforts on strengthening its influence over the states of the 
former U.S.SR by binding them closer through integration initiatives, 
such as the Russia-Belarus-Kazakhstan Customs Union or Putin's proposed 
Eurasian Union.
    The Military
    Russian military forces, both nuclear and conventional, support 
deterrence and enhance Moscow's geopolitical clout. Since late 2008 the 
Kremlin has embraced a wide-ranging military reform and modernization 
program to field a smaller, more mobile, better-trained, and high-tech 
force during the next decade. This plan represents a radical break with 
historical Soviet approaches to manpower, force structure, and 
training. The initial phases, mainly focused on force reorganization 
and cuts in the mobilization base and officer corps, have been largely 
implemented and are being institutionalized. The ground forces alone 
have reduced about 60 percent of armor and infantry battalions since 
2008, while the Ministry of Defense cut about 135,000 officer 
positions, many at field grade.
    Moscow is now setting its sights on long-term challenges of 
rearmament and professionalization. In 2010, a 10-year procurement plan 
was approved to replace Soviet-era hardware and bolster deterrence with 
a balanced set of modern conventional, asymmetric, and nuclear 
capabilities. However, funding, bureaucratic, and cultural hurdles--
coupled with the challenge of reinvigorating a military industrial base 
that deteriorated for more than a decade after the Soviet collapse--
complicate Russian efforts.
    The reform and modernization programs will yield improvements that 
will allow the Russian military to more rapidly defeat its smaller 
neighbors and remain the dominant military force in the post-Soviet 
space, but they will not--and are not intended to--enable Moscow to 
conduct sustained offensive operations against NATO collectively. In 
addition, the steep decline in conventional capabilities since the 
collapse of the Soviet Union has compelled Moscow to invest significant 
capital to modernize its conventional forces. At least until Russia's 
high precision conventional arms achieve practical operational utility, 
Moscow will embrace nuclear deterrence as the focal point of its 
defense planning. It still views its nuclear forces as critical for 
ensuring Russian sovereignty and relevance on the world stage and for 
offsetting its military weaknesses vis-a-vis potential opponents with 
stronger militaries.
The Caucasus and Central Asia
    Recent developments in Georgia, following the victory of Prime 
Minister Bidzina Ivanishvili's Georgian Dream party in the October 2012 
parliamentary elections, offer new hope for easing bilateral Russian-
Georgian tensions. Prime Minister Ivanishvili has expressed interest in 
normalizing relations with Russia and has sought to improve the tone of 
the dialogue with Moscow. However, after nearly a decade of President 
Mikheil Saakashvili's United National Movement party rule, Georgia 
faces a challenging political transition and an increased risk of 
domestic political instability.
    The standoff between Armenia and Azerbaijan over the Armenian-
occupied Nagorno-Karabakh region remains a potential flashpoint. 
Heightened rhetoric, distrust on both sides, and recurring violence 
along the Line of Contact increase the risk of miscalculations that 
could escalate the situation with little warning.
    The threat of instability remains in the states of Central Asia. 
Central Asian leaders have prioritized regime stability over political 
and economic reforms that could improve long-term governance and 
legitimacy. Most fear any signs of Arab Spring-type uprisings and 
repress even small signs of discontent. The Central Asian states have 
not built constructive relationships with each other; personal 
rivalries and longstanding disputes over borders, water, and energy 
create bilateral frictions between neighbors and potential flashpoints 
for conflict. Ethnic conflicts are also possible and could emerge with 
little warning. Clashes between ethnic Uzbeks and Kyrgyz in southern 
Kyrgyzstan following the 2010 overthrow of the government resulted in 
the deaths of more than 400 people, and in the absence of government 
efforts to lead reconciliation, tensions between these ethnic groups 
remain high.
Ukraine, Belarus, and Moldova
    In Belarus, Lukashenko has weathered an economic crisis that 
presented him with the greatest challenge to his rule since he took 
power in 1994. Corrective measures and financial assistance from Russia 
have eased some of the more harmful consequences of the crisis, and 
opposition movements, such as the Revolution through Social Networks, 
have petered out. Nevertheless, Belarus's economic situation remains 
precarious, and Lukashenko's refusal to institute structural economic 
reforms raises the likelihood that Belarus will fall into another 
economic crisis in 2013.
    Under President Yanukovych, Ukraine is drifting towards 
authoritarianism. The October 2012 parliamentary elections were marred 
by irregularities and fell far short of Western standards for free and 
fair elections, representing a step backwards from prior Ukrainian 
elections. Yanukovych also shows few signs that he intends to release 
imprisoned opposition leader former Prime Minister Yuliya Tymoshenko 
any time soon, a key condition to improving Ukraine's relations with 
the West. The government appears to be ``doubling down,'' preparing 
additional criminal charges against Tymoshenko that could keep her 
behind bars for life. In addition, the lack of structural economic 
reforms coupled with a precarious financial situation raises the risk 
of economic crisis in 2013.
    The status quo in Moldova is likely to prevail during the next 
year. Electing new leaders in Moldova and in the separatist region of 
Transnistria has improved the tone of relations between Chisinau and 
Tiraspol. A renewed focus on confidence-building measures, such as 
easing restrictions on the movement of people and goods, generated 
cautious optimism in early 2012 about progress toward eventual 
settlement of the Transnistria conflict. However, the negotiating 
positions of both sides later hardened, and a settlement to the 
conflict is highly unlikely in the next year.
                    latin america and the caribbean
    Positive trends in much of Latin America include the deepening of 
democratic principles, economic growth, and resilience in the face of 
the global financial crisis. Income inequality in the region is also 
showing a steady decline. In some areas, however, economic stagnation, 
high rates of violent crime and impunity, ruling party efforts to 
manipulate democratic institutions to consolidate power, and slow 
recovery from natural disasters are challenging these strides. 
Initiatives to strengthen regional integration are leading some 
countries to try to limit U.S. influence, but they are hampered by 
ideological differences and regional rivalries.
    Iran has been reaching out to Latin America and the Caribbean to 
decrease its international isolation. President Ahmadinejad traveled to 
the region twice in 2012. Tehran has cultivated ties to leaders of the 
Venezuelan-led Alliance for the Peoples of our Americas (ALBA) in 
Bolivia, Cuba, Ecuador, Nicaragua, and Venezuela, and maintains cordial 
relations with Cuba and Nicaragua. Relations with Tehran offer these 
governments a way to stake out independent positions on the 
international issue of Iran, while extracting financial aid and 
investment for economic and social projects.
    The drug threat to the United States emanates primarily from the 
Western Hemisphere; the overwhelming majority of drugs now consumed in 
the United States are produced in Mexico, Colombia, Canada, and the 
United States. Patterns in drug marketing and trafficking create 
conditions that could fuel this trend and further undermine citizen 
security in several countries in the region. Central American 
Governments, especially Honduras, El Salvador and Guatemala, are trying 
to cope with some of the highest violent crime and homicide rates in 
the world. In addition, weak and corrupt institutions in these 
countries foster permissive environments for gang and criminal 
activity, limit democratic freedom, encourage systemic corruption, and 
slow recovery.
Mexico
    Recently inaugurated Mexican President Enrique Pena Nieto inherited 
a complex security situation marked by confrontation between the state 
and drug cartels, strong public concern over levels of violence, and 
unprecedented security cooperation with the United States. Pena Nieto 
has said he will prioritize efforts to reduce violence and push reforms 
aimed at strengthening the rule of law, including: Mexico's transition 
to an accusatory system of justice, a more effective counter-illicit 
finance regime, police professionalization, and bolstered government 
intelligence capabilities.
    President Calderon turned over the presidency to Pena Nieto on 1 
December, having made headway against several cartels, in particular 
Los Zetas, the Beltran Leyva Organization, and the Gulf Cartel. Drug-
related homicides have increased significantly since 2007--Calderon's 
first full year in office--and remain high; more than 50,000 Mexicans 
have died as a result of drug-related violence since that year.
    Pena Nieto promised to push forward Calderon's landmark 2008 
constitutional reform to overhaul Mexico's judicial system. The 
judicial reform process has been uneven across Mexico's states, and 
many are unlikely to meet the 2016 implementation deadline. On police 
reform, Pena Nieto plans to create a new gendarmerie, or paramilitary 
police, to gradually take over policing duties from the military. He 
also has publicly endorsed efforts to reform and modernize the Federal 
police, as well as state and municipal-level police forces. Pena 
Nieto's plans to emphasize anti-money laundering efforts will be 
strengthened by a recently passed law that restricts high-value dollar 
and peso purchases commonly used to launder drug proceeds, such as in 
real estate sales, and requires government entities to provide data to 
support money-laundering prosecutions.
Venezuela
    Venezuelan President Hugo Chavez's death on 5 March has triggered 
preparations for a new election in which we expect Vice President 
Nicolas Maduro to compete against Miranda Governor and former 
presidential candidate Henrique Capriles Radonski. Venezuelan Foreign 
Minister Elias Jaua announced that Maduro will take over as interim 
president and that an election will be held within 30 days. Maduro is a 
long-time Chavez loyalist and will almost certainly continue Chavez's 
socialist policies.
    The Venezuelan Government will be up against the consequences of an 
increasingly deteriorating business environment and growing 
macroeconomic imbalances. Debt obligations will consume a growing share 
of Venezuela's oil revenues, even if oil prices remain high. Lingering 
citizen concerns that Caracas will face in the next year also include 
personal safety, which has been threatened by a rising tide of violent 
crime.
Cuba
    Cuban President Raul Castro is proceeding cautiously with economic 
reforms to reduce the state's direct role in the economy and diversify 
trade relations, while preserving socialism and the regime. Measures 
implemented since 2011 to expand self-employment, permit sales of 
vehicles and property, and lease state lands to farmers are generally 
popular but have failed to produce much growth. With their primary 
patron Hugo Chavez's death, Cuba's leaders are urgently trying to 
attract foreign investment partners and increase their access to hard 
currency and foreign credit.
    A priority for Cuban leaders is ensuring that economic reform does 
not increase pressure for a political opening and greater individual 
rights. There is no indication that Castro's efforts, including his 
stated interest in laying the groundwork for a generational transition 
in leadership, will loosen the regime's grip on power. The stiff prison 
term imposed on the U.S. Agency for International Development 
subcontractor Alan Gross for facilitating uncensored Internet 
connectivity demonstrates the Castro regime's sensitivity to public 
access to technology and information beyond its control. Indeed, harsh 
government repression of peaceful protests and an upswing in short-term 
arrests of dissidents indicate economic changes will not be coupled 
with political changes.
    Havana recently announced a new travel and migration policy for 
most Cubans that will no longer require exit permits and extends the 
time Cubans can remain abroad without forfeiting property and other 
rights. The new policy has thus far only prompted a modest boost in 
U.S. visas. The U.S. Interests Section in Havana recently implemented 
process improvements that dramatically reduced wait times for non-
immigrant visa appointments. Countries around the region are watching 
for any indication of significant increases in Cuban nationals arriving 
under the new travel policy, but to date they have seen no such 
increases.
Haiti
    Stability in Haiti is fragile because of the country's weak 
governing institutions. Strained relations between President Michel 
Martelly, in office since May 2011, and the opposition-dominated 
legislature are delaying progress on several fronts, including plans to 
hold overdue Senate and local elections and advance the President's 
agenda to create jobs, improve education, and attract foreign 
investment. Although Martelly is generally still popular, the risk of 
social unrest could grow because of unmet expectations over living 
conditions and the lack of economic opportunities. President Martelly 
will likely face continued protests--some possibly violent and 
organized by his enemies--over rising food costs.
    President Martelly and Prime Minister Laurent Lamothe intend to 
prioritize private-sector-led growth and end dependence on aid. 
However, Haiti will remain dependent on the international community for 
the foreseeable future because of the devastating effects of the 
earthquake in January 2010 on infrastructure and production capacity, 
several recent natural disasters that ruined staple food crops, and the 
unsettled political and security climate. Of the estimated 1.5 million 
Haitians displaced by the earthquake, more than 350,000 are still in 
tent encampments. We assess that the current threat of a mass migration 
from Haiti is relatively low because Haitians are aware of the standing 
U.S. policy of rapid repatriation of migrants intercepted at sea.
                                 europe
Euro-Zone Crisis
    European leaders are still grappling with the euro-zone crisis--the 
euro zone's economy slipped back into recession in 2012 following 2 
years of slow economic growth. We noted last year that the outcome of 
the crisis has major implications not just for the United States but 
also for the world economy. The risk of an unmanaged breakup of the 
euro zone is lower this year because European Union (EU) leaders have 
taken steps to strengthen banking and fiscal integration, but economic 
deterioration in Europe threatens to depress world growth.
    This year, rising anger over austerity could affect Europe's social 
and political fabric. Given high unemployment--particularly among 
youth--throughout the peripheral euro-zone states (Greece, Italy, 
Portugal, and Spain), there has been an uptick in strikes and violent 
protests. The greatest risk to stability is austerity- and reform-
fatigue spreading across Europe. In November 2012, tens of thousands 
marched--mostly in southern Europe but also in Belgium and France--in 
the first pan-EU labor union action against budget cuts. The crisis has 
already led most European states to cut defense spending, reducing the 
capability of allies to support NATO and other U.S. security interests 
around the world.
Turkey
    Turkey's activist foreign policy has changed fundamentally during 
the past year, mostly in reaction to Asad's brutal approach to the 
opposition-led unrest in Syria. Ankara has since begun to support 
overtly the Syrian political opposition by hosting its members in 
Turkey. This is a departure from Turkey's ruling Justice and 
Development party (AKP)-designed foreign policy approach, which 
emphasized engagement and incentives for shaping behavior but is now 
driven by the destabilizing regional effects of the Asad regime's 
actions. Turkey continues to call on the international community to 
take action against Asad and is increasingly turning to the United 
States and NATO for assistance in managing the crisis.
    The Turkish Kurdish terrorist group Kurdistan People's Congress 
(KGK/former PKK) is Ankara's primary security threat. Turkey's Kurdish 
issue, marked by armed struggle against insurgent KGK forces now 
entering its fourth decade, is increasingly challenging Ankara 
domestically with regional implications. KGK-initiated violence inside 
of Turkey is at its deadliest level in more than a decade. This 
development is fueling public opposition to much-needed constitutional 
reforms to address the Turkish Kurdish minority's legitimate demands 
for political and cultural rights. The sharp rise in violence has 
pushed Ankara to lean more toward military, vice political, means to 
deal with the KGK, although efforts are underway to relaunch talks with 
the KGK leadership. Kurds in Syria are taking advantage of unrest 
fomented by the opposition to Asad, which is stoking Turkish fears of 
Kurdish separatism in Turkey.
    Turkish relations with Iraq are strained. Turkish leaders are 
concerned about what they perceive to be increasingly authoritarian 
tendencies of the Maliki-led government, relations among communities 
within Iraq, and perceived trends in Iraq's foreign policy. Iraq has 
been angered by Turkey's efforts to expand political and energy ties 
with Iraq's semi-autonomous Kurdistan Region without consulting 
Baghdad.
    The Turkey-Israel bilateral relationship remains troubled. In a 
September 2012 speech, Erdogan said Turkey would not normalize 
relations with Israel until Israel met Ankara's three conditions: 
publicly apologizing for the 2010 incident in which Israel interdicted 
an aid flotilla headed for Gaza and killed nine aboard the ship Mavi 
Marmara; providing reparations to the families of the Mavi Marmara 
victims; and lifting the Gaza blockade. Israel's late 2012 operation 
against HAMAS and other Palestinian militant groups in Gaza further 
hardened Turkish attitudes. There seem to be few prospects for 
improving relations between Israel and Turkey.
The Balkans
    Ethnic and internal political divides in the Western Balkans will 
continue to pose the greatest risk to regional stability in 2013. Many 
fragile states in the region suffer from economic stagnation, high 
unemployment, corruption, and weak rule of law. Although the security 
situation in Kosovo's Serb-majority north has improved since fall 2011, 
Western diplomatic and security engagement is needed to implement many 
of the agreements reached in EU-sponsored talks.
    As the EU-facilitated dialogue to help normalize relations between 
Kosovo and Serbia gains traction, the risk of threats and violence by 
ethnic Serb hardliners in northern Kosovo probably will increase. 
Serbia gained EU candidacy status in March 2012 and would like a date 
to begin EU accession talks. However, the relatively new government 
(elected last May) faces large hurdles in fulfilling EU accession 
criteria and reconciling Serbia's constitutional claims to Kosovo with 
the fact that Kosovo is independent. Kosovo's supervised independence 
ended in September 2012, and Pristina will likely seek to expand its 
instruments of sovereignty over its territory. The Kosovo Government 
opened the Mitrovica North Administrative Office in July 2012, 
extending government services to the Serb-majority region. In June 
2013, Kosovo law allows the government to change the mandate of 
Pristina's potential efforts to transition the Kosovo Security Force 
(KSF). This warrants attention to avoid negative responses from 
Belgrade and the Kosovo Serb community in northern Kosovo.
    In Bosnia-Herzegovina (BiH), differences among Serb, Croat, and 
Bosniak elites are intensifying, threatening BiH's state institutions 
and posing obstacles to further Euro-Atlantic integration. A series of 
political crises have distracted attention from pursuing needed reforms 
for EU and NATO integration, and secessionist rhetoric from the 
leadership of the political entity Republika Srpska has further 
challenged Bosnia's internal cohesion. In Macedonia, we do not expect a 
return to the civil war violence of a decade ago. However, disputes 
between Albanian and Macedonian communities might become more polarized 
in the coming year. Tension between Macedonia and Bulgaria warrants 
attention. In addition, Greece's ongoing objection to the country using 
the name ``Macedonia'' is another source of friction, and blocks 
Macedonia's EU and NATO aspirations. In Albania, government 
institutions suffer from corruption and excessive political influence. 
In the lead-up to the June 2013 parliamentary elections, there is worry 
about a return to the heated, partisan conflict that erupted after the 
2009 parliamentary elections, when the opposition party contested the 
election and boycotted parliament on-and-off for nearly 2 years.

            STATEMENT OF LTG MICHAEL T. FLYNN, USA, 
             DIRECTOR, DEFENSE INTELLIGENCE AGENCY

    General Flynn. Thank you. Good morning, Chairman Levin, 
Ranking Member Inhofe, and distinguished members of the 
committee:
    Thank you for this opportunity to testify and for your 
continued support to the dedicated intelligence professionals 
of the DIA and the entire defense intelligence enterprise, many 
of whom are forward-deployed directly supporting U.S. and 
allied military forces in Afghanistan, as well as in 141 
countries in 262 locations around the world. I have been the 
Director of DIA for nearly 8 months now and I cannot 
overemphasize how proud and privileged I am to serve our Nation 
in this capacity.
    As our defense strategy highlights, our Nation is at a 
moment of transition. The global security environment, as 
Director Clapper just stated, presents increasingly complex 
challenges and a growing list of threats and adversaries. The 
demands on the U.S. intelligence system have skyrocketed in 
recent years and these demands are only expected to increase.
    The United States faces an uncertain security environment 
marked by a broad spectrum of dissimilar threats from nation 
states, non-nation state actors, transnational organized 
criminal groups, highly adaptive transnational terrorist 
networks, the proliferation of WMD, and the ever-looming and 
very dangerous threat of cyber attacks against our defense 
industrial base as well as against other critical components of 
our Nation's infrastructure. I view this latter threat as the 
most dangerous threat we face today.
    This opening statement, along with my more thorough 
statement for the record, reflects DIA's best analysis and it 
is based on DIA's worldwide human intelligence, technical 
intelligence, counterintelligence, and measurement and 
signature intelligence collection, as well as our world-class 
national-level document and media exploitation capabilities. 
Additionally, our mission is executed in close collaboration 
with our IC partners, our international coalition partners, as 
well as utilizing the full range of open sources available in 
today's information environment.
    Our customers run the gamut from the President of the 
United States on down to our warfighting combatant commanders. 
But the most important customer we serve are the soldiers, 
sailors, airmen, marines, and civilians who serve our Nation 
around the world and who are willing to stand in harm's way to 
protect our country.
    Without restating what Director Clapper has already 
addressed, I will simply say we face a complex and 
interconnected global operational environment characterized by 
a multitude of actors. This unprecedented array of threats and 
challenges include the continuing threats from the Taliban 
insurgency in Afghanistan, al Qaeda and affiliated terrorist 
organizations in the Middle East and Africa, terrorist havens 
in Pakistan, the popular upheavals and their aftermath in 
Syria, Egypt, and elsewhere in the Middle East, Iran's 
sustained nuclear and missile developments, North Korea's 
continuing nuclear and missile provocations, the growing 
seriousness of cyber threats to our defense industrial base, 
our Nation's critical infrastructure, government networks, and 
the American business community, particularly from China and 
Iran, and finally the growth in China's economic and military 
power. All of these factors place significant demands on the 
DIA and the entire defense intelligence enterprise.
    As stated above, I believe the most pressing threat facing 
our country is the threat from cyber attacks. The daily 
occurrences of attacks are damaging on a variety of levels and 
they are not only persistent and dangerous; the likelihood of 
serious damage to our national security is very real.
    Potential adversaries are increasingly more capable of 
conducting cyber operations. Cyber attacks remain an important 
and increasing transnational threat to the security of the 
United States, with state actors such as China, Russia, Iran, 
and North Korea integrating these capabilities into their 
intelligence-gathering methods and warfare doctrine. Malicious 
actors, including terrorist organizations, have also 
demonstrated the willingness, though limited capability, to use 
cyber as a means to attack U.S. interests.
    One final point regarding cyber attacks that we need to 
keep in mind: Behind these attacks are human beings. Some are 
non-state individuals, some part of state-sponsored networks, 
but each with increasing capabilities and harmful intentions 
doing damage to our national security.
    Lastly, since DIA's mission includes providing our DOD 
strategic warning, given the enduring impact of the Arab 
Spring, the ongoing turmoil in Syria, persistent territorial 
disputes globally, and emerging transnational threats 
previously described, all these challenges underscore our need 
for effective strategic warning and long-range foresight to 
prevent strategic surprise.
    Strategic problems such as proliferation of WMD, state-on-
state conflict, instability, resource scarcity, and terrorism 
remain at the forefront of U.S. warning concerns, however 
strategic surprise not only as a goal of the deliberate 
deception efforts by our adversaries, but now also stemming 
from human and social dynamics. Those small and varied 
interactions with seemingly no immediate relevance to DOD can 
rapidly evolve and radically alter U.S. policy.
    To uncover these challenges, DIA in partnership with the 
IC, our combatant commands, and our closest international 
partners, monitors the interactions between military, 
political, technological, economic, and social developments. We 
place these events in the context of history, culture, 
religion, and physical and human geography. Our ability to 
understand these interactions provides decision advantage in 
the face of unforeseen events to anticipate surprise.
    Technological change has the potential to create surprise. 
Less developed countries and non-state actors may surge with 
innovative capabilities that could counter some U.S. military 
capabilities. Proliferation of advanced technology and the 
rapid improvements in commercial off-the-shelf technology will 
aid development of new commercially-enabled asymmetric threats 
and improvements in communications will speed the proliferation 
of advanced and commercially available technologies.
    In order to meet these challenges, DIA through our strategy 
and our transformative Vision 2020, Driving Change Through 
Integration Project, has undertaken several initiatives 
intended to increase the efficiency and effectiveness of DIA 
and the defense intelligence enterprise, the single biggest 
component of which is our need to take the right lessons 
learned from a decade of war and more closely integrate our 
intelligence operations with our uniformed Services, our 
combatant commands, our IC teammates, and our allies and 
coalition partners.
    To conclude, today's focus on combat operations in 
Afghanistan against insurgents and transnational terrorism 
around the world does not preclude the potential that other 
threats will come to the fore, including conflicts among major 
countries that could intersect vital U.S. interests. Defense 
intelligence must be able to provide timely and actionable 
intelligence across the entire threat spectrum.
    In close collaboration with the IC, DIA is strengthening 
collection and analysis and sharing more information across 
intelligence disciplines and with our Nation's closest allies.
    The men and women of DIA and our entire defense 
intelligence enterprise know they have a unique responsibility 
to the American people and take great pride in their work. I am 
honored and privileged to serve with them and present their 
analysis to you. On behalf of the men and women of DIA and the 
entire enterprise, thank you for your continuing confidence. 
Your support is vital to us as well as our national security, 
and I look forward to answering your questions. Thank you.
    [The prepared statement of General Flynn follows:]
            Prepared Statement by LTG Michael T. Flynn, USA
    Good morning, Chairman Levin, Ranking Member Inhofe, and member of 
the committee. Thank you for this opportunity to testify and for your 
continued support to the dedicated men and women of the Defense 
Intelligence Agency (DIA), many of whom are forward-deployed directly 
supporting U.S. and allied military forces in Afghanistan and other 
places around the world.
    The United States faces a complex security environment marked by a 
broad spectrum of dissimilar threats and emerging from countries and 
highly adaptive transnational terrorist networks. This testimony 
reflects DIA's best analysis, based on the agency's worldwide human 
intelligence, technical intelligence, counterintelligence, and document 
and media exploitation capabilities, along with formation from DIA's 
Intelligence Community (IC) partners, international allies, and open 
sources.
    I will begin my testimony first with an assessment of Afghanistan, 
where the Department of Defense (DOD), the IC, DIA, and our coalition 
partners remain actively engaged supporting military operations against 
the threat of al Qaeda and other anti-goyernment of Afghanistan forces.
                        conflict in afghanistan
    As the International Security Assistance Force (ISAF) continues the 
transition in Afghanistan, the Afghan Government and the Afghan 
National Security Forces (ANSF) will seek to complete a Bilateral 
Security Agreement in 2013, assume full security lead for all 
ofAfghanistan, and conduct presidential and provincial council 
elections in 2014.
    The Afghan Army and Police have performed well over the course of 
2012. Increasing independent and Afghan-led operations, along with 
joint operations with ISAF, have countered insurgent influence in key 
urban centers in southern and eastern AfghanistIDt. Afghan Security 
Forces have proven more capable and better coordinated in responding to 
sustained high-profile attacks in Kabul, managing nationwide civil 
unrest, and have additionally improved their capability to secure roads 
and critical transportation corridors in the country's north. As an 
auxiliary to Afghanistan's formal security forces, the Afghan Local 
Police (ALP) have disrupted insurgent activity in rural areas that 
might otherwise lack central government security presence.
    The Afghan National Army (ANA) and Afghan National Police (ANP) met 
their recruitment goals for 2012. Overall force generation also remains 
on track to support Afghan assumption of security lead for all of 
Afghanistan by 2014. Future recruiting figures are expected to 
fluctuate as recruiting requirements change to compensate for 
attrition. However, we expect the force to remain within authorized 
manning levels despite these fluctuations.
    Operationally, the ANA has shown some improvement in capability and 
effectiveness, but require sustained mentoring and direct support from 
ISAF for combat enabling capabilities such as close air support; 
medical evacuation; intelligence, surveillance and reconnaissance; and 
counter-improvised explosive device (IED) expertise and technology. 
This reliance on ISAF for combat enabler functions limits the ANA's 
ability to independently project force outside of large urban areas and 
logistical hubs. Despite these limitations, the Afghan population 
continues to view the Army positively.
    The Afghan Police are steadily improving although sustained 
improvements to their development and capability will rely on continued 
ISAF oversight, partnering, and support. ANP development challenges are 
further compounded by a difficult dual mission of simultaneously 
building law enforcement capability and serving as a paramilitary 
backstop to the ANA. The Afghan Minister of Interior recognizes the 
strain this dual role places on the ANP's already limited capacity and 
has pledged to begin shifting the organization's focus toward the law 
enforcement mission. The Afghan population holds the ANP in lower 
regard than the Army, chiefly owing to perceptions of ineffectiveness 
and corruption.
    An emerging trend of concern is the recent rise of insider attacks 
within the Afghan security forces, which accounted for 12 percent of 
U.S. military casualties in 2012. Perpetrator motivations are known in 
only about half the attacks, with causation roughly split between 
personal acrimony and insurgent influence. Although the Afghan 
Government has begun implementing a counter-intelligence plan for 
reducing infiltration, many of the causes behind these incidents are 
expected to persist absent systematic improvements in the quality of 
leadership within the security forces.
    Over the course of 2013, the Afghan Government will face several 
pivotal issues. Negotiations over a Bilateral Security Agreement with 
the United States will likely increase tension over issues related to 
Afghan sovereignty such as the footprint and activities of U.S. forces 
post 2014 Technical and political preparations for the 2014 
presidential election will begin in earnest, potentially distracting 
from other governance initiatives and reforms. Persistent human capital 
shortages and weak institutions will continue to limit the reach of the 
central government, impede service delivery, and erode the government's 
connection to the population. These challenges will be especially 
pronounced as Kabul struggles to extend its writ in heavily contested 
and geographically remote areas of Afghanistan which are expected to 
transition next year. Corruption at all levels of the government is 
expected to persist, despite President Karzai's renewed focus on 
reforms, as powerbrokers strengthen their patronage networks in 
anticipation of an uncertain future post-2014.
    Regarding Iranian influence in Afghanistan, Iran maintains a degree 
of economic leverage over Afghanistan, which it has attempted to use to 
extract political concessions from the Afghan Government. Iran is a key 
trade partner, providing critical imports of fuel to Afghanistan. Iran 
also hosts approximately 3 million Afghan refugees and, in May of last 
year, threatened their expulsion if the Afghan parliament approved the 
U.S.-Afghan Strategic Partnership Agreement. Although the threat was 
unsuccessful in deterring the Agreement, a mass deportation from Iran 
would cause a significant humanitarian crisis inside Afghanistan.
    Al Qaeda leaders continue to view participation in attacks against 
the coalition as a key element showcasing al Qaeda as the leader of the 
global jihad. However, the group's operational capacity in Afghanistan 
is limited. There is a small al Qaeda presence in the northeastern 
mountains in addition to pockets of al Qaeda fighters elsewhere in the 
country. Despite recent Taliban statements distancing the Taliban from 
international terrorism, we expect al Qaeda to continue its limited 
support to the Afghan insurgency and to use media statements to hail 
the pending 2014 draw down as a victory for jihadists.
                     transnational terrorist threat
    Transnational and regional terrorist threat organizations continue 
to impact governments and U.S. interests around the world, particularly 
al Qaeda and its associated groups.
                                al qaeda
    Several years of sustained counterterrorism pressure have degraded 
al Qaeda's Pakistan-based leadership. Al Qaeda is now forced to rely on 
a limited cadre of experienced leaders, who are restricted to operating 
primarily inside a Haqqani Taliban Network-facilitated safehaven in 
North Waziristan. This pressure has made it difficult for al Qaeda to 
replenish its senior ranks with the experienced leaders, trainers, and 
attack planners it was able to promote in previous years. It has also 
limited the group's ability to mount sophisticated, complex attacks in 
the west similar to the attempted 2006 transatlantic airliner plot.
    Despite these setbacks, al Qaeda retains the intent, though not the 
robust capability, to plan and conduct terrorist attacks against the 
west, including the United States. al Qaeda's leadership in Pakistan 
continues to inspire and guide its regional nodes, allies, and like-
minded extremists to engage in terrorism against the west. Looking 
ahead, only sustained counterterrorism pressure against al Qaeda in 
Pakistan and Afghanistan will diminish the group's operational 
capabilities in the long term.
    In addition, Pakistan-based al Qaeda will retain its leadership 
role, guiding the al Qaeda-associated movement over the next 6 to 12 
months. Even if continued counterterrorism pressure further diminishes 
the leadership, the remaining al Qaeda senior leaders will retain at 
least a symbolic leadership role through public statements and 
strategic guidance to regional nodes.
    Yemen-based al Qaeda in the Arabian Peninsula (AQAP) remains 
resolute in targeting the U.S. Homeland, as well as U.S. and western 
interests in Yemen and the Arabian Peninsula. However, ongoing 
counterterrorism efforts against the group's leaders are likely slowing 
progress of operational coordination. Over the next 6 months, the group 
will likely focus on attacks against U.S., Western, Yemeni, and Saudi 
interests in the Arabian Peninsula while simultaneously pursuing 
external plotting in the west.
    Al Qaeda in Iraq (AQI) exhibits resilience through its sustained 
ability to conduct periodic coordinated and complex attacks throughout 
Iraq. The group directs the majority of its propaganda and attacks 
against Iraqi Government, security, and Shia civilian targets hoping to 
destabilize the government and inflame sectarian tensions. Since the 
departure of U.S. forces, AQI has exploited the more permissive 
security environment to increase its operations and presence in many 
locations. AQI also has expanded into Syria, participating in the 
conflict there under the name ofal-Nusrah Front. Since mid-2011, AQI 
has dispatched personnel, money, and materiel from Iraq to support the 
formation and development of al-Nusrah Front, and in December the State 
Department designated al-Nusrah Front as an alias for AQI.
    Al Qaeda in the Lands of the Islamic Maghreb (AQIM) and its allies 
have proven resilient despite the French-led military intervention in 
northern Mali. Although these groups no longer control key strategic 
towns, we continue to judge they retain the capability to launch 
attacks within Mali and neighboring countries. Exploiting the 
permissive Libyan security environment, AQIM acquired new weapons 
including probably a small number ofMan-portable Air Defense Systems. 
Further, AQIM will likely continue to bolster its ties to al Qaeda-
associated terrorist groups, such as Boko Haram in Nigeria, throughout 
the region to influence and support attack planning.
                other terrorist groups/areas of concern
    In the Horn of Africa, Al-Shabaab remains resilient despite the 
Somali Government, African Union Mission in Somalia, and Ethiopian 
National Defense Force's coalition ability to maintain pressure on the 
group. Despite its loss of territory, al-Shabaab will continue 
asymmetric and terrorist attacks in Somalia and Kenya during 2013. 
Concurrently, al-Shabaab-associated foreign fighters are expected to 
increasingly plot attacks regionally.
    Iran supports and arms terrorist and militant groups in 
Afghanistan, Iraq, Yemen, and the Levant. The Iranian Islamic 
Revolutionary Guard Corps-Qods Force (IRGC-QF) trains and provides 
weapons and logistic support to Lebanese Hizballah. In turn, Lebanese 
Hizballah trains Iraqi Shia insurgents and terrorists in Iraq, Iran, 
Lebanon providing them with tactics and technology which pose a threat 
to U.S. interests. Iran's security forces, since mid-2012 have also 
provided training, advice, money, weapons and equipment for Jaysh al 
Sha'bi a Syrian pro-regime militia. This training, some of which has 
taken place in Iran at government facilities, has enabled Jaysh al 
Sha'bi to operate rifles, mortars and rocket propelled grenades. The 
October 2011 plot to assassinate the Saudi Ambassador to the United 
States, the disrupted attacks in Azerbaijan, Thailand, and Kenya, and 
the February 13, 2012, attacks in India and Georgia illustrate the 
terrorist threat posed by Tehran.
    Since 2011, terrorist and militia groups with ties to al Qaeda have 
been exploiting Libya's security environment to establish a permanent 
presence and target U.S. and Western interests, as demonstrated by the 
June 6 and September 11 attacks against the U.S. mission in Benghazi. 
Since the revolution, they have established training camps, acquired 
weapons, and strengthened and thickened networks to support attacks 
throughout the region.
    Southeast Asia (SEA) remains a facilitation hub for transnational 
terrorist groups. Transnational and regional Islamic terrorists and 
insurgents exploit porous borders and limited security cooperation 
between SEA nations, enabling movement of personnel and logistics 
throughout the region. Although authorities have arrested several 
terrorists with ties to al Qaeda, al Qaeda remains interested in 
maintaining links to associated networks and persistent efforts by al 
Qaeda to reestablish a foothold in SEA remain a long-term threat.
    In Latin America, Iran and Lebanese Hizballah are trying to expand 
influence and have regional networks that support global contingency 
planning. The fall 2011 Iranian plot to use Mexico as an operational 
platform to assassinate the Saudi ambassador to the United States 
illustrates the potential Iranian terrorist threat in the Western 
Hemisphere. Hizballah supporters and sympathizers exploit lax financial 
laws, widespread corruption, and porous borders throughout the Western 
Hemisphere. These individuals focus on cultivating relationships 
through cultural and religious organizations; expanding political 
agendas; and overtly increasing international support from sympathetic 
governments, Shia communities, and Lebanese expatriates. Some of these 
sympathizers and supporters are also active in criminal enterprises in 
the region, to include money laundering, document forgery, and the drug 
trade.
    In Colombia, the Revolutionary Armed Forces of Colombia (FARC) 
poses the most significant continuing threat to U.S. personnel and 
interests in 2013. The FARC considers U.S. personnel and interests in 
Colombia as legitimate targets, and U.S. personnel collocated with host 
nation forces remain at risk. Separately, the National Liberation Army 
(ELN) will maintain its current limited operational tempo in Colombia, 
but we believe the group will present no direct terrorist threat to 
U.S. personnel in 2013. Both groups derive a large portion of their 
operational funding from the drug trade, though the ELN is less of a 
trafficking threat than the FARC, which remains Colombia's largest drug 
trafficking organization, and other purely criminal groups.
            homegrown violent extremist and insider threats
    Homegrown violent extremists (HVEs) are a growing threat to the 
DOD, as evidenced by numerous disrupted plots targeting DOD facilities, 
installations, and personnel since 2009. The majority of HVE plots are 
unsophisticated, use readily available weapons, and target nearby 
facilities. While they are less likely to generate spectacular, mass 
casualty attacks than transnational terror groups, HVE attacks are 
considerably more difficult for law enforcement and intelligence 
agencies to detect and disrupt.
    Since 2009 a small number of individuals working for or with access 
to DOD personnel and facilities have acted on behalf of or have been 
inspired by terrorist groups. We anticipate terrorist groups and 
sympathetic extremists will seek to establish relationships with 
individuals associated with DOD to collect information and conduct 
attacks both inside and outside of the United States. This is why our 
counterintelligence efforts to thwart these types of attacks must 
maintain a robust and ready component of our overall force posture.
                              cyber threat
    Potential adversaries are increasingly more capable of conducting 
cyber operations. The continually increasing transnational threat of a 
cyber attack remains of vital interest to the security of the United 
States.
    As the United States, the DOD, and our interdependent defense 
systems and critical infrastructure continue to grow more reliant on 
the convergence of networks and the Internet, any uncertainty as to how 
state or non-state actors will use cyber warfare capabilities will 
threaten our ability to appropriately defend our critical defense 
systems and infrastructure, as well as our ability to plan for military 
responses. The recent Aramco attacks in Saudi Arabia as well as the 
distributed denial of service against U.S. financial institutions 
highlight developing challenges in this area.
    Some of the most advanced cyber state actors probably will not 
launch a devastating cyber attack against the United States absent a 
military conflict or other existential threat within the next 2 years, 
however, continued cyber reconnaissance and exploitation from a myriad 
of cyber actors will continue.
    Another significant global cyber development is the role. The 
Internet plays in political stability and regime change, as governments 
are trying to increase their content control in cyber space; several 
nations are advocating control policies and restrictive Internet 
governance. The Arab Spring and recent online releases from Syria 
underscore the interconnected nature of our global society and the ease 
by which developing events can be portrayed and disseminated in near 
real time, significantly challenging oppressive governmental authority.
                    nations and regions of interest
Iran
    Shifting focus to Iran, Tehran poses a major threat to U.S. 
interests through its regional ambitions, support to terrorist and 
militant groups, and improving military capabilities and nuclear 
ambitions. Iran continues efforts to gain regional power by countering 
Western influence, expanding ties with its neighbors, and advocating 
Islamic solidarity while supporting and arming groups in Afghanistan, 
Iraq, and the Levant.
    Iran has threatened to temporarily restrict commercial and military 
vessels from accessing the Strait ofHormuz if it is attacked or in 
response to further sanctions on its oil exports. Iran has also 
threatened to launch missiles against U.S. targets and our regional 
allies in response to an attack. Tehran could also employ its terrorist 
surrogates worldwide in response to an attack or provocation. However, 
it is unlikely to initiate or intentionally provoke a conflict or 
launch a preemptive attack.
    In its relationship to Iraq, Iran generally has strong relations 
with Baghdad, despite some points of friction. Tehran supports Prime 
Minister Maliki and wants to maintain a friendly, Shia Islamist-led 
government in Baghdad. Iran welcomed the U.S. drawdown, and Supreme 
Leader Khamenei and senior Iranian military officials view the U.S. 
military withdrawal as a strategic defeat for the United States. Over 
the long-term, Iran is concerned a strong Iraq could once again emerge 
as a regional rival, particularly given unresolved issues such as 
border demarcation.
    Iran is attempting to expand its influence with new regional 
governments that Tehran perceives to be allies of the United States. 
Tehran also continues to build ties with groups it perceives to be 
hostile to U.S. interests, particularly the Huthis in Yemen. Iran is 
seriously concerned by the conflict in Syria, a country which is 
essential to Tehran's strategy in the Levant. Iran's strategy in Syria 
includes providing variety of lethal and non-lethal support to the 
Syrian regime, led predominately by the Qods Force.
    Iran is making steady improvement to its military capabilities. The 
navy, in particular, is developing faster, more lethal surface vessels, 
growing its submarine force, expanding its cruise missile defense 
strategy, and increasing its presence in the Gulf of Oman, the Persian 
Gulf, and the Caspian Sea. The navy continues to conduct out of area 
deployments, to include near continuous counter-piracy operations in 
the Gulf of Aden and southern Red Sea as well as a deployment to the 
Mediterranean Sea in early 2012, and aspires to travel as far as the 
Atlantic Ocean.
    Iran can strike targets throughout the region and into Eastern 
Europe. In addition to its growing missile and rocket inventories, Iran 
is seeking to enhance lethality and effectiveness of existing systems 
with improvements in accuracy and warhead designs. Iran is developing 
an anti-ship ballistic missile called Khalij Fars, which could threaten 
maritime activity throughout the Persian Gulf and Strait of Hormuz. 
Iran's Simorgh space launch vehicle shows the country's intent to 
develop Intercontinental Ballistic Missile (ICBM) technology.
    Iran constitutes the most significant counterintelligence threat in 
the mid-east. Iran's highest priority intelligence targets are the 
U.S., Israel and internal opposition groups. Iran's intelligence 
services, the Ministry ofIntelligence and Security (MOIS) and IRGC-QF, 
target DOD interests throughout the world, most markedly in Iraq, 
Afghanistan, and Gulf Cooperation Council states.
    Iran's intelligence services also play a vital role projecting 
Iranian influence beyond its borders. The Qods Force plays a central--
yet often hidden--role in formulating and implementing Iran's Foreign 
Policy, particularly in areas considered vital to Iran's national 
security interests, like Iraq and Afghanistan. Iran's intelligence 
services continue to improve their technical capabilities and expand 
Iran's influence into Latin American and Africa.
North Korea
    Turning to East Asia nations, the Democratic People's Republic of 
Korea's (DPRK) primary national goals are preserving its current system 
of government, improving its poor economy, and building national 
support for its current leader, Kim Jong Un. North Korea's leadership 
is emphasizing policy continuity under Kim Jong Un, including continued 
pursuit of nuclear and missile capabilities for strategic deterrence, 
international prestige, and to gain economic and political concessions.
    Kim Jong Un is firmly in control of the DPRK and he has assumed all 
significant senior Party and military positions, including Supreme 
Commander of the Korean Peoples' Army, First Secretary of the Korea 
Workers' Party Secretariat, and First Chairman of the National Defense 
Commission. The younger Kim possesses a charisma that his father did 
not and is depicted as a caring but firm leader, much in the image of 
his grandfather, Kim II Sung. Kim Jong Un has asserted his authority by 
replacing and reassigning senior officials and by strengthening Party 
control over the Military.
    We believe North Korea sees benefit in negotiations with the United 
States, but is no longer willing to negotiate over eliminating its 
nuclear and ballistic missile programs. Convinced of its need to 
possess nuclear weapons as a guarantor of its national security, North 
Korea is more likely now to push for negotiations over security 
guarantees, a peace treaty, and elimination of economic sanctions. In 
the process, North Korea will likely seek international recognition as 
a nuclear power and acceptance of its right to a space program.
    In response to United Nations Security Council condemnation of its 
December Taepo-Dong-2 space launch and apparent nuclear test in 
February, North Korea has threatened additional coercive actions which 
may include long range ballistic missile launches and more nuclear 
tests. While these actions leave North Korea more isolated economically 
and diplomatically, we believe North Korea's intent ultimately is to 
convince the United States of the futility of continued sanctions and 
force the United States back to negotiations on terms more favorable to 
North Korea.
    North Korea's large, forward-positioned military can attack South 
Korea with little or no warning, but it suffers from logistic 
shortages, aging equipment, and poor training. Pyongyang likely knows 
it cannot reunite the Korean Peninsula by force and is unlikely to 
attack on a scale that would risk the survival of its regime, but has 
improved its capability to conduct military provocations, especially 
along the disputed maritime boundary in the Yellow Sea. Pyongyang is 
also making efforts to upgrade conventional weapons, including 
modernizing every aspect of its deployed missile forces.
    The regime is pursuing a uranium enrichment capability for nuclear 
weapons. It also seeks ballistic missiles with nuclear capability and 
continues to develop the Taepo-Dong-2, as well as a road mobile ICBM, 
which it paraded in April 2012. North Korea has already taken some 
initial steps towards fielding this mobile system. It also used its 
Taepo-Dong-2 launch vehicle to put a satellite in orbit, thus 
demonstrating its long-range missile technology.
    North Korea conducted Global Positioning System (GPS) jamming in 
April-May 2012 that reportedly interfered with maritime and aviation 
navigation.
China
    Turning to China, the People's Liberation Army (PLA) is building a 
modern military capable of defending China's ``core interests'' of 
protecting territorial integrity (which includes Taiwan and other 
territorial and maritime claims around China's border), preserving 
China's political system and ensuring sustainable economic and social 
development. Preparation for a Taiwan conflict with U.S. intervention 
remains the primary driver of the PLA's evolving force structure, 
weapons development, operational planning and training.
    China has spent as much as $215 billion on military-related goods 
and services in 2012, in contrast to the $107 billion Beijing reported 
in its official military budget. This budget omits major categories, 
but it does show spending increases for domestic military production 
and programs to improve professionalism and the quality of life for 
military personnel.
    Even as the Chinese military plans for conflict and continues its 
build-up across from Taiwan, cross-Strait relations have remained good 
following Taiwan President Ma Ying-jeou's January 2012 re-election. 
Both sides continue to strengthen economic and cultural engagement and 
have largely adhered to a diplomatic truce in the competition to 
persuade other countries to switch diplomatic recognition.
    Disputed areas in the East and South China Seas remain flashpoints, 
with Chinese assertion of sovereignty frustrating Japan's and Southeast 
Asian claimants' determination to exploit their claimed exclusive 
economic zones. The tensions raise prospects for further incidents, 
although interest by all sides in avoiding serious conflict reduces 
chances for an escalation involving military force.
    China's ground force is seeking to restructure itself into a 
mechanized, modular force that can respond to support joint operations 
anywhere along China's borders. This goal is currently taking shape 
with an emphasis on building and outfitting brigades as the main 
operational unit while upgrading their command staffs know-how in 
information technology and automated command systems.
    The PLA navy is developing the JIN-class nuclear-powered ballistic 
missile submarine and JL-2 submarine-launched ballistic missile, which 
may reach initial operational capability around 2014. China's 
investment in naval weapons primarily focuses on anti-air and anti-
surface capabilities to achieve periodic and local sea and air 
superiority within the first island chain. China's first aircraft 
carrier, which commissioned in late 2012, will not reach its full 
potential until it acquires an operational fixed-wing air regiment in 
several years.
    China's air force is transforming from a force oriented solely on 
territorial defense into one capable of both offshore offensive and 
defensive roles, including strike, air and missile defense, and early 
warning and reconnaissance. It is also seeking to improve its strategic 
projection by increasing its long-range transport and logistical 
capabilities. Modernization efforts include investing in stealth 
technology, as evidenced by testing of a fifth generation fighter 
prototype in 2011 and the roll-out and testing of a smaller fifth 
generation fighter in 2012.
    China's nuclear arsenal currently consists of approximately 50-75 
ICBMs, including the silo-based CSS-4 (DF-5); the solid-fueled, road-
mobile CSS-10 Mods 1 and 2 (DF-31 and DF-31A); and the more limited 
range CSS-3 (DF-3). Of these systems, less than 50 can range the 
continental United States. To modernize the nuclear missile force, 
China is adding more survivable road-mobile systems, enhancing its 
silo-based systems, and developing a sea-based nuclear deterrent. They 
are also augmenting the over 1,200 conventional short-range ballistic 
missiles deployed opposite Taiwan with a limited but growing number of 
conventionally armed, medium-range ballistic missiles, including the 
DF-21D anti-ship ballistic missile. China is also developing a tiered 
ballistic missile defense system and has successfully tested the upper-
tier capability on two occasions.
    China's space program enhances China's conventional military 
capabilities. China operates satellites for communications, navigation, 
earth resources, weather, and intelligence, surveillance, and 
reconnaissance, in addition to manned space and space exploration 
missions. China successfully tested a direct ascent anti-satellite 
weapon (ASAT) missile in 2007, and is developing other counterspace 
capabilities.
    China poses a significant intelligence threat as well. It uses non-
traditional collectors with no overt ties to the Chinese Government as 
well as its formal intelligence services to gather U.S. defense 
information, target civilian dual-use research, and obtain sensitive 
U.S. military technologies. Economic espionage, illicit procurement, 
and the theft of trade secrets and dual-use or military technology have 
revealed pervasive Chinese collection efforts, resulting in multiple 
indictments and convictions.
Pakistan
    In Pakistan, tension in the U.S.-Pakistan relationship eased with 
the July 2012 reopening of the U.S./NATO supply lines in Pakistan after 
an 8-month closure and an apparent decision by Pakistan to reset the 
relationship. Although dialogue has resumed, anti-U.S. sentiment and 
criticism of Pakistan's cooperation with the United States among the 
population remains high.
    Islamabad is currently focused on the upcoming spring 2013 
elections, which would represent the first transition of a civilian 
government to another democratically elected civilian government. 
Pakistan's Army chief Kayani is also scheduled to retire from his post 
in late 2013.
    Approximately one-third of Pakistan's army and paramilitary forces 
are deployed in the Federally Administered Tribal Areas (FATA) and 
Khyber Pakhtunkhwa Province (KPP) to support combat operations at any 
given time. Over the past year, Pakistan conducted efforts to counter 
militants in the FATA and KPP which directly threaten Pakistan's 
internal security. Despite some success disrupting Pakistan-focused 
militant activity, Pakistan continues to struggle to maintain security 
due to its continued counter-insurgency fight and the extremely 
difficult terrain. Islamabad has stated its intention to conduct large-
scale military operations against militants in North Waziristan, 
although it is unclear when these operations will commence.
    Pakistan has taken steps to improve bilateral ties with Kabul over 
the past year. Tension with Kabul increased after Kabul implicated 
Islamabad in the 2011 assassination ofAfghanistan's High Peace Council 
Chairman Burhanuddin Rabbani. After bilateral relations resumed in 
February 2012, Pakistan acquiesced to long-time Afghan requests by 
publicly calling on the Taliban to join reconciliation efforts and 
releasing some Taliban prisoners to energize the Afghan peace process. 
However, longstanding issues including cross-border shelling by 
Pakistan and alleged Afghan safe havens for anti-Pakistan militant 
groups continue to impede broader cooperation.
    Pakistan and India continue to no progress on economic and trade 
issues, despite deeply held mistrust, but little progress has been made 
on territorial issues. A major terrorist attack against India linked to 
Pakistan, would result in renewed tension and potential for escalation.
India
    While the India-Pakistan rivalry continues to overlay regional and 
military competition between the two nations, relations between New 
Delhi and Islamabad improved in 2012. India and Pakistan agreed to 
expand trade, and continue to discuss implementation of Pakistan's 
decision to grant India Most Favored Nation trade status. They are 
expected to continue holding talks on nuclear and conventional 
confidence-building measures through the year.
    New Delhi and Beijing continue to conduct military-to-military 
engagement and discuss their longstanding border dispute. India is 
concerned over Chinese logistical improvements and is taking steps to 
improve its own capabilities. India is raising additional ground 
forces, improving logistical capacity, and has based advanced fighter 
aircraft opposite China. India remains concerned over China's activity 
in South Asia and the Indian Ocean region, and seeks to ensure access 
to resources and maritime trade routes.
    In 2012, India expanded its efforts to increase regional economic 
and military ties. India and Japan conducted their first bilateral 
naval exercise, and India and Vietnam increased their naval engagement. 
Additionally, in the summer of 2012 India requested full membership in 
the Shanghai Cooperation Organization (SCO), the focus of which now 
includes military cooperation, intelligence sharing, and 
counterterrorism.
    India seeks a moderate government in Afghanistan that will deny 
anti-Indian militant groups the use of its territory from which to 
launch attacks on India. New Delhi has pledged economic and development 
assistance and provides limited training to Afghan National Security 
Force personnel at military institutions in India.
    India is in the midst of a major military modernization effort--
undertaken by all three Military Services--to address problems with its 
aging equipment and to posture itself to defend against Pakistan and to 
a lesser extent China. Military modernization is progressing slowly due 
to India's bureaucratic procurement process and a defense industry, 
which fails to provide equipment to the services that meet 
requirements. Currently, India fulfills over 70 percent of its Military 
Service equipment requirements through foreign acquisitions; New Delhi 
would like to reverse this percentage, sourcing 70 percent of 
requirements from indigenous defense industries.
    India conducts periodic tests of its nuclear-capable missiles to 
enhance and verify missile reliability and capabilities. India's 
delivery systems include nuclear-capable fighter aircraft and ballistic 
missiles. India is developing a nuclear-capable 6,000 km range 
intercontinental ballistic missile that will eventually carry multiple 
warheads. Its first flight test occurred in April 2012 with a single 
warhead.
                              arab spring
    The Arab Spring unleashed powerful new populist forces in the Arab 
world-long suppressed by autocratic regimes--leading to a high degree 
of uncertainty. With the formation of new governments only now 
beginning across North Africa, the political and security outcomes 
remain unclear. Various forms of Islam will play more prominent roles 
in governments than in the past. However, new governments face the same 
significant economic challenges that hastened their predecessors' 
downfall, suggesting that these governments will struggle to satisfy 
newly emboldened electorates, making future unrest likely.
    The outcome in countries still facing unrest, such as Syria, is 
similarly unclear. Syria remains a stalemate between a cohesive, but 
embattled regime, and a fractured opposition that appears to be gaining 
ground but has yet to either coalesce into a force capable of 
overthrowing the regime or convince the majority of the population they 
are a viable alternative. The regime has lost enough legitimacy that 
its long-term survival is unlikely, but when and how the stalemate will 
break is uncertain.
Libya
    The first free elections in over 40 years took place in Libya on 
July 7, 2012. Moderate parties with pro-western leanings outperformed 
Islamists, but the ideological character of the interim government 
remains unclear. This government will write a new constitution and form 
a permanent government over the next year. It also faces issues left 
unresolved by its predecessor, including reintegrating militias, 
rebuilding security institutions, and allocating resources, including 
oil and fresh water.
    Libya's national military has minimal capabilities following the 
revolution. The government therefore relies on affiliated militias to 
help maintain order, but the continued existence of heavily armed 
militias established along ethnic, tribal and religious lines threatens 
stability. Attempts are underway to rein in these militias, mainly by 
absorption into an organization called Libya Shield under the Army 
Chief of Staff.
    Libya, a State Party to the Chemical Weapons Convention (CWC) in 
February 2004, previously declared a stockpile of bulk liquid sulfur 
mustard, jellified mustard heel, and liquid precursors. An equipment 
malfunction required a suspension of destruction activities in early 
February 2011, just before the outbreak of hostilities. Libyan forces 
also discovered additional chemical weapons or material in Libya and 
the government has indicated that it intends to continue cooperation 
with the international community regarding existing CW stockpiles. 
Tripoli is consulting regularly with the Organization for the 
Prohibition of Chemical Weapons (OPCW) regarding resumption of 
destruction activities and will probably complete destruction of the 
stockpiles.
Syria
    After 2 years of unrest, Syrian President Asad's hold on power is 
becoming tenuous, due to the improved effectiveness of Syria's internal 
armed opposition and deteriorating security situation in the country. 
Asad's inner circle appears to be largely cohesive. The Syrian 
military, despite casualties, desertions, and defections, remains 
largely cohesive, but is likely stretched thin by constant operations. 
The military has not been able to quash opposition activity in the 
vital cities of Damascus and Aleppo--despite employing increasingly 
lethal tactics--and appears to be straining to maintain operations in 
other parts of the country.
    The Syrian regime maintains the military advantage--particularly in 
firepower and air superiority--but continues to struggle with 
defections, morale problems, and an overall inability to decisively 
defeat the opposition. Opposition fighters have gained control of 
territory in the east and along the strategic northern border with 
Turkey, which serves as the insurgents' primary supply line. 
Coordination has improved among some internal armed opposition groups; 
however, ties with external groups, including nominal Free Syrian Army 
(FSA) leaders in Turkey, are increasingly strained.
    Syria's most prominent external political opposition group, the 
Syrian Opposition Coalition (SOC), is attempting to gain internal 
legitimacy, but no group has been able to unite the diverse groups 
behind a strategy for replacing the regime. Regional pressure has 
increased as the Arab League (AL) continues calling on the regime to 
end violence while other states provide increased amounts of lethal and 
non-lethal support to opposition forces.
    Damascus continues its strategic partnership with Hizballah and 
perceives it as an extension of its defense against Israel and internal 
opposition. Since early 2011, Hizballah has provided training, advice, 
and extensive logistic support to the Syrian Government and its 
supporters. Hizballah--has directly trained Syrian Government personnel 
inside Syria and has facilitated IRGC-QF training of some Syrian 
forces. Hizballah also has played a substantial role in efforts to 
expel Syrian opposition forces from areas within Syria. Iran also has 
actively supported the Syrian regime in its fight against the 
opposition.
    Syria, not a state party to the CWC, maintains an advanced Chemical 
Weapons (CW) program and has a stockpile that includes either complete 
or binary components of sarin, mustard, and VX. During the past several 
years, Damascus has continued to seek CW-related precursors and 
technology from foreign sources. Syria has signed, but did not ratify 
the Biological Weapons (BW) Convention. We do not believe Syria has 
achieved a capability to use biological agents as effective mass-
casualty weapons. We also remain concerned terrorists, including al 
Qaeda in Iraq's Syria-based group al-Nusrah Front, will seek to obtain 
Syrian Weapons of Mass Destruction (WMD) should security fail in the 
wake of the unrest, as al Qaeda and its regional node al Qaeda in Iraq 
have aspired to obtain WMD in the past.
    Syria has several hundred SCUD-B, -C, and -D, and SS-21 SRBMs and 
may have chemical warheads available for a portion of its SCUD 
missiles. Syria also has a domestic version of the Iranian 600 mm 
Fateh-110 SRBM. All of Syria's missiles are mobile and can reach much 
of Israel and large portions of Iraq, Jordan, and Turkey from launch 
sites well within the country. Damascus relies on foreign help, mainly 
from Iran, to advance its solid-propellant rocket and missile 
development and production capability. Syria's liquid-propellant 
missile program depends on essential foreign equipment and assistance, 
primarily from North Korean entities.
Egypt
    Turning to Egypt, civil-military relations are in flux after 
President Mohamed Mursi--the Muslim Brotherhood's Freedom and Justice 
(FJP) candidate elected in June--retired Egypt's military leadership. 
The military is now under the leadership of Defense Minister General 
Abd al-Fatah el-Sisi, who appears responsive to Mursi. Islamist/secular 
tension remains high following the referendum that approved Egypt's new 
constitution. President Mursi's November 22 declaration expanded his 
executive powers and removed the majority of judicial oversight of the 
president; the subsequent and ongoing violent protests throughout the 
country underscore the growing divide within Egyptian society over the 
future of the revolution. Domestic security and terrorist threats, 
especially in the Sinai, continue to challenge the government as it 
concurrently focuses resources on reforming the Ministry of Interior 
and tackling Egypt's economic crisis.
    Domestic security remains a challenge for the Mursi Government, as 
the police are alienate from the public following their role in tamping 
down protests during the 2011 revolution. Nearly 2 years following the 
revolution, the military continues to fulfill some domestic security 
functions as police and security forces attempt to regain their 
capabilities and legitimacy. For example, Egyptian security forces 
struggled to control protests at the U.S. Embassy in Cairo in mid-
September, resulting in perimeter breaches. Meanwhile, the Sinai 
security situation continues to deteriorate and terrorist networks 
build their capabilities amid the security vacuum.
                            remaining levant
    In Israel, there is increasing concern that regional instability 
will increase threats and undermine longstanding peace agreements. 
Israel and Jordan are particularly concerned about the prospects for 
chaos and long-term instability in Syria. The primary worry is the 
security of Syria's chemical and biological weapons, but Jordan's 
fragile economy is stressed by a growing number ofSyrian refugees and 
the need for military vigilance on its border with Syria. Unrest in 
Syria has heightened sectarian tensions in Lebanon and sporadic 
violence is likely in the coming year, especially as the spring 
parliamentary elections approach. Israel-Egypt military relationships 
are intact, despite increasing tension at senior levels over the past 
several months related to increased weapons smuggling and terrorism 
from Sinai.
    The Gaza Strip, since the mid-November conflict, has been the 
quietest it has been for years, with virtually no rocket or mortar 
attacks on Israel. HAMAS remains preoccupied with internal Palestinian 
issues but is attempting to obtain more advanced weapons from Iran and 
Libya. The Palestinian Popular Resistance Committees and al Qaeda-
associated terrorists are exploiting the post-revolutionary environment 
in the Sinai to expand their operational capabilities. Increased 
international cooperation against HAMAS and Iranian arms smuggling 
could hamper HAMAS' access to weapons, but will not affect its ability 
to control the Gaza Strip.
    Hizballah is focused on internal Lebanese political issues and 
improving its paramilitary capabilities. Israel and Hizballah are 
preparing for another round of fighting, but Hizballah currently 
appears to have no interest in renewing the conflict. Hizballah' s 
attack against an Israeli tour bus in Bulgaria on July 18, which killed 
five Israelis, reflects the group's aggressive posture and ability to 
maintain plausible deniability. Israel's next battle with Hizballah is 
likely to involve more ground forces early in the conflict and may 
extend much deeper into Lebanon.
Iraq
    Since formally ending the Iraq mission in December 2011, the Iraqi 
Security Forces (ISF) have demonstrated progress in providing security 
and will probably be able to maintain internal security over the next 
year. While sectarian tensions have increased due to the government's 
unwillingness to share power and the growing crisis in Syria, the 
violence in Iraq is expected to remain consistent with levels observed 
since late 2009 as long as the Syrian regime stays in power and the 
spillover of violence is limited. The ISF is becoming more capable 
having led Iraqi security operations since late 2010, but can quickly 
become overwhelmed as they still require training and assistance in a 
number of areas including logistics, intelligence, and employment of 
newly acquired equipment. The ISF have demonstrated an ability to put 
forces on the street, conduct static security of high-profile sites, 
and operate checkpoints. However, numerous security vulnerabilities 
remain due to manning shortages, logistical shortfalls, and overly 
centralized command and control. The ISF are still unable to defend 
against external threats especially from the air, having no ability to 
defend their airspace.
    Although Interior Ministry police forces have taken the lead for 
internal security in some locations, they are not prepared to take 
overall responsibility from the Iraqi Army. Outside of select Iraqi 
counterterrorism units, Iraqi police forces are understaffed, ill-
equipped, and vulnerable to terrorist attack, infiltration, and 
corruption.
    Iraq's Sunni population is increasingly distraught over its 
fortunes in Iraq and continued targeting by the Shia-led government in 
Baghdad. The arrest of Sunni Finance Minister Rafi al-Issawi's security 
team only a year after a similar action against former Sunni Vice 
President Tariq al-Hashimi set off large-scale demonstrations in Iraq's 
three major Sunni provinces. Although the demonstrations thus far have 
been mostly peaceful, if Sunnis do not see progress through the 
political process or concessions from the Iraqi Government, some may 
seek change through force rather than the ballot box.
    Sunni insurgent groups will remain persistent security challenges 
for the Iraqi Government and remaining U.S. personnel, but they are 
unlikely to threaten the existence of the Iraqi Government over the 
next year. Nationalist insurgent Sunni groups have downsize as members 
motivated by opposition to the U.S. presence have ceased operations and 
moved to support Sunni groups in Syria, however a core of fighters 
remain committed to attacking the Iraqi Government. Additionally former 
Sunni insurgent, tribal, and political leaders are uniting under a 
peaceful movement that some have labeled the ``Sunni Spring'' in a bid 
to secure more political power from Baghdad. While the Sunni movement 
is peaceful now, it could quickly spiral into violent movement if the 
ISF overreacts, the Sunnis fail to gain concessions from Baghdad, or 
the Sunnis begin to fracture into move violent groups. While Shia armed 
groups have not conducted attacks this year, likely because they 
perceive attacks against the United States are not currently in their 
interest--however, they remain capable of resuming violence and are 
preparing for any spill over of violence from Syria that could embolden 
a renewed Sunni insurgency.
    Iraq recently has pursued numerous foreign military sales contracts 
to overcome equipment shortfalls. However, we expect it will take 
several years for the new acquisitions to improve Iraqi military 
capabilities. In October 2012, Iraq negotiated preliminary arms deals 
worth over $4 billion with Russia that included attack helicopters and 
air defense systems, they will probably sign those contracts in 2013.
    Iraq will attempt to balance its relationship with the Sunni Arab 
states, Iran, Turkey, and the United States over the coming year. Iraq 
advocates a negotiated transition for the Syrian Government to restore 
stability and prevent a spillover of violence in Iraq. Iran will 
continue to broaden its diplomatic, security and economic ties with 
Iraq while Sunni Arab states will remain suspicious of Baghdad's Shia-
led government and its ties to Tehran. We expect Baghdad will support 
policies Iraqi leaders perceive are consistent with their strategic 
goal of ensuring a stable, Shia-dominated Iraq.
Arabian Gulf
    The security situation throughout Yemen remains tenuous, with 
government security forces focused either on providing security in 
Sanaa or working to counter AQAP. Iranian meddling in Yemen's domestic 
affairs--including support to the Huthi movement in the north and 
secessionists in the south--presents an additional security risk. The 
political transition and military reorganization are positive 
improvements, but both are proceeding extremely slowly. Yemen's failing 
economy, dwindling water resources, and food insecurity will further 
complicate efforts to stabilize the country.
    Bahrain and Saudi Arabia continue to experience opposition 
protests, however they do not pose existential threats to the regimes. 
In Bahrain, low-level street violence has become the norm, with radical 
youth groups regularly using Molotov cocktails, IEDs and other homemade 
weapons to attack police patrols. There were a number of violent 
clashes and protests in Bahrain leading up to February 14th, the 2-year 
anniversary of the Shia uprising; however, Bahraini security forces 
consistently use less-than-lethal measures to disperse these protests. 
Shia in Saudi Arabia's Eastern Province also conduct sporadic protests. 
While the Saudi Government has generally practiced restraint, a few 
Shia have died during clashes.
Russia
    Moscow has serious concerns about missile defense plans in Europe 
and is using diplomacy and public relations to try to shape 
implementation of the European Phased Adaptive Approach--the U.S. 
contribution to a North Atlantic Treaty Organization missile defense 
system. Moscow insists on legal guarantees that missile defense systems 
would not target Russia's strategic capabilities. Russian leaders have 
threatened to take military countermeasures if the impasse in missile 
defense negotiations persists.
    Russia continues to cooperate in Afghanistan with the United States 
and NATO. Russia's Afghanistan policy reflects an uneasy balance 
between Moscow's wish for stability in Afghanistan and its suspicion 
that Washington is pursuing anti-Russian geopolitical objectives in 
Central Asia. With the drawdown of U.S. forces set for 2014, Russia is 
increasingly worried about security threats flowing from Afghanistan. 
Moscow will likely continue to allow supplies to pass through Russia, 
but will resist a long-term U.S. military presence in Central Asia. 
Russia also will likely reach out to countries in the region, such as 
Pakistan, in an attempt to shape the security environment leading up to 
and after the planned withdrawal.
    Moscow's 10-year rearmament plan is a top priority for the Armed 
Forces, but it faces funding and implementation risks owing in part to 
a potential decline in oil and gas revenues, spending inefficiencies, 
an aging industrial base, and corruption. Russia spent an announced 
$63.2 billion on its Armed Forces this year, and the current budget 
plan calls for a 9.8 percent inflation-adjusted increase in 2013. 
Multiple demands on the Russia budget, including President Putin's 
insistence the current budget fund his social spending decrees, have 
caused the defense budget to grow at a slower pace than Moscow 
originally intended.
    The general purpose forces--to include dual-use nonstrategic 
nuclear forces--will continue to acquire new equipment for the near-
term, but deliveries will be small and largely consist of modernized 
Soviet-era weapons. Russia is also planning to buy select foreign 
systems, such as France's Mistral amphibious assault ship and Italian 
light armored vehicles. Russia will field more SS-26 short-range 
ballistic missiles. The development of the PAK-FA, Russia's new fifth-
generation fighter, will continue, though deployment will not occur for 
several years.
    Priorities for the strategic nuclear forces include force 
modernization and underground command and control facilities upgrades. 
Russia will field more road-mobile SS-27 Mod-2 ICBMs with multiple 
independently targetable reentry vehicles. It also will continue 
development of the Dolgorukiy/SS-NX-32 Bulava fleet ballistic missile 
submarine/submarine-launched ballistic missile and next-generation air-
launched cruise missiles.
    Russia recognizes the strategic value of space. Russia has 
significant space capabilities and is improving its navigation, 
communications, ballistic missile launch detection, and intelligence-
gathering satellites. Russia is also researching and developing 
capabilities that could target satellites.
    Russia's space sector has experienced a series of failures in 
recent years but is taking steps to correct quality control problems 
within its satellite and space launch vehicle industries. In the past 
year, Russia completed population of its GLONASS navigation satellite 
constellation and is making gradual improvements to its communications, 
ballistic missile launch detection, and intelligence-gathering 
satellites. Moscow has extensive space surveillance and tracking 
assets, a prerequisite for performing a full range of space activities, 
and is on track to modernize and expand these capabilities by 2020.
    Russia continues to destroy chemical agent stockpiles in accordance 
with the ewe, although continued funding shortfalls, safety incidents, 
and technical challenges will delay completion by several years past 
its announced date of December 31, 2015. Russian entities remain 
engaged in some dual-use, biological activities. It is unclear whether 
these activities are inconsistent with the BWC.
Africa
    Africa faces a myriad of challenges that will require continued 
U.S. attention. Although slight progress in Somalia has been gradual, 
resulting from territorial gains by nascent government forces supported 
by the African Union and Ethiopia, governments in the Sahel and West 
Africa are stressed by instability and insufficient government control, 
conditions that encourage the growth of terrorism. Mali, in particular, 
was plunged into turmoil after a northern insurgency begun in early 
2012 seized control of the country's north; a decline in government 
influence that was exacerbated by a March 2012 coup. In the weeks 
following a January, 2013 French-led intervention in Mali, extremist 
forces have been driven from main northern population centers; however, 
Malian security capacity and governance remain weak, and the country is 
likely to remain dependent on external support to consolidate security 
gains and facilitate the return of a democratically-elected government 
in Bamako. Instability persists in Africa's Great Lakes Region, where 
proxy militia forces threaten stability within border areas of the 
Democratic Republic of the Congo, Rwanda, South Sudan, and Uganda. The 
most notorious, the Lord's Resistance Army, has been pursued by a 
regional coalition that relies on U.S. support. Longstanding Chinese 
influence and growing Iranian involvement pose additional challenges to 
U.S. interests.
Latin America
    Turning to Latin America, Mexico elected Enrique Pena Nieto from 
the opposition Institutional Revolutionary Party. He is expected to 
build upon former President Felipe Calderon's security efforts; his 
strategy will be to mitigate transnational organized crime and violence 
by designing security policies to reduce kidnapping, homicides, and 
extortion, in addition to conducting anti-cartel operations. Pena 
Nieto's proposals include nationwide police reform, strengthening 
judicial institutions, and enhancing bilateral relationship with the 
United States based not only on security issues, but also on increasing 
trade, commerce, and economic relations. Pena Nieto will continue 
Calderon's policy of using the military as the lead public security 
element to combat drug trafficking and violence until the police are 
able to adequately assume the responsibilities.
    As of February 2013, security forces--the Army, Navy and police--
had captured or killed 23 of Mexico's 37 most wanted traffickers in 
operations since March 2009, causing cartels to fracture, but also 
spurring violence in key areas. Two other were killed in internal 
purges. Approximately 60,000 people have died in drug-related violence 
since Calderon took office in December 2006; however, 2012 experienced 
the first yearly decrease in drug murders during his administration.
    The proliferation of drug cartels and violence in Central America 
is prompting leaders in countries such as Honduras and Guatemala to 
continue to use the military to combat drug trafficking and perform 
traditional law enforcement functions.
    Venezuela peacefully transitioned to an interim government in the 
aftermath of President Hugo Chavez's death on 5 March. Acting President 
Nicolas Maduro-Chavez's designated successor-narrowly won the April 14 
special presidential election. The opposition has refused to concede 
and called for a full recount. Election day mostly was peaceful and the 
military safeguarded the voting, a duty it has performed since 1958. 
The military continues to modernize and will receive additional Chinese 
and Russian equipment deliveries; Caracas took possession of two 
Chinese medium transport aircraft in November and Russian surface-to-
air missile systems in April.
    Brazil postponed its decision on the purchase of a new fighter 
aircraft and likely will choose the aircraft that offers the most 
favorable technology transfer package that it can utilize in its own 
defense industry. A decision is likely no earlier than June 2013.
    In Cuba, President Raul Castro's reform efforts, including his 
recent announcement to step down upon completion of his term in 2018, 
are unlikely to loosen the regime's grip on power. The government 
continues to exert control of the populace through a security apparatus 
that is capable of maintaining and quelling internal unrest. The Cuban 
intelligence services have proven very capable of penetrating key U.S. 
and DOD targets, and will remain a major threat for the foreseeable 
future. Despite Havana's recent relaxation on migration rules, a mass 
migration from Cuba is unlikely.
                 other transnational issues of concern
WMD and Delivery System Proliferation
    The proliferation and potential for use of WMD and ballistic 
missiles remains a grave and enduring threat. Securing nuclear weapons 
and materials is a worldwide imperative to prevent accidents and the 
potential diversion of fissile or radiological materials. Chemical and 
biological weapons are becoming more technically sophisticated as 
technology proliferates. Al Qaeda and other terrorist organizations are 
working to acquire and employ chemical, biological, and nuclear 
materials. They are most likely to use low-level Chemical, Biological, 
Radiological, or Nuclear (CBRN) agents, such as ricin, botulinum toxin, 
radiological. dispersal devices, and toxic industrial chemicals like 
cyanide and chlorine as low cost alternatives.
    We are concerned about the potential for terrorists to acquire 
Syrian WMD materials. While Syria's chemical and biological weapons 
stockpiles are currently under the control of the regime, al Qaeda and 
its regional node, al Qaeda in Iraq, could seek to obtain Syrian 
stockpiles should security fail.
    Many advanced nations are cooperating to stop WMD proliferation; 
however some aspects of WMD-related research and technology are beyond 
their direct control, including scientific advances, scientists' 
enthusiasm for sharing their research, and the availability of 
information about dual-use threats or technologies. For example, the 
availability of naturally occurring pathogens of proven virulence 
exploitable from actual disease outbreaks presents a low-cost, low-
risk, low-complexity alternative to obtaining such organisms from 
either a secured laboratory facility or an environmental reservoir.
    Determined groups and individuals, as well as the proliferation 
networks they tie into, often sidestep or outpace international 
detection and export-control regimes. They supply WMD and ballistic 
missile-related materials and technologies to countries of concern by 
regularly changing the names of their front companies, operating in 
countries with permissive environments or lax enforcement, and avoiding 
international financial institutions.
                       theater ballistic missiles
    Ballistic missiles continue to pose a threat as they become more 
survivable, reliable, and accurate at greater ranges. Potential 
adversaries are basing more missiles on mobile platforms at sea and on 
land. Technical and operational measures to defeat missile defenses 
also are increasing. China, Iran, and North Korea, for example, 
exercise near simultaneous salvo firings from multiple locations to 
saturate missile defenses. Countries are designing missiles to launch 
from multiple transporters against a broad array of targets, enhancing 
their mobility and effectiveness on the battlefield. Shorter launch-
preparation times and smaller footprints are making new systems more 
survivable, and many have measures to defeat missile defenses.
                            global narcotics
    The multi-billion dollar global narcotics trade is a major and 
growing source of crime, violence, and political instability in Latin 
America, Europe, Africa, and Asia undermining the rule of law, sapping 
legitimate economic development, and inflicting high socio-economic 
costs. The production and trafficking of the two drugs most associated 
with conflict, insurgency, and insecurity are cocaine and heroin. The 
total retail market value of these two drugs alone exceeds $150 billion 
while the overall value of the global illicit drug market is over $320 
billion. Traffickers often bribe officials and buy military-grade 
weapons and sophisticated communications equipment that give them 
state-like intelligence and security capabilities. As drug consumption 
expands in the developing world, anti-government groups will 
increasingly exploit growing drug market opportunities to supplement 
other sources of funding.
                      foreign intelligence threats
    In addition to the transnational threats discussed above, the 
United States and DOD face a persistent and significant intelligence 
threat posed by numerous countries and a few subnational actors. 
Effective counterintelligence is a significant priority for the DIA, 
the Military Services, other defense agencies, and the DOD. Foreign 
intelligence services conduct a wide range of intelligence activities 
to degrade our national security interests worldwide. They target our 
Armed Forces, our military and commercial research, development, and 
acquisition activities, our national intelligence system, and our 
government's perceptions and decision processes. A few transnational 
terrorist groups have developed their own intelligence collection and 
counterintelligence capabilities. An emerging threat that concerns the 
department involves the potential for compromise of our supply chain by 
inserting malicious code into or otherwise corrupting key components 
bound for important warfighting systems.
           hard, deep, buried targets/underground facilities
    The use of underground facilities (UGF) to conceal and protect 
critical military and civilian assets and functions is widespread and 
expanding. China, North Korea, Iran, Syria, Russia, Pakistan, and 
Lebanese Hezbollah have active underground programs. UGFs conceal and 
increase the survivability of strategic command and control, leadership 
protection and relocation, military research and development, 
industrial production, and strategic military assets. A significant 
trend of concern is the basing of ballistic and cruise missiles and 
other systems designed for anti-access/area denial weapons directly 
within UGFs.
    In addition, Russia, China, Iran, and North Korea operate national-
level military denial and deception programs. These programs are 
designed to counter U.S. technical reconnaissance, conceal military 
research and development, misrepresent major weapon systems and 
capabilities designed for use against the United States or U.S. allies, 
and degrade U.S. kinetic targeting. These four countries, and others, 
plan and execute military denial and deception based on knowledge of 
U.S. reconnaissance capabilities and intelligence sources and methods 
derived from espionage, space surveillance, unauthorized disclosures 
and open source materials.
              advanced conventional munition proliferation
    Another transnational military issue is the proliferation of 
advanced conventional weapons, especially air defense systems and anti-
ship cruise missiles. We remain concerned especially with Russia's 
exports of these arms, including the SA-17, SA-22, and SA-20 surface-
to-air missile systems, as well as the supersonic Yakhont anti-ship 
cruise missile. Russia has exported several of these systems to 
countries of concern, including the SA-17 to Venezuela, and the SA-17, 
SA-22 and Yakhont to Syria. The 300-km range Yakhont poses a major 
threat to naval operations particularly in the eastern Mediterranean. 
In terms of weapons in development, Russia continues testing the Club-K 
cruise missile system, a family of weapons deployed inside standardized 
shipping containers similar to those found on merchant vessels, freight 
rail trains and road vehicles. The covert nature of this weapon would 
render identifying threat platforms very difficult and reduce warning 
of an attack.
                         global health security
    Our ability to mitigate and control health threats before they 
impact U.S. interests relies on early warning, despite the absence of 
precise indicators of when and where new diseases will emerge or 
chemical incidents will occur. In less well-governed regions, naturally 
occurring disease-causing organisms and insecure chemical stockpiles 
present low-cost, low-risk, low-complexity alternatives for non-state 
actor acquisition, vice obtaining such agents from secured facilities.
    Less than fully transparent foreign government vulnerabilities in 
health preparedness, consequence management, and resilience impact U.S. 
national security interests through second-, third-, and fourth-order 
effects, during natural disasters, worldwide events such as the 
Olympics and G8 Summits, and catastrophic human disease outbreaks.
    Governments utilize health care delivery to advance diplomatic 
intentions abroad. Non-state actors and extremists take advantage of 
governments' inabilities to meet the needs of their populations by 
providing health services to increase influence, internally and 
internationally.
               potential for strategic surpise (warning)
    The enduring impact of the Arab Spring, the ongoing turmoil in 
Syria, persistent territorial disputes globally, and emerging 
challenges underscore the need for effective strategic warning and 
long-range foresight to prevent strategic surprise.
    Strategic problems such as proliferation of weapons of mass 
destruction, state-on-state conflict, instability, resource scarcity, 
and terrorism remain at the forefront of U.S. warning concerns. 
However, strategic surprise, not only as a goal of the deliberate 
deception efforts by our adversaries, but now also often stemming from 
human and social dynamics--those small and varied interactions with 
seemingly no immediate relevance to the DOD--can rapidly evolve and 
radically alter U.S. policy. To uncover these challenges DIA, in 
partnership with the IC and combatant commands, monitors the 
interactions between military, political, technological, economic, and 
social developments. We place the events in the context of history, 
culture, religion, and physical and human geography. Our ability to 
understand these interactions provides decision-advantage in the face 
of unforeseen events to anticipate surprise.
    Technological change has the potential to create surprise. Less-
developed countries and non-state actors may surge with innovative 
capabilities that could challenge or counter some U.S. military 
capabilities. Proliferation of advanced technology and the rapid 
improvements in commercial off-the-shelf technology will aid 
development of new commercially enabled asymmetric threats. 
Improvements in communications will speed the proliferation of advanced 
and commercially available technologies.
investment strategy for scientific and technical intelligence analysis 
                             and collection
    Scientific and Technical Intelligence (S&TI) is foundational to all 
aspects of DIA's mission. DIA's efforts in the area of S&TI are 
intended to anticipate development of foreign advanced weapons, provide 
characteristics and performance of foreign systems, deliver onboard 
intelligence mission data to maximize the effectiveness of our military 
systems, characterize advance in denial and deception, and generate 
warning of the disruptive use of existing and emerging technologies by 
both state and non-actors. In recent years we have noted, for example, 
the appearance of sophisticated threats to our naval forces, efforts to 
counter our advantages in precision guidance and low-observable systems 
and the ability of terrorist groups and insurgents to rapidly adapt 
improvised explosive devices to newly introduced countermeasures. We 
have also seen the appearance on the horizon of technologies such as 
quantum computing or electromagnetic weapons that may eventually pose a 
threat to our information security, computer capabilities, and 
communications backbone.
    In order to meet these challenges DIA, as the functional manager 
for all-source analysis within the Defense Intelligence Enterprise, has 
undertaken several initiatives intended to increase the effectiveness 
and efficiency of DIA and Defense Intelligence Enterprise S&TI efforts. 
The Defense Technology and Long-Range Analysis Office (formerly the 
Defense Warning Office) established the Defense Intelligence Disruptive 
Technologies Analysis Committee (DIDTAC); Since its origin, the DIDTAC 
has refined collaborative procedures for tasking and synchronization, 
is being integrated into an advanced Warning construct, and is 
addressing a complex analytic issue assoCiated with autonomy and 
autonomous systems. We have also launched a Technology Targeting 
capability to identify methods that key U.S. defense technology is 
being acquired by foreign countries. DIA has established an S&TI 
framework to better support the needs of the acquisition, policy, and 
warfighter communities. As part of this framework, we have established 
the Defense Intelligence Officer for S&TI to integrate intelligence 
functions (collection, analysis, international partnerships, etc.) 
across the Defense Intelligence Enterprise. In addition, through the 
S&TI framework we are working towards better integration of the DOD and 
national Laboratories to better leverage U.S. capabilities.
                               conclusion
    Today's focus on combat operations against insurgents and 
transnational terrorists does not preclude the potential that other 
threats will come to the fore, including conflicts among major 
countries that could intersect vital U.S. interests. Defense 
intelligence must be able to provide timely and actionable intelligence 
across the entire threat spectrum.
    In cooperation with the IC, DIA is strengthening collection and 
analysis and sharing more information across intelligence disciplines, 
and with our Nation's close allies.
    The men and women of DIA know they have a unique responsibility to 
the American people and take great pride in their work. I am privileged 
to serve with them and present their analysis to you.
    On behalf of the men and women of DIA and the defense intelligence 
enterprise, thank you for your continuing confidence. Your support is 
vital to us.

    Chairman Levin. Thank you very much, General.
    We'll start with an 8-minute first round.
    Director Clapper, Iran has been enriching and continues to 
enrich uranium, and to stockpile that uranium, currently under 
the International Atomic Energy Agency (IAEA) safeguards. The 
concern, however, is that Iran might be able to stockpile 
enough uranium to enrich weapons-grade uranium and to produce 
nuclear weapons in a relatively short period.
    Your prepared statement includes an important assessment 
that Iran could not divert safeguarded material and produce a 
weapon's worth of uranium before this activity is discovered. 
Can you tell us about how much warning you believe we would 
have?
    Mr. Clapper. We continue to hold the most likely 
assessment, our assessment is that if they were to move to 
highly enriched uranium, which would be a dead giveaway--
there's no other reason that it would be produced other than 
for a weapon--the most likely scenario is they would do that 
covertly, which would actually slow the time--actually lengthen 
the time in which they could develop a testable single weapon.
    Clearly, if they were to do a breakout using the facilities 
they have now to enrich uranium, which is, as you indicated, 
under safeguard and under IAEA supervision, that clearly is a 
real bellwether. That would be a big warning. If they were to 
do that, which we think is the least likely scenario, it would 
be a fairly brief time, as we indicated in the statement.
    Chairman Levin. A fairly brief time?
    Mr. Clapper. There are imponderables there on how--because 
there's an industrial process here involved and so there's all 
kinds of factors that could affect that time. But we're talking 
probably a period of months, not years.
    Chairman Levin. All right. Have they made a decision, in 
your assessment, to produce nuclear weapons?
    Mr. Clapper. They have not. We continue to hold that they 
have not yet made that decision, and that decision would be 
made singly by the Supreme Leader.
    Chairman Levin. Can you give us your assessment of the 
impact of the current sanctions regime against Iran?
    Mr. Clapper. It is having a huge impact on their economy, 
there is no question about that. Any measure you use--
inflation, unemployment, unavailability of commodities, et 
cetera, it's having a tremendous impact on their economy by any 
measure. That said, it has not yet induced a change in their 
policy.
    Chairman Levin. General Flynn and Director Clapper both, 
relative to Pakistan: Has Pakistan changed its strategic 
calculation with respect to Afghanistan? More specifically, is 
there any change that we have determined in Pakistan's so far 
unwillingness to deal with the Afghan Taliban which has been 
given sanctuary in Pakistan? Is that still their on-the-ground 
position, that they are not going to take on or deal with or 
put in jeopardy the Afghan Taliban that is again inside 
Pakistan?
    Mr. Clapper. I will say that the tenet to remember here is 
that the primary strategic interest of Pakistan is India, and 
so they view whatever they do in Afghanistan through that lens 
of their preeminent threat, and what they are most consumed 
with is India. So to the extent that they can maintain 
visibility and influence in Afghanistan, I believe they will 
continue to do so.
    Chairman Levin. So there's no change that we have discerned 
in Pakistan and so far their unwillingness to take on the 
Taliban inside Pakistan, the Afghan Taliban?
    Mr. Clapper. Inside Pakistan, the sect of the Taliban 
that's in Pakistan certainly poses, does pose a threat to the 
Pakistanis and they have, when they could----
    Chairman Levin. The Afghan----
    Mr. Clapper. They have also, I need to point out, lost 
thousands of troops in the FATA in pursuit of militants.
    Chairman Levin. But I'm talking about the Afghan Taliban 
that they have given sanctuary in Pakistan.
    Mr. Clapper. That's correct, that's correct.
    Chairman Levin. Let me ask General Flynn: Is there any 
change in that?
    General Flynn. Not basically.
    Chairman Levin. All right. Now, in terms of North Korea, 
you've indicated, I believe, that the difference that's been 
publicly stated between the IC, writ large, and the DIA on the 
issue of whether or not North Korea has a nuclear weapon 
capable of delivery by a ballistic missile, that is in your 
judgment a small part of a bigger picture, Director Clapper, 
and that is a nuanced issue, as you point out.
    I would think that because of the public leak here and the 
description of this that the best way to determine that it's a 
nuanced difference is to deal with the nuance.
    Mr. Clapper. The best way to deal with it would be to know 
about it.
    Chairman Levin. I understand.
    Mr. Clapper. So, as I pointed out, the issue here is what 
we know, in fact, which we've outlined, and what we impute from 
those facts, and that's where you get into the differences and 
confidence levels that people have.
    Chairman Levin. Can you, just since it's now in the public, 
give us an idea as to why you think it's nuanced, give us what 
that difference is?
    Mr. Clapper. The difference has to do with the confidence 
level in the actual ability of the North Koreans to make a 
weapon that will work in a missile. Neither we nor the North 
Koreans know whether that will actually work, whether they have 
such a capability, if they have it whether it will actually 
work. So DIA has a higher confidence level than the rest of the 
community on that, on that capability. That's the difference.
    Chairman Levin. Okay, that's helpful.
    In Syria, the President set forth a red line in terms of 
chemical weapons. Without getting into the question of that 
which you prefer to deal with in a classified setting, can you 
tell us whether, in your judgment, Director, that red line has 
been crossed?
    Mr. Clapper. That is a policy question and not one for 
intelligence to comment on.
    Chairman Levin. So there is no assessment that you've 
made--without getting into it in public, have you made an 
assessment as to whether that red line has been crossed?
    Mr. Clapper. I have not, and nor will we.
    Chairman Levin. All right. You talked about the global 
jihadist movement, Director, in your opening statement. Does 
the continuing operation of the detention facility at 
Guantanamo serve as a recruitment tool for a global jihadist 
movement?
    Mr. Clapper. I'm sorry?
    Chairman Levin. Is the continued operation of the facility 
at Guantanamo a recruiting tool for the global jihadist 
movement?
    Mr. Clapper. This has been a long subject of debate ever 
since Guantanamo was established, and there are those who 
believe that in the past it has been used or cited certainly in 
jihadist literature and on their websites.
    Chairman Levin. General Flynn, do you have an opinion on 
that?
    General Flynn. I agree with what Director Clapper has 
stated here. I think that we just have to pay attention to not 
just Guantanamo, but also other places where individuals are 
being held by other countries, and pay very close attention to 
what happens to the disposition of those individuals in those 
other countries.
    Chairman Levin. As it might relate to----
    General Flynn. As it might relate to their returning to the 
battlefield, so to speak.
    Chairman Levin. Thank you.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    I wasn't going to mention Guantanamo, but just for the 
record, I've always observed this is one of the few good deals 
that we have. It's still only $4,000 a year and about half the 
time, they don't even bill us for it.
    But I'd like, for the record, you to tell me, what do we 
have--where is an alternative to Guantanamo? Because I think 
that's a great resource and it's been used, politically, in the 
wrong way in my opinion.
    [The information referred to follows:]

    General Flynn. Within the Department of Defense, this would be 
handled by the Under Secretary of Defense for Policy.

    Senator Inhofe. The statement that you made, Director 
Clapper, we couldn't find in your written statement. So I sent 
for it and I found it. I'm going to read this really quickly. I 
was overwhelmed. You said: ``In almost 50 years of 
intelligence, I don't remember when we've had a more diverse 
array of threats and crisis situations around the world to deal 
with.''
    Mr. Chairman, I think that's about as strong a statement as 
I've heard.
    General Flynn, do you agree with that statement?
    General Flynn. I do.
    Senator Inhofe. Director Clapper, I was going to bring up 
this, the last time we went through this, because I was in the 
Senate at the time we went through the last peace dividend. I 
remember the euphoria that was out there. The Cold War is over, 
we no longer need all of this. We actually did a lot of cuts in 
terms of--I have one that, it's somewhere around a 30 percent 
cut in our capability. At the same time, China, during that 
same decade of the 1990s, was increasing by about 300 percent.
    Do you see--what other similarities--now, you've covered 
that and I appreciate it. What other similarities do you recall 
that happened during that peace dividend facade back in the 
1990s and what we're facing today? Anything else?
    Mr. Clapper. Looking back, because of the cuts we were 
taking I often wonder whether we failed to fully appreciate the 
onset of terrorism. I remember I first got religion about 
terrorism when I did the Khobar Towers investigation in 1996. I 
had just left DIA as its Director. That occurred in June 1996 
and I had left DIA as Director in September 1995, and had 
occasion to go back and critique myself, and I saw how little 
my former agency, now General Flynn's, was devoting to 
terrorism. A lot of it was because of, I think, the cuts and 
still trying to get over the preoccupation with the Soviet 
Union.
    Senator Inhofe. You would probably say that we need to 
remember the lessons of that currently, I'm sure?
    Mr. Clapper. Absolutely, sir. That's why I said I fear I've 
seen this movie before.
    Senator Inhofe. Yes, sir. That's a good way of putting it.
    Director Clapper, I've said sometimes we say things so many 
times we forget what the original source was. I do remember, 
though, back in, I think it was 2007, that our intelligence did 
come to the conclusion that Iran was going to have the 
capability that we're looking at now by 2015. That's the first 
time that I remember that date, and that really hasn't changed 
much since then. Am I accurate in my recollection?
    Mr. Clapper. Specifically, sir, what capability are you 
referring to?
    Senator Inhofe. I'm talking about a nuclear capability and 
delivery system.
    Mr. Clapper. That date is good. The Iranians are pursuing 
the development of two systems that potentially could have 
intercontinental capability and the belief is that about the 
first time they'd be ready to do that would be as early as 
2015.
    Senator Inhofe. For both of you: Recently, we had a Senate 
Armed Services Committee hearing earlier this year when we 
asked General Mattis this question. We said: ``Do you believe 
that current economic and diplomatic efforts to stop Iran from 
acquiring a nuclear weapons capability have been successful?'' 
His answer was: ``No.'' Do you agree with his answer?
    Mr. Clapper. My answer to that--and I've been asked that, 
to comment on General Mattis's comment--was that the sanctions 
are having a huge impact on their economy, but it has not yet 
induced a change in their policy.
    Senator Inhofe. How about you, General Flynn?
    General Flynn. I would agree. Their behavior, and their 
intention, is to achieve that capability.
    Senator Inhofe. Okay.
    One of the concerns I have, and you did cover it, Director 
Clapper, briefly anyway, and that is the continent of Africa. 
We were all concerned back when that was under three commands 
and now, of course, it's under one command. But the resources 
for that command come from U.S. European Command (EUCOM). We've 
talked to both Admiral Stavridis, the current one, and of 
course General Breedlove is going to become the EUCOM 
commander, and they're all very much concerned, as I have been 
for a long time, in the lack of, even currently, without 
reducing resources due to sequestration, the lack of resources 
that we have facing the potential threats on that continent.
    Now, you talked about Mali, some of what's going on now. We 
remember going through the Somalia problem. Sudan, Southern 
Sudan--I've been to Southern Sudan twice and I've seen this new 
country being developed, and I'm very concerned about the fact 
that we were short of intelligence in that whole region.
    It's not just the countries that you mentioned. You did 
mention Nigeria. But there's other places in West Africa, all 
the way from Togo, Ghana, and then down into the gulf, where 
once they are developing the oil resources down there and that 
money emerges, problems emerge with it. So we're going to, I'm 
sure, have to expand our ISR capability in that area.
    Do you have any thoughts about the parts of Africa that you 
did not mention that are potentially a great threat?
    Mr. Clapper. Sir, I think you covered it very well. I would 
just comment that if you look at northern Africa, say from 
Mauritania or Senegal on the west all the way to Sudan on the 
east, it's about 475 million people, and very porous borders, 
weak security services, and of course the place is awash in 
weapons. Most importantly, most importantly, a very high 
proportion of the population are young and unemployed males, 
who are frustrated and are easily attracted to the jihadist 
causes.
    So that whole area I believe is, and the other countries 
you mentioned, I think is going to be a tremendous challenge, 
certainly for us in the intelligence business, a big challenge. 
We don't cover the Earth like Sherwin-Williams paint equally. 
So we have focused on other areas. So the challenge will be how 
to bring to bear more, particularly in the ISR arena, 
capability to Africa.
    Senator Inhofe. Yes, Africa is unique in another way, too. 
You can find a place right now where we have adequate 
intelligence, there's not a real threat there. But when they 
change leadership in these countries--look at Cote d'Ivoire. 
When the Gbagbos were taken over--I know the Department of 
State (DOS) doesn't agree with my assessment of this, but when 
they were taken over by this Alassane Ouattara, who is actually 
from Burkina Faso, all of a sudden you have a new threat that's 
out there. To stay ahead of that, while it wasn't necessary to 
get a lot of intelligence prior to that time under the Gbagbo 
regime, in my opinion, now it is because you're dealing with 
people who have terrorism in their background.
    So I would just hope that we look at some of the potential 
problems that are there, because they're very real in that 
country.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Inhofe.
    Senator King.
    Senator King. Director Clapper, you've given us an 
appalling list of risks today, a long list of threats and 
problems that we face. You started your testimony talking about 
the effect of the sequester and I think it's important to 
emphasize that the sequester is not a 1-year proposition. It is 
written into law to continue.
    Given that list of threats and given the increase in risk 
that's occasioned, would it be fair to say that the sequester 
itself is the most serious security risk this country faces 
right now?
    Mr. Clapper. It's certainly what--as I indicated in my 
testimony, it is certainly consuming us, the IC leadership, for 
what we see happening to the capability and, importantly, the 
expectations that people seem to have for our having this 
global insight. That's going to be very hard.
    If we sustain sequestration through 2021, which is what the 
law calls for, in fact, we go through another year of 
sequestration, as I said in my testimony to the Senate 
Intelligence Committee and the day before the House 
Intelligence Committee, we collectively are going to have to 
rethink what people expect from the IC, because it isn't going 
to be the same.
    Senator King. General Flynn?
    General Flynn. Yes, if I could add to that, because I just 
want to reemphasize this as another senior leader in the IC. 
Just to reemphasize what Director Clapper talked about, we are 
about people and we do not want to damage that vital component 
of our capability. The sequestration, as you all know, provides 
us almost no flexibility, not just this year, but over the long 
haul.
    One other thing I'd like to remind everybody is our 
adversaries won't take a strategic pause to wait for us to 
correct ourselves. The real cost--and I think Director Clapper 
highlighted it very well--is what I would describe as public 
insecurity and the potential for strategic surprise. We really 
won't know what we've missed, given the potential damage that 
sequestration will have on us. So I think his word 
``insidious'' is appropriate.
    Senator King. We won't know what we've missed until 
something blows up.
    Mr. Clapper. Yes, sir.
    Senator King. Let me change the subject to a more specific 
one. I asked General Dempsey this the other day. In 
Afghanistan, as we are transitioning out it seems to me one of 
the key questions is: Who do the people of Afghanistan support? 
From an intelligence perspective, are they with the Karzai 
regime? Are they with the government? Are they with the 
Taliban? What is the status of the on-the-ground public opinion 
in that country?
    Mr. Clapper. I think it's very much a mixed bag and I think 
the forthcoming election, assuming it's held on time, has 
already generated a great deal of political activity. I think 
that's going to be a real indicator of where these loyalties 
lie. In the areas controlled by the Taliban--that's principally 
in the rural areas--I think they're probably in control and 
hold sway. In the urban areas, particularly in Kabul, probably 
the central government under Karzai has more attraction.
    But bear in mind, Afghanistan is very much a tribal 
country, somewhat artificial as a country in the conventional 
sense that we think about countries. So loyalties, I think, lie 
mostly on a tribal basis.
    Senator King. One other more specific question on the 
sequester and the dollars. As I read the figures that you have 
supplied, Director Clapper, we're talking about absolute cuts 
in real dollars, not cuts in growth, is that correct?
    Mr. Clapper. Absolutely. We had to cut about $4 billion in 
7 months and in a classified setting I'd be happy to go through 
the litany of actual capabilities that we're cutting.
    Senator King. But that continues over time.
    Mr. Clapper. Absolutely.
    Senator King. It will be some time before you actually 
reach the amount of nominal dollars that you were at in 2012, 
is that not correct?
    Mr. Clapper. If you start with the base of 2012 and take 
sequestration and the other actions that have been taken, it is 
a substantial cut and we don't start to get well until about 
2022 or 2023.
    Senator King. Thank you.
    One other question on Iran. We've had some discussion. This 
morning in the New York Times there was an article headlining a 
report led by former Ambassador Pickering, who is very well 
respected in the field, who argues that the sanctions in Iran 
are not affecting the decisionmakers and, in fact, may be 
driving them in the other direction.
    Could you comment on that thought?
    Mr. Clapper. That's certainly one thesis. There are those 
in the IC that have pointed that out, that that's a 
possibility, that you would reach a certain tipping point where 
maybe that would prompt the Supreme Leader to go ahead and 
build a nuclear weapon. That's clearly a possibility. But at 
the same time, at least right now, we don't think that 
decision's been made.
    Senator King. It seems to me the problem with sanctions 
against countries that are essentially autocratic is that the 
sanctions affect everybody in the street and they don't 
necessarily affect the decisionmaker. The Supreme Leader could 
hang on. He's not going to have any problem getting bread in 
the marketplace.
    Mr. Clapper. Right, it won't affect him that way. What they 
do worry about, though, is sufficient restiveness in the street 
that would actually jeopardize the regime. I think they are 
concerned about that.
    Senator King. That was going to be my follow-on question: 
Does political pressure in a country like Iran mean anything?
    Mr. Clapper. Political pressure from outside or----
    Senator King. No, no, no. From within, in the streets.
    Mr. Clapper. Oh, I think it can. I think it can. I think 
again perhaps--don't know, but perhaps this will play out in 
the forthcoming Iranian election. You have the Ahmedinejad 
faction who will put up a candidate not exactly embraced by the 
Supreme Leader. This could create an interesting political 
dynamic. But I don't know. We'll have to see.
    Senator King. Thank you.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator King.
    Senator McCain.
    Senator McCain. I thank the witnesses for their being here 
and their continued service. I don't want to beat a dead horse 
here on the sequestration, but I believe both witnesses--is it 
true that if this continues our ability to provide the 
necessary intelligence information for the decisionmakers will 
be jeopardized, thereby jeopardizing our national security? 
Would you agree with that?
    Mr. Clapper. I would.
    Senator McCain. General Flynn?
    General Flynn. 100 percent.
    Senator McCain. We seem to be living in some kind of 
parallel universe here. We get testimony from you and other 
military leaders and yet there's nothing from the White House 
and there's nothing here in Congress, effort to repeal what is 
clearly a threat to our national security. But some of us will 
keep on trying.
    General Clapper, you and the Secretary of State, as we now 
know, and then-Secretary of Defense, and the CJCS some time ago 
had supported arming the rebels. Why did you take that 
position?
    Mr. Clapper. Sir, I have never spoken publicly about the 
position I took in that regard and I don't think it's 
appropriate for me to do so. Advice I render the President, 
that's between him and me, and I don't think it's appropriate 
to talk publicly about it.
    Senator McCain. You don't think it's appropriate to talk to 
Members of Congress about your views on a situation that's 
going on where some 80,000 people have been massacred?
    Mr. Clapper. I'll talk about that. Specifically----
    Senator McCain. Then the question----
    Mr. Clapper.--on the advice, the advice I rendered the 
President on the issue of arming the opposition----
    Senator McCain. The question is what advice do you give to 
Congress as far as arming the rebels?
    Mr. Clapper. I believe at this point there are lots and 
lots of weapons in Syria, and if we're going to expend 
resources in support of the opposition I am not convinced now 
that arming--our supplying yet additional weaponry to the 
opposition would have the desired impact, based on cost-
benefit.
    Senator McCain. Would a no-fly zone do that?
    Mr. Clapper. That's a possibility. Again, that in the end 
is a policy thing, not an intelligence question. Certainly if 
and as the opposition gains control of sufficient geography on 
the ground, then that's a possibility. But doing a no-fly zone, 
even a partial one, is not a trivial undertaking. There is, as 
I mentioned, a tremendous array of weaponry in Syria, to 
include a very sophisticated air defense capability, depending 
on who's operating it. So a no-fly zone would not be without 
cost.
    Senator McCain. Even though General Mattis and Admiral 
Stavridis both testified that we could with cruise missiles and 
moving the Patriot missiles in the right places, that we could 
establish a no-fly zone?
    Mr. Clapper. Patriot missiles, I'm getting out of my league 
here. It's a better discussion with DOD. But that's essentially 
a point weapon. The theory is that you could position Patriot 
missiles outside of Syria and somehow provide security over a 
zone. Given the nature of the Patriot weapon, which is a point, 
it's not an area protector, that would be tough.
    Senator McCain. You know what's fascinating here, General, 
is that now you are saying, and so did the CJCS, that the 
situation has deteriorated so much that you now have questions 
whether we should supply weapons to the rebels or not, which 
then argues that we should have supplied them back when you 
recommended it, according to published reports, as well as the 
Secretary of State, as well as the CJCS.
    It's remarkable. So now you and the administration sit here 
and say: Well, we don't know where the weapons are going. Well, 
maybe if we had helped the people who were fighting from the 
beginning, before all these jihadists flowed into the fighting 
in Israel, we might have been able to have some beneficial 
effect. Meanwhile, we sit by and watch 80,000, the countries--
would you agree that both Lebanon and Jordan have been 
destabilized?
    Mr. Clapper. It's had a huge impact on the neighboring 
countries. Jordan, Lebanon, Turkey, Iraq have absorbed a huge 
number of refugees, yes, not to mention the humanitarian 
aspects, but the spillover of the fighting.
    Senator McCain. Thank you.
    Is support flown into Syria over Iraqi air space?
    Mr. Clapper. Happy to talk about all that in closed 
session.
    Senator McCain. Okay. Do you believe Iran will seek to keep 
Assad in power at all costs?
    Mr. Clapper. Absolutely. His fall would be a huge strategic 
loss to Iran.
    Senator McCain. A huge strategic loss to Iran. But yet we 
don't seem to know of any real way to assist them. That's quite 
remarkable commentary on the capability or the commitment of 
the United States of America.
    How would you characterize Russian interests within Syria?
    Mr. Clapper. That represents their last bastion, I guess, 
in the Mideast where they have influence. It's been a huge 
weapons client of theirs. There is the general aversion to just 
being in opposition to us, and as well, I think, the Russians 
have concerns about their own homeland from the standpoint of 
jihadist influence, particularly in the Caucasus. So there's a 
number of factors, I think, that motivate the Russians.
    But I also think they are concerned about what would follow 
Assad, in the ``be careful what you ask for'' department.
    Senator McCain. Is Iranian support for the Assad regime 
increasing? We hear reports, for example, they're taking people 
to Iran and training them and sending them back to Syria.
    Mr. Clapper. There's some of that that has been going on, 
yes.
    Senator McCain. There was an article in the Wall Street 
Journal I think yesterday: ``U.S. Fears Syria Rebel Victory For 
Now.'' Is that your view?
    Mr. Clapper. I'm sorry, sir. What was the headline?
    Senator McCain. It says: ``Senior Obama administration 
officials have caught some lawmakers and allies by surprise in 
recent weeks with an amended approach to Syria. They don't want 
an outright rebel military victory right now because they 
believe, in the words of one senior official, `that the good 
guys may not come out on top.' ''
    Mr. Clapper. That depends on your definition of ``good 
guys.'' Certainly the jihadists, the Sunni-dominated groups, 
the fighting groups in the opposition, most notably al Nusra, 
which has been punching way above its weight in terms of its 
size, who have recently pledged allegiance to al Qaeda, that is 
a great concern. They are present in 13 of the 14 provinces in 
Syria and are starting to establish municipal services, provide 
humanitarian aid, food, hospitals, and sharia law courts.
    Senator McCain. All of this might have been avoided if we 
hadn't sat by and watched it happen.
    I thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCain.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Thank you, gentlemen, for not only your testimony, but for 
your service.
    The issue obviously that you've brought front and center is 
sequestration. I just have more a procedural question. First of 
all, as I understand it, your appropriation is part of the 
defense appropriations bill as a classified annex, that we did, 
in fact, pass a defense appropriations bill. We didn't do a lot 
of those. Most agencies have Continuing Resolutions, and that 
within the context of that bill, were you able to achieve at 
least flexibility and prioritization in order to cope with what 
we all recognize as decreased funding?
    Mr. Clapper. The National Intelligence Program (NIP), which 
I manage, straddles six Cabinet departments and two independent 
agencies. The bulk of the program is carried in the DOD budget. 
So not to get into sequestration arcana here----
    Senator Reed. Yes, sir.
    Mr. Clapper.--but the NIP, the program I operate and 
manage, was divided into 700 Plan Program Activities (PPA), 
which covers the entire extent of the NIP. Every one of those 
700 PPAs had to be equally taxed. Congress imposed a more 
onerous, more restrictive array, rule set, limiting my ability 
to move money from PPA to PPA. So I have these very small PPAs 
with not a lot of money in them and many of them are only 
people, and for whatever reason, they decided that there needed 
to be more control over the NIP.
    The effect of the fiscal year 2013 appropriations act did 
help us in that it allowed us to move some money around so that 
we could move the money into the pots that we were already 
committed to by virtue of the fact we were 5 months into the 
fiscal year before we got a bill. So it would have been a 
disaster without it.
    The down side, of course: It kept the PPA structure. It did 
allow new starts, which was good, but it also for most 
accounts, with three specific exceptions which I can't discuss 
here, it was less money at the end of the day with the 
appropriations act. Of course, the impact of sequestration was 
actually doubled because we had to take it in 7 months, so the 
real cut there was about 13 percent, the realistic impact.
    Senator Reed. That's helpful because I think it provides 
more of a context of things we might be able to do.
    We have a macro issue with the sequestration which 
everyone, I think, recognizes has huge and accelerating impacts 
on your programs. But are there legislative, both 
authorization, not on this committee but on the Intelligence 
Committee, and appropriations matters that could at least give 
you flexibility, give you the ability to, whatever the top line 
is, spend it more wisely?
    Mr. Clapper. As I said, we will pay our fair share of the 
tax here and we have, and by the way done it in such a way we 
can avoid--where we can protect our people, we think, from 
furloughs.
    So I guess if I had to ask, my wish list of one would be 
some relief on our PPA structure, or just at least treat me 
like the big DOD, where I'd have larger PPAs.
    Senator Reed. Yes, sir. That's something that could be 
done, not as a macro solution to sequestration, but as a 
micro----
    Mr. Clapper. In the bill Senator Feinstein and Senator 
Chambliss, chair and ranking of the Senate Intelligence 
Committee, sought to do that, and that failed.
    Senator Reed. That's valuable insight. Thank you, sir.
    I know you have a range of issues and you have multiple 
programs. But in a simplistic approach, there always seems to 
be two major areas, HUMINT and technical intelligence. Harking 
back to the 1990s, one of the things that seemed to be 
sacrificed was HUMINT, to our chagrin. Can you balance those 
programs? Without getting into detail, obviously, in open 
session, is there one area that's going to suffer more than the 
other? Again it goes back to this question: Can we give you at 
least flexibility to manage better?
    Mr. Clapper. Again, not to be a Johnny One-Note, but 
that's--in this environment, the one thing that I would ask for 
is more latitude on how we take the cuts and allowing us, the 
IC leadership, to put the money where the most important payoff 
is.
    With respect to the question you raise, sir, it's an age-
old one in intelligence. The approach that I've tried to take 
here in the last 2 years as our budget's gone down is to try to 
protect and invest in those capabilities that give us the most 
general coverage. That's why I'm very strong on sustaining our 
overhead reconnaissance capability, because that covers the 
Earth, denied area or not.
    Similarly, even when times were thin in the late 1990s, 
HUMINT capabilities were extremely important. That's why I am a 
huge proponent of what Dr. Vickers and General Flynn are doing 
with the Defense Clandestine Service, which isn't really an 
increase as much as it is a reshaping, a recasting of an 
organization I started when I was Director of DIA in 1992 
called the Defense HUMINT Service. Better integration with the 
Federal Bureau of Investigation (FBI) and the CIA, more 
clandestine case officers, who are worth their weight in gold. 
That's a unique capability that no other part of the IC can 
render.
    So as we make these reductions, we are going to have to 
focus much, much more on quality and the quality of our 
investments, since we're not going to have safety in numbers.
    Senator Reed. I want General Flynn to be able to just make 
a comment, but I have one quick question. Syria has come up a 
number of times, and there is clear evidence, public evidence, 
of Iranian involvement. My presumption, though, is that there 
are regional forces who are operating inside Syria who are 
supporting the efforts of the rebels, opposing Iranian----
    Mr. Clapper. Yes.
    Senator Reed. So this is not a situation where there is 
only one player, one external player in the field, and that's 
the Iranians. This is actually a complicated situation where 
there are conscious and capable people from other countries on 
the ground assisting the rebels.
    Mr. Clapper. Yes, that's true. It is a very complex 
situation there. One of the phenomena that makes it even more 
difficult for us to assess good guys and bad guys is they will 
portray a different face depending on whether they're looking 
westward or some other way. So that makes it even more 
complicated.
    One of the great concerns we have is the magnet that Syria 
has turned into, particularly for foreign fighters. The 
Europeans are very concerned about the 400-plus Europeans that 
have gone to Syria to fight the great fight. So it's a very 
complex situation, and there are bad guys and good guys and a 
large number of shades of grey in between.
    Senator Reed. My time has expired. General Flynn, I hope 
there's a second round and I can come back. I'd just simply say 
that we in Rhode Island are very proud of you and your brother, 
almost as proud as your mother. Thank you.
    Chairman Levin. Thank you very much, Senator Reed.
    Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman.
    I want to thank the witnesses for being here today and for 
your service to our country.
    I wanted to ask, General Flynn, in your written statement 
you say that Iran is providing money and funding to the Syrian 
regime, the Assad regime. We know that Iran also provides funds 
to Hezbollah. Can you let me know, either Director Clapper or 
General Flynn, in order to support Hezbollah and the Assad 
regime is Tehran using the Lebanese banking system or financial 
sector? What access to the financial system do they have in 
contravention to our sanctions and our international sanctions?
    Mr. Clapper. You're speaking specifically of Iranian 
financial support to Hezbollah?
    Senator Ayotte. Using the Lebanese banking system. Two 
things: Hezbollah, Assad regime.
    Mr. Clapper. It'd probably be better to take that for the 
record.
    Senator Ayotte. Okay.
    Mr. Clapper. We'll get back. Off the top of my head, I do 
not know the specifics of that.
    [The information referred to follows:]

    [Deleted.]

    Senator Ayotte. Okay. I would appreciate that. Thank you 
very much.
    I also wanted to ask both of you: How has Tehran 
characterized the U.S. withdrawal from Iraq without a follow-on 
force?
    Mr. Clapper. How would they characterize it?
    Senator Ayotte. How have they previously characterized it? 
As I understand it, in your written testimony, General Flynn, 
you said that Supreme Leader Khamenei and senior Iranian 
military officials view the U.S. military withdrawal from Iraq 
as a strategic defeat for the United States. Is that true?
    General Flynn. I would say that is correct in their 
perception, what we assess as their perception, yes.
    Senator Ayotte. So how might Tehran characterize a 
precipitous U.S. withdrawal from Afghanistan? How do you think 
that would: (a) be viewed by Iran; and (b) what activities do 
you believe that would precipitate in Afghanistan by the 
Iranians?
    Mr. Clapper. The Iranians have never cared for having us on 
either of their borders. So just as they welcome our departure 
from Iraq, so will they from Afghanistan. Their interest, of 
course, is sustaining their influence in both those neighboring 
countries, as in Iraq. They make that attempt in Afghanistan. 
Don't think they'll be as successful or influential in 
Afghanistan as they might have been--might be in Iraq.
    Senator Ayotte. Although I will say that General Dunford 
expressed concerns about that in the western part of 
Afghanistan at our hearing the other day.
    What is Iran doing now in Iraq and how is Iran using Iraq, 
including their air space?
    Mr. Clapper. The main thing, at least I worry about, is 
their supplying of weaponry or explosives to the western part 
of Iraq, or Iran--Afghanistan, excuse me.
    Mike, do you want to add anything?
    General Flynn. First, on your first issue, I think we have 
to understand how you're defining ``precipitous'' and also the 
implications, also the perception of the region and clearly 
Iran. As we continue through our transition, I think we all 
need to be paying attention to how we are doing that, and we 
need to do it very smartly, and I think General Dunford laid 
that out very clearly in his testimony. But the perceptions of 
that region in all the different players are something that we 
pay very close attention to.
    In specifically Iranian influence, I would add potential 
training to that as well of some of the kinds of capabilities 
and weapons systems that we have seen applied inside of 
Afghanistan, particularly out in the west.
    Senator Ayotte. When you say training, what do you mean by 
that, General?
    General Flynn. Just training on small arms, things like 
that, that we have become aware of over the years, as we saw 
applied in Iraq as well.
    Senator Ayotte. Director Clapper, I wanted to ask you about 
the September 11 attack on our diplomatic facility in Benghazi, 
and I particularly wanted to ask you about the prior attacks on 
our consulate, both on April 6 and June 6, that occurred before 
the September 11 attack, obviously, where four brave Americans 
were murdered.
    I wanted to ask you about the IC's assessment of those 
attacks and whether you or the DNI briefed President Obama or 
Secretary Clinton about the two preceding attacks and the 
deteriorating security situation in Benghazi prior to September 
11?
    Mr. Clapper. I did not personally brief them, but we 
certainly had reported those in all of our intelligence 
vehicles.
    Senator Ayotte. Your intelligence vehicles would have 
included the prior attacks on the consulate?
    Mr. Clapper. Yes.
    Senator Ayotte. Do you believe that the IC had a sufficient 
picture of the deteriorating security situation in Benghazi?
    Mr. Clapper. I think we had a general idea of the situation 
in eastern Libya. We probably didn't have the fidelity on the 
exact situation in Benghazi, but we certainly knew the lack of 
control that the central government in Tripoli had over the 
militias in that part of the country. That's a historical 
tradition and that continued even after the fall of Qadafi.
    Senator Ayotte. You said that the intelligence briefings 
that would have been prepared by the DNI talked about the prior 
attacks I just referenced in April and June prior to the 
September 11 attack. Would they have also included the 
assessment of the British closing their facility, as well as 
the Red Cross?
    Mr. Clapper. Yes.
    Senator Ayotte. Are those the types of intelligence that's 
reported up the chain of command, despite not having a specific 
conversation, would you say, with the President?
    Mr. Clapper. Yes.
    Senator Ayotte. Just to be clear, you didn't have any 
specific conversations with Secretary Clinton about this issue?
    Mr. Clapper. We had many conversations about it. I don't 
recall specifically a conversation with her prior to the attack 
on September 11. I just don't remember. We could have. I just 
don't remember.
    Senator Ayotte. I thank both of you.
    I also wanted to ask, General Flynn, about the Chinese 
development of a fifth generation fighter and where they are 
with that. Also, if you could comment on the Russian 
development of a fifth generation fighter?
    General Flynn. A couple of more technical answers to that 
would have to go to closed session. But I would just offer that 
the capabilities that we are seeing being developed and the 
investments being made by both China and Russia are concerning. 
We pay very close attention to these investments and to these 
capabilities and we work very closely with not only our 
commands that are out in the various theaters, both EUCOM and 
U.S. Pacific Command, but also our strong partners out in the 
region, to ensure that we clearly understand how good these 
capabilities are.
    Senator Ayotte. Thank you. Thank you, General.
    Director Clapper, finally, given the assessment of the IC 
regarding eastern Libya, what lessons do you take from the 
situation that happened in Benghazi?
    Mr. Clapper. One, don't do unclassified talking points for 
Members of Congress. That's one of the lessons I learned from 
that experience.
    Clearly we've gone to school on that situation, 
particularly the whole subject of support to both enhancing 
security and providing intelligence to--more tactical level 
intelligence for these facilities. That said, we have plans 
here, but obviously sequestration is going to have an impact on 
that.
    Senator Ayotte. I know that my time is up, but the lesson 
can't be not to do talking points for Members of Congress. How 
about getting the talking points right?
    Thank you.
    Mr. Clapper. They were right.
    Chairman Levin. Okay. Thank you, Senator Ayotte.
    Senator Donnelly.
    Senator Donnelly. Thank you, Mr. Chairman.
    Director, thank you. General, thank you.
    I apologize if some of these questions have been asked. I 
had to step out for a few minutes.
    When you look at North Korea and the decisionmaking chain 
there, how is that working exactly right now?
    Mr. Clapper. That's a great question. I think there isn't 
much of a chain. It's probably vested in the new young leader, 
Kim Jong Un. So there isn't a lot of upward flow of information 
or flow of decision options. I think they're all pretty much 
centered in one person.
    Senator Donnelly. So for want of a better way to put it, 
are decisions being made basically in a seat-of-the-pants way?
    Mr. Clapper. That's kind of my impression, yes, sir. I 
think he's driven by the need to prove his position, 
consolidate his power, and a lot of what he's doing and saying 
are driven by both messages to a domestic audience and the 
international audience.
    Senator Donnelly. Do the generals play any role other than 
to tell him what he wants to hear?
    Mr. Clapper. Pretty much, that's our impression, that it's 
``Yes, sir, yes, sir, three bags full'' from the military there 
right now.
    Senator Donnelly. The Chinese, is there a point where they 
are no longer willing to just let them continue this way?
    Mr. Clapper. I don't know that the Chinese have reached 
that point, but we see indications that the Chinese are 
certainly rethinking their relationship, particularly with the 
new administration in China.
    Senator Donnelly. With North Korea, what is the extent, in 
however much you can tell us, of North Korea and Iran's 
collaboration on nuclear missile technology?
    Mr. Clapper. Not much. The Iranians are a little wary of 
the North Koreans.
    Senator Donnelly. As to sanctions on both countries, are 
those sanctions working or are you seeing them having an 
effect? Are they affecting not only the lives of the people in 
the country, but are they affecting decisionmaking at all?
    Mr. Clapper. We discussed this a little bit before, but 
yes, the sanctions are having an impact in Iran. No question 
they've had huge impact on their economy. By any measure, it's 
been affected. But has it changed the policy on their nuclear 
activity? No.
    In North Korea, pretty much isolated anyway, the lone 
benefactor for North Korea is, of course, China, and China in 
my view--to the extent that anyone has leverage over North 
Korea it's China.
    Senator Donnelly. Switching neighborhoods, as we draw down 
in Afghanistan, does the Afghan National Security Forces (ANSF) 
have the capability to conduct adequate intelligence and 
counterintelligence operations?
    Mr. Clapper. That is an enabler that they need continued 
advice and assistance. Their national organization, the 
National Directorate of Security, is pretty good. They've had a 
long relationship with us. But I think their military 
intelligence and counterintelligence probably need more work.
    Senator Donnelly. Is that going to be one of the things 
that we focus on as we draw down our people who are remaining?
    General Flynn. A couple of things on the ANSF. First, I 
think it just needs to be stated that we're achieving the 
numbers that we said we were going to achieve, and I think the 
number is around 352,000. I was in Afghanistan in June 2002 
when we graduated the very first battalion. So to be able to 
see the growth and the development and certainly the capability 
to get to this level--what we assess, as you are highlighting, 
is they still have challenges with what we would call enabling 
capabilities, and intelligence is clearly one of them, as well 
as a few others.
    But their ability to do on a scale of--on one end would be 
high-end operations, totally independent, to another scale 
which would be just being able to run a basic checkpoint, 
there's a range in the middle there. But they range that full 
scale. They have certainly some units that have full capability 
to do completely independent operations, all the way down to 
where they need a lot of advice and assist, and we'll continue 
to do that.
    Senator Donnelly. As to their ability to do intelligence 
and counterintelligence, how do you see that moving forward? Is 
that an area that we're going to have to work closely with them 
on?
    General Flynn. It is, and we do constantly. Particularly 
within the entire defense structure, the defense intelligence 
structure, we are all engaged with our counterparts there on a 
daily basis in helping them develop that capability, teaching 
them, training them, working with them. We'll continue to do 
that as we transition.
    Senator Donnelly. As you look at Afghanistan, in the border 
areas and just across in Pakistan, and especially in the 
frontier provinces, those areas, once the Taliban goes in 
there, is there any pressure from the Pakistan army or any 
efforts on the part of the Government of Pakistan to try to 
push back up there? Or is their greatest danger our drones and 
other methods?
    General Flynn. We were talking about this earlier, but the 
Pakistan military has been engaged for the last decade 
conducting operations inside their own territory to help not 
only themselves with some of these militias and terrorist 
organizations, insurgent organizations, in their own country, 
but also to help us out on the Afghan side. There's been a lot 
of cooperation, border cooperation, between our units in 
Regional Command East, South, Southwest, with some of their 
counterparts in the various corps along the Pakistani border.
    So a lot has occurred. A lot of action has taken place. 
More needs to be done. We need to continue to keep the dialogue 
open between not only the international community and the 
region there, Afghanistan and Pakistan particularly, but also 
between the Afghan military and the Pakistani military. We have 
to help move that dialogue along.
    But as Director Clapper said earlier, he mentioned that 
Pakistan's number one issue is how they view India, and that's 
really the bigger, wider regional issue.
    Senator Donnelly. Is the Inter-Services Intelligence (ISI) 
buying into this effort to try to work and clean up the 
frontier areas as well?
    Mr. Clapper. I'd be happy to talk to you about that in 
closed session. John Brennan, the new Director of CIA, was just 
out there and had a pretty good meeting with the Director of 
ISI. I'd be happy to fill you in on that in closed session.
    Senator Donnelly. That's fair.
    Thank you very much.
    Chairman Levin. Thank you, Senator Donnelly.
    Senator Cruz.
    Senator Cruz. Thank you, Mr. Chairman.
    Gentlemen, thank you both for your testimony today and 
thank you also for your service at a time of great risk 
throughout the world. I'd like to ask questions focusing on two 
regions of the world: first of all, Benghazi; and then second, 
North Korea.
    With respect to Benghazi, during the 7\1/2\ hours of the 
attack on September 11 in Benghazi did either of you, Director 
Clapper, General Flynn, during those 7\1/2\ hours have any 
conversations with the President concerning what was happening 
there?
    Mr. Clapper. I did not during that period, no.
    General Flynn. I did not.
    Senator Cruz. Did either of you during those 7\1/2\ hours 
have any conversations with Secretary Clinton during that 
attack?
    Mr. Clapper. I did not.
    General Flynn. No, Senator.
    Senator Cruz. Okay, thank you.
    Previously this committee had a hearing with then-Defense 
Secretary Leon Panetta and General Dempsey in which Benghazi 
was discussed at considerable length. General Dempsey at the 
time expressed his views--and I'm paraphrasing, but--that the 
nature of the attack, and in particular the fact that multiple 
mortar shells hit a rooftop, demonstrated to him at the time 
that it was an organized military attack. He said something to 
the effect of that he thought it was obvious that it was an 
organized military effect.
    I would be interested with both of you if you agree with 
that assessment that it was obvious at the time?
    Mr. Clapper. No, sir, it was not. The one thing they did--
there were really two or three phases of the attack. I would 
characterize the attack on the Temporary Mission Facility much 
more of a vandalism and looting thing. The mortar attack which 
took place, it took about 10 or 11 minutes, demonstrated some 
operational proficiency.
    I would commend to you, which I don't know if you've seen 
it, sir, a briefing that we put together that visually 
recreates as best we could what were the actual events. I'd be 
happy to have that brought to you so you could see our best 
replication of what occurred during the phases of the attacks.
    Senator Cruz. I would be appreciative of that, thank you.
    General Flynn, do you have anything to add on that?
    General Flynn. I would just say that personally my 
instincts were that what we were watching was, particularly on 
the specific date, was clearly something that was not what I 
would call normal activity, based on the strategy assessments 
that had already been made over the last number of months. I 
know that from our perspective there was a sense that this was 
probably more organized, and we, of course, judged that over 
the next few days.
    Senator Cruz. Thank you.
    One additional question on Benghazi. Have we made any 
significant progress in identifying and apprehending the 
terrorists who carried out those attacks?
    Mr. Clapper. The FBI is leading that investigation and has 
made some progress on identifying them. Again, I'm sure they'd 
be happy to brief you on the state of play with their 
investigation.
    Senator Cruz. Thank you.
    At this point I'd like to shift to North Korea. General 
Clapper, in your prepared testimony you stated that North 
Korea's nuclear weapons and missile programs pose a serious 
threat to the United States. I'd like to invite you to 
elaborate on that threat, if you might?
    Mr. Clapper. They've been at the nuclear business for 50 
years. They have the technical infrastructure and technical 
expertise, as we've seen with Yongbyon and their other 
facilities. They have pursued missiles. They've conducted--
developed building missiles and conducted three underground 
tests. They launched the Taepodong-2.
    So they have what appears to be the basic ingredients for 
nuclear-equipped missiles. At the same time, there's a lot we 
don't know and that's what gives rise to the debate that is 
going on in the IC, and the varying degrees of confidence 
levels that components in the IC have about the actual 
technical knowledge of whether they've actually built a weapon 
that will go in a missile and if it'll work.
    So if they launch this Musudan missile that'll be of great 
interest to both them and us, to see if it actually works, 
because they've never launched one. The same is true with their 
long-range ICBM. They've displayed it in a parade, but we've 
never seen them test it.
    Senator Cruz. Director Clapper, on March 15th the Vice 
Chairman of the Joint Chiefs said publicly that he believes the 
North Koreans, quote, ``probably''--North Korea, quote, 
``probably does have the range to reach the United States in 
particular the KNO8.'' Do you agree with that assessment?
    Mr. Clapper. That's his assessment. I can't argue with it. 
We've just never seen that tested or proven.
    Senator Cruz. General Flynn, I'd like to get your views on 
the same question.
    General Flynn. One of the things that I think is 
highlighted from the last couple of weeks of what we've been 
talking about with North Korea--and Director Clapper said it 
earlier today--and where we are today as a community is we 
ensure that all views are stated, all views are known. We do 
challenge each other's assumptions. Those views are presented 
to every level of customer, to include the President on down to 
all of our combatant commanders.
    I think that the assumptions that we make are the 
components of which, without going into any details, and of 
course we can get into much greater detail in another session. 
But I think the assumptions is where we really need to keep 
looking at, examining, challenging each other, and ensure that 
those assumptions are presented. I know, based on the way 
Director Clapper has encouraged all of us to present our views, 
we do that.
    Senator Cruz. Now, General Flynn, I guess in the past week 
a statement was made public from a report that DIA assesses 
with moderate confidence that the North [Korea] currently has 
nuclear weapons capable of delivery by ballistic missiles, 
however the reliability will be low. What was the timeframe? 
What was the date of that assessment?
    General Flynn. That was a--first of all, it was a seven-
page document. It was a classified document, the date of which 
was the March timeframe. To not beat a dead horse, I guess, 
what we really have is, as I was just saying, a difference in 
how we judge assumptions in this case. And there's some other 
components that go into the methodology that we use and I'd 
rather not discuss that here, and more than welcome to get into 
excruciating detail in closed session.
    Senator Cruz. I look forward to that.
    If I could ask one final question, which is, if I 
understood your testimony today, you currently have a higher 
level of confidence as to that assessment. Am I understanding 
you correctly? If so, could you provide some of the basis for 
that?
    General Flynn. The differences of levels of assessment 
within the community are, there's a difference, those 
differences are known, and the reasons why, the factors that 
play into that, are known. The answer to the latter part of 
your question is yes, in closed session.
    Mr. Clapper. I'd just say, sir, that the debate for us 
centers around the facts we know versus what we impute to those 
facts. That's where there is, I think, healthy debate and 
healthy disagreement. So analysts at DIA may have a different 
confidence level in that judgment than the rest of the 
community. That's fine. Eliminating those or coming up with a 
common denominator, I'm not sure that's a good thing, either.
    Senator Cruz. Very good. Thank you, gentlemen.
    Thank you, Mr. Chairman.
    Chairman Levin. Just to clarify that: They have a higher 
level of confidence, is that fair to say?
    Mr. Clapper. DIA does, yes.
    Chairman Levin. Thank you.
    Senator Graham.
    Senator Graham. Thank you, Mr. Chairman.
    Let's continue that line of questioning just for a moment. 
If nothing changes in North Korea, if they continue to be a 
military totalitarian state, where they spend most of their 
money on their military at the expense of their own people, and 
they continue to develop technology, it's just a matter of time 
before they have technology to reach us. Do you agree with 
that?
    Mr. Clapper. Probably so. I think if they keep working at 
it--and clearly they are of a single-minded focus on this. 
Particularly the current leader, even more--perhaps maybe more 
intensely than his father--I think feels that that is the key 
to their survival, nuclear weapons.
    Senator Graham. I think that's a good honest assessment. 
Let's put in the bucket of threats that the Nation faces a more 
nuclearly capable North Korea with larger missiles and probably 
smaller bombs in the future. Do you think, General Flynn, 
that's a reasonable threat we should be planning to guard 
against if nothing changes?
    General Flynn. I do believe that's a reasonable threat.
    Senator Graham. Okay, all right.
    Syria. Do they have enough chemical weapons in Syria to 
kill millions of people or thousands of people?
    Mr. Clapper. Potentially, yes. Of course, that's very 
dependent on lots of things, the number of casualties that 
could be incurred if they employ chemical weapons.
    Senator Graham. But they have a lot of the stuff?
    Mr. Clapper. They have a lot of that stuff.
    Senator Graham. That could kill lots of people?
    Mr. Clapper. That's correct.
    Senator Graham. So that's another threat that we face.
    Mr. Clapper. Yes.
    Senator Graham. All right. Then the Iranian nuclear 
program. Over the last 6 months as we've been imposing 
sanctions and negotiating through the P5+1 regime, do they have 
more or less enriched uranium for a nuclear bomb?
    Mr. Clapper. Sir, we'll get you the exact numbers in a 
closed context.
    Senator Graham. Can I just say it's more? Probably?
    Mr. Clapper. Not highly enriched, but up to the 20 percent 
level.
    Senator Graham. They're marching in the wrong direction. We 
talk, they enrich. So let's put that in the bucket.
    We have China. Are they building up their military, General 
Flynn, or are they reducing their military?
    General Flynn. China is investing money in their military, 
absolutely.
    Senator Graham. Can you give me a good explanation, in 
light of all this, why Congress would do sequestration?
    Mr. Clapper. Sir, I don't think we want to go there.
    We have spoken intensely about the impacts of sequestration 
on----
    Senator Graham. Let's just finish it out, and I'm not going 
to get you to go there. General Flynn, if sequestration was 
fully implemented over the next decade, how would it affect 
your agency's ability to defend us against the threats we know 
we face today and could come up tomorrow?
    General Flynn. Senator, thanks for asking the question. I 
think it is part of our mission, probably the single biggest 
threat for us is our ability to provide strategic warning, not 
only for DOD, but for this country. I think that that would be 
severely impacted.
    Senator Graham. On a scale of 1 to 10 in terms of impact, 
10 being terrible and 1 being not so bad, where would you put 
sequestration over a decade?
    General Flynn. Ten.
    Mr. Clapper. A 10 over a decade.
    General Flynn. Yes.
    Mr. Clapper. Of course, the law right now runs through 
2021. So if we continue these mindless cuts, as I said to my 
two authorizing committees Monday and Tuesday, we need to do a 
serious rethink on just what it is we expect of the U.S. 
intelligence enterprise, because it would be something much, 
much less than what we've had.
    Senator Graham. Let's get back to Syria. Are you familiar 
with the opposition council, I think it's the Syrian Opposition 
Council (SOC)?
    Mr. Clapper. Yes, I know about it and know what it is.
    Senator Graham. Have you met with those folks?
    Mr. Clapper. No.
    Senator Graham. I wrote a letter along with four other 
members of the Senate who recently visited Jordan, Turkey, and 
Israel, asking the SOC, which is the political component of the 
opposition, to allow the IC the day after Assad falls to come 
in and secure the chemical weapons sites and tell the world 
that they would be okay with the chemical weapons being 
destroyed. I'm waiting on a response.
    Do you think that is a good thing for us to ask of the 
people who may take over Syria?
    Mr. Clapper. Yes, sir, I do think it would be a good thing 
to ask. I think the issue is the extent to which any of these 
external groups, whether it's the SOC now or others, have sway 
or insight or influence inside the country.
    Senator Graham. But once Assad falls, someone's going to 
take over.
    Mr. Clapper. Our assessment is that it will be 
fractionated. Again, this is a projection. We don't know. But 
we believe the most likely option when Assad falls--and we 
think it is a question of time--will be factions controlling 
various parts of the country.
    Senator Graham. The SOC is a coalition of factions, and my 
hope is that they will be able to create some governing 
capacity. But since they're the organ that we're working with, 
the organization, I will continue to press them to renounce 
ownership of chemical weapons in the new Syria. I'd appreciate 
any help you could give us there.
    One of the fears I have after my visit is that radicals 
have gotten more involved, not less, on the ground in Syria. So 
I think that observation is correct.
    Mr. Clapper. It is.
    Senator Graham. A big fear is that the casualties of Syria, 
the list of casualties, could be the King of Jordan. Almost 
500,000 refugees have spilled over into Jordan. The King was 
incredibly concerned and he said the longer this war goes on 
the worse it is for him. Do you agree with that?
    Mr. Clapper. I do.
    Senator Graham. If we'd looked back a year ago, the threats 
on the ground--is Syria getting better or worse over the last 
year?
    Mr. Clapper. There is no good trend I can tell you about in 
Syria.
    Senator Graham. So let's play it out. A year from now, you 
could have millions of refugees in Jordan and Turkey if 
something doesn't happen; do you agree with that?
    Mr. Clapper. I do. I think as the infrastructure and the 
conditions in Syria continue to deteriorate, there are going to 
be more and more people----
    Senator Graham. I just hope the international community is 
listening to you and we find a way to end this war. To me, 
winning now would be having the King survive, controlling the 
chemical weapons, and the second war between the factions 
that's surely to come with the radicals would be small in scope 
and short in duration. I think that's the best we can hope for 
at this point.
    General Flynn, you said 352,000 Afghan security forces 
under arms. Do you recommend to this committee we continue that 
level of ANSF through 2018, the 352,000?
    General Flynn. That's really, that's really a policy issue. 
From my standpoint, Senator----
    Senator Graham. Would that be wise----
    General Flynn. I think that the ANSF, especially the Afghan 
National Army, is a threat to a resurgent Taliban coming back--
--
    Senator Graham. General Allen thought it was----
    General Flynn.--as well as the Afghan National Police.
    Senator Graham. Would you disagree with General Allen when 
he said he thought it would be wise?
    Mr. Clapper. Sorry, sir?
    Senator Graham. Do you have any reason to discount what 
General Allen said when he thought it would be wise to continue 
the 352,000, keep them at 352,000?
    Mr. Clapper. From an intelligence perspective, no. That's 
the guy that you should listen to.
    Senator Graham. One last question. I think he's a good guy 
for us to listen to.
    Drones. During the last 5 years particularly, would you 
agree with me that the drone program particularly in the FATA, 
the tribal regions of Pakistan and Afghanistan and, quite 
frankly, throughout the world in ungoverned areas, has paid 
dividends to this country in terms of our safety?
    Mr. Clapper. Absolutely. If I can speak globally so that I 
can speak publicly, yes.
    Senator Graham. Would you like to continue that program to 
maintain our national security?
    Mr. Clapper. I think it is a tremendous capability, yes.
    Senator Graham. Thank you both for your service.
    Chairman Levin. Thank you.
    We're going to have a 3-minute second round, because I 
think two votes are scheduled still for noon.
    Director, you have said that the sanctions against Iran are 
having a huge effect on their economy; they've not yet induced 
a change in their policy. Just very quickly: Do you believe 
that the combination of keeping those options in place and 
strengthening them, if possible, plus keeping military options 
on the table, continuing our efforts in multilateral diplomacy, 
gives us a reasonable chance of convincing Iran they should not 
build nuclear weapons?
    Mr. Clapper. That is also a policy question.
    Chairman Levin. What's your assessment?
    Mr. Clapper. I'll speak personally and my answer would be 
yes.
    Chairman Levin. Now, the issue of Benghazi has come up. I 
want to just understand exactly what your role was in terms of 
the point papers. Did you approve, Director, the talking 
points?
    Mr. Clapper. I did not. I did not. People below me did, but 
I did not see them until after the fact.
    Chairman Levin. You indicated here in your quick back and 
forth with Senator Ayotte that you thought that those talking 
points were right.
    Mr. Clapper. They were the best we could do at the time. 
Also, in light of our concerns from both an intelligence and 
investigatory standpoint, that is as much as we should say at 
the time. That is illustrative of the dilemma of speaking in 
public about intelligence things, which is somewhat--can often 
be an oxymoron.
    Chairman Levin. But you believed that they were accurate at 
the time?
    Mr. Clapper. It was our--it was--well, it wasn't completely 
accurate because there were some things, particularly from a 
source and methods and because of investigatory concerns that 
the FBI had. No, it wasn't completely accurate. It's the best 
we could do at the time and still protect those equities.
    Chairman Levin. Did you believe at the time that it was 
accurate? Did you believe it was inaccurate?
    Mr. Clapper. Well, we've since----
    Chairman Levin. At the time?
    Mr. Clapper. There's an issue about the spontaneity of the 
demonstration.
    Chairman Levin. I know there's an issue now. I'm saying 
when they were written did you, whoever wrote them, believe 
they were accurate?
    Mr. Clapper. We believed them to be, as tempered by our 
concerns for intelligence and investigatory equities.
    Chairman Levin. Okay, I understand that. Given all that 
temperance, at the time that they were produced you believed 
that they were accurate?
    Mr. Clapper. That was my response to Senator Ayotte, yes.
    Chairman Levin. Is that your response?
    Mr. Clapper. Yes.
    Chairman Levin. Now, those were the same talking points 
that Secretary Rice followed, right?
    Mr. Clapper. Yes.
    Chairman Levin. When she was highly criticized for 
following them, what was your feeling inside, your own personal 
belief? Did you think it was fair that she be criticized?
    Mr. Clapper. I thought it was unfair because the hit she 
took, I didn't think that was appropriate. She was going on 
what we had given her, and that was our collective best 
judgment at the time as to what should have been said.
    Chairman Levin. Thank you.
    Senator Inhofe.
    Senator Inhofe. When we had Mr. Brennan before this 
committee, and I had talked to him in my office before, 
referring to the annex--that's the second wave of the Benghazi 
attacks--he said, and then repeated it here: 
``Unequivocally''--he used that word--``we all knew that that 
was an organized terrorist attack.''
    You disagreed with that?
    Mr. Clapper. No, I don't. That's the one thing that 
happened that had the earmark of some organization and 
proficiency, was the 11-minute mortar attack on the annex 
facility.
    Senator Inhofe. Okay. I appreciate that because that's not 
the--I know that's what you were thinking when you answered the 
question of someone over here, but it sounded like--I'll go 
back and read the transcript. I appreciate that answer very 
much.
    Now, lastly, and this is the last thing I do have, is: As 
withdrawal takes place in Afghanistan, number one, will that 
necessarily withdraw a likely percentage of our ISR capability? 
Number two, should it?
    Mr. Clapper. We obviously--I say ``we.'' The intelligence 
capabilities in Afghanistan will be drawing down as well. That 
is, though, a function of the footprint, whatever residual 
footprint that remains for DOD, and then whatever footprint the 
DOS has. Then we tuck up underneath those.
    So the exact profile that we'll have has not been 
determined yet. Of course, our main concern is detecting a 
potential threat to the Homeland. By virtue of the fact that we 
are already drawing down and closing bases and we don't have as 
many places that gives us access for intelligence purposes, 
that is certainly going to change the landscape as far as we're 
concerned.
    Senator Inhofe. Then the second part of the question was: 
Should it? It's a hard question to answer because, as we talked 
before about all the needs that are there, West Africa and 
other places, it's a matter of resources. But I keep hearing 
that on a percentage basis the withdrawal is going to also 
impair to about the same degree your international capability 
and resources.
    Mr. Clapper. That's probably a fair statement.
    Senator Inhofe. If that happens, is that proper? Should it?
    Mr. Clapper. Our intent is, as I say, Senator Inhofe, to 
sustain sufficient presence there to monitor the situation, not 
to the fidelity and the degree that we have today with the 
large force footprint.
    Senator Inhofe. Thank you.
    Chairman Levin. Thank you, Senator Inhofe.
    Senator King.
    Senator King. One very brief question, Senator. Thank you.
    The sequester has come up a lot today and there's an 
ongoing discussion in Congress about flexibility and giving you 
the flexibility to have more ability to move the cuts around. 
My question is, is giving you flexibility enough to solve the 
problem or is the sequester still a problem in terms of the 
absolute dollars no matter how much flexibility you have?
    Mr. Clapper. That's a great question, sir. Obviously, I 
don't know of any professional intelligence officer when asked, 
could you use more resources, wouldn't say ``absolutely.'' At 
the same time, with the financial cuts that we're absorbing 
this year, which will have impact, there's no question about 
it, we're going to do away with capabilities we can't get back. 
We've discussed that at the hearing on Tuesday.
    My great concern is sustaining this, particularly the 
impact that's going to have on our most valuable resource, 
which is our people.
    General Flynn. If I can add just to that, Senator. I think 
the other point, it's not just the IC and the requests that we 
believe we need to be able to do our mission. But it's also all 
of our customers, not just the Customer No. 1 at the White 
House, but it's every one of our combatant commanders, every 
one of our joint task force commanders, every one of our 
leaders out there that are conducting operations around the 
world, the demands that they are putting on because of the 
variety of threats and challenges that we've described today. 
That's where the demand signal is coming from.
    Senator King. On the issue of your people, Federal 
employees haven't had a raise in 3 or 4 years. There's the 
threat of furlough days, which you've indicated you've been 
able to avoid. But are you seeing an impact in terms of 
retention and recruitment? Because one of the things you 
testified in the beginning was one of our grave mistakes in the 
1990s was the hollowing out of the human capacity. Is that a 
threat in this situation?
    Mr. Clapper. It will be. I have to say that whether or not 
we're going to have furloughs has not been completely resolved 
yet, particularly with the intelligence components in DOD.
    Our attrition rate has run the last 3 or 4 years around 
4.2, 4.4 percent across the entire IC, which is pretty low. We 
have a number of people who will be eligible to retire that's 
around 10 percent of the entire IC can retire now and in the 
next 5 years another 15 percent.
    I think if we go to drastically reduce the IC, to include 
its people, we would need, if I may--I'm talking out of school 
here because I haven't got the permission of the Office of 
Management and Budget, but we basically have the same 
incentives or inducements for people to retire as we did in the 
1990s, the same amount of money and all that sort of thing, 
which isn't much of an incentive these days.
    So if we have to do some dramatic reshaping of the 
workforce, again having the latitude to induce people to leave, 
to end their careers in government, because it's very 
important, it's crucial, something that we didn't do very well 
in the late 1990s, that we continue to bring on new people, new 
blood, and new energy to the IC, rather than letting the 
workforce age out.
    General Flynn. If I could just add specifically to DIA, in 
the last 10 years we have gone from a roughly 25 percent of 
workforce, of employees, in their 20s and 30s to 50 percent in 
the last 10 years. What I'm afraid of is that those young 
people who have, many of which, over 6,000 from our 
organization, deployed to places like Iraq and Afghanistan over 
the last decade, will feel as though this life that they have 
decided to dedicate themselves to in defense of our country 
will--they will walk away from this. I'm really concerned about 
that, and I think that there's an awful lot of uncertainty, 
especially as I talk to many of these young people in our 
organization. I think it's unfair.
    Senator King. Thank you, General.
    Thank you both, gentlemen, for your service and your 
testimony today.
    Chairman Levin. Thank you, Senator King.
    Now I'm going to call on Senator Blumenthal in a moment. 
But the vote has begun. I'm going to leave in a few minutes, 
and if you would, Senator Blumenthal, when you're done with 
your questions, if you would adjourn the committee, I'd 
appreciate it.
    Senator Blumenthal. Thank you, Mr. Chairman.
    Chairman Levin. Thank you.
    Senator Blumenthal [presiding]. I will be brief because of 
the vote that we have ongoing right now.
    I wanted to ask generally, in terms of our collaboration 
with the Israeli IC, are you satisfied that there is a complete 
and cooperative flow of information both ways?
    Mr. Clapper. Absolutely, sir. I have been associated with 
Israeli intelligence in one capacity or another for 30, 35 
years. It's never been closer or more pervasive.
    Senator Blumenthal. Without asking you the specific 
assessments with respect to the Iranian development of a 
nuclear capability, would you say that the assessment on your 
part and the Israelis is the same?
    Mr. Clapper. Generally speaking, yes. But we have this--and 
this is, I think, a commentary on the intimacy of the 
relationship. We have the same dialogue, the same debates, the 
same arguments analytically, but generally speaking we're on 
the same page.
    Senator Blumenthal. The same page based on more or less the 
same facts and the same kind of availability of information?
    Mr. Clapper. Generally speaking, yes. They have unique 
sources, we have unique sources. But generally, yes.
    Senator Blumenthal. Do you share the information coming 
from those separate unique sources?
    Mr. Clapper. Pretty much.
    Senator Blumenthal. Thank you.
    Let me turn now to the Pakistani situation. Are you 
satisfied that the Pakistani military and its government are 
taking sufficient steps to safeguard its nuclear arms?
    Mr. Clapper. I'd much prefer to discuss that in closed 
session.
    Senator Blumenthal. Maybe without asking you for 
information that you would feel uncomfortable disclosing, and I 
certainly don't want to press you on that score, can you tell 
us simply whether you believe there is more that can and should 
be done?
    Mr. Clapper. I'm sorry, sir?
    Senator Blumenthal. More that can and should be done by the 
Pakistani military to safeguard?
    Mr. Clapper. I'd prefer to discuss that in closed session, 
sir.
    Senator Blumenthal. I understand. Thank you.
    Let me turn to Venezuela. Could you give us some idea of 
what the current fraud or irregularities that are ongoing in 
their electoral process?
    Mr. Clapper. That's unclear that there have been any. There 
may have been some. I think the issue would be whether they're 
of sufficient magnitude under their system that would merit a 
recount, and it at least at this juncture doesn't appear to me 
to be the case.
    Senator Blumenthal. In your view there would be no 
sufficient requirement for a recount?
    Mr. Clapper. As far as I know now, no.
    Senator Blumenthal. Finally, you spoke a few minutes ago 
about the challenges of recruiting and keeping the best minds 
in America, which all of us want, to be available to the 
American IC. Is there anything that we can do to encourage or 
support that effort?
    Mr. Clapper. Sir, it would be nice if they got a pay raise 
occasionally, and it would be nice not to be threatened with 
furloughs.
    Senator Blumenthal. I take that to heart and to mind.
    With that, sir, let me say thank you to both of you for 
your service to this Nation, which has been extraordinarily 
distinguished and able. I will, if there's no objection, 
adjourn this hearing. Thank you very much.
    We are adjourned.
    [Questions for the record with answers supplied follow:]
            Questions Submitted by Senator Claire McCaskill
                              north korea
    1. Senator McCaskill. Director Clapper, recent aggressive behavior 
from North Korea appears to be following a pattern we came to expect 
from both Kim Jong-Il and Kim Il-Sung. However, given Kim Jong-Un's 
recent accent to power, it might be difficult to predict how the North 
will respond to actions taken by outside actors, such as the United 
States, South Korea, and China. What is the Intelligence Community's 
current assessment of Kim Jong-Un's likelihood to react in ways we came 
to expect from his father and grandfather?
    Mr. Clapper. [Deleted.]

                      taliban intelligence network
    2. Senator McCaskill. Director Clapper, the drawdown of U.S. and 
coalition forces from Afghanistan has the potential to create security 
gaps that can be exploited by Taliban and other forces. The Taliban's 
intelligence network has demonstrated the ability to identify targets 
and exploit opportunities, such as the September 2012 attack on Camp 
Bastion that resulted in the destruction of a squadron of Marine Corps 
AV-8B Harrier jets and the death of two U.S. marines. What is your 
current assessment of the quality and capability of the Taliban's 
intelligence network?
    Mr. Clapper. [Deleted.]

    3. Senator McCaskill. Director Clapper, is the quality and 
capability of the Taliban's intelligence network degrading or 
improving?
    Mr. Clapper. [Deleted.]

                                chechnya
    4. Senator McCaskill. Director Clapper, it has been reported that 
at least one of the brothers involved in the Boston Marathon bombing 
recently travelled to the Russian Caucuses and Chechnya. He was also 
interviewed by the FBI in 2011 at the request of the Russian Government 
regarding possible ties to extremist groups. Is there any concern that 
other individuals or groups that are already in the United States with 
ties to Chechen terrorists will target Americans as part of a larger 
threat that we haven't seen here before?
    Mr. Clapper. [Deleted.]

    5. Senator McCaskill. Director Clapper, since the Russian 
Government has dealt with numerous Chechen terrorist attacks, have they 
provided any information regarding this attack as well as past plots or 
future threats against U.S. interests?
    Mr. Clapper. [Deleted.]

                               venezuela
    6. Senator McCaskill. Director Clapper, in your written testimony 
you said: ``Iran has been reaching out to Latin America and the 
Caribbean to decrease its international isolation. President 
Ahmadinejad traveled to the region twice in 2012. Tehran has cultivated 
ties to leaders of the Venezuelan-led Alliance for the Peoples of our 
Americas in Bolivia, Cuba, Ecuador, Nicaragua, and Venezuela, and 
maintains cordial relations with Cuba and Nicaragua.'' What does the 
death of former President Hugo Chavez and the election of President 
Nicolas Maduro mean for Venezuela's relationship with Iran?
    Mr. Clapper. [Deleted.]
                                 ______
                                 
             Questions Submitted by Senator Joe Manchin III
                        china and cyber security
    7. Senator Manchin. Director Clapper, the Obama administration has 
continually stated that cyber security is among its top national 
security concerns. A February report accused a Chinese military unit of 
being responsible for a number of hacking attacks here in the United 
States. During his recent visit to China, however, Secretary Kerry 
announced a U.S.-China pact on fighting cyber attacks. Given the recent 
attacks, what are your thoughts on this newly formed partnership with 
China to increase action on cyber security?
    Mr. Clapper. [Deleted.]

                         political dysfunction
    8. Senator Manchin. Director Clapper and General Flynn, former 
Secretary Gates also said: ``The major threat to the United States is 
the dysfunction in America's political system . . . the best laws have 
come from the vital center and usually as the result of compromise . . 
. politicians are more concerned with winning elections and scoring 
political points than protecting our country.'' Do you see our 
political dysfunction as a threat to our national security?
    Mr. Clapper. [Deleted.]
    General Flynn. [Deleted.]
                                 ______
                                 
               Question Submitted by Senator Joe Donnelly
                  cooperation in border area security
    9. Senator Donnelly. Director Clapper and General Flynn, during the 
hearing, you, General Flynn, testified that the Pakistan military has 
cooperated on the border with Afghanistan in addressing threats from 
terrorist organizations operating in that area. I inquired what role 
the Inter-Services Intelligence; the Pakistan intelligence agency, has 
been playing in addressing these threats, and you, Director Clapper, 
responded that you could address this issue in a closed session. Would 
you please provide the information on the role of the Inter-Services 
Intelligence in addressing terrorist threats along the border between 
Afghanistan and Pakistan?
    Mr. Clapper. [Deleted.]
    General Flynn. [Deleted.]
                                 ______
                                 
             Questions Submitted by Senator James M. Inhofe
                  iranian ballistic missile capability
    10. Senator Inhofe. Director Clapper and General Flynn, you noted 
in your prepared testimony, Director Clapper, that Iranian ballistic 
missiles are capable of carrying weapons of mass destruction and that 
Iran has demonstrated an ability to launch small satellites. The 
Department of Defense continues to assess that Iran could flight test 
an ICBM by 2015. Given that Iran has launched satellites into space, 
why couldn't they be capable of testing an ICBM sooner than 2015?
    Mr. Clapper. [Deleted.]
    General Flynn. [Deleted.]

    11. Senator Inhofe. Director Clapper and General Flynn, could the 
Iranians test an intermediate-range ballistic missile capable of 
reaching Paris or London sooner than 2015?
    Mr. Clapper. [Deleted.]
    General Flynn. [Deleted.]

    12. Senator Inhofe. Director Clapper and General Flynn, do you 
believe Iran would want to have the capability to reach the United 
States and its Western European allies with a ballistic missile, and if 
so, for what purpose?
    Mr. Clapper. [Deleted.]
    General Flynn. [Deleted.]

    [Whereupon, at 12:10 p.m., the committee adjourned.]

                                 
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