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HEARING OF THE NATIONAL COMMISSION ON TERRORIST ATTACKS UPON THE 

UNITED STATES 

 

FOURTH PUBLIC HEARING -- INTELLIGENCE AND THE WAR ON TERRORISM 

253 RUSSELL SENATE OFFICE BUILDING, WASHINGTON, D.C. 

TUESDAY, OCTOBER 14, 2003, 9:00 A.M. 

CHAIRED BY: THOMAS H. KEAN 

WITNESSES: 

JAMES R. SCHLESINGER, CHAIRMAN, MITRE CORPORATION, AND FORMER DIRECTOR 

OF CENTRAL INTELLIGENCE AND SECRETARY OF DEFENSE; 

JOHN M. DEUTCH, PROFESSOR OF CHEMISTRY, MIT, AND FORMER DIRECTOR OF 

CENTRAL INTELLIGENCE AND DEPUTY SECRETARY OF DEFENSE; 

JAMES B. STEINBERG, VICE PRESIDENT AND DIRECTOR OF FOREIGN POLICY 

STUDIES, THE BROOKINGS INSTITUTION, AND FORMER DEPUTY NATIONAL SECURITY 

ADVISER; 

RICHARD KERR, FORMER DEPUTY DIRECTOR OF CENTRAL INTELLIGENCE, CENTRAL 

INTELLIGENCE AGENCY; 

MARY O. MCCARTHY, VISITING FELLOW, CENTER FOR STRATEGIC AND 

INTERNATIONAL STUDIES, AND FORMER NATIONAL INTELLIGENCE OFFICER FOR 

WARNING, CENTRAL INTELLIGENCE AGENCY; 

JOHN GANNON, STAFF DIRECTOR, HOUSE SELECT COMMITTEE ON HOMELAND 

SECURITY 

 GOV. THOMAS H. KEAN: Okay, I'd like to call the hearing to order. 

On behalf of the National Commission on Terrorist Attacks Upon the 

United States, I hereby call the public hearing to order. We are 

holding this, our fourth open session, to hear testimony on the topic 

of intelligence in the war on terrorism; how to improve the 

effectiveness of the intelligence community against the terrorist 

threat. That's one of the areas that Congress has directed us to look 

at. 

 Between now and the end of this calendar year we'll continue to 

explore questions involving policy. In the new year, our hearings will 

focus increasingly on key fact questions in the events that led up to 

the attacks on September 11 and their aftermath. In both open and 

closed sessions, we will question individuals who held positions of 

responsibility in the present and in the past administration. Hearings 

will run for several days duration. Upon the conclusion of this 

hearing, the vice chair and I will be available if there are any 

questions from the press. 

 During the first part of our hearings today, questions will focus 

on organization and leadership within the intelligence community and 
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the national security structure. In the afternoon we're going to turn 

our attention to the important question of how our government prepares 

and provides warnings about terrorist attacks. Questions for our 

witnesses this morning will include the attacks of September 11, 

estimates of systematic failure with the leadership, organization, 

performance or funding of the intelligence community, and what changes 

can best address that particular problem. 

 Should there be a director of national intelligence, with direct 

authority over the national intelligence agencies of our government? 

How well is the government coordinating the conduct of efforts against 

terrorism and relevant work of the intelligence community? What changes 

are needed in the role or structure of the National Security Council 

and the Homeland Security Council? Has the Congress met its 

responsibility in establishing priorities, providing resources and 

providing oversight of the intelligence community? 

 To start off, our first witness this morning I think is known to 

everyone in this room. The Honorable James R. Schlesinger, currently 

the chairman of the MITRE Corporation, he's a former Director of the 

Central Intelligence Agency, as well as a former Secretary of Defense. 

We appreciate your willingness very much to appear before the 

Commission. Your prepared statements will be entered into the record 

in full, so if you could proceed with your testimony. 

 MR. JAMES R. SCHLESINGER: Thank you, Mr. Chairman, and I thank 

the Commission for inviting me today to testify. I shall try to 

summarize my testimony. My initial observation is a caution to remind 

you that intelligence is a very difficult business. Intelligence is 

not only supposed to gather facts, many of which others are attempting 

to conceal or disguise and increasingly so, may I say in passing. It 

is also expected to provide a coherent picture that helps to prepare us 

for future developments. To be sure, few of us are clairvoyants. When 

events throw the inherent limitations of intelligence into bold relief, 

we are surprised and frustrated because intelligence has failed to 

predict the future. 

 Intelligence is highly successful in dealing with routine 

developments. It is, however, particularly prone to failure at the 

turning points of history. It is perhaps obvious that the problems of 

intelligence become even harder when we deal with non-Western cultures, 

amplified when we are attempting to understand those who regard us as 

infidels. Nonetheless, I believe that we can do better in responding 

to terrorism. Until now we have not been sufficiently strategic and 

long term in our analytical efforts. We have relied too much on secret 

intelligence and too much on country expertise. 

 When events do throw the inherent limitations of intelligence 

into bold relief, the immediate response is to seek the restructuring 

of the intelligence community in organization or in management. It is 

perhaps an American tendency to minimize inherent substantive problems 

and to believe that failures are failures of organization, which can be 

prevented by the right organizational solution. No one would question 

that management can always be improved, but major organizational change 

is not the salvation. I would submit that the real challenge lies in 

recruiting, fostering, training and motivating people with insight, and 
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when necessary bring about long-term changes in the ethos of 

intelligence organizations. 

 Intelligence is produced by normal human beings with their 

preconceptions, their habits of mind, their associations and the like. 

Tinkering with the organizational structure can help, but by itself 

will not improve and bring about a major improvement. Now, ideas 

regarding organizational reform have a long history. Over the years 

there have been dozens of studies. I myself produced a study in 1971 

at the behest of President Nixon, at a time that it was felt that the 

benefits of intelligence were not commensurate with the costs and the 

central problem of intelligence was the quality of analysis. 

 I recommended against the creation of a director of national 

intelligence, because it would only dilute the role of the DCI without 

corresponding advantage. Instead, I urged that the DCI be given 

greater authority over the entire intelligence community, provide 

budgetary guidance and overall plan, much of which President Nixon 

subsequently ordered. In 1982, I argued against proposed legislation 

that would have created an intelligence charter intended to rein in the 

intelligence community. That legislation would have established in 

effect a Department of Intelligence that would have combined 

intelligence assets scattered across the government. 

 The point that I made then was that intelligence had to be 

oriented toward the consumers of intelligence, that agency heads and 

others needed to know and to trust the people that were providing 

intelligence, and that if intelligence was centralized in the 

prescribed manner, inevitably and surreptitiously intelligence 

activities would be recreated in departments, agencies and the several 

commands. Indeed, the widespread tendency to deplore duplication and 

to embrace the efficiency of centralization lasted only until one could 

see the consequences. 

 Still, the urge to combine intelligence activities under central 

command and control continues to reappear. I urge this commission to 

reflect on the long history involved and refrain from recommending 

major surgery, unless substantial improvement is to be obtained. It 

takes awhile to settle down after surgery and the disruptions that are 

inevitable are likely to distract us from the main goal: the 

improvement of the intelligence product. 

 With regard to performance, one must seek to achieve two somewhat 

contradictory things. On the one hand, one must seek to engage the 

policymakers in the intelligence process so that they do more than 

read, if they do, the intelligent product or listen to the briefings. 

It is essential for good intelligence to understand the concerns of the 

policymakers so that both collection and analysis can focus on those 

concerns. At the same time, one must seek to avoid mixing intelligence 

and policy, even though in a complicated world that cannot be avoided 

entirely. Regrettably, that essential line frequently is crossed from 

either side. 

 In this connection, one must understand the distinct role of the 

policymaker once he has decided he must explain, that is sell, that 

policy to the public, the press and the Congress. Intelligence 

unavoidably deals with shades of gray, not with black and white. But 
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leaders cannot dwell on the uncertainties, the fuzzy evidence, the 

equivocations of intelligence. Leaders have to decide. When decisions 

are made, they are regularly hyped in the quest for public support. 

One can cite notable examples from the Roosevelt administration, from 

the Reagan administration, from the Clinton administration, if not in 

more recent years. All administrations will engage in the practice. 

In a democracy administrations are obliged to seek public support. 

 At the other end of this dichotomy, analysts cannot be vestal 

virgins operating in an academic environment. If they want their 

product to be taken seriously by the policymakers, they must be 

prepared for some interaction. If the subject is relevant and the 

product is interesting, there should be questioning. Nonetheless, 

analysts all too frequently act like a bunch of college professors: 

how dare they challenge me? The analytic fraternity varies between two 

moods. In one mood it is said that the policymakers pay no attention 

to what I write. There must be more interaction. In that second mood, 

the policymakers are interacting, and one hears the cries, I am being 

pressured or even attacked. In politics, those cries will attract 

attention. But one must bear in mind that the questioning is 

desirable. Nonetheless, it will regularly be described as pressure. 

 Mr. Chairman, over the years it has been recognized for this 

continuous need for interaction between the policymakers and the 

intelligence community. Efforts have been made in that direction. 

They have been brief and they usually are terminated. It is only in 

periods of crisis that regularly we have the kind of interaction 

between the policymakers and the intelligence community that is most 

fruitful. 

 Mr. Chairman, we all recognize that priorities must be adjusted 

over time, particularly so is this -- is this so when there is a major 

change in the international scene, such as there was after the collapse 

of the Soviet Union and subsequently with the rise of terrorism. Those 

are major turning points. Yet what is conceptually easy to accept 

remains difficult to implement and practice. Intelligence 

organizations are large bureaucracies, particularly -- they do not 

adapt immediately. Particularly, this is the case when there is little 

budget leeway and resources must be wrested away from others in the 

organization. 

 In the late 1990s, for example, intellectually it was recognized 

that we were at war with the terrorists. Nonetheless, resources did 

not stream into counterterrorism to the degree that one might expect 

for a nation at war. The reason of course: those resources had to be 

pried loose from other entities in the intelligence establishment, 

which stood ready to resist such loss of resources. After 9/11 we 

readily, if belatedly, recognized that more resources should have moved 

in accordance with the indicated change in priorities. 

 That was easy to recognize in retrospect, though even now we are 

not creating the strategic framework for a long-term war. We must 

recognize that large bureaucracies do tend to become inbred and that 

inevitably there is resistance to new ideas, particularly those that 

come in from the outside. Though we cannot simply acquiesce in such 

behavior, we must recognize the difficulty of adaptation in large 
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organizations. That is why we need to protect and foster competition 

in analysis. Thank you, Mr. Chairman. 

 MR. KEAN: Mr. Ben-Veniste? 

 MR. RICHARD BEN-VENISTE: Good morning, Mr. Secretary, and thank 

you very much for appearing here today to share your extraordinary 

experience with us. And on a personal note I would simply like to say 

that your extraordinary service to the country, over now I guess four 

decades, is both remarkable and a tremendous opportunity for us to have 

you share that experience with us today. So I thank you again for your 

willingness to appear. 

 MR. SCHLESINGER: Thank you, sir. 

 MR. BEN-VENISTE: Over the years you have certainly been 

consistent in stating that competing centers of analysis and 

interpretation within the intelligence community is superior to 

centralization, and you've also observed that centralization would 

probably be quixotic or impossible because the centers -- various 

competing centers would surreptitiously go back to their status quo or 

something close to it, even if there was an attempt to foist centrality 

upon it. I think that's a very interesting observation and one which 

obviously we need to take note of, because we live not in a theoretical 

world, but a practical world. 

 But having said that, when you have these competing centers of 

intelligence analysis and interpretation, would you agree that there is 

a concomitant impulse to protect and husband that intelligence analysis 

within each of these competing centers? And I see you nodding. Is 

that consistent with your experience? 

 MR. SCHLESINGER: It is and it must be resisted. 

 MR. BEN-VENISTE: But once you have these sort of practical 

issues of protecting turf and thereby protecting the substance of 

intelligence analysis, it occurs to me and perhaps others on this 

commission that although there was a significant amount of intelligence 

collected prior to 9/11, this very same desire to protect and 

concomitant resistance to share intelligence seemed to be a substantial 

contributing factor in the failure to prevent the 9/11 disaster. And 

I'd like to get your comment on that observation. 

 MR. SCHLESINGER: The biggest source of so-called intelligence 

failures are axioms that grip the political community. Axioms that 

grip the political community and infiltrate, as it were, affect 

intelligence estimates. And for that reason, the prevailing wisdom in 

intelligence has to be resisted. When I was DCI, however briefly, I 

was going to set up a division of devil's advocacy within the Central 

Intelligence Agency so that whenever there was a prevailing view, such 

as the Soviet Union will stop producing missiles at 1,000 -- ICBMs at 

1,000 because all they want to do is match us. There was another view, 

which is that the Soviet Union might want to exceed our productions, 

our deployment. And so you need to have devil's advocacy within the 

system, and you need to institutionalize that within each agency. 
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 Now, what you describe is in part the result of the hearings in 

the mid-1970s. Remember that it was the Congress that held those 

hearings and wanted to establish a wall between intelligence and the 

law enforcement community, such that the FBI could not draw on CIA 

information. Since 9/11 we've knocked down that wall, but the tendency 

to stay within organizations has in part been driven by the legislation 

and the rules that came out of the 1970s. We are breaking down some of 

those barriers. Within the intelligence community, narrowly defined, 

we have now something called Intel-link. And what Intel-link has done 

has been to weaken, though not eliminate, the baronies to which you 

refer. We need to go further. 

 One of the problems is the attitude of indifference to certain 

information, rather than the desire to hold that information within the 

organization. Take for example the report of the FBI agent out in 

Phoenix. It wasn't that the FBI felt that was so valuable that that 

was a nugget that had to be retained and not shared with anybody else. 

It was, "That's a small matter. Let's get on with fighting crime and 

disregard that." So a lot of this is a problem of insufficient 

attention to what is really relevant. And I think that this can in 

part be -- what you describe can be in part achieved by better scrutiny 

over the entire flow of intelligence, picking out those things that 

appear to be relevant to the current problem, even though you recognize 

that there's some future problem down the road that will be relevant 

but you don't know what it should be. 

 MR. BEN-VENISTE: Well, I appreciate that analysis, Dr. 

Schlesinger. You've raised in the course of that a number of important 

issues. Would you not agree that having some central form of receipt 

of analytical information would go a long way toward remedying the 

inherent problems in these baronies, as you put it so colorfully? In 

addition, you have touched on an issue relating to what I would regard 

as analysis and interpretation within our domestic intelligence 

gathering apparatus, the FBI. And the combination of those two I think 

speaks again to the issue of improving our analysis and interpretation 

mechanism and to put that information into the right hands for 

prevention, which has now since 9/11 obviously reared itself as an 

important second priority of the FBI, besides their primary goal of law 

enforcement. 

 And so could you comment based on your experience and whether you 

feel there is a need on the analytical and interpretation side within 

our domestic intelligence gathering apparatus to improve, or in some 

way differentiate between the law enforcement functions of the FBI and 

the analytical functions of domestic intelligence interpretation. 

 MR. SCHLESINGER: It's not only in the world of terrorism, and 

it is, of course, not only domestic. There is the interweaving of 

intelligence that comes from overseas with what we gather domestically. 

One of the problems that occurred from the legislation in the 1970s was 

that although the Central Intelligence Agency was set up to gather all 

information, after the changes of the 1970s the FBI was precluded from 

turning to the CIA and that led to some of the problems that we saw 

with respect to the two terrorists who were in Kuala Lumpur. 

 I overstate when I say that the FBI was not into analysis. They 

didn't do analysis. Organizations are bureaucracies. You go to the 
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place, you go to the functions, to the specialties within an 

organization in which you will have promotions. In the FBI prior to 

9/11, as I recall it, you could soar all the way up to GS11 if you were 

in analysis. That was not the way to attract the best talent. And 

analysis tended to be to confirm that General Motors -- "Where is 

General Motors headquartered?" would come a question from the special 

agent in charge out in Paducah, and the answer will come back from the 

analytical shop, "General Motors is headquartered in Detroit, 

Michigan." 

 I think that it's changing. I think that the Director is working 

hard at changing, but he has got to create an analytical frame of mind 

within an organization that has not been strong in that area. 

 MR. BEN-VENISTE: So you would recommend, I take it, that the -- 

if the intelligence analysis function is to remain within the FBI, 

there be a separate form of promotion and a professional cadre of 

analysts within the FBI who would be promoted on criteria that is much 

different -- 

 MR. SCHLESINGER: From those of the past. 

 MR. BEN-VENISTE: -- from those criteria used for promoting the 

law enforcement side of the FBI? 

 MR. SCHLESINGER: Well, they have to an opportunity, a serious 

opportunity, to rise within the organization. It's the same way that 

it was in the military services. If you spent too much time in joint 

commands in the past, your chances for promotion were modest. 

 MR. BEN-VENISTE: And would you agree that in the recruitment 

effort in getting the best and the brightest analysts possible, that 

the criteria might be substantially different than the recruiting 

criteria traditionally for law enforcement agents? 

 MR. SCHLESINGER: Yes, sir. 

 MR. BEN-VENISTE: Thank you. 

 Slade? 

 MR. KEAN: Senator Gorton? 

 SEN. SLADE GORTON: Thank you, sir. 

 That certainly leads to my question. Jim, in one trenchant 

sentence, which regrettably you don't follow up, you say: "I would 

submit that the real challenge is recruiting, fostering and motivating 

the right people." What suggestions do you have for accomplishing or 

reaching that goal? 

 MR. SCHLESINGER: That in itself is not an easy question. One 

has got to move away from narrow expertise and to convey the broader 

picture of the new environment in which the United States finds itself 

as a result of the global war on terrorism. It is a substantially 

different environment. No longer can you focus on being the leading 

authority on Soviet deployment of the SS-9 or SS-18 missile. Country 
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expertise, to which I referred here, is in a sense too narrow because 

terrorism spreads beyond many of the countries in the Muslim world. 

 And as I indicate, even though at the moment we are responding 

tactically to many of these problems, I don't think that we have a 

sufficiently good strategic framework of the overall problem of 

terrorism, a problem that stems from a civil war that is going on 

within the Muslim worlds and which, partly for reasons of political 

correctness here in the United States, we tend to blur somewhat. So I 

think that you have to have people that you protect. And, as I mention 

in here, when analysts read in the paper every day how they've failed 

and so forth, they begin to get risk averse. It's important that we 

have straight talk from the analysts and that we protect them in a way 

that they do not become risk averse. I'm not sure that I've fully 

answered that question, Senator? 

 MR. GORTON: It is an aspiration that is not easy to achieve. 

But let me go to a second question. A good deal of the public inquiry, 

now reflected at this commission, has to do with the so-called question 

of "connecting the dots." In your view from all of your reading and 

expertise in this area, was the failure to anticipate and prevent 9/11 

a failure to connect the dots that were available, or were there too 

few dots? And if the former, would a different organization have 

resulted in connecting the same dots that we had in a way that was more 

productive than constructive? 

 MR. SCHLESINGER: Well, thank you for that question. I have 

here a diagram that shows a large number of dots of different hues and 

the problem, Senator, is not that we have too few dots, but that there 

are too many dots and we cannot identify which of them is significant. 

In retrospect it is easy to identify the significant dots. I've got 

here, "Mohammed Atta, one-way tickets, paid cash, four Arab looking men 

in aisle seats." In retrospect, since we know what happened, we can 

select amongst the various dots and we will be able to identify those 

that were important and we -- if we had known they were important 

before, we could have taken action. 

 The problem, the challenge is to find means of highlighting these 

areas, those that were significant. And there are a number of ways 

that we can do that, and I don't believe that the intelligence 

community is sufficiently focused on some of the cheaper ways in 

SIGINT, cellular phones and so forth, that would be of help in this 

area. Of finding, of highlighting, what is a countless set of dots. 

 MR. GORTON: But was that an organizational failure, or a 

failure of imagination? 

 MR. SCHLESINGER: It's both. It's both. Imagination is a 

precious and rare commodity and we need to understand that within any 

organization that those who presently have the resources like it that 

way, and they don't like to sacrifice those resources because somebody 

comes up with what he thinks is an imaginative idea. That is the 

responsibility of leadership. To find those areas, in this case of new 

technologies, we are spending billions up there on new satellites. And 

some of the things that we could be doing to highlight these areas I 

believe can be achieved through tens of millions of dollars. But as 

your question implies, we have to recognize them. 
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 Let me go back to your initial question if I may, Senator. I 

thought that we did not connect the dots before 9/11, in particular. 

And I said this at the time. This is not a retrospective view. We had 

the seizure of that French aircraft, we had the episode in Manila in 

which there was the plan to shoot -- to blow up 10 or 11 American 

airliners coming out of the Far East and included, as a throwaway line, 

to take an aircraft and to drive it into the headquarters of the CIA in 

Langley, Virginia. 

 Now, I think that should have gotten more attention at CIA 

headquarters in Langley, Virginia, than may have been the case. That 

certainly should be an attention grabber. It was plain that they were 

thinking in terms of using aircraft in this way. In general, the 

problem remains that there are many, many dots out there and it is -- 

one of the effects of the criticism that has gone on of the 

intelligence community is that analysts have become more risk averse. 

And so instead of evaluating these dots and saying, well, that comes 

from an incredible source, and we can disregard it, or we should pay 

less attention to it, they are saying, suppose that that source, even 

though he's got a very poor record of credibility, turns out to have 

been right. Then my job is on the line, so pass along all the dots to 

the highest authority -- that gets to be problem. 

 MR. GORTON: Well, with respect, each one of the dots, each one 

of the incidents to which you refer, was generally and publicly known 

before 9/11. 

 MR. SCHLESINGER: Yes. 

 MR. GORTON: Did you anticipate or fear this kind of attack? 

Did anyone of like experience with you outside government that you know 

of do so? 

 MR. SCHLESINGER: Did I anticipate that? I thought that it was 

not unlikely given what had happened particularly in Manila. Given, as 

you will recall, the episode with the Egyptian aircraft and so forth. 

I don't think, in retrospect, we should have been surprised. 

 MR. GORTON: You say that in 1971 you recommended against the 

creation of a Director of National Intelligence, is that still your 

view? 

 MR. SCHLESINGER: Yes, sir. 

 MR. GORTON: You also say that you urged the DCI be given 

greater authority over the entire intelligence community. You implied 

that that took place during the Nixon administration. Is it still 

desirable to increase that authority? 

 MR. SCHLESINGER: It has been an evolution. It started -- at 

that time the DCI had control of about 15 percent of the intelligence 

budget. And therefore there was -- and there was tension as the 

previous question suggested, there was tension within elements of the 

community in that -- to take one clear example, the NSA did not like to 

be directed by people from the Central Intelligence Agency, and we had 

to break that down otherwise -- and let me say also that at that time 
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the people who were running the intelligence community staff all -- 

virtually all were drawn from the clandestine services. Clandestine 

services provide you with many insights, but they do not necessarily 

provide you with the best insight with respect to SIGINT. 

 And so there was legitimate resistance on the part of the NSA as 

well as institutional resistance. We moved slowly in that direction, 

it went up, at some times it receded, I think that the DCI has 

substantial authority now, the necessary authority if it is pushed too 

hard, if he pushes that authority too hard he will run into resistance. 

First from the military services, then from the NSA, then from the 

Secretary of Defense, or perhaps in the reverse order. 

 MR. GORTON: Do you -- are you aware of the recommendations that 

John Deutch is going to make as our next witness? 

 MR. SCHLESINGER: I'm not specifically aware. 

 MR. GORTON: All right. Let me share what I consider the heart 

of them and ask for your comments on them. He, as I read his 

testimony, is going to recommend that the DCI be given executive 

authority for domestic intelligence activities. That is to say, that 

the DCI will in effect be in charge of that portion of the FBI that is 

now dealing with domestic intelligence activities, just as he has 

control over the CIA today. What is your reaction to that 

recommendation? 

 MR. SCHLESINGER: My reaction is the DCI is a pretty busy man 

already. I would approach that with great caution. I think that we 

now have an experiment, and these experiments as it were, take a 

considerable period of time to reach fruition. We have the director of 

the FBI attempting to move in the right direction with regard to 

improving analytical activities within -- analytical intelligence 

activities within that agency. To disrupt it now I think might be a 

mistake. We will see. 

 Perhaps more significant, it has been the suggestion, which I'm 

not yet ready to endorse, that we create an MI5 in this country, which 

in effect takes that intelligence function away from the FBI. I don't 

think we should do that as yet, but we should consider it as an 

alternative. And I think that that may be a more effective way than 

simply handing over the intelligence functions of the FBI to the DCI. 

Over the years we have had -- what shall I say? An interesting history 

of relations between the Central Intelligence Agency and the FBI. When 

J. Edgar Hoover was director, he had instructed his people not to talk 

to the people in the CIA. Well, that was a prime example, I think, of 

the baronies -- I should add that despite that directive from the 

Director, that the people in the agency understood that they had to 

talk to each other, so that they did that surreptitiously. 

 MR. GORTON: One more question, Mr. Schlesinger. The 

investigations and the resulting reforms from the Church Committee, in 

your view did they improve our intelligence capabilities, derogate from 

them, were they neutral? Or if they derogated from them, did they have 

other values which made them worthwhile? What is your general view of 

the aftermath of that dramatic set of changes? 
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 MR. SCHLESINGER: Well, I think that in the large that they 

probably were detrimental. I think that it was useful to point to 

certain activities that had been going on, but that, particularly on 

the House side, rather than the Senate side, that the investigations 

got out of hand; that more was -- far more was revealed in those 

investigating than it was desirable to reveal, and that some of the 

legislation and rules that evolved from it have not been helpful. 

 MR. GORTON: Thank you, Mr. Chairman. 

 MR. KEAN: Mr. Ben-Veniste? 

 MR. BEN-VENISTE: Dr. Schlesinger, another recommendation that 

has been discussed is to invest in a Director of National Intelligence 

with certain authorities over budget, many of which you've mentioned 

that now reside within the Pentagon. And now you see the Director of 

CIA who has obligations with respect to running that agency and, 

nominally, is supposed to direct traffic in terms of where intelligence 

resources go, but has no actual authority because he does not control 

the budget. Eighty percent or so of the intelligence budget is held 

within the Department of Defense. 

 What would your reaction be -- and I know you have expressed over 

the years the injunction against emulating kiddy soccer whenever 

there's a crisis, where everybody, all the kids run to the ball. 

Mindful of that, however, and in view of this very significant change 

in the intelligence needs of this country after the Cold War, what 

would your view be about a Director of National Intelligence who was 

disassociated from running a particular agency, had no troops, but yet 

had budget allocation authorities to direct how the enormous amount of 

money that's spent on intelligence is allocated? 

 MR. SCHLESINGER: Well, he would be without troops and he would 

be essentially another special assistant to the President. There is 

always a temptation to try to move things towards the White House, and 

the White House is better at setting overall policy than running 

operations, and only a limited number of operations can be run from the 

White House. I think that you really want to keep that back in the 

agencies and the departments. 

 I would add that the President proposes, the Congress disposes, 

that it is the Congress that will decide on the level of appropriations 

for various intelligence activities, and that these appropriations may 

or may not be used or may be amplified for the purposes prescribed. 

The NRO, to take an example, is -- I would not like to see the Air 

Force begin to lose its interest in running the NRO because the 

authority over the NRO has been shifted off some place else. I think 

that one has to be very careful once again in motivating the people who 

are actually doing the work. If the NRO, which has over the years 

drawn very qualified Air Force officers, were suddenly to be an orphan 

of the Air Force -- that would not be desirable for that particular arm 

of the intelligence community, and the consequence would be that you 

would draw in fewer capable people. And I think that that is more or 

less inevitable. It is now some 40 years since I wrote a paper on how 

you had to motivate agencies and institutions to do what you want to 

do. Simply handing down directives usually runs into considerable 

resistance. 
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 MR. BEN-VENISTE: You have been very articulate in expressing all 

of the things that shouldn't be done to change. 

 MR. SCHLESINGER: Uh-huh. 

 MR. BEN-VENISTE: Where do you come out in terms of your 

recommendations of what should be done? 

 MR. SCHLESINGER: Well, the first point, once again, is that 

management changes can be helpful, but they should be a result of 

modest adjustment rather than gross surgery. Gross surgery probably -- 

unless it is very carefully conceived in advance, probably does more 

harm than good for an extended period simply because you've shaken up 

all of these institutions. People are wondering who's in charge, 

whatever the formal organizational chart. So adjustments: Build up the 

counter-terrorism work, draw better people into it, set up a special 

group that would deal with establishing a conceptual framework for -- a 

conceptual strategic framework for dealing with the terrorism problem, 

which we have not as yet, I believe, thought through. Those are the 

kinds of things: recruit better people and protect them. The real 

problem is the quality of intelligence. 

 When the CIA was started, when the intelligence community was 

started, there was a greater tendency in the intelligence community to 

go outside and to find what were regarded as the best minds in the 

country. That has diminished, and I think that there ought to be 

encouragement, greater encouragement, to go out and find some of the 

people. There's too much of talking to each other and not talking to 

the people out there. Just take an example. There was, I think, 

insufficient contact with the people in the oil industry with regard to 

the ferment in the Middle East. These people are out there. They know 

what's going on. They know what's going on better than somebody 

sitting in his cubicle at Langley or in the DIA. And there needs to be 

more outreach, it seems to me. There is an outreach program. It has 

always been there, but it has become more and more formalistic: 

debriefing people who visited Baghdad since 1995, or what have you. 

 MR. BEN-VENISTE: Thank you, sir. 

 MR. SCHLESINGER: Let me add that I don't think, given what they 

had, that the analytical -- the analysts did too badly with regard to 

the issues of weapons of mass destruction. The real problem is that 

with all the commerce that goes on in -- that has gone on in Iraq, that 

we were unable to get agents in who would tell us what was going on in 

the country. 

 MR. KEAN: Mr. Fielding and then Commissioner Gorelick. 

 MR. FRED F. FIELDING: (Off mike.) Is that better? Thank you 

very much for appearing here today and for your government service over 

the years. You have to bear with us; we have to analyze something that 

you've thought about for years and years, and what we're trying to do 

is, in fulfilling our mandate, come up with a recommendation of what 

changes, if any, should be done. So if we're asking questions that 

seem a little mundane or a little off the walls, because we're 

searching. 
13

 One of the issues Richard just touched upon is something that is 

confusing to me as well, and that is dealing with budgetary authorities 

and that sort of thing. And I noted that in -- you gave some testimony 

in 1972 in which you said be careful of those who are paying for the 

intelligence -- who are paying the intelligence analysts, that if -- 

and the example you cited was that if the CIA was paying for the 

analyst, then the Secretary of State or at least the Foreign Service 

would probably look askance at the information. They would deem that 

to be penetration. And you stated that you were concerned that the DCI 

might have difficulty effectively executing budget authority outside of 

his ambit. 

 In that regard I guess I have two questions. If a Director of 

National Intelligence is created, or if the Director of CIA is given 

greater authority over the intelligence agencies within the various 

departments, Defense et cetera, should each department continue to pay 

for its own analysts and its own intelligence? And a follow up to that 

is, is there an effective way to centralize authority of our 

counterintelligence agencies, though they're located in different 

departments and different subsets, without creating too much tension 

again due to budgetary control issues? 

 MR. SCHLESINGER: Let me deal with that second question first. 

Yes, I think we need to think long and hard about mechanisms for a 

greater cohesion within the counterterrorism effort, simply because we 

have not thought about it very much in the past and that it has been, 

at least for some agencies, a secondary effort. And so now that the 

global war on terrorism is the central priority of American foreign 

policy, we need to think better how to bring together these elements 

that are dealing with the counterterrorism issue. I think that that, 

indeed, is the case. 

 Now, as to your earlier part of your question, this goes back to 

that need for competition. I note that in the press and amongst 

members of Congress there has been great enthusiasm expressed that the 

Department of State took a footnote, if that was what it was, in the 

recent NIE, October 2002, saying that they didn't see that there was 

all that much evidence that there was weapons of mass destruction. I 

think that you need to have that kind of ferment going on and 

protecting that source of special information for the Secretary of 

State is highly desirable. It took us years to break down the 

resistance of what were then called CINCs to making use of the very 

costly satellites that we are utilizing, because they were national 

intelligence and they weren't under the CINCs' direct control. I think 

that we have shown that those national assets can be responsive to the 

needs of the CINCs, now the Combatant Commanders, and that as a result 

they welcome this source of information not under their direct control. 

 But I read in the press about allegations at least that the 

Department of Defense set up a special entity to examine certain 

aspects of our Middle Eastern problem. I think that that may have been 

exaggerated. The press does exaggerate from time to time. But it does 

point to the fact that when an agency head is disappointed with the 

quality of information that he's getting, he is going to find some way 

of setting up in effect his additional sources of intelligence under 

his guidance. 
14

 MR. FIELDING: Thank you. 

 MR. SCHLESINGER: I'm not sure that I answered your question. 

 MR. FIELDING: No, you have. Thank you. 

 MR. KEAN: Ms. Gorelick. 

 MS. JAMIE S. GORELICK: Dr. Schlesinger, I'd like to follow up on 

Slade Gorton's question. He asked you whether there was a failure of 

imagination or a failure of organization, and you essentially responded 

there was a failure of leadership. And I personally would add a 

failure of urgency. 

 MR. SCHLESINGER: I think I said there was both. 

 MS. GORELICK: Yes, both and you added leadership. My question 

is an organizational one, and I know you've warned us against 

organizational changes. But I'm having trouble squaring that with the 

observations in your testimony. Right now we have a situation where 

there is no accountability for the entire government’s intelligence 

capacity, except in the person of the President of the United States 

and the National Security Advisor as his aide. And my question to you 

is how do you get the organization, the imagination, the leadership, 

the urgency if you haven't invested someone with authority to move 

resources to where they need to go? 

 You say in your testimony, you're not going to get the resources 

away from a certain agency that has them, the Defense Department, to 

the place where they might be needed at the observation of the DCI, for 

example, who doesn't have them, because the Secretary of Defense is not 

going to part with them. We are faced with that. We have to remedy 

that. We have to address that. You've sat in both places, as has Dr. 

Deutch of -- from whom we'll hear in a few minutes. You know that as 

Secretary of Defense if you wanted resources to stay put, they stayed 

put in your agency. And you know when you were DCI, if you wanted them 

from the Secretary of Defense, in that battle you were likely to come 

out the loser. 

 So my question to you is what are we supposed to make of that? 

How do we remedy the fact that there is no accountability anywhere in 

the government for the intelligence product right now, except at the 

presidential level? 

 MR. SCHLESINGER: I think that the DCI has responsibility for the 

intelligence product. The President does not deal with producing 

intelligence. The President has got too many other things on his mind, 

and the DCI is the advisor to the National Security Council, which 

presumably does these allocations. Now, the example that I cited was 

not the unwillingness of Department X to give up resources to Agency Y. 

It was within Agency Y it is difficult to reallocate resources under a 

budget constraint, simply because the resistance to taking away 

resources from the other established entities is too fierce. And it 

is, as your question implies, even more fierce when you cross agency 

lines. 
15

 I don't know -- I do not know that this issue has a resolution. 

It is that we will just have to cope with it. And George Shultz when 

he was here, when he used to describe what is the function of 

government is to cope with the same damn issue day after day, month 

after month. We aren't going to resolve the budget issues. Budgets 

are the heart of government policy and conceptually we can put somebody 

in charge and he will allocate here and there and so forth, and you do 

not know after you've put that somebody in charge what the consequences 

will be of that allocation; whether you will be able to retain good 

people or recruit good people in the NRO, an example I cited earlier. 

 So conceptually you are suggesting that we have some overall 

intelligence, not in the technical sense, that deals with the 

allocation problem and far-seemingly allocates resources. I don't 

think that you're going to be able to achieve that. 

 MS. GORELICK: Because of the politics of it? Because of the 

oversight? I mean, we had a situation in which the DCI literally was 

pounding on tables all over town, saying -- in February of 2001 saying, 

we have a very big problem here. This issue of al Qaeda and 

particularly threats to the United States had skyrocketed to the top of 

his attention, and yet we don't see a -- what the follow up was. We 

don't see the urgency. And the question is how do you get that? Is 

there an organizational way to address it? Obviously that is not all 

that you would do. But it strikes me anyway that simply saying, well, 

this is what we've got is, quite frankly, not a sufficient answer. 

 MR. SCHLESINGER: The Agency has much of the analytical talent of 

the intelligence community, and the Director of -- and, as I mentioned 

earlier, the analytical question is the heart of the problem. The 

Director presumably is able to influence the analytical effort. In the 

case that you cited, my recollection is, at least according to the 

press, that after we pounded the table that we wound up with five 

people working on the al Qaeda problem prior to 9/11. You know, if you 

want to deal with a problem, this country is at war. That is a major 

threat, all of which was right and all of which the director said, and 

he didn't get the support or understanding, as your question implies, 

that he should have gotten. But still there was a minimal effort 

directed towards the al Qaeda problem, and that is something that could 

have been handled within the Agency. 

 MR. KEAN: Mr. Secretary, thank you very, very much. I know 

there are commissioners who have additional questions, three or four of 

them. We've simply got to move on because of our time constraints. 

But I want to thank you very, very much, Mr. Secretary. 

 MR. SCHLESINGER: Thank you, Mr. Chairman. 

 MR. MAX CLELAND: Mr. Chairman, we can't ask a question? 

 MR. KEAN: Well, it just -- we have another witness who's going 

to be late if we don't move on. We've got a schedule beyond this for 

other witnesses. We're already 15 minutes beyond schedule, but I 

apologize. 
16

 MR. CLELAND: Mr. Chairman, while Mr. Deutch is taking his seat, 

would it be possible for those of us who have not had a chance to ask a 

question to start the second round of questioning? 

 MR. KEAN: I'm sorry? 

 MR. CLELAND: For those of us who have not had a chance to ask a 

question yet, would it be possible for us to come to the front of the 

line here in terms of questions to Mr. Deutch? 

 MR. KEAN: Yes. But there are two people who were already ahead 

of you, Senator, in the last round. 

 Our next witness is the Honorable John Deutch, professor of 

Chemistry, MIT. Of course, for our purposes most importantly former 

Director of Central Intelligence and Deputy Secretary of Defense. Like 

our first witness, this is a man who has served our government long and 

well, for which we all appreciate and thank him, and has had very 

important experience at senior levels of government. 

 We do appreciate your willingness to appear before the 

Commission. Your prepared statement will be in the record in full, so 

if you'd like to proceed, sir. 

 MR. JOHN M. DEUTCH: Thank you very much, Mr. Chairman. What I'd 

like to do if it's suitable, sir, is to summarize the basic points of 

my testimony and then answer the many questions that I'm sure you will 

have. We owe it to the families of the victims of the 9/11 attacks and 

to all U.S. citizens to assure that the United States intelligence is 

the best -- in the best possible position to protect Americans from 

future terrorist attacks. 

 In my judgment -- sir? Is that better, sir? In my judgment, the 

U.S. intelligence capabilities are inadequate to meet today's terrorist 

threats and other security threats that our nation faces. This is not 

surprising. Intelligence responsibilities and authorities were really 

established 50 years ago to meet Cold War challenges. They were based 

on distinctions which no longer hold today: that there was a bright 

line between peace time and war time; that there was a bright line 

between foreign and domestic threats; and that there was a bright line 

between national security and law enforcement. 

 In my judgment, significant change is required and in my comments 

I would like to describe to you the realignments that in my judgment 

are needed to accomplish this improvement in U.S. intelligence. My 

principal and my underlying proposed realignment is that I believe that 

the balance between national security and law enforcement in counterterrorism efforts, that the priority must be given to national security 

and to defense of the American people. As you understand, at present 

the Director of Central Intelligence has little executive authority 

over the intelligence programs for which he or she is responsible. 

Even though that -- he is the senior intelligence official responsible 

for national security, he has executive authority only over the Central 

Intelligence Agency and over none of the other intelligence -- many 

other intelligence agencies that are in our government, including in 

the Defense Department and the FBI. 
17

 By "executive authority" I mean the combination of two kinds of 

functions. One is the budget and resource allocation function, and the 

second thing is the responsibility for day-to-day management of 

operations. The Director of Central Intelligence is responsible for 

the Central Intelligence Agency and therefore for foreign intelligence 

collection, but domestic intelligence collection activities are in the 

FBI and that separation of foreign and domestic intelligence collection 

places limits on the effectiveness of our intelligence which I believe 

have to be removed in order to better combat terrorist threats. 

 The single most important change that I propose for your 

consideration, Mr. Chairman, is that the Director of Central 

Intelligence be given executive authority for domestic intelligence 

collection where U.S. persons are involved. This would mean transfer 

of the FBI's intelligence division and counter-terrorism division to 

the new Domestic Intelligence Service established as an agency under 

the director of Central Intelligence. And that this new Domestic 

Intelligence Service would report and be responsible to the director of 

Central Intelligence, just as the CIA is today. 

 There should be transfer of those individuals, special agents in 

the FBI who are dedicated to and able to help in this domestic 

intelligence collection, but the principal function would be to bring 

together domestic and foreign intelligence collection under the 

executive authority of the director of Central Intelligence. The 

principal advantage of this arrangement would be that it would permit 

integration of domestic and foreign intelligence efforts to combat 

terrorism. Consider a database put together to look at the movements 

of suspected foreign terrorists into the United States, or dealing with 

foreign persons abroad. All of this needs to be handled under a single 

collection and analytical umbrella to provide the information, the 

intelligence and the warning for the leadership of this country. 

 I don't believe that this can be adequately pursued in the 

Federal Bureau of Investigation because their traditional approach, 

highly successful as it has been, is to build a case for prosecution 

under the laws -- under the rules and the procedures which work for law 

enforcement. Their view, their tradition, and a strong tradition it 

is, is to collect a case, provide the basis for a case suitable for 

bringing to prosecution in a case of law. The intelligence community 

on the other hand is collect information, give it as wide as possible 

dissemination with appropriate caveats in order to provide warning of 

potential attacks or warning of potential actions. 

 The FBI as a consequence has limited analytical capability for 

intelligence collection and, more importantly, analysis. And while I'm 

sure that there have been improvements in past years, I believe that 

ultimately the fundamental culture of having it in a law enforcement 

environment where law enforcement rules hold mean that the intelligence 

dissemination, collection and analysis will not be as wide as it should 

be. 

 There are, of course, disadvantages to the centralization of 

domestic and foreign intelligence under the Director of Central 

Intelligence, and most of that has to do with the risk of misuse of 

intelligence information bearing on Americans. That's a very serious 

matter. But, indeed, I would suggest that that risk exists in all 
18

arrangements that are under consideration, including the present one 

where the FBI is involved in these activities. And that the Department 

of Justice, a very important responsibility, must assure and have the 

power of oversight to make sure that there is no violation of what are 

the agreed upon American rights, rights of Americans during the 

collection and analysis of domestic intelligence. 

 The second most important recommendation that I make is to -- for 

strengthening our intelligence capability to combat terrorism and other 

national security threats is to change the balance of authority between 

the Director of Central Intelligence and the Secretary of Defense. As 

you know, the Director of Central Intelligence has limited ability to 

coordinate or plan the resource efforts of the intelligence community. 

Of the three major national security intelligence programs, the 

national foreign intelligence program, the joint military intelligence 

program, and the tactical intelligence and related activities, all of 

which are -- many of -- most of which are in the Department of Defense, 

the Director of Central Intelligence does not have authority over two 

out of three of those programs: the so-called JMIP and the TIARA 

program. The Director of Central Intelligence has little ability to 

influence some of the key intelligence agencies in the Department of 

Defense, the National Security Agency, the National Imagery and Mapping 

Agency, the Defense Intelligence Agency and the National Reconnaissance 

Office. 

 I believe that effective intelligence requires an integrated 

effort of all these programs and all these different agencies. One 

must establish a metric for performance, a metric for following costs, 

a schedule for achieving different benchmarks for better intelligence 

collection and analysis. For example, it is vital to have the 

strongest link between the National Security Agency and the CIA's 

Directorate of Operations. That could only be managed more effectively 

over time if there is integrated resource planning by the Director of 

Central Intelligence. Therefore, I would propose that the Director of 

Central Intelligence be given responsibility for resource management -- 

principal responsibility for resource management over all intelligence 

programs of this country, but specifically of the Department of 

Defense. 

 I would leave the day-to-day management of the agencies with the 

Secretary of Defense for very practical reasons. The activities of the 

National Security Agency, for example, in communications security, the 

activities of the Defense Intelligence Agency in supporting troops in 

the field require that the Secretary of Defense have day-to-day 

management authority. Unlike my proposal for a domestic intelligence 

service where I would give executive authority to the director of 

Central Intelligence, in this case I believe the day-to-day management 

responsibility must be with the Secretary of Defense, and resource 

planning should be -- and resource allocation with the Director of 

Central Intelligence, that person being held accountable, and in the 

end with the secretary of Defense having to concur in the proposed 

program. 

 If these different authorities are given -- these additional 

authorities are given to the Director of Central Intelligence, I 

believe we have to recognize that the responsibilities of that 

individual are different than the Director of Central Intelligence 
19

Agency and that those two positions should be separated. There should 

be an individual who functions as the Director of Central Intelligence, 

with responsibility over the new domestic intelligence service, over 

the CIA and the resource planning for the entire intelligence 

community, and there should be a director of the CIA who reports to the 

DCI just as the new Director of the Defense Intelligence Service. 

 Clearly, to do this responsibly, properly, the Director of 

Central Intelligence will need a stronger community staff with greater 

responsibilities to integrate different efforts. I've included in the 

testimony -- I know it doesn't show up well -- a chart that indicates 

the proposed realignment of responsibilities. And the central features 

of the chart are the creation of a new domestic intelligence service 

under the Director of Central Intelligence, and the creation of a 

single integrated resource planning effort for the combined 

intelligence budgets. Finally, it indicates the responsibility of the 

intelligence community staff providing needed functional oversight over 

many parts of the intelligence community activities that are required 

to strengthen our intelligence capability. I'm just going to briefly 

mention what these are. They are mentioned in more detail in my 

testimony. 

 First, this new realignment will strengthen human intelligence 

collection by integrating various efforts which are taking place today 

at DOD, in the FBI and certainly in the Directorate of Operations in 

the Central Intelligence Agency. It should, very importantly, improve 

intelligence analysis by giving analysts access to information from 

every possible source, especially domestic collection efforts. It will 

make the Director of Central Intelligence more accountable for 

performance because that individual now will have a responsibility for 

resource management for the entire community, and it will give that 

individual executive authority over domestic and foreign intelligence 

collection. 

 There are other accompanying changes which should help make this 

a more effective arrangement. There are measures which could be done 

to strengthen covert action, an extremely important feature of our 

fight against terrorism. The ultimate success is to learn of a serious 

terrorist threat and to interdict it before it occurs to threaten 

American people and American lives and property. The new arrangement 

should also be organized to do better oversight and management of 

information operations, offensive information operations. 

 I believe the Director of Central Intelligence needs to be given 

greater authority to coordinate cooperation with other countries. 

Currently this is done on an agency by agency basis and we do not have 

a general approach to our -- it's been my experience, to cooperation 

with all aspects of intelligence with various countries who are 

extremely important partners to us in the fight against terrorism and 

other intelligence matters. The new arrangement should help the 

Director of Central Intelligence plan for and execute a better and more 

effective science and technology program, bringing online advances in 

technology which will help collect intelligence, more information for 

our protection. For example, in the management and exploitation of 

databases. For example, the detection of biological warfare and 

chemical warfare agents. For example, in the downstream processing, 
20

exploitation and dissemination of the enormous amount of material which 

are now collected by our satellites. 

 And, finally, I would mention the importance of having rotation 

of personnel between intelligence agencies, just like was done in 

Goldwater-Nichols here in this building, I guess, to assure that 

officers in one of the intelligence agencies some time in their career 

as they gain in seniority have the experience of working in other 

intelligence agencies. 

 Let me summarize, sir. Terrorism and national security threats 

demand greater integration of intelligence collection and analytic 

activities in this country. The walls that exist between law 

enforcement and intelligence in the intelligence community must be just 

done away with. And the intelligence community must have greater 

ability to manage the resources which are presently in the Department 

of Defense's budget. 

 I've proposed integration under the Director of Central 

Intelligence as the best way to achieve and improve intelligence for 

the security of the U.S. people. There are, of course, other options. 

Let me mention three. One is do nothing. Work at the margins to 

improve the existing practice. That's always a prudent thing to do. 

It's always the easy thing to do. In my judgment, that will not lead 

to the necessary improvement of intelligence which should be given to 

the American people. 

 The second is to establish a domestic intelligence service, but 

to place it in the Department of Homeland Security. This is sort of 

the MI5 model where the MI5 model really reports to the Home Office in 

the United Kingdom. Here I think that would be moving in exactly the 

opposite direction. Instead of consolidating the intelligence 

activities, it would be creating yet a third center. You could give 

the responsibility to the Secretary of Defense. On the other hand, the 

Secretary of Defense's primary responsibility is military matters and, 

as I said earlier, that person is very busy indeed as things stand. 

Or, finally, you could give principal authority to the FBI and the 

Department of Justice. 

 I believe that there is an essential conflict between law 

enforcement and national security that makes that a bad idea. I 

believe that the FBI, for the cultural reasons I've mentioned, is 

unlikely to quickly build up the necessary capability for either 

collection or analysis. And, frankly, I believe the Department of 

Justice should have a focus on defending and protecting and assuring 

that U.S. rights are respected however the balance is struck in these 

matters. 

 So in my judgment the best option and the option that I would 

urge this commission to consider carefully is to a centralization of 

the intelligence activities and responsibilities under the Director of 

Central Intelligence, with the provisos that I have mentioned. Thank 

you very much for your attention, Mr. Chairman. 

 MR. KEAN: (Off mike.) 
21

 MR. FIELDING: Dr. Deutch, thank you very much not only for being 

here today and for providing us with some interesting reading prior to 

this, but also for your many, many years of government service to your 

country. As I explained to Dr. Schlesinger earlier, we're trying to 

work within our mandate and trying to figure out, looking at existing 

structures, what if anything we should recommend by way of change. 

It's clear that the system certainly can stand scrutiny. The real 

question is whether changes should be made. 

 We don't want to recommend change for change sake, obviously, and 

we certainly want to get it right. But by the same token, I don't 

think anybody is served if we recommend something that's purely 

aspirational but can't effectively solve whatever problems exist. 

You've given us a very, very serious and well thought out proposal and 

I know we're appreciative, and please don't misunderstand if I ask 

questions that seem like I don't necessarily agree with it. I just -- 

I'm trying to make sure I understand the facets of it, and I'm sure my 

fellow commissioners will have the same goal. 

 But the first thing I'd like to discuss with you is in February 

of 1992 the Chairmen of the House and Senate Intelligence Committees 

held a press conference and announced their plans they were going to 

create a Director of National Intelligence. And according to the 

legislation they then introduce, the Director of National Intelligence 

would have complete control over the U.S. intelligence community, 

including the management of assets owned and operated by the Defense 

Department. All of the assets. And they argued that a DNI was badly 

needed because the intelligence community had grown into an empire 

without an emperor, so to speak, and responsibility was decentralized, 

money was being wasted on duplicative programs that were turf battles 

among agencies, with little legal authority to guide U.S. intelligence 

operational activities. 

 I know this sounds all very familiar to all of us now, but this 

was 11 years ago and they announced that this was going to be a czar 

with teeth. Dave McCurdy was pushing this was the czar with teeth. 

He's going to be a czar with troops and forces and budgets. And 

obviously the reaction to the legislation was relatively swift and 

overwhelmingly negative. And I know you're now familiar with the 

recommendations of the Joint Inquiry, which again came out 10 years 

later and concerned -- and recommended a Director of National 

Intelligence. And they -- I have a quote here. This was to be the 

principal advisor to the President on intelligence and, quote, "have 

the full range of management, budget and personnel responsibilities 

needed to make the entire U.S. intelligence community operate as a 

coherent whole," end of quote. And they recommended that that position 

be cabinet level, as you know, and that no person simultaneously serves 

as Director of National Intelligence and Director of CIA. 

 Your proposal suggests that you keep the Director of CIA -- 

excuse me, Director of Central Intelligence as the head of the 

intelligence community, and that you establish, as I understand it, the 

domestic intelligence service under that director's leadership. And I 

guess I have two threshold questions before we get to specifics. One 

of them is why do you believe that we should keep -- specifically keep 

the Director of Central Intelligence as the head of the intelligence 

community, as opposed to creating a cabinet level -- or the DNI with 
22

some specificity? And the second question is why wouldn't both 

proposals, yours which modifies DNI, suffer the same fate in Congress, 

as it did 11 years ago? 

 MR. DEUTCH: Mr. Fielding, the first point is words. Whether you 

call it a director of National Intelligence or a director of Central 

Intelligence to me is not material. What is material is the 

description of the authorities and responsibilities that that person 

will have. If you at the last moment want to, for basically cosmetic 

reasons, change DCI to DNI, I think that that's -- you know, that is a 

question of cosmetics. The question is what is the authority and the 

responsibilities of the individual? 

 There have been a lot of past studies and people who have 

recommended the creation of greater authorities under the DCI or DNI, 

as you have mentioned in your comments, and I am here doing it again 

today, however with a little bit more precision in the sense that I 

only suggest executive authority for the DCI over the Central 

Intelligence Agency in the domestic intelligence service. I do not 

suggest executive authority over the Defense agencies. I think that 

must remain with the Secretary of Defense, and the best balance can be 

struck by having the resource planning responsibility given to the DCI, 

but not the day-to-day management. That is a question of my experience 

as Deputy Secretary of Defense, as well as DCI, how that balance can 

best be struck. 

 Would Congress approve such a proposal after the very strong 

endorsement of this commission? Let me say that you're as -- better. 

Everyone here is better able to estimate that possibility. And I am -- 

I'm, after all, a chemistry professor for MIT. But let me tell you 

something. I think it's the right thing to do and it reminds me very 

much of the debate that went on prior to the formation of the Secretary 

of Defense. Could it be that a secretary of Defense could balance 

being Secretary of War, Secretary of Navy, later Secretary of the Air 

Force? And it took a long time and there was still occasionally 

tangents and struggles. But inevitably, that's where time's arrow is 

going and that's really what I'm saying here. 

 MR. FIELDING: Thank you. I mean, I want to follow up on that 

just for a second too because you've got unique background to help us. 

You were Director of Central Intelligence and you were Deputy Secretary 

of Defense. So you know, if you will, from both sides of that issue 

when there is an issue of who's in charge. You suggest that the 

Director not manage the day-to-day operations of agency activities, as 

I understand it. 

 MR. DEUTCH: Yes, sir, in the Defense Department. 

 MR. FIELDING: That's what I'm talking -- I'm sorry. But I guess 

if they're an integral part of military operations, that's the need for 

that. But won't such a structure that just will lead to an overlap of 

duties between the Defense Department and the Director and perhaps 

confusion as to the lines of jurisdiction and who's going to be the 

arbiter of these disputes, so to speak? I mean, are we creating an 

absolute mess on our hands? 
23

 MR. DEUTCH: Well, first of all, I think we do have an absolute 

mess on our hands now and the American people are at risk because of 

it. But let me say to you, you can't do this with complete clarity. 

There are going to be lots of places where it's blurred and you must 

have a cooperative relationship between the Secretary and the Director 

of Central Intelligence. I believe that, had I not been deputy 

Secretary of Defense and had my Secretary in the office, Bill Perry, my 

job would have gone from being impossible to truly impossible. And so 

I do think that there is going to be some mess there and I can point 

out to you in great detail where it could occur. 

 Dual budget processes which kind of exist now and that cannot be 

allowed to happen. Directionally, it's the right way to go. If you 

want to make better integration of different intelligence collection, 

specially from the NSA and the Directorate of Operations in these 

matters, specially when it may deal with information on U.S. persons, 

this has to be done. 

 MR. FIELDING: Harking back to your experience as DCI, you 

obviously had some concerns as to the ambit of your authority and your 

control -- and I'm making that assumption. And if that be true, will 

this correct those problems that you had from the point of view of the 

DCI? 

 MR. DEUTCH: Let me divide it into two pieces. First of all, 

with respect to the Department of Defense, I personally didn't have 

this problem because I went, day one, from having done the Defense 

allocation issue on one side to the other side. So I personally didn't 

have this difficulty. My predecessor had this difficulty with me and I 

believe subsequently my successors have had this difficulty with 

others. But I didn't have it because I came from being deputy 

secretary of Defense. 

 With the FBI, the issue was entirely different, and while a lot 

of progress has been made, a lot of progress since the time of John 

Foster Dulles -- I mean Allan Dulles and J. Edgar Hoover, there still 

are tremendous difficulties. And if it had not been in the case of 

counterintelligence, with Louis Freeh and myself and my deputy taking 

an immediate interest, we would have serious problems, and I think that 

regardless of the good intentions of many, many people and both those 

strong and important organizations, it's just set up wrong. And you 

can't make it right by telling them to cooperate more. 

 MR. FIELDING: Thank you. 

 MR. KEAN: Commissioner Gorelick. 

 MS. GORELICK: Dr. Deutch, I want to echo Fred Fielding's 

comments of appreciation for the time and energy that you've put into 

this. You have given us in your testimony and in your written 

statement really a very rich and thoughtful product and I hope we'll 

have some time beyond the limited hour that we have today to benefit 

from your views and, as Fred pointed out, your unique experience. 

 I'd like to ask you some questions about focusing on the domestic 

side and first, to seek a very clear statement from you with regard to 

your proposal. I take it that you would not change in any way the 
24

constitutional or statutory protections of rights that American 

citizens currently have with regard to the investigative techniques 

that may be used against them, or about them, or in relation to them. 

Is that correct? 

 MR. DEUTCH: I certainly am not proposing that here today. I am 

suggesting that whatever balance is struck, the arrangement that I 

suggest puts the Department of Justice in a better position to assure 

that that set of rules was followed for the current arrangement. 

 MS. GORELICK: Is that because you believe that the Department of 

Justice is now somewhat conflicted in that regard? 

 MR. DEUTCH: I think Department of Justice is tremendously 

conflicted between hugely important and valued goals. Goal one is to 

defend Americans. Goal two is to bring people to justice, and goal 

three is to protect the rights of Americans. And I think that is a 

very tough set of differences -- strains to resolve when you are 

working on databases which contain information about American citizens. 

 MS. GORELICK: So you would give the Department of Justice sort 

of policy oversight responsibility for the domestic collection 

capacities of this new DIS? 

 

 MR. DEUTCH: The word "policy" troubles me there, Counselor. I 

would say not only would they set the policy, they would also have the 

responsibility to making sure and enforcing that it was followed. So 

they would have, you know, a direct hand in determining that the rules 

of the game, with regard to American citizens especially, were 

scrupulously followed by the Domestic Intelligence Service. 

 MS. GORELICK: Now you say that there are -- you reject the 

notion of tinkering at the edges, working with what we've got is the 

way you put it and I'd like to turn your attention to the discussion of 

Terrorist Threat Integration Center, which, as you know, calls itself a 

joint venture. It's supposed to fully integrate information whether 

gathered at home or abroad. But there does not appear to be one person 

or one entity in charge of it. In your view, what are its limitations 

because this is the place where the intelligence is supposed to come 

together in the manner that you suggest would be possible under your 

new system? And could whatever shortcomings there may be, be overcome 

short of the organizational changes that you propose? 

 MR. DEUTCH: Well, let me first of all say that I have not had 

the occasion to know how the new Terrorist Threat Integration Center is 

operating and what the rules of the game are. So what I'll have to do 

in answering this question is to ask you certain questions. You know, 

I would ask, does the head of that TTIC have the right to reassign 

people to different jobs and call in from the FBI or call in from the 

NSA, I need 10 more analysts, bring them here tomorrow morning? 

 MS. GORELICK: No. 

 MR. DEUTCH: Sorry? I didn't hear you. 

 MS. GORELICK: Let's assume the answer is no. 
25

 MR. DEUTCH: Let's assume the answer is no. 

 MS. GORELICK: But why don't you continue with your rhetorical 

question? 

 MR. DEUTCH: Does the Director -- who's actually an excellent, 

excellent individual, a person who's the head of this -- does that 

person -- can he pick up the phone and say, I want you to shift $10 

million from this activity to this activity? It's a reprogramming, 

we'll have to inform Congress but I want to do that right now and the 

director supports this. No. Does the Director of this agency have the 

ability to say, You know, we got to think about this over the long 

term. The way you get good intelligence is to follow a target for a 

long time. This idea that you just could drop in one day and collect a 

lot of good agents is wrong. You really have to pursue a target for a 

long period of time. That's when you really develop good sources and 

understand what you're dealing with. 

 Because we want to develop a collection strategy over several 

years in a certain region of the world. Does the director of this 

center have the ability to set such a plan for several years and make 

it stick with the different agencies? That's another question I would 

ask. I don't think you can fix that around the edges. 

 MS. GORELICK: At our very first hearing I examined the chairs 

and ranking members of the intelligence committees on one of the 

subjects that you addressed, which is whether they did or whether even 

under the current construct they could perform effective oversight of 

the intelligence community. One of the advantages, I presume, of this 

organizational structure is that there would be oversight across the 

board throughout the intelligence communities. Their response, 

roughly, was we can review budget items line by line but we don't have 

effective means to look across the intelligence community to match up 

the threat with the capacity that is supposed to address that threat. 

 You have been overseen by the committees that oversee defense and 

the committees that oversee intelligence. And having been overseen by 

two of the three committees, the other relevant committee being 

judiciary, what are the upsides, if you can identify them, of the 

shifts that you proposed from an oversight point of view? 

 MR. DEUTCH: If I were able to see this realignment take place, I 

would suggest that you would have a separate budget category in the 

defense accounts, the national security accounts, the 050 accounts just 

like we do today -- for example, for atomic energy defense activities -

- I would set one up for the intelligence activities which included 

NFIP, JMIP and TIARA, and associated budget for the domestic 

intelligence service. And I would create that as a separate budget 

category in the overall National Security Budget 050 accounts. I 

believe that that would eventually lead Congress to establish a single 

committee to follow those set of functions. If you could have a single 

authorizing committee, you would do much, much better with respect, in 

my judgment, I think, to congressional support and knowledge, informed 

judgment about these activities. 
26

 So I think that this naturally leads to a single congressional 

committee oversight and one which would be better informed and 

basically more supportive of intelligence activities. 

 MS. GORELICK: Thank you for that response. One last question. 

I was following you all the way through your presentation where the 

thrust of it was, we need to give responsibility and authority to the 

same person, and we need to hold them accountable because we've given 

that person -- whether it's the DCI or the DNI -- authority over 

budgets and resources and programmatic efforts. With regard to the 

Defense Department, you say let's keep the executive authority over 

there because they have operational capacity that is well placed there. 

Nevertheless, you say let us give this authority to this DCI or the 

DNI, but the Secretary of Defense has to concur -- now, concur in the 

exercise of the authority by this DCI or DNI. 

 Now, in my experience, when the secretary of Defense, given his 

powerful position in the cabinet, given his stature, given the 

resources that he has at his disposal has to concur in anything, that's 

the end of the story. That concurrence becomes all the power that is 

needed to maintain the current status quo. So I will ask you, having 

sat in both places, with all of the honesty you are capable of 

mustering in a public setting - (laughter) -- to tell us whether the 

concurrence you suggest undermines the thoughtful proposal you've put 

on the table? 

 MR. DEUTCH: I may need help on this, Mr. Chairman. You, of 

course, have raised a very excellent point here, but I want to make 

really two remarks about it. The first is, I did not say that the 

executive authority lay with the Secretary of Defense with these 

defense agencies, I said the day-to-day management authority. I would 

say the principal planning and resource allocation authority for these 

agencies lies with the Director of Central Intelligence. That's 

different. And I don't want to see a parallel structure run by the 

financial side of the Office of the Secretary of Defense redo all the 

budget analysis to get into the kinds of bureaucratic problems that Mr. 

Fielding also alluded to. 

 Basically, in my heart I don't think you can tell the Secretary 

of Defense use these agencies for combat support, and to support troops 

that are deployed abroad, and not have the Secretary of Defense happy 

with that -- with what the program is. There's also an element of 

trying to keep Mr. Fielding on my side by saying without this proposal 

from the Secretary of Defense having concurrence at the last analysis, 

this proposal goes nowhere. It goes nowhere. You must give the 

Secretary of Defense that last -- as I can tell you by speaking with 

several of them. Without that, you can't possibly get the additional 

oversight, the additional authorities within the Director of Central 

Intelligence. 

 So there is an element of it that just says this is the best way 

of keeping the legitimate military concerns on board. So that's why I 

came on it. 

 MS. GORELICK: Thank you very much. 

 MR. KEAN: Commissioner Fielding. 
27

 MR. FIELDING: One follow up question on our analysis. It has 

been suggested that we also consider a structure similar to MI-5. I 

would appreciate any comments you could give us and your thoughts on 

that as we look as this whole structural issue. 

 MR. DEUTCH: I know the MI-5 very well and its operation. The 

MI-5, as you know, reports to the Home Office, so presumably the 

comparable suggestion here would be to put the domestic intelligence 

service in the Department of Homeland Security. And that, it seems to 

me, goes in the wrong direction because it fragments two groups into 

three. On the other hand, I believe that the Secretary of the 

Department of Homeland Security has a tremendously important role to 

play in intelligence analysis, because remember the domestic 

intelligence service is principally concerned with collection 

activities, so the Department of Homeland Security has a tremendously 

important role to play in intelligence analysis and analyzing 

information from all sources, just as the Department of State does 

today, or the Department of Defense does today. 

 And so the intelligence community has the Secretary of Homeland 

Security as a principal customer, but I do not believe that you should 

establish a collection agency away from these others. I think it's 

going in exactly the wrong direction. 

 MR. FIELDING: Thank you very much. 

 MR. KEAN: Commissioner Roemer. 

 MR. TIMOTHY J. ROEMER: Thank you, Mr. Chairman, nice to see you 

again. 

 MR. KEAN: Good to see you, sir. 

 MR. ROEMER: We appreciate your time today. You've talked a lot 

about the relationship between the DCI and the SecDef, the Secretary of 

Defense. I'm more interested, given the fact that you've given that a 

lot of thought and a lot of time today and our commissioners have 

zeroed in on that, I'm more interested in coming back to some of the 

mandate that we have on this 9/11 commission, both at what happened on 

9/11 and prior to it, and the relationship between the DCI and the 

National Security Advisor. You were a DCI in 1995 and 1996. There 

were, in the 1997, 1998 time period, there were a couple of 

Presidential Decision Directives that Mr. Steinberg talks about in his 

open testimony, that one created the position of a coordinator for 

national terrorism, another set forth -- as Mr. Steinberg's open 

testimony talks about -- set forth ways to protect the critical 

infrastructure in the United States of America. 

 Given that this commission is supposed to look at not just the 

technical failures in the intelligence community -- and the Joint 

Inquiry found several and numerous failures -- you said we're at a 

crisis position with respect to the intelligence community. We're also 

supposed to look at policy, and were there policy failures? Let me put 

this question directly to you. Who within the government is 

responsible for enforcing a Presidential Decision Directive? Is it the 

DCI? Is it the National Security Advisor? Is it both? And how do we 
28

improve this nexus in this relationship in the future so that we can 

formulate policy to react to these transnational threats directly 

against the people and the interests of the United States of America, 

and formulate effective policy through the venues of government? 

 How would you directly answer that question? 

 MR. DEUTCH: Well, Congressman, I would say the National Security 

Advisor is responsible for that in the national security area 

absolutely. That's certainly the way it was in my time and there was 

never any difficulty in my experience in either the Defense Department 

or the intelligence community. On the other hand, in law enforcement 

you have a much more complex question. If you have the National 

Security Advisor breeze in and say, please let's do this, with respect 

to some colorable law enforcement activity, you may end up with a huge 

problem on your hands. 

 And indeed, there were plenty of occasions where that came up in 

domestic and international matters where the ability to enforce 

executive branch views on the law enforcement community came to quite a 

set of loggerheads. And so I would say to you it's quite clear in the 

national security area, a little less clear to me about how you do it 

when it's involved in law enforcement. 

 MR. ROEMER: And along those lines of enforcement of PDDs by the 

national security advisor, given your time there, do you think that 

those were adequately -- was there that adequate enforcement at that 

time? Was there an aggressive tendency to go back to the agencies and 

see that they enforced that new PDD? 

 MR. DEUTCH: The PDDs you've mentioned, the two you've mentioned, 

occurred after my time. 

 MR. ROEMER: They occurred in '98, '97, '98, you were there in 

'95, '96. 

 MR. DEUTCH: Right. I can't comment on that. I will tell you 

that we had many struggles, many struggles about infrastructure 

protection. That's another very complicated subject. And also there, 

regarding infrastructure protection as a law enforcement matter is in 

my mind -- as opposed to a national security matter -- a separate 

problem, related but separate problem, was not resolved happily in any 

way, but also didn't lead to a PDD. 

 In other words, because it wasn't resolvable the President didn't 

promulgate a decision memorandum on it because it wasn't resolved but 

it still, I think, has its problems. Infrastructure protection. 

 MR. ROEMER: Two of the top three recommendations made by the 

Joint Inquiry were regarding the structure and the performance of the 

National Security Council. The first one you've addressed 

significantly today, the DNI. Number two and number three addressed 

the National Security Council. Do you have specific recommendations as 

to how we better structure the National Security Council in relation to 

the current ongoing threat that we have? 
29

 MR. DEUTCH: I do not. I did not find in my time that the 

National Security Council was part of the problem of anything, so I do 

not have a specific recommendation on that. And a little bit to echo 

my boss, Jim Schlesinger, prior boss Jim Schlesinger, I'm not sure how 

much you really want the White House to get into the management of 

these kinds of issues. 

 MR. ROEMER: Thank you, Mr. Chairman. 

 MR. KEAN: Senator Cleland. 

 MR. CLELAND: Yeah, Mr. Chairman, thank you very much. 

 Mr. Secretary, this is such a clear and cogent and well thought 

out proposal I fear for your future in the federal government. 

 MR. DEUTCH: You don't have to fear for it, sir. 

 (Laughter.) 

 MR. CLELAND: Let me just say, Secretary Schlesinger mentioned 

something that peaked my interest. He mentioned the phrase, "turning 

point of history," or turning points of history. And yet I still 

desire to have a coherent picture about future developments. As a 

history guy I'm fascinated with one of the Winston Churchill quotes 

that, "How do you know where you're going unless you know where you've 

been?" One of the things that's been fascinating to me was looking a 

little bit about where we've been, when was the last attack on this 

country, it was Pearl Harbor. 

 And my father was stationed at Pearl Harbor after the attack, so 

I've been fascinated with that period of our history. It does seem 

that right after Pearl Harbor there was an immediate critique that it 

was intelligence failure, that information was stove-piped not 

disseminated and certainly not available in a clear picture to decision 

makers. If that all sounds familiar that was the conclusion right 

after 1941, and about four commissions went into this in depth over a 

period of about four or five years. 

 You mentioned that this sounds a little bit today like the debate 

about creating a Secretary of Defense, well, that whole structure 

apparently came about in 1947, the Defense Reorganization Act, which 

among other things not only created the Secretary of Defense but 

created the CIA, the Central Intelligence Agency. And one of the 

things that was fascinating to me too was your testimony that back in 

those days, in the days of the Cold War, there were bright lines. 

There was a line, there was a barrier about where our power ended and 

the Soviet power began. 

The Berlin Wall, the various lines along -- the hundred divisions 

behind the Warsaw Pact and so forth. Those bright lines are gone now, 

we're in another world. And I think that's what you're at. Doesn't it 

seem to you that in the wake of the 9/11 attack we're at another one of 

those turning points in history where we have to adapt and adjust, 

particularly in terms of the way we read the tea leaves and making 

those estimates of where the tea leaves carry us to the decision 

makers. 
30

 I think your chart moves us in that direction and I think you're 

right, doing nothing maintains the current mess. One of the things I 

always noticed was -- being on the Armed Services Committee for six 

years here in the Senate -- was that the intelligence community was 

always referred to as the intelligence community. I always tried to 

find out who was accountable. In many ways more than 12 different 

agencies under six different cabinet officers were part of the 

intelligence community. But who was accountable? 

 And in the intelligence failure of 9/11 I've been trying to find 

out who was accountable. And this government did have a lot of 

information but it wasn't shared, the tea leaves weren't looked at 

appropriately, and obviously not enough to get to the decision makers. 

So I agree with you. We've got to adjust to this turning point in 

history to a new kind of threat and that is the terrorist threat that 

doesn't acknowledge bright lines. They don't acknowledge the bright 

lines between domestic and foreign intelligence. They hit the seams, 

so to speak. 

 And so I'd just like for you to elaborate a little bit more maybe 

on the history that you're aware of maybe in the former discussion 

about creating a new organization to connect the dots, back in those 

days of 1947 in the wake of Pearl Harbor and World War II and what we 

needed in terms of centralizing intelligence. Can you share a little 

bit and just some of that information, is some of that information 

relevant to us now? 

 MR. DEUTCH: Senator, let me give you a very brief answer because 

I know our time is short here. But Roberta Wohlstetter wrote a book on 

the failure, the intelligence failure of Pearl Harbor, which has stuck 

in my mind because it explains not only Pearl Harbor, it explains lots 

of these intelligence failures. And when I say intelligence failures I 

don't mean to disparage the community, and certainly not the people who 

work in it. 

 But successful intelligence requires three steps. Collection of 

information, analysis of that information, and then transmission to a 

policy maker who is willing to listen. And when you look in detail at 

these events, always there is something which was going wrong in part 

of those three steps. Sometimes the policy maker is not willing to 

listen, and that was in part the problem in Pearl Harbor, military 

commanders there and here. Often it is inadequate analysis and it 

always is better to have more information rather than less. 

 But the heart of the matter is to have a set of dedicated and 

capable intelligence analysts who have access to all available 

information and who can objectively give you their unvarnished best 

estimate. It doesn't guarantee you successful intelligence because the 

policy maker may still not listen, but you have to have the elements, 

collect the information, do fabulous analysis and have a policy maker 

who's willing to listen. 

 MR. CLELAND: Thank you, Mr. Secretary, that was a powerful 

statement. Thanks very much. 

 MR. KEAN: Thank you. 
31

 I'm curious, if the recommendations that you are now proposing 

had been in effect some years ago, do you think it would have changed 

what happened on 9/11? 

 MR. DEUTCH: Governor, I can't answer a question like that, it is 

too hypothetical. I think it is a catastrophe what happened to this 

country, and I think it signals the need to do something. But I could 

not possibly give you a fair answer to that question. 

 MR. KEAN: Okay. I understand that. 

 Yes. Slade, then Commissioner Lehman. 

 MR. GORTON: Dr. Deutch, as fascinating as this is, it reminds me 

-- you mentioned a book about Pearl Harbor. It reminds me of that 

wonderful title of a tragedy in World War II, "A Bridge Too Far." And 

so my question to you is, if you took out the blue lines and didn't get 

yourself into a fight with the Secretary of Defense, and perhaps only 

had what you have here as CIA and the Domestic Intelligence Service 

under a single head, would that be a significant improvement over the 

present situation? 

 MR. DEUTCH: Senator, it would be a significant improvement. And 

I'm well aware that this is a bridge too far. My effort was to try and 

clearly describe what I thought the necessary changes were. But you 

are quite right. If you let the -- if you leave the Defense stuff out, 

you've got lots of big things you've given up, especially the 

connection between human intelligence collection and signals 

intelligence collection. It would be a big step but I don't think it 

would be a sufficient step. 

 MR. GORTON: Thank you, Mr. Chairman. 

 MR. KEAN: Secretary Lehman. 

 MR. JOHN F. LEHMAN: Dr. Deutch, one of the critiques of the 

current intelligence community is that, as a result of the tremendous 

technical breakthroughs of the '60s, '70s, and then the political 

assaults of the Pike Committee and the Church Committee during -- on 

the intelligence community as a whole that this drove a total 

domination and the creation of a completely technical culture in the 

intelligence community. If it wasn't measurable, if it wasn't 

countable, then it had -- it was dismissed as anecdotal. And this has 

been applied even to subjective analysis, having to have a mathematical 

probability assigned to it before it could be passed forward. 

 Given that not much in the war on terror, not much of the enemy 

target base is countable, do we have too much investment both in 

hardware and in culture, in the technical dimension of intelligence 

today. 

 MR. DEUTCH: Mr. Secretary, it's a very good question. I would 

first of all argue that if you look in detail at even the most farreaching human collection possibility you might think of, that there 

are elements of technical intelligence which can support that and make 

it more effective. So first of all, I sort of resist saying we have 
32

human intelligence, then we have, you know, satellites, and they're 

kind of disconnected. I think that, in fact, if you look in detail, 

you can see occasions where if you work them closely together, and I 

think that's happening more and more, that it's really a very good 

thing. 

 There's no question that human intelligence capability, 

especially in the CIA, suffered dramatically in the early '90s. No 

question about it, including during my time. But the overwhelming 

reason for that fact, Mr. Secretary, had nothing to do with technical 

or non-technical. It had to do with one thing, and that was Aldrich 

Ames. If you go back to 1991 and this town -- 1992, '93, the one thing 

which was quite clear was what had happened to Soviet and Russian 

penetration of our intelligence services and the FBI. And so if you 

say to me, why was there such, you know, declining budgets, yes, all 

these other things, everything would have been okay if it hadn't been 

for Aldrich Ames. I believe that the history of the Director of 

Operations would have been much smoother sailing. 

 And I'm very, very pleased that my deputy, who is now Director, 

has managed to build up and strengthen that Directorate of Operations. 

But please would you describe what has been the great decline and then 

coming back up of the Directorate of Operations. Remember, it was 

Aldrich Ames that caused the problem, not anything else. 

 MR. LEHMAN: Thank you. 

 MR. KEAN: Last question from Commissioner Ben-Veniste. 

 MR. BEN-VENISTE: Dr. Deutch, I am intrigued with something which 

was mentioned in your prepared remarks with respect to recruitment of 

foreign assets. I sit on another commission which is charged with 

declassifying millions of pages of documents from the post -- World War 

II and post-World War II period. And the focus there is on 

 MR. BEN-VENISTE: Could you turn on the microphone? 

 MR. BEN-VENISTE: I'm sorry. Did you hear -- 

 MR. DEUTCH: I heard, yes, sir. 

 MR. BEN-VENISTE: Okay. The focus there is on the recruitment of 

those with Nazi war crimes histories in the post-World War II period as 

a matter of expediency to get up and running against a Soviet threat. 

And I notice that you have discussed the question which has been raised 

broadly in the post-9/11 period of whether restrictions on recruitment 

of foreign assets who have histories of crimes against humanity make 

sense to continue in the post-9/11 period. In having seen the result 

of the compromising of the West German Intelligence Organization from 

the recruitment of those with that kind of tainted past and noticing 

your remarks on the subject, I wonder if you could elaborate. 

 MR. DEUTCH: Could you tell me where these remarks are, Mr. BenVeniste? 

 MR. BEN-VENISTE: This would be on page three of five -- 
33

 MR. DEUTCH: Three? 

 MR. BEN-VENISTE: -- in an article which you wrote. 

 MR. DEUTCH: Oh, I see. It's not in my testimony? 

 MR. BEN-VENISTE: I'm sorry. It was in the materials which our 

very diligent staff had collected. It was an article which you wrote 

with Jeffrey Smith in Foreign Policy Magazine fairly recently. 

 MR. DEUTCH: I don't have the article in front of me. If you 

read that article with care, it also has a proposal similar to this but 

less -- thank you. But let me just say that you absolutely have to 

recruit individuals with the worst kinds of backgrounds, the worst 

kinds of criminal and humanitarian deficiencies. You absolutely have 

to do that. The question is the procedure that is used for a case 

officer in the field to recruit such individuals. But let there be no 

doubt about it, we can have no barriers on the kind of character, 

criminal record or personality of agents that are case officers try to 

recruit in the field. That is essential. 

 How they get approval for that is what is at issue, I think, in 

the article that you refer to. And it is my judgment that case 

officers of the field are best protected and best able to take those 

risks if there's a procedure that validates their decision to recruit a 

bad person. But let me be clear about it so there's not a moment of 

doubt. If you cannot -- you must be able to recruit the very worst 

kinds of people in order to pursue our national interests. 

 MR. KEAN: Dr. Deutch, thank you very, very much. 

 MR. DEUTCH: Thank you. 

 MR. BEN-VENISTE: Thank you. 

 MR. KEAN: Thank you very much. 

 Our final witness this morning is James B. Steinberg, Vice 

President and Director of Foreign Policy Studies at the Brookings 

Institute, and former Deputy National Security Advisor. We're going to 

hear from Mr. Steinberg about the question of terrorism, about how the 

policy process works and perhaps should work at the senior levels of 

government. We look forward to his recommendations as to how the 

national security structure can perform better. 

 Mr. Steinberg, your prepared statement will be entered into the 

record in full, and so please proceed with your testimony. 

 MR. STEINBERG: Thank you, Mr. Chairman, and thank you for the 

opportunity to appear today before the Commission. The subject of this 

morning's hearing is crucial to developing an effective strategy 

towards homeland security, and it's clear from the discussion already 

that you all have given considerable thought and attention to this, 

which I think is a great service to the country. There's little 

dispute about the central role that information plays in combating 

terrorist threats to the United States and to our interests. 
34

 And similarly, there is a broad consensus about the need to adapt 

the way we handle the collection, analysis and dissemination of 

information to meet these new threats. This consensus is reflected in 

the Congressional Joint Inquiry, in the enactment of the USA Patriot 

Act, the creation of the Department of Homeland Security and the broad 

range of institutional changes adopted by the Administration since 

9/11. The question is not whether we should act, but whether we have 

gone far enough in thinking about the systematic implications of this 

challenge. 

 My overall judgment is that while Congress and the administration 

have taken important and positive steps, we need to think more boldly. 

The basic tact taken thus far has been based on an incremental 

adaptation of existing institutions. Even the Department of Homeland 

Security to date has not fundamentally changed the way we handle the 

information challenge. This is perhaps not surprising given the deep 

institutional inertia that provides obstacles to change, and the 

legitimate fear that disruption at a time of great risk carries its own 

risks. 

 But as is often is the case, the short run imperative to get on 

with the urgent task at hand can stand in the way of making the changes 

we need for the long run. And as Director Deutch and you have 

discussed already, the post-World War II history of adapting our 

national security structures is instructive. Not until the GoldwaterNichols Act of 1985 did we really move effectively to integrate the 

military services, and even today important challenges remain. 

 On the intelligence front, the concept behind the creation of the 

Director of Central Intelligence in 1947 has never been realized. In 

my statement I identify seven features of the counterterrorism 

challenge that, when taken together, constitute a powerful argument for 

a systematic rethinking about the way we do business. At the core is a 

realization that the community that is key to the counterterrorism task 

is much broader than the Cold War model of the national security and 

intelligence communities. 

 Today state and local governments and the private sector play a 

much larger role than the federal government, and the prevention task 

extends far beyond the law enforcement community. Therefore we need an 

approach that reflects this far flung, highly decentralized universe of 

critical actors, both in the United States and abroad. These features 

of the new challenge have direct implications for policy, which I have 

identified in my written submission. I want to just touch on a few of 

them here. 

 First, we must give greater priority to information sharing. 

There's no question that there have been important improvements since 

9/11, but they still do not fully reflect the sea change that is 

needed. A critical portion of the community of collectors and users of 

information related to homeland security are outside the corral of 

cleared personnel, and the solution cannot simply be to increase the 

number of people with security clearances. Similarly, the core concept 

of need to know, which is so fundamental to our current structure, is 

difficult to apply and often counterproductive in counterterrorism. 

Sometimes we don't know who needs to know, as the 9/11 experience 

itself demonstrates. 
35

We need an approach where the priority is to get the information 

out to those who could make effective use of it. The burden should be 

on those who want to classify and restrict to justify the restriction, 

rather than presume that information needs to be closely held, 

particularly when the originating agency that often makes these 

decisions has the greatest stake in protecting its sources and methods, 

but little accountability for the failure to share. 

 I can illustrate this point by drawing on the story of how the 

scientific community ultimately tracked down and identified the SARS 

virus. The key to this effort was not a predetermined community of 

experts closely holding information among themselves. Instead, all 

those involved were encouraged to post their speculations and their 

research results on the Internet, where anyone could access and build 

on them. In some cases, insights came from unexpected quarters, and 

this was in clear contrast with the process by which scientists 

uncovered the cause of AIDS, in the pre-Internet world. 

 In that case, researchers worried as much about gaining credit 

for the discovery as with sharing with other researchers. In the case 

of AIDS, the process took a decade, compared to several months for 

SARS. Now, of course, advances in biological research also helped 

speed the SARS identification process, but the comparison and the 

nature of the network that was used is instructive. 

The issue of balancing risks between sharing and protecting 

information is also illustrated in the debate over open source code 

versus proprietary source code in the cyber security world. Those who 

favor keeping source code secret argue that opening them to the public 

might expose security holes to potential hackers. Proponents of open 

code argue that by making the code public, more minds can be brought to 

bear to identify and patch potential security problems. More and more 

of this argument for openness is winning the day. The second major 

point is that we need to examine the two key walls that characterized 

our intelligence community during the Cold War, the line between law 

enforcement intelligence and the line between domestic and foreign 

intelligence. 

 I won't repeat the arguments made so articulately and eloquently 

by Director Deutch in his testimony to you, but suffice to say I 

largely agree with his recommendations. We do need a Director of 

National Intelligence to integrate domestic and foreign 

counterterrorism efforts, and a domestic security agency which is 

separate from the FBI and law enforcement. While Director Schlesinger 

and others rightly warn that reorganization isn't everything, the 

example I cited of the 1947 National Security Act and Goldwater-Nichols 

also illustrates that at times nothing short of organizational reform 

will change the incentives to change the way the individuals act in the 

system. 

 I know that some have expressed fears about the civil liberties 

consequences from creating a domestic security agency. I believe that 

the civil liberties issues, while real, exist today in the current 

system as the debate over aspects of the USA Patriot Act make clear. 

Moreover, the best way to address this problem is to tackle it head on 

rather than rely on imperfections in the existing system to safeguard 

civil liberties. It would be unfortunate indeed if the only way we 
36

could protect civil liberties was at the expense of protecting our 

security. I think this is a false choice, and I'll return to this issue 

in a moment. 

The third major point is that we need a parallel integration of 

the policy apparatus to mirror the proposed changes on the intelligence 

side. In particular, we need to examine how to integrate better the 

domestic and foreign policy dimensions of counterterrorism. And to 

accomplish this, as I state in more detail in my written submission, I 

suggest that we strengthen the role of the Secretary of DHS in the 

interagency process, and integrate the Homeland Security Council better 

into the NSA. 

 Finally and most important, we need a system that will be 

effective in taking on the counterterrorism challenge while sustaining 

the support of the American people. As a result of the controversies 

over intelligence collection and analysis programs like the TIA and 

CAPPS II, and the recent revelations concerning JetBlue's provision of 

personally identifiable information to an army contractor, today we 

risk creating the worst of two worlds. 

 The public thinks that the government is guilty of massive 

invasions of privacy, while government officials may become so gun-shy 

about collecting information that they refrain from legitimate 

activities that could be vital to stopping terrorists. We can avoid 

both dangers by developing a clear, transparent approach to information 

gathering and use that empowers government officials to do their jobs 

while providing reassurance the public that the information is being 

used in appropriate and tailored ways. 

 Guidelines that set out the rules and procedures, backed by 

effective accountability practices, serve both goals simultaneously. 

As a member, along with Senator Gorton, of the Markle Foundation Task 

Force on Security in the Information Age, we've been working to help 

develop in more detail a strategy that would integrate advances in 

information technology with the necessary policies to achieve these two 

goals. We issued our first report last fall under the able leadership 

of Phillip Zelikow, and we plan to complete a second report later this 

fall on this issue of guidelines and accountability, and look forward 

to sharing our results with the Commission. 

 Establishing a system of guidelines and accountability should be 

a priority for Congress as a part of its overall oversight 

responsibility. Although I believe that the guidelines themselves 

should be issued by the Executive Branch rather than enacted by 

Congress. This will allow a learning experience as we move into 

relatively uncharted and technologically fast moving waters. These 

guidelines should be developed in close cooperation with the private 

sector, with as much public transparency as possible, consistent 

legitimate security needs. Thank you for your attention and I look 

forward to your questions. 

 MR. KEAN: Thank you very much. 

 Secretary Lehman. 

 MR. LEHMAN: Thank you. 
37

 Mr. Steinberg, I found your testimony very compelling and it goes 

right to the heart of the issues. I would like to start by asking your 

views about the role of the National Security Council, because as you 

know it was envisioned to solve all of the problems that we're worrying 

about here. It was supposed to have the ability to coordinate 

differing views on priorities on budgets and to resolve differences 

between the cabinet barons. In my own limited experience, on the NSC 

staff, I found that it worked pretty well doing that, particularly on 

issue of priorities on intelligence. There was a thing called the 

Forty Committee where differences of views between State, Defense and 

individual elements of the intelligence community were resolved, and 

money moved against the wishes of certain of the players around the 

table. 

 And they came to every meeting because if they didn't, they knew 

Kissinger would move the money anyway, so it functioned pretty well. 

And what in the intervening time between the establishment of the NSC 

and its initial implementation by President Truman, which was very 

different than what Forrestal had intended. What's gone wrong? Why is 

that mechanism no longer sufficient to resolve these kinds of budgetary 

priority targeting and personnel issues? 

 MR. STEINBERG: I think you've raised a very important question, 

and I think the answer is that within its traditional ambit I think the 

NSC still does work well. There is a community that is part of the NSC 

community, the traditional one, the Secretary of Defense, the Chairman 

of the Joint Chiefs, the Director of the CIA, the Secretary of State, 

occasionally the Secretary of the Treasury, who are familiar with the 

system, work within the system. But what we found moving into the 

1990s with these new set of challenges, which was very different than 

dealing with a foreign state adversary, was that there were a set of 

actors who didn't function with the ambit of the NSC system. 

 The most important was the Justice Department and particularly 

the FBI, and for the reasons that we've been discussing this morning, 

there was a deep reluctance to submit the FBI to the overall 

responsibilities of the NSC, questions about the role of the White 

House, questions about whether the independence of the law enforcement 

function would be compromised. And while there were considerable 

discussions throughout President Clinton's term about trying to 

reconcile these differences, we were unable to reach an agreement that 

was comfortable on both sides and had the imprimatur of the broader 

support that would be needed, I think, to make those kinds of changes. 

 And this similarly is true with respect to aspects of the 

economic and domestic policy system which were not traditionally part 

of the NSC. And so I think that the basic model that you've described 

can work and can work very effectively. But we need to rethink what 

that community is and who ought to be part of it. And one of the 

reasons why I believe, along with Director Deutch, that we do want to 

separate the law enforcement in the domestic security function is that 

I think it is -- it will remain uncomfortable to bring the FBI in its 

law enforcement capacity under the NSC system, but it's imperative that 

we bring this domestic counterintelligence and counterterrorism 

function into that system and integrate it what we're doing. 
38

 So I think that's why I would favor basically returning the NSC 

to its traditional role but with a new concept of what national 

security is about. If that is the function -- and we understand the 

national security challenge to be different than the challenge of 

dealing with the Soviet Union or with foreign states -- then we want to 

think about the composition and the interaction among the agencies in a 

different way. 

 MR. LEHMAN: So how would we structure the role of a DNI or DCI 

along the lines you're recommending into that NSC structure? I mean, 

there always has been one National Security Advisor. Now, in effect, 

there would be two. How would you divide the functions of a DNI, a DCI 

and the NSC, the National Security Advisor, and, of course, I'm 

presuming that you're not recommending that a DCI enhanced or DNI be a 

member of a cabinet. 

 MR. STEINBERG: That's correct. I don't think there'd be two 

National Security Advisors, because I think that the DNI would still be 

providing intelligence input into a policy process. In effect, they're 

an advisor to the NSC system rather than a member of the NSC system. I 

think that I have, in my testimony, not wandered into the perilous 

grounds that John Deutch did about the relationship between the DNI and 

the Secretary of Defense, he knows it better than I do. I've certainly 

observed it and I think that both points that he made about some 

desirability and the points that you've made about the practicalities 

are both real. But what I think -- what the key issue now is for 

domestic security isn't this question about the role of either the DCI 

or the DNI over domestic intelligence collection and analysis, over 

which now he does not have appropriate authority. 

 So I don't see this as a significant change of the role of either 

of the DNI or the DCI in the NSC system, I do think it is an expansion 

of the role with respect to counterterrorism intelligence collection 

and analysis within the United States and vis-à-vis U.S. persons, where 

his responsibility will be functioning the same but will cover set of 

activities. 

 MR. LEHMAN: Thank you. There are people who believe that the 

greater blame in intelligence failures over 9/11 lies not necessarily 

with the intelligence community but with the lack of the proper 

prioritizing given by senior political decision makers, and this is 

part of a larger issue that's always been debated about should the 

policy maker take a much more active role in directing the priorities 

of what is to be collected, and direct the intelligence community to 

find a way to collect it rather than taking a more passive role and 

saying okay, tell me what's happening, giving no priorities as to what 

hypotheses should be collected against, and I think in the reading of 

recent post World War II history, that's a pretty strong case that the 

intelligence community has not been given the kinds of priorities of 

targeting and the hypotheses to collect against that would have made 

their focus and their collection and analysis much more effective. 

 In your time as Deputy National Security Advisor, was there an 

effective prioritizing of the assets or was it more driven by 

capabilities? We have these wonderful satellites that can count 

things, so let's count camps, and if we can't count camps then they 

don't exist sort of thing. Would you comment on that? 
39

 MR. STEINBERG: That's a very good question. I think during the 

time that I was in the White House, we began to move in a direction 

that increased the role of the policy, community and setting 

priorities. I don't remember the number of that PDD, but we instituted 

a process by which there was a formal involvement of the policy 

community in identifying collection and analysis priorities which was 

then fed into the Director's own tasking responsibilities. And I say, 

it was formal process that was led by the NSC and Directorate of 

Intelligence to, in effect, solicit from the policy agencies and to 

develop a ranking or categories of ranking of different levels of 

priority which would then -- to be turned into tasking. 

 I would say it was a step in the right direction but I do agree 

with you that the policy community is ultimately responsible for 

setting those priorities, that the Director can provide advice based on 

what the intelligence community sees as the threats, but the policy 

community is ultimately accountable for those allocation of resources 

and for protecting the national security. So what I think we need to 

do is to take that one step further, which is to make sure that that 

input, which the policy community now provides, is actually reflected 

in the decisions that are made by the tasking done by the DCI and the 

Secretary of Defense, and that there is a feedback loop in that so that 

those decisions are again reviewed in a timely and effective way to 

make sure that the policy community is not only having a chance to say 

in a front end what it thinks the priorities are, but really 

meaningfully engage with the results that come out of that process when 

those general priorities are translated into actual operational 

allocations of resources. 

 MR. LEHMAN: I have two more questions related. Jim Schlesinger 

earlier testified that much more important than moving around the 

blocks on the chart are recruiting and supporting the right kinds of 

people, and I'd like to get your views on what kind of people are we 

recruiting. And I'm more talking about analysis than the operational 

side. First, at the top, what kind of person should be the CIA 

Director? And then at the analytical level, are we recruiting -- I 

mean, Kissinger used to say that one of the problems with CIA analysis 

is the way they recruit people. They can have nothing in their past 

and hence can have nothing in their future. That's obviously not very 

fair. But the point of self-recruiting is true in any bureaucracy. 

You end up with the same round pebbles, smooth and edgeless, and so 

what they produce is smooth and edgeless. 

 And the related second question is how in that kind of a 

community and in the community you now want to centralize under a DNI 

do you keep diversity and competition of hypotheses and of 

interpretation? 

 MR. STEINBERG: On your first question, the leadership, it's hard 

to make a broad statement because you really depend on very uniquely 

qualified special individuals, and we've had a couple of them here 

today. I think what we've seen from both previous speakers is that 

individuals who've had experience both in the analytic world and the 

policy world I think tend to make good Directors of Central 

Intelligence, simply because they understand the policy process and how 

intelligence and information fits into it, but they need strong 
40

analytic backgrounds of their own so they're not simply translating the 

policymakers' process. And I think if you look at the history of 

recent directors, we've had a number of enormously talented people. 

 The more important question in terms of trying to figure out a 

process is the one that you've raised, which is who do we bring in? 

And I think I'd make a couple of points about that. First, we do need 

diversity. And while I believe that we need a Director of National 

Intelligence, I don't think we should get rid of all of the 

intelligence -- the components of the intelligence community. I served 

in INR at the beginning of the Clinton administration and have enormous 

respect both for the analysts there and for the fact that there is an 

intelligence component which is closely connected to the State 

Department, because I think it brings insights and perspective into the 

broader intelligence community that would be absent if it were really 

centralized, as had been proposed for a number of years, to have one 

intelligence community. And I think the same is true about DIA and 

other components, the service intelligence components and the like. So 

I'm not for creating a single entity to do the analysis. I think there 

should be somebody who's responsible overall for that. 

 The INR experience is instructive because one of the things that 

brings strength to the INR analysts is many of them have served as 

foreign service officers in foreign posts. And there's a tendency for 

exactly the reasons that you said in the core parts of the intelligence 

community, and particularly in the analytic part of the CIA to be leery 

of people who've ever been anywhere and who may have been part of those 

things. They want people who come in from university, who have strong 

educational backgrounds, but who can sort of make sure that there 

aren't any risks. And so what happens is that they tend to be very 

strong analytically trained but not a lot of experience in the world. 

And there is -- and then once they become part of the community, it's 

even harder to send them out because of fears of compromise and the 

like, and so they don't rotate out into the field. 

 And while there's clearly a place for strong academically trained 

individuals, I think we need to have a much more diverse sense of who 

we want to bring in, people from the business community who offer 

enormous insights into these problems, people from different walks of 

life, from religious communities and like missionary groups who've been 

abroad. And sometimes they won't be people you want to have full time 

on the intelligence community staff, but we need to have a much more 

diverse array of expertise. We need to let people in the analytic 

community get out into the world some. Let them serve with state and 

local governments if we're dealing with counterterrorism to see the 

perspective from the cop on the beat or the public health worker. 

 I think it's that sense of rather than having a very cabined off 

community that fits in with my broader sense of what the more 

decentralized, more open sense of what the intelligence community ought 

to consist of. 

MR. LEHMAN: Thank you. 

 MR. KEAN: Commissioner Roemer. 
41

 MR. ROEMER: Thank you, Mr. Chairman, and nice to see you again. 

And on behalf of the Commission, we all thank you for your valuable and 

very capable public service throughout the 1990s. 

 I want to ask, as somebody who was there, as somebody who was on 

the National Security Council during the 1990s, that there was an 

important event that the Joint Inquiry looked at and that we will 

certainly look at on this commission when, in December of 1998, the 

Director of Central Intelligence, George Tenet, issued a memorandum to 

senior CIA managers, the Deputy DCI and others, and he said this, and I 

quote. He said, "We must now enter a new phase in our effort against 

bin Laden. We are at war. I want no resources or people spared in 

this effort, either inside the CIA or the community." End quote. 

 Now, despite his exclamation there or his memorandums, the Joint 

Inquiry concluded that the intelligence community was not on a war 

footing prior to September 11th. Do you agree with that, and if not, 

why not? 

 MR. STEINBERG: I think you have to look at that period during 

the 1990s in an evolutionary way. I think that throughout the period 

there was a growing and growing sense of the urgency and the priority 

that needed to be given to the counterterrorism task, particularly the 

specific threat that al Qaeda represented. I cited in my testimony 

since statements from the President in the mid-1990s, I think there was 

a clear awareness of this being of growing importance, and certainly by 

the time of the bombings in August of 1998 on our embassies, about the 

absolute first priority. 

 And I can tell you, having had a chance to watch Mr. Berger close 

up, that this was by far and away, without even a shadow of a close 

second, his most dominant priority, as I said, growing throughout the 

1990s but certainly following the August 1998 bombings. It was the 

first thing he worried about every day and the last thing he worried 

about every night before he went home, which was never very often. 

And I think that the memorandum that you identified reflected the 

fact that particular in the CIA, which was dealing with what was most 

known about al Qaeda and its operations, that is its overseas 

activities, that at least what I saw, which is in the senior level of 

the CIA, a real appreciation of just how important and how urgent this 

was. 

 And, frankly, I think if you look at what took place in the 

period post-1998, and you obviously will have access to the details, 

and there are some that I can't go into in specifics here, there was an 

enormous amount of activity that led to significant disruptions of 

terrorist cells in a number of countries abroad, as I mentioned in my 

testimony the significant activity that took place in the run-up to the 

millennium, some of it from just outstanding casework by officers, some 

by alert border agents and all the kinds of things, the combination of 

both good work and good luck that you need to have in these things. 

 So I think there was clearly a movement in that direction and 

it's obviously, I think we would all say in retrospect that more could 

be done, that there were aspects of the community that resisted change, 

that there's enormous inertia. And I think that was a fundamental 
42

problem on the domestic side because it was simply outside the ambit of 

what we had in the authority over it. This was -- there was a very, 

very thick wall between the NSC process and the White House and 

domestic related activities that involved the Justice Department and 

the FBI. And for the reasons we discussed, there were good reasons for 

aspects of that, but it created a system that made it harder to 

integrate the overall effort. 

 MR. ROEMER: Given the fact that it was the DCI and it was a 

memorandum, a piece of paper. Given that former DCI Deutch said that 

he thought that responsibility should go to the National Security 

Council, in retrospect, should there have been something else coming, 

especially after 1998 and the embassy bombings? Should it have 

elevated to a different set of actors? Should it have been through a 

different set of policy directives? What might have changed this from, 

as you stated it, evolutionary status to a war footing? 

 MR. STEINBERG: Well, I think if you look at the activities of 

the NSC principals in the post-August 1998 period, you would see 

something that looked pretty much like a war footing. And particularly 

in the period in 1999, as we became concerned with the millennium, 

there were practically daily conversations by the NSC principals about 

this problem. And certainly in the fall of 1999 there were daily and 

sometimes multiple times a day meetings of the NSC principals about 

this. So I think at the highest levels there was a recognition that 

this was a challenge the likes of which we had not seen in a very long 

time. Because even during the height of the Cold War, this was not a 

kind of a tactical day-to-day crisis with the exception of periods like 

the Cuban Missile Crisis or the Berlin Crisis. 

 So people understood that. I think that the problems with 

changing the way the system as a whole worked, as opposed to what 

individual cabinet members and sort of principal deputies were doing 

was that we hadn't thoroughly taken apart the system. What we did was 

to create a focus at the NSC, both through the National Security 

Advisor and through the Director of Counterterrorism, who I think did 

an extraordinary job, and I think, as many of you know, I think Dick 

Clark was an enormous civil servant who provided a considerable amount 

of energy and drive into action to that. But I think that what is 

clear and clearly what I've advocated here is that we try to work it 

through an existing system. We made the changes in PDD 62, but we 

still relied on the lead agency concept and we still weren't able to 

deal with the two barriers that I talked about which is the divide 

between foreign and domestic and the divide between law enforcement and 

intelligence. 

 We had endless discussions with the FBI and the Justice 

Department about how to solve these problems. But without, I think, 

direction not only from the President, but also from Congress and from 

leading voices such as the Commission, I think that the public support 

for the kind of changes that are needed now is possible. But that's 

why we have to, I think, have the kind of leadership that you all can 

show in making that happen. 

 MR. ROEMER: Given what you learned in the National Security 

Council during the 1990s and given the fact that you said that you 

learned more and more, especially after the African bombings, 
43

especially after the Millennium threat, what specifically did you tell 

the Bush administration when they came into office about how to 

organize the National Security Council, so that it could respond 

quickly in a transition period to this imminent threat? 

 MR. STEINBERG: I can only speak for myself. I know that Mr. 

Berger had extensive conversations with him as well, but since I've 

also talked about this in some of my public writing since then, I think 

I can feel comfortable in saying, which is that I felt very strongly 

that the counterterrorism and the law enforcement intelligence 

connection needed to be brought explicitly into the NSC process. I 

wrote a short op-ed in the Washington Post in January of 2001, 

suggesting one model to do that because I think the theme that struck 

me most clearly was the fact that we were very much hampered by this 

divide and that this was something that the NSC had to get a hold of, 

that we could not simply allow that piece of what is crucial for our 

security to be held at arm's length from the most effective process of 

integrating these functions. 

 And then I thought that, while the President would need to have 

independent advice from the agencies, there needed to be a stronger 

role for the NSC to integrate all of those aspects. It goes beyond the 

law enforcement intelligence function. I also felt there was a need to 

integrate better the economic and political security side of our work 

because we're moving in a seamless world, where these lines that we 

built up over the years that have been mirrored in the bureaucratic 

institutions that we've created simply don't correspond to what we now 

have to deal with and that in order to have accountability for these 

things, we needed to have a place in which all these pieces came 

together rather than through separate stovepipes up to the President 

who, obviously, ultimately has all the accountability but who can't 

really manage it unless he has got a process that can help integrate 

these things better. 

 MR. ROEMER: And finally, Mr. Steinberg, you've been very 

helpful. When I was on the Joint Inquiry, we expressed our concern 

about getting access to the Presidential Decision Briefs. I think they 

are important for two reasons, one because not only do they inform the 

President about -- and other policymakers about what intelligence 

they've gathered from different kinds of sources and methods about what 

the threat might be but maybe even more importantly, how a certain 

group of people in the bureaucracy and the organization are able to put 

information together to inform and advise and warn policymakers. So 

it's very, very important, I think, as informative to policymakers, 

informative about the bureaucracy. What do you feel about PDBs? 

 MR. STEINBERG: There's certainly a very strong reason why, 

first, the dissemination of the PDB is very small and that the 

President and the executive branch has been very reluctant to share 

that more broadly. And I think that's appropriate. I think it is an 

important fact itself as to what the President and his advisers are 

focusing on in addition to the fact that, as you well know, some of the 

most sensitive information available to advisors is in that in ways 

that's just not available in almost any other intelligence product. 

 MR. ROEMER: Including the SEIBs? 
44

 MR. STEINBERG: Including the SEIBs. Absolutely. I do believe 

in the unique case that you are facing here when we really need to 

think about this process. We are being asked to make such core and 

critical decisions about the future of the way we do business to deal 

with this new threat that it is appropriate for the Commission to have 

access to this. But I take that on the basis that the Commission will 

treat it as a very special exercise and one in which -- with the 

sensitivity to why it is, as a general matter, that the PDB should not 

be generally available, because I think otherwise we would just 

undercut the PDB as the instrument that it needs to be of dealing with 

the way the President and his barely most senior advisors learn about 

the things that are most important to their job. 

 MR. ROEMER: Thank you. Thank you, Mr. Chairman. 

 MR. KEAN: Commissioner Gorelick. 

 MS. GORELICK: Thank you very much, Mr. Chairman. 

 Thank you, Mr. Steinberg, for being here and for your very 

helpful testimony. I would like to follow up very briefly on 

Commissioner Lehman's questions to you about priority setting and 

Commissioner Roemer's question to you about the operational role of the 

National Security Council. 

 You had -- it was PDD-35 -- the PDD-35 process, the ability to 

set priorities across the government for the collection of 

intelligence. But, as you just described with regard to the 

millennium, when you had warning that something was going to occur or 

might occur, the NSC had the ability to surge, to bring everyone to the 

table many times a week, often many times a day to break through the 

barriers among the different agencies, including the big barrier that 

you have alluded to, the barrier between domestic and foreign 

intelligence. 

So this is my question to you. Absent the kind of structural 

reform that you have suggested and others have suggested where you 

literally tear down the wall between domestic and foreign collection 

and put someone in control of both, what is the role of the National 

Security Council in breaking through those barriers in a period of 

heightened warning as we had when Director Tenet made his statements in 

February of '01 that we're in a crisis period and need to be at our 

most wary? What is the proper role of the National Security Council in 

those circumstances? 

 MR. STEINBERG: To think about it, you have to think about the 

two different roles that the NSC generally plays, which is, one, their 

overall policy coordination and policy setting process and the other, 

what I could call a crisis management function. Both of them are 

critical but they've very different. The policy-making process is a 

deliberative process. It tries to set long-term goals and priorities. 

It tries to look at how you meld the different claims on time and 

resources and tries to think forward in a pro-active way about what 

needs to be done. It brings everybody to the table but the debates are 

important and they provide guidance for the decisions that agencies are 

going to make and to reconcile conflicting claims. 
45

 But, inevitably, those things don't touch on the operational side 

and for the day-to-day operations, we do rely on the agencies. One of 

the reasons why, I think, where we are now, I believe we should 

strengthen the role of the Secretary of DHS is because I think for many 

of the day-to-day responsibilities of Homeland Security, it would be 

important to have a Cabinet level operation official who is accountable 

and responsible for this set of activities and that responsibility 

should not reside at the NSC. 

 However, for crisis management -- and this is as true for dealing 

with crises abroad as it is with this particular crisis -- there are 

times in which you need to accelerate and intensify the focus of actors 

around the problem that requires high-level decisions and doing not 

business as usual, however good the business as usual is and business 

as usual can be quite good. I'm not meaning to disparage it. And 

there is a function there in which the NSC process continues to focus 

attention and make sure that timely information is brought to the 

table, decisions are being made in a timely way and there is an ability 

to review the way those decisions are being implemented. 

 But just as though we've talked about this as being a war, this 

is not an acute war. It has acute phases where we have particular 

heightened periods of warning. But it is simply unsustainable to think 

that we're going to solve the problem by having NSC principals meet 

every day to deal with this challenge. There are other things they 

have to do. We need to build a system that can embody as part of its 

business as usual a better way of handling this, understanding that in 

periods of crisis, we're going to have to surge and use this mechanism 

of crisis management in the NSC to deal with these extremely heightened 

periods. 

 MS. GORELICK: So if you were still Deputy National Security 

Advisor, I take it your advice on structure within the White House, 

obviously acknowledging that the structure within the White House is 

the prerogative of any individual president and has to mirror the way 

that person and his key advisers feel comfortable operating, but you 

would bring within the ambit of the National Security Council the 

Department of Homeland Security and the domestic intelligence 

capacities of the FBI, whether it's as the FBI or as some new entity. 

And I take it you would not then have a competing additional Homeland 

Security Council. Is that correct? 

 MR. STEINBERG: And I think the problem right now is we've ended 

up with what is arguably the worst of both worlds, which is -- I think 

it was possible to say at the beginning that we're going to have a very 

strong Homeland Security Council and a homeland security advisor who 

has the same role, clout, responsibilities that the national security 

advisor did. There'd be problems about the foreign and domestic scene, 

but you'd at least have a strong and dynamic process. 

 Under those circumstances you would not have a strong Secretary 

of Homeland Security. Alternatively, we could have a strong Secretary 

of Homeland Security who has large responsibilities for all the 

domestic functions, both within his agency and the broader domestic 

community, and then the NSC to bridge that gap. I think given the fact 

we've now created DHS, that latter model is the better model. It 

allows some of the domestic functions which the NSC is not particularly 
46

connected to, particularly the FEMA-type connections, not to be 

something that the NSC has to worry about day-to-day, but allows us to 

both get the strength of an executive agency with implementation 

capability in a strong Secretary of Homeland Security. And the 

coordination across the foreign and domestic scene to the NSC with the 

deputy as exists now and is very capably by Fran Townsend, who has a 

full time responsibility for this job. 

 MS. GORELICK: Thank you for those clear and incisive answers. 

 MR. KEAN: Senator Gorton. 

 MR. GORTON: On the seventh page of your written testimony, Jim, 

I think in one paragraph you summarize as cogently as I've ever seen it 

the case against combining law enforcement with these preventive 

activities in the FBI, and in that, of course, you have many allies, at 

least outside of the FBI and the Department of Justice. But you go on 

to say with further reasons as you outline that a separate domestic 

security organization is needed for prevention. And then say that they 

are three possibilities for that agency. 

 In Justice but separated from the FBI, in the Department of 

Homeland Security or as an independent agency. Unless that latter is 

an awfully broad definition, aren't there more than three? Is it not 

at least conceivably possible, and I'd like your critique on it, to 

simply merge this function with the present CIA, or to do what John 

Deutch recommended, to have both the CIA and this domestic entity under 

a DCI, which from -- I think that's sort of a modest DNI, it isn't as 

broad as your recommendations on it, these backed off from that. 

 And wouldn't either of those be a superior response or way to 

respond to this because of this divorce, this present divorce between 

domestic intelligence and intelligence coming from overseas? 

 MR. STEINBERG: Maybe I wasn't clear enough in my written 

testimony. When I talk about an independent agency I had in mind 

reporting to the DNI. I mean, not as something separate from the 

entire system. I meant independent only that it would not be in any 

cabinet level agency. And so I completely agree with you. 

 MR. GORTON: Let's say, you know, this DNI idea has been around 

for years and the political objections to it from -- or at least the 

policy objections to it from Secretaries of Defense have always 

prevented it from being seriously considered. Even if we regarded a 

DNI as the ideal solution, my backup question to John Deutch, would it 

not be an improvement to have it married more closely somehow or other 

with the CIA, even if we don't have an overall DNI? 

 MR. STEINBERG: Absolutely. I completely agree with that. The 

only thing I would be careful about is I would not want to see this 

merged with the DO. I mean, I think that there is -- Justice, there is 

an MI5 and an MI6, it's a slightly different model because it reports 

to the Home Secretary. I would not want the -- I think it's important 

that the DO have its distinct functions from what this domestic 

intelligence service would be doing, and particularly in the collection 

function. 
47

 But I have no problem in saying that the model that you've 

suggested, because the very fact of giving the DCI that authority 

creates a mini DNI, in my view. I mean, it creates a broader spectrum 

of integration over the whole counterterrorism function, and the 

prevention function to the DCI. So whether we change the name or not, 

I think we've accomplished an important part of what needs to be done 

through the model that you've described. 

 MR. GORTON: Thank you, and thank you for a remarkable analysis. 

 MR. KEAN: Commissioner Ben-Veniste. 

 MR. BEN-VENISTE: Good afternoon, almost, Mr. Steinberg. And 

thank you for coming, it's good to see you again. I would like to turn 

from the theoretical to the historical, as you have ample experience in 

both of those areas. Secretary Schlesinger today testified that, and I 

think it's consistent with the general public perception, that there 

was an insufficient sense of urgency in the intelligence community 

prior to 9/11 about the terrorist threat, and particularly the 

potential for a domestic event. 

 That seems contrary to the testimony which you have given here 

today, which indicates that there were frequent conversations at the 

highest level within the intelligence community about terrorist 

threats, and so can you explain whether there was some sort of 

disconnect once there was a change in administrations, or was there a 

communication of the sense of urgency which you have testified about as 

our administrations transitioned from one to the other? 

 MR. STEINBERG: I think one of the hardest things to do from 

somebody who has been inside and now is outside is to pretend that we 

know what was going on in the administration that you're not serving. 

And so I'm very reluctant to make a judgment about what has been going 

on within the current Administration. I think we all rely on second 

and third-hand accounts, and I think we need to hear -- and I would 

certainly be uncomfortable with making judgments until I heard more 

from the current administration itself. 

 I want to go back to my main point, though, which is that I think 

that one of the problems, again, nobody disputes that one can always do 

more and in retrospect, post 9/11, there are things that one could say 

should have been done, indisputably that's true. But I want to convey 

the sense that there was a profound sense about the change in the 

nature of the world and that the absolute priority that the 

counterterrorism mission and particularly the al Qaeda threat 

represented. 

 I think one of the problems is that we could see at the NSC, a 

lot about what the CIA was doing. We got briefed all the time, we had 

access to learning about what their activities were both on the DO and 

the DI side. We had no transparency vis-à-vis the domestic side. 

There was a wall, and it was, as Ms. Gorelick said, the curtain was 

slightly raised during the millennium, when the rules were kind of 

bent, but for the most part that was not true. And so it's very hard 

for me to make a judgment, frankly, about how well things were being 

done on that side, because we didn't have oversight and were not 

thought appropriately to have oversight over that part of the process. 
48

 And I think that what we have learned from that is the need to 

establish accountability somewhere in the system so that when you say, 

well, was enough urgency given, were enough priority, you can say, 

here's where the responsibility lies. And I think that there are two 

dimensions to that. Where is the responsibility on the intelligence 

collection and analysis side, and where is it on the policy side? And 

I think the American people are entitled to know that short of the 

President, who do we look to for these things? 

 And we must structure ourselves in a way that creates the 

incentives, where somebody has their authority and their accountability 

match up, and you can say, yes, they had the ability to make the 

decisions, and if they didn't make them then they're accountable, and 

if they did then they deserve the credit for what was done. 

 MR. BEN-VENISTE: Perhaps I was imprecise in my question. Let me 

go about it in a more direct way. You indicate that there was a high 

sense of urgency in your administration, particularly as you got to the 

millennium, with respect to the terrorist threat. It was, as you have 

said, the number one priority of the National Security Council. My 

question is whether that sense of urgency was communicated to the 

incoming administration. 

 MR. STEINBERG: I think undoubtedly yes. I mean, indisputably 

yes. That is, it was -- you could not have been sitting where we were 

sitting and spending our day-to-day and trying to describe to our 

successors about what we were doing day-to-day and not have that be the 

priority, because it was in fact what we were doing and it was 

transformative in terms of the way we did business, the focus that we 

had, and the activities that were the preoccupation of the most senior 

people not only in the NSC but in all senior levels. 

 MR. BEN-VENISTE: Thank you. 

 MR. KEAN: Mr. Steinberg, thank you very much for your articulate 

testimony. We appreciate it very much, it's been extraordinarily 

helpful. We will take a break now, I would remind commission members 

we have a very important meeting now so if you have any business to do, 

personal or otherwise, if you could do it as fast as possible and join 

in the back for our meeting. Thank you very much. We'll reconvene at 

as close to 1:00 as we can. 

 (Recess.) 

 MR. KEAN: Okay. I'll call the hearing back to order and I want 

to apologize to the witnesses and to those of you here. We're way 

behind schedule and it was because we had some extraordinarily 

important committee business, something that has come up very recently, 

in fact, today. But I thank you for your patience and the panel is on 

the topic of warning. Should we change the way the government prepares 

and issues warnings of terrorist attacks? We've asked three witnesses 

with long experience in the intelligence community to address that 

particular questions. Mr. Richard Kerr, former Deputy Director of 

Central Intelligence, Dr. Mary McCarthy, visiting fellow at the Center 

for Strategic International Studies and former National Intelligence 

Officer for Warning, and Mr. John Gannon, Staff Director, House Select 
49

Committee on Homeland Security, and former Chair of the National 

Intelligence Council and Assistant Director of Central Intelligence for 

Analysis and Production. 

 We will hear the panelists' views on questions such as what are 

the essential methods or principles for analyzing and preparing 

warnings of surprise attack. Were they properly applied before 9/11? 

What is right and what is wrong with our current system of warning? 

What needs to be done to improve our ability as a government to provide 

better warning of catastrophic terrorist attack? Your prepared 

statements already are being entered into the record, and I think, Mr. 

Kerr, if you would begin. 

MR. RICHARD KERR: You want to change the order? 

MR. KEAN: That's fine with us. 

 MR. RICHARD KERR: Well, thank you. I appreciate your inviting 

me. It's a very important subject to address and I thought I would -- 

I have one important thing that I need to say at the beginning, just 

for full disclosure. I about a month and a half ago, two months ago, 

was asked by the Director of Central Intelligence to review the 

organizations in the intelligence community responsible for 

counterterrorism, which included the CTC, Counter Terrorism Center, and 

the new Threat Integration Center. And that report was due on the 15th 

of October, and we will provide it to the Director tomorrow -- we need 

our deadline -- but because of that, and because of the fact that he 

has not seen that report yet, I'm a little reluctant obviously to talk 

about the details of it, but still are quite willing to talk about the 

larger issues and the issues surrounding it. 

 On Warning, I was in the analytic business and involved what I 

thought was the warning business for something like 35, 40 years now at 

this point in time. And I tended to think of Warning as an integral 

process to the fundamental intelligence process, not as an offline 

business. The main objective, it seemed to me, in warning and looking 

at the threat was to look for -- understand first of all, country 

problems and issues that extended beyond countries' trans-national 

issues -- but try to identify the key threats and fundamentally to look 

at discontinuity. Trying to understand what might change that would 

make a significant difference, or have a dramatic impact. 

 Intelligence is quite honestly very good at continuity, as most 

of us are. Things usually happen the way we think they're going to 

happen. Events turn out the way we -- nine times out of 10 the way 

they have turned out in the past. It's that small amount that turn out 

differently, the discontinuity that becomes incredibly important and 

those tend to constitute the failures, if you will, in intelligence or 

policy or in the full dimension of national policy. 

 Warning in my view -- I spend a lot of my life, as I said, 

working on intelligence and working on warning, but warning that was 

relatively static. It was strategic warning on the Soviet Union. It 

was looking for large changes in military capabilities. It was looking 

for changes in emphasis, changes in different strategy. But it was 

strategic. It was while there was current intelligence and short-term 
50

threat analysis. It tended to be the minor part of that larger Cold 

War kind of intelligence that I was involved in. 

 Clearly terrorism brings to the problem, as do some other areas 

like weapons of mass destruction, an immediacy -- not only a strategic 

problem but an immediate tactical problem. It seems to me both 

require, as did the larger problems in the past, the same fundamental 

things. They require first of all clear understanding of the problem. 

They involve a good deal of research and in-depth analysis. Before you 

can put pieces and make sense out of them, you need context. You need 

to have some place to put them. 

 There is a premium I think in this area of terrorism and 

counterterrorism, a premium on structuring information. One of the 

most difficult problems is to identify the problem. My experience in 

intelligence is the areas where I've made mistakes, and I can tell you 

I've made enough of them on my own or with others -- the help of 

others. The problem was not so much in many cases that we did not have 

information; the problem was that we did not understand the appropriate 

question to address, and therefore missed a key element. 

 I think that one point I would make here today is that I think 

it's terribly important for a commission like this, and I think you 

probably do at this stage, but it's terribly important for the American 

people to understand the limitations of intelligence. It is not an 

all-seeing, all-knowing organization. We had that impression for a 

number of years, an omnipotence, that was useful in some cases, but it 

is no longer a useful label to have on it. We deal with uncertainty, 

we deal with fragmentary information, we deal with supposition. We do 

not often have a full array of information. It's terribly important to 

understand that. 

 I was talking to a reporter the other day who was saying, "Well, 

you could do a lot better. You're paid to do a lot better." And my 

reaction to that was, "Tell me who's going to be the Democratic nominee 

in 2004. Tell me who it is? You have perfect information. You have 

polls, you can talk to all the people, you have history with you." It 

should be an easy problem, right? Well, then try to deal with Saddam 

Hussein who protects his information, who's 3,000 miles away in a 

culture we don't fully understand. I mean, there is I think too much 

of a view that says that this is a kind of all-knowing complete 

understanding that intelligence has. 

 In fact, in my view we're doing rather well in the foreign 

intelligence area and in some other areas. In my view we will have 

another terrorist attack and it will be a successful attack, and that 

attack will show another intelligence, if you will, failure. More than 

likely it will show an inability to get the right information in the 

right place, in the right hands, with the right understanding of the 

problem. And that is the challenge of the counterintelligence elements 

today. 

 One last statement. I would say that if I were in 9/11 -- prior 

to 9/11 if I came to -- if I was the Deputy Director for Central 

Intelligence and I came to the Hill and I said I wanted to increase -- 

"I've identified a strategic threat," and there had clearly been a 

strategic threat identified prior to 9/11. "I have identified a 
51

strategic threat and I want to increase my budget five or six or seven 

times. I want to put billions of dollars into it. I want to increase 

my manpower by the hundreds." I'm sure the reception I would have 

gotten from my own comptroller, from the organizations within my own 

organization, from the Congress, from the executive, from OMB would 

have said, "Wait a minute. Wait a minute. We know this is a threat, 

but that is a rather -- an overreaction to a problem." And I think 

that's important to put that in some context. We have increased 

significantly -- it would have been very interesting to look back, and 

maybe you've done that, at what the budget requests were prior to 9/11 

and how those were responded to. How comptrollers and budget people 

deal with new ideas, with radical significant increases. Usually not 

favorable because somebody loses in that process. It's not just a full 

gain. Let me stop there and look forward to your questions in our 

exchange. 

 MR. KEAN: Okay, thank you. 

 Ms. McCarthy, you may. 

 MS. MARY O. McCARTHY: Okay, thank you. I don't have this on. 

Is it on now? No. Well, Mr. Chairman and commissioners, it's my honor 

to be here today. As you know, I have been a CIA officer for almost 20 

years and have held positions in the intelligence community as a 

national intelligence officer for warning, amongst other things, and in 

the policy world on the National Security Council staff in two 

administrations. I'm here today to share with you some of what I 

learned about intelligence warning in the course of that experience, 

and from my own research and teaching. Thus, the views I express here 

will be my own and as a current CIA employee, I'll have to say they are 

not necessarily those of the Central Intelligence Agency. 

 First, I'd like to say briefly what I mean when I talk about 

warning. I am talking about more than just sound an alarm to say that 

a bad thing is nigh. I am, rather, talking about warning analysis as a 

process by which analysts identify threats, develop or imagine possible 

outcomes than explore the relevant data and demand relevant data that 

are not at hand, and they keep the decision makers informed. The idea 

is to be able to provide these decision makers with a series of 

assessments or warnings of increasing precision regarding the 

likelihood and proximity of the unwelcome event. 

 Such a system of warning analysis must also entail an ensured 

flow of information across agencies, and more and more today to 

different levels of government. And it also must have a reliable 

access to the information by means of integrated information 

technology. There is no question that analysis of and collection on 

the so-called transnational threats, such as terrorism and 

proliferation, have made the warning job more complicated. The 

mobility and the small footprint of the terrorist groups, for example, 

present greater challenges to intelligence analysts and collectors than 

does the job of following large armies, or even traditional 

insurgencies, whose range of activities is more clearly understood. 

But it is still possible, indeed necessary, to apply the same system of 

meticulous conceptualizing, sorting of data and vigorous dialogue with 

collectors that form the basis of sound analysis. 
52

 Secondly, it is crucially important that this strategic warning 

analysis be conducted as a separate activity from that which produces 

the daily analytic reports and threat lists, and where the pace of work 

simply does not permit reflection, research or exploration of 

alternative hypotheses. But that near-term analysis or tactical effort 

is strengthened by the strategic analysis, which provides context for 

fast breaking events and because the process identifies the most 

dangerous intelligence gaps and stimulates collection, the likelihood 

that the relevant helpful intelligence for interdiction in disruption 

efforts, for example, will have been collected. 

 Also, it is important to recognize that we are mere human beings 

who are doing this work. What we need to do is develop systems that 

will help us do the work better, while minimizing the known human 

propensities for error. In my written testimony for the record I 

recount in some detail the history of intelligence warning failures 

since World War II. Previous reviews of those events by Congress and 

by the intelligence community itself have recommended that a national 

intelligence officer for warning be created or strengthened or 

empowered to provide advice to the Director of Central Intelligence and 

to be the substantive leader on the discipline of warning intelligence. 

 The one thing that I would like to underscore in my testimony 

today is that having such an individual is not sufficient. Rather, it 

is a system that is needed with expert analysts in each analytic area 

dedicated to the task of big picture analysis and the exploration of 

alternative hypotheses. And finally the Congress, with its budget and 

oversight authorities, has a role here as well. There is much that 

Congress can do to encourage the necessary reforms and establishing 

ongoing review mechanisms to ensure that these reforms endure. 

Thank you, Mr. Chairman. 

 MR. KEAN: Thank you. 

 Mr. Gannon. 

 MR. JOHN GANNON: Thank you, Mr. Chairman. Mr. Chairman, in -- 

am I on? Okay. Mr. Chairman, in my written statement I argued that 

warning in my view is a subset of the rigor and discipline that should 

be characteristic of all intelligence community analysis. And while 

the administration and the general public may be disappointed to find 

out what we don't know, they should not be disappointed in the rigor 

that we apply to the analysis that we do on what we know and what we 

don't know. 

 What I argued for in my written testimony was greater emphasis on 

interagency training and interagency approaches to raise the standards 

with regard to warning and analytic trade path overall. There is a 

clear need to achieve connectivity among the analytic programs as 

electric connectivity and also collaborative technologies across those 

programs so that you can have the analytic programs work together, 

including on warning issues. Outreach. That is, recognition by all 

the intelligence producers that information we need to deal with the 

complex set of issues that are before us. The expertise and a lot of 

the information now resides outside the intelligence community is not 

going to be picked up in traditional collection systems and we have to 
53

have ways of getting that information and to some degree our analysts 

have to be out there to get it. 

 I also stress the importance of accountable leadership in any of 

the changes that we make, and also the -- in my experience in the 

intelligence community, particularly in the last six years when I was 

Deputy Director for Intelligence and then moved on to -- at CIA, and 

then moved on to intelligence community jobs, I saw what I thought was 

a very discouraging lack of a capability on the part of Congress and of 

the DCI really to evaluate programs across the agencies, in a way that 

he and then the Congress could really make judgments in the budgetary 

tradeoffs that they are responsible for. 

 With those recommendations, I wanted to just use the remainder of 

my five minutes to say that it's easy to make these kinds of 

recommendations. You've heard them before. The question is how do you 

implement them? How do you get there from here? And in my experience 

of being involved in a number of commission studies, that was the 

essential problem. Sometimes very erudite, wise observations made 

about the community, but no direction on how you get to where the 

commissioners want to be from where we were in the intelligence 

community. And as a result, I think very often very little was 

actually implemented out of some very good work that was done in 

evaluating our performance. 

 I believe that intelligence community reform should not be seen 

as an exercise in major surgery. I believe there are a lot of smaller 

things, bite-size things that can be done that will I think help move 

us in a constructive direction. I would strongly argue that the 

analytic community is ripe for reform in ways that I think can be done. 

It can be done reasonably cheaply and I think with very positive effect 

on improving the quality of analysis and the discipline that goes into 

it. I also think that at times the community is burdened with the 

notion that intelligence community reform is a zero sum gain: either 

we do it all or we don't do any. I think we should remove that notion 

and identify those areas where we really can make progress and then 

proceed with the reform. Any reform needs to -- I think with regard to 

analysis, does need to be interagency in its scope, given the issues 

that we're covering today, and the interdependence of the community 

both technologically and with regard to the threat environment that we 

face. I think there needs to be accountability built in for the 

initiatives that we adopt. There needs to be sustained -- 

sustainability. 

 I presented to you, in addition to my written statement, a copy 

of the strategic investment plan that was produced by the analytic 

community of the intelligence community back in 2000/2001, and I cite 

this just as an example -- or a case study of how well the community 

can do when it is brought together. But also I wanted to bring it to 

your attention as something that I believe is not sustainable unless we 

approach these kinds of challenges in a more structured way. 

 The strategic investment plan looked out 10 years and we had the 

11 agencies who produce analysis working together over a period of two 

years on this plan. And I believe what they said about the threat, if 

you skim it, it was right and I think the intelligence community needs 

to be given a lot more credit than it is given on understanding the 
54

complexity of the integrated threat environment that we were facing in 

the late '90s and up to 2001. 

It prioritized across those programs strategic goals for 

interagency training, which all the members thought and all the program 

managers thought was important. Having accessible interoperable 

databases, developing connectivity and a collaborative work 

environment, and a system that would enable us to prioritize not only 

the analytic issues that we're working on on a continuing basis, but 

collection. Having analysis much more involved in assisting collectors 

to understand priorities in a more complex world. 

 It also looked at outside expertise and how we could in our 

various programs avail ourselves more of the expertise that was out 

there. And also an open source strategy, which I believe the 

intelligence community really has not been able to achieve to the 

degree that it needs to, given the importance of open source 

information. I would say -- or would tell you also that I was Chairman 

of the National Intelligence Council at this time and we did a project 

called Global Trends 2015, which was an effort to show the intelligence 

community how engaging with outside experts could be done to enhance 

our understanding of the future and to improve our ability to 

prioritize. 

 The strategic investment plan also said very clearly that we need 

to expand the mandate of the intelligence community and warning 

organization to include a leading role for it in competitive and 

alternative analysis. That is, bringing technology to bear on the 

rigor that we apply to our analysis. It also recommended, just for 

your interest, the consideration of an intelligence community fusion 

center, recognizing that we needed to have a better capability to fuse 

data to integrate foreign and domestic analysis and so forth. 

 So let me just say in conclusion that there are pluses and 

minuses to this experience. I think the experience of the strategic 

investment plan showed that there is tremendous collaborative potential 

in the analytic community, and this was a part of the wisdom of 

Congress in establishing the Assistant Director for Analysis and 

Production and collection positions in the first place. Data was 

shared. A predecessor's study to the investment plan was actually an 

effort to understand how many analysts we have in the community, what 

their capabilities are, what their shortfalls are, what they're working 

on, what their priorities are. And while there was great resistance 

initially, the programs shared data and we were able to make some basic 

findings about the community before we moved into the strategic 

investment plan. 

 This was never an attempt to unify the budgets. Legally we 

couldn't do that. But it was an effort to show what the various 

programs are investing in and whether it was consistent with what we 

had identified as the objectives for analysis. And that -- I did 

participate with the Defense Intelligence Agency, for example, on their 

budget planning process, and I think it was a very constructive 

exercise. What this was about -- it was also not about consolidating 

programs. I think the analytic programs recognized that they are 

dedicated -- their analysts are dedicated to very specific and 

defensible missions, either operational, collection or whatever, and we 
55

did not want to homogenize the effort. What we wanted to do was 

understand the differences, but find common ground for sensible 

strategic planning. What are the common needs and language training 

and understanding collection management and so forth. 

 My point to you finally is that this kind of exercise, however 

much work went into it, I don't believe is sustainable in the 

intelligence community the way it is now structured. I think the 

ADCIAP, the Assistant Director for Analysis Production for Collection, 

and actually the Deputy Director for Community Management, those 

positions were established by Congress but they were put in a staff, a 

community management staff. And I believe two things. If you really 

want these programs to be sustained in the kind of modest reform that 

I'm talking about, I think you have to do one of two things. They have 

to be given a program status within the intelligence community, or 

preferably in my judgment, they really have to be put into the resource 

base on top of which the Director of Central Intelligence sits, and 

that means CIA. 

 I think the -- if you want to sustain efforts, really build 

structure and resources around these initiatives, the DCI does have to 

be in charge and I think what this calls for is a return of Central 

Intelligence to CIA in the way that I think Walter Bedell Smith, the 

original director of Central Intelligence, envisioned it. I'll stop 

there. 

 MR. KEAN: Thank you very much, Mr. Gannon. The two lead 

commissioner questions will be by Senator Cleland and then Governor 

Thompson. Other commissioners will follow with questions after they've 

completed their questions. 

 Senator Cleland. 

 MR. CLELAND: Thank you very much, Mr. Chairman. 

 Mr. Gannon, you said that Walter Bedell Smith was the first 

Director of the CIA, wasn't he Eisenhower's Chief of Staff? 

 MR. GANNON: Yes, he was, sir, yeah. 

 MR. CLELAND: So there was a sense in 1947, after World War II 

and after Pearl Harbor and after four commissions looked at Pearl 

Harbor and looked at all of that, that there was a need for 

centralizing intelligence, where you had somebody like Eisenhower's 

chief of staff in effect pull it all together. Is that your reading of 

that period of time? 

 MR. GANNON: It is. I think what we was trying to do was a 

coordination function. 

 MR. CLELAND: Coordination? 

 MR. GANNON: Yes. 

 MR. CLELAND: Then we move to now, where the most recent book on 

9/11 called, "1,000 Years For Revenge" by a guy named Peter Lance says, 

"The mass murders of September the 11th were the culmination of a plot 
56

that had been in the works for seven years. The pathology that spawned 

it had begun to infect our country another five years before that. 

Twelve years. That's how far back I followed the trail to 9/11." 

That's the author here. "With all the dots on that line, why couldn't 

our government see it coming?" 

 He refers to 9/11 as the greatest failure of intelligence since 

the Trojan Horse. That might be a little bit exaggerated. In the 

sense that Pearl Harbor was looked upon as a tragic failure of 

intelligence as well. My question to each of you, starting with Mr. 

Gannon, is two-fold. Who is responsible for warning this country of an 

attack on this nation, and who's accountable? 

 Mr. Gannon? 

 MR. GANNON: Well, I believe the President of the United States 

is responsible for warning in that context, because he's not only 

dealing with intelligence but all the resources of the government and 

his responsibility for them. But I also believe that his major 

intelligence advisor should be and must be the Director of Central 

Intelligence, as a single focus on a warning. 

 MR. CLELAND: Ms. McCarthy? 

 MS. McCARTHY: Yes, I agree with John. The President is 

ultimately responsible and the Director of Central Intelligence must 

have the apparatus to be able to provide those warnings to the 

President. As far as who is accountable, I think that's what the 

Commission is discovering, and hopefully what we will discover is that 

our systems were not adequate. I'm not talking about technical 

systems, I'm talking about our organizational systems, were not 

correctly configured to address these kinds of threats. And the 

systems that we had in place during the early Cold War period at least 

that developed the warning mechanisms had more or less atrophied, so 

that our direction was a little bit different. 

 Now, whether or not there are individuals in individual positions 

that were accountable, I leave it to the Commission to determine. 

 MR. CLELAND: Well, I actually asked you who was responsible for 

warning who? I didn't say systems, which systems or which agency, I 

deliberately asked the question, who is responsible for warning this 

country of an attack on itself, and who is accountable? I'm not 

pulling your chain here, I'm trying to make a point here. Are you 

saying systems are accountable? 

 MS. McCARTHY: No, I'm saying that -- 

 MR. CLELAND: Mr. Gannon says the President of the United States 

is accountable and then the CIA Director, or DCI, is responsible. 

 MS. McCARTHY: Yes, Senator, I was saying that the systems were 

faulty, therefore they may be in part responsible, not accountable. I 

think accountability is a person, ultimately, but I'm not in a position 

to make that judgment. 
57

 MR. CLELAND: Well, after Pearl Harbor, two people were relieved 

of their jobs. The Naval commander at Pearl Harbor and the Army 

commander at Pearl Harbor. No one has lost their job, no one has been 

held accountable, no one has been fired for 9/11. I'll just throw that 

out. My whole point here is in this whole section on warning of 

transnational threats and this whole warning system concept, I thought 

that's what the defense system and the CIA and the intelligence 

community did. 

 See, that's been my point. I sat six years on the Senate Armed 

Services Committee, and I was always told about the intelligence 

community. But when I looked into it, the intelligence community was 

more than a dozen different agencies, stove-piped into a dozen 

different budgets, 12 different systems that were responsible or 

accountable to six different cabinet level secretaries. So my point is 

that if the community is responsible, then nobody's responsible. See, 

that's the whole point. 

 And shouldn't we have a centralized point of warning and 

accountability? Others have testified today about that need. Do you 

have a point to make about that? A real head of the intelligence 

community, call it the National Director of Intelligence, Director of 

Central Intelligence, empowered with budgets and authority. Do you 

have an opinion about that? 

 MS. McCARTHY: I absolutely agree. I mean, what you have laid 

out, Senator, I think is necessary. 

 MR. CLELAND: Mr. Kerr? 

 MR. KERR: Well -- 

 MR. CLELAND: Who's responsible, who is for warning this country, 

and who's accountable? 

 MR. KERR: Well, I would agree with John in terms of presidential 

accountability. It does seem to me that the Director of Central 

Intelligence has a very clear charter as the principal foreign 

intelligence advisor to the President. So certainly in that area. 

Now, to hold the Director of Central Intelligence responsible for 

information in the domestic arena, at least prior to 9/11, I think is a 

mistake. I don't think that's a -- that is not in his area of 

responsibility. 

 I do tend to -- you referred to Pearl Harbor. I think both of 

those were -- both of the ones court-martialed, as you mentioned, were 

wrong, in fact. And in history, in hindsight, we had strategic warning 

that Japan was a real immediate threat, strategic warning. So one can 

go back much further than those two officers, I think, and find 

responsibility. To try to find a focus of holding a person responsible 

or a single organization responsible for an action that occurs against 

the United States, I personally think is a mistake. 

 This is a complex country, the Congress has responsibility, the 

courts have responsibility, individuals throughout the executive have 

different responsibility. I think you need much better focus than we 

have now, I think you need a much clearer line of reporting and much 
58

more clarity in that. But to say you need a, you know, as the military 

would say, belly button, I think is a simple answer to a complex 

problem. 

 MR. CLELAND: I don't think so. First of all, my Daddy served at 

Pearl Harbor after the attack. I'm well aware that Admiral Kimmell and 

General Short were not really responsible for Pearl Harbor, they were 

hung out to dry. And I voted in the Senate to reverse Admiral 

Kimmell's court martial, as a matter of fact. 

My whole point here is this. A few years ago Senator Pat 

Roberts, who's a dear friend of mine and has a great sense of humor, 

was subcommittee Chairman on Terrorist Threats or Emerging Threats in 

the Armed Services Committee. 

 And he brought in people from all kinds of agencies, 20, 30 

different people, and said, okay, sit in the order in which you're 

involved in the chain of command. And there was this musical chairs. 

And that was a powerful point that he made. What I'm suggesting here 

is that if we use the term intelligence community that means nobody's 

accountable, nobody's responsible. See, that's my whole point. We've 

got a committee here, and so we have to -- I think part of 9/11 is that 

somebody somewhere in the lexicon didn't connect the dots. 

 But it's more than that. Didn't see or wasn't able to read the 

tea leaves and put things together in this mosaic that we called 

intelligence information. And if nobody's in charge then, nobody's 

going to be pulling all this together. So I asked the question 

deliberately, since this is on warning. Now, we now know that the FBI 

was responsible, President Reagan made the FBI responsible for in 

effect terrorist attacks and this is a massive failure on the part of 

the FBI. But as we've discussed, the FBI is not culturally attuned to 

warning. 

 It's culturally attuned to prosecution. So, what do we do about 

that? Where do we pinpoint the accountability and the responsibility 

for dealing with the question of warning against the terrorist attacks 

that does come across the bright lines. The bright lines were there in 

the Cold War. That was their line and this is our line. No more 

bright lines. 

 Mr. Gannon, you have any comment to make? 

 MR. GANNON: On a solution, or -- 

 MR. CLELAND: Yeah, on the recommendation. Now, we've had 

recommendations here -- 

 MR. GANNON: Well, first of all -- 

 MR. CLELAND: -- about strengthening powerfully the Director of 

the Central Intelligence -- 

 MR. GANNON: Well, I think in my own view I guess I wouldn't be 

as hard on the FBI as you have just been or as the author of that book 

has been. I think the threat of 9/11 actually came from abroad, so I 

think it's the conundrum we face, that we had a challenge where a lot 
59

of the intelligence and the planning of that operation was abroad, it 

was not domestic. And I would also say that going back to Dick's point 

about sometimes not having information, sometimes information is 

knowable but not retrievable. And an example I would give you is that 

the Hamburg cell in Germany where we know a lot of the 9/11 was 

planned, it would have been a real breakthrough for us to have known 

that that planning was taking place. And it didn't have to be HUMINT, 

it could have been SIGINT, it could have been any one of the INTs, it 

could have been any one of the INTs, but the point is we didn't know. 

 Why didn't we know? Was it an intelligence failure? I will tell 

you it had a lot more to do with the fact that the relationship between 

law enforcement and intelligence in Germany was very distant and that's 

exactly the way all of us wanted it because of Germany's particular 

history. There was also a legislation of the books in Germany that did 

not allow the government to go after organizations that were 

religiously based, and this planning was being done in the cover of a 

mosque. So what we have done since 9/11, we have worked with -- I 

think we have achieved a level -- or the intelligence community has 

achieved a level of collaboration that's unprecedented in not just 

intelligence but on the political and legal fronts where we have gotten 

those laws changed, not just in Germany but in the United Kingdom and 

Spain, so I think that we are recognizing that we were hampered not by 

intelligence but by a lot of other factors that prevented us from 

knowing what we needed to know. 

 To answer your question, I happen to believe working the 

Department now from the Homeland Security environment and having come 

out of the intelligence community that the domestic challenge that 

you're talking about, I think, can be addressed by a Department of 

Homeland Security that has major information collection 

responsibilities, as dealing with the 22 agencies that have come into 

the Department, and both training them to be collectors of information 

but critically providing them with threat assessment so they know what 

they should be collecting. This is just information, not clandestine 

intelligence, and there's a lot of information in our ports, our 

borders and our airports. I think the Department of Homeland Security 

could greatly improve our posture with regard to the analysis of the 

domestic threat, simply performing that domestic function. 

 I also happen to believe that FBI, whatever its failings or its 

case orientation, can do the intelligence collection effort if it is 

resourced and directed to do so. 

 MR. CLELAND: As one who -- 

 MR. GANNON: It's a combination of the -- 

 MR. CLELAND: As one who was an author of the Homeland Security 

bill, I understand that. We can get a lot of intelligence, shall we 

say, from the first responders, the policemen on the beat and so forth. 

I understand that. What I'm talking about is the national strategic 

responsibility for warning this country. This book says that -- we're 

talking about Germany here -- it says from the early 1990s, Osama bin 

Laden was running an active al Qaeda terrorist cell in New York City. 

The FBI had sufficient intelligence to capture the bomb maker before he 

even attacked the World Trade Center the first time in 1993. 
60

 The point being here, some have said that we don't need radical 

surgery, we don't need major surgery here, but we've had a major attack 

on our country, we've had a major intelligence failure and what I'm 

trying to ask you all is, what is your best way that you would 

recommend to us that we think about structuring warning? Ms. McCarthy? 

And who's accountable for that? 

 MS. McCARTHY: I would go back to my initial remark, and that is 

I think that having a single individual below the Director of Central 

Intelligence level, who is the substantive expert on warning, is one 

solution but not the entire solution. The entire solution would 

encompass integrating the warning function into every single analytic 

unit in the intelligence committee and making sure that that's their 

mission. 

 MR. CLELAND: Can we follow up on that from some of the readings, 

some of the testimony here. I understand that the people who were 

involved in Warning were somehow separate or different than the people 

involved in normal analytical efforts. I thought all analytical 

efforts, all data, all information was out there to estimate what the 

threat to the United States was. 

 MS. McCARTHY: Not everyone would agree with me on this, but I 

think that the conscious effort to do warning analysis on much of the 

community actually had gotten diverted to the exercise of producing the 

daily intelligence that needed to be produced for senior policymakers, 

and on the issue that you cited earlier about the early identification 

of an al Qaeda cell in New York, for example. That to me is an 

indication that the kind of warning analysis on the counterterrorism 

front was not taking place. In other words, we tended to look at 

individual cells and individual activities and actors rather than at 

the broad strategic cultural picture to identify the kinds of 

activities, the kinds of goals and missions that these groups would 

intend to have, and my fix for that would be -- and I don't have a 

notion that this is the only fix, but my fix for that would be to have 

-- on the counterterrorism issue, which I think is sui generis in terms 

of its complexity --would be to have a central component. 

 I don't favor a new agency, because if you develop a new agency, 

you end up having to develop a new culture, and trying to fix the 

cultures we have already is difficult enough. But I would have a 

separate component that would deal with all of the information across 

the government including domestic intelligence, all the information 

including information from state and local levels and from the private 

sector, when available, to do the warning job on counterterrorism. I 

would not have that particular -- it's a difficult choice, because I 

think it's very dangerous to have that component involved in any kind 

of collection or operation. 

 Then you end up with -- as a citizen rather than as an 

intelligence expert, that would concern me. That you have a group of 

operatives, essentially, who are used to very proactive -- in a 

different kind of legal framework -- activity, undertaking domestic 

operations. So I think it has to be solely an analytic component. But 

it would also have to have some way of stimulating collection, which I 

think makes it very difficult to try to kind of visualize or legislate 
61

such a component, because it's kind of a fine line sometimes between 

collecting -- particularly in domestic groups -- and interfering in 

their lives and First Amendment issues and so on. But that would be 

what I would favor. 

 MR. CLELAND: Thank you, Ms. McCarthy. 

 Mr. Kerr, a comment? In terms of how to enhance our warning 

capability and our accountability for warning in this country? 

 MR. KERR: Well, I think you do need to strengthen the position 

of the DCI, the authorities of the DCI in a number of areas. And I 

would agree with John. I think it's very important to go back to a 

concept that thinks more clearly about a Central Intelligence Agency. 

Call it what you wish, but one which incorporates those functions in a 

much clearer way. 

 I do think there are two other things that are worth looking at. 

One is there is nothing like information when it comes to analysis. 

You know, you can have a ton of analysis and an ounce of information 

and not get very far with it. We were information short. And I 

understand this concern about all these dots that needed to be 

connected. It's easier to do that in hindsight than it is at the time. 

It is the relationship among information that's not associated in 

anybody's mind or in the machinery, or have the analytic techniques or 

the analytic methodologies to do that. 

 There are ways to do that. You know, there are ways to mine 

databases that have unconnected information and apply logic to it and 

do some very sophisticated things. It still comes down to people, good 

research, good analysis and people committed to it. And quite honestly 

over the past -- in my view, and I think John and Mary would probably 

agree with me. Over the past several years, quite a few years now, our 

analytic base for research in-depth has been sacrificed to current 

intelligence and to other ideas. We've spread around people on staffs, 

and while John will talk about all these nice new community management 

staffs and the analytic staffs, those are staffs. Their value-added 

and my judgment is interesting, but not critical. So I think we need a 

lot more people who do the work. 

 I had this feeling at one point in time we were going to have an 

organization that was kind of an inverted pyramid. There was one 

analyst at the bottom and everybody was sitting on his shoulders, or 

her shoulders. And there is some truth to that. We need people to do 

the work, not just manage the resources. 

 MR. CLELAND: Thank you very much, Mr. Kerr. 

 Thank all of you for your service to our country. 

 Mr. Chairman, thank you. 

 MR. KEAN: Thank you very much. 

 Governor Thompson. 
62

 MR. JAMES R. THOMPSON: My question primarily is consisting of 

re-plowing plowed ground, so I'll keep it brief. But I'm struck by 

something that you said, Ms. McCarthy, and I'll use that as a lead off 

to the question that I'd like all three of you to answer as clearly as 

you can. We talked about this this morning with earlier witnesses, Mr. 

Deutch, Mr. Schlesinger, and for me it wasn't fleshed out enough. 

 You said, Ms. McCarthy, there ought to be an element or a 

component for analysis that took into account both domestic and foreign 

intelligence, but that you as a citizen sort of drew the line at 

collection. See if you can agree with me on this, in the old days, the 

Cold War days, where it was nation state against nation state, it was 

us versus the Soviets or their proxies and the issue was land armies 

that moved, or missiles that were manufactured and moved around. There 

was a clear difference between domestic intelligence and foreign 

intelligence. 

 Now we have private actors on the scene, al Qaeda and Osama bin 

Laden and their proxies around the world in dozens of countries 

literally, united perhaps by language if not by religion, so that 

national boundaries to them are less important. The ability to move 

money around this world through technology didn't exist back in the 

'40s and the '50s. Immigration has produced a different nation than we 

were 30 or 40 years ago, we now have ethnic enclaves which we sometimes 

suspect harbor planners or those who would aid terrorism if the 

indictments of federal prosecuting authorities are to be taken at face 

value. 

 Doesn't this argue for the elimination of this organizational 

difference between the collection of domestic and foreign intelligence? 

Doesn't this argue for taking the functions of both the FBI and the CIA 

and other agencies in that regard and putting them into a single agency 

which reports up to somebody who's got the ability to spread all of 

this combined information, not only before the president of the United 

States, but the analysts responsible for warning and would you favor 

the retreat from what our Cold War organizations were? 

 MR. KERR: Are you asking? 

 MR. THOMPSON: All three of you. 

 MR. KERR: Well, let me take a stab at it. I think what you've 

described as putting that person that does the -- that walks in with 

that final bit of information in a role that's pretty distant from the 

people that do the work, that take action on a daily basis that know 

how to respond to it. I'll tell you, I go -- I've gone in this job, I 

mentioned to you that I've been working for George Tenet in the last 

month and a half, I've gone to his 5:30 meeting which is a meeting of 

George and his principle officers that are involved in the clandestine 

services, someone from the Homeland Security, someone from the Bureau, 

his counterterrorism person, John Brennan from TTIC and a variety of 

others. 

 That meeting, I would guess, is the closest you can come to an 

operational meeting where someone says, I want to do the following, go 

do it, talk to somebody in this country and tell them not to do this 

tonight, because we're worried about it, do something else. It is an 
63

operational role that is, in my experience, when I was in the Agency 

that the Director of Central Intelligence did not have, did not need to 

have, because we were not in that kind of immediate kind of situation. 

George Tenet, I believe, and I -- I've gone to some of the other 

meetings and no one else in government, other than perhaps George Tenet 

and his meeting with the President in the morning, does that kind of 

operational level detail. 

 Now, I don't know how to replicate that, and at what level you do 

it, but I know it needs to be done. And quite honestly, I've talked to 

some people about this and they'd say, well, you talk about 

micromanagement, that's the ultimate in micromanagement. The guy is 

the top of the Central Intelligence Agency, and Director of Central 

Intelligence, who's making operational decisions, but that's the way it 

works in fact. That's what you have to do, because the things that are 

being acted upon make a real difference. Liaison with other countries, 

with the Bureau and its case, with the Homeland Security and its 

action. 

 Now, can someone else do that? It's not obvious to me that 

someone more distant than George Tenet from the people who do real 

stuff, who send real messages and say, talk to foreign liaison and wrap 

those people up tonight, or talk to the Bureau and do a real action, if 

you get much farther away from that ability I think you're in a fair 

amount of trouble. So I don't know how far -- how much further you can 

centralize it? It does sound like micromanagement to me but from my 

perspective that's really damn good micromanagement, that's doing the 

hard work at the right place. So, you know -- I don't know that if I 

designed -- you asked me can I design a system that will be better? I 

wouldn't have come to that conclusion that he should do what he's 

doing, but having watched it and listened to it and seen it operate, 

I'm pretty impressed by how good it works. 

 And I'll tell you, if he wasn't there right now doing what he 

does at 5:30 to 7:30 every night, a lot of things would fall between 

the cracks. And so you know, how do you turn that into an institution, 

an organization? Right now, it's a leadership, because he's got the 

target on his back, he's the guy that feels he has the responsibility 

to do it, and he's doing it. Now, how do you institutionalize that and 

make that a part of the system? And over to you, that's a good 

question, I don't understand quite how to do, but I think it works 

reasonably well, not perfect. 

 MR. THOMPSON: It strikes me as ironic that you took some comfort 

from the fact that the laws were changed in the U.K. and Spain and 

Germany but we haven't changed the laws in the United States. 

 MR. KERR: Well, foreign liaison has always been in the system. 

 MR. THOMPSON: Ms. McCarthy? 

 MS. McCARTHY: Well, I think there's a dilemma, and I don't know 

what the answer is, but I think on balance it's easier to modify the 

culture of the FBI to collect domestic intelligence and to use the 

departments -- the agencies in Homeland Security that collect a lot of 

intelligence that John was recounting, border patrol, customs and so 

on, and send that intelligence to a central place where it's -- it 
64

along with foreign intelligence can be analyzed but does not, but the 

head of that component does not direct operations. The system that 

Dick has just described wherein the DCI takes some responsibility for 

orchestrating domestic and overseas operations at that level is 

probably a good one. 

 But again, we're dealing with a legal framework here that we've 

become accustomed to and which I think that doesn't mean we can't 

change it, but I think we take some comfort in the legal mechanisms to 

oversee the current domestic agencies that are not the same mechanisms, 

for example that our foreign intelligence agencies serve under. It's 

easier in my view to have a single individual to oversee that process 

than it is to change the cultures and the legal framework to sort of 

yank us around to have a new organization. That's where I come out on. 

 MR. THOMPSON: John? 

 MR. GANNON: As an analyst and a practicing analyst for most of 

my career, I think we have to distinguish between the analysis in 

integrating foreign and domestic and data fusion and so forth and then 

collection. I think it is in the collection area that you do really 

have the legal problems and concerns, domestic concerns about having 

$40 billion worth of collection systems working against our citizens. 

I think that's a profound issue of concern. But it began, as an 

analyst, even 25 years ago when I was an analyst on the Caribbean, I 

didn't have to depend on a collection system which is a human brain, 

that naturally integrates foreign and domestic analysis. 

 When I was analyzing the Caribbean I knew what the trade 

implications were in the United States, I think I would have been a 

failure as an analyst if I didn't. So I think to some extent in the 

dialogue that's taken place today, there's an exaggerated notion in the 

analytic community about this distinction about foreign and domestic. 

I would also say that I don't believe you could structure any analytic 

program today that wouldn't integrate foreign and domestic analysis, 

that wouldn't use the best technology to fuse data, and that wouldn't 

share information. So again, a lot of I think there's a certain 

mythology that's grown up about that. 

 But I do think there are some real concerns that I think were 

addressed, and Senator Cleland was a part of it, went in the framing of 

the Homeland Security Act. You know, we recognized that we need to 

improve foreign collection on CIA's part, we recognized that the FBI 

had some work to do with regard to the intelligence function that we 

expected it to perform, but there were also some significant residual 

issues that related to the fact that we had new stakeholders now in our 

national security arena and they were the state and local governments 

and the private sector. They were the first responders to whom we 

needed to providing intelligence. 

 And when you deal with those communities, there are very 

significant civil liberty and privacy issues that have to be addressed, 

it's a new model of information sharing as I said, both with the legacy 

agencies that are coming into the Department, making them really 

intelligence collectors, but then also sharing with the state and local 

government and the private sector the intelligence community I think it 

was correctly perceived, was not the agent to be doing that. I think 
65

that was the justification for establishing the Department of Homeland 

Security Act, and I continue to believe if we sort of get back to that 

legislation called for, having a department that really can work with 

the legacy agencies of the state and local government and the private 

sector, developing a new model for information sharing, I think that is 

-- that will help us to address the problem. 

 At the same time, strictly on the collection side, I think we 

have to work with FBI to enable it, to resource it, to do a better 

intelligence collection on the domestic side. The concern, of course, 

among those agencies as I worked with them, both in the transition 

planning office and now on the committee, is who is responsible for 

actually articulating the threat? And there's been a real tension 

between the FBI and the Department with that regard. 

 But what has resulted and I said this in my written testimony, is 

that when we ask for a briefing on the domestic threat, we now have 

CTC, TTIC, the Department of Homeland Security and FBI which tend to 

come as a family which looks larger to us than it ever was, so I think 

we are at risk of at least creating a certain confusion or perception 

that we have divided accountability. Again, I think with the 

implementation of the Homeland Security, standing up a department that 

has the capabilities that that legislation calls for, having FBI 

strengthen its capabilities and the same on the foreign side, the 

President is accountable, he has three different sources of expertise 

and I think that is -- in my judgment, is workable and it will improve 

our posture both on the foreign and domestic side. 

 MR. THOMPSON: Thank you, Mr. Chairman. 

 MR. KEAN: Congressman Roemer, and then Secretary -- 

 MR. ROEMER: Thank you, Mr. Chairman. 

 Nice to have all three of you here. We very much appreciate your 

testimony and I hope -- I know on our part it was certainly worth the 

wait, we apologize for the long delay and I hope, although I'm not 

claiming it will be, reciprocated on your part. Dr. McCarthy, I want 

to ask you a couple of questions, I've read some of your extensive 

writing on the National Intelligence Officer for Warning, and I want to 

be clear. You were Officer for Warning? 

 MS. McCARTHY: Yes, I was. 

 MR. ROEMER: And you were serving in that position when? 

 MS. McCARTHY: I served as the Deputy National Intelligence 

Officer from 1991 to 1994 and then '94 to mid '96 as the National 

Intelligence Officer for Warning. 

 MR. ROEMER: So, mid '96, so about five years you had experience 

in this position -- 

 MS. McCARTHY: That's right. 

 MR. ROEMER: -- and then you've written extensively on this as 

well, too. I believe in your writing you have said that in 2001 when 
66

the 9/11 terrorist attack took place, that the National Intelligence 

Officer for Warning did not have responsibility for terrorism, is that 

correct? 

 MS. McCARTHY: Well, I don't -- that's my understanding, that's 

correct. That some time after I left the position in '96 I think 

sometime around that time, it was decided that, and I suppose although 

I can't say this authoritatively, that the counterterrorism center 

would in fact have that responsibility. In any case, the National 

Intelligence Officer for Warning did not have terrorism as part of his 

portfolio. 

 MR. ROEMER: Explain to me and explain to the American people 

who may be watching this, how is it that the National Intelligence 

Officer for Warning at the Central Intelligence Agency tasked with 

telling the country when there's an imminent threat, and certainly 

through the Joint Inquiry hearings we heard of the alarm and the record 

chatter in the summer of 2001, that that person did not even have it in 

their portfolio? To warn the CIA nor the country about a threat from 

terrorism or al Qaeda? 

 MS. McCARTHY: Mr. Roemer, I really can't speak with first hand 

knowledge of how that decision was made, I was as you know, down at the 

White House by that time. 

 MR. ROEMER: But the decision was made and to the best of your 

understanding they did not have that in their portfolio, is that 

correct? 

 MS. McCARTHY: That's to the best of my understanding, that's 

right. 

 MR. ROEMER: And if that was the case in September of 2001, has 

that been fixed? 

 MS. McCARTHY: I don't know. I don't know, I believe that is 

still not the case, so if the follow up question then is who does have 

responsibility, I can't answer that but maybe Mr. Kerr can. 

 MR. ROEMER: Well, as I move on to somebody else, and I don't 

mean to hone too much in on you, it's because you have such good 

knowledge in this area. My next question would be, why hasn't it been 

fixed, and then who has responsibility for warning our country about 

terrorism? Mr. Kerr, before I ask you the question, you were the one 

that said in your very eloquent and helpful statement, that you would 

predict that there's going to be another terrorist attack, it's going 

to be successful, why haven't we fixed the system at this point? 

 MR. KERR: Well, I -- John may have the specific dates but my 

understanding is that the decision was made that because you had the 

Counter Terrorism Center, because you had both analysts in it and you 

had collection people in it, and it assumed responsibility for the 

judgments about the threat, that having the warning function performed 

where the bulk of the people, large number of people were working on 

the threat itself, was the most logical place. An NIO for Warning, you 

know, Mary will excuse me I'm sure, lives off the other organizations, 

they have very little staff, they fundamentally have to live off the 
67

other organizations. What they can do, and this is a point that's 

legitimate I think implicit in your question, is they can ask questions 

in a different way, or turn the problem around slightly from what the 

analytic elements might do. 

 But I think the anticipation was that given the size of CTC, the 

collection, the counterterrorism center, the fact that the bulk of the 

analysts, in fact, many regional analysts had been transferred there, 

and their responsibilities that it would be a better organization to 

assume this larger role. And John may be able to help a little bit, 

but I think that's the logic behind it. And why they didn't recreate 

it, I think is the very reason that they moved it there in the first 

place. It is where the bulk of counter terrorism work is done today, 

and was done at that time. 

 MR. ROEMER: I'm still not sure I understand how that's going to 

be helpful post 9/11 in terms of getting warning out and fixing a 

system that had some real problems in it, but John can you -- Mr. 

Gannon, can you help at all in explaining why that officer was not 

responsible for terrorism and if it in fact has been fixed at this 

point? 

 MR. GANNON: Well, I think there were -- prior to 9/11 I think 

there were -- there was more than one officer who was responsible for 

articulating the terrorist threat. If you will pardon me, if I could 

go back to that point, and I left the intelligence community about that 

time and I think the major problem we were having and those officers 

were having was prioritizing the various threats we had. I recall 

going to the I think it was the Armed Services Committee with Director 

Tenet and Senator Levin at the time, did what he does so well, he said 

okay, you have laid out for us, a very rich and diverse threat 

assessment here. 

 We were talking about the ballistic missile threat, a growing 

threat now from Iran, Iraq, North Korea, a residual threat from China 

and Russia, we're worried about the military modernization in China, 

you're talking about more regional threats like in Bosnia, Africa, we 

just went through the crisis in East Timor. Terrorism in all its 

dimensions, so it wasn't just conventional, that we were talking about 

chemical, biological and biological was a major concern, because we 

didn't know what we needed to know about the biological threat. But 

radiological, nuclear and then you know, humanitarian disasters and 

refugee flows and all those other issues that intelligence officers are 

being required to deal with, how did you put -- Senator Levin said, 

well tell me one to 10, what are the real threats, what are the most 

important ones? 

 And the Director responded, if any of those happens, I'm 

accountable, I can't prioritize. I went back and got some analysts 

together and tried to prioritize and what we came up with was a 

terrorist threat, probably abroad. And this was just very close to the 

eve of 9/11. But I would also say that we were dealing with a stretch 

at the time of our resources to deal with what I would call 

conventional kinds of threats and then the new technology based 

threats. We talked for example, about terrorists or adversaries who 

might be able to get hold of laser technology and do damage to our 

satellites. 
68

 So here we had a community that was being forced to deal with the 

new technological threats, but at the same time, while we worried about 

lasers we still had to worry about the Palestinian who would throw a 

rock. Because of the political implications of that. So, we couldn't 

prioritize, the Congress could not prioritize either, and we were hit 

by a terrorist incident that we would not have ruled out, in any of the 

exercises we would not have ruled out that that could have happened, or 

it might even be probable, but what we would have needed was hard 

intelligence that it was about to happen. So we -- 

 MR. ROEMER: Can I ask you a question on that light? 

 MR. GANNON: Sure. 

 MR. ROEMER: We saw Dr. Schlesinger this morning, hold up a 

graph with a bunch of dots scattered all over it, of equal size and 

difficulty of deciphering and reading. And then he held up one with 

some rather large red and green, yellow dots that were easier to find 

and hopefully analyze and decide what they meant. 

 What do we need to do to help our strategic analytical 

capabilities so that when there are clues, not clues that say X is 

going to attack New York City on such and such a date at 11:50 p.m., 

but clues that say -- like the Bojinka plot -- that say that a plane is 

going to be flown by terrorists into CIA headquarters in Langley, or 

other evidence comes in that we have a body of strategic analytical 

thinkers and people that come back with different kinds of 

controversial or disagreeing statements about something, that they 

could put that type of evidence together. The Joint Inquiry listed 

probably two dozen instances of planes being used as weapons. How do 

we restructure that so that those dots look bigger and that we have an 

opportunity at least to prevent that kind of terrorist attack from 

taking place. 

 MR. GANNON: Well, in my experience with intelligence community 

analysts, the best dot connectors are, in fact, people. It's 

brainpower that does it, it isn't systems. But you do have to have 

systems in place that enable the brains to come together. And this is 

really what the Strategic Investment Plan was all about. I think -- as 

the Assistant Director for Analysis and Production, I could not 

communicate with the eleven agencies that were doing analysis 

electronically. I had three different systems on my desk, one computer 

with two CPUs, and another system that enabled me to communicate with 

the CIA's CWE system, which was an excellent system. 

 So I could actually talk to a station chief in a remote station 

and get a response quicker than I could talk to the Director of DIA, 

because of the lack of connectivity and collaborative technology. 

 MR. ROEMER: Within CIA headquarters? 

 MR. GANNON: I was in CIA headquarters, yes. And so I think 

those -- bringing the analytic community together, and I'm not talking 

about homogenizing it and I'm not talking about reducing CIA's -- but 

recognizing that you have, for example, in the United States Air Force 

-- I think it's the major repository of science and technology 
69

expertise in the community -- places like Fort Patrick have tremendous 

capabilities that can be brought to bear that could help us and bring 

tremendous brainpower to dealing with these issues. 

 So I think bringing the analytic community together, which again, 

this is not rocket science and it is not a very hard thing to do. But 

creating a collaborative environment where the director of Central 

Intelligence can call on the Air Force, the Army down in NGIC down in 

Charlottesville, for example, and have that expertise working the same 

set of problems together so that he can do -- advise the President 

really based on what the intelligence community as a whole and also 

that community's ability to leverage outside expertise can do, and not 

just be narrowly focused on what the CIA can do for him. 

 So I think the -- the analytic community I think did recognize 

how it could do better, but I think it struggles, partly because of the 

resistance within the community, to having those kinds of collaborative 

relationships developed. 

 MR. KERR: Just one comment I agree with John, although I would -

- I think it's very easy to overstate the analytic connections. You 

can do an awful lot with a small group. The real key is in 

information. Hard insight, information coming out of penetrations of 

terrorist organizations, could foreign intelligence. You can have as 

good a collaboration as you wish. You can go around and talk to 

everybody, you can involve everybody in it, but if you're arguing about 

information that's ambiguous, unclear and imprecise, it will not carry 

you to the warning -- through the warning problem. You need hard, 

specific factual information out of foreign intelligence collected 

against the elements that are planning. 

 MR. ROEMER: You're talking about, Mr. Kerr, human intelligence - 

 MR. KERR: You need human intelligence -- 

 MR. ROEMER: -- unilateral and foreign liaisons. 

 MR. KERR: -- or a full range of intelligence, but you -- but it 

has to be intelligence directed against, in my view, against the 

organizations that are planning. You can analyze all you want. And, I 

mean, we're all analysts here and we've done -- I've analyzed 

information that led you nowhere for years because we didn't know 

enough. We spent the first 15 years of our work on Soviet ICBMs, we 

never accurately identified where a Soviet ICBM was because we didn't 

have a picture of the site until we had satellite reconnaissance going 

over an ICBM site. We were misestimating where they were and that 

problem is compounded. 

 I mean, it's the same kind of problem, not the Soviets but the 

same kind of problem. There's nothing like hard information. And 

analysis will carry you so far but only so far. And if you're going to 

do your investment, that I would say -- if you're going to do an 

investment about where you spend your money, it would be very useful to 

think about where you get the biggest bang for the buck. And as an old 

analyst, it's not clear to me that it's in analysis. 

 MR. KEAN: Congressman Hamilton. 
70

 MR. LEE H. HAMILTON: Mr. Gannon, I was struck by your comment a 

moment ago about prioritization. And it always seemed to me that this 

was one of the key problems. And you're all from the intelligence 

community. Who has the responsibility to prioritize and how does it 

work? I mean, you have all of these threats out here that when we 

listen to the intelligence people, scare you to death. And any one of 

them could cause great damage to the country. Is it the intelligence 

people that have the responsibility to prioritize, or is it the 

policymaker that has that responsibility, or is it some interaction 

between the two? You have to prioritize threats. 

 There are dozens of threats against the United States and it 

makes an awful difference how you allocate resources as to how you 

prioritize those threats. You have thousands and thousands of targets 

in the United States. It makes a huge difference how you prioritize 

those targets. Now, the tendency, I can tell you, of the policymaker 

is not to make the decision, because it's too tough and because you 

could be wrong. And therefore you want to do everything, but you can't 

do everything, because you don't have the resources to do it. How do 

we get a better sense of prioritization of threats and targets in this 

system? 

 MR. GANNON: When it comes to actually doing something about a 

threat or developing policy, I think that is on the political side. 

But I think the development of an integrated threat assessment which 

explains what we know and what we don't know, is I think, the 

responsibility, and should be, of the Director of Central Intelligence. 

He has been -- 

 MR. HAMILTON: When you were ticking off all of those threats a 

moment ago, I think, with regard to Senator Levin's question, did the 

intelligence community at that time respond to the Senator and say, 

these are the threats and these are the priorities of the threats? 

 MR. GANNON: We made an effort that I described when I went back 

with our analysts. But again, I think we have the analysts who are 

responsible for these accounts and -- 

 MR. HAMILTON: Is it the responsibility of the analysts to come 

forward and say, okay, we've got a dozen of these threats and this is 

the order in which we see the seriousness of those threats? Is that 

your responsibility? 

 MR. GANNON: I believe it is the responsibility of the Director 

of Central Intelligence to bring the analysts together and to 

prioritize to the extent you can, and also to explain why you can't 

prioritize with regard to the intelligence issue. I'd say on the 

operational side that's the responsibility of -- and the policy side, 

the responsibility of others. But I think it's very important to hold 

the DCI accountable for that prioritization or for an explanation of 

why we cannot prioritize. 

 MR. HAMILTON: So the DCI then should make known to the President 

and perhaps his top aides, Mr. President, these are the threats the 

United States faces and we put this at the top of the list and we put 

this at the bottom of the list? 
71

 MR. GANNON: Yes. 

 MR. HAMILTON: That's their responsibility. 

 MR. GANNON: I believe so. 

 MR. KEAN: Secretary Lehman. 

 MR. LEHMAN: Thank you. I have two questions. The first one 

you're at liberty to duck, but I'd like to hear any of you who have a 

comment on it. It's a follow-up to Chairman Hamilton's. 

 We had testimony this morning that the NSC was totally mobilized 

after '98 to focus on terrorism, and specifically al Qaeda. The DCI 

had sent a memo shortly thereafter saying that we were at war with al 

Qaeda. Yet by the end of the Clinton administration and on into 9/11 

itself, the sum total of that was that terrorism had to have been 

dropped from the NIO for Warning’s portfolio, and there were only five 

people in the entire CIA who were assigned to al Qaeda. Who gets the 

blame? What went wrong? And don't say the system. 

 (Laughter.) 

 MR. GANNON: Well, I was in a position as Chairman of the 

National Intelligence Council and as Assistant Director for Analysis 

and Production to see a lot of what was collected and a lot of what was 

produced, and there was not a single day that went by that I didn't see 

UBL, Usama bin Laden, related traffic. So I believe it would be 

inaccurate to say that we did not have a major program in place to 

analyze and to collect against Usama bin Laden. I would also say that 

the major change I think -- I left the intelligence community in July 

of 2001, and I believe the date where the major change occurred in the 

intelligence community with regard to the approach to terrorism was 11 

September, it was not 20 January. 

 I noted no difference in the approach in the change of the 

administrations. 

 MR. LEHMAN: Okay. Anybody else? 

 MS. McCARTHY: I'll just try to add something to what John said. 

The fact that the NIO for Warning no longer had the terrorism account I 

think points to my earlier statement, that sort of bureaucracies take 

over and the NIO for Warning turns out to be not always a popular 

person. And that's why I urged that the Commission, that they make a 

recommendation on the NIO for Warning, not just say that we need to 

have an empowered NIO for Warning because bureaucracies will win out 

again. 

 My perspective, however, was that there was a lot of work going 

on on al Qaeda, and I don't know where the information comes from that 

there were only five people, because I personally saw lots of people 

who were both analyzing and working on the collection against UBL 

during that period. What I think was missing was what I described 

earlier, and that was to Senator Cleland, which was the overall picture 

of al Qaeda, and the development of that picture from a strategic 
72

perspective that had more to do than what individual actors were doing, 

but what the strategic picture was in terms of the cultural impetus and 

the networks and what was driving recruitment, you know, particularly. 

 We had a vague notion of what this was, oh, it's antiAmericanism, oh, it's the American presence in the Gulf, but a much 

more learned appraisal was needed of the strategic view of al Qaeda, 

and that's what was missing. And I know there certainly was an 

increased effort, but it was not probably proportional to what we 

perceived to be the threat at the time. 

 MR. KERR: I would respond by saying -- 

 MR. LEHMAN: Dick, could I – 

MR. KERR: Mr. Chairman, I regret that I have to excuse myself to 

make another appointment, and I'd be happy to come back or in any way 

assist any of the members. 

 MR. KEAN: Thank you very much, we appreciate your help. 

 MR. LEHMAN: Thank you. 

 MR. KERR: Secretary Lehman, in response to your question, I was 

asked in -- I don't know the exact date but sometime around probably 

'97, '98, with a couple of other people to come in and review the 

counterterrorism program as an outsider. And quite honestly, at that 

time as I looked at it, I thought the activities that were going on 

against al Qaeda and others were rather impressive in terms of the 

scope of their activities, the coordination with NSA and NIMA and the 

other organizations, a very focused attack on information and on 

activities. 

 But I would pose a larger response to your question, and that is, 

the relationship between the expenditure of money and the hiring of 

analysts does not very directly relate to the priority given to 

problems in the intelligence community or policy problems generally. 

Now, why? Because the system is very difficult to move around. So you 

say, this is my priority, the DCI I'm sure would have said many times 

that terrorism is my priority. But when you get down into the 

bureaucracy, when people start arguing, well, how about weapons of mass 

destruction? And how about what's going on in the Soviet Union? The 

future development of nuclear weapons or in Korea or in this and that? 

 Then the system tends to break down, and what you end up doing is 

spreading it around. You spread around the money, you spread around 

the analysts. So the relationship between priority and resources and 

expenditure of money is a hard one to come by. You know, if you're the 

DCI and you say, how much have we really increased in this area, you 

get a lot of fluff back, quite honestly, and a lot of dancing around. 

And my guess is that is -- the direct response to requirements is very 

hard to pin down in the intelligence community. 

 One thing the DCI does not really control, the resources of NSA, 

or the NIMA or DIA or the NRO, he has some influence, but he cannot 

say, this is your priority because it's my priority. You know, one 

might want to think about whether you should change that. But no one 
73

can really say, this is our highest priority and by God we're going to 

have our resources and our manpower and our activities relate to that. 

And I personally think that's a mistake. I think the system should be 

more responsive. I think you can jerk it around too much and lose your 

place, but I think it needs to be, and as Lee Hamilton said, he's been 

through -- we had in my experience five or six major systems to get 

priorities. 

 They all involved the executive. They all involved we'll have a 

meeting at the beginning of this year and we'll bring in the Secretary 

of State or the Deputy Secretary of State and the deputy of this and 

that. You have one meeting and they say, you've got to be kidding, and 

I'm not going back to another meeting like that. So then you get 

somebody down in the system, pretty soon it's all intelligence officers 

talking to each other. And that's not all bad, because they have some 

idea of the threat. 

 But sooner or later those systems break down to the lowest common 

denominator, because other people have too much to do, they don't think 

it's that important, the system's not that good. 

 MR. LEHMAN: But that's letting the system do it. I can 

guarantee you there have been times when there have been decisionmakers in these agencies who didn't let that happen. And we talked 

earlier about the way that the system worked at one period under 

Kissinger, where everybody came to every one of those meetings because 

they were terrified if they didn't he'd move the money where he felt 

like moving it and have the President sign an order laying off half of 

one analytic section and adding the bodies to another. 

 So you cannot blame it on the system, it is people making these 

decisions. And that leads to my second question, which was 

precipitated by my distinguished colleague, Senator Cleland, with whom 

I almost never disagree. But I must disagree today, and that was in 

the Pearl Harbor. I've studied a good bit of the Pearl Harbor 

aftermath, and as some of the evidence has come to light since, like 

the discovery of the mini submarine off Pearl Harbor, and I think they 

shot exactly the right people in General Short and Admiral Kimmell, and 

they shot them for the right reasons. Because they had succumbed to 

Groupthink in their intelligence staffs, who had accepted the view 

which became unquestioned in both commands, that though both of them 

knew there was going to be war within days, there was no lack of 

warning that the Japanese were going to attack. But the Groupthink had 

both accepted the fact that they were going to hit Singapore and the 

Malay Archipelago first. And so Short and Kimmell both sent the troops 

home for the weekend, closed down the radar on Sunday, gave everybody 

leave, and he was dressing for golf, Kimmell, when the report came in 

from the O’Kane that a Japanese sub was trying to get into Pearl Harbor 

and he dismissed it. So that is my question. My own short experience 

in the government in the '70s and '80s, 

I encountered perhaps more Groupthink from CIA than any other agency. 

And they were all guilty of it, not the least being naval intelligence 

on their particular view of what the Soviets were doing. There was an 

unquestioned orthodoxy that didn't change for a long time. But two 

examples of the Groupthink that became dominant in CIA that screamed 

out warning, in my judgment, strategic warning of other things that did 
74

then happen, were in Vietnam it became the house view in CIA that all 

the supplies for operations in the south came down the trail. 

 Now, there were dissident views from operating people actually 

operating within CIA, but the house view was -- and they defended it 

and got more entrenched as the war went on - when in fact, it turned 

out some 80 percent came in through Sihanoukville. We only found that 

out afterwards. And then Secretary Schlesinger earlier today testified 

about his rather famous fight with CIA over Soviet intentions on the 

SS18s, where CIA had a house view that the Soviets were not going to go 

beyond parity. They wanted to achieve equality and then that was it. 

 Of course, subsequent events proved that wasn't at all what they 

were doing but there was a -- any bureaucracy has a way, if the top guy 

or the top NIO on a subject has made the judgment on good and honest 

basis that everything was coming down the trail. It is not 

particularly career enhancing for some junior analyst to tell the boss 

that he's totally wrong. And so there gradually becomes an orthodoxy 

in any big bureaucracy and CIA is, I think, particularly prone to it. 

How do we break that culture as we proceed in this war on terrorism? 

Because it is a factor and some of it can be assisted perhaps by these 

organizational changes we have and some of it depends on the personnel 

and what kind of a culture you cultivate in the agency. Your views? 

 MS. McCARTHY: Well, it is a huge problem and it is one that I 

think cannot resolve just by organizational changes or by 

pronouncements that from now on, we want to see more alternative 

hypothesis, discovery by alternative hypothesis investigation. It's 

not going to work. We've tried that in the past. My own view is it 

has to be legislated and people have to be made legislatively 

accountable and there has to be continual oversight and I would suggest 

a continual review and I suggested that we may want to have something 

like the GAO take the responsibility under legislation for doing an 

absolute review of the strategic warning function within the 

intelligence community, not just CIA but the intelligence community at 

large or perhaps another staff that the Congress may wish to establish. 

But I think it has to be legislated. 

 We've been through this dance several times now with warning 

failures followed by investigation followed by recommendations to have 

more attention to warning. And we have more attention to warning for a 

short period of time and then the sort of culture, the dominant culture 

in the bureaucracy take over. So we have to say most of the time, it 

works. Most of the time, they are very bright people, they do very 

good work. And most of the time, they get away with it. But it's when 

they don't that the sort of warts of the system, if I may use the word, 

are revealed. So I think it's going to take more than just a 

recommendation to fix it. 

 MR. KERR: I would -- I mean, I understand your points about 

Sihanoukville and about the Groupthink. But I think, quite honestly -- 

and it will show my parochialism but even people who are parochial 

could be right occasionally -- I think the institution is much richer 

in dissent than you would -- I mean I found an organization where I 

could and I thought others around us could argue all kinds of issues 

and take them very high in the system, if you could make a good 

argument. I mean, you have to be careful with cranks who have an 
75

argument but have no basis for it. But I think it was an organization 

that was quite transparent in that way and actually the debate within 

the organization is constant, always arguing. We argue at every level. 

 My analyst, when I started as a junior analyst used to argue with 

me about things I already published in the current intelligence. He 

would come in the next morning and rewrite it for me to show me how 

wrong I was. We would argue about everything. We had this sense about 

all kinds of things. The Navy is a very interesting problem too. We 

had a continual fight with the Navy on everything and quite often, we 

were right and not the Navy. Sometimes we were wrong. But it's a rich 

-- that's what I think you get out of an -- it's a matter of 

leadership. You don't always have it. Some issues, you do get caught 

up in a Groupthink, kind of thing where you're convinced you're right. 

Evidence just supports you so well. 

 You know, I would give the organization a lot more credit in 

looking at it historically. You want to look at Vietnam, apart from 

the trail down the Sihanouk, and you'll see a very strong story of 

dissent: dissent with NACV, dissent with Washington, dissent with all 

the people that said what was going to happen in the war was a very 

clear argument. Now it wasn't always right but if you are looking for 

one organization that was on the right side of it, you'd have to go to 

CIA, quite honestly. Very rich debate. Very rich argument. Lots of 

debate inside the organization. So I wouldn't sell it short on that. 

It's not big organizations that make mistakes but it's also pretty darn 

good on a lot of issues. 

 MR. LEHMAN: Point well taken. Just one follow-up. How do you 

preserve that diversity, that openness, that willingness to accept 

defeat -- 

 MR. KERR: Leadership -- 

 MR. LEHMAN: -- if you over-centralize, if you bring all of the 

agencies under one hierarchy, which to a greater or lesser degree is 

going to have an orthodoxy? 

 MR. KERR: I think that is an issue, a serious issue. I think 

one would have to be very careful about too big an organization that's 

too well organized, that doesn't allow dissent and I think it's still 

true in that -- when I was Deputy Director, people walked into my 

office on a regular basis and said, You don't know what the hell you're 

doing. You've got this thing so sprawled and so screwed up. Analysts, 

not some senior officer. Somebody coming in saying, You're all wrong. 

You're doing it wrong. I think that happens today. 

 You have to have that intimacy. It's a fairly intimate 

organization that works together rather well. And I think you need -- 

I don't know what would happen if you had a Director of National 

Intelligence and everybody was in this nice, neat structure and it was 

all kind of very well organized. Would it be better? I don't know. 

I'd like to think about it. I'm not an organizational person. I think 

you can beat any organization. You can go around it, run over it. You 

do it in if you're smart enough and clever enough. You can get the 

right thing out of it. 
76

 MR. KEAN: Final question for Commissioner Ben-Veniste. 

 MR. BEN-VENISTE: I would like to pick up on something that Mr. 

Gannon raised earlier, which is that one of our greatest assets is the 

brain power of the individuals who are performing the analytical 

function, something that I very much agree with just based on my own 

human experience rather than the kind of experience that you bring to 

us. First of all, we read in the newspaper about various individuals 

in key roles resigning their positions at a time now. I notice that 

nobody here on this panel is currently in the administration. Yet the 

collective investment in your intelligence, in your experience is very 

significant. And so that's one thing I'd like you to comment on and 

that is the recruitment and retention of individuals who are capable. 

 Secondly, the collegiality that we've talked about is obviously 

lacking in terms of the kinds of counter-indications of husbanding 

intelligence information, husbanding views within each of the many, 

many separate compartments and agencies which collect and analyze 

information. 

 Mr. Kerr, I must take issue with something which you said earlier 

and that is the fact that if you had a heck of a lot more money, maybe 

you would have gotten the kind of intelligence which was specific to 

the 9/11 threat. Yes, clearly, if you had known, if we had known that 

al Qaeda specifically was going to direct airplanes, hijacked airplanes 

into our buildings, that would have been very useful to know in 

interdicting. We are in a war against an adversary that recognizes the 

danger of penetration which is very insular in its make-up, is 

compartmentalized and so doesn't necessarily offer that opportunity. 

Yet, prior to 9/11, we knew that al Qaeda was planning a major effort 

against the United States within the United States. We knew, as is 

reflected in the Joint Inquiry report, that at least on a dozen 

separate kinds of plots, airplanes were considered to be used as 

weapons. 

 My goodness, the CIA itself was a target of a plot to fly an 

airplane into the CIA headquarters and you have, by the same token, an 

indication from CIA that al Qaeda operatives have entered the United 

States and you have from the FBI information that suggests that 

individuals from the Mid-East in the United States, in flight schools, 

in numbers, learning how to steer aircraft, disregarding landing or 

taking off. Now, isn't that enough information to get some 

collaborative group together and figure out maybe airplanes are going 

to be used as weapons in the next attack against the United States and 

provide sufficient information for warning and countermeasure steps? 

 MR. KERR: Clearly -- first of all, if I implied or I said that 

using more money would have solved the problem, I didn't mean it that 

way. I said if you're going to have more money, how you invest it 

would be important and quite honestly, I would invest it in clandestine 

-- getting secret information out of the inside of terrorists, not on 

other things. But so if I said other than, I misspoke. 

 In terms of the question that you ask, I don't know the details 

of the events leading up to 9/11 as well as you do. I mean, that's not 

something I'm expert on. I would say, however, what little I do know, 

that the way you put it, the neatness with which you described it does 
77

not, it seems to me, reflect the situation as it really was. I said of 

disconnected events that while if you had all those on your desk neatly 

arrayed, one, two, three, four, a reasonably good group of analysts 

could have gone down and associated them. 

 When you're looking at a world of information and my guess is 

today, if you went to CTC and to TTIC and said, tell me information, 

the best information you have today and I assume you talked to John 

Brennan and the CTC people, they would say, Let me show you, give you 

some idea of the multiplicity of warning that we have. They're going 

to blow up a bridge. It's going to be a power station. It's going to 

be this, it's going to be that. It's going to be overseas. That 

information though doesn't come with enough specifics to allow you to 

do more than go back, try to follow up a source, follow up another 

source. The idea of then taking that and following it to action, 

that's what I was saying earlier. I think right now George Tenet is in 

the process of doing action each night, of taking action against 

things. That's the key. 

 Now, how we -- why we didn't do it, I just don't know enough 

about it. And the way you put it would suggest we should have known. 

But my guess is it's not that straightforward. 

 MR. BEN-VENISTE: I'm not suggesting it's simplistic. But with 

the billions of dollars that we spend in this country on intelligence, 

on safeguarding our security, the question is when two separate 

agencies of government have in their possession this amount of 

information and yet they are not talking to each other, would you not 

agree that there must be for the future, whether it has to be crammed 

down the throats of those who are protecting their turf, some kind of 

integration of information -- 

 MR. KERR: No question -- 

 MR. BEN-VENISTE: -- it breaks apart this historic inability to 

share information. 

 MR. KERR: There's no question and there's no question that the 

integration of domestic and foreign intelligence didn't exist except in 

a few areas, maybe counterintelligence and a couple of other areas and 

there was exchange at some level. But an integration of real and 

analytic integration, it's not clear to me that it exists completely 

today. It's better. People are doing better with that but that's a 

very challenging -- and certainly was not done prior to 9/11. I think 

there's no question about that. 

 MR. BEN-VENISTE: Thank you, sir. 

 MR. KEAN: Thank you very much, Commissioner. Ms. McCarthy, Mr. 

Kerr, thank you very much. It was lively, interesting and I appreciate 

very much the time you took to be with us and to help us today. The 

hearing record will remain open for 10 days, if anybody wants to add 

anything, correct anything. 

 And we will now be adjourned. 

 Thank you all very much.