```

[Senate Hearing 112-741]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-741

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

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 16, 2012

                               __________

         Printed for the use of the Committee on Armed Services

        Available via the World Wide Web: http://www.fdsys.gov/

                               __________

                  U.S. GOVERNMENT PRINTING OFFICE
79-855                    WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, [email protected].  

  

                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
JACK REED, Rhode Island              JAMES M. INHOFE, Oklahoma
DANIEL K. AKAKA, Hawaii              JEFF SESSIONS, Alabama
E. BENJAMIN NELSON, Nebraska         SAXBY CHAMBLISS, Georgia
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri           SCOTT P. BROWN, Massachusetts
MARK UDALL, Colorado                 ROB PORTMAN, Ohio
KAY R. HAGAN, North Carolina         KELLY AYOTTE, New Hampshire
MARK BEGICH, Alaska                  SUSAN M. COLLINS, Maine
JOE MANCHIN III, West Virginia       LINDSEY GRAHAM, South Carolina
JEANNE SHAHEEN, New Hampshire        JOHN CORNYN, Texas
KIRSTEN E. GILLIBRAND, New York      DAVID VITTER, Louisiana
RICHARD BLUMENTHAL, Connecticut

                   Richard D. DeBobes, Staff Director

                 Ann E. Sauer, Minority Staff Director

                                  (ii)

  
?

                            C O N T E N T S

                               __________

                    CHRONOLOGICAL LIST OF WITNESSES

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

                           february 16, 2012

                                                                   Page

Clapper, Hon. James R., Jr., Director of National Intelligence...    10
Burgess, LTG Ronald L., Jr., USA, Director, Defense Intelligence 
  Agency.........................................................    33

                                 (iii)

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

                              ----------                              

                      THURSDAY, FEBRUARY 16, 2012

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:35 a.m. in room 
SD-G50, Dirksen Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, Lieberman, Webb, 
Udall, Hagan, Manchin, Shaheen, Blumenthal, McCain, Inhofe, 
Wicker, Brown, Portman, Ayotte, Graham, and Cornyn.
    Committee staff members present: Richard D. DeBobes, staff 
director; and Leah C. Brewer, nominations and hearings clerk.
    Majority staff members present: Jonathan S. Epstein, 
counsel; Richard W. Fieldhouse, professional staff member; 
Jessica L. Kingston, research assistant; Michael J. Kuiken, 
professional staff member; Gerald J. Leeling, counsel; Thomas 
K. McConnell, professional staff member; William G.P. Monahan, 
Counsel; Michael J. Noblet, professional staff member; Roy F. 
Phillips, professional staff member; Russell L. Shaffer, 
counsel; and William K. Sutey, professional staff member.
    Minority staff members present: Adam J. Barker, 
professional staff member; Christian D. Brose, professional 
staff member; Pablo E. Carrillo, minority general counsel; John 
W. Heath, Jr., minority investigative counsel; Paul C. Hutton 
IV, professional staff member; Daniel A. Lerner, professional 
staff member; Lucian L. Niemeyer, professional staff member; 
Michael J. Sistak, research assistant; and Richard F. Walsh, 
minority counsel.
    Staff assistants present: Kathleen A. Kulenkampff, Hannah 
I. Lloyd, and Bradley S. Watson.
    Committee members' assistants present: Bryon Manna, 
assistant to Senator Lieberman; Nick Ikeda, assistant to 
Senator Akaka; Ann Premer, assistant to Senator Nelson; Gordon 
Peterson, assistant to Senator Webb; Casey Howard, assistant to 
Senator Udall; Mara Boggs, assistant to Senator Manchin; Chad 
Kreikemeier, assistant to Senator Shaheen; Ethan Saxon, 
assistant to Senator Blumenthal; Anthony Lazarski, assistant to 
Senator Inhofe; Lenwood Landrum, assistant to Senator Sessions; 
Joseph Lai, assistant to Senator Wicker; Charles Prosch, 
assistant to Senator Brown; Brad Bowman, assistant to Senator 
Ayotte; Sergio Sarkany, assistant to Senator Graham; and Dave 
Hanke, assistant to Senator Cornyn.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody. Let me start by 
welcoming our witnesses for today's hearing on current and 
longer-term threats and challenges around the world. We are 
glad to have the Director of National Intelligence (DNI), James 
R. Clapper, Jr., and the Director of the Defense Intelligence 
Agency (DIA), Lieutenant General Ronald L. Burgess, Jr., USA, 
as our witnesses. We thank you both for your long and continued 
service to our Nation on behalf of our troops to whom we all 
owe so much.
    This committee has a special responsibility to the men and 
women of our Armed Forces to be vigilant about intelligence 
programs because the safety of our troops, decisions on whether 
or not to use military force, and the planning for military 
operations depend so heavily on intelligence.
    The security situation in Afghanistan remains one of our 
highest priority threats for our Intelligence Community. In the 
last year, there are clear signs of progress. Afghan National 
Security Forces (ANSF) are in the lead in providing security in 
Kabul, including during the gathering of over 2,000 Afghan 
leaders for their recent loya jirga last November. The Afghan 
National Army (ANA) and Afghan National Police (ANP) are in 
charge of security in former Taliban strongholds in southern 
Afghanistan. In addition, Ministry of Interior and Ministry of 
Defense planners have developed a plan for the ministries' 
combined team operations for 2012 and 2013. The ANA is widely 
respected, and even the ANP, traditionally lagging far behind 
in that virtue, are gaining increasing respect among the Afghan 
people. Nevertheless, security remains fragile.
    A key to progress on security in Afghanistan is the process 
of transitioning the lead for securing the Afghan people from 
coalition forces to the Afghan security forces. The transition 
process is underway and continues apace, with the Afghan army 
and police assuming the security lead in more and more areas 
throughout the country. We heard on Tuesday from the Chairman 
of the Joint Chiefs of Staff, General Dempsey, that the 
transition process is on track to meet the goal of having the 
ANSF take the lead throughout Afghanistan by 2014.
    Successful transition is going to depend on a number of 
factors, including the growth in the capabilities of the ANA 
and ANP and their readiness to take the security lead; the 
nature of the insurgency; and progress on reconciliation talks. 
We would be interested in hearing our witnesses' assessment of 
the current security situation in Afghanistan and their views 
on the progress both in terms of providing security and of 
transition and the possibilities for reconciliation with the 
Taliban.
    I am concerned by recent news reports that the latest 
National Intelligence Estimate (NIE) reflects a difference of 
views between the Intelligence Community and our military 
commanders over the security situation in Afghanistan. 
According to these news reports, the NIE contains a set of 
additional comments endorsed by coalition commander General 
Allen, Ambassador Crocker, U.S. Central Command Commander 
General Mattis, and U.S. European Command Commander Admiral 
Stavridis, disagreeing with the NIE's assessment relative to 
the sustainability of security gains particularly in the south. 
I hope our witnesses will address this alleged difference of 
views in the recent NIE.
    Security in Afghanistan is going to remain in jeopardy so 
long as there continues to be sanctuary in Pakistan for 
insurgents conducting cross-border attacks against U.S., 
coalition, and Afghan forces, and against the Afghan people. 
Pakistan's refusal to go after the safe havens of the Haqqani 
network in North Waziristan and of the Afghan Taliban Shura in 
Quetta belies Pakistan's assertions that it is committed to 
peace and security in the region. Pakistan's support for the 
Haqqani network, which former Chairman of the Joint Chiefs of 
Staff Admiral Mullen called a ``veritable arm'' of the Inter-
Services Intelligence (ISI) of Pakistan, Pakistan's 
intelligence agency, is a major cause for U.S.-Pakistan 
relations reaching a low point, where they are going to remain 
until the Pakistan military ends its ties to these militant 
extremists carrying out cross-border attacks.
    We need to understand the Intelligence Community's 
assessment of Pakistan's strategy with respect to these 
insurgent groups and the reconciliation process and as to 
Pakistan's power to determine outcomes.
    The U.S. campaign against the global jihadist movement, as 
Director Clapper's opening statement calls it, had a number of 
significant successes in the last year, notably operations 
against Osama bin Laden and Anwar al-Awlaki. These successes 
struck major blows to al Qaeda's senior leadership and to one 
of its most active affiliates. As a result of these operations 
and sustained pressure in Pakistan, Yemen, Somalia, and North 
Africa, al Qaeda and its affiliates are showing strain. We 
would be interested in the Intelligence Community's assessment 
of last week's announcement of a merger between al Qaeda and al 
Shabaab and whether it signals an increased threat to the 
United States and our interests in Somalia.
    Last August, the President issued Presidential Study 
Directive 10 which identifies the prevention of mass atrocities 
and genocide as a core national security interest and moral 
responsibility of the United States. I am pleased to see 
Director Clapper has included in his testimony a discussion of 
the importance of the prevention of mass atrocities and the 
need for the Intelligence Community to report on these 
incidents rapidly so as to inform policymakers of these deeply 
concerning events.
    Over the past year, the international community has acted 
to prevent a mass atrocity in Libya, but we are currently 
witnessing a mass atrocity in Syria. These tragedies have 
resulted in deaths of many civilians seeking their universal 
freedoms and destabilized a sensitive region that is critical 
to the United States and our allies.
    Now, relative to Iran, which is obviously a major topic, 
there is a strong bipartisan determination on this committee 
and in this Congress to do all that we can to counter the 
threat posed by Iran and, in particular, to stop Iran from 
acquiring nuclear weapons. In the most recent National Defense 
Authorization Act (NDAA), we made a major breakthrough with 
respect to Iran sanctions by requiring foreign financial 
institutions to choose between maintaining ties with the U.S. 
financial system or doing business with the Central Bank of 
Iran, especially relative to the purchase of Iranian petroleum 
and related products. President Obama has appropriately focused 
considerable and determined diplomatic effort ``to prevent Iran 
from getting a nuclear weapon,'' and he has repeatedly said 
there are ``no options off the table to achieve that goal.''
    The American people are entitled to a clear Intelligence 
Community estimate about the length of time it would take Iran 
to construct a usable nuclear weapon, if and when they decide 
to produce one, and how likely is it that they will decide to 
do so.
    An additional matter of concern with regard to Iran was 
raised in a recent report discussing Iran's apparent 
willingness to host and support senior al Qaeda leaders and 
facilitators. This is a matter that has not received a great 
deal of attention in recent years. However, if true, Iran's 
sanctuary of al Qaeda could preserve some of the group's most 
senior leaders and potentially provide Iran with a dangerous 
proxy. The committee looks forward to the Director's testimony 
on that matter as well.
    On Syria, the recent veto by Russia and China of the Arab 
League-drafted resolution at the United Nations Security 
Council has bolstered the Assad regime and has regrettably 
demonstrated the willingness of China and Russia to support 
regimes seeking to crush individuals who are seeking a better 
and a freer life. We hope that the Directors here will share 
with the committee what we know about the individuals seeking 
to overthrow the Assad regime, what we know about who is 
supplying the Assad regime with weapons, what the regime's 
intentions are, and what we know about the willingness of the 
Syrian military to continue to kill and maim their own 
countrymen.
    Relative to Iraq, despite the political, economic, and 
security challenges that confront Iraq, the government's 
leaders appear to be willing to work generally together to 
resolve issues politically rather than through violence. While 
there is much this new democracy needs to do to build a new and 
truly pluralistic, stable, and sovereign nation, we would like 
to hear our witnesses' views on the Iraqis' progress to date 
and outlook for stability and political compromise. We also 
would be interested in the risk of unchecked Iranian influence 
in Iraq and what is the Iraqi Government's commitment and 
capability to deal with that influence or their willingness to 
deal with that influence.
    I am going to put my comments relative to China and the 
Asia-Pacific region in general in the record and end with just 
a comment on cybersecurity.
    Director Clapper's prepared statement indicates that the 
Intelligence Community places the cybersecurity threat to our 
country and our economy in the top tier of threats, alongside 
of terrorism and the proliferation of weapons of mass 
destruction (WMD). That is surely where that cyber threat 
belongs. A recent report from the National Counterintelligence 
Executive stated that entities operating from within China and 
Russia are responsible for the massive and routine theft of 
U.S. commercial and military technology, and that could 
threaten our national security and our prosperity. It is 
important to know what our Intelligence Community regards this 
economic espionage as, whether it is a significant national 
security threat, and also whether that view is shared by our 
policymakers, and whether China would believe that we are just 
bluffing if we talk about ending normal trade relations if the 
economic espionage and counterfeiting and theft of our 
intellectual property do not end.
    Before turning to Senator McCain for his opening remarks 
and then to our witnesses for their testimony, I would like to 
remind everyone that we have arranged for a closed session in 
room SVC-217, the Office of Senate Security, located in the 
Capitol Visitor Center, following this open session, in the 
event that such a closed session is necessary.
    Senator McCain.
    [The prepared statement of Chairman Levin follows:]

                Prepared Statement by Senator Carl Levin

    I would like to welcome our witnesses for today's hearing on 
current and longer-term threats and challenges around the world. We are 
glad to have the Director of National Intelligence, James Clapper, and 
the Director of the Defense Intelligence Agency, Lieutenant General Ron 
Burgess, as our witnesses today. We thank you for your long and 
continued service to the Nation on behalf of our troops to whom we owe 
so much.
    This committee has a special responsibility to the men and women of 
our Armed Forces to be vigilant about intelligence programs because the 
safety of our troops, decisions on whether or not to use military 
force, and the planning for military operations depend so heavily on 
intelligence.

                          AFGHANISTAN/PAKISTAN

    The security situation in Afghanistan remains one of the highest 
priority threats for our Intelligence Community. In the last year, 
there are clear signs of progress. Afghan security forces are in the 
lead in providing security in Kabul, including during the gathering of 
over 2,000 Afghan leaders for the recent Loya Jirga last November. The 
Afghan Army and Police are in charge of security in former Taliban 
strongholds in southern Afghanistan. In addition, Ministry of Interior 
and Ministry of Defense planners have developed a plan for the 
ministries' combined team operations for 2012 and 2013. The Afghan Army 
is widely respected, and even the Afghan Police, traditionally lagging 
far behind in that virtue, are gaining increasing respect among the 
Afghan people. According to a United Nations survey last month, the 
number of Afghans who expressed personal respect for the Afghan Police 
has increased to 81 percent, up 8 percent from the year before. 
Nonetheless, security remains fragile.
    A key to progress on security in Afghanistan is the process of 
transitioning the lead for securing the Afghan people from coalition 
forces to the Afghan security forces. The transition process is 
underway and continues apace, with the Afghan Army and Police assuming 
the security lead in more and more areas throughout the country. By 
later this year, approximately 50 percent of the Afghan population will 
live in areas where Afghan security forces have assumed the lead for 
providing security, supported by coalition forces. We heard on Tuesday 
from Chairman of the Joint Chiefs of Staff General Dempsey that the 
transition process is on track to meet the goal, agreed by Presidents 
Obama and Karzai and endorsed at the NATO Lisbon Summit, to have Afghan 
security forces in the lead for security throughout all Afghanistan by 
2014.
    Successful transition will depend on a number of factors, 
including: the growth in the capabilities of the Afghan Army and Police 
and their readiness to take the security lead; the nature of the 
insurgency; and progress on reconciliation talks. We would be 
interested in hearing our witnesses' assessment of the current security 
situation in Afghanistan and their views on the progress both in terms 
of providing security and of transition, and the possibilities for 
reconciliation with the Taliban.
    I am concerned by recent news reports that the latest National 
Intelligence Estimate (NIE) reflects a difference of views between the 
Intelligence Community and our military commanders over the security 
situation in Afghanistan, particularly in the south. According to these 
reports, the NIE contains a set of additional comments endorsed by 
Coalition Commander General John Allen, Ambassador Ryan Crocker, 
Central Command Commander General Mattis, and European Command 
Commander Admiral Stavridis, disagreeing with the NIE's assessment of 
the sustainability of security gains in the south. I hope that our 
witnesses will address this alleged difference of views in the recent 
NIE.
    Security in Afghanistan will remain in jeopardy so long as there 
continues to be sanctuary in Pakistan for insurgents conducting cross-
border attacks against U.S., coalition, and Afghan forces and the 
Afghan people. Pakistan's refusal to go after the safe havens of the 
Haqqani network in North Waziristan and of the Afghan Taliban Shura in 
Quetta belies Pakistan's assertions that it is committed to peace and 
security in the region. Pakistan's support to the Haqqani network, 
which former Chairman of the Joint Chiefs of Staff Admiral Mullen 
called a ``veritable arm'' of the ISI, Pakistan's intelligence agency, 
is a major cause for U.S.-Pakistan relations reaching a low point, 
where they will remain until the Pakistan military ends its ties to 
these militant extremists carrying out cross-border attacks.
    We need to understand the Intelligence Community's assessment of 
Pakistan's strategy with respect to these insurgent groups and the 
reconciliation process, and as to Pakistan's power to determine 
outcomes.

                           TERRORISM THREATS

    The U.S. campaign against the global jihadist movement--as Director 
Clapper's opening statement calls it--had a number of significant 
successes in the last year--most notably operations against Osama bin 
Laden and Anwar al-Awlaki. These successes struck major blows to al 
Qaeda's senior leadership and one of its most active affiliates, al 
Qaeda in the Arabian Peninsula. As a result of these operations and 
sustained pressure in Pakistan, Yemen, Somalia, and North Africa, al 
Qaeda and its affiliates are showing strain. The committee is also 
interested in the Intelligence Community's assessment of last week's 
announcement of a merger between al Qaeda and al Shabab and whether it 
signals an increased threat to the United States and our interests from 
Somalia.

                            MASS ATROCITIES

    Last August, the President issued Presidential Study Directive-10 
which identifies the prevention of mass atrocities and genocide as a 
core national security interest and moral responsibility of the United 
States. I am pleased to see that Director Clapper has included in his 
testimony a discussion of the importance of the prevention of mass 
atrocities, and the need for the Intelligence Community to report on 
these incidents rapidly so as to inform policymakers of these deeply 
concerning events.
    Over the past year, the international community has acted to 
prevent a mass atrocity in Libya and is currently witnessing a mass 
atrocity in Syria. These tragedies have resulted in the deaths of many 
civilians seeking their universal freedoms and destabilized a sensitive 
region that is critical to the United States and our allies.

                                  IRAN

    There is a strong bipartisan determination on this committee and in 
this Congress to do all we can to counter the threat posed by Iran and, 
in particular, to stop Iran from acquiring nuclear weapons. In the most 
recent National Defense Authorization Act, we made a real breakthrough 
with respect to Iran sanctions by requiring foreign financial 
institutions to choose between maintaining ties with the U.S. financial 
system or doing business with the Central Bank of Iran, especially 
relative to the purchase of Iranian petroleum and related products. 
President Obama has appropriately focused considerable and determined 
diplomatic effort ``to prevent Iran from getting a nuclear weapon,'' 
and he has repeatedly said there are ``no options off the table to 
achieve that goal.''
    The American people are entitled to a clear Intelligence Community 
estimate about the length of time it would take Iran to construct a 
usable nuclear weapon if or when they decide to produce one and how 
likely it is that they will decide to do so.
    An additional matter of concern with regard to Iran was raised in a 
recent report discussing Iran's apparent willingness to host and 
support senior al Qaeda leaders and facilitators. This is a matter that 
has not received a great deal of attention in recent years. However, if 
true, Iran's sanctuary of al Qaeda could preserve some of the group's 
most senior leaders and--potentially--provide Iran with a dangerous 
proxy. In recent congressional testimony, Director Clapper indicated 
that sustained pressure on al Qaeda has the potential to reduce the 
group to roaming criminal bands, but Iran's continued support could 
contribute to a future resurgence. The committee looks forward to the 
Director's testimony on these matters.

                        ARAB SPRING/EGYPT/SYRIA

    The upheavals of the Arab Spring have had significant implications 
for security and stability in the Middle East and North Africa. In 
Egypt, the first democratically elected incoming government in more 
than three decades, which is comprised of the Muslim Brotherhood and 
more conservative religious parties, is an unknown entity. The 
disposition of the Americans charged in the ongoing probe against 
organizations building the capacity of Egypt's civil society is also of 
great concern to many members of this committee. The committee looks 
forward to Director Clapper's assessment of the new government's 
intentions relative to these matters.
    On Syria, the recent veto by Russia and China of the Arab League-
drafted resolution at the United Nations Security Council has bolstered 
the Assad regime and has regrettably demonstrated the willingness of 
Russia and China to support regimes seeking to crush individuals 
seeking a better and freer life. I hope Director Clapper will share 
with the committee what we know about the individuals seeking to 
overthrow the Assad regime, what we know about who is supplying the 
Assad regime with weapons, what the regime's intentions are, and what 
we know about the willingness of the Syrian military to continue to 
kill and maim their own countrymen.

                                  IRAQ

    Despite the political, economic, and security challenges that 
confront Iraq, the government's leaders appear to be willing to work 
generally together to resolve issues politically rather than through 
violence. While there is much this new democracy needs to do to build a 
truly pluralistic, stable, and sovereign nation, we would like to hear 
the witnesses' views on the Iraqis' progress to date and outlook for 
stability and political compromise. We also look forward to the 
witnesses' assessment of the security situation in Iraq, the risk of 
unchecked Iranian influence, and the Iraqi Government's commitment and 
capability to improve political and economic conditions.

                              ASIA PACIFIC

    One of the main components of the President's recently announced 
Defense Strategic Guidance is to rebalance force structure and 
investments toward the Asia Pacific and this strategic focus is most 
appropriate and timely.
    The recent death of long-time North Korean dictator Kim Jong il has 
resulted in an abrupt, uncertain leadership change for a rogue nation 
with ballistic missile and nuclear capabilities.
    The lack of transparency associated with China's rapid military 
growth, coupled with China's assertiveness, particularly in the South 
and East China Seas, increases the potential for instability and 
miscalculation.
    These and other challenges underscore the need to continue and 
enhance the U.S. military's commitment to the Asia Pacific and to 
develop and strengthen alliances and partnerships in the region.
    Director Clapper's prepared statement attributes China's recent 
crackdown on internal dissension to concern among Chinese leaders about 
contagious effects of the Arab Spring. We would like to hear from 
Director Clapper whether there are, in fact, any reverberations in 
China from the uprisings in the Middle East, as well as the 
Intelligence Community's expectations regarding China's reaction to the 
President's strategic emphasis on the Asia-Pacific region.

                             CYBERSECURITY

    Director Clapper's prepared statement indicates that the 
Intelligence Community places the cybersecurity threat to our country 
and our economy in the top tier of threats, alongside terrorism and 
proliferation of weapons of mass destruction. That's surely where it 
belongs. A recent report from the National Counterintelligence 
Executive stated that entities operating from within China and Russia 
are responsible for the massive routine theft of U.S. commercial and 
military technology that could threaten national security and 
prosperity. It is important to know whether Director Clapper regards 
this economic espionage as a significant national security threat and 
whether that view is shared by policymakers, and whether China would 
believe we are just bluffing if we talk about ending normal trade 
relations if the economic espionage and counterfeiting and theft of our 
intellectual property do not end.
    Before turning to Senator McCain for his opening remarks, and our 
witnesses for their testimony, I would remind everyone that we have 
arranged for a closed session in room SVC-217, the Office of Senate 
Security, located in the Capitol Visitor Center, following this open 
session, if that is necessary.

                STATEMENT OF SENATOR JOHN McCAIN

    Senator McCain. Thank you, Mr. Chairman.
    Let me join you in welcoming Director Clapper and General 
Burgess and thanking them for their many years of distinguished 
service.
    I also want to take this opportunity to express our 
enormous gratitude to the men and women of our Intelligence 
Community. It is a truism that intelligence often fails 
publicly but succeeds privately. I only wish the American 
people could know the full extent of what our Intelligence 
Community does to keep us safe.
    Today's hearing is a fitting companion to the one this 
committee held on Tuesday to review the President's annual 
budget request for the Department of Defense (DOD), as well as 
his broader proposal to cut $487 billion in defense spending 
over 10 years. As Secretary of Defense Panetta and Chairman of 
the Joint Chiefs of Staff Dempsey told this committee on 
Tuesday, the administration's planned reductions in defense 
spending would entail greater risk to our military, to our 
missions, and to our national security. This stands to reason. 
But what does not is why we would choose to increase the 
already growing risk to our national security at this time. 
Just consider the scale and scope of these risks.
    Despite the remarkable damage inflicted on al Qaeda's core 
leadership by our military and intelligence professionals, al 
Qaeda's affiliates in Iraq, the Horn of Africa, and the Maghreb 
are growing stronger, more independent, more diffuse, and more 
willing to attack American interests.
    As evidenced by their plot to assassinate the Saudi 
ambassador in a Washington restaurant, the rulers in Iran 
clearly pose a more direct threat to us than many would have 
assumed just a year ago and that is on top of the hostile 
actions in which Iran has been engaging for years, including 
killing Americans in Iraq and Afghanistan, supporting terrorist 
groups across the Middle East, destabilizing Arab countries, 
propping up and rearming the Assad regime in Syria, and 
continuing their undeterred pursuit of a nuclear weapons 
capability. The threat posed by the Iranian regime could soon 
bring the Middle East to the brink of war if it is not there 
already.
    North Korea is in the midst of a potentially dangerous and 
destabilizing transition. An inexperienced 29-year-old is now 
in charge of a government that continues to produce nuclear 
weapons, develop ever-more sophisticated ballistic missiles, 
threaten our ally in the Republic of Korea, and administer the 
most brutal apparatus of state oppression of any country on 
Earth. The chances of increased conflict and miscalculations 
are as real as ever before.
    The Peoples Republic of China continues with a 
nontransparent buildup of its military forces while engaging in 
provocative acts against its neighbors in international waters. 
Indeed, tensions in the South China Sea have rarely been 
higher. At the same time, the number and sophistication of 
cyber attacks on American targets by Chinese actors, likely 
with Chinese Government involvement in many cases, is growing 
increasingly severe and damaging. Indeed, as last year's report 
from the Office of the National Counterintelligence Executive 
makes clear, ``Chinese actors are the world's most active and 
persistent perpetrators of economic espionage.''
    In Afghanistan, the Taliban insurgency is damaged but not 
broken, and regrettably their will to stay in the fight against 
the international coalition and our Afghan partners has only 
been increased by the administration's repeated public 
commitments to certain dates for withdrawing down our military 
forces regardless of conditions on the ground. Meanwhile, 
Pakistan remains as fragile and combustible as ever. As our 
witnesses' statements make clear, Pakistan's intelligence 
service continues to support terrorist elements inside 
Afghanistan that are attacking and killing Americans.
    In Iraq, the fragile stability of democratic gains that 
Iraqis have been able to forge, thanks to the surge, now seem 
to be unraveling. Prime Minister Maliki appears to be 
consolidating his power at the expense of the other political 
blocs. Violence is up significantly since the departure of U.S. 
troops. Al Qaeda in Iraq (AQI) and violent Shia extremist 
groups are still very much active and threatening to Iraq's 
stability. It is increasingly difficult to argue that Iraq, to 
use the President's words, is ``stable and self-reliant.''
    One year into the Arab Spring, the situation remains fluid, 
uncertain, and in places very troubling. From Tunisia and Libya 
to Egypt, Yemen, and Bahrain, countries are undergoing 
monumental changes and the outcomes of those changes are still 
far from clear. Then there is Syria, where the conflict appears 
to be entering a new phase. More than 6,000 lives have been 
lost and there appears to be no end in sight.
    The bloodshed must be stopped and we should rule out no 
option that could help save lives. We must consider, among 
other actions, providing opposition groups inside Syria both 
political and military with better means to organize their 
activities, to care for the wounded, to find safe havens, to 
communicate securely, to defend themselves, and to fight back 
against Assad's forces. The time has come when all options must 
be on the table to end the killing and force Assad to leave 
power.
    We could continue for some time listing the myriad of other 
threats facing our Nation, and I am confident we will cover 
most of them in today's hearing. What should be clear is that 
by no objective assessment are the threats to our national 
security decreasing. To the contrary, they are increasing as 
the prepared testimonies of our witnesses make vividly clear. 
So the question that Members of Congress and the members of 
this committee in particular need to think long and hard about 
is this: Why, in an international environment of growing 
uncertainty, risk, and threat, would we choose to add to those 
risks by making large and misguided cuts to our national 
defense budget, cuts that by themselves will not significantly 
reduce our national debt, the real driver of which is our 
domestic entitlement programs? I do not see a compelling answer 
to this question at this time. I imagine today's hearing will 
underscore that point.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you so much, Senator McCain.
    Director Clapper.

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

    Director Clapper. Thank you, Chairman Levin and Ranking 
Member McCain, distinguished members of the committee, for 
inviting us to present the 2012 worldwide threat assessment. I 
would observe you have probably already given it for us.
    I am joined today by the Director of the DIA, my friend and 
colleague of long standing, Lieutenant General Ron Burgess.
    These remarks and our statement for the record reflect the 
collective insights of extraordinary men and women of the U.S. 
Intelligence Community whom you have recognized--and we most 
appreciate that--and whom it is our privilege and honor to 
lead. We are most appreciative of your acknowledgment of the 
work, sometimes under very hazardous conditions, that is done 
by the men and women of the community around the world.
    We will not attempt to cover the full scope of worldwide 
threats in these brief oral remarks, so I would like to 
highlight some of the issues that we identified for the coming 
year, some of which you have already done for us, as I said.
    Earlier this month was the 51st anniversary of my 
enlistment in the Marine Corps and during my subsequent entire 
career, I do not recall a more complex and interdependent array 
of challenges than we face today. The capabilities, 
technologies, know-how, communications, and environmental 
forces are not confined by borders and can trigger 
transnational disruptions with astonishing speed. Never before 
has the Intelligence Community been called upon to master such 
complexity on so many issues in such a resource-constrained 
environment.
    We are rising to the challenge by continuing to integrate 
the Intelligence Community, taking advantage of new 
technologies, implementing new efficiencies, and as always, 
simply working harder. But candidly maintaining the world's 
premier intelligence enterprise in the face of our shrinking 
budgets will be a challenge. We will be accepting and managing 
risks more so than we have had to do in the last decade. When I 
say ``we,'' I mean both the legislative and the executive.
    We begin our threat assessment as we did last year with the 
global issues of terrorism and proliferation. The Intelligence 
Community sees the next 2 to 3 years as a critical transition 
phase for the terrorist threat, particularly for al Qaeda and 
likeminded groups. With Osama bin Laden's death, the global 
jihadist movement lost its most iconic and inspirational 
leader. The new al Qaeda commander is less charismatic and the 
death or capture of prominent al Qaeda figures has shrunk the 
group's top leadership layer. However, even with its degraded 
capabilities and its focus on smaller, simpler plots, al Qaeda 
remains a threat. As long as we sustain the pressure, we judge 
that core al Qaeda will be of largely symbolic importance to 
the global jihadist movement, but regional affiliates and, to a 
lesser extent, small cells and individuals will drive the 
global jihad agenda.
    Proliferation, that is, efforts to develop, acquire, or 
spread WMD, is also a major global strategic threat. Among 
nation-states, as you have alluded, Iran's technical advances, 
particularly in uranium enrichment, strengthen our assessment 
that Iran is more than capable of producing enough highly 
enriched uranium for a weapon if its political leaders, 
specifically the Supreme Leader himself, choose to do so.
    North Korea's export of ballistic missiles and associated 
materials to several countries, including Iran and Syria, 
illustrate the reach of North Korea's proliferation activities. 
We do not expect that Kim Jong Un, North Korea's new young 
leader, to change Pyongyang's policy of attempting to export 
most of its weapons systems.
    I note that in this year's statement for the record, as you 
have noted yourselves, that we elevated our discussion of cyber 
threats to follow terrorism and proliferation, and perhaps in 
something of the coals of Newcastle, just to affirm that cyber 
threat is one of the most challenging ones we face. We foresee 
a cyber environment in which emerging technologies are 
developed and implemented before security responses can be put 
in place. Among state actors, we are particularly concerned 
about entities within China and Russia conducting intrusions 
into U.S. computer networks and stealing U.S. data. The growing 
role that non-state actors are playing in cyberspace is a great 
example of the easy access to potentially disruptive and even 
lethal technology and know-how by such groups.
    Two of our greatest strategic cyber challenges are, first, 
definitive, real-time attribution of cyber attacks, that is, 
knowing who carried out such attacks and where perpetrators are 
located; and second, managing the enormous vulnerabilities 
within the IT supply chain for U.S. networks. In this regard, a 
cybersecurity bill was recently introduced by Senators 
Lieberman, Collins, Rockefeller, and Feinstein. It addresses 
the core homeland security requirements that would improve 
cybersecurity for the American people, for our Nation's 
critical infrastructure, and for the Federal Government's own 
networks and computers. The Intelligence Community considers 
such legislative steps essential to addressing our Nation's 
critical infrastructure vulnerabilities which pose serious 
national and economic security risks.
    Briefly, looking geographically around the world, in 
Afghanistan--and General Burgess will have more to say about 
this--during the past year, the Taliban lost some ground, but 
that was mainly in places where the International Security 
Assistance Forces (ISAF) were concentrated. Taliban senior 
leaders continue to enjoy safe haven in Pakistan. ISAF's 
efforts to partner with ANSF are encouraging, but corruption 
and governance challenges continue to threaten the Afghan 
forces' operational effectiveness. Most provinces have 
established basic governance structures, but they struggle to 
provide essential services. The ISAF's support and the support 
of Afghanistan's neighbors, notably and particularly Pakistan, 
will remain essential to sustain the gains that have been 
achieved. Although there is broad international political 
support for the Afghan Government, there are doubts in many 
capitals, particularly in Europe, about how to fund Afghanistan 
initiatives after 2014.
    In Iraq, violence and sporadic high-profile attacks 
continue. Prime Minister Maliki's recent aggressive moves 
against Sunni political leaders have heightened political 
tensions. But for now, we believe the Sunnis continue to view 
the political process as the best venue to pursue change.
    Elsewhere across the Middle East and North Africa, those 
pushing for change are confronting ruling elites, sectarian, 
ethnic, and tribal divisions, lack of experience with 
democracies, stalled economic development, military and 
security force resistance, and regional power initiatives. 
These are fluid political environments that offer openings for 
extremists to participate more assertively in political life. 
States where authoritarian leaders have been toppled, such as 
Tunisia, Egypt, and Libya, have to construct or reconstruct 
their political systems through complex negotiations among 
competing factions. Nowhere is this transition, I believe, more 
important than in Egypt, which, I think, will be a bellwether, 
and, of course, is so strategically important because of its 
size, its location, and, of course, the peace treaty that it 
now has with Israel.
    In Syria, regime intransigence and social divisions are 
prolonging internal struggles and could potentially turn 
domestic upheavals into regional crises.
    In Yemen, although a political transition is underway, the 
security situation continues to be marred by violence, and 
fragmentation of the country is a real possibility.
    As the ancient Roman historian Tacitus once observed, ``the 
best day after a bad emperor is the first.'' But after that, I 
would add, things get very problematic.
    The Intelligence Community is also paying close attention 
to developments across the African continent, throughout the 
western hemisphere, Europe, and across Asia. Here too, few 
issues are self-contained. Virtually every region has a bearing 
on our key concerns of terrorism, proliferation, cybersecurity, 
and instability, and throughout the globe, wherever there are 
environmental stresses on water, food, and natural resources, 
as well as health threats, economic crises, and organized 
crime, we see ripple effects around the world and impacts on 
U.S. interests.
    Amidst these extraordinary challenges, it is important to 
remind this distinguished body and the American people that in 
all of our work, the U.S. Intelligence Community strives to 
exemplify American values. We carry out our missions with 
respect for the rule of law and the protection of civil 
liberties and privacy. That pledge leads me to mention our 
highest legislative priority this year and it requires the 
support of both houses of Congress. I refer specifically to the 
Foreign Intelligence Surveillance Act (FISA)--which is set to 
expire at the end of 2012.
    Title 7 of FISA allows the Intelligence Community to 
collect vital information about international terrorists and 
other important targets overseas. This law authorizes 
surveillance of non-U.S. persons located overseas who are of 
foreign intelligence importance, meaning they have a connection 
to or information about threats such as terrorism or 
proliferation. It also provides for comprehensive oversight by 
all three branches of Government to protect the privacy and 
civil liberties of U.S. persons. The Department of Justice and 
my office conduct extensive oversight reviews of these 
activities and we report to Congress on implementation and 
compliance twice a year. Intelligence collection under FISA 
produces crucial intelligence that is vital to protect the 
Nation against international terrorism and other threats.
    We are always considering whether there are changes that 
could be made to improve the law, but our first priority is 
reauthorization of these authorities in their current form. We 
look forward to the speedy enactment of the legislation 
reauthorizing the FISA amendments act so there can be no 
interruption in our ability to use these authorities to protect 
the American people.
    So I end this brief statement where I began and then turn 
it over to General Burgess.
    The fiscal environment we face as a Nation and in our 
Intelligence Community will require careful identification and 
management of the challenges the Intelligence Community focuses 
on and the risks we must mutually assume.
    With that, I thank you and the members of the committee for 
your dedication to the security of our Nation, your support for 
our men and women of the Intelligence Community, and your 
attention here today.
    [The prepared statement of Director Clapper follows:]

              Prepared Statement by Hon. James R. Clapper

    Chairman Levin, Ranking Member McCain, members of the committee, 
thank you for the invitation to offer the Intelligence Community's 
assessment of threats to U.S. national security.
    This statement provides extensive detail about numerous state and 
nonstate actors, crosscutting political, economic, and military 
developments and transnational trends, all of which constitute our 
Nation's strategic and tactical landscape. Although I believe that 
counterterrorism, counterproliferation, cybersecurity, and 
counterintelligence are at the immediate forefront of our security 
concerns, it is virtually impossible to rank--in terms of long-term 
importance--the numerous, potential threats to U.S. national security. 
The United States no longer faces--as in the Cold War--one dominant 
threat. Rather, it is the multiplicity and interconnectedness of 
potential threats--and the actors behind them--that constitute our 
biggest challenge. Indeed, even the four categories noted above are 
also inextricably linked, reflecting a quickly changing international 
environment of rising new powers, rapid diffusion of power to nonstate 
actors and ever greater access by individuals and small groups to 
lethal technologies. We in the Intelligence Community believe it is our 
duty to work together as an integrated team to understand and master 
this complexity. By providing better strategic and tactical 
intelligence, we can partner more effectively with other Government 
officials at home and abroad to protect our vital national interests.

                               TERRORISM

    The next 2 to 3 years will be a critical transition phase for the 
terrorist threat facing the United States, particularly from al Qaeda 
and like-minded groups, which we often refer to as the ``global 
jihadist movement.'' During this transition, we expect leadership of 
the movement to become more decentralized, with ``core'' al Qaeda--the 
Pakistan-based group formerly led by Osama bin Laden--diminishing in 
operational importance; regional al Qaeda affiliates planning and 
attempting terrorist attacks; multiple voices providing inspiration for 
the movement; and more vigorous debate about local versus global 
agendas. We assess that with continued robust counterterrorism (CT) 
efforts and extensive cooperation with our allies and partners, there 
is a better-than-even chance that decentralization will lead to 
fragmentation of the movement within a few years. With fragmentation, 
core al Qaeda will likely be of largely symbolic importance to the 
movement; regional groups, and to a lesser extent small cells and 
individuals, will drive the global jihad agenda both within the United 
States and abroad.

         During and after this transition, the movement will 
        continue to be a dangerous transnational force, regardless of 
        the status of core al Qaeda, its affiliates, and its allies. 
        Terrorist groups and individuals sympathetic to the jihadist 
        movement will have access to the recruits, financing, arms and 
        explosives, and safe havens needed to execute operations.
         A key challenge for the West during this transition 
        will be conducting aggressive CT operations while not 
        exacerbating anti-Western global agendas and galvanizing new 
        fronts in the movement.

The CBRN Threat
    We assess that a mass attack by foreign terrorist groups involving 
a chemical, biological, radiological, or nuclear (CBRN) weapon in the 
United States is unlikely in the next year, as a result of intense 
counterterrorism pressure. Nevertheless, given the compartmented nature 
of CBRN programs, the spread of technological information, and the 
minimal infrastructure needed for some CBRN efforts, the Intelligence 
Community remains alert to the CBRN threat.
    Although we assess that a mass attack is unlikely, we worry about a 
limited CBR attack in the United States or against our interests 
overseas in the next year because of the interest expressed in such a 
capability by some foreign groups, such as al Qaeda in the Arabian 
Peninsula's (AQAP).

         The Intelligence Community judges that lone actors 
        abroad or in the United States--including criminals and 
        homegrown violent extremists (HVEs) inspired by terrorist 
        leaders or literature advocating use of CBR materials--are 
        capable of conducting at least limited attacks in the next 
        year, but we assess the anthrax threat to the United States by 
        lone actors is low.

Core al Qaeda in Decline
         With Osama bin Laden's death, the global jihadist 
        movement lost its most iconic and inspirational leader, even 
        for disaffected members of the group.
         We do not assess that al Qaeda's new leader, Ayman al-
        Zawahiri, will change al Qaeda's strategic direction, but most 
        al Qaeda members find Zawahiri's leadership style less 
        compelling than bin Laden's image as a holy man and warrior, 
        and will not offer him the deference they gave bin Laden.

    The death or capture of prominent al Qaeda figures since bin 
Laden's death has shrunk the layer of top lieutenants directly under 
Zawahiri. These losses, combined with the long list of earlier losses 
since CT operations intensified in 2008, lead us to assess that core al 
Qaeda's ability to perform a variety of functions--including preserving 
leadership and conducting external operations--has weakened 
significantly.

         We judge that al Qaeda's losses are so substantial and 
        its operating environment so restricted that a new group of 
        leaders, even if they could be found, would have difficulty 
        integrating into the organization and compensating for mounting 
        losses.
         We judge that with its degraded capabilities al Qaeda 
        increasingly will seek to execute smaller, simpler plots to 
        demonstrate relevance to the global jihad, even as it aspires 
        to mass casualty and economically damaging attacks, including 
        against the United States and U.S. interests overseas.
         With sustained CT pressure, we anticipate that core al 
        Qaeda will suffer sustained degradation, diminished cohesion, 
        and decreasing influence in the coming year.

Leadership of the Global Jihad
    We assess that core al Qaeda still communicates with its 
affiliates, but its ability to do so probably rests with only a few 
remaining senior leaders and their communications facilitators. We 
judge senior leaders almost certainly believe that persistent contact 
with affiliates is necessary to influence them to act on al Qaeda's 
global priorities and preserve a unified narrative.
    The Intelligence Community judges that al Qaeda's regional 
affiliates--AQAP, al Qaeda in Iraq (AQI), al Qaeda in the Islamic 
Maghreb (AQIM), and al-Shabaab--will remain committed to the group's 
ideology, and in terms of threats to U.S. interests will surpass the 
remnants of core al Qaeda in Pakistan. We expect that each group will 
seek opportunities to strike Western targets in its operating area, but 
the intent and ability of each affiliate to conduct transnational 
attacks varies widely. The future of any affiliate, and its role in the 
jihadist movement, will depend on how external forces (primarily the 
pace and effectiveness of CT operations) and internal forces (the 
competition between the local and global jihadist agendas) play out.

         Despite the death in September of AQAP transnational 
        operations chief and U.S. person Anwar al-Aulaqi, we judge AQAP 
        remains the node most likely to attempt transnational attacks. 
        His death probably reduces, at least temporarily, AQAP's 
        ability to plan transnational attacks, but many of those 
        responsible for implementing plots, including bombmakers, 
        financiers, and facilitators, remain and could advance plots.
         We assess that AQI will remain focused on overthrowing 
        the Shia-led government in Baghdad in favor of a Sunni-led 
        Islamic caliphate. It probably will attempt attacks primarily 
        on local Iraqi targets, including government institutions, 
        Iraqi Security Forces (ISF) personnel, Shia civilians, and 
        recalcitrant Sunnis, such as members of the Sons of Iraq, and 
        will seek to rebuild support among the Sunni population. In its 
        public statements, the group also supports the goals of the 
        global jihad, and we are watchful for indications that AQI 
        aspires to conduct attacks in the West.

    In Africa, AQIM and al-Shabaab are prioritizing local interests--
combating regional CT operations--over transnational operations. Al-
Shabaab has many sub-clans with divergent interests; most rank and file 
fighters have no interest in global jihad.

         Internal divisions and diminished local support for 
        al-Shabaab in the wake of the 2011 humanitarian crisis, coupled 
        with military pressure from the African Union Mission in 
        Somalia (AMISOM), Transitional Federal Government (TFG), Kenya, 
        and Ethiopia, have eroded alShabaab's control in southern 
        Somalia. In late 2011, Kenyan troops moved to encircle the port 
        of Kismaayo, the port al-Shabaab has used in past years to 
        generate much of its revenue. The ability of anti-Shabaab 
        forces to consolidate gains, control proxy forces, and win 
        support of local clans will be key to preventing al-Shabaab's 
        reclamation of Somali territory.
         We assess that most al-Shabaab members in 2012 will 
        remain focused on battling AMISOM, TFG, and Ethiopian/Kenyan-
        backed forces in Somalia. However, other al-Shabaab leaders may 
        intend to expand the group's influence and plan attacks outside 
        areas that al-Shabaab controls in southern and central Somalia, 
        such as in East Africa; al-Shabaab fighters were responsible 
        for twin bombings in Uganda in July 2010. Members of the 
        group--particularly a foreign fighter cadre that includes U.S. 
        passport holders--may also have aspirations to attack inside 
        the United States; however, we lack insight into concrete 
        operational plans outside the Horn of Africa.

    Other militant and terrorist networks will continue to threaten 
U.S. interests outside their primary operating areas. However, we judge 
that most lack either the capability or intent to plan, train for, and 
execute sophisticated attacks in the United States. Tehrik-e Taleban 
Pakistan (TTP), for example, is likely to remain heavily engaged 
against the Pakistani military and Coalition forces in Afghanistan, 
while providing some support to the Afghan insurgency.

The Threat from Homegrown Violent Extremists
    We assess that at least in the near term the threat in the United 
States from HVEs will be characterized by lone actors or small groups 
inspired by al Qaeda's ideology but not formally affiliated with it or 
other related groups. Most HVEs are constrained tactically by a 
difficult operating environment in the United States, but a handful 
have exhibited improved tradecraft and operational security and 
increased willingness to consider less sophisticated attacks, which 
suggests the HVE threat may be evolving.

         In the past decade, most HVEs who have aspired to 
        high-profile, mass-casualty attacks in the United States--
        typically involving the use of explosives against symbolic 
        infrastructure, government, and military targets--did not have 
        the technical capability to match their aspirations; however, 
        in 2009, extremists who were first radicalized in the United 
        States, but then travelled overseas and received training and 
        guidance from terrorist groups, attempted two mass-casualty 
        explosives attacks in the United States.

    We remain alert to potential dynamics that might emerge in the 
United States, online, or overseas that would alter the nature of the 
HVE threat. Some include:

         A galvanizing event or series of events perceived to 
        reflect an anti-Islamic bias or agenda in the United States.
         U.S. or Western military involvement in another Muslim 
        country.
         Increased HVE learning from past disruptions and 
        plots.
         Increased HVE use of the Internet to share propaganda, 
        form social or peer networks, or recruit others for attack 
        planning.
         Civil or inter-state conflict overseas leading to the 
        radicalization of individuals in diaspora communities in the 
        United States.

The Threat from Iran
    The 2011 plot to assassinate the Saudi Ambassador to the United 
States shows that some Iranian officials--probably including Supreme 
Leader Ali Khamenei--have changed their calculus and are now more 
willing to conduct an attack in the United States in response to real 
or perceived U.S. actions that threaten the regime. We are also 
concerned about Iranian plotting against U.S. or allied interests 
overseas.

         Iran's willingness to sponsor future attacks in the 
        United States or against our interests abroad probably will be 
        shaped by Tehran's evaluation of the costs it bears for the 
        plot against the Ambassador as well as Iranian leaders' 
        perceptions of U.S. threats against the regime.

                             PROLIFERATION

    Nation-state efforts to develop, acquire, and/or proliferate 
weapons of mass destruction (WMD) and their related delivery systems 
constitute a major threat to the safety of our Nation, our deployed 
troops, and our allies. The threat and destabilizing effect of nuclear 
proliferation, as well as the threat from the proliferation of 
materials and technologies that could contribute to existing and 
prospective chemical and biological weapons programs, are among our top 
concerns.
    Traditionally, deterrence and diplomacy have constrained most 
nation states from acquiring biological, chemical, or nuclear weapons, 
but these constraints may be of less utility in preventing terrorist 
groups from doing so. The time when only a few states had access to the 
most dangerous technologies is past. Biological and chemical materials 
and technologies, almost always dual-use, move easily in our globalized 
economy, as do the personnel with scientific expertise to design and 
use them. The latest discoveries in the life sciences diffuse globally 
and rapidly.
    We assess that no nation states have provided WMD assistance to 
terrorist groups and that no nonstate actors are targeting WMD sites in 
countries with unrest; however, as governments become unstable and 
transform, WMD-related materials may become vulnerable to nonstate 
actors, if the security that protects them erodes.

                   WMD THREATS: IRAN AND NORTH KOREA

    We assess Iran is keeping open the option to develop nuclear 
weapons, in part by developing various nuclear capabilities that better 
position it to produce such weapons, should it choose to do so. We do 
not know, however, if Iran will eventually decide to build nuclear 
weapons.
    Iran nevertheless is expanding its uranium enrichment capabilities, 
which can be used for either civil or weapons purposes. As reported by 
the International Atomic Energy Agency, to date, Iran in late October 
2011 had about 4,150 kg of 3.5 percent LEUF6 and about 80 kg of 20-
percent enriched UF6 produced at Natanz. Iran confirmed on 9 January 
that it has started enriching uranium for the first time at its second 
enrichment plant, near Qom.
    Iran's technical advancement, particularly in uranium enrichment, 
strengthens our assessment that Iran has the scientific, technical, and 
industrial capacity to eventually produce nuclear weapons, making the 
central issue its political will to do so. These advancements 
contribute to our judgment that Iran is technically capable of 
producing enough highly enriched uranium for a weapon, if it so 
chooses.
    We judge Iran would likely choose missile delivery as its preferred 
method of delivering a nuclear weapon. Iran already has the largest 
inventory of ballistic missiles in the Middle East, and it is expanding 
the scale, reach, and sophistication of its ballistic missile forces, 
many of which are inherently capable of carrying a nuclear payload.
    We judge Iran's nuclear decisionmaking is guided by a cost-benefit 
approach, which offers the international community opportunities to 
influence Tehran. Iranian leaders undoubtedly consider Iran's security, 
prestige, and influence, as well as the international political and 
security environment, when making decisions about its nuclear program.
    Iran's growing inventory of ballistic missiles and its acquisition 
and indigenous production of anti-ship cruise missiles (ASCM) provide 
capabilities to enhance its power projection. Tehran views its 
conventionally armed missiles as an integral part of its strategy to 
deter--and if necessary retaliate against--forces in the region, 
including U.S. forces. Its ballistic missiles are inherently capable of 
delivering WMD, and, if so armed, would fit into this strategy.
    North Korea's nuclear weapons and missile programs pose a serious 
threat to the security environment in East Asia. Its export of 
ballistic missiles and associated materials to several countries, 
including Iran and Syria, and its assistance to Syria--now ended--in 
the construction of a nuclear reactor (destroyed in 2007), illustrate 
the reach of the North's proliferation activities. Despite the October 
2007 Six-Party agreement--in which North Korea reaffirmed its 
commitment not to transfer nuclear materials, technology, or know-how--
we remain alert to the possibility that North Korea might again export 
nuclear technology.
    We judge North Korea has tested two nuclear devices. Its October 
2006 nuclear test is consistent with our longstanding assessment that 
it produced a nuclear device, although we judge the test itself was a 
partial failure. The North's probable nuclear test in May 2009 had a 
yield of roughly two kilotons TNT equivalent and was apparently more 
successful than the 2006 test. These tests strengthen our assessment 
that North Korea has produced nuclear weapons.
    In November 2010, North Korea revealed a claimed 2,000 centrifuge 
uranium enrichment facility to an unofficial U.S. delegation visiting 
the Yongbyon Nuclear Research Center, and stated it would produce low-
enriched uranium to fuel a planned light-water reactor under 
construction at Yongbyon. The North's disclosure supports the United 
States' longstanding assessment that North Korea has pursued a uranium-
enrichment capability.
    The Intelligence Community assesses Pyongyang views its nuclear 
capabilities as intended for deterrence, international prestige, and 
coercive diplomacy. We judge that North Korea would consider using 
nuclear weapons only under narrow circumstances. We also assess, albeit 
with low confidence, Pyongyang probably would not attempt to use 
nuclear weapons against U.S. forces or territory, unless it perceived 
its regime to be on the verge of military defeat and risked an 
irretrievable loss of control.

            CYBER THREATS: AN EVOLVING AND STRATEGIC CONCERN

Major Trends
    Cyber threats pose a critical national and economic security 
concern due to the continued advances in--and growing dependency on--
the information technology (IT) that underpins nearly all aspects of 
modern society. Data collection, processing, storage, and transmission 
capabilities are increasing exponentially; meanwhile, mobile, wireless, 
and cloud computing bring the full power of the globally-connected 
Internet to myriad personal devices and critical infrastructure. Owing 
to market incentives, innovation in functionality is outpacing 
innovation in security, and neither the public nor private sector has 
been successful at fully implementing existing best practices.
    The impact of this evolution is seen not only in the scope and 
nature of cyber security incidents, but also in the range of actors and 
targets. In the last year, we observed increased breadth and 
sophistication of computer network operations (CNO) by both state and 
nonstate actors. Our technical advancements in detection and 
attribution shed light on malicious activity, but cyber intruders 
continue to explore new means to circumvent defensive measures.
    Among state actors, China and Russia are of particular concern. As 
indicated in the October 2011 biennial economic espionage report from 
the National Counterintelligence Executive, entities within these 
countries are responsible for extensive illicit intrusions into U.S. 
computer networks and theft of U.S. intellectual property.
    Nonstate actors are also playing an increasing role in 
international and domestic politics through the use of social media 
technologies. We currently face a cyber environment where emerging 
technologies are developed and implemented faster than governments can 
keep pace, as illustrated by the failed efforts at censoring social 
media during the 2011 Arab Spring revolutions in Tunisia, Egypt, and 
Libya. Hacker groups, such as Anonymous and Lulz Security (LulzSec), 
have conducted distributed denial of service attacks and web site 
defacements against government and corporate interests they oppose. The 
well publicized intrusions into NASDAQ and International Monetary Fund 
(IMF) networks underscore the vulnerability of key sectors of the U.S. 
and global economy.
    Hackers are also circumventing network security by targeting 
companies that produce security technologies, highlighting the 
challenges to securing online data in the face of adaptable intruders. 
The compromise of U.S. and Dutch digital certificate issuers in 2011 
represents a threat to one of the most fundamental technologies used to 
secure online communications and sensitive transactions, such as online 
banking. Hackers also accessed the corporate network of the computer 
security firm RSA in March 2011 and exfiltrated data on the algorithms 
used in its authentication system.
    Subsequently, a U.S. defense contractor revealed that hackers used 
the information obtained from RSA to access its network.
Outlook
    We assess that CNO is likely to increase in coming years. Two of 
our greatest strategic challenges regarding cyber threats are: (1) the 
difficulty of providing timely, actionable warning of cyber threats and 
incidents, such as identifying past or present security breaches, 
definitively attributing them, and accurately distinguishing between 
cyber espionage intrusions and potentially disruptive cyber attacks; 
and (2) the highly complex vulnerabilities associated with the IT 
supply chain for U.S. networks. In both cases, U.S. Government 
engagement with private sector owners and operators of critical 
infrastructures is essential for mitigating these threats.

                          COUNTERINTELLIGENCE

    We assess that foreign intelligence services (FIS) are constantly 
developing methods and technologies that challenge the ability of the 
U.S. Government and private sector to protect U.S. national security 
and economic information, information systems, and infrastructure. The 
changing, persistent, multifaceted nature of these activities makes 
them particularly difficult to counter.
    Given today's environment, we assess that the most menacing foreign 
intelligence threats in the next 2 to 3 years will involve:

         Cyber-Enabled Espionage. FIS have launched numerous 
        computer network operations targeting U.S. Government agencies, 
        businesses, and universities. We assess that many intrusions 
        into U.S. networks are not being detected. Although most 
        activity detected to date has been targeted against 
        unclassified networks connected to the Internet, foreign cyber 
        actors have also begun targeting classified networks.
         Insider Threats. Insiders have caused significant 
        damage to U.S. interests from the theft and unauthorized 
        disclosure of classified, economic, and proprietary information 
        and other acts of espionage. We assess that trusted insiders 
        using their access for malicious intent represent one of 
        today's primary threats to U.S. classified networks.
         Espionage by China, Russia, and Iran. Russia and China 
        are aggressive and successful purveyors of economic espionage 
        against the United States. Iran's intelligence operations 
        against the United States, including cyber capabilities, have 
        dramatically increased in recent years in depth and complexity. 
        We assess that FIS from these three countries will remain the 
        top threats to the United States in the coming years.

    We judge that evolving business practices and information 
technology will provide even more opportunities for FIS, trusted 
insiders, hackers, and others to collect sensitive U.S. economic data. 
Corporate supply chains and financial networks will increasingly rely 
on global links that can be exploited by foreign collectors, and the 
growing use of cloud data processing and storage may present new 
challenges to the security and integrity of sensitive information.

                            MASS ATROCITIES

    Presidential Study Directive-10, issued in August 2011, identifies 
the prevention of mass atrocities and genocide as a core national 
security interest and moral responsibility of the United States. Mass 
atrocities generally involve large-scale and deliberate attacks on 
civilians, and can include genocide. The Presidential Directive 
establishes an interagency Atrocities Prevention Board that will 
coordinate a U.S. Government-wide effort to prevent or mitigate such 
violence. The Intelligence Community will play a significant role in 
this effort, and we have been asked to expand collection and analysis 
and to encourage partner governments to collect and share intelligence 
on this issue.
    Unfortunately, mass atrocities have been a recurring feature of the 
global landscape. Since the turn of century, hundreds of thousands of 
civilians have lost their lives during conflicts in the Darfur region 
of Sudan and in the eastern Congo (Kinshasa). Recently, atrocities in 
Libya and Syria have occurred against the backdrop of major political 
upheavals. Mass atrocities usually occur in the context of other 
instability events and often result from calculated strategies by new 
or threatened ruling elites to assert or retain control, regardless of 
the cost. Violence against civilians also emerges in places where 
poorly institutionalized governments discriminate against minorities, 
socioeconomic conditions are poor, or local powerbrokers operate with 
impunity, as in Kyrgyzstan in 2010. In addition, terrorists and 
insurgents may exploit similar conditions to conduct attacks against 
civilians, as in Boko Haram's recent attacks on churches in Nigeria.

                           GLOBAL CHALLENGES

South Asia
    Afghanistan
    The Afghan Government will continue to make incremental, fragile 
progress in governance, security, and development in 2012. Progress 
will depend on capable Afghan partners and require substantial 
international support, particularly to fight the still resilient, 
Taliban-led insurgency. International Security Assistance Forces (ISAF) 
will remain essential to secure gains and nurture developmental 
initiatives through 2012. Enduring stability also depends heavily but 
not exclusively on neighboring states, especially Pakistan. We judge 
that, although there is broad international political support for the 
Afghan Government, many European Governments harbor doubts about 
funding for Afghanistan initiatives post-2014.
        Resilient Insurgency
    We assess that the Taliban-led insurgency in Afghanistan has lost 
ground in some areas. For example, the Taliban's ability to influence 
the population and maintain its strongholds inside Afghanistan has 
diminished since last year. However, its losses have come mainly in 
areas where ISAF surge forces are concentrated; it remains resilient 
and capable of challenging U.S. and international goals; and Taliban 
senior leaders continue to enjoy safe haven in Pakistan, which enables 
them to provide strategic direction to the insurgency and not fear for 
their safety.
    We assess al Qaeda's impact on the Afghanistan insurgency is 
limited. It most often works to support other insurgent groups that do 
not rely on al Qaeda or foreign fighter participation to mount 
successful operations. That said, al Qaeda is committed to the Afghan 
jihad, and the propaganda gains from participating in insurgent attacks 
outweigh their limited battlefield impact.
        Afghan Internal Capabilities
    In terms of security, we judge that the Afghan police and Army will 
continue to depend on ISAF support. ISAF partnering and mentoring have 
begun to show signs of sustainable progress at the tactical and 
ministerial levels; however, corruption as well as poor leadership and 
management will threaten Afghan National Security Forces' (ANSF) 
operational effectiveness.
    In terms of governance, there have been incremental improvements 
extending rule of law, including official endorsement of traditional 
legal systems, and most provinces have established basic governance 
structures. However, provinces still struggle to provide essential 
services. Moreover, access to official governance is primarily limited 
to urban areas, such as district and provincial capitals, leaving much 
of the rural population isolated from the government.
    The Karzai Government did achieve some successes in 2011. The first 
phase of the process to transition security to Afghan leadership 
proceeded smoothly, and the second tranche of the transition is 
progressing as scheduled. The Karzai administration successfully 
convened a Loya Jirga in November to socialize the strategic 
partnership with the United States. Now that the fall 2010 electoral 
crisis is resolved, the Wolesi Jirga will likely regroup during the 
current winter recess and return its focus to limiting President 
Karzai's authority, likely using the parliamentary approval process for 
ministerial appointees as a way to highlight Parliament's independence.
        Status of the Afghan Drug Trade
    Afghanistan is the largest supplier of illicit opium to the world 
market and probably produces enough to fulfill yearly global demand for 
illicit opiates. Afghans earned $1.8 billion from the opiate trade, 
equivalent to 12 percent of the licit gross domestic product (GDP) in 
2010, according to U.S. Government, IMF, and United Nations estimates. 
We judge the level of security in local areas, including ease of access 
to markets for licit crops, is the most significant factor affecting 
poppy farmers' decisionmaking; additional contributing factors include 
coercive measures, the viability of licit crops, and, to a lesser 
extent, opium prices.
    Pakistan
    We judge al Qaeda operatives are balancing support for attacks in 
Pakistan with guidance to refocus the global jihad externally, against 
U.S. targets. al Qaeda also will increasingly rely on ideological and 
operational alliances with Pakistani militant factions to accomplish 
its goals within Pakistan and to conduct transnational attacks. 
Pakistani military leaders have had limited success against al Qaeda 
operatives, other foreign fighters, and Pakistani militants who pose a 
threat to Islamabad.
    Meanwhile, the country's economic recovery is at risk. In an effort 
to keep its coalition in power to the end of the 5-year parliamentary 
term, the government has been unwilling to persuade its disparate 
coalition members to accept much needed but unpopular policy and tax 
reforms. Sustained remittances from overseas Pakistanis (on the order 
of $10-12 billion a year) have kept Reserves high, as have borrowed 
resources from the IMF. However, the economy last fiscal year expanded 
at a slower rate of about 2 percent, partly because of flood damages; 
both foreign direct investment and domestic investment are declining; 
and Pakistan's investment-to-GDP ratio declined for the third year in a 
row to 13.4 percent at the beginning of the fiscal year in July 2011.
    India
        Relations with Pakistan
    After a 4-year pause, India and Pakistan revived expert-level 
discussions on conventional and nuclear confidence-building measures 
(CBM), when they met in Islamabad December 26-27, 2011. Following the 
meetings, a joint statement noted that both sides reviewed the 
implementation and strengthening of existing CBMs in the framework of 
the Lahore MoU, and agreed to explore possibilities for additional, 
mutually acceptable CBMs. India-Pakistan relations also improved in 
2011 after both sides in February agreed to resume the bilateral 
dialogue, suspended since the November 2008 terrorist attack in Mumbai.

         The two countries' home secretaries in March charted a 
        work program to improve cooperation, including commitments to 
        establish a hotline, streamline visa procedures, and meet on a 
        biannual basis. Both sides also began to negotiate procedures 
        to review each other's investigations into the Mumbai attack. 
        The two countries are making progress in these areas.
         Prime Minister Singh and Prime Minister Gilani had 
        cordial meetings during the April international cricket 
        championships and the November South Asia Association for 
        Regional Cooperation (SAARC) meeting.
         Progress expanding trade ties has also helped improve 
        relations, and Islamabad in November publicly committed to a 
        proposal for granting most favored nation trade status to 
        India.
         Less progress has been made in discussions over the 
        difficult border issues of Siachen Glacier and Sir Creek, and 
        we judge New Delhi will maintain a go-slow approach in these 
        negotiations.
        Relations with Afghanistan
    India significantly increased its engagement with Afghanistan in 
2011, when it pledged another $500 million in aid during Prime Minister 
Singh's May visit to Kabul and finalized a Strategic Partnership 
Agreement with Afghanistan in October. This pact is likely to 
facilitate closer bilateral security cooperation, more training of 
Afghan security personnel, and modest material support to Afghan 
Government security forces. However, New Delhi in the near term is 
unlikely to send troops or heavy equipment to Kabul because it does not 
want to provoke Pakistan. India's increased engagement is aimed at 
helping the Afghan Government sustain its sovereignty and independence 
during and after ISAF forces draw down. The Indian Government also is 
increasing efforts to spur Indian investment in Afghanistan's fledgling 
natural resources sector, which New Delhi sees as crucial to its 
strategic and economic interests in the region.
    We judge that India sees its goals in Afghanistan as consistent 
with U.S. objectives and favors a sustained ISAF and U.S. presence in 
the country. India will almost certainly cooperate with the United 
States and Afghanistan in bilateral and multilateral frameworks to 
identify assistance activities that will help bolster civil society, 
develop capacity, and strengthen political structures in Afghanistan. 
Moreover, India consistently ranks among the top three nations that 
Afghans see as helping their country rebuild. As of August 2011, India 
ranked as Afghanistan's fifth largest bilateral donor.
        Relations with China
    Despite public statements intended to downplay tensions between 
India and China, we judge that India is increasingly concerned about 
China's posture along their disputed border and Beijing's perceived 
aggressive posture in the Indian Ocean and Asia-Pacific region. The 
Indian Army believes a major Sino-Indian conflict is not imminent, but 
the Indian military is strengthening its forces in preparation to fight 
a limited conflict along the disputed border, and is working to balance 
Chinese power projection in the Indian Ocean. India has expressed 
support for a strong U.S. military posture in East Asia and U.S. 
engagement in Asia.
East Asia
    North Korea
    Kim Jong Un became North Korea's leader following the death of his 
father, Kim Jong Il, on 17 December 2011. Although it is still early to 
assess the extent of his authority, senior regime leaders will probably 
remain cohesive at least in the near term to prevent instability and 
protect their interests.
    China
    China in 2011 appeared to temper the assertive behavior that 
characterized its foreign policy the year before, but the internal and 
external drivers of that behavior persist. Moreover, although Chinese 
leaders have affirmed their commitment to a peaceful and pragmatic 
foreign policy--and especially to stable relations with China's 
neighbors and the rest of the world--Beijing may take actions contrary 
to that goal if it perceives that China's sovereignty or national 
security is being seriously challenged.
        Internal Dynamics
    The Arab Spring uprisings stoked concern among Chinese leaders that 
similar unrest in China could undermine their rule, prompting Beijing 
to launch its harshest crackdown on dissent in at least a decade. At 
the same time, apprehension about the global economy and the potential 
for domestic instability also appeared to increase in 2011, heightening 
Beijing's resistance to external pressure and suspicion of U.S. 
intentions.
    China's economic policies came under review, as leaders shifted 
their focus from fighting inflation to supporting growth because of 
concerns that the global consequences of debt problems in Europe would 
reduce external demand and Chinese GDP growth. Chinese GDP growth did 
slow down over the course of the year, albeit from levels that are the 
envy of most countries. Beijing continued a policy of permitting modest 
appreciation of the renminbi--which rose about 5 percent against the 
currencies of China's trading partners in 2011--although it remains 
substantially undervalued.
    Politically, China's impending leadership succession in the fall of 
2012 will reinforce Beijing's tendency toward a cautious and 
nationalist posture this year. Leaders will focus on the personnel 
changes expected at the Party Congress, and are unlikely to risk 
internal criticism by advocating bold policy changes or compromises on 
sovereignty issues.
        People's Liberation Army (PLA) Modernization
    China began its military modernization program in earnest in the 
late 1990s, after observing the long-range precision guided warfare 
demonstrated by Western powers in Operation Desert Storm and the 
Balkans, and determining that the nature of warfare had changed. It 
responded by investing in short- and medium-range ballistic missiles, 
modern naval platforms, improved air and air defense systems, 
counterspace capabilities, and intelligence, surveillance, and 
reconnaissance (ISR) to support over-the-horizon military operations. 
Since 2008, Beijing has shown a greater willingness to project military 
force to protect national interests, including Chinese maritime 
shipping as far away as the Middle East, and more recently to enforce 
sovereignty claims throughout the South China Sea. However, Taiwan 
remains the PLA's most critical potential mission and the PLA continues 
to build capabilities to deter it from declaring independence and to 
deter, delay or deny U.S. interference in a potential cross-Strait 
conflict.
    Many of Beijing's military capability goals have now been realized, 
resulting in impressive military might. Other goals remain longer term, 
but the PLA is receiving the funding and political support to transform 
the PLA into a fully modern force, capable of sustained operations in 
Asia and beyond.
    Taiwan
    The Taiwan Strait was characterized in 2011 by relative stability 
and generally positive developments, with China and Taiwan implementing 
economic cooperation initiatives and exploring agreements on a range of 
practical issues. President Ma Ying-jeou's reelection on 14 January 
suggests continued cross-strait rapprochement. Progress, however, 
probably will continue to be incremental because of differences over 
sensitive political issues, and because both sides have other domestic 
priorities. In the meantime, the military balance continues to shift in 
China's favor.
Near East: Middle East and North Africa
    Regional Implications of the Arab Spring
    The Arab world is in a period of turmoil and change that will 
challenge the ability of the United States to influence events in the 
Middle East. This turmoil is driven by forces that will shape Arab 
politics for years, including a large youth population; economic 
grievances associated with persistent unemployment, inequality, and 
corruption; increased popular participation and renewed hope in 
effecting political change; and a greater ability by opposition groups 
to mobilize nonviolent resistance on a large scale. Meanwhile, the 
forces propelling change are confronting ruling elites; sectarian, 
ethnic, and tribal divisions; lack of experience with democracy; 
dependence on natural resource wealth; and regional power rivalries.
    Arab countries are undergoing a variety of contested transitions. 
These political transitions are likely to be complex and protracted. 
States where authoritarian leaders have been toppled--Tunisia, Egypt, 
and Libya--will have to reconstruct their political systems via complex 
negotiations among competing factions. In Syria, regime intransigence 
and societal divisions are prolonging internal struggles and 
potentially turning domestic upheavals into regional crises.
    The countries most affected by the Arab Spring--Egypt, Libya, 
Syria, and Tunisia--suffered setbacks to development, with economic 
activity stalling or declining. Tunisia faces challenges in boosting 
growth and employment, but economic conditions probably will improve 
modestly in the coming year. Oil production in Libya declined 
substantially, causing fluctuation in global oil prices, but increased 
production from other countries prevented serious market disruption and 
capped price increases. Saudi Arabia and Qatar have expanded social 
spending and food subsidies to address popular concerns, which will 
saddle them with large budget deficits if oil prices decline 
substantially.
    Fluid political environments across the Arab world also offer 
openings for Islamic activists to participate more fully in political 
life. The strong showing by the Islamist al-Nahda party in the Tunisian 
elections and the success of Islamist parties in elections in Egypt and 
Morocco suggest that they might be the best organized competitors in 
diverse electoral contests. Although Islamist parties' long-term 
political prospects probably will depend on how they actually solve 
economic and social problems, their platforms and rhetoric suggest they 
will adopt a mix of pro-market and populist social welfare policies.
    This new regional environment poses challenges for U.S. strategic 
partnerships in the Arab world. However, we judge that Arab leaders 
will continue to cooperate with the United States on regional security 
to help check Iran's regional ambitions, and some will seek economic 
assistance.
    Libya
    Tripoli similarly faces profound challenges in the wake of the 
insurgents' defeat of Muammar al-Qadhafi, including navigating 
political obstacles, rebuilding the economy, and securing Libya. The 
Libyans have thus far met the deadlines contained in the roadmap they 
developed, and are on track to hold elections in June for the National 
Congress, which will then draft a constitution. To continue to achieve 
its milestones, however, the interim government needs to assert its 
authority without igniting divisions among Libya's various 
stakeholders. It also needs to work toward disbanding and integrating 
the country's various militias. Libyan authorities will need continued 
international assistance to locate and secure what is left of the 
estimated 20,000 Manportable Air-Defense Systems (MANPADS) Qadhafi's 
regime acquired since 1970. Central to Libya's rebuilding is also the 
recovery of its economy, particularly oil production and export 
capability. Over the longer term, restarting oil production and exports 
will be critical to Libya's growth and development.
    Tunisia
    In recent months, Tunisia has passed several milestones on its path 
toward democracy, the most significant being the 23 October Constituent 
Assembly elections, accepted both by international observers and the 
Tunisian public as fair, credible, and transparent. Out of the 
elections, a new governing coalition has emerged, led by the Islamist 
Nahda Party, in partnership with the secularist Ettakatol party and 
Congress for the Republic party. Hamadi Jebali, Nahda's Secretary 
General, assumed the post of Prime Minister on 14 December and rolled 
out his cabinet on 22 December.
    Yemen
    President Ali Abdallah Salih signed a GCC deal to transfer power 
and has recently departed Yemen to receive medical treatment in the 
United States. However, youth protestors, who sparked the movement for 
political reform, rejected the GCC deal for failing to call for Salih 
to step down immediately and be put on trial. An additional obstacle to 
completing a peaceful transfer of power is that the political actors 
involved in the negotiations do not represent all the key armed 
opposition groups. For example, Huthi rebels, southern secessionists, 
and antigovernment tribes--none of whom are part of the GCC 
negotiations--will likely try to strengthen their control locally if a 
political deal excludes them.
    Ongoing instability in Yemen provides AQAP with greater freedom to 
plan and conduct operations. AQAP has exploited the political unrest to 
adopt a more aggressive strategy in southern Yemen, and it continues to 
threaten U.S. and Western diplomatic interests, particularly in Sanaa.
    Lebanon
    Lebanon has not experienced violence or widespread political unrest 
as a result of the events of the Arab Spring, but it suffers from 
sectarian tensions that make its stability fragile. The risk of 
violence remains because of: potential developments with the Special 
Tribunal for Lebanon (STL), which in June 2011 indicted Hizballah 
members for the assassination of former Prime Minister Rafik Hariri; 
the possibility that Syrian unrest might spread into Lebanon; threats 
to Hizballah's leadership, infrastructure, or weapons; and the 
potential for renewed conflict between Hizballah and Israel. Prime 
Minister Miqati was able to provide funding to the STL using funds from 
the Prime Minister's office, but Hizballah will continue trying to 
undermine the STL investigation. Hizballah's Secretary General in mid-
November publicly warned that an Israeli attack on Iran would spark a 
regional war, signaling that Hizballah may retaliate for a strike on 
Iran.
    Syria
    We are now nearly a year into the unrest and antiregime protests in 
Syria, and the situation is unlikely to be resolved quickly. Both the 
regime and the opposition are determined to prevail, and neither side 
appears willing to compromise on the key issue of President Bashar al-
Asad remaining in power.
    The Arab League's decision on 12 November 2011 to suspend Syria's 
membership and impose sanctions further galvanized international 
opposition to Asad. Syria's opposition has taken steps to organize and 
some elements have taken up arms. The shift toward violent tactics is 
intensifying pressure on the regime's security and military assets, and 
it risks alienating Syrians opposed to the violent overthrow of the 
regime, dividing the political opposition, and increasing widespread 
sectarian tension. Regional criticism of Asad increased markedly over 
the last several months, with a growing number of states taking 
measures to support the opposition. A draft United Nations Security 
Council (UNSC) resolution endorsing the League's call for Asad to 
transfer much of his power to Vice President Farouk al-Shara was vetoed 
by Russia and China on 4 February. The League had called for Shara to 
preside over an interim unity government that would write a new 
constitution and hold elections within 3 months. The League also is 
looking to restrict Syria's regional diplomatic capabilities to exert 
pressure on the Asad regime. A League official on 4 February called on 
member states to expel Syrian ambassadors and cut diplomatic and 
economic ties with Syria, according to a Middle Eastern press report.
    Arab Spring and the Global Jihadist Movement
    The unrest potentially provides terrorists inspired by the global 
jihadist movement more operating space, as security services focus more 
on internal security and, in some cases, undergo transformations in 
make-up and orientation.

         Bin Ladin's death, combined with other leadership 
        losses, probably will distract the group from exploiting the 
        unrest in the short run. al Qaeda leaders likely assess that 
        gaining traction in countries undergoing transitions could 
        prepare the way for future operations against Western and local 
        targets, but they probably will struggle to keep pace with 
        events. Rhetoric from Ayman al-Zawahiri, bin Ladin's successor, 
        has not resonated with the populations of countries 
        experiencing protests. Regional groups, however, may move more 
        quickly to exploit opportunities.
         If, over the longer term, governments take real steps 
        to address public demands for political participation and 
        democratic institutions--and remain committed to CT efforts--we 
        judge that core al Qaeda and the global jihadist movement will 
        experience a strategic setback. al Qaeda probably will find it 
        difficult to compete for local support with groups like the 
        Muslim Brotherhood that participate in the political process, 
        provide social services, and advocate religious values. 
        Nonviolent, pro-democracy demonstrations challenge al Qaeda's 
        violent jihadist ideology and might yield increased political 
        power for secular or moderate Islamist parties.
         However, prolonged instability or unmet promises of 
        reform would give al Qaeda, its affiliates, and its allies more 
        time to establish networks, gain support, and potentially 
        engage in operations, probably with less scrutiny from local 
        security services. Ongoing unrest most likely would exacerbate 
        public frustration, erosion of state power, and economic woes--
        conditions that al Qaeda would work to exploit.

    The ongoing turmoil probably will cause at least a temporary 
setback to CT efforts and might prove a longer-term impediment, if 
successor governments view violent Sunni extremism as a less immediate 
threat than did previous regimes. The prospects for cooperation will be 
further complicated if senior security officials who have cooperated 
with U.S. and allied services lose their positions.
    Iran
    Iran's leaders are confronting continued domestic political 
problems, a stalling economy, and an uncertain regional dynamic as the 
effects of the Arab Spring unfold. Elite infighting has reached new 
levels, as the rift grows between Supreme Leader Khamenei and President 
Ahmadi-Nejad. The regime has intensified attacks on prominent 
government officials and their families, as well, including former 
President Ali Hashemi-Rafsanjani. The infighting has worsened in the 
runup to the legislative elections in March and the presidential 
election in 2013, especially in the wake of Khamenei's musings in 
October 2011 that the popularly elected president could be replaced by 
a prime minister chosen by the legislature.
    Iran's economy is weighed down by international sanctions. The new 
U.S. sanctions will have a greater impact on Iran than previous U.S. 
designations because the Central Bank of Iran (CBI) is more important 
to Iran's international trade than any of the previously designated 
Iranian banks. The CBI has handled a greater volume of foreign bank 
transactions than other designated banks and receives the revenue for 
the roughly 70 percent of Iranian oil sold by the National Iranian Oil 
Company.
    Despite this, Iran's economic difficulties probably will not 
jeopardize the regime, absent a sudden and sustained fall in oil prices 
or a sudden domestic crisis that disrupts oil exports. In a rare public 
indication of the sanctions' impact, Ahmadi-Nejad said in a speech to 
the legislature in early November that Iran is facing the ``heaviest 
economic onslaught'' in history, a sentiment echoed by the head of the 
CBI.
    In its efforts to spread its influence externally, Iran continues 
to support proxies and surrogates abroad, and it has sought to exploit 
the Arab Spring but has reaped limited benefits, thus far. Its biggest 
regional concern is Syria because regime change would be a major 
strategic loss for Tehran. In Iraq, it probably will continue efforts 
to strengthen ties to Baghdad and the Kurdistan Regional Government. In 
Afghanistan, Iran is attempting to undermine any strategic partnership 
between the United States and Afghanistan.
    Iraq
    The Iraqi Government is positioned to keep violence near current 
levels through 2012, although periodic spikes are likely. ISFs are 
capable of planning and executing security operations, and Iraqi 
counterterrorism forces have demonstrated they are capable of targeting 
remaining terrorists and insurgents. However, AQI--despite its weakened 
capabilities--remains capable of high-profile attacks, and some Shia 
militant groups will continue targeting U.S. interests, including 
diplomatic personnel.
    Despite slow progress on political goals, Iraqi citizens are 
pursuing change through the political process, rather than violence. 
Prime Minister Maliki's relations with Sunni and Kurdish leaders, 
currently under strain due to his accusations against senior Sunni 
officials, will be a critical factor in maintaining political 
stability.
    On the economic front, despite recent growth, Baghdad needs to 
improve its financial systems and institutions, diversify its economy, 
improve transparency and delivery of essential services, and rebuild 
infrastructure to satisfy public expectations and attract foreign 
capital. Oil revenues were considerably higher in 2011 than 2010, due 
to a combination of increased output and higher oil prices, and 
sustaining those gains is important. Iraq's poor employment rates--as 
much as half of the workforce is unemployed or underemployed, according 
to United Nations estimates--illustrate the difficulties of 
transitioning to a private sector economy. If unaddressed, high 
unemployment could, over the long term, be a source of domestic unrest.
Africa
    Africa faces a broad range of challenges in 2012. Sub-Saharan 
Africa collectively falls at the bottom of almost all economic and 
social indicators, and, although the overall continent is seeing 
economic progress, Africa remains vulnerable to political crises, 
democratic backsliding, and natural disasters. We assess that violence, 
corruption, and terrorism are likely to plague Africa in areas key to 
U.S. interests. Unresolved discord between Sudan and South Sudan, 
continued fighting in Somalia, extremist attacks in Nigeria, and 
ongoing friction in the Great Lakes region highlight unstable 
conditions on the continent.
    Sudan and South Sudan
    Sudan and South Sudan in 2012 will face political uncertainty and 
potential instability. Several key bilateral issues were left 
unresolved prior to South Sudan's independence in July 2011, including 
the disposition of Sudan's debt burden, the status of the disputed 
province of Abyei, and the mechanisms of sharing oil wealth. Although 
we assess that neither side wants to return to war, we anticipate 
episodes of violence--an unintentional spark could escalate quickly.
    President Bashir and the National Congress Party (NCP) are 
confronting a range of challenges, including growing public 
dissatisfaction over economic decline and insurgencies on Sudan's 
southern and western borders. Sudanese economic conditions have 
deteriorated since South Sudan's independence--Khartoum lost 75 percent 
of its oil Reserves along with 20 percent of its population; and the 
country is facing a decline in economic growth, projected hard currency 
shortages, high inflation, and increasing prices on staple goods, all 
of which threaten political stability and fuel opposition to Bashir and 
the NCP. We assess Khartoum is likely to use all available means to 
prevent protests from escalating and will pursue a military response to 
provocations by Sudan People's Liberation Movement-North (SPLM-N) 
rebels in South Kordofan and Blue Nile States.
    We assess the conflict in Sudan's western Darfur region will simmer 
as a low level insurgency through 2012. Lengthy talks in Doha concluded 
in 2011, but resulted in a peace agreement with only one rebel group; 
significant Darfur rebel groups remain outside the peace process. 
Khartoum is concerned about ties between some Darfur rebel groups and 
the SPLM-N and about Justice and Equality Movement rebels, who returned 
to Darfur from Libya in late 2011.
    South Sudan in 2012 will face serious challenges that threaten to 
destabilize its fragile, untested, and poorly resourced government. 
Festering ethnic disputes are likely to undermine national cohesion, 
and the southern government will struggle to provide security, manage 
rampant corruption, and provide basic services. Anti-Juba rebel militia 
groups active in the areas along South Sudan's northern border are 
undermining stability and challenging Juba's ability to maintain 
security. We assess the ruling Sudan People's Liberation Movement will 
continue to turn to the international community for assistance.
    Somalia
    After two decades without a stable, central governing authority, 
Somalia is the quintessential example of a failed state. The mandate of 
the current Transitional Federal Government (TFG) expires in August 
2012, and we see few signs that Somalia will escape the cycle of weak 
governance. The TFG and its successor almost certainly will be bogged 
down with political infighting and corruption that impede efforts to 
improve security, provide basic services, or gain popular legitimacy. 
The TFG is certain to face persistent attacks from al-Shabaab and 
remains reliant on the current 9,700 peacekeepers from the African 
Union Mission in Somalia to retain control over Mogadishu.
    Nigeria
    Nigeria is critical to U.S. interests--it is Africa's most populous 
nation and the source of 8 percent of total U.S. oil imports--but it 
faces three key challenges in 2012: (1) healing political wounds from 
the April 2011 presidential election, which triggered rioting and 
hundreds of deaths in the largely Muslim north, after the victory of 
Goodluck Jonathan, a Christian and a southerner; (2) managing the 
chronic unrest in the oil-rich Niger Delta region; a 2009 truce between 
militants and the government appears to be holding, but widespread 
criminality and corruption are undermining both local development and 
oil production; and (3) most pressing, dealing with the Islamic 
extremist group popularly known as Boko Haram. The group carries out 
near-daily ambushes, assassinations, and raids in the northeast. It 
carried out two high-profile suicide attacks in the capital in 2011, 
hitting the national police headquarters in June and the U.N. building 
in August. Its attacks on churches in northern Nigeria have spurred 
retaliatory attacks on mosques in the South, and prompted thousands of 
Muslims to flee southern Nigeria for safety in the North. There are 
also fears that Boko Haram--elements of which have engaged with AQIM--
is interested in hitting Western targets, such as the U.S. Embassy and 
hotels frequented by Westerners.
    Central Africa's Great Lakes Region
    The Great Lakes region, despite gains in peace and security in the 
past decade, remains vulnerable to the chronic pressures of weak 
governance, ethnic cleavages, and active rebel groups. For example, 
volatility is a risk for Burundi, which faces continued political 
violence and extrajudicial killings. The Democratic Republic of the 
Congo (DRC) is still struggling to recover from the trauma of foreign 
invasion and civil war from 1996-2003, and the government has little 
control over large swaths of the country. Much of Congo's stability 
depends on U.N. peacekeepers, at an annual cost to the international 
community of over $1 billion. Many Congolese are discontented with the 
government's failure to improve the economy and rein in rebel groups, 
undisciplined soldiers, and ethnic militia that operate with impunity 
in the east. Much of the Congolese Army--poorly led and rarely paid--
will continue to be a predator to, rather than a protector of, the 
population. The lack of credible presidential and legislative elections 
in the DRC in November 2011 demonstrates that significant challenges 
remain as President Kabila begins his second term.
Russia and Eurasia
    Russia
    The prospect of another Putin presidency has sparked frustration 
and anger in some circles, evidenced by the protests following the 
December 2011 Duma elections, as well as debate over its impact on 
Russia's development. We assess Putin's return is likely to mean more 
continuity than change in Russian domestic politics and foreign policy, 
at least during the next year.
    On the domestic political front, Putin is most likely to preserve 
the political/economic system rather than be an agent of reform or 
liberalization, despite looming problems that will test the 
sustainability of Russia's ``managed democracy'' and crony capitalism. 
Putin will likely focus on restoring elite cohesion, protecting elite 
assets, and securing new opportunities for elite enrichment. At the 
same time he will seek a level of prosperity that placates the masses, 
while managing growing demands for change, which might prove 
increasingly difficult, given Russia's moderate growth rates.
        Foreign Policy
    In foreign policy, Putin's return is unlikely to bring immediate, 
substantive reversals in Russia's approach to the United States, but 
advancement of the bilateral relationship will prove increasingly 
challenging. Putin has acknowledged that the ``reset'' with Washington 
has yielded benefits for Russia, suggesting he sees value in preserving 
a cooperative relationship. Nevertheless, Putin's instinctive distrust 
of U.S. intentions and his transactional approach towards relations 
probably will make him more likely to confront Washington over policy 
differences.
    Maintaining the positive momentum of the reset will also be harder 
because several areas of mutual interest, such as the New START 
agreement and cooperation on Afghanistan, have already been addressed. 
Russia continues to view the reset largely as a U.S. initiative and 
believes that the onus is on the United States to demonstrate 
flexibility and make compromises to advance the relationship.
    Missile defense will remain a sensitive issue for the Kremlin, and 
Moscow will look to the U.S. and our NATO partners for binding 
guarantees that any system will not be directed at Russia. Continuing 
concerns about U.S. missile defense plans will reinforce Russia's 
reluctance to engage in further nuclear arms reductions. Moscow is also 
not likely to be particularly helpful in dealing with Syria or with 
Iran and its nuclear program. Russia is unlikely to support additional 
sanctions against Iran, which it worries are aimed at regime change, 
and argues that confidence-building measures and an incremental system 
of rewards are the best way to persuade Iran to increase cooperation 
with the International Atomic Energy Agency. In the case of Syria, 
Moscow is troubled by the Libyan precedent and believes the West is 
pursuing a policy of regime change that Moscow assesses will 
destabilize the region. The Kremlin also will remain suspicious of U.S. 
cooperation with the states of the former Soviet Union.
        Assessing the Russian Military
    Russian military forces, both nuclear and conventional, support 
deterrence and enhance Moscow's geo-political clout. The Kremlin since 
late 2008 has embraced a wide-ranging military reform and modernization 
program designed to field a smaller, more mobile, better-trained, and 
high-tech force over the next decade. This plan represents a radical 
break with historical Soviet approaches to manpower, force structure, 
and training. The initial phases, mainly focused on force 
reorganization and cuts in the mobilization base and officer corps, 
have been largely implemented and are being institutionalized. The 
ground forces alone have reduced about 60 percent of armor and infantry 
battalions since 2008, while the Ministry of Defense cut about 135,000 
officer positions, many at field grade.
    Moscow is now setting its sights on long-term challenges of 
rearmament and professionalization. In 2010, Medvedev and Putin 
approved a 10-year procurement plan to replace Soviet-era hardware and 
bolster deterrence with a balanced set of modern conventional, 
asymmetric, and nuclear capabilities. However, funding, bureaucratic, 
and cultural hurdles--coupled with the challenge of reinvigorating a 
military industrial base that deteriorated for more than a decade after 
the Soviet collapse--will complicate Russian efforts.
    The reform and modernization programs will yield improvements that 
will allow the Russian military to more rapidly defeat its smaller 
neighbors and remain the dominant military force in the post-Soviet 
space, but will not--and are not intended to--enable Moscow to conduct 
sustained offensive operations against NATO collectively. In addition, 
the steep decline in conventional capabilities since the collapse of 
the Soviet Union has compelled Moscow to invest significant capital to 
modernize its conventional forces. At least until Russia's high 
precision conventional arms achieve practical operational utility, 
Moscow will embrace nuclear deterrence as the focal point of its 
defense planning, and it still views its nuclear forces as critical for 
ensuring Russian sovereignty and relevance on the world stage, and for 
offsetting its military weaknesses vis-a-vis potential opponents with 
stronger militaries.
    Central Asia and the Caucasus
    The unresolved conflicts of the Caucasus and the fragility of some 
Central Asian states represent the most likely flashpoints in the 
Eurasia region. Moscow's occupation and military presence in and 
expanded political-economic ties to Georgia's separatist regions of 
South Ossetia and Abkhazia account for some of the tensions. Meanwhile, 
Tbilisi charged Russia with complicity in a series of bombings in 
Georgia in 2010 and 2011, while the Kremlin has been suspicious about 
Georgian engagement with ethnic groups in Russia's North Caucasus. 
Georgia's new constitution strengthens the office of the Prime Minister 
after the 2013 presidential election, leading some to expect that 
President Saakashvili may seek to stay in power by serving as Prime 
Minister, which could impact the prospect for reducing tensions.
    The Nagorno-Karabakh region is another potential flashpoint. 
Heightened rhetoric, distrust on both sides, and recurring violence 
along the Line of Contact increase the risk of miscalculations that 
could escalate the situation with little warning.
    Central Asian leaders are concerned about a Central Asian version 
of the Arab Spring, and have implemented measures to buttress their 
control and disrupt potential social mobilization, rather than 
implementing liberalizing reforms. The overthrow of the Kyrgyzstani 
Government in April 2010 and the subsequent ethnic violence in the 
country's south--the unrest in June 2010 left over 400 dead and led to 
a brief exodus of ethnic Uzbeks to Kyrgyzstan's border with 
Uzbekistan--show that instability can come with little warning in parts 
of Central Asia. Kyrgyzstan successfully held a peaceful presidential 
election in October 2011, but Kyrgyz authorities remain concerned about 
the potential for renewed violence in the country's south, and 
Uzbekistan's Government has set up temporary shelters in the event of 
violence and another wave of refugees.
    Central Asia's ability to cope with violent extremist 
organizations--especially militants based in Pakistan and Afghanistan--
represents an additional focus, particularly in light of the planned 
U.S. withdrawal from Afghanistan in 2014. The region's violent 
extremism is also a growing security concern for Moscow. In 2011, 
Kazakhstan experienced labor unrest and minor clashes with militants, 
including the country's first-ever suicide attack in May. Tajikistan is 
particularly important due to its extensive border with Afghanistan and 
its history of internal and cross-border violence. In 2010, Dushanbe 
had to contend with small groups of militants, an indicator that 
Tajikistan is also potentially vulnerable.
    Ukraine and Belarus
    Developments in Ukraine and Belarus, while not threatening to U.S. 
national security, present challenges to important U.S. interests in 
the region. Democracy in Ukraine is increasingly under siege as Kyiv 
drifts closer toward authoritarianism under President Yanukovych. The 
selective prosecution of members of the political opposition, including 
former Prime Minister and Yanukovych rival Yuliya Tymoshenko, on 
politically-motivated legal charges, government use of administrative 
levers to stifle independent media, and attempts to manipulate election 
laws ahead of this October's parliamentary elections are all indicative 
of this trend.
    In Belarus, the systemic economic crisis presents Belarusian 
President Lukashenko with the strongest challenge yet to his hold on 
power. Continuing support among significant segments of Belarusian 
society, a loyal and responsive security apparatus, a wary population 
reluctant to take political action against the regime, and occasional 
Russian support decrease the near-term likelihood of regime change.
Europe
    The Balkans
    Deep ethnic and political divides in the Western Balkans pose a 
challenge to stability in Europe in 2012. Protracted instability in 
Kosovo--especially Serb-majority northern Kosovo--and lack of progress 
with the European Union (EU)-facilitated Serbia-Kosovo dialogue remain 
sources of tension requiring Western diplomatic and security 
engagement. Inter-ethnic strains and dysfunctional state structures 
also threaten stability in Bosnia-Herzegovina (BiH).
    Northern Kosovo is particularly crucial. Clashes between NATO-led 
Kosovo Force (KFOR) soldiers and local Serbs in late 2011--in which 
over 60 KFOR soldiers were injured, two by gunshot--underscore ethnic 
Serbs' commitment to violently resist KFOR attempts to remove 
roadblocks in the north. The impasse has settled into an uneasy 
stalemate; Kosovo Serbs are allowing KFOR limited ground movement, but 
refusing to allow EU Rule of Law Mission (EULEX) vehicles through the 
roadblocks and thwarting KFOR efforts to permanently remove roadblocks 
or shut down bypass roads.
    More than 80 countries, including 22 of 27 EU members, have 
recognized Kosovo's independence, but in the coming years it will 
remain a fragile state, dependent on the international community for 
economic, security, and development assistance. As we saw in 2011, 
violence can erupt with little to no warning, especially in the 
northern municipalities. We assess that local forces cannot be relied 
upon to assume KFOR's key tasks--fixed-site security, riot control, and 
border management--at least until Belgrade and Pristina normalize 
relations. The Kosovo Security Force (KSF) has nearly reached its 
authorized strength of 2,500 lightly armed personnel but faces 
recruiting, funding, and training challenges. KSF will likely decide to 
transform itself into an armed force when its mandate comes up for 
review in June 2013. We assess that the Kosovo Serbs and Belgrade will 
continue to oppose any effort to expand Pristina's control over 
northern Kosovo, but in different ways. Belgrade will politically limit 
its response to sharp rhetoric condemning Pristina's efforts, while 
Kosovo Serbs will likely employ familiar tactics, such as roadblocks 
and street protests that pose a risk of sparking violence.
    Turkey and the Kurdish Issue
    A significant uptick in violence since June 2011 by the Turkish 
Kurdish terrorist group Kongra-Gel (KGK/formerly PKK) complicated 
Turkish Government efforts--already faltering in the face of mounting 
nationalist sentiment--to forge a political solution to the 
longstanding conflict. The KGK attack of 19 October 2011 that killed 24 
Turkish security forces was the deadliest incident since 1993 and the 
fourth largest KGK attack ever. Public outcry over the violence forced 
Prime Minister Erdogan and his ruling Justice and Development Party 
(AKP) to place increased emphasis on military operations against the 
KGK.
Latin America and the Caribbean
    Regional Dynamics
    Latin America is making progress in sustaining economic growth and 
deepening democratic principles. Weathering some of the worst effects 
of the global recession, Chile, Peru, Brazil, Colombia, Mexico, and 
Panama have earned investment-grade status. Competitive, democratic 
elections are increasingly the standard in most of the region. However, 
populist, authoritarian leaders in Venezuela, Ecuador, Bolivia, and 
Nicaragua are undercutting representative democracy and consolidating 
power in their executives.
    The drug threat to the United States also emanates primarily from 
the Western Hemisphere, where rising drug violence and corruption are 
undermining stability and the rule of law in some countries. The 
majority of U.S.-consumed drugs are produced in Mexico, Colombia, 
Canada, and the United States. The drug trade also contributes to the 
fact that Central American Governments, especially Honduras, El 
Salvador, and Guatemala, are coping with some of the highest violent 
crime and homicide rates in the world. In addition, weak institutions 
and corrupt officials in these countries have fostered a permissive 
environment for gang and criminal activity to thrive.
    Efforts to shape effective regional integration organizations 
continue with uneven results. In December 2011, Caracas hosted the 
inaugural Community of Latin American and Caribbean States summit, 
excluding the United States and Canada. The Venezuela-led Bolivarian 
Alliance for the Americas--created in part to spread Chavez's influence 
in the region--is only muddling through. The Union of South American 
Nations (UNASUR) has attempted to take on some multilateral issues, 
provide a forum to coordinate positions, and calm regional tensions. 
Nonetheless, enthusiasm for UNASUR likely will outpace the 
institution's ability to develop specialized capabilities and programs.
    Latin America increasingly has accommodated outside actors seeking 
to establish or deepen relations, at times to attenuate U.S. influence. 
Ties with Tehran offer some regional governments a means of staking an 
independent position on Iran--thereby mitigating its isolation--while 
also attempting to extract Iranian financial aid and investment for 
economic and social projects. Russia has established political and 
trade relations with most countries in the region. China has 
dramatically increased its economic outreach to Latin America, and 
during the last few years has become the largest trade partner to 
several of the region's larger economies, including Brazil, Chile, and 
Peru.
    Mexico
    Mexico's Government remains committed to fighting the country's 
drug cartels and enacting reforms aimed at strengthening the rule of 
law. The government has scored important takedowns of cartel leaders, 
but the implementation of its ambitious reform agenda is a slow process 
requiring legislative action at the Federal and state levels.
    During Calderon's presidency, Mexican Federal police and military 
operations have degraded several cartels, caused some to split into 
factions, and disrupted some of their criminal operations. Since 
December 2009, military and police units have killed or captured five 
senior cartel leaders, and Mexican officials report that 23 of the 37 
``most wanted'' traffickers have been arrested or killed by 
authorities. In the meantime, criminal violence has increased sharply 
since 2007. Drug-related homicides rose to over 15,000 in 2010 and 
stood at 12,903 as of October 1, 2011, with sharp upticks in some 
states and declines in others, such as Chihuahua, during the last year. 
The vast majority of these homicides are the result of trafficker-on-
trafficker violence.
    The Mexican cartels have a presence in the United States, but we 
are not likely to see the level of violence that is plaguing Mexico 
spill across the U.S. border. We assess that traffickers are wary of 
more effective law enforcement in the United States. Moreover, the 
factor that drives most of the bloodshed in Mexico--competition for 
control of trafficking routes and networks of corrupt officials--is not 
widely applicable to the small retail drug trafficking activities on 
the U.S. side of the border. U.S. officials and citizens in Mexico are 
at increased risk because of generalized violence.
    Venezuela
    Venezuelan politics will be highly competitive and polarized over 
the next year. At stake in the October 2012 presidential election is 
whether essential characteristics of President Chavez's 12 years in 
power--the weakening of democratic institutions and representative 
democracy and virulent anti-U.S. foreign policy--persist and even 
deepen or begin to reverse. Chavez announced that he is cancer-free, 
but there are still doubts about his health; and there is no other 
leader who can match his charisma, force of personality, or ability to 
manipulate politics and policy should he be unable to run again. In 
addition, his failure to groom others to lead his United Socialist 
Party of Venezuela means that any successor would lack his stature. 
Once the campaign season begins in February 2012, the electorate will 
be seeking solutions for the country's 25 percent inflation, widespread 
food and energy shortages, and soaring crime and homicide rates.
    Cuba
    Cuban President Raul Castro has begun a delicate, cautious process 
of reform designed to revive the island's flagging economy without 
loosening political control. With a weakening Hugo Chavez as their 
primary patron, Cuba's leaders are desperately seeking to diversify 
their foreign investment partners and increase their access to hard 
currency and foreign credit. Wary of instability, authorities are only 
gradually implementing economic reforms announced last year. For 
example, the delay in the planned layoff of a million state workers 
reflects the sensitivity of the Castro regime as it observes uprisings 
elsewhere in the world.
    Cuban leaders are also concerned that economic reform will increase 
pressure on them for a political opening and greater individual rights. 
The stiff prison term imposed on the U.S. Agency for International 
Development subcontractor Alan Gross for facilitating uncensored 
internet connectivity demonstrates the Castro regime's fear of social 
media. Indeed, harsh government repression of peaceful protests and an 
upswing in short-term arrests of dissidents suggest economic changes 
will not be coupled with political changes.
    At this writing, we anticipate that the 28 January 2012 Communist 
Party conference will emphasize the importance of technocratic 
competence, rather than party membership, underscoring Castro's stated 
focus on improving government bureaucracy and expertise. There is no 
indication that Castro's efforts, including his stated interest in 
laying the groundwork for a generational transition in leadership, will 
loosen the Party's grip on power.
    Haiti
    President Martelly was inaugurated in May 2011. Political 
disagreements between the legislative and executive branches impeded 
the confirmation of a prime minister and stalled the government's 
ability to make decisions for nearly 5 months. In October, the new 
government, headed by Prime Minister Garry Conille, was sworn in. New 
to governance, President Martelly is still learning how to navigate the 
political arena and has made several missteps since taking office. 
These decisions have further strained his relations with the 
opposition-led Parliament and have at times caused friction with 
international partners. That said, since taking office, the Martelly 
administration has made progress on several fronts, including in the 
rule of law, education, housing, and infrastructure, and as such has 
demonstrated its commitment to improving the well being of the Haitian 
people and helping the country achieve economic growth and development.
    Although the lack of a duly functioning government for a large part 
of 2011 affected recovery and reconstruction efforts, it did not halt 
all activity. Almost two-thirds of the estimated 1.5 million Haitians 
displaced by the earthquake have left tent encampments and over half of 
the estimated 10 million cubic meters of rubble created by the 
earthquake has been removed. The Haitian-led international campaign to 
prevent and treat cholera mitigated the impact of the outbreak, 
bringing the case mortality rate below the international standard of 1 
percent. The Haitian economy is slowly improving and the macroeconomic 
situation is stabilizing. We judge that, given these improving 
conditions and the Haitians' recognition of the standing U.S. policy of 
rapid repatriation of migrants at sea, there is little current threat 
of a mass migration from Haiti.
          significant state and nonstate intelligence threats
Transnational Organized Crime
    Transnational organized crime (TOC) is an abiding threat to U.S. 
economic and national security interests, and we are concerned about 
how this threat might evolve in the future. We are aware of the 
potential for criminal service providers to play an important role in 
proliferating nuclear-applicable materials and facilitating terrorism. 
In addition, the growing reach of TOC networks is pushing them to form 
strategic alliances with state leaders and FIS personnel.

         The increasingly close link between Russian and 
        Eurasian organized crime and oligarchs enhances the ability of 
        state or state-allied actors to undermine competition in gas, 
        oil, aluminum, and precious metals markets, potentially 
        threatening U.S. national and economic security.

    As global trade shifts to emerging markets--many plagued by high 
levels of corruption and criminal activity--U.S. and western companies' 
competiveness is being eroded by overseas corrupt business practices.

         In Russia, pervasive corruption augmented by powerful 
        criminal organizations probably drove public perceptions and 
        led to Russia being ranked with sub-Saharan Africa on 
        Transparency International's Corruption Perceptions Index in 
        2010.

    Transnational organized criminal groups are also weakening 
stability and undermining rule of law in some emerging democracies and 
areas of strategic importance to the United States.

         Mexican drug cartels are responsible for high levels 
        of violence and corruption in Mexico and contribute to 
        instability in Central America, while the drug trade continues 
        to fuel the Revolutionary Armed Forces insurgency in Colombia.

    In addition, human smuggling and trafficking are transnational 
organized criminal activities that are increasing due to globalization. 
Kidnapping for ransom is increasing in many regions worldwide and 
generates new and deep income streams for transnational criminal 
organizations (particularly in Mexico) and terrorist networks.

         Those who smuggle humans illegally have access to 
        sophisticated, forged travel papers and the ability to 
        constantly change their smuggling routes--routes that may span 
        multiple continents before reaching their destinations. 
        Smugglers undermine state sovereignty and sometimes facilitate 
        the terrorist threat. For instance in September 2011, three 
        Pakistanis pled guilty to conspiracy to provide materiel to TTP 
        by agreeing to smuggle a person they believed to be a member of 
        a terrorist organization across U.S. borders.
         As pressure is applied to their traditional illicit 
        businesses, members of transnational criminal organizations are 
        moving into human trafficking because it is a lower risk, 
        higher profit operation, according to a 2010 U.N. Office on 
        Drugs and Crime review. Human traffickers often use the same 
        document forgers, corrupt officials, and illicit travel experts 
        to exploit their victims by force, increasing human suffering 
        around the globe. Although the nature of the problem frustrates 
        collection of reliable statistics, most countries are affected 
        by human trafficking, serving as source, transit, or 
        destination points. The International Labor Organization 
        estimates human trafficking for the purposes of sexual and/or 
        economic exploitation to be a $20 billion business.
         Terrorists and insurgents will increasingly turn to 
        crime and criminal networks for funding and logistics, in part 
        because of U.S. and Western success in attacking other sources 
        of their funding. Criminal connections and activities of both 
        Hizballah and AQIM illustrate this trend.
Space
    In 2011, the Department of Defense and Office of the Director of 
National Intelligence published the first joint National Security Space 
Strategy. It emphasized that two key trends challenge our use of 
space--the congested and contested nature of the space environment.
    Growing global use of space--along with the effects of spacecraft 
structural failures, accidents involving space systems, and debris-
producing, destructive antisatellite tests--has increased congestion. 
To meet growing demand for radiofrequency bandwidth, more transponders 
are placed in service, raising the probability of interference. If 
space congestion grows unchecked, it will increase the probability of 
mishaps and contribute to destabilization of the space environment.
    Space is also increasingly contested in all orbits. Today, space 
systems and their supporting infrastructures face a range of manmade 
threats that may deny, degrade, deceive, disrupt, or destroy assets. 
Potential adversaries are seeking to exploit perceived space 
vulnerabilities. As more nations and nonstate actors develop 
counterspace capabilities during the next decade, threats to U.S. space 
systems and challenges to the stability and security of the space 
environment will increase. Irresponsible acts against space systems 
could also have implications beyond the space domain, disrupting 
worldwide services on which civil and commercial sectors depend.
Economics
    New Economic Shocks and Unresolved Financial Strains
    The fledgling economic recovery from the global recession of 2008-
2009 was challenged in 2011 by a series of shocks embroiling countries 
and regions important to the global economy and leading to heightened 
volatility in financial and commodity markets. Shocks included the Arab 
Spring uprisings, which triggered widespread disruptions to business 
activity and eventually changes to regimes; the Japanese earthquake and 
tsunami that caused a nuclear tragedy and painful, significant 
disruptions in manufacturing supply chains; and European leaders' 
inability to restore financial market confidence in the 
creditworthiness of a number of debt-troubled euro-zone countries, 
putting the survival of the common currency and the stability of the 
European economy in jeopardy. Additional challenges facing euro-zone 
recovery include continued high unemployment and a tightening of credit 
in 2012.
    Elsewhere, numerous governments were challenged by rising food and 
energy prices that surged in the first half of the year and ended up 
averaging more than 25 percent higher than in 2010. In an atmosphere of 
growing pessimism about the near-term prospects for global economic 
activity and corporate profitability, as of late in 2011 equity markets 
for the year were down sharply in almost every major financial center, 
with 15 to 25 percent declines in Germany, France, Japan, China, India, 
Brazil, and Turkey. Far greater losses were suffered in the stock 
markets of the most vulnerable countries, such as Egypt and Greece, 
which were down almost 50 percent. In January 2011 the IMF projected 
global economic growth would slow from the 5.1 percent growth achieved 
in 2010 to 4.4 percent in 2011 and 4.5 percent in 2012, but by 
September it had lowered its projections to 4 percent growth in both 
2011 and 2012. Many forecasters were reducing growth estimates during 
the final months of 2011, and the majority predicted an outright, 
though likely brief, recession for the euro zone and several emerging 
market countries.
    Energy
    Oil prices ended the year well below the highs reached just after 
Libyan oil output ceased in March. From time to time during 2011, 
market participants voiced concerns about supply disruptions from other 
potential shocks, for example one that could originate in Iran, but 
these worries did not overshadow the emerging sentiment that a euro-
zone recession and associated deceleration of global growth could curb 
demand. On balance, by year-end the main oil price benchmarks were up 
about 20 percent from the 2010 average, but roughly 15 percent below 
the earlier peaks in 2011.
    Although the most promising advances in global energy production 
have been in renewable energy, fossil fuels continued to dominate the 
global energy mix and the political discussion in 2011. West Texas 
Intermediate oil prices (the U.S. benchmark) have remained above $70 
per barrel for 2 years and averaged $95 per barrel in 2011, providing a 
favorable price environment for innovations in fossil fuel extraction 
as well as alternative energy sources. Oil and gas production gains 
from U.S. shale formations, Canadian oil sands, and offshore deep water 
wells in Brazil are examples of energy output driven by high oil prices 
and technology advances, such as horizontal drilling, hydraulic 
fracturing, and deep water exploitation. The impact of Japan's tsunami, 
meanwhile, has clouded the prospects for low-carbon-emissions nuclear 
power. Germany has pledged to phase out nuclear power over 11 years--
nearly a quarter of its current electricity production--and approvals 
and construction of additional nuclear facilities worldwide are likely 
to slow under increased scrutiny of safety procedures.
Water Security
    During the next 10 years, water problems will contribute to 
instability in states important to U.S. national security interests. 
Water shortages, poor water quality, and floods, by themselves, are 
unlikely to result in state failure. However, water problems combined 
with poverty, social tensions, environmental degradation, ineffectual 
leadership, and weak political institutions contribute to social 
disruptions that can result in state failure.
    Depletion of groundwater supplies in some agricultural areas--
caused by poor management--will pose a risk to both national and global 
food markets. Depleted and degraded groundwater can threaten food 
security and thereby risk internal, social disruption, which, in turn, 
can lead to political disruption. When water available for agriculture 
is insufficient, agricultural workers lose their jobs and fewer crops 
are grown. As a result, there is a strong correlation between water 
available for agriculture and national GDP in countries with high 
levels of agricultural employment.
    Now and for the foreseeable future, water shortages and pollution 
probably will negatively affect the economic performance of important 
U.S. trading partners. Economic output will suffer if countries do not 
have sufficient clean water supplies to generate electrical power or to 
maintain and expand manufacturing and resource extraction. Hydropower 
is an important source of electricity in developing countries--more 
than 15 developing countries generate 80 percent or more of their 
electrical power from hydropower--and demand for water to support all 
forms of electricity production and industrial processes is increasing.
    Water-related state-on-state conflict, however, is unlikely during 
the next 10 years. Historically, water tensions have led to more water-
sharing agreements than violent conflicts. As water shortages become 
more acute beyond the next 10 years, water in shared basins will 
increasingly be used as leverage; the use of water as a weapon or to 
further terrorist objectives also will become more likely.
    Improved water management--involving, for example, pricing, 
allocations, and ``virtual water'' trade--and investments in water-
related sectors (such as, agriculture, power, and water treatment) will 
afford the best solutions for water problems. Because agriculture uses 
approximately 70 percent of the global fresh water supply, the greatest 
potential for relief from water scarcity will be through mechanisms and 
technology that increase water use efficiency and the ability to 
transfer water among sectors.
Health Threats and Natural Disasters
    The past year illustrates, again, how health threats and natural 
disasters can not only kill and sicken thousands of people and destroy 
homes and livelihoods, but also challenge--and potentially 
destabilize--governments, as they attempt to respond.

         Although Tokyo responded adequately in the immediate 
        aftermath of Japan's largest earthquake, the triple disaster 
        contributed to Prime Minister Kan's resignation, and led then-
        Finance Minister Noda, now the Prime Minister, to admit that 
        the government's inability to lead raised distrust of lawmakers 
        and government to levels not previously seen.
         An outbreak of Escherichia coli (E. coli) associated 
        with contaminated sprouts infected 3,500 people in Germany 
        between May and July, produced life threatening complications 
        in 855, and resulted in 53 deaths. The inability to quickly 
        identify the source led to loss of life and caused economic 
        losses estimated at $1 billion.

    Although we can say with near certainty that new outbreaks of 
disease and catastrophic natural disasters will occur during the next 
several years, we cannot predict their timing, locations, causes, or 
severity. We assess the international community needs to improve 
surveillance, early warning, and response capabilities for these 
events, and, by doing so, will enhance its ability to respond to 
manmade disasters. This can be accomplished in part by member state 
implementation of the World Health Organization's International Health 
Regulations (2005). The key challenge is that fiscal austerity measures 
in many countries might so restrict funding that preparedness declines.
                               conclusion
    The issues that we consider here confront responsible citizens and 
their governments everywhere. The Intelligence Community is fully 
committed to arming our decisionmakers--policymakers, warfighters, and 
law enforcement officers--with the best intelligence and analytic 
insight we can provide. This is necessary to enable them to take the 
actions and make the decisions that will protect American lives and 
American interests, here and around the world.

    Chairman Levin. Thank you, Director Clapper.
    General Burgess.

STATEMENT OF LTG RONALD L. BURGESS, JR., USA, DIRECTOR, DEFENSE 
                      INTELLIGENCE AGENCY

    General Burgess. Chairman Levin, Ranking Member McCain, and 
other members of the committee, I want to thank you for the 
opportunity to join my longtime friend and professional 
colleague, Director Clapper, in representing the men and women 
of the U.S. Intelligence Community.
    I would like to begin with current military operations in 
Afghanistan where we assess that endemic corruption and 
persistent qualitative deficiencies in the ANA and ANP 
undermine efforts to extend effective governance and security. 
The ANA remains reliant on ISAF for key combat support such as 
logistics, intelligence, and transport. While ANA performance 
improved in some operations when partnered with ISAF units, 
additional gains will require sustained mentoring and support.
    Despite successful coalition targeting, the Taliban remains 
resilient and able to replace leadership losses while also 
competing to provide governance at the local level. From its 
Pakistani safe havens, the Taliban leadership remains confident 
of eventual victory.
    To the west, Iran remains committed to threatening U.S. 
interests in the region through its support to terrorists and 
militant groups, including in Iraq and Afghanistan, while it 
remains committed to strengthening its naval, nuclear, and 
missile capabilities. Iran can close the Straits of Hormuz at 
least temporarily and may launch missiles against U.S. forces 
and our allies in the region, if it is attacked. Iran could 
also attempt to employ terrorist surrogates worldwide. However, 
the agency assesses Iran as unlikely to initiate or 
intentionally provoke a conflict.
    Iranian ballistic missiles in development could range 
across the region and Central Europe. Iran's new space launch 
vehicle demonstrates progress toward a potential 
intercontinental ballistic missile. Iran today has the 
technical, scientific, and industrial capability to eventually 
produce nuclear weapons. While international pressure against 
Iran has increased, including through sanctions, we assess that 
Tehran is not close to agreeing to abandon its nuclear program.
    In Iraq, DIA assesses that Baghdad security forces probably 
can maintain current security levels this year despite manning 
shortages and overly centralized command and control. Despite 
perceptions of sectarian bias and a need for logistics, 
intelligence, and tactical communications training, Iraq's 
security forces are putting forces on the street, they are 
securing high-profile sites, and they are conducting 
intelligence-driven targeting. However, Sunni insurgent and 
Shia militant groups likely will remain serious challenges for 
Iraq and remaining U.S. personnel until more comprehensive 
political reconciliation reduces lingering tensions among 
religious and tribal constituencies.
    More broadly across the region, the popular forces sweeping 
the Middle East and North Africa are demonstrating the 
potential to reorder longstanding assumptions, relationships, 
and alliances in a way that invites risk and opportunities for 
the United States and our allies. Armed domestic opponents pose 
an unprecedented challenge to the al Assad regime in Syria, and 
its collapse would have serious implications for Iran, 
Hezbollah, Hamas, and Lebanon.
    Turning to Asia, North Korea's third-generation leadership 
transition is underway. Improving the economy and regime's 
survival remain enduring leadership priorities. Pyongyang's 
nuclear and missile programs provide strategic deterrence, 
international prestige, and leverage to extract economic and 
political concessions. While North Korea may abandon portions 
of its nuclear program for better relations with the United 
States, it is unlikely to surrender its nuclear weapons.
    Pyongyang's forward-positioned military can attack South 
Korea with little or no strategic warning, but it suffers from 
logistic shortages, aging equipment, and poor training. 
Pyongyang likely knows it cannot reunite the peninsula by force 
and is unlikely to attack on a scale that would risk its own 
survival.
    We see no sign that the leadership transition has changed 
the regime's calculus regarding nuclear weapons, and the DIA 
retains continued focus on the peninsula to provide warning 
against additional attacks from the north.
    China continues to build a more modern military to defend 
its core interests, which are territorial sovereignty, national 
unity, and sustained access to economic resources. Countering 
U.S. forces in a Taiwan or South China Sea contingency remains 
a top Chinese military priority. Investments in naval anti-air 
and anti-ship capabilities are designed to achieve periodic and 
local sea and air superiority to include the islands closest to 
the mainland. Once focused on territorial defense, China's air 
force is developing offshore strike, air and missile defense, 
strategic mobility, and early warning and reconnaissance 
capabilities. China may incorporate new capabilities in novel 
ways that present challenges for U.S. forces.
    Last year's first flight of a fifth-generation fighter and 
launch of China's first aircraft carrier underscore the breadth 
and quality of China's military modernization program. However, 
a lack of modern combat experience is but one example that 
steps remain before China achieves the full potential of its 
new technologies, platforms, and military personnel.
    Regarding cyber threats, we continue to see daily attempts 
to gain access to our Nation's government and business computer 
networks, including our own secure systems. This threat is 
large and growing in scale and sophistication.
    Finally, al Qaeda losses in 2011 have focused the core 
group and its affiliates in Yemen, Somalia, and North Africa on 
self-preservation and reconstitution. Though damaged, the group 
and its affiliates remain committed to transnational attacks in 
Europe and against the United States. Al Qaeda in the lands of 
the Maghreb (AQIM) acquired weapons from Libya this year, 
kidnapped westerners, and continued its support of Nigeria-
based Boko Haram. While we have made important gains against al 
Qaeda and its affiliates, we remain in a race against their 
ability to evolve, regenerate leadership, and launch attacks. 
Self-radicalization or lone wolf individuals, including within 
the United States and even within our own ranks, remain an 
enduring concern.
    I would like to close by noting how honored I am to 
represent the men and women of the DIA. We remain acutely aware 
that while much of what we do is secret, our work is always a 
public trust. On their behalf, I would like to thank the 
members of this committee for your continued support and 
confidence in our work. Thank you.
    [The prepared statement of General Burgess follows:]

         Prepared Statement by LTG Ronald L. Burgess, Jr., USA

    Good morning, Chairman Levin, Ranking Member McCain, and members of 
the committee. Thank you for this opportunity to testify and for your 
continued support of the dedicated men and women of the Defense 
Intelligence Agency (DIA), many of whom are forward-deployed directly 
supporting U.S. and allied military forces in Afghanistan and around 
the world.
    The United States faces a complex security environment marked by a 
broad spectrum of dissimilar threats, including rising regional powers 
and highly adaptive and resilient transnational terrorist networks. 
This testimony reflects DIA's best analysis, based on the Agency's 
worldwide human intelligence, technical intelligence, 
counterintelligence, and document and media exploitation capabilities, 
along with information from DIA's Intelligence Community (IC) partners, 
international allies, and open sources.
    I will begin my testimony with an assessment of Iraq in the post 
U.S. military drawdown environment and then focus on Afghanistan, where 
the Department of Defense (DOD), the IC, and DlA remain actively 
engaged supporting military operations.
    Following the withdrawal of U.S. forces from Iraq in accordance 
with the U.S.-Iraq security agreement, the Iraqi Security Forces (ISF) 
will probably be able to maintain internal security at current levels 
over the next year. The ISF have led Iraqi security operations since 
late 2010 but still require training in a number of areas, including 
logistics, intelligence, and on new equipment purchased from the United 
States. The ISF have demonstrated the ability to put forces on the 
street, conduct static security of high-profile sites, operate 
checkpoints, and conduct intelligence-driven targeting. However, 
numerous security vulnerabilities remain due to manning shortages, 
logistical shortfalls, and overly centralized command and control. The 
ISF are unable to maintain external security and will be unable to 
secure Iraq's borders or defend against an external threat over the 
next year.
    Interior Ministry police forces are not prepared to take the lead 
for internal security from the Iraqi army. Outside of select Iraqi 
counterterrorism units, many Iraqi police forces are understaffed, ill-
equipped, and vulnerable to terrorist attack, intimidation, 
infiltration, and corruption.
    Sunni insurgent and Shia militant groups will remain persistent 
security challenges for the Iraqi Government and remaining U.S. 
diplomatic, military, and civilian personnel. Sunni groups will likely 
contract in size as members motivated by opposition to the U.S. 
presence cease fighting, leaving a core of fighters committed to 
continued attacks on the Shia-dominated government. However, without an 
increase in popular support for insurgent activities or sustained 
external support, the Sunni insurgency will be unable to pose an 
existential threat to the Iraqi Government.
    Al Qaeda in Iraq (AQI) exhibits resiliency through its sustained 
ability to conduct periodic coordinated and complex attacks throughout 
Iraq. The group directs the majority of its propaganda and attacks 
against Iraqi Government, security, and Shia civilian targets, hoping 
to destabilize the government and inflame sectarian tensions. With the 
departure of U.S. forces, AQI will seek to exploit a more permissive 
security environment to increase its operations and presence throughout 
the country.
    Iraq's political environment will remain volatile and marked by 
periodic crises. However, the various ethno-sectarian political blocs 
perceive greater advantage can be gained through the political process 
than through violence and will probably remain engaged. Prime Minister 
Nuri al-Maliki and Kurdish leaders have strong incentives to maintain 
the current political dynamic, and both sides likely will seek to 
resolve Arab-Kurd issues diplomatically. However, an uncoordinated 
Kurdish or Iraqi military deployment in the disputed territories in 
2012 risks inadvertent conflict.
    Iraq will attempt to balance its relationship with the Sunni Arab 
states, Iran, and Turkey in the wake of the U.S. withdrawal. Sunni Arab 
states will remain suspicious of the Shia-led Government, citing its 
close ties to Tehran. Iran will seek to broaden its diplomatic, 
security, and economic ties with Iraq. DIA expects Baghdad will attempt 
to balance these competing interests rather than gravitating toward one 
camp.
    Turning to Afghanistan, the Afghan army and police exceeded growth 
benchmarks for 2011 although persistent qualitative challenges continue 
to impede their development into an independent, self-sustaining 
security apparatus. The Afghan National Army (ANA) showed marked 
improvements in some operations when partnered with International 
Security Assistance Force (ISAF) units. However, continued gains in ANA 
capability and operational effectiveness require sustained mentoring 
and direct support from ISAP. Moreover, the ANA's reliance on ISAF for 
many critical combat enabling functions underscores its inability to 
operate independently. Nevertheless, Afghanistan's population generally 
favors the army over the police.
    The Afghan National Police (ANP) has improved in both capacity and 
capability, but its viability as an effective, cohesive security force 
currently requires ISAP's direct oversight, partnering, and support. 
The ANP suffers from pervasive corruption and popular perceptions that 
it is unable to extend security in many areas. Unlike the army, the ANP 
is additionally challenged by serving in both counterinsurgency and law 
enforcement roles. This dual mission places acute demands on the ANP's 
already limited capacity. Local initiatives such as the Afghan Local 
Police are intended to augment the ANP by filling security voids and 
have helped to counter insurgent influence in some areas.
    The Afghan Government will face several challenges to its 
development over the next year. Endemic human capital shortages make it 
difficult for the government to fill many positions with qualified 
personnel. Underdeveloped government institutions, especially at the 
district and village level, will impede service delivery and limit the 
government's connection to the population. Corruption will continue at 
all levels of the government and efforts by the Afghans to root it out 
will be hindered as officials and powerbrokers, especially at the 
subnational level, focus on maintaining their patronage networks. 
Finally, as the transition process continues, the Afghan Government 
will struggle to fill the vacuum left by ISAF troops and resources, 
while continuing to support ongoing ISAF efforts in non-transitioned 
areas.
    In Pakistan, the May 1, 2011, raid in Abbottabad followed several 
other high-profile events that inflamed anti-U.S. sentiments. Some 
criticized the army for being powerless to stop the U.S. raid inside 
Pakistan; others questioned whether the military was either complicit 
in hiding Osama bin Laden or incompetent in failing to find him. Much 
criticism was placed on Pakistan's cooperation with the United States 
and that enticed Islamabad to further distance itself from the United 
States.
    Pakistan's Army, Air Force, and paramilitary forces has been tested 
by increased combat operations in the tribal areas since 2007. 
Approximately 140,000 Army and paramilitary forces are deployed to 
combat positions at any given time. This continued state of deployment, 
combined with budgetary constraints, has taken a toll on Pakistan's 
combat capabilities.
    Safehavens in the Federally Administered Tribal Areas (FATA) of 
Pakistan continue to be crucial enablers for the Taliban, Haqqani 
Network (HQN), Hezb-e Islami Gulbuddin insurgent groups, and al Qaeda 
which seek to recruit, train, and equip fighters for operations in 
Afghanistan. Pakistan military efforts focused on Tehrik-e Taliban 
Pakistan (TIP) which threatens Pakistan's stability in the FATA and 
Khyber Paktunkhwa (KP) have had no effect in limiting HQN use of the 
FATA as a safehaven. Continued ISAF efforts in Afghanistan, coupled 
with simultaneous Pakistan military operations targeting Afghan 
insurgent groups based in the FATA, are required to help disrupt 
insurgent freedom of movement.
    Al Qaeda's Pakistan-based leadership has been degraded by several 
years of attrition and is now forced to rely on a shrinking cadre of 
experienced leaders restricted to operating primarily inside an HQN-
facilitated safehaven in North Waziristan. The cumulative effect of 
sustained counterterrorism operations has made it difficult for al 
Qaeda to replenish its senior ranks with the type of experienced 
leaders, trainers, and attack planners it promoted in previous years. 
Recent key losses compound other challenges facing the group, 
especially significant competition from the Arab Spring movements in 
the battle of ideas and the shift of focus away from the battlefields 
of Iraq and Afghanistan as Western troops decrease their presence.
    Sustained counterterrorism pressure since 2008--including the 
killing of al Qaeda leaders Osama bin Laden, Atiyah Abel al Rahman, and 
Ilyas Kashmiri in 2011--reduced the Pakistan-based core al Qaeda's 
cohesion and capabilities, including its ability to mount 
sophisticated, complex attacks in the west similar to the 2006 
Transatlantic Airliner plot. However, despite these setbacks, al Qaeda 
retains its intent, though perhaps not the robust capability, to plan 
and conduct terrorist attacks against the west, including the U.S. 
Homeland. Core al Qaeda almost certainly will also try to inspire 
regional nodes and allies, as well as unaffiliated but like-minded 
extremists, to engage in terrorism against the west. The group can be 
expected to continue its limited support to the Afghan insurgency over 
the next year. Looking ahead, we assess that keeping up 
counterterrorism pressure against core al Qaeda will be crucial to 
maintaining and building upon gains against the group.
    Polls indicate that inflation and unemployment are the primary 
concerns for the Pakistani populace. With Pakistan's 2013 elections 
approaching, Islamabad will be challenged by the difficult economic 
conditions and opposition parties seeking to undermine the government.
    Pakistan views India as its greatest threat, but Islamabad has 
engaged in confidence building talks with New Delhi that seeks an 
expansion of economic ties. The military situation is calm, but a major 
terrorist attack, especially if linked to Pakistan, would jeopardize 
continued progress. New Delhi and Islamabad are expected to hold talks 
on confidence-building measures in 2012. Sustained momentum on these 
issues may enable discussions on more contentious issues over time.
    India considers regional stability a prerequisite for maintaining 
its continued economic growth. New Delhi views economic growth coupled 
with a strong military as essential for gaining recognition as a global 
power. Domestic political issues such as unemployment, inflation, and 
several high-level corruption scandals continue to dominate New Delhi's 
attention. Senior Indian leaders also remain concerned about the 
country's Maoist-inspired insurgency, terrorism, and the security 
situation in Kashmir, although the latter saw a marked decline in 
violence compared to 2010. While India continues to carefully monitor 
events in Pakistan, China is also viewed as a long-term challenge.
    In 2011, India continued efforts to increase economic and military 
engagement with countries in East and Southeast Asia. India and Japan 
agreed to conduct a bilateral naval exercise, their first since 2008; 
India and Vietnam pledged to increase naval training; and the India-
South Korea relationship continues to progress following the Indian 
Defense Minister's late 2010 visit.
    Beijing and New Delhi resumed military-to-military engagement in 
mid-2011, held their first strategic economic dialogue in September, 
and discussed their longstanding border dispute in November. The 
military situation along the contested border is quiet. However, India 
is concerned over Chinese logistical improvements and is taking steps 
to improve its own capabilities. India is raising additional ground 
forces, is improving logistical capacity, and has based advanced 
fighter aircraft opposite China.
    India conducts periodic tests of its nuclear-capable missiles to 
enhance and verify its ballistic missile reliability and capabilities. 
India's current delivery systems include nuclear-capable fighter 
aircraft and ballistic missiles, and India claims it is developing a 
nuclear-capable 6,000 kilometer (km)-range intercontinental ballistic 
missile (ICBM) that will carry multiple warheads. India intends to test 
this ICBM in 2012.
    Turning to North Korea, the primary goals of the Democratic 
People's Republic of Korea (DPRK) are preserving its current system of 
government, improving its poor economy, and building national 
confidence and support for Kim Jong Un--youngest son of the late Kim 
Jong Il and North Korea's new ``Great Leader.'' North Korea's 
leadership is emphasizing policy continuity under Kim Jong Un which DIA 
anticipates will include continued pursuit of nuclear and missile 
capabilities for strategic deterrence and international prestige, as 
well as to gain economic and political concessions.
    Kim Jong Un was appointed to the rank of four-star general and Vice 
Chairman of the Korea Workers Party (KWP) Central Military Commission 
in 2010, he was given the title of Supreme Commander shortly after his 
father's death. He has yet to assume his father's other titles, 
however, such as General Secretary of the KWP and Chairman of the 
National Defense Commission. DIA believes he will assume these titles 
after an appropriate period of mourning when doing so will not be seen 
as detracting from his father's legacy.
    North Korea signaled last year a willingness to return to Six-Party 
Talks. In November 2010, North Korea showed a visiting group of 
American academics a site at the Yongbyon Nuclear Research Center where 
it claimed to be building a light water reactor (LWR) and operating a 
gas centrifuge uranium enrichment facility intended to support low-
enriched uranium fuel production for the LWR. The development of this 
type of uranium enrichment capability could enable North Korea to 
produce fissile material to support its nuclear program.
    North Korea's large, forward-positioned military can attack South 
Korea with little or no strategic warning, but it suffers from logistic 
shortages, aging equipment, and poor training. It has attacked South 
Korean forces in/near disputed territories in the past and maintains 
the capability for further provocations. Pyongyang is making some 
efforts to upgrade conventional weapons, including modernizing certain 
aspects of its deployed missile forces--short-, medium-, and 
intermediate-range systems.
    North Korea has tested missiles, including the Taepo-Dong-2 space 
launch vehicle/ICBM, in violation of international law. Pyongyang also 
has a long history of ballistic missile development.
    North Korea's intelligence resources are focused primarily on South 
Korea and are dedicated to influencing public opinion, collecting 
sensitive information on U.S. and Republic of Korea Government and 
military targets, and in some cases assassinating high-profile 
defectors and outspoken critics of the North Korean regime. North 
Korean intelligence officers and agents for years have infiltrated 
South Korea by posing as defectors. Firsthand accounts of confessed 
North Korean agents describe long-term strategies that can involve many 
years of living in South Korea as sleeper agents before being tasked 
with a mission. North Korean intelligence activity is likely greatest 
in East Asia; however, the full extent of activity outside the Korean 
peninsula is unknown.
    Shifting focus to Iran, Tehran poses a threat to U.S. interests 
through its regional ambitions, support to terrorist and militant 
groups, and improving military and nuclear capabilities. The recent 
plot to assassinate the Saudi Ambassador to the United States 
illustrates the terrorist threat posed by Tehran beyond the region.
    Iran also continues efforts to gain regional power by countering 
Western influence, expanding ties with its neighbors, and advocating 
Islamic solidarity while supporting and arming groups in Afghanistan, 
Iraq, and the Levant. The Iranian Islamic Revolutionary Guard Corps 
(IRGC) trains and provides weapons and logistic support to Lebanese 
Hizballah. In turn, Lebanese Hizballah has trained Iraqi insurgents in 
Iraq, Iran, and Lebanon at Iran's behest, providing them with tactics 
and technology to attack U.S. interests. We estimate the IRGC-QF 
enables similar training of HAMAS, also using Lebanese Hizballah as a 
conduit.
    Iran's military capabilities continue to improve. The navy is 
adding new ships and submarines and expanding bases on the Gulf of 
Oman, the Persian Gulf, and the Caspian Sea. Additionally, Iran is 
deploying vessels into the Arabian Sea for counter-piracy operations 
and conducted its first transit by a submarine to the Red Sea in 2011.
    If attacked, or if sanctions on its oil exports are enacted, Iran 
has threatened to control traffic in or temporarily close the Strait of 
Hormuz with its naval forces, a capability that it likely has. Iran has 
also threatened to launch missiles against the United States and our 
allies in the region in response to an attack; it could also employ its 
terrorist surrogates worldwide. However, it is unlikely to initiate or 
intentionally provoke a conflict or launch a preemptive attack.
    Iran can already strike targets throughout the region and into 
Eastern Europe with ballistic missiles. In addition to its growing 
missile and rocket inventories, Iran is seeking to enhance lethality 
and effectiveness of existing systems with improvements in accuracy and 
warhead designs. Iran's Simorgh space launch vehicle shows the 
country's intent to develop technologies applicable to developing an 
ICBM.
    In Afghanistan, Tehran seeks to prevent a strategic partnership 
declaration between Afghanistan and the United States and has 
repeatedly claimed that a U.S. presence will promote long-term 
instability. Iran provides weapons, funding, and training to 
insurgents, while maintaining ties with the Government in Kabul and 
supporting development efforts.
    In its relationship to Iraq, Tehran supports Prime Minister Maliki 
and wants to maintain a friendly, Shia Islamist-led government in 
Baghdad. Iran welcomed the U.S. drawdown, and Supreme Leader Khamenei 
and senior Iranian military officials have credited the Iraqi people's 
unified resistance for forcing the withdrawal. Despite some points of 
friction, Tehran generally has strong relations with Baghdad, but over 
the long-term, Iran is concerned a strong Iraq could once again emerge 
as a regional rival.
    Iran characterized the Arab Spring as being inspired by its own 
1979 revolution--an assertion that has not resonated with Arab 
populations. Iran seeks new opportunities to expand its influence with 
the fall of a number of governments that were perceived to be allies of 
the United States. Iran is concerned by the unrest in Syria, a country 
essential to Tehran's strategy in the Levant. Iran continued to support 
Syria during the unrest but has called on President Bashar al-Asad to 
implement reforms.
    With regard to counterintelligence concerns, Iran views the United 
States as one of its highest priority intelligence targets, in addition 
to Israel and internal opposition groups. [ran's MOIS and the IRGC-QF 
target DOD interests throughout the world, most markedly in areas such 
as Iraq, Afghanistan, and Gulf Cooperation Council states. In each of 
these regions Iran constitutes the most significant foreign 
intelligence service threat.
    Iran's intelligence services play a vital role not only in 
collection, but also in projecting Iranian influence beyond its 
borders. The Qods Force plays a central yet often hidden role in 
formulating and implementing Iran's Foreign Policy, particularly in 
areas considered vital to Iran's national security interests.
    The events of the Arab Spring unleashed powerful new popular forces 
in the Arab world, a world long suppressed by autocratic regimes, and 
led to a high degree of uncertainty. With elections and the formation 
of new governments only now beginning across North Africa, the 
political and security outcomes remain unclear. Religion will playa 
more prominent role in governments than in the past. However, new 
governments will continue to face the same significant socioeconomic 
challenges that hastened their predecessors' downfall. That suggests 
struggle ahead to satisfy newly emboldened electorates, making future 
unrest likely.
    The outcome in countries still facing civil unrest is similarly 
unclear. Syria and Yemen remain in stalemates between cohesive, but 
embattled, regimes and fractured oppositions that have yet to either 
coalesce into forces capable of overthrowing the regimes or convince 
the majority of the population they are a viable alternative. At this 
stage, both regimes have lost enough legitimacy that their long-term 
survival is unlikely. When and how the stalemates will break is 
uncertain.
    Following the death of Moammar Qadhafi on October 20,2011, and the 
declaration of liberation 3 days later, Libya faces a series of 
challenges to include: meeting election deadlines; disarming and 
reintegrating militias; and resolving political, tribal, regional, 
religious, and ideological rivalries. Transitional National Council 
(TNC) Chairman Mustafa Abd al-Jalil's controversial pledge to invoke 
Islamic law raised concern, although the new Prime Minister, Abd al-
Rahim al-Keeb, later clarified the TNC espouses a moderate Turkish-
style government. It is unclear how much influence hard-line Islamists 
will have on the development of the new government.
    The threat of insurgency and aggression against the TNC remains if 
former Qadhafi regime supporters are not successfully reconciled and 
brought into the political transition. Revenge attacks, arbitrary 
arrests, and forced displacement of Libyans and sub-Saharan Africans 
were common in September and October. Human Rights Watch urgently 
recommended in December that the TNC address abuses of detainees held 
by the TNC and militias, and continuation of such practices will 
sharpen the desire for retaliation.
    In addition to increasing security concerns during the post-Qadhafi 
transition, the completion of repairs to the Libyan oil infrastructure 
will be critical to improving the oil-dependent national economy. 
Effective demobilization of militias is unlikely if meaningful jobs and 
income are unavailable. At the same time, rebuilding and maintaining 
other critical infrastructures, such as security, essential public 
services, and day-to-day effective governance, will also be crucial to 
building and sustaining the new Libyan Government's legitimacy and 
credibility.
    In 2004, Libya had declared a stockpile of bulk liquid sulfur 
mustard, jellified mustard heel, and liquid precursors. TNC forces 
during the unrest discovered undeclared Chemical Warfare (CW) weapons 
or material in Libya which they have since declared to the Organization 
for the Prohibition of Chemical Weapons. Libya's TNC indicated they 
intend to cooperate with the international community regarding CW 
stockpiles in Libya including the destruction of CW material.
    Turning to Egypt, since the February 2011 resignation of President 
Hosni Mubarak, smaller scale protests have continued over issues such 
as the prosecution of former regime officials, government transparency, 
the transition process, economic issues, and sectarian tensions. To 
control protests and stabilize the country, the military-led transition 
government has given in to many protester demands.
    After 10 months of unrest, the regime and opposition in Syria are 
in a stalemate; however, the regime is cohesive. The leading opposition 
umbrella organization, the Syrian National Council (SNC), announced its 
leadership structure on October 2 and continues to call for the non-
violent ouster of the regime. The Syrian military, despite some 
desertions and defections to the armed opposition, on the whole remains 
a viable, cohesive, and effective force. The military suppresses unrest 
throughout the country. The SNC has yet to emerge as a clear or united 
alternative to the Asad regime, and it has not been able to unite 
Syrians on a strategy for ousting and replacing the regime. Regional 
pressure on the regime increased as the Arab League (AL) suspended 
Syria's membership in mid-November and deployed monitors to Syria in 
late December after earlier calls to the regime to end violence, 
withdraw forces from cities, release detainees, permit access to AL 
monitors, and begin dialogue with the opposition. The AL, in late 
January, publicly called for Asad to transfer power to a deputy and 
accelerate legislative elections. On February 2, following an AL 
request for U.N. support for their proposal, the U.N. Security Council 
(UNSC) convened to discuss a potential UNSC resolution.
    Syria is acquiring sophisticated weapons systems such as advanced 
surface-to-air and coastal defense missiles. In addition, Damascus is 
developing long-range rockets and short-range ballistic missiles with 
increased accuracy and extended range.
    Syria is suspected of maintaining an active chemical warfare (CW) 
program, with a stockpile of CW agents which can be delivered by 
aircraft or ballistic missiles. Syria seeks chemical warfare-related 
precursors and expertise from foreign sources to supplement its 
domestic capabilities.
    Damascus maintains a small civil nuclear program that includes a 
Chinese-built research reactor containing one kilogram of weapons-grade 
uranium, an irradiation facility for sterilizing medical products, a 
facility that produces radiopharmaceuticals, and about one metric ton 
of unenriched uranium produced domestically. The International Atomic 
Energy Agency (IAEA) safeguards the reactor. Syria's former covert 
nuclear program--for which the IAEA recently referred Syria to the UN 
Security Council--appears to be dormant.
    Damascus continues its strategic partnership with Hizballah and 
perceives it as an extension of its defense against Israel. Syria's 
strategic partnership with Iran centers on shared regional objectives 
that include countering Israel by transferring increasingly 
sophisticated arms to Hizballah.
    The northern and southern borders of Israel have largely remained 
calm despite periods of tension, such as the June 5 Nakba Day violence 
in the Golan Heights and the August 18 terrorist attack near Eilat in 
southern Israel. Both HAMAS and Hizballah are applying lessons learned 
from past conflicts with Israel. Even if neither intends to resume 
fighting, escalation could result from miscalculated responses to a 
provocation or incident.
    In Gaza, HAMAS is preoccupied with internal Palestinian issues and 
is still rearming and rebuilding after Israel's December 2008 Operation 
Cast Lead. HAMAS is avoiding provocations that could trigger another 
major conflict with Israel. Increased international cooperation against 
HAMAS and Iranian arms smuggling will hamper the group's rearmament but 
will not affect its ability to control Gaza.
    Since it interdicted an international, Turkish-led aid flotilla to 
the Gaza Strip in May 2010, Israel has demonstrated its willingness to 
maintain a naval blockade of Gaza, but changed its policy from a list 
of permitted items to a list of prohibited items. This allows entry of 
more food and commercial goods. Israel also has reiterated it will 
permit international aid shipments to Gaza if they come through 
Israeli-controlled crossing points after unloading in an Israeli or 
Egyptian port.
    Hizballah is focused on internal Lebanese political issues and 
improving its paramilitary capabilities, which now are stronger than 
when it fought Israel in 2006. Both sides expect and are preparing for 
another round of fighting, but Hizballah appears to have no interest in 
renewing the conflict at this time. Israel's next battle with Hizballah 
is likely to involve more ground forces early in the conflict and may 
extend much deeper into Lebanon.
    Iran funds, instigates, and coordinates most anti-Israeli activity 
in the region. Israel is concerned that Iran is giving increasingly 
sophisticated weapons to its enemies, including Hizballah, HAMAS, and 
Palestine Islamic Jihad. These actions could offset Israel's 
traditional military superiority, erode its deterrent, and lead to war.
    In Yemen, Arab Spring protests calling for President Ali Abdallah 
Salih's ouster and prosecution have often devolved into open fighting 
between regime forces, dissident military units, and tribal 
confederations. President Salih's return to Yemen from Saudi Arabia, 
where he was convalescing after a failed assassination attempt, has 
done little to reestablish stability in the country. Political elites 
have since agreed to a consensus government and implementation of a 
political transition plan, but protest activity has continued. Yemeni 
forces eventually rescued a military unit besieged by al Qaeda in the 
Arabian Peninsula in the city of Zinjibar, but the regime still 
struggles to secure the city and the surrounding area. Calls for 
autonomy from a Huthi insurgency in the north and an often violent but 
fractured secessionist movement in the south will challenge any future 
Government of Yemen. These threats, combined with dwindling water and 
oil resources, will complicate efforts to stabilize Yemen.
    Yemen-based al Qaeda in the Arabian Peninsula has the intent, but a 
diminished capability, to target the U.S. Homeland. Over the next 6 
months, the group will likely focus on local attacks against U.S., 
Western, Yemeni, and Saudi interests in the Arabian Peninsula. In the 
longer term, the permissive operating environment in Yemen will allow 
the group to reconstitute this capability, absent sustained 
counterterrorism pressure.
    In general, the cohesion of the al Qaeda network is not reliant on 
a single, unifying leader, and the network will remain intact even if 
senior leaders are removed or communication with al Qaeda core is 
severed. Over the long term, as each regionally-based al Qaeda node 
increasingly pursues its own agenda, we anticipate decentralization 
away from Pakistan-based al Qaeda leadership. Indeed, as core al 
Qaeda's position deteriorates, we assess the center of gravity for the 
broader global jihadist movement could shift from Pakistan to another 
theater. Each node, however, almost certainly will continue to self-
identify as part of al Qaeda, as long as it benefits the node's 
recruitment, fundraising, and prestige. The nodes' public recognition 
of Ayman al-Zawahiri as successor to bin Laden underscores this 
continuing adherence to the notion of a broader al Qaeda movement.
    Nonstate actor, particularly al Qaeda and its associated movements, 
have learned much from their successes and failures over the past few 
years, as well as through their associations with state-based 
intelligence services, and they have instructed their personnel in 
espionage tradecraft, interrogation, counterintelligence, and 
operational security concepts. They continue to use this knowledge and 
training both offensively to target U.S. interests worldwide and 
defensively to counter U.S. counterterrorism efforts.
    In 2011, al Qaeda in the Lands of the Islamic Maghreb (AQIM) 
acquired weapons from Libya, though we have not been able to confirm 
AQIM's acquisition of Libyan manportable air defense systems; kidnapped 
Westerners; and continued its support to Nigeria-based Boko Haram. AQIM 
espouses the al Qaeda ideology and eulogized Osama bin Laden following 
his death.
    I now turn to the Horn ofAfrica. In 2011, increased regional 
opposition against al-Shabaab led to their first territorial losses 
since 2006. In early August, Transitional Federal Government (TFG) and 
African Union Mission in Somalia expanded control of territory in 
Mogadishu when al-Shabaab abandoned their front lines and implemented a 
guerrilla-style retaliation strategy. In the western Somali border 
regions, Ethiopian-and Kenyan-backed TFG proxy forces fought al-Shabaab 
since early 2011, and in October, Kenyan Defense Forces also entered 
southern Somalia. Al-Shabaab called upon its supporters to launch 
attacks in Kenya. In response, al-Shabaab-associated foreign fighters 
are executing attacks in Kenya. East Africa-based al Qaeda operatives 
remain interested in conducting attacks in Europe.
    In 2011, al-Shabaab continued its operations against the Somali TFG 
and the African Union Mission in Somalia and sought to exploit foreign 
aid and nongovernmental organizations responding to the Somali famine 
crisis.
    Prolonged drought will worsen security conditions, driving 
population migration and increased competition over food and natural 
resources. Despite increased humanitarian efforts, al-Shabaab's 
restrictions on international humanitarian relief, ongoing insecurity 
that hampers distribution of aid, and low rainfall will contribute to a 
prolonged food crisis until at least August 2012.
    Southeast Asia (SEA) is a geographic facilitation hub for 
transnational terrorist groups, with al Qaeda maintaining links to 
associated networks in SEA. Other transnational and regional Islamic 
terrorists and insurgents continue to exploit porous borders and 
limited security cooperation between SEA nations, enabling movement of 
personnel and logistics throughout SEA.
    China is building a modern military capable of defending its self 
proclaimed ``core interests'' of protecting territorial integrity, 
sovereignty and national unity; preserving China's political system; 
and ensuring sustainable economic and social development. Defense 
against intervention by U.S. forces in a regional contingency over 
Taiwan is currently among the highest priorities for the military's 
planning, weapons development training.
    DIA estimates China spent as much as $183 billion on military-
related goods and services in 2011, compared to the $93 billion Beijing 
reported in its official military budget. This budget omits major 
categories, but it does show spending increases for domestic military 
production and programs to improve professionalism and the quality of 
life for military personnel.
    Even as the Chinese military plans for conflict and continues its 
build-up across from Taiwan, cross-Strait relations have gradually 
improved since 2008 and currently remain stable and positive. Both 
sides continue to strengthen economic and cultural engagement and have 
largely adhered to a diplomatic truce in the competition to persuade 
other countries to switch diplomatic recognition.
    China's investment in naval weapons primarily focuses on anti-air 
and anti-surface capabilities to achieve periodic and local sea and air 
superiority within the first island chain. China's first aircraft 
carrier, which began sea trials in 2011, will serve as a training 
platform once it is commissioned, likely in 2012. The carrier will not 
reach its full potential until it acquires an operational fixed-wing 
air regiment several years after commissioning.
    Once oriented solely on territorial defense, the People's 
Liberation Army (PLA) Air Force is transforming into a force capable of 
both offshore offensive and defensive roles, including strike, air and 
missile defense, strategic mobility, and early warning and 
reconnaissance. The PLA Air Force began testing a fifth generation 
fighter prototype in 2011.
    China's strategic missile force, the Second Artillery, currently 
has fewer than 50 ICBMs that can strike the continental United States, 
but it probably will more than double that number by 2025. To modernize 
the nuclear missile force, China is adding more survivable road-mobile 
systems, enhancing its silo-based systems, and developing a sea-based 
nuclear deterrent. The Navy is developing the JIN-class nuclear-powered 
ballistic missile submarine and JL-2 submarine-launched ballistic 
missile, which may reach initial operational capability around 2014. 
China deployed a number of conventionally armed, medium-range ballistic 
missiles and is probably preparing to deploy the medium-range DF-21D 
anti-ship ballistic missile.
    China is beginning to develop and test technologies to enable 
ballistic missile defense. The space program, including ostensible 
civil projects, supports China's growing ability to deny or degrade the 
space assets of potential adversaries and enhances China's conventional 
military capabilities. China operates satellites for communications, 
navigation, earth resources, weather, and intelligence, surveillance, 
and reconnaissance, in addition to manned space and space exploration 
missions. China successfully tested a direct ascent anti-satellite 
weapon (ASAT) missile and is developing jammers and directed-energy 
weapons for ASAT missions. A prerequisite for ASAT attacks, China's 
ability to track and identify satellites is enhanced by technologies 
from China's manned and lunar programs as well as technologies and 
methods developed to detect and track space debris. Beijing rarely 
acknowledges direct military applications of its space program and 
refers to nearly all satellite launches as scientific or civil in 
nature.
    China has used its intelligence services to gather information via 
a significant network of agents and contacts utilizing a variety of 
methods to obtain U.S. military technology to advance their defense 
industries, global command and control, and strategic warfighting 
capabilities. The Chinese continue to improve their technical 
capabilities, increasing the collection threat against the United 
States. The Chinese also utilize their intelligence collection to 
improve their economic standing and to influence foreign policy. In 
recent years, multiple cases of economic espionage and theft of dual-
use and military technology have uncovered pervasive Chinese collection 
efforts.
    In Russia, Moscow has pursued a more cooperative approach to 
relations with the United States and the West. Although the recent 
election showed diminishing results for Prime Minister Vladimir Putin's 
political party, he is still on a course to win the March 2012 
presidential election. If elected, he would continue to advocate 
strengthening the Russian military. If Putin's mandate is weakened, he 
may moderate some of his views; however, no major changes are likely in 
Russia's defense and foreign policy objectives toward the United States 
in the coming year.
    An example of recent cooperation is Moscow's willingness to permit 
supplies to pass through Russia to Coalition forces in Afghanistan, but 
a push to maintain the current presence in Central Asia beyond the 
publicized 2014 drawdown or the creation of new bases in the region may 
drive the Kremlin to reconsider its level of support. Russia also has 
cooperated with the United States by agreeing to U.N. sanctions on 
Iran; however, Russian officials are now calling for an incentives 
approach, arguing sanctions options have been exhausted and further 
sanctions would stifle Iran's economy.
    Despite areas of cooperation, Moscow has serious concerns about 
missile defense plans in Europe and is using diplomacy and public 
relations to try to shape implementation of the European Phased 
Adaptive Approach--the U.S. contribution to a North Atlantic Treaty 
Organization missile defense system. Moscow insists on legal 
guarantees, which would ensure missile defense systems would not target 
Russia's strategic capabilities.
    Russia also opposes sanctions and foreign intervention against 
Syria and has consistently urged the opposition to reach an 
accommodation with the regime. Moscow has enjoyed close ties with Syria 
since Soviet times and has strategic and economic interests in Syria.
    The Russian military's most comprehensive reform since World War II 
continues. The goal is to create more agile, modern, and capable 
forces. General purpose forces will be smaller, more mobile, and combat 
ready. They will be better suited to respond to threats along Russia's 
periphery, win local conflicts, and quickly end regional wars. Russia 
will rely on its robust nuclear arsenal to deter and, if necessary, 
engage in larger regional or worldwide conflicts.
    Russia has moved from division--to brigade-centric ground forces, 
disbanded most of its Soviet-era ground force mobilization bases, and 
consolidated air force units and bases. To better control general 
purpose forces in regional conflicts, it has formed the first peacetime 
joint strategic commands--West, East, South, and Center. Additionally, 
the military has established an Aerospace Defense Command under General 
Staff control, which will perform integrated air, missile, and space 
defense missions.
    Moscow's 10-year modernization plan is a top priority for the Armed 
Forces, but it faces funding and implementation risks owing in part to 
a possible decline in the price of oil. The Federal budget is set to 
increase spending by more than 55 percent in 2014 from 2011 spending 
levels. Competing demands to sell arms abroad, Russia's aging 
industrial base, insufficient resources, plus corruption and 
mismanagement most likely will keep modern equipment below those 
levels.
    New equipment for the general purpose forces will increase in 2012, 
but deliveries will be small and Soviet-era weapons will remain the 
standard. Russia also will buy selected foreign systems, such as 
France's Mistral amphibious assault ship and Italian light armored 
vehicles, and will integrate foreign technology and sustain joint 
production programs. Russia will continue to field the SS-26 short-
range ballistic missile, with the first deployed unit being fully 
supplied recently. Development of the PAK-FA, Russia's new fifth-
generation fighter, will continue, though deployment will not occur for 
several years.
    Russia is upgrading massive underground facilities that provide 
command and control of its strategic nuclear forces as well as 
modernizing strategic nuclear forces as another top priority. Russia 
will field more road-mobile 55-27 Mod-2 ICBMs with multiple 
independently targetable reentry vehicles. It also will continue 
development of the Dolgorukiy/SS-NX-32 Bulava fleet ballistic missile 
submarine/submarine-launched ballistic missile and next-generation air-
launched cruise missiles.
    Russia recognizes the strategic value of space as a military forces 
multiplier. Russia already has formidable space and counterspace 
capabilities and is improving its navigation, communications, ballistic 
missile launch detection, and intelligence-gathering satellites. It has 
extensive systems for space surveillance and tracking and others with 
inherent counterspace applications, such as satellite-tracking laser 
rangefinders. Russia is researching or expanding directed-energy and 
signal jamming capabilities that could target satellites.
    Military readiness is generally increasing in Russia's new units, 
but demographic trends, the 1-year conscription policy, and contract 
personnel recruitment problems will complicate efforts to fill the 
ranks adequately. Programs to build a professional military are 
proceeding slowly because they are expensive and Moscow's current 
priority is rearmament.
    Turning to Latin America, President Felipe Calderon of Mexico 
continues his aggressive campaign against transnational criminal 
organizations (TCOs) through high-value-targeting operations, although 
critics contend that it has increased drug-related violence. This 
leaves Mexico's traditional counterdrug efforts such as interdiction 
and eradication as lesser priorities. Almost 50,000 people have died in 
drug-related violence since Calderon declared war on cartels shortly 
after taking office in December 2006. Security forces--the Army, Navy, 
and police--captured or killed 21 of Mexico's 37 most wanted 
traffickers on a list the attorney general announced in March 2009. 
Government leaders are appointing active and retired military officers 
to key police leadership positions to tackle corruption, conduct more 
aggressive anti-cartel operations, and maximize civil-military 
cooperation. National elections in July 2012 will result in a complete 
turnover in the presidency and both houses of Congress.
    In Cuba, President Raul Castro's April 2011 appointment as First 
Secretary of the Cuban Communist Party (PCC) officially established his 
dominance over all aspects of government. Economic reforms, including 
permission for Cubans to buy and sell real estate and automobiles, are 
proceeding slowly. A PCC conference in January 2012 failed to address 
sensitive leadership and JX)litical issues, such as term limits and 
succession. Cuba, overly dependent on ailing Venezuelan President Hugo 
Chavez, will work to expand economic ties, especially with China and 
Brazil.
    Cuba remains the predominant foreign intelligence threat to the 
United States emanating from Latin America.
    In Venezuela, President Hugo Chavez's June 2011 cancer diagnosis 
has not derailed his bid to win reelection in 2012. Prior to the 
October 7 presidential election, we believe the Venezuelan Government 
will stay focused on domestic issues such as the country's high cost of 
living and the escalating crime rate. Meanwhile, Venezuela is 
modernizing its armed forces, unveiling recently acquired Russian 
equipment including tanks, armored personnel vehicles, multiple rocket 
launchers, self-propelled howitzers, and anti-aircraft guns.
    I will now shift from a geographic focus to address issues that 
spread across national boundaries such as proliferation, cyber 
security, and health and water security.
    The proliferation and potential for use of weapons of mass 
destruction (WMD) and ballistic missiles remains a grave and enduring 
threat. Securing nuclear weapons and materials is a worldwide 
imperative to prevent both accidents and the potential diversion of 
fissile and radiological materials. Chemical and biological weapons are 
becoming more technically sophisticated as technology proliferates. 
Terrorist organizations are working to acquire and employ chemical, 
biological, and radiological materials.
    Many advanced nations are cooperating to stop WMD proliferation; 
however some aspects of WMD-related research and technology are beyond 
their direct control, including commercial scientific advances, 
scientists' enthusiasm for sharing their research, and the availability 
of dual-use information and education. For example, the availability of 
naturally-occurring pathogens of proven virulence exploitable from 
actual disease outbreaks presents a low-cost, low-risk, low-complexity 
alternative to obtaining such organisms from either a secured 
laboratory facility or an environmental reservoir.
    Determined groups and individuals, as well as the proliferation 
networks they tie into, often sidestep or outpace international 
detection and export-control regimes. They supply WMD and ballistic 
missile-related materials and technologies to countries of concern by 
regularly changing the names of the front companies they use, operating 
in countries with permissive environments or lax enforcement, and 
avoiding international financial institutions.
    Ballistic missiles continue to pose a threat as they become more 
survivable, reliable, and accurate at greater range. Potential 
adversaries are basing more missiles on mobile platforms at sea and on 
land. Technical and operational measures to defeat missile defenses 
also are increasing. China and Iran for example, exercise near 
simultaneous salvo firings from multiple locations to saturate missile 
defenses. Countries are designing missiles to launch from multiple 
transporters against a broad array of targets, enhancing their mobility 
and effectiveness on the battlefield. Shorter launch-preparation times 
and smaller footprints are making new systems more survivable, and many 
have measures to defeat missile defenses.
    Theater ballistic missiles already are a formidable threat in the 
Middle East and Asia, and proliferation is expanding their availability 
worldwide. Technology sharing will accelerate the speed with which 
potential adversaries deploy new, more capable ballistic missile 
systems over the next decade. Sophisticated missiles and the equipment 
to produce them are marketed openly.
    On space and counter-space issues, governments and commercial 
enterprises continue to proliferate space and counter-space related 
capabilities, including some with direct military applications. Space 
technologies and services that have both civilian and military uses, in 
such areas as communications, reconnaissance, navigation, and 
targeting, remain relatively easy for states and nonstate actors to 
obtain.
    One example is Chinese development of the Beidou position, 
navigation and timing system which the Chinese plan to have available 
for regional users by 2012 and internationally by 2020. This system 
will enable subscribers outside of China to purchase receivers and 
services that give civilian and military applications greater 
redundancy and independence in a conflict scenario that employs space 
assets.
    From the counter-space perspective, Russia and China continue 
developing systems and technologies that can interfere with or disable 
vital U.S. space-based navigation, communication, and intelligence 
collection satellites. North Korea has mounted Soviet-made jamming 
devices on vehicles near the North-South demarcation line that can 
disturb Global Positioning System (GPS) signals within a 50-100 
kilometer (km) radius and is reported to be developing an indigenous 
GPS jammer with an extended range of more than 100 km. Other state and 
non-state actors rely on denial and deception techniques to defeat 
space-based imagery collection, conduct electronic warfare or signal 
jamming, and possibly attack ground sites for space assets.
    Another important transnational threat is that potential 
adversaries are increasingly more capable of conducting cyberspace 
operations against the United States. The pace of foreign economic 
collection and industrial espionage activities conducted by foreign 
intelligence services, corporations, and private individuals against 
major U.S. corporations and government agencies is accelerating. China 
is likely using its computer network exploitation capability to support 
intelligence collection against the United States. Russia also poses a 
highly capable cyber threat to the United States.
    Many countries are considering emulating the United States by 
creating their own cyber commands or dedicated military cyber 
organizations. On May 16, 2011, Iran announced plans to create a cyber 
command. The U.S. national infrastructure, which includes 
communications, transportation, financial, and energy networks, is a 
lucrative target for malicious actors.
    In addition to cyber, another capability that is spreading is the 
use of underground facilities (UGFs) in foreign countries to conceal 
and protect critical military and civilian assets and functions. China, 
North Korea, Iran, Syria, Russia, Pakistan, and Lebanese Hizballah have 
active underground programs. Foreign nations and non-state actors 
employ UGFs in an attempt conceal and make more survivable a variety of 
programs, including WMD strategic command and control, leadership 
protection and relocation, military research and development, 
industrial production, and ground, naval, and air military assets. A 
significant trend of concern is the basing of ballistic and cruise 
missiles and other systems designed for anti-access/area denial weapons 
directly within UGFs.
    Another transnational military issue is that many of the countries 
mentioned above continue to receive advanced conventional munitions, 
including modern air defense systems, precision weapons, and counter 
precision-guided munition systems. DIA remains concerned with the 
proliferation of advanced cruise missiles, such as Russia's supersonic 
Yakhont anti-ship cruise missile which Moscow sold to Syria and 
Vietnam. The 300 km range Yakhont poses a major threat to naval 
operations particularly in the eastern Mediterranean.
    Another important issue that transcends national borders is the 
impossibility of predicting when and where new outbreaks of diseases 
and catastrophic natural disasters with global health security 
implications will occur.
    In Asia, both North Korea and China face domestic health related 
challenges. China's efforts to improve food and drug safety have 
significant shortcomings that affect human health and trade with the 
United States and other partners. China's poor environmental protection 
practices will continue to fuel internal social discontent. North 
Korea's inadequate response to multidrug-resistant tuberculosis, avian 
influenza, foot-and-mouth disease, and other infectious diseases poses 
a health threat to South Korea, China, and other countries as well as 
to its own population.
    As a result of demographic and economic development pressures, 
North Africa, the Middle East, and South Asia will face major 
challenges coping with water problems. Problems associated with water 
shortages and flooding will contribute to instability in many countries 
important to the United States and may require U.S. military assistance 
over the next 10 years. Water shared across borders will increasingly 
be used as leverage in relations between States. Engagement on these 
and other security issues important to our regional partners will be 
key to maintaining U.S. interests and minimizing the risks of conflict 
over the next 10 years and beyond.
    In some of the same countries that face the challenges discussed 
above, the narcotics trade is also a problem. The multi-billion dollar 
global narcotics trade is a major and growing source of crime, 
violence, and political instability in Latin America, Afghanistan, and 
Africa, undermining the rule of law, sapping legitimate economic 
development, and inflicting high socio-economic costs. Cocaine and 
heroin are the two drugs whose production and trafficking are most 
associated with conflict, insurgency, and insecurity. Gross annual 
profits from these two drugs alone exceed $150 billion. Traffickers 
often use these vast earnings to bribe officials and buy military-grade 
weapons and sophisticated communications equipment. This gives them 
state-like intelligence and security capabilities that often outpace 
government capacities, even in countries such as Colombia and Mexico, 
where there is substantial U.S. counterdrug support. At least 10 
terrorist and insurgent groups obtain funding from the drug trade to 
support operations, logistics, and recruitment. As drug consumption is 
expanding in the developing world, anti-government groups increasingly 
will exploit growing drug market opportunities to supplement irregular 
sympathizer donations.
    In addition to the transnational threats discussed above, the 
United States and DOD face a persistent and significant intelligence 
threat posed by numerous countries and a few sub-national actors. DOD 
counterintelligence must focus both on identifying, neutralizing, and/
or exploiting the activities of foreign intelligence officers and 
international terrorists and those trusted insiders who support our 
adversaries. Effective counterintelligence is a significant priority 
for DIA, the Military Services, other defense agencies, and DOD. 
Foreign intelligence services conduct a wide range of intelligence 
activities, as discussed earlier, to degrade our national security 
interests worldwide. They target our Armed Forces, warfighting and 
commercial research, development and acquisition activities, national 
intelligence system, and our Government's perceptions and decision 
processes. A few transnational terrorist groups, often aided by foreign 
intelligence organizations, have developed their own intelligence 
collection and counterintelligence capabilities. In an era of 
globalized commerce, an emerging threat that concerns the department 
involves possible foreign compromise of our supply chain which could 
degrade or defeat our information systems or weapons platforms by 
inserting malicious code into or otherwise corrupting key components 
bound for these important warfighting systems.
    I would like to now turn to two areas where DIA is focusing 
revitalized efforts as an outgrowth of our strategic plan. These are 
strategic warning and our investment in scientific and technical 
intelligence (S&TI) collection and analysis.
    The events of the Arab Spring underscore enduring concern regarding 
the potential for strategic surprise and the need for effective 
warning. Enduring strategic problems like WMD proliferation, regional 
conflicts, and terrorism will remain at the forefront of our warning 
concerns. However, small and varied events--with seemingly limited 
relevance to DOD--can rapidly evolve and radically alter U.S. policy. 
DIA analysis must recognize the implications of these events and 
include them in our perceptions of strategic threat.
    In the foreseeable future, the United States will remain the 
dominant military power with few countries seeking comparable, full-
spectrum conventional military forces. Despite this advantage, the gap 
between the United States and others will narrow through the adaptation 
of asymmetric alternatives to conventional capabilities and a continued 
effort to identify our strategic vulnerabilities.
    The pace at which our strategic and operating environments evolve 
is in creasing-offering advantage to those actors which are most agile 
and able to seize new opportunities or mitigate emerging risks. This 
advantage amplifies the ability of single actors to alter the strategic 
environment. Global austerity measures will impact the military and 
intelligence capability of strategic partners, further amplifying the 
risk to U.S. interests.
    The acceleration of technological change also has potential to 
create surprise. Less developed countries and nonstate actors may 
acquire innovative capabilities that could negate some U.S. military 
capabilities. Proliferation of advanced technology and the rapid 
improvements in commercial off-the-shelf technology will aid 
development of new asymmetric threats.
    DIA's efforts in the area of scientific and technical intelligence 
(S&TI) are intended to allow our customers to anticipate foreign 
advanced weapons and emerging technology, provide characteristics and 
performance of foreign systems, provide onboard mission data to 
maximize the effectiveness of our military systems, and to provide 
warning of the disruptive use of existing technologies by both state 
and nonstate actors. In recent years DIA has noted, for example, the 
appearance of sophisticated threats to our naval forces, efforts to 
counter our advantages in precisions guidance and low-observable 
systems, and the ability of terrorist groups and insurgents to rapidly 
adapt improvised explosive devices to newly introduced countermeasures. 
We have also seen the appearance on the horizon of technologies such as 
quantum computing or electromagnetic weapons that may eventually pose a 
threat to our information security and computer capabilities.
    In order to meet these challenges DIA's Directorate for Analysis, 
as the functional manager for all-source analysis within the defense 
intelligence enterprise, has undertaken several initiatives intended to 
increase the effectiveness and efficiency of the DIA and wider defense 
intelligence enterprise S&TI efforts. In April, the Defense 
Intelligence Analysis Program Board of Governors declared Emerging and 
Disruptive Technology Intelligence a complex analytic issue. As a 
result the DIA Defense Warning Office was chosen as the lead integrator 
for this issue and we formed a Defense Intelligence Disruptive 
Technologies Analysis Committee to coordinate tasking, collection, and 
production in this area. S&TI is an area that requires constant 
research as well as production and, in accordance with DIA's Strategic 
Plan, we are currently circulating for comment a draft Strategic 
Research Plan at the defense intelligence enterprise level. We are also 
drafting a framework for S&TI analysis and collection and will have a 
high-level kickoff meeting for this effort in late January that also 
involves our principal customers.
    The potential for trusted U.S. Government and contractor insiders 
using their authorized access to personnel, facilities, information, 
equipment, networks or information systems in order to cause great harm 
is becoming an increasingly serious threat to our national security. 
Trusted insiders now have unprecedented access to U.S. Government 
information and resources in secure work environments that stress 
information-sharing and connectivity. As experienced by the U.S. 
Government in the recent massive ``WikiLeaks'' disclosure, the 
unchecked distribution of classified information compromises our 
national security and also endangers lives. The Defense Intelligence 
Agency, Defense Counterintelligence (CI) and Human Intelligence Center, 
is the functional manager for the DOD CI Insider Threat Program and has 
been coordinating with the Office of the National Counterintelligence 
Executive, the Office of the Undersecretary of Defense for Intelligence 
and the Office of the Assistant Secretary of Defense (Homeland Defense 
and Americas Security Affairs) in developing DOD policy for the Defense 
Insider Threat Program, to include identifying roles and 
responsibilities for the DOD CI enterprise.
    DIA's Counterintelligence and Security Office has devised and 
deployed a multi-faceted Insider Threat program designed to identify 
threats to DIA personnel, information and operations from within. 
Strategic reports are also crafted based on lessons learned. These 
reports are designed to increase the Agency's security awareness, and 
to inform the development of an array of personnel and technical 
capabilities to respond to any identified threat or breach in security.
    In conclusion, today's focus on combat operations against 
insurgents and transnational terrorists does not preclude the potential 
that other threats will come to the fore, including conflicts among 
major countries that could intersect vital U.S. interests. Defense 
intelligence must be able to provide timely and actionable intelligence 
across the entire threat spectrum.
    In cooperation with the IC, DIA is strengthening collection and 
analysis and sharing more information across intelligence disciplines 
and among agencies and the Nation's close allies.
    The men and women of DIA know they have a unique responsibility to 
the American people and take great pride in their work. While their 
work is often secret, it is a public trust. I am privileged to serve 
with them and present their analysis to you.
    On behalf of the men and women of DIA and the defense intelligence 
enterprise, thank you for your continuing confidence. Your support is 
vital to us.

    Chairman Levin. Thank you very much, General Burgess.
    Let us try 7 minutes for a first round, and I hope there 
will be time for a second round.
    Director Clapper's prepared statement said the following in 
terms of the Intelligence Community's assessment about Iran's 
nuclear program: ``We assess Iran as keeping open the option to 
develop nuclear weapons should it choose to do so. We do not 
know, however, if Iran will eventually decide to build nuclear 
weapons.'' His statement also said that we judge Iran's nuclear 
decisionmaking as guided by a cost-benefit approach which 
offers the international community opportunities to influence 
Tehran.
    General Burgess, do you agree with that statement of 
Director Clapper in his prepared statement?
    General Burgess. Yes, sir. Sir, I think it would be very 
consistent with what the Vice Chairman of the Joint Chiefs and 
myself, along with a couple of other witnesses, stated before 
this committee almost a year and a half ago.
    Chairman Levin. Director Clapper, I understand that what 
you have said--and what General Burgess agrees with--is that 
Iran has not yet decided to develop nuclear weapons. Is that 
correct? Is that still your assessment?
    Director Clapper. Yes, sir. That is the Intelligence 
Community's assessment that that is an option that is still 
held out by the Iranians and we believe the decision would be 
made by the Supreme Leader himself and he would base that on a 
cost-benefit analysis in terms of--I do not think he would want 
a nuclear weapon at any price. So that, I think, plays to the 
value of sanctions, particularly the recent ratcheting up of 
more sanctions in anticipation that that will induce a change 
in their policy and behavior.
    Chairman Levin. It is the Intelligence Community's 
assessment that sanctions and other international pressure 
actually could--not will necessarily, but could--influence Iran 
in its decision as to whether to proceed?
    Director Clapper. Absolutely, sir. Of course, the impacts 
that the sanctions are already having on the Iranian economy, 
the devaluation of their currency, the difficulty they are 
having in engaging in banking transactions, which will, of 
course, increase with the recent provisions in the NDAA. So to 
the extent that the Iranian population becomes restive and if 
the regime then feels threatened in terms of its stability and 
tenure, the thought is that that could change their policy.
    I think it is interesting that they have apparently asked 
the European Union for resumption of the Five Plus One 
dialogue, and of course, there is another meeting coming up, 
another engagement with the International Atomic Energy Agency 
(IAEA). So we will see whether the Iranians may be changing 
their mind.
    Chairman Levin. I must tell you I am skeptical about 
putting any significance in that, but nonetheless, it is not my 
testimony that we are here to hear. It is your testimony and it 
is obviously important testimony.
    Director Clapper, in a recent interview, Defense Secretary 
Panetta said that if Iran decides to pursue a nuclear weapon 
capability, ``it would probably take them about a year to be 
able to produce a bomb and then possibly another 1 or 2 years 
in order to put it on a delivery vehicle of some sort in order 
to deliver that weapon.'' Do you disagree with Defense 
Secretary Panetta's assessment?
    Director Clapper. No, sir, I do not disagree, and 
particularly with respect to the year, that is, I think, 
technically feasible but practically not likely. There are all 
kinds of combinations and permutations that could affect how 
long it might take should the Iranians make a decision to 
pursue a nuclear weapon, how long that might take. I think the 
details of that are best--it is rather complex and arcane and 
sensitive because of how we know this--left to a closed session 
discussion.
    Chairman Levin. You say that the year is perhaps right, but 
it is more likely that it would take longer. Was that the 
implication of your statement?
    Director Clapper. Yes, sir.
    Chairman Levin. Now, a Washington Post columnist recently 
wrote that a senior administration official believes that an 
Israeli strike against Iran was likely this spring. General 
Burgess, in the view of the Intelligence Community, has Israel 
decided to attack Iran?
    General Burgess. Sir, to the best of our knowledge, Israel 
has not decided to attack Iran.
    Chairman Levin. I was concerned, as I indicated in my 
opening statement, Director Clapper, by recent news reports 
that the latest NIE reflects a difference of views between the 
Intelligence Community and our military commanders over the 
security situation in Afghanistan. I made reference as to who 
signed up to that difference of views, including General Allen, 
Ambassador Crocker--not including. These are the ones who 
signed the difference: General Allen, Ambassador Crocker, 
General Mattis, and Admiral Stavridis.
    Can you tell us whether those news reports are accurate, 
that there is a difference of views on that matter?
    Director Clapper. Without going into the specifics of 
classified NIEs, I can certainly confirm that they took issue 
with the NIE on three counts having to do with the assumptions 
that were made about force structure. They did not feel that we 
gave sufficient weight to Pakistan and its impact as a safe 
haven, and generally felt that the NIE was pessimistic.
    Chairman Levin. Pessimistic about that or about other 
matters as well?
    Director Clapper. Just generally it was pessimistic.
    Chairman Levin. About the situation in Afghanistan?
    Director Clapper. In Afghanistan and the prospects for 
post-2014. That, by the way, was the timeframe. It is after 
2014.
    If you forgive a little history, sir, I served as an 
analyst briefer for General Westmoreland in Vietnam in 1966. I 
kind of lost my professional innocence a little bit then when I 
found out that operational commanders sometimes do not agree 
with their view of the success of their campaign as compared to 
and contrasted with that perspective displayed by intelligence.
    Fast forward about 25 years or so and I served as the Chief 
of Air Force intelligence during Operation Desert Storm. 
General Schwarzkopf protested long and loud all during the war 
and after the war about the accuracy of the intelligence, in 
fact, that did not comport with his view.
    Classically intelligence is supposedly in the portion of 
the glass that is half empty, and operational commanders and 
policymakers, for that matter, are often in the portion of the 
glass that is half full. Probably the truth is somewhere at the 
water line.
    So I do not find it a bad thing. In fact, I think it is 
healthy that there is contrast between what the operational 
commanders believe and what the Intelligence Community 
assesses.
    Chairman Levin. Thank you very much.
    Senator McCain.
    Senator McCain. I want to follow up on the chairman's 
questions. So you believe that post-2014, Afghanistan faces 
extremely difficult challenges?
    Director Clapper. Yes, sir, I do. I think in terms of 
governance and the ability of the ANSF, which we are striving 
hard to train up, there are some indications that that is 
having success, but I think the Afghan Government will continue 
to require assistance from the West. Of course, another issue 
is the extent to which we and other coalition members will be 
able to sustain that support.
    Importantly as well is the achievement of a strategic 
partnership agreement with the Afghan Government which would be 
a preface for our continued presence in some form to advise and 
assist and perhaps assist particularly with counterterrorism 
(CT).
    Senator McCain. There has been no change in the ISI 
relationship with the Haqqani network who are killing Americans 
in Afghanistan.
    Director Clapper. Yes, sir. With respect to the Pakistani 
Government--and ISI is a kind of microcosm of the larger 
government--their existential threat is India, and they focus 
on that. Their concern is, of course, sustaining influence and 
presence in Afghanistan, and they will probably continue to do 
that through proxy militias.
    Senator McCain. So our relationship with Pakistan must be 
based on the realistic assessment that ISI's relationship with 
the Haqqani network and other organizations will probably not 
change.
    Director Clapper. Yes, sir. There are cases where our 
interests converge government-to-government, and that 
relationship and that factoid is reflected in the relationship 
with ISI.
    Senator McCain. Secretary Panetta publicly stated that 
Israel will decide in April, May, or June whether to attack 
Iran's nuclear facilities or not. Do you agree with that?
    Director Clapper. I think he was quoted by a columnist. I 
think General Burgess answered that question. We do not believe 
at this point that they have made a decision to do that. What 
could have given rise to this is simply the fact that the 
weather becomes better, obviously, in the spring and that could 
be conducive to an attack. But to reemphasize what General 
Burgess said, we do not believe they have made such a decision.
    Senator McCain. We are seeing a very intriguing kind of 
situation evolve here. There have been what is believed to be 
Iranian attacks or attempts to attack worldwide: in the United 
States in the case of the Saudi ambassador, Georgia, India--the 
explosions there. Now today we read about Thailand. Does this 
tell us a number of things, including the extent of the Iranian 
worldwide terrorist network, and does this also tell us that 
there is a covert conflict or war going on between Israel and 
Iran?
    Director Clapper. There are two dimensions of this. I think 
on the one hand, they feel somewhat under siege. On the other 
hand, they are sort of feeling their oats. Through the Iranian 
lens, they probably view Arab Spring as a good thing and 
opportunities for them to exploit, which thus far have not 
worked to their favor. So they, through their proxies, the 
Islamic Revolutionary Guard Corps (IRGC) particularly, 
decided--made a conscious judgment to reach out against 
primarily Israeli and then secondarily against U.S. interests.
    Senator McCain. They are displaying some capabilities.
    Director Clapper. Yes, sir, to a certain extent. Even 
though the attacks that you reference were not successful, in 
one case they blew one of their own up, but they regard those 
as successful because of the psychological impact they have in 
each one of the countries.
    Senator McCain. Quickly, in the situation in Mexico, 50,000 
Mexicans have lost their lives as a result of drug-related 
violence. Is your assessment that these violent criminal 
organizations pose a threat to the United States, including 
States along the border?
    Director Clapper. Yes, sir, they do. There is always the 
prospect of a spillover, and that is one reason why we are 
working closely with the Mexican Government and that is 
particularly true with respect to intelligence initiatives that 
we are working with them, which I would be happy to discuss in 
closed session. But it is a profound threat to both countries.
    Senator McCain. Have you seen any indication that the top 
candidates vying to succeed President Calderon will alter the 
way the Mexican Government addresses the threat of the cartels?
    Director Clapper. I cannot do a one-by-one assessment, but 
I believe that no matter who succeeds President Calderon, they 
will be committed to continue this campaign.
    Senator McCain. I suggest you look a little more carefully 
because I think that may not be the case, at least with one of 
the candidates.
    If the status quo remains in Syria with increasing Russian 
arms and equipment, Iranian presence and assistance to Assad, 
what is the outlook as far as the situation in Syria is 
concerned, and what in your view do we and the Arab League and 
other likeminded countries need to do to alter that equation if 
it is an apparent stalemate with the massacre continuing?
    Director Clapper. There are, as we characterize them, four 
pillars of the Assad regime.
    The continued effectiveness of the military and support of 
his own military, which is quite large. There have been 
desertions but, for the most part--and they have engaged about 
80 percent of their maneuver units in assaults on the civilian 
population.
    The economy is another pillar that has really taken some 
hits. The price of gas has doubled since September. The price 
of food has gone sky high. They have periodic electrical 
interruptions. So the economy is going south.
    The state of the opposition, which is quite fragmented. It 
is very localized. The Syrian National Council really does not 
only command and control these opposition groups. The Free 
Syrian Army is a separate organization not connected to the 
Syrian National Council.
    Of course, the other is the cohesion of the elites. 
Although we have seen signs of some of the seniors in the Assad 
regime making contingency plans to evacuate, move families, 
move financial resources, to this point, they have held 
together. Assad himself, probably because of his psychological 
need to emulate his father, sees no other option but to 
continue to try to crush the opposition.
    Senator McCain. I guess my question, sir, was unless 
something changes as far as assistance from the outside, do you 
see a continued stalemate in Syria?
    Director Clapper. I do, sir. I think it will just continue. 
Short of a coup or something like that, Assad will hang in 
there and continue to do as he has done.
    Senator McCain. The massacre continues.
    I thank the witnesses. It has been very helpful.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCain.
    Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Director Clapper, General Burgess, thanks for your really 
extraordinary leadership of the Intelligence Community and all 
you do to protect our security.
    Director Clapper, I want to just go back to Iran for a 
couple of minutes quickly. You said this morning that it is 
your assessment, or the Intelligence Community's assessment, 
that Iran has not made a decision to build a nuclear weapon. 
But I assume you also believe, based on IAEA reports and 
information that the Intelligence Community has, that Iran has 
taken steps to put them in a position to make a decision to 
break out and build a nuclear weapon.
    Director Clapper. Yes, sir. That is a good 
characterization. There also are certain things they have not 
yet done, which I would be happy to discuss in closed session, 
that would be key indicators that they have made such a 
decision.
    Senator Lieberman. Yes. But they have done things--is it 
fair to say--that are inconsistent with just wanting to have 
peaceful nuclear energy capacity?
    Director Clapper. Obviously, the issue here is the extent 
to which they produce highly enriched uranium. They have 
produced small amounts of 20 percent highly enriched uranium 
which ostensibly could be used for legitimate peaceful 
purposes. So if they go beyond that, obviously, that would be a 
negative indicator. I will put it that way.
    Senator Lieberman. Right.
    General Burgess, do you want to add to that at all?
    General Burgess. Sir, I would agree with what Director 
Clapper said, but, sir, I would agree with your 
characterization because of the movement from 3.5 to the 20 
percent enrichment. That is already a leap and it is not that 
much of a bigger leap to the 90 percent that they would need to 
go to.
    Senator Lieberman. Right. Thank you.
    Do you both agree or is it your assessment that if Iran 
makes a decision to build a nuclear weapons capability and, in 
fact, achieves it, that it is likely to set off a nuclear arms 
race within the region; in other words, that other countries, 
Saudi Arabia, for instance, will want to also have a nuclear 
weapons capacity?
    Director Clapper. It is certainly a possibility, sir, 
absolutely.
    Senator Lieberman. Is it also fair to say--and we have 
talked about the Iranian sponsorship of terrorism--that if they 
did have nuclear weapons capability, it might well embolden 
them in their use of terrorism against regional opponents and 
even the United States?
    Director Clapper. Yes, sir. It would serve as a deterrent. 
I think even to a certain extent the ambiguity that exists now 
serves as a deterrent and does serve to help embolden them.
    Senator Lieberman. Okay, thanks.
    Let me go to cybersecurity. Thank you very much, Director 
Clapper, for your statement of support for the legislation that 
Senators Collins, Rockefeller, Feinstein, and I introduced.
    The main intention of the legislation--it does a lot of 
things--is to create a system where the Federal Government, 
through the Department of Homeland Security (DHS), advised and 
supported, if you will, by the National Security Agency, can 
work with the private sector to make sure that the private 
sector is defending itself and our country against cyber 
attack. I have spent a lot of time on this. Right now, because 
of the remarkable capacities of cyber attackers and the extent 
to which they can attack privately owned and operated cyber 
infrastructure for either economic gains or to literally attack 
our country, we need to ask the private sector to make 
investments to defend themselves and us that I am afraid they 
are not yet making.
    Is that your general impression? In other words, bottom 
line, do we have a vulnerability at this moment? Does the 
privately owned and operated cyber infrastructure of America 
have a vulnerability to both economic thievery and strategic 
attack?
    Director Clapper. Both the chairman and the ranking member 
cited the National Counterintelligence Executive report that we 
issued in October which called out both China and Russia as our 
primary concerns particularly with respect to the Chinese and 
their theft of intellectual property; of course much of which 
occurs in the private sector.
    I know the bill is quite lengthy, some 270 pages. I have 
not read it all. The important thing for me was the precepts 
that it addresses. It delineates roles of the various 
components of the government to include the DHS, which I 
believe has an important role to play here. It defines what I 
feel is a good balance in the relationship with the private 
sector and how intrusive the government is going to be, which 
is certainly an issue, and most importantly, protect civil 
liberties and privacy. I am sure there are other provisions in 
the bill that some might take issue with, but the precepts, I 
think, are important in terms of the balance between protection 
and our freedom.
    Senator Lieberman. I appreciate very much what you have 
just said.
    Part of the problem here as we go forward, I think, is that 
so much of the vulnerability we have and even the attacks that 
are occurring now or the exploitation occurring are largely 
invisible to the public. So am I right in this regard that 
there is--the report you just cited said it--extensive, ongoing 
theft of intellectual property of American businesses, which in 
fact enables competition from abroad that actually costs us 
jobs here at home and diminishes our economic prosperity at 
home.
    Director Clapper. Absolutely, sir. One of the downsides of 
this, profound downsides, for the United States, of course, 
particularly when people are robbing us of our technology, 
which saves them the investment in research and development--so 
that is almost a double whammy, if you will. I think there is 
difficulty for some--it is something you cannot see, feel, or 
touch since it is a passive theft and you do not directly see 
immediately the negative impacts of that, unlike an attack 
which, obviously, is by its nature active in which you would 
feel the effect of seizure of the banking system or the 
stopping of our electrical grid or some other egregious effect 
like that.
    Senator Lieberman. Finally, would you agree with General 
Burgess, that right now our privately owned and operated cyber 
infrastructure, electric grid, banking system, transportation, 
even water supply and dams, are not adequately defended against 
such an attack?
    Director Clapper. That is probably true and it is uneven. 
Some parts of the infrastructure are reasonably well-protected.
    Senator Lieberman. I agree.
    Director Clapper. But it is not complete. Of course, the 
weakest link proposition here is vulnerability.
    Senator Lieberman. General Burgess, do you want to add 
something?
    General Burgess. Sir, I was just going to say, I, like 
Director Clapper, have not read the whole bill, but from my 
days when I was in the Office of the DNI and took on the issue 
of cyber security with Mike McConnell, I think what you have 
put on the table, sir, is a great first step. As an American 
citizen, thank you to the Senate for doing that. It is a good 
first step. It is progress. Change is generally evolutionary as 
opposed to revolutionary, and I would say this is evolutionary 
in my humble opinion.
    If I had one thing that I would comment on, as I think I 
understand, there is not a requirement to share some 
information. It is encouraged. I always tell people when I 
speak publicly, we are a Nation separated by a common language. 
We all define words a little differently. So in terms of 
economic attack and things like that, some entities may not 
want others to know about what has been taken and they are not 
required to divulge that.
    Senator Lieberman. I take that seriously. It is a good 
comment. It is a thoughtful poke. Thank you for your words.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Lieberman.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    I really think that this is one of the better hearings that 
we have had with the straightforward responses, and I 
appreciate that very much. Your comment about language--I am 
going to get that from the record. I am going to use that later 
on.
    Chairman Levin. I just wrote it down.
    Senator Inhofe. Oh, you did? That was a good one, General.
    I think we pretty much have decided on this 20 percent, 
getting back to Iran now, that it is something that is either 
achieved or is being achieved, as we talk. General Burgess, you 
said we have the scientific, technical, and industrial 
capabilities of producing a weapon. We did not really talk 
about when. ``When'' is the big issue.
    I remember what Secretary Panetta said just the other day, 
and we have repeated it several times. Several of the 
questioners have. I think that is consistent. Back in the 
debate, where we had a difference of opinion as to whether or 
not we should continue with the ground-based interceptor in 
Poland, at that time the unclassified date was actually 2015. 
So this is pretty consistent.
    One thing I do not understand--and I think there are a lot 
of people who do not, and I would like to get the 
clarification. We do know, in terms of the percentage necessary 
for the production of power. We are talking about from 3.5 to 5 
percent enrichment. Is that pretty well something that has been 
used?
    Director Clapper. I think so, sir. I cannot verify it for 
power generation. I do not know what the percentage is, but I 
think that is right.
    Senator Inhofe. But it is something less than the 20 
percent, apparently where they are right now.
    Director Clapper. Yes, sir, I would guess.
    Senator Inhofe. This morning in today's Early Bird, they 
talked about Iran has invoked the medical reactor to justify 
its enrichment of uranium to 20 percent, the higher level of 
refinement that nuclear power systems require. The higher 
enriched material also enables Iran to potentially move more 
quickly.
    It talks about something that I have heard and I assume is 
correct that the difficulty is getting up to the 20 percentage. 
The time between reaching that level and reaching the 90 
percent that we have been concerned about goes much more 
rapidly than it would be to get up to 20 percent. Is this 
accurate?
    Director Clapper. That is generally true, sir, but there 
are a number of factors that would affect the pace and volume 
which would, frankly, be best left to a closed discussion. I 
would be happy to do that with you.
    Senator Inhofe. Sure, and that is good. But I have heard 
this. These are things that we assume, we have talked about, 
and my concern has been when we do end up getting to that 
point.
    It has been reported by the President that he is weighing 
the options of cutting down our nuclear arsenal unilaterally by 
up to 80 percent, and that is something that I am very much 
concerned about. There are a lot of us who actually, back when 
the New Strategic Arms Reduction Treaty (START) was debated, 
were concerned about these things, and I still am. It is my 
understanding--and I remember it. I am going to read a quote by 
the President. When the President was trying to get the 
additional Senators on board to pass the treaty, he made some 
commitments. He said, ``I recognize that nuclear modernization 
requires investment in the long term. It is my commitment to 
Congress that my administration will pursue these programs and 
capabilities for as long as I am President.'' Yet, in the 
fiscal year 2013 budget, he is decreasing that amount by $347 
million and actually delaying the system of modernization.
    I have a quote that I have used recently by former 
Secretary of Defense Gates that talks about--I cannot find it 
right here, but it talks about the fact that we have some 30 
other countries that depend on our nuclear umbrella here. Do 
either one of you have any comments to make about this, which 
is not a proposal yet, but it is a discussion of reduction of 
some 80 percent?
    Director Clapper. Sir, that is news to me. To what extent 
we may reduce or not our nuclear arsenal is certainly not an 
intelligence call, but I can assure you that the Intelligence 
Community will be a participant in such deliberations and would 
certainly convey the threat dimensions of this, particularly 
with respect to the nations of primary nuclear concern which, 
of course, are Russia and China.
    Senator Inhofe. Yes. You said it is news to you, but this 
was released yesterday and maybe you were preparing for this 
hearing and did not get that.
    Let me just mention something about North Korea.
    Director Clapper. What I meant was news to me, sir, was 
reducing that to that extent.
    Senator Inhofe. Okay. That was in the release yesterday.
    In the area of North Korea, I have always been concerned 
about the accuracy of our intelligence there. I told the story 
of going back to 1998 when I made the request as to when North 
Korea would have the capability. At that time--this is a multi-
stage rocket--they talked about 3 to 5 years, and it was 7 days 
later in 1998, August 31, that they actually fired one. I would 
just like to know how confident the two of you are on the 
quality of the intelligence we have on North Korea.
    Director Clapper. Sir, I have followed North Korea for a 
long time. I served as the Director of Intelligence to U.S. 
Forces Korea in the 1980s, and I will tell you that North Korea 
is one of the toughest intelligence targets we have and has 
long been a very, very secretive society, very controlled 
society. There is ambiguity about our insight into North 
Korea's nuclear capabilities and their intentions.
    There are some promising developments, which I would be 
happy to discuss with you in closed session, with respect to 
enhancing the quality of our intelligence insights.
    Senator Inhofe. I would appreciate that very much.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Inhofe.
    Senator Webb is next.
    Senator Webb. Thank you, Mr. Chairman.
    Mr. Chairman and Senator Inhofe both, actually the writer 
in me has to say this. Before you use that quote from General 
Burgess, I believe the first person who made that statement was 
Winston Churchill, when he said that the United States and 
Britain were two countries separated by a common language. So I 
did not want to out you, General Burgess, but somebody was 
going to do it sooner or later.
    Senator Inhofe. I appreciate that.
    Senator Webb. It actually goes to one of the points that I 
need to make this morning and to ask both of you for your 
advice on, and that is words do count. I also sit on the Senate 
Foreign Relations Committee, and the last few days, we have 
been trying to put together a resolution with respect to Syria. 
First, I would say, Director Clapper, that your testimony and 
your comments were very helpful today. You can hear the 
frustration from people like Senator McCain on the fact that 
people up here think they need to do something, but we have to 
be careful what we do and we have to be careful about the 
statements that we make as a Senate.
    I have had a number of occasions, since I have been here, 
to attempt to look at some of these statements that are well-
meaning but hastily drawn and sometimes overly conclusive in 
their tone and yet are not really complete in the detail. These 
things are pulled into the media and they say the Senate 
unanimously made this particular conclusion about one event or 
another.
    We had General Dempsey up here 2 days ago. I asked him a 
question about the nature of the opposition in Syria, the 
question going not to what the Assad regime would be capable of 
doing which, by the way, Director Clapper, I thought you laid 
out in very understandable specifics, but really what is on the 
other side of the picket line? Who are they? How much of this 
is domestic? How much of it is foreign? What is the regional 
dynamic?
    He made one comment. I am going to give you a partial 
quote. He said, ``Syria is a much different situation than we 
collectively saw in Libya. It presents a very different 
challenge in which we also know that other regional actors are 
providing support as a part of a Sunni majority rebelling 
against an oppressive regime.'' We all know this. I think you 
made some comments about this as well.
    I asked him about the reports in the media last week that 
al Qaeda was involved in some of the assassination attempts in 
Syria. He would not reject it out of hand. He said he did not 
know.
    But one of the things that General Dempsey was very clear 
about was they were still attempting to analyze the 
intelligence information to come to some sort of conclusions. 
So this is an opportune time for me to be able to ask both of 
you, what are your thoughts on the nature of the opposition 
that is active on the ground in Syria right now?
    Director Clapper. Let me take a stab at that and then I 
will ask General Burgess to amplify or correct, as the case may 
be.
    As I indicated earlier, the opposition is very 
fractionated. There is not a national movement even though 
there is a title of the Syrian National Council, but a lot of 
that is from external exiles and the like. But there is not a 
unitary, connected opposition force. It is very local. It is on 
a community-by-community basis. In fact, in some communities, 
the opposition is actually providing municipal services as 
though it is running the community and trying to defend itself 
against attacks from the Syrian regime-controlled military.
    The Free Syrian Army, which is a blanket generic name that 
is applied to the collection of oppositionists, is itself not 
unified. There is an internal feud about who is going to lead 
it.
    Complicating this, as you implied, of course, are the 
neighborhood dynamics. The Iranians are very, very concerned 
about propping up Assad. So they have sent help in terms of 
trainers, advisors, and equipment, mostly riot suppression 
equipment, that sort of thing.
    Another disturbing phenomenon that we have seen recently 
apparently is the presence of extremists who have infiltrated 
the opposition groups. The opposition groups, in many cases, 
may not be aware they are there.
    We have had the two attacks that you alluded to, the two 
bombings in Damascus in December, I think it was, and then the 
two additional bombings in Aleppo, both of which were targeted 
against security and intelligence buildings and had all the 
earmarks of an al Qaeda-like attack. So we believe that AQI is 
extending its reach into Syria.
    Complicating all this is--this is another contrast with 
Libya where we had one or two or three sites that had chemical 
warfare components. It is a much more complex issue in Syria 
which has an extensive network of such installations, although 
to this point--and we are watching these very carefully--they 
appear to be secure.
    So many complexities here involving the opposition which I 
am sure will affect any discussion about coming to some 
assistance.
    Senator Webb. General?
    General Burgess. Sir, there is not a whole lot I can add to 
what Director Clapper laid out.
    The only other comment that I would make is in regards to 
what we have seen, reference the al Qaeda-like events. As we 
try and look at some of that, it appears to be those elements 
that may already be in-country. But what we have not seen so 
far and what we have not assessed yet is whether there would be 
what I would call a clarion call to outsiders coming in to 
augment. We have not seen much of that up to this time. So 
basically the team that is on the ground is playing with what 
it has.
    Senator Webb. Thank you.
    My time is up, but I would like to read very briefly from a 
piece that was just published by Leslie H. Gelb, who needs no 
introduction, a foreign policy expert in our country, saying, 
``when interventionists become avenging angels, they blind 
themselves and the nation, and run dangerously amok. They 
plunge in with no plans, with half-baked plans, with demands to 
supply arms to rebels they know nothing about, with ideas for 
no-fly zones and bombing. Their good intentions could pave the 
road to hell for Syrians--preserving lives today, but 
sacrificing many more later.''
    Again, I hope members of this body will keep this in mind 
as we develop policies.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Webb.
    Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman.
    Director Clapper, General Burgess, thank you so much for 
being here today and for your service.
    Director Clapper, I believe you have previously testified 
that the reengagement rate from those who have been released 
from Guantanamo Bay was 27 percent. What is the current 
reengagement rate of terrorists who have been released from 
Guantanamo and has it gone up again from the 27 percent?
    Director Clapper. I think the next assessment will reflect 
a very small, less than a percentage point, increase.
    Senator Ayotte. So the next assessment will reflect perhaps 
a percentage increase. So from 27 percent to 28 percent?
    Director Clapper. Somewhere in that neighborhood.
    Senator Ayotte. Certainly anyone being released from there 
and getting back in to fight our soldiers is one too many. Is 
it not?
    Director Clapper. Yes.
    Senator Ayotte. I wanted to ask you about--there have been 
reports from the administration about the potential of 
exchanging--and I asked Secretary Panetta about this the other 
day--of five detainees to Qatar in exchange for gestures of 
good will from the Taliban in Afghanistan. As I understand 
these five detainees that have been reported by both the 
Washington Post and the Wall Street Journal, they have been 
previously assessed by the administration in 2010 to present a 
high risk of returning to the fight. Has the designation for 
these five detainees changed by the administration?
    Director Clapper. No, ma'am, they have not.
    I hasten to add that, of course, negotiations have always 
been a part of any winding down of combat hostilities, and that 
is the case here. This is a case of exploring the option to see 
what sort of reaction we might get from the Taliban.
    A couple points I would make here is that I do not think 
anyone harbors any illusions about these five Taliban members 
and what they might do if they were transferred. Part and 
parcel of this discussion would be their transfer to a third 
country such as Qatar, and then the conditions under which they 
would be surveilled and monitored.
    I would also want to add that under the provisions of the 
NDAA of Fiscal Year 2012, the Secretary of Defense has to 
certify his view on whether or not anyone can be transferred 
with respect to their recidivism. I can tell you from personal 
encounters with Secretary Panetta, he treats that authority 
with the gravity that it deserves. So this is something I think 
the administration will do very deliberately.
    Senator Ayotte. I appreciate that and I appreciate what the 
Secretary had to say about his responsibilities the other day, 
and I know that he takes these very seriously.
    But I want people to understand very clearly these 
individuals were designated by the administration in 2010 to be 
high risk. Nothing has changed about that assessment. The 
notion that we can monitor them or surveill them--we have tried 
that in the past with releasing people that have come from 
Guantanamo, terrorists, to third-party countries. Now we think 
may go up to a 20 percent reengagement rate for what I 
understand the administration has described as good will from 
the Taliban.
    I think this is an unacceptable risk. Unless we are going 
to get them to lay down their arms, I do not know why we would 
do this to our military men and women and to our allies. So I 
appreciate what you are saying. I just see this as a huge risk 
in terms of safety for our troops and our allies.
    I wanted to ask you briefly about Iran. I know that you 
have received many, many questions, both of you, about Iran. I 
just want to clarify a couple of issues.
    Does the Iranian regime continue to support Hezbollah? What 
kind of threat does Hezbollah pose to our ally, Israel? Is Iran 
supporting Hamas in the Gaza Strip? General Burgess, is Iran 
supporting insurgents in Afghanistan, and what role is Iran 
playing in Iraq?
    Director Clapper. I did not quite write down all those 
questions.
    Senator Ayotte. Do they continue to support Hezbollah?
    Director Clapper. Yes, they do.
    Senator Ayotte. Hamas?
    Director Clapper. There is a very close relationship 
between particularly the IRGC, the Republican Guard Corps, Qods 
Force, which is the organization responsible for external 
operations around the world, and Hezbollah. It is a partnership 
arrangement with the Iranians as the senior partner.
    Senator Ayotte. Is Hezbollah not a terrorist group that 
threatens our close ally, Israel?
    Director Clapper. Yes.
    Senator Ayotte. Does Iran continue to support Hamas in the 
Gaza Strip?
    Director Clapper. Indirectly, yes.
    Senator Ayotte. Are they not a threat also to Israel and 
also to the peace process?
    Director Clapper. Hamas?
    Senator Ayotte. Yes.
    Director Clapper. Yes.
    Senator Ayotte. General Burgess, is Iran supporting the 
insurgents in Afghanistan?
    General Burgess. Yes, ma'am.
    Senator Ayotte. What type of role are they playing in 
Afghanistan?
    General Burgess. They have provided arms. They have been 
caught. We have found Iranian arms in Afghanistan. So they are 
working what we would call a dual-track strategy as they work 
not only against U.S. and coalition desires in there, but at 
the same time, they want to put forward the Government of 
Afghanistan. So they are walking a very fine line.
    Senator Ayotte. But they are clearly supporting our enemies 
and trying to kill our soldiers.
    General Burgess. Yes, ma'am.
    Senator Ayotte. In Iraq, what role are they playing right 
now, now that we have withdrawn, and how would you describe 
their role there?
    General Burgess. I would describe their role in much the 
same way as I did in Afghanistan as very dual-track. Iran does 
not want a strong Iraq on their border, but at the same time, 
they also want to encourage us out of there totally. So again, 
they are walking both sides of the fence.
    Senator Ayotte. So again, they are working contrary to a 
stable Iraq and they are also working contrary to our national 
security interests.
    General Burgess. I would not disagree with that statement.
    Director Clapper. They would like to have a cooperative 
Shia-dominated government in Iraq, which they have, but that is 
not to say that the Iraqi Government, particularly Prime 
Minister Maliki, is necessarily a complete satellite of Iran. 
He has his issues with the Iranians as well.
    Senator Ayotte. But clearly their efforts are continuing to 
fuel sectarian violence.
    Director Clapper. Absolutely. The three principal Shia 
militant groups that Iran has supported in the past, some of 
which were directly responsible for attacks on U.S. forces--and 
of course, the issue is whether they will turn their ire 
against the Iraqi Government or simply become part of the 
political process, remains to be seen.
    Senator Ayotte. When you throw on top of it, of course, 
their efforts to acquire a nuclear weapon, no question they are 
a grave threat to our national security and to that of our 
allies.
    Director Clapper. That is true. Iran is a big problem.
    Senator Ayotte. Thank you.
    Chairman Levin. Thank you, Senator Ayotte.
    Senator Blumenthal.
    Senator Blumenthal. Thank you, Mr. Chairman. I join with 
other members of the committee in thanking you for your service 
and for your excellent testimony here this morning.
    Focusing on Afghanistan and the improvised explosive 
devices (IED), members of this committee and the U.S. Senate 
consider the role of Pakistan in providing ingredients used to 
make those roadside bombs as a grave threat to this Nation. In 
fact, in the 2012 NDAA, the $700 million in aid to Pakistan is 
frozen until they--and I am quoting--``demonstrate significant 
efforts toward implementation of a strategy to counter 
improvised explosive devices.''
    I have heard nothing. I have seen nothing that indicates 
they are making that kind of significant effort. Am I 
misinformed? Could you shed some light on that issue?
    General Burgess. Sir, IED usage in Afghanistan is up by 15 
percent, and most of the precursors and components for those 
IEDs, while they are assembled in Afghanistan, come through 
Pakistan.
    Senator Blumenthal. That could not be happening if Pakistan 
were making significant efforts to stem the flow of ammonium 
calcium nitrate and fertilizer, the components of those 
roadside bombs. Am I correct in that?
    Director Clapper. Yes, sir, that is correct. Two of the 
major companies that produce these materials are located in 
Pakistan. There is an extensive network from Pakistan into 
Afghanistan to move these materials.
    Senator Blumenthal. We know where those plants are, do we 
not?
    Director Clapper. Yes, sir, we do.
    Senator Blumenthal. In fact, the congressional delegation 
that I joined, as recently as August, met with at least one of 
the owners of those plants who indicated that their production 
is ongoing and the Pakistanis have the wherewithal to stop the 
flow of those ingredients into Afghanistan. Do they not, sir?
    Director Clapper. That is a good question, sir, as to how 
much the Pakistani Government controls anything in the 
Federally Administered Tribal Areas (FATA) and the FATA regions 
which border Afghanistan. But it is clear they could probably 
do more than they have to this point.
    Senator Blumenthal. Again, to come to the bottom line here, 
they have really made no significant effort so far.
    Director Clapper. Not that I am aware of, no, sir.
    Senator Blumenthal. Turning to another area of inquiry, 
could you shed some light on the talks that are in progress, if 
there are such talks--as Mr. Karzai has acknowledged in the 
past few days, there are apparently--involving the three 
parties--the Taliban, the United States, and Afghanistan?
    Director Clapper. Yes, sir, there have been. I do not think 
either General Burgess or I are the authorities on the 
negotiations with the Taliban. I am sure the Special 
Representative for Afghanistan and Pakistan, Mark Grossman, is 
far better informed of that.
    But I am sure there has been dialogue. I am sure President 
Karzai, either directly or through intermediaries, has been 
discussing reconciliation issues with the Taliban.
    Senator Blumenthal. You are aware that such talks are 
ongoing?
    Director Clapper. Yes, sir, I believe they are.
    Senator Blumenthal. What would be the need then for 
releasing these currently incarcerated Taliban insurgents if 
those talks are ongoing at the moment?
    Director Clapper. Sir, this is part of confidence building. 
I think that started as a separate track and there are some 
reciprocity considerations which I would prefer to talk about 
in closed session.
    Senator Blumenthal. I appreciate that. I would just say I 
would see no need for that kind of release if, in fact, the 
talks are ongoing, and if, in fact, our adversaries have an 
interest, a self-interest, in talking, I personally would 
question the need for any such release, apart from the security 
issues that have been raised by my colleague from New 
Hampshire, Senator Ayotte, and others previously.
    Let me ask you, if I may, a general question, and I 
understand you may be reluctant to go into details in this 
setting. But if you could characterize whether there are 
differences in the threat assessments from our intelligence 
about the Iranian nuclear capability and the potential response 
to Israeli intervention there and the Israelis' intelligence 
assessments, if you understand my question, which calls for a 
general answer. I am not asking for the details.
    Director Clapper. If your question is, just to make sure I 
understand it, do we and the Israelis largely agree, the answer 
is, yes.
    Senator Blumenthal. Do you agree, General Burgess?
    General Burgess. Sir, I do. We have been in these 
discussions for many years. I have personally been involved in 
them in both my time at the Office of the DNI and as Director 
of DIA. Sir, generally speaking, our assessments track with 
each other. They comport.
    Senator Blumenthal. Thank you.
    Let me ask a final question and you may not think it is 
directly relevant to all of the questions that you have had so 
far, but we have been in discussions, as recently as a couple 
of days ago, with Secretary Panetta and General Dempsey about 
the overall budget of DOD and the platforms that exist. In 
terms of platforms for intelligence gathering, are there 
particular areas where you think the expenditure of resources 
poses a threat; in other words, to put it more simply, where 
diminished funding impedes or imperils intelligence gathering 
by the United States?
    Director Clapper. Sir, we are going through our own cuts in 
the Intelligence Community since a large portion of the 
national intelligence program is embedded in the DOD budget. So 
we were given the same reduction targets on a proportionate 
basis. So we are in the mode, for the first time in 10 years, 
of cutting intelligence resources. We have been on a steady 
upward slope for the whole decade and that is going to come to 
a halt. So we will have less capability than we have had in the 
last 10 years.
    That said, I have been through this before. When I served 
as Director of DIA in the early 1990s and we had to reap the 
peace dividend after the fall of the wall, we did some profound 
cutting in the Intelligence Community, and did not do it very 
well. So we have tried to profit from that experience and place 
stock in those capabilities that make us resilient and agile so 
we can respond as we need to wherever hot spots or crises occur 
in the world.
    So as DOD, for example, pivots to the Far East or the 
Pacific, we will do that as well. Obviously, a major equity for 
us in the Intelligence Community is support to the military.
    Where we are affected, I think, to get to your question, 
is, for example, as we draw down in Iraq and have a much 
reduced footprint across the board to include intelligence, 
that will affect the fidelity of the intelligence that we have 
previously had on Iraq. I anticipate, when we draw down in 
Afghanistan and intelligence resources are drawn down 
proportionately, that we will also not have the fidelity that 
we have today. So in that context, yes, we will lose some 
capability.
    But the premise of the Intelligence Community and one of 
the organizing principles I have tried to push, as a result of 
my experience 20 years ago, is those capabilities that enable 
global coverage to include for denied areas such as Russia and 
China, and enable us to adapt and be resilient depending on 
what the crisis of the day is.
    Senator Blumenthal. Thank you very much. Again, thank you 
both for answering my questions and for being so forthcoming to 
our committee. Thank you.
    Chairman Levin. Thank you very much, Senator Blumenthal.
    Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    I will not belabor the points two of my colleagues have 
made in reference to Iran, and I agree with most of what was 
said. But I just want to emphasize how important it is that we 
ensure that Israel has everything it needs from us to close any 
intelligence capability gaps it has with respect to Iran. Do 
both of you agree with that recommendation or suggestion?
    Director Clapper. Yes, sir, and I think both of us have 
been proponents for sharing intelligence with the Israelis. I 
will be going there next week to engage with the Israeli 
intelligence officials to discuss that very point.
    Senator Brown. Great. Thank you.
    Director Clapper, also just to add on a little bit more, my 
colleagues have already mentioned Syria and how the people are 
enduring serious attacks from Assad. Earlier this week, the 
head of al Qaeda released a video calling on all Muslims in the 
countries surrounding Syria to join the fight against the Assad 
regime. Given that the President and the administration 
officials continue to say it is not a matter of if, but when, 
it will fail and fall, are we prepared for the situation of a 
possible failed state where al Qaeda enjoys a safe harbor and 
refuge from which to coordinate attacks i.e., like what is the 
plan if Syria falls?
    Director Clapper. That is a great question, sir, because 
who would succeed or what would succeed Assad is a mystery. We 
certainly do not know--I do not--what would ensue. As the quote 
that I read in my oral remarks here at the outset of the 
testimony, quoting the Roman historian Tacitus, when he said 
the best day after a bad emperor is the first day and after 
that, I would add, it goes down hill. There is no identifiable 
group that would succeed him. So there would be a vacuum, I 
think, that would lend itself to extremists operating in Syria, 
which is particularly troublesome in light of the large network 
of chemical warfare, chemical and biological weapons storage 
facilities and other related facilities that there are in 
Syria.
    Senator Brown. I agree. I have a concern that AQI is moving 
towards Syria and consolidating themselves there now. Do you 
have any evidence of that?
    Director Clapper. Yes, sir, we do. We have seen evidence of 
Sunni extremists. I cannot label them specifically as al Qaeda, 
but a similar ilk, who are infiltrating the oppositionist 
groups, in many cases probably unbeknownst to those opposition 
groups.
    Senator Brown. Just to shift gears a little bit to the Fort 
Hood shooting. I know that there were some recommendations made 
regarding information-sharing. What is the status of that? Can 
you tell me a little bit about the Counterintelligence 
Community and what they are doing to help the leaders on the 
ground identify potential breakdowns like the one we saw at 
Fort Hood?
    Director Clapper. I am not sure what you are asking.
    Senator Brown. Key reforms have yet to be completed, 
particularly in the area of information-sharing which 
continues, I think, to put our Nation at risk for homegrown 
terrorism and insider threats. Are you getting all the 
information you need from U.S. agencies to adequately address 
our domestic threats, do you think?
    Director Clapper. Sir, I will put it this way. I think we 
have come a long way in the last 10 years in information-
sharing. It is a big focus for me for the Office of the DNI, 
sharing vertically across the agencies, as well as--or 
horizontally and vertically, as well with the Federal, State, 
local, tribal, and private sector. There has been a lot of work 
done towards that. It is an emphasis area for me, and I do 
think we have made great improvements.
    At the same time, of course, we have had episodes like 
Wikileaks which reminds us of the need to balance sharing and 
security. So we always have that fine line to draw between 
those two. But I think we have improved, but there is always 
more to do.
    Senator Brown. Very well. Thank you both.
    Chairman Levin. Thank you very much, Senator Brown.
    Senator Udall.
    Senator Udall. Mr. Chairman, I'm sorry, but I would like to 
yield to Mr. Manchin. I know he has a scheduling conflict, but 
I would like to keep my place in the queue, if I might.
    Senator Manchin. We are just flip-flopping, Mr. Chairman.
    Chairman Levin. We always appreciate those kind of 
courtesies.
    Senator Manchin.
    Senator Manchin. Thank you so much, Mr. Chairman.
    Director Clapper, I am reading a book, finishing it up. It 
is called ``The Coming Jobs War'' by Jim Clifton. I would 
recommend it if you all have not seen it. It says basically the 
coming jobs war is going to be the biggest war that we have 
facing this world; who is fighting for what jobs. It basically 
breaks it down: 7 billion human beings on this great planet 
Earth; 5 billion over the age of 15; 3 billion seeking a job of 
some sort or working; only 1.2 billion formal jobs in the world 
today. So we can see the mammoth problem that we are facing.
    With that, I think, what I am asking is when you conduct 
intelligence estimates, do you consider the impact of 
unemployment and what it will have on the stability of a 
population and how that increases the likelihood of unrest and 
terrorism?
    Director Clapper. Absolutely, sir. I have not read the 
book, but I will get it. I think the point, even more basic 
than jobs, is if you project out in the future what the world's 
supply of food and water is going to be in the face of the 
growing population, if you project out what the population of 
the Earth is going to be in the face of declining resources. 
Yes, absolutely we do account for that in doing any kind of 
intelligence assessments. An indelible illustration of that, of 
course, was Arab Spring because of the conditions which 
actually still exist, the population bulge of high numbers of 
young, unemployed people, rising economic difficulties and 
deprivation, the lack of political freedom of expression. Of 
course, one of our major insights into that is in social media, 
which has become a major bellwether for the attitudes of 
people. So the short answer to your question, sir, is 
absolutely, we do consider that in assessing the potential for 
disruption.
    Senator Manchin. Thank you.
    General, following up on that, when I read this book and I 
was thinking our involvement and the amount of money that we 
have spent in Afghanistan, knowing that when we leave, they 
have no economy; they have had no economy; the only economy 
they have is us. Knowing that the unrest, instability, 
terrorism, or the ability to foster terrorism will be the 
same--and I have a very, very hard time understanding why we 
are still there, and I know I have talked to everybody and I 
feel very strong about that.
    What I will say is this, sir. There are reports that North 
Korea and Iran have possession of U.S. drones that crashed in 
December and will likely try to reverse engineer them so they 
would have them at their disposal. Why on earth did we not 
design or request a design of destruction when we lost those 
drones under any circumstance, that we could have destroyed 
them so they could not have been copied and reproduced back to 
use against us?
    Director Clapper. I would be happy to discuss that with you 
in closed session, sir.
    Senator Manchin. I understand.
    General Burgess, what does the succession of Kim Jong Un 
mean for the security of the Korean Peninsula, and what does it 
mean for the North Korean nuclear program and the Six Party 
Talks that are going on?
    General Burgess. Sir, what I would tell you so far, as we 
have watched the succession, it is unfolding as we had thought 
it would. It is actually moving as has been designated. At this 
time, we see no change to any of their policies and we actually 
see no impact on the way they are going about conducting 
business at the present time.
    Senator Manchin. Concerning al Qaeda, al Shabaab, the 
terrorist insurgent group in Somalia, formally joined al Qaeda 
this past week. Some Somalian Americans have traveled from the 
United States to join al Shabaab and fight the transitional 
government in Somalia. I would like to know from you, sir, what 
are we going to be doing to respond to this threat?
    Director Clapper. First of all, I would play down a bit the 
significance of this union between al Shabaab and al Qaeda. I 
think the core al Qaeda is an organization under siege and is 
in decline. Al Shabaab, for its part, is under pressure by 
virtue of both of the Ethiopian and Kenyan incursions into 
Somalia. They have lost territory and are under the gun. So I 
think we will continue to do what we have always done with 
these two organizations. Al Shabaab, for its part, has been 
largely focused on regional issues, that is, within the Horn of 
Africa as opposed to projecting out a homeland threat. What is 
bothersome about al Shabaab, of course, are the number of 
foreign fighter recruits that they bring in and train and then 
fight.
    Senator Manchin. Finally, to both of you all, on Tuesday, 
General Dempsey testified that the military government in Egypt 
is aware that they stand to lose $1.3 billion of aid from the 
United States, and we have been a solid partner. According to 
press reports, the same government General Dempsey spoke of is 
losing power to anti-American factions. Some of these factions 
are a campaign to end the U.S. aid to Egypt.
    Based on your intelligence assessments, will we be able to 
rely on a future Egyptian Government to uphold the 1979 peace 
treaty with Israel?
    Director Clapper. That is an excellent question, sir, and I 
think that will depend very much on the continuation of the 
transitional process in Egypt, particularly when they write 
their constitution and what the constitution may or may not say 
about the treaty with Israel. I think under any circumstance--I 
cannot foresee a circumstance with any civilian government that 
emerges after the Supreme Council of the Armed Forces 
transitions or hands off in June that there will not at least 
be a review of the treaty. But how that will come out we do not 
know.
    [The information referred to follows:]

    General Burgess. Sir, I would agree with Director Clapper.

    Senator Manchin. Let me just say thank you to both of you 
for your outstanding service to this country of ours.
    With that, I want to thank my gracious colleague, most 
generous colleague from Colorado.
    Chairman Levin. Thank you, Senator Manchin.
    Senator Graham.
    Senator Graham. Thank you, Mr. Chairman.
    Thank you both for your service to our country.
    I think it was mentioned that the intelligence budget is 
wrapped up in the DOD budget. Secretary Panetta said that if we 
did sequestration, if we took another $500 billion to $600 
billion on top of the $487 billion being planned, it would be 
devastating. It would be irresponsible on the DOD side. Would 
it have the same effect, Director Clapper, on the intelligence 
side?
    Director Clapper. Absolutely, sir.
    Senator Graham. Would you agree with me that if America 
ever needed a smart intelligence network, it is now? Because 
the enemies we are fighting really do not care if they die. 
They just want you to go with them.
    Director Clapper. That and other reasons, yes, sir.
    If I may add, the provisions, as they pertain to 
intelligence, are actually even more onerous because we would 
not have any latitude to move or pick and choose where we would 
reduce. It is stipulated for us that every single program 
within intelligence would have to take a proportional hit. So 
we would be faced with the prospect of RIFing a lot of 
employees, which would have a devastating effect not only on 
them, but the employees who were not, as well as it would 
affect virtually every major acquisition system we have in the 
Intelligence Community because they would all be wounded. So it 
would be a disaster.
    Senator Graham. Would you say it would result in destroying 
the ability of the Intelligence Community to adequately defend 
this country?
    Director Clapper. Sir, I would have a hard time saying, as 
the DNI, that I could face a group like this and say I have any 
degree of confidence that I can provide adequate intelligence 
for the safety and welfare of this Nation if that happened.
    Senator Graham. In many ways, America would go blind in 
terms of intelligence gathering.
    Director Clapper. It would, sir, over time.
    Senator Graham. Over time, okay.
    Let us go to Iran. Keep this at the 30,000-foot view. The 
regime's goal, do you not think, is survival? Right? Do you 
both agree with that?
    Director Clapper. Yes, sir.
    Senator Graham. Do you think they have made a decision that 
maybe the best way to survive is to develop a nuclear weapon?
    Director Clapper. Sir, we have said consistently that they 
will base this on a cost-benefit analysis.
    Senator Graham. Do you think they are trying to develop a 
nuclear weapon? Do you think that is their goal?
    Director Clapper. They are putting themselves--they are 
sustaining the industrial infrastructure to enable them, if 
they make that decision, yes, sir.
    Senator Graham. Do you think they are building these power 
plants for peaceful nuclear power generation purposes?
    Director Clapper. That remains to be seen.
    Senator Graham. Do you have doubt about the Iranians' 
intentions when it comes to making a nuclear weapon?
    Director Clapper. I do.
    Senator Graham. So you are not so sure they are trying to 
make a bomb?
    Director Clapper. I am sorry?
    Senator Graham. You doubt whether or not they are trying to 
create a nuclear bomb?
    Director Clapper. I think they are keeping themselves in a 
position to make that decision, but there are certain things 
they have not yet done and have not done for some time.
    Senator Graham. How would we know when they have made that 
decision?
    Director Clapper. I am happy to discuss that with you in 
closed session.
    Senator Graham. I guess my point is that I take a different 
view. I am very convinced that they are going down the road of 
developing a nuclear weapon. I cannot read anyone's mind, but 
it seems logical to me that they believe if they get a nuclear 
weapon, they will become North Korea and nobody really in the 
future is going to bother them.
    Let us talk about nuclear capability in the hands of the 
Iranians. Is that a good outcome for U.S. national security 
interests if they were able to have nuclear capability?
    Director Clapper. Obviously not, if they were to have a 
nuclear weapon and the means of delivering it.
    Senator Graham. Right.
    The reason being, it would create a nuclear arms race most 
likely in the Middle East.
    Director Clapper. That is certainly a potential and likely 
outcome.
    Senator Graham. Arab Sunni states would not take kindly to 
Persian Shias having a nuclear trump card.
    Director Clapper. Correct.
    Senator Graham. The likelihood of a terrorist organization 
being able to access nuclear materials in the hands of the 
Iranian ayatollahs would be greater, not less. Would you not 
think?
    Director Clapper. Probably so, and of course, that is the 
nexus of a terrorist group and WMD.
    Senator Graham. So when President Obama says it is 
unacceptable for the Iranians to achieve nuclear capability, do 
you agree with that?
    Director Clapper. Yes, sir, I do.
    Senator Graham. Congress is about to introduce a resolution 
that says containment of a nuclear-capable Iran is not a good 
national security strategy. So we are going to be backing up 
the President, and I am glad to hear you agree with that 
proposition, that we should not as a Nation try to contain a 
nuclear-capable Iran. We should try to prevent it. As you said, 
sanctions may work. I hope they do. I am not in the camp of 
believing that all is lost.
    Do you also believe that all options should remain on the 
table when it comes to stopping them from getting a nuclear 
capability?
    Director Clapper. Sir, that is a personal view. That is not 
the Intelligence Community's policy, but certainly I do.
    Senator Graham. Just personally.
    Yes. That is what the President said and I certainly agree 
with him.
    Now, let us get back to Iraq. Has the security environment 
deteriorated since we left Iraq militarily?
    Director Clapper. I think it is about the same. We have 
recently done an assessment on the prospects in Iraq for the 
next 18 months, and I think the view is that while there are 
challenges and uncertainties, we believe, at least for the next 
year or so, that the Iraqi Government will continue. It appears 
that the Sunnis at this point believe that their best prospect 
for protecting their interests is to participate in the 
government.
    Senator Graham. So do you believe that us withdrawing all 
of our forces from Iraq has really had no effect on the Iraqi 
security environment?
    Director Clapper. I would not say no effect.
    Senator Graham. Would you say minimal effect?
    Director Clapper. I think there are certain enabler 
capabilities that they no longer have by virtue of our absence. 
But at the same time, as General Burgess indicated in his 
statement, they have done reasonably well and they have a 
reasonably capable CT force.
    Senator Graham. Do you know why Vice President Hashimi, a 
Sunni Vice President, why they tried to indict him days after 
we left and not before?
    Director Clapper. I do not know why the timing other than, 
I guess, the implication would be that our presence there, 
although we were doing all we could diplomatically--I do not 
know why the timing.
    Senator Graham. Is it generally viewed by the Sunnis and 
the Kurds that when America left Iraq, that was a boon to 
Iranian influence?
    Director Clapper. Sir, I do not really know how----
    Senator Graham. Have you talked to the Sunnis and Kurds 
about this?
    Director Clapper. I have not.
    Senator Graham. I would suggest that you do.
    Now, when it comes to Afghanistan.
    Director Clapper. There is no question they are concerned 
about----
    Senator Graham. I would suggest you sit down with some 
leading Sunnis and Kurds and have a discussion about what they 
think is happening in Iraq.
    Now, Afghanistan. The Strategic Partnership Agreement is 
really the last card to be played in many ways--is that not 
correct--via Afghanistan?
    Director Clapper. I am not sure what you mean by ``last 
card.''
    Senator Graham. Mr. Chairman, just if I could have 30 
additional seconds here, I will be quick.
    The bottom line is if we have an American military presence 
post 2014 at the request of the Afghan Government and people 
that would allow a CT capability, American air power, that 
would always give the edge to the Afghan security forces and 
probably be the end of the Taliban militarily. Do you agree 
with that construct?
    Director Clapper. I do. I think that would be a very 
positive thing not only in Afghanistan, but regionally.
    Senator Graham. Would be the best way to negotiate with the 
Taliban saying you are never going to take this country back 
over militarily. You need to get involved in the political 
system.
    Director Clapper. At a minimum, that the Taliban would not 
provide a reservoir or harbor or safe haven for the likes of al 
Qaeda.
    Senator Graham. Thank you.
    Chairman Levin. Thank you, Senator Graham.
    Senator Udall.
    Senator Udall. Mr. Chairman, I am again going to yield to a 
colleague, Senator Hagan, who chairs the Emerging Threats and 
Capabilities Subcommittee, who has to preside on the floor in a 
few minutes. So if I might, I would yield to her.
    Chairman Levin. Of course. Senator Hagan?
    Senator Hagan. Thank you, Mr. Chairman, and certainly thank 
you, Senator Udall.
    I wanted to follow up on Senator Graham's question 
concerning Iraq, but I also wanted to state how much I 
appreciate both of you being here today testifying but, in 
addition, your leadership and long-term security interests in 
our country. So thank you.
    Director Clapper, in your prepared testimony, you state 
AQI, despite its weakened capabilities, remains capable of 
high-profile attacks and some Shia militant groups will 
continue targeting U.S. interests, including diplomatic 
personnel.
    What is the Intelligence Community's assessment of the 
capabilities of Iraqi CT forces to continue similar operations 
against AQI in the absence of our U.S. forces? General Burgess?
    General Burgess. Ma'am, I would tell you that our 
assessment is that the CT force that was left there is a 
capable force but also AQI is a capable and formidable foe. So 
while the Iraqis have some capability, there are certainly some 
things that we are still looking at doing to help them from an 
intelligence standpoint and some others with some of the 
resources----
    Senator Hagan. How about protecting our diplomatic forces?
    General Burgess. Ma'am, we put a lot of resources against 
that as the United States and we work with our Iraqi friends.
    Senator Hagan. Thank you.
    Let me move to Libya and the proliferation of their weapons 
stockpiles. When Qaddafi's regime fell, it was discovered he 
had undeclared stocks of chemical weapons, as well as large 
quantities of conventional weapons. Can you tell me if the 
chemical weapons are secured?
    Director Clapper. Yes, they are.
    Senator Hagan. Were these weapons produced by Libya or 
whether they had help in producing these weapons?
    Director Clapper. We do not know and have not been able to 
determine that.
    Senator Hagan. What about your assessment of what happened 
to all the stockpiles of conventional weapons such as missile 
and artillery?
    Director Clapper. The principal area of concern, of course, 
are the so-called Manportable Air-Defense Systems (MANPADS), or 
shoulder-fired anti-aircraft weapons, and the estimate was, 
going into the upheavals there, of about 20,000 MANPADS. In 
fact, Libya had more MANPADS than any non-producing country in 
the world.
    There has been an active and aggressive program run by the 
Department of State (DOS) to recover MANPADS, and through that 
program, the estimate--they have recovered about a quarter of 
them, about 5,000 MANPADS. There are some number of others that 
were probably destroyed in the course of the air campaign that 
were in depots and other storage places, but the truth is that 
MANPADS and other weapons are distributed all over the place, 
in homes, in factories, in schoolhouses. It is all over. So 
there is a concern, obviously, about recovery of these weapons.
    I would say, though, that the transitional government in 
Libya is on schedule and is moving towards elections and 
reforming the government. Their oil refinery capacity has 
recovered faster than we anticipated. They are up to, we 
estimate, about 1 million barrels a day, and their pre-upheaval 
level was about 1.6 million. So there are problems there, but 
there is some room for optimism.
    Senator Hagan. How did you estimate 20,000 MANPADS and then 
5,000 recovered?
    Director Clapper. The 5,000 recovered is by count.
    Senator Hagan. Right.
    Director Clapper. That was the best intelligence assessment 
that we had based on all-source analysis of the number of 
MANPADS they had before the demonstrations and the like 
started.
    Senator Hagan. In recent weeks, we have seen a spike in 
violent attacks by the Boko Haram in Nigeria. Are some of these 
weapons getting into Nigeria, especially the MANPADS that you 
are discussing?
    Director Clapper. We do not have any evidence of a direct 
relationship between weapons in Libya and Nigeria, no.
    Senator Hagan. According to press reports, al Qaeda in the 
Arabian Peninsula (AQAP), partially as a result of the ongoing 
political crisis in Yemen's capital, continues to gain 
territory in the southern region of Yemen. AQAP's gains are a 
cause for concern, obviously, for many reasons, including the 
fact that it potentially creates a sanctuary for planning of 
external operations.
    My question is what is the Intelligence Community's 
assessment of AQAP's territorial gains in southern Yemen and 
has it provided planning and training space for the potential 
AQAP external operations.
    Director Clapper. Obviously, we are very concerned about 
that, particularly to the extent that it would provide a haven 
for training facilities. We are monitoring that very carefully 
and also watching. I think it interesting when a terrorist 
group like al Qaeda and AQAP all of a sudden has municipal 
responsibilities and just how they deal with that and whether 
that will be a distraction to their foreign plotting. I think 
AQAP, though, as one of the al Qaeda franchises, is probably 
the organization that we are most concerned about in terms of 
potential threats to Europe or the Homeland.
    Senator Hagan. What is your assessment of the ability of 
the Yemeni security service to confront AQAP and regain the 
government's control of this space?
    Director Clapper. To this point, we continue to have good 
cooperation with the Yemeni intelligence and security 
organizations, and hopefully that will be sustained even as the 
government transitions.
    Senator Hagan. Thank you, Mr. Chairman.
    Thank you, gentlemen.
    Chairman Levin. Thank you very much, Senator Hagan.
    Senator Cornyn.
    Senator Cornyn. Thank you, Mr. Chairman.
    Thank you for your service, gentlemen. You have our respect 
and admiration.
    I just have a few questions I want to ask you about the 
economy. Director Clapper, on page 28 of your prepared remarks, 
you talk about the challenges to the global economy and also to 
energy. I want to specifically ask you about the red lines that 
Secretary Panetta identified with regard to blockades of the 
Strait of Hormuz which I do not think it takes a fertile 
imagination to see if there was some sort of action by Israel 
against Iran because of concern about their nuclear capability, 
that there would be retaliation and part of that could well be 
a blockade of the Strait of Hormuz, and I am confident we could 
break that blockade.
    But I just want to ask you when 20 percent of the world's 
oil supply transits the Strait of Hormuz, what is the impact on 
oil prices of the geopolitical issues that we see in the Middle 
East? In other words, does the threat of a possible action by 
Israel against Iran and possible retaliation, which would 
include a blockade of the Strait of Hormuz, affect worldwide 
oil prices?
    Director Clapper. Yes, sir, it does, and, of course, for 
the reasons you cite, if the strait were blocked, that would 
have profound impact not only in the region but in the rest of 
the world. It would have great impact, obviously, on the price 
of oil. Of course, that is one thing we have to manage very 
carefully with the NDAA provisions on imposing more sanctions 
on Iran so that we do not end up in the worst of both worlds. 
But you are quite right. It is a very delicate balance here and 
clearly would have impacts on the price of oil and the world 
economy.
    Senator Cornyn. A blockade of the Strait of Hormuz, because 
of the blockade of the oil trade--would you see that that would 
have a negative impact not only on the global economy in terms 
of the projections of growth--and what I am getting at is, 
obviously, we are coming out of a very tough patch and 
projections by the Congressional Budget Office and the Federal 
Reserve are for a relatively slow rate of growth and higher 
unemployment here for the next several years. I just would like 
to get your impressions of the possibility of a blockade--what 
that would do in terms of the rate of expected growth of our 
economy here and related topics.
    Director Clapper. Sir, I would have to take that one under 
advisement. I am not an economist, and I would want the experts 
to--if there is the possibility for projecting what the impacts 
would be globally on the economy and individually, and it would 
vary from country to country depending on how dependent they 
are on oil that transits the Strait. I think the general answer 
is, it is hard to see a good effect for any number of reasons 
if a blockade were allowed to stand.
    Senator Cornyn. We have been debating a payroll tax 
holiday. An estimate is that it would provide an extra $20 a 
week for a person making $50,000 a year, but in 2011, the 
average family spent more than $4,000 in gasoline. So my 
concern is, in terms of our economy, the geopolitical 
uncertainty that we have been talking about, and what impact 
that would have on families here in the United States and what 
impact it would have to perhaps dampen, if not wipe out, our 
economic recovery. I know you know that is the direction I was 
heading in.
    Let me ask you. Because I am from Texas, obviously Mexico 
is our southern neighbor. Senator McCain had some questions 
about Mexico, and obviously, it is a matter of continual 
concern.
    The Department of Justice, and more particularly the Bureau 
of Alcohol, Tobacco, and Firearms, had a program called ``Fast 
and Furious'' that you are aware of whereby approximately 2,000 
weapons were allowed to walk from gun dealers in the United 
States by the Bureau of Alcohol, Tobacco, and Firearms. I 
believe the last estimate I saw is that roughly only about a 
quarter of those weapons have actually been recovered. Of 
course, one of them--or two of them, actually were found at the 
scene of the death of U.S. Border Patrol Agent Brian Terry.
    Could you shed any light or do you have any opinion on what 
the impact of the transit of those firearms would have on the 
cartels and the violence and the crime that we might see as a 
result?
    Director Clapper. Sir, this is not an intelligence issue. 
Fortunately, it is one aspect that I do not have any 
responsibility for. It is a very unfortunate incident. 
Obviously, guns, whether in a case like this or by any other 
means, that find their way from the United States into Mexico 
certainly do not help the situation.
    Senator Cornyn. I am advised Mexico Government officials 
were not advised by the Department of Justice or the Bureau of 
Alcohol, Tobacco, and Firearms about this ``Fast and Furious'' 
program. Do either of you have anything you can tell us about 
their reaction to this diplomatic breakdown?
    Director Clapper. No, I cannot, sir. Again, it was not an 
issue conducted in intelligence channels. So I do not know 
anything about it.
    [The information referred to follows:]

    General Burgess. Sir, I would agree with Director Clapper.

    Senator Cornyn. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Cornyn.
    Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    Gentlemen, good morning to you. Thanks for the incredible 
breadth and depth of your work and the tour that you have taken 
us on touching on many of the hot spots in the world. I also 
want to thank you for your service, which has included many, 
many years.
    Let me turn to a comment that Secretary Gates made at West 
Point. He said, ``I must tell you when it comes to predicting 
the nature and location of our next military engagements, since 
Vietnam our record has been perfect. We have never once gotten 
it right from Mayaguez to Grenada, Panama, Somalia, the 
Balkans, Haiti, Kuwait, Iraq, and more. We had no idea, a year 
before any of these missions, that we would be so engaged.''
    Do you agree with Secretary Gates on this point, and if so, 
what can we do and what can you do to address that failing? I 
guess I presupposed, Director Clapper, you would agree with me 
and Secretary Gates, but if you disagree, please feel free to 
do so.
    Director Clapper. I am a great fan of Secretary Gates. We 
are good friends and have known each other, so I am loathe to 
disagree with him.
    I would say that as far as our obligation, our 
responsibility is to provide as much insight for decisionmakers 
and policymakers, which we are not, what the implications are, 
what the threat situation is, what kind of a situation we are 
getting ourselves into for any military operation overseas.
    Senator Udall. General Burgess, do you care to comment and 
particularly if there are any thoughts you have of changes, 
additional resources?
    General Burgess. No, sir, I would not. Like Director 
Clapper, I would probably never publicly disagree with 
Secretary Gates.
    But having said that, as we have discussed even last year 
in front of this committee having this same discussion as we 
looked at the Arab Spring, as it was called then, I am one of 
those that think that the Intelligence Community did, in fact, 
paint the picture of the environment and the situation and 
things that were going on. Did we make the tactical call in 
some cases? No, sir. Can we be faulted for that? Sure, because 
there is intelligence failure and operational success as we 
say.
    Senator Udall. I think it is important to note that 
Secretary Gates said we have a perfect record--I am 
paraphrasing--when it comes to predicting the nature and 
location of our next military engagements. He did not 
necessarily imply that our intelligence did not give us some 
indication or that we were not prepared with some understanding 
of those cultures and societies.
    Let me piggyback on your comment about the Arab Spring and 
direct a question to both of you. I would be interested to see 
what you have to say. What has the Intelligence Community 
learned in the wake of the Arab Spring?
    Director Clapper. We have learned that in our focus on CT, 
where we were in many of these countries engaged with local 
liaison services on that subject and maybe were not paying as 
much attention to the back yard that we were in at the time, so 
there is that lesson.
    Certainly, we put a lot of emphasis on the use of social 
media as an indicator. It is not a panacea. It is not the cure-
all and it is not clairvoyant, but it is certainly a great 
indicator of the general attitudes and tenor of a citizenry. 
That, as well as how a host government may try to suppress that 
social media. So that is somewhat a new thing for us which I 
think was brought home to us very clearly as a result of Arab 
Spring.
    Senator Udall. General Burgess, do you have anything else 
to add?
    General Burgess. I have nothing to add.
    Senator Udall. I am slightly loathe to even mention it 
here, but it is in the general information that North Korea's 
citizens now have more access, Director Clapper, to new media 
technologies.
    Director Clapper. Well, not much. There are certain elite 
that have access to that sort of thing, but the general 
citizenry, unless it is smuggled in from the outside, do not. 
Of course, the North Korean regime realizes that and what 
social media means in terms of the outside world and freedom of 
information.
    Senator Udall. There is an opportunity there but also 
fraught with danger for their citizens, obviously.
    Let me turn to Pakistan. We know that it is a fractious 
environment there. It is a regime divided. Who determines there 
the level of cooperation on CT and on the counterinsurgency 
efforts?
    Director Clapper. Sir, the Pakistani Government is in the 
throes of reexamining a reset, if I can use that term, of just 
what the relationship will be with the United States. That is a 
subject their parliament is going to take up, and so we will 
await the outcome of that.
    Senator Udall. How do you assess the current economic 
situation in Pakistan?
    Director Clapper. They have their challenges. It is a tough 
situation there for them.
    Senator Udall. Another question on Pakistan. Your 
assessment, General Burgess and Director Clapper, on the 
likelihood of another military coup in Pakistan over the next 
year to 2 years. Is that a closed session topic?
    Director Clapper. The history has been that they have never 
had an administration that saw the completion of its whole 
term. I am moderately optimistic that this one may succeed 
despite all its current challenges and the court proceeding 
that is going on there now. But I do not think it is the 
inclination of the current army leadership, specifically 
General Kayani, who I think is very sensitive to the 
independence of the military and not doing that.
    Senator Udall. I see Senator Shaheen is here. Let me ask 
one last question.
    Would you describe--and I know you speak in plain English, 
but I will put it that way as well--the magnitude of the cyber 
threat facing the country? We were privy to some important 
briefings as you all participated in these last few weeks on 
the Senate side.
    Director Clapper. Sir, we discussed this quite a bit, and 
both of us have spoken to it in our written testimony and it is 
quite profound. In my oral remarks, I just highlighted the fact 
that CT, proliferation, and cyber are our three major concerns 
that we highlighted in the oral testimony. The National 
Counterintelligence Executive, which is part of my staff, 
issued a report on the impact of economic espionage in this 
country, which was put out in October, which called out both 
Russia and China, particularly China because of the grand theft 
of intellectual property in this country. So it is quite a 
profound threat, and that is one reason why we are supportive 
of the Lieberman, Collins, Rockefeller, Feinstein bill.
    Senator Udall. You included it in your three central 
threats?
    Director Clapper. I did.
    Senator Udall. Thank you again. Thanks for your service and 
thank you for spending all morning with us. I appreciate it. 
Thank you.
    Chairman Levin. Thank you, Senator Udall.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you, Director Clapper and General Burgess, for being 
here. I hate to keep you past the noon hour, so I will try and 
be quick.
    Last year, in the midst of the Libyan operation, Senator 
Collins and I wrote to the administration expressing our 
concerns that I know you share about Libya's vast arsenal of 
unsecured MANPADS. Considering that these pose a continuing 
threat and there are an estimated 20,000 still out there, I am 
not going to ask you to speak to that because we asked that the 
Intelligence Committee give us a report as part of the NDAA. I 
just wanted to say that I look forward to hearing from you 
about that subject because it is clearly going to continue to 
be a concern.
    Director Clapper. It is a concern, and you are quite right 
about the estimate, the all-source estimate we had before the 
anti-Qaddafi demonstrations started of about 20,000 MANPADS in 
Libya. DOS is managing an aggressive program to recover 
MANPADS, and to this point it has recovered about 25 percent of 
them, about 5,000. There are many others that we are certain, 
although we cannot count them all, that were destroyed by 
virtue of the fact they were in ammo depots and bunkers and 
this sort of thing that were destroyed during either the 
contest between the opposition and regime or the NATO air 
strikes. That said, there is a large number that are unlocated 
and will be very problematic in recovering since they have them 
all over the place. Libya was awash in weaponry.
    So we will continue with the program to do what we can to 
either account for the ones destroyed or damaged during the 
demonstrations and encounters and, as well, continue, I would 
guess, with the recovery program that the DOS team is running.
    Senator Shaheen. How often are we seeing these come up with 
the militias in Libya as there is continuing conflict there?
    Director Clapper. There is. Many of the Libyan militias 
have not folded under a central government yet and many of them 
are keeping their weapons for one reason or another. So that 
too is another issue that we are trying to watch.
    Senator Shaheen. I want to pick up on Senator Udall's 
questioning about Pakistan, which I believe continues to be one 
of the most dangerous parts of the world, and especially given 
the continued back-and-forth in our relationship with Pakistan. 
Can you talk about what the current vulnerabilities are of 
their nuclear program and the potential to lead to 
proliferation of sensitive technology or material?
    Director Clapper. I would be pleased to discuss that with 
you in closed session.
    Senator Shaheen. I thought that is what you might say, but 
can you talk about how confident you are that the Pakistani 
nuclear program has the appropriate safeguards and protections?
    Director Clapper. I am reasonably confident they do.
    Senator Shaheen. Are we also feeling like the next level of 
military leadership down from General Kayani also shares the 
same commitment to safeguarding that arsenal that we have seen 
from the top leadership in the military?
    Director Clapper. I believe they do.
    Senator Shaheen. Thank you.
    Obviously, Pakistan's relations with India play a role in 
their defense plans and operations. There has been some small 
good news in terms of the potential for a thaw in that 
relationship in the last year or so. Can you talk about how you 
assess the potential for improved ties between the two 
countries and how that might affect stability in that region?
    Director Clapper. Obviously, from Pakistan's standpoint, 
they view India as an existential threat, but as you alluded, 
there have been some encouraging breaks here in the context of 
dialogue between the two countries. I know from having traveled 
and dialogued with--the Indians would be very interested as 
well in relaxing tensions, but there are longstanding, 
fundamental issues there that, I think, will be hard to 
overcome. Obviously, if they did reach some agreement, it would 
be huge, but there are lots of countervailing factors, I think, 
that are again best left for discussion in closed session that 
I think are going to make that difficult.
    Senator Shaheen. When we were there last summer--I was 
there with Chairman Levin, and this issue came up. The 
political leadership was quick to reassure us that they were 
taking measures to try and thaw relations. Is our assessment 
that there is a commitment at the top levels in both India and 
Pakistan to try and address this longstanding conflict that has 
existed between the two countries?
    Director Clapper. I think that is probably a fair 
assessment. I think at the top levels, they would both see 
advantages, mutual advantages.
    Senator Shaheen. Thank you.
    General Burgess, for nearly 2 decades, the submarine force 
is a major priority and its military modernization has been 
something that we have seen from China. To what extent do those 
ongoing modernization efforts and its focus on expanding its 
submarine force raise concerns with our Navy and our ability to 
respond to that Chinese buildup?
    General Burgess. I think across the board the Chinese are 
making modernization improvements, whether it be in their air 
force, in their navy, and other aspects of what they are doing. 
They are taking a very holistic approach. Submarines are part 
of that.
    We in DIA, along with the Navy and others, are watching 
that very carefully and we continue to watch their 
developments.
    Senator Shaheen. Thank you.
    Director Clapper, I want to go back to Russia. I chair the 
European Affairs Subcommittee in the Senate Foreign Relations 
Committee, and so we have been watching very closely what is 
happening in Russia right now, the protests, the reaction to 
Putin's announcement that he would switch from being Prime 
Minister to being President again. You talked in your January 
testimony about Putin's return to the presidency is resulting 
in more continuity than change.
    Can you talk about how we view, first of all, the impact of 
demonstrations in Russia and what change that might effect as 
we are looking at a changeover in Putin's role there?
    Director Clapper. I think I find this evolution in Russia 
very interesting. Again, this is another manifestation of the 
impact of social media. I think the Russian Government, the 
Russian elite are finding real challenges in putting that free 
information flow via social media genie back in the bottle. I 
often wonder whether Mr. Putin will rue the day he decided to 
come back. He might have been better served to quit while he 
was ahead. I think he comes from the old school, and I do not 
think the old order is going to work in Russia. I think the 
thousands of people willing to turn out in a bitter, bitter 
Moscow cold in January and February is a great testament to 
some profound change I believe is going on in Russia.
    Senator Shaheen. Thank you both very much.
    Chairman Levin. Thank you very much, Senator Shaheen.
    I have a few questions which may be the beginning and the 
end of round two, depending if any other Senators arrive.
    First, in response to a question about how long an Israeli 
military attack on Iran would postpone Iran getting a bomb, 
Secretary of Defense Panetta said, ``that at best it might 
postpone it maybe 1, possibly 2 years''. Does the Intelligence 
Community agree with that?
    Director Clapper. I do not disagree with it, but I think 
there are a lot of factors that could play here. How effective 
such an attack was, what the targets were, what the rate of 
recovery might be. So there are a lot of imponderables there 
that could affect a guesstimate--and that is all it is--about 
how long it would take to resume.
    Chairman Levin. Has the Intelligence Community made an 
estimate of that issue, how long it would take to resume after 
an Israeli military attack?
    Director Clapper. We have not come up with a single number 
for the reasons I just alluded to. It would be hard to come up 
with a number because it would have to be an assessment as well 
as how well the Iranians could recover and how much damage--how 
effective the attack was.
    Chairman Levin. Okay. Now, you indicated that our 
Intelligence Community and the Israeli Intelligence Community 
are aligned on issues relative to Iran. Do the Israelis agree 
with you that Iran has not made a decision as to whether or not 
to have a nuclear weapon? Do they agree with that?
    Director Clapper. I am happy to discuss that with you in 
closed session, sir.
    Chairman Levin. Thank you.
    By the way, I do not believe there is going to be a need 
today for that closed session to give us all hope for lunch.
    Director Clapper, what is the Intelligence Community's 
assessment of the performance of the ANSF in providing security 
in those areas where they have assumed the lead?
    Director Clapper. I think so far, so good. The areas that 
have been turned over in the initial tranche, I think, have 
performed reasonably well, but let me ask General Burgess if he 
wants to add to that.
    Chairman Levin. Thank you. General?
    General Burgess. Sir, I think the Intelligence Community 
would agree with what you just stated, and, in fact, this is 
one of the places where the Intelligence Community is in 
agreement with the commanders on the ground in terms of how the 
Afghan forces are performing.
    Chairman Levin. That is, that they are performing?
    General Burgess. They are performing well when they are 
backed up by enablers from ISAF.
    Chairman Levin. Thank you.
    In a DOD press briefing recently, Lieutenant General 
Scaparadi, Commander of the ISAF Joint Command, and who is in 
charge of operations in Afghanistan, described some signs of 
progress by the ANSF. He indicated that he gave a positive view 
of the progress to build the capabilities of the ANA and the 
ANP. I think, General Burgess, you have indicated you just 
basically share that view, and I think also Director Clapper 
indicated pretty much the same thing.
    This is my question to you, General. Do you share General 
Dempsey's assessment--that was just a couple days ago--that the 
ANSF are on track to assume the lead for providing security 
throughout Afghanistan by 2014 while still requiring support 
from coalition forces for key enablers like intelligence and 
lift?
    General Burgess. Yes, sir, I would be in agreement.
    Chairman Levin. A question on Pakistan. According to news 
reports, a leaked NATO report titled ``State of the Taliban 
2012'' included claims by Taliban detainees that Pakistan is 
providing support to the insurgency, and it reportedly also 
portrayed, though, a strained and a distrustful relationship 
between the Pakistani intelligence, the ISI, and key insurgent 
groups, including the Haqqani network. This is what the 
document reportedly stated: ``There is a widespread assumption 
that Pakistan will never allow the Taliban the chance to become 
independent of ISI control.''
    Do you share that same assumption that Pakistan will never 
allow the Taliban a chance to become independent of ISI 
control?
    Director Clapper. I have not seen this report, sir.
    I think the Pakistanis via the ISI would want to maintain 
visibility and influence. I am not sure I would go so far as to 
say they would insist on dominance, but they certainly want to 
have insight and influence in Afghanistan, particularly in a 
post-2014 context, remembering that their primary interest is 
India.
    Chairman Levin. General, in your assessment, does the 
Pakistan military have the intention to take steps to stop the 
Haqqani's use of the FATA or the KP province as a safe haven 
for conducting cross-border attacks into Afghanistan?
    Director Clapper. The Pakistani army, within its 
capabilities and in light of its other obligations, has done a 
lot in the FATA and has lost a lot of soldiers in that process.
    Chairman Levin. My question, though, is whether they have 
the intention to take steps to stop the Haqqanis.
    Director Clapper. I do not think so.
    General Burgess. Sir, I would agree with that. If you look 
at what the Pakistan army has done, they have actually cut 
forces from 2010 to now in terms of the number of brigades that 
are in there because they have a sustainment issue.
    Chairman Levin. Okay. Relative to the reconciliation talks, 
Director, what are the Taliban's motivations for participating 
in the reconciliation talks?
    Director Clapper. That is a great question, sir. I think 
they want to, I believe, achieve some legitimacy. They want to 
be players in some form in a Government of Afghanistan. Of 
course, they obviously see us as key to that end.
    Chairman Levin. Thank you.
    Senator Portman.
    Senator Portman. Thank you, Mr. Chairman.
    Gentlemen, I will not prolong this because it looks like I 
may be between you and a much-deserved break for lunch.
    First of all, thank you for your testimony today. I had two 
other hearings. So I bounced around a little.
    But I got to hear some of the opening and I also listened 
to Senator McCain and his opening. He talked a little about the 
increasing reports of a link between al Qaeda and Iran.
    Director Clapper, last year the Treasury Department 
designated a number of high-ranking members of al Qaeda who 
operate a facilitation network from inside of Iran. There was a 
press release announcing the designations from David Cohen, the 
Under Secretary. He says--and I quote--``Iran is the leading 
sponsor of state-sponsored terrorism in the world today. By 
exposing Iran's secret deal with al Qaeda and allowing it to 
funnel funds and operatives through its territory, we are 
illuminating yet another aspect of Iran's unmatched support for 
terrorism.'' That is a pretty troubling statement.
    What is your understanding of this secret so-called deal 
between Iran and al Qaeda?
    Director Clapper. Iran and al Qaeda have had a, to a 
certain extent, shotgun marriage. I think Iran has harbored al 
Qaeda leaders, facilitators but under house arrest conditions, 
remembering of course that Iran is a Shia state and al Qaeda is 
Sunni. So they do not agree ideologically in the first place. I 
think Iran, of course, pays attention to our pursuit of al 
Qaeda and what we have done in Afghanistan and Iraq, next door 
neighbors to them. So on the one hand, they have had this sort 
of standoff arrangement with al Qaeda allowing them to exist 
there but not to foment any operations directly from Iran 
because they are very sensitive about, hey, we might come after 
them there as well. So it has been this longstanding, as I say, 
kind of a shotgun marriage or a marriage of convenience. I 
think probably the Iranians may think that they might use 
perhaps al Qaeda in the future as a surrogate or proxy.
    Senator Portman. Would they think, Mr. Director, that they 
might use them as a hedge against an attack from the West?
    Director Clapper. That is what I meant. They may have that 
in mind for future use, but I think for now--and the history 
has been that they have not allowed them to operate freely in 
Iran.
    Senator Portman. You think they have not allowed them to 
conduct operations using Iran as a platform.
    Director Clapper. I do not think they have, sir, not 
directly, not in the sense, say, by core al Qaeda in Pakistan.
    Senator Portman. Speaking of core al Qaeda and core al 
Qaeda leadership, it seems as though some significant progress 
has been made. Your statements today say that there is a 
diminishing operational importance of the core al Qaeda 
leadership and that they play an increasingly symbolic role.
    Director Clapper. That assumes we sustain the pressure on 
them, though.
    Senator Portman. Okay. That is one of my questions. Having 
dedicated a lot of resources to that effort over the years to 
go after the core leadership and we have not had success in 
attritting their numbers and their role, what do you think our 
resource level needs to be going forward, and what happens to 
the lower-level al Qaeda in Pakistan if the final elements of 
the core leadership are taken out?
    Director Clapper. They are about down to that. I think what 
we have to ensure is that they do not regenerate, that they do 
not recruit and continue to operate there. So we will always 
have to be vigilant to prevent a recurrence or regeneration of 
the al Qaeda leadership centering its planning and operational 
planning from the safe haven in Pakistan.
    Senator Portman. If we are successful in the continued 
effort, how would you prioritize resources that we are 
currently using targeting the core? Would you think those 
resources would have to continue to be devoted to the al Qaeda 
threat?
    Director Clapper. Well, yes, sir, because of the 
franchises, so-called, notably AQAP which currently we view as 
the primary threat to the homeland because of their planning 
and intent to attack either in Europe or the United States. 
Then there are the variants in AQIM in Africa. So as these 
franchises emerge, drawing on the ideology of al Qaeda wherever 
they are, I think we will always be in the mode of being 
vigilant to their reemergence.
    Senator Portman. I thank you.
    General Burgess, thank you for your leadership with the 
National Air and Space Intelligence Center and all the other 
intelligence work that your folks are doing to provide us with 
the information that we need as a country to be able to respond 
to these threats. As the ranking member of the Emerging Threats 
and Capabilities Subcommittee, I am continually impressed by 
the good work of your folks. So thank you for that.
    Mr. Chairman, I am going to allow these witnesses, who have 
spent a lot of time here today, the opportunity now to take a 
much-deserved break. Thank you.
    Chairman Levin. I know you want to allow it, but I am going 
to ask two more questions. So despite your good suggestion, 
Senator Portman, I am going to just finish up with a couple of 
questions.
    My last question had to do with the motivation of the 
Taliban. My next question relating to the reconciliation talks 
that they are apparently engaging in has to do not with their 
motivation, which you addressed, but what your assessment is of 
the prospects of success in any degree of those talks.
    Director Clapper. Sir, I do not know and we will not know 
until we actually engage.
    Chairman Levin. Do you have an assessment?
    Director Clapper. No, I do not. I honestly do not know. I 
do know that Taliban objectives----
    Chairman Levin. I am talking about prospects. Do you think 
you are likely to advance the cause of some kind of a positive 
success in Afghanistan?
    Director Clapper. It could, and I believe that is the 
reason that such negotiations are being pursued, to see whether 
there is a path there that may buttress or support 
reconciliation and resolution.
    Chairman Levin. Like a number of other members of the 
committee, I have expressed some real concern at the reports 
that the administration is considering transferring some 
Taliban detainees from Guantanamo to Qatar, and I have 
expressed this both publicly and to the administration 
privately. It seems to me that such transfers would be 
premature and should only be considered after the Taliban has 
engaged in positive discussions on reconciliation. I think you 
heard at least one or maybe more of our members express similar 
concerns this morning, and I just want to let you know that 
there is some real concern by many members of this committee 
about such a transfer in the absence of some real progress and 
real showing of good faith in meeting some of the other 
conditions.
    We are aware that the Secretary of Defense has to certify 
certain things before that takes place, but in addition to that 
certification, there are some real feelings that the people who 
would be released, even though they may be contained in Qatar, 
nonetheless could have an effect on the battle by some control, 
by some propaganda that they might utilize, and in other ways.
    So I want you to be aware of that feeling on the part of 
many members of this committee--I do not know if all of us feel 
that way, but there has been so much expression that you should 
be aware of it.
    My question, though, has to do with this. Has the decision 
been made regarding the transfer of detainees to Guantanamo?
    Director Clapper. No, sir.
    Chairman Levin. Okay.
    Now, Mr. Director, you stated that there has been about a 
decade of funding increases to the Intelligence Community and 
now, as part of the defense budget, cuts that have been 
mandated by the law that was passed by Congress, that there is 
now going to be a reduction in the DOD budget and that includes 
in the Intelligence Community budget as well and that that 
would reduce some capability. My question is whether you are 
able to administer the cut in a way that any reduction in 
capability is manageable and acceptable.
    Director Clapper. Yes, sir, we can. Now, just to be clear, 
that is under the Budget Control Act. If we were to go to 
sequestration, that is quite a different matter.
    Chairman Levin. No. My question was the Budget Control Act.
    Under the 2013 budget request, which does follow the Budget 
Control Act, that came in from the administration a few days 
ago, that request, including the request relative to your 
budget and any reduction in the budget, has your support.
    Director Clapper. Yes, sir, it does.
    Chairman Levin. Senator Portman? So you can take some of 
the brunt for delaying their lunch. After all your good 
instincts and your sensitivity, I took that on myself.
    Thank you both for your fine testimony, your service to our 
Nation, for all of the people who work with you in the 
Intelligence Community, for the great work that they do. We 
frequently talk about our troops and we consider people in the 
Intelligence Community to be very much like our troops with the 
dedication that they show, the risks that many of them take. So 
we are thankful to you and to them and to their families 
because families need to support your community as they do our 
troops.
    This hearing will stand adjourned.
    [Questions for the record with answers supplied follow:]

            Questions Submitted by Senator Claire McCaskill

                                 SYRIA

    1. Senator McCaskill. Director Clapper, we all agree that the 
conduct of the Asad regime in Syria is an outrage and that the 
slaughter must come to an end. With this escalating violence in Syria, 
some have called for the United States to work toward the removal of 
the Asad regime by arming the opposition forces fighting it and the 
state security forces. However, the prospect of arming opposition 
forces in Syria--whether directly or indirectly--has been something 
many observers have cautioned against. Specifically, the dynamics of 
the opposition appear uncertain, and some believe arming the opposition 
groups could have new negative effects on U.S. security interests and 
regional stability. The actors under the umbrella of the Free Syrian 
Army appear to have little unity, and the opposition as a whole is 
complicated by competing regional, tribal, and sectarian interests. You 
also testified before this Committee that al Qaeda's Iraqi affiliate 
group appears to have infiltrated Syrian opposition groups and was 
likely responsible for recent suicide bombings in Damascus and Aleppo 
in Syria. I am concerned that the situation in Syria will allow for al 
Qaeda's operations to grow alongside or outside of the opposition's 
command. Based on our intelligence of the make-up of the opposition, 
would it be possible for the international community to provide arms to 
the rebels without running the risk that those weapons could fall into 
the hands of al Qaeda forces operating in Syria?
    Director Clapper. [Deleted.]

    2. Senator McCaskill. Director Clapper, what are the most 
significant risks of providing arms to the Syrian opposition?
    Director Clapper. [Deleted.]

    3. Senator McCaskill. Director Clapper, what other options should 
the international community consider that would reduce the chance of 
providing support to groups that run counter to U.S. security 
interests, such as al Qaeda, while still applying pressure against the 
Asad regime?
    Director Clapper. [Deleted.]

                                  IRAN

    4. Senator McCaskill. Director Clapper, Secretary Panetta and 
President Obama have made it clear that it is unacceptable for Iran to 
acquire nuclear weapons capabilities--a position I firmly agree with--
and that, accordingly, all options remain on the table as international 
tensions rise. As we saw years ago in Iraq, it is clear that 
intelligence plays a critical role in the decision to commit diplomatic 
or military resources to achieve our national security goals. The past 
decade has shown that the quality and utility of our intelligence can 
have significant consequences on our international political standing, 
as well as tremendous costs in blood and treasure. Therefore, it is 
essential that we critically assess our intelligence. In light of the 
recent boasts of advances in its nuclear program, what analyses are 
being done to determine the credibility of the Iranian regime's 
assertions?
    Director Clapper. [Deleted.]

    5. Senator McCaskill. Director Clapper, are we confident in the 
strength of our intelligence in regards to Iran's nuclear capabilities 
and intentions?
    Director Clapper. [Deleted.]

    6. Senator McCaskill. Director Clapper, what steps do we take to 
address the credibility and veracity of our intelligence on such 
sensitive issues that could impact major national security decisions in 
light of past failures to more critically assess our intelligence and 
to affectively seek additional information?
    Director Clapper. [Deleted.]

                            COUNTERTERRORISM

    7. Senator McCaskill. General Burgess, even as we wind down our 
military operations in Afghanistan, we continue to face the threat of 
violent extremism around the globe. Extremist and militant groups such 
as al Qaeda in the Arabian Peninsula and the Islamic Maghreb and Al 
Shabaab in Somalia remain a threat to U.S. security interests. It is 
clear today that our operations in Afghanistan placed immense pressure 
on our fiscal and military resources, and it is critical to our 
national security that our counterterrorism (CT) strategy moving 
forward be as effective as possible. In the current environment, from 
what location is an attack against our Homeland most likely to emanate?
    General Burgess. [Deleted.]

    8. Senator McCaskill. General Burgess, where do you feel the 
greatest threat to our national security exists today?
    General Burgess. [Deleted.]

    9. Senator McCaskill. General Burgess, do you feel that our CT 
operations in the Horn of Africa and the Arabian Peninsula are 
resourced properly to achieve their operational goals of preventing 
safe havens for terrorists and countering extremist groups?
    General Burgess. [Deleted.]

    10. Senator McCaskill. General Burgess, in light of the recent 
political instability in Yemen, are you confident that the United 
States will be able to continue operations to counter extremist groups 
in that country?
    General Burgess. [Deleted.]

    11. Senator McCaskill. General Burgess, where is al Qaeda most 
active in the world today?
    General Burgess. [Deleted.]

                                PAKISTAN

    12. Senator McCaskill. General Burgess, as we wind down U.S. combat 
operations in Afghanistan, there is great concern that al Qaeda and 
other extremist groups could work toward reestablishment in that 
country. Pakistan remains a key player in countering such reemergence, 
but senior U.S. military officials have raised blunt concerns that the 
Pakistani Inter-Services Intelligence (ISI) has supported insurgent 
networks that engage in attacks on U.S. targets in Afghanistan. Given 
concerns about Pakistan's implicit or explicit support of extremist 
groups such as the Haqqani network, how confident are you in Pakistan's 
commitment to continuing to being a CT partner in the region once U.S. 
military operations have ended in Afghanistan?
    General Burgess. [Deleted.]
                                 ______
                                 
               Questions Submitted by Senator Mark Udall

                           COMMERCIAL IMAGERY

    13. Senator Udall. Director Clapper, in light of language regarding 
commercial imagery in the National Defense Authorization Act of 2012 
and the Intelligence Authorization Act of 2012, how is the Office of 
the Director of National Intelligence assisting the Department of 
Defense (DOD) to conduct the requirements, performance, and cost review 
required by both bills?
    Director Clapper. [Deleted.]

    14. Senator Udall. Director Clapper, how are the J-8 and the 
combatant commands involved in the imagery requirements and industrial 
base study ordered by the White House?
    Director Clapper. [Deleted.]

    15. Senator Udall. Director Clapper, in light of multiple 
presidential policies (to include Presidents Clinton, Bush, and Obama) 
and directives that stress the use of commercial imagery to the maximum 
extent possible, how do you justify the fiscal year 2013 proposed 
reduction for commercial imagery?
    Director Clapper. [Deleted.]
                                 ______
                                 
               Questions Submitted by Senator John McCain

                       IRANIAN NUCLEAR CAPABILITY

    16. Senator McCain. Director Clapper, in response to questions from 
Senator Lieberman regarding Iran making a decision to build a nuclear 
weapon, you stated that there are ``certain things they [Iran] have not 
done which I'd be happy to discuss in a closed session that would be 
key indicators that they have made such a decision.'' Please identify 
these key indicators.
    Director Clapper. [Deleted.]

                             CYBER SECURITY

    17. Senator McCain. Director Clapper, earlier this year in a speech 
at Fordham University, General Keith Alexander, USA, Commander of U.S. 
Cyber Command (CYBERCOM) and the Director of the National Security 
Agency (NSA), asserted that if a significant cyber attack against this 
country were to take place there may not be much that he and his teams 
at either CYBERCOM or NSA can legally do to stop it in advance. 
According to General Alexander, ``in order to stop [a cyber attack] you 
have to see it in real time, and you have to have those authorities. 
Those are the conditions we've put on the table . . . Now how and what 
Congress chooses, that'll be a policy decision.'' Do you agree with 
General Alexander's assessment?
    Director Clapper. [Deleted.]

    18. Senator McCain. Director Clapper, to date, legislative 
proposals before Congress have done very little to address this real 
concern. Why hasn't more been done to ensure that DOD and NSA have the 
tools necessary to protect the Homeland from cyber attacks?
    Director Clapper. [Deleted.]

    19. Senator McCain. Director Clapper, after the release of the DOD 
cyber security strategy in September of last year, General Cartwright, 
the former Vice Chairman of the Joint Chiefs of Staff, stated that DOD 
is spending 90 percent of its time playing defense against cyber 
attacks and 10 percent playing offense and that DOD should invert this 
defense-offense ratio to assert that there will be consequences to a 
cyber attack against the United States. Do you agree with General 
Cartwright's statements?
    Director Clapper. [Deleted.]

    20. Senator McCain. Director Clapper, what do you view as the 
appropriate direction DOD and the Nation as a whole should be headed 
with respect to cyber deterrence?
    Director Clapper. [Deleted.]

    21. Senator McCain. Director Clapper, do you view this as a matter 
of urgency?
    Director Clapper. [Deleted.]
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker

                            IRAN AND ISRAEL

    22. Senator Wicker. General Burgess, Iran continues its path toward 
a nuclear weapons capability. Sanctions have clearly begun to affect 
the Iranian economy but do not appear, as of yet, to have altered their 
nuclear weapons efforts. Just yesterday, Iran threatened to cut oil 
exports to several European Union countries and unveiled advances in 
its nuclear fuel programs. The United States has certain intelligence 
capabilities that our allies do not. Broadly speaking, do you believe 
your counterparts in the Israeli Ministry of Defense and Israeli 
Security Services are pleased with the level of cooperation and mutual 
trust with DOD and our Intelligence Community?
    General Burgess. [Deleted.]

    23. Senator Wicker. General Burgess, what would be the implications 
of an attack by Israel against Iran for our regional allies?
    General Burgess. [Deleted.]

                                 SYRIA

    24. Senator Wicker. Director Clapper, the situation in Syria 
continues to deteriorate. Thousands of innocent Syrians have been 
brutally murdered and countless have been wounded. President Obama said 
in his State of the Union Address that in Syria, he has ``no doubt that 
the Assad regime will soon discover that the forces of change can't be 
reversed, and that human dignity can't be denied.'' How do you judge 
the capabilities of the Free Syrian Army?
    Director Clapper. [Deleted.]

    25. Senator Wicker. Director Clapper, members of the administration 
have stated we will exhaust all diplomatic options in an effort to 
avoid any military confrontation, though there have been reports that 
the United States is beginning to rethink its military strategy and 
support. What would this entail?
    Director Clapper. [Deleted.]

    26. Senator Wicker. Director Clapper, what is the extent of the 
Syrian chemical stockpile?
    Director Clapper. [Deleted.]

    27. Senator Wicker. Director Clapper, what can be done to secure 
the Syrian chemical stockpile if the Assad regime loses control?
    Director Clapper. [Deleted.]

    28. Senator Wicker. Director Clapper, are we working with the 
Israelis to ensure these weapons do not get into the wrong hands?
    Director Clapper. [Deleted.]

    29. Senator Wicker. Director Clapper, what, if any, military 
options do you see for DOD?
    Director Clapper. [Deleted.]

                                 EGYPT

    30. Senator Wicker. Director Clapper, just over a year ago, the 
Egyptian people took to the streets and overthrew President Hosni 
Mubarak. Today, it appears that Islamist factions are poised to take 
control of the Egyptian Government and the country's future. How would 
you characterize our current relationship with the Egyptian 
intelligence services?
    Director Clapper. [Deleted.]

    31. Senator Wicker. Director Clapper, has their cooperation and 
relationship with DOD and the Intelligence Community changed since last 
year?
    Director Clapper. [Deleted.]

    32. Senator Wicker. Director Clapper, what is your assessment of 
the Muslim Brotherhood?
    Director Clapper. [Deleted.]

    33. Senator Wicker. Director Clapper, what impact will a 
Brotherhood-led government have on relations between the U.S. military 
and the Egyptian military?
    Director Clapper. [Deleted.]

    34. Senator Wicker. Director Clapper, how are we strategically 
adapting to the new role the military is taking within the Egyptian 
Government?
    Director Clapper. [Deleted.]

    35. Senator Wicker. Director Clapper, it appears that the Egyptian 
Government has little, if no, control over Sinai. What is the impact of 
that likely to be in our security calculations for the upcoming year?
    Director Clapper. [Deleted.]

                 REGIONAL EVENTS AND ISRAEL'S SECURITY

    36. Senator Wicker. Director Clapper, events of recent months have 
highlighted the unique role Israel plays in the Middle East as a 
reliable, stable, and democratic U.S. ally who not only shares our 
interests, but also our values. That said, the uncertainty of the 
regional tumult has raised questions about Israel's qualitative 
military edge (QME). Maintaining Israel's QME has been a longstanding 
cornerstone of U.S. policy in the Middle East. What strategy is in 
place to ensure Israel's QME as the security situation in the region 
continues to change?
    Director Clapper. [Deleted.]

    37. Senator Wicker. Director Clapper, there have been reports that 
the joint military drill with Israel has been rescheduled for the fall. 
Why are we participating in such a drill at this time, and what 
benefits do we hope to achieve from the exercise?
    Director Clapper. [Deleted.]

                   TROOP WITHDRAWAL FROM AFGHANISTAN

    38. Senator Wicker. General Burgess, I do not see any tactical or 
diplomatic sense in your recent announcement about telling the enemy 
the date we are going to pull out troops. This gives the enemy an 
advantage on the ground and also eliminates any incentive for the 
Taliban to engage in substantive political negotiations with the Afghan 
Government. Our strategy in Afghanistan must be based solely on the 
conditions on the ground and not on the politics of the 2012 election. 
Political expediency should never be an excuse for a rush to judgment 
on public policy--let alone our national security. How does DOD plan to 
execute this announced withdrawal while not further endangering the 
lives of our troops and still meeting operational demands?
    General Burgess. As this question concerns Department of Defense 
(DOD) plans and policy, the Defense Intelligence Agency (DIA) defers to 
the appropriate DOD planning and policy element.

    39. Senator Wicker. General Burgess, in your testimony you stated 
that ``the Afghan Government will struggle to fill the vacuum left by 
the International Security Assistance Forces (ISAF) and resources, 
while continuing to support ongoing ISAF efforts in nontransitioned 
areas.'' What specific struggles are you referring to?
    General Burgess. [Deleted.]

     foreign language training and retention of qualified personnel
    40. Senator Wicker. Director Clapper and General Burgess, I am a 
strong proponent of foreign language and cultural training at the 
military academies, ROTC cadets and midshipmen, as well as similar 
training and incentives for college students interested in the 
Intelligence Community. These initiatives include the Center for 
Intelligence and Security Studies at the University of Mississippi, 
which prepares undergraduate students for careers in intelligence 
analysis. To what extent do you believe education and training in 
foreign languages and cultures are important in preparing the next 
generations of military officers and civilian analysts?
    Director Clapper. [Deleted.]
    General Burgess. Education and training in foreign languages and 
cultures are exceptionally important to the Nation at this time in 
history. The need for language, cultural proficiency, and regional 
expertise is only going to grow--not just within the Intelligence 
Community and DOD, but across all parts of society that touch an 
increasingly interconnected world. For all concerned, it is a very 
dynamic strategic environment. More than ever, language, cultural 
proficiency, and regional/area expertise are the keys that open hard 
targets. They are prerequisites for success.

    41. Senator Wicker. Director Clapper and General Burgess, can you 
elaborate on the Intelligence Community's--and DIA's--ongoing efforts 
to recruit and retain qualified and capable Active Duty and civilian 
analysts and operators, and what challenges you face?
    Director Clapper. [Deleted.]
    General Burgess. DIA recently moved to Centralized Recruitment, 
Hiring, and Placement. Under this initiative, DIA centrally manages 
staffing to meet the mission and skills requirements while shaping the 
next generation of intelligence professionals. This initiative allows 
DIA to hire and retain the required skills and competencies through an 
increased focus on hiring at the developmental level and retaining our 
best and brightest by affording them career developmental 
opportunities. Specifically, DIA has developed programs to advance 
employee careers, including Joint Duty Assignments, the Upward Mobility 
Program, and the Accelerated Career Transition Program. DIA's primary 
programs to attract external talent include summer internships, 
cooperative education, and Wounded Warrior. Future challenges include 
budget constraints and a constantly changing environment; however, we 
are confident that Centralized Recruitment, Hiring, and Placement will 
allow DIA to meet our mission.
                                 ______
                                 
               Questions Submitted by Senator John Cornyn

                     FUTURE U.S. NUCLEAR REDUCTIONS

    42. Senator Cornyn. Director Clapper and General Burgess, in April 
2009, President Obama declared his intention to ``seek the goal of a 
world without nuclear weapons.'' While such an outcome would be nice, I 
see this goal as, at best, the stuff of pure fantasy, and, perhaps more 
accurately, incredibly misguided and perilous for our Nation's long-
term security. In December 2010, the Senate ratified the President's 
New Strategic Arms Reduction Treaty (START). I voted against it, partly 
because of the fantastical nature of the President's stated long-term 
goal of a nuclear-free world. Earlier this week, Chairman of the Joint 
Chiefs of Staff, General Martin Dempsey, USA, testified that a nuclear 
posture review was underway. According to recent reports, DOD is 
exploring scenarios that could reduce our nuclear weapons stockpile by 
up to 80 percent. I am deeply troubled by this. Iran continues to make 
progress in its pursuit of nuclear weapons, North Korea's nuclear 
weapons program remains a serious threat to regional security and 
stability, and we do not know the full extent of the Chinese nuclear 
arsenal. Nuclear weapons exist in the world, and this is not a genie 
that we can put back in the bottle. If, in his pursuit of a zero-nuke 
world, President Obama succeeds in eliminating the entire U.S. nuclear 
arsenal, what effect would that have on the global threat picture for 
the United States?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

    43. Senator Cornyn. Director Clapper and General Burgess, are you 
on board with the President's goal of eliminating the U.S. nuclear 
arsenal?
    Director Clapper. [Deleted.]
    General Burgess. As an intelligence agency, DIA provides analysis 
to executive branch policymakers to inform policy decisions. However, 
we do not comment on policy.

                                 CHINA

    44. Senator Cornyn. Director Clapper and General Burgess, according 
to DOD, China's official defense budget has grown by an average of 12.1 
percent each year since 2001. According to reports earlier this week, 
China's defense budget is now expected to double by 2015, making it 
more than all the rest of the Asia-Pacific regions combined. What is 
your assessment of the strategic intent behind China's military 
modernization, both in the region and globally?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

                                 TAIWAN
    45. Senator Cornyn. General Burgess, you note in your prepared 
testimony that ``Defense against U.S. forces in a regional contingency 
over Taiwan is currently among the highest priorities for the Peoples 
Republic of China military's planning, weapons development, and 
training.'' Since 2006, Taiwan has sought unsuccessfully to purchase 66 
new F-16 C/D fighters from the United States in order to bolster its 
defensive capabilities and address a massive shortfall in fighter 
aircraft that is looming. In your view, what would be the impact on 
U.S. interests in the region if the size of Taiwan's fighter fleet is 
cut in half through retirements of aging and obsolete aircraft, as is 
projected?
    General Burgess. [Deleted.]

    46. Senator Cornyn. General Burgess, if Taiwan's existing capacity 
to defend its skies against Chinese military aggression is diminished, 
what new risks would the United States face?
    General Burgess. [Deleted.]

                             CYBER ATTACKS

    47. Senator Cornyn. Director Clapper and General Burgess, in recent 
years, our Nation has experienced an increasing volley of cyber attacks 
and cyber theft emanating from China, and this is of great concern to 
many senators. According to an October 2011 report by the Office of the 
National Counterintelligence Executive, ``Chinese actors are the 
world's most active and persistent perpetrators of economic 
espionage.'' The report goes on to highlight that ``computer networks 
of a broad array of U.S. Government agencies . . . were targeted by 
cyber espionage; much of this activity appears to have originated in 
China.'' What is your assessment of this growing threat?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

    48. Senator Cornyn. Director Clapper, you also note that Russia is 
of particular concern in this area, as entities within Russia are 
``responsible for extensive illicit intrusions into U.S. computer 
networks and theft of U.S. intellectual property.'' Please elaborate on 
this point, and compare it to the scope of the cyber threat emanating 
from China.
    Director Clapper. [Deleted.]

                                  IRAN

    49. Senator Cornyn. General Burgess, you note in your testimony 
that the Iranian Revolutionary Guard Corps trains and provides weapons 
and logistical support to Lebanese Hizballah, which in turn trains 
insurgents in Iraq at Iran's behest, ``providing them with tactics and 
technology to attack U.S. interests.'' Furthermore, you state that in 
Afghanistan, Iran also provides ``weapons, funding, and training to 
insurgents, while maintaining ties with the Government in Kabul.'' 
Would you agree that Iran is directly responsible for the death of U.S. 
servicemembers in Iraq and Afghanistan over the past several years?
    General Burgess. DIA, as an intelligence agency, defers to legal 
counsel at the policy level within the executive branch for a response 
to this question which requests legal determinations or 
characterizations concerning the activities of a foreign nation state.

    50. Senator Cornyn. General Burgess, do you consider those actions 
to be acts of war?
    General Burgess. DIA, as an intelligence agency, defers to legal 
counsel at the policy level within the executive branch for a response 
to this question which requests legal determinations or 
characterizations concerning the activities of a foreign nation state.

                    POTENTIAL ISRAELI ATTACK ON IRAN

    51. Senator Cornyn. Director Clapper and General Burgess, our 
friend and ally, Israel, sees an existential threat to their east--
Iran. Media speculation continues to mount about a potential Israel 
strike on Iran's nuclear facilities. If the Israelis do attempt to take 
out these sites in Iran, what can you tell me about Iran's likely 
retaliation?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

    52. Senator Cornyn. Director Clapper and General Burgess, how might 
this play out, and what U.S. interests would be most at risk in such a 
situation?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

                                  IRAQ

    53. Senator Cornyn. Director Clapper and General Burgess, you, 
Director Clapper, made clear in your prepared statement that Iraqi 
Security Forces (ISF) ``are capable of planning and executing security 
operations, and Iraqi CT forces have demonstrated they are capable of 
targeting remaining terrorists and insurgents.'' Yet, General Burgess 
stated ``the ISF are unable to maintain external security and will be 
unable to secure Iraq's borders or defend against an external threat 
over the next year.'' These seem like two very different conclusions. 
Please explain the inconsistency.
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

    54. Senator Cornyn. General Burgess, you note that ``Tehran 
generally has strong relations with Baghdad, but over the long-term, 
Iran is concerned a strong Iraq could once again emerge as a regional 
rival.'' Do you believe Iran's influence has grown in Iraq since the 
last U.S. troops were withdrawn in December?
    General Burgess. [Deleted.]

                         WITHDRAWAL TIMETABLES

    55. Senator Cornyn. Director Clapper and General Burgess, Secretary 
Panetta recently stated ``by the mid- to latter-part of 2013, the 
United States would transition from a combat role to a training, 
advise, and assist role.'' I remain concerned by this administration's 
insistence on timetables for the future U.S. drawdown in Afghanistan. 
You both state that the ISAF are essential, providing oversight and 
direct support to the Afghan police and army. If we withdraw our forces 
precipitously and the Afghan Government fails, we would be left with a 
failed state not much different than the pre-September 11 Afghanistan. 
In your opinion, is this a realistic timeline and, if the Afghans 
cannot ``fill the vacuum left by ISAF troops and resources,'' what are 
the implications for our own national security?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

    56. Senator Cornyn. Director Clapper and General Burgess, do you 
think explicitly stating our military timetables makes it easier for 
the Taliban and its affiliates to formulate their strategy and plan for 
the future?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

                            FUTURE OF EGYPT

    57. Senator Cornyn. Director Clapper and General Burgess, just over 
a year ago, the Egyptian people took to the streets and overthrew 
President Hosni Mubarak. Today, it appears that Islamist factions are 
poised to take control of the Egyptian Government and the country's 
future. What is your assessment of the risks posed to U.S. interests by 
the Muslim Brotherhood?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

                                 MEXICO

    58. Senator Cornyn. General Burgess, you note that Mexican 
President Felipe Calderon's aggressive campaign against transnational 
criminal organizations has resulted in Mexican security forces having 
captured or killed 21 of Mexico's 37 most wanted traffickers. What is 
your assessment of the progress that has been made since Calderon took 
office in December 2006?
    General Burgess. [Deleted.]

    59. Senator Cornyn. Director Clapper and General Burgess, Mexico 
will hold presidential elections this summer. In your opinion, if the 
next president of Mexico loses focus of the necessity to combat the 
drug cartels and strengthen the rule of law, what would the impact be?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

    60. Senator Cornyn. Director Clapper and General Burgess, can the 
progress that has been made since 2006 be sustained if the Mexican 
Government's attention is focused elsewhere?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

    61. Senator Cornyn. Director Clapper and General Burgess, how would 
an increased level of threat from the drug cartels most likely impact 
the United States?
    Director Clapper. [Deleted.]
    General Burgess. [Deleted.]

                                 INDIA

    62. Senator Cornyn. General Burgess, in your prepared testimony, 
you note that Pakistan views India as its greatest threat, and while 
India continues to carefully monitor events in Pakistan, it also views 
China as a long-term challenge. As a result, you highlight India's 
efforts to increase economic and military engagement with countries in 
East and Southeast Asia. Director Clapper notes that ``India has 
expressed support for a strong U.S. military posture in East Asia and 
U.S. engagement in Asia.'' How do you view the importance of U.S.-India 
military-to-military engagement?
    General Burgess. [Deleted.]

    63. Senator Cornyn. General Burgess, what contributions to regional 
security and stability does increased U.S.-India military cooperation 
offer?
    General Burgess. [Deleted.]

    [Whereupon, at 12:26 p.m., the committee adjourned.]

                                 

```