[Senate Hearing 106-580]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 106-580


 
  CURRENT AND PROJECTED NATIONAL SECURITY THREATS TO THE UNITED STATES

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

                                HEARING

                               before the

                    SELECT COMMITTEE ON INTELLIGENCE

                                 of the

                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                   on

  CURRENT AND PROJECTED NATIONAL SECURITY THREATS TO THE UNITED STATES

                               __________

                            FEBRUARY 2, 2000

                               __________

      Printed for the use of the Select Committee on Intelligence



                     U.S. GOVERNMENT PRINTING OFFICE
65-329 CC                    WASHINGTON : 2000





                    SELECT COMMITTEE ON INTELLIGENCE

                  RICHARD C. SHELBY, Alabama, Chairman
                RICHARD H. BRYAN, Nevada, Vice Chairman
RICHARD G. LUGAR, Indiana            BOB GRAHAM, Florida
JON KYL, Arizona                     JOHN F. KERRY, Massachusetts
JAMES M. INHOFE, Oklahoma            MAX BAUCUS, Montana
ORRIN G. HATCH, Utah                 CHARLES S. ROBB, Virginia
PAT ROBERTS, Kansas                  FRANK R. LAUTENBERG, New Jersey
WAYNE ALLARD, Colorado               CARL LEVIN, Michigan
CONNIE MACK, Florida
                  TRENT LOTT, Mississippi, Ex Officio
              THOMAS A. DASCHLE, South Dakota, Ex Officio
                                 ------                                
                      Bill Duhnke, Staff Director
                Alfred Cumming, Minority Staff Director
                    Kathleen P. McGhee, Chief Clerk




                            C O N T E N T S

                              ----------                              

           Hearing Held in Washington, D.C.: February 2, 2000

Statement of:
                                                                   Page
    Bryan, Hon. Richard H., a U.S. Senator from the State of 
      Nevada.....................................................     2
    Roy, Hon. J. Stapleton, Assistant Secretary of State of 
      Intelligence and Research..................................     3
    Shelby, Hon. Richard C., a U.S. Senator from the State of 
      Alabama....................................................     1
    Tenet, Hon. George J., Director of Central Intelligence......    10
    Wilson, Vice Admiral Thomas R. Wilson, Director, Defense 
      Intelligence Agency........................................    21
Testimony of:
    Roy, Hon. J. Stapleton, Assistant Secretary of State for 
      Intelligence and Research..................................    47
    Tenet, Hon. George J., Director of Central Intelligence......    30
    Wilson, Vice Admiral Thomas R. Wilson, Director, Defense 
      Intelligence Agency........................................    47


                HEARING ON THE WORLDWIDE THREAT FOR 2000

                              ----------                              


                      WEDNESDAY, FEBRUARY 2, 2000

                                       U.S. Senate,
                   Senate Select Committee on Intelligence,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
Room SH-216, Hart Senate Office Building, the Honorable Richard 
C. Shelby, Chairman of the Committee, presiding.
    Committee Members Present: Senators Shelby and Bryan.
    Chairman Shelby. The Committee will come to order.
    This is the Committee's first hearing of the 21st century, 
and I want to join with the Committee's new Vice Chairman, 
Senator Bryan, in welcoming our witnesses, as well as the 
American public, for this annual assessment of the threats 
facing our nation.
    We have asked our witnesses to focus on those conditions 
throughout the world that have fostered, or will foster, 
threats and challenges to the security of the United States. We 
will be concentrating this morning in an open session, and 
again this afternoon in a closed session, on conventional as 
well as unconventional threats, including threats posed by the 
proliferation of weapons of mass destruction and high-
technology state-sponsored and nonstate terrorists.
    This hearing is intended to form the backdrop not only for 
the Committee's annual budget authorization process but also 
for a comprehensive review of the capabilities of the 
Intelligence Community and the adequacy of the resources being 
dedicated to this very important work.
    The dynamic change and uncertainty that characterized the 
latter part of the nineties will likely continue through the 
first decade of the new century because what one of our 
witnesses calls the engines of turmoil remain largely in place. 
These ``engines of turmoil'' include significant transitions in 
key states and regions throughout the world, the continued 
existence of rogue states and terrorist groups, rapid 
technological development and proliferation, continuing 
international criminal activity, and reactions to a perception 
of U.S. political, economic, military and social dominance.
    Together, these factors foster a complex, dynamic and 
dangerous global security environment that will spawn crises 
affecting American interests. If we are to contain, manage and 
respond appropriately to these threats, we need to understand 
this challenging new security environment in the first year of 
the 21st century. And nowhere will these challenges be more 
evident than in the asymmetrical threats to our homeland--in 
the strategic nuclear missile threats from China and Russia, as 
well as rogue states, and in the threats posed to U.S. 
interests around the world by large regionally ambitious 
military powers.
    While this hearing is designed to address critical threats 
to our nation's security, another matter has come to the 
public's attention and is one that Director Tenet, I believe, 
should address in more detail. That matter is the conduct of 
Mr. Tenet's predecessor, John Deutch, and the conduct of senior 
CIA officials in investigating, failing to investigate, or 
possibly impeding the investigation of Mr. Deutch's handling or 
mishandling of classified information.
    These are matters, I believe, of the utmost importance. The 
American people have a keen interest in the performance of 
senior officials charged with upholding our laws and policies 
with respect to the protection of classified information, the 
disclosure of which would constitute a serious and immediate 
threat to our national security.
    Therefore, I hope that you will take this opportunity to 
explain, Mr. Tenet, to the American public today the actions of 
your predecessor, the investigations into those actions, the 
actions of other CIA officials with respect to this 
investigation, and your own actions in this regard.
    With that in mind, the Committee is very pleased to welcome 
back the Director of Central Intelligence, Mr. George Tenet. 
We're also pleased to welcome two individuals to their first 
public appearance before this Committee--the relatively new 
Director of the Defense Intelligence Agency, Vice Admiral 
Thomas Wilson, and the new Assistant Secretary of State for 
Intelligence and Research, Ambassador Stapleton Roy.
    If there's no objection, we've asked Secretary Roy and 
Admiral Wilson to submit their statements for the record, and 
it will be so ordered. Director Tenet will then present his 
oral testimony, after which I will open the floor for Members' 
questions. In the interest of time, I would ask that members 
submit any opening statements for the record, other than 
Senator Bryan, so that all members will have ample opportunity 
to ask questions.
    But before calling on you, Director Tenet, let me turn to 
my colleague and my new Vice Chairman, Senator Bryan.
    Vice Chairman Bryan. Thank you very much, Mr. Chairman.
    As you have observed, this is my first roll call with you 
as the new Vice Chairman of this Committee, and I look forward 
to working with you and other colleagues in the Committee in a 
bipartisan way in discharging our oversight responsibilities 
with respect to the Intelligence Community.
    Let me first commend you for the timely manner in which 
you're scheduling the Committee's annual worldwide threat 
hearing. As we both know, because this is an election year, our 
time schedule will be compressed. And so I think it's most 
important that we get off as quickly as we can at the beginning 
of the year and the timing of this hearing, which was 
rescheduled through circumstances beyond your control or my 
control, indicates the manner in which we tend to approach this 
responsibility.
    The annual worldwide threat hearing is one of the 
Committee's most important. It's indispensable in helping 
members frame the Committee's approach to intelligence issues 
in the year ahead. But it's important for another reason. 
Because this is an open hearing, the American people themselves 
will have an opportunity to assess the seriousness of the 
threats that face our country, and reach their own conclusions.
    Mr. Chairman, our nation faces numerous threats, albeit 
qualitatively different than those that we faced during the 
Cold War. Rather than the singularly focused threat of the 
former Soviet Union, we now face a host of so-called 
transNational issues and threats. As the term implies, these 
threats are not confined to specific countries, but rather 
cross international borders.
    Mr. Chairman, as you and I observed firsthand during our 
recent visit to eight African nations, the terrible effects of 
one of those transNational threats, in this case terrorism, can 
be deadly. In both Kenya and Tanzania, we visited the remains 
of our embassies, both of whichwere the object of viciously 
destructive terrorist attacks in 1998. Over the last several years, 
you, Mr. Chairman, have placed a proper emphasis on the transNational 
threats, such as terrorism, weapons proliferation and narcotics, and I 
very much look forward to working with you on these and other issues 
during the course of the year.
    Mr. Chairman, with your indulgence, I'd like to touch on 
one more issue, one which you appropriately raised, and I'd 
like to associate myself with your comments in terms of the 
recent issue that has come to light with respect to DCI John 
Deutch's handling of classified information and the misuse of 
government computers as reported in the February 1st edition of 
the New York Times.
    I must say that I find this issue extremely troubling. Not 
only are the specifics of the case very disturbing; so, too, is 
the manner and timing in which this Committee was notified. I 
look forward to hearing any comments that the DCI may have on 
this issue today, and I am particularly anxious to see the 
results of the accountability panel's inquiry into this matter 
as soon as that panel has completed its work.
    I would also be very interested in whether or not there 
have been any morale problems as a consequence of that, because 
one of the obvious concerns raised is whether there is a dual 
standard in dealing with a former DCI and other employees of 
the agency who might have been guilty of similar activity.
    And finally, I would like to applaud the efforts of the CIA 
Inspector General, Britt Snider. His investigative report 
produced on this matter is both comprehensive and balanced. And 
again, Mr. Chairman, I look forward to working with you today 
and throughout the rest of the year on issues affecting the 
Intelligence Community. Thank you.
    Chairman Shelby. Mr. Tenet, you proceed as you wish.
    [The prepared statements of Director Tenet, Admiral Wilson, 
and Ambassador Roy follow:]

 Prepared Statement of J. Stapleton Roy, Assistant Secretary of State 
                     for Intelligence and Research

    Chairman Shelby, Senator Bryan, Members of the Committee, I 
appreciate this opportunity to present the views of the State 
Department's Bureau of Intelligence and Research (INR) on current and 
projected threats to our nation.
    Thanks to our military readiness, our intelligence capabilities, 
and the effectiveness of our diplomacy, threats to our national 
existence from nuclear or large-scale conventional attack remain low.
    The threats we face today are less direct and more diffuse. Efforts 
by countries to acquire nuclear weapons and ballistic missile 
capabilities remain of high concern. International terrorists--Usama 
bin Ladin's organization is the most prominent--threaten Americans at 
home and around the globe. Narcotraffickers and international criminals 
endanger our way of life and corrupt governments and societies 
everywhere. Globalization has brought manifold benefits, but it has 
created new vulnerabilities. ``Soft'' threats, such as the spread of 
epidemic disease, environmental degradation, or conflict over water 
rights, pose new challenges that we are only beginning to understand.
    In addition, the United States must pay special attention to the 
activities and intentions of states with global reach (Russia and 
China) and to countries whose behavior poses actual or potential 
threats to American interests. The latter group includes North Korea, 
Iran, and Iraq.
                           the nuclear threat
    Only Russia has the unqualified capacity to destroy the United 
States. Indeed, for the foreseeable future, Russia's ability to 
threaten U.S. territory and overseas interests is greater than all 
other potential adversaries combined. China is the only other country 
that is not an ally of the United States that currently has the 
capacity to strike the U.S. homeland with nuclear weapons. Moreover, 
the aggregate nuclear-armed ICBM threat against the United States is 
declining dramatically as a result of Russian military choices related 
to START I and START II and the significantly reduced size of the 
Russian economy.
    This situation could change for the worse if Moscow (and 
secondarily, Beijing) concluded that the United States was pursuing 
interests in fundamental conflict with their own. Such perceptions 
could trigger decisions that would significantly increase the 
quantitative threat to the United States. Instead of reducing their 
nuclear warheads to some 1,500, the Russians could halt their decline 
at or above 2,000 warheads. The Chinese could triple their nuclear 
deterrent by the end of the decade to more than 100 ICBM warheads by 
MIRVing existing ICBMs. Should either (or both) put their strategic 
forces on a higher state of alert, their serious early warning 
deficiencies would increase the danger of accidental launch.
    The growing availability of technical information about nuclear 
weapons and the increase in well-financed non-state terrorist 
organizations make the prospect of a suitcase or cargo ship bomb a 
significant second order concern. The difficulty of acquiring 
sufficient fissile materials would be the most important technical 
factor limiting the ability of such a group to detonate a nuclear 
device in an American city.
    North Korea, with its nascent space launch vehicle/ICBM program and 
presumed nuclear potential, is preeminent among emerging Third World 
nuclear threats. Given the credibility of U.S. retaliatory capabilities 
in the face of any nuclear attack on the American homeland, we would 
assign the North Korean threat to a tertiary level. A multifaceted 
diplomatic effort is under way to eliminate this threat. So far, this 
effort has yielded a freeze on activity at declared North Korean 
nuclear facilities and a moratorium on further space or missile 
launches.
                   missiles and missile proliferation
    Ballistic missiles are a special concern, particularly when 
possessed by countries with nuclear, chemical, or biological weapons, 
because of their ability to strike rapidly and penetrate defense. An 
increasing number of countries are developing capabilities to produce 
ballistic missiles and/or space launch vehicles; these include 
potential adversaries like North Korea and Iran, and regional rivals 
like India and Pakistan. These capabilities have been increased by 
technology transfers from other countries--principally Russia, China, 
North Korea, and advanced European nations. This will allow for 
extended range and improved accuracy of older-generation missiles. 
Ballistic missiles are unlikely to be used against U.S. territory, but 
they are a growing threat to U.S. allies and to U.S. forces deployed 
abroad.
                    the conventional military threat
    The threat of a large-scale conventional military attack against 
the United States or its allies will remain low for the immediate 
future. Since the demise of the Warsaw Pact, there has existed no 
hostile military alliance capable of challenging the United States or 
NATO, and none is on the horizon.
    Regional tensions and potential conflicts threaten U.S. interests 
abroad. Progress toward Middle East peace has reduced the chances of 
another major war there, but it may have increased the determination of 
regional terrorist groups to derail the peace process. Iraq threatens 
regional security by confronting coalition forces and retaining weapons 
ofmass destruction (WMD) ambitions. Saddam Hussein could precipitate 
major crises at any time.
    Trends are visible that could increase the conventional military 
threats. U.S. military dominance and economic, cultural, and 
technological preeminence have sparked resentment by potential rivals 
who do not share U.S. values and are concerned that the United States 
will use it global leverage in ways inimical to their interests. This 
has prompted them to seek ways to constrain Washington. These countries 
are not likely to enter formal defensive alliances, but if they 
perceive U.S. policies as hostile to their national interests, they may 
be increasingly inclined to cooperate militarily, particularly in the 
sale of weapons and technologies that might otherwise have been kept 
off the market.
                          technology diffusion
    Accelerating technological progress in an increasingly global 
economy has facilitated the spread of advanced military technologies 
once restricted to a few industrialized nations. Chemical and 
biological weapons will pose a growing threat to U.S. interests at home 
and abroad, as the means to produce them become more accessible and 
affordable. Such weapons are attractive to countries seeking a cheap 
deterrent and to terrorist groups looking for means of inflicting mass 
casualties. They pose a potential military threat to U.S. forces abroad 
and to our homeland.
    The critical importance of communications and computer networks to 
the military and to almost every sector of the civilian economy has 
increased U.S. vulnerability to a hostile disruption of its information 
infrastructure. Russia, China, and Cuba have active government IW 
programs, and a number of other countries are interested in the 
concept.
        terrorism, narcotics, and international organized crime
    Terrorism.--The United States remains the number one target of 
international terrorism. As in previous years, close to one-third of 
all incidents worldwide in the first nine months of 1999--about 90--
were directed against Americans. About 60 of these took place in Latin 
America and Western Europe, including the murder of three NGO workers 
in Columbia.
    Increasingly, where attacks occur does not fully reflect the origin 
of the threat. The far-flung reach of Usama bin Ladin (UBL) from his 
base in Afghanistan is reflected in a continuous flurry of threats by 
his organization on almost every continent. Although we cannot 
attribute any of last year's anti-U.S. attacks to him, his 
transnational network and the devastating example of his 1998 attacks 
on our embassies in Kenya and Tanzania make him the primary threat to 
U.S. interests at home and abroad. Members of his network and other 
like-minded radical Mujahedin are active globally. Bin Ladin funds 
training camps and participates in a worldwide terrorist network. But 
he is not responsible for every Mujahedin attack. The UBL network is 
analogous to a large corporation with UBL as a CEO who provides 
guidance, funding, and logistical support. His supporter, like regional 
directors or affiliates, are not micromanaged, and may be left to 
follow separate agendas.
    A number of terrorists, including bin Ladin, have evinced interest 
in acquiring weapons of mass destruction. So far, Aum Shinriyko, the 
group responsible for the 1995 subway gas attack in Tokyo, is the only 
group to use such a weapon on a large scale.
    State sponsorship of terrorism has declined but has not 
disappeared. Libya last year surrendered two suspects in the Pan Am 103 
case for trial. North Korea recently stated that it ``would not allow 
terrorism or any support to it.'' Syria completed a first round of 
formal peace talks with Israel earlier this month. Cuba no longer 
actively supports armed struggle but continues to harbor terrorists. 
Iraq also harbors terrorists and may be rebuilding its intelligence 
networks to support terrorism. Sudan has been a safe haven and 
logistical hub for numerous international terrorist groups; the recent 
political shakeup in Khartoum has yet to result in a noticeable 
difference. Despite President Khatami's attempts to distance Teheran 
from terrorism, Iran continues to support the use of violence to derail 
the peace process.
    There have been counterterrorism successes over the past year. 
Jordanian and Canadian authorities averted possible attacks. The leader 
of the PKK, a Kurdish terrorist group, was captured, tried, and 
convicted. Jordan expelled the political leadership of the terrorist 
group Hamas, and Japan passed laws stringently regulating Aum 
Shinriyko. Seven countries signed the international convention on 
financing terrorism on the first day it was open for accession.
    Narcotics.--The expanding reach of international drug trafficking 
organizations poses a significant security threat to the United States, 
their primary target. Abroad, criminal drug gangs suborn foreign 
officials at all levels, threatening the rule of law.
    Despite antinarcotics successes, notably in Bolivia and Peru, 
illicit drugs from Latin America constitute the primary drug threat to 
the United States. An apparent improvement in Colombian cocaine-
processing efficiency means that traffickers can direct even more of 
the drug to U.S. markets. Drugs fund insurgent groups warring against 
the Columbian government. Bribery at all levels of officialdom in 
Mexico and, to a lesser extent, the Caribbean ensure that drugs reach 
their target.
    Columbia and Mexico have the largest share of the U.S. heroin 
market, but opium poppy cultivation in Asia is increasing, particularly 
in Burma and Afghanistan. Indications are that Burma, after two years 
of drought reduced opium poppy cultivation, will return to its 
traditionally high cultivation level. In Afghanistan, production of 
opium and heroin is a major source of revenue for the ruling Taleban 
and a political instrument of bin Ladin to ``corrupt'' the West.
    Crime.--At home and abroad, the activities of international 
criminals threaten Americans, their businesses, and their financial 
institutions. Organized crime has capitalized on economic 
liberalization and technological advances to penetrate the world's 
financial, banking, and payment systems. It has become increasingly 
sophisticated in high-tech computer crime, complex financial fraud, and 
theft of intellectual property. The cost to U.S. citizens, businesses, 
and government programs is in the billions of dollars.
    International criminal gangs trade in materials for WMD, sensitive 
American technology, and banned or dangerous substances. They also 
traffic in women and children, and in illegal visas and immigration. 
Organized crime groups exploit systemic weaknesses in fledgling 
democracies and economies in transition.
                            economic threats
    The international economic outlook is more positive than at any 
time since the start of the Asian economic crisis in mid-1997. World 
economic output is forecast to rise from 2.5 percent last year to 3.0 
percent this year. Despite the impressive rebound from the economic 
turmoil of 1997-98, significant vulnerabilities in the Asian emerging 
economies could affect U.S. economic and strategic interests. The 
recovery of confidence in he currencies and financial markets of 
Southeast Asia and South Korea remains fragile, and their banking 
system are in need of further restructuring. Overall, the danger of a 
second Asian financial crisis has substantially diminished. The more 
cautious and sophisticated approach of foreign investors, the increase 
in transparency of financial information, and the region's dramatic 
reduction in reliance on short-term debt have all decreased Asia's 
susceptibility to a financial panic triggered by the economic problems 
of one country.
    Despite export recovery and high and growing foreign exchange 
reserves, China is one of Asia's soft spots. Growth this year could 
falter under the weight of deflation. China's banks are burdened with 
bad debt. Fresh bankruptcies could require urgent capitalization and 
fiscal resources already are stretched thin. Chinese policymakers are 
concerned about rising unemployment and want to stimulate economic 
growth, but they have fewer and fewer options other than painful 
economic reform.
    Latin America should recover from last year's recession and achieve 
3.7% overall growth. Mexico, Brazil, Chile, and Peru have made 
difficult policy adjustments that leave them better positioned to 
weather external developments. Latin America governments generally 
remain publicly committed to fiscal austerity, trade liberalization, 
and low inflation. However, income inequality and the failure of 
market-oriented policies to dent high poverty levels could decrease 
stability in countries where recovery lags.
    Economic espionage against the United States is a backhanded 
tribute to our economic prowess. In particular industries and for 
particular companies, especially in vital high-tech sectors, economic 
espionage can threaten profits and fruits of innovation.
   threats to human rights, democracy, and humanitarian interventions
    The national security of the United States is tied to political 
stability, peace, and democratic governance in other regions. When 
human rights are systematically abused, when internal conflicts 
threaten to spill over into neighboring countries, and when democratic 
principles are undermined by coups and/or corruption, like-minded 
governments look to the United States to provide leadership, in 
conjunction with their own efforts, to address these threats. Most 
current complex emergencies are caused by violent ethnic tensions and 
religious intolerance, often fueled by malevolent political leaders and 
militias, that generate large numbers of displaced persons and atrocity 
victims. The US Government has led international efforts to mitigate 
such destabilizing humanitarian crises--through providing generous 
refugee assistance, supporting international tribunals that prosecute 
war criminals, and preventing those security threats from erupting or 
re-erupting through support for free and fair elections and for human 
rights monitoring.
                            ``soft threats''
    The United States faces a broad array of long-term threats to our 
national well-being. Some of these take the form of episodic natural 
disasters--floods in Venezuela, earthquakes in Turkey and Taiwan. While 
the greatest loss of life from natural disasters will continue to be in 
crowded poor regions, overseas Americans are often affected, as are 
governments with which we work to achieve common goals. Reducing the 
suffering inflicted by such crises will depend on improving the use of 
early-warning information systems and providing prompt humanitarian 
assistance.
    Environmental threats range from toxic spills to global climate 
change. Environmental contamination can cause severe local problems. 
Global warming would result in broader and unpredictable weather 
fluctuations, altered agricultural production, and rising sea levels. 
Each of these regional problems would affect national economic 
production, food exports and imports, and even international relations 
as natural resource balances shift within and among countries. A 
related threat may come from increasingly resilient bacteria and 
viruses, which can take advantage of global linkages, poor sanitation, 
and urban congestion to spread quickly across continents.
    Populations in poor regions continue to grow, even as birthrates 
decline. This demographic lag ensures that over the next few decades in 
many poor countries a growing cohort of young people will be stymied by 
the lack of economic opportunities, inadequate health care and schools, 
and crowded living conditions. They may be inclined to act violently 
against their governments or be swayed by extremists touting anti-
Western nosatrums. The safety of both overseas and domestic Americans 
could be harmed by a growing population with dim prospects directing 
anger at those perceived to have too much.
                      countries with global reach
    Russia.--Russia's ability to project power beyond its borders and 
to challenge U.S. interests directly is much diminished. Russia is 
focused on its own internal problems and aware of its weaknesses and 
limitations. Nevertheless, Russia remains a nuclear power with the 
capability to destroy the United States. It retains the ability to 
influence foreign and security policy developments in Europe and, to a 
lesser extent, around the globe. Its interests sometimes coincide with 
those of the United States and our allies, and sometimes not. Regional 
instability in the former Soviet Union, in particular in the Caucasus 
or Central Asia, could impinge on U.S. interests, especially if such 
instability were to spiral our of control or tempt external 
intervention.
    The Russian political scene was dramatically altered by the Duma 
elections in December and Yeltsin's surprise resignation, but the 
consequences for Russia's development as a state remain uncertain. 
Vladimir Putin, who at 47 represents a younger generation, is riding a 
wave of popularity based, in part, on his vigorous prosecution of the 
war in Chechnya. Putin, the odds-on favorite to win the presidency, 
almost certainly will be a more engaged and predictable leader. He has 
spoken of the need for a democratic, market-oriented approach, 
including political pluralism and freedom of speech and of conscience, 
that would revitalize the Russian economy. He has called for reform and 
pledged to fight crime and corruption. But Putin has a security-
services background, makes no secret of his belief in a strong state 
that plays a guiding role in the economy, and is enmeshed in a system 
dominated by a narrow stratum of political and financial elites. For 
Putin to undertake systematic and thoroughgoing reform, he would have 
to move against some of the very people on whom his power depends.
    It is too early to predict how recent leadership changes will 
affect Russia's foreign and security policies. Both Putin and Foreign 
Minister Ivanov have promised broad continuity. Russia's need for 
integration into international economic and financial institutions and 
access to key markets makes a wholesale return to the ideological 
confrontation and policy collisions of the Cold War unlikely. But 
Russia will persist in efforts to counter what it perceives as U.S. 
dominance by using the diplomatic tools at its disposal.
    China.--China's commitment to a multipolar world in which it would 
have major global influence means that its interests occasionally lead 
to rivalry with the United States, sometimes in concert with Russia or 
France. China's increasingly capable military forces and economic base, 
and its network of supporters, especially among the developing 
countries, will better enable the PRC to forestall or limit unwelcome 
U.S. unilateral and allied actions. This also can translate into 
opposition to U.S.-led initiatives at the UN.
    The most serious potential threat to the United States would be 
Chinese military action, possibly in response to a perceived U.S. 
challenge to vital PRC interests. Actions that might trigger such a 
response include implementation of a robust threat missile defense 
system that nullified Chinese deterrence or included Taiwan (directly 
or indirectly) and thus increased prospects for indefinite Taiwan 
separation or de jure independence. China's refusal to rule out use of 
force and determination to forestall further steps toward Taiwan 
separateness or explicit independence, and in the long term to achieve 
reunification, jeopardizes peace and security in the Taiwan Strait.
    Chinese proliferation behavior is a continuing concern, 
particularly when it contributes to changes in the balance and 
threatens U.S. interests in other geographic regions. China has 
assisted the missile and nuclear programs of Pakistan, Iran, and 
others. China has made progress in adopting international control norms 
in the nuclear area, but Beijing does not accept all elements of the 
Missile Technology Control Regime.
    The risk of instability within China sparked by social discontent 
over unemployment, official corruption or malfeasance, religious 
persecution, violation of human rights, lack of democratic choices, 
ethnic discrimination, and other factors remains real. Should social 
order decline significantly, U.S. economic interests in China (trade 
and investments) would suffer, and the expected increased outflow of 
Chinese migrants to the region and to the United States would have a 
problematic--but not genuinely threatening--impact on U.S. interests. 
Should regime failure occur and result in ineffective government in 
China, the United States would face serious new uncertainties in East 
Asia.
                 other countries and regions of concern
    North Korea.--The DPRK's ability to sustain a conflict has 
continued to decrease in the past year. Nevertheless, the North's 
military still has the capability to inflict heavy damage and 
casualties in the opening phases of a war. The political situation in 
the North appears stable, with Kim Jong-Il firmly in charge. There is 
evidence that in some areas the economic situation is less dire; rather 
than struggling simply to keep its head above water, the regime has 
been able to turn its attention to such long-term concerns as restoring 
infrastructure. There are signs that the regime is examining a range of 
relatively pragmatic, though still seemingly ad hoc, solutions to the 
DPRK's economic problems. Diplomatically, the North has begun a broad 
push to improve relations with developed countries, which it hopes can 
provide economic assistance. Pyongyang continues to refuse to deal 
officially with Seoul, but unofficial contacts--in such fields as the 
economy, culture, and sports--were carried out on a fairly large scale 
last year.
    An area of top concern is the North's development of long-range 
ballistic missiles and its ongoing efforts to sell missile technology 
to countries in the Middle East and South Asia. North Korea last fall 
announced it would not launch a satellite or a long-range missile 
during high-level U.S.-DPRK talks. But on the question of missile 
sales, the North has said only that it would be willing to halt sales 
under the right circumstances, a formulation that will require 
clarification.
    Iran.--In addition to posing a threat in the areas of WMD and 
terrorism, Iran is perhaps the only major power in the Middle East 
consistently opposed to the Middle EastPeace Process. Deep-seated 
hostility to the MEPP within conservative circles of the Tehran regime 
plays a major role in the government's apparent willingness to support 
terrorist groups and their attacks against Israel or other parties 
involved in the process. Although we believe Iranian factions and 
leaders are not unanimous in their support for the use of terrorism to 
effect political ends, so far this disunity has not resulted in a 
discernible change of behavior.
    How best to deal with the challenges posed by Iran is a continuing 
source of disagreement with other important countries, including some 
of our closest allies. Tehran is well aware of these differences and 
attempts to exploit them to erode the effectiveness of U.S. sanctions.
    Iraq.--Baghdad's denunciation of UNSCR 1284 and continued public 
refusal to allow weapons inspections to resume indicates Iraq's 
intention to ensure that any future UN inspection presence in Iraq is 
weak. Over the past year, Iraq's military has escalated its challenges 
to coalition aircraft in the no-fly zones. The regime has looked for 
new ways to circumvent UN sanctions, while using proceeds from illegal 
smuggling to enhance its military capabilities and enrich Saddam's 
family and inner circle. Iraqi media and official rhetoric menacing 
Kuwait and other Iraqi neighbors underscore the regime's continued 
threat to the region.
    Baghdad consistently denounces the MEPP, and appears committed to a 
position of stalwart opposition to regional peace. Press reports 
indicted that the regime seeks to eliminate opposition figures inside 
and outside the country, and to target U.S. facilities such as the 
Radio Free Europe/Radio Liberty offices in Prague. The regime hosts 
several Palestinian rejectionist groups and the Mujahedin-e Khalq, a 
terrorist organization.
    Europe.--Peace and stability in southeastern Europe remain the 
paramount ``threat'' on the continent. The threat from Serbia stems 
from the undemocratic nature of the regime. Serbia's autocrat, 
Milosevic, still holds the critical levers of power and refuses to meet 
legitimate demands for democracy. The possibility of further violence 
from the Milosevic regime, directed at Montenegro or elsewhere, is 
undiminished. Milosevic poses a continuing challenge to NATO and to the 
peace and security of the region.
    Kosovar-Serbian recriminations and retaliatory attacks will 
continue, and Serbian-Montenegrin tensions will mount as Podgorica and 
President Djukanovic seek to carve out an increasingly independent 
status. Crime and corruption, homegrown and involving Russian and other 
groups, will continue to plague parts of Europe--especially Albania, 
Bosnia, and other Balkan areas.
    More broadly, West European leaders are concerned over potential 
disruption of existing arms control regimes and deterrence strategies 
from U.S. development of National Missile Defense and the ascent of 
Vladimir Putin in Russia. European economies, though improving, remain 
captive to high unemployment, labor unrest, pressures to enlarge the 
European Union, and a single currency (the euro) with only a one-year 
track record.
    South Asia.--The volatile South Asian region could quickly become 
embroiled in serious conflict, probably over the disputed state of 
Jammu and Kashmir. Last May, India discovered an incursion from 
Pakistan into the Kargil sector of Indian Kashmir. In December, 
Kashmiri militants hijacked an Indian Airlines aircraft on a flight 
from Kathmandu to New Delhi. Tension over Kashmir is endemic in the 
Indo-Pakistani relationship and can evolve quickly into a full-blown 
crisis threatening a wider, and ultimately much more destructive, war 
between India and Pakistan that could result in the use of nuclear 
weapons.
    Possession of nuclear weapons by these two adversaries will be a 
part of the landscape for the foreseeable future. Indeed, such weapons 
will become more entrenched in these countries as they develop military 
doctrine and command and control procedures for their potential use. 
Both India and Pakistan have made it clear that they well continue to 
develop their nuclear weapons and missiles capable of delivering them. 
We expect to see more ballistic missile tests in the region; there may 
be another round of nuclear tests. Pakistan and India might well 
themselves become sources of technology for yet other countries bent on 
acquiring nuclear and missile capabilities.
    Latin America.--A decade into the democracy and market revolution, 
the vast majority of Latin Americans have experienced little or no 
improvement in living conditions. Recent economic troubles have fueled 
unemployment, crime, and poverty, undermining the commitment of many 
Latin Americans to free-market economic liberalization. While Latin 
Americans are committed in principle to democracy, many question how 
successful democracy has been in their own countries because of slow 
progress in alleviating wide social inequities and in curbing 
corruption. These concerns have raised fears among some observers that 
disillusioned Latin Americans will turn to authoritarian governments to 
improve their economic situations and reduce crime.
    That said, Latin American democracies have proved resilient in the 
face of economic crises, and all ideological alternatives to democratic 
government remain discredited. Although Ecuador's fragile democratic 
institutions are under tremendous pressure because of its ongoing 
economic and political crises, recent developments in that country show 
that Latin American militaries are fully aware that overt intervention 
risks international opprobrium and sanctions, and they will therefore 
favor solutions that maintain at least a semblance of constitutional 
continuity. Another concern is that legitimately elected leaders could 
assume authoritarian powers with popular support. Peruvian President 
Fujimori provided a model with his ``self-coup'' in 1992, and Venezuela 
under President Chavez bears careful watching. In none of the other 
major countries of Latin America--Argentina, Brazil, Chile, Colombia, 
and Mexico--is democracy threatened in the short or medium term.
    In Cuba, an aging Fidel Castro refuses to make concessions toward a 
more open political system, and Cuba's overall human rights record 
remains the worst in the hemisphere. There is little sign of 
significant economic reform. The flow of refugees seeking relief from 
repressive conditions continues. With no real provision for 
succession--beyond more of the same, with Raul Castro at the helm--the 
departure of Fidel could usher in a period of greater instability under 
a less charismatic leader, possibly leading to further mass migration 
and internal violence.
    Africa.--African political and economic crises frequently threaten 
U.S. efforts to promote democratization, human rights, the rule of law, 
and economic development. Crime and terrorism thrive in some of 
Africa's unstable and impoverished nations. Appeals for the United 
States to assist humanitarian relief programs and peacekeeping 
operations are strong and growing.
    In Angola, the government continues to struggle against UNITA. 
Renewed fighting, now reaching to the border with Namibia, increasingly 
entangles Angola's neighbors in this decades-long civil war.
    A peace agreement for the Democratic Republic of the Congo was 
signed in Lusaka in August 1999, but implementation has been slow. 
Continuing cease-fire violations, the involvement of neighboring 
countries, and the injection of arms and other assistance from outside 
the region make this conflict potentially the most destabilizing in 
Africa.
    Further east, Burundi faces heightened ethnic tensions. Nelson 
Mandela chairs a peace process, but the high degree of distrust among 
the many factions makes his task difficult. Renewed genocide in Burundi 
and neighboring Rwanda remains a possibility.
    Sudan, after 16 years of civil war that has generated an estimated 
4 million internally displaced persons and 360,000 refugees, is 
experiencing renewed tensions within its governing political elite. It 
remains a haven for terrorists.
    Ethiopia and Eritrea continue to rearm and prepare to resume their 
conflict over a disputed border. A renewal of this conflict has the 
potential to be, by far, the most lethal in Africa.
    In West Africa, Sierra Leone struggles to make a peace process work 
with UN support. Its neighbors worry that renewed civil war could 
adversely affect their stability. The recent coup in Cote d'Ivoire 
illustrates the fragility of democracy and the threat inherent in 
corruption and the exclusion of regional, tribal, and religious groups 
from the political process. Good governance alone might not be enough 
to prevent conflict. Current levels of economic expansion may be 
insufficient to cope with growing populations and a sharp decline in 
foreign assistance. Poorly implemented reforms could unleash such 
simmering problems as inter ethnic violence.
    In closing, it is worth mentioning that an additional threat to 
U.S. interests would be a failure to commit the necessary resources to 
address the range of threats noted above. From the perspective of INR, 
we cannot defend against these many threats to U.S. interests by force 
alone, or by acting alone. We need the help of others. The ability of 
the United States to carry out a strong, effective diplomacy on behalf 
of its interests is an important part of our national security 
strategy. In this respect, shortchanging America's foreign assistance 
programs, or America's diplomatic presence overseas (260 missions, 
representing 30 federal agencies), would represent a long-term threat 
to out national interest. What is unique about this particular threat 
is that it is one exclusively within the power of the United States to 
address and resolve.

Prepared Statement of George J. Tenet, Director of Central Intelligence

                              introduction
    Mr. Chairman, as we face a new century, we face a new world. A 
world where technology, especially information technology, develops and 
spreads at lightning speed--and becomes obsolete just as fast. A world 
of increasing economic integration, where a US company designs a 
product in Des Moines, makes it in Mumbai, and sells it in Sydney. A 
world where nation-states remain the most important and powerful 
players, but where multinational corporations, nongovernment 
organizations, and even individuals can have a dramatic impact.
    This new world harbors the residual effects of the Cold War--which 
had frozen many traditional ethnic hatreds and conflicts within the 
global competition between two superpowers. Over the past 10 years they 
began to thaw in Africa, the Caucasus, and the Balkans, and we continue 
to see the results today.
    It is against this backdrop that I want to describe the realities 
of our national security environment in the first year of the 21st 
century: where technology has enabled, driven, or magnified the threat 
to us; where age-old resentments threaten to spill-over into open 
violence; and where a growing perception of our so-called ``hegemony'' 
has become a lightning rod for the disaffected. Moreover, this 
environment of rapid change makes us even more vulnerable to sudden 
surprise.
                          transnational issues
    Mr. Chairman, bearing these themes in mind, I would like to start 
with a survey of those issues that cross national borders. Let me begin 
with the proliferation of weapons of mass destruction.
    Mr. Chairman, on proliferation, the picture that I drew last year 
has become even more stark and worrisome. Transfers of enabling 
technologies to countries of proliferation concern have not abated. 
Many states in the next ten years will find it easier to obtain weapons 
of mass destruction and the means to deliver them. Let me underline 
three aspects of this important problem:
     First, the missile threat to the United States from states 
other than Russia or China is steadily emerging. The threat to US 
interests and forces overseas is here and now.
     Second, the development of missiles and weapons of mass 
destruction in South Asia has led to more-advanced systems, and both 
sides have begun to establish the doctrine and tactics to use these 
weapons.
     Third, some countries that we have earlier considered 
exclusively as weapons technology importers may step up their roles as 
``secondary suppliers,'' compounding the proliferation problem even 
further.
    Let's look at the first issue, the growing threat to the United 
States. We're all familiar with Russian and Chinese capabilities to 
strike at military and civilian targets throughout the United States. 
To a large degree, we expect our mutual deterrent and diplomacy to help 
protect us from this, as they have for much of the last century.
    Over the next 15 years, however, our cities will face ballistic 
missile threats from a wider variety of actors--North Korea, probably 
Iran, and possibly Iraq. In some cases, this is because of indigenous 
technological development, and in other cases, because of direct 
foreign assistance. And while the missile arsenals of these countries 
will be fewer in number, constrained to smaller payloads, and less 
reliable than those of the Russians and Chinese, they will still pose a 
lethal and less predictable threat.
    North Korea already has tested a space launch vehicle, the Taepo 
Dong-1 which it could theoretically convert into an ICBM capable of 
delivering a small biological or chemical weapon to the United States 
although with significant inaccuracies. Moreover, North Korea has the 
ability to test its Taepo Dong-2 this year; this missile may be capable 
of delivering a nuclear payload to the United States.
    Most analysts believe that Iran, following the North Korean 
pattern, could test an ICBM capable of delivering a light payload to 
the United States in the next few years.
    Given that Iraqi missile development efforts are continuing, we 
think that it too could develop an ICBM--especially with foreign 
assistance--sometime in the next decade.
    These countries calculate that possession of ICBMs would enable 
them to complicate and increase the cost of US planning and 
intervention, enhance deterrence, build prestige, and improve their 
abilities to engage in coercive diplomacy.
    As alarming as the long-range missile threat is, it should not 
overshadow the immediacy and seriousness of the threat that US forces, 
interests, and allies already face overseas from short- and medium-
range missiles. The proliferation of medium-range ballistic missiles 
(MRBMs)--driven primarily by North Korean No Dong sales--is 
significantly altering strategic balances in the Middle East and Asia.
    Mr. Chairman, nowhere has the regional threat been more 
dramatically played out than in South Asia. Both Pakistan and India 
have intensified their missile and nuclear rivalry. Further nuclear 
testing is possible and both states have begun to develop nuclear-use 
doctrines and contingency planning. This is a clear sign of maturing 
WMD programs. I will discuss South Asia's broader problems later in my 
briefing.
    Mr. Chairman, another sign that WMD programs are maturing is the 
emergence of secondary suppliers of weapons technology.
    While Russia, China, and North Korea continue to be the main 
suppliers of ballistic missiles and related technology, long-standing 
recipients--such as Iran--might become suppliers in their own right as 
they develop domestic production capabilities. Other countries that 
today import missile-related technology, such as Syria and Iraq, also 
may emerge in the next few years as suppliers.
    Over the near term, we expect that most of their exports will be of 
shorter range ballistic missile-related equipment, components, and 
materials. But, as their domestic infrastructures and expertise 
develop, they will be able to offer a broader range of technologies 
that could include longer-range missiles and related technology.
    Iran in the next years may be able to supply not only complete 
Scuds, but also Shahab-3s and related technology, and perhaps even 
more-advanced technologies if Tehran continues to receive assistance 
from Russia, China, and North Korea.
    Mr. Chairman, the problem may not be limited to missile sales; we 
also remain very concerned that new or nontraditional nuclear suppliers 
could emerge from this same pool.
    This brings me to a new area of discussion: that more than ever we 
risk substantial surprise. This is not for a lack of effort on the part 
of the Intelligence Community; it results from significant effort on 
the part of proliferators.
    There are four main reasons. First and most important, 
proliferators are showing greater proficiency in the use of denial and 
deception.
    Second, the growing availability of dual-use technologies--
including guidance and control equipment, electronic test equipment, 
and specialty materials--is making it easier for proliferators to 
obtain the materials they need.
    The dual-use dilemma is a particularly vexing problem as we seek to 
detect and combat biological warfare programs, in part because of the 
substantial overlap between BW agents and legitimate vaccines. About a 
dozen countries either have offensive BW programs or are pursuing them. 
Some want to use them against regional adversaries, but other see them 
as a way to counter overwhelming US and Western conventional 
superiority.
    Third, the potential for surprise is exacerbated by the growing 
capacity of countries seeking WMD to import talent that can help them 
make dramatic leaps on things like new chemical and biological agents 
and delivery systems. In short, they can buy the expertise that confers 
the advantage of technologies surprise.
    Finally, the accelerating pace of technological progress makes 
information and technology easier to obtain and in more advanced forms 
that when the weapons were initially developed.
    We are making progress against these problems, Mr. Chairman, but I 
must tell you that the hill is getting steeper every year.
                               terrorism
    Let me now turn to another threat with worldwide reach--terrorism.
    Since July 1998, working with foreign governments worldwide, we 
have helped to render more than two dozen terrorists to justice. More 
than half were associates of Usama Bin Ladin's Al-Qaida organization. 
These renditions have shattered terrorist cells and networks, thwarted 
terrorist plans, and in some cases even prevented attacks from 
occurring.
    Although 1999 did not witness the dramatic terrorist attacks that 
punctuated 1998, our profile in the world and thus our attraction as a 
terrorist target will not diminish any time soon.
    We are learning more about the perpetrators every day, Mr. 
Chairman, and I call tell you that they are a diverse lot motivated by 
many causes.
    Usama Bin Ladin is still foremost among these terrorists, because 
of the immediacy and seriousness of the threat he poses. Everything we 
have learned recently confirms our conviction that he wants to strike 
further blows against America. Despite some well-publicized 
disruptions, we believe he could still strike without additional 
warning. Indeed, Usama Bin Ladin's organization and other terrorist 
groups are placing increased emphasis on developing surrogates to carry 
our attacks in an effort to avoid detection. For example, the Egyptian 
Islamic Jihad (EIJ) is linked closed by Bin Ladin's organization and 
has operatives located around the world--including in Europe, Yemen, 
Pakistan, Lebanon, and Afghanistan. And, there is now an intricate web 
of alliances among Sunni extremists worldwide, including North 
Africans, radical Palestinians, Pakistanis, and Central Asians.
    Some of these terrorists are actively sponsored by national 
governments that harbor great antipathy toward the United States. Iran, 
for one, remains the most active state sponsor. Although we have seen 
some moderating trends in Iranian domestic policy and even some public 
criticism of the security apparatus, the fact remains that the use of 
terrorism as a political tool by official Iranian organs has not 
changed since President Khatami took office in August 1997.
    Mr. Chairman, we remain concerned that terrorist groups worldwide 
continue to explore how rapidly evolving and spreading technologies 
might enhance the lethality of their operations. Although terrorists 
we've preempted still appear to be relying on conventional weapons, we 
know that a number of these groups are seeking chemical, biological, 
radiological, or nuclear (CBRN) agents. We are aware of several 
instances in which terrorists have contemplated using these materials.
    Among them is Bin Ladin, who has shown a strong interest in 
chemical weapons. His operatives have trained to conduct attacks with 
toxic chemicals or biological toxins.
    HAMAS is also pursuing a capability to conduct attacks with toxic 
chemicals.
    Terrorists also are embracing the opportunities offered by recent 
leaps in information technology. To a greater and greater degree, 
terrorist groups, including Hizballah, HAMAS, the Abu Nidal 
organization, and Bin Ladin's al Qa'ida organization are using 
computerized files, e-mail, and encryption to support their operations.
    Mr. Chairman, to sum up this part of my briefing, we have had our 
share of successes, but I must be frank in saying that this has only 
succeeded in buying time against an increasingly dangerous threat. The 
difficulty in destroying this threat lies in the fact that our efforts 
will not be enough to overcome the fundamental causes of the 
phenomenon--poverty, alienation, disaffection, and ethnic hatreds 
deeply rooted in history. In the meantime, constant vigilance and 
timely intelligence are our best weapons.
                               narcotics
    Mr. Chairman, let me now turn to another threat that reaches across 
borders for its victims: narcotics. The problem we face has become 
considerably more global in scope and can be summed up like this: 
narcotics production is likely to rise dramatically in the next few 
years and worldwide trafficking involves more diverse and sophisticated 
groups.
    On the first point, coca cultivation in Peru and Bolivia has 
continued to decline--due largely to successful eradication efforts--
but that will probably be offset to some extent by increases in 
Colombian cultivation. More productive coca varieties and more 
efficient processing results in production of cocaine more than two and 
a half times that previously estimated.
    There is some good news in Colombia. Under President Pastrana's 
leadershp, Bogota is beginning to improve on its 1999 counterdrug 
efforts. In November, Pastrana approved the first extradition of a 
Colombian drug trafficker to the United States since passage of a 1997 
law.
    On the other side of the world, a dramatic increase of opium and 
heroin production in Afghanistan is again a cause for concern. This 
year, Afghanistan's farmers harvested a crop with the potential to 
produce 167 tons of heroin, making Afghanistan the world's largest 
producer of opium. Burma, which has a serious drought, dropped to 
second place, but will likely rebound quickly when the weather 
improves.
    Explosive growth in Afghan opium production is being driven by the 
shared interests of traditional traffickers and the Taliban. And as 
with so many of these cross-national issues, Mr. Chairman, what 
concerns me most is the way the threats become intertwined. In this 
case, there is ample evidence that Islamic extremists such as Usama Bin 
Ladin uses profits from the drug trade to support their terror 
campaign.
                     international organized crime
    Mr. Chairman, let me turn now to the related issue of organized 
crime. Organized crime has become a serious international security 
issue. It not only can victimize individuals, but it also has the 
potential to retard or undermine the political and economic development 
of entire countries, especially newly independent ones or those moving 
from command systems to open societies.
    The threat is quite apparent in Russia, where it has become a 
powerful and pervasive force. Crime groups there have been aggressive 
in gaining access to critical sectors of Russia's economy--including 
strategic resources like the oil, coal, and aluminum industries.
    Meanwhile, money is moving out of Russia on a large scale. Russian 
officials estimate that some $1.5 to $2 billion leaves the country 
monthly. Most is not derived from criminal activities but rather is 
sent abroad to avoid taxation and the country's economic instability. 
Still, Russian officials say that criminal activity may account for 
about one-third of the capital flight.
                         information operations
    Finally Mr. Chairman, before I end this chapter on transnational 
issues, let me note the especially threatening nature of a relatively 
new phenomenon--information warfare. I say especially threatening 
because as this century progresses our country's security will depend 
more and more on the unimpeded and secure flow of information. Any 
foreign adversary that develops the ability to interrupt that flow or 
shut it down will have the potential to weaken us dramatically or even 
render us helpless.
    A surprising number of information warfare-related tools and 
``weapons'' are available on the open market at relatively little cost. 
Indeed, the proliferation of personal computers, and the skills 
associated with them, has created millions of potential ``information 
warriors''.
    Already, we see a number of countries expressing interest in 
information operations and information warfare as a means to counter US 
military superiority. Several key states are aggressively working to 
develop the IW capabilities and to incorporate these new tools into 
their warfighting doctrine.
    This is one of the most complex issues I've put on the table. Mr. 
Chairman, but, simply put, information warfare has the potential to be 
a major force multiplier. And why is this?
    It enables a single entity to have a significant and serious 
impact.
    It is a weapon that ``comes ashore'' and can effect the daily lives 
of Americans across the country.
    It gives a force projection capability to those who have never had 
it before, and it can be used as an asymmetric response.
    It will be a basic capability of modern militaries and intelligence 
services around the world in the near future and secondary players not 
long thereafter.
    All of this amounts to one of the ``cutting edge'' challenges for 
intelligence in the 21st century. We are working on means of 
prevention, warning, and detection, but as in so many areas in the 
technological age, Mr. Chairman, we are truly in a race with technology 
itself.
                            regional issues
    At this point, Mr. Chairman, I'd like to leave the transnational 
issues and turn briefly to some of the regions and critical states in 
the world.
                                 russia
    We begin with Russia. As you know, we are now in the post-Yeltsin 
era, and difficult choices loom for the new president Russians will 
choose in exactly two months:
    He will face three fundamental questions:
    First, will he keep Russia moving toward further consolidation of 
its new democracy or will growing public sentiment in favor of a strong 
hand and a yearning for order tempt him to slow down or even reverse 
course?
    Second, will he try to build a consensus on quickening the pace of 
economic reform and expanding efforts to intergrate into global 
markets--some Russian officials favor this--or will he rely on heavy 
state intervention to advance economic goals?
    Finally, will Moscow give priority to a cooperative relationship 
with the West or will anti-US sentiments continue to grow, leading to a 
Russia that is isolated, frustrated, and hostile? This would increase 
the risk of anunintended confrontation, which would be particularly 
dangerous as Russia increasingly relies on nuclear weapons for its 
defense--an emphasis reflected most recently in its new national 
security concept.
    As these questions indicate, a new Russian President will inherit a 
country in which much has been accomplished--but in which much still 
needs to be done to fully transform its economy, ensure that democracy 
is deeply rooted, and establish a clear future direction for it in the 
world outside Russia.
    Russian polls indicate that Acting President Putin is the odds on 
favorite to win the election--though I must tell you, Mr. Chairman, 
that two months can be an eternity in Russia's turbulent political 
scene. Putin appears tough and pragmatic, but it is far from clear what 
he would do as president. If he can continue to consolidated elite and 
popular support, as president he may gain political capital that he 
could choose to spend on moving Russia further along the path toward 
economic recovery and democratic stability.
    Former Premier Primakov is in the best position to challenge Putin, 
though he faces a big uphill battle. He would need the backing of other 
groups--most importantly the Communists. The Communists, however, have 
shown their willingness to deal with Putin's party in a recent 
agreement that divided Duma leadership positions between them. Such 
tactical alliances are likely to become more prevalent as parties seek 
to work out new power relationships in the post-Yeltsin era.
    At least two factors will be pivotal in determining Russia's near-
term trajectory:
    The conflict in Chechnya: Setbacks in the war could hurt Putin's 
presidential prospects unless he can deftly shift blame, while 
perceived successes there will help him remain the front runner.
    The economy: The devalued ruble, increased world oil prices, and a 
favorable trade balance fueled by steeply reduced import levels have 
allowed Moscow to actually show some economic growth in the wake of the 
August 1998 financial crash. Nonetheless, Russia faces $8 billion in 
foreign debt coming due this year. Absent a new I-M-F deal to 
reschedule, Moscow would have to redirect recent gains from economic 
growth to pay it down, or run the risk of default.
    Over the longer term, the new Russian president must be able to 
stabilize the political situation sufficiently to address structural 
problems in the Russian economy. He must also be willing to take on the 
crime and corruption problem--both of which impede foreign investment.
    In the foreign policy arena, US-Russian relations will be tested on 
a number of fronts. Most immediately, Western criticism of the Chechen 
war has heightened Russian suspicions about US and Western activity in 
neighboring areas, be it energy pipeline decisions involving the 
Caucasus and Central Asia, NATO's continuing role in the Balkans, or 
NATO's relations with the Baltic states. Moscow's ties to Iran also 
will continue to complicate US-Russian relations, as will Russian 
objections to US plans for a National Missile Defense. There are, 
nonetheless, some issues that could move things in a more positive 
direction.
    For example, Putin and others have voiced support for finalizing 
the START II agreement and moving toward further arms cuts in START 
III.
    Similarly, many Russian officials express a desire to more deeply 
intergrate Russia into the world economy, be it through continued 
cooperation with the G-8 or prospective membership in the WTO.
    One of my biggest concerns--regardless of the path that Russia 
chooses--remains the security of its nuclear weapons and materials. 
Russia's economic difficulties continue to weaken the reliability of 
nuclear personnel and Russia's system for securing fissile material. We 
have no evidence that weapons are missing in Russia, but we remain 
concerned by reports of lax discipline, labor strikes, poor morale, and 
criminal activities at nuclear storage facilities.
                     the caucasus and central asia
    Mr. Chairman, earlier I mentioned the war in Chechnya in the 
context of Russia's domestic situation. Chechnya also has significance 
for the Caucasus and Central Asia, a part of the world that has the 
potential to become more volatile as it becomes more important to the 
United States.
    As you know, the United States has expended great effort to support 
pipelines that will bring the Caspian's energy resources to Western 
markets. One oil pipeline is expected to pass through both Georgia and 
Azerbaijan. Western companies are trying to construct a gas pipeline 
under the Caspian Sea from Turkmenistan through Azerbaijan and Georgia 
en route to Turkey.
    Although many of the leaders in the region through which the 
pipelines will flow view the United States as a friend, regime 
stability there is fragile.
    Most economies are stagnating or growing very slowly, unemployment 
is rising, and poverty remains high. This creates opportunities for 
criminals, drug runners, and arms proliferators. It also means the 
region could become a breeding ground for a new generation of Islamic 
extremists, taking advantage of increasing dissatisfaction.
    There is not much popular support for Islamic militancy anywhere in 
Central Asia or the Caucasus, but as militants are pushed out of 
Chechnya, they may seek refuge--and stoke militancy--in the South 
Caucasus and Central Asia.
                            the middle east
    Mr. Chairman, let me turn now to another region of the world where 
vital US interests are at stake: the strategically important Middle 
East. Many positive developments are apparent, most notably the new 
potential for progress on peace. But if we step back for a moment, it 
is clear that the Middle East is entering a major transition in many 
aspects of its political, economic, and security environment.
    In addition to the leadership successions that have begun with the 
passing of King Hussein of Jordan, the Amir of Bahrain, and King Hassan 
of Morocco, there is the challenge of demographics. Many of the 
countries of the Middle East still have population growth rates among 
the highest in the world, significantly exceeding 3 percent, meaning 
that job markets will be severely challenged to create openings for the 
large mass of young people entering the labor force each year.
    Another challenge is economic restructuring. There is a legacy of 
statist economic policies and an inadequate investment climate in most 
countries in the Middle East.
    As the region falls behind in competitive terms--despite a few 
positive steps by some countries--governments will find it hard over 
the next 5 to 10 years to maintain levels of state sector employment 
and government services that have been key elements of their strategy 
for domestic stability.
    Finally, there is the information revolution. The rise of regional 
newspapers, satellite television, and the Internet are all reducing 
governments' control over information flows in the Middle East. 
Islamist groups, among others, already are taking advantage of these 
technologies to further their agendas.
    What all of this means, Mr. Chairman, is that the Middle East--a 
region on which we will depend even more for oil a decade from now (40 
percent compared to 26 percent today)--is heading into a much less 
predictable period that will require even greater agility from the 
United States as it seeks to protect its vital interests there.
Iran
    Turning now to Iran: Change in Iran is inevitable. Mr. Chairman. 
The election of President Khatami reflected the Iranian popular desire 
for change. He has used this mandate to put Iran on a path to a more 
open society. This path will be volatile at times as the factions 
struggle to control the pace and direction of political change.
    A key indicator that the battle over change is heating up came last 
July when student protests erupted in 18 Iranian cities for several 
days. The coming year promises to be just as contentious as Iran elects 
a new Majles (Parliament) in February.
    Many Iranians particularly the large cohort of restive youth and 
students will judge the elections as a test of the regime's willingness 
to accommodate the popular demand for reform.
    If they witness a rigged election, it could begin to radicalize 
what has so far been a peaceful demand for change.
    Fair elections would probably yield a pro-reform majority, but 
opponents of change still exert heavy control over the candidate 
selection process.
    Former President Rafsanjani's decision to run for the Majles--
apparently at the urging of the conservatives--highlights the 
leadership's desire to bring the two factions back to the center. The 
conservatives are supportive of his candidacy, because they believe a 
centrist Rafsanjani is a more trustworthy alternative to the reformers.
    Even if the elections produce a Majles dominated by Khatami's 
supporters, further progress on reform will remain erratic. Supreme 
Leader Khamenei and key institutions such as the Revolutionary Guard 
Corps and the large parastatal foundations will remain outside the 
authority of the Majles and in a position to fight a stubborn rearguard 
against political change.
    Moreover, even as the Iranians digest the results of the Majles 
elections, the factions will begin preliminary maneuvering for the 
presidential election scheduled for mid-2001, which is almost certain 
to keep the domestic political scene unsettled.
    The factional maneuvering probably means that foreign policy 
options will still be calculated first to prevent damage to the various 
leaders' domestic positions. This will inhibit politically risky 
departures from established policy. This means that Iran's foreign 
policy next year will still exhibit considerable hostility to US 
interests. This is most clearly demonstrated by Tehran's continued 
rejection of the Middle East peace process and its efforts to energize 
rejectionist Palestinian and Hizballah operations aimed at thwarting a 
negotiated Arab-Israeli peace. Iranian perceptions of increasing US 
influence in the Caucasus--demonstrated most recently by the signing of 
the Baku-Ceyhan pipeline agreement--could similarly motivate Iran to 
more aggressively seek to thwart what it regards as a US effort to 
encircle it to the north.
Iraq
    With regard to Iraq, Saddam faced a difficult start in 1999--
including the most serious Shia unrest since 1991 and significant 
economic difficulties.
    The Shia unrest was not confined to the south but also affected 
some areas of Baghdad itself, presenting Saddam's regime with a major 
security problem. On the economic side, to rein in inflation, stabilize 
the dinar, and reduce the budget deficit, Saddam was forced to raise 
taxes, ease foreign exchange controls, and cut nonwage public spending.
    Saddam has, however, shown himself to be politically agile enough 
to weather these challenges. He brutally suppressed the Shia uprisings 
of last spring and early summer. The regime is still gaining some 
revenue from illegal oil sales. Increased access to food and medical 
supplies through the oil for food program has improved living 
conditions in Baghdad.
    A major worry is that Iraqi reconstruction of WMD-capable 
facilities damaged during Operation Desert Fox and continued work on 
delivery systems shows the priority Saddam continues to attach to 
preserving a WMD infrastructure. And Iraq's conventional military 
remains one of the largest in the Middle East, even though it is now 
less than half the size during the Gulf War.
    He can still hurt coalition forces, but his military options are 
sharply limited. His continuing challenge to the no-fly-zone 
enforcement remains his only sustainable means of engaging US and Uk 
forces.
    In sum, to the extent that Saddam has had any successes in the last 
year, they have been largely tactical. In a strategic sense, he is 
still on a downward path. His economic infrastructure continues to 
deteriorate, the Kurdish-inhabited northern tier remains outside the 
grip of his army, and although many governments are sympathetic to the 
plight of the Iraqi people, few if any are willing to call Saddam an 
ally.
                              the balkans
    Mr. Chairman, looking briefly at the Balkans--
    Signs of positive long-term change are beginning to emerge there as 
the influence of the Milosevic regime in the region wanes in the wake 
of the Kosovo conflict and a new, more liberal government takes the 
reigns of power in Croatia. Political alternatives to the dominant 
ethnic parties in Bosnia also are beginning to develop, capitalizing on 
the vulnerability ofoldline leaders to charges of corruption and 
economic mismanagement. Despite this progress, there is still a long 
way to go before the Balkans move beyond the ethnic hatreds and 
depressed economies that have produced so much turmoil and tragedy. Of 
the many threats to peace and stability in the year ahead, the greatest 
remains Slobodan Milosevic--the world's only sitting president indicted 
for crimes against humanity.
    Milosevic's hold on power has not been seriously shaken in the past 
few months. He retains control of the security forces, military 
commands, and an effective media machine. His inner circle remains 
loyal or at least cowed. The political opposition has not yet developed 
a strategy to capitalize on public anger with Milosevic.
    Milosevic has two problems that could still force him from power--
the economy and the Montenegrin challenge. The Serbian economy is in a 
virtual state of collapse, and Serbia is now the poorest country in 
Europe. Inflation and unemployment are rising, and the country is 
struggling to repair the damage to its infrastructure from NATO air 
strikes. The average wage is only $48 a month and even these salaries 
typically are several months in arrears. Basic subsistence is 
guaranteed only by unofficial economic activity and the traditional 
lifeline between urban dwellers and their relatives on the farms.
    Milosevic's captive media are trying--with some success--to blame 
these troubles on the air strikes and on international sanctions. 
Nonetheless, as time passes, we believe the people will increasingly 
hold Milosevic responsible. Moreover, a sudden, unforeseen economic 
catastrophe, such as hyperinflation or a breakdown this winter of the 
patched-up electric grid, could lead to mass demonstrations that would 
pose a real threat.
    For its part, Montenegro may be heading toward independence, and 
tensions are certainly escalating as Montenegrin President Djukanovic 
continues to take steps that break ties to the federal government. 
Milosevic wants to crush Djukanovic, because he serves as an important 
symbol to the democratic opposition in Serbia and to the Serbian people 
that the regime can be successfully challenged. Djukanovic controls the 
largest independent media operation in Yugoslavia, which has strongly 
criticized the Milosevic regime over the past several years for the 
Kosovo conflict, political repression and official corruption. Both 
Milosevic and Djukanovic will try to avoid serious confrontation for 
now, but a final showdown will be difficult to avoid.
Kosovo
    Regarding Kosovo, Mr. Chairman, the international presence has 
managed to restore a semblance of peace, but it is brittle. Large-scale 
interethnic violence has vanished, but the UN Mission in Kosovo and K-
FOR have been unable to stop daily small-scale attacks, montly by 
Kosovar Albanians against ethnic Serbs. This chronic violence has 
caused most of the remaining 80,000-100,000 Serbs to congregate in 
enclaves in northern and eastern Kosovo, and they are organizing self-
defense forces.
    The campaign to disarm the former Kosovo Liberation army has had 
success, but both sides continue to cache small arms and other 
ordnance. There is even a chance that fighting between Belgrade's 
security forces and ethnic Albanians will reignite should Belgrade 
continue to harass and intimidate the Albanian minority in southern 
Serbia, and should Kosovo Albanian extremists attempt to launch an 
insurgency aimed at annexing Southern Serbia into a greater Kosovo.
                                 china
    Mr. Chairman, let us now turn to East Asia, where China has entered 
the new century as the world's fastest rising power.
    The leadership there is continuing its bold, 20-year-old effort to 
propel the nation's economy into the modern world, shedding the 
constrains of the old Communist central command system. The economy is 
the engine by which China seeks world prestige, global economic clout, 
and the funding for new military strength, thereby redressing what it 
often proclaims as a hundred years of humiliation at the hands of 
Western powers. Domestically, it also was the engine that Deng Xiaoping 
and his successors calculated would enable the Party to deliver on its 
unspoken social contract with the Chinese people: monopoly of political 
power in exchange for a strong China with a higher standard of living 
for its citizens.
    But events conspired last year to tarnish Beijing's achievements, 
to remind people that China had not yet arrived as a modern world 
power, and to make the leadership generally ill-at-ease:
    China put on an impressive display of military might at its 50th 
anniversary parade in Beijing, but the leadership today sees a growing 
technological gap with the West.
    Inside China, the image of domestic tranquillity was tarnished by 
last April's appearance of the Falungoing religious sect, whose 
audacious, surprise demonstration outside the leadership compound call 
into question the Communist Party's ability to offer an ethos that 
still attracts the Chinese people.
    Even the return of Macau in late December--the fall of another 
symbol of a divided China--was overshadowed by the actions of Taiwan 
President Lee Teng-hui. Lee declared last July that his island's 
relations with the mainland should be conducted under the rubic of 
``state to state'' rather than ``one China''.
    Lee's statement has China deeply worried that Taiwan's return to 
Beijing rule is less likely than before. Chinese leaders act as if they 
believe that, at a minimum, a show of force is required if they are to 
preserve any hope of reunification.
    Because of this, we see high potential for another military flare-
up across the Taiwan Strait this year. The catalyst for these tensions 
is the Taiwan election on 18 March, which Beijing will be monitoring 
for signs that a new president will retreat from Lee Teng-hui's 
statements--or further extend the political distance from 
reunification.
    Although Beijing today still lacks the air and sealift capability 
to successfully invade Taiwan.
    China has been increasing the size and sophistication of its forces 
arrayed along the Strait, most notably by deploying stort-range 
ballistic missiles.
    China should receive the first of two modern, Russian-built 
Sovremennyy destroyers later this month; we expect the ship to join the 
East Sea Fleet, which regularly conducts operations near Taiwan.
    In the coming year, we expect to see an uncertain Chinese 
leadership launching the nation deeper into the uncharted waters of 
economic reform while trying to retain tight grip political control. 
Thus far, Beijing's approach has largely succeeded. But the question 
remains open whether, in the long run, a market economy and an 
authoritarian regime can co-exist successfully.
                              north korea
    Looking further east, North Korea's propaganda declares 1999 the 
``year of the great turnaround.'' This is a view not supported by my 
analysts, however. Indeed, we see a North Korea continuing to suffer 
from serious economic problems, and we see a population, perhaps now 
including the elite, that is losing confidence in the regime. Mr. 
Chairman, sudden, radical, and possibly dangerous change remains a real 
possibility in North Korea, and that change could come at any time.
    The North Korean economy is in dire straits. Industrial operations 
remain low. The future outlook is clouded by industrial facilities that 
are nearly beyond repair after years of underinvestment, spare parts 
shortages, and poor maintenance.
    This year's harvest is more than 1 million tons short of minimum 
grain needs. International food aid has again been critical in meeting 
the population's minimum food needs.
    Trade is also down. Exports to Japan--the North's most important 
market--fell by 17 percent from $111 million to $92 million. Trade with 
China--the North's largest source of imports--declined from nearly $200 
million to about $160 million, primarily because China delivered less 
grain.
    Kim Chong-il does not appear to have an effective longterm strategy 
for reversing his country's economic fortunes. Kim's inability to meet 
the basic needs of his people and his reliance on coercion makes his 
regime more brittle because even minor instances of defiance have 
greater potential to snowball into wider anti-regime actions.
    Instead of real reform, North Korea's strategy is to garner as much 
aid as possible from overseas, and the North has reenergized its global 
diplomacy to this end. It is negotiating for a high-level visit to 
reciprocate Dr. Perry's trip to P'yongyang. It has agreed to diplomatic 
talks with Japan for the first time in several years. It has 
unprecedented commercial contacts with South Korea, including a tourism 
deal with a South Korean firm that will provide almost $1 billion over 
six years.
    But P'yongyang's maneuvering room will be constrained by Kim's 
perception that openness threatens his control and by the 
contradictions inherent in his overall strategy--a strategy based on 
hinting at concessions on the very weapons programs that he has 
increasingly come to depend on for leverage in the international arena. 
Squaring these circles will require more diplomatic agility than Kim 
has yet to demonstrate in either the domestic or international areas.
                               east asia
    Mr. Chairman, China and North Korea do not exist in a vacuum. They 
influence the policies of other states--including how those states 
relate to us. Nowhere is this more true than in East Asia. Let me talk 
about two trends there that I believe will affect US interests over the 
next several years.
    The first is the growing concern in the region about China and 
North Korea. Leaders in Southeast Asia have long worried about Chinese 
interference in their internal affairs, but the concerns of these 
governments and publics also now focus on China's growing economic and 
military power and the potential influence it will provide Beijing. 
Concerns about North Korea are more varied and localized. Japan fears 
North Korea's expanding missile capabilities, while South Korea--along 
with the historical threat of a North Korean invasion--worries that the 
collapse of the regime in the North will create humanitarian, economic, 
and military challenges for the South.
    These concerns create several dynamics. For one thing, they fuel 
incentives to expand and modernize defense forces. Japan's interest in 
building its own satellite imaging system, for example, is a direct 
result of its concern about North Korea. Vietnam's recent acquisition 
of Su-27 aircraft from Russia reflect concerns about China's future 
military might. And Seoul's attempts to modernize its air force and 
navy reflect the fact that it is looking beyond North Korea toward 
potential future threats.
    In addition, these concerns reinforce the long-standing desire 
among almost all the states of the region for the US to remain engaged 
militarily. In short, regional leaders--and most publics--continue to 
see the US presence as key to East Asian stability, although I must 
tell you, Mr. Chairman, that some leaders in the region have doubts 
about our staying power there.
    The second trend worth noting for you is the continuing pressure in 
East Asia for more open and accountable political systems. Over the 
last 15 years, that pressure brought political change to the 
Philippines, Thailand, South Korea, Taiwan, Japan, and most recently 
Indonesia. Others, including Malaysia and China, are certain to face 
similar pressure for change in the years ahead as the spread of 
information technology limits the ability of authoritarian leaders to 
control the public's exposure to democracy and to constrain opponents 
from organizing. These pressures, of course, create the potential for 
political instability, particularly if they are resisted by incumbent 
leaders.
                               indonesia
    Mr. Chairman, I've mentioned Indonesia a couple of times earlier, 
so let me take a moment to say a few words about it. Indonesia is in 
the midst of a difficult transition to democracy that will have a 
powerful bearing on the country's future direction and perhaps even on 
its cohesion as a nation. President Wahid is grappling with a variety 
of long-standing, intractable issues including communal violence, 
separatist sentiments, and an economy in distress. At the same time, he 
is trying to forge a new role for the Indonesian military--which 
includes tighter civilian control and the gradual withdrawal of the 
armed forces from the domestic political arena--and create an open, 
consensual decisionmaking process in a country accustomed to 30-years 
of one-man rule.
    Since his selection to the presidency last October, Wahid has 
implemented a variety of initiatives designed to set the country on the 
path to democracy. A popularly elected president who preaches religious 
and political tolerance, Wahid has succeeded in forming a viable 
coalition government drawn fromdisparate elements. He is actively 
supporting a national investigation into alleged human rights abuses by 
the Indonesian military in East Timor, and a once muzzled national 
press is flourishing. He also is taking steps to improve Jakarta's 
bilateral relations with a number of countries and restore Indonesia's 
regional prominence, which suffered in the wake of the Asian financial 
crisis in 1997 and the domestic political uncertainty that surrounded 
the fall of President Soeharto in 1998.
    Addressing demands from restive provinces to redefine their 
relationship with Jakarta is Wahid's most immediate challenge. Several 
leaders in the region remain concerned that Jakarta's loss of East 
Timor--coupled with growing separatist tensions and communal violence 
across the archipelago--could result in the Balkanization of the 
country over the next several years. The challenges are myriad: in the 
west, pressure is mounting from Acehnese separatists who have resisted 
Jakarta's control since the 1950s and began an insurgency in 1976. To 
the east in Irian Jaya--recently renamed Papua--there is local 
resentment of Jakarta's exploitation of the province's natural 
resources, but the insurgent movement is weak. The nearby Malukus have 
been wracked by communal violence for the past year; this is Christian-
Muslim violence with an ethnic overlay that may not only be difficult 
to pacify, but could ignite sectarian violence elsewhere in the 
archipelago, testing the country's long commitment to religious 
tolerance. Indonesia's ASEAN partners particularly fear the refugee and 
humanitarian crisis that would accompany such worst-case scenarios.
                             india-pakistan
    Whatever suspicions and fissures exist among states in East Asia, 
they pale in comparison to the deep-seated rivalry between India and 
Pakistan. Mr. Chairman, last spring, the two countries narrowly averted 
a full-scale war in Kashmir, which could have escalated to the nuclear 
level.
    The military balance can be summarized easily: India enjoys 
advantages over Pakistan in most areas of conventional defense 
preparedness, including a decisive advantage in fighter aircraft, 
almost twice as many men under arms, and a much larger economy.
    Recent changes in government in both countries add tensions to the 
picture. The October coup in Pakistan that brought to power Gen. 
Musharraf--who served as Army chief during the Kargil conflict with 
India last summer--has reinforced New Delhi's inclination not to reopen 
the bilateral dialogue anytime soon.
    Pakistanis are equally suspicious of India's newly elected 
coalition government in which Hindu nationalists hold significant sway. 
Clearly, the dispute over Kashmir remains as intractable as ever.
    We are particularly concerned that heavy fighting is continuing 
through the winter, unlike in the past, and probably will increase 
significantly in the spring.
    New Delhi may opt to crack down hard on Kashmiri militants 
operating on the Indian side of the Line of Control or even order 
military strikes against militant training camps inside Pakistani-held 
Kashmir.
    Thus, we must head into the new year, Mr. Chairman, with continuing 
deep concerns about the antagonisms that persist in South Asia and 
their potential to fuel a wider and more dangerous conflict on the 
subcontinent.
                                 africa
    Mr. Chairman, South Asia presents a discouraging picture but it 
hardly compares to sub-Saharan Africa, which has been largely bypassed 
by globalization and the accelerating spread of technology. The region 
has little connectivity to the rest of the world--with just 16 
telephone lines per 1,000 people--and its battered infrastructure, the 
population's limited access to education, and widespread health 
problems such as AIDS and malaria have deterred many foreign investors.
    One indicator of Sub-Saharan Africa's marginalization is its 
infinitesimal share of world trade in goods and services, which slipped 
from 2.8 percent in the early 1980s to just 1.5 percent in recent 
years.
    As Africa's already small role in the international economy has 
faded, instability has intensified. Humanitarian crisis is constant. 
Since 1995, violent internal unrest has wracked 15 of the region's 48 
countries, and 19 Sub-Saharan governments have deployed military 
forces--as peacekeepers, protectors of beleaguered regimes, or outright 
invaders--to other African states.
    Instability fosters conditions potentially leading to genocide and 
other massive human rights abuses. In the Great Lakes region, Congo 
(K)'s beleaguered government periodically targets Tutsis as suspected 
saboteurs, while the civil war in Burundi could with little warning 
degenerate into another round of wholesale ethnic killings. In Sierra 
Leone, the rebels who used widespread mutilations of civilians as a 
conscious tactic of intimidation are poised to break a tenuous cease-
fire and resume a campaign of terror.
    Finally, endemic violence and instability increase the danger that 
criminal and insurgent groups will zero in on individual US citizens as 
soft targets.
                               conclusion
    Mr. Chairman, this has been a long briefing, and I'd like to get to 
your specific questions on these and other subjects. Before doing so, I 
would just sum it up this way: the fact that we are arguably the 
world's most powerful nation does not bestow invulnerability; in fact, 
it may make us a larger target for those who don't share our interests, 
values, or beliefs. We must take care to be on guard, watching our 
every step, and looking far ahead. Let me assure you that our 
Intelligence Community is well prepared to do that.
    Thank you, Mr. Chairman. Now, I'd welcome any questions from you 
and your colleagues.

Prepared Statement of Vice Admiral Thomas R. Wilson, Director, Defense 
                          Intelligence Agency

                           executive summary
    The dynamic change and uncertainty that characterized the 1990s 
will likely continue through 2015 because the basic engines of turmoil 
remain largely in place. These include: Significant transitions 
underway in key states and regions such as Russia, China, North Korea, 
the Middle East, and Europe; the continued existence of rogue states, 
groups, and individuals who do not share our vision of the future; 
rapid technology development and proliferation; declining global 
defense spending; pressures resulting from uneven demographic and 
economic developments; evolving international and regional security 
structures, institutions, and concepts, including the growing influence 
of NGOs; reactions to the perception of western political, economic, 
military and social dominance; continuing international criminal 
activity, particularly the narcotics trade; ethnic, cultural, and 
religious conflict, and increased numbers of people in need.
    These factors create the conditions in which threats and challenges 
emerge, and define the context in which US strategy, interests, and 
forces operate. Collectively, they foster a complex, dynamic, and 
dangerous global security environment that will continue to spur 
numerous crises, hotspots, and issues affecting US interests. 
Containing, managing, and responding to these will be a constant 
challenge.
    Beyond this general global turmoil, three specific developments are 
likely to present more direct long-term military challenges to US 
policy and interest:
    The asymmetric threat.--Most adversaries recognize our general 
military superiority and want to avoid engaging the US military on our 
terms, choosing instead to pursue a wide variety of initiatives 
designed to circumvent or minimize our strengths and exploit perceived 
weaknesses. Asymmetric approaches will become the dominant 
characteristic of most future threats to our homeland and a defining 
challenge for US strategy, operations, and force development.
    Strategic nuclear missile threats.--We will continue to face 
strategic nuclear threats--from Russia and China, and eventually from 
North Korea and other `rogue' states. While the total number of 
warheads targeted against us will be much lower than during the Cold 
War, the mix of threat nations, force structures, capabilities, and 
employment doctrines will complicate the strategic threat picture.
    Large regional military threats.--Several potential regional 
adversaries will maintain large military forces featuring a mix of Cold 
War and post-Cold War technologies and concepts. Under the right 
conditions, these regional militaries could present a significant 
challenge.
                    the global security environment
    To paraphrase the ancient Chinese curse ``. . . we are living in 
very interesting times.'' More than a decade has passed since the end 
of the Cold War, yet we seem no closer to the emergence of a new, 
stable international order. Rather, the complex mix of political, 
economic, military, and social factors that have undermined stability 
during much of the 1990s remain at play. The most important of these 
include:
    Significant continuing uncertainties, especially regarding the 
future of Russia, China, Europe, the Middle East, and the Korean 
peninsula. Developments in each of these key states and regions will go 
a long way towards defining the future security environment. But it 
would be difficult to be highly confident in predicting outcomes.
    Rogue states, groups, and individuals (e.g. Iran and North Korea, 
numerous terrorist and international criminal groups, Usama Bin Ladin, 
etc.) who do not share our vision of the future and are willing to 
engage in violence to improve their position and undermine order. Many 
of these adversaries view the United States as the primary source of 
their troubles, and will continue to target our policies, facilities, 
interests, and personnel.
    Rapid technology development and proliferation--particularly in the 
areas of information processing, biotechnology, communications, 
nanotechnology, and weapons. Technology will continue to have a 
staggering impact on the way people live, think, work, and fight. Some 
aspects of our general military-technological advantage are likely to 
erode. Some technological surprises will undoubtedly occur.
    Declining global defense spending. The 50% real reduction in global 
defense spending during the past decade is having multiple impacts. 
First, both adversaries and allies have not kept pace with the US 
military (despite our own spending reductions). This has spurred foes 
toward asymmetric options, widened the gap between US and allied 
forces, reduced the number of allied redundant systems, and increased 
the demand on unique US force capabilities. Additional, longer-term 
impacts--on global defense technology development and proliferation, 
and on US-allied defense industrial consolidation, cooperation, and 
technological competitiveness--are likely.
    Pressures resulting from unfavorable demographic developments. By 
2020, developing world population will increase some 25%. Meanwhile, 
some 20-30 million of the world's poorest people move into urban areas 
each year. These trends will continue to stress the resources, 
infrastructure, and leadership of states throughout Africa, Asia, and 
Latin America.
    Growing disparities in global wealth and resource distribution. One 
quarter of the world's population (the developed world) controls nearly 
80% of today's wealth and consumes the great majority of the world's 
resources. The numbers will get worse (from the developing world's 
perspective) during the next 15 years, exacerbating north-south and 
inter-regional tensions.
    Evolving global security structures, organizations, and 
institutions. The changing structure, role, adaptability, and influence 
of familiar Cold Warentities--the UN, NATO, the nation state, etc.--and 
the increasing presence and impact of NGOs, brings greater uncertainty 
to the way policy is made and implemented in the post Cold War era.
    Reaction to ``western dominance.'' Many individuals, groups, and 
states fear the global expansion and perceived dominance of western 
(and especially US) values, ideals, culture, and institutions. Efforts 
to resist, halt, or undo this trend will spur anti-US sentiments and 
behavior.
    International drug cultivation, production, transport, and use will 
remain a major source of instability, both within drug producing, 
transit, and target countries, and between trafficking and consumer 
nations. The connection between drug cartels, corruption, and 
antigovernment activities (terrorism and insurgency) will increase as 
the narcotics trade provides an important funding source for criminal 
and antigovernment groups. States with weak democratic traditions and 
poor economic performance and prospects will be particularly 
susceptible. Counternarcotic activities will become more complex and 
difficult as new areas of cultivation and transit emerge and 
traffickers exploit advances in technology, communications, 
transportation, and finance.
    Ethnic, religious, and cultural divisions will remain a motivation 
for and source of conflict in much of the world. As the situation in 
Kosovo demonstrates, ethnic-based conflict is often brutal and 
intractable.
    Increasing numbers of people in need. A combination of factors--
many of those listed above, plus inadequate infrastructure and health 
facilities, resource shortages, natural disasters, epidemics, and 
insufficient local, regional, and global response capabilities--have 
combined to increase the numbers of people requiring international 
humanitarian assistance. According to UN assessments, some 35-40 
million people worldwide needed aid each year during the 1990s, 
compared to slightly more than 20 million in 1985. Likewise, the 
number, size, cost, and duration of UN and other ``peace operations'' 
have risen significantly since the late 1980s.
    These factors create the conditions in which threats and challenges 
emerge, and define the context in which US strategy, interests, and 
forces operate. Collectively, they foster a complex, dynamic, and 
dangerous global security environment. A review of just a few of last 
year's headlines--Iraq's continued combativeness, prolonged ethnic 
tensions in the Balkans and Indonesia, Russia's ongoing offensive in 
Chechnya, North Korea's intransigence, continued hostility between 
India and Pakistan, Colombia's insurgency, and tribal and internecine 
disputes throughout many parts of Africa--underscores the point. 
Moreover, no power, condition, or circumstance is likely to emerge 
during the next 15 years capable of transcending this general 
instability and imposing a new global order. Accordingly, we can expect 
the global dynamic will continue to spur numerous crises, hotspots, and 
issues that will directly affect US policy and interests. Containing, 
managing, and responding to these will be a constant challenge.
    Against this backdrop of general global turmoil, I'd like to focus 
on three specific developments that present more direct long term 
military challenges to US policy and interests:
    The asymmetric threat.--Most adversaries recognized our general 
military superiority and want to avoid engaging the US military on our 
terms, choosing instead to pursue a wide variety of initiatives 
designed to circumvent or minimize our strengths and exploit perceived 
weaknesses. Asymmetric approaches will become the dominant 
characteristic of most future threats to our homeland and a defining 
challenge for US strategy, operations, and force development.
    Strategic nuclear missile threats.--We will continue to face 
strategic nuclear threats--from Russia and China, and eventually from 
North Korea and other ``rogue'' states. While the total number of 
warheads targeted against us will be much lower than during the Cold 
War, the mix of threat nations, force structures, capabilities, and 
employment doctrines will complicate the strategic threat picture.
    Large regional military threats.--Several potential regional 
adversaries will maintain large military forces featuring a mix of Col 
War and post-Cold War technologies and concepts. Under the right 
conditions, these regional militaries could present a significant 
challenge.
                     the growing asymmetric threat
    Most of the rest of the world believes the United States will 
remain the dominant global power during the next 15 years. Foreign 
assessments generally point to the following US strengths: our economy 
weathered the recent global financial crisis in excellent shape and is 
uniquely positioned to capitalize on the coming ``high-tech boom;'' we 
are among the world's leaders in the development and use of the most 
important technologies (but civilian and military); we have the world's 
best university system and the most fluid and effective capital 
markets; we spend nearly half of what the advanced industrial world 
spends on all types of research and development each year; we retain 
strong alliances with key nations; and we enjoy unrivaled ``soft 
power''--the global appeal of American ideas, institutions, leadership 
and culture.
    Perhaps even more striking, however, is how potential adversaries 
think about our military advantage. The superiority of US military 
concepts, technology, and capabilities has been a key theme in foreign 
military assessments since Operation Desert Storm. Moreover, many 
foreign military leaders and writing express concern that our 
conventional warfighting lead will grow, given our doctrinal and 
resource commitment to achieving the operational capabilities 
envisioned in Jointed Vision 2010.
    Adversary anticipation of continued US military superiority is the 
genesis of the asymmetric challenge. Potential US opponents (from 
druglords and terrorists to criminal gangs, insurgents,and the civilian 
and military leadership of opposing states) do not want to engage the 
US military on its terms. The are more likely to pursue their 
objectives while avoiding a US military confrontation, and/or to 
develop asymmetric means (operational and technological) to reduce US 
military superiority, render it irrelevant, or exploit our perceived 
weaknesses. Asymmetric approaches are imperative for US adversaries and 
are likely to be a dominant component of most future threats.
    The asymmetric problem is extremely complex because adversaries, 
objectives, targets, and means of attack can vary widely from situation 
to situation. Moreover, some developments--such as WMD and missile 
proliferation, counter-space capabilities, denial and deception 
operations, etc.--could have both symmetric and asymmetric 
applications, depending on the context. Recognizing these potential 
ambiguities, and understanding that many different approaches are 
possible, I am most concerned about the following ``asymmetric'' 
trends, developments, and capabilities.
    Threats to Critical Infrastructure.--Many adversaries believe the 
best way to avoid, deter, or offset US military superiority is to 
develop a capability to threaten the US homeland. In addition to the 
strategic nuclear threats discussed below, our national infrastructure 
is vulnerable to disruptions by physical and computer attack. The 
interdependent nature of the infrastructure creates even more of a 
vulnerability. Foreign states have the greatest potential capability to 
attack our infrastructure because they possess the intelligence assets 
to assess and analyze infrastructure vulnerabilities, and the range of 
weapons--conventional munitions, WMD, and information operations 
tools--to take advantage of vulnerabilities.
    The most immediate and serious infrastructure threat, however, is 
from insiders, terrorists, criminals, and other small groups or 
individuals carrying out well-coordinated strikes against selected 
critical nodes. While conventional munition attacks are most likely 
now, over time our adversaries will develop an increased capacity, and 
perhaps intent, to employ WMD. They are also likely to increase their 
capabilities for computer intrusion. Commercial off-the-shelf products 
and services present new security challenges and concerns, providing 
opportunities to develop software functions allowing unauthorized 
access, theft and manipulation of data, and denial of service.
    Information Operations.--Information operations can involve many 
components including electronic warfare, psychological operations, 
physical attack, denial deception, computer network attack, and the use 
of more exotic technologies such as directed energy weapons or 
electromagnetic pulse weapons. Adversaries recognize our civilian and 
military reliance on advanced information technologies and systems, and 
understand that information superiority provides the US unique 
capability advantages. Many also assess that the real center of gravity 
for US military actions in US public opinion. Accordingly, numerous 
potential foes are pursuing information operations capabilities as 
relatively low cost means to undermine support of US actions, attack 
key US capabilities, and counter US military superiority.
    The information operations threat continues to spread worldwide, 
with more mature technologies and more sophisticated tools being 
developed continuously. However, the level of threat varies widely from 
adversary to adversary. Most opponents currently lack the foresight or 
the capability to fully integrate all information operations tools into 
a comprehensive attack. Many with limited resources will seek to 
develop only computer network attack options--relying on modest 
training, computer hardware and software purchases, and/or the use of 
``hired'' criminal hackers. At present, most nations probably have 
programs to protect their own information systems, and some--
particularly Russia and China--have offensive information operations 
capabilities. Today, we are more likely to face information operations 
carried out by terrorists, insurgents, cults, criminals, hackers, and 
insider individuals spurred by a range of motivations.
    Terrorism.--Terrorism remains a very significant asymmetric threat 
to our interests at home and abroad. The terrorist threat to the US 
will grow as disgruntled groups and individuals focus on America as the 
source of their trouble. Most anti-US terrorism will be regional and 
based on perceived racial, ethnic or religious grievances. Terrorism 
will tend to occur in urban centers, often capitals. The US military is 
vulnerable due to its overseas presence and status as a symbol of US 
power, interests, and influence. However, in many cases, increased 
security at US military and diplomatic facilities will drive terrorists 
to attack ``softer'' targets such as private citizens or commercial 
interests.
    Terrorism will be a serious threat to Americans especially in most 
Middle Eastern countries, North Africa, parts of Sub-Saharan Africa, 
Turkey, Greece, the Balkans, Peru, and Colombia. The characteristics of 
the most effective terrorist organizations--highly compartmented 
operations planning, good cover and security, extreme suspicion of 
outsiders, and ruthlessness--make them very hard intelligence targets. 
Middle East-based terrorist groups will remain the most important 
threat. State sponsors (primarily Iran) and individuals with the 
financial means (such as Usama bin Ladin) will continue to provide much 
of the economic and technological support needed by terrorists. The 
potential for terrorist WMD use will increase over time, with chemical, 
biological, and radiological agents the most likely choice.
    WMD and Missile Proliferation.--Many potential adversaries believe 
they can preclude US force options and offset US conventional military 
superiority by developing WMD and missiles. Others are motivated more 
by regional threat perceptions. In either case, the pressure to acquire 
WMD and missiles is high, and, unfortunately, the post Cold War 
environment is more amenable to proliferation activities. New alliances 
have formed, providing pooled resources for developing these 
capabilities, while technological advances and global economic 
conditions have made it easier to transfer materiel and expertise. The 
basic sciences necessary to produce these weapons are widely 
understood. Most of the technology is readily available, and the raw 
materials are common. All told, the prospects for limiting 
proliferation are slim, and the global WMD threat to US-allied 
territory, interests, forces, and facilities will increase 
significantly.
    Several rogue states will likely acquire nuclear weapons during the 
next decade or so, and some existing nuclear states will undoubtedly 
increase their inventories. As these trends unfold, the prospects for 
limited nuclear weapons use in a regional conflict will rise. So too 
will the potential for a terrorist or some other sub-national group to 
acquire and use a weapon.
    Chemical and biological weapons are generally easier to develop, 
hide, and deploy than nuclear weapons and will be readily available to 
those with the will and resources to attain them. I expect these 
weapons to be widely proliferated, and they could well be used in a 
regional conflict over the next 15 years. I am also concerned that sub-
national groups or individuals will use chemical or biological agents 
in a terrorist or insurgent operation. Such an event could occur in the 
United States or against US-allied forces and facilities overseas. The 
planning for such ``smaller-scale'' incidents would be extremely 
difficult to detect, and consequently, to deter or warn against.
    Theater-range ballistic and cruise missile proliferation is another 
growing challenge. I expect the numbers of ballistic missiles with 
ranges between 500 and 3,000 kilometers to increase significantly 
during the next 15 years and to become more accurate and destructive. 
Likewise, the potential for widespread proliferation of land attack 
cruise missiles is high. While the types of missiles most likely to be 
proliferated will be a generation or two behind the global state of the 
art, states that acquire them will have new or enhanced capabilities 
for delivering WMD or conventional payloads inter-regionally against 
fixed targets. Major air and sea ports, logistics bases and facilities, 
troop concentrations, and fixed communications nodes will be 
increasingly at risk.
    The Foreign Intelligence Threat.--Adversaries hoping to employ 
asymmetric approaches against the United States desire detailed 
intelligence on US decision-making, operational concepts, capabilities, 
shortcomings, and vulnerabilities. Consequently, we continue to face 
extensive intelligence threats from a large number of foreign nations 
and sub-national entities including terrorists, international criminal 
organizations, foreign commercial enterprises, and other disgruntled 
groups and individuals. These intelligence efforts are generally 
targeted against our national security policy-making apparatus, our 
national infrastructure, our military plans, personnel, and 
capabilities, and our critical technologies. While foreign states--
particularly Russia and China--present the biggest intelligence threat, 
all our adversaries are likely to exploit technological advances to 
expand their collection activities. Moreover, the open nature of our 
society, and increasing ease with which money, technology, information, 
and people move around the globe in the modern era, make effective 
counterintelligence and security that much more complex and difficult 
to achieve.
    Cover, Concealment, Camouflage, Denial and Deception (C3D2).--Many 
potential adversaries--nations, groups, and individuals--are 
undertaking more and increasingly sophisticated C3D2 activities against 
the United States. These operations are generally designed to hide key 
activities, facilities, and capabilities (e.g. mobilization or attack 
preparations, WMD programs, advanced weapons systems developments, 
treaty noncompliance, etc.) from US intelligence, to manipulate US 
perceptions and assessments of those programs, and to protect key 
capabilities from US precision strike platforms. Foreign knowledge of 
US intelligence and military operations capabilities is essential to 
effective C3D2. Advances in satellite warning capabilities, the growing 
availability of camouflage, concealment, deception, and obscurant 
materials, advanced technology for an experience with building 
undergound facilities, and the growing use of fiber optics and 
encryption, will increase the C3D2 challenge.
    Counter-Space Capabilities.--The US reliance on (and advantages in) 
the use of space platforms is well known by our potential adversaries. 
Many are attempting to reduce this advantage by developing capabilities 
to threaten US space assets, in particular through denial and 
deception, signal jamming, and ground segment attack. By 2015, future 
adversaries will be able to employ a wide variety of means to disrupt, 
degrade, or defeat portions of the US space support system. A number of 
countries are interested in or experimenting with a variety of 
technologies that could be used to develop counter-space capabilities. 
These efforts could result in improved systems for space object 
tracking, electronic warfare or jamming, and directed energy weapons.
                      the strategic nuclear threat
    Russia.--Russian strategic forces are in flux. During the 1990s, 
force levels were reduced significantly, and additional reductions are 
certain during the next 15 year. But the precise size and shape of 
Moscow's future strategic deterrent will depend on several ``unknown'' 
factors, including: future resource levels, arms control 
considerations, threat perceptions, Russia's ability to maintain aging 
force elements, and the success of strategic force modernization 
programs. Despite this general uncertainty, I can foresee virtually on 
circumstance, short of state failure, in which Russia will not maintain 
a strong strategic nuclear capability, with many hundreds of warheads 
and relatively modern delivery platforms capable of striking the United 
States. I say this because even during the past decade, with severe 
economic constraints and other pressing priorities, Moscow mustered the 
political will and resources to maintain key aspects of its strategic 
forces capability, fund several new strategic weapons programs, and 
upgrade portions of its strategic infrastructure. Moreover, strategic 
forces continue to receive priority today--in terms of manpower, 
training, and other resources.
    In addition to the changes in strategic force composition, Moscow's 
thinking about the role, utility, and employment of nuclear forces is 
in flux. The 1999 Draft Russian Military Doctrine provides some 
insights. In includes a nuclear weapons use formulation similar to that 
described in the 1993 doctrinal document, but widens the theoretical 
threshold for Russian employment of nuclear weapons during a 
conventional conflict if the situation becomes ``critical'' to national 
security. Russia's strategic force posture and strategy will continue 
to evolve, reflecting the uncertain political and economic situation, 
changing Russian perceptions of the international security environment 
and strategic threats, and the increased dependence on strategic forces 
as the ``backbone'' of Russian military power. This uncertainty in 
Russian strategic thinking is troubling.
    China.--China's strategic nuclear force is small and dated at 
present, but Bejing's top military priority is to strengthen and 
modernize its strategic nuclear deterrent. Several new strategic 
missile systems are under development, along with upgrade programs for 
existing missiles, and for associated command, control, communications 
and other related strategic force capabilities. In early August 1999, 
China conducted the first test flight of its DF-31 ICBM. It will be 
deployed on a road-mobile launcher and will have the range to target 
portions of North America. While the pace and extent of China's 
strategic modernization clearly indicates deterrent rather than ``first 
strike'' intentions, the number, reliability, survivability, and 
accuracy of Chinese strategic missiles capable of hitting the United 
States will increase significantly during the next two decades.
    Rogue Strategic Forces.--Russia and China are the only potential 
threat states capable today of targeting the United States with 
intercontinental ballistic missiles. However, I am increasingly 
concerned that more radical hostile nation--particularly North Korea 
and Iran--will develop that capability over the next several years. The 
growing availability of missile technology, components, and expertise, 
intense political pressure to acquire longer-range ballistic missiles, 
the willingness of some states to take shortcuts and accept more risk 
in their missile development programs, and our sometimes limited 
ability to reliably track these protected programs, are all cause for 
concern. Moreover, we must assume that any state capable of developing 
or acquiring missiles with intercontinental range will likely be able 
to arm those missiles with weapons of mass destruction.
    Whether this broader threat emerges sooner or later, during the 
next 15 years, the strategic nuclear environment will become more 
diverse and complex. This has significant implications for US strategic 
force planning, doctrine, deterrence, and testing.
                       large regional militaries
    Joint Vision 2010 is the conceptual template for US force 
development. It envisions a 21st Century ``information age'' US 
military that leverages high quality, highly-trained personnel, 
advanced technology, and the development of four key operational 
concepts--dominant maneuver, precision engagement, full dimensional 
protection, and focused logistics--to achieve dominance across the 
range of military operations. The United States, and to a lesser extent 
our closest allies, are moving steadily toward the capabilities 
embodied in this vision.
    In contrast, most other large militaries will continue to field 
primarily ``industrial age'' forces--generally mass and firepower 
oriented, employing large armored and infantry formations, late-
generation Cold War (vice 21st Century) technologies, and centralized, 
hierarchical command-and-control structures. Over the next 15 years, 
many regional states will seek to augment these forces with selected 
highend capabilities, including: WMD and missiles, advanced C4I 
systems, satellite reconnaissance, precision strike systems, global 
positioning, advanced air defense systems, and advanced anti-surface 
ship capabilities. It is likely that in any large regional conflict 
beyond 2010, US forces will face adversaries who combine the mass and 
firepower of a late-20th century force with some more-advanced systems 
and concepts.
    On paper, such forces would be hard pressed to match our dominant 
maneuver, power projection, and precision engagement capabilities. Most 
would prefer not to engage in traditional conventional warfare with the 
US. But in an actual combat situation, the precise threat these forces 
pose will depend on the degree to which they have absorbed and can 
apply key technologies, have overcome deficiencies in training, 
leadership, doctrine, and logistics, and on the specific operational-
tactical environment. Under the right conditions, their quantitative 
capability, combined with situational advantages--e.g. initiative, 
limited objective, short lines of communication, familiar terrain, time 
to deploy and prepare combat positions, and the skillful use of 
asymmetric approaches--will present significant challenges to US 
mission success. China and Russia at the high end, followed by North 
Korea, Iran, and Iraq, are all examples of militaries that could field 
large forces with a mix of current and advanced capabilities.
    China.--Bejing is modernizing and improving the People's Liberation 
Army (PLA) at a steady pace, consistent with the country's overall 
emphasis on general economic and infrastructure development. During the 
past year, the PLA has fielded several new ballistic missiles, agreed 
to purchase Su-30 FLANKER aircraft from Russia (delivery within 2 
years), and taken delivery of the fourth Russian KILO submarine and 
additional indigenous submarines. Just this month, the PLA received the 
first two SOVREMENNYY destroyers from Russia, and could field its first 
airborne early warning aircraft within the next year or so.
    Beyond modernization, the PLA has revised its training program to 
improve pilot proficiency, improve its capabilities for engaging 
stealth aircraft, cruise missiles, and helicopter gunships, and improve 
its ability to defend against precision strikes, electronic jamming, 
and all forms of reconnaissance. In addition, logistics are being 
centralized and modernized across the force. The PLA is also upgrading 
C4I links to its forces with satellite dishes, fiber optic, and video 
links
    As a result of these and other developments, China's capability for 
regional military operations will improve significantly. By 2010 or so, 
some of China's best units will have achieved a reasonably high level 
of proficiency at maneuver warfare (though they will probably not fully 
master large, complex joint service operations until closer to 2020). 
Moreover, by 2015 Chinese forces will be much better equipped, 
possessing more than a thousand theater-range missiles, hundreds of 
fourth-generation aircraft, thousands of ``late Cold War equivalent'' 
tanks and artillery, a handful of advanced diesel and third generation 
nuclear submarines, and some 20 or so new surface combatants. China is 
also likely to field an integrated air defense system and modern 
command-and-control systems at the strategic and operational levels.
    The Taiwan issue will remain a major potential flashpoint, 
particularly over the near term. As tensions between China and Taiwan 
remain high, there is an increased risk of small scale military 
``incidents''--intimidating exercises, heightened force readiness in 
border regions, accidents involving opposition air or naval forces in 
close proximity, etc. It is doubtful, however, unless Taipei moved more 
directly toward independence, that China would attempt a larger scale 
military operation to attack Taiwan outright. Beijing recognizes the 
risk inherent in such a move and, at least for the near term, probably 
has questions about is military ability to succeed. Nevertheless, by 
2015, China's conventional force modernization will provide an 
increasingly credible military threat against Taiwan (though probably 
not the large amphibious capability necessary for invasion).
    Russia.--Moscow will remain focused on internal political, 
economic, and social imperatives for at least the next decade. 
Meanwhile, Russia's Armed Forces continue in crisis. The military 
leadership remains capable of exercising effective control, but there 
is increased potential for collapse in military discipline, 
particularly in the event of a large-scale internal crisis. The Defense 
Ministry and General Staff are attempting to cope with broad-based 
discontent while struggling to implement much-needed reforms. 
Compensation, housing, and other shortfalls continue to undermine 
morale. Under these conditions--chronic underfunding and neglect--there 
is little chance that Moscow's conventional forces will improve 
significantly during the next decade.
    Beyond that timeframe, the size, characteristics, and capabilities 
of Russia's conventional forces could vary widely, depending on the 
outcome of numerous unsettled issues. Among the most important of these 
are the size of Russia's defense budget, Russian threat perceptions, 
the achievement of national consensus on a blueprint for military 
reform, and Moscow's success at restoring the ``intangible'' components 
of military effectiveness (leadership, readiness, morale, sustainment, 
etc.). Two alternatives seem most likely:
    If the Russian military experiences continued underfunding, 
indecision, and leadership indifference, it will remain chronically 
weak, and present about the same (or even a reduced) level of threat to 
US interests in 2015 as it does today. This alternative becomes more 
likely the longer Russia's economic problems persist, defense budgets 
decline or remain relatively stagnant, there is no consensus on the 
direction for defense reform, and the national leadership continues to 
neglect the needs of the military.
    If economic recovery and political stability come sooner rather 
than later, and the military receives stable, consistent leadership and 
resources, Russia could begin rebuilding an effective military toward 
the end of this decade, and field a smaller, but more modern and 
capable force in the 2015 timeframe. This improved force would be large 
and potent by regional standards, equipped with thousands of later-
generation Cold War systems, and hundreds of more advanced systems 
built after 2005.
    North Korea.--North Korea will remain a challenging dilemma: a 
``failing'' state with rising internal pressures and limited 
conventional military capability, but posing an increasing regional and 
global threat by virtue of its expanding WMD and long-range missiles. 
As the pressure builds on the economy, society, and military, there is 
increased potential for internal collapse, instability, and leadership 
change.
    North Korea's capability to successfully conduct complex, multi-
echelon, large-scale operations to reunify the Korean peninsula 
declined in the 1990s. This was, in large measure, the result of severe 
resource constraints, including widespread food and energy shortages. 
Still, Pyongyang has managed to maintain a huge military force 
numbering over one million personnel. I am most concerned about 
Pyongyang's very large, forward-deployed forces, and its extensive 
``asymmetric'' capabilities--WMD and missiles, underground facilities, 
and special operations forces. These capabilities, combined with the 
time, distance, terrain, and other theater characteristics, make a 
Korean war scenario very challenging. War on the peninsula would be 
very violent and destructive, and could occur with little warning.
    North Korea's resource difficulties will continue with limited 
policy changes insufficient to allow a major economic recovery. 
Nevertheless, Pyongyang will continue to place a high premium on 
military power (as a source of leverage in international and bilateral 
fora), and will strive, with some limited success, to slow the erosion 
of its conventional military forces and to continue to expand its 
asymmetric capabilities.
    Iran.--Iran's armed forces are embarked on an uneven, yet 
deliberate, military buildup designed to ensure the security of the 
cleric-led regime, increase its influence in the Middle East and 
Central Asia, deter Iraq or any other regional aggressor, and limit US 
regional influence. Iran's leaders seek to dominate the Gulf area, and, 
at present, we have major concerns over how Teheran may act to 
undermine agreements between Israel and Syria, Lebanon, and the 
Palestinians. Iran's conventional land and air forces have significant 
limitations with regard to mobility, logistics infrastructure, and 
modern weapons systems. Rivalry and mistrust between Revolutionary 
Guards, the regime's main internal security arm, and the regular armed 
forces is serious and hampers effective operations among the nearly 
half million in the uniformed services. Iran has compensated for these 
weaknesses by developing (or pursuing) numerous asymmetric 
capabilities, to include subversion and terrorism, the deployment of 
air, air defense, missile, mine warfare, and naval capabilities to 
interdict maritime access in and around the Strait of Hormuz, and the 
acquisition of WMD and longer range missiles to deter the US and to 
intimidate Iran's neighbors.
    Iran has a relatively large ballistic missile force, and is likely 
assembling SCUD SSMs in the country. Last June, in response to the 
assassination of a high-ranking Iranian army general, Iran used SSMs to 
attack anti-regime Iranians encamped about 100 kilometers inside Iraq. 
Teheran intends to develop longer range SSMs capable of striking the 
entire Arabian Peninsula and Israel.
    Iran's navy is the most capable in the region and, even with the 
presence of Western forces, can probably stem the flow of oil from the 
Gulf for brief periods employing KILO submarines, missile patrol boats, 
and numerous naval mines, some of which may be modern and 
sophisticated. Aided by China, Iran has developed a potent anti-ship 
cruise missile capability to threaten sea traffic from shore, ship, and 
aircraft platforms.
    Although Iran's force modernization efforts will proceed gradually, 
during the next 15 years it will likely acquire a full range of WMD 
capabilities, field substantial numbers of ballistic and cruise 
missiles--including some with intercontinental range--increase its 
inventory of modern aircraft, expand its armored forces, and continue 
to improve its anti-surface ship capability. Iran's effectiveness in 
generating and employing this increased military potential against an 
advanced adversary will depend in large part on ``intangibles''--
command and control, training, maintenance, reconnaissance and 
intelligence, leadership, and situational conditions and circumstances.
    Iraq.--Years of UN sanctions and embargoes as well as US and 
Coalition military actions have significantly degraded Iraq's military 
capabilities. Overall manpower and material resource shortages, a 
problematic logistics system, and a relative inability to execute 
combined arms doctrine have adversely affected Iraqi military 
capabilities. These shortcomings are aggravated by intensive regime 
security requirements.
    Nevertheless, Iraq's ground forces continue to be one of the most 
formidable within the region. They are able to protect the regime 
effectively, deploy rapidly, and threaten Iraq's neighbors absent any 
external constraints. Iraq's air and air defense forces retain only a 
marginal capability to protect Iraqi air space and project air power 
outside Iraq's borders. Although the threat to Coalition Forces is 
minimal, continued Iraqi confrontational actions underscore the 
regime's determination to stay the course. Iraq has probably been able 
to retain a residual level of WMD and missile capabilities. The lack of 
intrusive inspection and disarmament mechanisms permits Baghdad to 
enhance these capabilities. Lessons learned from survivability remain 
the regime's watchwords.
    Absent decisive regime change, Iraq will continue to pose complex 
political and military challenges to Coalition interests well into the 
future. Baghdad's attempts to upgrade its military capabilities will be 
hampered as long as effective UN sanctions remain in place. 
Reconstitution of strategic air defense assets, WMD, and ballistic 
missile capabilities remain Baghdad's highest priorities. Expansionand 
modernization of ground and air forces are secondary objectives. Over 
the longer term, assuming Iraq's leadership continues to place a high 
premium on military power, is able to ``get around the sanctions 
regime'' sooner rather than later, and the price of oil is stable, 
Baghdad could, by 2015, acquire a large inventory of WMD, obtain 
hundreds of theater ballistic and cruise missiles, expand its inventory 
of modern aircraft, and double its fleet of armored vehicles. While 
this force would be large and potent by regional standards, its 
prospects for success against a western opponent would depend 
ultimately on how successful Baghdad was in overcoming chronic 
weaknesses in military leadership, reconnaissance and intelligence, 
morale, readiness, logistics, and training.
                        other issues of concern
    There are two other nearer term issues--the situation in the 
Balkans and the continuing rivalry between India and Pakistan--that 
deserve comment based on their potential impact on US security 
interests.
    Federal Republic of Yugoslavia.--During 1999, there was great 
upheaval within the Federal Republic of Yugoslavia (FRY). Despite 
remaining nominally part of the FRY, Kosovo was lost to Serb control 
during the summer. The year ended with increased tensions between the 
last two constituent republics of the FRY, Serbia and Montenegro. 
President Djukanovic of Montenegro, a long-time political rival of 
Milosevic, has moved to redefine relations between the two republics. 
His program calls for virtual political, economic, and foreign and 
defense policy independence of Montenegro. Predictably, Serbian 
President Milosevic resists these efforts. Though the Yugoslav Army 
maintains a garrison in Montenegro that could easily defeat the small 
Montenegrin paramilitary forces, neither side appears ready to force 
the issue at this time.
    Despite defeat by NATO and the loss of Kosovo, FRY President 
Milosevic does not appear in imminent danger of losing his political 
control. This is probably attributable to the near total lack of unity 
among the various political opposition parties within Serbia. There is 
currently no reason to believe that Milosevic will not serve his entire 
term of office, which expires in the summer of 2001.
    Kosovo.--Since entering Kosovo, NATO forces have overseen the 
withdrawal of Serb forces and the demobilization and disarmament of the 
UCK. KFOR is in control of the province, but ethnic violence continues, 
most directed at remaining Serbs by vengeful Kosovar Albanians. There 
is no direct military threat to KFOR, but there is always the 
possibility that KFOR troops could be caught in ethnic fighting. The 
FRY military has reorganized following the loss of Kosovo, but is 
concentrating on force and facility reconstitution and does not appear 
able or willing to attempt a re-entry into Kosovo.
    Bosnia.--International peacekeeping forces in Bosnia continue to 
operate in a complex inter-ethnic environment that poses significant 
challenges to the establishment of a stable and enduring peace. Deep 
mutual distrust among Bosnia's ethnic factions and the legacy of war 
has created an impetus toward de facto partition of Bosnia. All three 
of the Bosnian factions have resisted full implementation of the Dayton 
Accords at one time or another. Each ethnic group will only cooperate 
as long as its perceived, long-term interests are not forfeited or 
marginalized. Although the civilian aspects of Dayton are lagging in 
their implementation, progress has been made. We believe the Bosnian 
factions will continue to generally comply with the military aspects of 
the Dayton Accords and SFOR directives, and will not engage in 
widespread violence, so long as peacekeeping forces remain credible. 
Pervasive international engagement--both political and economic--will 
be necessary to prevent a permanent division of Bosnia along ethnic 
lines.
    SFOR is the dominant military force in Bosnia, and the direct 
military threat facing it remains low. SFOR monitors all factional 
armies, permitting the entities to train only with SFOR approval, and 
keeping all equipment in cantonment sites. None of the factions will 
risk taking any kind of overt military action against SFOR. The 
Federation Army is receiving assistance from the Train and Equip 
Program, which is moving the military balance in its favor. However, 
the Federation Army continues to be hampered by the unwillingness of 
the Muslims and Croats to effectively integrate. The Bosnian Serb Army, 
which no longer enjoys an overwhelming superiority in heavy weapons, 
poses very little threat to SFOR as it is hampered by its own internal 
problems such as insufficient funds for training, equipment 
modernization, maintenance, and personnel.
    Participating in refugee resettlement, freedom of movement, and 
other civil implementation issues may expose SFOR personnel to 
increased risk. The international community proclaimed 1999 as a year 
of refugee returns, and it began to focus on moving people back to 
areas where they are ethnically in the minority. An increase of 40% was 
realized in minority returns in 1999, but this is a slow and uncertain 
process that is marked by occasional incidents of local violence.
    India and Pakistan.--The tense rivalry between India and Pakistan 
remains an important security concern. Both nations continue to invest 
heavily in defense and the procurement of military equipment. At 
present, each side possesses sufficient material to assemble a limited 
number of nuclear weapons, has short-range ballistic missiles, and 
maintains large standing forces in close proximity across a tense line 
of control. With each viewing their security relationship in zero-sum 
terms, we remain concerned about the potential, particularly over the 
near term, for one of their military clashes to escalate into a wider 
conflict.
    The dispute between India and Pakistan concerning the status of the 
state of Jammu and Kashmir is the most likely trigger for war between 
the two countries. The state was the site of major fighting in 1947, 
1965 and 1971; and again witnessed heavy military action in 1999. With 
Islamabad and Delhi's respective positions on Kashmir firmly 
entrenched, meaningful progress on the issue is unlikely in the near 
term.
                               conclusion
    The dynamic change and uncertainty that characterized the 1990s 
will likely continue through 2015 because the basic engines of turmoil 
remain largely in place. The volatile mix of global political, 
economic, social, technological, and military conditions will continue 
to bring great stress to the international order. While no Soviet-like 
military competitor will emerge during this timeframe, the combined 
impact of numerous local, regional, and transnational challenges 
presents a formidable obstacle to our strategic vision.
    Most adversaries will attempt to avoid directly confronting the 
United States military on our terms, choosing instead to pursue a 
variety of asymmetric means that undermine our power, leadership, and 
influence. Strategic nuclear threats will endure through this 
timeframe, but the mix of adversary strategic doctrines and 
capabilities will complicate deterrence planning. China, Russia, North 
Korea, Iran, and Iraq will maintain relatively large and well-equipped 
militaries, which could pose a significant challenge under the right 
operational conditions.

      TESTIMONY OF HON. GEORGE TENET, DIRECTOR OF CENTRAL 
    INTELLIGENCE ACCOMPANIED BY VICE ADMIRAL THOMAS WILSON, 
DIRECTOR, DEFENSE INTELLIGENCE AGENCY; AND AMBASSADOR STAPLETON 
ROY, ASSISTANT SECRETARY OF STATE FOR INTELLIGENCE AND RESEARCH

    Director Tenet. Thank you, Mr. Chairman.
    I appreciate the opportunity to discuss with the Committee 
our assessment of the threats facing the United States. But 
before so doing, I want to make some brief comments about 
recent news articles concerning a highly sensitive classified 
report by the CIA's Inspector General.
    The report, which was provided to the Committee in August 
of 1999, was critical of an internal investigation of former 
Director John Deutch's mishandling of classified information.
    You and Senator Kerrey have communicated directly with me 
about your insistence that classified material be properly 
handled and that you will defend any employee of the 
Intelligence Community who brings instances of mishandling to 
your attention. You've also asked me to provide you with the 
results of the accountability determination when it is 
completed, and I will certainly do so.
    The Inspector General's report was thorough and its 
conclusions and recommendations were sound. The IG report did 
not conclude that anyone intentionally impeded the security 
investigation relating to DCI Deutch. Had the Inspector General 
any evidence to that effect, he would have been obliged to 
refer the matter to the Department of Justice. He did not do 
so.
    At the conclusion of the Inspector General's investigation 
last August, when all of the relevant facts were available to 
me, I made the decision to suspend the security clearances of 
my predecessor, John Deutch. My action and his response were 
made public at that time.
    As the IG report documents, the internal investigation took 
too long to complete. The process certainly was not perfect, 
Mr. Chairman, and I fully accept that finding. Yet, once the 
facts were put forward by the Inspector General, I did take 
decisive action.
    That said, let me discuss the matters which continue to 
concern me and you--threats to our national security. Mr. 
Chairman, as we face a new century, we face a new world--a 
world where technology, especially information technology, 
develops and spreads at lightning speed and becomes obsolete 
just as fast; a world of increasing economic integration, where 
a U.S. company designs a product in Des Moines, makes it in 
Bombay and sells it in Sydney; a world where nation-states 
remain the most important and powerful players, but where 
multinational corporations, nongovernment organizations, and 
even individuals can have a dramatic impact.
    This new world harbors the residual effects of the Cold 
War, which had frozen many traditional ethnic hatreds and 
conflicts within the global competition between the two 
superpowers. Over the past ten years, they began to thaw in 
Africa, the Caucasus and the Balkans, and we continue to see 
the results today. It is against this backdrop that I want to 
describe the realities of our national security environment in 
the first year of the 21st century, where technology has 
enabled, driven, or magnified the threat to us; where age-old 
resentments threaten to spill over into open violence, and 
where growing perception of our so-called hegemony has become a 
lightening rod for the disaffected. Moreover, this environment 
of rapid change makes us even more vulnerable to sudden 
surprise.
    Mr. Chairman, let me first talk to you about the 
proliferation of the weapons of mass destruction. The picture 
that I drew last year has become even more stark and worrisome. 
Transfers of enabling technologies to countries of 
proliferation concern have not abated. Many states in the next 
ten years will find it easier to obtain weapons of mass 
destruction and the means to deliver them.
    Let me underline three aspects of this important problem. 
First, the missile threat to the United States from states 
other than Russia or China, is steadily emerging. The threat to 
U.S. interests and forces overseas is here and now.
    Second, the development of missiles and weapons of mass 
destruction in South Asia has led to more advanced systems, and 
both sides have begun to establish the doctrine and tactics to 
use these weapons.
    Third, some countries we have earlier considered 
exclusively as weapons technology importers may step up their 
roles as secondary suppliers, compounding the proliferation 
problem even further. We are all familiar with Russian and 
Chinese capabilities to strike at military and civilian targets 
throughout the United States. To a large degree, we expect our 
mutual deterrent and diplomacy to help protect us from this as, 
they have for much of the last century.
    Over the next 15 years, however, our cities will face 
ballistic missile threats from a wider variety of actors--North 
Korea, probably Iran, and possibly Iraq. In some cases, this is 
because of indigenous technological development, and in other 
cases because of direct foreign assistance. And while the 
missile arsenals of these countries will be fewer in number, 
constrained to smaller payloads and less reliable than those of 
the Russians and Chinese, they will still pose a lethal and 
less predictable threat.
    North Korea already has tested a space launch vehicle, the 
Taepo Dong I, which it could theoretically convert into an ICBM 
capable of delivering a small biological or chemical weapon to 
the United States, although with significant inaccuracies. 
Moreover, North Korea has the ability to test its Taepo Dong II 
this year. This missile may be capable of delivering a nuclear 
payload to the United States.
    Most analysts believe that Iran, following the North Korean 
pattern, could test an ICBM capable of delivering a light 
payload to the United States in the next few years. Given that 
Iraq missile developments are continuing, we think that it, 
too, could develop an ICBM, especially with foreign assistance, 
sometime in the next decade. These countries calculate that the 
possession of ICBMs would enable them to complicate and 
increase the cost of U.S. planning and intervention, enhance 
deterrence, build prestige and improve their abilities to 
engage in coercive diplomacy.
    As alarming as the long-range missile threat is, it should 
not overshadow the immediacy and seriousness of the threats 
that U.S. forces, interests and allies already face overseas 
from short and medium-range missiles. The proliferation of 
medium-range ballistic missiles, driven primarily by the North 
Korean No Dong sales, is significantly altering strategic 
balances in the Middle East and Asia. Nowhere has the regional 
threat been more dramatically played out than in South Asia. 
Both Pakistan and India have intensified their missile and 
nuclear rivalry. Further nuclear testing is possible, and both 
states have begun to develop nuclear-use doctrines and 
contingency planning. This is a clear sign of maturing WMD 
programs.
    Another sign that WMD programs are maturing is the 
emergence of secondary suppliers of weapons technology. While 
Russia, China and North Korea continue to be the main suppliers 
of ballistic missiles and related technology, longstanding 
recipients, such as Iran, might become suppliers in their own 
right as they develop domestic production capabilities. Other 
countries that today import missile-related technology, such as 
Syria and Iraq, also may emerge in the next few years as 
suppliers.
    Over the near term, we expect that most of their exports 
will be of shorter-range ballistic missiles-related equipment, 
components and technologies. But as their domestic 
infrastructures and expertise develop, they will be able to 
offer a broader range of technologies thatcould include longer-
range missiles and related technology. Iran, in the next few years, may 
be able to supply not only complete SCUDs, but also Shahab-3s and 
related technology, and perhaps even more advanced technologies, if 
Tehran continues to achieve assistance from Russia, China and North 
Korea.
    Mr. Chairman, the problem may not be limited to missile 
sales. We also remain very concerned that new or non-
traditional nuclear suppliers could emerge from this same pool. 
This brings me to a new area of discussion that more than ever 
we risk substantial surprise. This is not for a lack of effort 
on the part of the Intelligence Community; it results from 
significant effort on the part of proliferators.
    There are four main reasons: denial and deception; the 
growing availability of dual-use technology; the potential for 
surprise is exacerbated, thirdly, by growing capacity of these 
countries seeking WMD to import talent that can help them make 
dramatic leaps on things like new chemical and biological 
agents; finally, the accelerating pace of technological 
progress makes information and technology easier to obtain in 
more advanced forms than when the weapons were initially 
developed.
    We are making progress on these problems, Mr. Chairman, but 
I must tell you the hill is getting steeper every year.
    With regard to terrorism, since July of 1998, working with 
foreign governments worldwide, we have helped to render more 
than two dozen terrorists to justice. More than half were 
associates of Usama Bin Ladin's organization. These renditions 
have shattered terrorist cells and networks, thwarted terrorist 
plans, and in some cases even prevented attacks from occurring. 
Although 1999 did not witness the dramatic terrorist attacks 
that punctuated 1998, our profile in the world--thus our 
attraction as a terrorist target--will not diminish any time 
soon.
    We are learning more about our perpetrators every day. Bin 
Ladin is still foremost among these terrorists because of the 
immediacy and seriousness of the threat he poses. Everything 
that we have learned recently confirms our conviction that he 
wants to strike further blows against the United States. 
Despite some well-publicized disruptions, we still believe he 
could strike without additional warning. Indeed, Bin Ladin's 
organization and other terrorist groups are placing increased 
emphasis on developing surrogates to carry out attacks, in an 
effort to avoid detection.
    For example, the Egyptian Islamic Jihad is linked closely 
to Bin Ladin's organization and his operatives located around 
the world, including in Europe, Yemen, Pakistan, Lebanon, and 
Afghanistan. And now, Mr. Chairman, there is an intricate web 
of alliances among Sunni extremists worldwide, including North 
Africans, radical Palestinians, Pakistanis, and Central Asians. 
Some of these terrorists are actively sponsored by national 
governments that harbor great antipathy for the United States.
    Iran, for one, remains the most active state sponsor. 
Although we have seen some moderating trends in Iranian 
domestic policy and even some public criticism of the security 
apparatus, the fact remains that the use of terrorism as a 
political tool by official Iranian organs has not changed since 
President Khatami took office in August of 1997.
    Mr. Chairman, let me move on to narcotics. The problem we 
face has become considerably more global in scope and can be 
summed up like this: Narcotics production is likely to rise 
dramatically in the next few years, and worldwide trafficking 
involves more diverse and sophisticated groups. On the first 
point, coca cultivation in Peru and Bolivia has continued to 
decline, due largely to successful eradication efforts. But 
that will probably be offset to some extent by increases in 
Colombian cultivation. More productive coca varieties and more 
efficient processing results in production of cocaine more than 
two and a half times that previously estimated.
    There is some good news in Colombia. Under President 
Pastrana's leadership, Bogota is beginning to improve on its 
1999 efforts. In November, Pastrana approved the first 
extradition of a Colombian drug trafficker to the United States 
since the passage of legislation in 1997.
    On the other side of the world, a dramatic increase in 
opium and heroin production in Afghanistan is again a cause for 
concern. This year Afghanistan's farmers harvested a crop with 
the potential to produce 167 tons of heroin, making Afghanistan 
the world's largest producer of opium. Burma, which has had a 
serious drought, dropped to second place but will likely 
rebound quickly when the weather improves.
    Explosive growth in Afghan opium production is being driven 
by the shared interests of traditional traffickers and the 
Taliban. And, as with so many of these cross-national issues, 
Mr. Chairman, what concerns me most is the way the threats 
become intertwined. In this case, there is ample evidence that 
Islamic extremists, such as Usama Bin Ladin, uses profits from 
the drug trade to support their campaign of terrorism.
    Mr. Chairman, my statement goes on to talk about 
information operations and organized crime, but let me move to 
regional issues in the interest of time. First, let me start 
with Russia. As you know, we are now in the post-Yeltsin era, 
and difficult choices loom for the new president Russians will 
choose in exactly two months. He will face three fundamental 
questions: First, will he keep Russia moving toward the 
consolidation of its new democracy, or will growing public 
sentiment in favor of a strong hand and a yearning for order 
tempt to slow him down or even reverse course?
    Second, will he try to build a consensus on quickening the 
pace of economic reform and expanding efforts to integrate into 
global markets--some Russian officials favor this--or will he 
rely on heavy state intervention to advance economic goals? 
Finally, will Moscow give priority to a cooperative 
relationship with the West, or will anti-U.S. sentiments 
continue to grow, leading to a Russia that is isolated, 
frustrated or hostile? This would increase the risk of 
unintended confrontation, which would be particularly dangerous 
as Russia increasingly relies on nuclear weapons for its 
defense, an emphasis reflected most recently in its new 
National Security Concept.
    As these questions indicate, the new Russian president will 
inherit a country in which much has been accomplished but in 
which much still needs to be done to transform its economy, 
ensure that its democracy is deeply rooted, and establish a 
clear future direction for it in the world outside of Russia. 
Russian polls indicate that Acting President Putin is the odds-
on favorite to win the election, though I must tell you, Mr. 
Chairman, that two months can be an eternity in Russia's 
turbulent political scene. Putin appears tough and pragmatic, 
but it is far from clear what he would do as president. If he 
can continue to consolidate a lead in popular support, as 
president he may be able to gain political capital that he 
could choose to spend on moving Russia further along the path 
of economic recovery and democratic stability.
    Former Premier Primakov is in the best position to 
challenge Putin, though he faces an uphill battle. He would 
need the backing of other groups, most importantly the 
communists. The communists, however, have shown their 
willingness to deal with Putin's party in a recent agreement 
that divided the Duma leadership positions between them. Such 
tactical alliances are likely to become more prevalent as 
parties seek to work out new power relationships in the post-
Yeltsin era.
    At least two factors will be pivotal in determining 
Russia's near-term trajectory. First, the conflict in Chechnya. 
Setbacks in the war could hurt Putin's presidential prospects 
unless he can deftly shift blame, while perceived successes 
there will help him remain the front runner. The economy. The 
devalued ruble, increased world oil prices and favorable trade 
balance, fueled by steeply reduced import levels, have allowed 
Russia to actually show some economic growth in the wake ofthe 
August '98 financial crash. Nonetheless, Russia faces an $8 billion in 
foreign debt coming due this year. Absent a new IMF deal to reschedule, 
Moscow would have to redirect recent gains for economic growth to pay 
it down or run the risk of default.
    Over the longer term, the new Russian president must be 
able to stabilize the political situation sufficiently to 
address structural problems in the Russian economy. He must 
also be willing to take on the crime and corruption problem, 
both of which impede foreign investment.
    In the foreign policy arena, U.S.-Russian relations will be 
tested on a number of fronts. Most immediately, Western 
criticism of the Chechen war has heightened Russian suspicions 
about U.S. and Western activity in neighboring areas, be it 
energy supply decisions involving the Caucasus in Central Asia, 
NATO's continuing role in the Balkans, or NATO's relations with 
Baltic states. Moscow's ties to Iran will also continue to 
complicate U.S.-Russian relations, as will Russian objections 
to U.S. plans for national missile defense.
    There are, nonetheless, some issues that could improve 
things and move them in a more positive direction. Putin and 
others have voiced support for finalizing the START II 
agreement and moving toward further arms cuts on START III. 
Similarly, many other Russian officials express a desire to 
more deeply integrate Russia into the world economy, be it 
through continued cooperation with the G-8, or prospective 
membership in the WTO.
    One of my biggest concerns, regardless of the path that 
Russia chooses, remains the security of its nuclear weapons and 
materials. Russia's economic difficulties continue to weaken 
the reliability of nuclear personnel and Russia's system for 
security fissile material. We have no evidence that weapons are 
missing in Russia, but we remain concerned about reports of lax 
discipline, labor strikes, poor morale and criminal activities 
at nuclear storage facilities.
    Mr. Chairman, let me move on to Iran. Change in Iran is 
inevitable. The election of President Khatami reflected the 
Iranian popular desire for change. He has used this mandate to 
put Iran on a path towards a more open society. This path will 
be volatile at times, as the factions struggle to control the 
pace and direction of political change. The key indicator that 
the battle over change is heating up came last July, when 
student protests erupted in 18 Iranian cities for several days. 
The coming year promises to be just as contentious, as Iran 
elects a new parliament in February.
    Many Iranians, particularly the large cohort of restive 
youth and students, will judge the elections as a test of the 
regime's willingness to accommodate the popular demand for 
reform. If they witness a rigged election, it could begin to 
radicalize what has so far been a peaceful demand for change. 
Fair elections would probably yield a pro-reform majority, but 
opponents of change still exert heavy control over the 
candidate selection process.
    Former President Rafsanjani's decision to run for the 
Majlis, apparently at the urging of conservatives, highlights 
the leadership's desire to bring the two factions back to the 
center. The conservatives are supportive of his candidacy 
because they believe a centrist Rafsanjani is a more 
trustworthy alternative to the reformers. Even if elections 
produce a Majlis dominated by Khatami supporters, further 
progress on reform will remain erratic. Supreme Leader Khamenei 
and key institutions such as the Revolutionary Guard Corps and 
the large parastatal foundations will remain outside the 
authority of the Majlis and in a position to fight a stubborn, 
rear-guard action against political change.
    Moreover, even as the Iranians digest the results of the 
Majlis elections, the factions will begin preliminary 
maneuvering for the presidential election scheduled for mid-
2001, which is almost certain to keep the domestic political 
scene unsettled. The factional maneuvering probably means that 
foreign policy options will still be calculated first to 
prevent damage to the various leaders' domestic positions. This 
will inhibit politically risky departures from established 
policy. This means that Iran's foreign policy next year will 
still exhibit considerable hostility to U.S. interests. This is 
most clearly demonstrated by Tehran's continued rejection of 
the Middle East peace process and its efforts to energize 
rejectionist Palestinian and Hizbollah operations aimed at 
thwarting a negotiated Arab-Israeli peace.
    Iranian perceptions of increasing U.S. influence in the 
Caucasus, demonstrated most recently by the signing of the 
Baku-Ceyhan pipeline agreement, could similarly motivate Iran 
to more aggressively seek to thwart what it regards as a U.S. 
effort to encircle it from the north.
    Mr. Chairman, let me move to the Balkans, an important 
area. Signs of positive long-term change are beginning to 
emerge there as the influence of the Milosevic regime in the 
region wanes in the wake of the Kosovo conflict, and a new, 
more liberal government takes the reins of power in Croatia. 
Political alternatives to the dominate ethnic parties in Bosnia 
are also beginning to develop, capitalizing on the 
vulnerability of old-line leaders to charges of corruption and 
economic mismanagement.
    Despite this progress, there is still a long way to go 
before the Balkans move beyond the ethnic hatreds and depressed 
economies that have produced so much turmoil and tragedy. Of 
the many threats to peace and stability in the year ahead, the 
greatest remains Slobodan Milosevic, the world's only sitting 
president indicted for crimes against humanity. Milosevic's 
hold on power has not been seriously shaken in the past few 
months. He retains control of the security forces, military 
commands, and an effective media machine. His inner circle 
remains loyal or at least cowed. The political opposition has 
not yet developed a strategy to capitalize on public anger with 
Milosevic.
    Milosevic has two problems that could still force him from 
power--the economy and the Montenegrin challenge. The Serbian 
economy is in a virtual state of collapse, and Serbia is now 
the poorest country in Europe. Inflation and unemployment are 
rising, and the country is struggling to repair the damage to 
its infrastructure from NATO airstrikes. The average wage is 
only $48 a month, and even these salaries typically are several 
months in arrears. Basic subsistence is guaranteed only by 
unofficial economic activity and the traditional lifeline 
between urban dwellers and their relatives on the farms. 
Milosevic's captive media are trying, with some success, to 
blame these troubles on the air strikes and on international 
sanctions.
    Nonetheless, as time passes, our analysts believe that the 
people will increasingly hold Milosevic responsible. Moreover, 
a sudden unforeseen economic catastrophe, such as 
hyperinflation or a breakdown this winter of the patched-up 
electric grid, could lead to mass demonstrations that would 
pose a real threat.
    For its part, Montenegro may be heading toward 
independence, and tensions are certainly escalating as 
Montenegrin President Djukanovic continues to take steps to 
break ties with the federal government. Milosevic wants to 
crush Djukanovic because he serves as an important symbol to 
the democratic opposition in Serbia and to the Serbian people 
that the regime can be successfully challenged. Djukanovic 
controls the largest independent media operation in Yugoslavia, 
which has strongly criticized the Milosevic regime over the 
past several years for the Kosovo conflict, political 
repression, and official corruption. Both Milosevic and 
Djukanovic will try to avoid serious confrontation for now, but 
a final showdown will be difficult to avoid.
    Regarding Kosovo, the international presence has managed to 
restore a semblance of peace, but it is brittle. Large-scale 
inter-ethnic violence has vanished, but the U.N. Mission in 
Kosovo and KFOR have been unable to stop daily small-scale 
attacks, mostly by Kosovar Albanians against ethnic Serbs. This 
chronic violence has caused most of the remaining 80,000 to 
100,000 Serbs to congregate in enclaves innorthern and eastern 
Kosovo, and they are organizing self-defense forces.
    The campaign to disarm the former Kosovo Liberation Army 
has had success, but both sides continue to cache small arms 
and other ordnance. There's even a chance that fighting between 
Belgrade security forces and ethnic Albanians will reignite, 
should Belgrade continue to harass and intimidate the Albanian 
minority in southern Serbia, and should Kosovo Albanian 
extremists attempt to launch an insurgency aimed at annexing 
southern Serbia into a greater Kosovo.
    Let me now turn to China, Mr. Chairman. The leadership 
there is continuing its bold 20-year-old effort to propel the 
nation's economy into the modern world, shedding the 
constraints of the old communist central command system. The 
economy is the engine by which China seeks world prestige, 
global economic clout and the funding for new military 
strength, thereby redressing what it often proclaims as 100 
years of humiliation at the hands of Western powers. 
Domestically, it was the engine that Deng Xiaoping and his 
successors calculated would enable the party to deliver on its 
unspoken social contract with the Chinese people--monopoly of 
political power in exchange for a strong China with a higher 
standard of living for its citizens.
    But events conspired last year to tarnish Beijing's 
achievements, to remind people that China had not yet arrived 
as a modern world power, and to make the leadership generally 
ill at ease. China put on an impressive display of military 
might at its 50th anniversary parade in Beijing, but the 
leadership today sees a growing technological gap with the 
West.
    Inside China, the image of domestic tranquility was 
tarnished by last April's appearance of the Falun Gong 
religious sect, whose audacious surprise demonstration outside 
the leadership compound called into question the Community 
Party's ability to offer an ethos that still attracts the 
Chinese people.
    Even the return of Macao in late December, the fall of 
another symbol of a divided China, was overshadowed by the 
actions of Taiwan President Lee Teng-Hui. Lee declared last 
July that his island's relations with the mainland should be 
conducted under the rubric of state-to-state rather than one-
China. Lee's statement has China deeply worried that Taiwan's 
return to Beijing is less likely than before. Chinese leaders 
act as if they believe at a minimum a show of force is required 
if they are to preserve any hope of reunification.
    Because of this, we see a high potential for yet another 
military flare-up across the Taiwan Strait this year. The 
catalyst for these tensions is the Taiwan election on the 18th 
of March, which Beijing will be monitoring for signs that a new 
president will retreat from Lee's statements or further extend 
the political distance from reunification. Although Beijing 
today still lacks the air and sealift capability to invade 
Taiwan, China has been increasing the size and sophistication 
of its forces arrayed along the strait, most notably by 
deploying short-range ballistic missiles. China should receive 
the first two Russian-built destroyers later this month. And we 
expect the ships to join the East Sea Fleet, which regularly 
conducts operations near Taiwan.
    In the coming year, we expect to see an uncertain Chinese 
leadership launching the nation deeper into the uncharted 
waters of economic reform, while trying to retain a tight grip 
on political control. But the question remains open, Mr. 
Chairman, whether in the long run a market economy and an 
authoritarian regime can coalesce equally.
    Mr. Chairman, I want to talk about two more subjects, North 
Korea, and India and Pakistan, and we'll reserve the rest. 
North Korea's propaganda declares 1999 the year of the great 
turnaround. This is not a view supported by my analysts. 
Indeed, we see a North Korea continuing to suffer from serious 
economic problems, and we see a population, perhaps now 
including the elite, that is losing confidence in the regime. 
Mr. Chairman, sudden radical and possibly dangerous change 
remains a real possibility in North Korea, and that change 
could come at any time.
    The North Korean economy is in dire straits. Industrial 
operations remain low. The future outlook is clouded by 
industrial facilities that are nearly beyond repair after years 
of underinvestment, spare-parts shortages and poor maintenance. 
This year's harvest is more than one million tons short of the 
minimum grain needs. International food aid has again been 
critical in meeting the population's minimum food needs. Trade 
is also down. Exports to Japan, the North's most important 
market, fell by 17 percent. Trade with China, the North's 
largest source of imports, declined to $160 million, primarily 
because China delivered less grain.
    Kim Jong Il does not appear to have an effective long-term 
strategy for reversing his country's economic fortunes. His 
inability to meet the basic needs of his people and reliance on 
coercion makes his regime more brittle because even minor 
instances of defiance have greater potential to snowball into 
wider anti-regime actions. Instead of real reform, North Korean 
strategy is to garner as much aid as possible from overseas, 
and the North has reenergized its global diplomacy to this end.
    It has agreed to diplomatic talks with Japan for the first 
time in several years. It has unprecedented commercial contacts 
with South Korea, including a tourism deal with a South Korean 
firm that will provide almost a billion dollars. But 
Pyongyang's maneuvering room will be constrained by Kim's 
perception that openness threatens his control and by 
contradictions inherent in his overall strategy, a strategy 
based on hinting at concessions on the very weapons program 
that he has increasingly come to depend on for leverage in the 
international arena. Squaring these circles will require more 
diplomatic agility than Kim has yet to demonstrate in either 
domestic or international arenas.
    Finally, Mr. Chairman, let me talk about India and 
Pakistan. Last spring the two countries narrowly averted a 
full-scale war in Kashmir, which could have escalated to the 
nuclear level. The military balance can be summarized easily. 
India enjoys advantages over Pakistan in most areas of 
conventional defense preparedness, including a decisive 
advantage in fighter aircraft, almost twice as many men under 
arms, and a much larger economy.
    Recent changes in the government of both countries add 
tensions to the picture. The October coup in Pakistan that 
brought General Musharraf to power, who served as the army 
chief during the Kargil conflict with India last summer, has 
reinforced New Delhi's inclination not to reopen the bilateral 
dialogue anytime soon. Pakistanis are equally suspicious of 
India's newly elected coalition government, in which Hindu 
nationalists hold significant sway.
    Clearly, the dispute over Kashmir remains as intractable as 
ever. We are particularly concerned that heavy fighting is 
continuing through the winter, unlike in the past, and probably 
will increase significantly in the spring. New Delhi may opt to 
crack down hard on Kashmiri militants operating on the Indian 
side of the line of control, or even order military strikes 
against militant training camps inside Pakistan-held Kashmir.
    Thus, Mr. Chairman, we must head into this new year with 
continuing deep concerns about the antagonisms that persist in 
South Asia and their potential to fuel a wider and more 
dangerous conflict on the subcontinent.
    Mr. Chairman, I know this has been a long briefing, and we 
skipped over many subjects, and we want to get to your 
questions. But before so doing, I would sum it up this way: The 
fact that we are arguably the world's most powerful nation does 
not bestow invulnerability. In fact, it may make us a larger 
target for those who don't share our interests, our values, and 
our beliefs. We must take care to be on guard, watching our 
every step and looking far ahead. Let me assure you that our 
Intelligence Community is well prepared to do just that.
    Thank you, Mr. Chairman. Thank you, Senator Bryan.
    Chairman Shelby. Director Tenet, it's been reported that 
former Director Deutch placed highly classified materials on 
his unclassified home computer, a computer that was connected 
to the Internet, but that, as far as can be determined, no 
outsider gained access to this material. That's what we've been 
told.
    Director Tenet. Yes, sir.
    Chairman Shelby. Can you assure us that the classified 
files in Mr. Deutch's unclassified computer were not accessed 
from outside?
    Director Tenet. Mr. Chairman, we cannot assure you of that 
fact. All I can say is we came to a judgment that said we 
cannot exclude that possibility. We have no evidence to suggest 
that that has occurred. But, I cannot give you assurances.
    Chairman Shelby. You can't reassure us?
    Director Tenet. No, sir, I can't give you a definitive 
statement to say it absolutely didn't happen.
    Chairman Shelby. When evaluating the scope of information 
potentially compromised by Mr. Deutch to the material disclosed 
by Mr. Ames or Pollard, how would you rate it? In other words, 
was it sensitive, more sensitive or less sensitive?
    Director Tenet. Well, Mr. Chairman, we have to make a 
distinction between espionage cases where people were intending 
to harm the United States----
    Chairman Shelby. I know that.
    Director Tenet [continuing]. And documents that you found 
on someone's computer who was working at home. I don't think 
there is any way.
    Chairman Shelby. But, we are talking about materials, 
classified materials.
    Director Tenet. I understand that.
    Chairman Shelby. Okay.
    Director Tenet. In both the case of Ames and in the case of 
Pollard, we can document the fact that a foreign power had 
direct access to significant material, including human assets. 
In this case, we can't tell you that any damage has occurred. 
We don't exclude the possibility; I can't tell you it has or 
has not occurred. So I don't think that that's a fair 
comparison.
    Chairman Shelby. You can't confirm it and you can't deny 
it, right?
    Director Tenet. You can't, sir, but I can't put the Deutch 
case in the same context as Pollard or Ames. I don't think 
that's fair.
    Vice Chairman Bryan. Mr. Chairman, I don't think you got an 
answer to your question. I don't think the Chairman was 
impugning motives here. He was asking as to the material 
itself.
    Chairman Shelby. The material, the sensitivity of the 
material.
    Director Tenet. As you know, in the report--and I don't 
want to go into it specifically in open session--there was 
enormously sensitive material on this computer, at the highest 
levels of classification.
    Chairman Shelby. Highest levels of classified information 
were transferred from--to an unclassified----
    Director Tenet. Sir, the distinction again--and I think we 
should let the Inspector General walk you through all this--but 
there is a distinction between the transfer and his sitting 
down at a computer and writing. He basically created all these 
documents, rather than transferring files, which is a 
distinction; there is a difference there.
    Chairman Shelby. But it was, as you just said, very 
sensitive material.
    Director Tenet. Yes, sir.
    Chairman Shelby. Was Mr. Deutch ever asked to take a 
polygraph examination concerning the information he took to his 
home while Director of CIA?
    Director Tenet. Mr. Chairman, I'd preferred that you ask 
the Inspector General and the investigators how they conducted 
their investigation, rather than me getting into how they did 
their business.
    Chairman Shelby. Senator Bryan brought this up earlier and 
I believe this is about right. It took the CIA almost a year 
and a half to notify the Intelligence Committees after the 
material was discovered on Dr. Deutch's computers. Why did it 
take so long to notify this Committee and why did it take so 
long to notify the Department of Justice?
    Director Tenet. Well, sir, I don't have--there is no excuse 
for that. That should have been done promptly. Certainly by the 
spring of 1997, when internal reviews had been completed by the 
Office of Personnel Security, we should have come to you. But 
my view is, is that when you have a case involving the 
Director, the notification should have been prompt. And there 
is no excuse for that. And we should not have assumed that it 
happened, and it should have happened.
    Chairman Shelby. Director Tenet, why wasn't the FBI brought 
into the investigation of this early on?
    Director Tenet. Well, Mr. Chairman, remember--and the IG 
again should come talk to you about all these facts.
    Chairman Shelby. He's going to. He's going to come.
    Director Tenet. One of the things that he and our internal 
accountability board is looking at right now is that 
originally, in fact, a referral was not made to the Department 
of Justice. There was a legal judgment made not to refer the 
case. Well, we have to get underneath that.
    As you know, subsequently, when we get to the 1998 time 
period, the IG did make a referral, the Justice Department did 
decline to prosecute, so that the Justice Department did have 
an opportunity to play in this case at a later date.
    Chairman Shelby. If you were faced with a similar set of 
facts today, involving anyone at Langley, at the CIA, an 
employee, how would you react?
    Director Tenet. Certainly, Senator, I think I would have 
taken the same ultimate disciplinary action, which has to be 
the same for everybody. In fact, the action we took against the 
Director was unprecedented in its scope, because we believe 
that everybody has to be treated equally, whether at the top of 
the chain or the bottom of the chain, so that the men and women 
who work for us understand that there are not two standards.
    Everybody has a right to due process, and process is 
provided to everybody, but in essence that would be my answer. 
Obviously, there are lessons learned in how we did this, and 
we're looking at all those things as well.
    Chairman Shelby. Senator Bryan.
    Vice Chairman Bryan. Thank you very much, Mr. Chairman.
    Let me just pursue the Chairman's questions for just a 
moment. I understand the state of the record. It's clear there 
is no evidence--repeat, no evidence--that Mr. Deutch 
transferred any information to unauthorized personnel. And that 
is a distinction between the Aldrich and the Pollard matter, as 
you've made clear. Nevertheless, you have characterized the 
information that was on the unclassified computer as highly 
sensitive. And I take it that we can get into that in more 
detail in a closed hearing.
    Director Tenet. Yes, sir.
    Vice Chairman Bryan. I take it that this is not just 
something that people ought not to know about, but this is 
serious stuff. Is that a fair generalization?
    Director Tenet. Yes, sir.
    Vice Chairman Bryan. Very serious stuff. And so, I guess my 
follow-up questions are twofold. Have you done a damage 
assessment?
    Director Tenet. Well, sir, we've certainly, I think we--no, 
not in a formal way. We have basically fulfilled all the 
obligations the Inspector General--or are in the process of 
fulfilling all the obligations the Inspector General imposed on 
us.
    In a formal sense, no, I have not done it a damage 
assessment in terms of what the possibility would be.
    Vice Chairman Bryan. I ask that question in the context 
that, as I understand it, because this information was on an 
unclassified computer, for purposes of our 
counterintelligence----
    Director Tenet. Yes, sir.
    Vice Chairman Bryan [continuing]. We have to assume that 
that information may have been compromised.
    Director Tenet. Yes, sir.
    Vice Chairman Bryan. If that is the case, then it seems to 
me that a damage assessment would be appropriate. And, the 
follow-on question to that, it seems to me, is what actions 
have been taken in response to that assessment. That is to say, 
are we changing, making any different responses because of the 
assumption that we have to make that this information----
    Director Tenet. Yes, sir. Well, I'd like to--first, 
Senator, I think it's valid and legitimate to go do a damage 
assessment. In closed session, I'd like to walk you through--we 
can talk about some of the documents and you'll see--you'll get 
a full sense of the issue I think in closed session.
    Vice Chairman Bryan. Let me ask you about the 
accountability review. Where are we on that? When can we expect 
to get that?
    Director Tenet. The Executive Director has completed that 
review as of yesterday, and he will forward it through the 
Deputy Director and then on to me. So I hope that we will 
provide that to you very quickly.
    Vice Chairman Bryan. And can you give us the scope of the 
review? Obviously it should include yourself, as well as 
others, and does it do that?
    Director Tenet. Yes, sir. It goes through the entire chain 
of command, looks at everybody who touched this, looks at their 
actions, looks at their judgments and will cover everybody.
    Vice Chairman Bryan. And let me just say, the Chairman 
raised the question--I mean, the delay, which you've 
acknowledged is inexcusable, what actions are going to be taken 
prospectively? The Committee is entitled to receive this 
information----
    Director Tenet. Yes, sir.
    Vice Chairman Bryan [continuing]. As part of its oversight. 
You would not deny that. What steps are being taken so that if 
something like this happens prospectively that the Committee 
gets an earlier notification?
    Director Tenet. Sir, you know that there is a notification 
process and policy in place that gives you everything, almost 
as soon as I get it. That's the standard. We need to move. 
There is no upside in not bringing you this information. 
Everybody understands that.
    Chairman Shelby. What happened in this case?
    Director Tenet. That's another issue in terms of the 
accountability. I mean, there are multiple nodes that had a 
responsibility to move this information and they understood 
that, and that's something that we're dealing with.
    Vice Chairman Bryan. And let me say as the new Vice 
Chairman, not only is the notification important, but the 
manner in which we are notified is important. To be presented 
with some information in the talking points during the course 
of a hearing is really not the kind of notification I think the 
Committee's entitled to. You've acknowledged and we all 
understand that this compromise is serious. It strikes me that 
when we have that kind of compromise that there needs to be a 
process by which the Chairman or the Vice Chairman and the 
staff directors are requested to have a meeting with you or 
your authorized representatives to say, ``Look, here's the 
situation.'' And I would hope that we would have that 
commitment from you.
    Director Tenet. In fact, Senator, that's what we do today. 
Even on the most sensitive issues, you're provided written, 
detailed notifications. There are briefings. I think there's a 
process here that's working extremely well. It didn't work in 
this case as well as it needed to, but we have a process in 
place that we pay a lot of attention to, and I think the 
record's a good one.
    Vice Chairman Bryan. I think the other question that's 
raised publicly is the treatment in the Deutch case, with 
reference to referral to the Department of Justice for possible 
action. The delay there seems to me to have been excessive. My 
understanding is that it is regarded as a very serious offense 
when information is mishandled--classified information such as 
this.
    In hindsight, shouldn't that have been referred to the DOJ 
earlier for whatever determination they want to make?
    Director Tenet. Sir, the Inspector General feels so. But 
there was a legal judgment made. I'm not a lawyer, but I 
understand that there was a debate within the office of the 
General Counsel about what the right way to proceed here was. 
There was a decision not to make the referral. That's something 
that we're looking at in our own accountability chain to 
understand why this decision was made that way.
    There was a subsequent decision to refer by the General 
Counsel and Justice declined a prosecution. So, we're looking 
at all that.
    The IG will have a view on that, and we will in terms of 
our accountability process as well.
    Vice Chairman Bryan. But in hindsight, wouldn't it have 
been better to do so?
    Director Tenet. Well, of course. In hindsight, of course.
    Vice Chairman Bryan. I mean, because the thrust of what the 
article in the newspaper yesterday seems to suggest, in using 
the language of impeding, is that the process was deliberately 
slowed so that the time period for referral to independent 
counsel was allowed to expire. I'm not making that assertion, 
Mr. Tenet. I want to be clear.
    Nevertheless, the actions, or the inactions, do give some 
arguable credibility to that position. Could you respond to 
that?
    Director Tenet. Sir, the thing that worries me is of course 
there was no impeding. There was no intentional effort. The IG 
didn't find that. If he had, we would have had another Justice 
Department issue. The perception has been created that that's 
what happened. I think it was erroneously portrayed in the news 
piece.
    The fact is that this didn't work as quickly as it should 
have worked. We know that now, and we make no excuses. We were 
in a period of great transition. We were dealing with a former 
Director. People were trying to do their best job. At the end 
of the day, we now know that we all could have done this 
better. The entire system could have performed better.
    We take a lot of pride in policing ourselves. You know, 
some people say, ``Can the CIA police itself?'' Well, we take a 
lot of pride in our own internal accountability and our 
professional responsibility and conducting ourselves honorably 
and ensuring that this Committee and the American people 
believe that.
    Anything that detracts from that is not good for me and not 
good for my people.
    Vice Chairman Bryan. And I think the final observation that 
I would have is certainly the appearance is of a dual standard. 
That is to say that the former DCI, an individual who we all 
know--we respect his talents and abilities and his 
contributions. Nevertheless, you cannot escape the conclusion 
that had this been someone who was on a lower level in the 
hierarchy, that different treatment would be given.
    I think that's damaging to morale within the agency itself 
because everybody ought to be held to the same standard of 
accountability.
    Director Tenet. Well.
    Vice Chairman Bryan. Do you agree with that?
    Director Tenet. In terms of process, everybody has a right 
to due process and I never want to be in a situation where my 
employees at the lower ranks feel that the people higher up get 
any benefits or privileges.
    I will say this. There have been analogous cases to 
Director Deutch's case where we did not take the kind of action 
we took against this Director. I believe stronger action was 
required, because as the leader of the organization, you're 
required to act and behave on the basis of higher standards.
    So when we look at punishment, I think that the statement 
to everybody ultimately is, we took decisive, tough action 
against the former leader of the organization. And that has an 
impact as well in the positive, I believe.
    Vice Chairman Bryan. So I take it that your view would be 
that within the agency the perception is that the treatment of 
Mr. Deutch was comparable that others who might have been 
guilty of similar classified violations would have received.
    Director Tenet. Well, sir, I don't want to speak for them. 
I can't--you know, I didn't take a poll after the action to 
find out what the constituencies felt, but here's the message I 
want to leave to the men and women that I lead: There is one 
standard. People up and down the chain of command will get 
disciplined. This process--we will ensure that a process is 
fair, not just for people at the top but people at the bottom, 
and everybody gets the same treatment.
    And that's the message I want to leave them with. There are 
no distinctions between the top and the bottom, and we run a 
fair and honest institution when it comes to disciplining men 
and women.
    Vice Chairman Bryan. So your own perspective would be that 
you have treated others, or the agency has treated others in 
situations similar to Mr. Deutch, in a comparable fashion?
    Director Tenet. Yes, sir, although I do feel in his case we 
went the extra mile because of his leadership position.
    Vice Chairman Bryan. Mr. Chairman, I thank you. Thank you 
very much, Mr. Tenet.
    Chairman Shelby. Director Tenet, is it troubling to you, as 
it is to me, that--we know Mr. Deutch, Dr. Deutch we call him. 
And we know that he's done a lot, served this nation in the 
defense over at the Pentagon and in the CIA and all this. He 
has an exemplary career. But isn't it troubling to you that 
someone at the CIA--especially a Director--but anybody that 
would use unclassified computer to do all these things, not 
inadvertently, not once, but continuously, to a great extent. 
Isn't that troubling? You wouldn't do that, would you?
    Director Tenet. Mr. Chairman----
    Chairman Shelby. Sir, would you do that?
    Director Tenet. Well, my computer literacy is so low that I 
probably couldn't do it. [Laughter.]
    But in any event----
    Chairman Shelby. Now I didn't ask you, could you.
    Director Tenet. Let me say something serious to you. I 
wouldn't do it, Mr. Chairman. And obviously, there's no 
education in the second kick of a mule and everybody's gotten 
the picture here. But, let me say this to you: You know, I took 
a stern action against John. He's obviously my predecessor and 
my friend. He was sloppy in what he did. He worked around the 
clock. He didn't think about what he was doing.
    Nevertheless, as Director, I believe he should have known 
better. And I think, you know, in some way you have a salutary 
impact here because everybody understands. We talk about 
computer security, we talk about electronic means of getting 
into our databases. Now it's shown that this is an important 
issue that we're all paying attention to.
    And, you know, one man's mistake is another man's 
stupidity. Of course, it's troubling that we're in this 
situation. It's a tough situation for all of us to be in and we 
took a tough action for it.
    Chairman Shelby. Was he polygraphed regarding any of this? 
Do you know?
    Director Tenet. I don't, and I'd prefer that you'd talk to 
the investigators and the folks who----
    Chairman Shelby. We will. You don't know and you're not 
going to say.
    Director Tenet. Let's talk about that later, if we could, 
sir.
    Chairman Shelby. Do you know if he has ever failed a 
polygraph test?
    Director Tenet. I don't know that.
    Chairman Shelby. You don't. We'll get into it a little 
later, in the closed session.
    Director Tenet. Okay.
    Chairman Shelby. To go back to the counterintelligence 
threat, the recent discovery of a Russian listening device 
inside the State Department and reports of PRC espionage 
against the Department of Energy's nuclear labs have served all 
of us as stark reminders of the continued counterintelligence 
threat to the U.S. government facilities and personnel.
    The Intelligence Community is currently reviewing, as you 
well know, its counterintelligence postures for the 21st 
century in an exercise dubbed CI-21. The Intelligence Committee 
will be holding closed hearings on CI-21, as well as on the 
State Department bug. But I think it's important here today to 
take the opportunity, while we're in open session, to outline 
the extent of this problem for the American people who have 
heard about it.
    Director Tenet, which countries are most aggressively 
engaged in collection of intelligence against the United 
States? What are their primary targets--political and 
diplomatic intelligence, military plans and defense and 
technology, economic and industrial secrets? And to what extent 
have the traditional threats changed?
    Director Tenet. Well, Mr. Chairman, let me----
    Chairman Shelby. You can talk about some of it here.
    Director Tenet. Yes. Let me say this. There are a lot of 
countries involved in espionage against the United States--
traditional enemies, some friends.
    Chairman Shelby. Sure.
    Director Tenet. Different motivations. Why do they do it? 
One, they want to penetrate the United States government. Two, 
they want to get access to your trade secrets and your economic 
well-being. They want to access technology. They want to access 
what our private sector does for a living. What we're trying to 
do in CI-21, Louis Freeh and I are trying to design a system 
that basically allows us to understand what the most important 
threats are, and then allocate people and resources to work 
against these threats not just within the government, but also 
to engage the private sector in a way that it's never been 
engaged before, in creating something so that, Mr. Chairman, 
we're not talking to you about counterintelligence when we have 
a case. When we have a case, it's too late; it means that 
something's already happened.
    Chairman Shelby. Something bad, generally.
    Director Tenet. Something bad is generally happening. So 
the only good news here is there is an arrest, followed by the 
bad news of a damage investigation. And what we would like to 
do is use the resources in the intelligence and law enforcement 
communities proactively, engage analysis and use analytical 
tools in a way we haven't done before, and create something 
that's new.
    Now, Louis and I are going to brief this. He needs to brief 
the Attorney General, I'm going to brief the National Security 
Adviser. I think the President has a keen interest in this. And 
then we will come forward and give you this new plan that we 
plan to undertake.
    Chairman Shelby. Sure. I think it's very important, and the 
timeliness couldn't be better.
    Director Tenet. Yes, sir.
    Chairman Shelby. Admiral Wilson, do you have any comments 
on this threat?
    Admiral Wilson. Well, I certainly agree with the threat. 
And the world of information superiority being so important, 
protecting your own is too often undervalued compared to 
acquiring others'. So we would support aggressive moves in 
counterintelligence improvements.
    Chairman Shelby. Ambassador Roy, I know you are new on this 
job. You have served this country with distinction in your 
ambassadorial post. But over in State, where you are dealing 
with intelligence and security there, isn't it troubling to 
you, the bug and the penetration somewhat, that was in the 
paper recently, about the State Department, out of Russia--
probably not shocking?
    Ambassador Roy. It is troubling to me. My experience has 
been that maintaining the alertness and the procedures that you 
need is difficult, because of the human factor, over time. And 
to protect secrets properly, you have to maintain the highest 
standards over time. In that sense, I think that the recent 
cases have been useful because they have provided the 
additional impetus for all of us to tighten our procedures.
    That's what the State Department has been doing; I am 
confident that's what other members of the Intelligence 
Community have been doing. In the case of the State Department, 
I think the damage assessments are under way, and the probable 
damage is limited.
    Chairman Shelby. Admiral Wilson, what's your assessment of 
the performance of the Russian military recently, particularly 
the army in their current operation in Chechnya?
    Admiral Wilson. Well, first of all, the Chechen situation 
will not be solved by military actions alone. It's been going 
on for centuries, and it won't be solved by military action. 
The Russians do show a good ability to move forces to the 
region; however, they have taken a high percentage of their 
ready forces to do so. And, therefore, it impedes Russian 
military modernization to any extent that they could accomplish 
that in the economic environment that exists there.
    They have used some of the same brute-force tactics that 
did not work well earlier in the nineties, in 1996 
specifically--of heavy bombardment of the city and then 
followed up with infantry and internal security forces, which 
are ill-prepared to conduct urban warfare, which is difficult 
for any military to conduct.
    So the Russian military is not well-prepared for the 
situation that they were thrust into. It's a difficult 
situation for any military. They are taking losses, as are the 
Chechens. And it will not solve the problem, which will be 
around for a long time at the current pace.
    Chairman Shelby. Okay.
    Senator Bryan?
    Vice Chairman Bryan. Thank you very much, Mr. Chairman.
    Mr. Tenet, returning to you for a moment, I am sympathetic 
with the position that you find yourself in, that when you do 
achieve success in breaking up terrorist cells or activity, 
it's not something that you can proclaim. Your failures are on 
the front page of the morning newspaper and the lead stories on 
television across the country. And I think it's fair to 
acknowledge that there have been, as you made oblique reference 
to in your presentation, that there have been successes that 
you've briefed the Committee on, and we applaud those efforts 
and commend them.
    Nevertheless, it appears to me that we may be just chipping 
around on the edge. My question: Is there a broader, more 
systemic approach that we ought to be undertaking? And if we 
are doing that, to the extent that you can do so in an open 
session, would you care to respond to that?
    Director Tenet. Let me handle this in the open, but then 
I'd like to talk about it in closed session at greater length. 
There is-- I don't want you to think that there is not a 
systematic effort to look at a worldwide terrorist 
infrastructure and think about how you disrupt or make it more 
difficult for them to operate. Indeed, what we learned over the 
course of the five or six weeks leading up to the New Year 
celebrations, on the basis of all the actions we took, we 
learned that there's an infrastructure out there that is 
perhaps bigger than we anticipated.
    And we essentially have undertaken to systematically 
develop a strategic plan to attack this infrastructure. And I 
don't want to say more than that. But we look at this not just 
from an event perspective. I come and tell you two dozen 
renditions. That's tactical in nature. There is a strategic 
outlook about how to do this, not just by ourselves, but in 
concert with our allies.
    Of course, in terms of the bigger picture, at the end of 
the day you've got to go back, and we won't go through what I 
said about the Middle East, but you've got to go back and look 
at the economics and demographics of the region of the world 
that basically is going to spawn, unless some changes are made, 
large numbers of unemployed men to whom bin Ladin's message 
resonates, and people like him.
    So there are big systemic issues about economic 
opportunity. Chechnya is another example, for example. I mean, 
Afghanistan was the calling card in the seventies and eighties; 
Chechnya will become the calling card of this millennium in 
terms of where do terrorists go and train and act. So these 
conflicts, while we talk about them from the concept of the 
Chechens and the Russians, also turn into spawning grounds of 
the next generation of people who try their skills.
    Now, that all involves a very intricate strategy that we 
need to think about. So, it's not just what the law enforcement 
and Intelligence Community does. It's how we look at a world 
and regions of the world where we can strategically use 
relationships that undermine the terrorists' ability to 
operate.
    Vice Chairman Bryan. So you're really suggesting to us that 
the Russian-Chechnyan conflict is, from our point of view, a 
potential source of a new generation of terrorists who will 
learn their craft----
    Director Tenet. Yes, sir.
    Vice Chairman Bryan [continuing]. And that long after that 
conflict may subside--assuming that it does, at least in its 
present form--there may be some spin-off implications for us 
that can be very troubling.
    Director Tenet. I think that you should expect that the 
opportunity the terrorists will take to inject themselves in 
this, for Muslim reasons and reasons to aid the Chechens, many 
of whom are not terrorists, will create a cascading effect of 
people proving their mettle on a battleground that they will 
then come back and test against us in other places, yes, sir.
    Vice Chairman Bryan. Changing the focus a little bit, Mr. 
Tenet, one of my first calls as the new Vice Chairman dealt 
with a fairly significant information systems breakdown. I want 
to speak somewhat obliquely here. My question is, what are we 
doing to prevent a recurrence of that? Are there other aspects 
in the Intelligence Community, not precisely of this same 
nature, that are in jeopardy of a breakdown or a failure of 
this magnitude? And thirdly, what, if anything, do you need 
from us in the Congress to address any of those concerns?
    Director Tenet. First, let me say that Mike Hayden has it 
totally under control. We did have a problem for a series of 
days. He did undertake the work-arounds. He did all the right 
things. He is in the middle of a lessons-learned. He believes 
there was no intelligence loss, that we've retrieved all that 
collection and processed it all. And we are now looking at an 
after-action with him.
    The point I would make is we need to find out what 
happened. The point I would make is that we have an 
infrastructure that is functioning at near or overcapacity 
constantly, and we need to ensure that we're making the right 
investments and that our leadership is looking at these things 
as carefully as they need to. And I think that we are.
    And I think the men and women out there did a great job in 
getting us back up and running without missing a beat. And it 
was something that had us all concerned, but handled very well 
by General Hayden and the folks at NSA.
    Vice Chairman Bryan. I hope that you will follow up on this 
and give us a report. You're making a critical judgment in 
terms of personnel and the way it was handled, but to have 
something of that magnitude occur for that length of time, had 
the situation globally been more----
    Director Tenet. Yes, sir.
    Vice Chairman Bryan. [continuing]. Volatile it would have 
been extremely dangerous in terms of the lack of information 
that we were able to gather. And so I would hope that you would 
report back to us, once the after-action report is completed, 
what, if anything, we need to do to help you.
    Director Tenet. Yes, sir.
    Vice Chairman Bryan. This is not in a critical vein, but to 
help you in that.
    Director Tenet. Right. We will do that.
    Vice Chairman Bryan. Admiral Wilson, if I might just ask 
you a question about the situation in Colombia, what is the 
status with the guerrilla action there and the government? The 
DCI made reference to the situation in Colombia, but I don't 
really have a sense. It's been a few years since I've been 
there and flew into the part of the country where a lot of the 
coca is being processed and some of the plants are grown. Give 
us your assessment. Are we winning? Are we losing? Are we 
holding our own? It looks like more and more of that country 
seems to have been taken over, in a de facto sense, at least, 
by the guerrilla movements, even though the government itself 
tends to be more cooperative in terms of extraditions and other 
kinds of activity.
    Admiral Wilson. Senator, I think that the government of 
Colombia, and specifically their security force, is enormously 
challenged in dealing with the insurgent threat in rural 
Colombia, which, of course, is fueled by narcotics and other 
criminal activity. They're trying hard and have made some 
improvements, but are still challenged by mobility and 
flexibility and command-and-control and intelligence shortfalls 
against a difficult adversary.
    The rebels, the insurgents, have used the demilitarized 
zones disproportionately to their advantage in the field of 
military activity, and so they continue to be a challenge for 
Colombian security forces. The Colombian Army, while it appears 
able to protect large cities and the urban environment, is not 
able to control the countryside where the insurgents operate.
    So, I think I would say that while they are certainly not 
winning, they're trying very hard to hold their own in a very 
difficult situation, even as the President tries to put 
together a political process that will reach some type of peace 
agreement in the future with the insurgents.
    Vice Chairman Bryan. Were you all involved, and if so, what 
role did you play in providing the intelligence data needed for 
the supplemental appropriation request for Colombia? Were you 
involved in that process from the intelligence point of view, 
in terms of what was needed?
    Admiral Wilson. We did provide intelligence associated with 
that. Yes, sir.
    Vice Chairman Bryan. And specifically, I mean, some areas 
that you felt ought to be included in terms of the request.
    Admiral Wilson: Yes.
    Vice Chairman Bryan. You were?
    Admiral Wilson: We did, as a community, participate in the 
exercise.
    Vice Chairman Bryan. I appreciate that. Let me yield back 
to the Chairman.
    Chairman Shelby. Thank you, Senator Bryan.
    Director Tenet, we all realize we're going into a closed 
hearing later this afternoon and we'll be able to get into just 
about everything there. But could you assess here today, to 
some extent, what's the status of Iran's nuclear weapons 
program?
    Director Tenet. Well, we should talk about this behind 
closed doors.
    Chairman Shelby. Okay. Could you say here that Russia, the 
PRC and other people, other suppliers have given assistance to 
their nuclear program?
    Director Tenet. Let me outline all of that for you behind 
closed doors.
    Chairman Shelby. Okay. What about North Korea? Do you 
believe that North Korea is continuing to work on its nuclear 
weapons program and related activities, or can you say here, or 
you'd rather get into that in a closed session too?
    Director Tenet. Sounds good to me, Mr. Chairman. 
[Laughter.]
    Chairman Shelby. Okay, that's what you'd rather do.
    Senator Bryan, do you have any other questions?
    Vice Chairman Bryan. Well, we wouldn't want to neglect 
Ambassador Roy. Let me ask you, one of the perennial questions 
that comes up every year is the degree of cooperation we get 
with Mexico, whether we ought to recertify them for compliance. 
Give us your take. I mean, I must say that I don't see a lot of 
encouraging news there. Maybe we haven't focused on some of the 
areas that may give some cause for hope. But your analysis 
there, Mr. Ambassador, if I may.
    Ambassador Roy. We think we're making progress in 
addressing a very difficult and complex issue. As you know, it 
was our success in attacking the narcotics routes through the 
Caribbean that resulted in the diversion of those routes to 
Mexico, and Mexico is now the principal route through which 
cocaine from South America enters the U.S. market.
    We have worked with the Mexican government. They have set 
up special police forces. They are using new technology at 
border points to try to interdict actions. They have passed new 
laws which are designed to improve their ability to get rid of 
corrupt security officials. They have focused at senior 
government levels on the problem of dealing with corruption at 
the highest levels of the government that are related to the 
narcotraffic. This has affected governors in Mexico.
    So that on balance, we feel that we are working in the 
right direction with the Mexican government and are getting a 
positive spirit of cooperation from them.
    Vice Chairman Bryan. Well, I hope so. I was in Mexico a few 
years ago, and they cited operations where we have very 
carefully screened everybody, and they had passed all of the 
litmus tests, and this was something that gave us great cause 
for hope.
    I understand now that we have determined that we are going 
to abandon that particular effort because the corruption has 
been so pervasive. It would appear to be 180 degrees from where 
we were a few years ago. I don't minimize the difficulty of the 
problem; I think its tremendous. But I mean--progress--I don't 
think that the American public, Mr. Ambassador, sees great 
results there.
    You know, the amount of narcotics that comes into the 
United States, I think, in no way has been abated. I am not 
suggesting we ought not to try to interdict that. And you are 
quite right; the supply route has changed, based upon some of 
the successes previously elsewhere in the Caribbean.
    Ambassador Roy. Senator, our assessments of the issues you 
have just addressed are objective. When we see increases in the 
narcotics entering the United States, we say so. But at the 
same time, it would be our judgment that the problem would be 
much worse if we had not been able to accomplish the progress 
in working with the Mexican government in addressing these 
types of problems that you refer you that we have made.
    But it is a constant, and indeed a growing, problem. As you 
know, our assessments of the amount of cocaine produced in 
South America have risen recently. So I would agree with your 
assessment that this is a growing threat to our well-being. 
It's not one that we can say we are winning the war against.
    Vice Chairman Bryan. The last question: To what extent has 
Mexico's evolving pluralistic political structure, where they 
do have opposition parties who not only can challenge but 
actually can prevail to what extent is that a factor either 
that helps or impedes this effort of trying to get greater 
cooperation from Mexico and to ferret out those elements that 
are part of this pervasive corruption that makes it so 
difficult for us? Is that a positive factor, a negative factor; 
I mean, politically, how does that play in Mexico? And what 
role do the two parties take, the same or different, with 
respect to this issue of cooperation with the U.S.?
    Ambassador Roy. It's a mixed picture. We welcome progress 
toward democratization. But our experience in other countries--
I have personal experience of my own in this respect--is that 
the process of democratization brings new problems, even as it 
enables the countries to solve old problems. And I think in the 
case of Mexico a more open political system there is not going 
to be an unmixed blessing in terms of the efficiency of our 
antinarcotics operations. But I think it's an area where we can 
make progress as long as we understand the problem and devote 
the necessary attention and resources, which I think we are 
doing.
    Vice Chairman Bryan. Gentlemen, thank you very much. I know 
we're going to get into more of these questions in closed 
session. Mr. Chairman, thank you very much.
    Chairman Shelby. Thank you.
    We'll conclude this hearing. Thank you all--Admiral Wilson, 
Director Tenet, Ambassador Roy. The Committee is adjourned.
    [Whereupon, at 11:25 a.m., the Committee adjourned.]


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