[Senate Hearing 108-90]
[From the U.S. Government Publishing Office]
S. Hrg. 108-90
DIPLOMACY AND THE WAR ON TERRORISM
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
MARCH 18, 2003
__________
Printed for the use of the Committee on Foreign Relations
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COMMITTEE ON FOREIGN RELATIONS
RICHARD G. LUGAR, Indiana, Chairman
CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware
LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland
GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut
SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts
MICHAEL B. ENZI, Wyoming RUSSELL D. FEINGOLD, Wisconsin
GEORGE V. VOINOVICH, Ohio BARBARA BOXER, California
LAMAR ALEXANDER, Tennessee BILL NELSON, Florida
NORM COLEMAN, Minnesota JOHN D. ROCKEFELLER IV, West
JOHN E. SUNUNU, New Hampshire Virginia
JON S. CORZINE, New Jersey
Kenneth A. Myers, Jr., Staff Director
Antony J. Blinken, Democratic Staff Director
(ii)
C O N T E N T S
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Page
Biden, Hon. Joseph R., Jr., U.S. Senator from Delaware, prepared
statement...................................................... 3
Black, Hon. J. Cofer, Coordinator for Counterterrorism,
Department of State, Washington, DC............................ 27
Prepared statement........................................... 30
Responses to additional questions for the record submitted by
Senator Feingold........................................... 69
Feingold, Hon. Russell D., U.S. Senator from Wisconsin, prepared
statement...................................................... 23
Green, Hon. Grant S., Jr., Under Secretary of State for
Management, Department of State, Washington, DC................ 10
Prepared statement........................................... 12
Responses to additional questions for the record submitted by
Senator Biden.............................................. 66
Grossman, Hon. Marc, Under Secretary of State for Political
Affairs, Department of State, Washington, DC................... 4
Prepared statement........................................... 8
Responses to additional questions for the record submitted by
Senator Allen.............................................. 65
Responses to additional questions for the record submitted by
Senator Biden.............................................. 66
Pistole, Mr. John S., Deputy Assistant Director of the
Counterterrorism Division, Federal Bureau of Investigation,
Washington, DC................................................. 35
Prepared statement........................................... 38
Zarate, Mr. Juan C., Esq., Deputy Assistant Secretary, Executive
Office for Terrorist Financing and Financial Crimes, Department
of the Treasury, Washington, DC................................ 42
Prepared statement........................................... 45
(iii)
DIPLOMACY AND THE WAR ON TERRORISM
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TUESDAY, MARCH 18, 2003
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 9:15 a.m. in room
SD-419, Dirksen Senate Office Building, Hon. Richard G. Lugar
(chairman of the committee), presiding.
Present: Senators Lugar, Hagel, Chafee, Feingold, and Bill
Nelson.
The Chairman. Good morning. This hearing of the Senate
Foreign Relations Committee is called to order. Today, the
committee meets to examine the critical role of diplomacy in
the war on terrorism. We do so as diplomatic efforts at the
United Nations related to disarming Iraq have come to a
conclusion.
During the last several months, the ability of our military
to defeat Iraq has never been in question. What has been in
doubt are factors related to our diplomatic strength and our
standing in the world. Our diplomats have been at the forefront
of efforts to gain support in the United Nations Security
Council to secure necessary basing and overflight rights to
limit anti-American reactions to war in the Arab world, and
secure allied participation in the work of reconstructing Iraq
after a war.
The September 11 attacks jarred our country out of
complacency toward foreign threats, but what is still missing
from American political discourse is support for the
painstaking work of foreign policy, an indispensable role that
diplomacy plays in our strategic efforts to win the larger war
on terrorism. American embassies and diplomatic personnel are
on the front lines of the war on terrorism. On a daily basis,
they are enlisting assistance in foreign countries from
Presidents and Prime Ministers all the way down to the local
police precincts.
It is a massive undertaking that has brought a major influx
of law enforcement, intelligence, and financial experts into
embassies to work with their local counterparts. We have
garnered the sympathy and cooperation of nations on every
continent for our efforts to deny members of al-Qaeda refuge
and financial support. The arrest of Khalid Shaikh Mohammed,
who masterminded the September 11 attacks, is the most recent
example of the success that this hard work is yielding.
Despite the critical role of the State Department, we have
not provided it with sufficient funding. We are spending only a
little more than 7 cents on foreign affairs for every dollar we
spend on defense, and as a percentage of discretionary spending
the international affairs budget stands at 3.4 percent. This is
the lowest percentage of discretionary funding devoted to
international affairs in recent memory. The figure is 30
percent below the 1985 peak, and 15 percent below the annual
average since 1983.
Under President Bush and Secretary of State Powell, foreign
affairs spending has received important increases since the
September 11, 2001 events, but we dug a very deep hole for
ourselves during the mid- and late-1990's, when complacency
about the role of our diplomats led foreign affairs spending to
be greatly devalued. From 1994 to 1997, the international
affairs budget sustained consecutive annual decreases of 3.6
percent, 5.6 percent, 11.4 percent, and 1.5 percent.
This slide occurred even as the State Department was
incurring the heavy added costs of establishing new missions in
the 15 states of the former Soviet Union. The State Department
budget has been starved and has not yet fully recovered and,
moreover, this week we are considering a budget resolution in
the Senate that reduces the President's request for the
international affairs portion of the budget by $1 billion.
The importance of the State Department budget to the fight
on terrorism can be seen in Pakistan. After September 11, some
3,000 United States officials on temporary duty entered the
country to help track down al-Qaeda terrorists. They included
State's own diplomatic security personnel, FBI officers,
special forces, and intelligence agents. The embassy staff
stretched thin, with only four political officers and two
economic officers to support the influx.
This is not an isolated case. The GAO has documented
staffing gaps in hardship posts, officers serving without
adequate language training, and embassies that do not meet even
the most minimal standards of safety.
Secretary of State Powell, good soldier that he is, will
always do his best with the money that the President and the
Congress give him, but Members of Congress need to inform the
American people that we are underfunding our foreign affairs
capabilities at a time of great peril.
Teddy Roosevelt prescribed that America should, ``speak
softly and carry a big stick.'' In the present age, we are
carrying an incredibly big stick, but we must be willing to
spend more resources on the ability to speak softly. If a
greater commitment to resources can prevent the bombing of one
of our embassies, secure alliance participation in expensive
peacekeeping efforts, or improve detection of terrorists
seeking visas, the investment will have yielded dividends far
beyond its cost.
In the long term, it will be diplomatic skills, public
diplomacy efforts, and foreign assistance that can help build
strong and stable societies that fulfill the aspirations of
their citizens and deny terrorists the uncontrolled territory
and abject poverty in which they thrive.
The purpose of this hearing is to examine whether the State
Department has the resources, both here in Washington and in
its embassies overseas, to pursue the kind of broad effort
against terrorism that is needed both in the short term and in
the long term.
I am delighted to welcome again Marc Grossman, Under
Secretary of State for Political Affairs, and Grant Green, the
Under Secretary of State for Management, who will be testifying
on the first panel. We will then turn to a second panel, who
will focus specifically on the work that is taking place in our
embassies. Ambassador-at-Large Cofer Black is State's
Coordinator for Counterterrorism. Mr. John Pistole is the
Deputy Assistant Director of the Counterintelligence Unit of
the FBI, and last we will hear from Juan Zarate, who is the
Deputy Assistant Secretary in charge of the Treasury
Department's Executive Office for Terrorist Financing and
Financial Crime.
We appreciate the enormous expertise that each of our
witnesses offers us today, and we look forward to their
testimony. I would mention that we may be joined by the
distinguished ranking member. I would say for the benefit of
all who are following, as I am, the strong recovery of Senator
Biden, he was at the White House for the meeting last evening.
He is making a strong recovery, is deeply interested in all
that we are doing, and we welcome him back at any moment that
he comes to our committee hearing.
And I would say parenthetically before I ask the witnesses,
we understand the traffic engulfments of the Capitol that could
have led to our witnesses failing to appear, and I thank you
for your valiant and timely efforts to get ahead of the mob,
but our colleagues may not have been so fortunate, and so they
will be joining us in due course, except for the stalwart
Senator Hagel, who is always prepared, and maybe even spent the
night in the Capitol in order to be ready.
[The prepared statement of Senator Biden follows:]
Prepared Statement of Senator Joseph R. Biden, Jr.
Mr. Chairman, thank you for convening this hearing. On the eve of
likely military action in Iraq, we must keep focused on the vital task
of combating the al-Qaeda network of terrorists and other terrorists
which pose a clear and still present danger.
The effort against terrorism has both a short-term and long-term
dimension. The short-term dimension is the campaign against
terrorists--to discover and dismantle the al-Qaeda network and their
financial support.
The long-term dimension is the campaign against terrorism--to
counter the warped ideologies that give rise to terrorists and to
prevent the emergence of failed states which could become a safe haven
for terrorists.
In these campaigns, we need allies. We may be the world's leading
power, but we do not control the world. We cannot arrest aI-Qaeda cells
in Hamburg or Madrid without cooperation from our German and Spanish
allies. We cannot seize bank accounts in the Middle East from
Washington.
It goes without saying, therefore, that American officials assigned
to our embassies and consulates around the world play an essential role
in fighting terrorism.
From sharing intelligence with foreign police agencies, to tracking
down the financial infrastructure of terrorism, to securing dangerous
weapons in Russia, thousands of American diplomats work every day to
prevent another terrorist attack on our country.
A key question for the committee is whether we are giving our
diplomats the tools to do the job. In my view, we are not. The
President's budget for international affairs provides a welcome
increase to $28.5 billion, but spending for such programs remains well
below the peak levels of the Cold War. The global effort against
terrorism requires the same level of commitment, if not more, that we
devoted to the global effort to contain communism.
Unfortunately, the budget resolution now on the Senate floor
reduces the President's international affairs budget by $1 billion. All
of the cuts come from the President's important initiative to expand
foreign assistance through the Millennium Challenge Account.
At a time when many countries question the commitment of the United
States to multilateral cooperation and to combating global poverty, the
Congress should not shortchange the pledge made by the President at a
UN summit in Mexico last year.
Poverty is not the cause of terrorism; most of the 9/11 hijackers
were from the middle class. But around the world, too many countries
and people who would turn a blind eye to terrorism--and would give
terrorists support and sanctuary--are poor and in despair. We must
reach these people before the terrorists do.
Just as we must devote sufficient resources to the war against
terrorism, we must do everything possible to deprive the terrorists of
the money which sustains their efforts.
A monitoring group established by the UN Security Council reported
in December that, while al-Qaeda's financing networks have been
disrupted, it ``appears to still have access to substantial funding
from its previously established investment, nongovernmental
organization and charitable support network, and deep-pocketed
supporters.''
This same group reported last September that the roughly $112
million of al-Qaeda assets frozen at that time represented only a
``small fraction of the funds and resources [that] experts on terrorism
believe to still be available to al-Qaeda and the Taliban.'' In other
words, we have a long way to go.
According to a bipartisan report of a Council on Foreign Relations,
our own government's efforts in this area are falling short:
``after an initially robust attempt to curtail financing for
international terrorism, the Bush Administration's current
efforts are strategically inadequate to assure the sustained
results we need to protect U.S. security.''
After that report was issued, I asked the White House for
information on specific action in several areas. Nearly five months
have passed, and I have yet to receive a response.
Another important question is whether we have agreement with our
allies on the objective. There appears to be unity among civilized
nations about the threat posed by al-Qaeda. But there may not be full
agreement with our allies in Europe and elsewhere about the threat
posed by other terrorist groups, or even the reasons that such groups
exist.
Where we see things as black and white, our allies often see shades
of gray. Do we need to close this perception gap? How can we best do
so?
Lastly, the committee should consider whether international
institutions are adequate to the task of confronting international
terrorism. After September 11 the world mobilized through the UN system
and through regional bodies to crack down on terrorism.
In the UN, for example, several special committees established by
the Security Council are doing important and credible work in
monitoring compliance with UN resolutions passed in the wake of 9/11.
But perhaps we should look beyond these ad hoc arrangements and
consider whether the world community should develop new institutions--
either within the UN system or elsewhere--to facilitate cooperation on
counter-terrorism and help provide nations the means and methods to
crack down on terrorist organizations. We are in this struggle for the
long term, and must organize both our domestic and international
institutions accordingly.
The Chairman. Under Secretary Grossman, would you testify,
and then Under Secretary Green.
STATEMENT OF HON. MARC GROSSMAN, UNDER SECRETARY OF STATE FOR
POLITICAL AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC
Mr. Grossman. Yes, Senator Lugar, thank you very much.
Mr. Chairman, Senator Hagel, we thank you very much, all of
us, for the opportunity to testify today on diplomacy's role in
the war against terrorism, and before I do anything else, Mr.
Chairman, on behalf of the men and women of the Department of
State, let me thank you and the entire committee for your
strong support of American diplomacy through the years.
Senator Lugar, I find myself from time to time in a
position of saying I could get rid of my testimony because I
agreed with yours, and this is one of those cases. We believe,
as you do, in the importance, the strength, and the requirement
for American diplomacy.
In fact, Mr. Chairman, I read with interest the January 27
piece you put into the Washington Post, which was called
``Beating Terror,'' and in it you outlined five foreign policy
campaigns necessary to win this war against terrorism,
strengthening U.S. diplomacy, expanding and globalizing the
Nunn-Lugar cooperative threat reduction program, promoting free
trade, strengthening and building alliances, and reinvigorating
the United States' commitment to democracy, the environment,
energy, and development.
Mr. Chairman, I would say your goals highlight our
priorities as we fight this war from the State Department along
with the rest of our colleagues in government against the war
on terrorism. Secretary Powell said, when he was here
testifying for the President's 2004 international affairs
budget on February 6, that ``our number one priority is to
fight and win the global war on terrorism.''
Mr. Chairman, as you have said, this war on terror is a war
unlike any other, because we are fighting a network of
terrorists who are embedded and work in 60 different countries.
The war on terrorism is also a war unlike any other because we
need to break the nexus between weapons of mass destruction and
terrorism.
To fight the war on terrorism we are engaged in a campaign
unlike any other, and here I think President Bush said it best.
He said, ``We will direct every resource at our command--every
means of diplomacy, every tool of intelligence, every
instrument of law enforcement, every financial influence, and
every necessary weapon of war--to the disruption and defeat of
the global terror network.'' So our response to terrorism, Mr.
Chairman, is global, and so, as you said, America's future and
America's success depends on the quality and skill of the
people at the Department of State.
Secretary Powell has said that he has stopped thinking
about the State Department as what he used to call the first
line of defense for the United States, and now says that we are
on the front line of the offense by pursuing active and
purposeful diplomacy.
What does it mean to be on the offense? As you said, Mr.
Chairman, our colleagues, the Foreign Service, Civil Service,
Foreign Service national employees gain the cooperation of
leaders in other countries to support American goals. Our
officers work to maximize the support for American initiatives.
They coordinate policies. They resolve differences. They work
with Finance Ministers and central bankers to cutoff terrorist
financing. They are on the front line of the efforts to prevent
terrorists from getting into the United States. Our office has
worked to build public support for American values and
policies. Our officers keep the Department functioning smoothly
and, as you noted, Mr. Chairman, our officers are also at work
every day keeping us safe.
I took the liberty, Mr. Chairman, of passing out this book,
called ``Inside a U.S. Embassy,'' which is a brand new
publication of the American Foreign Service Association, and I
would recommend it to you. It takes a number of chapters of
what people do in an embassy every single day hour by hour, day
by day, in promoting America's interests, and I just offer this
to you, sir, and to your staff as something that might be of
interest.
Through this active and purposeful diplomacy, we built a
coalition against terrorism unlike any other. Ambassador Black
will talk more in detail, but we have 90 nations that have
arrested or detained 2,700 terrorists and their supporters
since September 11.
Seventeen nations contributed nearly 6,000 troops to
Operation Enduring Freedom and to the national security
assistance force in Kabul. One hundred and sixty one countries
have blocked terrorist assets totaling $116 million, and I am
confident, Mr. Chairman and other members of this committee,
that we will have a coalition to pursue military action if that
is required in Iraq, and all of those efforts are made possible
by the people at the State Department with the strong support
from others in our diplomacy.
Mr. Chairman, there are other examples as well. Our
diplomacy in Southeast Asia prompted the exchanges of
information that allowed intelligence and law enforcement
agencies to break up active terrorist networks in Indonesia. In
Operation Enduring Freedom, our diplomacy paved the way for
U.S. forces to transit, stage in, and operate in numerous
countries in Afghanistan, and in Central Asia effective
engagement has secured also new base access agreements and
overflight permissions.
Mr. Chairman, as you said, September 11, 2001 changed
America and it changed the way the State Department does
business. Under the direction of the Secretary and the Deputy
Secretary, Under Secretary Green and I and every bureau at the
State Department and every one of our missions overseas have
organized to contribute to the fight against terrorism. Our
missions ensure that counterterrorism objectives are met
consistently, and that our operations succeed.
Mr. Chairman, I particularly appreciated the observation
that you made in your letter of invitation to this hearing that
foreign policy tools contained in the 150 account will make or
break our antiterrorism efforts in the long term, and Congress'
strong support enables the United States to present and to
sustain an effective offensive against terrorism and its root
causes, and that is why we support the President's 2004
request.
Mr. Chairman, if you would allow me, I would like to just
share a few more examples of the returns on the investment that
you make in the State Department, USAID, and other foreign
affairs agencies on the counterterrorism front. As I briefly
mentioned, hundreds of wanted terrorists have been apprehended
by the United States since 11 September, and yourself, sir, you
referred to Khalid Shaikh Mohammed.
Under the antiterrorism assistance program, we are
providing training and equipment to 56 countries to fight
terrorists within and around their borders. The $10 million
that Congress authorized in the fiscal year 2002 supplemental
budget for enhancing Pakistan's counterterrorism capabilities
has, as you said, Mr. Chairman, already helped facilitate
success in that country.
Last year, we provided training to over 4,700 foreign
security and law enforcement officers from 45 different
countries. Our antinarcotics and anticrime programs are also
showing success, and very importantly, as you said in your
letter of invitation, our public diplomacy efforts are designed
to reach out and influence global public opinion, build trust
in our policies, and build respect and understanding for
American values and principles.
I have also taken the opportunity, Mr. Chairman, to provide
for you some examples of that public diplomacy work. In it, you
will find some pictures of a program that we call Shared
Values, and it was a series of mini-documentaries, pamphlets
and other materials showing Muslims leading successful and good
lives in the United States. That program we estimate reached
288 million people in South Asia and East Asia.
Mr. Chairman, before I stop, I wanted to highlight one
other point we have been making since September 11, and I think
it is an important one for this committee, that stopping
terrorism, fighting terrorism and promoting human rights and
democracy are not on opposite poles. Supporting the growth of
democracy and the respect for human rights around the world is
one of our greatest weapons against terrorism.
National security strategy in the United States says that
America must stand for the non-negotiable demand for human
dignity, rule of law, limits on the absolute power of the
State, freedom of speech, freedom of worship, equal justice,
respect for women, religious and ethnic tolerance, and respect
for private property, and all of those things I believe are
part of this campaign to beat the global war on terrorism, and
since September 11 we have increased our global engagement on
building democracy and protecting human rights.
Mr. Chairman, the President's budget for fiscal year 2004
for the State Department for our foreign affairs agencies will
provide the dollars we need to stay on the offense in the fight
against terrorism. With adequate resources, foreign affairs
agencies can devote more attention to addressing fundamental
challenges that make countries vulnerable to terrorist networks
and to their operations. We will have the money we need to
focus greater attention and resources on weak States that can
serve as a refuge or a staging ground for terrorist
organizations.
And I know, very importantly to this committee, we can do
more in these countries and others to boost economic
development, improve governance practices, and increase respect
for human rights and the rule of law, and that is why the
President's request includes the request for $1.3 billion to
launch the Millennium Challenge Account [MCA], a new bilateral
assistance program for developing countries that rule justly.
The President has also asked for $2 billion in 2004 to
support HIV/AIDS care and prevention programs in the hardest-
hit countries especially Africa and the Caribbean, with the
goal to provide $15 billion in HIV/AIDS funding over the next 5
years and, very importantly, the Middle East partnership
initiative, launched in December, has democracy promotion as
one of its priorities and links these reforms to economic and
education reforms. These are all smart and necessary
investments in the fight against terrorism.
Mr. Chairman, we thank you, we thank all the members of the
committee for helping the State Department, USAID, and other
foreign affairs agencies get the resources we need to do our
jobs, to do them well for the sake of the American people and,
from your consistent support, we know that you understand the
sacrifices, and I would say sometimes the ultimate sacrifice
that the men and women of our diplomatic corps, as well as
their families, make every day to protect the United States of
America.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Grossman follows:]
Prepared Statement of Ambassador Marc Grossman, Under Secretary of
State for Political Affairs
Mr. Chairman, thank you for the opportunity to testify today on
diplomacy's role in the war against terrorism. I thank the committee--
and you and Senator Biden in particular--for your strong support of
U.S. diplomacy.
Mr. Chairman, I read with interest your January 27 Washington Post
piece on ``Beating Terror.'' In it, you outlined five foreign policy
campaigns necessary to win the war against terrorism: strengthening
U.S. diplomacy; expanding and globalizing the Nunn-Lugar Cooperative
Threat Reduction Program; promoting free trade; strengthening and
building alliances; and reinvigorating the U.S. commitment to
democracy, the environment, energy and development.
Mr. Chairman, your goals highlight our priorities as we fight the
global war on terrorism.
Secretary Powell said on February 6 when he testified before this
Committee in support of the President's FY04 International Affairs
budget that, ``our number one priority is to fight and win the global
war on terrorism.''
Mr. Chairman, let me say at the outset that the war on terrorism is
a war unlike any other. We are fighting a network of terrorists
operating in more than 60 countries.
The war on terrorism is also a war unlike any other because we must
stop the proliferation or use of weapons of mass destruction, which are
potential instruments of terror unlike any other. Nuclear weapons,
biological weapons, radiological weapons and chemical weapons in the
hands of terror groups or rogue states like Iraq are a challenge to
American security.
To fight this enemy, we are engaged in a campaign unlike any other.
President Bush has said, ``We will direct every resource at our
command--every means of diplomacy, every tool of intelligence, every
instrument of law enforcement, every financial influence, and every
necessary weapon of war--to the disruption and to the defeat of global
terror network.''
Our response to terrorism is global. And so America's future
depends on the quality and skill of the people of the State Department.
Secretary Powell says that he has stopped thinking about the
Department as a first line of defense for our national interests and
now says that we are the first line of offense by pursuing active,
purposeful diplomacy.
What does it mean to be on the offense?
Our colleagues--Foreign Service, Civil Service, Foreign Service
Nationals--gain cooperation of leaders in other countries to support
American goals. Our officers work to maximize support for U.S.
initiatives, coordinate policies and resolve differences. Our officers
work with Finance Ministries and Central Banks to cut off financial
support for terrorists. Our officers are on the front line of the
effort to prevent terrorists from getting into the United States. Our
officers work to build public support for American values and policies.
Our officers keep our Department functioning smoothly, at home and
abroad, and our officers keep us safe.
Through this active, purposeful diplomacy, we have built a
coalition against terrorism unlike any other. More than 90 nations have
arrested or detained over 2,700 terrorists and their supporters since
9/11. 17 nations have contributed nearly 6,000 troops to Operation
Enduring Freedom and to the International Security Assistance Force in
Kabul. NATO members and partners have played an especially key role.
161 countries have blocked terrorist assets totaling $116 million--$34
million in the U.S. and $82 million abroad.
Here are several examples:
Our diplomacy in Southeast Asia prompted the exchanges of
information that allowed intelligence and law enforcement agencies to
break up an active terrorist network led by the Indonesia-based Jemaah
Islamiya. Arrests have occurred in Singapore, Malaysia, and Indonesia.
In Operating Enduring Freedom, our diplomacy paved the way for U.S.
forces to transit, stage in, and operate in numerous countries in
Afghanistan and its region.
In Central Asia, effective engagement secured new base-access
agreements and overflight permission.
September 11, 2001 changed America. September 11 also changed the
way the State Department does business.
Under the direction of the Secretary and Deputy Secretary, every
bureau in the Department and all of our Missions overseas have
organized to contribute to the fight against terrorism. Our Missions
ensure that counterterrorism objectives are met consistently and that
our operations succeed.
Mr. Chairman, I appreciate the observation made in your letter of
invitation that ``the foreign policy tools contained in the 150 account
will make or break our anti-terrorism efforts in the long term.''
Congress's strong support enables the U.S. to present and sustain an
effective offense against terrorism and its root causes. That is why we
support the President's FY-04 budget of $18.8 billion for the State
Department.
Our number one priority is to fight and win the global war on
terrorism. The President's budget furthers this goal by providing
economic military and democracy assistance to key foreign partners and
allies and pursing our program of ``Diplomatic Readiness.''
Over the last two years, with support from Congress, the State
Department has begun to address our human and capital resource needs.
The President's FY04 budget requests resources that will allow us to
continue to reinforce America's world-class diplomatic force--focusing
even more attention on the people, places and tools needed to promote
U.S. foreign policy goals.
Mr. Chairman, let me share with you a few more examples of the
returns on your investment State Department, USAID and other foreign
affairs agencies on the counter terrorism front.
As I briefly mentioned earlier, hundreds of wanted
terrorists have been apprehended by the United States since
September 11, and our partners have arrested thousands more.
These arrests include Khalid Shaikh Muhammad on March 1.
Through our Antiterrorism Assistance (ATA) Program, we are
providing training and equipment to 56 countries to fight
terrorists within and around their borders.
The $10 million Congress authorized in the FY 2002
supplemental budget for enhancing Pakistan's counterterrorism
capabilities has already helped to facilitate successes against
some of the most wanted terrorists in the world, including
Khalid Shaikh Muhammad.
Last year, we provided training to over 4700 foreign
security and law enforcement officers from 45 different
countries.
Our anti-narcotics and anti-crime programs have also shown
success. There is now stronger emphasis on counter-terrorism
training in our global network of International Law Enforcement
Academies' core and specialized courses. Our drug crop
eradication and interdiction programs in Asia, Latin America,
and elsewhere, have taken hundreds of tons of illicit drugs out
of circulation, helping to choke off an important source of
revenue to terrorist networks.
Our public diplomacy programs reach out to influence global
public opinion, build trust in our national policy, and build
respect and understanding for American values and principals.
The Shared Values Initiative of mini-documentaries, pamphlets
and other materials showing Muslims leading successful, secure
lives in America reached 288 million people in the Middle East,
South Asia, and East Asia.
Mr. Chairman, I want to highlight another point we have been making
since September 11: fighting terror and promoting human rights are not
opposite poles.
I believe supporting the growth of democracy and the respect of
human rights around the world is one of our greatest weapons against
terrorism. As the National Security Strategy of the United States says:
``America must stand for the nonnegotiable demands of human dignity:
the rule of law; limits on the absolute power of the state; free
speech; freedom of worship; equal justice; respect for women; religious
and ethnic tolerance; and respect for private property.''
Since September 11, we have increased our global engagement on
building democracy and protecting human rights.
Here is an example of how this all comes together: With your
support, in Colombia the United States trained and equipped a
counterdrug brigade. This unit is human rights vetted and received U.S.
human rights training. There has not been a single credible human
rights violation charged to this unit and it is considered the best
unit in the Colombian military. In fact, when I visit Colombia, human
rights advocates always tell me that what is needed is more such U.S.
training, not less, because our training means Colombia's military
becomes more professional, effective and respectful of human rights and
democracy.
The President's budget for FY 2004 will provide the dollars we need
to stay on the offense in the fight against terrorism. With adequate
resources, foreign affairs agencies can devote more attention to
addressing fundamental challenges that make countries vulnerable to
terrorist networks and their operations.
We will have the dollars we need to focus greater attention
and resources on weak states that can serve as refuge and
staging grounds for terrorist organizations.
We can do more in these countries and others to boost
economic development, improve governance practices, and
increase respect for human rights and the rule of law. The
President's budget includes a request for $1.3 billion to
launch the Millennium Challenge Account, a new bilateral
assistance program for developing countries that rule justly.
The President has also asked for $2 billion in FY04 to support
HIV/AIDS care and prevention programs in the hardest hit
countries, especially Africa and the Caribbean, with a goal to
provide $15 billion in HIV/AIDS funding over the next five
years. The Middle East Partnership Initiative (MEPI), which was
launched in December, has democracy promotion as one of its
priorities and links these efforts to economic and education
reforms. These are all smart and necessary investments.
We thank you, Mr. Chairman, for helping the State Department,
USAID, and other foreign affairs agencies get the resources we need to
do our jobs, and do them well, for the sake of the American people.
From your consistent support we know that you understand the
sacrifices--and sometimes the ultimate sacrifice--that the men and
women of our diplomatic corps, as well as their families, make every
day to protect America.
The Chairman. Thank you very much, Under Secretary
Grossman.
Under Secretary Green, would you proceed with your
testimony?
STATEMENT OF HON. GRANT S. GREEN, JR., UNDER SECRETARY OF STATE
FOR MANAGEMENT, DEPARTMENT OF STATE, WASHINGTON, DC
Mr. Green. Yes, sir. Mr. Chairman, members of the
committee, like Under Secretary Grossman, I am very pleased to
participate in this panel and have an opportunity to discuss
how the Department of State's management agenda supports the
war on terrorism.
As you know, Mr. Chairman, the people of the Department of
State have long been familiar with what affected all Americans
first-hand on September 11, 2001. They have always worked and
lived under what are often difficult and even dangerous
circumstances, including the daily threat of terrorism. The
August 7, 1998 bombings of the U.S. embassies in Nairobi and
Dar es Salaam focused the Department's attention on the threat
of terrorism and the need to respond to it as we never have
before.
September 11 did not change that focus nor State's
management priorities as much as it affirmed their importance.
Our agenda is more essential than ever, not just to play an
active role in the war on terrorism, but to address the whole
range of requirements that will give the United States and the
diplomatic infrastructure, our people in the field from all the
U.S. Government agencies, need to do their work.
Secretary Powell's management priorities were laid out on
day one. They have not changed, and they are pretty simple:
people, security, technology, facilities, and the resources
that support those four priorities.
At the pinnacle of our efforts are people, recruiting them,
training them, and doing the things that enable us to retain
them. To repair the large gap created in our personnel
structure by almost a decade of too few hires, we began the
Diplomatic Readiness Initiative in 2001. The DRI's 3-year plan
calls for bringing on board nearly 1,200 more foreign affairs
personnel, and completing it in 2004 is one of Secretary
Powell's highest priorities.
At the same time, we are strengthening the training
provided through the Foreign Service Institute,
counterterrorism, consular training, particularly in the areas
of improved visa interviewing skills and border protection,
public diplomacy training, as Under Secretary Grossman
mentioned, to bolster our ability to explain U.S. policy and
improve America's image, and language training, especially the
critical language programs such as Arabic, Persian, Farsi, Dari
and Pashtu.
One more point on people, Mr. Chairman. I noted with
interest your comment to the Secretary at a previous testimony
on filling hardship posts. We are currently examining a range
of incentives and doing away with disincentives which would
encourage people to serve at hardship posts, making sure that
we have the staff to man some of our most difficult posts and
assignments. We are enforcing the fair share assignment rules,
which require all Foreign Service staff to serve a portion of
their careers at these hardship posts.
A second priority, Mr. Chairman, and that is security. Our
security challenges are to sustain the security readiness as
threat levels remain elevated, to strengthen existing programs,
and have the flexibility to deal with the increasing threats
worldwide. We have had a major worldwide security upgrade
program underway since the 1998 embassy bombings, and I believe
our efforts are paying off.
As an example, we attribute the minimum damage from the
June 2002 attack on the American consulate in Karachi to be the
result of improved security awareness, training, and the
significant investment in physical and technical security
programs, but we have a lot more to do, and we will continue to
need your great support.
In the area of technology, we are well on the way to
providing the hardware and the software needed to build, as the
Secretary puts it, a state-of-the-art State Department. We will
be replacing the Department's outmoded telegram system with
SMART, a modern, centralized Internet-like system that
integrates all of the means through which people exchange
information, replacing today's cables, e-mails, Department
notices, and memoranda with e-documents.
Technology improvements do not just make work easier for
our employees. They relate directly to the war on terrorism
through such activities as visa and passport name checks,
increased data-sharing with other agencies, border security
controls, and services that support American citizens abroad.
Our fourth management priority, facilities. As I briefly
mentioned, we are aggressively addressing the longstanding
issue of insecure, unsafe, and outdated facilities in which
most U.S. Government employees overseas work. We just opened
new embassies in Nairobi and Dar es Salaam, replacing those
bombed in 1998. They are attractive, they are safe, they are
secure, and they are the kind of facilities that we must build
for our people everywhere.
In this vein, working with the Office of Management and
Budget, we have proposed a capital security cost-sharing
program that will allocate the capital cost of new overseas
facilities to all U.S. Government agencies. In addition to
being a fair way to allocate costs, it will act as a direct
incentive to right-sizing.
On the domestic side, we have faced a broad range of
challenges related to the war on terrorism. For example, we had
to close our central mail facility after the anthrax attack. We
stepped up emergency preparedness and enhanced the security of
our domestic buildings in the aftermath of that. We have
implemented a much more structured framework and a series of
standard procedures to ensure a fully coordinated emergency
preparedness effort for our Washington headquarters and for our
other domestic State Department facilities.
Let me touch briefly on consular affairs, because they play
a major role in our war on terrorism. September 11 altered the
context in which consular work is done both at home and abroad,
and I will state categorically that our first priority remains
the safety and the protection of U.S. citizens.
In close cooperation and coordination with the Department
of Homeland Security, we have done much. We have restructured
the visa process, for example, requiring new clearance
procedures for some applicants. We have improved document
integrity and fraud prevention. We have enhanced data
collection and expanded information-sharing, and we continue to
develop and deploy numerous new technologies to give us more
effective tools in this area.
Mr. Chairman, the bottom line is that we will continue to
do our best to give our people the infrastructure and the tools
they need to do their job, and we very much appreciate the
support you and the committee have shown for our management
initiatives. Mr. Chairman, we thank you for your past support.
We look forward to working with you and the committee as we
address the many management challenges facing the Department of
State, as we continue to conduct diplomacy around the world on
behalf of the American people.
Thank you.
[The prepared statement of Mr. Green follows:]
Prepared Statement of Grant S. Green, Jr., Under Secretary of State for
Management
INTRODUCTION
Mr. Chairman and members of the committee, I am pleased to
participate in this panel and to have the opportunity to discuss how
the Department of State's management agenda supports the War on
Terrorism.
The people of the Department of State have long been familiar with
what affected all Americans firsthand on September 11, 2001. They have
always worked and lived under what are often very difficult and
dangerous circumstances, including the daily threat of terrorism. The
August 7, 1998 bombings of the U.S. embassies in Nairobi and Dar es
Salaam focused the Department's attention on the threat of terrorism
and the need to respond to it as never before.
September 11th did not change State's management priorities as much
as it reaffirmed their importance. Our agenda is more essential than
ever--not simply to play an active role in the War on Terrorism, but to
address the whole range of requirements that will give the United
States the diplomatic infrastructure our people in the field from all
U.S.G. agencies need to do their work.
We have asked the Congress for $6.388 billion for the
Administration of the Foreign Affairs portion of the FY 2004 State
Department budget submission.
STATE'S MANAGEMENT AGENDA
Secretary Powell's management priorities are:
People,
Security,
Technology,
Facilities, and
The resources that support those priorities.
I will discuss what we have accomplished in each of these areas,
and what we plan to do over the next several years. I will also address
domestic infrastructure and operations, and consular affairs. While not
directly related to how we manage the Department of State and U.S.
diplomatic posts, consular affairs are critical to the War on
Terrorism.
PEOPLE
At the pinnacle of our efforts are our people--recruiting,
training, and retaining them. We want to get to a point where our
people can take training without seriously jeopardizing their missions
or offices; where our men and women don't have to fill two or three
positions at once; and where people have a chance to breathe
occasionally. We began to do this in 2002 with the Diplomatic Readiness
Initiative (DRI).
The DRI's three year plan calls for bringing on board 1158 more
foreign affairs personnel so that we can repair the large gap created
in our personnel structure and, thus, the strain put on our people by
almost a decade of too few hires, an inability to train properly, and
hundreds of unmet positions. Completing the DRI in FY 2004 is one of
Secretary Powell's highest priorities.
We have just started to get the traction we need to have enough
people to respond to priorities like the war on terrorism. Without
continued support we will have only applied a band-aid because our
responsibilities only continue to expand. For example, we have 40
people in Kabul now that we had to take out of our existing resources.
We made impressive gains in the first year of the hiring
initiative. We met all our hiring goals, reformed the Foreign Service
hiring process, and increased interest in careers at the Department. We
not only hired the 360 new employees under DRI, but we also hired
almost 600 additional employees in security, information technology,
and consular affairs. This was a huge increase--double the number of
junior officers over 2001--and, by increasing our outreach and
targeting it effectively, we did it without lowering standards.
At long last we are within striking distance of a Foreign Service
that is not only talented and committed but as diverse as we need to be
to represent America.
In 2002, we:
Increased interest in traditionally deficit areas including
management officers, information technology specialists, office
managers, financial management officers, and consular officers.
Sent out the new people we hired to meet critical visa
requirements, respond to emerging priorities like the war on
terrorism, fill critical gaps overseas, and to receive
additional training.
Increased training for new hires and began sending more
people to leadership and management training--a direct result
of higher staffing levels.
We have to capitalize on that investment in recruitment and realize
the full gains from these initial successes by continuing the hiring
momentum.
We recently approved for implementation a list of recommendations
that will enhance the incentives for employees to bid on difficult to
staff posts, covering quality of life issues, allowances and benefits,
and promotion and assignments.
We are also changing the organizational culture to instill better
leadership and management. We cannot do that if we only have enough
people to do the day-to-day work. We have to have the added strength to
respond to crises without leaving gaping holes.
We do currently maintain ``surge'' teams for security, consular,
management, and terrorism response assistance. Typically, we provide
additional capacity on a short-term basis by pulling experienced people
from other places and applying them to that priority situation. Because
the last Administration had ``underhired'' in the 1990s, compared to
our expanding mission, those responding to a crisis usually leave
important work unattended.
Training and career development are important components in
managing and retaining our people. Last year we implemented mandatory
leadership training for mid-level officers. This year we are beginning
a mandatory Senior Executive Threshold Seminar for officers newly
promoted to the Senior Foreign Service and Senior Executive Service.
The Army builds in a cushion to their manpower to allow for
training and transit. The Diplomatic Readiness Initiative would begin
to give us a small version of that system. We need the kind of
mentality that plans for crises, training, and new requirements.
Expanding counterterrorism training and response is an important
goal. The Bureaus of Near Eastern Affairs, Consular Affairs, and
Diplomatic Security, the Office of the Coordinator for
Counterterrorism, and the Foreign Service Institute all contribute to
this effort.
We are strengthening consular training, particularly in the areas
of improved visa interviewing skills and border protection. Public
Diplomacy training is also being expanded to bolster our ability to
explain U.S. policy to a foreign audience and to improve America's
image abroad.
Language ability is critical. While language skill is not a hiring
requirement, we do have an active foreign language recruitment program
to identify and recruit Americans with existing foreign language
abilities. We rely on training employees in languages as they are
needed in order to respond flexibly to changing needs. We are
endeavoring to provide even better language training, especially in
critical and burgeoning language programs such as Arabic, Persian/
Farsi, Dan, and Pashtu. We assess overseas positions yearly to
determine which should require language facility. While we do grant
some waivers, employees who are assigned to those positions must have--
or be able to acquire--the required language skill level before going
to post. Language-qualified persons were assigned to 88 percent of the
language-designated positions filled in FY 2002.
SECURITY
Our security challenges are to:
Sustain security readiness as threat levels remain elevated;
Strengthen existing programs; and
Have the flexibility to deal with the increasing threat
worldwide.
The Worldwide Security Upgrade funding continues to support (a) the
security enhancements implemented soon after the 1998 embassy bombings
and (b) new initiatives to keep current with measures to counter
threats. Both the worldwide demand for security personnel and the need
to protect our embassies during demonstrations and hostile acts means
contract guard costs will remain a necessary and expensive element of
our security program. In Kabul, we have to hire American contract
guards to replace the U.S. Marines currently protecting the U.S.
embassy. This is because the infrastructure does not exist for hiring
loyal guards locally.
This multi-year effort was the most significant overall improvement
to our perimeter security systems since the late 1980s. We will
continue similar and equally important work on annexes and other
buildings not included in the original program and maintain a life
cycle maintenance and replacement program to protect the upgrade
investments we have made over the past four years.
Our efforts are paying off. We attribute the minimal damage from
the June 2002 attack on the American Consulate in Karachi to be the
result of improved security awareness, training, and significant
investments in physical and technical security programs.
The chemical/biological countermeasures program has begun
deployment of 35,000 escape masks to personnel of all U.S.G. agencies
who staff our overseas missions. We will also provide training in the
use of these masks. Refresher training has been refocused specifically
on posts in Near Eastern and South Asian areas to address the threat
posed by Iraq; military-grade Chem/Bio suits are being deployed to
selected posts in those regions.
As an example of how September 11th has changed circumstances, our
FY 2004 budget request includes almost $5 million to respond to a U.S.
Olympic Committee request for federal agents to provide security
support to the government of Greece for the protection of U.S. athletes
at the Olympics. We have not previously offered this level of support
for events abroad. We believe that today's threat environment, among
other factors, makes this support a prudent and necessary decision.
To improve our capabilities to connect to a variety of interagency
databases supporting intelligence and antiterrorism activities and
programs, we plan to upgrade the systems and networks that support
Diplomatic Security law enforcement and investigative operations.
Currently connectivity is often limited to outdated modem
communications that are unacceptable for user access to existing
databases.
We have been unable to move forward on establishing a Center for
Antiterrorism and Security Training (CAST) because funding has not yet
been approved by Congress. Without suitable venues to train our agents
and other foreign law enforcement personnel who are our allies in
fighting terrorism, preparing those needing skills for combating
terrorists becomes challenging.
TECHNOLOGY
We are well on the way to providing the hardware and software
needed to build, as the Secretary puts it, a state-of-the-art State
Department. Our guiding principle, and the driving motivation behind
the E-Government initiative in the President's Management Agenda and
the E-Government Act of 2002, is that business practices should drive
every information technology (IT) project we undertake. We have
reinvigorated our information technology capital planning program by
creating an E-Government Program Board, composed of a wide range of
senior Department officials, and established an E-Government Program
Management Office to support the Board. These moves illustrate our
commitment to focus on business practices in managing IT projects.
Technology improvements do not just make work easier for our
employees. They relate directly to the War on Terrorism, through such
activities as visa and passport name checks, increased data sharing
with other agencies, border security controls, and services for
American citizens abroad.
We are completing modernization of the Department's global
classified and unclassified IT infrastructure through the successful
OpenNet Plus and Classified Connectivity Programs this year. We will
systematically refresh those systems to preclude IT obsolescence and
modernize our software tools to make the best use of this upgraded
cyber highway.
We will replace the Department's outmoded telegram system with
SMART, the State Messaging and Archive Retrieval Toolset. SMART is a
modern, centralized, Internet-like system that integrates all the means
through which people exchange information: replacing today's cables, e-
mails, Department notices, and memoranda with e-documents. SMART will
replace the fragmented processes, systems, and paper and automated
documents in use today with a single web-based system.
Protecting our ability to communicate worldwide rapidly and
securely is paramount during this terrorism battle. Our Chief
Information Officer has increased our efforts to improve our cyber
security profile. We have an ambitious plan to complete certification
and accreditation on all major applications and general support systems
by the end of FY 2004.
The Department is creating an alternate communications site to
support continuous, worldwide connectivity during emergencies.
Providing critical communications redundancy with rapid cutover
capability during a loss of the primary site is important to our
managers here in Washington and our employees around the globe.
We have expanded the intelligence community's Secret Internet
Protocol Routing Network (SIPRNET) worldwide through our classified
network to allow easier interagency information exchange and
collaboration.
We are consolidating our sources of information for security and
survivability. Because of this, bandwidth demands have doubled in the
past year. These requirements will continue to escalate. Fortunately,
in keeping with our focus on finding cost effective means to meet our
business requirements, we are working with other USG partners to find
innovative ways to meet our telecommunications requirements, building
in redundancy while reducing the ``price per bit.''
This degree of antiterrorism effort has required the Department to
increase technology efforts on all fronts and thus slowed some of our
routine IT business activities.
FACILITIES
More than 30 U.S.G. agencies, including the Department of State,
rely on the support platform our 260 diplomatic and consular posts
provide.
Secretary Powell has stated that he is proud of the job the Bureau
of Overseas Buildings Operations (OBO) is doing in bringing the costs
down of our embassy facilities around the world. State is carrying out
its construction program in a way that makes maximum use of modern
technology, state-of-art construction techniques, and standardization
of products. We just opened the new embassies in Nairobi and Dar es
Salaam, replacing those bombed in 1998. They are attractive, safe, and
secure facilities, the kind that we must build for our people
everywhere.
We are aggressively addressing the long-standing issue of insecure,
unsafe, and outdated facilities in which most U.S.G. employees overseas
work. In FY 2002, OBO obligated nearly $1.8 billion. This performance
represents the highest level of obligations in OBO history--84% over
the previous high set in FY 2001. We obligated nearly $700 million for
13 new embassy compound (NEC) projects alone, and another $152.6
million in Perimeter/Compound Security Upgrades.
It is critical that the United States sustain this level of effort
for more than a decade even to replace the most inadequate facilities
on our list.
Our FY 2004 budget request includes $761.4 million for construction
of secure embassy compounds in seven countries and $128.3 million for
construction of a new embassy building in Germany.
The budget proposes a Capital Security Cost-Sharing Program that
would allocate the capital costs of new overseas facilities to all
U.S.G. agencies. This program will serve two vital purposes:
To accelerate the construction of new embassy compounds.
To encourage U.S.G. agencies to evaluate their overseas
positions more carefully.
In doing so, it will further the President's Management Agenda
initiative to ensure that the official American presence abroad is
rightsized. The surcharge to the cost of stationing an American
employee overseas will not undermine vital overseas work, but it will
encourage more efficient management of personnel and taxpayer funds.
DOMESTIC INFRASTRUCTURE AND OPERATIONS
Our continuing objectives are to improve administrative services,
enhance quality of work and life for employees, advance the use of
technology, and leverage information resources. At the same time, we
have faced a broad range of challenges related to the War on Terrorism,
e.g., closure of our central mail facility because of an anthrax
attack, stepping up emergency preparedness and enhancing the security
of our domestic buildings, and procuring and moving equipment in short
order to set up Embassy Kabul.
We are moving actively to ensure the security of our buildings and
people in the United States. We have established the Homeland Security
Group (D/HS) in the Office of the Deputy Secretary. The Group serves as
the Department's liaison on homeland security issues to other
appropriate USG entities such as the Department of Homeland Security
and the Homeland Security Council, and coordinates homeland security
issues within the Department of State including overseas posts. We have
implemented a more structured framework to ensure a coordinated
emergency preparedness effort for our Washington headquarters and other
domestic State offices. We have established a Domestic Emergency Action
Committee to coordinate and consolidate our domestic emergency
planning. And, we are working with District of Columbia officials on a
design to enhance the perimeter security of the Harry S Truman
building.
Vital to improving the quality of work and life for employees is
our program for the modern management and renovation of domestic
facilities, including the consolidation of office space in Foggy Bottom
and multi-year renovation of the Harry S Truman Building. Security
elements are a major factor in our domestic infrastructure requirements
and the security of our domestic facilities became significantly more
visible after September 11th.
CONSULAR AFFAIRS
September 11th altered the context in which consular work is done
at home and abroad. Our first priority remains the protection of U.S.
citizens. U.S. citizens traveling, studying and working abroad have
always been on the front lines of America's struggles with terror,
crime and threats to safety.
Terror and political uncertainty abroad require intensified
services to Americans overseas using the best available technology. Our
improvements over the coming year include:
On-line registration of U.S. citizens.
Enhanced crisis management capability.
Improved information management to allow us to track how
many U.S. citizens abroad are victims of terrorism and other
serious crimes such as kidnapping, homicide, rape, assault, and
child abuse.
Innovative knowledge management, using modern tools to get
user-friendly information and guidance to our consular officers
quickly even when they are away from their offices assisting
Americans at remote locations.
Our consular work also protects Americans at home in the United
States. Continuous improvement of passport and visa programs makes it
ever more difficult for terrorists or criminals to operate with forged
or altered American passports or visas.
All domestic passport facilities now issue the highly secure
photodigitized passport, which incorporates printed digital photos and
related security devices. The digitized photo makes photo substitution
very difficult to do. Photo substitution was formerly the most
prevalent form of passport fraud. However, we know that we cannot be
complacent, and we continue to explore ways to enhance passport
security. We are also now providing these more secure passports to
Americans abroad: last year we transferred all but emergency passport
production to the United States. Most overseas Americans appear to
understand the security benefits of the new procedures, even though
they increase the amount of time that applicants abroad must wait to
receive a passport. We recently successfully completed pilot testing of
electronic transfer of passport data between two posts and a domestic
passport center. This electronic data transfer process will be
available at all posts in 2003 and will significantly reduce the wait
time for applicants overseas.
We are continuing through FY 2004 a project to scan as quickly as
possible into our digital passport application database (PRISM) 32
million passport applications from 1994 to 1999. The scanning of these
applications for older but still valid passports will make data and
images of valid passport holders available via our intranet to consular
offices worldwide. We also plan to transfer passport data and photos
electronically to U.S. ports of entry where the information will be
used to verify the authenticity of passports and the identity of the
passport bearer.
Last year, we completed development of the Consular Lost and Stolen
Passport System (CLASP), an electronic database that serves as the
central repository for information regarding lost or stolen U.S.
passports. All overseas posts and domestic passport agencies have
access to CLASP. We are sharing CLASP data with the U.S. Customs
Service's Treasury Enforcement Communication System (TECS) for use at
ports of entry and anticipate sharing it with the law enforcement
community by next year.
We have underway the worldwide deployment of the more secure
Lincoln visa, a redesigned Automated Cash Register System, a new Back-
Up Namecheck system featuring real-time update of local lookout files
from the central database, and a new Nonimmigrant Visa release
expanding electronic capture of data elements. Within the next year, we
plan to deploy a re-engineered and machine-readable immigrant visa with
electronic photo and a totally re-engineered American Citizens Services
system.
To ensure that visas are not issued to persons who might pose a
security risk, the Department has put in place special clearance
requirements for all adult visa applicants who are nationals or
permanent residents of countries that are designated as state sponsors
of terrorism, or who were born in one of them.
We are actively participating with the Department of Homeland
Security and the exchange community in the design and development of
the Student and Exchange Visitor Information System (SEVIS), the
permanent system that will contribute to our national security as it
adds integrity to the student and exchange visa issuing process.
We have instructed all posts to retain visa applications for at
least seven years. This replaces the old standard, under which
applications were destroyed after a year or two. Interim measures have
been taken to provide for paper storage of these applications. We have
made changes to consular automated systems to allow consular sections
to scan many applications for later retrieval and for easier
collaboration with other concerned U.S.G. agencies on special clearance
and other procedures. All visa applications dating from at least
October 2000 will be retained for at least seven years in a form
admissible in U.S. courts.
CONCLUSION
The bottom line is that we will continue to do our very best to
give our people the infrastructure and the tools they need to do their
job. We very much appreciate the support you have shown for our
management initiatives.
Mr. Chairman, I look forward to working with you and the Committee
as we address the challenges facing the Department of State and our
role in the War on Terrorism. I would be happy to answer any questions
you and the other members of the Committee have.
The Chairman. Thank you very much, Secretary Green. We will
try a 7-minute trial run today for our questioning. Let me
begin by starting my 7 minutes. I just compliment both of you
and the Department on this remarkable book, ``Inside a United
States Embassy.''
I have just briefly been acquainted with the book, but I am
fascinated by the contents, and I think that not only members
of the committee but all Americans will be deeply interested in
this, because clearly the case we are trying to make--both you
as officials of our State Department and American diplomacy and
Senators who have a deep interest in the success of that
diplomacy--are enhanced when a very broad number of Americans
have some idea of what you do, what the Department does.
For example, in this book, a consular officer--you have
just addressed this situation, Under Secretary Green, in
Manila--but likewise there is a picture of an American in Panay
City jail in Manila, and a consular official is trying to help
this individual get out of jail.
This an example of the nitty gritty affairs that occur
sometimes to innocent Americans, and sometimes to Americans who
are not so innocent in various countries. We simply take for
granted that there is a presence of our country there to try to
make certain that the rights and privileges of Americans and
their personal safety, those of their families, and those of
their businesses and affairs, are taken care of.
Now, the people who are taking care of it are often
consular officials, people on the embassy staffs. The book goes
on to point out all the services that are offered, the
information-gleaning that you have mentioned today, as well as
the information-sharing with other governments, the financial
expertise, clearly the ceremonial work, which is high profile
and which most of us recognize.
But, in fact, as we take a look at Korea--and we have been
talking about the Korean Peninsula a lot in this committee,
some of you have pointed out that in addition to 37,000
American Armed Forces in South Korea presently, on any one day
there are probably well over 100,000 Americans in other
capacities, many of them in the Seoul capital area under the
same potential guns and fire that we describe with regard to
the Armed Forces, and that is not a happenstance.
Americans are active abroad as students, as business
people, as tourists, as persons heavily involved in the
cultures of other nations, and we take for granted that
somebody--the State Department--looks after all of them, and
they do, and this book is an excellent business in terms of the
detailed work of individual Foreign Service officers.
Now, second, I am pleased with the report you have made
with regard to the hardship post issues that we have raised.
You could argue, and you have not, that this did not happen on
your watch, but nevertheless for several years, as we heard
Secretary Powell testify, there were no Foreign Service exams
taken by anybody. It is inconceivable in our Armed Forces that
for several years there would be no second lieutenants
commissioned, no continuity with regard to the service. How in
the world we anticipated that things were going to work in our
diplomatic corps with that kind of a gap, I do not know, but
nevertheless we are here picking up the pieces.
Now, having said that, it is important we pick them up
quickly and you are taking steps to do that, and trying to make
sure that not only is the training enhanced for those people,
often young people who are there and may not have all the
requirements right now, but some of the senior people likewise
are pitching in, serving terms in unpleasant places.
They were not chosen, particularly, but nevertheless they
are a necessity. Under the security problems that our country
has experienced, their presence there is required, and so I
appreciate that, and this is something I hope you will offer us
more detail on as you have an opportunity to complete our
record of where things stand now, because as benchmarks we will
continue to want to look at this.
Now, I do not want in this short period of time to get into
all of the argument as to budget, but essentially my general
view is that the Department at some point, as I sort of totaled
up the whole score, asked for about $3 billion more than it
appears in the budget debate we are about to have that the
Department is likely to get, without there being changes. The
Budget Committee would appear to have taken, first of all, the
official administration budget that came out of OMB, and that
really upgraded things by about $1 billion, and the Budget
Committee, it appears to me, has sheared the billion off.
So to retrace the bidding as I see it, the State Department
identified about $3 billion. A billion of that disappeared by
the time it came out of the administration as a whole, or it
went down from three to one. In the budget consideration at
least in the Senate, the one has disappeared.
Now, this is significant, and we are about to have hearings
again on what to do in funding the Millennium Challenge
Account, which you have mentioned in your testimony, as well as
the HIV/AIDS account, which you have also mentioned in your
testimony. These are accounts which, quite frankly, given the
budget situation as I perceive it in the Budget Committee, are
very likely to be given pretty short shrift. I do not know
where the money comes, except for displacement of other vital
things that are occurring out in the field or elsewhere in the
State Department, and these are not the only accounts that I
think are under some jeopardy.
Now, I mention this because I personally, or this
committee, really, may need to try to offer an amendment during
this debate. It is not an easy thing to do, because you have a
60-vote requirement as a rule, given the parliamentary
procedure, to change this situation, but I would say that I
need your help. We are going to need some testimony very
rapidly, if this deletion on the Senate side is to be remedied.
Now, I suspect--and this is really reaching ahead, but I am
told, reliably, that there will be a supplemental
appropriations bill coming along in the event hostilities occur
in Iraq. I suppose in a parliamentary way it is possible for me
or for other Senators to offer amendments during the
supplemental appropriations which ostensibly are to support
military action, the type of thing our Department of Defense
may require. But the case that we are trying to make today is
clearly that the money required for diplomacy throughout this
period and for reconstruction of Iraq afterwards is extremely
important in terms of our national security and our overall
success.
So in one form or another it appears to me that we are
going to need to identify funds fairly rapidly, or various
programs are rapidly going by the wayside in the fiscal year
that commences October 1. This is no news, I am sure, to either
one of you, and so I do not really have a question, precisely.
I have a plea, and that is, help us. That is one purpose of
having this timely hearing this morning. It comes really as we
get into both the budget defense in a formal sense and
conceivably a supplemental appropriation debate that may follow
shortly.
Do either of you have a quick comment? If not, I
understand, but if you do, please testify.
Mr. Grossman. Mr. Chairman, thank you very much. Just so we
get the record straight, I appreciate what you say about the
book. So that credit goes where credit belongs, this book was
put out by the American Foreign Service Association, our
professional association. We, just as you did, thought it was
an excellent contribution, and we are trying to do as much as
we can to publicize it, but I want you to know that it is their
book. They got a lot of people to contribute to it, and I
really congratulate them for the same reasons that you
mentioned.
The Chairman. I hope all listeners at this hearing have
seen the book and will want to read it.
Mr. Grossman. That is exactly right. As you say, it is
excellent, and I appreciate you mentioning it.
If I might just say also, on the question of changes in
diplomacy, Mr. Chairman, you all have helped us over the last
couple of years and before, kind of think about new ways of
doing business, and Under Secretary Green talked about the
people and the security and the technology, but there is also a
philosophical change that has to take place at the State
Department and that is, moving from an organization that
thought its job was to go out and report things and send them
back to other people, to the job that is listed in this book,
where people are doing active diplomacy on behalf of Americans
every single day, and so we are also making that transition
from what I would call the more passive institution of the past
to a more active institution as it is today.
The two points that you raise on the budget. We are here to
support the President's budget. That is our job. That is what
we believe in. But I would say to the points that you raise
specifically, sir, first, I think the Millennium Challenge
Account--and the reason I raised it in my testimony--I think
the Millennium Challenge Account is one of the most overlooked
and yet most important initiatives to come over the last couple
of years.
The President's speech in Monterrey, Mexico, is worth
rereading, because being able to increase the foreign affairs
budget of the United States and tie it to performance in
countries I think is a very big idea, and so that is why we
came to the Congress with the President's request, and second,
again to connect the issues of HIV/AIDS to the questions of
terrorism, because if HIV/AIDS tears up countries and weakens
them, and weakens their institutions, and makes it impossible
for people to have economies, those people will be, or could be
a haven for terrorism.
So just as I said that human rights and terrorism are not
two parts of a pole, that all of the things we are trying to do
are part of an answer to the global war on terrorism, and I
appreciate your comments, Mr. Chairman.
The Chairman. Well, thank you very much. I think the
committee knows that on Wednesday we are hopeful of having a
markup of the HIV/AIDS legislation, and Senators on both sides
of the aisle have worked very hard to fashion a bill that might
have strong support in this committee and hopefully on the
floor of the Senate. It is something that the President and
Members of the Senate in both parties have been advocating.
This is why the urgency with regard to the funding of it, which
is sort of fundamental, and the other debate that we are having
are rather a poignant experience for the moment.
Senator Feingold.
Senator Feingold. Thank you, Mr. Chairman, and I want to
thank you and Senator Biden for holding this important hearing,
and thank all the witnesses for being here today.
As America stands on the cusp of war in Iraq, it is
especially important to continue devoting our attention here to
the fight against terrorism, a fight that should be our very
first foreign policy priority. We cannot hope to win that fight
without the commitment of others working in a broad coalition
to deny terrorists safe havens and access to financing.
The fact is that today, even as American military and
economic might stand unchallenged around the world, we need the
rest of the world more than ever before, and we desperately
need what has been called by some our soft power, the
compelling quality of our national values, the appeal of our
ideals, our capacity for moral suasion. Our soft power was once
unrivaled. If we watch it diminish without taking action, I
think we have failed in our duty to the American people. To
harness all of this power not only to defeat terrorists but
also to move toward a vision of a better future and a more
just, prosperous, and peaceful world, we will also need a
strong and capable and innovative diplomatic service.
Much of the hard work of the campaign against terrorism
falls on the shoulders of the men and women of the State
Department. They must build the partnerships, foster the trust,
and coordinate the cooperation that is so crucial to the fight
against terrorism. I have had the honor of personally
witnessing this kind of incredible work, especially in Africa
over the past 10 years, and I am so impressed with the people
that serve us in these various posts. We are asking a great
deal of them.
This, Mr. Chairman, is an excellent opportunity to review
the question of whether or not they have all of the tools that
they need to succeed. I would like to ask the witnesses first a
question concerning some of the work we did on the Africa
subcommittee in the last Congress.
Last year, the Subcommittee on African Affairs held a
series of hearings examining weak States in the region, and
trying to draw out the different ways that State weakness
presents opportunities for international criminal activity,
including terrorism. One of the primary conclusions I drew from
the hearings was that long-term, sustained engagement is
essential to make headway in places that have minimal control
over their borders and also, of course, over transactions that
may occur within those borders.
Could you please describe for the committee the kinds of
strategies that the Department is pursuing to increase the
stability and capacity of weak States, and I mean this in
general, not just Africa, but that is the place we study the
most, obviously, under that committee.
Secretary Grossman.
Mr. Grossman. Yes, Senator, thanks very much, and first let
me thank you very much for your comments that you made about
the men and women who are serving abroad and serving at home,
Foreign Service, Civil Service, and our very important Foreign
Service national employees as well.
I would also just wish to say that I believe, as you do,
that we need, now, the most effective international coalition
we can possibly get to pursue this war on terrorism, and I know
that that is Secretary Powell's belief and the President's
belief, and we will pursue those policies as well.
In terms of what we are doing, as you say, not just in
Africa but around the world, in terms of dealing with States
that have these challenges, one is--again I go back to the
answer I gave to Senator Lugar, is the Millennium Challenge
Account. I think the Millennium Challenge Account would have a
huge impact on countries in Africa, some countries in Latin
America, and countries in Asia.
The second thing I would say, Senator, is that we have
worked very hard with the Congress to promote the kind of
trade, and free trade that is necessary so that people in those
countries can have jobs, so I am very supportive, for example,
of the African Growth and Opportunities Act [AGOA], and if you
take a look at the kinds of anecdotal evidence about how people
have taken advantage of AGOA and created jobs, and created new
communities and are exporting to the United States.
I would say also the Andean Trade Preferences Act is
exactly the same category. If we expect people to do things
that are good for them and good for their communities, then we
are going to need to import more from those countries.
The other thing I would say, Senator, is that when you look
at that what we are now carrying as the war on terrorism our
assistance to frontline States, many of them, some of them in
Africa, you can see--and I will be glad to give this to the
committee--across a whole range of issues from child survival,
development assistance, CSF, FMF, fighting terrorism, helping
people in their peacekeeping operations, international
development assistance, all across the board, I think we are
trying to run a consolidated and serious policy to help
countries meet the challenges that you say, particularly in
Africa.
We have got a level of resources in the 2004 request of
about $1.6 billion and, as I say, it is an across-the-board
effort to try to make these countries successful.
Senator Feingold. Let me just follow on that for a minute,
because I certainly respect what you say about trade and
opportunities for trade with countries that are able to do
that, and also the Millennium Challenge Account has great
potential, but the countries we looked at at our hearings, the
Somalias and Liberias, the Democratic Republic of Congo,
frankly, these are countries that are not in great shape to
benefit from these kinds of initiatives at this point because
they have much greater preliminary problems, issues of border
control, rule of law, financial control.
What I am really getting at here is not the countries that
are ready to do well under AGOA, or perhaps even to get the
Millennium Account money, but countries that are in much more
difficult straits, countries that we have referred to as
``failed or weak States.'' I wonder if you could address what
is being done in those countries, because I do think those are
the ones that are open to greatest potential for terrorist
activity and international criminal activity.
Mr. Grossman. Yes, sir. First let me say that with the
Millennium Challenge Account of course, there is a maximum
gross national product income on Millennium Challenge Accounts.
The Millennium Challenge Account is actually directed to the
poorest countries, and maybe all countries will not be able to
meet their requirements, but the idea that money from the MCA
would somehow flow to countries that need to meet the kinds of
requirements that you have laid out, border controls, better
governance, more justice in their countries, I think actually
there is a connection to be made there, and so I think the MCA
for me is part of that effort.
Senator Feingold. Let me ask you, are you saying that
Somalia or Liberia in their current condition would have the
possibility of being eligible under MCA?
Mr. Grossman. No. It is a combination of their gross
national products, their income levels, and also what they are
doing to try to change their society, so I hope it would at
least be an incentive.
Senator Feingold. Well, I would suggest--and I know my time
is up--I stand to be corrected. I would think these countries
have other severe governance and other problems that would
probably make them not very logical candidates for that help,
so in future discussions I want to certainly get at the value
of MCA and the value of AGOA and trade, but I think there are
more fundamental problems of chaotic conditions in some of
these countries. We need to have a real strategy, or we are
going to end up with more and more venues for terrorist
activity to be perpetrated not only in Africa but other places
in the world, but I do appreciate your testimony today.
Mr. Grossman. Thank you, sir.
[The prepared statement of Senator Feingold follows:]
Prepared Statement Senator Russell D. Feingold
I want to thank Chairman Lugar and Senator Biden for holding this
important hearing, and to thank all of the witnesses for being here
today.
As America stands on the threshold of a war in Iraq, it is
especially important to continue devoting our attention here to the
fight against terrorism--a fight that should be our very first foreign
policy priority. We cannot hope to win that fight without the
commitment of others, working in a broad coalition to deny terrorists
safe havens and access to financing. The fact is that today, even as
American military and economic might stand unchallenged around the
globe, we need the rest of the world more than ever before. And we
desperately need what has been called our ``soft power''--the
compelling quality of our national values, the appeal of our ideals,
our capacity for moral suasion. Our soft power was once unrivaled. If
we watch it diminish without taking action, we will have failed in our
duty to the American people.
And to harness all of this power--not only to defeat terrorists,
but also to move toward a vision of a better future and a more just,
prosperous, and peaceful world--we also need a strong and capable and
innovative diplomatic service. Much of the hard work of the campaign
against terrorism falls on the shoulders of the men and women of the
State Department. They must build the partnerships, foster the trust,
and coordinate the cooperation that is so crucial to the fight against
terrorism. We are asking a great deal of them, and this is an excellent
opportunity to review the question of whether or not they have all of
the tools that they need to succeed.
The Chairman. Senator Hagel.
Senator Hagel. Mr. Chairman, thank you.
Gentlemen, welcome, and we are grateful for your efforts,
your leadership, your good work, and please convey that to your
colleagues as you return to the State Department. We appreciate
especially your work at this complicated, dangerous time.
Under Secretary Green, as you laid out in your testimony
this morning, some of the advances and significant achievements
that have been made over the last couple of years in our
embassies as you laid them out in five different areas,
beginning with people, with our war on terrorism, additional
government representatives that have moved into our embassies
around the world, FBI, CIA, Homeland Security, Commerce, other
departments, what kind of pressure is that putting on our
resources, physical pressure on our embassies, people
pressures, logistics support pressures, if any?
Mr. Green. Thank you, Senator Hagel. As you know, and as
Under Secretary Grossman mentioned, our role overseas has
changed dramatically. More than two-thirds, now, of U.S. direct
hire personnel overseas are non-State people and we, as you
know, go through a process of approving or disapproving
additions to our overseas posts. We recognize that with the
changes, the war on drugs, the health issues, economic issues,
terrorism, that there will be demands on our overseas posts
that are much different than what historically has happened. We
attempt to accommodate those.
There are occasions when an overseas post physically cannot
accommodate those people, and the result is that we will not
let them come. It also gets to the whole issue of right-sizing,
not downsizing but right-sizing and, as the GAO has indicated
in their recent report, we need to take a look at all of our
overseas embassies to see what is right. There may be some
shifts that need to be made among posts. There may need to be
some that are downsized, and there may need to be some that
need to be increased in size.
Agencies who reside at our embassies and on our compounds
do pay a certain administrative fee for being there, and that
is done through a combined joint process at our posts called
ICASs, and they have a council that agrees or disagrees with
increasing the number of people and contributing toward their
upkeep.
The other thing that has just been proposed by us and at
least accepted in concept by OMB was the cost-sharing I
mentioned, and that is, as we build new embassies we are going
to have to go to the tenants and ask them to contribute to the
construction and the operations and subsequently to the
operations and maintenance of those posts.
It serves two purposes. One is that it is fair, but second,
it makes other departments and agencies who may not consider
the budget implications of having people overseas, it will
focus their attention on that, so when you build a new embassy
and a desk in an unclassified area is $22,000 and a classified
area is about $34,000, hopefully it will make that Department
or that agency think about the cost, not to mention the cost of
maintaining a person overseas, which can be anywhere from
$350,000 to $600,000 a year. It will make them think twice
about how many people do I really need.
Senator Hagel. Thank you. Obviously you have thought
through this, and you have gotten to part of the core of my
question as to why, because as you suggest, to develop ongoing
relationships in these countries to fight terrorism, it is
unfair to load the State Department budget up with all of this
burden, and so any assistance you need from me--I cannot speak
for any other members of this committee, but I certainly will
help you and the Secretary in every way if you have a snag with
that, because I can see more and more of your resources being
drained away to other agencies, and we all are focused on the
same objective, of course, but it is not fair to ask you to
pick it all up. Thank you, Mr. Secretary.
Secretary Grossman, as it appears we are going to war in
Iraq in a matter of hours, if, in fact, we do go to war in Iraq
with what appears to be a very limited coalition of other
troops on the ground--right now I count the British and the
Australians, and maybe there are others, or will be others, but
what effect do you believe that a war without a United Nations
resolution, without the legitimacy of the Security Council,
might have on our efforts to continue to coordinate
antiterrorism efforts within Muslim and Arab countries? Will it
make any difference? Will they be less likely to cooperate,
more likely to cooperate? I would be interested in your
reflection on that.
Mr. Grossman. Thank you, Senator Hagel.
First, obviously, if the President decides--really it is
now up to Saddam Hussein. If Saddam Hussein does not meet the
requirement of getting out of Iraq in 48 hours, I actually
believe, sir, that although we may have a limited number of
people with us on the ground, there will, Senator Hagel, be
quite a large number of people who will consider themselves
part of this coalition, who will give overflight rights, or
basing rights, or other support, so I do not think that we are
going to be alone in this, and I hope that the committee and
the American people will also recognize that a large number of
people are going to stand up and be for this, and I think that
is a plus, sir.
Second, although obviously we worked hard and we would have
liked to have had a second U.N. Security Council resolution
because it would have been politically useful, I think the
legality here and legitimacy of our action really is beyond
question, and that is that after 11 or 12 years of having
Saddam Hussein ignore these resolutions, I think the United
States has a right to act and I believe that, as people look at
our case, especially after Resolution 1441, they will agree
with that as well.
Sir, I believe that success is going to be the most
important determining factor here, and I believe that the men
and women in uniform, if they have to go into combat, will be
successful, they will be successful quickly, and I believe that
that success will actually bring us more cooperation rather
than less cooperation over time.
I do not see, and I do not fear--perhaps Ambassador Black
will have a different view, but I do not fear a falling-off of
cooperation either in the Arab States, other Muslim States, or
around the world, because I believe we will be successful and
we will show that we can operate successfully against
terrorism, and people ought to be a part of that team.
Senator Hagel. Thank you.
The Chairman. Thank you very much. Senator Hagel.
Senator Chafee.
Senator Chafee. Thank you very much, Mr. Chairman. I am
interested in the integration of the new homeland security law
into the work that you do, and from what I understand, it is
contemplated that the homeland security will encourage more
coordination between the work the embassies do and domestic
protection, and that the law authorizes Secretary Ridge to
assign employees of Homeland Security to embassies and
consulates, and directs Secretary Ridge and Secretary Powell to
come up with some kind of a memorandum of understanding [MOU]
in that direction. How is that proceeding?
Mr. Green. Thank you, Senator Chafee. We have since the
announcement of the Homeland Security Act been deeply involved
as the Department began to stand itself up, deeply involved in
the coordination of that effort. We established an office
reporting directly to the Deputy Secretary that facilitated and
ensured that kind of coordination.
We are now beginning to transition to a more regularized
process so that our Department coordinates and will continue to
coordinate with the Department of Homeland Security the way we
coordinate with the Department of Defense or any other
Department.
The bureaus within the State Department, counterterrorism,
diplomatic security, and consular affairs, which are the three
that have the most interface with the Department of Homeland
Security are on a constant and regular basis contacting their
counterparts in that Department.
The MOU that you mentioned is in the process of being
worked and coordinated between the two Departments. As you
know, the Secretary of Homeland Security does have oversight
responsibility over consular officers and visa adjudications
through the Secretary of State, and that will be part of the
MOU that is being worked as we speak.
Senator Chafee. Thank you very much. That is all the
questions I have.
The Chairman. Senator Hagel, do you have any further
questions of our witnesses?
Senator Hagel. With the second panel, Mr. Chairman. I would
wait and direct my questions to Ambassador Black.
The Chairman. Very well. We thank both of you for your
timely appearance today and for the great support you have
given the Department, and likewise the efforts of our
committee. We look forward to working closely with you.
Mr. Green. Thank you for your support, sir.
Mr. Grossman. Thank you, Mr. Chairman.
The Chairman. The Chair now calls our second panel forward,
and that panel will be composed of Hon. J. Cofer Black,
Coordinator for Counterterrorism, Department of State,
Washington, DC; Mr. John Pistole, Deputy Director of the
Counterintelligence Unit, Federal Bureau of Investigation,
Washington, DC; and Juan C. Zarate, Deputy Assistant Secretary,
Executive Office for Terrorist Financing and Financial Crimes,
Department of the Treasury in Washington, DC. Gentlemen, we
welcome you.
Let me just make a short announcement for Senators and for
all who are witnessing the hearing. A rollcall vote of the
Senate will occur at 12 noon. It would appear, however, we will
have ample time for the full testimony of our witnesses and
questioning by Senators of the witnesses, but I mention that
timeframe because it will be on the minds of some as we
approach the noon hour.
I will ask you to testify in the order I introduced you,
and that would be first of all, Mr. Black. All of your full
statements will be included in the record, so you need not ask
for permission to do that, and please proceed and summarize as
you wish. Mr. Black.
STATEMENT OF HON. J. COFER BLACK, COORDINATOR FOR
COUNTERTERRORISM, DEPARTMENT OF STATE, WASHINGTON, DC
Ambassador Black. Mr. Chairman, Senator Biden, committee
members, I appreciate your invitation to testify on the State
Department's role in coordinating the non-military war against
terrorism overseas. I also want to express my thanks to you and
members of the committee for recognizing the very crucial role
our embassies play in combating terrorism.
Mr. Chairman, I am also honored to be here with Mr. John
Pistole from the FBI and Mr. Juan Zarate from the Treasury
Department. While I endeavor to avoid covering the same ground
as Under Secretaries Grossman and Green in the previous panel,
one cannot overemphasize the importance of our diplomatic
efforts in the global war on terrorism. Terrorists and their
organizations cannot be defeated through force of arms alone,
as Secretary Powell has stated. Diplomacy constitutes this
Nation's first line of defense, and also one of the most potent
offensive weapons in the war on terrorism. Diplomacy is the
instrument of power that builds the political will and
strengthens international cooperation. Diplomacy helps us to
take the war to the terrorists, to cutoff the resources they
need and depend upon to survive.
I want to make clear at the outset of my remarks that the
State Department, our embassies and consulates abroad certainly
are not alone in carrying out this important work. Many other
Federal agencies, particularly the ones represented by those
seated next to me, for example, have critical missions in this
regard. However, as the lead foreign affairs agency, the
Department of State through my office serves as a statutorily
appointed coordinator and overall clearinghouse for the wide
span of counterterrorism activities conducted overseas by the
U.S. Government.
As you might imagine, the job of coordinating such a large
interagency and international effort is a great challenge. It
is a challenge because of the growth of counterterrorism
initiatives and programs since 9/11. It is a challenge because
of the evolving terrorist threat and the shifting international
environment that, for example, is being effected today by
Iraq's continued intransigence to disarm, and its support of
and potential future support for, enhanced support for
international terrorism. Finally, there is the challenge of
undertaking these expanded responsibilities in the face of
limited resources.
In all of these efforts, our embassies and consulates play
a critical role. Let me briefly describe our ongoing efforts in
this context. Since 9/11, we have methodically taken the battle
against terrorism to the international front lines. Our
embassies and consulates are serving us well.
Over my career in international affairs, and at times being
a part of that diplomatic front line, I have developed much
admiration and respect for the men and women who serve at our
missions overseas. In the face of especially grave threats
today, they continue to serve with great professionalism and
bravery. Indeed, they are the backbone to our overseas
counterterrorism efforts. It is this diplomatic readiness, to
use Secretary Powell's phrase, that is vital to our ability to
fight terrorism.
It is an important function of my office and staff to
support this frontline effort. Since assuming the coordinator's
job 3 months ago, I have traveled to Russia, China, Japan,
Israel, Jordan, Saudi Arabia, the U.K. and the triborder region
of South America. In doing so, I can say unequivocally that our
chiefs of mission and the country teams are invaluable
resources. They are both leading and supporting our efforts to
promote and achieve our counterterrorism agenda in their
respective host countries and regions.
Our embassies also help to facilitate efforts to cutoff
support to terrorists through supporting our counterterrorist
programs. Just a few days ago, my staff joined an interagency
team that went to Manila to successfully assist the Government
of the Philippines in adopting the financial controls vital to
denying terrorists access to funding and, in doing so, brought
the Philippines into compliance with international standards.
My staff in similar Washington-based interagency teams,
joining our country teams overseas, are helping many other
frontline States in this and in other ways. Our embassies and
consulates also provide critical information on terrorist
organizations. Such information serves as the foundation of our
imposing legal and administrative sanctions against such
organizations. The Secretary of State formally has designated
36 foreign terrorist organizations. Among other consequences,
U.S. persons are prohibited from knowingly providing any
designated organization with financial and other forms of
material support.
We have also designated more than 250 terrorist individuals
and entities under Executive Order 13324 on terrorist financing
and other applicable U.N. Security Council resolutions. This
has resulted in the worldwide seizure of more than $120
million.
Regarding training, U.S. embassies and consulates are also
working with us to train and equip frontline States to fight
terrorists within and around their borders. Our antiterrorism
assistance, usually referred to as the ATA program, is
providing training to 56 countries through 180 courses during
fiscal year 2003, and plans to step up its training efforts in
fiscal year 2004. We are working with 37 countries through our
Terrorist Interdiction Program, called TIP, to evaluate,
establish, and improve the border-monitoring capabilities.
These and other programs are described in further detail in the
written statement accompanying this testimony.
To diminish the underlying conditions that terrorists
exploit, we are coordinating our assistance programs to
complement our counterterrorism interests. Our public affairs
programs actively disseminate information that accurately
portray our policies and promote our democratic values. Our
embassies play a vital role in this respect as well, advising
us on our international assistance programs and actively
fostering greater understanding of the United States through a
wide spectrum of public affairs and exchange programs. While
these are successes, you have asked me to comment on the
obstacles we face and ways in which they have been or can be
overcome.
Quite frankly, one of the largest challenges is connecting
the resources in a timely and effective manner, to our
operational and program needs. While we are deeply grateful for
the support of the Congress that was provided to our
counterterrorism programs, delays in the enactment of
appropriations have repercussions on our operations. I would
defer to the Department's financial specialists on proposing a
solution. However, clearly, there are problems that arise from
having only a half-year to utilize funds that were originally
intended to be expended over a full year period.
The administration is also reviewing the requirement in
current law regarding the designations of terrorist
organizations and individuals every 2 years. The designations
of foreign terrorist organizations, or FTOs, expires after 2
years unless renewed. This year, 29 groups are up for
redesignation, taking valuable staff resources away from
pressing counterterrorism work. We, therefore, are preparing
draft legislation to amend the FTO statute and make it less
administratively onerous.
Overseas, we face a number of obstacles. We have scored
some notable recent successes, including the March 1 arrest by
Pakistani authorities and others of Khalid Shaikh Mohammed, a
ranking al-Qaeda leader, through close cooperation and
coordination with the Pakistani authorities. However, al-Qaeda
and other terrorist groups continue to pose a grave threat to
the United States and our allies. Your continued support for
our capacity-building programs will help. While the dividends
of such investment may not be completely apparent, we must
think of our global war on terrorism as a long-term fight, as
was the case in the cold war.
Research and development: we must also continue our
counterterrorism R&D efforts. I would like to especially
mention the work of our interagency Technical Support Working
Group, led by my office, that is developing new technologies to
protect us against terrorist attacks.
I have with me, as an example, a product of direct
relevance to the Congress. This is the ``Quick 2000'' mask.
This is one of the masks distributed to Members and staff. The
Technical Support Working Group was instrumental in guiding its
development.
Another product of this R&D group is a specially designed
card that will alert the wearer to the presence of radioactive
materials. This unit essentially, Mr. Chairman, takes the needs
of the frontline warriors in counterterrorism, is in contact
with private sector companies, and is able to quickly, rapidly
prototype and provide products into the hands of our frontline
responders. As an example, this card replaces an item that was
very heavy, very bulky, and it will be made available even to
the private sector customers for $3 each.
Let me conclude by saying that the key to fighting
terrorism is a sustained effort that can be achieved only
through sustained resources. It is not just al-Qaeda that
threatens our citizens and interests, but other terrorist
organizations and supporters, including the State sponsors of
terrorism. To defeat this threat requires our full attention,
both here in Washington and abroad, and your continued support
to our embassies and interagency community involved in fighting
terrorism is absolutely vital, Mr. Chairman.
Thank you for allowing me to present my testimony. I look
forward to your questions at any time.
[The prepared statement of Ambassador Black follows:]
Prepared Statement of Ambassador J. Cofer Black, Coordinator for
Counterterrorism, Department of State
Mr. Chairman, Senator Biden, Committee Members:
I appreciate your invitation to testify on the State Department's
role in coordinating the non-military war against terrorism overseas. I
also want to express thanks to you and members of the committee for
recognizing the crucial role our embassies play in combating terrorism.
Mr. Chairman, while I will endeavor to avoid covering the same
ground as Under Secretaries Grossman and Green in the previous panel,
one cannot overemphasize the importance of our diplomatic efforts in
the Global War on Terrorism. Terrorists and their organizations cannot
be defeated through force of arms alone. As Secretary Powell has
stated, diplomacy constitutes this nation's first line of defense and
also one of our most potent offensive weapons in the war on terrorism.
Diplomacy is the instrument of power that builds political will and
strengthens international cooperation. Through diplomatic exchanges we
promote counterterrorism cooperation with friendly nations that serves
our mutual interests. We build capacity that bolsters the capabilities
of our allies. Diplomacy helps us take the war to the terrorists, to
cut off the resources they need and depend upon to survive.
I want to make clear at the outset of my remarks that the State
Department and our embassies and consulates abroad certainly are not
alone in carrying out this important mission. The Departments of
Justice, Treasury, Homeland Security, Defense, CIA and many other
federal agencies have critical missions in this regard. However, as the
lead foreign affairs agency, the Department of State--through my
office--serves as the statutorily appointed coordinator and overall
clearinghouse for the wide span of counterterrorism activities
conducted overseas by the United States Government.
As you might imagine, the job of coordinating such a large
interagency--and international--effort is a great challenge. It is a
challenge because of the growth of counterterrorism initiatives and
programs since 9/11. It is a challenge because of the evolving
terrorist threat and the shifting international environment that, for
example, is being affected today by Iraq's continued intransigence to
disarm and its support of and potential future support for
international terrorism. Finally, there is the challenge of undertaking
these expanded responsibilities in the face of limited resources.
In all of these efforts, our embassies and consulates play a
critical role. Let me briefly describe our ongoing efforts in this
context.
EMBASSY ACTIVITIES
Since 9/11, we have methodically taken the battle against terrorism
to the international front lines. Our ambassadors and the staff members
of our embassies and consulates, drawn not just from State but also
from other federal agencies, are serving us well. Over my career in
international affairs and now being a part of that diplomatic front
line, I have much admiration and respect for the men and women who
serve at our missions overseas. In the face of especially grave threats
today, they continue to serve with great professionalism and bravery.
Indeed, they are the backbone to our overseas counterterrorist efforts.
It is this ``diplomatic readiness,'' to use Secretary Powell's phrase,
that is vital to our ability to fight terrorism.
Our embassies are our direct conduits to the governments of other
nations. They facilitate our efforts to disrupt terrorist networks and
to apprehend terrorist individuals. The ambassador, his or her deputy,
and other members of the country team, including representatives from
other agencies, are all instrumental in developing and maintaining good
working relations with the host country and pursuing our
counterterrorism objectives.
It is an important function of my office and staff to support this
front line effort. Since assuming the Coordinator's job three months
ago, I have traveled to Russia, China, Japan, Israel, Jordan, Saudi
Arabia, and the Tri-Border region of South America. In doing so, I can
say unequivocally that our Chiefs of Mission and their country teams
are invaluable resources. They are both leading and supporting our
efforts to promote and achieve our counterterrorism agenda in their
respective host countries and regions.
Our embassies also help to facilitate efforts to cut off support to
terrorists through supporting our CT programs. Just a few days ago, my
staff joined an interagency team that went to Manila to successfully
assist the Government of the Philippines in adopting financial controls
vital to denying terrorists access to funding and in so doing brought
the Philippines into compliance with international standards. My staff
and similar Washington-based interagency teams, joining our country
teams overseas, are helping many other front-line states to evaluate
their financial systems, identify vulnerabilities, and develop
counterterrorism finance training programs.
Our embassies and consulates also provide critical information on
terrorist organizations. Such information serves as the basis for our
imposing legal and administrative sanctions against such organizations.
The Secretary of State currently has designated 36 foreign terrorist
organizations. Among other consequences of such designations, U.S.
persons are prohibited from knowingly providing any designated
organization with financial and other forms of material support.
Working with the Departments of Treasury and Justice, and with other
countries, the State Department has also designated more than 250
individuals and entities linked to terrorism under Executive Order
13324 and under applicable UN Security Council Resolutions, resulting
in the worldwide seizure of more than $120 million.
TRAINING
U.S. embassies and consulates also are working with us to train and
equip frontline states to fight terrorists within and around their
borders. Our Antiterrorism Assistance (ATA) program is providing
training to 56 countries through 180 courses during FY 2003 and hopes
to step up its training efforts in FY 2004. We are working with 37
countries through our Terrorist Interdiction Program (TIP) to evaluate,
establish and improve border-monitoring capabilities.
These and other programs are described in further detail in an
accompanying written statement to this testimony.
To diminish the underlying conditions that terrorists exploit, we
are coordinating our assistance programs to dovetail them with our
counterterrorism interests. My staff recently met with AID officials to
discuss ways to deepen this coordination. Our public affairs programs
actively disseminate information overseas that accurately portrays our
policies and promotes our democratic values. Our embassies play a vital
role here as well, advising us on our international assistance programs
and actively fostering greater understanding of the United States
through a wide spectrum of public affairs and exchange programs.
While these are successes, you have also asked me to comment on the
obstacles we face and ways in which they have been or can be overcome.
OBSTACLES
Quite frankly, one of the biggest challenges is connecting the
resources to our operational and program needs in a timely and
effective manner. While we are deeply grateful for the support that the
Congress has provided to our counterterrorism programs, delays in the
enactment of appropriations have repercussions on our operations. I
would defer to the Department's budget specialists on proposing a
solution. However, clearly, there are difficulties that arise from
having only a half-year to utilize funds for programs that were
originally intended to expend such funding over a full year period.
The Administration is also reviewing the requirement in current law
regarding designations of terrorist organizations and individuals every
two years. Under a law first enacted in 1996, the designation of a
Foreign Terrorist Organization (FTO) expires after two years unless
renewed, even if there is little or no change in the activities of
these designated groups. This year, 29 groups are up for redesignation.
The task of drafting new administrative records every two years to
support a determination to redesignate FTOs is labor intensive and
unnecessary in most cases. Resources needed for redesignations could be
better used for other important counterterrorism duties, including
monitoring and designating new groups as appropriate. We are preparing
draft legislation to amend the FTO statute and make it less
administratively onerous.
Overseas, we face a number of obstacles. We have scored some
notable recent successes, including the March 1 arrest by Pakistani
authorities of Khalid Shaikh Mohammed, a ranking al-Qaida leader,
through close cooperation and coordination with Pakistani authorities.
However, al-Qaida and other terrorist networks continue to pose a grave
threat to the United States and our allies. There are no easy
solutions. In addition to our ongoing real-time operations, we must
continue to provide frontline countries the training and assistance
needed to support their counterterrorism efforts. Your continued
support for our capacity-building programs will help. While the
dividends of such investment may not be immediately apparent, we must
think of our global war on terrorism as a long-term fight that may take
years or, indeed, decades, as was the case with the Cold War.
RESEARCH & DEVELOPMENT
We must also continue our counterterrorism R&D efforts. On this,
I'd like to especially mention the work of the interagency Technical
Support Working Group (TSWG), led by my office, that is developing new
technologies to protect us against terrorist attacks. I am holding up
two TSWG products of direct relevance to this Congress. The ``Quick
2000'' mask is the one distributed to Members and staff. The TSWG
guided its development. Another product of this R&D group is a
specially designed card that will alert the wearer to the presence of
radioactive materials.
Mr. Chairman, let me conclude by saying that the key to fighting
terrorism is sustained effort. That can be achieved only through
sustained resources. It is not just al-Qaida that threatens our
citizens and interests but other terrorist organizations and their
supporters, including state sponsors of terrorism. To defeat this
threat requires our full attention both here in Washington and abroad.
To win, your continued support to our embassies and the interagency
community involved in fighting terrorism is vital.
Thank you for the opportunity to testify and I would be glad to
answer any questions.
______
State Department Counterterrorism Programs
Terrorist Finance Programs. This is a core function of S/CT. We
seek to interrupt and deny the flow of funds going to terrorists and
their operations and to strengthen the financial and regulatory sectors
of vulnerable coalition partners against manipulation and penetration
by the financiers of terror.
The groundwork for our counterterrorism finance offensive was
actually laid many years before 9/11, with provisions that the State
Department proposed and the Congress enacted as part of the
Antiterrorism and Effective Death Penalty Act of 1996. The Act
authorizes the Secretary of State, in consultation with the Attorney
General and the Secretary of Treasury, to designate Foreign Terrorist
Organizations (FTOs). Among other provisions, the Act prohibits U.S.
persons and persons subject to the jurisdiction of the United States
from knowingly providing material support or resources to an FTO, or
attempt or conspire to do so. Among other consequences of a
designation, any financial institution that becomes aware that it has
possession of or control over funds of a designated FTO must retain
possession of or control over the funds and report the funds to the
Treasury Department's Office of the Foreign Assets Control (OFAC).
Currently 36 groups are designated.
Following September 11, the President signed Executive Order 13224,
which requires U.S. persons to freeze the assets of individuals and
entities designated under this E.O. for their support of terrorism.
There are currently over 250 individuals and entities designated under
E.O. 13224. The White House also established an interagency mechanism
to coordinate terrorist financing policy among USG agencies. Each
embassy has identified a Terrorism Finance Coordination Officer to lead
the effort to work with the host governments to detect, disrupt and
deter terrorist financing. Internationally, the UN has also stepped up
its own efforts in the area of fighting terrorist financing in a major
way following September 11, requiring countries to freeze the assets of
those included in its consolidated list of entities and individuals
with ties to al-Qaida and the Taliban. This list continues to expand as
countries join us in submitting new names of individuals and entities
linked to al-Qaida to the UN. So far, USG and coalition freezing
actions have netted over $120 million in assets of persons or entities
with ties to terrorist networks, and in many cases to al-Qaida.
We are working with the Financial Action Task Force (FATF)--a 31-
member organization that sets international standards to combat money
laundering and more recently to combat terrorist financing. Last month
the FATF elaborated on two of its earlier recommendations on terrorist
financing to make the use of cross-border wire transfers and
alternative remittance systems (such as hawalas) more transparent, and
less subject to exploitation by terrorist groups. On the bilateral
front, interagency teams led by the State Department are traveling to
states critical to our counterterrorism efforts to evaluate their
financial systems, identify vulnerabilities, and develop and implement
comprehensive counterterrorism financing training and technical
assistance programs.
CT Finance Capacity Building programs are coordinated by S/CT and
administered through State/INL (The Bureau for International Narcotics
and Law Enforcement Affairs) and counterpart entities at the
Departments of Justice, Treasury, and Homeland Security. These programs
are aimed at providing front-line states with technical assistance in
drafting anti-terrorist financing legislation, and training for bank
regulators, investigators, and prosecutors to identify and combat
financial crime, particularly terrorist financing. (For FY 2004, the
budget request includes $3.5 million.)
Antiterrorism Training Assistance (ATA). This program was among the
first specific counterterrorism programs funded at State, first
authorized in late 1983. It continues to serve as the primary provider
of U.S. Government antiterrorism training and equipment to the law
enforcement agencies of friendly countries needing assistance in the
war against terrorism. S/CT provides policy guidance and funding to the
Bureau of Diplomatic Security Office of Antiterrorism Assistance, which
implements the program.
The program provides a wide range of courses to strengthen the
capacities of recipient countries. The training includes traditional
courses such as hostage negotiations, bomb detection and airport
security. In recent years, ATA has developed new courses for countering
terrorism financing and defeating cyber-terrorism. It also has provided
a series of seven seminars to help other countries strengthen their
counterterrorism legislation. The Department works of course with the
US embassy officers, especially the Regional Security Officers, in
developing the training package to meet the recipient country's needs.
In FY 2003, we are scheduling 180 courses for 56 countries.
(For FY 2004, the Department is requesting $106.4 million to meet
the program's growing requirements in the NADR account of the Foreign
Appropriations Bill. Of this amount, $19.4 million is specifically
requested for programs in Afghanistan, Pakistan and Indonesia.)
CT R&D. The State Department, through S/CT, co-chairs the inter-
agency Technical Support Working Group (TSWG) that rapidly develops and
prototypes counterterrorism technologies to provide protections against
terrorist attacks. For example, the ``Quick 2000'' masks that have been
distributed to members of Congress and staff were evaluated, modified
and improved based on a testing protocol developed by the TSWG.
This has been a very successful and important program. S/CT
provides policy oversight, managerial direction and helps provide core
funding. The Defense Department executes the program, and provides
technical oversight for the program and contributes the larger share of
the funding. Recently, the State Department reached agreement with the
new Department of Homeland Security to facilitate DHS participation in
the TSWG and to contribute funding.
S/CT has been able to leverage the relatively small State
Department contribution to develop matching contributions and joint
research with international partners in Britain, Canada and Israel. (FY
2004 request: $1.8 million.)
Terrorist Interdiction Program (TIP). TIP aims at bolstering the
border security of countries at a high risk of terrorist transit.
Through this program, priority countries are provided a sophisticated
database system and related support that identifies and tracks
suspected terrorists as they enter and exit these countries. The
program uses a sophisticated data base system with high-speed
connections to airports or border crossing points. The program provides
computer hardware, database software and training and is currently
being deployed in five countries and is scheduled for deployment in
twelve more countries this calendar year. Arrests and detentions have
occurred in all five countries where the system has been deployed.
(FY 2004 request: $11 million for installations in up to 12 new
countries and continued work and maintenance on previous
installations.)
CT Senior Policy Workshops. These workshops aim at improving the
capability of participating countries to effectively respond to Weapons
of Mass Destruction and other forms of terrorist attack. The objective
is to increase senior host nation officials' awareness of the
complexities of preventing and effectively mitigating a major terrorist
attack. Ten workshops are planned for FY 04, with three in Greece to
help preparations for the 2004 Olympics.
While the focus of these workshops is to effectively respond to WMD
terrorist incidents overseas, some are customized to address host
government needs based on their perceived threat. For example,
workshops were used in the Caspian Sea as the first phase of the
Training and Assistance offered to Azerbaijan, Georgia, and Turkey to
further facilitate the success of the Baku-Tbilisi-Ceyhan Gas and Oil
Pipeline in responding to energy threats. In partnership with the
Department of Energy, we are currently conducting Workshops in Central
Asia (Kazakhstan) in response to their energy security threats and to
effectively respond to nuclear materials discovered following the
break-up of the Soviet Union.
(FY 2004 request: $2.5 million in NADR funds to conduct 10
Workshops.)
Foreign Emergency Support Team (FEST). As the lead Federal agency
to respond to an international terrorist-related crisis, the Department
of State heads the FEST. The FEST provides a specially trained and
equipped interagency team to assist the U.S. ambassador and a host
government in dealing with a terrorist incident. The team can provide
advice, assistance and assessments for the embassy on a variety of
terrorism-related issues. The composition of the FEST varies, depending
on the nature of the incident (such as a hostage situation, an embassy
bombing, or a chemical, biological, radiological, or nuclear (CBRN)
incident). The team is led by a senior State Department officer and
includes additional State Department personnel, such as operations
officers, communications experts, and diplomatic security agents.
A dedicated aircraft, which is specially configured and carries up
to 55 persons, is operated by the Department of Defense and is on a
four-hour standby. Smaller teams can be deployed by other means as
required.
(No program increases are requested in the FY 04 request.)
Exercises, TOPOFF. The Department of State plans and coordinates
the international dimension of the domestic (U.S.) Top Officials
exercise (TOPOFF). This series of exercises was designed to test and
improve the nation's domestic readiness for responding to terrorist
incidents involving Chemical, Biological, Radiological, and Nuclear
(CBRN) agents or devices. The current TOPOFF exercise, TOPOFF 2, is co-
sponsored by the Department of States and the Department of Homeland
Security. It is a series of events that started in the spring of 2002
and culminates with the full-scale exercise in May 2003. TOPOFF 2
involves active participation by the Government of Canada in all
aspects of the exercise.
S/CT also takes part in two or three Theater Commander's
Counterterrorism exercises each year. These full-scale exercises
require a year of preparation and normally include representatives from
the various agencies that participate in the FEST. The exercises ensure
continued inter-operability and provide an opportunity to improve
capabilities. S/CT leads the interagency effort and participates in all
the planning activities. Most of the scenarios are complex and include
such serious threats as chemical, biological, nuclear and cyber
terrorism.
(No program increases are requested in the FY 04 request.)
Rewards for Justice Program. The State Department's Rewards for
Justice program is an important tool for helping deter terrorist
attacks and apprehend suspects. In general, this program offers rewards
of up to $5 million for information leading to an arrest or conviction
of any individual for conspiring, aiding, abetting or committing an act
of international terrorism against U.S. persons or property or the
prevention, frustration or favorable resolution thereof. With respect
to Usama bin Laden and other key al-Qaida leaders, however, the
Secretary has authorized a reward of up to $25 million.
(The FY 04 budget does not include program increases but there is
an $11 million carryover from a previous Supplemental that can be used
for the rewards program for terrorism, war criminal and war criminal
cases.
The Chairman. Thank you very much, Mr. Black.
Mr. Pistole.
STATEMENT OF JOHN S. PISTOLE, DEPUTY ASSISTANT DIRECTOR OF THE
COUNTERTERRORISM DIVISION, FEDERAL BUREAU OF INVESTIGATION,
WASHINGTON, DC
Mr. Pistole. Mr. Chairman, thank you for the opportunity to
be here, Senator Hagel, and recognize Ambassador Black and Mr.
Zarate here on this panel. I appreciate the opportunity to be
here. I would also like to recognize Mr. Roderick Beverly, who
is the Special Agent in Charge of our Office of International
Operations, with me today. He has oversight for our
International Legal Attache (Legat) program, which I will touch
on just briefly.
I would like to comment for a moment, if I may, Mr.
Chairman, on the war on terrorism component of this diplomacy
and war on terrorism focusing on the FBI's efforts in concert
with the Department of State and other agencies. As you know,
the FBI is a wholly different agency than it was prior to 9/11,
refocused, and re-engineered to address our top priority, that
of preventing the next terrorist act.
Under the leadership of Attorney General Ashcroft and
Director Mueller we have re-engineered the way we do business
to ensure that our 56 field officers and nearly 29,000
employees all have as their top focus and priority the
prevention of the next terrorist attack against U.S. interests
abroad, and more specifically, here in the United States.
Thanks to the support of your committee and the entire
Congress, for the passage of, for example, the Patriot Act and
other tools, we now have the tools necessary for us to do the
job that we need to do in protecting the American people and
protecting the national security of the United States.
Obviously, there are no guarantees in this business, in
counterterrorism. We fully expect that al-Qaeda or other
extremists will try to strike at the United States, especially
with the onset of hostilities with Iraq, and we anticipate
various means and methods of those possible attacks, but we in
the FBI, with our associates at the Department of State, stand
ready. We have, again, thousands of people working long hours,
days, nights, weekends to ensure that everything humanly
possible is being done to prevent future terrorist acts here.
Senator Feingold mentioned the importance of keeping our
focus on counterterrorism even in the advent of hostilities
with Iraq. We agree with the assessment that al-Qaeda, and
others, still represent the most significant threat to the
United States in terms of possible attacks. To that end we have
stood up a Iraqi Task Force command post within our Strategic
Information and Operations Center (SIOC) at FBI headquarters,
to address all issues attendant to the possible hostilities
with Iraq. This task force is comprised of subject matter
experts from our Iraqi side of the Counterterrorism Division,
and is being enhanced and augmented by nearly 200 agents and
analysts from our Criminal Investigative Division.
If I could, Mr. Chairman, I would just like to touch very
briefly on some of the top priorities right now. The first is
to identify al-Qaeda or other sleeper cells here in the United
States, similar to the 19 hijackers. We are doing everything we
possibly can to achieve that goal within the confines of the
Constitution.
Our second priority is preventing State sponsors of
terrorists from committing acts here, either through their own
means or through surrogates or sympathizers, who may want to
assist State sponsors.
A third priority is identifying those lone offenders, those
extremists who may act on their own or who are sympathetic in
ways to either the Iraqi community, the Iraqi cause, or to the
other extremists, such as some of the Sunni extremists, and al-
Qaeda.
Our fourth priority is to identify those individuals here
in the United States, who are providing support to terrorists
either through fundraising or recruiting other individuals for
possible terrorist acts against the United States.
Those are the priorities that we are focused on, and it is
primarily through our Legal Attache program--we have 45 Legat
offices overseas--that we accomplish the collection,
exploitation, and dissemination of information and intelligence
to the law enforcement community and to the intelligence
community from overseas back into the FBI.
We currently have approximately 200 FBI employees assigned
to 45 Legal Attache offices around the world. That is thanks to
State Department support and your support. We are increasing
that by an additional five offices this year and an additional
five offices in fiscal year 2004, which will bring us up close
to 240 FBI employees physically located in embassies around the
world. It gives not only the presence of the FBI from the
intelligence perspective, but also the law enforcement
perspective, which we find so vital in working with foreign
intelligence services and law enforcement agencies.
We have undertaken a number of initiatives after 9/11 to
ensure that we are providing the best possible preventive
service to the U.S. people, to the people and to the community.
A couple of things I would like to highlight. One is our
Terrorist Financing Operations Section within the
Counterterrorism Division, which is employed in cutting edge
technology and tools, primarily with the CIA's Counterterrorism
Center, in identifying and disrupting financing of terrorist
activity around the world, and working with the Treasury
Department. There are a number of successes that we would not
necessarily go through in this open committee, but there have
been significant successes achieved in that regard.
In terms of FBI participation in State Department programs,
some of those have been mentioned. Under Secretaries Green and
Grossman have mentioned a couple of those, one being the
Antiterrorism Training Assistance program, I believe in 56
countries. The FBI participated in nearly two-thirds of those
training sessions, with over 4,700 Foreign Service officers and
law enforcement officers receiving training.
Ambassador Black mentioned the Technical Support Working
Group which the FBI is a strong proponent of, thanks to State
Department leadership, and obviously the Foreign Emergency
Support Team, the FEST, which deploys in the event of overseas
terrorist activity, most notably with the East Africa bombings
from 4\1/2\ years ago, and, of course, congressionally mandated
field training exercises such as Top Off which we participated
in just a couple of years ago.
Currently we are pre4paring for Top Off 2, the next top
official training exercise, which will be a key exercise to
practice crisis management and emergency response capabilities.
It is a challenge to find the necessary resources, when we are
doing all we can to prevent the next terrorist attack, to
participate in these training exercises, but that is something
that we in the FBI, are fully committed to.
And then, of course, the Rewards for Justice program, which
pays, as you know, Mr. Chairman, up to $5 million for
information leading to the apprehension of designated
individuals, and up to $25 million for a select few, which we
have been able to deploy just recently, as has been mentioned,
with the apprehension of Khalid Shaikh Mohammed.
We also participate, through State Department leadership,
in the International Law Enforcement Academies, most notably in
Budapest, Hungary. I had the privilege, in 1995, of teaching at
the first two sessions of the ILEA there. It has been a
tremendous success in terms of trying to teach the rule of law
and policing, if you will, in former Soviet bloc countries,
primarily. It has been a tremendous success in that we have
seen the emphasis on traditional organized crime and white
collar crime transfer to counterterrorism activity, so we
appreciate the State Department's leadership and support in
that regard.
And of course we have created a number of Joint Terrorism
Task Forces in the FBI. We had 35 prior to 9/11. Now, all 56 of
our field offices have Joint Terrorism Task Forces augmented by
10 additional task forces in our larger Resident Agencies
around the country. We also have our National Joint Terrorist
Task Force [NJTTF] at FBI headquarters, which the State
Department is a key component of, assessing, evaluating and
disseminating information as it relates to State Department
issues.
In terms of the broader perspective, we are partners with
the State Department in assessing and evaluating the nearly
4,000 threats that have been received against the United States
post 9/11. The State Department plays a key role, as
appropriate, in dealing with those threats to determine the
credibility of each and every one. Almost all of these threats
have little or no credibility, but, obviously there is no room
for error in this business, so we have to assess and validate
the credibility of each of those threats, which State has
played a key role in.
We have created an analysis branch within the FBI
Counterterrorism Division, which provides the analysis that,
frankly, the FBI has lacked previously. We have had great
analysts, but we have not been good at disseminating the
information. We have done a terrific job of collecting
information over the years, but not a terrific job of
disseminating that to the intelligence community and other law
enforcement agencies who have a need to know that information,
and in concert with the State Department, again through the
NJTTF and other avenues, we have been able to enhance and
augment our efforts in that regard.
We have also established a new Office of Intelligence,
headed by an Executive Assistant Director, still to be named,
that will provide core training and enhancements to the FBI's
analytic capability.
We are also establishing reports officers in each of our 56
field offices. We are also looking at placing reports officers
in some of the Legal Attache offices. We have created the
Terrorism Reports and Requirements section in the
Counterterrorism Division, where the reports officers have now
published over 550 intelligence reports to the community, of
FBI source information and other sensitive information that
previously was close-held in the FBI.
We have done a number of other things which I will not go
into, they are in my written statement, but which I would be
glad to respond to. I will just touch on a couple of other
things. We are strong proponents of the Terrorism Threat
Integration Center which was recently announced and created, as
being a focal point for the analysis of threat information. A
fusion cell, if you will, of intelligence from the FBI, from
the CIA, from the Department of Homeland Security and all those
agencies attendant to that will allow one-stop shopping, for
the fight on terrorism.
We have a number of other initiatives ongoing, as everybody
is aware. With the rise in the threat level last night we have
undertaken a number of steps to be more visible in terms of the
fight on terrorism, and to ensure that we are doing everything
possible to protect the American people.
In closing, while it might be outside my purview to comment
on another Department's budget or their efforts, I would like
to say that the FBI appreciates, Mr. Chairman, your support and
the committee's support for State Department initiatives as a
means of being on the cutting edge of fighting counterterrorism
worldwide. It is because of the State Department's efforts and
initiatives around the world that the FBI is able to make
critical linkages of both foreign intelligence services and law
enforcement agencies that frankly we would not have the means
to do, and so I appreciate your support for that, and also as a
fellow Hoosier I appreciate the opportunity to be before you
today, sir.
Thank you.
[The prepared statement of Mr. Pistole follows:]
Prepared Statement of John S. Pistole, Deputy Assistant Director,
Counterterrorism Division, Federal Bureau of Investigation
Good morning Chairman Lugar, Senator Biden, and other distinguished
Members of the Committee. I would like to express my gratitude to the
Committee for your thoughtful consideration of this weighty topic, as
well as for the opportunity to testify today. I am honored to be
included in this distinguished panel of executives from the Department
of State (DOS) and the Department of the Treasury. I am accompanied
today by Roderick L. Beverly, the Special Agent in Charge of the FBI's
Office of International Operations.
The FBI's Office of International Operations oversees our Legal
Attache (Legat) program, which represents a vital component in our
counterterrorism efforts. It is primarily through the Legat program
that we coordinate investigative efforts and share information with our
international law enforcement and intelligence partners.
With the assistance of Congress and the DOS, the FBI has
established 45 Legat offices. A Legat presence throughout the world has
enhanced the FBI's ability to bring investigative resources to bear
quickly in the aftermath of terrorist acts. For instance, in response
to the events of September 11, 2001, Legat offices facilitated the
rapid deployment of approximately 700 FBI personnel overseas. Legats
were also able to react immediately and lend assistance in the October
2002 shooting of U.S. AID Officer Laurence Foley in Amman; the bombing
earlier this year of a disco in Bali; and the recent bombing of the
airport at Davo City in the Philippines where 21 people were killed,
including one American.
Through a Memorandum of Understanding (MOU) with the DOS, FBI
Legats are part of the embassy community. The MOU acknowledges the
Ambassador as Chief of Mission. In addition to investigative and host
country liaison responsibilities, Legats work with the Administrative
Officer of the embassy regarding their needs within the embassy itself.
They respond to requests from other DOS employees, provide regular
briefings to the Ambassador and/or Deputy Chief of Mission, and
participate in all other in house activities, such as emergency action
meetings and weekly country team meetings. As a result of the FBI's
efforts to identify and dismantle terrorist networks, the Legats work
in close coordination with Regional Security Officers and other embassy
staff to prevent future terrorist incidents from occurring both
overseas and in the U.S. From fiscal year (FY) 2001 to FY 2002, the
number of leads (investigative requests) covered by Legats increased
from 41,211 to 53,105 (a 29% increase).
The FBI's 45 Legats are staffed by 126 Special Agents and 74
support personnel. By the end of this fiscal year, it is proposed that
the staffing level increase to 145 Special Agents and 83 support
personnel as a result of new offices in: Abu Dhabi, United Arab
Emirates (U.A.E.); Kuala Lumpur, Malaysia; Sanaa, Yemen; Tbilisi,
Georgia; and Tunis, Tunisia. In addition, there will be three sub-
offices created in: Bonn (Berlin, Germany); Milan (Rome, Italy) and
Toronto (Ottawa, Canada). Six existing Legat Offices will also receive
additional personnel. Those offices are: Amman, Jordan; Cairo, Egypt;
Islamabad, Pakistan; Manila, Philippines; Ottawa, Canada; and, Riyadh,
Saudi Arabia. Of the additional $44.7 million that the FBI was allotted
for its Counterterrorism mission overseas, approximately $23.7 million
was earmarked for Legat expansion.
I would like to share a few specific examples which demonstrate how
FBI Legats are facilitating efforts to address international terrorism.
The FBI's Criminal Justice Information Services Division (CJIS),
located in Clarksburg, West Virginia, has responsibility for the
oversight of the Integrated Automated Fingerprint Identification System
(IAFIS). A recent priority CJIS effort was facilitated by the ability
to leverage professional relationships developed by Legats with
Pakistani law enforcement personnel. CJIS sent numerous teams to
Pakistan for the purpose of providing equipment and training relating
to the computerized capture of fingerprints. This method consists of
using inkless portable fingerprinting stations that can be used onsite
during an investigation. Subject fingerprints are loaded directly into
the system where they are analyzed and classified for future reference
and comparison with existing databases. CJIS personnel have trained
Pakistani law enforcement personnel in the use of this equipment as
well as providing them with equipment.
The FBI Laboratory also has been engaged with Legats to ensure that
numerous international law enforcement partners are aware of the
availability of the FBI's Combined DNA Index System (CODIS), for
assisting in the identification through DNA data of terrorists subjects
and other criminal suspects.
The FBI, through the assistance and coordination of the DOS, has
made progress in disrupting the flow of funds being used to finance
terrorists and their operations. The FBI Counterterrorism Division's
Terrorist Financing Operations Section (TFOS), has worked hand in hand
with the DOS, and other agencies, to identify countries that are
critical to the FBI's counterterrorism efforts and to provide crucial
terrorist financing training and investigative assistance. This
includes providing assistance in drafting antiterrorism financing
legislation and training for the banking industry, local prosecutors
and criminal investigators. The DOS has facilitated access to foreign
financial information for TFOS as the FBI tracks terrorist financing
worldwide. The DOS has also rendered assistance by facilitating the
assignment of terrorist finance investigators to international
terrorist finance task forces and by coordinating the FBI's
participation in major international conferences on terrorist
financing.
The FBI utilizes the DOS's Antiterrorism Training Assistance
Program to provide specialized counterterrorism training courses on
topics such as hostage negotiations, crime scene processing, major case
investigations, cyber crime and terrorist financing, in countries
involved in the war against terrorism. The FBI is also a participant in
other DOS programs, including: the inter-agency Technical Support Work
Group (TSWG), which develops and prototypes counterterrorism
technologies to provide protections against terrorist attacks; the
Foreign Emergency Support Team (FEST), which responds to international
terrorist-related crisis incidents and supports the U.S. ambassador and
host government in dealing with incidents; and, the Top Officials
exercise (TOPOFF 2) which tests the nation's domestic readiness for
responding to a terrorist incident involving chemical, biological,
radiological and nuclear agents or devices. In addition, the FBI
supports the DOS's Rewards for Justice Program, which offers rewards of
up to $5 million for information leading to an arrest or conviction of
any person for conspiring, aiding, abetting or committing an act of
international terrorism against U.S. persons or property.
Working in conjunction with DOS foreign assistance expertise and
authorities in this way helps the FBI build relationships with other
countries' law enforcement agencies to contain criminal threats. For
example, the FBI is the lead agency for the International Law
Enforcement Academy (ILEA) in Budapest, Hungary. The four ILEAs around
the world have greatly strengthened instruction on law enforcement
approaches to fighting terrorism since the attacks against our country
on September 11, 2001.
The FBI and the DOS are coordinating, better than ever, the
information we both posses regarding known and suspected terrorists.
The FBI is sharing information we maintain in our National Crime
Information Center (NCIC) index, and the Violent Gang Terrorist
Organization File (VGTOF), with the State Department's TIPOFF system.
The DOS is also a full participant in the Counterterrorism Division's
National Joint Terrorism Task Force (NJTTF) at FBIHQ.
Last month, Director Mueller testified before the Senate Select
Committee on Intelligence that the Al-Qaeda network will remain for the
foreseeable future the most immediate and serious threat facing this
country. While this remains true, the recent arrest of Khalid Shaikh
Mohammed, or KSM, and the arrest just this past Saturday of Yassir al-
Jaziri, represent significant blows to the leadership of the Al-Qaeda
network. Our Pakistani partners were instrumental in these successes
and I would like to thank them and congratulate them. I assure you that
any and all resources of the FBI are being brought to bear to exploit
the intelligence information obtained as a result of these arrests.
Despite the arrests of Khalid Shaikh Mohammed and Yassir al-Jaziri,
Al-Qaeda and other terrorist networks are adept at defending their
organizations from US and international law enforcement efforts. As
these terrorist organizations evolve and change their tactics, we, too,
must evolve. Accordingly, the past 18 months have brought momentous
changes to the FBI, including the incorporation of an enhanced
intelligence function that will better enable us to defend against the
terrorist threat.
I would now like to briefly discuss, from a broader perspective,
efforts and initiatives to identify and dismantle terrorist networks
over the past 18 months. The FBI Legat Program and our partnerships
with agencies such as the DOS and the Department of the Treasury have
played an integral role in these efforts. More than 200 suspected
terrorists have been charged with crimes, half of whom have been
convicted. The rest are awaiting trial. Moreover, our efforts have
damaged terrorist networks and disrupted terrorist plots across the
country. In the past month alone, the FBI has arrested 36 international
and 14 domestic suspected terrorists.
The FBI has reorganized to effectively meet the challenges of the
nation's war on terrorism. For one, the FBI has augmented our
counterterrorism resources and is making organizational enhancements to
focus our counterterrorism priorities. I would like to review some of
those changes with the Committee, beginning with the FBI's analytical
program.
Last year, we began the process of focusing on the analysis program
by creating an Analysis Branch within the Counterterrorism Division
(CTD). This new Analysis Branch was assigned the mission of producing
strategic assessments of the terrorism threat to the United States. To
date, the Analysis Branch has produced nearly 30 in-depth analytical
assessments.
Through FY 2004, the FBI's proposed increase in analysts will
result in quadruple the number than we had prior to September 11, 2001.
The FY 2004 proposal represents a 156% increase in funding for analysts
in comparison to the FY 2002 budget. Recognizing that we could not get
to where we needed to be overnight, the CIA detailed 25 of their
analysts to the FBI to provide an immediate infusion of expertise into
our program while our hiring initiative is underway.
We have also implemented a number of initiatives aimed at enhancing
training for our analytical workforce; which included creating the
College of Analytical Studies. The FBI, in conjunction with the CIA,
has begun training our new intelligence analysts at the College of
Analytical Studies. By the end of this year, we expect more than 200
analysts to have completed the six-week training course.
These improvements to our analytic program had to be made quickly
to address our immediate needs. The FBI has also taken steps to ensure
the ability to collect and analyze intelligence for the long term. The
centerpiece of this effort is the establishment of an Executive
Assistant Director for Intelligence (EAD/I) who will have direct
authority and responsibility for the FBI's national intelligence
program. Specifically, the EAD/I will be responsible foremost for our
counterterrorism mission. The EAD/I will oversee the intelligence
programs for our counterintelligence, criminal, and cyber divisions.
The EAD/I will also ensure that we are sharing information with our
Federal, State, local and international partners. Furthermore,
intelligence units staffed with Reports Officers will be established in
every field office and will function under the authority of the EAD/I.
The Reports Officers will be responsible for identifying, extracting,
and collecting intelligence from FBI investigations and sharing that
information throughout the FBI and to other national and international
law enforcement and intelligence entities.
The FBI has also reorganized its system for threat warnings by
establishing a number of specialized counterterrorism units. I would
like to outline for the Committee a number of these specialized units.
CT Watch, a 24-hour Counterterrorism Watch Center, was created to serve
as the FBI's focal point for all incoming terrorist threats. The
Communications Analysis Section was established to analyze terrorist
electronic and telephone communications and identify terrorist
associations and networks. The Document Exploitation Unit was initiated
to identify and disseminate intelligence gleaned from millions of pages
of documents or computers seized overseas by intelligence agencies. The
Special Technologies and Applications Section was formed to provide
technical support for field office investigations requiring specialized
computer technology expertise and support. And finally, the previously
mentioned TFOS was established; TFOS is devoted entirely to the
financial aspects of terrorism investigations and liaison with the
financial services industry, both at home and abroad. All of these
recently created, specialized counterterrorism units have streamlined
the FBI's resources to more effectively target terrorism threats.
If we are to defeat terrorists and their supporters, a wide range
of organizations must work together. The FBI is committed to the
closest possible cooperation with the Intelligence Community, other
Federal government agencies, international partners, and our essential
partners at the State and local level. Toward that end, the FBI has
developed numerous information sharing and operational coordination
initiatives. We have expanded the number of Joint Terrorism Task Forces
(JTTFs) from 35, two years ago, to 66 today. The JTTFs partner FBI
personnel with hundreds of investigators from various Federal, State,
and local agencies in field offices across the country and are
important force multipliers aiding our fight against terrorism. In
addition, over a 90-day period beginning this month, we will provide
500 JTTF agents and State, and local law enforcement personnel with
specialized counterterrorism training. By the end of FY 2003, basic
counterterrorism training will be provided to an estimated 14,000
Federal, State, and local law enforcement officers. Beginning in FY
2004, the FBI proposes to provide this training to 27,000 Federal,
State and local law enforcement officers per year.
In July 2002, we established the National JTTF (NJTTF) at FBI
Headquarters, staffed by representatives from 30 federal, state, and
local agencies. The NJTTF acts as a ``point of fusion'' for terrorism
information by coordinating the flow of information between
Headquarters and the other JTTFs located across the country and between
the agencies represented on the NJTTF and other government agencies.
The DOS is an integral partner in this endeavor and is a full
participant in the National JTTF.
The Office of Law Enforcement Coordination (OLEC) was created to
enhance the ability of the FBI to forge cooperation and substantive
relationships with all of our State and local law enforcement
counterparts. The OLEC, which is run by a former Chief of Police, also
has liaison responsibilities with the White House Homeland Security
Council.
The FBI Intelligence Bulletin (``The Bulletin'') is disseminated
weekly to more than 17,000 law enforcement agencies and to 60 Federal
agencies. The Bulletin provides information about terrorism issues and
threats to patrol officers and other local law enforcement personnel.
The recipients of The Bulletin have direct daily contacts with the
general public. These contacts could result in the discovery of
critical information regarding counterterrorism issues and threats.
With regard to outreach, the FBI is making unprecedented efforts to
communicate effectively with the intelligence, law enforcement,
government, and public sector communities. To prevent terrorists from
acquiring weapons of mass destruction (WMD), we are coordinating with
suppliers and manufacturers of WMD materials in an effort to facilitate
their voluntarily reporting of any suspicious purchases or inquiries.
In addition to enhancing our relationships with agencies related to
WMD, we have established working relationships with a host of non-
traditional agencies, including the Army Corps of Engineers and Bureau
of Land Reclamation. We have also expanded our relationship with such
groups as the Transportation Security Administration (TSA) and the U.S.
Coast Guard (USCG).
To augment local field office investigative capabilities, Flying
Squads were established to provide for specialized personnel to respond
to fast-breaking situations and provide a surge capacity in support of
FBI Rapid Deployment Teams.
Before closing, I would like to briefly discuss the fusion of
intelligence information for analysis. The FBI strongly supports the
President's initiative to establish a Terrorist Threat Information
Center (TTIC) that will merge and analyze terrorist-related information
collected domestically and abroad. The TTIC will provide all-source,
integrated analysis to the FBI, CIA, Department of Homeland Security
(DHS), and other Federal agencies (including the DOS), which, in turn,
can quickly share the analysis with State and local law enforcement.
The two-way flow of information between Federal and local law
enforcement is necessary to sharpen both the collection and analysis of
threat-related information. The FBI JTTFs will provide an effective
channel to share the TTIC's analytical products with our partners in
State and local law enforcement. The FBI is committed to working with
the DHS to push information and analysis out of the TTIC to other
Federal agencies, and to State and local officials.
Let me conclude by saying that the nature of the threats facing the
U.S. homeland continues to evolve and so does the FBI. We have made
significant strides toward enhancing our operations, both domestically
and overseas, through valuable partnerships such as the one we enjoy
with the DOS. Let me again express my gratitude to you, Mr. Chairman,
and the Committee for your invitation and I look forward to responding
to any questions.
The Chairman. Thank you. Well, I appreciate both of those
last two things you said, without giving the order of
preference, but thank you for the good interdepartmental
cooperation. This is so critical, and I just interject this. As
all of you recall in hearings in this committee and
Intelligence and elsewhere after 9/11 the degree of firewall
situations was really very, very sad to see, and it is
difficult for cultures to intermingle, for people to find each
other in our government, but I congratulate you on doing that,
and likewise speaking cheerfully about it as something that
ought to be done.
Well, now another important Department of our government,
Mr. Zarate.
STATEMENT OF JUAN C. ZARATE, DEPUTY ASSISTANT SECRETARY,
EXECUTIVE OFFICE FOR TERRORIST FINANCING AND FINANCIAL CRIMES,
DEPARTMENT OF THE TREASURY, WASHINGTON, DC
Mr. Zarate. Mr. Chairman and Senator Hagel, thank you for
having me today to testify along with Ambassador Black and Mr.
Pistole about the international efforts the Treasury Department
is taking in close coordination with the State Department and
sister departments and agencies to combat terrorist financing.
Since September 11, the U.S. Government has led a global
campaign to identify, disrupt, and dismantle the sources and
means of funding for al-Qaeda and the other terrorist groups
that threaten the United States. As you know, Mr. Chairman, the
money used to fuel terrorism flows not just in dollars but in
yen, euros, and pounds. Thus, our campaign to starve terrorist
groups of funding and to bankrupt their operations will
continue to rely on our ability to work with our partners
abroad to achieve collective success.
I would like to emphasize, sir, at the outset the
importance of vigorous interagency cooperation in attacking
terrorist financing, as well as to thank my distinguished
colleagues from the State Department and the FBI and other
agencies and departments in our Federal Government for their
work with us on this campaign. In particular, I have been very
well served by our embassies abroad in approximately 20
missions since September 11 to deal with the issue of terrorist
financing, and the work abroad has been fine and consistent.
Mr. Chairman, terrorism in the 21st century is a global
enterprise. Al-Qaeda and other terrorist groups have learned to
use the ease and freedom of the international financial system,
both formal and informal, to support their international
network and ambitions. To disrupt the various ways that
terrorist groups raise and move funds, we have developed a
multipronged U.S. Government strategy to attack terrorist
networks that demands constant international and diplomatic
engagement. Specific elements of our international engagement
are worth highlighting.
Our most public weapon in the financial war on terrorism
has been the public designation of terrorist-related entities
and the blocking of their assets. To date, we have blocked more
than $120 million worldwide, based on our ability to
internationalize these domestic efforts.
Not only have we been able to cutoff channels that serve to
move funds for terrorism, we have impelled an international
process to confront the common threat of terrorism. By working
with our allies, in close concert with the State Department, to
implement an international mechanism for designation and
freezing, we have made it much harder for terrorists to hide
their money in the world's banks and to move it through the
financial channels. We have also sent a common signal to the
bankers of terror: there will be no refuge from the gaze of the
international community.
Our international strategy has achieved success beyond
designations and blocking actions. We and our allies have
vigorously engaged multilateral institutions such as the
Financial Action Task Force on Money Laundering and the U.N.
Counterterrorism Committee in an effort to examine the measures
the international community is taking to regulate and monitor
financial mechanisms abused by terrorist groups.
In particular, we have achieved great success and focused
the world's attention on the abuse of charities by terrorist
groups as well as the terrorist use of informal systems of
transferring money, often known as hawalah, to fund terrorism.
Mr. Chairman, we have also committed ourselves to
promulgating and establishing international standards that
serve to protect the integrity of all aspects of the
international financial system. One critical way we have
accomplished this is through the Financial Action Task Force
[FATF], which developed the eight special recommendations on
terrorist financing due to the leadership of the United States,
which require all member nations to adopt a counterterrorist
financing regime. In addition, the Treasury Department will
continue its close collaboration with the World Bank, the IMF,
and the UNCTC to ensure that countries are assessed based on
the standards set by the FATF.
Mr. Chairman, we have had enormous success of late in
moving countries to change their relevant laws and regulations
in the area of anti-money laundering and counterterrorist
financing. Thanks in large part to the authority granted to the
Secretary of the Treasury by Congress in section 311 of the USA
Patriot Act, countries have been fearful of the economic effect
of designation as a primary money laundering concern.
As a result, countries like Nigeria and the Philippines
have taken action, thanks to our leadership and interagency
cooperation, to avoid the stigma of designation from the United
States. A country like Ukraine has moved quickly, in addition,
to pass laws that would remove it from having this designation
and having that stigma on their international financial system.
This power under the Patriot Act, in combination with the
threat of international rebuke, is an effective tool in molding
international behavior to comply with international financial
standards. One area in which we have worked extremely closely
and well with the Department of State and the Department of
Justice has been in providing our international partners with
the tools necessary to combat terrorist financing. In the
ILEAs, in specific bilateral missions, in multilateral
settings, we have worked very closely to provide capacity-
building measures for our partners.
Mr. Chairman, though the U.S. Government has led the world
in focusing attention on the problem of terrorist financing,
there is still much work to be done. My colleagues have
mentioned certain elements. Allow me to do so.
There are several specific challenges that lie ahead of us,
in particular in the international regime. Foremost, as
indicated by Senator Feingold, we must maintain political and
diplomatic pressure on our partners abroad and the
international institutions in which we engage to continue to
focus on the problems associated with terrorist financing.
The further the world's memory of September 11 recedes, the
harder it is to maintain a sense of urgency internationally to
act against terrorism. We must ensure that we are constantly
communicating the importance of this issue to our partners, and
that our own resolve, in particular abroad and in the
embassies, is not seen as wavering.
We must continue to broaden and deepen our efforts
worldwide with respect to our overall strategy. From improving
the way the international community blocks assets, to ensuring
that charitable giving is not corrupted by terrorists, we need
to be vigilant and ensure that all countries are taking the
necessary steps to deter, detect, and disrupt terrorist
financing.
We will and must continue to address fundamental areas of
concerns with our partners. In the long run, our success in
combating terrorist financing will depend upon the ability of
other countries to police their own financial and charitable
sectors, and we must continue to assist them in developing
these capabilities.
Mr. Chairman, as you know, we are engaged in a long and
unconventional struggle that requires us to work tirelessly
abroad to choke off the channels of funding to terrorist groups
and to raise the standards in the international financial
system. I, too, appreciate this committee's support for the
State Department and thank the State Department for their
unyielding support in our overarching efforts. Ours is
certainly a long-term mission to save lives by denying the
terrorists the funds they need to train, to plan, to travel, to
hide, and to attack. By denying these terrorists dollars and
yen, we are depriving them of bullets and bombs.
I thank you, Mr. Chairman, for your support, and I would be
very happy to answer any questions you or Senator Hagel may
have.
[The prepared statement of Mr. Zarate follows:]
Prepared Statement of Juan C. Zarate, Deputy Assistant Secretary,
Executive Office, Terrorist Financing and Financial Crime, U.S.
Department of the Treasury
Chairman Lugar, Senator Biden, and distinguished members of the
Senate Committee on Foreign Relations, thank you for inviting me to
testify today about the international efforts the Treasury Department
has taken, in close coordination with the State Department and our
other sister departments and agencies, to attack the financial networks
and systems that support and facilitate international terrorism.
Since September 11, we have led a global campaign to identify,
disrupt, and dismantle the sources and means of funding for al-Qaida
and other terrorist groups. As President Bush stated on September 24,
2001, ``If you do business with terrorists, if you support or sponsor
them, you will not do business with the United States of America.'' We
therefore have attacked the financial infrastructure of terrorist
groups and held accountable those who bankroll terror.
The money used to fuel terrorism flows not just in dollars but in
yen, euros, and pounds. The U.S. government has led an international
effort to focus the world's attention on the threat of terrorist
financing, and we have realized significant success. Certainly, the
Treasury and the U.S. government have devoted extensive resources and
expertise to fulfill this mandate, but this campaign has always been an
international endeavor and has relied on the cooperation of our
international partners to successfully achieve our goals.
International cooperation is critical for our overall success,
especially when addressing the short and long-term threats of terrorist
financing throughout the world. We cannot bomb bank accounts, and we
therefore rely on international cooperation in all our efforts. We have
shown quite clearly that our counter-terrorism mission is best served
when we work collectively with our partners. Thus, our campaign to
starve terrorist groups of funding and to bankrupt their operations
will continue to rely on our ability to work with our partners abroad
to achieve collective success.
I would like to emphasize at the outset the importance of vigorous
interagency consultation and cooperation in attacking terrorist
financing, as well as to thank the State Department, the Justice
Department, and other agencies and departments in our federal
government for their work with us on this campaign. From our experience
before and after September 11th, we know that terrorist financing is a
complicated and multi-dimensional problem that both domestically and
internationally implicates a range of legal, regulatory, financial,
intelligence and law enforcement interests. Consequently, no successful
attack on the financial underpinnings of terrorism may be advanced
without coordinated interagency strategies on the use of legal,
regulatory, private sector, law enforcement, diplomatic and
intelligence-gathering tools required to combat this problem.
In this respect, the State Department has provided the Treasury
Department with enormous support in our collective international
efforts. In the multiple missions I and others from the Treasury
Department have taken abroad and with a series of Treasury initiatives
that have required international coordination, we have been well served
by our Embassies abroad and by the State Department more generally.
Before I address the specific diplomatic and international efforts
we have undertaken to advance the fight against terrorist financing,
allow me to share with you the overarching efforts and strategy of the
U.S. government in attacking this problem.
I. STRATEGY TO COMBAT TERRORIST FINANCING
Terrorism in the 21st century is a global enterprise consisting of
both simple and sophisticated financial mechanisms. Al Qaida and other
terrorist groups have learned to use the ease and freedom of the
international financial system--both formal and informal--to support
their international network and ambitions. The war against terrorist
financing, therefore, is an immense undertaking because it requires us
to preserve the openness and efficiency of our modern financial system,
with the free flow of capital and information, while ensuring that it
is not abused by terrorists and their financiers.
We know that terrorist groups tap into a wide range of sources for
their financial support, including State sponsors, wealthy donors,
charity and relief organizations, front companies, and common criminal
activity, and that they use formal and informal ways of moving money
such as informal value transfer systems and trade-based schemes. To
address and disrupt the various ways that terrorist groups raise and
move funds, we have developed a seven-part U.S. government strategy to
attack terrorist networks and to prevent both the short and long-term
effects of terrorist financing:
1. Targeted intelligence gathering.
2. Freezing of terrorist-related assets.
3. Law enforcement actions.
4. Diplomatic efforts and outreach.
5. Smarter regulatory scrutiny and International Standard
Setting.
6. Outreach to the private sectors.
7. Capacity building for other governments and the financial
sector.
The objective of our strategy is simple--to prevent acts of
terrorism in the short and long term by identifying and disrupting
terrorist operations and the financial networks that support those
operations. Because of the international and multi-faceted nature of
terrorist networks, this is an integrated, inter-agency strategy
requiring international cooperation.
II. INTERNATIONAL AND DIPLOMATIC EFFORTS
Treasury is in a unique position to work with the international
financial sector--both government and private. Treasury officials have
traveled abroad extensively to engage our partners in various
ministries and central banks, as well as financial professionals in
private industry trade associations and institutions, on the issue of
terrorist financing. We are in daily contact with foreign financial
officials and are engaged in bilateral and multilateral discussions
regarding international cooperation and action against terrorist
activities and financing. We are promoting technical assistance and
training abroad to ensure that our partners have the requisite capacity
to regulate vulnerable industries, enforce laws and share financial
information.
The U.S. government has engaged in numerous international fora,
including the G7, G8, G20, the Financial Action Task Force (FATF), the
Egmont Group, and the international financial institutions to combat
terrorist financing in a global, systematic way. We have worked with
these international bodies and regional organizations such as APEC, the
OSCE, and the Manila Framework Group to further coordinate
international efforts to stop the financing of terrorism and to ensure
that countries take concrete actions. In general, the United States has
led the initiative to make the battle against terrorist financing a
priority for the world, through bilateral and multilateral engagements
as well as constant diplomatic pressure.
A. Blocking Assets and Cutting Off Worldwide Channels of Terrorist
Funding
Our most public weapon in the financial war on terrorism has been
the public designation of terrorist-related entities and the blocking
of their assets pursuant to the President's September 23, 2001
Executive Order and the authority to designate terrorist organizations
as Foreign Terrorist Organizations. To date, we, through the good work
of the Office of Foreign Assets Control (OFAC), the State Department,
and the inter-agency community, have blocked more than $125 million
worldwide based on our ability to internationalize these domestic
efforts. Not only have we been able to cut off channels that served to
move funds for terrorism, we have impelled an international process to
confront the common threat of terrorism, regardless of the source of
terrorist funds or the particular agenda of any terrorist group.
The United States has worked diligently with the UN Security
Council to adopt international resolutions reflecting the goals of our
domestic executive orders and providing the mechanism for UN member
states to freeze terrorist-related assets. These UN Security Council
resolutions form the legal basis for freezing terrorist assets on a
global basis. We have worked with our allies in the UN to pursue
bilateral and multilateral designations of terrorist-related parties
where possible and appropriate. We have achieved some notable successes
in this area to date:
U.S.-Saudi Joint Designations--On March 11, 2002, the United States
participated in its first joint designation of a terrorist supporter.
The United States and Saudi Arabia jointly designated the Somalia and
Bosnia-Herzegovina offices of Al Haramain, a Saudi-based NGO. These two
organizations are linked to al Qaida and their names were forwarded to
the Sanctions Committee for inclusion under the UNSCR 1333/1390 list.
On September 9, 2002, the United States and Saudi Arabia jointly
referred to the Sanctions Committee Wa'el Hamza Julaidan, an associate
of Usama bin Laden and a supporter of al Qaida.
G7 Joint Designation--On April 19, 2002, the United States, along
with the other G7 members, jointly designated nine individuals and one
organization. Most of these groups were European-based al Qaida
organizers and financiers of terrorism. Because of their al Qaida
links, all ten of these names were forwarded to the UN Sanctions
Committee for inclusion under the UNSCR 1333/1390 list.
U.S.-Italy Joint Designation--On August 29, 2002, the United States
and Italy jointly designated 11 individuals and 14 entities. All of the
individuals were linked to the Salafist Group for Call and Combat
designated in the original U.S. Annex to E.O. 13224. The 14 entities
are part of the Nada/Nasreddin financial network, who are two terrorist
financiers designated on earlier E.O. 13224 lists.
U.S.-Central Asia Joint Designation--On September 6, 2002, the
United States, Afghanistan, Kyrgyzstan, and China jointly referred to
the Sanctions Committee the Eastern Turkistan Islamic Movement, an al
Qaida-linked organization which operates in these and other countries
in Central Asia.
Designation of Jemaa Islamiyya--On October 23, 2002, the United
States designated the Southeast Asian terrorist group, Jemaa Islamiyya,
suspected by many in the media of perpetrating the deadly attacks on a
nightclub in Bali on October 12th. In the subsequent request of the
United Nations to also designate this group for its ties to the al
Qaida organization, the U.S. joined Australia, Indonesia, Singapore,
and 46 other countries, including all the members of ASEAN and the EU,
in requesting Jemaa Islamiyya's designation. This represents the most
widespread show of support of any terrorist designation to date.
Three Chechen Groups--On February 28, 2003 the United States
designated three Chechnya-based terrorists groups responsible for the
Moscow theater siege. In the subsequent request of the United Nations
to also designate these groups for their ties to the al Qaida
organization, the U.S. was joined by UN Security Council members
France, Russia, China, the UK, Spain, and Germany in requesting their
designation.
These global actions to designate and freeze the assets of
terrorist-related groups have only been effective because we have been
able to use the international mechanisms in place to effect a global
shut down of terrorist financial infrastructures. For example, the
international designation of the al Barakaat network in November 2001,
which was a money remitting business used by Usama bin Laden to funnel
money to associated terror groups, proved effective because the
international community acted in unison. The recent designation of the
worldwide network of Benevolence International Foundation, a Chicago-
based charity that was supporting al Qaida, is another example of the
international community taking common action to cut off the flow of
funds to al Qaida. By working with our allies to implement an
international mechanism for designation and freezing, we have made it
much harder for terrorists to hide their money in the world's banks or
send it abroad through formal financial channels. We have also sent a
common signal to the bankers of terror. There will be no refuge from
the gaze of the international community.
B. Regulation of Charities and Alternative Remittance Systems
Our international strategy has achieved success beyond designations
and blocking actions. We and our allies have vigorously engaged
multilateral institutions such as the IMF, the World Bank, the UN, and
the Financial Action Task Force (FATF) in an effort to examine the
measures the international community is taking to regulate and monitor
those financial mechanisms being abused by terrorist groups.
Prior to September 11, 2001, the international community lacked
focus on the specific means that terrorist groups were using to raise
and move money. One example of this is al Qaida's perverted use of
charities and non-profit organizations to raise money, move persons and
materiel, and provide logistical support for their international
operations. Nothing could be more reprehensible than the terrorists'
use of images of widows and orphans to raise money for the killing of
innocent lives. The international community has responded by blocking
the assets of suspect charities, closing down and taking law
enforcement action against others, and setting standards to protect
charitable institutions from being abused as vehicles for terrorist
financing. Through the 31-member Financial Action Task Force (FATF),
the international community set forth the first international best
practices to protect charities against potential terrorist abuse. The
establishment of those standards has been followed by actions by
several jurisdictions, including Gulf States, to monitor how their
charitable organizations operate, especially in conflict zones.
The funding of suspect organizations can originate from both
legitimate donations and illegal sources within our own borders.
Because these organizations also support humanitarian and relief
efforts, the commingling of legitimate and illegitimate funds makes it
difficult to follow the money trail. The Internal Revenue Service-
Criminal Investigation (IRS-CI) has worked with the inter-agency
community abroad and continues to coordinate these efforts with its Tax
Exempt/Government Entities Division, whose primary responsibility is
administering the tax laws associated with charitable organizations, to
specifically address issues involving terrorism fund-raising by these
suspect organizations.
Our strategy has also begun to make progress in countering the
prevalent use of informal systems of transferring money, often known as
hawala, throughout the world, including South Asia, the Gulf, Europe,
and North America, to fund terrorism. This previously largely
unregulated financial practice has been abused by terrorist financiers
and other criminals to move and launder large amounts of money quickly
and surreptitiously. Along with the world community, we have worked to
broaden regulatory structures for informal money service businesses,
such as hawalas, and enforce regulations against those refusing to
register. In May of 2002, I led an inter-agency delegation to the
United Arab Emirates for the first international conference on this
issue. As a result of this conference, nearly forty countries committed
to regulate this sector through registration or licensing. Countries
like the UAE, Pakistan, and others have responded by regulating this
sector for the first time, which is proving important for information
gathering and sharing and ensuring financial transparency within the
informal financial sector. The FATF and other international bodies have
further developed standards that are specific to this sector and will
continue to work with countries to ensure that this sector is well
regulated and overseen.
Overall, the concentration on these issues in the international
arena is due in large part to the consistent work of the U.S.
government to place pressure on the international community, in all
relevant fora. We will continue to do so.
C. International Standard Setting
All of these efforts are part of a strategy to set global standards
that will plug gaps in the formal and informal financial sectors to
prevent, or at least minimize, the potential of abuse by terrorist
groups and their supporters. As President Bush has stated on several
occasions, the war against terrorism will be a long-term effort that
will require us to think creatively and to ensure that our modern
systems are not being used against us. With respect to terrorist
financing, we have committed ourselves to promulgating and establishing
international standards that serve to protect the integrity of all
aspects of the international financial system.
One critical way we have accomplished this is through the FATF,
which has served since 1989 as the preeminent anti-money laundering
multilateral organization in the world. The United States has played a
leading role in the development of this organization as the primary
forum for advancing international standards to combat terrorist
financing. On October 31, 2001, at the United States' initiative, the
FATF issued Eight Special Recommendations on Terrorist Financing,
requiring all member nations to adopt a counter-terrorist financing
regime. These Eight Special Recommendations have become the benchmark
for counter-terrorist financing regimes and have led to several
countries modifying and passing new laws to protect their financial
systems from abuse by terrorists. The Eight Special Recommendations
commit states to undertake the following measures against terrorist
financing:
1. Ratify the UN International Convention for the Suppression
of the Financing of Terrorism and implement relevant UN
Resolutions against terrorist financing;
2. Criminalize the financing of terrorism, terrorist acts and
terrorist organizations;
3. Freeze and confiscate terrorist assets;
4. Require financial institutions to report suspicious
transactions linked to terrorism;
5. Provide the widest possible assistance to other countries'
laws enforcement and regulatory authorities for terrorist
financing investigations;
6. Impose anti-money laundering requirements on alternative
remittance systems;
7. Require financial institutions to include accurate and
meaningful originator information in money transfers; and
8. Ensure that non-profit organizations cannot be misused to
finance terrorism.
The FATF has further elaborated on these Eight Special
Recommendations, including devising a worldwide standard for the
information required to travel in cross-border wire transfers and
developing best practices for the regulation of charities. Together
with the Departments of State and Justice, Treasury will continue to
work with the FATF to build on its successful record in persuading
jurisdictions to adopt anti-money laundering and anti-terrorist
financing regimes to strengthen global protection against terrorist
finance.
In addition, the Treasury Department will continue its close
collaboration with the World Bank, the IMF, and the UN CTC to ensure
that (a) countries are assessed based on the standards set by the FATF
and (b) countries can be identified to receive priority technical
assistance in order for them to come into compliance with the Eight
Special Recommendations on Terrorist Financing. We will also continue
to work with all relevant regional bodies to promote the common
international standards being developed on all relevant financial
matters.
We have had enormous success of late in moving countries to change
their relevant laws and regulations in the area of anti-money
laundering and counter-terrorist financing. Thanks in large part to the
authority granted to the Secretary of the Treasury by Congress in
Section 311 of the USA PATRIOT Act, countries have been fearful of the
economic effects of designation as a ``primary money laundering
concern.'' As a result, countries like Nigeria and the Philippines have
taken action to avoid the stigma of this designation by the United
States, and the Ukraine moved quickly to pass laws that would remove
this designation from their country's financial system. This power
under the PATRIOT Act, in combination with the threat of international
rebuke, is an effective tool in molding international behavior to
comply with international financial standards.
D. International Information Sharing and Law Enforcement Cooperation
Information sharing is critical to fighting terrorism, and a
critical element in our efforts to identify and dismantle terrorist
financing is the ability to access quickly terrorist-related
information received from our international partners. We have seen in
recent days, with the capture of important al Qaida leaders and
operatives, the enormous impact and success resulting from close
international cooperation in the law enforcement and intelligence
communities. The U.S. government has forged ties around the world that
are important in continuing to ferret out global terrorist networks.
For example, soon after September 11th, a Caribbean ally provided
critical financial information through its Financial Intelligence Unit
(FIU) to the Financial Crimes Enforcement Network (FinCEN) that allowed
the revelation of a financial network that supported terrorist groups
and stretched around the world.
In order to improve the flow of information, in particular
financial information related to terrorist financing, we have worked to
establish and expand international information-sharing channels.
Through FinCEN, we have directed the attention of the Egmont Group
towards terrorist financing. The Egmont Group represents 69 FIUs from
various countries around the world, and FinCEN is the FIU for the
United States. The FIU in each nation receives financial information
(such as SARs) from financial institutions pursuant to each
government's particular anti-money laundering laws, analyzes and
processes these disclosures, and disseminates the information
domestically to appropriate government authorities and internationally
to other FIUs in support of national and international law enforcement
operations.
Since September 11th, the Egmont Group has taken steps to leverage
its information collection and sharing capabilities to support the
United States in its global war on terrorism. On October 31, 2001,
FinCEN hosted a special Egmont Group meeting that focused on the FIUs'
role in the fight against terrorism. The FIUs agreed to: (i) work to
eliminate impediments to information exchange; (ii) make terrorist
financing a form of suspicious activity to be reported by all financial
sectors to their respective FIUs; (iii) undertake joint studies of
particular money laundering vulnerabilities, especially when they may
have some bearing on counterterrorism, such as hawala; and (iv) create
sanitized cases for training purposes.
Approximately ten additional candidate FIUs currently are being
considered for admission to the Egmont Group at its next annual plenary
meeting. Egmont has conducted and will continue to host training
sessions to improve the analytical capabilities of FIU staff around the
world. FinCEN is heavily engaged in these efforts and recently
participated in the international training session held Oaxaca, Mexico,
co-hosted with the UN.
IRS-CI contributes to international information sharing, law
enforcement cooperation, and the overall strategy to combat terrorist
financing through its Law Enforcement Attaches located in key
international financial centers throughout the world. These attaches
support ongoing terrorist financing investigations and aggressively
develop liaisons with their foreign counterparts to facilitate the flow
of information in this area.
In addition, we have worked closely with the Departments of Justice
and State to establish new means of investigating terrorist financing
cases. For example, the United States and Switzerland entered into a
memorandum of understanding on September 4, 2002, that allows federal
agents from each country to work hand-in-hand with their counterparts
on related terrorist financing investigations. This cooperative
international working arrangement is a novel way of ensuring close
coordination and information sharing. We will continue to work on
establishing these types of open channels of communication
internationally to uncover terrorist networks.
In addition, we developed the Counter-Terrorist Financing Public
Awareness and Rewards Campaign in coordination with the State
Department, which we announced together on November 13, 2002. This
partnership with the State Department's ``Rewards for Justice Program''
is a campaign to offer $5 million for information on funding networks
that support terrorist activities, including underground financial
systems, illicit charities, and corrupt financial service providers. In
addition, this program is intended to raise public awareness and
understanding of how terrorist financing occurs. The State Department
has been a strong supporter and advocate of this Campaign, and the
Embassies are serving as an important medium for this information.
E. Capacity Building
Providing our international partners with the legal, regulatory,
and enforcement capabilities to combat and prevent terrorist financing
is an integral part of our overarching strategy. Along with the State
and Justice Departments, we have engaged in several capacity-building
initiatives with other governments and the private sector to defeat
terrorist financing activity. For example, we have provided several
countries in the Gulf with training related to trade-based money
laundering, which is a scheme used by smugglers and perhaps terrorist
financiers to move money intended for criminal purposes through
commerce. Our international partners have welcomed this type of
training, and we plan to provide it to other countries that are
susceptible to this practice throughout the world. Treasury has in
addition utilized IRS-CI's financial investigation expertise in
conducting assessments of various foreign governments' law enforcement
capabilities, developing courses, and furnishing instructors for
training in financial investigative techniques. Moreover, Treasury has
and will continue to contribute to the inter-agency law enforcement
training programs at the various International Law Enforcement
Academies (ILEA) around the world, including the recently established
ILEA in Costa Rica.
In addition, Treasury is co-chairing a FATF Working Group on
Terrorist Financing, which, among other issues, is charged with
identifying technical assistance needs of various governments around
the world. This Working Group is collaborating with donor states, the
International Monetary Fund, the World Bank, and the UN Counter-
Terrorism Committee in helping to identify jurisdictions in need of
technical assistance. Bilaterally, members of my office, the Office of
Foreign Assets Control (OFAC), and FinCEN, among other Treasury
components in close cooperation with the Departments of State and
Justice, have worked directly with foreign governments to increase
their capabilities to freeze terrorist-related assets and to process
and analyze financial information. We have also participated, along
with the Treasury's Office of Technical Assistance, in several inter-
agency assessments of technical assistance needs with respect to
combating terrorist financing in various countries of strategic
interest to the United States.
These efforts will gain strength as we enlist the further
cooperation of other international donors. We have certainly seen
recently a greater commitment from various countries to provide needed
training and technical assistance to countries that have demonstrated a
clear need and desire for assistance.
III. CHALLENGES AHEAD
Though the U.S. government has led the world in focusing attention
on the problem of terrorist financing, there is still much work to be
done. There are several specific challenges that lie before us that we
must continue to address in the international context.
Foremost, we must maintain political and diplomatic pressure on our
partners abroad and the international institutions in which we engage
to continue to focus on the problems associated with terrorist
financing. The further the world's memory of September 11th recedes,
the harder it is to maintain a sense of urgency internationally to act
against terrorism. We must ensure that we are constantly communicating
the importance of this issue to our partners and that our own resolve,
in particular abroad, is not seen as wavering.
We must continue to broaden and deepen our efforts worldwide. From
improving the way the international community blocks assets to ensuring
that charitable giving is not corrupted by terrorists, we need to be
vigilant and ensure that all countries are taking the necessary steps
to deter, detect, and disrupt terrorist financing. This is particularly
the case in areas of the financial system that are especially
vulnerable to abuse by terrorist groups, such as alternative remittance
systems and charities in crisis locations.
In this endeavor, we will and must continue to address fundamental
areas of concern with our partners. Since September 11th, the United
States and the EU have campaigned jointly to designate terrorist
entities and their financial backers in order to freeze their assets.
For example, nearly every terrorist individual and entity designated by
the United States also has been designated by the EU or some of its
member states. Moreover, the United States and the EU have established
a fluid, informal mechanism for sharing information on terrorists and
their supporters.
Recent terrorist finance developments at the EU member-state level
also are positive. Last September, we co-chaired with Spain an
important meeting of the FATF to discuss international standards and
measures being taken in the war against terrorist financing. In August,
Italy joined the United States in submitting to the UN 1267 Sanctions
Committee the names of 25 individuals and entities linked to al Qaida.
The Dutch Government recently froze the assets of the ``New Peoples
Army'' and its leader Jose Sison, both known to be responsible for the
killing of American citizens in the Philippines. France, Belgium, The
Netherlands and Germany have all submitted names in recent months to
the UN 1267 list.
Nevertheless, differences remain that must be addressed. We have
pressed the EU to join us in labeling Hamas and Hizballah as terrorist
organizations. Thus far, most European countries have avoided this
issue, on grounds of a supposed distinction between the ``charitable''
or ``political'' wing of Hamas and Hizballah and the militant/terrorist
wing. The United States has rejected the notion that ``firewalls''
separate political or charitable activity from the terrorist activities
of Hamas and Hizballah, and we urge our European counterparts to do the
same. Not only is money fungible across all programs and activities of
these terrorist organizations, but no evidence has been brought forward
to establish the existence of any such ``firewalls.'' Nor is there any
reason to suppose that terrorists within either organization respect
such niceties.
We are beginning to see some progress. Recently, for example,
Denmark and Germany took concrete enforcement actions against the Al
Aqsa Foundation--a fundraiser for Hamas. In addition, the EU recently
designated the al-Aqsa Martyrs Brigade, a Hamas-related group that has
taken responsibility for a number of suicide bombings in Israel. These
are important developments and movements in the right direction, but we
have a long way yet to go. We also need to continue to press the EU on
improving and streamlining the methods in which they designate parties
under the Clearinghouse process.
Our EU counterparts know that the United States is pressing for
resolution on these critical issues, which we believe will enhance the
EU's ability to combat terrorist financing. We welcome the generally
good cooperation of the EU in the financial war on terrorism to date,
and we will continue to push for progress on these remaining issues.
In other regions of the world, we face challenges of capacity
building to develop more transparent and accountable financial sectors
and to establish greater oversight of the charitable sector. In the
long run, our success in combating terrorist financing will depend upon
the ability of other countries to police their own financial and
charitable sectors, and we must assist them in developing these
capabilities. We will continue to work through the FATF, the IMF, the
World Bank, the UN CTC, various regional organizations and with other
donor countries to coordinate the delivery of technical assistance to
those countries with the political will but lacking the necessary means
to combat terrorist financing.
IV. CONCLUSION
I was interested to note Senator Biden's recent speech in which he
stated that ``[o]ur new war is not a Cold War but a Borderless War.''
Indeed, we are engaged in a long, unconventional struggle that requires
us to use all of the U.S. government's assets. In this mission, we must
work tirelessly abroad to choke off the channels of funding to
terrorist groups and to raise the standards in the international
financial system. As part of this war, the battle against terrorist
financing is a long-term campaign for the Treasury Department and the
entire U.S. government. As I have said before, ours is a long-term
mission to save lives by denying the terrorists the funds they need to
train, to plan, to travel, to hide, and to attack. By denying these
terrorists dollars and yen, , we are depriving them of bullets and
bombs. I thank you for your support. I will be happy to answer any
questions you may have.
The Chairman. Well, thank you very much, Mr. Zarate.
Once again, we will have another round of questioning with
7-minute limits, and Senator Hagel and I are the only two
survivors on this side of the panel. We will try to do the best
we can on behalf of all our colleagues.
Let me just say again what a difference this is to have
three agencies of our government all complementing each other
not only in your rhetoric, but likewise in your deeds, in the
work that is being done on the ground, recognizing that a part
of our mission today is to think through the State Department's
budget, its housing of all of the agencies, its ability,
really, to function in the field, sometimes under very arduous
circumstances, which all of you face with your colleagues
wherever they are. So the same hardship post situations we are
talking about with regard to the State Department are equally
true for the FBI, for Treasury, for others, and we appreciate
those Americans who are there.
Now, let me just pick up on this by saying the $120 million
that has been blocked, mentioned by both Mr. Black and Mr.
Zarate, is an important figure, and I want to try to get a
better dimension of both how that came about and what else we
are seeking out there. I just take as a point of personal
experience, picking up on this cooperation element, that I
visited our American Embassy in Germany.
My former colleague in the Senate, Dan Coats, is our
Ambassador to Germany now. Ambassador Coats pulled together,
there in the embassy, officials from our intelligence agencies,
from the FBI, from the other agencies of government, all of
whom were prepared really to tell me how they were working with
German friends who were in similar responsibilities. It was a
remarkable demonstration of cooperation, and went straight to
the problems both of trying to find out about al-Qaeda cells or
cell members who had been operating in Germany, some of them
prior to 9/11, some of them after then, and the money problems.
Here is an international situation. The German economy is
very complex, and the banking system is likewise. We had
hearings here both behind closed doors, and a few in front,
with regard to stopping the money flow, and this is a delicate
business. Very rapidly, Americans came into the hearings and
would say, now, careful there, you are getting into bank
accounts, you are getting in to privacy issues. The flow of
money does not just happen, separating terrorist money from
other money, from people's regular checking accounts or from
commercial transactions.
It is almost like the problem of the wiretapping issues
that occurred back in the Carter administration before the
Intelligence Committee. How does the FBI segregate these calls,
or expunge all of the information which is irrelevant, or on
the same lines, through a court order that is specifically
drawn for the protection of civil liberties? This type of thing
began.
Now, the Germans have the same problem. So do the French,
and so does everybody else who is working with us, and yet the
cooperation of all of these countries is of the essence. If
there are weak links along there, they are rapidly taken
advantage of by those who want to transfer money, quite apart
from this hawalah exercise that became a new term and a new
source of education for all of us with respect to how money is
actually transferred when it does not go through regular means.
I am just curious, as you expressed I think very well, Mr.
Zarate, as the 9/11 situation pales, so conceivably could the
enthusiasm, not in our banking system, or with Treasury, but
with others with whom we cooperate. As a matter of fact, in our
current diplomacy vis-a-vis Iraq sometimes I have the
impression, as I visit with diplomats from other countries,
that they want a good relationship with the United States and
therefore they are inclined to be cooperative, but they do not
see the terrorist situation in quite the same way that we see
it.
Now, we have complained that after all, we were hit. The
Brandenburg Gate and the Eiffel Tower were not taken out by an
aircraft. Maybe their attitude would be different. But they
would reply, I think rather weakly, that we do not anticipate
that we are the target, you are the target, and I am trying to
bring to the surface how we get cooperation, and how does it
remain? And $120 million is a lot of money. Many estimates of
the amount of money that is flowing, either through the bogus
charities or through a liberal interpretation of what a charity
may be, or just another old fashioned method, demonstrate that
the size is greater than this by some multiple.
So describe to me, what is the nature of the cooperation?
What more do we need? In terms of diplomacy, what do we need to
say to a country that may make them more amenable to having the
common fight? Likewise, how do you overcome the civil liberties
challenges, legitimate questions raised by Americans on privacy
issues?
Mr. Zarate. Thank you, Mr. Chairman. If I could first
answer your question with respect to the amount of frozen
assets, our most recent estimate of the worldwide assets frozen
related to al-Qaeda and other terrorist groups is actually $125
million, so it is actually a little bit over $120 million.
Those funds--and it is important to remember this--are the
funds that have been captured at the moment that the blocking
orders were put in place by the domestic regime, either
pursuant to the U.N. process or pursuant to a domestic process,
so that number I think is a little deceiving, because its
significance is that it signals a cutting-off of channels that
had existed prior to the blocking.
The Chairman. I see, an initial freeze en bloc.
Mr. Zarate. Exactly, so there is a freezing that actually
happens, and those are the amounts that were in the accounts or
in process of being transferred at the time the orders were in
place.
With respect to cooperation, we are finding cooperation is
unwavering on this, in part because we have kept it at the top
of our agenda. One of the key issues, and I think it may be
unique to the area of terrorist financing, is that not only do
countries feel a sense of threat, perhaps not as directly as
the United States, but they do feel a sense of threat with
respect to terrorism. And they also feel, and they know that
the corrupting effects on their financial system, their
domestic financial system, is extremely threatening to the way
their economy works. So with respect to measures taken to
combat terrorist financing, increasing international standards,
we are looking at a commitment worldwide to effectuate those
efforts.
With respect to the civil liberties issue, the issue of
blocking of assets has been challenged in court. The United
States has prevailed to date with respect to all of the
challenges, in particular the domestic entities that have been
blocked, in particular the Holy Land for Relief and
Development, which was a Hamas fundraiser. Those challenges
have been upheld in court, and we do not see a problem with
that.
The process domestically is extremely intensive with
respect to the review of whose assets, or which entities'
assets will be blocked. There is a very intricate interagency
process controlled at the highest levels of the administration
because of the sensitivity of the very issues you have pointed
out.
Internationally, there is a U.N. process in place to
designate entities, and that as well is scrubbed by the
international community through the U.N. Sanctions Committee.
The Chairman. Let me just say, I understand the blockage.
Now, what is likely to happen to the money? After the money is
blocked, it sits there. What sort of legal disposition occurs?
Mr. Zarate. Unlike in a situation where you have a seizure
or a forfeiture, the blocking actually sits there and
theoretically can sit there ad infinitum. But what you have in
the case of the terrorist programs, and you see this in the
case of the various country programs administered by the Office
of Foreign Assets Control, is that you have a blocking regime
in place in the hopes that the regime you are blocking, or the
entity you are blocking can be reformed and the money can be
returned.
We saw this very clearly in the case of Afghanistan. Once
the Afghan interim authority was put in place, all of the
reserves which had been blocked, the central bank reserves from
Afghanistan which had been blocked were unblocked and returned
to the Afghan central authority for their use and for their
credits, so that, in essence, is the model.
With respect to individual terrorists and entities, those
remain blocked.
The Chairman. Yes. They would not be reforming, I suspect.
I mean, you may get reform in a State situation.
Mr. Zarate. In certain instances you could have individuals
who disassociate themselves from the organization that formed
part of the terrorist network, and we have seen delistings for
those reasons, and unblocking of very minimal amounts for that
reason, but otherwise I think you are right, Mr. Chairman.
The Chairman. Senator Hagel.
Senator Hagel. Mr. Chairman, thank you.
Gentlemen, thank you for appearing today. I would add to
the Treasury and the FBI our thanks, as has been mentioned by
the chairman and others here, and we are all grateful for what
you are doing for this country, and please give your colleagues
our thanks as well.
Mr. Pistole you have, in your testimony, noted, and I
quote, ``last month Director Mueller testified before the
Senate Select Committee on Intelligence that the al-Qaeda
network will remain for the foreseeable future the most
immediate and serious threat facing this country.'' I was at
that hearing, and I happento agree with Director Mueller's
assessment.
For each of the three of you, I would appreciate your
thoughts on this question, and it is this. As we have, over the
last 18 months, defined more and more the threat, where the
threat is coming from, identifying the more sophisticated
terrorist networks in the world, who harbors those networks,
who supports them, who finances them, do you see any
intentional or unintentional grouping of these sophisticated
networks in some new league, or multiterrorist network that
would help support their overall efforts, each of their overall
efforts as terrorism?
We understand that each is driven by different dynamics
toward different governments, peoples, groups, countries, but
is one of the consequences of what we are doing--and by the
way, I am not rendering an opinion one way or the other,
whether it is good or bad, but one of the consequences of our
intense focus on terrorism now, as the Director has stated, as
you have noted in response to the chairman's questions about
other nations working closely with us, certainly Ambassador
Black has testified to this effect, is there evidence of that
going on, may go on, and if there is, does that work to our
benefit or not? So gentlemen, take any part of that, and I
appreciate hearing from the three of you. Thank you.
Mr. Pistole. Thank you, Senator Hagel. I will approach it
from the domestic perspective. We have seen little indication
in the United States of, for example, Sunni extremists such as
al-Qaeda establishing relationships with other terrorist groups
such as Hezbollah, Hamas, some of the international groups such
as Jemaah Islamiyah or the Abu Sayyef group, Indonesia and the
Philippines respectively. Ambassador Black can touch on some of
those associations more specifically as it relates to overseas.
We have also seen little indication of, for example,
domestic terrorist groups such as some of the Aryan Nations,
the white extremists, some of those groups, having any
association with the foreign, if you will, groups such as the
Sunni extremists, such as al-Qaeda, and in only one instance
was there even a speculation of that, which we were able to
discount through investigation, so we have, if you will,
stovepipes of terrorist activity, groups that have their own
goals, motives, and accomplishments which they strive for in
large part independent of the other groups.
The concern we have now is with the probable hostilities
with Iraq, what Iraqi either intelligence officers or other
individuals sympathetic to the Hussein regime may try to do in
terms of enlisting these other groups either as sympathetic to
the Muslim cause or to the cause of the underdog, if you will,
against the superpower of the United States.
We have some intelligence which I will not go into in this
hearing, but about some of these sympathizers and some of these
other individuals and groups who have indicated an interest in
taking terrorist acts against the United States in the event of
hostilities. We believe we have excellent coverage of those
individuals and entities around the United States and are very
well positioned, in fact best positioned in the history of the
FBI to determine whether any such individuals are moving from
the talking stage of, here is what we may do in the event of
hostilities, to a national operations stage, and we believe
that there is limited, our assessment is that there is limited
activity in that regard, but there is still significant
activity from a fundraising and recruitment perspective, so
that is it in a nutshell from a domestic perspective.
Senator Hagel. Thank you. Ambassador Black.
Ambassador Black. Yes, Senator, I think it is important we
should remind ourselves of programmatically the success that
the U.S. Government and FBI, American intelligence, Treasury
Department, working with their foreign colleagues and
counterparts, have had in this global war on terrorism. I think
we should be mindful of the fact that the President, the
administration's strategy has put tremendous pressure on these
primary terrorist groups, and this should not be
underestimated.
Al-Qaeda is not the organization now that it was before. It
is under stress organizationally. Its leadership spends more
time trying to figure out how to keep from getting caught than
they do trying to launch operations, yet at the same time we
have to be mindful that there is the certainty that terrorists
will attempt to launch multiple attacks against their enemy,
which is us and our allies.
This international cooperation has resulted in a reduction
in al-Qaeda's organizational capability from which to strike.
Their resource base is lower than it was when we started, and I
suspect history will say by this time it was greatly depleted,
still dangerous, still vicious. But I think the
administration's strategy in this case is working handsomely.
Things are not going well for the terrorists, and things
certainly are not going well for al-Qaeda, witness the
successes that American intelligence and the FBI have had on
their own with their foreign counterparts. These people are
going into extreme maneuverability to try and remain viable and
also to be in a position to conduct attacks.
Their options are limited. They can reach out to other
terrorist organizations over the long term to sustain them.
They can hijack issues that they are not normally associated
with, local issues around the globe, whether it has to do with
Islanders' rights in the Pacific or other similar type things.
They also will attempt to make themselves more attractive to
local groups that are looking for resources.
At the same time, Senator, it is very important to
appreciate that the U.S. Government is doing everything it
possibly can not only inside the United States but around the
world to put extreme pressure on these people to capture them,
to render them to law enforcement, to identify their
connections, to cutoff the sources of their funding. I, for
one, who have been in this game for quite a few years, must say
that I can tell you in all honesty that we are making
tremendous progress.
The concern, of course, is that you do not know what you do
not know, and people that do counterterrorism, like the
gentlemen seated next to me, always have to be mindful of the
fact that there could be a catastrophe, but I would say at the
same time that the United States' counterterrorism effort is
increasingly effective. It shows no sign of stopping. The
pressure on al-Qaeda and our enemies is intense, and they will
be extremely challenged to survive, much less remain in place
or, to a lesser extent, even grow and increase their
capabilities.
Senator Hagel. Mr. Chairman, if I might, I would like to
get Mr. Zarate's comment, but may I ask a quick question of
Ambassador Black?
Sir, you are saying you see no evidence from your vantage
point of seeing these terrorist groups forging a new overall
multilateral terrorist league or network?
Ambassador Black. I do not see it in terms of the
classically established terrorist groups. I do not see
Hezbollah embracing al-Qaeda. In fact, I should sense it may be
something of the opposite. They have competing agendas, but I
do think that where agendas are sympathetic or compatible, such
as perhaps with localized terrorist groups in Asia that have a
commonality with an al-Qaeda. You certainly see actions on that
part to keep those contacts alive.
Senator Hagel. Thank you. Mr. Zarate.
Mr. Zarate. Thank you, Senator Hagel. I would like to echo
Ambassador Black's comments. I think first and foremost we need
to assure the American public that our actions have certainly
disrupted terrorist operations and, on the financial front,
certainly deterred fundraising that had been occurring prior to
9/11. The blocking of assets, the arrest of key financiers,
other efforts by governments abroad has been extremely
important to our efforts.
I think the great danger with al-Qaeda, and Ambassador
Black mentioned this, is their ability to reach into particular
regions and to touch the allegiances of certain groups. We have
certainly seen that in Somalia and Chechnya, in Southeast Asia,
in Iraq, with Ansar al-Islam, so that is the real danger, and
with respect to financing, the problem lies in the fact that
funding mechanisms and fundraising and the channels by which
money can move are fairly fungible, so they can be used not
just by al-Qaeda but by other groups. But I cannot say before
you today, sir, that we are seeing the types of links that you
are talking about.
Senator Hagel. Thank you.
The Chairman. Thank you very much, Senator Hagel. I have
three questions, and this will conclude my questioning. Senator
Hagel may have additional questions.
Let me say that a common complaint used to be, and I hope
it is past, by consular officials that intelligence and
enforcement agencies inside the embassies did not share
information very readily with them, that the communication line
between the State Department people and the others was
deficient.
Now, I have already cited an example from my own experience
with Ambassador Coats in Germany, where clearly everybody was
around the table, obviously all of us talking and visiting. I
presume the Ambassador does this routinely every day. That was
true of our embassy in Russia--I visited there not too long
ago--and in Great Britain, and I suspect it is true elsewhere.
But to what extent do you still get these complaints, those
of you who are, say, in the FBI and the Treasury, that you are
doing good work but on the other hand we are not altogether
sure what you are doing, from the Ambassador, or from the
Charge, or from others who have responsibility and who are
housed in the same place, or have you successfully mitigated
these complaints in such a way that there is a general feeling
throughout all of our consular service of the kind of
cooperation we have seen here today? Do you have a thought, Mr.
Zarate?
Mr. Zarate. Absolutely, Mr. Chairman. I, too, have been
abroad and seen the country teams working extremely well
together in Europe, in the gulf, and in other parts of the
world. The country teams are working extremely well together in
terms of sharing information. We identified this as an issue
early on in the process, right after 9/11, and what we did in
close coordination with the State Department was to create what
are called terrorist financing coordinators in all of the
embassies around the world.
These are coordinators that bring together all of the
elements within an embassy team that have any equities at all
to do with terrorist financing, so you have the Legat, you have
any former Treasury bureaus, customs attaches, you have the
econ counselor and others who are involved in these issues, so
there is constant sharing of information, and I think though
there may be occasional mishaps with respect to the sharing of
information, I think we have created a system by which
information, at least from the terrorist financing perspective,
is being shared quite well.
The Chairman. Very well. Do you have further comment, Mr.
Pistole?
Mr. Pistole. Mr. Chairman, I think post-9/11 there has been
a new synergy and a new emphasis, and realization of the
absolute need to cooperate, share information that perhaps was
not present prior to 9/11. The only indications of problems,
and I like to look at it as, there are no problems, only
opportunities to demonstrate character, but the only
opportunities to demonstrate character that we have encouraged
are primarily personality-driven between two strong
personalities at different agencies.
The Chairman. Let me ask, I am just curious at this point,
given the blockage of funds, how do you estimate that al-Qaeda
funds itself? We have had reports in the press of illegal
diamonds mined in Sierra Leone and sold by Liberia, and somehow
those assets converted to whatever al-Qaeda needed. That is
simply one dramatic example that has bobbed up in the press
which might leave all the account-blocking behind in some other
type of trade, but what is your estimate of how the financing
still goes on and how extensive it is?
You, Mr. Zarate, have estimated it probably is down to a
dull roar in comparison to the past, but can you quantify or
give us any idea of what is going on?
Mr. Zarate. Mr. Chairman, it is very difficult to find a
universe of dollars or foreign currency that are being used for
terrorist financing. That being said, I think that al-Qaeda and
other groups are still using traditional means and formal
financial means to move money and to raise money.
Certainly donors are still active to a certain extent.
Certainly charities throughout the world are susceptible to
abuse and still continue to be a problem, as I mentioned in my
oral testimony, and we do suspect that unconventional means of
moving money, for example, trade-based money laundering may be
a way that terrorist financiers are moving money in particular
regions of the world, perhaps southwest Asia and the gulf. So
those are things that we are still looking at very vigilantly,
and as I mentioned in my testimony, it is important to deal
with these issues not only in a short-term basis in terms of
blocking and disrupting movements of funds, but also to deal
with the long-term efforts of creating systems and mechanisms
in countries so that they themselves, countries, can deal with
this issue from a regulatory law enforcement and general
enforcement perspective.
The Chairman. Mr. Black, from your long-term experience in
this situation, do you have anything additional to offer on the
finances of al-Qaeda?
Ambassador Black. Yes, Mr. Chairman. Probably al-Qaeda's
greatest infusion of resources took place when he was in
Khartoum and he ran a construction company, built roads, and
purchased----
The Chairman. This is Osama bin Laden?
Ambassador Black. Osama bin Laden, the leader of the al-
Qaeda organization, whose ability to conduct legitimate
commercial activity has ended. The United States and her allies
have certainly interfered with that, and so you are essentially
talking about the movement of funds that could be used as well
as the collection of funds that are contributed by select
charities or individuals. Financially, he is under stress, and
the United States and the Department of the Treasury and the
State Department, the FBI, and intelligence and our allies are
looking at ways to stop all sources of resources, financial
resources, including the hawalahs, including charities, and the
whole like, so that is to the good.
The bad, Mr. Chairman, is unfortunately many of these
terrorist organizations are essentially inexpensive, so whereas
we I think are meeting with some considerable success in
interdicting the flow of funds, a little bit still with these
people goes a long way, so we have a ways left to go on that.
The Chairman. Just on that point, though, clearly it would
appear that training camps such as the ones that al-Qaeda used
to have in Afghanistan are fairly extensive operations.
Likewise I have read reports from time to time of offers by al-
Qaeda to buy, if not fissile material, at least elements that
might lead to weapons of mass destruction. This probably
involves money as opposed to in-kind transactions. It is a very
expensive business.
If what you are testifying is that we are down, now, to
sort of the bare essentials of inexpensive living off the land,
or in-kind trades of cloth and food and so forth, that is a
different situation, obviously, than that which we have
observed before.
Can any of you give any flavor of where the al-Qaeda
situation is? In other words, is there enough money to conduct
at least in some places sophisticated operations that can be
threatening to us, or is the privation fairly persuasive for
them?
Ambassador Black. No, sir. They certainly are extremely
dangerous, and they have the capability to strike. That is very
important to appreciate. However, they are not the organization
they were, and the trend is downward. Their ability to move
funds has become more problematical for them. They are moving
away from more classical means of transmitting funds, relying
more upon personal relationships and hawalahs. The
organizational entity that was al-Qaeda seems to be changing
into something that is less formal, less precise, and much
slower.
The Chairman. Mr. Pistole, do you have something to add?
Mr. Pistole. Yes, Mr. Chairman. If I could just add, from
the domestic perspective we have identified a number of
individuals engaged in traditional crime such as drug
trafficking, counterfeiting, traditional white collar crimes,
different frauds, to facilitate terrorist activity, we do not
believe here in the United States but overseas.
And without specifically identifying which groups they are
associated with, there have been some recently publicized
indictments and pleas and convictions about individuals engaged
in those traditional crimes, the extent of which we are
challenged in tracing those funds to actual terrorist activity
overseas, but we know they go to terrorist organizations, and
as Mr. Zarate mentioned earlier, $1 that we can take away from
a terrorist organization is just that many fewer bombs and
bullets they can buy.
The Chairman. I am curious. We had open testimony when the
joint intelligence committees met in a number of hearings in
the last calendar year discussing the tragedy of 9/11.
Testimony came from the Director of NSA about the overwhelming
numbers of messages, the explosion of cell phones, cables,
other devices all over the world in which people communicate
with each other in volumes well beyond the capacity of NSA to
encompass some days, quite apart from engaging in this term
that arose from the hearings, ``data mining.'' You try to parse
through all of this debris and find the nugget that you might
put in front of a policymaker like yourselves.
Now, I am curious--at least as operatives, as you are both
in the field and here in Washington--are you getting better
support, say from NSA or from others, in terms of information
that is useful in a timely way? Because clearly that is the
whole point of the exercise, that those who are collecting
messages and tips and names and what-have-you, and hopefully
have translators to get the language right and so forth, are
getting to you. Are you getting support? Can you give any idea
of how this has moved quantitatively or qualitatively in your
Departments? Mr. Zarate.
Mr. Zarate. Mr. Chairman, I think I can say for the entire
Department of the Treasury that we have received enormous
support from the intelligence community after September 11.
Once the President declared war on terrorism and made one of
the principal prongs of that war combating terrorist financing,
there was a renewed commitment to using assets in the field to
collect relevant intelligence, and we have worked very closely
with the intelligence community to use that information.
I would just like to note as well that we have been doing
our best to sift through and to find the wheat in this chaff in
terms of the financial information that we are responsible for,
the Bank Secrecy Act information, the CTRs and SARs which banks
file with the Financial Crimes Enforcement Network are
extremely valuable to law enforcement, and we are doing our
best to find ways to mine through that information and to
provide the best service to our law enforcement partners.
The Chairman. Mr. Black.
Ambassador Black. Mr. Chairman, as a consumer of
intelligence now, I must say that we are very pleased with the
product that we are getting. It is timely, it is quick, the
relationships among the principals I think are very close, very
mutually supporting and as, I think, a symbol. Mr. Chairman,
perhaps what you are looking for is representing the Department
of State on the Senior Steering Group, which is a senior group
that looks over the terrorist threat integration center. I
represent the Department of State.
So we are in on the ground floor with Mr. Pistole and
others, Winston Wiley from the CIA and others, so that we are
plugged into this new integration center in a very productive
way. I think the trend has been very, very positive. We are
very pleased, and we are humbled at how hard people in the FBI
and the intelligence communities work around the clock on our
behalf.
The Chairman. Well, Mr. Black, let me just say, because for
the sake of the hearing we ought to recognize you have been a
major producer of intelligence and other responsibilities.
Ambassador Black. That is why I am sort of glorying in this
change of jobs here, Mr. Chairman. This is much better.
The Chairman. Exactly, your humility as a consumer of all
of this, but likewise your praise of those who are out in the
field who are well-known to you and we appreciate that.
Ambassador Black. Thank you.
The Chairman. Mr. Pistole.
Mr. Pistole. Yes, Mr. Chairman. Specifically concerning the
NSA, post-9/11 we had an exchange of personnel, FBI
representatives to Fort Meade and NSA representatives to FBI
headquarters, where I receive a daily briefing from an NSA
representative on pertinent traffic that they have intercepted
that is germane to our war on terrorism as it pertains to the
United States.
Our major issue there is just getting additional people
read in on certain classified projects that will give them the
access and then be able to provide that information in a useful
way, for example, to our Joint Terrorism Task Forces around the
country, to take it from the top secret classification down to
something usable at the JTTF level, then make that actionable.
We are working with NSA on that and have made some significant
inroads in that area, terrific cooperation.
The Chairman. Thank you.
My final question regards the support that your activities
receive from the embassies. Now, this relates not just to human
support in terms of good feeling and cooperation. Are our
embassies equipped in a technical sense, communicationwise, for
example, or electronically, or in a state-of-the-art that might
be found in many international American businesses as they work
in countries side by side?
I ask this question because in the past the answer had been
clearly no. The embassies were not so equipped. Now, you have,
thank goodness, cooperation of a number of American business
people who have sometimes availed our own governmental
officials of their services. This has led, I think, each one of
us who have visited a number of embassies to really grave
questions as we face the terrorism problem of why are we not up
to speed?
Here is a nation that did not invent everything, but has a
great number of entrepreneurs. As all of you know in the
intelligence field, the informal advisory group that came to
the fore, many entrepreneurs who have intellectual property
issues have a real problem. How do you share this in the public
good, given that this is your livelihood, which you have done
so in patriotic service, remarkably.
Now, having availed themselves of the information, getting
it fixed out there with the hardware in these embassies is
another task altogether. It is expensive, it is not well
understood. Can you help our understanding a bit today as to
what we ought to be doing, and how it would help the mission
that you are talking about, quite apart from the cooperation of
the support? It just seems to me that it is still of the
essence, if we are serious in the war against terrorism, that
those who are on the outposts, whatever department they are in,
have at least the benefit of the expertise and the equipment
that has been found here in the States.
Mr. Black, would you lead off on that?
Ambassador Black. Yes, thank you, Mr. Chairman. I think it
is important to reflect upon the statements of the Secretary,
as well as Under Secretary Grossman, who clearly have
emphasized one key point which is very, very important, I
think, in appreciating what the State Department is doing for
us all today, and that is diplomatic action, and the emphasis
is on action.
It is not a diplomatic service that relies upon or exists
exclusively, if not even primarily, on simply reporting back
home, giving reports of what is going on. This is action
facilitating the global war on terrorism. We can judge
ourselves on how well we do in terms of how effectively we can
enable and empower our law enforcement and Treasury, our
financial experts and our intelligence question capability to
develop that information that is so key in the global war on
terrorism.
We are the opposite of how the Department of State started
when it was founded, where I recall someone told me a couple of
years after the State Department was founded that there was a
Foreign Service officer in a country in Africa, and the
Department said, if we have not heard from him in 6 months, we
are going to have to write him a letter.
This is the other end of the spectrum. I mean, here things
are happening so fast you do need technological support to keep
up with it all, not only for your own purposes, but also to
integrate effectively with American law enforcement, with
intelligence. Some of our embassies are very, very good, and
the ones that your committee and other committees have
supported and funded are a blessing, are a safe haven, are a
safe and effective place to work. Not all our embassies are
like that. I think they can be upgraded. It is the old phrase,
``speed costs, how fast do we want to go.''
In this global war on terrorism, I know you appreciate
this, Mr. Chairman, many other agencies of this Federal
Government get a lot of attention on their frontline role in
counterterrorism, but it all starts, and the first among equals
is the Department of State, and if it does its job, the rest go
ahead and may they get the glory, but if we do not do our job,
if we do not do it as effectively as we can, they will
struggle, and their labor will be inefficient.
The Chairman. You have to at least provide the telephones
and something else beyond that.
Ambassador Black. As long as they share.
The Chairman. Mr. Zarate.
Mr. Zarate. Mr. Chairman, I do not feel that I am qualified
to talk about the technological needs of the various embassies
abroad. I will note, though, that as Ambassador Black has
mentioned, the flow of information is incredibly critical to
our efforts, and we have certainly increased our communications
with posts abroad both in unclassified and classified ways and
found it to be very effective and very useful in terms of our
overall efforts. But with respect to your specific question, I
am not qualified to answer that.
The Chairman. Mr. Pistole, do you have any more
information?
Mr. Pistole. Well, Mr. Chairman, the FBI, as you may be
aware, has always been IT-challenged in a lot of respects. The
old adage since I came in 20 years ago was, ``the FBI, we get
yesterday's technology at tomorrow's prices,'' and
unfortunately we have not been in a position to be a real
player in the intelligence community through the top secret
linkages that we have needed up until Director Mueller come on
with the Bureau.
He brought in some key people in critical positions where,
given the funding, with your support, we are in the process of
installing and linking all of our Legats and all of our field
officers with the intelligence community in a way that
hopefully, by the end of the year, we will be where we should
be, but we are not there yet.
The Chairman. Mr. Black, the President obviously nominates
ambassadors. Those ambassadors, after proper clearance and
what-have-you, come to this committee. We have hearings for
each one of these persons, and they are all able Americans. It
just strikes me, however, as we are discussing this today, if I
were one of these people that was appointed and was heading out
there, I might want to have a degree of training and expertise
and consultation with each of your departments, starting with
the State Department.
Obviously, there are many roles an ambassador must play
that do not get into technical IT or sharing with regard to
stopping money laundering, terrorism, what-have-you, but
increasingly these are roles that ambassadors have to play,
have to be prepared to do. It is a chief executive role in
which, regardless of how broad our experience may have been in
private business, or maybe even in some public endeavors, you
need to be a quick study, but you have to have something to
study, somebody who will be the tutor.
I am wondering to what extent has the State Department been
active in thinking through the curricula that an effective
ambassador, who is to be chief executive of sorts of the
embassy that is the umbrella for everybody--because we are
talking about cooperation of the whole family here--what kind
of training such persons now receive, and what improvements
should we make on that?
Ambassador Black. As the Secretary has enunciated, ours is
an action diplomacy where results are expected. When new
ambassadors come in, all of their qualifications are looked at,
but essentially we have developed an intensive training program
for ambassadors keyed to their personal experience. I have gone
through this myself, where you can sort of have a menu and
choose what you like. Most ambassadors have the luxury and
interest to pursue this full-time and take all the courses
involved.
We also make personal appointments, and get briefed in
depth and in detail by law enforcement, the intelligence
community briefings on their countries----
The Chairman. How much time does this take? I mean, if
ambassadors are coming in from scratch, how many weeks and so
forth would he or she spend in this?
Ambassador Black. Well, it would take generally about 3
weeks. It could be a little bit shorter, or it could be longer,
depending what their needs are and the complexities involved,
and obviously in the most sophisticated case, if you take a
very complex country that has very complex technological
issues, resources issues, places of great geographical
position, it takes a longer time.
I think our ambassadors are given a very solid grounding in
their responsibilities and their leadership role in interacting
with other members of the community, because the ambassador, as
the chief of mission, as the President's personal
representative and the leader of the country team, is basically
the conductor of the U.S. Government's activities not only in
counterterrorism but in every other facet. He is the
knowledgeable and he is probably the most important person in
terms of a country in terms of deconflicting the interests of
the various agencies to make sure the overall U.S. Government's
interests are pursued.
The Chairman. I am just curious, Mr. Zarate, if an official
of the United States Treasury was to go overseas and at least
have an office in the embassy compound and so forth, does that
official receive any special training with regard to the
country to which he or she is going to serve? In other words,
are people prepared for the cultural situation and the
institutional differences from others? How do they go about
getting ready for that?
Mr. Zarate. Treasury has a number of attaches abroad and
certainly with respect to the attaches in certain posts there
is a regional expertise that the individual usually has
attendant to their respective duty. I know that they work
extremely closely with the State Department not only before but
also on the ground once they arrive to ensure that they are up
to speed with the full gamut of diplomatic and political issues
they need to be aware of.
One thing I would like to mention, Mr. Chairman, the State
Department has done a very good job of recently is pulling in
Treasury Department officials to lecture to new diplomats at
the Foreign Service Institute. I have a number of my colleagues
with me today who have actually lectured to the incoming
classes, so to speak, of the State Department, and they are
made aware of our ongoing efforts, ongoing efforts more
specifically in certain countries and more generally about what
the Treasury Department does, so that has been very effective.
The Chairman. Mr. Pistole, I suppose with the FBI agents or
personnel, they would need to know something about the legal
systems of various countries, evidence requirements and other
aspects. What kind of training could you describe that they
receive?
Mr. Pistole. Yes, Mr. Chairman. Each of our legal attaches
and assistant legal attaches go through a mandatory training
back here in Washington at FBI headquarters both to the
sensibilities of the particular culture and the other agencies,
and the interrelatedness of the agencies in that embassy.
It ranges from, for example, if an individual has been an
assistant legal attache in an office, and that is a more
limited couple of weeks of training, retraining, up to several
months of training, depending on the individual, coupled with
if there is a language requirement to get up to speed, but it
is primarily the office of Mr. Beverly here, the Office of
International Operations that takes that lead and works with
other agencies to provide that training prior to our legal
attaches being assigned.
The Chairman. Well, I thank each one of you for your
testimony and for being so forthcoming in your responses to the
committee, and we wish you every success.
I have a statement from Senator Biden that I would like to
submit for the record, so by unanimous consent that will go in
right after my own. Thank you very much. The hearing is
adjourned.
[Whereupon, at 12 noon, the committee adjourned, to
reconvene subject to the call of the Chair.]
----------
Responses to Additional Questions Submitted for the Record
------
Responses of Hon. Marc Grossman, Under Secretary of State for Political
Affairs, to Additional Questions for the Record Submitted by Senator
George Allen
Question 1. As the world's largest democracy, it seems fitting that
our relationship with India should be evolving in such positive
directions--politically, militarily, and economically. I am encouraged
by the high-level dialogue carried out by you and others in the Bush
Administration with India on a range of issues. One area where we could
do more is in the economic arena. India remains largely an untapped
market for U.S. investors and products. How is the Administration
working with India to further develop our important economic
relationship?
Answer. In November 2001, President Bush and Prime Minister
Vajpayee formally established the ``U.S.-India Economic Dialogue''
which evolved from the ``Economic Coordination Group'' established
during President Clinton's visit in March 2000. The Economic Dialogue
has five ``pillars'': Energy, Environment, Trade, Finance and Commerce,
each of which is led by the appropriate U.S. agency or Indian Ministry.
The purpose of the Economic Dialogue is to facilitate senior-level
discussions and cooperative activities between the two governments. The
process also solicits the support and input of the private sector into
government decisions and actions concerning the bilateral economic
relationship. The Conveners of the Dialogue are the Assistant to the
President for Economic Policy (currently Stephen Friedman) and the
Indian National Security Adviser to the Prime Minister (Currently
Brajesh Mishra). The U.S.-India Business Council, the Confederation of
Indian Industries and the Federation of Indian Chambers of Commerce and
Industry are the official private sector partners of the Economic
Dialogue.
In February 2003, NEC chair Steve Friedman wrote to Indian NSA
Brajesh Mishra and told him of the President's commitment to a stronger
and more vibrant U.S.-India relationship. Mr. Friedman noted progress
on the dialogue in three particular areas--the November launch by State
Department Under Secretary Al Larson and Indian Additional Secretary
Ghosh of the private-sector-led biotechnology initiative, the Finance
sub-cabinet meetings in Washington and Commerce Under Secretary Kenneth
Juster's talks in New Delhi on high-tech trade.
As a result of Mr. Juster's meetings, the High-Technology
Cooperation Group (HTCG) was established in November 2002 in New Delhi,
led by Under Secretary Juster and Foreign Secretary Kanwal Sibal. The
role of the HTCG is to promote and facilitate bilateral high-technology
commerce. The first official meeting of the HTCG was held on July 2 in
Washington and the agenda covered trade facilitation, market access
issues and confidence building measures for trade in dual-use items.
The next meeting of the HTCG is tentatively scheduled for November 2003
in New Delhi.
Under the umbrella structure of the Economic Dialogue, numerous
discussions and meetings were held during 2002, including Cabinet/
Minister-level meetings in the areas of Trade, Finance, Energy and the
Environment. In 2003, Cabinet/Minister-level meetings have been held on
Energy, the Environment and Commerce.
Private sector endeavors have included the creation of an industry
Biotech Alliance in November 2002, a Track II dialogue on trade, and
participation in the June 2003 Commercial Dialogue. As part of the
HTCG, over 100 business representatives from India and the U.S.
attended the ``Financing Innovation'' Forum held on June 30. The Forum
covered the investment climate for high-tech, the role of venture
capital and the specific sectors of IT, life sciences, defense and
nanotechnology. Another private sector forum is expected to occur in
conjunction with the HTCG meeting in November.
We fully agree that India remains largely an untapped market for
U.S. investors and products and we will continue to look for avenues to
broaden and deepen our economic relationship in close consultation with
the private sector.
Question 2. This Administration, to its credit, has recognized that
India is a natural strategic ally for the United States. More than ever
before, we have clearly placed greater focus on how to build
constructive and broad-based relations with India, and rightly so. I
understand we are working with India, for example, to expand our
relations into such new areas as civilian nuclear safety and space
cooperation. Could you comment on what progress is being made in these
areas?
Answer. The United States is committed to increasing cooperation in
the civilian nuclear safety, space, and high technology trade areas--
the so-called ``trinity''--consistent with our own laws and
international commitments. President Bush has taken a personal interest
in achieving this objective. We have:
waived sanctions imposed because of India's 1998 nuclear
tests that limited a wide range of military and economic
cooperation.
resumed and expanded a dialogue between nuclear regulatory
agencies based on publicly available information that is aimed
at promoting civil nuclear safety. This had been suspended
after India's nuclear tests in 1998.
hosted the chairman of India's Atomic Energy Board. The
Chairman of the U.S. Nuclear Regulatory Commission paid a
return visit to India in January 2003.
reaffirmed our commitment to bilateral space cooperation,
first by renewing a Memorandum of Understanding with Indian
counterpart agencies, and second by laying plans for a
conference with India in which technical experts will map out a
detailed agenda for action.
continued civilian space cooperation in such areas as earth
and atmospheric sciences and utilization of data from satellite
resources for agricultural, communication, telemedicine,
disaster management/mitigation, weather prediction/research,
and search and rescue.
______
Responses of Hon. Marc Grossman, Under Secretary of State for Political
Affairs and Hon. Grant Green, Under Secretary of State for Management,
to Additional Questions for the Record Submitted by Senator Joseph R.
Biden, Jr.
Question 1. For the last six months the administration has been
intensely focused on Iraq. The diplomatic campaign has caused
considerable friction with many close allies in Europe. How has the
argument over Iraq policy affected bilateral and multilateral
cooperation with leading nations in Europe, such as France and Germany,
in the campaign against al-Qaida?
Answer. Despite the disagreements over Iraq policy, our bilateral
cooperation with both France and Germany in the war against terrorism
has remained strong. France continues to provide over 1000 troops in
the Afghan theater in ISAF, training the Afghan National Army, and
conducting land and sea-based counterterrorism operations. Germany has
played a substantial role in Afghanistan, deploying 2,500 troops in
support of its lead role (with the Dutch) within ISAF III. Germany is
also overseeing the training and equipping of the Afghan police. In
support of Operation Enduring Freedom, Germany has deployed over 200
troops to Kuwait as part of a ``Fuchs'' Nuclear, Biological, and
Chemical (NBC) detection unit.
In addition, law enforcement cooperation and intelligence sharing
are proceeding with both countries and are continuing to produce
concrete results. Germany's cooperation in the investigation and
prosecution of members of the al-Qaida ``Hamburg Cell'' has been
excellent, resulting in the provision of important evidence in the U.S.
Government's prosecution of Zacarias Moussaoui.
Question 2. Have France and Germany denied any formal requests--or
discouraged the submission of such requests by the United States--for
extradition or requests under treaties on mutual legal assistance since
September 1, 2001?
Answer. No, neither France nor Germany denied or discouraged U.S.
requests in terrorism-related cases under extradition or mutual
assistance treaties since September 1, 2001.
Question 3. What is the Department's view of the effectiveness of
Security Council Resolution 1373? What is the record of compliance by
member states?
Answer. UNSCR 1373 provides a strong diplomatic and legal basis for
international cooperation against terrorism. It has a broad mandate
with provisions that are binding on all UN Member States. Almost all UN
Member states support and are cooperating on UNSCR 1373. All but eight
Member States have made their initial reports to the Counter Terrorism
Committee on their efforts to improve their abilities to combat
terrorism. Multinational organizations, including the OSCE, OAS, ASEAN
and AU, representing well over 130 countries, have in some fashion
endorsed implementation of UNSCR 1373. Primarily because of UNSCR 1373,
the number of UN Member States that have become parties to all of the
12 international conventions and protocols related to terrorism has
increased significantly from 2 in September 2001 to 31. In addition, in
an effort to close the legislative gaps identified by the CTC, many
States have either adopted new or revised existing counter-terrorism
legislation.
Question 4. What is the Department's view of the work of the
Counter-terrorism Committee which is monitoring implementation of
Security Council Resolution 1373? What is the United States doing to
support the work of the Counter-Terrorism Committee? At what level is
the United States represented in the work of the Committee?
Answer. During its first full year of operation, the Counter
Terrorism Committee (CTC) made a good beginning in monitoring the
efforts of UN Member States to implement UNSCR 1373. In reviewing more
than 340 reports from 188 States, the CTC has been able to highlight
the gaps in most States' counter terrorism capacity and is working to
get them to improve. This will require assistance in the form of
expertise and resources in many cases to ensure that these gaps can be
filled. In addition, through its extensive outreach efforts, the CTC
has helped place counter-terrorism on the agendas of many
international, regional and sub-regional organizations. This has
resulted in the beginnings of a global counter-terrorism network. The
U.S. provides both expertise and diplomatic support to the CTC. U.S.
direct, bilateral counter terrorism assistance to selected countries
greatly assists in the implementation of UNSCR 1373 and the work of the
Counter Terrorism Committee, because it helps fill some of the capacity
gaps identified by the CTC. Also, the State Department leads an
ambitious worldwide USG interagency program of capacity-building and
technical assistance to coalition partners in all regions to build
transparency and accountability in the financial and regulatory sectors
and thus helps to strengthen their counter terrorism laws and
regulations to help them implement financial aspects of UNSCR 1373.
Representatives from the CTC made presentations and took part in the
discussions. We are consulting with the Justice Department on proposals
to send drafting teams to help some countries individually.
We are working with international organizations to which we
belong--G8, FATF, International Financial Institutions, OAS, OSCE,
NATO, ICAO, IATA, IMO--to encourage and assist their members to
implement UNSCR 1373 and to support the work of the CTC. The U.S.
Senior Advisor for United Nations Counter Terrorism Matters, Ambassador
Ted McNamara, meets regularly with the CTC Chairman. In weekly meetings
of the CTC, the U.S. is represented by the General Counsel of the U.S.
Mission to the United Nations.
Question 5. What is the United States doing to press UN member
states who are not in compliance with their obligations under Security
Council Resolution 1373?
Answer. The U.S. and other members of the CTC approach such states
bilaterally. We also work within the global, regional and sub-regional
organizations to encourage and assist all Member States to improve
their counter terrorism capabilities as required by UNSCR 1373. The
U.S. also provides counter-terrorism assistance to countries
bilaterally.
Question 6. After September 11, 2001, the Senate approved the UN
convention for the Suppression of Terrorist Bombings and the UN
Convention for the Suppression of the Financing of Terrorism. To date,
88 states have ratified the Convention for the Suppression of Terrorist
Bombings, and 76 have ratified the Convention for the Suppression of
Terrorist Financing. What are we doing to press other countries to
ratify these treaties? How are efforts proceeding?
Answer. Global ratification and implementation of all 12
international counterterrorism conventions is a key Administration
goal. We actively engage with every partner that has not ratified all
12 to urge them to do so, and provide bilateral assistance to aid
implementation where appropriate. At international seminars and
conferences we have held on strengthening counterterrorism legislation,
we have urged attendees to ratify the conventions and provided pointers
for drafting implementing legislation.
Similarly, we work with the UN Counterterrorism Committee, UN
Office of Drug Control's Terrorism Prevention Branch, the G-8, the
European Union, the Financial Action Task Force, and other multilateral
organizations to urge and assist adoption and implementation of the
conventions. USG efforts are making progress: there are, for example,
now 101 parties to the ``Bombing Convention'' and 91 parties to the
``Terrorism Financing Convention.''
Question 7. The obligations in the UN Convention for the
Suppression of Terrorism Financing and Security Council Resolution 1373
require member states to take a number of steps to crack down on money
laundering and other illegal efforts to evade regulatory controls.
What is the Department's judgment about the technical
ability of member states to comply with the requirements of the
UN Convention and Resolution 1373? What are we doing to provide
such technical assistance. Are nations willing to accept our
assistance.
Answer. The technical abilities of UN Member States to implement
UNSCR 1373 and of States Parties to implement the Terrorist Financing
Convention vary widely. The U.S. provides bilateral counter terrorism
assistance to 20 countries. We also encourage global/functional
organizations and regional organizations to provide counter terrorism
assistance. Nations are generally very happy to accept such assistance.
Question 8. In October 2002, a Council on Foreign Relations task
force highlighted that ``no international organization has emerged with
the mandate and expertise to direct and coordinate global efforts to
combat a problem that, by its very nature, requires global responses.''
A report by a working group at the United Nations also noted ``overlaps
and duplications'' in the efforts of UN agencies, but also significant
gaps in the institution in terms of both mandates and funding.
a. Are the counterterrorism efforts of existing international
institutions sufficient?
Answer. All relevant international institutions, such as the UN,
North Atlantic Treaty Organization (NATO), Group of Eight (G-8),
International Civil Aviation Organization (ICAO), Organization of
American States (OAS), European Union (EU) International Atomic Energy
Agency (IAEA) and Organization for Security and Cooperation in Europe
(OSCE) are contributing to the fight against terrorism, each drawing on
its own expertise. The challenge is to keep counterterrorism efforts at
the top of the agendas of these organizations and entities. The UN
Security Council's Counter-Terrorism Committee (CTC) has been engaged
in an active out-reach effort to bring the regional and sub-regional
groups into the fight against terrorism, thereby increasing
substantially the resources to engage in the fight against terrorism.
Some 65 such organizations recently met at the UN to coordinate their
efforts.
b. Is the administration considering proposing any changes
within the UN system or elsewhere to promote improved
international cooperation and coordination on counter-
terrorism?
Answer. We are working with the UN to augment, on a step-by-step
basis, its capability to support international counter-terrorism
efforts. The objective is to enhance the ongoing and evolving
counterterrorism activities of the UN and its specialized agencies,
such as the International Civil Aviation Organization (ICAO) and the
International Maritime Organization (IMO). For example, the CTC, which
has been in existence for little over one year, has reviewed the
capacity of more than 180 States to fight terrorism and has worked to
ensure that States that are willing to fight terrorism, but do not have
the resources or expertise, are matched with States or other regional
organizations or other entities that can--and will--provide the needed
technical assistance and resources. This is an on-going and evolving
process.
Question 9. Following September 11, 2001, many posts, like Embassy
Islamabad, were inundated by an influx of staff from law enforcement
and intelligence agencies. Moreover, we had (and still have) a great
need for both regional specialists, linguists, and public diplomacy
specialists.
a. What measures are we taking, or are we considering taking,
to provide a ``surge capacity'' for these kinds of situations?
b. Should we have a formal ``reserve corps''--like the
military does--of regional and linguistic experts (and State
Department retirees) who can be called on in such emergencies?
Answer. Our Diplomatic Readiness Initiative (DRI) was designed to
provide us adequate personnel to respond to crises and emerging
priorities.
Typically, we provide additional capacity to the Embassy's
political or other sections by pulling experienced people from other
places and applying them to that priority situation. This is what we
have been doing to respond to our growing anti-terrorism and border
security missions. We are able to reposition existing resources to best
meet changing needs or respond to a crisis through formal and informal
processes within the Department. In addition, we do currently maintain
``surge'' teams for security, consular, administrative/management, and
terrorism response assistance.
Because we had under hired compared with our expanding mission in
the 1990s, those responding to a crisis usually left important work
unattended. With full implementation of the Diplomatic Readiness
initiative in FY2004, we will have built a ``personnel complement'' and
a stronger capacity to respond to these events. We will be on our way
to planning for crises rather than just responding to them.
We are also able to call upon the resources of Foreign Service
retirees. We frequently hire retirees to meet our needs when we lack a
particular skill in the current population or need additional
assistance. We have made additional use of this resource after
September 11, 2001. This is a flexible response to changing needs that
works well.
Question 10. Since September 11, there has been a great deal of
discussions about whether State Department consular officers are
receiving the right information from the intelligence and law
enforcement agencies--so they can deny visas to suspected terrorists.
Because of legislation passed after 9/11, State now has access, through
the CLASS system, to data from the National Criminal Information Center
(NCIC). State also gets information from the intelligence agencies
through the ``Tip-off'' program.
Do you have adequate financial and personnel resources in
all aspects of visa processing? If not, where are there
shortfalls?
Answer. The Department's visa processing activities as well as
program support for the ``Tip-Off'' watchlist of known suspected
foreign terrorists are funded from the revenues generated by the
Machine Readable Visa (MRV) fee. This is a $100 fee paid by applicants
seeking a non-immigrant visa.
FY 2003 revenue projections are based on an MRV demand level of 6
million cases. To date, Department estimates remain on target. However,
because of uncertainties surrounding international travel, any decline
below this target level would create program shortfalls that would have
to be met with supplemental funding, such as additional appropriations.
In addition to funding the CLASS system, one major area dependent
on MRV revenue is consular staffing. MRV revenues pay for the salary
and benefits of over 2,400 staff involved in border security programs,
including visa processing.
______
Responses of Ambassador J. Cofer Black, Coordinator for Counter-
terrorism, Department of State, to Additional Questions for the Record
Submitted by Senator Russell D. Feingold
Question. I understand that a review of the Counterterrorism Office
is now underway. Is this true? If so, can you elaborate on this review
and inform the committee how foreign assistance programs funded under
the NADR account will be impacted?
Answer. A preliminary top-to-bottom review of S/CT operations was
done soon after my appointment. I have asked my senior staff to make
some adjustments to better facilitate S/CT's core mission, which is to
coordinate counterterrorism policy. The mission of foreign assistance
programs under the NADR account will continue as requested and as
appropriated. What I am striving to accomplish is improved management
control and oversight of these critical programs, in particular TIP, to
insure that the programs are carried out in a manner that will better
serve the task given me by the Secretary. In this regard, I am
establishing a direct hire U.S. government employee, reporting to me
via my Deputy Coordinator for Policy and Programs, to be the program
director for the TIP program. This direct hire U.S. government position
will provide policy, funding, diplomacy, coordination, program
direction to all TIP program activities. We already have such an
employee dedicated to the DS/ATA program.
Question. As you know, funding for Antiterrorism Assistance (ATA)
and the Terrorist Interdiction Program (TIP) has increased over the
past two fiscal years to deal with the heightened threat of
international terrorism. However, in some cases, it is difficult for
relatively small programs to effectively absorb large increases in
funding. As of March 18, 2003, what is the status of the fiscal year
2002 and 2003 funding for ATA, TIP, and other foreign assistance
programs managed by the Counterterrorism Office? Has all of this
funding been obligated? If not, what are the problems associated with
obligating this funding? Has funding for ATA or TIP been temporarily
transferred or otherwise ``borrowed'' against to pay for other
programs?
Answer. The rapid and sizeable expansion of the State Department's
counterterrorism capacity-building programs has raised challenges.
Helping our partners to develop the skills needed to fight terrorism
more effectively, however, is a key part of the war against terrorism
and the Department has devoted the attention and resources necessary to
overcome these challenges.
The ATA program obligated all of its FY 2002 funding by the end of
the fiscal year and has also obligated much of the FY 2002 supplemental
budget. The remainder of the FY 2002 supplemental funds will be
obligated based on ATA plans by the end of FY 2003 as required. For FY
2003, approximately half of the funding allocated to the ATA program
has been obligated thus far.
To meet urgent needs for the Karzai Protection Operation (KPO) and
related training activities, for which $25 million is requested in the
FY 2003 supplemental budget, we have had to borrow (reprogram) about $7
million against other FY 2003 programs. This will cover us for almost
two months, after which time we hope Congress will have passed the
supplemental appropriation. Supplemental funds will allow us to
reimburse programs and fund remaining KPO costs for the fiscal year.