[Senate Hearing 111-254]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-254
 
 CURRENT AND FUTURE WORLDWIDE THREATS TO THE NATIONAL SECURITY OF THE 
                             UNITED STATES 

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 10, 2009

                               __________

         Printed for the use of the Committee on Armed Services

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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

EDWARD M. KENNEDY, Massachusetts     JOHN McCAIN, Arizona
ROBERT C. BYRD, West Virginia        JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     JEFF SESSIONS, Alabama
JACK REED, Rhode Island              SAXBY CHAMBLISS, Georgia
DANIEL K. AKAKA, Hawaii              LINDSEY GRAHAM, South Carolina
BILL NELSON, Florida                 JOHN THUNE, South Dakota
E. BENJAMIN NELSON, Nebraska         MEL MARTINEZ, Florida
EVAN BAYH, Indiana                   ROGER F. WICKER, Mississippi
JIM WEBB, Virginia                   RICHARD BURR, North Carolina
CLAIRE McCASKILL, Missouri           DAVID VITTER, Louisiana
MARK UDALL, Colorado                 SUSAN M. COLLINS, Maine
KAY R. HAGAN, North Carolina
MARK BEGICH, Alaska
ROLAND W. BURRIS, Illinois

                   Richard D. DeBobes, Staff Director

               Joseph W. Bowab, Republican Staff Director

                                  (ii)


















                            C O N T E N T S

                               __________

                    CHRONOLOGICAL LIST OF WITNESSES

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

                             march 10, 2009

                                                                   Page

Blair, Hon. Dennis C., Director, National Intelligence...........     6
Maples, LTG Michael D., USA, Director, Defense Intelligence 
  Agency.........................................................    41

                                 (iii)


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

                              ----------                              


                        TUESDAY, MARCH 10, 2009

                                        U.S. Senate
                                Committee on Armed Services
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:36 a.m. in room 
SH-216, Hart Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, Lieberman, Reed, 
E. Benjamin Nelson, Bayh, Webb, McCaskill, Udall, Hagan, 
Begich, Burris, McCain, Inhofe, Sessions, Graham, Thune, 
Martinez, Wicker, Vitter, and Collins.
    Committee staff members present: Richard D. DeBobes, staff 
director; Leah C. Brewer, nominations and hearings clerk; and 
Mary J. Kyle, legislative clerk.
    Majority staff members present: Madelyn R. Creedon, 
counsel; Richard W. Fieldhouse, professional staff member; 
Creighton Greene, professional staff member; Michael J. Kuiken, 
professional staff member; Thomas K. McConnell, professional 
staff member; William G.P. Monahan, counsel; Michael J. Noblet, 
professional staff member; John H. Quirk V, professional staff 
member; and William K. Sutey, professional staff member.
    Minority staff members present: Joseph W. Bowab, Republican 
staff director; Adam J. Barker, research assistant; William M. 
Caniano, professional staff member; Richard H. Fontaine, Jr., 
deputy Republican staff director; and Paul C. Hutton IV, 
professional staff member.
    Staff assistants present: Kevin A. Cronin, Jessica L. 
Kingston, and Ali Z. Pasha.
    Committee members' assistants present: Sharon L. Waxman, 
assistant to Senator Kennedy; James Tuite, assistant to Senator 
Byrd; Christopher Griffin, assistant to Senator Lieberman; 
Elizabeth King, assistant to Senator Reed; Christopher Caple, 
assistant to Senator Bill Nelson; Ann Premer, assistant to 
Senator Ben Nelson; Jon Davey, assistant to Senator Bayh; 
Gordon I. Peterson, assistant to Senator Webb; Jennifer 
Barrett, assistant to Senator Udall; David Ramseur, assistant 
to Senator Begich; Anthony J. Lazarski, assistant to Senator 
Inhofe; Lenwood Landrum and Sandra Luff, assistants to Senator 
Sessions; Adam G. Brake, assistant to Senator Graham; Jason Van 
Beek, assistant to Senator Thune; Brian W. Walsh and Erskine W. 
Wells III, assistants to Senator Martinez; and Chip Kennett, 
assistant to Senator Collins.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody. I'd like to 
welcome our witnesses for today's hearing on current and 
longer-term threats and challenges around the world. We're 
delighted to have the Director of National Intelligence (DNI), 
Dennis Blair, for his first appearance before us as DNI; and 
the Defense Intelligence Agency (DIA) Director, General Michael 
Maples, for his final appearance before the Senate Armed 
Services Committee.
    General Maples, on behalf of the committee, thank you for 
your great service to the Nation, and for your appearances 
before this committee.
    General Maples. Thank you, sir.
    Chairman Levin. This committee has a special responsibility 
to the men and women of our Armed Forces to be vigilant on 
intelligence programs, because decisions on whether or not to 
use military force, the planning for military operations, and 
carrying them out successfully depend so heavily on accurate 
intelligence.
    I want to focus my remarks this morning on a few major 
challenges to our security. The situation in Afghanistan has 
been deteriorating for several years and is now a serious 
problem, necessitating the dispatch of additional U.S. forces 
even before the new administration completes its strategic 
review of the region and while it's working on a comprehensive 
regional approach to the problem. This situation is the result 
of: (1) years of large commitment of U.S. military troops in 
Iraq; (2) a disorganized and underresourced international 
effort in Afghanistan; (3) the disappointing performance by the 
Government of Afghanistan; and (4) a resurgent Taliban enjoying 
sanctuary in Pakistan across a border that the U.S. commander 
in that region, Brigadier General John Nicholson, says is 
``wide open.''
    Indeed, the Afghan-Taliban forces under Mullah Omar operate 
with impunity from Pakistan's Baluchistan province, crossing 
unhampered into southern Afghanistan. Other large Pakistan 
militant forces now dominate major portions of the Federally 
Administered Tribal Areas (FATA) in the Northwest Frontier 
Province. It is in these regions that al Qaeda is based and 
from which attacks in Afghanistan and Pakistan itself are 
launched.
    The militant strongholds in Pakistan, however, are not 
simply a threat to Afghanistan. They have also become a clear 
threat to Pakistan's security and the source of major global 
terrorist threat from al Qaeda. The United States and our 
allies have to develop alternatives to address Pakistan's 
security concerns and persuade Pakistan to make a fundamental 
break with its past policies. I do not underestimate the 
challenge that this could present to Pakistan. I have doubts, 
however, as to whether Pakistan has the will or the capacity to 
make significant changes in the near term. Achieving a basic 
change in Pakistan's strategic security policy will take time, 
but we cannot make progress in Afghanistan or the defense of 
America against an al Qaeda attack dependent on a hoped-for 
change in Pakistan's calculus and capabilities.
    There are many things that we and our allies can do in 
Afghanistan to protect the population, help them establish the 
rule of law, and improve their lives, while seeking ways to end 
the Pakistan safe havens. Can we fully succeed with an open 
border and safe havens in Pakistan? No. But progress in 
Afghanistan cannot await changes in Pakistan.
    Relative to Iraq, the President has announced a timetable 
for reducing force levels in Iraq and reorienting our mission 
there. I look forward to the witnesses' estimates about likely 
Iraqi political developments, including the prospects for 
reconciliation and the peaceful settlement of the political and 
territorial issues in the north.
    Turning to Iran, the Obama administration has initiated a 
new diplomatic approach to persuade Tehran to stop its uranium 
enrichment program, forego the acquisition of nuclear weapons, 
and behave more constructively in the region. Director Blair's 
statement today indicates that the Intelligence Community (IC) 
continues to believe that some combination of international 
scrutiny, pressure, and incentives might persuade Tehran to 
forego a nuclear weapon capability, but achieving this would be 
``difficult.''
    Secretary Clinton's invitation to Iran to participate in a 
conference on Afghanistan at the end of the month is an 
important test of whether Iran is willing to explore ways to 
begin a less confrontational relationship.
    The Obama administration is trying to reset relations with 
Russia for multiple reasons. We have many common security 
interests with Russia and our mutual security will be best 
served if we cooperate to address our common security 
challenges. One important opportunity is the exploration of the 
possibility of cooperating with Russia on missile defense 
capabilities to provide protection against Iran's ballistic 
missile systems. A nuclear-armed Iran with ballistic missiles 
would be a common threat to which Russia cannot be indifferent. 
U.S.-Russia cooperation on missile defense would send a 
powerful signal to Iran, perhaps helping to dissuade Iran from 
continuing to violate U.N. resolutions.
    Secretary Gates recently indicated that he thinks there is 
interest in Russia on cooperation, and I look forward to 
learning the views of the IC on this question as well this 
morning.
    Clarity on the status of Iran's nuclear program is also 
crucial. Director Blair's testimony last month is consistent 
with the last National Intelligence Estimate (NIE), which 
concluded that, while Iran had halted its efforts to seek a 
nuclear warhead, Iran is continuing its uranium enrichment 
program and ballistic missile development efforts. Moreover, 
Iran has sufficient low-enriched uranium (LEU) to produce a 
nuclear weapon if it chooses to further enrich that material to 
weapons-grade levels. It would be useful for our witnesses to 
clarify the IC's view of Iran's current activities and its 
intent.
    The other primary nuclear and missile proliferation 
challenge remains North Korea. North Korea rejected the 
verification protocol proposed in the Six-Party Talks in 
December and has since made a number of belligerent threats and 
appears to be preparing another attempt to launch a satellite 
with a system that could demonstrate many aspects of a long-
range ballistic missile capability.
    The question is whether North Korea will agree to 
acceptable verification of its declaration, including the issue 
of a suspected uranium enrichment program, and what that would 
mean for U.S. policy. North Korea has a habit of issuing dire 
threats when it does not get its way. To what lengths will the 
regime go to try to extract concessions and attempt to get us 
to re-engage on their terms?
    The challenges confronting the U.S. Africa Command 
(AFRICOM) are vast and complex: ungoverned or undergoverned 
areas that offer potential havens and recruiting grounds for 
terrorist extremists and nations immersed in or emerging from 
conflict, where peace is elusive or fragile and international 
forces are required to provide much of the security and 
stability. Our thoughts are with all of the personnel of the 
aid agencies and the nongovernmental organizations being 
expelled from Sudan and the people they serve following the 
International Criminal Court's (ICC) arrest warrant for the 
president of Sudan. I look forward to hearing our witnesses' 
assessment of the implications of this decision by the ICC.
    The challenges within our own hemisphere are complex. The 
violence in Mexico is becoming reminiscent of the situation in 
Colombia a decade ago. The root cause of the violence in Mexico 
is the same as Colombia: trafficking and profiting from illegal 
narcotics. The source of the vast majority of these drugs 
remains Colombia, but the problems created from the trafficking 
of these narcotics run from Panama City to Tijuana and includes 
the Pacific and Atlantic Oceans.
    I would also appreciate it if you could add to your 
presentations this morning any information that you can provide 
us relative to the Chinese Government's intent and motive in 
the maneuvers of their ships against the USNS Impeccable, a 
Navy ship which was in the South China Sea and in international 
waters.
    We are going to have a closed session following this 
session and will have a briefer from the Navy who is ready to 
brief the committee during our closed session on this matter in 
the China Sea. We've arranged, as I said, for that session and 
it's going to be in Hart 219 following this open session.
    Senator McCain.

                STATEMENT OF SENATOR JOHN McCAIN

    Senator McCain. Thank you, Mr. Chairman, and I join you in 
welcoming our witnesses today.
    Director Blair, I'd like to acknowledge and appreciate your 
willingness to return to government service and assume one of 
the most important and difficult positions in the executive 
branch.
    General Maples, this is likely and on your part hopefully 
your last appearance before the committee as the Director of 
DIA. I know you will relinquish the directorship of DIA later 
this month and retire later this year. Thank you for your 
leadership of the DIA and for 38 years of distinguished service 
in the United States Army.
    This is an important hearing on the committee's annual 
calendar. The committee has a special responsibility to look 
closely at our Nation's intelligence analysis, the nature of 
the threats we face today, and the intelligence programs that 
support those in harm's way. We hope you'll describe the 
complex nature of today's international environment and 
identify those areas of risk, concern, and opportunity that are 
critical to our national security.
    I hope we will be able to discuss and you're prepared to 
discuss security trends and prospects in Iraq and Afghanistan, 
the capabilities and intent of al Qaeda, including threats to 
the U.S. Homeland, U.S. interests worldwide, and the outlook 
for Pakistan, especially progress against extremism in its 
FATAs and the possibility of an outbreak in military 
hostilities with India.
    In addition, Iran's nuclear ambitions pose a large and 
enduring problem to our interests, and there are also ongoing 
developments with respect to Russia, China, and North Korea.
    Closer to home, there's a widening drug war on Mexico's 
border with the United States and our Department of Justice has 
identified Mexican gangs as ``the biggest organized crime 
threat to the United States.'' We'd benefit from your views on 
these issues.
    The committee is also interested in your estimates about 
the destabilizing impact of the global economic crisis on our 
allies and adversaries, the domestic and international impact 
of global climate change on our national security, and the 
threats to the U.S. information infrastructure posed by both 
state and non-state actors.
    Our forces around the world, and especially in Iraq and 
Afghanistan, put a premium on the intelligence support they 
receive, especially those conducting counterinsurgency and 
counterterrorism operations. The committee is interested in the 
state of our human intelligence capability, linguist resources, 
and intelligence, surveillance, and reconnaissance (ISR) 
capacities.
    I thank the witnesses for their appearance today and I also 
am interested in any public statements prior to our closed 
hearing that you might make on the apparent confrontation at 
sea with Chinese naval forces.
    I thank you, Mr. Chairman.
    [The prepared statement of Senator McCain follows:]
               Prepared Statement by Senator John McCain
    Mr Chairman, thank you.
    I join you in welcoming our witnesses today.
    Director Blair, I would also like to acknowledge your willingness 
to return to government service and to assume one of the most important 
and difficult positions in the executive branch.
    General Maples, this likely is your last appearance before the 
committee as the Director of the Defense Intelligence Agency (DIA). I 
know you will relinquish the directorship of DIA later this month and 
retire later in the year. Thank you for your leadership at DIA and for 
your years of distinguished service in the United States Army.
    This is an important hearing in the committee's annual calendar. 
The committee has a special responsibility to look closely at our 
nation's intelligence analysis, the nature of the threats we face 
today, and the intelligence programs that support those in harm's way.
    We expect you to describe the complex nature of today's 
international environment and identify those areas of risk, concern, 
and opportunity that are critical to our national security.
    In that regard, we hope that you are prepared to discuss security 
trends and prospects in Iraq and Afghanistan; the capabilities and 
intent of al Qaeda, including threats to the U.S. Homeland and U.S. 
interests worldwide; and the outlook for Pakistan, especially progress 
against extremism in its Federally Administered Tribal Areas and the 
possibility of an outbreak in military hostilities with India.
    In addition, Iran's nuclear ambitions pose a large and enduring 
problem to our interests, and there are ongoing developments with 
respect to Russia, China, and North Korea. Closer to home, there is a 
broadening drug war on Mexico's border with the United States and our 
Justice Department has identified Mexican gangs as the ``biggest 
organized crime threat to the United States.'' We would benefit from 
your views on these issues.
    The committee is also interested in your estimates about the 
destabilizing impact of the global economic crisis on our allies and 
adversaries, the domestic and international impact of global climate 
change on our national security and the threats to the U.S. information 
infrastructure posed by both state and non-state actors.
    Our forces around the world, and especially in Iraq and 
Afghanistan, put a premium on the intelligence support that they 
receive, especially those conducting counterinsurgency and 
counterterrorism operations. The committee is interested in the state 
of our human intelligence capability; linguist resources; and 
intelligence, surveillance, and reconnaissance capacities.
    Mr Chairman, thank you and I look forward to hearing from our 
witnesses.

    Chairman Levin. Thank you so much, Senator McCain.
    Director Blair.

     STATEMENT OF HON. DENNIS C. BLAIR, DIRECTOR, NATIONAL 
                          INTELLIGENCE

    Director Blair. Chairman Levin, Ranking Member McCain, 
members of the committee, this morning General Maples and I 
represent thousands of patriotic, highly skilled professionals, 
the world's finest intelligence team. All these intelligence 
agencies participated in compiling the information and analysis 
that I'm reporting on this morning and the longer statements 
for the record which we submitted.
    My report is not simply of threats, but also of 
opportunities and a tour of the complex and dynamic national 
security landscape with which the United States must deal. Let 
me start with the global economic crisis.
    It already looms as the most serious one in decades. You 
may have seen yesterday's World Bank estimates that both world 
gross domestic product (GDP) and trade are declining at 
unprecedented rates. Since September of last year, 10 nations 
have committed to new International Monetary Fund (IMF) 
programs and, unlike the 1997-1998 Asian financial crisis, no 
country or region can export its way out of this one.
    The stakes are high. Mexico, with its close trade links to 
the United States, is vulnerable to a prolonged U.S. recession. 
Europe and the former Soviet bloc have experienced anti-state 
demonstrations. Much of Eurasia, Latin America, and sub-Saharan 
Africa lack sufficient cash reserves and access to 
international aid.
    Economic crises increase the risk of regime-threatening 
instability if they are prolonged 1 or 2 years, and we're 
watching this closely. Instability can loosen the fragile hold 
that many developing countries have on law and order.
    There are some silver linings. With low oil prices, 
Venezuela will face fiscal constraints this year. Iran's 
president faces less than certain prospects for reelection in 
June. However, a serious energy supply crunch may happen in the 
longer range future if sustained low prices lead to major cuts 
or delays in new investments in the near term.
    This crisis presents challenges for the United States, who 
is generally held to be responsible for it. The November G-20 
summit elevated the influence of emerging market nations, but 
the United States also has opportunities to demonstrate 
increased leadership. Our openness, development, skills, 
leadership skills, the mobility of our workforce, puts us in a 
better position to re-invent ourselves. Washington will have 
the opportunity to fashion new global structures that can 
benefit all nations.
    Turning to terrorism, importantly, we have seen progress in 
Muslim opinion turning against terrorist groups. Over the last 
18 months, al Qaeda has faced public criticism from prominent 
religious leaders and even from fellow extremists. In 2008, 
these terrorists did not achieve their goal of conducting 
another major attack on the United States and no major country 
is at immediate risk of collapse from extreme terrorist groups.
    Replacing the loss of key leaders since 2008 in Pakistan's 
FATAs has proved difficult for al Qaeda. Al Qaeda in Iraq 
continues to be squeezed. Saudi Arabia's aggressive 
counterterrorism efforts have rendered the Kingdom a harsh 
operating environment for al Qaeda.
    But despite these setbacks, al Qaeda remains dangerous. 
Yemen is reemerging as a jihadist battleground. The 
capabilities of terrorist groups in East Africa will increase 
in the next year and we remain concerned about the potential 
for home-grown American extremists inspired by al Qaeda's 
militant ideology to plan attacks in this country.
    There are many challenges in that region that stretches 
from the Middle East to South Asia, and these challenges exist 
despite the progress I outlined in countering violent 
extremism. The United States has strong tools from military 
force to diplomacy and good relations with the vast majority of 
these nations and we will need all these tools in order to help 
forge a durable structure for peace and prosperity.
    The revival of Iran as a regional power, the deepening of 
ethnic, sectarian, and economic divisions across much of the 
region, the looming leadership succession among U.S. allies, 
all these factors are shaping the strategic landscape. 
Hezbollah and Hamas, with support from Iran, champion armed 
resistance to Israel, a development that complicates efforts to 
resolve the Israeli-Palestinian dispute and undercuts the 
legitimacy of moderate Arab states that support negotiated 
settlements. Battlelines are increasingly drawn in that part of 
the world, not just between Israel and Arab countries, but also 
between secular Arab nationalists and ascendant Islamic 
nationalist movements inside moderate states.
    The Iranian regime views the United States as its principal 
enemy and a threat to Iran. A more assertive regional Iranian 
foreign policy coupled with its dogged development of a uranium 
enrichment capability alarms most governments in the region 
from Riyadh to Tel Aviv.
    The Levant is the key focal point for these strategic 
shifts. Recent fighting between Israel and Hamas on the Gaza 
Strip has deepened Palestinian political divisions. It's also 
widened the rift between regional moderates, led by Egypt, 
Jordan, Saudi Arabia, and hard-liners, including Iran, 
Hezbollah, and Syria. With Hamas controlling Gaza and Hezbollah 
growing stronger in Lebanon, progress on a Palestinian-Israeli 
accord is much more difficult. With Iran pursuing uranium 
enrichment and Israel determined not to allow it to develop a 
nuclear weapon capability, there is potential for an Iran-
Israeli confrontation or crisis. Moderate Arab states fear a 
nuclear-armed Iran, but without progress on a Palestinian 
settlement they are harder put to defend their ties to the 
United States.
    In Iraq, coalition and Iraqi operations and dwindling 
popular tolerance for violence have helped to sideline 
extremists. Fewer Iraqis are dying at the hands of their 
countrymen than at any time in the last 2 years. Nevertheless, 
disputed internal boundaries, perceptions of government 
repression, or increased foreign support to insurgent or 
militia groups could reverse political and security progress, 
and Baghdad also will be coping with declining oil revenues.
    In Afghanistan, the Taliban-dominated insurgency forces 
have demonstrated greater aggressiveness. Improved governance 
and extended development were hampered in 2008 by a lack of 
security. Afghan leaders must tackle endemic corruption and an 
extensive drug trade. Progress has been made in expanding and 
fielding the Afghan National Army, but many factors hamper 
efforts to make the units capable of independent action. The 
upcoming 2009 presidential election will present a greater 
security challenge than the election of 2004 and insurgents 
will probably make a concerted effort to disrupt it.
    Improvement in Afghanistan and Pakistan's taking control of 
their border areas, improving governance, and creating economic 
and educational opportunities throughout the country are 
linked. I agree, Chairman Levin, that that doesn't mean that 
you can't do anything in Afghanistan without solving Pakistan, 
but there is a linkage between these two that we have to 
address in making our policy.
    In 2008, Islamabad intensified counterinsurgency efforts, 
but its record in dealing with militants has been mixed. It 
balances conflicting internal and counterterrorist priorities. 
The government is losing authority in the north and the west 
and even in the more developed parts of the country mounting 
economic hardships and frustration over poor governance have 
given rise to greater radicalization.
    The time when only a few states had access to the most 
dangerous technologies is long over. Often dual use, they 
circulate easily in our globalized economy, as does the 
scientific expertise. It is difficult for the United States and 
its partners to track efforts to acquire components and 
production technologies that are widely available. Traditional 
deterrence and diplomacy constraints may not prevent terrorist 
groups from using mass effect weapons, and one of the biggest 
security challenges facing the United States is fashioning a 
more effective nonproliferation strategy along with our 
partners.
    As the chairman mentioned, the assessments in our 2000 NIE 
about Iran's nuclear weapons programs are generally still 
valid. Iran at a minimum is keeping open the option to develop 
deliverable nuclear weapons. The halt since 2003 in nuclear 
weapons design and weaponization was primarily in response to 
increasing international scrutiny, and we assess that some 
combination of threats and intensified international attention 
and pressures, along with opportunities for Iran to achieve its 
security goals, might prompt Iran to extend this halt to some 
nuclear weapons-related activities.
    Let me turn to Asia, rapidly becoming the long-term locus 
of power in the world. Japan remains the world's second largest 
global economy and a strong ally of the United States, but the 
global downturn is exacting a heavy toll on Japan's economy. To 
realize its aspirations to play a stronger regional and perhaps 
global role will require political leadership and difficult 
decisions by Japan.
    The rising giants, China and India, are playing increasing 
regional roles economically, politically, and militarily. China 
tries to assure access to markets, commodities, and energy 
supplies needed to sustain domestic economic growth. Chinese 
diplomacy seeks to maintain favorable relations with other 
powers, especially the United States. The global downturn, 
however, threatens China's domestic stability and Chinese 
leaders are taking both economic and security steps to deal 
with it.
    Taiwan as an area of tension in U.S.-China relations has 
substantially relaxed. Taiwan President Ma, inaugurated in May, 
has resumed dialogue with Beijing, and leaders on both sides of 
the Straits are cautiously optimistic about less 
confrontational relations. Nonetheless, preparations for a 
Taiwan conflict drive the modernization goals of the People's 
Liberation Army (PLA).
    But in addition to that, China's security interests are 
broadening. A full civilian and military space capability, and 
formidable capabilities in cyberspace are rapidly developing. 
China will attempt to develop at least a limited naval 
projection capability, which is already reflected in anti-
piracy operations off the coast of Somalia, and we can talk 
about the incident that happened recently in the South China 
Sea.
    Like China, India's expanding economy will lead New Delhi 
to pursue new trade partners, to gain access to vital energy 
markets, and to develop other resources that sustain rapid 
growth. India's growth rate will slow this coming year, but 
ample reserves and a sound banking system will help ensure 
relative stability.
    Determined efforts by Indian and Pakistani leaders to 
improve relations could unravel unless Islamabad takes 
meaningful steps to cut support to anti-Indian militant groups 
and New Delhi for its part makes credible efforts to allay 
Pakistan's security concerns. The increase in violent attacks 
within India is a cause of great concern to its government, as 
is instability in neighboring countries in South Asia, and I 
think the attacks in Islamabad on cricket teams was the latest 
instance of that.
    On the global stage, Indian leaders will continue to follow 
an independent course. That we are both democracies does not 
guarantee congruence of our interests. Nonetheless, good 
relations with the United States will be important for India to 
realize its global ambitions.
    Although the Middle East and Asia have the highest call on 
our attention, our concerns are broader. Russia is actively 
cultivating relations with regional powers, including China, 
Iran, and Venezuela. Moscow also is trying to maintain control 
over energy networks to Europe and to East Asia. Russian 
leaders have spoken positively about the possibilities for a 
change in the U.S.-Russian dynamic, but the North Atlantic 
Treaty Organization (NATO) enlargement, the conflict over 
Georgia's separatist region, and missile defense could pose 
difficulties because of the combination of overlapping and 
conflicting interests there.
    In Latin America, populist, often autocratic, regimes pose 
challenges to the region's long-term success. Basic law and 
order issues, including rising violent crime, powerful drug 
trafficking organizations, confront key hemispheric nations, as 
do uneven governance and institution-building efforts in 
confronting chronic corruption. The corruptive influence and 
increasing violence of Mexican drug cartels impedes Mexico 
City's ability to govern parts of its territory. Unless the 
United States is able to deliver market access on a permanent 
and meaningful basis, its traditionally privileged position in 
the region could erode, with a concomitant decline in political 
influence.
    In addition, the United States has an opportunity to 
partner with Mexico in promoting our common interests in the 
region, including working against the drug cartels, stopping 
weapons moving generally south along the border, and working on 
other common issues.
    Africa has made substantial economic and political progress 
over the past decade and the level of open warfare has declined 
significantly, especially in Liberia, Sierra Leone, and the 
Ivory Coast. However, the drop in commodity prices and global 
recession will test the durability of the region's recent 
positive growth trend. Even before the current crisis, the 6 
percent GDP growth rate in Africa, although impressive, was not 
able to bring the necessary structural changes to reduce 
poverty and a number of intractable conflicts persist in the 
Democratic Republic of Congo, Nigeria, Sudan, and Somalia.
    In Darfur, peace talks remain stymied, the larger 
peacekeeping force is slow in deploying, and the recent actions 
that the chairman referred to have made progress there even 
more difficult.
    Let me finish with the long-term challenge of environmental 
security and the threats to our information technology 
infrastructure. Adding more than a billion people to the 
world's population by 2025 will put pressure on clean energy 
sources and food and water supplies. Most of the world's 
population will move from rural to urban areas. They're seeking 
economic opportunity and many, particularly in Asia, will 
achieve advanced lifestyles with greater per capita consumption 
and greater generation per capita of pollution.
    According to the United Nations (U.N.) International Panel 
on Climate Change, physical effects of climate change will 
worsen in coming years. Multilateral policymaking on climate 
change is likely to be substantial and will be a growing 
priority among traditional security affairs. The world sees the 
United States in a pivotal leadership role.
    As effects of climate change mount, the United States will 
come under increasing pressure to help the international 
community set goals for emissions reductions and to help others 
through technological progress.
    Finally, threats to our information technology 
infrastructure. It is becoming both indispensable to the 
functioning of our society and vulnerable to catastrophic 
disruptions in a way that the old decentralized analog systems 
were not. Cybersystems are being targeted for exploitation and 
potentially for disruption or destruction, and it's being done 
by an increasing array of both non-state and state adversaries.
    Network defense technologies are widely available to 
mitigate threats, but they have not been uniformly adopted. A 
number of nations, including Russia and China, can disrupt 
elements of our information infrastructure. We must take 
proactive measures to detect and prevent intrusions before they 
cause significant damage. We must recognize that cyber defense 
is not a one-time fix. It requires a continual investment in 
hardware, software, and cyber defenses.
    In conclusion, the international security environment is 
complex. The global financial crisis has exacerbated what was 
already a growing set of political and economic uncertainties. 
We're nevertheless in a strong position to shape a world 
reflecting universal aspirations and the values that have 
motivated Americans since 1776: human rights, the rule of law, 
liberal market economics, and social justice. Whether we can 
succeed will depend on actions we take here at home, restoring 
strong economic growth and maintaining our scientific and 
technological edge, and defending ourselves at reasonable cost, 
while preserving our civil liberties.
    It will also depend on actions abroad, not only how we deal 
with individual regions, individual regimes, individual crises, 
but also on how we develop a new multilateral system, formal or 
informal, for effective international cooperation in areas like 
trade and finance, in neutralizing extremist groups using 
terrorism, in controlling the proliferation of weapons of mass 
destruction (WMD), in developing codes of conduct for 
cyberspace and space, and in mitigating and slowing global 
climate change.
    Mr. Chairman, subject to your questions, that concludes the 
prepared remarks.
    [The prepared statement of Director Blair follows:]
                 Prepared Statement by Dennis C. Blair
    Chairman Levin, Ranking Member McCain, and members of the 
committee, thank you for the invitation to offer my assessment of 
threats to U.S. national security. I am pleased to be joined by my 
colleague, Lieutenant General Michael Maples, the Director of the 
Defense Intelligence Agency (DIA), and I am proud to lead the world's 
best Intelligence Community (IC). In addition to this unclassified 
statement for the record, I have also submitted a classified statement 
for the record.
             far-reaching impact of global economic crisis
    The primary near-term security concern of the United States is the 
global economic crisis and its geopolitical implications. The crisis 
has been ongoing for over a year, and economists are divided over 
whether and when we could hit bottom. Some even fear that the recession 
could further deepen and reach the level of the Great Depression. Of 
course, all of us recall the dramatic political consequences wrought by 
the economic turmoil of the 1920s and 1930s in Europe, the instability, 
and high levels of violent extremism. Though we do not know its 
eventual scale, it already looms as the most serious global economic 
and financial crisis in decades.
    Forecasts differ significantly over the depth of the downturn. 
Industrialized countries are already in recession, and growth in 
emerging market countries, previously thought to be immune from an 
industrialized country financial crisis, has also faltered, and many 
are in recession as well. Even China and India have seen their dynamic 
growth engines take a hit as they grapple with falling demand for their 
exports and a slowdown in foreign direct and portfolio investments. 
Governments worldwide are initiating monetary and fiscal stimulus 
programs designed to stabilize and recapitalize their financial 
sectors, cushion the impact of stalling economic activity, and 
eventually jumpstart a recovery, perhaps as early as late 2009. The 
International Monetary Fund (IMF), which recently released its revised 
forecast for 2009 projecting an anemic 0.5 percent increase in the 
global economy, warns that the risks to the global economy are on the 
downside.
    The financial crisis and global recession are likely to produce a 
wave of economic crises in emerging market nations over the next year, 
prompting additional countries to request IMF or other multilateral or 
bilateral support. Since September 2008, 10 nations committed to new 
IMF programs intended to provide balance of payments support. All face 
the task of tackling economic problems in a less benign global economic 
environment. Unlike the Asian financial crisis of 1997-1998, the 
globally synchronized nature of this slowdown means that countries will 
not be able to export their way out of this recession. Indeed, policies 
designed to promote domestic export industries--so-called beggar-thy-
neighbor policies such as competitive currency devaluations, import 
tariffs, and/or export subsidies--risk unleashing a wave of destructive 
protectionism.
    Time is probably our greatest threat. The longer it takes for the 
recovery to begin, the greater the likelihood of serious damage to U.S. 
strategic interests. Roughly a quarter of the countries in the world 
have already experienced low-level instability such as government 
changes because of the current slowdown. Europe and the former Soviet 
Union have experienced the bulk of the anti-state demonstrations. 
Although two-thirds of countries in the world have sufficient financial 
or other means to limit the impact for the moment, much of Latin 
America, former Soviet Union states and sub-Saharan Africa lack 
sufficient cash reserves, access to international aid or credit, or 
other coping mechanism. Statistical modeling shows that economic crises 
increase the risk of regime-threatening instability if they persist 
over a 1- to 2-year period. Besides increased economic nationalism, the 
most likely political fallout for U.S. interests will involve allies 
and friends not being able to fully meet their defense and humanitarian 
obligations. Potential refugee flows from the Caribbean could also 
impact homeland security.
    The dramatic decline in oil prices--more than a two-thirds decline 
from the July peak of $147 per barrel--is partially a result of the 
market betting on a deep and perhaps protracted global recession. A 
serious supply crunch is possible down the road if sustained low prices 
lead to major cuts or delays in investment by national and 
international oil companies, especially high cost unconventional oil 
sources like oil sands. Nevertheless, lower prices benefit consumers, 
and declining revenues may put the squeeze on the adventurism of 
producers like Iran and Venezuela.
    The crisis presents many challenges for the United States. It 
started in the United States, quickly spread to other industrial 
economies and then, more recently, to emerging markets. The widely held 
perception that excesses in U.S. financial markets and inadequate 
regulation were responsible has increased criticism about free market 
policies, which may make it difficult to achieve long-time U.S. 
objectives, such as the opening of national capital markets and 
increasing domestic demand in Asia. It already has increased 
questioning of U.S. stewardship of the global economy and the 
international financial structure.
    The November G-20 financial summit in Washington also elevated the 
influence of large, emerging market nations. As was the case in the 
Asian financial crisis, China has an opportunity to increase its 
prestige if Beijing can exert a stabilizing influence by maintaining 
strong import growth and not letting its currency slide. But the United 
States also has opportunities to demonstrate increased leadership 
domestically, bilaterally, and in multilateral organizations such as 
the World Trade Organization, Asia-Pacific Economic Cooperation, and 
Association of Southeast Asian Nations. Recessions are a relative game, 
and historically the United States has proven more adroit at responding 
to them than most. The U.S. tradition of openness, developed skills, 
and mobility probably puts it in a better position to reinvent itself. 
Moreover, in potentially leading recovery efforts in coordination with 
the G-20, Washington will have the opportunity to fashion new 
international global structures that can benefit all. Global 
coordination and cooperation on many fronts will be required to rebuild 
trust in the global financial system and to ensure that the economic 
and financial crises do not spiral into broader geopolitical tensions.
                turning the corner on violent extremism
    I next want to focus on extremist groups that use terrorism. The 
groups with the greatest capability to threaten are extremist Muslim 
groups. In 2008 terrorists did not achieve their goal of conducting 
another major attack in the U.S. Homeland. We have seen notable 
progress in Muslim opinion turning against terrorist groups like al 
Qaeda. Over the last year and a half, al Qaeda has faced significant 
public criticism from prominent religious leaders and fellow extremists 
primarily regarding the use of brutal and indiscriminate tactics--
particularly those employed by al Qaeda in Iraq (AQI) and al Qaeda in 
the Lands of Islamic Maghreb (AQIM)--that have resulted in the deaths 
of Muslim civilians. Given the increased pressure posed by these 
criticisms, al Qaeda leaders increasingly have highlighted enduring 
support for the Taliban and the fight in Afghanistan and Pakistan and 
in other regions where they portray the west being at war with Islam 
and al Qaeda as the vanguard of the global terrorist movement. A broad 
array of Muslim countries is nevertheless having success in stemming 
the rise of extremism and attractiveness of terrorist groups. No major 
country is at immediate risk of collapse at the hands of extremist, 
terrorist groups, although a number--such as Pakistan and Afghanistan--
have to work hard to repulse a still serious threat. In the next 
section I will discuss at length the challenges facing us in Pakistan 
and Afghanistan where militant have gained some traction despite the 
successes against al Qaeda.
    Because of the pressure we and our allies have put on al Qaeda's 
core leadership in Pakistan and the continued decline of al Qaeda's 
most prominent regional affiliate in Iraq, al Qaeda today is less 
capable and effective than it was a year ago.
    In Pakistan's Federally Administered Tribal Areas (FATA), al Qaeda 
lost significant parts of its command structure since 2008 in a 
succession of blows as damaging to the group as any since the fall of 
the Taliban in late 2001. Key leaders killed over the past year include 
Khalid Habib, al Qaeda's military chief and the fourth man in its chain 
of command; Abu Layth al-Libi, who directed cross-border attacks 
against our forces in Afghanistan and was a rising star in the 
organization; Abu Khabab al-Masri, the group's leading expert on 
explosives and chemical attacks and a driving force behind its 
terrorist plotting against the U.S. Homeland and Europe; and Usama al-
Kini who was involved in the bombings of our Embassies in East Africa 
in 1998 and later became the chief planner of al Qaeda's terrorist 
attacks in Pakistan.

         The loss of these and many other leaders in quick 
        succession has made it more difficult for al Qaeda to identify 
        replacements, and in some cases the group has had to promote 
        more junior figures considerably less skilled and respected 
        than the individuals they are replacing.

    Sustained pressure against al Qaeda in the FATA has the potential 
to further degrade its organizational cohesion and diminish the threat 
it poses. If forced to vacate the FATA and locate elsewhere, the group 
would be vulnerable to U.S. or host-country security crackdowns as well 
as local resistance, and probably would be forced to adopt an even more 
dispersed, clandestine structure, making training and operational 
coordination more difficult. Without access to its FATA safe haven, al 
Qaeda also undoubtedly would have greater difficulty supporting the 
Taliban insurgency in Afghanistan. It is conceivable al Qaeda could 
relocate elsewhere in South Asia, the Gulf, or parts of Africa where it 
could exploit a weak central government and close proximity to 
established recruitment, fundraising, and facilitation networks, but we 
judge none of these locations would be as conducive to their 
operational needs as their location in the FATA.
    In Iraq, we judge the maturation of the Awakening movement, Iraqi 
Security Forces (ISF) gains, and the subsequent spread of Sons of Iraq 
groups, in combination with coalition operations against AQI leaders, 
have reduced AQI's operational capabilities and restricted the group's 
freedom of movement and sanctuaries. Nevertheless, we judge the group 
is likely to retain a residual capacity to undertake terrorist 
operations for years to come. I will focus on AQI in greater detail 
when I discuss Iraq.
    Saudi Arabia's aggressive counterterrorism efforts since 2003 have 
rendered the Kingdom a harsh operating environment for al Qaeda, but 
Riyadh is now facing new external threats from al Qaeda elements in the 
region, particularly from Yemen. Senior al Qaeda leaders are focused on 
resurrecting an operational presence due to Saudi security actions over 
the past 5 years that have resulted in the death or capture of most 
identified Saudi-based al Qaeda senior leaders and operatives. Senior 
al Qaeda leaders view the Kingdom as a strategic target owing to Bin 
Ladin's longstanding objective of unseating the al-Saud family and the 
symbolic value of attacking Western and Saudi targets in the land of 
the two holy mosques.
    The Saudi Government counterterrorism approach includes law 
enforcement efforts coupled with a complementary long-term program to 
stem radicalization. Riyadh's multi-faceted ``counter-radicalization'' 
and ``de-radicalization'' strategy uses detainee rehabilitation 
programs, the media, and religious scholars to combat terrorism and 
build public support for its strong security posture.
    Counterterrorism efforts by Indonesia, in some cases with U.S. 
assistance, have led to the arrests and deaths of hundreds of Jemaah 
Islamiya (JI) operatives, including top leaders and key operatives. In 
November, Indonesia executed three JI terrorists--Imam Samudra, 
Mukhlas, and Amrozi--for their role in the 2002 Bali bombings. While 
the IC continues to assess that JI in Indonesia and the Abu Sayyaf 
Group in the Philippines are the two terrorist groups posing threats to 
U.S. interests in Southeast Asia, efforts by Southeast Asian 
Governments against both groups in the past few years have degraded 
their attack capabilities.
    The primary threat from Europe-based extremists stems from al Qaeda 
and Sunni affiliates who return from training in Pakistan to conduct 
attacks in Europe or the United States. We have had limited visibility 
into European plotting, but we assess that al Qaeda is continuing to 
plan attacks in Europe and the west. Al Qaeda has used Europe as a 
launching point for external operations against the Homeland on several 
occasions since September 11, and we believe that the group continues 
to view Europe as a viable launching point. Al Qaeda most recently 
targeted Denmark and the U.K., and we assess these countries remain 
viable targets. Al Qaeda leaders have also prominently mentioned 
France, most likely in reprisal for the 2004 headscarf ban.
    The social, political, and economic integration of Western Europe's 
15 to 20 million Muslims is progressing slowly, creating opportunities 
for extremist propagandists and recruiters. The highly diverse Muslim 
population in Europe already faces much higher poverty and unemployment 
rates than the general population, and the current economic crisis 
almost certainly will disproportionately affect the region's Muslims. 
Numerous worldwide and European Islamic groups are actively encouraging 
Muslims in Europe to reject assimilation and support militant versions 
of Islam. Successful social integration would give most ordinary 
Muslims a stronger political and economic stake in their countries of 
residence, even though better educational and economic opportunities do 
not preclude radicalization among a minority. Visible progress toward 
an Arab-Israeli settlement, along with stability in Iraq and 
Afghanistan, would help undercut radicals' appeal to Muslim foreign 
policy grievances.
    European governments are undertaking a wide range of policies to 
promote Muslim social integration and counter radicalization. In 
addition to pursuing socioeconomic initiatives aimed at all immigrants, 
France, Germany, Italy, and several smaller European countries have 
established various types of religious-based consultative councils 
composed of leading Muslim groups. Additionally, the United Kingdom has 
established the most diversified and energetic official outreach 
program to Muslims, largely reflecting concern about homegrown 
terrorism since the July 2005 London attacks. Among other initiatives, 
the U.K. Government has promoted the creation of an advisory board on 
mosque governance, a committee of Muslim theologians, and consultative 
bodies of Muslim women and youth. It also has held multiple high 
profile conferences with Islamic scholars and government 
representatives from the Muslim world. British police have made a 
conscious decision to seek the cooperation of non-violent radicals even 
while political authorities have encouraged former radicals and Sufis 
to speak out against hardline political Islam.
Core al Qaeda
    Despite these successes, al Qaeda and its affiliates and allies 
remain dangerous and adaptive enemies, and the threat they could 
inspire or orchestrate an attack on the United States or European 
countries. Under the strategic direction of Usama Bin Ladin and his 
deputy, Ayman al-Zawahiri, al Qaeda remains intent on attacking U.S. 
interests worldwide, including the U.S. Homeland. Although al Qaeda's 
core organization in the tribal areas of Pakistan is under greater 
pressure now than it was a year ago, we assess that it remains the most 
dangerous component of the larger al Qaeda network. Al Qaeda leaders 
still use the tribal areas as a base from which they can avoid capture, 
produce propaganda, communicate with operational cells abroad, and 
provide training and indoctrination to new terrorist operatives.

         We lack insight into specific details, timing, and 
        intended targets of potential, current U.S. Homeland plots, 
        although we assess al Qaeda continues to pursue plans for 
        Homeland attacks and is likely focusing on prominent political, 
        economic, and infrastructure targets designed to produce mass 
        casualties, visually dramatic destruction, significant economic 
        aftershocks, and/or fear among the population.
         Increased security measures at home and abroad have 
        caused al Qaeda to view the West, especially the United States, 
        as a harder target than in the past, but we remain concerned 
        about an influx of Western recruits into the tribal areas since 
        mid-2006.
         Al Qaeda and its extremist sympathizers in Pakistan 
        have waged a campaign of deadly and destabilizing suicide 
        attacks throughout Pakistan, including the bombing of the 
        Marriott Hotel in Islamabad in September, which killed 60 
        people and wounded hundreds.
    AQIM
    Al Qaeda's other robust affiliate, al Qaeda in the Lands of the 
Islamic Maghreb (AQIM), is the most active terrorist group in 
northwestern Africa and, in our assessment, represents a significant 
threat to U.S. and western interests in the region. AQIM has continued 
to focus primarily on Algerian Government targets, but since its merger 
with al Qaeda in September 2006 the group has expanded its target set 
to include U.S., U.N., and other western interests and has launched 
progressively more sophisticated attacks, employing vehicle-borne 
improvised explosive device (VBIEDs), near-simultaneous bombings, and 
suicide bombings.

         AQIM has conducted nearly a dozen attacks against 
        Western targets to include a nearsimultaneous VBIED attack 
        against United Nations facilities and the Algerian 
        Constitutional Court in Algiers in December 2007, killing at 
        least 47 and wounding more than 100. AQIM associates also 
        attacked the Israeli Embassy in Mauritania in February 2008.
         AQIM Europe-based cells act as financial support and 
        facilitation nodes, but these cells could possibly become 
        operational at the direction of AQIM leadership.

    We assess that over the next year AQIM will continue to demonstrate 
its increased capability and commitment to senior al Qaeda leadership 
by attacking local and Western interests throughout North Africa and 
the Sahel. AQIM traditionally has operated in Algeria and northern Mali 
and has recruited and trained an unknown number of extremists from 
Tunisia, Morocco, Nigeria, Mauritania, Libya, and other countries. We 
assess some of these trainees may have returned to their home countries 
to plot attacks against local and western interests.
    Al Qaeda in Yemen
    Yemen is reemerging as a jihadist battleground and potential 
regional base of operations for al Qaeda to plan internal and external 
attacks, train terrorists, and facilitate the movement of operatives. 
Al Qaeda leaders could use al Qaeda in Yemen and the growing presence 
of foreign jihadists there to supplement its external operations 
agenda, promote turmoil in Saudi Arabia, and weaken the Salih regime.

         Al Qaeda in Yemen on 17 September 2008 conducted an 
        attack against the U.S. Embassy in Sana'a. The coordinated 
        attack used two explosives-laden vehicles, suicide bombers, and 
        small-arms fire and killed six guards and four civilians. As of 
        September 2008, the group had conducted 20 attacks against 
        U.S., Western, and Yemeni targets, most carried out by the 
        splinter faction, Jund al-Yemen.
    East Africa
    We judge the terrorist threat to U.S. interests in East Africa, 
primarily from al Qaeda and al Qaeda-affiliated Islamic extremists in 
Somalia and Kenya, will increase in the next year as al Qaeda's East 
Africa network continues to plot operations against U.S., Western, and 
local targets and the influence of the Somalia-based terrorist group 
al-Shabaab grows. Given the high-profile U.S. role in the region and 
its perceived direction--in the minds of al Qaeda and local 
extremists--of foreign intervention in Somalia, we assess U.S. 
counterterrorism efforts will be challenged not only by the al Qaeda 
operatives in the Horn, but also by Somali extremists and increasing 
numbers of foreign fighters supporting al-Shabaab's efforts.
The Homegrown Threat
    We judge any homegrown extremists in the United States do not yet 
rise to the numerical level or exhibit the operational tempo or 
proficiency we have seen in Western Europe. A range of factors inside 
the United States may contribute to a lower incidence of homegrown 
cells developing. Nevertheless, we remain concerned about the potential 
for homegrown extremists inspired by al Qaeda's militant ideology to 
plan attacks inside the United States, Europe, and elsewhere without 
operational direction from the group itself. In this regard, over the 
next year we will remain focused on identifying any ties between U.S.-
based individuals and extremist networks overseas. Though difficult to 
measure, the spread of radical Salafi Internet sites that provide 
religious justification for attacks; aggressive and violent anti-
Western rhetoric; and signs that self-generating cells in the United 
States identify with Bin Laden's violent objectives all point to the 
likelihood that a small but violent number of cells may develop here.

         Al Qaeda's propaganda efforts include messages in 
        English and those aimed specifically at an American audience 
        either in translated form or directly by al Qaeda's second-in-
        command, Ayman al-Zawahiri, such as with his November 2008 
        video message following the U.S. presidential elections. U.S.-
        born al Qaeda members such as Adam Gadahn, who was indicted by 
        a U.S. grand jury in October 2006 on charges of treason, 
        providing material support to a designated foreign terrorist 
        organization, and aiding and abetting terrorists, also 
        participated in making these English-language propaganda 
        messages.
The Threat from Lebanese Hizballah
    Lebanese Hizballah continues to be a formidable terrorist adversary 
with an ability to attack the U.S. Homeland and U.S. interests abroad. 
Hizballah is a multifaceted, disciplined organization that combines 
political, social, paramilitary, and terrorist elements, and we assess 
that any decision by the group to resort to arms or terrorist tactics 
is carefully calibrated. At the same time, we judge armed struggle, 
particularly against Israel, remains central to Hizballah's ideology 
and strategy.
    We assess Lebanese Hizballah, which has conducted anti-U.S. attacks 
overseas in the past, may consider attacking U.S. interests should it 
perceive a direct U.S. threat to the group's survival, leadership, or 
infrastructure or to Iran. However, we judge Hizballah would carefully 
weigh the decision to take any action against the United States. 
Hizballah probably continues to support proxy groups and individuals, 
which could provide the group plausible deniability for possible 
attacks against the West or Israel.
    We assess Hizballah anticipates a future conflict with Israel and 
probably continues to implement lessons learned from the conflict in 
the summer of 2006. In a potential future conflict, Hizballah is likely 
to be better prepared and more capable than in 2006.
                       the ``arc of instability''
    The large region from the Middle East to South Asia is the locus 
for many of the challenges facing the United States in the 21st 
century. While we are making progress countering terrorism, the roots 
and the issues related to the many problems in this region go deeper 
and are very complicated. The United States has strong tools--from 
military force to diplomacy in the region and good relationships with 
the vast majority of states. There is almost universal recognition that 
the United States is vital to any solutions, and these can be brought 
to bear in ways that benefit the United States and the region. I will 
begin with looking at individual states, but the IC analysis I present 
here emphasizes the regional linkages exacerbating problems and 
providing opportunities that are available for tackling the problems.
The Changing Geopolitical Landscape in the Middle East
    In the Middle East, the revival of Iran as a regional power, the 
deepening of ethnic, sectarian, and economic divisions across much of 
the region, and looming leadership succession among U.S. allies are 
shaping the strategic landscape. Hizballah and Hamas have successfully 
seized the mantle of resistance to Israel from moderate regimes with 
secular Arab nationalists being discredited in the popular mind. Battle 
lines are increasingly drawn not just between Israel and Arab countries 
but also between secular Arab nationalists and ascendant Islamic 
nationalist movements inside moderate Arab states. Iran's influence in 
Iraq, its enduring strategic ties to Syria, pursuit of a nuclear 
weapons capability, and the success of Tehran's allies--Hamas and 
Hizballah--are fueling Iran's aspirations for regional preeminence. 
Arab Sunni leaders are struggling to limit Iran's gains; Saudi Arabia's 
more activist regional diplomacy falls short of significantly 
constraining Iran's freedom of maneuver. Iran's ambitions combined with 
unresolved conflicts in Iraq, Lebanon, and the Palestinian territories 
represent the principal flashpoints for intensified conflict in the 
region.
    Iran's longstanding foreign policy goals are to preserve the 
Islamic regime, safeguard Iran's sovereignty, defend its nuclear 
ambitions, and expand its influence in the region and the Islamic 
world. Iranian leaders perceive that regional developments--including 
the removal of Saddam and the Taliban, challenges facing the United 
States in Iraq and Afghanistan, the increased influence of Hamas and 
Hizballah, and, until recently, higher oil revenues--have given Tehran 
more opportunities and freedom to pursue its objective of becoming a 
regional power. This perception has produced a more assertive Iranian 
foreign policy in which Tehran has focused on expanding ties in Iraq, 
Afghanistan, and the Levant to better influence and exploit regional 
political, economic, and security developments. Iran's pursuit of 
nuclear weapon capability is another element in its more assertive 
foreign policy--an aspect that I will discuss later.
    In Tehran, Iran's conservative faction continues to dominate the 
government. Supreme Leader Khamenei has consolidated political power in 
his office, but his reliance on hardline conservative elements--the 
IRGC, war veterans turned politicians such as President Mahmud Ahmadi-
Nejad, and selected clerics--to bolster his authority has upset the 
earlier factional balance in Iranian politics.

         Although the regime still comprises many competing 
        factions, only those that support the concept of a powerful 
        Supreme Leader and advocate revolutionary values now have a 
        significant voice in decisionmaking.

    President Ahmadi-Nejad faces less than certain prospects for 
reelection in June because his management of the economy and aggressive 
foreign policy rhetoric have become sources of significant domestic 
criticism and political friction. Ahmadi-Nejad's economic policies have 
reduced unemployment marginally, but have fueled significant inflation, 
providing his critics ample ammunition to question his competence. The 
sharp fall in global oil prices will add to Iran's economic problems, 
but Tehran has a substantial cushion of foreign reserves to support 
social and other spending priorities. Less energy revenues may also 
help to dampen its foreign policy adventurism.
    We expect Khamenei will attempt to manipulate the presidential 
election, largely by limiting the range of candidates. As he has in 
past elections, the Supreme Leader probably will attempt to influence 
the decisions of individuals to run, monitor the vetting and approval 
of candidates, and influence media coverage of the campaign.

         We do not know if Khamenei will actively support 
        Ahmadi-Nejad's re-election. The Supreme Leader publicly has 
        expressed support for Ahmadi-Nejad's administration, but we 
        judge his statements are intended more to minimize criticisms 
        of the regime than to endorse the President.
         Although we expect that whoever is elected will be a 
        strong supporter of the Islamic Republic, we note that the 
        election of a more pragmatic figure may, over time, produce 
        some moderation of Iranian behavior by introducing into the 
        decisionmaking process a wider range of options than those 
        presented under Ahmadi-Nejad.

    Militarily, Iran continues to strengthen the three pillars of its 
strategic deterrence: surface-to-surface missiles, long-range rockets 
and aircraft for retaliation; naval forces to disrupt maritime traffic 
through key waterways; and unconventional forces and surrogates to 
conduct worldwide lethal operations. Although many of their statements 
are exaggerations, Iranian officials throughout the past year have 
repeatedly claimed both greater ballistic missile capabilities that 
could threaten U.S. and allied interests and the ability to close the 
Strait of Hormuz using unconventional small boat operations, anti-ship 
cruise missiles, and other naval systems. Some officials, such as 
Islamic Revolutionary Guard Corps Commander Major General Mohammad Ali 
Jafari-Najafabadi, have hinted that Iran would have a hand in attacks 
on ``America's interests even in far away places,'' suggesting Iran has 
contingency plans for unconventional warfare and terrorism against the 
United States and its allies.
    Iran's goals in Iraq include preventing the emergence of a threat 
from Iraqi territory, either from the Government of Iraq itself, or 
from the United States. To achieve this, Iran probably seeks a 
Government in Baghdad in which Tehran's Shiite allies hold the majority 
of political, economic, and security power. Iran also has sought to 
make the United States suffer political, economic, and human costs in 
order to limit U.S. engagement in the region and to ensure that 
Washington does not maintain a permanent military presence in Iraq or 
use its military to pressure or attack Iran.

         Iranian efforts to secure influence in Iraq encompass 
        a wide range of activities, including using propaganda, 
        providing humanitarian assistance, building commercial and 
        economic ties, and supporting Shiite elements fighting the 
        coalition. Iran has provided a variety of Shia militants with 
        lethal support including weapons, funding, training, logistical 
        and operational support, and intelligence training.
         We judge Iran will continue to calibrate its lethal 
        aid to Iraqi Shiite militants based on the threat it perceives 
        from U.S. forces in Iraq, the state of U.S.-Iran relations, 
        Tehran's fear of a Bathist resurgence, Tehran's desire to help 
        defend Iraqi Shiite against sectarian violence, and to maintain 
        the ability to play a spoiler role in Iraq if Iran perceives 
        the Government of Iraq has become a strategic threat.
         Despite Tehran's efforts, we judge Iraqi nationalism 
        and the growing capabilities of the Iraqi Government will limit 
        Iranian influence in Iraq. Baghdad, for example, signed the 
        U.S.-Iraq security agreement despite Iranian opposition.

    In Afghanistan, Iran has focused on promoting a friendly central 
government in Kabul and limiting western power and influence. Iran's 
policy in Afghanistan follows multiple tracks, including providing 
political and economic support to the Karzai Government and developing 
relationships with actors across the political spectrum.

         Iran has opposed Afghan reconciliation talks with the 
        Taliban as risking an increase in the group's influence and 
        legitimacy.
         We judge Iran distrusts the Taliban and opposes its 
        return to power but uses the provision of lethal aid as a way 
        to pressure western forces, gather intelligence, and build ties 
        that could protect Iran's interests if the Taliban regains 
        control of the country.

    In the Levant, Tehran is focused on building influence in Lebanon 
and expanding the capability of key allies. Tehran continues to support 
groups such as Hizballah, Hamas, and Palestine Islamic Jihad (PIJ), 
which it views as integral to its efforts to challenge Israeli and 
Western influence in the Middle East.

         Hizballah is the largest recipient of Iranian 
        financial aid, training, and weaponry, and Iran's senior 
        leadership has cited Hizballah as a model for other militant 
        groups. We assess Tehran has continued to provide Hizballah 
        with significant amounts of funding, training, and weapons 
        since the 2006 conflict with Israel, increasing the group's 
        capabilities to pressure other Lebanese factions and to 
        threaten Israel.
         Iran's provision of training, weapons, and money to 
        Hamas since the 2006 Palestinian elections has bolstered the 
        group's ability to strike Israel and oppose the Palestinian 
        Authority (PA).
Worsening Conflict in the Levant
    The Palestinian Territories and Lebanon are two places where the 
multifaceted connections of which I spoke are most pronounced in this 
arc of instability. Two non-state actors, Hamas and Hizballah, play 
prominent roles, while individual states that oppose U.S. interests, 
such as Iran and Syria, also are prominent. In both these countries, we 
worry about worsening conflict and the potential for growing violent 
extremism.
    Fighting between Israel and Hamas in the Gaza Strip subsided in 
mid-January, leaving in its wake hardened attitudes among Israelis and 
Palestinians, deepened Palestinian political divisions, and a widened 
rift between regional moderates--led by Egypt, Saudi Arabia, and 
Jordan--and hardliners, including Iran, Hizballah, and Syria. A key 
challenge for U.S. policy in the coming year will be finding ways to 
strengthen moderates and renew the potential for peace negotiations, 
lest post-conflict division and anger in the region further diminish 
prospects for peace.
    With Hamas in control of Gaza and Hizballah growing stronger in 
Lebanon, progress on a Palestinian-Israeli accord is growing more 
difficult. With Iran developing a nuclear weapon capability and Israel 
determined not to allow it, there is potential for an Iran-Israeli 
confrontation or crisis on that issue as well. Moderate Arab states 
fear a nuclear-armed Iran, want progress on Palestinian settlement--the 
absence of which deprives U.S. Arab allies of crucial political capital 
to defend strategic ties to the United States and wish to sustain a 
moderate, statecentered politics for the region. Progress on the 
Israeli-Palestinian peace track would increase opportunities for the 
United States to broaden its engagement with Arab publics, including 
those aligning with the growing ideology of Islamic nationalism.

         The Israeli public appears broadly supportive of 
        Israel's military action and believes Israel must act 
        decisively to prevent attacks from Palestinian-controlled 
        territory. At the same time, Israel's military actions in Gaza 
        have deepened Palestinian anger towards Israel, both in the 
        Gaza Strip and in the West Bank, and sparked outrage and 
        protests throughout the Arab and Muslim world.
         Hamas and the PA are engaged in an intense 
        competition, with both sides seeking to emerge from the 
        conflict in a stronger political position, but relations 
        between the two organizations have been further embittered by 
        the crisis. The PA accused Hamas of needlessly provoking an 
        Israeli attack and Hamas, which has argued it ``won'' by 
        surviving the operation and continuing its control of Gaza, 
        accused the PA of essentially collaborating with the Israeli 
        assault.
         The moderate Arab states and regional hardliners are 
        competing to shape the regional developments and public 
        attitudes in the aftermath of the Gaza crisis. The moderates 
        seek a reconciliation of the Palestinian factions and the 
        resumption of peace talks between Israel and the Palestinians, 
        while hardliners are encouraging Hamas to retain its 
        uncompromising stance toward Israel. These opposing regional 
        blocs are competing to take the lead in delivering humanitarian 
        aid to Palestinians in Gaza. Moderate states support U.S. 
        efforts to establish a ceasefire and border security regime 
        that will prevent the rearming of Hamas, while Iran is likely 
        to lead an effort to provide weapons to Hamas to build the 
        group's military capabilities.

    Tensions between Hamas and Fatah have been elevated since Hamas 
seized control of the Gaza Strip in June 2007, and efforts to achieve 
reconciliation have failed. Both factions continue to attack, harass, 
and detain members of the other group in the West Bank and the Gaza 
Strip, deepening mutual resentment and making an accord between them 
difficult. Reconciliation talks between Fatah and Hamas scheduled for 
November in Cairo did not occur because Hamas refused to attend the 
meetings, in part to protest ongoing PA security measures in the West 
Bank targeting its members.

         Disagreement between Fatah and Hamas about a range of 
        issues such as the timing of national elections and formation 
        of a unity government could lead Hamas to challenge the 
        legitimacy of Abbas's government and will remain obstacles to 
        Fatah-Hamas reconciliation.

    In 2008, longstanding tensions worsened between anti-democratic 
Fatah elements, mostly but not exclusively the so-called ``old-guard'' 
and typically younger elements demanding internal reforms within the 
faction, worsened in 2008 amid discussions over the location of and 
attendance at Fatah's long-delayed sixth General Congress. These 
internal conflicts threaten to fracture the party and damage its 
prospects in the run-up to PA presidential and legislative elections in 
2009 or early 2010. There is no consensus among Fatah officials 
regarding a replacement for President Abbas, who has not groomed a 
successor, and no potential leader has gained Fatah's full support.
    In Lebanon, after a long stalemate, the political process showed 
some movement last year that reasserted a fragile consensus giving 
Hizballah and the opposition veto power in the Lebanese Government. The 
Doha Accord in May ended armed clashes between Hizballah and Lebanese 
civilians and 18 months of political stalemate. The accord also paved 
the way for the election of former Lebanese Armed Forces (LAF) 
Commander Michel Sulayman as President on May 25, 2008. Sulayman has 
positioned himself as a consensus-builder between the March 14 
coalition and the Hizballah-led opposition and has made progress on 
some issues, including forming the national unity cabinet, drafting the 
cabinet statement, and reforming the electoral law.

         The Lebanese political scene has enjoyed a period of 
        relative calm and reconciliation since May, probably because 
        all Lebanese parties are focused on preparing and forging 
        alliances for the National Assembly election in June 2009. 
        Lebanese Christian voters, divided between the two political 
        camps, will be decisive in determining who wins a majority in 
        the election.

    The security situation remains fragile in Lebanon, especially in 
the north, which saw fighting between the Sunni and Alawi communities 
last summer. The Hizballah-initiated violence in May has left all 
sectarian groups--the Sunnis in particular--concerned about their 
security. The LAF's limited response and the Hizballah-led opposition's 
military strength have reinforced the view that sectarian communities 
must defend themselves. All sides are working to develop sectarian-
based militia forces. Hizballah continues to bolster its military 
strength; since the 2006 war, the group has rearmed and trained 
additional personnel in preparation for possible future conflict with 
Israel.
    Hizballah's attempts to reconcile with other Lebanese parties are 
an effort to show the group's commitment to a Lebanese nationalist 
agenda in preparation for the election. They are also meant to reduce 
the damage done to Hizballah's image by its armed takeover of parts of 
Beirut in May.
    Since becoming President of Syria in June 2000, Bashar al-Asad has 
strengthened his hold on power in Syria. Asad's standing has been 
augmented by his perceived success in weathering regional crises and 
international pressure and by the regime's ability to highlight Syria's 
relative insulation from violence in Iraq and Lebanon. Within Syria, 
Asad has preserved the pillars of regime control established by his 
father while gradually using personnel turnover to appoint loyalists 
and expand his power base.

         Syrian leaders continue to exploit ``resistance'' to 
        Israel and rejection of U.S. pressure to unify Syrians in 
        support of the regime, despite broad dissatisfaction with 
        economic conditions, some disappointment at the lack of 
        political reforms, and quiet resentment by some Sunnis at 
        domination by the Alawi minority.

    Damascus continues efforts to cement its influence in Lebanon by 
providing economic and other support to its allies in the Lebanese 
opposition. Syria has exploited its role in helping secure the May 2008 
Doha agreement, which ended Lebanon's political violence last spring 
and ushered in a unity government, to improve relations with Europe and 
moderate Arab states. Syria is poised to appoint an ambassador to 
Lebanon, and we judge Syria will continue to interfere in Lebanese 
affairs in pursuit of its own interests.
    Syrian military cooperation with Iran, including trilateral 
cooperation with Hizballah, has increased during the past year. Syria 
views its links to Iran as a means to press and deter adversaries, 
particularly Israel, and create leverage for achieving its major goals 
of a lead role in the Arab world, maintaining influence in Lebanon, and 
regaining the Golan Heights. For Syria's part, Iran has proven over the 
last quarter century to be Syria's most reliable ally. Shared interests 
over the past few years--support for Lebanese Hizballah, sustaining 
Palestinian terrorists, and countering U.S. regional intentions--have 
drawn Iran and Syria toward a closer alliance. Syrian military support 
to Hizballah has increased substantially over the past 5 years, 
especially since the 2006 Israel-Hizballah war. Damascus also supports 
Palestinian rejectionist groups, such as Hamas, which base their 
external leadership in Syria.
    Syria probably will adjust its approach to the Iraq insurgency as 
Iraq's situation evolves. As the United States withdraws, we assess 
Damascus will seek improved political and economic ties to Baghdad and 
is likely to support oppositionists opposed to a long-term U.S. 
presence in Iraq. Syria will remain the primary gateway for foreign 
fighters entering Iraq. Syria condemned the October 26, 2008, U.S. raid 
that targeted AQI foreign fighter facilitator Abu Ghadiyah and staged a 
temporary removal of some border guard forces. Damascus also closed 
U.S. institutions in Syria, including the Damascus Community School and 
the American Cultural Center.
A More Stable Iraq as Counterbalance
    The positive security trends over the past year have endured and 
expanded, and a more stable Iraq could counterbalance other negative 
trends in the region. Extremists in Iraq have been largely sidelined by 
coalition and Iraqi operations and dwindling popular tolerance for 
violence, and their attacks are no longer a major catalyst for 
sectarian violence. Iraqis now are less inclined to resolve their 
differences through unsanctioned violence, and fewer Iraqis are dying 
at the hands of their countrymen than at any time in the past 2 years. 
Indeed, communal violence is now at the lowest sustained levels since 
Prime Minister Nuri al-Maliki's Government came to power. Improving 
security conditions in Iraq have given the Prime Minister an 
opportunity to assert authority in previously denied areas of the 
country. Meanwhile, the maturation of the Awakening movement, ISF 
gains, and the subsequent spread of Sons of Iraq groups, in combination 
with coalition operations against AQI leaders, have weakened AQI by 
largely forcing it out of strongholds such as Al Anbar and much of 
greater Baghdad.
    The main factors that have contributed to these positive trends are 
as follows:

         First, coalition operations and population security 
        measures have been critical to reducing violence in Iraq. We 
        judge Coalition support in the form of a credible, politically 
        neutral security guarantor also has facilitated the ISF's 
        ability to deal with ethnosectarian issues.
         Second, the Sunni insurgency has continued to wane. 
        Most Iraqi-led Sunni insurgent groups have largely suspended 
        operations against the coalition, favoring engagement with the 
        United States to protect their communities, to oppose AQI, or 
        protect against feared domination by the Iraqi Government, 
        although many are hedging by maintaining their organizational 
        structures and access to weapons.
         Third, the threat from AQI has continued to diminish. 
        AQI, although still dangerous, has experienced the defection of 
        members, lost key mobilization areas, suffered disruption of 
        support infrastructure and funding, and been forced to change 
        targeting priorities. Indeed, the pace of suicide bombings 
        countrywide, which we consider one indicator of AQI's 
        operational capability, fell significantly during the last 
        year.
         Fourth, the threat of violence from most Shiite 
        militants has declined. Many Shiite who looked upon Sadr's 
        Jaysh al-Mahdi (JAM) in early 2008 as defenders against Sunni 
        extremists eventually came to see the JAM as pariahs, leading 
        Muqtada al-Sadr to announce last summer that most of his 
        thousands-strong militia would set aside their weapons to 
        become a cultural organization and a counterweight to Western 
        influence. Some Shiite militant groups such as Sadrist-
        affiliated groups and Kata'ib Hizballah (KH) probably will 
        continue anti-coalition attacks and may engage in sporadic 
        violence against Iraqi Government targets.
         Lastly, the capabilities of the ISF have continued to 
        improve. The ISF's increasing professionalism and improvements 
        in warfighting skills have allowed it to assume more 
        responsibility for Iraq's internal security, as demonstrated by 
        the successful operations against Shiite militants in Al 
        Basrah, Sadr City, and Al `Amarah, and against Sunni extremists 
        in Diyala and Mosul. Despite these improvements, the ISF 
        remains dependent on the United States for enabling 
        capabilities such as logistics, fire support, and intelligence.

    We assess political and security progress could be halted or even 
reversed by a number of factors, particularly if these challenges occur 
in combination.

         Disputed internal boundaries. Resolving disputed 
        boundaries, primarily in northern Iraq, probably will be the 
        most fiercely contested political issue to face Iraq in the 
        next several years and poses the greatest threat to government 
        stability.
         Perceptions of Iraqi Government repression. Policies 
        or actions of the Iraqi Government perceived by segments of 
        Iraq's ethnosectarian population to represent a broad and 
        enduring campaign of repression could lead to widespread 
        violence.
         Increased foreign support to insurgent or militia 
        groups. We judge a large infusion of foreign support could 
        deepen and intensify the ensuing conflict if Iraqi militants 
        and insurgents sought external assistance to challenge or 
        destabilize the Iraqi Government.

    In addition to these challenges, Baghdad will confront more 
difficult choices about spending priorities as a result of declining 
oil revenues as it simultaneously grapples with security force 
modernization, infrastructure investment, and expanding public 
payrolls. Iraq's economy will continue to depend heavily on hydrocarbon 
exports, government spending, and continued security improvements.
    We judge Iran will expand political and economic ties to Baghdad 
and will continue to supply weapons and training to Shiite militants to 
counter a Sunni resurgence, maintain leverage in Iraq, and keep 
pressure on U.S. forces. Iraqi nationalism, however, acts as a check on 
Iran's ability to project power in Iraq. Syria will focus on improving 
relations with Baghdad and seek increased trade and energy exports but 
also will continue to support Baathists and other non-AQI Sunni 
oppositionists to try to gain leverage in Iraq. Turkey will continue to 
focus on countering the Kurdistan People's Congress, a Kurdish 
terrorist group based in northern Iraq. The Turkish military continues 
to conduct cross-border air and artillery strikes in northern Iraq 
against the Kurdistan People's Congress (KGK, formerly PKK), a Kurdish 
terrorist organization waging armed conflict against Turkey. The KGK 
appears to retain the desire to attack Turkish targets. In early 
October 2008, the KGK launched an attack on a Turkish military outpost 
that left 17 Turkish troops dead.

         Turkish officials met with Kurdistan Regional 
        Government President Barzani in October 2008, opening the 
        prospect of closer ties between Turkey and the KRG. Like the 
        rest of Europe, the Turkish economy is feeling the effects of 
        the global financial crisis. In mid-November, Standard and 
        Poor's downgraded Turkey's credit outlook from stable to 
        negative.

    Iraq's Sunni Arab neighbors are starting to reestablish an Arab 
presence in Baghdad, but Arab engagement is likely to be slow and 
halting over the next year. Jordan's King Abdallah in August became the 
first Arab head of state to travel to Baghdad since the fall of Saddam; 
he dispatched an Ambassador to Iraq in October.
Afghan-Pakistani Linkages
    In the past year, Afghanistan's Taliban-dominated insurgency has 
increased the geographic scope and frequency of attacks. Taliban 
reaction to expanded Afghan and North Atlantic Treaty Operations (NATO) 
account for some of the increase in violence, but insurgents also have 
demonstrated greater aggressiveness and more lethal tactics. Efforts to 
improve governance and extend development were hampered in 2008 by a 
lack of security in many areas and a general lack of government 
capacity and competency. The ability of the Afghan Government, NATO, 
and the United States to push back the Taliban and deliver security, 
basic governance, and economic development will determine the continued 
support of the Afghan people for the government and the international 
community. Afghan leaders also must tackle endemic corruption and an 
extensive drug trade, which erode the capacity of the government while 
diminishing public confidence in its already fragile institutions.
    Specifically, the security situation has deteriorated in many 
eastern areas of the country and in the south and northwest. Taliban 
and affiliated insurgent groups have expanded operations into 
previously peaceful areas of the west and around Kabul. The Taliban-
dominated insurgency has expanded in scope despite International 
Security Assistance Force and Operation Enduring Freedom military 
operations targeting insurgent command and control networks.
    Continued progress has been made in expanding and fielding the 
Afghan National Army, but the shortage of international trainers in the 
field, high operational tempo, attrition, and absenteeism hamper 
efforts to make units capable of independent action. The Afghan 
National Police remains a largely untrained force with high rates of 
corruption and absenteeism. Limitations to training, mentoring, and 
equipping combined with an ineffective Ministry of Interior and large 
parts of the country that have not been effectively ``cleared'' hinder 
the progress and effectiveness of the policy.
    Kabul in 2009 must work closely with the national legislature and 
provincial and tribal leaders to establish and extend the capacity of 
the central and provincial government. The country faces a chronic 
shortage of resources and of qualified and motivated government 
officials at the national and local level. In addition, continued 
attacks undercut the national government's image as a viable guarantor 
of security, persuading tribal and other influential nonstate actors to 
either remain neutral or back insurgents. The 2009 presidential 
election will present a greater security challenge than the 2004 
election, and the insurgents probably will make a concerted effort to 
disrupt it.
    Kabul's inability to build effective, honest, and loyal provincial 
and district level institutions capable of providing basic services and 
sustainable, licit livelihoods erodes its popular legitimacy and 
increases the influence of local warlords and the Taliban. The Afghan 
Government has launched some initiatives, such as the Independent 
Directorate of Local Governance, to address governance shortcomings, 
but corruption has exceeded culturally tolerable levels and is eroding 
the legitimacy of the government. Both law enforcement and judicial 
capacity, although somewhat improved, remain limited, and Kabul remains 
constrained in its ability to deploy programs at the provincial and 
local levels.
    The Afghan Government has no coherent tribal engagement strategy, 
but where Pashtun tribal and government interests intersect, gains in 
local security, stability, and development are possible. At the 
provincial level, governors who have proven themselves effective 
mediators of local disputes among tribes and other local groups in 
their respective jurisdictions garner support from Afghan audiences and 
the donor community.
    The Afghan drug trade is a major source of revenue for corrupt 
officials, the Taliban and other insurgent groups operating in the 
country and is one of the greatest long-term challenges facing 
Afghanistan. The insidious effects of drug-related criminality continue 
to undercut the government's ability to assert its authority outside of 
Kabul, to develop a strong, rule-of-law based system, and to rebuild 
the economy. Despite decreases in poppy cultivation in 2008, opium 
production in Afghanistan remains historically high, and the country 
produces over 90 percent of the world's supply with 95 percent of the 
crop grown in five contiguous provinces of southwestern Afghanistan and 
over 60 percent in one province alone, Helmand. In 2008, farmers grew 
157,300 hectares of poppy, potentially producing an estimated 7,700 
metric tons of opium. Almost every province outside the southwest was 
either poppy-free or had a dramatic decrease in cultivation, due to a 
combination of effective local anti-poppy campaigns, better security 
unfavorable weather, and decreased opium prices relative to other 
crops, and improved governance and security in key provinces. The 
United Nations estimates that the total value to agricultural producers 
of Afghan opium in 2008 was $730 million--although the gap in 
profitability has narrowed. No improvement in the security in 
Afghanistan is possible without progress in Pakistan.
    No improvement in Afghanistan is possible without Pakistan taking 
control of its border areas and improving governance, creating economic 
and educational opportunities throughout the country. The government is 
losing authority in parts of the North-West Frontier Province and has 
less control of its semi-autonomous tribal areas: even in the more 
developed parts of the country, mounting economic hardships and 
frustration over poor governance have given rise to greater 
radicalization.
    In 2008 Islamabad intensified counterinsurgency efforts, but 
Islamabad's record in dealing with militants has been mixed as it 
navigates conflicting internal and counterterrorist priorities. 
Pakistan's leaders are facing enormous socio-economic challenges. 
Economic hardships are intense, and the country is now facing a major 
balance of payments challenge. Islamabad needs to make painful reforms 
to improve overall macroeconomic stability. Pakistan's law-and-order 
situation is dismal, affecting even Pakistani elites, and violence 
between various sectarian, ethnic, and political groups threatens to 
escalate. Pakistan's population is growing rapidly at a rate of about 2 
percent a year, and roughly half of the country's 172 million residents 
are illiterate, under the age of 20, and live near or below the poverty 
line. Among the needed reforms are measures to improve the transparency 
of government expenditures and impose taxes on wealthy landowners. Such 
reforms would reduce the opportunities for corruption among Pakistani 
political leaders, help to establish a more level political playing 
field, and help build the confidence of average Pakistanis in their 
government.
    The Pakistani Government's current plans will require intensified 
and sustained efforts to orchestrate the administrative, economic, 
educational, legal, and social reforms required to create an 
environment that discourages Islamic extremism and encourages the 
development of human capital. This, in turn, requires effective 
political leadership focused on improving the capabilities of Pakistani 
institutions for effective governance.
Weapons of Mass Destruction Proliferation Exacerbating Prospects for 
        Middle East
    The ongoing efforts of nation-states to develop and/or acquire 
dangerous weapons and delivery systems in the Middle East and elsewhere 
constitute another major threat to the safety of our Nation, our 
deployed troops, and our allies. (The threat posed by North Korea's 
weapons of mass destruction (WMD) program is assessed below, in the 
section on Asia.) We are most concerned about the threat and 
destabilizing effect of nuclear proliferation. The threat from the 
proliferation of materials and technologies that could contribute to 
both existing and prospective biological and chemical weapons programs 
also is real. Most of the international community shares these 
concerns.
    WMD use by most nation states traditionally has been constrained by 
the logic of deterrence and by diplomacy, but these constraints may be 
of less utility in preventing the use of mass-effect weapons by 
terrorist groups. Moreover, the time when only a few states had access 
to the most dangerous technologies is long over. Technologies, often 
dual-use, circulate easily in our globalized economy, as do the 
personnel with scientific expertise who design and use them. Therefore, 
it is difficult for the United States and its partners to track efforts 
to acquire components and production technologies that are widely 
available.
    We assess countries that are still pursuing WMD programs will 
continue to try to improve their capabilities and level of self-
sufficiency over the next decade. Nuclear, chemical, and/or biological 
weapons or the production technologies and materials necessary to 
produce them may also be acquired by states that do not now have such 
programs; and/or by terrorist or insurgent organizations; and by 
criminal organizations, acting alone or through middlemen.
    Iranian Nuclear and Missile Programs
    The Iranian regime continues to flout U.N. Security Council 
restrictions on its nuclear programs. There is a real risk that its 
nuclear program will prompt other countries in the Middle East region 
to pursue nuclear options conducive to the development of nuclear 
weapons, and the advent of additional nuclear weapons programs might 
lead countries in other regions to reassess their nuclear options.
    I want to be very clear in characterizing the Iranian nuclear 
program. First, there are three key parts to an effective nuclear 
weapons capability:

          (1) Production of fissile material;
          (2) Effective means for weapon delivery; and
          (3) Design, weaponization, and testing of the warhead itself.

    We assessed in our 2007 National Intelligence Estimate (NIE) on 
this subject that Iran's nuclear weapon design and weaponization work 
was halted in fall 2003, along with its covert uranium conversion and 
enrichment-related activities. Declared uranium enrichment efforts were 
suspended in 2003 but resumed in January 2006 and will enable Iran to 
produce weapons-usable fissile material if it chooses to do so. 
Development of medium-range ballistic missiles, inherently capable of 
delivering nuclear weapons, has continued unabated.
    We assess Iranian military entities were working under government 
direction to develop nuclear weapons until fall 2003. Iranian entities 
are continuing to develop a range of technical capabilities that could 
be applied to producing nuclear weapons, if a decision were made to do 
so.

         Iran continues its efforts to develop uranium 
        enrichment technology, which can be used both to produce low-
        enriched uranium for power reactor fuel and to produce highly 
        enriched uranium for nuclear weapons.
         As noted, Iran continues to deploy and improve 
        ballistic missiles inherently capable of delivering nuclear 
        weapons.
         We assess Iran since fall 2003 has conducted research 
        and development projects with commercial and conventional 
        military applications, some of which would be of limited use 
        for nuclear weapons.

    We judge in fall 2003 Tehran halted its nuclear weapons design and 
weaponization activities and that the halt lasted at least several 
years. We assess Tehran had not restarted these activities as of at 
least mid-2007. Although we do not know whether Iran currently intends 
to develop nuclear weapons, we assess Tehran at a minimum is keeping 
open the option to develop them.
    We judge the halt was directed primarily in response to increasing 
international scrutiny and pressure resulting from exposure of Iran's 
previously undeclared nuclear work. This indicates Iran may be more 
susceptible to influence on the issue than we had judged in the 2005 
NIE.
    We do not have sufficient intelligence reporting to judge 
confidently whether Tehran is willing to maintain indefinitely the halt 
of its previously enumerated nuclear weapons-related activities while 
it weighs its options, or whether it will or already has set specific 
deadlines or criteria that will prompt it to restart those activities. 
We assess Iran has the scientific, technical, and industrial capacity 
eventually to produce nuclear weapons. In our judgment, only an Iranian 
political decision to abandon a nuclear weapons objective would 
plausibly keep Iran from eventually producing nuclear weapons--and such 
a decision is inherently reversible. I reiterate that two activities of 
the three relevant to a nuclear weapons capability continue: 
development of uranium enrichment technology that will enable 
production of fissile material, if Iran chooses to do so, and 
development of nuclear-capable ballistic missile systems.
    We assess convincing the Iranian leadership to forgo the eventual 
development of nuclear weapons will be difficult given the linkage many 
within the leadership see between nuclear weapons and Iran's key 
national security and foreign policy objectives, and given Iran's 
considerable effort from at least the late 1980s to 2003 to develop 
such weapons. Our analysis suggests that some combination of threats of 
intensified international scrutiny and pressures, along with 
opportunities for Iran to achieve its security and goals might--if 
perceived by Iran's leaders as credible--prompt Tehran to extend the 
halt to the above nuclear weapons-related activities. It is difficult 
to specify what such a combination might be.
    We continue to assess Iran does not currently have a nuclear 
weapon. We continue to assess Iran probably has imported at least some 
weapons-usable fissile material but still judge it has not obtained 
enough for a nuclear weapon. We cannot rule out that Iran has acquired 
from abroad or will acquire in the future a nuclear weapon or enough 
fissile material for a weapon. Barring such acquisitions, if Iran wants 
to have nuclear weapons it would need to produce sufficient amounts of 
fissile material indigenously. We judge it has not yet done so.
    Iran made significant progress in 2007 and 2008 installing and 
operating centrifuges at its main centrifuge enrichment plant, Natanz. 
We judge Iran probably would be technically capable of producing enough 
highly-enriched uranium for a weapon sometime during the 2010-2015 
timeframe. INR judges Iran is unlikely to achieve this capability 
before 2013 because of foreseeable technical and programmatic problems.
    Iranian Missile Threat
    Beyond its WMD potential, Iranian conventional military power 
threatens Persian Gulf states and challenges U.S. interests. Iran is 
enhancing its ability to project its military power, primarily with 
ballistic missiles and naval power, with the goal of dominating the 
Gulf region and deterring potential adversaries. It seeks a capacity to 
disrupt the operations and reinforcement of U.S. forces based in the 
region, potentially intimidating regional allies into withholding 
support for U.S. policy, and raising the political, financial, and 
human costs to the United States and our allies of our presence.

         Iran's growing inventory of ballistic missiles--it 
        already has the largest inventory in the Middle East--and its 
        acquisition of anti-ship cruise missiles provide capabilities 
        to enhance its power projection. Tehran views its 
        conventionally armed missiles as an integral part of its 
        strategy to deter and if necessary retaliate against forces in 
        the region, including U.S. forces. Its ballistic missiles are 
        inherently capable of delivering WMD and if so armed would fit 
        into this same strategy.

    The Terrorist Chemical, Biological, Radiological, and Nuclear 
        (CBRN) Threat
    Over the coming years, we will continue to face a substantial 
threat, including in the U.S. Homeland, from terrorists attempting to 
acquire biological, chemical, and possibly nuclear weapons and use them 
to conduct large-scale attacks. Conventional weapons and explosives 
will continue to be the most often used instruments of destruction in 
terrorist attacks; however, terrorists who are determined to develop 
CBRN capabilities will have increasing opportunities to do so, owing to 
the spread of relevant technological knowledge and the ability to work 
with CBRN materials and designs in safe havens.

         Most terrorist groups that have shown some interest, 
        intent, or capability to conduct CBRN attacks have pursued only 
        limited, technically simple approaches that have not yet caused 
        large numbers of casualties.

    In particular, we assess the terrorist use of biological agents 
represents a growing threat as the barriers to obtaining many suitable 
starter cultures are eroding and open source technical literature and 
basic laboratory equipment can facilitate production. Terrorist 
chemical attacks also represent a substantial threat. Small-scale 
chemical attacks using industrial toxins have been the most frequent 
type of CBRN attack to date. The chlorine attacks in Iraq from October 
2006 through the summer of 2007 highlighted terrorist interest in using 
commercial and easily available toxic industrial chemicals as weapons.
    Al Qaeda is the terrorist group that historically has sought the 
broadest range of CBRN attack capabilities, and we assess that it would 
use any CBRN capability it acquires in an anti-U.S. attack, preferably 
against the Homeland. There also is a threat of biological or chemical 
attacks in the U.S. Homeland by lone individuals.
                              rising asia
    As the terrorism and proliferation threats persist across the ``arc 
of instability,'' East and South Asia are poised to become the long-
term power center of the world. China and India are restoring the 
positions they held in the 18th century when China produced 
approximately 30 percent and India 15 percent of the world's wealth. 
These two countries are likely to surpass the gross domestic product 
(GDP) of all other economies except the United States and Japan by 
2025, although the current financial crisis may somewhat slow the 
momentum. Japan remains the second largest global economy and a strong 
U.S. ally in the region, but the global economic slowdown is exacting a 
heavy toll on Japan's economy. To realize its aspirations to play 
increased regional and global roles will require strong leadership and 
politically difficult decisions. All together--Japan, the ``tiger'' 
economies like South Korea and Taiwan as well as the rising giants of 
China and India point to the ``rise of Asia'' as a defining 
characteristic of the 21st century. China's reemergence as a major 
power with global impact is especially affecting the regional balance 
of power.
    As in the Middle East, the United States has strong relationships 
in East Asia--a network of alliances with Japan, South Korea, the 
Philippines, Thailand, and Australia, and close partnerships with other 
countries--and a longstanding forward military presence. Countries in 
the region look to the United States for leadership and for ways to 
encourage China to become a constructive and responsible player in the 
regional and global communities. Although China will have ample 
opportunity to play a positive role, it also poses a potential 
challenge if it chooses to use its growing power and influence in ways 
counter to U.S. or broader international interests.
China's Transformation
    China is 30 years into a fundamental transformation that will take 
many more decades to complete. Although there have been moments when 
the government's effort to maintain control seemed on the verge of 
failure--notably the crisis on Tiananmen Square in 1989--the government 
has been remarkably successful in guiding reform. China has avoided the 
fate of most other socialist countries, suffering neither the economic 
and political collapse of the Soviet Union nor the stagnation of Cuba 
and North Korea.
    We judge China's international behavior is driven by a combination 
of domestic priorities, primarily maintaining economic prosperity and 
domestic stability, and a longstanding ambition to see China play the 
role of a great power in East Asia and globally. Chinese leaders view 
preserving domestic stability as one of their most important internal 
security challenges. Their greatest concerns are separatist unrest and 
the possibility that local protests could merge into a coordinated 
national movement demanding fundamental political reforms or an end to 
Party rule. Security forces move quickly and sometimes forcefully to 
end demonstrations. The March 2008 protests in Tibet highlighted the 
danger of separatist unrest and prompted Beijing to deploy paramilitary 
and military assets to end the demonstrations.
    These same domestic priorities are central to Chinese foreign 
policy. China's desire to secure access to the markets, commodities, 
and energy supplies needed to sustain domestic economic growth 
significantly influences its foreign engagement. Chinese diplomacy 
seeks to maintain favorable relations with other major powers, 
particularly the United States, which Beijing perceives as vital to 
China's economic success and to achieving its other strategic 
objectives. But Beijing is also seeking to build its global image and 
influence in order to advance its broader interests and to resist what 
it perceives as external challenges to those interests or to China's 
security and territorial integrity.
    Taiwan as an area of tension in U.S.-China relations has 
substantially relaxed since the 2008 election of Ma Ying-jeou. The new 
Taiwanese President inaugurated in May has resumed dialogue with 
Beijing after a 9-year hiatus, and leaders on both sides of the Taiwan 
Strait are now cautiously optimistic that a new period of less 
confrontational relations has begun. Many outstanding challenges 
remain, however, and the two sides eventually will need to confront 
issues such as Taiwan's participation in international organizations. 
Beijing has not renounced the use of force against the island, and 
China's leaders see maintaining the goal of unification as vital to 
regime legitimacy.
PLA Modernization
    Preparations for a possible Taiwan conflict continue to drive the 
modernization goals of the People's Liberation Army (PLA) and the 
Chinese defense-industrial complex. It will likely remain the primary 
factor as long as the Taiwan situation is unresolved.
    At the same time, we judge that China over the past several years 
has begun a substantially new phase in its military development by 
beginning to articulate roles and missions for the PLA that go well 
beyond China's immediate territorial interests.

         For example, China's leaders may decide to contribute 
        combat forces to peacekeeping operations, in addition to 
        expanding the current level of command and logistic support.
         China's national security interests are broadening. 
        This will likely lead China to attempt to develop at least a 
        limited naval power projection capability extending beyond the 
        South China Sea. This already has been reflected in Beijing's 
        decision in December to participate in anti-piracy operations 
        off the coast of Somalia.
    Missile Capability
    China continues to develop and field conventional theater-range 
ballistic and cruise missile capabilities that can reach U.S. forces 
and regional bases throughout the Western Pacific and Asia, including 
Guam. China also is developing conventionally armed short- and medium-
range ballistic missiles with terminally guided maneuverable warheads 
that could be used to attack U.S. naval forces and airbases. In 
addition, counter-command, control, and sensor systems, to include 
communications satellite jammers, are among Beijing's highest military 
priorities.
    Counterspace Systems
    China continues to pursue a long-term program to develop a 
capability to disrupt and damage critical foreign space systems. 
Counterspace systems, including antisatellite weapons, also rank among 
the country's highest military priorities.
    Nuclear Capability
    On the nuclear side, we judge Beijing seeks to modernize China's 
strategic forces in order to address concerns about the survivability 
of those systems in the face of foreign, particularly US, advances in 
strategic reconnaissance, precision strike, and missile defenses. We 
assess China's nuclear capabilities will increase over the next 10 
years.
Indian Pragmatism
    Like China, India's expanding economy will lead New Delhi to pursue 
new trade partners, gain access to vital energy markets, and generate 
the other resources required to sustain rapid economic growth. To 
sustain rapid growth, Indian governments also must maintain the 
political support for economic reforms needed to drive the expanding 
economy.
    On the global stage, Indian leaders will continue to follow an 
independent course characterized by economic and political pragmatism. 
New Delhi will not automatically support or oppose positions favored by 
the United States or any other major power. Nonetheless, good relations 
with the United States will be essential for India to realize its 
global ambitions. Indian leaders will seek benefits from American 
influence, trade, and technology. Strong ties to Washington also will 
give India more confidence in dealing with China and in mitigating the 
dangers posed by its long-time adversary, Pakistan. However, Indian 
leaders often will adopt positions contrary to those favored by 
Washington. India will be concerned about China during the coming 
decade because of Beijing's political and economic power and its 
ability to project military force regionally, but Indian leaders will 
strive to avoid confrontation with China.
    Indian-Pakistan Relations
    Within South Asia, one of the world's least integrated regions, 
India will strive to manage tensions with Pakistan, transnational 
terrorism, and spillover from instability in small neighboring states. 
Determined efforts by Indian and Pakistani leaders to improve relations 
through the so-called Composite Dialogue over the last 4 years could 
unravel unless Islamabad takes sustained, concrete, meaningful steps to 
allay Indian concerns about Islamabad's support to anti-Indian militant 
groups. This is the case particularly in light of the November 2008 
terrorist attack in Mumbai. The attack has convinced many Indians that 
Pakistani military leaders, in an effort to undercut India's emerging 
international stature, now favor a strategy of allowing Pakistan-based 
groups to attack targets that symbolize New Delhi's growing prominence 
on the global stage or that could undermine India's prominence by 
provoking religious violence in the country. In the absence of a 
military response against Islamabad, the Indian public will look for 
visible signs that Pakistan is actively working to punish those 
involved and eliminate its domestic terrorist organizations. Pakistan-
based groups could carry out additional attacks against India and run 
the risk of provoking an India-Pakistan conflict. In addition, India, 
which has endured a series of major terrorist attacks without major 
military response since 2003, is under domestic pressure to make rapid 
and significant improvements in its counterterrorism capabilities.
    India also will look for ways to safeguard its interests in light 
of the concluding civil war in Sri Lanka and political uncertainty in 
Bangladesh and Nepal, which have experienced dramatic transformations 
in government during the past year. New Delhi generally will be 
supportive of democratic forces in its smaller neighbors, while also 
being sensitive to the opinions of the Tamil and Bengali communities 
within India.
North Korea's Nuclear Ambitions
    In addition to a possible India-Pakistan conflict, Pyongyang's 
nuclear ambitions and proliferation behavior threaten to destabilize 
East Asia. The North's October 2006 nuclear test is consistent with our 
longstanding assessment that it had produced a nuclear device. Prior to 
the test, we assessed that North Korea produced enough plutonium for at 
least a half dozen nuclear weapons. The IC continues to assess North 
Korea has pursued a uranium enrichment capability in the past. Some in 
the IC have increasing concerns that North Korea has an ongoing covert 
uranium enrichment program.
    Pyongyang probably views its nuclear weapons as being more for 
deterrence, international prestige, and coercive diplomacy than for 
warfighting and would consider using nuclear weapons only under certain 
narrow circumstances. We also assess Pyongyang probably would not 
attempt to use nuclear weapons against U.S. forces or territory unless 
it perceived the regime to be on the verge of military defeat and 
risked an irretrievable loss of control.
    Progress was made, albeit painstakingly, last year in Six-Party 
Talks; the Democratic People's Republic of Korea (DPRK) has shut down 
three core facilities at Yongbyon and has completed 8 of the 11 
disablement steps. However, much work remains. At the latest round of 
talks held in December in Beijing, the DPRK refused to agree to a Six 
Party verification protocol needed to verify the completeness and 
correctness of its nuclear declaration. Since then, Pyongyang has 
issued hardline statements suggesting further challenges to 
denuclearization.
    On the proliferation side, North Korea has sold ballistic missiles 
and associated materials to several Middle Eastern countries, including 
Iran, and, in our assessment, assisted Syria with the construction of a 
nuclear reactor. We remain concerned North Korea could again export 
nuclear technology. In the October 3 Second Phase Actions agreement, 
the DPRK reaffirmed its commitment not to transfer nuclear materials, 
technology, or know-how. We assess Pyongyang is less likely to risk 
selling nuclear weapons or weapons-quantities of fissile material than 
nuclear technology or less sensitive equipment to other countries or 
non-state actors, in part because it needs its limited fissile material 
for its own deterrent. Pyongyang probably also perceives that it would 
risk a regime-ending military confrontation with the United States if 
the nuclear material was used by another country or group in a nuclear 
strike or terrorist attacks and the United States could trace the 
material back to North Korea. It is possible, however, that the North 
might find a nuclear weapons or fissile material transfer more 
appealing if its own stockpile grows larger and/or it faces an extreme 
economic crisis where the potentially huge revenue from such a sale 
could help the country survive.
    We assess that poor economic conditions are fueling systemic 
vulnerability within North Korea. Public statements by the regime 
emphasize the need for adequate food supplies. A relatively good fall 
harvest in 2008, combined with the delivery of substantial U.S. food 
aid--500,000 tons of grain have been promised and about one-third of 
this has been delivered--probably will prevent deterioration in the 
food security situation during the next few months. However, we assess 
North Korea is still failing to come to grips with the economic 
downturn that began in the early 1990s and that prospects for economic 
recovery remain slight. In addition to food, shortages in fertilizer 
and energy continue to plague the economy. Investment spending appears 
is negligible, trade remains weak, and we see little progress toward 
economic reforms. Pyongyang has long been in default on a relatively 
large foreign debt and we assess that badly needed foreign investment 
will not take place unless the North comes to terms with its 
international creditors and conforms to internationally accepted trade 
and financial norms, badly needed foreign investment will not take 
place.

         Pyongyang's strategic posture is not helping its 
        economy. Trade with Japan has fallen precipitously since the 
        nuclear and missile tests of 2006, and, while commercial trade 
        with South Korea rose in 2008, South Korean aid and tourism to 
        the north declined due to increased north-south tensions.

    Despite this poor economic performance and the many privations of 
the North Korean public, we see no organized opposition to Kim Jong 
Il's rule and only occasional incidents of social disorder. Kim 
probably suffered a stroke in August that incapacitated him for several 
weeks, hindering his ability to operate as actively as he did before 
the stroke. However, his recent public activities suggest his health 
has improved significantly, and we assess he is making key decisions. 
The state's control apparatus by all accounts remains strong, 
sustaining the dismal condition of human rights in North Korea.
                growing challenges in russia and eurasia
    Russian challenges to U.S. interests now spring more from Moscow's 
perceived strengths than from the state weaknesses characteristic of 
the 1990s. U.S. involvement in Iraq and Afghanistan and general anti-
Americanism have created openings for Russia to build alternative 
arrangements to the U.S.-led international political and economic 
institutional order. Russia is actively cultivating relations with 
regional powers, including China, Iran, and Venezuela to increase its 
ability to influence events. Moscow also is trying to maintain control 
over energy supply and transportation networks to Europe to East Asia, 
and protect and further enhance its market share in Europe through new 
bilateral energy partnerships and organizing a gas cartel with other 
major exporters. Russia appears to believe the continued heavy 
dependence of European countries and former Soviet states on Russia's 
state gas monopoly, Gazprom, provides Moscow with political and 
economic leverage.
    Russia continues to rely on its nuclear deterrent and retaliatory 
capability to counter the perceived threat from the United States and 
NATO. Moscow for the past several years has also been strengthening its 
conventional military force to make it a credible foreign policy 
instrument, both to signal its political resurgence and to assert its 
dominance over neighboring states, like Georgia. Moscow has actively 
engaged in foreign military cooperation with countries such as China 
and Venezuela, in part to remind the United States and others of 
Russia's global military relevance. Despite persistent challenges, 
including a long-term decline in the numbers and quality of recruits 
and difficulties in keeping pace with the demands of weapons 
modernization, the Russian military defeated the Georgian military last 
August.
    Russian leaders recently have spoken positively about the 
possibilities for change in the U.S.-Russia dynamic, but issues such as 
NATO enlargement, the conflict over Georgia's separatist regions, and 
Missile Defense will continue to pose difficulties for the relationship 
and underscore the challenges of finding ways to engage with Russia. 
Even as it seeks to negotiate a robust post-Strategic Arms Reduction 
Treaty agreement, Moscow consistently stresses that the accession to 
NATO of Georgia and Ukraine would put existing arms control regimes and 
negotiations at risk and could prompt Russian military countermeasures 
as well as increased pressure against Tbilisi and Kyiv. Russia's strong 
engagement with countries like Iran and Syria, including advanced 
weapons sales, also has implications for U.S. nonproliferation 
interests.
Eurasia/Caucasus/Central Asia
    Six months after the fighting between Russia and Georgia over 
Abkhazia and South Ossetia last August, the separatist regions remain 
potential flashpoints. Moscow's expanded military presence in and 
political-economic ties to these regions, along with continuing 
violence increase the risk of provocation, overreaction, or 
miscalculation leading to a resumption of fighting. Although the 
political situation in Georgia has stabilized, President Saakashvili 
faces increasing criticism from the domestic opposition, and his 
reaction to that will either enhance or set back Georgia's democratic 
development.
    The continued difficulty of bridging fundamental differences 
between Azerbaijan and Armenia over Nagorno-Karabakh will also keep 
tensions high in the Caucasus. Azerbaijan fears isolation in the wake 
of Kosovo's independence, Russia's recognition of South Ossetia and 
Abkhazia, and signs of improved Armenian-Turkish relations. Armenia is 
concerned about Baku's military buildup and does not want to become 
dependent on Russia. Both countries face the dual challenges of 
overcoming inertia in democratic reforms and battling endemic 
corruption in the face of an economic downturn.
    An increasingly assertive Russia and the fallout from the global 
financial crisis will combine to amplify the challenges facing Ukraine 
as it heads for a presidential election in the winter of 2009-2010. 
Ukraine has moved toward democracy and western integration despite 
numerous political tests since independence. Progress will be difficult 
because of weak political institutions, ongoing conflicts with Russia 
over gas pricing and contracts and the new exigencies of the global 
financial crisis, which has dramatically revealed the underlying 
weaknesses of the Ukrainian economy and potentially Ukraine's 
stability.
    In Belarus, the Lukashenko regime appears willing to cooperate with 
Russian efforts to counter U.S. missile defense plans with Prague and 
Warsaw. However, Russia's continuing efforts to control key Belarusian 
economic sectors could prompt Minsk to improve ties with the West to 
balance Moscow. Lukashenko maintains an authoritarian grip on power and 
could return to repressive measures if public discontent over the 
worsening economy turns to protest.
    The five Central Asian states--Kazakhstan, Uzbekistan, Kyrgyzstan, 
Tajikistan, and Turkmenistan--with their highly-personalized politics, 
weak institutions, and growing inequalities are ill-equipped to deal 
with the challenges posed by Islamic violent extremism, poor economic 
development, and problems associated with energy water and food 
distribution. Energy helped make Kazakhstan a regional economic force, 
but any sustained decline in oil prices would affect revenues, could 
lead to societal discontent, and will derail the momentum for domestic 
reforms. Tajikistan and Kyrgyzstan have heavily depended on migrant 
worker remittances from both Russia and Kazakhstan for a significant 
portion of their gross domestic product--up to 45 percent in the case 
of Tajikistan--and will be severely affected by the financial crisis. 
Tajikistan, in particular, faces increased threats to internal 
stability from the loss of these critical revenue streams. Ultimately, 
these challenges to regional stability could threaten the security of 
critical U.S. and NATO lines of communication to Afghanistan through 
Central Asia.
The Balkans
    Events in the Balkans will again pose the greatest threat of 
instability in Europe in 2009, despite positive developments in the 
last year that included Kosovo's peaceful declaration of independence 
from Serbia, the election of pro-EU leaders in Serbia, and offers of 
NATO membership to Croatia and Albania. The principal challenges to 
stability will come from the unresolved political status of the Serb 
minority in Kosovo, particularly in northern Kosovo, and Bosnia-
Herzegovina's (BiH) continuing uneasy inter-ethnic condominium.
    More than 50 nations, including 22 of 27 EU members, have 
recognized the new state of Kosovo. In the coming years Pristina will 
depend on the international community for economic and development 
assistance and to ensure Kosovo's territorial integrity. Belgrade 
openly supports parallel Kosovo Serb institutions. It has used 
political and legal means to challenge and undermine Pristina's 
sovereignty and to limit the mandate of the EU's Rule of Law mission 
(EULEX) in Kosovo, which is meant to help Kosovo authorities build 
multi-ethnic police, judiciary, and customs systems. This has 
reinforced the de facto separation of Kosovo into an Albanian-majority 
south and a Serb-majority north and frustrated the Kosovo Albanians. 
Kosovo Force's (KFOR) presence will help deter widespread violence, 
however. Serbia's leaders espouse a European future, and President 
Tadic desires quick progress toward EU membership, but they are 
unwilling to abandon Belgrade's stake in Kosovo to achieve that end. 
Belgrade still looks for Moscow's diplomatic support on this issue and 
recently concluded a significant energy deal with Moscow, including 
sale of a majority stake in its state oil refinery.
    Bosnia's future as a multi-ethnic state remains in doubt, although 
neither widespread violence nor a formal split is imminent. Ethnic 
agendas still dominate the political process, and wrangling among the 
three main ethnic groups over the past 18 months has stalled the 
process of building a central government capable of taking the country 
into NATO and the EU. Threats of secession by Bosnian Serb leaders and 
calls by some Bosniak leaders to eliminate the Bosnian Serb entity have 
increased inter-ethnic tensions to perhaps the highest level in years.
                    testing times for latin america
    Latin American economies, following 5 consecutive years of solid 
performance, are feeling the repercussions from the global financial 
crisis. We expect the region's growth rate will fall substantially this 
year to about 1 percent from 4 percent for 2008. Exports from the 
region have averaged 20 percent growth for 5 years, but falling 
commodity prices and slowdowns in major industrial markets have sharply 
reduced export growth in the fourth quarter of 2008 and into 2009. 
Foreign direct investment flows through mid-year 2008 were on pace to 
reach the record level of $110 billion in 2007, but are likely to have 
diminished in late 2008 and probably will continue to do so in 2009. 
Finally, after 10 years of worker remittances growing at an average 
annual rate of better than 15 percent, remittances grew just 7 percent 
in 2007 and grew only 1 to 2 percent in 2008.
    Democracy in much of Latin America has established impressive roots 
over the past decade or so. In countries that comprise the bulk of the 
region's GDP and population--like Brazil, Chile, Colombia, Mexico, and 
Peru--pro-market policies have yielded important economic dividends 
that help fortify democratic gains. Brazil is becoming a leading 
regional power and, along with others like Argentina and Chile, is 
trying to promote greater South American integration.
    Developments in the last year, however, underscore the challenge 
that populist, often autocratic regimes still pose in the region. 
Venezuela attracts substantial, if declining, regional popular support, 
but its influence is likely to diminish as its economic problems mount. 
Cuba, though an economic basket case, can still influence the Latin 
American left because of its so-called ``anti-imperialist'' stance. 
Others like Bolivia, and to a lesser extent Argentina and Ecuador, have 
embraced populist policies and are likely to also lag behind. Some, 
such as Haiti, have become even poorer and still less governable. Basic 
law-and-order issues, to include rising violent crime and powerful drug 
trafficking organizations also confront key hemispheric nations, as do 
uneven governance and institution-building efforts and performance in 
confronting chronic corruption. To maintain our political and economic 
influence in the region, the United States will be called upon to help 
the region's governments address their growing security problems and to 
deliver greater market access. Our use of bilateral trade agreements, 
and foreign aid through the Millennium Challenge Account to less 
developed countries, helps cement sound economic policies and more 
effective governance.
    As in Africa (see below), China has increased its outreach to Latin 
America in recent years, primarily in pursuit of access to markets and 
resources to fuel its economic development and growth. This is boosting 
Chinese economic and diplomatic influence in the region, and generating 
questions about Beijing's long-term intention in the developing world--
potentially as an alternative development model. Beijing's military 
engagement in the region--while secondary to its economic and political 
engagement efforts--also facilitates access to strategic natural 
resources. People's Liberation Army outreach activities in Latin 
America have included high-level strategic dialogue, personnel 
exchanges, and sales of weapons and equipment. Nonetheless, Beijing has 
made few arms sales to the region, outside of Venezuela, nor developed 
significant military-to-military ties with any countries. For its part, 
Tehran has made some progress over the last few years in improving 
commercial ties and establishing embassies and cultural centers in 
Latin America, with an aim to reducing Iran's international isolation. 
Hizballah has long maintained a presence in the tri-border region 
between Argentina, Brazil and Paraguay, a notorious region for 
narcotics and arms trafficking.
Mexico
    Mexico's sound fiscal and monetary policies will probably provide 
some insulation from the current global economic volatility. With 80 
percent of its exports destined for U.S. consumers and low 
international oil prices, however, Mexico would take a strong hit from 
a prolonged U.S. recession. Mexico's Finance Secretariat cut growth 
estimates for 2008 to 1.5 percent, and Finance Minister Carstens has 
openly acknowledged growth might contract by a percentage point this 
year. Mexico last experienced a fall in GDP in 2001. Unemployment late 
last year was almost 4.5 percent, up a point from 2007 and 
underemployment is even higher. Employment in the construction sector 
dropped more than 4 percent in the same time period, according to 
Mexico's National Statistics Institute.
    The sharp economic downturn as yet shows no sign of hurting 
Mexico's debt posture or spurring northward migration. Mexico's 
National Statistics Institute late last year indicated that Mexican 
emigration had dropped 42 percent since 2006, probably due to the 
decreased demand for labor in the United States. That trend probably 
will lead to declines in remittances, the second largest source of 
foreign currency after oil exports, and increase pressure on the 
government to create jobs.
    Mexico remains the most important conduit for illicit drugs 
reaching the United States. As much as 90 percent of that cocaine known 
to be directed toward the United States, and some Colombian heroin, 
eventually transits Mexico before entering the United States. Despite 
recent successful efforts to counter precursor chemical diversion and 
drug trafficking, Mexico is the chief foreign supplier of 
methamphetamine and marijuana to the U.S. market and produces most of 
the heroin consumed west of the Mississippi River. The corruptive 
influence and increasing violence of Mexican drug cartels, which are 
among the most powerful organized crime groups in the world, impede 
Mexico City's ability to govern parts of its territory and build 
effective democratic institutions.
    Nearly 5,500 people--mostly cartel operatives and to a lesser 
degree local police--were murdered in 2008 in cartel-related violence, 
far exceeding the record of about 2,700 drug-related murders in 2007. 
Also, the cartels have shown their willingness and capacity to strike 
Mexican Government officials, its leadership, and the military. 
Nevertheless, sustained government pressure has disrupted established 
transnational cocaine supply chains, interfered with day-to-day cartel 
operations, and has started to fragment Mexico's powerful drug cartels. 
We assess that significantly more cocaine is diverting to Central 
America before moving into Mexico, a shift that, in our judgment, 
mitigates some risks drug traffickers faced in Mexico but that also 
complicates trafficking operations.
    As trafficking networks have come under increasing strain from 
President Calderon's counternarcotics efforts, elements of Mexico's 
most powerful cartels have become more aggressive. The assassination of 
the national police commissioner last May, the grenade attack in a 
crowded plaza in Michoacan State last September and the execution of 
Brigadier General marco Enrique Tello Quinonez this month indicate 
cartel elements are increasingly willing to kill high-level Mexican 
officials, retaliate against soldiers, and tolerate more collateral 
damage among civilians not directly involved in the drug trade.
    Calderon has demonstrated his determination to address the problem 
of narcotics-related corruption at all levels of the government by 
launching Operation Cleanup. Most notably, this has led to the arrest 
of a former Deputy Attorney General and the head of Interpol in Mexico. 
In addition, Calderon won approval in November of the 2009 Federal 
budget, which increased outlays in real terms to the Public Security 
Secretariat and the Attorney General's Office by 69 percent and 29 
percent, respectively.
Colombia
    President Uribe is committed to an all-out effort to defeat the 
Revolutionary Armed Forces of Colombia (FARC) by the time his term ends 
in 2010. His public statements indicate he is determined to use 
Colombia's security forces to maintain the systematic military pressure 
that has kept the FARC on the run, caused the FARC to lose territory, 
and degraded FARC command and control. Among the major successes in 
2008 were the deaths of key FARC leaders, including members of the 
ruling Secretariat, a continued high number of FARC desertions, and the 
2 July rescue of 15 hostages, including 3 U.S. citizens.
    Despite these reverses, the FARC leadership has shown no signs it 
seeks to end hostilities or participate in serious peace talks. The 
group has a record of resilience, and its chances for surviving as a 
viable insurgent force over the next several years will be aided by a 
still-cohesive leadership structure, substantial drug revenues, and 
cross-border sanctuaries in Venezuela and Ecuador.
    Although the FARC is unlikely to make a sustained comeback, it will 
still be able to conduct small-scale guerrilla and terrorist attacks 
nationwide. Official and nonofficial U.S. citizens remain at risk.
    The government's successes have contributed to a dramatic drop in 
crime, terrorist acts, massacres, and kidnappings. Bogota has made 
progress on providing better protection for labor unionists and 
instituting policies to educate the security services on human rights 
standards. Bogota needs to follow through, however, with its proposals 
to strengthen the judiciary and prosecute the murders of union members 
and human rights workers.
    Bogota's counterdrug successes--including capture and extradition 
of the leaders of the North Valley Cartel, the last remaining large-
scale drug cartel (besides the FARC), the targeting of mid-level 
leaders, a strong security force presence in key drug transit and coca 
growing zones, and its U.S.-backed coca eradication program--have 
hampered FARC drug trafficking operations. Bogota's strides in tackling 
corruption also have led to high-profile trafficker takedowns. Bogota 
arrested or killed important traffickers such as the Mejia Munera 
brothers, known as ``los Mellizos,'' in 2008 after the officials 
protecting them were removed from office. Colombian interdiction 
efforts resulted in an increase in seizures in 2008. Still, Colombia 
remains the world's leading producer of cocaine and a key supplier of 
heroin to the U.S. market. The U.S. Government's 2007 imagery-based 
survey indicates 167,000 hectares in Colombia were planted with coca, 
as compared to 157,200 in 2006, a statistically insignificant increase. 
Although the total area under cultivation remained nearly constant, 
aerial eradication reduced yield per hectare by killing some plants 
inside of areas counted as fully under cultivation and causing some 
farmers to lose harvests before they could rehabilitate the field. This 
resulted in a reduction in potential cocaine production from 550 metric 
tons in 2006 to 535 in 2007. Area under cultivation in 2007 was 
slightly less than in 2001, the year when Plan Colombia support began 
to take hold, but potential production is about one quarter less, due 
to the effects of aerial eradication on yield. We are still compiling 
and assessing the data from 2008.
Venezuela
    President Hugo Chavez is focusing on shoring up public support at 
home after his opponents won five key states and the capital in 
November gubernatorial and mayoral elections. Chavez also must deal 
with growing public concern about violent crime and worsening economic 
conditions. Nevertheless, Chavez remains Venezuela's most popular 
politician, according to a reputable local polling company, and 
controls the country's key institutions. To consolidate his socialist 
``revolution,'' Chavez has ordered a referendum for February aimed at 
allowing indefinite reelection for all elected officials. His push 
probably reflects concern over dwindling oil profits undercutting his 
ability to maintain popular domestic programs.
    Chavez probably will struggle to maintain economic growth in the 
coming years as oil prices fall from their record highs. He has been 
unable to control high inflation and his statist economic policies have 
reduced drastically private-sector growth. Chavez also has failed to 
make sufficient investments in infrastructure, especially in the vital 
oil sector, necessary for sustained growth.

         Venezuela's crude oil output of about 2.3 million b/d 
        and its exports to the United States are slowly declining; 
        prospects for a significant turnaround are limited unless 
        Caracas changes its current oil policies.
         If the price of West Texas Intermediate oil stays 
        below $50 per barrel for most of 2009, Chavez probably will be 
        forced to make major cuts in domestic and foreign spending or 
        to devalue the Venezuelan currency and draw down government 
        hard currency reserves to avoid a major economic crisis.

    Chavez is likely to face new constraints in 2009 as he attempts to 
expand his influence in Latin America. His willingness to spend oil 
revenue on foreign aid and his unstinting populist message have paid 
some dividends, but repeated spats with foreign leaders have tarnished 
his image and falling oil prices could further undermine his ability to 
buy friends. Chavez's approval rating has been decreasing regionally, 
according to the 2008 Latinbarometer, a highly regarded regional 
survey. Chavez has provided significant financial and political support 
to Evo Morales in Bolivia and Daniel Ortega in Nicaragua.
    Public disclosure of Chavez's close ties with the FARC, which were 
reflected in documents from the hard drives captured after the death of 
a FARC Secretariat member in March, have forced Chavez, at least 
rhetorically, to improve relations with Bogota. We assess Chavez is 
likely to maintain his decade-long ties to the FARC by providing them 
safe haven because of his ideological affinity to the group and his 
interest in influencing Colombian politics.

         The United States in September designated two senior 
        Venezuelan Government officials and one former official under 
        the Foreign Narcotics Kingpin Designation Act for materially 
        assisting the narcotics trafficking activities of the FARC.

    Chavez's efforts to expand his reach beyond Latin America continue 
to give priority to Iran, Russia, and China. The personal relationship 
between Iran's President Ahmadi-Nejad and Chavez drives strengthening 
bilateral economic and military ties, although the two countries are 
still struggling to overcome bureaucratic and linguistic obstacles to 
implementing accords. Venezuela also is serving as a bridge to help 
Iran build relations with other Latin American countries. Chavez has 
given special attention in recent months to deepening political, 
economic, and military ties to Russia. In late 2008, he announced his 
plans to build a nuclear power plant in Venezuela with Russian 
assistance.
    Despite Caracas's stated interest in purchasing more Russian, 
Chinese, and Spanish armaments, worsening economic conditions probably 
will force Chavez to slow such acquisitions. His $5.3 billion in 
military purchases since 2005 have attracted notice within the region, 
although Venezuela's overall military capabilities remain plagued by 
logistic, maintenance and transportation shortfalls. Notable purchases 
from Russia include 24 Su-30MK2 fighters, helicopters, and assault 
rifles.
    Chavez's growing ties to Iran, coupled with Venezuela's lax 
financial laws and border controls, and widespread corruption have 
created a permissive environment for Hizballah to exploit. In June 
2008, two Venezuelan-based individuals, one a Venezuelan diplomat, were 
designated by the U.S. Treasury Department as supporters of terrorism 
for reportedly providing logistical and financial support to Hizballah 
members.
    Venezuela is second only to Colombia as the most important cocaine 
departure country in South America, and it is the leading departure 
country of air smuggling to world markets. Venezuela's share of the 
cocaine departing South America has tripled from 5 percent in 2004 to 
15 percent through the third quarter of 2008. Counternarcotics 
cooperation has sunk to an all-time low in the wake of the expulsion of 
the U.S. Ambassador by Chavez and his refusal to grant visas to new 
Drug Enforcement Agency (DEA) officials to work in Venezuela.
Cuba
    President Raul Castro's record since formally taking power in 
February 2008 indicates his primary objective in the coming year will 
be to make Cuba's dysfunctional socialist economy more efficient. His 
task has been made more difficult, however, by the extensive damage to 
the country's already weak agricultural sector and infrastructure by 
three major and successive hurricanes last year. The global economic 
downturn will further slow growth, diminishing the regime's options for 
addressing public dissatisfaction with living conditions.
    Havana's competent and immediate response to the hurricanes 
underscores the effectiveness of regime controls and indicates that it 
remains capable of preventing a spontaneous mass migration. 
Nevertheless, we judge that at a minimum the annual flow of Cuban 
migrants to the United States will stay at the same high levels of 
about 35,000 legal and illegal migrants annually that have prevailed 
over the past several years.
    Raul almost certainly will continue to proceed cautiously on any 
reforms to the economy in order to maintain elite consensus and avoid 
raising public expectations beyond what he is able or willing to 
deliver. We have seen no indication in the modest changes he has 
implemented that he intends to abandon core Communist economic 
principles, such as state ownership of production. On the political 
front, all indications are that Raul will continue to deny elements of 
civil society and pro-democracy dissidents the exercise of free 
expression.
    Venezuela's preferential terms for oil sales and payments for Cuban 
medical personnel and other technical specialists will remain Cuba's 
economic lifeline, despite Cuba's efforts to attract other sources of 
foreign investment from countries such as China and Russia. President 
Chavez probably will prioritize aid to Havana over other foreign policy 
commitments.
    We assess Raul will continue his efforts to bolster Havana's 
international legitimacy by projecting a more moderate political image. 
Nevertheless, Cuba almost certainly will remain heavily involved 
behind-the-scenes in counseling and supporting authoritarian populist 
governments in Latin America and otherwise seeking to undermine U.S. 
influence across the region.
Bolivia
    After nearly a year of sporadic unrest and rising tensions, 
President Evo Morales and opposition legislators last October reached a 
compromise to allow a referendum in late January on a draft 
constitution that encapsulates much of Morales' social and economic 
reform agenda. The compromise eased tensions following a string of 
violent protests last fall, but some leaders in eastern departments 
rejected the compromise. Nevertheless, the referendum passed by a 
comfortable margin. The draft constitution leaves many contentious 
issues vague, which several government and opposition leaders have 
acknowledged probably will lead to further disputes over implementation 
in the run-up to new presidential elections in December 2009.
    Although the risk of violence against U.S. citizens has been 
reduced for the time being, Morales consistently has accused official 
U.S. organizations--the U.S. Embassy, DEA, and U.S. Agency for 
International Development--of conspiring against him. Morales in 
September expelled the U.S. Ambassador and in November expelled DEA 
personnel. Morales in January publicly threatened to close Congress and 
pass bills implementing the new Constitution by decree if legislators 
refused to cooperate.
    Chavez promised to protect Morales's government and provided La Paz 
important financial assistance. Since 2006, Venezuela has provided 
Bolivia more than $95 million in direct financial aid.
                     africa: falling further behind
    Africa has made substantial economic and political progress over 
the past decade. However, the durability of the region's recent 
positive growth trend, particularly among countries dependent on 
commodity exports and foreign capital inflows, will be tested by the 
drop in commodity prices and recessions in the United States and 
Europe. Even before the financial crisis hit, the 6 percent GDP growth 
rate--although impressive--was insufficient to bring about necessary 
structural changes in the continent's economy. Africa's economic growth 
is led by a small number of oil-producing countries, but even those 
countries without oil resources have experienced GDP growth rates far 
above their historical rates. Agriculture, the foundation of most 
African economies, is far from achieving self-sufficiency, but 
technical solutions and infrastructure enhancement have demonstrated 
their ability to boost production in Mali, Malawi, and Zambia. Further 
transformations remain uncertain in light of the EU's continuing ban on 
genetically modified foodstuffs.
    In addition to fallout from the global financial crisis, Africa 
faces other economic, societal and security challenges. Sub-Saharan 
Africa is confronting a shortage of skilled medical personnel, 
deteriorating health systems, and inadequate budgets to deal with 
diseases like HIV/AIDS, malaria, and tuberculosis. Transnational crime, 
especially the transshipment of illegal drugs to Europe, and corruption 
are growing in various parts of Africa, weighing down the continent's 
economic growth, reducing government efficiency, and undermining the 
security services of African states.
    China's presence has grown substantially over the past decade. 
Total bilateral trade between China and the continent has increased 
from less than $4 billion in 1995 to $100 billion in 2008, but the EU 
and the United States still remain far larger economic partners for the 
region. China's objectives are to secure access to African markets and 
natural resources, isolate Taiwan, and enhance its international 
stature, all of which it has made progress on. Nevertheless, China's 
role has generated local resentment as Chinese firms are seen as 
undercutting African competitors in securing commercial contracts and 
falling short of standard local labor practices. Moreover, there is 
little discernible evidence of Chinese investments being used to 
incorporate Africa into the industrial ``global value production 
chains'' that are becoming the hallmark of integrative trade and 
foreign direct investment flows, especially in manufacturing in other 
regions of the world.
    The most serious problem confronting Africa is the continuation of 
a number of serious and seemingly intractable conflicts in three of 
Africa's largest and most important states: the Democratic Republic of 
the Congo, Nigeria, and Sudan. The conflicts in the Congo and Sudan 
have spilled across their borders and have at times taken on a regional 
dimension. In the Horn of Africa, the ongoing conflict in Somalia and 
the collapse of the country's economy have given rise to a piracy 
epidemic in the Gulf of Aden and have created a terrorist safe haven in 
southern Somalia.
    Although African Governments' political commitment to peacekeeping 
has increased significantly over the last 10 years, the capacities of 
the African Union (AU), regional organization, and individual African 
states to conduct peacekeeping operations have been stretched to the 
limit. Major troop contributing countries are becoming more wary and 
less capable of deploying peacekeepers to potentially dangerous 
operations whose mandates and missions are unclear.
The Democratic Republic of the Congo
    In the Democratic Republic of the Congo (DRC), President Joseph 
Kabila has been unable to consolidate his control over the turbulent 
eastern border region. In that area, rebel groups, undisciplined 
soldiers, and ethnic militia have operated inside and outside of the 
DRC largely with impunity for many years and have been responsible for 
numerous acts of violence and human rights abuses. The trouble has 
persisted, even with the help of the largest U.N. peacekeeping 
operation in the world. Recently, however, Kabila has agreed to conduct 
joint military operations with nearby countries in an effort to root 
out some of these groups. As a result, Rwanda and Uganda have each sent 
forces into different parts of the border region, Rwanda into the North 
and South Kivu Provinces and Uganda into the extreme northeastern 
region. In the Kivus, Kinshasa and Kigali are both concerned about the 
remnant of the 1994 Hutu-led Force for the Democratic Liberation of 
Rwanda (FDLR). While not a military threat to the Tutsi-led government 
in Kigali at this time, the force is a threat to local Congolese 
communities. With Kinshasa's approval, Rwanda sent several thousand 
soldiers into the area to defeat, demobilize, or repatriate the FDLR. 
In return for Kinshasa's cooperation, Kigali appears to have dropped 
its support for a Congolese Tutsi rebel leader, General Laurent Nkunda. 
The Rwandans have arrested Nkunda and have him in custody. Moreover, 
his forces have divided, some joining up with Congolese government 
troops. In the northeast, the Ugandan-led military operation (with both 
Congolese and Sudanese support) has so far been unsuccessful. Its 
objective is to eliminate the threat posed by the Ugandan rebel group 
known as the Lord's Resistance Army (LRA), led by Joseph Kony. 
Congolese forces, in the near term, probably will not be able to 
reassert sufficient control over territory occupied by the LRA and 
other rebels groups or to stop sporadic outbreaks of violence.
Nigeria
    Nigeria's oil-rich Delta region, which supplies 10 percent of U.S. 
oil imports and accounts for America's largest investment in Sub-
Saharan Africa, has been engulfed in civil strife for nearly two 
decades. Widespread violence, criminality, and corruption have 
continued to disrupt Nigeria's oil and gas production, costing the 
country millions of dollars in lost revenue. Inadequate governance and 
a total lack of accountability has put billions of dollars in the 
pockets of corrupt leaders rather than in much needed development and 
infrastructure projects. Opportunistic militants, many of whom are 
beholden to local political leaders who have armed them in the run-up 
to Nigeria's last three national elections, have attacked oil 
facilities, kidnapped Nigerian and foreign oil workers, and left much 
of the Delta lawless and economically ravaged. As result of the 
violence and criminal activity, Nigerian oil production declined about 
10 percent in 2008. Unstable political conditions and the fall in the 
price of crude oil probably will slow or deter additional foreign 
investment in the Delta, contributing to further production drop-offs 
in the future. A turnaround in the current security environment is 
unlikely soon.
Sudan
    Tensions are mounting between North and South Sudan as they 
approach key milestones laid out by the 2005 Comprehensive Peace 
Agreement (CPA), while Darfur remains plagued by violence. The National 
Congress Party (NCP) and Sudanese People's Liberation Movement publicly 
have said they intend to proceed with national elections required to be 
held under CPA by July 2009. Recent military clashes on the North-South 
border highlight the slippage of other CPA deadlines, including border 
demarcation, troop redeployment, and integration of joint military 
units. Potential election delays are unlikely to trigger a violent 
collapse of the CPA, because both parties have strong incentives to 
maintain the status quo until at least 2011 when the south will vote on 
a referendum for independence, but small skirmishes are likely to 
continue.

         The Darfur conflict has become increasingly 
        complicated over the course of the past 5 years and is unlikely 
        to be resolved in the near future. While bureaucratic and 
        logistic constraints in New York and Sudan continue to delay 
        full deployment of a 26,000-person U.N. peacekeeping force, the 
        U.N. mediator's attempt to hold inclusive peace talks remains 
        stymied by rebel disunity and ongoing fighting, which, to date, 
        has displaced some 2.5 million people. Chadian-backed rebels 
        based in Darfur have advanced on the Sudanese capital in the 
        past year, risking an escalated proxy war between Khartoum and 
        N'Djamena.
         The International Criminal Court (ICC) is likely to 
        issue a warrant to arrest Sudanese President Omar Hassan al-
        Bashir on charges of war crimes, crimes against humanity, and 
        possibly genocide on March 4, heightening Khartoum's distrust 
        of western intentions. Several other NCP members' vulnerability 
        to ICC charges is likely to keep them at Bashir's side.
Somalia
    Somalia has not had a stable, central government for 17 years and 
continues to be mired in conflict. A U.N.-brokered agreement between 
the Somali Transitional Federal Government (TFG) and key opposition 
leaders in mid-2008 is unlikely to bring peace to Somalia in the near 
term. Ethiopia has withdrawn the troops it deployed to protect the TFG 
and oust the Council of Islamic Courts in late 2006 and resurgent 
Islamic extremists are expanding their operations throughout the 
country. The new unity government is facing multiple challenges, 
including the continued dominance of clan politics and lack of a viable 
security force. While the withdrawal of Ethiopian troops removed a key 
rallying point for the extremist opposition group al-Shabaab al 
Islamiyah, Islamic militants have shifted their focus toward attacking 
a modest AU peacekeeping force charged with protecting the TFG. 
Worsening violence as militias compete for territory is likely to 
displace thousands of additional Somalis, adding to this humanitarian 
crisis.
    Lawlessness in Somalia already has prompted a surge in piracy in 
the Gulf of Aden. The number of successful pirate attacks has increased 
almost fourfold since 2007 after the pirates received several multi-
million dollar ransom payments in early 2008. Local authorities' 
unwillingness or inability to stem piracy also has fueled the 
proliferation of hijackings. The growing number and sophistication of 
Somali pirate attacks threaten to restrict the options for countering 
them, and they could take root in Somali society if left unchecked.
Zimbabwe
    Zimbabwe continues to deteriorate under the brutal and corrupt rule 
of President Robert Mugabe. Over half the population is food insecure 
and public health facilities and schools have been almost completely 
shut down. With over 60,000 infected, the recent cholera epidemic is 
dramatic evidence of how far living conditions have plummeted in this 
once-prosperous and relatively well-developed country. Zimbabwe's sharp 
decline has generated problems throughout southern Africa as millions 
of refugees have fled to South Africa, Botswana, and Mozambique and as 
the region's well-publicized economic and security concerns have 
frightened foreign investors away. To date, Mugabe retains the support 
of his senior military officers and appears to be using his recently 
implemented power-sharing deal with the Movement for Democratic Change 
(MDC) to co-opt the opposition and to reduce Western pressure on his 
regime. Mugabe also has managed to hold on to the backing of South 
Africa, a key regional player. Pretoria, which brokered the coalition 
agreement between Mugabe and the opposition MDC, remains unwilling, 
despite growing criticism at home and abroad, to apply stronger 
pressure on Mugabe to step aside or to undertake fundamental political 
and economic reforms. Mugabe and his ruling elite are likely to remain 
in power until he loses the support of the security forces, South 
Africa steps up its pressure, or social and economic conditions in 
Zimbabwe become substantially worse. With both political parties 
signing on to the recent power-sharing agreement, it will be up to 
South Africa, the Southern African Development Community, and the AU to 
carefully watch Mugabe's actions and ensure that power is in fact 
shared and the MDC is allowed to lead.
Drug Trafficking in West Africa
    Drug trafficking has become a major problem in West Africa, and the 
emergence of Guinea-Bissau as Africa's first narco-state highlights the 
scope of the problem and what may be in store for other states in the 
region. Away from the scrutiny of local and international law 
enforcement, drug traffickers, often departing from Venezuela by air 
and sea, have transported large quantities of drugs, predominantly 
cocaine, from Latin America to European markets through the porous 
borders of more than a half dozen West African countries. Traffickers 
have successfully co-opted government and law enforcement officials in 
these countries, further undermining weak and economically impoverished 
governments who lack adequate law enforcement and judicial capacity. 
The Economic Community of West African States sponsored a conference in 
Cape Verde in late 2008 to address this issue and the Governments of 
Great Britain and France have conducted limited law enforcement and 
counternarcotics training in the region, but drug trafficking in West 
Africa probably will continue to expand in volume and scope in the 
absence of a concerted international effort to stop it.
              the growing cyber and organized crime threat
Threats to the U.S. Information Technology Infrastructure
    The U.S. information infrastructure, including telecommunications 
and computer networks and systems, and the data that reside on them, is 
critical to virtually every aspect of modern life. Threats to our 
information technology infrastructure are an important focus of the IC. 
As government, private sector, and personal activities continue to move 
to networked operations, as our digital systems add ever more 
capabilities, as wireless systems become even more ubiquitous, and as 
the design, manufacture, and service of information technology have 
moved overseas, the threat will continue to grow.
    This information and communications revolution also is enabling an 
unprecedented ability to spread ideas and influence large numbers of 
people. Nation-states and non-state groups are taking an increasing 
interest in the role of mass media in shaping international opinions. 
Terrorists will continue to be motivated to conduct spectacular attacks 
in part by the desire to achieve maximum media exposure for their 
cause. Increasing global connectivity is enabling radical groups to 
recruit and train new members, proliferate extremist ideologies, manage 
their finances, manipulate public opinion, and coordinate attacks. In 
the recent conflict in Gaza, for example, the media played an important 
role for both sides in shaping public perceptions of the conflict. We 
can expect future adversaries to similarly employ mass media in an 
attempt to constrain U.S. courses of actions in a future crisis or 
conflict.
    Further, the growing connectivity between information systems, the 
Internet, and other infrastructures creates opportunities for attackers 
to disrupt telecommunications, electrical power, energy pipelines, 
refineries, financial networks, and other critical infrastructures. 
Over the past several years we have seen cyber attacks against critical 
infrastructures abroad, and many of our own infrastructures are as 
vulnerable as their foreign counterparts.

         A successful cyber attack against a major financial 
        service provider could severely impact the national economy, 
        while cyber attacks against physical infrastructure computer 
        systems such as those that control power grids or oil 
        refineries have the potential to disrupt services for hours to 
        weeks.

    Network defense technologies are widely available to mitigate 
threats but have not been uniformly adopted due to associated costs, 
perceived need, operational requirements, and regulatory constraints. 
This slow rate of adoption has allowed cyber attackers to keep up with 
many defensive advances. Meanwhile, advances in digital communications 
technology, such as the growth in wireless connectivity and the 
acceleration of network convergence with a variety data increasingly 
digitized and transmitted over the Internet, are creating new 
vulnerabilities in our networks and new avenues for cyber attacks.
    Malicious activity on the Internet also is rapidly increasing: 
spam--unsolicited email that can contain malicious software--now 
accounts for 81 percent of all email according to Message Labs 
(Symantec); the Georgia Tech Information Security Center projects a 
ten-fold increase in malicious software targeting data in the coming 
year; and botnets--networks of hijacked computers used to deliver spam 
or launch distributed denial of service attacks--are expected to 
compose 15 percent of all online computers in 2009. Ferris Research 
estimates that the total cost of spam and all of the types of fraud 
that take advantage of spam's impact is $42 billion in the United 
States and $140 billion worldwide last year, while McAfee estimates 
that global companies may have lost over $1 trillion worth of 
intellectual property to data theft in 2008.
    State and Non-State Threats
    A growing array of state and non-state adversaries are increasingly 
targeting--for exploitation and potentially disruption or destruction--
our information infrastructure, including the Internet, 
telecommunications networks, computer systems, and embedded processors 
and controllers in critical industries. Over the past year, cyber 
exploitation activity has grown more sophisticated, more targeted, and 
more serious. The IC expects these trends to continue in the coming 
year.
    We assess that a number of nations, including Russia and China, 
have the technical capabilities to target and disrupt elements of the 
U.S. information infrastructure and for intelligence collection. Nation 
states and criminals target our government and private sector 
information networks to gain competitive advantage in the commercial 
sector. Terrorist groups, including al Qaeda, Hamas, and Hizballah, 
have expressed the desire to use cyber means to target the United 
States. Criminal elements continue to show growing sophistication in 
technical capability and targeting and today operate a pervasive, 
mature on-line service economy in illicit cyber capabilities and 
services available to anyone willing to pay. Each of these actors has 
different levels of skill and different intentions; therefore, we must 
develop flexible capabilities to counter each. We must take proactive 
measures to detect and prevent intrusions from whatever source, as they 
happen, and before they can do significant damage.
    We expect disruptive cyber activities to be the norm in future 
political or military conflicts. The Distributed Denial of Service 
(DDoS) attacks and Web defacements that targeted Georgia in 2008 and 
Estonia in 2007 disrupted government, media, and banking Web sites. 
DDoS attacks and Web defacements targeted Georgian government Web 
sites, including that of Georgian President Saakishvili, intermittently 
disrupting online access to the official Georgian perspective of the 
conflict and some Georgian Government functions but did not affect 
military action. Such attacks have been a common outlet for hackers 
during political disputes over the past decade, including Israel's 
military conflicts with Hizballah and Hamas in 2006 and 2008, the 
aftermath of the terrorist attacks in Mumbai last year, the publication 
of cartoons caricaturing the Prophet Mohammed in 2005, and the Chinese 
downing of a U.S. Navy aircraft in 2001.
    The Comprehensive National Cybersecurity Initiative
    In January 2008, the Comprehensive National Cybersecurity 
Initiative (CNCI) was adopted as national policy as part of National 
Security Presidential Directive 54/Homeland Security Presidential 
Directive 23 (NSPD-54/HSPD-23). With bipartisan support, Congress 
appropriated the vast majority of the CNCI funding request in the 
Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act of 2009.
    The CNCI addresses current cybersecurity threats, anticipates 
future threats and technologies, and develops a framework for creating 
in partnership with the private sector an environment that no longer 
favors cyber intruders over defenders. The CNCI includes defensive, 
offensive, education, research and development, and counterintelligence 
elements, while remaining sensitive throughout to the requirements of 
protecting the privacy rights and civil liberties of U.S. citizens. The 
CNCI is now making considerable progress in building a better 
understanding of the cyber threat, developing concrete solutions, and 
approving detailed courses of action. The Adminstration is now 
reviewing CNCI, to ensure it is consistent with its own cybersecurity 
policy.
    To be sure, significant work remains in order to protect, defend, 
and respond to the cyber threat in a manner that markedly improves our 
Nation's overall security. Yet there is reason to be hopeful. We are 
witnessing an unprecedented unity of effort across a broad coalition of 
government agencies, Members of Congress, and leaders of industry. To 
succeed, however, the CNCI must remain a long-term national priority. 
With sustained momentum and continued national resolve we can and will 
build an enduring security framework capable of protecting our vital 
national security, economic, and public health interests.
    We cannot afford to discover successful cyber intrusions after-the-
fact, accept disastrous losses, and then seek merely to contain them. 
It requires a broad alliance of departments, agencies, and industry 
leaders to focus on countering the threat, mitigating vulnerabilities, 
and enhancing resiliency in order to preserve our national security, 
national economy, and public welfare.
Growing Transnational Organized Crime Threat
    Most organized criminal activities increasingly involve either 
networks of interconnected criminal groups sharing expertise, skills, 
and resources in joint criminal ventures that transcend national 
boundaries or powerful, well-organized crime groups seeking to 
legitimize their image by investing in the global marketplace. 
Organized criminals and groups will increasingly pose a threat to U.S. 
national security interests by enhancing the capabilities of terrorists 
and hostile governments.
    Some organized crime networks, groups, and individuals also have 
invested in energy and mineral markets in an effort to diversify and 
legitimize their business activities. Criminals' coercive tactics, 
underhanded business practices, opaque motives, and self-serving 
loyalties can undermine the normal workings and integrity of these 
global markets. The most powerful, highprofile Eurasian criminal groups 
often form strategic alliances with senior political leaders and 
business tycoons and can operate from a relative safe haven status with 
little to fear of international arrest and prosecution. The leaders of 
many of these groups go to great lengths to portray themselves as 
legitimate businessmen and use front companies that give them more 
market access and leverage. They also employ some of the world's best 
accountants, lawyers, bankers, and lobbyists to deflect and frustrate 
the efforts of authorities.
    The change in the structure and types of activities conducted by 
transnational criminal groups is making it increasingly difficult to 
identify and attack them. In particular, the increasing prevalence of 
loosely knit networks, the use of cyberspace and global financial 
systems, and political corruption have made it easier for them to hide 
their involvement, to thwart law enforcement efforts, and to create 
images of legitimacy.
                         environmental security
    Climate change, energy, global health, and environmental security 
are often intertwined, and while not traditionally viewed as 
``threats'' to U.S. national security, they will affect Americans in 
major ways. The IC has increased its focus on these three critical 
issues as a result of unprecedented developments in the last year.
    Access to relatively secure and clean energy sources and management 
of chronic food and water shortages will assume increasing importance 
for a growing number of countries. Adding well over a billion people to 
the world's population by 2025 will itself put pressure on these vital 
resources. An increasing percentage of the world's population will be 
moving from rural areas to urban and developed ones to seek greater 
personal security and economic opportunity. Many, particularly in Asia, 
will be joining the middle class and will be seeking to emulate western 
lifestyles, which involves greater per capita consumption of all these 
resources.
    The already stressed resource sector will be further complicated 
and, in most cases, exacerbated by climate change, whose physical 
effects will worsen throughout this period. Continued escalation of 
energy demand will hasten the impacts of climate change. On the other 
hand, forcibly cutting back on fossil fuel use before substitutes are 
widely available could threaten continued economic development, 
particularly for countries like China, whose industries have not yet 
achieved high levels of energy efficiency.
    Food and water also are intertwined with climate change, energy, 
and demography. Rising energy prices increase the cost for consumers 
and the environment of industrial-scale agriculture and application of 
petrochemical fertilizers. A switch from use of arable land for food to 
fuel crops provides a limited solution and could exacerbate both the 
energy and food situations. Climatically, rainfall anomalies and 
constricted seasonal flows of snow and glacial melts are aggravating 
water scarcities, harming agriculture in many parts of the globe. 
Energy and climate dynamics also combine to amplify a number of other 
ills such as health problems, agricultural losses to pests, and storm 
damage. The greatest danger may arise from the convergence and 
interaction of many stresses simultaneously. Such a complex and 
unprecedented syndrome of problems could cause outright state failure, 
or weaken important pivotal states counted on to act as anchors of 
regional stability.
    Six to 9 months ago we were worried about the implications of 
increasing high oil prices: the situation has reversed sharply with oil 
prices falling to close to a third of their July 2008 peak of $147 per 
barrel in response to the sudden drop in world oil demand growth and 
slower economic growth resulting from the global financial crisis. 
Although we believe the longer-term trend is toward high oil prices, 
the current lower oil prices reduce pressures on the global economy. 
Emerging economies previously concerned about busting their budgets on 
fuel and food subsidies are breathing a sigh of relief now that prices 
have fallen substantially over the last 6 months. Most forecasters 
expect global oil demand and oil prices to remain depressed through 
2009 as the financial turmoil continues to unwind. The decline in price 
may, however, lead to delayed or cancelled investments in the upstream 
oil and gas sectors, creating the conditions for another spike in oil 
prices once global oil demand recovers. We also are concerned that 
lower oil prices may weaken momentum toward energy efficiency and the 
development of alternative sources of energy that are important for 
both energy and environmental security. The fall in energy prices also 
has had the side benefit of undercutting the economic positions of some 
of the more troublesome producers.
Assessing the Impact of Climate Change
    According to the United Nations Intergovernmental Panel on Climate 
Change (IPCC), a failure to act to reduce green house gas emissions 
risks severe damage to the planet by the end of this century and even 
greater risk in coming centuries. In a fossil-intensive scenario that 
IPCC examined (A1F1), global average temperatures increase by almost 4 
degrees centigrade. In such a scenario, water stored in glaciers and 
snow cover would decline significantly, reducing water availability in 
regions supplied by melt water from major mountain ranges, where more 
than one-sixth of the world population currently lives. Sea-level rise 
could be up to 59 centimeters by the end of the century and would cause 
substantial flooding. Individuals in densely populated and low-lying 
areas, especially the mega deltas of Asian and Africa, where adaptive 
capacity is relatively low, and which already face other challenges 
such as tropical storms or local coastal subsidence, are especially at 
risk. At a four-degree rise, according to the IPCC, up to 30 percent of 
plant and animal species would be at risk of extinction, global 
productivity in cereals would decline, intensity of tropical cyclones 
would increase, and extreme drought areas would rise from 1 percent 
land area to 30 percent.
    The IC recently completed a National Intelligence Assessment on the 
national security impacts of global climate change to 2030. The IC 
judges global climate change will have important and extensive 
implications for U.S. national security interests over the next 20 
years. Although the United States itself could be less affected and is 
better equipped than most nations to deal with climate change and may 
even see a benefit in the near term owing to increases in agriculture 
productivity, infrastructure repair and replacement will be costly. We 
judge the most significant impact for the United States will be 
indirect and result from climate-driven effects on many other countries 
and their potential to seriously affect U.S. national security 
interests. We assess climate change alone is unlikely to trigger state 
failure in any state out to 2030, but the impacts will worsen existing 
problems such as poverty, social tensions, environmental degradation, 
ineffectual leadership, and weak political institutions. Climate change 
could threaten domestic stability in some states, potentially 
contributing to intra- or, less likely, interstate conflict, 
particularly over access to increasingly scarce water resources. We 
judge economic migrants will perceive additional reasons to migrate 
because of harsh climates, both within nations and from disadvantaged 
to richer countries.
    From a national security perspective, climate change affects lives 
(for example, through food and water shortages, increased health 
problems including the spread of disease, and increased potential for 
conflict), property (for example through ground subsidence, flooding, 
coastal erosion, and extreme weather events), and other security 
interests. The United States depends on a smooth-functioning 
international system ensuring the flow of trade and market access to 
critical raw materials such as oil and gas, and security for its allies 
and partners. Climate change could affect all of these--domestic 
stability in a number of key states, the opening of new sea lanes and 
access to raw materials, and the global economy more broadly--with 
significant geopolitical consequences.
    In addition, anticipated impacts to the Homeland--including warming 
temperatures, changes in precipitation patterns, and possible increases 
in the severity of storms in the Gulf, increased demand for energy 
resources, disruptions in U.S. and Arctic infrastructure, and increases 
in immigration from resource-scarce regions of the world--are expected 
to be costly. Government, business, and public efforts to develop 
mitigation and adaptation strategies to deal with climate change--from 
policies to reduce greenhouse gasses to plans to reduce exposure to 
climate change or capitalize on potential impacts--may affect U.S. 
national security interests even more than the physical impacts of 
climate change itself.
    Multilateral policymaking on climate change is likely to be highly 
visible and a growing priority among traditional security affairs in 
the coming decades. We observe the United States is seen by the world 
as occupying a potentially pivotal leadership role between Europe, 
which is committed to long-term and dramatic reduction in carbon 
emissions, and a heterogeneous group of developing states wary of 
committing to greenhouse gas emissions reductions, which they believe 
would slow their economic growth. As effects of climate change begin to 
mount, the United States will come under increasing pressure to join 
the international community in setting meaningful long-term goals for 
emissions reductions, to reduce its own emissions, and to help others 
mitigate and adapt to climate change through technological progress and 
financial assistance.
Global Health
    Considerable empirical and theoretical studies have demonstrated 
the links between the health of a population and economic growth and 
development. Highly publicized virulent infectious diseases--including 
HIV/AIDS, a potential influenza pandemic, and ``mystery'' illnesses 
such as the 2003 outbreak of severe acute respiratory syndrome--remain 
the most direct health-related threats to the United States. The most 
pressing transnational health challenge for the United States is still 
the potential for emergence of a severe pandemic, with the primary 
candidate being a highly lethal influenza virus. The World Bank 
estimates that if the next pandemic virus is similar to the one that 
caused the 1918 pandemic, it could kill 71 million people worldwide and 
cause a major global recession with global costs exceeding $3 trillion. 
Other estimates, applying the 2.5 percent fatality rate from the 1918 
pandemic to today's population, reach 180 million deaths worldwide. 
Current threats include H5N1 influenza, a virus that, while primarily a 
poultry disease, continues to evolve and expand its geographic range.
    Infectious diseases are not the only health indicators with 
strategic significance. Chronic, non-communicable diseases; neglected 
tropical diseases; maternal and child mortality; malnutrition; 
sanitation and access to clean water; and availability of basic health 
care also affect the U.S. national interest through their impacts on 
the economies, governments, and militaries of key countries and 
regions.

         Terrorists and warlords have gained local and 
        international stature and even power by providing health 
        services governments could not. Widespread ill health in the 
        youth cohort may reduce a country's pool of healthy and capable 
        military recruits, a phenomenon that is currently playing out 
        in Russia and North Korea.

    Looking at specific states, the inability of the central government 
of Afghanistan to provide health-care and other services has helped to 
undermine its credibility while boosting support for a resurgent and 
increasingly sophisticated Taliban. Wide incidence of traumatic births, 
malnutrition, and disease put children there at high risk of impaired 
development, undermining their prospects of attending school, engaging 
more productively in critical labor such as agricultural production, 
and participating in other economic activity. In Iraq, a degraded 
health sector, shortages of medical personnel, and infections stemming 
from deficient sanitary conditions and lack of clean drinking water 
have undermined the credibility of the central government.
    Russia has the overall worst health indicators of any 
industrialized country. Poor health of Russian children and young 
people combined with falling birthrates threatens Russian military 
readiness with a projected halving of eligible military recruits 
between 2005 and 2018. China's high incidence of chronic disease 
stemming in great part from heavy tobacco use threatens to slow 
economic growth by incapacitating workers and incurring heavy health-
care costs. The health effects of environmental degradation are an 
increasing source of discontent in China.
    Venezuela and Cuba have been particularly adept at parlaying 
provision of charitable medical services to nationals of other 
countries into support in international forums such as the United 
Nations. Hizballah's provision of health and social services in Lebanon 
over the past 20 years has helped to legitimize the organization as a 
political force in that country, while Hamas's delivery of similar 
services was a factor in its legislative electoral success in the 
Palestinian territories.
    Turning to U.S. Homeland health security issues, existing 
international resources and regulations will be inadequate to control 
transnational disease spread at least through the next decade. Movement 
of people, animals, and products through mass transportation, 
smuggling, and commerce will continue to homogenize the already global 
environment. Incidents involving chemical or bacterial contamination of 
imported food or trade goods, whether accidental or intentional, are 
likely to increase as China and other developing countries struggle to 
implement effective monitoring systems. A similar challenge involves 
ensuring the safety of imported therapeutic drugs and precursor 
products, as contaminated and counterfeit pharmaceuticals continue to 
be a worldwide public health threat.
                               conclusion
    The international security environment is complex. No dominant 
adversary faces the United States that threatens our existence with 
military force, but the global financial crises has exacerbated what 
was already a growing set of political and economic uncertainties. We 
are nevertheless in a strong position to shape a world reflecting 
universal aspirations and values that have motivated Americans since 
1776: human rights; the rule of law; liberal market economics and 
social justice. Whether we can succeed will depend on actions we take 
here at home--restoring strong economic growth and maintaining our 
scientific and technological edge and defending ourselves at reasonable 
cost in dollars without violating our civil liberties. It will also 
depend on our actions abroad, not only in how we deal with regions, 
regimes and crises, but also in developing new multilateral systems, 
formal or informal, for effective international cooperation in trade 
and finance, in neutralizing extremist groups using terrorism, in 
controlling the proliferation of WMD, developing codes of conduct for 
cyberspace and space, and in mitigating and slowing global climate 
change.

    Chairman Levin. Thank you so much, Director Blair.
    General Maples.

  STATEMENT OF LTG MICHAEL D. MAPLES, USA, DIRECTOR, DEFENSE 
                      INTELLIGENCE AGENCY

    General Maples. Senator Levin, Senator McCain, members of 
the committee: First of all, thank you for this opportunity to 
appear with Director Blair today. I have submitted a statement 
for the record and I will summarize my remarks, focusing 
primarily on ongoing operations and military developments. But 
before I do, I just want to thank the members of the committee 
for your support of our service men and women around the world, 
and in particular for the support that you have provided to DIA 
and to our defense intelligence professionals, who support all 
of our men and women in uniform who are engaged in conflict 
around the world. Your support and what you have done for us to 
enable us to support them truly has been remarkable and I thank 
you for that.
    Chairman Levin. We thank you.
    General Maples. First of all, let me start with Iraq. The 
security situation in Iraq does continue to improve. Overall 
violence across the country declined in the last 6 months of 
2008 and by January 2009 attacks were 60 percent lower than in 
January 2008. While Iraqi leaders have reached accommodation on 
a range of key issues, many of Iraq's underlying problems, such 
as lingering ethno-sectarian rivalries, a weakened insurgency, 
a still developing central government, and a lack of a shared 
national vision, will continue to challenge Iraqis over the 
next year and beyond.
    Iraqi security forces (ISF) improved their overall 
capabilities in 2008, demonstrating an increased ability to 
plan, prepare, and execute independent counterinsurgency 
operations. The ISF continues to rely on coalition support for 
key enabling capabilities, including close air support, 
intelligence, and logistics. A rapid degradation of the 
security situation is unlikely in 2009, although the failure of 
the Iraqi government to address key issues may erode security 
over time. Control of disputed areas, particularly in Ninewah 
and Kirkuk, may be the greatest potential flashpoint in Iraq 
for 2008.
    The security situation in Afghanistan continued to worsen 
in 2008, driven by an increasingly proficient insurgency, 
government inability to deliver basic services to portions of 
the country, and insurgent access to safe havens in western 
Pakistan. Although the Taliban lost several key commanders in 
2008 and have not demonstrated an ability to conduct sustained 
conventional operations, it has increased attacks. Enemy-
initiated violence in 2008 grew by 55 percent over levels in 
2007. Statistics also show increases in suicide bombings, the 
use of improvised explosive devices, and small arms attacks.
    The AFA has grown from 49,000 to approximately 80,000 over 
the last year, fielding 6 new commando battalions which are 
specifically trained to handle counterinsurgency operations. 
Half of Afghan's combat arms units can lead combat operations, 
albeit with coalition support.
    Afghan National Police (ANP) forces still require 
considerable training and coalition support to fulfil their 
mission. The ANP has reportedly grown from 75,000 to 
approximately 80,000 over the last year. The Afghan Government 
has initiated a program to improve police performance.
    Over the next year, the Afghan Government will remain 
vulnerable to insurgent violence, the narcotics trade, foreign 
influences, and disruptive political maneuvering ahead of the 
2009 Afghan presidential election. Afghan popular discontent 
could worsen, especially in areas where tribes remain 
disenfranchised and basic employment opportunities are not 
provided.
    In Pakistan, some senior Pakistani leaders have publicly 
acknowledged that extremism has replaced India as Pakistan's 
preeminent national security threat. India, however, remains a 
high priority long-term concern. Strategic rivalry with India 
continues to drive Pakistan's development of an expanding array 
of delivery systems.
    In the FATA, al Qaeda, the Afghan Taliban, and Pakistan-
based extremist groups continue to have vital sanctuary. The 
area is used to recruit and train operatives, plan and prepare 
regional and transnational attacks, disseminate propaganda, and 
obtain equipment and supplies.
    Pakistan's military has expanded its paramilitary forces 
and deployed additional troops to the area in an effort to 
contain the threat. Although U.S. efforts to address Pakistani 
counterinsurgency deficiencies are underway, it will take years 
before meaningful capabilities are likely to be developed.
    Pakistan continues to develop its nuclear infrastructure, 
expand nuclear weapons stockpiles, and seek more advanced 
warheads and delivery systems. Pakistan has taken important 
steps to safeguard its nuclear weapons, although 
vulnerabilities still exist.
    Al Qaeda is committed to imposing its own interpretation of 
Islamic rule upon the Muslim world and is the biggest terrorist 
threat to U.S. interests worldwide. Al Qaeda retains the 
operational capability to plan, support, and direct 
transnational attacks, despite the deaths of multiple senior-
level operatives. Al Qaeda continues efforts to acquire 
chemical, biological, radiological, or nuclear materials and 
would not hesitate to use such weapons if the group develops 
sufficient capabilities.
    Al Qaeda also continues to further relationships with 
compatible regional terrorist groups, such as al Qaeda in the 
Lands of the Islamic Maghreb and al Qaeda in East Africa, to 
extend the organization's financial and operational reach.
    Now I'll turn to military developments in regions of 
interest. In Iran, Iran's military is designed principally to 
defend against external threats from more advanced adversaries 
and threats posed by internal opponents. However, Iran has the 
capability to conduct limited offensive operations with its 
ballistic missile and naval forces. Iran continues to develop 
and acquire ballistic missiles that can range Israel and 
Central Europe, including Iranian claims of an extended range 
variant of the Shahab-3 and a 2,000-kilometer medium-range 
ballistic missile, the Ashura.
    Iran's February 2, 2009, launch of the Safir space launch 
vehicle shows progress in mastering the technology needed to 
produce intercontinental ballistic missiles (ICBMs). Iran has 
boosted the lethality and effectiveness of existing missile 
systems with accuracy improvements and new submunition 
payloads.
    Ongoing naval modernization is focused on equipment such as 
fast missile patrol boats as well as anti-ship cruise missiles 
and naval mines. Iran continues to invest heavily in advanced 
air defenses. Iran has deployed advanced SA-15 tactical 
surface-to-air missile systems and continues to express 
interest in acquiring the long-range SA-20.
    With the rest of the IC, DIA judges Iran halted its nuclear 
weaponization and covert uranium conversion and enrichment-
related work in 2003, but we assess that Tehran is keeping open 
the option to develop nuclear weapons.
    China is strengthening its ability to conduct military 
operations along its periphery on its own terms. That would 
include the claims to an exclusive economic zone (EEZ) where 
the recent incident occurred. It is building and fielding 
sophisticated weapons systems and testing new doctrines that it 
believes will allow it to prevail in regional conflicts. The 
navy operates a large surface fleet, an increasingly modern 
submarine fleet, and appears likely to pursue an aircraft 
carrier development program. The air force is developing an 
extended range land attack cruise missile-capable bomber. 
China's nuclear force is becoming more survivable with the 
deployment of the DF-31 and DF-31 Alpha road-mobile ICBMs and 
the eventual deployment of the JL-2 submarine-launched 
ballistic missile. China is also expanding its space 
capabilities, counterspace, cyber warfare, and electronic 
warfare capabilities.
    In North Korea, North Korea's large forward positioned, but 
poorly equipped and poorly trained military is not well suited 
to sustain major military operations against the south. As a 
result of its limitations, North Korea is emphasizing its 
nuclear capabilities and ballistic missiles as a means to 
assure its sovereignty and to deter technologically superior 
opponents. The long-range artillery the North has positioned 
near the demilitarized zone is complemented by a substantial 
mobile ballistic missile force with an array of warhead 
options, to include WMD, that can range U.S. forces and our 
allies in the Republic of Korea and Japan.
    After a failed July 2006 test launch, North Korea has 
continued development of the Taepo Dong 2, which could be used 
for space launch or as an ICBM. North Korea announced in late 
February they intend to launch a communications satellite, 
Kwangmyongsong 2. North Korea also continues to work on an 
intermediate range ballistic missile.
    North Korea could have stockpiled several nuclear weapons 
from plutonium produced at Yongbyon and it likely sought a 
uranium enrichment capability for nuclear weapons, at least in 
the past.
    Russia is trying to reestablish military power that it 
believes commensurate with its economic strength and general 
political competence, although the current global economic 
downturn may limit Moscow's ability to achieve its goals. 
Russian conventional force capabilities continue to grow at a 
measured pace. Readiness improvements are seen primarily among 
the conventional permanent ready forces. Development and 
production of advanced strategic weapons continues, 
particularly on the SS-27 ICBM and the Bulava SS-NX-32 
submarine-launched ballistic missile that is still undergoing 
testing.
    Russia's widely publicized strategic missile launches and 
increased out of area activities are meant to signal a 
continued global reach and relevance.
    Under a comprehensive set of reforms announced in September 
2008, the Russian armed forces will be significantly reduced 
and remaining units modernized and brought up to permanent 
ready status by 2020. Emphasis reportedly will be given to 
precision munitions, intelligence assets, submarines, and 
elements of an aerospace defense system. These reforms, if 
carried out, would improve Russian capability to respond to 
limited regional threats, but reduce their capability for 
large-scale conventional war.
    Turning to global military trends of concern, the 
proliferation and potential use of WMDs, often linked with 
delivery system enhancements, remains a grave, enduring, and 
evolving threat. Terrorist organizations will continue to try 
to acquire and employ chemical, biological, radiological, or 
nuclear materials.
    The threat posed by ballistic missile delivery systems is 
likely to increase over the next decade. Ballistic missile 
systems with advanced liquid or solid propellent propulsion 
systems are becoming more mobile, survivable, reliable, 
accurate, and possess greater range.
    Cyber attacks on our information systems are a significant 
concern. Nation- and non-state terrorist and criminal groups 
are developing and refining their abilities to exploit and 
attack computer networks in support of their military, 
intelligence, or criminal goals. The scope and sophistication 
of malicious targeting against U.S. networks has steadily 
increased and is of particular concern because of the 
pronounced military advantages that the United States has 
traditionally derived from information networks.
    The international proliferation of space-related expertise 
and technology is also increasing, largely through commercial 
enterprises, and is helping nations acquire space and space-
related capabilities, including some with direct military 
applications. Included are more capable communications, 
reconnaissance, navigation, and targeting capabilities.
    At the same time, countries such as Russia and China are 
developing systems and technologies capable of interfering with 
or disabling vital U.S. space-based navigation, communication, 
and intelligence collection capabilities. In addition to direct 
ascent, anti-satellite missile capabilities such as satellite 
tracking, jamming, and laser blinding are also under 
development.
    The global economic crisis to date has not led to 
widespread defense spending cuts, with the exception of some 
Central and Eastern European nations. China's defense spending 
growth in 2009 is supported by continued economic growth and 
large international Reserves. China will likely continue to 
downsize forces, freeing funds needed to meet modernization and 
reform goals.
    Russia's defense spending will continue to increase despite 
recent declines in oil prices and domestic economic problems. 
Iran will see government revenues decline in 2009 as oil prices 
remain at low levels. Defense spending will have to be balanced 
with social programs. North Korea will continue to divert 
economic and aid resources to higher priority military projects 
in spite of critical public welfare needs.
    I appreciate this opportunity to share with you the 
tremendous work done by thousands of defense intelligence 
professionals who work very closely with their national 
intelligence, homeland security, and law enforcement 
colleagues. On their behalf, thank you for your strong support 
and your continued confidence in our work.
    [The prepared statement of General Maples follows:]
            Prepared Statement by LTG Michael D. Maples, USA
    Good morning, Chairman Levin, Ranking Member McCain, and members of 
the committee. Thank you for this opportunity to testify today and for 
your continued support to the dedicated men and women of the Defense 
Intelligence Agency (DIA), many of whom are forward-deployed directly 
supporting our military forces in Afghanistan, Iraq and around the 
world.
    Our Nation faces an unusually complex threat environment--one 
marked by an accelerating operational pace and a broad spectrum of 
dissimilar challenges and potential threats from nation-states and non-
state, transnational terrorist networks.
    This testimony reflects DIA's analytical assessments, worldwide 
human intelligence, technical intelligence, counterintelligence, and 
document and media exploitation collection efforts along with 
intelligence drawn from our close partners throughout the Intelligence 
Community (IC), international allies, and open sources.
                           ongoing conflicts
Iraq
    The security situation in Iraq continues to improve. With coalition 
assistance, communal violence has reached its lowest sustained levels 
since Prime Minister Nuri al-Maliki's government came to power in 2006 
and Iraqi leaders have reached accommodation on a range of key issues. 
However, many of Iraqis underlying problems, such as lingering ethno-
sectarian rivalries, a weakened insurgency, a still-developing central 
government, and lack of a shared national vision, will continue to 
challenge Iraqis over the next year and beyond. A rapid degradation of 
the security situation is unlikely in 2009, though the failure of the 
Iraqi Government to address key issues may erode security over time.
    Overall violence across the country declined in the last 6 months 
of 2008; by January 2009, attacks were 60 percent lower than in January 
2008. In the last quarter of 2008, the percentage of attacks which 
targeted Iraqi politicians, security officials, and civilians increased 
while the proportion of attacks targeting coalition forces declined to 
their lowest level. Key strategic areas are now under Iraqi Government 
control. This is largely the combined result of coalition and Iraqi 
operations, more capable and assertive Iraqi leadership and growing 
popular support for the Iraqi Government and security forces.
    The Sadrist movement's influence has declined over the past year. 
Muqtada al-Sadr's decision to cease Jaysh al-Mahdi (JAM) militant 
activity against government forces combined with aggressive Iraqi 
security force (ISF) operations against JAM have reduced the Sadrist's 
ability to use force to control and influence the population. In 
addition, over the past year the Islamic Supreme Council of Iraq (ISCI) 
and the Dawa Party have successfully undermined the Sadrist movement, 
limiting its ability to influence government decisions. In June, Sadr 
announced his intention to prioritize his organization's cultural, 
religious, and socioeconomic outreach while reducing its emphasis on 
political and militant activity, likely in an effort to regain popular 
support. This effort has been relatively successful enabling the 
Sadrists to gain sufficient representation in Shiite-dominated 
provinces to be a key partner in ruling coalitions in most southern 
provincial councils. As a result, the Sadrists will likely increase 
their influence at the local and national levels, which could bolster 
their efforts to gain concessions on detainee releases and amnesty for 
exiled Sadrists. The majority of JAM members appear to be complying 
with Sadr's ceasefire orders, although some will seek other means to 
violently oppose the coalition's presence in Iraq. JAM Special Groups 
and other Shiite extremists continue to receive lethal support from 
Iran.
    Al Qaeda in Iraq (AQI) and other active Sunni Arab insurgents 
continue to exploit anti-government and anti-Kurdish sentiment in 
northern Iraq despite ongoing security operations in the region; 
however, the group is increasingly forced to maintain a lower profile 
to avoid further losses. Particularly in northern Iraq, like-minded 
Sunni insurgent groups maintain a presence, leveraging AQI's 
infrastructure, exploiting Sunni fears of Kurdish expansion and 
destabilizing the region. The most notable of these groups is Ansar al-
Islam, which changed its name from Ansar al-Sunna in 2008 and has close 
relations with AQI in the north.
    AQI remains the most active terrorist group in Iraq. It continues 
to target the Iraqi Government and coalition forces while also trying 
to reignite sectarian violence, encouraging its most active and 
ideologically committed members to remain steadfast. Active opposition 
to AQI has grown since 2006 as backlash to the group's heavy-handed 
tactics. Coalition efforts to reinforce indigenous resistance to AQI 
have given the Iraqi opposition to AQI room to flourish. While AQI has 
the capability to regenerate if given an opportunity to do so, its 
operational tempo has steadily declined from 2006 levels with the 
attrition of mid- and senior level operatives. As a result, AQI is 
currently not able to achieve its strategic goals, and is instead 
focused on mitigating the effects of these losses to maintain 
viability. However, AQI's diminished operational tempo does not 
preclude it from conducting sporadic, yet effective, attacks that have 
lasting effects within Iraq. With its continued commitment to external 
attack planning, AQI remains a threat beyond Iraq.
    Attacks by Sunni insurgent groups have declined significantly, 
although most violence remains attributable to the Sunni insurgency. 
The Sunni Awakening and Sons of Iraq (SOI) local security movements 
have limited the operational environment for Sunni insurgent groups in 
central Iraq and forced them to explore new approaches, such as 
participation in the political process. The operating environment is 
more permissive for insurgent groups in northern Iraq. Across Iraq, 
insurgents retain the capability for violence, making the insurgency a 
long-term threat to the Iraqi Government unless it counters the 
underlying motivations for insurgent activity, including employment, 
provision of services, and security. Sunni insurgents currently operate 
primarily at a local level.
    SOI groups have proven themselves a critical force multiplier for 
coalition and ISF. They provide vital intelligence and security 
presence in many areas formerly dominated by extremists or militias. 
The SOI initiatives have begun to bridge sectarian divides between the 
Sunni and Shiite population, as groups embrace mutual cooperation to 
improve security. The transition of Baghdad's SOI programs to 
government control late last year proceeded smoothly. Twenty-percent of 
the SOI will transition into the ISF, and 80 percent into other 
employment. The transfer of responsibility for the SOI programs is a 
key step toward reinforcing Government of Iraq (GOI) security 
responsibility and Iraqi sovereignty.
    Sunni Arab relations with coalition forces have greatly improved, 
as have those between local Sunni security groups and the GOI despite 
lingering mutual mistrust. Prime Minister Maliki's operations against 
Shiite militants demonstrated to many Sunni Arab leaders that he was 
willing to act in national--not sectarian--interests. Tawafuq, the main 
Sunni Arab political coalition, returned to the Iraqi Government last 
July. Iraq's Arab neighbors are establishing a diplomatic presence in 
Baghdad for the first time since the fall of Saddam's regime. 
Provincial elections were a key step to maintaining Sunni Arab 
engagement, although the long-term provision of services to and 
economic development of stabilized Sunni areas by the Iraqi Government 
will be a more significant driver of reconciliation. Sunni Arabs widely 
boycotted the 2005 provincial elections and as a result are 
underrepresented in many provinces, including Ninawa, Diyala, and Salah 
ad Din. Following the largely credible and legitimate provincial 
elections in January 2009, Sunni Arabs have achieved a more equitable 
political representation. Results generally reflected the provincial 
ethno-sectarian demographics, which will likely help build Sunni 
confidence in Baghdad. Sunnis may tolerate some political setbacks 
provided they see improvements in their living conditions.
    Provincial elections have changed the balance of power between 
Shiite parties in Iraq. ISCI has lost its prominence and is unlikely to 
have high level positions in provincial governments. The Dawa Party, 
which led the State of Law coalition, has emerged as a stronger force 
in local and national politics and will be able to use its control of 
government resources to further its parliamentary election campaign 
efforts in late 2009. The Sadrist Trend, largely marginalized in 2008, 
will probably regain some influence due to a likely partnership in 
several provinces with the State of Law coalition.
    The ISF improved their overall capabilities in 2008, reaching 
tactical proficiency in providing security as demonstrated by an 
increased ability to plan, prepare, and execute independent 
counterinsurgency (COIN) operations. At the direction of Prime Minister 
Maliki in March, the ISF began a series of complex, large-scale COIN 
operations throughout Iraq. These high profile operations have been 
effective in regaining Iraqi Government control over previously 
contested areas. They also highlighted the relative progress of the ISF 
maneuver elements over the past year as they have expanded in size, 
capability, and ability to deploy.
    The ISF still suffers from deficiencies in combat support and 
service support to sustain large-scale operations. The ISF continues to 
rely on coalition support for key enabling capabilities including close 
air support, intelligence, surveillance, and reconnaissance (ISR), 
logistics, transportation, medevac, legal and finance support, civil-
military affairs and engineering, as well as counterterrorism and force 
protection assets. The greatest obstacles to ISF development continue 
to be a shortage of qualified leaders, a lack of vehicles and basic 
equipment and immature logistics and sustainment capability. Moreover, 
the spontaneous creation of new units exacerbates existing shortages of 
personnel and equipment. In addition, budget shortfalls will likely 
affect the ISF adversely unless the Prime Minister and the legislature 
can find salient ways to fund it.
    The sectarian composition of the ISF will continue to hinder 
operational effectiveness. The National Police, which will take on 
increasing responsibility for internal security, is estimated to be 
heavily staffed--maybe upwards of 75 percent--by Shiite. The Ministry 
of Interior reorganized the National Police and the coalition provided 
extensive retraining in an effort to counter corruption and abuses, but 
many Sunni Arabs still associate the organization with targeting Sunni 
Arabs during the sectarian violence that marked 2006 and early 2007. As 
a result, the prospect of National Police deployments has increased 
tension within Sunni majority provinces. Incorporating more Sunni 
officer recruits into National Police units in Mosul and Anbar 
provinces is helping to dispel some of the perceptions of the National 
Police being a strictly Shiite-dominated force. In addition, as the 
National Police continues to expand, the ethnosectarian composition of 
the force is expected to be more representative of the population.
    The Kurdish presence and claims across northern Iraq's disputed 
territories is fueling ethnic tensions and potential violence between 
Kurds and Arabs. The constitutional process for resolving disputed 
territories outlined in Article 140 of the Iraqi Constitution has 
stalled, and the U.N.'s three-phase plan to facilitate the Article 140 
process has not achieved measurable progress. Political tensions 
increased last August when Prime Minister Maliki challenged Kurdish 
control of Khanaqin in northern Diyala province. Also, in early 
December, Iraqi Army movements around Kirkuk--territory also claimed by 
the Kurds--further increased tensions. Coalition engagement helped 
diffuse the situation, but both GOI and Kurdish Regional Government 
(KRG) military forces remain deployed around the cities. Prime Minister 
Maliki's assertiveness, combined with increasing opposition to Kurdish 
territorial claims within the Iraqi parliament, will likely force the 
Kurds to adjust their strategy for incorporating disputed territories, 
including Kirkuk, into the KRG. The Kurds see their political leverage 
on this issue diminishing and as a result, fear the GoI will attempt to 
seize control of disputed areas the Kurds currently hold--especially in 
Ninawa and Kirkuk governorates. This may be the greatest potential 
flashpoint in Iraq for 2009.
    Turkey remains concerned about Kurdish separatism as well as the 
threat posed by the Kurdish terrorist group, the Kongra Gel (KGK). 
However, historic talks last October between KRG President Masoud 
Barzani and senior Turkish leaders may represent a thaw in Turkey's 
hard-line stance and a growing recognition that long-term resolution to 
the KGK issue will come through diplomatic efforts in addition to 
military action. KRG action on Turkish demands will be critical to 
continued diplomatic developments.
    Iran continues to provide money, weapons and training to some Iraqi 
Shiite militants despite pledges by senior Iranian officials to stop 
such support. The weapons include Explosively Formed Penetrators (EFPs) 
with radio-controlled, remote arming and passive infrared detonators, 
mortars, rockets, rocket-propelled grenades and launchers, small arms 
ammunition and explosives.
    The Islamic Revolutionary Guard Corps (IRGC) is part of the Iranian 
government and has a central role in carrying out Iran's policies in 
Iraq through its special operations command--the Qods Force. The IRGC-
Qods Force holds the Iraq portfolio within the Iranian regime and posts 
officers in Iran's diplomatic missions throughout Iraq, including 
Iran's current Ambassador to Iraq, Hassan Kazemi-Qomi, who is a Qods 
Force officer. The IRGC-Qods Force covertly trains, funds, and arms 
Iraqi insurgents and militias. It also offers strategic and operational 
guidance aimed at undermining U.S. interests in Iraq. The IRGC-Qods 
Force junior partner, the Lebanese Hizballah, has trained Iraqi 
insurgents in Iraq, Iran, and Lebanon. The Lebanese Hizballah provides 
insurgents with the training, tactics, and technology to conduct 
kidnappings, small unit tactical operations and employ sophisticated 
improvised explosive devices (IEDs), incorporating lessons learned from 
operations in southern Lebanon.
    Iran is training Shiite militants in use of IEDs and EFPs and 
efforts to defeat these weapons and the networks that design, build, 
emplace, and fund them draw persistent counterresponses. The flow of 
new IED technologies and highly creative emplacement and employment 
methods underscore the enemy's ability to adapt and react quickly and 
efficiently. Although there is a coercive aspect to Iranian policy in 
Iraq--with Iran seeking to use all sources of national power to secure 
greater influence in Iraq--Tehran and Baghdad generally enjoy a 
positive relationship and there is no evidence that the Iranians are 
seeking to topple Maliki's Government.
    The flow of foreign terrorists into Iraq and the number of 
associated suicide attacks have declined, due in large part to 
increased security measures and disruptions to the AQI network. At the 
same time, the nations where foreign fighters originate or transit have 
increased their counterterrorism efforts, especially targeting foreign 
fighter transport networks.
Afghanistan and Pakistan
    The security situation in Afghanistan continued to worsen in 2008, 
driven by an increasingly proficient insurgency, government inability 
to deliver basic services to portions of the country and insurgent 
access to safe havens in western Pakistan. Through its use of violence 
and intimidation, the Taliban-led insurgency in Afghanistan continued 
to undermine confidence in the government's ability to provide security 
and justice. While the insurgency remains concentrated in the Pashtun-
dominated south and east, it continued to expand over the past year to 
some western areas that lack effective security and government 
presence. As Afghanistan prepares for presidential elections in 2009, 
these factors will contribute to a more challenging environment than in 
2008. Across the border, Pakistan also faces simultaneous economic, 
political, and security challenges. The government faces an expanded 
militancy, which finds sanctuary in the Federally Administered Tribal 
Areas (FATA), and an economy beset by falling foreign exchange 
reserves, a depreciating currency, and high inflation. Despite an 
international economic aid package, the economy will continue to 
struggle in 2009.
    Although the Taliban have not demonstrated an ability to conduct 
sustained conventional operations, it has increased attacks every year 
since 2002. Enemy-initiated violence in 2008 grew by 55 percent over 
levels in 2007. Statistics also show a 21 percent increase in suicide 
bombings, a 106 percent increase in the use of IEDs, and a 33 percent 
increase in small arms attacks. Some of these trends reflect the 
International Security Assistance Force's (ISAF) increased activities 
in expanded operational areas.
    Insurgents in Afghanistan have expanded their use of tactics and 
techniques, such as kidnappings and suicide attacks, demonstrating the 
adaptive nature of the threat. Despite pledges by some local Afghan 
tribes to restrict border transit, insurgents continue to cross the 
porous Afghan-Pakistani border to safe havens in western Pakistan. 
Along Afghanistan's eastern border, Iran has sought to expand its 
influence in Afghanistan. Iran advances its goals through legitimate 
business and humanitarian efforts along with weapon shipments that 
include EFPs, rocket propelled grenades, mortars, rockets, small arms 
ammunition, and explosives.
    While the Taliban lost several key commanders in 2008, steady 
access to local Pashtun and foreign fighters has allowed them to 
sustain operations. Al Qaeda's presence in Afghanistan has increased to 
levels unseen since 2001-2002. Al Qaeda collaborates closely with the 
Taliban and other insurgent elements and supports the insurgency with 
personnel, training and resources, particularly in Afghanistan's south 
and east. Taliban and al Qaeda use of information operations have 
played to both domestic and international audiences, raising the 
profile of the insurgency and encouraging additional financial and 
personnel support.
    Afghanistan's army and police forces continue to slowly increase in 
size and effectiveness, but this growth has not kept pace with the 
Taliban's ability to exploit a lack of security presence. The Afghan 
National Army (ANA) has grown from 49,000 to approximately 80,000 over 
the last year, fielding 6 new commando battalions which are 
specifically trained to handle counterinsurgency operations. Half of 
Afghanistan's combat arms units can lead combat operations, albeit with 
coalition support. The Afghan people generally view the army as one of 
the most trusted Afghan institutions. In contrast, Afghan National 
Police (ANP) forces still require considerable training and coalition 
support to fulfill their mission. The ANP has reportedly grown from 
75,000 to approximately 80,000 over the last year. The Afghan 
Government has subsequently initiated a program to improve police 
performance. As of January, police from 52 of the most violent 
districts in Afghanistan have participated in training. Despite 
measured progress, the government continues to struggle against 
violence, corruption, and narcotics trade.
    Over the next year, the Afghan Government will remain vulnerable to 
insurgent violence, the narcotics trade, foreign influences and 
disruptive political maneuvering ahead of the 2009 Afghan presidential 
election. Without significant improvements in the government's ability 
to deliver basic services and provide increased security, Afghan 
popular discontent will persist and could worsen especially in areas 
where corruption persists, select Pashtun tribes remain disenfranchised 
and the economy does not provide basic employment opportunities.
    In Pakistan, the FATA continues to provide vital sanctuary to al 
Qaeda, the Afghan Taliban, and a number of foreign and Pakistan-based 
extremist groups. Al Qaeda exploits the permissive operating 
environment to support the Afghan insurgency while also planning 
attacks against the U.S. and western interests in Pakistan and 
worldwide. Together with the Afghan Taliban and other extremist groups, 
al Qaeda uses this sanctuary to train and recruit operatives, plan and 
prepare regional and transnational attacks, disseminate propaganda and 
obtain equipment and supplies. All these groups consider U.S. and 
western interests, as well as Pakistan's army and other Pakistani 
Government interests as legitimate targets, as demonstrated by the 
attacks against the Danish Embassy and Marriott Hotel in Islamabad.
    Pakistan's military has expanded paramilitary forces and deployed 
additional troops to the area in an effort to contain the threat. 
Pakistani military operations in Bajaur Agency have been met with 
fierce resistance by militants. While militants previously have been 
unable to sustain attacks in the face of a military response, militants 
in Bajaur maintain extensive networks and reinforcements, helping them 
remain entrenched. In the Swat Valley, a ``settled'' district of the 
Northwest Frontier Province, the government recently agreed to militant 
demands to impose Shari'a law in the district, a move that could 
embolden militant organizations in other parts of the country.
    Pakistani leaders stress the importance of national sovereignty and 
condemn cross-border military actions from Afghanistan. Nevertheless, 
while Pakistan has allowed limited U.S. assistance in counterinsurgency 
training, it is much more receptive to increased intelligence sharing, 
technical cooperation, and equipment and armaments to improve its 
counterterrorism and counterinsurgency capabilities. Although U.S. 
efforts to address Pakistani counterinsurgency deficiencies are 
underway, it will take years before meaningful capabilities are likely 
to be developed.
    While some Pakistani senior leaders have publicly acknowledged that 
extremism has replaced India as Pakistan's preeminent national security 
threat, India remains a high-priority, long-term concern. On matters of 
external defense, Pakistan seeks stability and a balance of power 
deterrent across the region through continued improvements to its 
nuclear and conventional forces, although the economic decline will 
likely slow progress in these areas.
    Pakistan continues to develop its nuclear infrastructure, expand 
nuclear weapon stockpiles and seek more advanced warheads and delivery 
systems. Pakistan has taken important steps to safeguard its nuclear 
weapons, though vulnerabilities exist.
    Strategic rivalry with India continues to drive Pakistan's 
development of an expanding array of delivery systems. Islamabad is 
developing cruise missiles such as the Babur for ground-launch and the 
Ra'ad for air-launch. Pakistan may pursue other launch platforms and 
missions for these missiles.
    Meanwhile, Pakistan continues to develop the Abdali short-range and 
the Shaheen II medium-range ballistic missiles. Significant progress 
was made last year in the Shaheen II's development and when deployed it 
would become Pakistan's longest ranged ballistic missile, capable of 
reaching targets out to 2,000 kilometers. These two missiles will join 
a missile inventory that already includes nuclear- and conventionally-
armed short- and medium-range ballistic missiles.
Transnational Terrorist Threat
    Al Qaeda is committed to imposing its own interpretation of Islamic 
rule upon the Muslim world and is the most significant terrorist threat 
to U.S. interests worldwide.
    Al Qaeda retains the operational capability to plan, support, and 
direct transnational attacks despite the deaths of multiple senior 
level operatives. The operating environment in the FATA--along with 
supportive indigenous elements in Pakistan--not only allows al Qaeda to 
support the Afghan insurgency, conduct attacks in Pakistan, and prepare 
transnational attacks against the west, it also provides the time and 
space needed to train and develop the next generation of al Qaeda 
leadership.
    Al Qaeda continues to recruit and train operatives who can travel 
easily, without drawing scrutiny from security services. In addition to 
being a target in its own right, Europe could be used as a platform 
from which attacks against the United States could be initiated.
    Al Qaeda continues efforts to acquire chemical, biological, 
radiological, or nuclear (CBRN) materials and would not hesitate to use 
such weapons if the group develops sufficient capabilities. CBRN-
related information is widely available on the internet and, in many 
cases, small scale or crude agents are easy to construct. Al Qaeda and 
its associates are most likely to use low-level CBRN agents such as 
ricin, botulinum toxin or toxic industrial chemicals such as cyanide 
and chlorine.
    In 2008, Osama bin Ladin issued 4 statements and al-Zawahiri issued 
10. Each has issued one statement thus far in 2009. The continued 
release of statements by the group's leaders and senior operatives who 
have not previously appeared in propaganda, is an attempt to convey 
health, a robust leadership core, and influence over the movement. The 
wide array of speakers is likely meant to signal that al Qaeda's 
viability transcends bin Ladin and al-Zawahiri. The messages are 
designed to encourage donors, enlist recruits, guide the movement, and 
drive a wedge between the United States and its allies.
    Al Qaeda increasingly lost operatives, including senior planners 
and trainers, to counterterrorism operations in Pakistan. Mid-level 
operatives rise to advance plans and operations; however, sustained 
counterterrorism operations strain the group's ability to recuperate 
from leadership losses, degrade transnational attack capabilities, and 
disrupt regional attack planning. Nevertheless, capable al Qaeda 
operatives remain.
    Al Qaeda continued to further relationships with compatible 
regional terrorist groups to extend the organization's financial and 
operational reach. Al Qaeda uses such mergers to foster public 
perceptions of its worldwide influence, pursue its transnational agenda 
and to strike U.S. and western interests in new areas. As these mergers 
multiply, the threat may increase as new franchises adopt al Qaeda's 
targeting priorities, against U.S. and western interests.
    Al Qaeda in the Lands of the Islamic Maghreb (AQIM) continues to 
expand its operational activities outside Algeria with several attacks 
against western interests in both Mauritania and Tunisia. Despite 
increased counterterrorism efforts by North African governments, AQIM 
continues to improve its ability to conduct sophisticated large-scale 
attacks in North Africa and the Sahel.
    East Africa remains an environment conducive to large, casualty-
producing attacks such as the 1998 embassy bombings. Despite regional 
counterterrorism operations since late 2006, senior East Africa-based 
al Qaeda operatives remain at large and likely continue attack planning 
against U.S. and western interests in the region.
    Recent propaganda from both al Qaeda and the Somalia-based 
terrorist group al-Shabaab highlighting their shared ideology suggests 
a formal merger announcement is forthcoming. Al-Shabaab has conducted 
near-daily attacks against regional government and security forces in 
Somalia, including suicide vehicle born IED attacks in Puntland and 
Somaliland. Cooperation among al Qaeda inspired extremists throughout 
the region strengthens al Qaeda's foothold in Africa.
    In South Asia, the November 2008 attack in Mumbai highlighted the 
increasing ability of terrorist organization Lashkar-e-Tayyiba to 
direct and execute terrorist attacks inside India. Besides raising 
India-Pakistan tensions, the targeting of foreign nationals and Jewish 
interests, as well as the coordination and complexity of the operation, 
marked a departure from previous attacks and raised concerns in the 
region.
    In Southeast Asia, the Jemaah Islamiyah (JI) and Abu Sayyaf Group 
(ASG) are the terrorist groups that pose the greatest threat to U.S. 
interests. The JI, which is based mainly in Indonesia, works regionally 
with other Islamic terrorist and separatist groups, including with the 
ASG, based in the Philippines, to achieve its goal of establishing a 
regional caliphate. Two JI operatives were arrested in Malaysia, but 
other senior operatives remain at large. While JI has not carried out a 
large-scale attack in Indonesia since the 2005 attack in Bali, raids 
and arrests by Indonesian authorities in mid-2008 revealed caches of 
bombs and explosives--clear signs that the group maintains the interest 
and capability to conduct attacks.
    A comprehensive peace accord remains elusive in the Philippines, 
where the Moro Islamic Liberation Front (MILF) and Philippine 
government continue to discuss conditions for resuming peace talks. The 
breakdown in negotiations spurred MILF bombings in Mindanao; violence 
likely will continue until both sides can agree on terms to resume 
negotiations. While Philippine counterterrorism efforts have disrupted 
some attacks, ASG and other terrorists retain the capability to conduct 
operations.
    Following the February 2008 killing of Hizballah terrorist leader 
Imad Mughniyah, Hizballah publicly threatened retaliation. Reprisals 
against those Hizballah believe responsible remains likely.
               regional issues and military developments
Iran
    Iran's military is designed principally to defend against external 
threats from more modern adversaries and threats posed by internal 
opponents. However, Iran could conduct limited offensive operations 
with its ballistic missile and naval forces.
    Diplomacy, economic leverage and active sponsorship of terrorist 
and paramilitary groups are the tools Iran uses to drive its aggressive 
foreign policy. In particular, terrorism is used to pressure or 
intimidate other countries, and, more broadly, to serve as a strategic 
deterrent. Iran assesses that its use of terrorism provides benefits 
with few costs and risks. Iran continues to provide lethal aid to Iraqi 
Shi'a militants and Afghan insurgents while simultaneously providing 
weapons, training and money to Lebanese Hizballah, its strategic 
partner.
    Within the country's borders, modernization of Iran's conventional 
military inventory has traditionally favored naval and air defense 
forces over ground and air units, while all Services have worked to 
improve their doctrine and tactics. Ongoing naval modernization is 
focused on equipment such as fast missile patrol boats as well as anti-
ship cruise missiles and naval mines. Iranian broadcasts claim that 
Iranian unmanned aerial vehicles (UAVs) have monitored U.S. aircraft 
carrier operations in the Persian Gulf. All naval elements have also 
developed and practiced methods intended to counter U.S. technical 
superiority.
    Iran continues to invest heavily in advanced air defenses, 
reversing decades of neglect in this arena. Iran has deployed the 
advanced SA-15 tactical surface-to-air missile (SAM) systems and 
continues to express interest in acquiring the long-range SA-20. Iran's 
procurement of modern SAMs with automated command, control and 
communications systems will improve its ability to protect senior 
leadership and key nuclear and industrial facilities.
    While not investing in major new ground systems since at least 
early 2005, Iran is building an asymmetric capability to counter more 
advanced, adversary ground forces, including enhancements to its Basij 
volunteer forces, which would play a large role in an asymmetric fight. 
IRGC ground forces are reorganizing to improve coordination in 
preparing for and countering internal and external threats. Regular 
ground forces may be included in that consolidation, and all ground 
forces continue training to better defend against potential invaders.
    Regular Iranian ballistic missile training continues throughout the 
country. Iran continues to develop and acquire ballistic missiles that 
can range Israel and central Europe, including Iranian claims of an 
extended-range variant of the Shahab-3 and a 2,000-km medium range 
ballistic missile (MRBM), the Ashura. Iran's February 2, 2009, launch 
of the Safir Space Launch Vehicle shows progress in some technologies 
relevant to intercontinental ballistic missiles (ICBMs). Beyond the 
steady growth in its missile and rocket inventories, Iran has boosted 
the lethality and effectiveness of existing systems with accuracy 
improvements and new submunition payloads.
    With the rest of the IC, we judge that Iran halted its nuclear 
weaponization and covert uranium conversion and enrichment-related work 
in 2003, but we assess that Tehran at a minimum is keeping open the 
option to develop nuclear weapons. Iran continues to develop its overt 
enrichment program in defiance of U.N. Security Council resolutions. 
Iran is producing uranium enrichment feed material at Esfahan, claims 
to be enriching uranium in 5,000 centrifuges at Natanz and is working 
on more advanced centrifuges. It also continues to build a heavy water 
reactor at Arak which will be capable of producing plutonium that could 
be processed for use in a weapon if required facilities are developed.
    DIA judges Iran's biological warfare (BW) efforts may have evolved 
beyond agent research and development, and we believe Iran likely has 
the capability to produce small quantities of BW agents but may only 
have a limited ability to weaponize them. Iran continues to engage in 
dual-use research and seek biotechnical materials, equipment and 
expertise, which have legitimate uses but could also enable ongoing BW 
efforts.
    We assess that Iran maintains dual-use facilities intended to 
produce chemical warfare agents in times of need and conducts research 
that could have offensive applications.
Syria
    Syria is trying to balance a complex mix of objectives throughout 
the region, particularly in Lebanon and Iraq, to both pursue its 
interests and protect itself in the volatile regional environment. 
Syria likely sees its foreign policies as successful, especially in 
Lebanon, as it has engaged with a steady stream of world leaders since 
it helped end Lebanon's political crisis in May.
    Syria seeks improved relations with the Iraqi Government, in 
particular lucrative renewed economic cooperation, while at the same 
time harboring Iraqis with ties to insurgents and other oppositionists 
in Iraq.
    Syria in recent weeks took steps to normalize relations with 
Lebanon, and in mid-October formally established diplomatic ties for 
the first time ever and took initial steps toward opening an embassy in 
Beirut. Yet Syria still seeks to strengthen its influence in Lebanon 
through its continuing support to Hizballah and other pro-Syrian 
allies. We judge that Syria will seek to expand its influence over the 
Lebanese government, especially in the upcoming 2009 elections, so that 
it can secure a role for itself in any wider Middle East diplomatic 
efforts and continue to stymie any legislation that threatens its 
interests, such as the United Nations' investigation into former 
Lebanese Prime Minister Hariri's assassination.
    Internally, the regime is trying to counter Islamic extremists that 
pose a threat to Syria, as highlighted by a car bombing in Damascus in 
September that killed 17 people. Partly in response to western pressure 
and in an effort to curb extremist threats to the regime, some foreign 
terrorist movements from Syria into Iraq are blocked. Nonetheless, 
Syria remains the primary gateway for Iraq-bound foreign fighters and 
numerous terrorist groups operate from Syrian territory.
    With regard to its external defense, Syria's military remains in a 
defensive posture and inferior to Israel's forces, but it is upgrading 
its missile, rocket, anti-tank, aircraft and air defense inventories. 
We judge it is likely giving anti-tank guided missiles to Hizballah as 
Syria remains committed to providing high levels of support to the 
organization. Syria increasingly perceives Hizballah as an extension of 
its own defense capabilities against Israel in potential future 
conflicts.
    Significant air defense related deliveries include at least two SA-
22 self-propelled short-range gun and missile air defense systems from 
Russia in June 2008, out of a contract for several dozen. Recent Syrian 
contracts with Russia for future delivery include new MiG-31 and MiG-
29M/M2 fighter aircraft, and the SA-X-17 medium-range SAM system.
    Syria's chemical warfare program is well established with a 
stockpile of nerve agent, which it can deliver by aircraft or ballistic 
missiles. During the past several years, Syria has continued to seek 
chemical warfare-related precursors and expertise from foreign sources. 
Syria has the facilities and the expertise to domestically produce, 
store and deliver chemical agents. Syria will continue to improve its 
chemical warfare capability for the foreseeable future to counter 
regional adversaries.
    Based on the duration of Syria's longstanding BW program, we judge 
some elements of the program may have advanced beyond the research and 
development stage and may be capable of limited agent production. Syria 
is not known to have successfully weaponized biological agents in an 
effective delivery system, but it possesses a number of conventional 
and chemical weapon systems that could easily be modified for 
biological agent delivery.
    Syria's ballistic missile inventory is designed to offset 
shortfalls in the country's conventional forces. It includes older 
Russian built SS-21s as well as SCUD B, SCUD C, and SCUD D missiles. 
Syria continues to flight test ballistic missiles which it views as a 
strategic deterrent against Israel.
Levant
    The Levant remains tense with the potential for renewed conflict. 
Israel, Hizballah and Syria are internalizing lessons learned from the 
summer 2006 conflict in preparation for potential future conflict. 
While none appear to want fighting to resume now, they all view its 
likelihood over the medium term. The period of high tension between 
Israel and Syria during the summer of 2007 has subsided. Nevertheless, 
Israel remains concerned over Syria's military posture. Similarly, 
Syria fears an Israeli attack.
    Senior Israel Defense Force leaders are driving an intense effort 
to fix shortcomings in readiness, training, logistics, and combined 
arms operations identified following the summer 2006 war.
    Iran and Syria jointly continue to support anti-Israel terrorist 
and militant groups in Lebanon and the Palestinian territories. 
However, the alliance between secular Arab Syria and theocratic Persian 
Iran is not a natural one, and may erode if Syria is accommodated 
significantly in any diplomatic agreement with Israel.
    Israel's recent Operation Cast Lead in the Gaza Strip, Hamas' rise 
to power in Gaza, the resultant bifurcation of control of the 
Palestinian territories and the ongoing rivalry between Hamas and Fatah 
complicate Israeli-Palestinian peacemaking efforts. Operation Cast 
Lead, which took place 27 December--18 January, aimed at reducing Hamas 
rocket fire into Israel and weapon smuggling into the Gaza Strip and 
sought to deter future Hamas attacks on Israel. The resulting 
ceasefire, details of which are still being negotiated by Egypt, is 
likely to result in a period of calm over the next year or so but will 
not address the long-term problems of Hamas control of the Gaza Strip. 
Unless a political solution to the intra-Palestinian division and 
Hamas' rejection of peace with Israel is found, another round of 
fighting in the Gaza Strip is likely in the mid-term future. Hamas will 
attempt to use the ceasefire to rebuild and improve its military 
capability while seeking to control reconstruction of the Gaza Strip. 
Increased international cooperation against Hamas and Iranian arms 
smuggling efforts will hamper Hamas' rearmament but will not affect 
Hamas' ability to maintain control in Gaza.
    After 18 months of political stalemate, former Lebanese Armed 
Forces Commander Michel Sleiman became Lebanon's President on May 25, 
2008. Sleiman's election followed the armed mid-May takeover of West 
Beirut by Lebanese Hizballah and the subsequent May 21, 2008, Doha 
agreement which quelled intra-Lebanese political in-fighting and ended 
the political impasse over the election of a new President. Currently 
Lebanese leaders are focused on the upcoming parliamentary elections 
scheduled for June 7, 2009. However, significant destabilizing 
influences remain: the rearming of militias and Syria's effort to 
maintain its influence in Lebanon, as well as the status of Hizballah's 
arms and its role, if any, in a Lebanese national defense strategy.
    Al Qaeda and other Islamist terrorist groups have tried to develop 
support and operate in Lebanon and the Palestinian territories. They 
have, however, encountered obstacles in attaining these goals.
China
    China is strengthening its ability to conduct military operations 
along its periphery on its own terms. It is building and fielding 
sophisticated weapon systems and testing new doctrines that it believes 
will allow it to prevail in regional conflicts and also counter 
traditional U.S. military advantages.
    The People's Liberation Army (PLA) is increasingly building its own 
sophisticated aircraft, surface combatants, submarines and weapon 
systems while still purchasing select systems from overseas. As an 
example, to improve its air defenses China is producing the 4th 
Generation F-10 fighter aircraft along with the PL-12 air-to-air 
missile, yet has continued to import SA-20 surface-to-air missiles 
(SAM) from Russia. China has developed and begun to deploy indigenous 
SAM systems which, together with SAMs imported from Russia, provide a 
modern, layered, ground-based air defense capability to defend 
important assets. China bought a total of 16 SA-20 air defense 
battalions, 8 of which have an increased engagement range from 150 to 
200 km. China is developing a layered maritime capability with medium-
range anti-ship ballistic missiles, submarines, maritime strike 
aircraft and surface combatants armed with increasingly sophisticated 
anti-ship cruise missiles.
    The PLA has achieved moderate success in introducing these new 
weapons. Additional integration probably will accelerate as the PLA 
explores the full potential of new weapons.
    China is looking beyond a potential Taiwan contingency and is 
pursuing capabilities needed to become a major regional power. The navy 
already operates a large surface fleet, an increasingly modern 
submarine fleet, and increasingly appears likely to pursue an aircraft 
carrier development program. The air force is developing an extended-
range, land-attack cruise-missile-capable bomber. However, China must 
still integrate new doctrinal concepts and it also lacks the overseas 
bases needed for extended operations. China will most likely increase 
maritime patrols of disputed oil fields and its Exclusive Economic 
Zone, although not achieve a true regional power projection capability 
in the next decade.
    Moving away from its historical reliance upon mass conscription, 
China is trying to build a more professional military workforce--one 
able to engage successfully in modern warfare. The PLA seeks to 
rejuvenate its officer corps, strengthen military education, reform its 
noncommissioned officer corps, improve military quality of life and 
combat corruption.
    China's deployed missile inventory includes nuclear-armed 
intercontinental, intermediate- and medium-range ballistic missiles, 
conventional medium- and short-range ballistic missiles and cruise 
missiles. China's nuclear force is becoming more survivable with the 
deployment of DF-31 and DF-31A road-mobile ICBMs and the eventual 
deployment of the JL-2 submarine launched ballistic missile. China 
currently has less than 50 ICBMs capable of targeting the United 
States; however the number of ICBM warheads capable of reaching the 
United States could more than double in the next 15 years, especially 
if multiple, independently-targeted reentry vehicles (MIRVs) are 
employed. China has also fielded over 1,000 CSS-6 and CSS-7 
conventional short-range ballistic missiles opposite Taiwan. It also is 
developing more capable medium- and intermediate-range conventional 
missiles able to range U.S. and allied military installations in the 
region.
    China's nuclear weapon stockpile likely will grow over the next 10 
years as new ballistic missiles are activated and older ones are 
upgraded. China likely has produced enough weapon-grade fissile 
material to meet its needs for the immediate future. In addition, China 
likely retains the capability to produce biological and chemical 
weapons.
    China's security strategy emphasizes strategic defense, which 
integrates diplomacy, economics and information operations with 
conventional military forces. However, growing capabilities in 
counterspace, cyber warfare, electronic warfare, and long-range 
precision strike could enable China to achieve strategic surprise
    While Chinese security strategy favors the defense, its operational 
doctrine does emphasize seizing the initiative through offensive 
action, including possible preemptive action. China does not view an 
offensive operational doctrine within the context of a strategic 
defense as contradictory.
    China's total military-related spending for 2008 could be as much 
as $120 to $175 billion. China has made marginal improvements in 
military budget transparency, but the PLA's disclosed budget still does 
not include major categories of expenditures. China's accounting 
opacity is inconsistent with international standards for reporting 
military spending. China also remains reluctant to share details about 
its growing counterspace capabilities.
    China maintains an active presence in the South and East China 
Seas. Chinese operations in the South China Sea, covering areas such as 
the Spratly and Paracel islands, include reconnaissance patrols, 
training and island defense, air defense and service support exercises. 
China also has conducted operations in the East China Sea area, 
including patrols to protect its maritime interests and claimed oil and 
gas resources.
    In late December, China deployed naval combatants to the Gulf of 
Aden to conduct counterpiracy operations. Since December, the navy has 
escorted several Chinese merchant vessels through the Gulf of Aden. 
While the duration of the deployment is expected to last approximately 
3 months, Chinese press reporting indicates that replacement warships 
could be made available to continue operations. This is the first time 
the Chinese Navy has deployed conducting operations outside of East 
Asian waters.
North Korea
    North Korea's main goals are to preserve its current system of 
government while improving its economic situation, albeit at a pace it 
believes will not threaten internal stability. Pyongyang does not view 
its nuclear ambitions, a large Active-Duty Force of about 1.2 million, 
and improved relations with the United States, as mutually exclusive. 
Rather they are the means Pyongyang uses to realize its goals.
    North Korea's large, forward-positioned, but poorly-equipped and 
poorly-trained military is not well-suited to sustain major military 
operations against the south. We believe as a result of its comparative 
limitations, North Korea is emphasizing improvements in its deterrent 
capability and its ability to defend against technologically superior 
forces. The long-range artillery the north has positioned near the 
demilitarized zone is complemented by a substantial mobile ballistic 
missile force with an array of warhead options to include weapons of 
mass destruction that can range U.S. forces and our allies in the 
Republic of Korea and Japan. North Korea relies upon these capabilities 
to ensure its sovereignty and independence and occasionally to remind 
the United States and neighboring countries of its military 
capabilities in order to have its positions and demands taken 
seriously.
    After a failed July 2006 test launch, North Korea has continued 
development of the Taepo Dong 2 which could be used for space launch or 
as an ICBM. North Korea announced in late February that they intend to 
launch a communications satellite, the Kwangmyongsong-2. North Korea 
also continues work on an intermediate range ballistic missile.
    Last year, progress in the Six-Party Talks was sporadic. In June 
North Korea provided its overdue nuclear declaration of plutonium 
activities and publicly demolished the Yongbyon cooling tower, but 
began reversing disablement measures in August in response to its 
continued presence on the U.S. State Sponsors of Terrorism List. 
Although North Korea resumed disablement of its nuclear program 
following its removal from the list in October, should the Six-Party 
Talks break down, the North is likely to respond with resumed 
production of fissile material at Yongbyon while also increasing 
rhetoric intended to encourage a return to dialogue on the North's 
terms. In such a scenario, additional missile or nuclear tests could 
occur.
    North Korea could have stockpiled several nuclear weapons from 
plutonium produced at Yongbyon and it likely sought a uranium 
enrichment capability for nuclear weapons at least in the past. It has 
proliferated nuclear weapons-related technology abroad. North Korea may 
be able to successfully mate a nuclear warhead to a ballistic missile.
    North Korea has had a longstanding chemical warfare program and we 
believe North Korea's chemical warfare capabilities probably includes 
the ability to produce bulk quantities of nerve, blister, choking and 
blood agents. We believe Pyongyang possesses a sizeable stockpile of 
agents.
    North Korea is believed to have a longstanding BW program that 
could support the production of BW agents. North Korea is party to the 
Biological and Toxin Weapons Convention, but has submitted only one 
confidence-building measure declaration and has admitted to no 
offensive BW activities.
    Kim Jong Il reportedly suffered a stroke in August 2008 but appears 
to have largely recovered, making frequent media appearences that are 
likely meant to show international and domestic audiences that he 
remains firmly in control. Leadership succession, should it occur due 
to Kim's sudden death, is likely to progress smoothly in the near term 
but, because the regime is structured around one-man rule, becomes 
problematic in the longer term as key individuals and factions compete 
for control.
Russia
    Russia continues on the more assertive path set by former President 
Putin, who passed the presidency to Dmitriy Medvedev in May but 
continues to wield significant authority as prime minister. Russia is 
trying to re-establish a degree of military power that it believes is 
commensurate with its economic strength and general political 
confidence--although the current global economic downturn may limit 
Moscow's ability to achieve its goals. Perceived Western encroachment 
into its claimed areas of interest and Islamic or insurgent threats 
along its periphery are driving Russia's current military activities 
and modernization efforts.
    Russia's widely publicized strategic missile launches and increased 
out-of-area activity are meant to signal Moscow's continued global 
reach and relevance to domestic and international audiences. Recent 
examples are the deployment of two Tu-160/Blackjack strategic bombers 
to Venezuela in September, the Pyotr Velikiy cruiser strike group's 
deployment to the Mediterranean during Russia's major exercise 
``Stability-2008'' and to the Caribbean in November.
    Russia opposes closer integration of former Soviet countries with 
the West and wants to continue its presence in the so-called ``frozen 
conflict'' areas. Russian peacekeeping forces in Moldova continue to be 
a major source of friction. In August, the Russian military defeated 
Georgian forces in operations around Abkhazia and South Ossetia and 
remain stationed in those separatist areas. During the Georgia 
conflict, Russia demonstrated the ability to quickly mobilize and 
respond with large numbers of ground and air forces. However, Russia 
also experienced several significant weaknesses in its execution such 
as a lack of air and ground coordination, the lack of precision weapons 
and navigation aids, the inability to suppress Georgian air defense 
forces, and a lack of UAVs.
    Russian conventional force capabilities continue to grow, albeit at 
a measured pace. Readiness improvements are seen primarily among the 
conventional Permanently Ready Forces (PRF), such as those used in 
Georgia. Russia has increased training and readiness levels in these 
units above the lowest points of the mid-1990s. However, Russia is 
finding it hard to improve training quality and modernize equipment 
while also increasing recruitment and retention rates for the 
volunteers needed in the PRF and the noncommissioned officer cadre.
    In September 2008, Moscow announced a comprehensive set of reforms 
for its Armed Forces, which, if carried out, would be among the most 
extensive and far-reaching of any instituted since World War II. While 
publicly connected with lessons learned from the August conflict with 
Georgia, these reforms also reflect a much broader and long-term set of 
evolving Russian threat perceptions and demographic and financial 
considerations. Under these plans, by 2020 the Russian Armed Forces 
will be reduced to 1,000,000 personnel, the number of officers slashed 
from 355,000 to 150,000, military education facilities consolidated, 
size of the general staff reduced, most if not all cadre units 
disbanded and remaining units brought up to permanently-ready status, 
and those permanently ready units reorganized, streamlined and 
modernized. While Russia has begun implementing some of these reforms, 
their ultimate success is problematic. Russia's worsening economy, 
manning shortfalls, resource constraints, and potential re-think of the 
reforms' impact on military capabilities will likely slow or even stall 
some elements.
    As part of the announced reforms, Russia plans to speed up the 
modernization of its active forces. Emphasis reportedly will be given 
to precision munitions, intelligence assets, submarines, and elements 
of an aerospace defense system. Russia has made a major commitment of 
almost 5 trillion rubles ($200 billion) to its 2007-2015 State 
Armaments Program to develop and build new conventional and nuclear 
weapon systems, with priority on maintenance and modernization of the 
latter. Even after recently announced cuts to its proposed 2009 defense 
budget, Russia plans to allocate nearly 1.1 trillion rubles ($45 
billion) for the military in 2009. Adjusted for inflation, this 
represents a 10 percent increase from 2008. However, a significant 
percentage of this funding will likely be lost to the defense budget 
due to corruption, mismanagement, and bureaucratic inefficiencies.
    These reforms, if largely carried out, would improve Russian 
capability to respond to limited, regional threats, but reduce their 
capability for large-scale conventional war. Making all residual forces 
permanently-ready and establishing the brigade as the basic ground unit 
would facilitate rapid mobilization and deployment of these relatively 
compact units to threatened areas. The decision to disband division and 
army-level formations also may reflect a belief that any conflict that 
PRF cannot handle would by necessity, escalate to nuclear. Russian 
operational plans do provide for the first use of nuclear weapons.
    Development and production of advanced strategic weapons continues, 
particularly on the Bulava SS-NX-32 submarine launched ballistic 
missile, still undergoing testing despite several publicized failures, 
and the SS-27 ICBM. Russia deployed six SS-27s in 2008, in addition to 
the six already placed on alert in December 2006 and 2007. Russian 
Strategic Rocket Forces also deployed two more SS-27s in silos, 
increasing the total to 50. Russian media reports say Russia flight-
tested its developmental RS-24, a MIRVed version of the SS-27, twice in 
2007 and once in 2008, and expects to deploy it in December 2009 after 
more testing. Russia claims the MIRVed SS-27 can penetrate any missile 
defense.
    The Strategic Arms Reduction Treaty (START) is scheduled to expire 
on December 5, 2009. Russian officials are eager to continue 
discussions to replace the treaty with a new legally-binding agreement 
in order to maintain strategic stability. Russia retains a relatively 
large stockpile of non-strategic nuclear warheads. Nuclear material 
diversion remains a concern despite increased security measures. Some 
nuclear facilities and research reactors remain vulnerable to internal 
theft, sabotage or a well-executed terrorist attack.
    Russia continues research and development efforts that could 
support its offensive chemical and BW programs.
    Russia signed more than $10 billion in arms sales agreements in 
2007, marking a second consecutive year of high sales. Russia recently 
signed large contracts with Algeria, India, Iran, Syria, and Venezuela, 
while new agreements with China have declined. Pending sales include 
advanced weapons such as multi-role fighter aircraft, transport 
aircraft, aerial refueling tankers, jet trainers, transport 
helicopters, armored infantry fighting vehicles, main battle tanks, and 
advanced surface-to-air missile systems.
    Russia will continue to produce advanced fighter aircraft for 
export to countries such as India, Malaysia, and Indonesia while also 
seeking additional warplane sales to South America and the Middle East. 
Moscow also continues to aggressively market its air defense systems, 
short-range ballistic missile systems and related automated command and 
control systems to Syria, Iran, Venezuela, China, and other countries. 
Defense industry officials, however, have expressed concern that the 
effects of the global economic crisis on many of Russia's arms 
customers may result in declining exports. In the coming year at least, 
Russia's defense industries will become more reliant on domestic 
orders.
Turkey-Iraq
    The Turkish Government has conducted numerous limited military 
operations over the last several months, primarily involving air and 
artillery strikes, against Kurdish terrorists in northern Iraq in an 
effort to disrupt their activities and degrade their capabilities. The 
KGK continues to strike targets throughout southeast Turkey to include 
a October 3, 2008, attack on a military outpost that killed 17 Turkish 
soldiers. The 3 October attack generated intense media and public 
pressure for additional military actions against KGK bases in northern 
Iraq, which could lead to a small to medium-scale ground operation this 
winter or early spring. A large-scale Turkish operation would run the 
risk of upsetting stability in northern Iraq.
Balkans
    In Kosovo, the security situation remains unsettled. February 17 
marked the first anniversary of Kosovo's unilateral declaration of 
independence. Over the past year a constitution has been put in place 
and in December the European Union's Rule of Law Mission (EULEX) 
deployed to Kosovo. While modest progress is being made, EULEX will 
continue to face challenges, especially in asserting authority in the 
Serb areas of northern Kosovo. Pristina will continue to look to the 
United States and leading European countries for reassurance and 
support, to include calls for maintaining a robust international 
military and police presence. In Bosnia, a political crisis is brewing, 
as Republika Srpska Prime Minister Milorad Dodik is challenging the 
country's state-central authorities, seeking greater autonomy and 
possibly independence. This represents the most significant crisis 
since the signing of the Dayton Accords of 1995. Dodik's challenge to 
the central state and the international community could spark violent 
incidents, but the prospects for widespread violence in Bosnia remain 
low.
Africa
    Beyond the threat of terrorism, the United States faces no major 
military threat in Africa, although there are serious challenges to our 
interests.
    Nigeria's oil-rich Niger Delta will continue to be plagued by 
violence as the root causes of the crisis--high levels of poverty, 
ethnic tensions, and rampant corruption--persist. Militant attacks are 
likely to expand beyond the immediate Delta region to affect 
neighboring Nigerian states as well as offshore hydrocarbon facilities.
    In Somalia, the Transitional Federal Government will likely 
continue to weaken, resulting in a further erosion of order. Largely 
ineffective, the Somali government is incapable of addressing the 
social and economic causes contributing to the ongoing piracy threat 
off the Somali coast. Unaddressed, piracy threatens to disrupt the flow 
of humanitarian supplies as well as commercial traffic transiting off 
the Somali coast. Warships from over a dozen nations currently conduct 
anti-pirate patrols in regional waters and have apprehended over 40 
suspected pirates this year; most have since been transferred to Somali 
and Yemeni authorities for prosecution. Despite this, attacks continue, 
but at rates lower than the peak of pirate activity in late 2008.
    In Sudan, the slow deployment of peacekeeping forces and stalled 
negotiations will continue to threaten the already desperate 
humanitarian situation in Darfur. Meanwhile, difficulties surrounding 
the implementation of the 2005 Comprehensive Peace Agreement will 
remain a source of tension between north and south Sudan and could lead 
to incidents of localized confrontation between the former civil war 
rivals.
Latin America
    While the United States presently faces no major conventional 
military threats across Latin America, a number of concerns endure.
    Venezuelan President Hugo Chavez, energized by his win in the 
February 15 national referendum that lifted presidential term limits, 
vowed to continue efforts to advance his agenda and confront U.S. 
regional influence. He has announced he will seek another 6-year term 
in 2012. The significant drop in world oil prices will delay Venezuelan 
plans to procure submarines, transport aircraft, and a strategic air 
defense system. Nonetheless, Venezuela has already purchased advanced 
fighters, attack helicopters, and assault rifles.
    Colombian counterinsurgency operations have degraded Revolutionary 
Armed Forces of Colombia (FARC) field units and operations, which has 
led to a significant increase in desertions. The FARC, and other drug 
trafficking organizations, have, however, maintained their dominant 
position in the global cocaine trade. Since 2002, President Uribe's 
national security strategy has dramatically bolstered the security 
forces' capabilities to counter operations of illegal armed groups 
nationwide. This security force buildup includes adoption and 
implementation of a joint command doctrine, which has allowed the 
police and military to decrease the FARC's manpower and capabilities 
significantly. Moreover, over the past 6 years, government security 
forces have removed numerous mid- and senior-level FARC leaders leaving 
the insurgent organization demoralized and in its most precarious state 
in the past 10 years.
    Bolivian President Morales continues to consolidate power with 
Venezuelan and Cuban assistance. He also won the January 25 vote on a 
draft constitution. However, the fact that the constitution was 
approved by a smaller margin than expected signaled that his popularity 
may have dropped which has emboldened the political opposition. The 
opposition continues to resist dialogue on key issues such as greater 
autonomy for some provinces as well as the sharing of hydro-carbon 
profits, and their efforts will challenge and perhaps destabilize his 
government.
    The broad support that Cuban President Raul Castro receives from 
the military, security services and the Communist Party will likely 
enable him to maintain stability, security, and his own position. The 
Cuban military's support for Raul Castro shows no signs of reversing. 
Recent cabinet changes tend to support this assessment. At present 
there are no indications that a mass migration is imminent.
    Growing strains on Mexican drug cartels from the Calderon 
government's successes is increasing the threat against civilian, 
military and law enforcement officials and, perhaps, against U.S. 
counternarcotics personnel in country. Despite recent successes against 
the Mexican drug cartels, drug-related violence continues to rise with 
2008's drug-related murders almost double the 2007 figures. 
Approximately 45,000 Mexican military personnel have been deployed 
nationwide as the lead counterdrug force while the government 
implements law enforcement and judicial reforms.
                    transnational issues of concern
Weapons of Mass Destruction and Delivery Systems
    The proliferation and potential use of weapons of mass destruction 
(WMD) and ballistic missiles against U.S. forces, the American people, 
our allies and interests remains a grave, enduring, and evolving 
threat.
    Qualitative and quantitative improvements in state nuclear 
programs--often linked with delivery system enhancements, further 
enhances the potential risk. Moreover, concerns remain regarding the 
safety and security of nuclear weapons and materials worldwide, and the 
potential diversion of fissile and radiological materials.
    As technology progresses and becomes increasingly available in a 
globalized world environment, the threat posed by chemical and 
biological weapons could become more diverse and technically 
sophisticated.
    Terrorist organizations will continue to try to acquire and employ 
chemical, biological, radiological, or nuclear materials in attacks 
while nation-states expand their WMD capabilities and the 
survivability, accuracy, and range of the associated delivery systems.
    Since mid-2006, numerous U.N. Security Council Resolutions have 
authorized sanctions against Iranian and North Korean nuclear and 
ballistic missile programs. While these actions have impeded some 
acquisition and support efforts, they have not stopped the programs 
themselves. Further frustrating sanction efforts is the inconsistent 
interpretation and enforcement of the resolutions by several key 
nations.
    While some countries such as Russia and China continue to market 
fully assembled Missile Technology Control Regime (MTCR)-compliant 
short range ballistic missiles, entities in China and North Korea, 
motivated by economic and strategic interests, continue to supply 
controlled technologies, components and raw materials in support of WMD 
and missile programs, especially across the Middle East and South Asia.
    While some of these transfers are proscribed under various WMD-
related control regimes, many others are dual-use with legitimate 
industrial applications. Examples include multi-axis computer 
numerically controlled machine tools that have applications in nuclear 
and missile programs, but are also commonly used throughout legitimate 
industry. Specialty metals such as 7000-series aluminum used in nuclear 
and missile programs are also commonly used in aircraft and other 
industries. Some chemicals used in fertilizer production are also 
controlled chemical weapon precursors and much of the glass-lined 
equipment used in pharmaceutical production is controlled due to its 
applicability to chemical and biological weapons programs. These last 
examples potentially could allow a state to embed an offensive chemical 
or biological weapons mobilization capability within its existing 
commercial infrastructure.
    Since 1999, Russia has adopted stronger export control laws and 
amended its criminal code to permit stricter punishment for illegal 
WMD-related exports. Similarly, China has also moved to enact export 
control laws to restrict proliferation of WMD-related materials. 
However, both have been inconsistent in applying these regulations, 
particularly regarding the sale of dual-use technology.
    Nongovernmental entities and individual entrepreneurs also remain a 
great concern. These organizations and the proliferation networks they 
tie into are often able to sidestep or outpace international detection 
and export control regimes. By regularly changing the names of the 
front companies they use, exploiting locations in countries with more 
permissive environments or lax enforcement and avoiding international 
financial institutions, these organizations are able to continue 
supplying WMD and ballistic missile-related and technology to countries 
of concern.
    Most state programs now emphasize self-sufficiency to reduce 
reliance upon external suppliers, which also limits their vulnerability 
to detection and interdiction. For example, Iranian weapon makers now 
advertise their ability to manufacture guidance and control components, 
such as dynamically tuned gyros. Instead of importing ballistic missile 
systems, Tehran now produces the SCUD B and C, Shahab-3 and Fateh-110 
even though it still depends on outside sources for many of the related 
dual-use raw materials and components.
    While these indigenous capabilities are not always a good 
substitute for foreign imports, particularly for more advanced 
technologies, they prove adequate in many cases. Consequently, as some 
countries forego imports in favor of indigenous WMD-related production, 
they position themselves anew as potential secondary proliferators.
    Even though most advanced nations cooperate against WMD 
proliferation, a number of trends beyond direct government control 
still fuel the threat. They include commercial scientific advances, the 
availability of relevant dual-use studies and information, scientists' 
enthusiasm for sharing their research and the availability of dual-use 
training and education.
    Overall, the threat posed by ballistic missile delivery systems is 
likely to increase while growing more complex over the next decade. 
Current trends indicate that adversary ballistic missile systems, with 
advanced liquid- or solid-propellant propulsion systems, are becoming 
more flexible, mobile, survivable, reliable and accurate and possess 
greater range. Pre-launch survivability is also likely to increase as 
potential adversaries strengthen their denial and deception measures 
and increasingly base their missiles on mobile sea- and land-based 
platforms. Adversary nations are increasingly adopting technical and 
operational countermeasures to defeat missile defenses. For example, 
China, Iran, and North Korea exercise near simultaneous salvo firings 
from multiple locations to defeat these defenses.
Computer Network Threats
    The U.S. information infrastructure, which includes 
telecommunications, computer networks and systems, and the data that 
resides on them, is critical to most aspects of modern life in the 
United States, Russia, and China posses the most experienced, well-
resourced and capable computer network operations (CNO) capabilities 
that could threaten the United States, but they are not the only 
foreign entities that do. Other nations and non-state terrorist and 
criminal groups are also developing and refining their abilities to 
exploit and attack computer networks in support of their military, 
intelligence or criminal goals.
    The scope and sophistication of malicious CNO targeting against 
U.S. networks has steadily increased over the last 5 years. This is of 
particular concern because of the pronounced military advantages that 
the United States has traditionally derived from information networks. 
Potential adversaries that cannot compete directly against the United 
States may view CNO as a preferred asymmetric strategy to exploit our 
weakness while minimizing or degrading our traditional strengths. In 
particular, overseas production of information technology components 
provides opportunities for potentially hostile actors to access 
targeted systems by exploiting the supply chain at its origin.
    Russia and China have the technical, educational and operational 
ability to conduct CNO against targeted networks. Russia remains the 
most capable cyber-threat to the United States. Several high-ranking 
Russian military officials have promoted CNO's potential against future 
adversaries. Since 2005 China has been incorporating offensive CNO into 
their military exercises, primarily in first strikes against enemy 
networks.
    Recent hacking activities emanating from China underscore concerns 
about potential hostile CNO intelligence collection activities. Several 
foreign governments, to include Germany, India, the United Kingdom, and 
South Korea, have publicly alleged government and corporate network 
intrusions by actors in China.
Foreign Intelligence
    Our peer competitors, traditional adversaries and today, terrorist 
organizations pose a significant challenge to the United States and in 
particular our military, as they attempt to steal our secrets, deter 
our global military operations and influence our national policy. We 
face a wide range of threats from the activities of foreign 
intelligence services and terrorist groups which employ classic 
intelligence tools and tradecraft to collect against U.S. military, 
diplomatic, and economic interests at home and abroad. Some terrorist 
groups are capable of conducting fairly sophisticated intelligence 
operations, to include the conduct of pre-operational surveillance.
    Foreign intelligence services directly and indirectly collect 
unclassified and classified information on key U.S. technologies, 
particularly military and dual-use, export-controlled items with 
military application. Several of our traditional adversaries pose a 
serious and persistent challenge; they have demonstrated exceptional 
patience and skill in pursuing priority U.S. and military targets. 
Industrial espionage has a profound impact which negates the 
effectiveness of our weapons systems and puts our military forces at 
risk.
    The threat to our infrastructure, especially our computer networks, 
remains a lucrative target to not only our adversaries' intelligence 
services, but also to organized criminal groups and individuals whose 
sole objective is to penetrate our network defenses.
Underground Facilities
    We are witnessing the emergence of a new warfighting domain--the 
subsurface domain. Changes in warfare have dictated that nations to a 
much greater extent are constructing and relying on deep underground 
facilities to conceal and protect their most vital national security 
functions and activities. Two key factors driving these changes are 
increased overhead reconnaissance capabilities and greater lethality, 
range, and accuracy of precision-guided munitions.
    In the past year, our potential adversaries have constructed dozens 
of deep underground facilities for their ballistic missile forces, 
including theater and ICBMs. The use of underground facilities 
complicates the IC's ability to monitor ballistic missile activities, 
and it improves the survivability of these weapons.
    Iran and North Korea protect major elements of their nuclear 
programs in underground facilities. In the 2006 conflict with Lebanon, 
Hizballah complicated Israeli targeting by using underground facilities 
to store weapons, conduct operations, and launch rockets; construction 
of underground havens by terrorist organizations is continuing.
    Contributing to a large increase in underground facility 
construction are recent and rapid advances in commercially available 
western tunneling technology. As potential adversaries improve their 
ability to build underground facilities, the U.S will find it harder to 
locate and successfully target these critical facilities.
Space and Counterspace
    The international proliferation of space-related expertise and 
technology is increasing, largely through commercial enterprises, and 
is helping other nations acquire space and space-related capabilities, 
including some with direct military applications.
    Because most space technologies have both civilian and military 
uses, this trend is providing a growing list of countries and non-state 
groups with more capable communications, reconnaissance, navigation, 
and targeting capabilities. Insurgents in Iraq, for example, have been 
captured in possession of commercial satellite imagery.
    Russia and China are developing systems and technologies capable of 
interfering with or disabling vital U.S. space-based navigation, 
communication and intelligence collection capabilities. Other countries 
have already deployed systems with inherent capabilities to support or 
conduct anti-satellite (ASAT) engagements, such as satellite-tracking, 
systems capable of jamming satellite communications, and laser range-
finding devices. However, these technologies are costly and most 
countries that want them are not expected to buy them soon. Aside from 
Russia and China, countries and non-state actors interested in 
acquiring counterspace capabilities will likely develop denial and 
deception techniques to defeat space-based imagery collection, conduct 
electronic warfare or signal jamming, and conduct physical attacks on 
ground-based space assets.
    China's space and counterspace capabilities have significant 
implications for U.S. space-based communications, ISR operations. China 
operates communications, ISR, navigation and Earth resource systems 
with military applications and will continue to deploy more advanced 
satellites through the next decade. In addition to its direct ascent 
ASAT program successfully tested in January 2007, China is developing 
jammers and kinetic and directed-energy weapons for ASAT missions. By 
adapting technologies from its manned and lunar space programs, China 
is improving its ability to track and identify satellites--a 
prerequisite for anti-satellite attacks.
    Russia is making progress modernizing its already formidable space 
and counterspace capabilities. Efforts are underway to improve Russian 
navigation, communications, ballistic missile launch detection, and 
intelligence-gathering satellites. Russia also is enhancing its 
extensive space surveillance and tracking systems, and maintains a 
number of systems, such as exoatmospheric antiballistic missiles and 
satellite-tracking laser range-finding systems, with inherent 
counterspace applications, and continues to research or expand 
directed-energy and signal jamming capabilities that could target 
satellites.
Advanced and Improvised Weapons
    Improvised weapons and advanced weapons such as IEDs, long-range 
rockets, and highly accurate guided missiles give non-state actors the 
capability to inflict losses against technologically superior opponents 
at a relatively low cost and with little training. The use of these 
weapons can produce operational and strategic-level effects beyond the 
battlefield when used to their maximum effect at the tactical level and 
publicized through the media or internet. This exposure provides 
terrorist and insurgent groups with a magnified politico-military 
potential that exceeds their historical norm.
    For example, Hizballah inflicted significant Israeli casualties and 
challenged Israeli ground operations and plans while using scores of 
advanced anti-tank guided missiles against Israeli ground forces during 
the summer 2006 Lebanon conflict. Hizballah also heavily damaged an 
Israeli warship with an anti-ship cruise missile, a military capability 
once limited to nation-states that Hizballah was not known to possess 
prior to the conflict.
    Advanced shoulder-launched anti-tank missiles and manportable air 
defense systems are increasingly available to non-state actors through 
uncontrolled exports, falsified end-user statements, gray market 
transfers, ransacked armories and/or direct supply from sympathetic 
regimes. Of concern, these weapons are easy to conceal, transport, and 
use; therefore, are ideal terrorist weapons. These weapons can be used 
singly or in combination with other asymmetric warfare tactics against 
high-value and lightly-defended targets such as distinguished 
personnel, critical infrastructure, and civil transportation.
    The threat posed by IEDs is significant. The September 2008 attack 
on the U.S. Embassy in Yemen combined small arms fire with multiple 
suicide bombers and suicide vehicle-borne IEDs. The IED threat is a 
function of the relatively low technological barrier for constructing 
them, the relative ease in acquiring or manufacturing the explosives, 
and the growing number of readily available training manuals that 
demonstrate how to build and effectively deploy them. Terrorist and 
insurgent groups regularly modify their tactics, techniques, and 
procedures in an attempt to mitigate counter-IED efforts as well as to 
avoid previous operational mistakes.
    Terrorist and insurgent groups no longer are limited to using 
stolen commercial explosives or military ordnance for building IEDs. 
Many groups are using homemade explosives that are manufactured from 
commercially available chemicals. Several terrorist groups are capable 
of producing homemade explosive mixtures that equal or exceed the power 
of military-grade explosives.
                               conclusion
    While combat operations and operations against transnational 
terrorists continue, other potential threats endure and evolve. Today's 
focus against the terrorist threat does not preclude the potential for 
conflict among major nation-states which could intersect vital U.S. 
interests. In response, defense intelligence must remain able to 
provide timely and actionable intelligence across the entire threat 
spectrum to policymakers and military decision-makers so they can 
maximize our Nation's opportunities while minimizing risks.
    In close cooperation with the broader IC, DIA continues to 
implement important structural and procedural reforms to strengthen 
analysis and collection while also expanding information sharing across 
intelligence disciplines, agencies and with our closest allies.
    During this critical period of conflict and change, your continuing 
support is vital. On behalf of the men and women of DIA and across the 
defense intelligence enterprise, thank you for your continuing 
confidence.
    Our people take great pride in their work. They understand it is an 
honor and a unique responsibility to conduct such sensitive work on 
behalf of the American people. It is a privilege for me to serve with 
them and to have this opportunity to represent their work to you today.
    Thank you. I would be pleased to answer your questions at this 
time.

    Chairman Levin. Thank you so much, General. Again, thank 
you for your great service to this country. This will be your 
last visit to us, but we will long remember that service. We 
very much appreciate it.
    General Maples. Thank you, sir.
    Chairman Levin. Let's try an 8-minute first round.
    There has been some confusion and I think some apparent 
inconsistencies in our assessment of Iran's uranium enrichment 
activities and their intent. It's my understanding that uranium 
for civil nuclear power production has to be enriched from 2 to 
4 percent, but that highly enriched uranium (HEU) which is 
necessary for a nuclear bomb or warhead needs to be enriched to 
about 90 percent.
    Let me ask you first, Director: Does the IC believe that as 
of this time Iran has any HEU?
    Director Blair. We assess now that Iran does not have any 
HEU.
    Chairman Levin. Now, on March--is your mike on, by the way?
    Director Blair. It is now.
    Chairman Levin. Thanks.
    On March 1, the Chairman of the Joint Chiefs, Admiral 
Mullen, was asked if Iran has enough fissile material to make a 
bomb and he said: ``We think they do.'' Now, that seems to be 
different from what you just said the IC thinks, which is that 
you believe they do not. Have you talked to Admiral Mullen or 
what is the explanation for that apparent difference?
    Director Blair. Mr. Chairman, Admiral Mullen later issued a 
clarification that he was referring to LEU, not HEU.
    Chairman Levin. Now, does the IC assess that Iran currently 
has made the decision to produce HEU for a warhead or a bomb?
    Director Blair. We assess that Iran has not yet made that 
decision.
    Chairman Levin. In 2007, the NIE on Iran said that ``The IC 
judges with high confidence that in the fall of 2003 Tehran 
halted its nuclear weapons program.'' Is the position of the IC 
the same as it was back in October 2007? Has that changed?
    Director Blair. Mr. Chairman, the nuclear weapons program 
is one of the three components required for a deliverable 
system, including a delivery system and the uranium. But as for 
the nuclear weapons program, the current position of the IC is 
the same, that Iran has stopped its nuclear weapons design and 
weaponization activities in 2003 and has not started them 
again, at least as of mid-2007.
    Chairman Levin. In 2007 that NIE said the following: ``That 
we judge with moderate confidence that the earliest possible 
date that Iran would be technically capable of producing enough 
HEU for a weapon is late 2009, but that is very unlikely.''
    Now, if your position is the same as it was in 2007, does 
the 2009 now become 2011?
    Director Blair. Our current estimate is that the minimum 
time at which Iran could technically produce the amount of HEU 
for a single weapon is 2010 to 2015. There are differences 
among the IC; 2010 to 2015 brackets that uncertainty.
    Chairman Levin. Relative to the Russian view of Iran, you 
indicated that Iran's neighbors are threatened or would be 
threatened by a nuclear-armed Iran. Russia is one of those 
neighbors. Is it the assessment of the IC that Russia would be 
concerned by a nuclear-armed Iran?
    Director Blair. Yes, sir, Russia would be concerned. It has 
a number of other interests with Iran that are also at play, 
but it would be concerned about a nuclear-armed Iran.
    Chairman Levin. Do you have an assessment as to whether or 
not Russia has an interest in cooperating with us on missile 
defense?
    Director Blair. Russia has an interest in cooperating with 
missile defense, we assess, Mr. Chairman. But they also have an 
incentive to limit that cooperation on nuclear defense. So I 
believe it will be a----
    Chairman Levin. On missile defense or--I'm sorry?
    Director Blair. Is that what you asked about, sir?
    Chairman Levin. Yes.
    Director Blair. Missile defense?
    Chairman Levin. You said ``nuclear defense.''
    Director Blair. I'm sorry. Missile defense. They have some 
positive incentives to cooperate with us. They have some ways 
they'd like to limit our missile defenses and their 
cooperation. So it would be a complex negotiation, but I think 
it's one worth exploring.
    Chairman Levin. General, here's a question for you. I think 
you both have indicated that the greatest threat to 
Afghanistan's security comes from the Afghan Taliban and other 
militant forces that reside in sanctuaries on the Pakistan side 
of the border, from which they are free to command operations 
against coalition forces. First of all, would you agree with 
our commander's assessment that the AFA is motivated, capable 
of fighting, and generally respected by the Afghans?
    General Maples. Sir, I would agree with that. In fact, 
they're one of the most respected institutions in Afghanistan.
    Chairman Levin. Could the Afghan Army be effective in 
countering the threat of cross-border incursions from Pakistan?
    General Maples. Yes, sir, they could.
    Chairman Levin. Can you tell us what the reasoning is why 
that army is not yet more focused on the border to stop those 
incursions, given that it's the greatest threat to 
Afghanistan--excuse me--yes, to Afghanistan, and given the 
apparent situation that the border police are not an effective 
force?
    General Maples. Sir, I believe there are a couple of 
factors that are involved in that. The first is the operational 
priority that is given to security in the populated areas of 
Afghanistan and the fact that the ANP are not at the point 
where they can provide the kind of security in the cities that 
is needed. So I think the prioritization of the effort is a 
part of that decision.
    I think the second part of it is simply the number of 
trained AFA troops that are in place. I think eventually we 
will reach that point where an operational decision will be 
made to employ the AFA in a different way.
    Chairman Levin. How soon can we reach that point of making 
that decision?
    General Maples. I know the decision has been made to expand 
the size of the AFA to 134,000 and that a great effort is going 
to be put into that to expedite it. I don't know the timeframe 
that the 134,000 will be reached.
    Chairman Levin. I guess this would be for you, Director, or 
either one actually could answer this. Is it the IC's 
assessment that the Afghan Taliban council, or Shura, operates 
openly in Quetta, Pakistan, without interference from the 
government? If so, why has the government or population so far 
failed to take action to eliminate the activities and the safe 
haven enjoyed by that Quetta Shura?
    Director, let me start with you. I think either one of you 
might want to comment on that.
    Director Blair. It's true that the Taliban governing bodies 
operate quite freely in Pakistan. The Pakistan approach to 
handling that threat is a combination of lack of capability, 
their overall approach in which they believe that there needs 
to be compromise and cooperation with some groups in that area, 
and their assessment of the threat of that group to Pakistan as 
opposed to Afghanistan.
    Chairman Levin. General, do you have any answer to the 
question, why Pakistan has not taken action against a terrorist 
group that's operating openly in Quetta?
    General Maples. Sir, the Quetta Shura is operating openly 
in Quetta. I believe it is more in relation to the effect on 
the Pakistani population, in particular the Pashtun population 
in Pakistan, that causes the Pakistani government to move at a 
slower pace, and they have not taken action against that Quetta 
Shura.
    Chairman Levin. Thank you.
    Senator McCain.
    Senator McCain. Thank you, Mr. Chairman.
    I thank the witnesses. Director Blair, on March 9, a 
Washington Post report says that the United States probably 
will not pull any more forces from Iraq this year beyond those 
announced over the weekend, the number two U.S. general in Iraq 
said Monday. About 12,000 U.S. soldiers will leave Iraq by 
September. ``What we have right now is what we plan on having 
for the foreseeable future,'' General Austin said.
    Is that accurate?
    Director Blair. I don't have additional information on 
that, Senator.
    Senator McCain. Surely you were consulted as to whether 
that's a fact or not?
    Director Blair. The announcement of, the President's 
announcement set a level of 10 to 12 brigades that were 
remaining, and I have not been in discussions on whether that 
will be 10 or 12 and just what the drawdown plans are in the 
future. I'm sure that the Department of Defense (DOD) has----
    Senator McCain. Well, please get briefed up and tell us. 
It's kind of an important item as to what our troop levels will 
be for the rest of this year. I don't think it's a minor item.
    Director Blair. No, sir. It's a very important item.
    It's just not in my area of responsibility. It's the 
Secretary of Defense----
    Senator McCain. You are the DNI.
    Director Blair. I am.
    Senator McCain. So you would be informed as to our troop 
levels in Iraq and our plans for troop levels in Iraq?
    Director Blair. I'm asked to assess the effects of 
different troop levels on the level of security in Iraq.
    Senator McCain. Director Blair, please get back to me, 
would you please, on that issue?
    Director Blair. Yes, sir.
    Senator McCain. I'd be very interested. I think most 
Americans are interested in troop levels in Iraq as well.
    [The information referred to follows:]

    [Deleted.]

    Senator McCain. Last month Iran successfully launched its 
first satellite into orbit and President Ahmadinejad proclaimed 
in a televised speech ``The official presence of the Islamic 
Republic was registered in space.'' Last Sunday, Iran tested a 
precision air-to-surface missile with a 70-mile range. Does 
that lead one to the conclusion that it's very likely that Iran 
will be developing a nuclear weapon to go along with the 
development of delivery vehicles?
    Director Blair. I don't think those missile developments, 
Senator McCain, prejudice the nuclear weapons decision one way 
or the other. I believe those are separate decisions. The same 
missiles can launch vehicles into space, they can launch 
warheads, either conventional or nuclear, onto land targets, 
and Iran is pursuing those for those multiple purposes. Whether 
they develop a nuclear weapon which could then be put in that 
warhead I believe is a separate decision which Iran has not 
made yet.
    Senator McCain. General Maples, do you have an opinion on 
that?
    General Maples. Sir, I would agree that the development of 
the nuclear weapon tied to the missile launch and testing are 
not necessarily related. I would say, though, that the Safir 
launch does advance their knowledge and their ability to 
develop an ICBM. The second test that you mentioned most 
likely, that was in the press, most likely an air-to-ship 
missile that was being tested.
    Senator McCain. General Maples, do you believe that it is 
Iran's intention to develop nuclear weapons?
    General Maples. I believe they are holding open that 
option, sir. I don't believe they've yet made that decision.
    Senator McCain. You don't believe that they have made the 
decision as to whether to develop nuclear weapons or not?
    General Maples. No, sir.
    Senator McCain. Could I turn to Pakistan--Afghanistan with 
you for a moment. Maybe you can clear up a little confusion. 
What's the difference between and the commonality between 
Taliban activity and al Qaeda activity in Afghanistan?
    General Maples. Sir, there is al Qaeda activity in 
Afghanistan. Generally al Qaeda from a central standpoint has 
recruits that come into their training camps in Pakistan. Often 
they will introduce al Qaeda individuals to provide supportive 
activity in Afghanistan, but not directly linked to al Qaeda 
activity.
    There is a direct link between al Qaeda, the Quetta Shura, 
the Haqqani, and the Miramshah Shura in particular with al 
Qaeda in Pakistan. So there is an exchange of information, of 
training, of expertise, and a sharing of capabilities in 
producing trained individuals that later conduct attacks in 
Afghanistan.
    Senator McCain. So are they working more closely together?
    General Maples. Sir, I believe they are working closely 
together and I believe al Qaeda's presence in Afghanistan is 
more significant, although still at a relatively minor scale, 
than we have seen in the past.
    Senator McCain. What kind of activity are you seeing on the 
part of the Iranians in Afghanistan?
    General Maples. Sir, the Iranians' primary activity is in 
the western part of Afghanistan. There's a great deal of 
economic investment that is pretty open in the western part, 
around Herat and elsewhere in Afghanistan. We have seen 
shipments of munitions that have been intercepted coming from 
Iran into Afghanistan that have contained small arms, some 
explosive devices coming in. However, that has been very 
limited in nature. I believe that Iran is keeping open their 
options in Afghanistan. They don't want to see a Taliban-
dominated Afghanistan, but they do want to have a presence and 
ensure that their interests are represented.
    We are seeing some increased activity between Iran and the 
Haqqani network that we have not seen in the past. So they're 
there, they're present, and they're trying to influence the 
future.
    Senator McCain. Director Blair, is it a true statement to 
say that in Afghanistan, since we are not winning, the nature 
of warfare and counterinsurgency and counterterrorism is that 
we are losing?
    Director Blair. I think it's important to look at the 
degree of government control over the various parts of the 
country as a really key indicator towards that question, and 
the amount of government control has been decreasing over the 
past year, so it's a bad trend.
    Senator McCain. So we really do not have control over the 
southern part of the country of Afghanistan?
    Director Blair. The reason for the deployment of the two 
brigades that the President announced a short time ago was in 
order to precisely stabilize that part of the country where the 
trends were the most negative and the stakes were the highest, 
with an eye towards the elections that are going to be taking 
place in August. So the trends were negative and the deployment 
was designed to stabilize the situation.
    Senator McCain. You and the administration are in the 
process of developing an overall strategy for Afghanistan?
    Director Blair. For Afghanistan and Pakistan, yes, sir.
    Senator McCain. I know it's a difficult process you're 
going through. Do you have any idea as to when we would 
probably get an indication what that strategy is?
    Director Blair. I can only say, Senator McCain, that the 
President is more impatient than you are.
    Senator McCain. I just would like to say that I believe 
that a minimalist approach may be the most attractive one. I 
also think it may be the most dangerous one. I think we proved 
in Iraq that not only do you need a change in strategy, but you 
need a robust military capability to first secure areas before 
you make progress in the other aspects of counterinsurgency.
    I hope that we will not view this as simply an exercise in 
counterterrorism, because it is a counterinsurgency. Many argue 
that it's the most difficult situation we've ever faced. I 
don't think it's as difficult as we faced in Iraq at its worst 
point before the surge. The government was on the verge of 
collapse. The casualties were incredibly higher than they are 
today. So I think that it would be a mistake to take a 
minimalist approach without a strategy designed along the lines 
of those strategies that have succeeded in other parts of the 
world, and we should pay attention to those that have succeeded 
and not repeat the mistakes of those that failed.
    I certainly look forward to working with you and to 
developing a strategy that will succeed. But I think also the 
American people need to be told that this is going to be a very 
difficult process, at least in the short term, and we should be 
prepared for a very difficult time, at least for a period of 
time in the near future.
    Do you have any response to that, Director?
    Director Blair. I couldn't have outlined it better myself, 
Senator. I think what we're involved with now is trying to 
think through not just the initial phase, but, as the President 
clearly said, the brigade deployments were an interim 
stabilizing action pending the development of the long-term 
strategy, and that long-term strategy has to look all the way 
out to an extended period of time in order to achieve success 
and victory. That kind of thinking is going on now, and I think 
you captured many of the important elements of it, sir.
    Senator McCain. Thank you very much, Director.
    Again, General, thank you for your outstanding service to 
the country. We're very proud of you.
    General Maples. Thank you, sir.
    Chairman Levin. Thank you, Senator McCain.
    Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Welcome, Director Blair. Thanks, General Maples. You've 
been really a straight shooter all the way for us and we value 
your service and really respect your credibility a great deal.
    Director Blair, at the beginning of your testimony here 
today you said something that I think a lot of people will find 
surprising, but I think we all ought to take it seriously: 
``The primary near-term security concern of the United States 
is the global economic crisis and its geopolitical 
implications.''
    A little further down you say: ``Of course, all of us 
recall the dramatic political consequences wrought by the 
economic turmoil of the 1920s and 1930s in Europe, the 
instability and high levels of violent extremism.''
    Down a little bit further you say: ``Europe and the former 
Soviet Union have experienced the bulk of the anti-state 
demonstrations.'' I would add, so far.
    Those are serious words and we ought to take them 
seriously. I wanted to ask you if you would go from them to 
what some of your specific concerns are. In other words, are 
there particular regions of the world, for instance some of the 
newly independent nations of the former Soviet Union, where you 
fear that the global economic recession could cause 
instability, perhaps violent extremism, or in that case a 
reassertion of Russian dominance over some of those countries?
    Director Blair. Senator, I think there are at least three 
important categories of effects of this global recession that 
will become more dire if it continues. The first are those 
countries that are just holding on, barely providing economic 
goods to their people, and they're quite vulnerable to economic 
uncertainties undermining the thin progress they have made 
recently, with all of the bad consequences that can come out of 
that.
    Senator Lieberman. Give us a couple of examples of that?
    Director Blair. I'd rather save it for closed session, 
Senator, if I could.
    Senator Lieberman. Are they centered in one part of the 
world?
    Director Blair. They're generally in that arc from the 
eastern Mediterranean across to Southeast Asia, in that area.
    The second category I think are the ones that you referred 
to in your question, are the countries which have fairly 
recently emerged from authoritarian governments. The former 
Warsaw Pact now have uneven levels of government in commitment 
to representative government, and they're under heavy strain 
from the Baltics all the way down to the Black Sea. As 
mentioned in testimony and as you've seen, there have been 
riots there. Governments have actually fallen in the Baltics. 
Countries with IMF loans like Ukraine are scrambling to 
maintain the conditions that gave them those.
    With the fairly recent democracies in those, one is worried 
about the fallout in terms of political gains and extremist 
groups who promise simple solutions of the type we've seen in 
the past.
    Senator Lieberman. From an intelligence perspective, based 
particularly on what I would at least call some of the economic 
aggressiveness or even bullying of the Russian government, do 
we have concerns that this economic vulnerability in some of 
the newly independent nations of Central and Eastern Europe 
might provide a further opportunity for the Russian Government 
to extend its influence, this time economically?
    Director Blair. Absolutely. It's quite clear that the 
Russians have used oil and gas deliveries in the past for that 
purpose. It's quite clear that they believe that they would 
like greater control of what they call ``the Near Abroad.''
    Senator Lieberman. Right.
    Director Blair. This is an opportunity. So yes, sir, that's 
definitely a concern there.
    Then the third category are our traditional strong partners 
around the world who are under strain. None of us have any fear 
that there will be catastrophic consequences in those 
countries. Democracies change governments and we've seen that 
in places like Iceland most recently. But the economic times 
make it difficult in countries from Japan to the U.K. to expend 
resources on overseas development aid. We saw that when the 
European nations met just 10 days ago, that they were reluctant 
to help the Eastern European and Central European countries 
right away. They held back there. Japan is somewhat constrained 
in what it can do.
    So in both economic assistance and certainly in helping 
with deployed military power, we're soon going to be testing 
that in the NATO summit concerning Afghanistan. When your 
budget is under pressure, it makes it even more difficult to 
pony up to deployable supportable forces overseas.
    So I'd say those three categories are what we're looking 
at. But what concerns us is we're not sure if the feet have 
touched the bottom of the swimming pool yet.
    Senator Lieberman. Correct.
    Director Blair. That makes it a more difficult pattern.
    Senator Lieberman. I agree. I appreciate the answer. I 
share your concerns. I think from a geopolitical, geostrategic 
point of view, unfortunately we may have to start thinking 
about threats to our security and to stability in different 
critical regions of the world which we may have to take action 
in as a result of the instability caused by the economic 
recession.
    I'm going to leave that there. I'm going to go to a 
different kind of question, Director. There's been a lot of 
controversy about your selection of Ambassador Charles Freeman 
to be the Chairman of the National Intelligence Council. Seven 
of our colleagues on the Senate Select Intelligence Committee 
(SSCI) wrote yesterday expressing their concern. I'm concerned.
    The concern is based, to state it briefly, on two points. 
One I think is a question about some previous business 
associations that the ambassador has had that may raise 
questions about his independence of analysis. The second are 
statements that he's made that appear either to be inclined to 
lean against Israel or too much in favor of China. In fact, I 
gather yesterday or in the last few days some of the leaders of 
the 1989 protests that led to the Chinese government's massacre 
at Tiananmen Square wrote President Obama to convey ``our 
intense dismay at your selection of Mr. Freeman.''
    So I wanted to ask you for the public record this morning, 
were you aware of these comments and associations by Ambassador 
Freeman before you chose him for this position? The concern 
here is that it suggests that he's more an advocate than an 
analyst, which is what we want in that position. Second, what 
are you doing about the concerns that have been expressed by 
people about the selection?
    Director Blair. Let me just make a couple of points about 
my selection of Ambassador Freeman. First, as far as the 
effects of business associations and the ethics rules, 
Ambassador Freeman is going through the vetting that is done 
with anybody joining the executive branch in terms of financial 
and past associations. In addition, because of a letter from 
some Members of Congress, the Inspector General is taking a 
closer look at those associations than is normally done with a 
Federal employee. So that's one piece of it.
    As far as the statements of Ambassador Freeman that have 
appeared in the press, I would say that those have all been out 
of context and I urge everyone to look at the full context of 
what he was saying.
    Two other things, though. A mutual friend said about 
Ambassador Freeman, who I've known for a number of years: There 
is no one whose intellect I respect more and with whom I agree 
less than Ambassador Freeman. Those of us who know him find him 
to be a person of strong views, of an inventive mind from the 
analytical point of view. I'm not talking about policy. When we 
go back and forth with him, a better understanding comes out of 
those interactions, and that's primarily the value that I think 
he will bring.
    On the effect that he might have on policy, I think that 
some misunderstand the role of the development of analysis 
which supports policy. Number one, neither I nor anyone who 
works for me makes policy. Our job is to inform it. We've found 
over time that the best way to inform policy is to have strong 
views held within the IC and then out of those we come out with 
the best ideas. Ambassador Freeman, with his long experience, 
his inventive mind, will add to that strongly.
    So that is the view that I had when I asked him to serve 
and that's how I feel about it.
    Senator Lieberman. I appreciate your answer. My time is up, 
but I will say this. Obviously, the IC is not a policymaker; 
you're analysts and providers of intelligence information.
    The concern about Ambassador Freeman is that he has such 
strong policy views, and those are not only his right, but his 
responsibility to express, that this position may not be the 
best for him because he will have to separate his policy views 
from the analysis.
    I just want to say to you, I don't have a particular course 
to recommend, but having been around Congress for a while my 
own sense is that this controversy is not going to go away 
until you or Ambassador Freeman find a way to resolve it. I'll 
go back and look at the statements that are on the record. I've 
read some at length and they are very decisive even in the 
context. So whether I disagree or agree with him, he's very 
opinionated, and it's a question of whether--I suppose in the 
end--and my time is up; I have to end--that this puts a greater 
burden on you to filter out opinions from analysis to make sure 
that you're giving the President and the other leaders of our 
country unfiltered intelligence information, not biased by 
previous policy points of view.
    Director Blair. Yes, sir; I think I can do a better job if 
I'm getting strong analytical viewpoints to sort out and pass 
on to you and to the President than if I'm getting pre-cooked 
pablum judgments that don't really challenge.
    Senator Lieberman. Okay. I guess I would say, to be 
continued. Thank you.
    Chairman Levin. Thank you very much, Senator Lieberman.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    Let me first make the comment about General Maples. Of 
course, I've felt closer to you than an awful lot of the rest 
of them because of your service at Fort Sill, and you are still 
talked about at Fort Sill and as soon as you retire you'll 
become a legend. I suppose that happens. But it's been great 
working with you and I appreciate all that you have done.
    My questions are going to be around the continent of 
Africa. But before doing that, let me just ask you, probably 
you, Director Blair. I have often felt for quite some time that 
our assessment of North Korea has not been quite as strong as I 
think it should be. I recall back from this meeting right here, 
from this committee, in August, it was August 24, 1998, we were 
talking about what their capability was in terms of their 
nuclear capability and their delivery systems.
    At that time I asked the question, or we asked the question 
as a committee, of the administration at that time, how long it 
would be before North Korea had a multi-stage capability. The 
answer was at that time--I think it might have been a NIE or it 
may have just been a letter from the administration--somewhere 
between 8 and 10 years. Seven days later on August 31, 1998, 
they fired one.
    Do you think that our assessment of their capability and 
their threat is accurate today?
    Director Blair. Senator Inhofe, I think we've learned since 
those days--and I was in an Active-Duty role having to do with 
the Pacific at that time, so I'm familiar with the issues you 
raise. I think that we have learned that North Korea is willing 
to field and deploy with less testing than almost any other 
country in the world would think is required. So I think that 
our estimates at that time probably gave the Koreans--or 
thought that the Koreans would go through more of these steps 
required to verify the weapons than in fact has proved the 
case. So our timelines are much shorter now.
    Senator Inhofe. I was one who had very strong feelings 
about AFRICOM. To me, as significant as the continent is, it 
didn't make any sense to have it in three different commands. I 
think it's working quite well. General Wald did a great job, 
and General Ward now is doing a tremendous job.
    But things are happening there that we don't talk about as 
much as we do as some of the other areas of threat. I have been 
concerned about it for some time, and I wonder if you feel that 
adequate resources are--first of all, it seems to me it would 
make a lot more sense if we had had the command actually 
located in Africa somewhere. I know the problems that are out 
there right now. Most of the presidents would say, yes, we 
would prefer that; we can't sell that to our people, though.
    Do you think that they have adequate resources now to take 
care of the real serious problems in terms of transportation 
and other resources in that command?
    Director Blair. Senator, I am pretty familiar with the 
establishment of AFRICOM and the desire to make it an 
integrated, not only militarily, but also military-diplomatic 
construct. I think the problem was that the Africans, with 
their history of colonialism and so on, did not see it the same 
way and frankly to this day do not see AFRICOM, which I think 
was very smart for all the reasons that you state--many African 
countries are looking for a hidden agenda there in terms of 
growing American military power. I think that is the biggest 
problem that we have.
    We started out behind the eight ball as we did. We have to 
sort of win it back an engagement at a time.
    Senator Inhofe. Don't you think the successes in the 
Economic Community of West African States are somewhat 
indicative that parts of certainly West Africa are coming 
around? My experience is when you talk to the presidents of any 
of these countries they all agree that it would have been 
better that way, but, as you point out, the threat of 
colonialism and all that was an obstacle.
    Now, getting to some specific areas, you mentioned in your 
written statement about Zimbabwe, Mugabe, and some of the 
problems that are down there. When you go there and you 
remember that Zimbabwe was the breadbasket of sub-Saharan 
Africa for so many years, and how this guy has just brought it 
down to nothing--do you feel that, because of the economic 
problems and the political problems that are there--and 
everybody recognizes it. I talked to President Kikwete of 
Tanzania back when he was the head of the African Union. They 
all understand that that's a problem.
    But it seems like there is a fear there to get in there and 
correct the problem. Part of that is the relationship, I guess, 
with South Africa that Zimbabwe has. What obstacles do you 
think we can overcome, will be trying to overcome? My feeling 
is that in Zimbabwe, as bad as their condition is right now, 
that that's a magnet for terrorist activity. What is your 
thought?
    Director Blair. Senator, I think the larger magnet right 
now is Somalia rather than Zimbabwe. In Somalia, the governance 
and law and order problems are even worse than they are in 
Zimbabwe. There's also terrorist activity up in the Maghreb 
with al Qaeda in Maghreb group. So it's really those two areas 
that we're more worried about from a terrorist point of view 
than we are----
    Senator Inhofe. I'm really thinking about in the future, 
though. I know right now that that's not the problem. I know 
Somalia is a problem.
    Let's move to Somalia, then. In your statement you talk a 
little bit about Ethiopia and the fact that they've withdrawn. 
As I recall, when they first went down there and they were on 
our side, very helpful at that time and joining forces with us, 
that it was really there for a limited period of time. They had 
limited capabilities and they said that, we're going to go 
down, we're going to help, but we won't be able to stay for a 
long period of time. Now, maybe my memory doesn't serve me 
correctly, but that's what I recall.
    The reason I bring this up is that there is a movement in 
both the House and the Senate that is somewhat punitive in 
nature in terms of Ethiopia, Prime Minister Meles, and others. 
Most of it's around social programs. Would you evaluate just 
the willingness of the Ethiopians to help us? Do you consider 
them to be a real ally?
    Director Blair. I think in their action in Somalia, 
Senator, the important thing was that the Somalis didn't 
consider it, or a large portion of Somalis, didn't consider it 
to be helpful. They attacked the Ethiopians, including some 
Somali Americans who went back and became suicide bombers 
against Ethiopia. So whatever Ethiopia's own mixture of motives 
in actually making that intervention, it was not supported by 
important groups within Somalia.
    Senator Inhofe. A lot of that was because of Eritrea and 
their problems, too.
    One last thing I'd like to observe in Africa is the problem 
of China. As you go through Africa and particularly in the oil 
states, Nigeria and the rest of them, anything that is new and 
shiny was given to them by China everywhere you go there. I 
know a lot of that is their quest for energy, for oil, and 
they've made their deals. But also, China has not been our 
friend in Somalia, or in Sudan and some of the other areas. I 
would just hope that our IC could be watching very carefully 
the activities of China on the continent of Africa.
    Director Blair. Yes, sir. We are doing so and we will 
continue to do so.
    Senator Inhofe. Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Inhofe.
    Senator Bayh.
    Senator Bayh. Thank you, Chairman Levin.
    Thank you, gentlemen, for your service to our country.
    Director, I was struck by your opening comments. I've been 
on this committee, been privileged to be here for many years, 
and I served on SSCI even longer, and I quite frankly can't 
recall a presentation from someone in your position that began 
with words like ``trade,'' ``GDP growth,'' or ``IMF reports.'' 
Then after a discussion of the global economic situation, you 
used the phrase ``turning to terrorism.''
    I think that showed very clearly how economic and financial 
matters are inextricably related to national security matters. 
The same could be said for our energy dependency, our growing 
fiscal dependency and growing debt to other countries. I hope 
this is not just a manifestation of the current economic crisis 
we face, but represents an integration of our thinking about 
all aspects of national security. So I commend you for that 
perspective and hope you will continue to share with us on this 
committee when you're before us. I thought it was rather 
striking.
    You've been asked about North Korea a couple of times. The 
reports about the upcoming launch that they say is ostensibly 
for satellite delivery, there have also been indications that 
that may tell us something about their capability of reaching 
Alaska, for example, with a missile. What do you expect?
    Director Blair. If it is a space launch vehicle that North 
Korea launches, the technology is indistinguishable from an 
ICBM. If a three-stage space launch vehicle works, then that 
could reach not only Alaska and Hawaii, but also part of the 
west coast of the United States, what the Hawaiians call the 
mainland and what the Alaskans call the Lower 48.
    Senator Bayh. Are you expecting that that's what they'll 
test?
    Director Blair. I tend to believe that the North Koreans 
announced that they were going to do a space launch and I 
believe that that's what they intend. I could be wrong, but 
that would be my estimate.
    Senator Bayh. It could affect the priority we place on 
missile defenses against such a threat.
    I'd like to ask you about Iran, something that Senator 
Lieberman and I have focused on together, and that is, as you 
well described, the clock is ticking with regard to their 
nuclear capabilities. When you look back at the past history of 
these things, whether it's India or Pakistan or other 
situations, you have to say that perhaps the clock will chime 
sooner rather than later.
    One of the few leverage points we have on them is their 
vulnerability to imports into Iran of refined petroleum 
products. I would appreciate your assessment about that 
vulnerability and if we had a serious and sustained effort to 
try and impact that, what, if any, impact that could have on 
their decisionmaking?
    Director Blair. Senator Bayh, beyond the sort of general 
discussion of a mixture of pressures and attention to Iran, I'd 
rather wait for a closed session if we could talk about 
individual things, sir.
    Senator Bayh. Okay. The reason for my asking--that's fine, 
Director. The reason for my asking is that time may be of the 
essence here and so we need to think about what matters might 
actually impact their calculus, and this seems to be one of the 
ones at our disposal and something we perhaps should get 
serious about sooner rather than later.
    Director Blair. Yes, sir. I agree, it's one of them I'd 
just rather discuss in a closed session.
    Senator Bayh. That's fine.
    Also focused on Iran, Senator McCain mentioned the recent 
test, I think it was the 70-mile missile. What is the status, 
if you can tell us--perhaps this has to wait for the closed 
session as well. But there have been published reports about 
Russia's intention to deliver even more advanced systems, 
General, than the one you mentioned that they have deployed 
around Tehran. Can you give us any update on the Russians, they 
signed the contract, but they haven't delivered them. Can you 
give us any update? Obviously, if they were to receive even 
more advanced air defense systems that would complicate the 
situation and might give us some insight into the willingness 
of the Russians to truly cooperate with us in trying to resolve 
this effort.
    General Maples. Sir, I can give you a specific in the 
closed session where we think they are. But we believe that 
Iran still desires to obtain the SA-20s.
    Senator Bayh. Let me ask you about this. Maybe you can 
answer this in open session. If they were to deliver such a 
weapons system, would that give either of you any insight into 
how cooperative the Russians are really willing to be with us 
in trying to contain this threat?
    General Maples. Yes, sir, I believe it would.
    Senator Bayh. That insight would be that perhaps they are 
not as willing to be as cooperative as some might like to 
think?
    Director Blair. I would tend to say, Senator, that it's 
going to be a bargain and that's one of the chips, and it's 
hard to say which chip will be more powerful than the other.
    General Maples. I think also that, with respect to Russia 
and their defense industry, Russia is spending an awful lot of 
time trying to market their products around the world in order 
to keep their production lines open. That's a very important 
factor to Russia right now.
    Senator Bayh. They do have commercial interests there.
    With regard to Pakistan, Director--thank you, General. Back 
to you. Can you give us--is it still your assessment that the 
most likely threat to our Homeland would emanate from the FATAs 
there in Pakistan? We'd heard that previously from your 
predecessor?
    Director Blair. I would say that the planning for such a 
mission would most likely emanate from al Qaeda, the leadership 
of which is there. Which foot soldiers they would use to 
actually make the delivery I think might widen the area.
    Senator Bayh. But the central nervous system for the 
planning would emanate from that place?
    Director Blair. Yes, sir.
    Senator Bayh. Or perhaps Quetta, which we previously 
discussed.
    Well, with that in mind and with the current political 
turmoil in Pakistan being all too apparent, how would you 
assess their capabilities for actually exerting some control in 
those areas? Are their capabilities improving? Are they static? 
Are they declining because of the political instability? How 
would you assess that?
    Director Blair. Let me start. General Maples has also been 
studying it closely.
    You see in the Pakistani approach to these different areas 
along their northwest and southern border different approaches. 
Sometimes it's troops going in to pacify areas. Other times 
it's deals being cut, as was true recently in the Swat Valley. 
Other times it's neglect which they hope is benign.
    I think that when I talked with the Pakistani leadership 
they are not satisfied with the capability of their armed 
forces to conduct those sorts of operations. But I do sense 
that they feel that it would be some combination of military, 
economic, and bargaining that would achieve their goals towards 
the area. So I don't see a big change in fundamental approach 
when I talk to them.
    General Maples. I believe that there is a change in view, 
particularly among the senior military leadership, of the 
importance of military engagement in that region, in the FATA 
and in the Northwest Provinces. I think we have seen an 
increase in capability somewhat in terms of the capabilities of 
the Frontier Corps.
    Most of Pakistan's military capabilities, though, remain 
conventional. They are just starting on the path of developing 
counterinsurgency kinds of forces and it's going to be quite 
some time before those forces are developed and able to make a 
difference in the area. But I do think that there is a will, 
and I think there is a desire, to do the best they can with 
what they have.
    Senator Bayh. Let me ask you this, and I'll try and word it 
in a way that perhaps you can be able to answer it, because 
there have been numerous published reports about this. But 
there seems to be some divergence in opinion between their 
leadership and ours about direct action against al Qaeda 
elements in the FATAs. They seem to think that if those kind of 
activities take place it destabilizes the situation more than 
it helps, and if those activities take place, some others think 
that it's what we need to do to try and disrupt them 
operationally.
    Do you have an assessment about these published reports?
    Director Blair. I think they draw distinctions between 
groups and there are some that they believe have to be hit and 
that we should cooperate on hitting, and there are others that 
they think don't constitute as much of a threat to them and 
that they think are best left alone. So when you discuss it 
with them, Senator Bayh, it's really almost tribe by tribe, 
warlord by warlord.
    Senator Bayh. Thank you again, gentlemen.
    Chairman Levin. Thank you, Senator Bayh.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    Just to follow up on that, Director Blair, that's probably 
the way--whether we agree or not with Pakistan's specific 
recommendations, tribe by tribe, area by area, is probably the 
only way we can deal in that tribal area that's never been 
controlled by a central government before. Isn't that right?
    Director Blair. No one I've talked to has come up with a 
grand strategy for that area that seems to me to be very 
realistic, yes, sir.
    Senator Sessions. Secretary Gates here expressed a real 
commitment to making sure that we have an Afghan face on the 
difficulties in Afghanistan. Of course, when we add 15,000 
troops I think that makes that a bit more difficult. What plans 
do we have to utilize our forces effectively or to bring along 
more rapidly the Afghan military and eventually to extract 
ourselves from that effort? Can you give me any thoughts on 
where you see we're heading in that direction?
    Our ultimate goal, I think, is for a decent government to 
be in place, that stands on its own, and that presents no 
threat to the United States.
    Director Blair. Senator, I think you express the objectives 
that we all share quite clearly. From the American point of 
view, of course, that kind of an Afghanistan would be an 
Afghanistan that's not a haven for al Qaeda and other groups 
who use it to come against the United States the way they did 
in 2001.
    I think the difficulties that the current review is 
wrestling with are how do you do that and what sort of 
resources and periods of time are needed to do that, although 
it is the responsibility of Afghanistan, they themselves say, 
and we feel that they need some help in order to get there. I 
think one thing that's important is that the intelligence 
capabilities to support that help are also pretty important. I 
know those of you who have visited the region know that the 
commanders say that the intelligence support provided in Iraq 
has been an absolute key to being able to make the sort of very 
precise, almost person by person kinds of operations that have 
been the key to success in separating a relatively small group 
of these violent extremists from the bulk of the population.
    If we are to be able to provide that sort of intelligence 
to support not only military operations, but also how do you 
support the political and the social programs that are going to 
be necessary to root out corruption, to get basic services to 
Afghanis, which will provide support for the government which 
is essential to reaching that goal? That's going to be pretty 
detailed, pretty intense intelligence support.
    Senator Sessions. Are you suggesting that you believe we 
could do better in intelligence in Afghanistan--obviously, I'm 
sure we could anywhere--and that you need additional resources 
and any other structural changes to do a better job of 
obtaining intelligence?
    Director Blair. I think we have to increase our 
intelligence effort on Afghanistan, yes, sir. Some of that may 
involve a shift of resources from elsewhere. Some of it may 
require additional resources. I think it's essential to----
    Senator Sessions. On a cost effective basis, your analysis 
would be, and I think most commanders would believe, that good 
intelligence can reduce the need for manpower?
    Director Blair. Yes, sir. If you have to catch them first 
and sort them out later, it's a lot more expensive than sorting 
them out first and catching only the ones you need to.
    Senator Sessions. General Maples?
    General Maples. Senator, on the defense intelligence side 
we're already accelerating additional intelligence personnel 
into the theater to provide analytic support to General 
McKiernan on the ground and establish a greater analytic 
presence, particularly in Kandahar in the southern part of the 
country. The ISR task force the Department has had in place is 
already moving on providing additional ISR capability to the 
theater to support General McKiernan as well. We have a very 
extensive dialogue going on on the structure, the intelligence 
structure that we're going to have in place with the additional 
forces that are going into Afghanistan.
    It's critically important for us that we have that 
intelligence because we're into intelligence-driven operations.
    Senator Sessions. Would you express the tension that I 
think tends to exist between increasing troop levels and 
increasing the Iraqi face on the situation--an Afghan face?
    General Maples. Senator, there is a tension there simply by 
a larger presence of U.S. forces. But the intent to have a 
larger Afghan face is absolutely what we need to do and where 
we should be going. U.S. forces, as we have done elsewhere, can 
improve the security situation, just as the latest arrivals 
into country in the areas to the west and southwest of Kabul 
are already making a difference in terms of the security of 
that region. Of course, that's a great line of communications 
and movement into the Kabul area.
    So if we can help in that regard and then free up ANA 
forces in order to do other things in the country and put them 
in the lead, it will help lead to success, I think.
    Senator Sessions. I once did a calculation on the cost of 
an Iraqi troop versus an American soldier and it was about 20 
to 1. You could field about 20 Iraqi soldiers for the cost of 
one American soldier in Iraq. I think we learned in al-Anbar 
that local people, motivated and supported, can have more 
effect than the American military in many instances.
    General Maples. To the point of your question to the 
Director, a part of what we have to do--and it is part of the 
planning process right now--is to increase the number of 
trainers that we have in country who are dedicated to 
increasing the capabilities of the Afghan National Army.
    Senator Sessions. I thank you for that.
    Director Blair, you indicated that the support in the 
Muslim world for terrorism appears to be declining, more 
hostility to that. Are there things that we can do to evidence 
a respect for the people in the Muslim world and that could 
help accelerate that? I don't think we have an ability to 
direct them in any way, but are there actions that we could 
take that could help eliminate or reduce the support for 
terrorism?
    Director Blair. Yes, sir, there are actions we could take. 
Partly it has to do with showing respect to the religion itself 
and distinguishing between the religion and those who misuse 
it. We have to keep in mind that this is something that Islam 
has to figure out for itself, and you don't sit there on the 
outside and try to manipulate it, not only because you can't, 
but also because that very action would probably be 
counterproductive in terms of the resentment of those looking 
at it.
    So on the overall scale that's important. When we look at 
polling data and we talk to people, another factor is the 
Israeli-Palestinian confrontation, which gives support to those 
who take the more radical view, the insurgent view, versus the 
peaceful view in that context.
    So that's sort of at the overall international level.
    Also at the local level, it's extremely important, of 
course, that by a combination of intelligence and basic 
training and cultural awareness that we act in the right way on 
the local level in order to help the people who are trying to 
live normal lives and make sure that it's clear that we're only 
going against those who are trying to disrupt that.
    Senator Sessions. Hundreds of millions of Muslims go to the 
mosque and are faithful, loyal, decent citizens in their 
country, obey the law, don't participate in terrorism, and we 
all ought to always remember that.
    Briefly, General Maples, very briefly, the status of the 
elections in Afghanistan, how serious of a dispute is that, 
whether they should be held or delayed some?
    General Maples. Sir, I think most everybody has reached the 
conclusion that the election should be held in August of this 
year. The real question for us now is what happens to President 
Karzai when his term of office ends in May, in that period of 
time between when his constitutional term in office ends and 
the elections are held.
    Senator Sessions. Thank you.
    Chairman Levin. Thank you, Senator Sessions.
    Senator Ben Nelson.
    Senator Ben Nelson. Thank you, Mr. Chairman.
    Thank you, gentlemen, for your service.
    Senator Sessions was talking about the importance of 
intelligence, particularly as it relates to Afghanistan. I'm 
wondering, in Iraq when we were trying to determine how we were 
doing--we had people saying we're losing, people saying we're 
winning, looking at the same set of facts at the same point in 
time. Logically they couldn't both be right. To move beyond the 
discussion about winning and losing in Iraq, we went to 
benchmarks to be able to establish a metric as to how we were 
progressing, to what degree, or not progressing on certain 
things in Iraq. I think we moved to a better dialogue about 
what was happening and not happening.
    I've suggested this before and I've written to the 
Secretaries of Defense and State suggesting that we establish 
benchmarks. But I wonder if actionable intelligence measuring 
our capabilities to see if we're increasing our capabilities or 
whether we're at a standstill in establishing actionable 
intelligence, I wonder if that wouldn't be the kind of a 
benchmark that would help us to know what we've achieved and 
what remains to be achieved.
    I'll ask either of you to respond.
    General Maples. Senator, let me just start on more of an 
operational level and the fulfillment of the intelligence 
requirements that were provided from the commander, because I 
think you're exactly right. As we look at the intelligence 
requirements from the commanders, we develop our collection 
strategies. But we have to have a process at the end of that 
that is an assessment of how well are we doing, are we actually 
meeting the need or are we just producing information, and are 
we producing the right kinds of information that are enabling 
our commanders to make the right kinds of decisions and our 
forces on the ground to take the right kinds of action.
    So I think that process on the IC side is absolutely 
essential.
    We recently had a National Intelligence Board, and I'll 
mention it for Director Blair, but I think he has already 
adopted the idea of intelligence metrics. That is, 
understanding what the objectives are we're trying to achieve 
and then using the systems that we have and our own assessments 
to do periodic assessments and see how well we are doing and 
where we are, and to provide the necessary updates to 
commanders and to policymakers as well. I think it's very 
important for us to do that.
    Senator Ben Nelson. Director Blair?
    Director Blair. Yes, sir. I think that the whole business 
of the role of intelligence and telling truth to power and all 
of that revolves around two processes within an administration. 
One is in the initial stages when the administration, like this 
one, is looking at policies to determine what it's going to do 
going forward, we have to lay out the situation on the ground 
so it's clearly understood what we're dealing with.
    We're often asked if-then questions. If the United States 
does this, then what will happen? We use different tools to do 
that. One that we've used quite well recently was sort of a 
tabletop seminar of playing out some possible policy options by 
the United States with members, knowledgeable members of the IC 
playing the roles of both adversaries and friends, and to try 
to see how this all shakes out. So that's sort of the role 
we're in now.
    Then once a policy is set, then I think the job of 
intelligence is to tell in a clear-eyed fashion to the 
policymakers, how is it doing, how is it working? We've talked 
about Iraq. Iraq was based on a set of intelligence assumptions 
about things going generally in a secure direction if things 
happened on the Iraqi side and on the coalition, the American 
side, and some possible dangers that might trip us up if they 
developed in a certain way.
    So our responsibility is to look at that, and we have a 
formal process of reporting periodically were the judgments we 
made correct, are the things that we predicted to happen 
happening, or have things happened--and were supposed to be an 
early warning indicator and certainly a current warning 
indicator of whether things are working out as they were 
anticipated. I think that's the big role at the policy level.
    Then of course down at the--once you put diplomats, troops, 
the Central Intelligence Agency agents, and aid workers into 
the field, then we need to provide the information that they 
need to get their job done. Your feedback on that one is pretty 
quick. You have a dissatisfied customer who's saying, I went 
out to this area, you told me this was going to happen, and 
something else happened.
    Senator Ben Nelson. That would be the case with basic 
services. For example, if your objective is to establish basic 
services, you could measure to what extent that is accomplished 
and how much more you have to do. The same thing I think would 
perhaps be the case in taking over the southern region: how 
much of it have you taken over, the major population centers, 
or are there some that remain to be taken over?
    Let me switch a little bit and go to cyber, because it's an 
ever-expanding asymmetric threat to the United States. In every 
aspect of our American life, and perhaps even in the world, 
cyber is critically important. Do we have the capabilities of 
deciding if something is an intrusion into our cyberspace here, 
whether it's a criminal act or an act of war?
    Director Blair. We do not have the absolutely unerring 
capability to determine that. It often takes weeks and 
sometimes months of subsequent investigation. We call that 
process attribution, who did it. The attribution process, if 
you're lucky, can be quick. Most of the time it's very slow and 
painstaking, and even at the end of very long investigations 
you're not quite sure. So it's not a ``we know who did it.''
    Senator Ben Nelson. Are we working to try to improve the 
speed with which we can establish that attribution?
    Director Blair. Absolutely, yes, sir. I think as important 
as attribution is having defenses up fast. We need to be able 
to detect a type of attack coming in and be able instantly to 
spread that information across a broad number of networks, not 
just the military and intelligence networks that we use for our 
business, but wider government, the ones that you all use for 
your communications here in the Legislative Branch, and then 
critical infrastructure. That can only be done by some very 
fast automated systems.
    Senator Ben Nelson. So it's better to be a defense against 
the intrusion than try to deal with it after the fact. But that 
obviously is a tall order.
    Director Blair. Yes, sir, but we're working on it.
    Senator Ben Nelson. Thank you.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Nelson.
    Senator Martinez.
    Senator Martinez. Thank you very much, Mr. Chairman.
    General Maples, let me add my word of thanks for your 
service and wish you the very best in your future endeavors.
    I want to shift to another area of the world, Latin 
America, which is close to the State of Florida and important 
to us in many respects. Director Blair, I wanted to ask if you 
would assess for us Venezuela's current situation given the 
international crisis, economic crisis, as well as the decline 
in oil revenues that we have seen to governments like Venezuela 
as a result of the declining oil prices.
    Do you see that dramatic decline in oil revenues to the 
Venezuelan government as becoming a factor and impacting the 
politics or the policies internally and externally of 
Venezuela's government?
    Director Blair. Yes, sir, externally it certainly affects 
it. We project that Venezuela will not be able to spread around 
its oil wealth abroad for the various projects that we all know 
about. Internally it's also having somewhat of an effect since 
these oil revenues are being used to prop up Chavez's populist 
approach. At least originally, it doesn't seem to make him any 
more modest about his goals of trying to become a ruler for 
longer than his constitution currently allows.
    Senator Martinez. Along those lines, do you see, as he 
retrenches in some of his international ambitions--what are his 
goals really in the region? He was a big purchaser of arms from 
Russia and others. Obviously--and perhaps, General Maples, you 
might want to comment on this. Has that curtailed the purchases 
of arms and his high ambitions, to include submarines, attack 
jet fighters, all kinds of things, including a facility to 
build AK-47s?
    Anyway, where are we on all of those issues? Has any 
curtailment occurred?
    General Maples. We're starting to see some decisions taken 
that would delay the purchase of some parts of that equation, 
and in particular you mentioned the submarines. The larger 
purchases, we are starting to see decisionmaking that would say 
they are going to delay that.
    The earlier purchases for arms manufacturing, AK-47s, put 
the plant in place, 200,000 weapons that they were bringing in, 
the fighters that he was bringing in, we still believe they are 
on track, and we believe that he is getting some credits, in 
particular from his major supplier, from Russia.
    Senator Martinez. Now, those arms are obviously not just 
for internal consumption, but I know that they find their way 
into other venues. Particularly I know that the Venezuelan 
government seems to have been complicit for a long time, and 
made public last year, with the Revolutionary Armed Forces of 
Colombia (FARC). Do you see any lessening of Venezuela's 
cooperation in providing sanctuaries as well as Ecuador's 
participation in providing sanctuaries for the FARC, and how do 
you assess the FARC's current situation given the major 
setbacks that they suffered last year?
    General Maples. Let me begin with your last point because I 
think the FARC has suffered some major setbacks. From a 
military standpoint, that's resulted in a great number of 
desertions, both of members of the FARC and leaders of the 
FARC. Nevertheless, they're continuing on in their narcotics 
effort, which is a part of what they do. But their activities 
are less than they have been in the past.
    President Chavez is still supportive of the FARC, but less 
so than we saw a year ago. No real response in terms of Ecuador 
at this point, probably because there's less activity of the 
FARC crossing the borders to the south.
    In terms of the weapons, we have not seen Venezuela 
supplying weapons. Don't know what the purpose of their 
purchase is, so they're making investments that we are watching 
because we don't know exactly what the intent is of President 
Chavez for the use of those.
    Senator Martinez. Now, the Venezuelan government I 
understand has been complicit in the cocaine flow through its 
territory both in the direction of West Africa, but also 
perhaps directly into Europe. Are you able to shed any light on 
this in terms of the Venezuelan government being complicit in 
drug trafficking?
    General Maples. Sir, I don't have any information on that, 
on the drug trafficking.
    Senator Martinez. The same with you, Director Blair?
    Director Blair. Yes.
    Senator Martinez. We know that Venezuela is pretty much 
Cuba's benefactor and as a result of their largesse through oil 
and other assistance provides Cuba with pretty much the ability 
to remain afloat in what is pretty much an economic basket case 
I think generally acknowledged. Any change in that relationship 
in addition to the fact that Cuba appears to have some 40,000 
Cubans operating in Venezuela, many of them I've read reports 
are involved in providing personal protection to Mr. Chavez, as 
well as obviously providing training to local police? 
Obviously, Cuba's police is not a democratic police force, but 
it's more a force of repression.
    Any light you can shed on those kinds of activities, both 
the reciprocal relationship, Venezuela's assistance to Cuba and 
Cuba's participation in Venezuela's increasingly autocratic 
government?
    Director Blair. General Maples mentioned Venezuela pulling 
back its support a little bit because of the price of oil going 
the way it is. It seems that its cooperation with Cuba, both 
its supply of economic support to Cuba and the reciprocal flow 
of Cubans into Venezuela, is the last thing that would go. It 
considers it more important. So we have not seen the effects on 
that that we've seen on some of these other areas we've talked 
about.
    Senator Martinez. Focusing on Cuba, a week ago today there 
were some pretty dramatic changes to the Cuban hierarchy. In 
fact, for the last couple of years many have claimed that Raul 
Castro in fact wants to present a moderate image and would be a 
harbinger of significant change. Last week Carlos Lage, who by 
many has been viewed as the reformer within the system and many 
viewed as a potential successor to Raul, was not only relieved 
of his responsibilities, but in a Stalinist kind of action, he 
and Felipe Perez Roque, the former foreign minister, both 
signed letters of confession admitting to their mistakes and 
resigning from all political posts. It's sort of reminiscent of 
Stalin in the late 1930s.
    But anyway, can you shed any light on what the IC makes of 
these changes, as well as the perception of Raul Castro as a 
moderate when in fact over the last 2 years anecdotal reporting 
of increasing repression within Cuba and absolutely no change 
in any respect, with this new purge, which has included 
bringing into the government now more military and continuing 
an aging leadership that seems to be essentially closing ranks 
rather than filtering any new air into the room.
    Director Blair. I think there are different explanations 
going back in personal relations and policy positions that the 
IC is debating about those personnel actions that you 
described. But a move toward political moderation is not one of 
the explanations that anybody thinks is a reason for it.
    Senator Martinez. Thank you. My time is up. Thank you very 
much.
    Chairman Levin. Thank you very much, Senator Martinez.
    Senator McCaskill.
    Senator McCaskill. Thank you, Mr. Chairman.
    To set the table for my questions, gentlemen, I assume that 
in this economic climate internationally the use of our 
resources in terms of our money flowing to these various 
nations that are so important to our national security becomes 
even more important. I assume that there wouldn't be any 
disagreement about that.
    Director Blair. I'm sorry? Which kind of money flowing to 
these countries?
    Senator McCaskill. Any kind of cash that we're giving to 
these countries directly from the American Government. I'm 
assuming that is a pretty strategic, important resource for us 
to be spreading around right now?
    Director Blair. It's more important in hard times than it 
is in other times, yes, ma'am.
    Senator McCaskill. Right. Relating to that, I know that we 
have given Pakistan over $12 billion and I would like to focus 
my questions on Lashkar-e-Taiba, the homegrown terrorist 
organization in Pakistan, and find out whatever we can find out 
in this forum, how confident you are of the cooperation of the 
Pakistani government with Lashkar-e-Taiba, if in fact they have 
been obstructionist in terms of our investigations, if you 
agree that Lashkar-e-Taiba is indicated in terms of involvement 
with not only Mumbai, but the cricket team deaths, obviously 
the subway killings in London, the international flights from 
Europe to the United States, the plots to blow those up, and 
your take on how we attack this issue of, while we are giving 
them billions of dollars, they're refusing to even provide 
basic cooperation in our investigations of this international 
terrorist organization, Lashkar-e-Taiba.
    Director Blair. I think many of the details ought to be 
saved for a closed session, Senator McCaskill. But in general, 
I don't think the picture with Pakistan's cooperation is quite 
as bleak as you portrayed. In fact, the action after the Mumbai 
bombing in particular has been greater from Pakistan's point of 
view than many previous ones.
    Leaders of Lashkar-e-Taiba were arrested and Pakistan has 
undertaken to prosecute them. It has asked for India to provide 
the evidence that could be used in such a prosecution. The 
United States is involved in trying to work with both sides in 
order to make that happen.
    So I think that particular trend is positive. But it has a 
ways to go and it's not a simple progress.
    Senator McCaskill. Let me ask about visa-free waivers as it 
relates to disaffected Pakistanis and their ability to travel, 
and whether or not there are any concerns about that. Also, if 
either one of you have any ability to share with us whether or 
not--I know there is a significantly influential American-
Pakistani community. A lot of professionals and leaders in 
every community in this country are from Pakistan and 
wonderful, loyal, patriotic American citizens. To what extent 
have we utilized that resource in trying to identify any cells 
of disaffected Pakistanis that maybe, unfortunately, have more 
leeway to travel than someone, for example, that's Iranian?
    Director Blair. I think we'll have to get back to you on 
that, Senator McCaskill. I do know that, in working with 
ethnic-American groups, whether they be Pakistani Americans or 
others, we get a great deal of cooperation on the very precise 
issues like the ones you mentioned. But I think on the 
particulars related to Pakistani-Americans and visa-free 
waivers we'll have to get back to you.
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    Senator McCaskill. Let me also ask you, where are we in 
terms of our challenges of our language ability in the IC and 
the ability of our resources to speak fluently and indigenously 
in terms of gathering the most valuable kind of intelligence 
that we can get?
    General Maples. I can talk from my own perspective there, 
and I think it's true across the whole community. We have all 
been focused on recruiting individuals who have native, near-
native language skills, cultural understanding, bringing them 
into the organizations. I know in my organization we have more 
than doubled the number of individuals that have the kinds of 
language and cultural skills that we're looking for, and they 
are being used right now both in our analytic arena to give us 
the cultural understanding that goes beyond knowledge, so that 
we really understand events as they're happening on the ground, 
and then forward in our human intelligence collection as well. 
Having those individuals who have the right background and have 
near-native language skills proves to make a huge difference 
for us in human intelligence-gathering.
    Senator McCaskill. Is there anything else we can do to be 
helpful in that regard? As a former prosecutor, I know where we 
got the best information and it wasn't from tough 
interrogations. It was from our ability to infiltrate and 
integrate into certain criminal organizations people who could 
give us real-time information.
    Obviously, in this area, when prevention is so important, I 
just want to make sure we're doing everything we can to give 
you everything you need to get that kind of capability that we 
have been so concerned about.
    Director Blair. That's a very kind offer, Senator. But I 
think it's not a lack of resources or effort at this point. 
It's the difficulty of it. I was just, for instance, last week 
at a meeting of what's called the Heritage Council, which is 
the heads of many ethnic American groups--Iraqi Americans, 
Afghan Americans, Burmese Americans. This is the third meeting 
with that group, and I'm told by both my people and the 
representatives in that group that it's taken almost that long 
to get the trust of the IC, for these leaders to realize that 
patriotic Burmese or Afghan Americans who went to serve their 
country and bring invaluable skills, it's okay, you are doing 
important work and you know all of the misperceptions and 
television-based rumors that are there.
    So we are making progress in that area. But I'm not sure we 
could have speeded up that program with more money or more 
effort. It's a high focus and I think we're making good 
inroads.
    Senator McCaskill. I think that the comment you made, 
Director Blair, about the recognition in our country that it's 
not the Muslim faith that's the problem, it's terrorists who 
inappropriately mask their terror in a religious connotation. 
So many of these leaders in America, wonderful--and it's not 
just the American Pakistani community I'm referring to. We 
have, as you say, so many Americans that still have family in 
Iraq and Iran, so many Americans who have family throughout 
this region.
    I just think they have suffered greatly because they are 
profiled, they are looked at suspiciously when they travel as 
American citizens. I think they are anxious to be helpful in so 
many ways, and I just hope it's a resource we continue to try 
to expand upon, because I think it could be very, very 
effective, not just in terms of our diplomatic efforts, but 
also in our intelligence efforts.
    Director Blair. I think you're right. In my background--and 
I'm sure General Maples knows it--the most highly decorated 
military unit in American history was the 442nd Regimental 
Combat Team, Asian Americans, many of whose parents and 
grandparents were in detention camps at the time that they went 
to Italy, and won more medals than any other unit in action.
    Senator McCaskill. I think there's some recruiting to be 
done there.
    Director Blair. I think there is.
    General Maples. You're exactly right, and these are 
Americans who want to serve our Nation.
    Senator McCaskill. Absolutely.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCaskill.
    Senator Wicker.
    Senator Wicker. Thank you, Mr. Chairman.
    Gentlemen, thank you for your testimony. I may be about to 
ask you to parse words, but I want to follow up on the 
chairman's question about Iran's nuclear aspirations. Director 
Blair, in your printed testimony you speak about Iran's pursuit 
of nuclear weapons as one of the goals that fuels Iran's 
aspirations for regional preeminence. You go on to mention 
Iran's goal of defending its nuclear ambitions.
    Yet in your answer to the chairman's questions, you agree 
with the rest of the IC that Iran has halted its nuclear 
weaponization program in 2003 and not resumed it. Explain their 
pursuit of nuclear weapons capability and defense of its 
nuclear ambitions in light of your answer to the chairman's 
question?
    Then I'd like to ask both of you if you are in complete 
agreement, if your agencies are in complete agreement with each 
other on the extent to which Iran has abandoned its nuclear 
weaponization goals.
    Director Blair. Senator Wicker, there are three components 
to Iran's nuclear weapons program. One is the fissionable 
material, HEU--their current supply of LEU under the 
International Atomic Energy Agency supervision, which could be 
the feedstock to HEU, which could result in having enough for a 
weapon by some time 2010 to 2015, and there's a difference of 
opinion among the intelligence groups within that range.
    Senator Wicker. 2010 to 2015?
    Director Blair. 2015, yes, sir.
    So that's the HEU which forms the payload of the bomb. Then 
there's the weaponization track of it, which has to do with 
developing the ability to take the HEU, put it with high 
explosives into a weapon that can go on a warhead. It was the 
work on that track that was suspended in mid-2003 and as of at 
least mid-2007 had not been resumed. So that's at a pause as 
far as late 2007.
    Then the third track is the delivery capability, which the 
delivery weapon of choice in that part, in most of the world, 
is a ballistic missile. Space launch technology is no different 
from military technology, and the Safir launch last month shows 
that Iran is mastering the use of ballistic weapons.
    So it takes all three of those to build a capability. The 
overall situation--and the IC agrees on this--is that Iran has 
not decided to press forward on all three tracks, to have a 
nuclear weapon on top of a ballistic missile.
    Senator Wicker. Are they proceeding on the first track?
    Director Blair. They're proceeding on the first. They're 
proceeding on the LEU track. They have not gone to a HEU track.
    Senator Wicker. It's your assessment that they are not 
producing HEU at this point?
    Director Blair. Yes, sir, that's the assessment.
    Senator Wicker. General Maples, are you and the Director in 
complete agreement on this assessment?
    General Maples. We are in agreement on this. In fact, 
across the IC we're in fundamental agreement on the assessment. 
I think between the agencies there may be some difference in 
the level of confidence, but we're in fundamental agreement on 
where they are.
    Senator Wicker. Is it fair to say that the Israelis 
disagree with that assessment?
    Director Blair. The Israelis are far more concerned about 
it and they take more of a worst case approach to these things 
from their point of view.
    Senator Wicker. Naturally they would be far more concerned. 
But in their assessment of the facts as they exist, do our 
friends in Israel assess the facts differently?
    Director Blair. The facts are the same. The interpretation 
of what they mean, Israel takes a----
    Senator Wicker. So it's a matter of interpretation?
    Director Blair. Yes, sir.
    Senator Wicker. Thank you.
    Let me move if I might, Mr. Chairman, to Mexico in the 
remaining time I have. The testimony talks about, the 
assessment that I have, talks about President Calderon's 
success leading to the increased violence. How serious of a 
problem is this for us? To what extent is our success in 
Colombia causing the drug trade to move to Mexico? Is there a 
connection there?
    Are there lessons we can learn from Plan Colombia? Is it 
time for the United States to consider a similar plan for 
Mexico, Plan Mexico, to fully devote our efforts toward this 
problem, which appears from these reports to be very, very 
serious?
    Director Blair. I think that the violence that we're seeing 
in Mexico, the drug-related violence which resulted in some 
6,000 deaths last year, is directly the result of President 
Calderon taking on the drug cartel. So in a sense it's the 
consequence of a positive development. I would emphasize that 
President Calderon's initiative is not just against drugs per 
se, as bad as they are, but he is motivated by seeing that the 
lock that the money and influence of drug cartels have on his 
country is a fundamental problem, on the judiciary system, on 
the police system, on the political system in many cases.
    So he came to the conclusion that unless he went after the 
drug cartels he was not attacking fundamental challenges of 
Mexico, and he's taken them on and it's been an amazing and 
admirable initiative on his part.
    I believe, the President believes, that it is important to 
support President Calderon on his initiative in many ways as we 
can, from the Merida Initiative which began under the previous 
administration and will be carried forward, to the things that 
we can do on an agency to agency basis, whether it's the 
Department of Justice (DOJ), the Federal Bureau of 
Investigation (FBI) within DOJ, Department of Homeland Security 
(DHS), or us in the IC who can assist the Mexican intelligence 
authorities on this goal which is in both of our interests.
    Senator Wicker. You see President Calderon's program as 
successful if he stays the course, even though the immediate 
result has been this huge spike in deaths and violence?
    Director Blair. Absolutely.
    Senator Wicker. I certainly hope so.
    Mr. Chairman, I hope we'll be willing to be a teammate with 
them, with our North American neighbor in this regard, because 
it certainly at this point appears to be a sort of surprising 
and very, very serious problem.
    Thank you.
    Chairman Levin. Thank you, Senator Wicker.
    Senator Webb.
    Senator Webb. Thank you, Mr. Chairman.
    Actually I wasn't going to start here, but let me express 
my concurrence with what Senator Wicker just said.
    When we look at this violence that is going on principally 
along the border--it's not simply along the border and it's not 
totally because of what the Mexicans are doing, although I 
certainly would express my appreciation for their taking that 
on. These cartels make $25 billion a year in profit. They have 
highly sophisticated military people working for them, people 
in some cases who were trained by our own special operations 
schools. They use automatic weapons, rocket-propelled grenades 
and grenades.
    They are already in our country. The Mexican cartels have 
operations in 230 cities in the United States. There was an 
article in The Economist about a year ago that said that, as I 
recall, two-thirds of the outdoor marijuana plantations in 
California are run by the Mexican drug cartels, and marijuana 
has replaced wine as the number one agricultural product of 
California.
    So I would begin--actually, I wasn't going to begin, but I 
would begin by requesting that you take a hard look at the 
threat to our national security that these transnational 
syndicates are bringing. It's not just the Mexican drug 
cartels. Fairfax County, Virginia, right across the river here, 
has several thousand gang members, principally MS-13, who are 
involved in a lot of violence and a lot of trafficking.
    That being said--I wanted to say it before Senator Wicker 
took off--the first thing I would say, Mr. Chairman, is for the 
record I'd like to point out that Director Blair, Admiral 
Mullen, and I are all from the same Naval Academy class. I've 
known Director Blair since I was 18. I think there are few 
people in this country who have developed the expertise that he 
did early on in his career with respect to Russia. In fact, I 
took Russian with Director Blair when I was a plebe. We got to 
the third class period, I was still trying to figure out the 
alphabet and he announced that he could now think in Russian. 
He's a pretty smart guy.
    Director Blair. Simple thoughts. [Laughter.]
    Senator Webb. I welcome him back to serving our country.
    I also would like to say that I appreciate the context in 
which you answered the question with respect to Ambassador 
Freeman. I was one of those who was very skeptical about the 
creation of the position that you now hold, and we corresponded 
about that. There is an inherent danger when you centralize 
intelligence, and we saw that with respect to the lack of 
divergence of opinions in terms of the run-up to Iraq. We 
simply didn't have enough contrary and meaningful discussion in 
the IC before we went in.
    So I think that the idea of having informed divergent views 
is very vital to how our decision processes work, and I 
appreciate that point of view.
    General, a question was asked to you about the relationship 
between Iran and Afghanistan. Is it not true that Iran is now 
also allowing NATO cargo shipments to pass through Iran into 
Afghanistan?
    General Maples. Sir, I'm not familiar with that.
    Senator Webb. We have been briefed to that effect. So 
you're not aware that that's going on?
    General Maples. No, sir. I'll have to get back to you on 
that, sir.
    [The information referred to follows:]

    [Deleted.]

    Senator Webb. All right.
    With respect to the testimony about China, Director Blair, 
I've had a long concern about the incrementalism with respect 
to China. You do mention in your testimony that China over the 
past several decades has begun a substantially new phase in its 
military development by beginning to articulate roles and 
missions that go beyond its immediate territorial interests.
    I actually wrote a piece for the New York Times about that 
in 1995 when they changed their doctrine from pure defense into 
power projection. I'm very concerned. It ties in with the 
incident that we saw with the naval ship. They have been 
expanding their military. In many cases it's understandable as 
you're expanding your economy, but in other cases it should 
give us concern, particularly with respect to the South China 
Sea. They claim Taiwan, obviously. They claim the Shinkaku 
Islands, which are between Taiwan and Japan. Japan also has 
sovereignty over those at this moment. They claim the Paracels, 
which Vietnam claims. They claim the Spratlys, which Vietnam, 
the Philippines, Brunei, and Malaysia claim. They claim lost 
territories basically wherever you can find a piece of Chinese 
porcelain from 500 years ago.
    There have been a number of incidents with respect to all 
of those areas that I just mentioned over the past 4 or 5 
years. They have been known to build facilities in Indian Ocean 
areas. Burma is a good example.
    So how are you seeing all this in terms of how that fits 
together for the position of the United States in that region?
    Director Blair. Senator, you've been I know following 
Southeast Asia very closely for a number of years. I think the 
Chinese trajectory there has changed in a somewhat more 
aggressive way in the past several years from what we had seen 
earlier. You will recall that when the code of conduct was 
agreed to with a lot of Association of Southeast Asian Nations 
pressure on China, it seemed that perhaps China was taking a 
diplomatic approach there. It settled its boundaries with 
Vietnam, agreed to the code of conduct.
    In the past several years they have become more aggressive 
in asserting the claims for the EEZ which, as you pointed out, 
sir, are excessive under almost any international code, and 
this latest incident with fishing vessels and a PLA Navy vessel 
involved is the most serious that we've seen since 2001, the 
EP-3 incident.
    So I would agree with you that as far as the South China 
Sea activities of China, they seem to be more military, 
aggressive, forward-pushing than we saw a couple of years 
before. The buildup in the South Fleet out of Hainan has been 
larger than other parts of the fleet. So I think that is a 
trend that we are seeing.
    The other big development, of course, is the Chinese 
deployment of a couple of ships to take part in anti-piracy 
patrols near Somalia. On that face it seems to be a good 
positive use of Chinese military forces as part of a group who 
are seeking common goals.
    So I think the debate is still on in China as to whether as 
their military power increases it will be used for good or for 
pushing people around.
    Senator Webb. Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Webb.
    Senator Collins.
    Senator Collins. Thank you. Thank you, Mr. Chairman.
    Director Blair, in your testimony you stated that the 
primary near-term security concern of the United States is the 
global economic crisis. That isn't usually how a DNI begins 
testimony to us, so it has caught all of our attention.
    A cyber attack on our financial institutions would 
obviously greatly exacerbate that crisis. What is your 
assessment of the capabilities of terrorists to launch a 
catastrophic cyber attack on our financial system?
    Director Blair. We know that terrorists are interested in 
using cyber weapons just the way they're interested in using 
most any weapon that they can use against us. We know that they 
believe that our economic strength is one of the targets that 
they would most like to attack. That's partly why they chose 
the World Trade Center, in addition to the symbolic reasons.
    We currently assess that their capability does not match 
their ambitions in that area, although that's something we have 
to work on all the time because as things become more 
widespread, terrorists can find hackers to work with them. So 
it is a concern. But right now I'd say their capability is low.
    In addition, I think the more spectacular attacks that kill 
a lot of people very publicly is what they are looking for 
also.
    Senator Collins. The Federal Government's Director of Cyber 
Security resigned this week and he cited a lack of support and 
funding as well as an overreliance on the National Security 
Agency (NSA) for combating threats to our Nation's computer 
systems. I know that you have not been DNI for that long, but 
what is your assessment of the adequacy of our efforts to 
combat cyber attacks?
    Director Blair. Senator Collins, I'm familiar with the 
remarks of the Director of the DHS Cyber Center as he left. The 
NSA is the repository of the most technical skill in the area 
of cyber defense, based in large measure on its ability to do 
cyber attack, which gives it an understanding of what the tools 
are so it knows what can be used against us. So I'm a strong 
advocate of the NSA making its technical skill available for 
defending other networks, both in the government and in the 
country.
    I'm also aware that this very much has to be done in a way 
that those who supervise us here in Congress and American 
citizens in general feel that that's being done under strict 
controls with oversight, so that we are protecting the right 
information and not gathering information that abridges civil 
liberties and privacy of Americans.
    I think unless we can work out that way to use the 
capabilities of the intelligence agencies for the right 
purposes, with confidence from those of you in Congress and the 
American people that we're not using them for the wrong 
purposes, we're not going to make the progress we need to on 
defending the country against those kind of attacks.
    I think we can do it technically. We have to do it in a way 
that everyone has confidence in. There's a review going on 
right now on that very subject, being led out of the White 
House, to try to build that structure and to get that support.
    Senator Collins. Thank you.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Collins.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Director Blair, thank you again for returning to active 
service. But I particularly want to thank and commend General 
Maples for his extraordinary service to the Army and to the 
Nation.
    I associate my comments with Chairman Levin and Ranking 
Member McCain, but I want to make one augmentation to the 
record. Senator McCain said 38 years of service and I have 
firsthand evidence that you joined the United States Army on 
July 3, 1967, which makes it 42. So thank you, General, for 
your service and your friendship.
    General Maples. Thank you, sir.
    Chairman Levin. You're even older than Senator McCain 
thought. [Laughter.]
    Senator Reed. I can't say anything because he looks younger 
than me and we're classmates. So I have to be very careful 
about this.
    Let me return to a topic that I think was broached, and 
that is the terrorist group Lashkar-e-Taiba. It's operating in 
Pakistan. It was in my recollection essentially a creature of 
Interservices Intelligence (ISI) to conduct operations in 
Kashmir, so its relationship to the Pakistan Intelligence 
Service is very disturbing. It conducted the operations in 
Mumbai, but some have suggested that it poses a much, much 
broader threat because of its ability to operate locally in 
Pakistan, because of its connections to many Pakistani 
nationals who reside outside of Pakistan in Europe and even in 
the United States.
    Can you give an assessment, is this the group that is 
beginning to fill up the operational space being denied to al-
Qaeda?
    Director Blair. Senator Reed, Lashkar-e-Taiba and its 
affiliate, which I believe is called JUN, J-U-N--this is the 
widows and orphans humanitarian wing of it. There is a typical 
arrangement often between extremist groups and----
    Senator Reed. The Hamas model.
    Director Blair. Yes, sir, which is well established.
    You're quite right, its long ties as being a means to hit 
India over the Kashmir issue give it strong roots. The Pakistan 
Government has changed its policy towards Lashkar-e-Taiba 
partially, but it has not become a force for good in Pakistan 
or in the region.
    I don't assess that it is replacing al Qaeda as a worldwide 
terrorist directed against western, American interests or 
shares the al Qaeda messianic ideology of a greater pan-Islamic 
state and driving conservative Muslim governments from power. I 
think it's much more directed than that. But it certainly has 
the capability and can still carry out acts which are against 
American interests.
    Senator Reed. General Maples, you have comments?
    General Maples. I would just comment that Sayyed, who is 
the leader of Lashkar-e-Taiba, does have a belief in the 
establishment of a fundamentalist Islamic state. Lashkar-e-
Taiba has been very involved in Afghanistan with that as an 
intended purpose. So while there is still the focus on Kashmir, 
a focus on India, there's also a focus in the other region. I 
think that fundamentalism is an issue that makes Lashkar-e-
Taiba a real concern to us, because I think they do have 
ambitions beyond that.
    I don't know that they have reached the level of another al 
Qaeda or a replacement for al Qaeda, but I think that their 
beliefs are very similar in nature. I also believe that the 
Pakistani government, as the Director has said, has distanced 
themselves from Lashkar-e-Taiba and has taken some very 
significant actions in the recent past towards the 
organization.
    Senator Reed. Thank you.
    Let me switch to a different topic. We are in the process 
now of redeploying our forces from Iraq to Afghanistan. One of 
the key issues that both General Odierno and General McKiernan 
have is their force multipliers, their intelligence platforms, 
their special operations forces, those things that allow you to 
build up the effort in Afghanistan, but also as an economy of 
force measure in Iraq to continue to keep the pressure.
    Can you give me from your perspective, Director Blair and 
then General Maples, sort of, do we have sufficient resources 
in this area, the intelligence platforms, the analysts, not the 
Brigade Combat Team (BCT) intelligence but those things that 
make the BCTs work well, for the effort that is before us?
    Director Blair. We had a meeting on that exact topic, 
Senator Reed, of the executive committee of the IC about 2 
weeks ago, in which we went through that analysis. The short 
answer to your question is that we believe we have the 
facilities that could be brought to bear. We have it largely, 
but not entirely. I'm confident that we will be able to put 
adequate support in to support the level of engagement that we 
decide on.
    The heart of it from the military point of view is the ISR 
joint task force, which now covers both Afghanistan and Iraq. 
General Maples is intimately involved in staffing that up.
    Senator Reed. General Maples?
    General Maples. Sir, the answer to your question is yes, I 
believe we have the resources to do what is necessary from a 
defense intelligence standpoint in both locations. We are 
working right now with Multi-National Force-Iraq on the plan 
for the intelligence structure that will remain as we go 
through the drawdown. Our belief is that our intelligence 
structure, with the exception of those capabilities that are 
organic to the BCTs, will remain in place. The only adjustments 
we're going to make is based on capacity and demand for the 
tasks that we're going to be performing. But we are not 
dependent on those resources in order to build the capabilities 
that we need in Afghanistan.
    That said, for me as we drawdown in Iraq there's still the 
issue of how do we cover those areas that the BCTs have been 
operating in from an intelligence standpoint, how do we do the 
handoff of the sources, how do we provide insight and knowledge 
of what's going on in those areas. We're working through that 
plan.
    A big part of that, as the Director says, is going to be 
the plus-up that the Secretary of Defense has directed in terms 
of ISR capability going into Iraq. In Afghanistan, we are 
structuring for the buildup of forces and we've already started 
that process, putting more analysts in place in Afghanistan, 
more ISR capability that is going into the country now.
    The real issue for us is the duration and our ability to 
sustain the kinds of deployments and the expertise that we need 
for Afghanistan. We're having to build additional capability so 
that we can sustain that over time.
    Senator Reed. Thank you.
    My time has expired, but let me once again conclude by 
thanking you, General, for your service to the countless 
soldiers you've led and inspired, and thank you so much.
    General Maples. Thank you.
    Chairman Levin. Thank you, Senator Reed.
    Senator Thune.
    Senator Thune. Thank you, Mr. Chairman.
    General, Director, my thanks also to you for your many 
years of service and for your continued service to our country. 
We appreciate all that you do to keep our country safe and 
secure.
    Let me, if I might, Director Blair, direct a question to 
you regarding a hearing last month in front of the House 
Permanent Select Committee on Intelligence, in which 
Congressman Miller asked you to address a potential security 
threat of relocating the Guantanamo Bay detainees to facilities 
in the United States, specifically the possibility that holding 
detainees here in facilities stateside may encourage an attack 
on a facility to free detainees.
    As you perhaps know, last year the Senate passed a Senate 
resolution by a vote of 94 to 3 expressing the Senate's view 
that detainees at Guantanamo should not be transferred 
stateside into facilities in American communities and 
neighborhoods. The President's January 22, executive order to 
close Guantanamo and determine the disposition of individuals 
detained at Guantanamo Bay within a year requires that those 
individuals detained at Guantanamo be ``returned to their home 
country, released, transferred to a third country, or 
transferred to another United States detention facility in a 
manner consistent with law and the national security and 
foreign policy interests of the United States,'' and that's a 
quote.
    That same executive order requires you, as the DNI, along 
with other senior administration officials, to identify and 
consider legal, logistical, and security issues relating to the 
potential transfer of individuals currently detained at 
Guantanamo to facilities within the United States, and that you 
and other participants in the review work with Congress on any 
legislation that may be appropriate.
    You had told, I think, Congressman Miller at that hearing 
you'd have to go back and see if the possibility that holding 
detainees here in facilities statewide warranted a threat. I 
guess my question has to do with that follow-up. Have you or 
your staff identified and considered those legal, logistical, 
and security issues relating to the potential transfer of 
individuals currently held at Guantanamo to facilities within 
the United States?
    Director Blair. Senator Thune, I was at a meeting yesterday 
in which, at the senior level, we reviewed the work that's 
being done by the working groups on those exact questions. All 
of the things that you mentioned are very much at the heart of 
the interlocking set of decisions that have to be made. I can 
also say, as was specified in the executive order, that there 
is a commitment to consult with Congress as these tough 
decisions are reached.
    I can say that if there'd been any neat and tidy ways to 
handle these conflicting goods that Senator Graham and others 
are right in the midst of from both a legal and a policy point 
of view, it would have been found. It's going to be a series of 
tough decisions and it'll require Congress as well as the 
executive branch to help make them.
    Senator Thune. Have you made any conclusions or assessments 
about the threat yet or identified any of the security issues 
that are associated with that?
    Director Blair. Sir, I think that it does somewhat raise 
the threat level when a prison contains foreign terrorists as 
well as others. I don't think that that threat level rises to 
the level of the ambitions of al Qaeda and similar groups to 
try to conduct a spectacular attack that would be as great as 
or even greater than September 11 on the United States or other 
countries. But it does raise that concern somewhat.
    Senator Thune. My assumption is too that the resolution 
passed by the Senate last year would figure into those 
deliberations and send a statement with regard to having some 
of these detainees in American communities and neighborhoods. 
It affects the deliberations, my guess is?
    Director Blair. Yes, sir. It has not passed unnoticed. 
Several members of the meeting that I was in yesterday reminded 
us that the Senate is very sensitive on that score.
    Senator Thune. Let me shift gears for just a minute. There 
was an article written by Secretary of Defense Gates and 
published in the Foreign Affairs Journal in January of this 
year, in which he wrote: ``Both Russia and China have increased 
their defense spending and modernization programs, to include 
air defense and fighter capabilities that in some cases 
approach the United States' own.''
    He goes on to explain that, with respect to China, improved 
air defenses, coupled with investments in other asymmetric 
capabilities such as cyber warfare, anti-satellite warfare, and 
anti-ship weaponry, all threaten the way that the United States 
projects power. Secretary Gates wrote that ``These asymmetric 
capabilities will require a shift to long-range, over the 
horizon systems such as the next-generation bomber.''
    My question is, do you agree with the Secretary of 
Defense's assessment that in some aspects Russia and China's 
air defense and fighter capabilities approach our own, and is 
it your conclusion that they are proliferating some of these 
advanced capabilities? General?
    General Maples. I do agree with that. In particular, China 
from the air defense standpoint has developed a very modern, 
layered air defense capability in depth and is seeking 
additional air defense capabilities that will project even out 
to a range of 400 kilometers, that significantly affects 
potential U.S. operations in that region.
    Russia, quite frankly, is the developer of most of those 
systems and is exporting those systems both to China and to 
other countries in the world.
    Senator Thune. What's your general view right now about our 
capabilities in terms of long-range strike, and does the next-
generation bomber figure into our ability to project power on a 
long-range basis, I mean going forward? What's your overall 
assessment, because that's a big debate about whether or not, 
in terms of procurement and some of the weapons systems that 
we're developing for the future? The 2006 Quadrennial Defense 
Review (QDR) said we needed a next-generation bomber by 2018. 
There are reports, of course, that that is being scaled back or 
perhaps eliminated entirely as a requirement.
    What's your overall assessment? Shouldn't we be pursuing 
upgrades in our long-range strike capabilities?
    Director Blair. Senator Thune, the question of whether the 
bomber is the exact right system for the threat is really a DOD 
decision to make. But I would point out that there has to be a 
balance between your strike capability and your intelligence 
capability. I am personally as concerned about our ability to 
find the right thing to hit as I am about the ability to hit 
it. Advances in cover and deception, advances in potential 
adversaries' knowledge of how we go about our business, and in 
understanding have made it much more difficult to be able to 
feed those target points to the weapons deliverers, whether 
they're firing missiles or cruiser bombers or, down at a lower 
level, whether they're a special forces team trying to snatch 
somebody who's out to hurt us.
    So I think that, while you're absolutely right to be 
worried about long-range strike systems, I really am frankly 
more concerned about being able to tell them what to strike.
    Senator Thune. General?
    General Maples. Sir, with respect to the capabilities, 
that's the dialogue that's going on in the Department right now 
as to the capabilities that we'll require for the future. It'll 
be a part of the QDR process this year.
    I agree with the Director, what we have to clearly explain 
is how those modernization efforts fit together and the impact 
that that is going to have on the systems that we field and the 
systems that we require.
    Senator Thune. Thank you both very much, gentlemen.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Thune.
    Senator Burris.
    Senator Burris. Thank you, Mr. Chairman.
    I too want to extend my congratulations and thanks for all 
the service you gentlemen have given to this country. May God 
continue to bless you.
    Last Wednesday, the ICC issued an arrest warrant for the 
Sudanese President Al-Bashir for directing the genocide in 
Darfur. Shortly after the ICC announcement, President Bashir 
moved to expel foreign aid groups that provided food, water, 
medicine, and other crucial supports to more than 1 million 
displaced people from the Darfur region.
    General Maples and Director Blair, can you give us an 
assessment of what is happening on the ground today and what 
the IC is assessing as may happen in the coming weeks and 
months for this region?
    Director Blair. Senator Burris, we are aware of those 
actions that you mentioned by the ICC and then President 
Bashir's reaction. We have moved to try to assess more closely 
the humanitarian impact of the withdrawal of the food aid and 
so on. It really is a matter of how long it's sustained, and 
what the subsequent events are. Those are pretty much based on 
President Bashir's actions.
    The ranges of what might happen could go from another 
humanitarian crisis because of continued denial of food 
supplies, continued lawlessness in the camps that would cause 
great suffering and deaths, down to a relatively mild worsening 
to what's already a bad situation if they were of a short 
duration and the relief organizations were back in. So it's 
something we're looking at and it's hard to make a call right 
now.
    Senator Burris. General Maples?
    General Maples. Sir, I have nothing to add to that. I 
agree.
    Senator Burris. What is the situation then with the U.N. 
and whether or not they're going to be able to get some 
peacekeeping troops in there? Do we have any information on 
what the United Nations and Sudan are working on? Chad is in 
there and they're already up to the border, or Khartoum. I'm 
wondering whether or not that's going to escalate. What 
intelligence do we have of what's happening there?
    Director Blair. Senator, a United Nations-blessed largely 
African force has been negotiating with the Khartoum government 
for the conditions under which it can increase its presence in 
the area. Certainly the U.N. has intensified its efforts 
recently. But the indictment and President Bashir's reaction 
have made him less cooperative than he was before on that 
score.
    Senator Burris. Do you think this will extend the problem 
with the U.N. trying to move in?
    Director Blair. I think it will make it harder, yes, sir.
    Senator Burris. Let me shift gears, gentlemen, for one 
moment. You heard Senator Wicker raise a question about the 
drug cartel--I think it was Senator Wicker--in Mexico. There is 
a report this morning indicating that a local police chief and 
a handful of officers in Mexico were killed in a blazing attack 
by the drug cartels. This seems to be a reoccurring story in 
recent weeks and months.
    Gentlemen, can you discuss the capability gap of the 
Mexicans in their fight against the drug cartel? Given the 
recent statement by Admiral Mullen and Secretary Gates with 
regard to the military assistance--I'm particularly interested 
in the gap within their military--can they be able to handle 
this situation?
    Director Blair. Senator, I believe that they can handle the 
situation, given the determination that President Calderon has 
showed. The resources that he has put against it, he has 
increased the number of troops he's committing. He's increased 
the resources he has made available to those, both to his army 
forces that are involved in that and to the other law 
enforcement bodies.
    He is moving to remove corrupt officials. He's taken a full 
range of actions which are necessary to do it. I think he can 
succeed. I think we have the responsibility as being on the 
other side of that same border and, as Senator Webb, Senator 
Wicker, and others pointed out, sharing the bad effects of 
those cartels in our country, to help him.
    I believe there's a strong commitment out of President 
Obama and his administration, and I sense just from talking on 
Capitol Hill that there's a very strong commitment here in the 
Senate and elsewhere to support that. I'm very optimistic we 
can take these guys if we put the resources in and work 
together.
    General Maples. Sir, one comment on that. The chairman just 
returned from Mexico and a visit to the region. On his return, 
the Joint Staff has taken his report back and is working up 
some recommendations on how we could provide some assistance to 
the Mexican military.
    I know that on the intelligence side, personally I've had 
interaction with my counterpart in Mexico, which is pretty 
significant in terms of the relationship between the 
militaries, in looking for ways that we can share information. 
The Navy has recently signed an agreement that will enable a 
sharing of information, and I think the other services are very 
close to having that done in the near term as well. So we are 
looking for ways that we can support the Mexican military in 
their effort.
    Senator Burris. Thank you, Mr. Chairman.
    Thank you very much, gentlemen.
    Chairman Levin. Thank you, Senator Burris.
    Senator Graham.
    Senator Graham. Thank you, Mr. Chairman.
    Thank you, gentlemen, both for your service to our country 
past, present, and future.
    Along the lines of military assistance to Mexico, it seems 
to be just from listening to the news that the threats are 
growing. Would a Mine Resistant Ambush Protected (MRAP) vehicle 
assistance program be beneficial, Director, General?
    Director Blair. Right now we're talking with the Mexican 
Government on many different levels, Senator Graham. I'm not 
aware of all of the eaches of what we've done, sir, and I 
hesitate to shoot off the top of my head about something like 
that.
    Senator Graham. Fair enough.
    Director Blair, a nuclear-armed Iran in terms of 
destabilizing the Mideast and making the world a more dangerous 
place. If that event occurred, how would you rate it in terms 
of 1 being not so much and 10 being very destabilizing?
    Director Blair. It would be up on the 8-to-10 scale, 
Senator Graham. The countries in the region would react. They 
would react I think by looking to their own defenses, by 
looking for more involvement and protection from the United 
States, and there would be a spin in the region which would not 
make it any safer than it is now, quite the opposite.
    Senator Graham. Potentially terrorist organizations might 
benefit from that technology? Would that be a concern?
    Director Blair. The more nuclear material, the more nuclear 
weapons technology around, the greater the chances of it 
getting into the wrong hands.
    Senator Graham. I read your report about Iraq. Do you think 
it would be in our long-term national security interest to 
consider an enduring relationship with the Iraqi government and 
people after 2011?
    Director Blair. I hope all of the effort we put on Iraq 
results in a long-term relationship and not just a [indicating] 
``done that, get out of there.''
    Senator Graham. I agree.
    Director Blair. There's been a lot of blood shed by Iraqis 
and by Americans there, and I'd hate to think that we didn't 
turn that into something positive for the long-term.
    Senator Graham. From the strategic point of view, it sits 
between Syria and Iran. It's pretty good to have a friend right 
there. It would allow--Turkey's been a good ally, so I think it 
would have some benefit. I appreciate that answer. I think we 
need to think in terms of long-term security interests and Iraq 
could become a very stable partner in the future. That's the 
hope, and I appreciate that answer.
    Pakistan. I just read in the news, so I don't know any 
details, this deal that was done or being proposed between the 
Pakistan government and Taliban type organizations in the Swat 
region about sharia law being applied, what's your take on that 
and how do you feel about that proposal?
    General Maples. Sir, an agreement reached by the governor 
of the Northwest Province with the militants in the Swat Valley 
has both some pluses and minuses to it. From a judicial 
standpoint, the application of sharia law in some form--of 
course, there are many forms of sharia law--provides a more 
responsive approach to the citizens in the valley, and that's 
how the Pakistanis see it.
    There are some conditions of the Pakistan government that 
go along with this.
    Senator Graham. If you were a woman in Pakistan, would that 
be unnerving to you?
    General Maples. Absolutely, sir, it would. It is also 
unnerving to us from the standpoint of what that means to other 
militants----
    Senator Graham. Right.
    General Maples. --in the region.
    Senator Graham. Exactly.
    General Maples. We're very concerned about that.
    Senator Graham. Is it just a practical accommodation 
because of weakness or is this in the mind of the governor of 
the region a win-win? What would make one engage in such an 
agreement?
    General Maples. I believe it was, at least initially, was a 
belief that he could reduce violence by giving in to that. The 
reality is it hasn't changed the activities of the militants.
    Senator Graham. As a matter of fact, to me it is a very 
disturbing event that could really send the wrong signal to the 
wrong people at the wrong time.
    General Maples. Absolutely.
    Senator Graham. Now, when it comes to budgets, Director 
Blair, I think you're well positioned to guide this Nation 
through some very difficult times, both of you gentlemen. The 
President's budget proposes a decrease in defense spending. 
We're at 3.6 percent of GDP, I believe is the accurate number 
in terms of defense spending to GDP, and over time that budget 
would go down to 3 percent. Is that a wise move? What effect 
would it have, if any, on the ability to defend our Nation?
    Director Blair. I haven't sorted out the consequences from 
that point of view, from an intelligence point of view. I can 
comment that, at least in the budget negotiations that have to 
do with the intelligence part of it, the national intelligence 
program, there seems to be a strong understanding of the 
importance for intelligence, and I'll be up here testifying 
about the adequacy of that soon.
    Senator Graham. The reason I asked that question is we 
envision growing the Army and the Marine Corps, which I think 
is a good move, but the highest cost of DOD is personnel costs. 
So if you're going to increase the number of people and that's 
your highest cost already, something has to give somewhere. I 
would like if you could look at it and see what would give, and 
does that make us weaker or stronger?
    When it comes to Yemen--I saw your evaluation--do you 
believe it would be a wise idea to release any detainee at 
Guantanamo Bay back into Yemen?
    Director Blair. That would have to be decided on a case by 
case basis. But the initial experience that has been had with 
detainees that have been released to Saudi Arabia and then have 
gone to Yemen has been really, really mixed. Some of them have 
taken part and returned to the fold. Some of them have made a 
move and then come back again. So it doesn't inspire 
confidence.
    Senator Graham. General Maples, have you reviewed the 
detainee operations in Afghanistan? If you have, could you give 
us a brief assessment of detainee operations? It is my opinion 
that the number of detainees will likely grow as we engage in 
more fighting. What is the disposition plan for foreign 
fighters held in Bagram Air Base in Afghanistan, or do we know 
yet?
    General Maples. Sir, I don't know yet. We have had 
discussions about the issue that you just raised, and that is 
as we introduce more U.S. forces, particularly in southern 
Afghanistan, that there may be a need to provide for additional 
detainees that we would expect to come in.
    Senator Graham. Thank you both.
    Chairman Levin. Thank you, Senator Graham.
    We're now going to adjourn to Hart 219 for a classified 
session. We'll meet there in 5 minutes. I expect it will be 
fairly brief, but let's see if we can all get there in 5 
minutes.
    We stand adjourned.
    [Questions for the record with answers supplied follow:]
               Questions Submitted by Senator Carl Levin
               cooperation with russia on missile defense
    1. Senator Levin. Director Blair, in your prepared testimony you 
indicate that ``some combination of threats of intensified 
international scrutiny and pressures, along with opportunities for Iran 
to achieve its security and goals might . . . prompt Tehran to extend 
the halt to [its] nuclear weapons-related activities.'' As I mentioned 
in my opening statement, there may be an important opportunity now to 
explore cooperation with Russia on missile defense as a new element of 
our efforts to dissuade Iran from such activities.
    If the United States and Russia could agree to pursue cooperation 
on missile defense, could it help to dissuade Iran from taking the 
nuclear weapons path?
    Director Blair. [Deleted.]

    2. Senator Levin. Director Blair, given previous United States-
Russian discussions on possible missile defense cooperation, if Russia 
is interested in improving its security relations with the United 
States, do you believe Russia would have an interest in cooperating 
with us on missile defense?
    Director Blair. [Deleted.]

                      reconciliation with taliban
    3. Senator Levin. Director Blair and Lieutenant General Maples, it 
has been reported that President Obama suggested a willingness to 
consider reconciling with more moderate elements of the Taliban, 
similar to the way General Petraeus was able to improve security in 
Iraq by reaching out to local Sunni tribesmen who rejected the violent 
tactics of al Qaeda in Iraq. In your view, is the Taliban in 
Afghanistan a monolithic group?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    4. Senator Levin. Director Blair and General Maples, are there 
different factions or tribes within the Taliban that could provide an 
opportunity to achieve reconciliation without returning to a situation 
in which al Qaeda and associated extremists are able to find safe haven 
in regions of Afghanistan?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                 an afghanistan version of sons of iraq
    5. Senator Levin. Director Blair and Lieutenant General Maples, a 
major new initiative in Afghanistan is the Afghan Public Protection 
Program. The program works through community ``shuras,'' or councils, 
to select local members of the Afghan Public Protection Force, who will 
serve neighborhood watch-like functions in their home communities. The 
program will be accountable to the Minister of the Interior. Some see 
the program as an important program for improving security in tribal 
areas, while others have expressed concern the program risks renewing 
or supporting warlords. Is the approach of paying local tribes to 
maintain security in their communities, along the model of the Sons of 
Iraq, applicable in Afghanistan, or are the conditions in Afghanistan 
too different for this model to work?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                         lines of communication
    6. Senator Levin. Director Blair and Lieutenant General Maples, 
significant attention has been focused on the lines of communication 
(LOCs) used to supply the United States and other international forces 
in Afghanistan. The ground LOCs through Pakistan have come under attack 
by insurgents, and the Government of Kyrgyzstan has decided to close 
the Manas air base used by United States forces. United States 
officials have emphasized the need to establish and preserve multiple 
options, and progress has apparently been made in exploring some 
northern routes, several of which would reportedly involve the Russian 
Federation. How willing is Russia to support the overall international 
effort in Afghanistan?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    7. Senator Levin. Director Blair and Lieutenant General Maples, how 
much of a liability might reliance on Russia prove to be, bearing in 
mind that any transit agreements offer host nations ongoing potential 
leverage?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

          cooperation on counternarcotics operations with iran
    8. Senator Levin. Director Blair and Lieutenant General Maples, 
according to the International Narcotics Control Board, illicit opium 
poppy cultivation in Afghanistan dropped from its record level in 2007 
and the number of provinces free of opium poppy also increased, from 13 
to 18. Despite these improvements, Afghanistan continues to account for 
by far the largest share of the world's illicit opium poppy 
cultivation. Some reports suggest that much of this opium is 
trafficking to and through Iran. Does the Iranian government have 
concerns about the presence of the drug trade and drug use in its 
country and are they undertaking any law enforcement or military 
operations to counter the threat of narcotics in their country?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    9. Senator Levin. Director Blair and Lieutenant General Maples, as 
the administration continues to review its policy vis-a-vis Iran, in 
your assessment, are there opportunities for cooperation between the 
United States and Iran on counternarcotics activities?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                          al qaeda in pakistan
    10. Senator Levin. Director Blair, your prepared statement asserts 
that al Qaeda has been badly damaged by the air strikes in the 
Federally Administered Tribal Areas (FATA) of Pakistan. You proceed to 
speculate about what would happen to al Qaeda ``if forced to vacate the 
FATA and locate elsewhere.'' The implication seems to be that you 
believe the air strikes are making al Qaeda's situation in Pakistan 
untenable and that they may be thinking of relocating. Are you in fact 
implying that al Qaeda is being hit so hard in Pakistan that it may 
decide to quit the region?
    Director Blair. [Deleted.]

    11. Senator Levin. Director Blair, do you have evidence for this?
    Director Blair. [Deleted.]

    12. Senator Levin. Director Blair, what probability is assigned to 
this?
    Director Blair. [Deleted.]

                        pakistan-india relations
    13. Senator Levin. Director Blair, many experts believe that 
Pakistan seeks to dominate the Afghanistan Government, by sponsoring 
militant groups like the Taliban, in part because of Pakistan's belief 
that India seeks to annihilate the Pakistan state. In this view, 
Pakistan believes it must have a friendly regime in Afghanistan so that 
Afghanistan can serve as a ``strategic rear'' for Pakistan's 
confrontation in the east against India. Pakistan also sponsors violent 
extremist groups as proxies against India in the dispute over Kashmir. 
These experts conclude that Pakistan is very unlikely to adopt a more 
cooperative stance on Afghanistan unless the India-Pakistan 
relationship is fundamentally changed.
    The Composite Dialogue between Pakistan and India has made 
considerable progress in recent years. Moreover, it was recently 
revealed that India and Pakistan pursued a very serious, secret 
backchannel negotiation over Kashmir since 1999 under President 
Musharraf that reached a high degree of maturity before being deferred 
due to the political decline of Musharraf. Does the Intelligence 
Community (IC) share the view that the Pakistan-India relationship is 
key to altering Pakistan's behavior towards Afghanistan?
    Director Blair. [Deleted.]

    14. Senator Levin. Director Blair, does the IC believe that a 
breakthrough in India-Pakistan security relations is possible, given 
what has been achieved in the Composite Dialogue and in the backchannel 
negotiations?
    Director Blair. [Deleted.]

    15. Senator Levin. Director Blair, is Pakistan politically ready to 
resolve its strategic differences with India?
    Director Blair. [Deleted.]

    16. Senator Levin. Director Blair, how should the militant attacks 
on the Indian embassy in Kabul and Mumbai be interpreted in light of 
the revelation about the backchannel Kashmir negotiations?
    Director Blair. [Deleted.]

                 prospects for political reconciliation
    17. Senator Levin. Director Blair and Lieutenant General Maples, 
the Iraqi Government must still enact important legislation to achieve 
meaningful and lasting political reconciliation and stability. What is 
your assessment of the prospects that the Government of Iraq will be 
able to enact legislation this year that will settle the internal 
boundary issues in northern Iraq with respect to the Iraqi Arabs, 
Turkmen, and Kurds; establish authorities for the control and 
management of the Iraqi oil and gas industry and the fair distribution 
of revenues; and continue the resolution of constitutional issues 
regarding the powers of the central and provincial governments?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                    fragility or stability of gains
    18. Senator Levin. Director Blair and Lieutenant General Maples, 
diplomatic and military leaders in Iraq have cautioned that security 
gains over the last year are fragile and subject to reversal. What is 
your assessment of the stability of security gains and reduced 
violence?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    19. Senator Levin. Director Blair and Lieutenant General Maples, 
what, in your assessment, are the greatest threats to these gains and 
what are the prospects of these threats materializing?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    20. Senator Levin. Director Blair and Lieutenant General Maples, 
General Odierno, the Commander of Multi-National Forces-Iraq, has 
indicated that if Iraq can peacefully and successfully get through the 
district and parliamentary elections scheduled through 2009, then 
political, economic, and security gains will have taken root. What is 
your assessment of Iraqi elections as indicators of increasing or 
decreasing stability and security in Iraq?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    21. Senator Levin. Director Blair and Lieutenant General Maples, 
are there other indicators that are better barometers of improving or 
deteriorating stability conditions?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                   potential of iraqi security forces
    22. Senator Levin. Director Blair and Lieutenant General Maples, an 
important aspect of the improved security conditions in Iraq is the 
improved capability of the Iraqi Security Forces (ISF). What is your 
assessment of the overall capability and reliability of the ISF?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    23. Senator Levin. Director Blair and Lieutenant General Maples, in 
your view, what are the enduring challenges or threats to the 
establishment of a reliably professional and capable ISF?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    24. Senator Levin. Director Blair and Lieutenant General Maples, 
what is your assessment of security conditions in those provinces where 
ISF have already assumed responsibility for maintaining security?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    25. Senator Levin. Director Blair and Lieutenant General Maples, 
what is your assessment of the infiltration or the risk of infiltration 
of ISF by sectarian militias, al Qaeda-in-Iraq, and Iranian agents?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                            muqtada al-sadr
    26. Senator Levin. Director Blair, in your statement you indicate 
that Shiite militant groups affiliated with cleric Muqtada al-Sadr are 
adapting their objectives and tactics away from violence to become 
``cultural organizations and a counterweight to Western influence.'' 
You acknowledge, however, that some Sadrist groups remain dangerous and 
may engage in sporadic attacks. What is your assessment of Muqtada al-
Sadr's intentions and capabilities through the rest of this year, 
especially with respect to the district and parliamentary elections?
    Director Blair. [Deleted.]

    27. Senator Levin. Director Blair, what do you expect Muqtada al-
Sadr and his affiliated groups will do to respond to or take advantage 
of the withdrawal of United States combat forces through August 2010?
    Director Blair. [Deleted.]

                     strength of iranian influence
    28. Senator Levin. Director Blair and Lieutenant General Maples, 
how would you characterize the degree of influence Iran exercises over 
the government, Shiite organizations, and the Shiite population as a 
whole in Iraq?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    29. Senator Levin. Director Blair and Lieutenant General Maples, is 
this influence growing or shrinking?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                       iranian nuclear intentions
    30. Senator Levin. Director Blair, on page 20 of your prepared 
statement, you write that ``we do not know whether Iran currently 
intends to develop nuclear weapons.'' However, on page 9 of your 
statement, twice you remark about Iran's ``pursuit of a nuclear weapons 
capability.'' Are these statements contradictory? What distinction do 
you draw between the intention to ``develop nuclear weapons'' and 
``pursue a nuclear weapons capability''?
    Director Blair. The full sentence from page 20 of the prepared 
Unclassified Statement for the Record was ``Although we do not know 
whether Iran currently intends to develop nuclear weapons, we assess 
Tehran at a minimum is keeping open the option to develop them.'' To 
``pursue a nuclear weapons capability'' is consistent with Iran 
``keeping open the option to develop'' nuclear weapons. In particular, 
as noted on pages 19-20 of that statement, ``Iranian entities are 
continuing to develop a range of technical capabilities that could be 
applied to producing nuclear weapons, if a decision were made to do so.

         a. (U) Iran continues its efforts to develop uranium 
        enrichment technology, which can be used both to produce low-
        enriched uranium for power reactor fuel and to produce highly-
        enriched uranium for nuclear weapons.
         b. (U) As noted, Iran continues to deploy and improve 
        ballistic missiles inherently capable of delivering nuclear 
        weapons.
         c. (U) We assess Iran since fall 2003 has conducted research 
        and development projects with commercial and conventional 
        military applications, some of which would be of limited use 
        for nuclear weapons.''

                     syria-israeli peace prospects
    31. Senator Levin. Director Blair and Lieutenant General Maples, 
Syria and Israel, with the assistance of Turkey, have been meeting to 
discuss a possible peace agreement. Does the IC believe that Syria 
would be willing to give up its strategic alliance with Iran in 
exchange for regaining the Golan Heights?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                         syrian nuclear reactor
    32. Senator Levin. Director Blair, your prepared statement 
indicates that the IC believes that the structure Israel destroyed in 
Syria was a nuclear reactor supplied by North Korea.
    Director Blair. [Deleted.]

    33. Senator Levin. Director Blair, do you believe that this reactor 
was intended to support a Syrian nuclear initiative, or was it in fact 
intended to support Iran's nuclear program?
    Director Blair. [Deleted.]

              egypt-gaza border--rocket/missile smuggling
    34. Senator Levin. Director Blair and Lieutenant General Maples, in 
bringing an end to the Israeli invasion of Gaza a few months ago, it 
was clear Israel's number one decisionmaking factor was whether the 
Egyptian government had the will and fortitude to attack aggressively 
the tunnels along the border with Gaza and the smuggling network 
throughout Egypt that enables weapons to enter Gaza. In recent months, 
we have seen the Egyptians undertake a number of efforts along the 
border to identify and counter the tunneling threat. However, we have 
not heard reports of an aggressive counter-smuggling effort. What is 
the IC's assessment of the current counter-tunneling effort along the 
Egypt-Gaza border?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    35. Senator Levin. Director Blair and Lieutenant General Maples, 
what is the IC's assessment of Egyptian efforts to attack the smuggling 
operations throughout Egypt, particularly along its border with Sudan?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    36. Senator Levin. Director Blair and Lieutenant General Maples, if 
the Israelis do not view the Egyptian's activities as adequate, do we 
believe the Israelis will attack unilaterally?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]
                                 ______
                                 
             Questions Submitted by Senator Daniel K. Akaka
                united states national security threats
    37. Senator Akaka. Director Blair and Lieutenant General Maples, if 
history has taught us nothing else, it is that significance can develop 
from unpredictable sources that had previously received little or no 
attention before it was too late. What geographic region of the world 
or subset of space/cyberspace threats not identified during the hearing 
has the biggest potential to be a future challenge to United States 
national security?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                             cyber attacks
    38. Senator Akaka. Lieutenant General Maples, for decades the 
United States has maintained full spectrum dominance in the sea, land, 
air, and space domains. Due to the scope and sophistication of 
malicious attacks to our computer networks, we must pay equal attention 
to the cyberspace domain. What is your assessment of the Department of 
Defense's (DOD) organization and integration of its cyber forces across 
the DOD?
    Lieutenant General Maples. [Deleted.]
                                 ______
                                 
               Questions Submitted by Senator John McCain
                                  iraq
    39. Senator McCain. Director Blair, on February 27, President Obama 
announced his withdrawal plan for Iraq. I believe the President's plan 
is reasonable, but it is not without risk. We will need to be cautious 
as we withdraw troops so as not to jeopardize these achievements, and 
listen closely to the commanders on the ground as the administration 
determines the pace of withdrawals. I was pleased that the President 
was willing to reconsider a plan based upon conditions on the ground. 
Did the IC participate in the Obama administration policy review 
leading to the decision to withdraw troops from Iraq? If so, how?
    Director Blair. The Intelligence Community provided key findings 
and analytic assessments on Iraq to a series of policymaker meetings on 
troop drawdown options leading up to the President's policy 
announcement.

    40. Senator McCain. Director Blair and Lieutenant General Maples, 
what does the IC assess are the potential flashpoints in Iraq that 
could still flare and possibly require an adjustment to the plan and 
did the IC convey this to the White House?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    41. Senator McCain. Director Blair and General Maples, does the IC 
have the resources necessary to adequately support the withdrawal plan 
for Iraq while simultaneously increasing operations in Afghanistan?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                           violence in mexico
    42. Senator McCain. Director Blair, as a result of increasing 
pressure from the Calderon government on the well-armed and capable 
Mexican drug cartels, we have seen a marked increase in violence, 
abductions, and arms smuggling near the United States-Mexico border. 
Last week, Secretary Gates labeled the situation as a ``serious 
problem'' and signaled a willingness to provide increased assistance to 
the Mexican government in the form of military hardware, training, and 
intelligence support. Former Central Intelligence Agency Director 
Michael Hayden stated recently the violence in Mexico will pose the 
second greatest threat to United States security this year, right after 
al Qaeda. Do you agree with former Director Hayden's and Secretary 
Gates' assessments about violence along the Mexican border?
    Director Blair. [Deleted.]

    43. Senator McCain. Director Blair, will that emerge as the second 
greatest threat to United States security?
    Director Blair. [Deleted.]

    44. Senator McCain. Director Blair, please describe in what ways 
the IC is working with the Mexican government to contain this growing 
threat?
    Director Blair. [Deleted.]

    45. Senator McCain. Director Blair, a recent report stated that a 
large percentage of the weapons used by these drug cartels originate in 
the United States. Secretary Napolitano stated last week that the drug-
related violence in Mexico was a ``top priority'' for her Department 
and pledged to work closely with other United States agencies to 
confront the weapons trafficking largely responsible for this growing 
threat. What steps have been taken to integrate the efforts of the IC 
and the Department of Homeland Security (DHS) to track and combat the 
trafficking of such weaponry and related hardware?
    Director Blair. [Deleted.]

          al qaeda and the federally administered tribal areas
    46. Senator McCain. Director Blair, in your statement you say that 
sustained pressure against al Qaeda in the FATA has the potential to 
further degrade its organizational cohesion and diminish the threat it 
poses. What do you think will happen to al Qaeda in the FATA if 
pressure there were relaxed or halted?
    Director Blair. [Deleted.]

    47. Senator McCain. Director Blair, do you believe that the al 
Qaeda leadership could establish the network's headquarters elsewhere? 
If so, where?
    Director Blair. [Deleted.]

    48. Senator McCain. Director Blair, are there any members inside al 
Qaeda that could effectively replace Bin Laden or Zawahiri?
    Director Blair. [Deleted.]

    49. Senator McCain. Director Blair, absent a safe haven and/or the 
demise of its principal leaders, what happens to the movement?
    Director Blair. [Deleted.]

    50. Senator McCain. Director Blair, currently, which al Qaeda 
affiliate or affiliates pose the most significant threat to the United 
States Homeland and United States interests worldwide?
    Director Blair. [Deleted.]

    51. Senator McCain. Director Blair, do you believe our European 
allies are adequately concerned and focused on the threat posed by al 
Qaeda? If not, why not?
    Director Blair. [Deleted.]

                                pakistan
    52. Senator McCain. Director Blair, Afghanistan's problems exist, 
of course, in a regional context, and we must increasingly view them as 
such. A special focus of our regional strategy must be Pakistan. For 
too long we have viewed Pakistan as important because of our goals in 
Afghanistan. Yet Pakistan is not simply important because of 
Afghanistan; Pakistan is important because of Pakistan. We cannot 
simply subordinate our Pakistan strategy to our Afghanistan policy. 
What is your current assessment of the future of Pakistan?
    Director Blair. [Deleted.]

    53. Senator McCain. Director Blair, what are the chances that the 
state will fall further and further under the control of Islamic 
extremists? If it does, what are the consequences?
    Director Blair. [Deleted.]

    54. Senator McCain. Director Blair, can you describe the economic 
situation in Pakistan and how it may impact stability in Pakistan?
    Director Blair. [Deleted.]

    55. Senator McCain. Director Blair, how do we address Pakistan's 
border concerns or insecurities?
    Director Blair. [Deleted.]

    56. Senator McCain. Director Blair, what role can India play in 
stabilizing Afghanistan and how are we engaging them?
    Director Blair. [Deleted.]

    57. Senator McCain. Director Blair, do you believe that while some 
of Pakistan's civilian and military leaders recognize the threat that 
growing militancy poses, many government leaders tolerate or employ 
militant groups as important policy instruments for maintaining 
stability in western Pakistan or exerting pressure on Kabul or New 
Delhi?
    Director Blair. [Deleted.]

    58. Senator McCain. Director Blair, do believe the new government 
in Pakistan and its military leaders are preoccupied about a potential 
war with India?
    Director Blair. [Deleted.]

    59. Senator McCain. Director Blair, do you believe Pakistan's 
insecurities about India can be reduced? If so, how?
    Director Blair. [Deleted.]

                       kurd-arab friction in iraq
    60. Senator McCain. Lieutenant General Maples, the Kurdish presence 
and claims across northern Iraq's disputed territories are fueling 
ethnic tensions and potential violence between Kurds and Arabs. The 
constitutional process for resolving disputed territories outlined in 
Article 140 of the Iraqi Constitution has stalled, and the United 
Nation's three-phase plan to facilitate the Article 140 process has not 
achieved measurable progress. How would you assess the current level of 
tension between Arabs and Kurds?
    Lieutenant General Maples. [Deleted.]

    61. Senator McCain. Lieutenant General Maples, is it increasing, 
decreasing, or staying the same?
    Lieutenant General Maples. [Deleted.]

    62. Senator McCain. Lieutenant General Maples, is Kurdish political 
leverage diminishing?
    Lieutenant General Maples. [Deleted.]

    63. Senator McCain. Lieutenant General Maples, is this troubling to 
the future stability of Iraq?
    Lieutenant General Maples. [Deleted.]

                        iranian activity in iraq
    64. Senator McCain. Lieutenant General Maples, the Islamic 
Revolutionary Guard Corps (IRGC) is part of the Iranian government and 
has a central role in carrying out Iran's policies in Iraq through its 
special operations command--the Qods Force. What do you assess to be 
Iran's objectives in Iraq now? Have they changed?
    Lieutenant General Maples. [Deleted.]

    65. Senator McCain. Lieutenant General Maples, do you anticipate 
Iranian meddling during Iraq's upcoming elections? If so, what do you 
expect?
    Lieutenant General Maples. [Deleted.]

    66. Senator McCain. Lieutenant General Maples, does the IRGC-Qods 
Force continue to covertly train, fund, and arm Iraqi insurgents and 
militias?
    Lieutenant General Maples. [Deleted.]

    67. Senator McCain. Lieutenant General Maples, will this activity 
continue as we withdraw?
    Lieutenant General Maples. [Deleted.]

    68. Senator McCain. Lieutenant General Maples, will the Qods Force 
target our withdrawing forces?
    Lieutenant General Maples. [Deleted.]

    69. Senator McCain. Lieutenant General Maples, do you have any 
evidence that there are more or fewer Iranian-made weapons or 
explosively former penetrator components going into Iraq?
    Lieutenant General Maples. [Deleted.]

                    cyber security and cyber threats
    70. Senator McCain. Director Blair, the United States depends on 
the cyber infrastructure heavily, possibly more than any other nation. 
Our Nation's security and economic prosperity depend on the security 
and stability of our communications and information networks. On 
February 9, President Obama ordered a 60-day review of the Nation's 
cyber security to examine a Federal organizational construct to address 
issues related to United States and global information and 
communications infrastructure and capabilities.
    What do you think the greatest threats to the United States are in 
terms of cyber security and communications infrastructure?
    Director Blair. [Deleted.]

    71. Senator McCain. Director Blair, at the threat hearing before 
the Senate Select Committee on Intelligence on February 12 you said, 
``I don't think the combination of terrorists and cyber is a nexus that 
we are most worried about.'' In an age dominated by asymmetric warfare 
I would not necessarily like to rule anything out. If a terrorist 
organization had the capability to damage or attack our communications 
networks or its supporting infrastructure, would they do it?
    Director Blair. [Deleted.]

    72. Senator McCain. Director Blair, are there currently any 
indications that any terrorist group has the intent or capability to 
launch a cyber attack against the United States or our worldwide 
interests?
    Director Blair. [Deleted.]

    73. Senator McCain. Director Blair, how is the IC currently 
organized to address cyber threats? Is that structure adequate to 
address the threat? Last month, you told the House Intelligence 
Committee that the National Security Agency (NSA), not the DHS, should 
be put in charge of network defense. Why is the NSA best suited to lead 
this effort?
    Director Blair. [Deleted.]

                      negotiating with the taliban
    74. Senator McCain. Director Blair and Lieutenant General Maples, 
in late 2008 discussion about ``reconciliation'' with the Taliban and 
other insurgents gained momentum. Last week, President Obama stated in 
an interview that the United States was not winning the war in 
Afghanistan and opened the door to a reconciliation process in which 
the American military would reach out to elements of the Taliban. 
President Obama told the New York Times, ``If you talk to General 
Petraeus, I think he would argue that part of the success in Iraq 
involved reaching out to people that we would consider being Islamic 
fundamentalists, but who were willing to work with us because they had 
been completely alienated by the tactics of al Qaeda in Iraq.'' Is it 
valid to consider the Sunni tribes in Anbar to be ``Islamic 
fundamentalists'' and to view them in a similar way to the Taliban?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    75. Senator McCain. Director Blair and Lieutenant General Maples, 
the situation in Afghanistan is more complex than Iraq. What are the 
risks associated with opening negotiations with the Taliban at this 
time?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    76. Senator McCain. Director Blair and Lieutenant General Maples, 
do you believe we are actually in a position to begin constructive 
dialogue with elements of the Taliban now?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    77. Senator McCain. Director Blair and Lieutenant General Maples, 
to begin these talks we will need to have at least moderate confidence 
in our intelligence about whom we are about to open negotiations. Are 
we there yet?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

            karzai and the central government of afghanistan
    78. Senator McCain. Director Blair and Lieutenant General Maples, 
few would argue that the central government's limited writ and 
perceived corruption are helping sustain a Taliban insurgency, and 
feeding pessimism about the Afghanistan stabilization effort. President 
Karzai recently called for early elections in Afghanistan. 
Afghanistan's independent election commission subsequently rejected 
Karzai's call for the election to be held by April, and instead 
formally confirmed August 20 as the voting date. The commission cited 
security problems as an important factor in its decision, saying it 
hoped the Taliban insurgency raging in much of the countryside might be 
better controlled by August. Is Karzai disconnected from what is going 
on inside Afghanistan?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    79. Senator McCain. Director Blair and Lieutenant General Maples, 
will there be an effective electoral opposition?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    80. Senator McCain. Director Blair and Lieutenant General Maples, 
do you assess that Karzai will be able to address the issues of 
corruption and narcotics in Afghanistan?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    81. Senator McCain. Director Blair and Lieutenant General Maples, 
does Karzai have constructive relationships with his regional 
neighbors?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    82. Senator McCain. Director Blair and Lieutenant General Maples, 
can you describe relations between the governments in Kabul and 
Islamabad now that Musharraf has left the political scene?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                    iranian activity in afghanistan
    83. Senator McCain. Lieutenant General Maples, Iran is trying to 
restore some of its traditional sway in eastern, central, and northern 
Afghanistan where Persian-speaking Afghans predominate, while also 
gaining leverage over the United States and North Atlantic Treaty 
Organization (NATO) there. Although the government in Teheran has a 
long history of opposing Taliban rule, should we view Iran's role in 
Afghanistan with suspicion?
    Lieutenant General Maples. [Deleted.]

    84. Senator McCain. Lieutenant General Maples, what can you tell us 
of the role the Qods Forces are playing in Afghanistan?
    Lieutenant General Maples. [Deleted.]

       drug trade and counternarcotics operations in afghanistan
    85. Senator McCain. Lieutenant General Maples, one of the thorniest 
problems in Afghanistan is its flourishing drug trade, which accounts 
for an estimated 90 percent of the world's heroin supply. In October 
2008, NATO defense ministers decided to allow International Security 
Assistance Forces to take on the drug traffickers who are fueling the 
insurgency, destabilizing Afghanistan, and killing our troops. Can you 
outline the general pattern of how money and drugs are used to finance 
the counterinsurgency?
    Lieutenant General Maples. [Deleted.]

    86. Senator McCain. Lieutenant General Maples, do you believe 
Afghanistan is a narco-state, or approaching one?
    Lieutenant General Maples. [Deleted.]

    87. Senator McCain. Lieutenant General Maples, what immediate and 
mid-term actions do you believe could be taken, by both the Government 
of Afghanistan and NATO, against the drug trade in Afghanistan that 
could assist in achievement of United States and NATO objectives?
    Lieutenant General Maples. [Deleted.]

    88. Senator McCain. Director Blair, what role, if any, does the IC 
play in supporting military efforts to target and interdict drug lords 
and labs in Afghanistan?
    Director Blair. [Deleted.]

    89. Senator McCain. Director Blair, how does the IC interface with 
drug enforcement organizations in this effort?
    Director Blair. [Deleted.]

                            suicide bombers
    90. Senator McCain. Director Blair, Professor Robert Pape, in his 
book Dying to Win: The Strategic Logic of Suicide Terrorism, argues 
that foreign occupation is the key driving factor behind suicide 
terrorist attacks. ``The data show,'' he writes, ``that there is little 
connection between suicide terrorism and Islamic fundamentalism, or any 
one of the world's religions. . . . Rather, what nearly all suicide 
terrorist attacks have in common is a specific secular and strategic 
goal: to compel modern democracies to withdraw military forces from 
territory that the terrorists consider to be their homeland.'' 
Professor Pape wrote his book before the increase of foreign troops in 
Iraq during 2007 led to a reduction in the number of suicide attacks 
inside that country. What is your assessment of his thesis and how the 
surge in Iraq affects it?
    Director Blair. [Deleted.]

    91. Senator McCain. Director Blair, how does the presence of 
foreign military forces rank among the drivers of terrorism when 
compared to, for example, the widespread availability of extremist 
education, internal repression and lack of economic opportunity, and 
perceived injustices in policy?
    Director Blair. [Deleted.]

                                 russia
    92. Senator McCain. Director Blair, where do you assess that 
Medvedev and Putin are taking the country?
    Director Blair. [Deleted.]

    93. Senator McCain. Director Blair, do you assess that Russia can 
become a partner in counterproliferation and counterterrorism?
    Director Blair. [Deleted.]

    94. Senator McCain. Lieutenant General Maples, what is the state of 
Russian military modernization?
    Lieutenant General Maples. [Deleted.]

                                belarus
    95. Senator McCain. Director Blair, numerous press accounts have 
reported that the Government of Belarus has commenced a strategic 
outreach to the West, including a large release of political prisoners, 
in an effort to develop an alternative to its close ties with Russia. 
The European Union has responded positively. How do you assess this 
reported shift in orientation?
    Director Blair. [Deleted.]

                                 china
    96. Senator McCain. Director Blair, China has been steadily 
building up its strategic and conventional capabilities since the 
1990s. China publically says its 2008 defense budget was $61 billion, 
though the Pentagon has historically challenged Beijing's reported 
figures as being low. All that spending has built a capable submarine 
fleet, an air force stocked with Russian warplanes, improved ballistic 
missiles, as well as satellite surveillance, radar, and interception 
capabilities. While China continues to stress that its military 
modernization is in line with its peaceful rise in the world, what do 
you assess China's long-term security objectives to be?
    Director Blair. [Deleted.]

    97. Senator McCain. Director Blair, what are its objectives vis-a-
vis Taiwan and other territorial claims?
    Director Blair. [Deleted.]

          terrorist groups in south america's tri-border area
    98. Senator McCain. Director Blair, the lawless tri-border area 
(TBA) of Brazil, Argentina, and Paraguay is a haven for drug smugglers 
and other radical groups, including sympathizers of Hamas and Hezbollah 
according to the 2008 State Department Country Report on Terrorism. The 
ability of these groups to organize, train, and raise money with near 
impunity should be of serious concern not only to these countries, but 
also to the United States. To what extent have these violent groups 
been able to solidify local support in the TBA?
    Director Blair. [Deleted.]

    99. Senator McCain. Director Blair, in your view, are the 
Governments of Brazil, Argentina, and Paraguay equipped to combat the 
threat posed by these violent groups and break up their operational 
capabilities? If not, where are their shortfalls?
    Director Blair. [Deleted.]

    100. Senator McCain. Director Blair, what can the IC do to assist 
this effort?
    Director Blair. [Deleted.]

                  iranian involvement in latin america
    101. Senator McCain. Director Blair, in January, Secretary of 
Defense Robert Gates stated that he is ``concerned about the level of 
subversive activity that the Iranians are carrying on in a number of 
places in Latin America, particularly South and Central America.'' Do 
you share in the Secretary's concern?
    Director Blair. [Deleted.]

    102. Senator McCain. Director Blair, what steps can be taken to 
counter Iranian influence in the region?
    Director Blair. [Deleted.]

                           human intelligence
    103. Senator McCain. Director Blair and Lieutenant General Maples, 
through the Cold War, we largely emphasized space and signals 
intelligence and deemphasized human intelligence (HUMINT). On April 14, 
2004, the Director of Central Intelligence George Tenet told the 9/11 
Commission that it will take ``5 more years to rebuild the clandestine 
service.'' As we approach the fifth anniversary of that 
prognostication, what is your assessment of the current state of our 
HUMINT capabilities?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                  intelligence sharing and cooperation
    104. Senator McCain. Director Blair, before the attacks of 
September 11, there were institutional impediments to intelligence 
sharing and cooperation both between the IC and law enforcement; within 
the IC of the United States itself; and with our allies and partners 
around the world. You've been on the job a little over a month and a 
half now. Do you have any initial impressions of the analytic 
capabilities of the IC?
    Director Blair. [Deleted.]

    105. Senator McCain. Director Blair, how would you evaluate the 
current state of exchange between the agencies of the IC? With law 
enforcement? With our allies?
    Director Blair. [Deleted.]

    106. Senator McCain. Director Blair, what impediments, if any, 
still exist and how would you propose remedying them?
    Director Blair. [Deleted.]

    107. Senator McCain. Director Blair and Lieutenant General Maples, 
what can you tell us about the presence of IC analysts in Afghanistan 
and Iraq and the value any such analytic presence brings to the time-
sensitive needs of our Armed Forces?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

                              contractors
    108. Senator McCain. Director Blair, do you have an estimate on the 
number of private contractors that are used by the intelligence 
agencies to perform intelligence activities?
    Director Blair. [Deleted.]

    109. Senator McCain. Director Blair, do you believe that these 
private contractors require rigorous oversight from the intelligence 
agencies?
    Director Blair. [Deleted.]

    110. Senator McCain. Director Blair, do you believe the 
intelligence agencies have personnel trained and resourced to ensure 
that rigorous oversight is provided?
    Director Blair. [Deleted.]

    111. Senator McCain. Director Blair, do you believe there are any 
intelligence activities that are too sensitive or too important to be 
conducted by contractors? If so, please identify them.
    Director Blair. [Deleted.]

                relations with the secretary of defense
    112. Senator McCain. Director Blair, at your confirmation hearing 
before the Senate Select Committee on Intelligence on January 22, you 
said ``I think we need to get rid of this artificial division in this 
global campaign against terrorists when the tools that are available in 
the DOD and the intelligence agency are both applicable and both need 
to be put together to get the job done. I find that operational 
effectiveness is in fact distorted by the way the authorities which are 
written for a different era come down. So I very much think we need to 
fix that problem.'' How are your relations with the Secretary of 
Defense?
    Director Blair. [Deleted.]

    113. Senator McCain. Director Blair, how serious are the divisions 
you discussed between the DOD and the IC? What would you propose to fix 
them?
    Director Blair. [Deleted.]

    114. Senator McCain. Director Blair, how do your organizations make 
major joint acquisition decisions?
    Director Blair. [Deleted.]

    115. Senator McCain. Director Blair, are you satisfied with the 
current process?
    Director Blair. [Deleted.]
                                 ______
                                 
            Questions Submitted by Senator Susan M. Collins
                         iran's nuclear program
    116. Senator Collins. Director Blair, the International Atomic 
Energy Agency (IAEA) recently issued a report on the Iranian nuclear 
program asserting Iran now has more than 1,000 kilograms of Low 
Enriched Uranium--which if further enriched to weapons-grade--would be 
enough for a single nuclear weapon. In the past 3 months, Iran has 
completed the installation of nearly 1,500 new centrifuges--an increase 
of more than 40 percent and now has more than 5,000 operating. IAEA 
inspectors lack sufficient access to key Iranian nuclear facilities, 
and Iran continues to refuse IAEA requests for design information or 
access to additional locations related to many aspects of their nuclear 
program.
    Israel's military intelligence chief said recently that Iran has 
``crossed the technological threshold,'' and its attainment of nuclear 
military capability is now a matter of ``incorporating the goal of 
producing an atomic bomb into its strategy.'' Your assessment is 
different from that of the Israelis, correct? Please explain.
    Director Blair. [Deleted.]

                                pakistan
    117. Senator Collins. Director Blair and Lieutenant General Maples, 
the political instability in Pakistan, the recent concessions to the 
Taliban, the assassination of former Prime Minister Benazir Bhutto, and 
the near constant tensions between India and Pakistan highlight the 
volatile security concerns in Pakistan and of its nuclear weapons. Do 
you believe that Pakistan's nuclear inventory is at risk of falling 
into the hands of terrorists?
    Director Blair. [Deleted.]
    Lieutenant General Maples. [Deleted.]

    [Whereupon, at 12:36 p.m., the committee adjourned.]

                                 
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