[Senate Hearing 112-159]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 112-159

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

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 10, 2011

                               __________

         Printed for the use of the Committee on Armed Services






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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

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

                   Richard D. DeBobes, Staff Director

               David M. Morriss, Minority Staff Director

                                  (ii)






                            C O N T E N T S

                               __________

                    CHRONOLOGICAL LIST OF WITNESSES

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

                             march 10, 2011

                                                                   Page

Clapper, Hon. James R., Jr., Director of National Intelligence...     6
Burgess, LTG Ronald L., Jr., USA, Director, Defense Intelligence 
  Agency.........................................................    31

                                 (iii)

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

                              ----------                              


                        THURSDAY, MARCH 10, 2011

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:33 a.m. in room 
SD-G50, Dirksen Senate Office Building, Senator Carl Levin 
(chairman) presiding.
    Committee members present: Senators Levin, Lieberman, 
Hagan, Manchin, Shaheen, Gillibrand, Blumenthal, McCain, Brown, 
Ayotte, and Cornyn.
    Committee staff members present: Richard D. DeBobes, staff 
director; and Leah C. Brewer, nominations and hearings clerk.
    Majority staff members present: Madelyn R. Creedon, 
counsel; Richard W. Fieldhouse, professional staff member; 
Jessica L. Kingston, research assistant; Thomas K. McConnell, 
professional staff member; William G.P. Monahan, counsel; 
Russell L. Shaffer, Counsel; and William K. Sutey, professional 
staff member.
    Minority staff members present: David M. Morriss, minority 
staff director; Adam J. Barker, professional staff member; 
Christian D. Brose, professional staff member; John W. Heath, 
Jr., minority investigative counsel; Daniel A. Lerner, 
professional staff member; and Michael J. Sistak, research 
assistant.
    Staff assistants present: Jennifer R. Knowles, Kathleen A. 
Kulenkampff, and Hannah I. Lloyd.
    Committee members' assistants present: Vance Serchuk, 
assistant to Senator Lieberman; Gordon Peterson, assistant to 
Senator Webb; Roger Pena, assistant to Senator Hagan; Joanne 
McLaughlin, assistant to Senator Manchin; Chad Kreikemeier, 
assistant to Senator Shaheen; Elana Broitman, assistant to 
Senator Gillibrand; Jeremy Bratt, assistant to Senator 
Blumenthal; Lenwood Landrum, assistant to Senator Sessions; 
Charles Prosch, assistant to Senator Brown; Brad Bowman, 
assistant to Senator Ayotte; Dave Hanke, assistant to Senator 
Cornyn; and Joshua Hodges, assistant to Senator Vitter.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Chairman Levin. Good morning, everybody.
    First, 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 James Clapper here 
for the first time as the Director of National Intelligence 
(DNI), along with the Defense Intelligence Agency (DIA) 
Director, General Ron Burgess.
    This committee has a special responsibility to the men and 
women of our Armed Forces to be vigilant on worldwide threats 
and on our intelligence programs. The safety of our troops, 
decisions on whether or not to use military force, and the 
planning for military operations all depend on understanding 
those threats through our intelligence programs and activities.
    In Afghanistan we're beginning to see signs that the 
strategy announced by the President just over a year ago is 
achieving some progress. U.S. coalition and Afghanistan 
security forces have partnered to drive insurgent forces from 
Taliban strongholds in the south, and Afghanistan security 
forces are increasingly taking the lead in securing these areas 
so the Afghanistan people can return to building a better life. 
General Petraeus has said that there are signs of friction 
within the insurgency's ranks and that some local Taliban 
fighters are questioning their leaders' orders to keep fighting 
while those leaders are safely hiding out in sanctuaries in 
Pakistan. Do our witnesses see that same phenomenon? What do 
they assess the prospects are for more lower-level insurgent 
fighters in Afghanistan to decide to lay down their arms and 
reintegrate into Afghanistan society?
    A significant juncture in the next few months is the July 
2011 date established by the President for the beginning of 
reductions in U.S. forces. Secretary Gates said the other day 
that ``we will be well-positioned to do just that.'' Later this 
month President Karzai is expected to announce a number of 
provinces and districts selected for the first phase of 
transition to Afghanistan security forces taking the lead in 
providing security.
    The President also said that the pace of the U.S. force 
reductions will be condition-based. One factor influencing 
those conditions will be the size and capability of the 
Afghanistan army and the Afghanistan police. I hope our 
witnesses will provide their views on whether the pending 
proposal to increase the size of the Afghan security forces by 
up to an additional 70,000 personnel, or a total of 378,000, 
would facilitate the transition to Afghan-led security.
    A major source of instability in Afghanistan is the 
continued presence of sanctuaries for extremist insurgent 
groups across the border with Pakistan. We need to hear from 
our witnesses whether there is a realistic prospect that the 
Pakistanis will end those safe havens and end the support that 
they've been providing to the Haqqani network and the Quetta 
Shura Taliban that cross over into Afghanistan to attack 
coalition and Afghan forces and innocent Afghan civilians. What 
is our witnesses' assessment of whether Pakistan might 
recalculate its strategic interest in Afghanistan and whether 
it might act to help bring the Afghan Taliban to the 
negotiating table?
    Events in the Middle East and North Africa are both 
stunning and uplifting. It is stirring to see people express 
their will for freedom and human rights which are, once again, 
shown to have universal appeal. The people of Egypt and Tunisia 
now face the difficult challenge of forming a government that 
embodies those values without giving way to the forces of 
extremism and intolerance, while the other countries in the 
region are struggling more with longstanding issues of economic 
and democratic reform.
    To date, the revolutions in the Middle East have not been a 
victory for al Qaeda or other extremist groups that reject 
democracy and that prey on the resentment caused by corruption 
and poverty to nourish and sustain them. While we do not expect 
the Intelligence Community (IC) to predict the future in this 
complex region, I do hope that our witnesses will provide 
insight into what the people in various countries in the region 
want to achieve, their ability and commitment to achieve it, 
and what outside actors are attempting to influence the 
outcomes.
    In Libya, the aspirations of the Libyan people for freedoms 
and human rights have been met with brutal oppression by the 
Qadhafi regime. Is the conflict headed for a protracted 
stalemate in the judgment of the IC? In addition, a 
humanitarian crisis is developing within the internally 
displaced and refugee populations growing along the borders 
with Tunisia and Egypt. We'd be interested in our witnesses' 
estimates as to whether it is likely the rebels in Libya can 
succeed militarily.
    The administration is conducting planning, with our allies, 
to prepare for a range of contingencies in Libya, including, 
but not limited to, the possibility of a no-fly zone to protect 
the people of Libya from air attack. These events in recent 
days have shown machine guns and tanks can slaughter people as 
well as bombs can from the air.
    Earlier this week the Arab League's Ambassador in 
Washington, Hussein Hassouna, indicated that the 22 members of 
the Arab League may endorse a no-fly zone when they meet in 
emergency session in Cairo this Saturday. While he said Arab 
League members feel ``a sense of urgency'' regarding Libya, 
saying that ``if we leave this for too long, things will be 
worse and worse for the people,'' he warned on the other hand 
that Arab countries ``are not in favor of foreign military 
intervention.'' We would appreciate our witnesses' assessments 
on who the opposition is in Libya, and whether our intervention 
more directly on their behalf, in the absence of Arab or Muslim 
countries' participation, might turn the people of the region 
against us as occupiers instead of their continuing to be 
focused against their own dictatorial regimes.
    In Iraq, our forces are implementing the decision by 
President Bush and Prime Minister Maliki as set forth in the 
2008 Security Agreement to withdraw all U.S. forces from Iraq 
by December 31st of this year. There are signs that the Maliki 
Government is cracking down on peaceful demonstrations. We'd 
want to hear from our witnesses their estimate of the prospects 
for democracy and for security for religious minorities in 
Iraq.
    Iran perhaps provides the greatest challenge to the United 
States and the international community. The recent update to 
the National Intelligence Estimate (NIE) on Iran's nuclear 
programs is of major interest. That update remains classified, 
but we look forward to some insight from our witnesses today on 
the Iranian nuclear program, particularly how many years away 
is it from being able to produce enough highly enriched uranium 
for one nuclear weapon, and from completing the design and 
manufacturing of all the parts of a warhead or bomb after a 
decision to do so were made by the Iranians, if they haven't 
already made such a decision. We also need their views on the 
effect of the sanctions on Iran and on which countries are the 
least cooperative in implementing those sanctions. For the 
members of our committee, we will be holding a briefing on the 
recent NIE review of Iran in the near future.
    The Iranian regime's cynical reaction to the upheavals in 
the region has been to redouble its suppression of popular 
protests at home, while championing and claiming credit for 
revolts elsewhere. We need to do what we can to pierce that 
veil of hypocrisy, to understand how the uprisings abroad are 
affecting the Iranian regime and its opponents.
    Questions abound on other parts of the world where we need 
the IC's assessments. For example, what are the prospects for 
Russian missile defense cooperation with NATO and the United 
States, and the potential impact of such cooperation, 
particularly with respect to Iran? What are our witnesses' 
views on North Korea's intentions, and what is the likelihood 
they would launch an attack on South Korea?
    So, our witnesses have a great deal of ground to cover with 
us this morning.
    We have arranged for a closed session following this open 
session, if needed.
    Senator McCain.

                STATEMENT OF SENATOR JOHN McCAIN

    Senator McCain. Thank you, Mr. Chairman, and thank our 
witnesses for the decades of service to our Nation, including 
in the critical intelligence positions they now hold.
    On behalf of our committee, please extend our gratitude to 
the men and women you lead, who labor everyday, often in 
silence, to secure our Nation.
    Our appreciation for the work of our IC is mixed with a 
great deal of humility as we consider the overwhelming array of 
worldwide threats now facing the country, which is the subject 
of this hearing. I say in all seriousness and with no eagerness 
that, in my many years of public service, I have never seen an 
international environment in which we have been called upon to 
confront more threats of greater diversity and magnitude, all 
at once, than we are in today's world. I know you would agree 
that there's much to keep us up at night.
    We face a wide variety of challenges ranging from al Qaeda, 
North Korea, Syria, Afghanistan, Pakistan, cyber networks, a 
rise of China and shifting balance of power in the dynamic 
Asia-Pacific region, and others.
    Trying to understand and anticipate all these challenges, 
and more, is a tall order. Congress and the American people are 
right to hold our intelligence professionals to the highest 
standards and to expect the most of them. After all, they 
expect nothing less of themselves. However, our expectations 
must also be realistic, and that means remembering, especially 
in times of rapid change like these, we must resist the 
temptation to mistake intelligence for omniscience.
    The truth is, there were plenty of people who foresaw that 
the status quo in the Middle East and in North Africa was far 
from stable. When you combine young populations, rising 
expectations, declining opportunities, corrupt and autocratic 
governments, and little to no political freedom, it doesn't 
take world-class intelligence to predict that this is a crisis 
in the making. It just takes common sense. But as for why this 
crisis is unfolding now, as opposed to some other time, I think 
that is and will remain a mystery. No intelligence agency, even 
ones as well-funded as ours, could be or should be expected to 
foresee that one forlorn young man in Tunisia would burn 
himself to death, and that this single tragedy would unleash a 
geopolitical shockwave toppling long-entrenched rulers, 
emboldening millions to find their political voices, and 
changing the region forever.
    The main question for us now is not, why didn't we see this 
coming, but how do we understand where it is going? That's why 
I would focus on the horrific events in Libya. Until now, in 
Tunisia and Egypt and elsewhere, we've seen overwhelmingly 
peaceful demonstrations elicit unprecedented political change, 
and most governments are seeking to accommodate that change 
without resorting to large-scale violence. These public 
demonstrations have not been inspired by violent extremism, but 
rather by moderate demands for greater freedom, justice, and 
opportunity. As such, they are a repudiation of everything al 
Qaeda stands for.
    We saw similar peaceful demands made by people in Libya, 
but the government's response has been something different 
entirely. The Qadhafi regime has unleashed a campaign of 
unconscionable violence--often at the hands of foreign 
mercenaries--which has pushed the country to the brink of civil 
war. The President of the United States has said that Qadhafi 
must go. He said all options are on the table to achieve that 
goal. I believe he's right on both counts. But we now seem to 
be increasingly faced with the possibility that Qadhafi will 
not go--that he will instead recapture control, at least in 
parts of Libya, enough to wage a counterrevolution of murder 
and oppression for a long time to come against anyone who 
stands in his way.
    If that were to happen, he would establish a dangerous 
counter-example to the revolutions in Egypt and Tunisia. It 
would signal to rulers across the region that the best way to 
maintain power in the face of peaceful demands for justice is 
through swift and merciless violence. There is much concern 
about the perception of U.S. or Western military involvement in 
another Muslim country after Afghanistan and Iraq, and that's 
why we must continue to work with our partners in the region to 
address the situation in Libya. Perhaps the greater concern for 
us all should be what it would mean for America's credibility 
moral and standing if a tyrant were allowed to massacre Arabs 
and Muslims in Libya and we watched it happen.
    Finally, Mr. Chairman, the situation regarding the no-fly 
zone continues to dominate the airwaves. Perhaps we are 
spending too much time on that single issue. I would point out 
that the New York Times this morning had an article by Nicholas 
Kristof: ``This is a pretty easy problem, for crying out 
loud.'' For all the hand-wringing in Washington about a no-fly 
zone over Libya, that's the verdict of General Merrill McPeak. 
I called General McPeak to get his take on a no-fly zone. He 
said: ``I can't imagine an easier military problem. If we can't 
impose a no-fly zone over a not even third-rate military power 
like Libya, then we ought to take a hell of a lot of our 
military budget and spend it on something else.''
    Perhaps as importantly, General Odierno, the U.S. Commander 
of Joint Operations Command, said: ``The U.S. military would be 
able to establish a no-fly zone over Libya within a couple of 
days if the international community decided that such a move 
were needed. We can react very quickly to all this if we have 
to. We're prepared to do that. I believe within a couple of 
days we would probably be able to implement a no-fly zone.''
    I'll be interested in the witnesses' views of the 
importance of establishing a no-fly zone given the recent news 
this morning in the Wall Street Journal that says: ``Meanwhile, 
rebel leaders in Benghazi said government planes had bombed 
fuel silos and an oil pipeline near Ras Lanuf. The strike 
raised fears that Qadhafi had turned his weapons on petroleum 
assets in opposition-controlled territory, something the rebel 
government has dreaded. `What we worried about has started to 
happen today,' said Abdul Hafidh Ghoga, spokesman for the 
temporary governing council in Benghazi. `This could lead to a 
huge environmental crisis, and one that could also cause global 
aftershocks in the oil industry.' ''
    I might add that the Government of France has just 
recognized this provisional government in Benghazi.
    I thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator McCain.
    Director Clapper, I think we will begin with you.
    I thank you again, both you and General Burgess, for your 
great service. I join Senator McCain in asking you to pass that 
along to the men and women with whom you work.

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

    Mr. Clapper. Thank you, Chairman Levin, Ranking Member 
McCain, and distinguished members of the committee for inviting 
General Ron Burgess, a friend and colleague of longstanding, 
and me to present the 2011 Worldwide Threat Assessment.
    As many of you understand, it's not possible to cover the 
full scope of worldwide threats in our brief oral remarks, so 
I'd like to take this opportunity to highlight four broad areas 
of significant concern to the IC. General Burgess will address 
specific threats and challenges for defense intelligence. 
Subject to your concurrence, we've submitted longer statements 
for the record.
    First and foremost is terrorism. Counterterrorism is our 
top priority because Job 1 for the IC is to keep Americans safe 
and the Homeland secure.
    The IC has helped thwart many potentially devastating 
attacks--for example, the cargo bomb plot last October. We've 
apprehended numerous bad actors throughout the world and 
greatly weakened much of al Qaeda's core capabilities, 
including its operations, training, and propaganda. We're 
especially focused on al Qaeda's resolve to recruit Americans 
and to spawn affiliate groups--most notably al Qaeda on the 
Arabian Peninsula--around the world.
    We also see disturbing instances of self-radicalization 
among our own citizens. While homegrown terrorists are 
numerically a small part of the global threat, they have a 
disproportionate impact because they understand our Homeland, 
have connections here, and have easier access to U.S. 
facilities.
    Counterterrorism is central to our overseas operations, 
notably in Afghanistan, and while progress in our efforts to 
disrupt, dismantle, and defeat al Qaeda is hard-won, we have 
seen and will continue to see success in government security 
and economic development that will erode the willingness of the 
Afghan people to support the Taliban and their al Qaeda allies.
    While U.S. combat operations have come to an official close 
in Iraq, bombings by terrorists, and specifically al Qaeda, 
mean that our work to help solidify the security gains we've 
made thus far remains a high priority.
    Another major concern is the proliferation of weapons of 
mass destruction (WMD). The proliferation threat environment is 
a fluid, borderless arena that reflects the broader global 
reality of an increasingly free movement of people, goods, and 
information. While this environment is critical for peaceful 
scientific and economic advances, it also allows the materials, 
technologies, and know-how related to chemical, biological, 
radiological, and nuclear weapons, as well as missile delivery 
systems, to be shared with ease and speed.
    Iran, as you noted, is a key challenge. In the months 
following the 2009 Iranian elections, we saw a popular movement 
challenge the authority of its government. We also saw the 
Iranian government crack down with harsh authoritarian control. 
Now we are seeing similar unrest, although so far on a smaller 
scale than was the case in 2009, and a similarly harsh 
crackdown by the regime. We look forward to discussing Iran 
further with you in closed session--particularly its nuclear 
posture.
    As you also noted, North Korean nuclear weapons and missile 
programs also pose a serious threat, both regionally and 
beyond. Pyongyang has signaled a willingness to reengage in 
dialogue, but it also craves international recognition as a 
nuclear weapons power, and it has shown troubling willingness 
to sell nuclear technologies.
    Third, I also want to highlight another major challenge for 
the IC. The reality, as you both noted, that we are in an 
interconnected interdependent world, and instability can arise 
and spread quickly beyond borders. Of course, the vivid 
examples of this include the sudden fall of the Ben Ali regime 
in Tunisia and the contagious mass uprisings in Egypt which led 
to the departure of former President Mubarak, and the large-
scale demonstrations and uprisings elsewhere, most notably now 
in Libya. The IC is following these fast-moving events closely.
    We've long assessed the political and socioeconomic drivers 
of instability in the region, including analyses of historical 
transitions of power to understand future risks to regime 
stability. However, specific triggers for how and when 
instability would lead to the collapse of various regimes 
cannot always be known or predicted. In other words, we aren't 
necessarily clairvoyant. Senator McCain, I very much appreciate 
your commentary about the need to distinguish mysteries and 
secrets, and sometimes we're held to the same standard for 
knowing both.
    What's happening in the Middle East is yet another 
manifestation of the fact that economic challenges and 
frustrated political aspirations have become paramount in our 
interdependent world and cannot be underestimated, from 
increasing debt to fluctuating growth, to China's economic 
rise.
    Another example of such interdependent challenges are cyber 
threats and their impacts on our national security and economic 
prosperity. This threat is increasing in scope and scale. 
Industry estimates that the production of malicious software 
has reached its highest level yet, with an average of 60,000 
new programs or variations identified each day. Industry has 
estimated that the loss of intellectual property worldwide to 
cyber crime continues to increase, with the most recent 2008 
annual figures approaching $1 trillion in losses. Last year, 
some of our largest information technology companies discovered 
that throughout much of 2009 they'd been targets of systematic 
efforts to penetrate their networks and acquire proprietary 
data.
    We're also analyzing the national security implications of 
energy, security, drug trafficking, emerging diseases, 
international organized crime, humanitarian disasters, and 
other global issues. In the face of these challenges, the IC 
must always remain attentive to developments in all parts of 
the globe and many spheres of activity, and that is why I 
consider it imperative that we must sustain a robust, balanced 
array of intelligence capabilities.
    Fourth, counterintelligence is another area of great 
concern to me. We face a wide range of foreign intelligence 
threats to our economic, political, and military interests at 
home and abroad. In addition to cyber and other threats clearly 
tied to foreign intelligence services, unauthorized disclosures 
of sensitive and classified U.S. Government information also 
pose substantial challenges, and the most prominent recent 
example, of course, is the unauthorized downloading of 
classified documents subsequently released by WikiLeaks.
    Speaking from an intelligence perspective, these 
disclosures have been very damaging. As part of a broader 
whole-of-government effort, we in the IC are working to better 
protect our information networks by improving audit and access 
controls, increasing our ability to detect and deter insider 
threats, and expanding awareness of foreign intelligence 
threats across the U.S. Government. I believe we can and will 
respond to the problems of intrusions and leaks, but we must do 
so without degrading essential intelligence integration and 
information sharing.
    In sum, the IC is better able to understand the vast array 
of interlocking concerns and trends, anticipate developments, 
and stay ahead of adversaries precisely because we operate in 
an integrated community.
    I thank you and the distinguished members of the committee 
for your support to the IC and your dedication to the security 
of our Nation. Following General Burgess' remarks, we look 
forward to your questions and our discussion.
    What I'd like to do is turn the podium over to Ron for his 
statement and then we'll go through the questions you raised in 
both of your opening statements.
    [The prepared statement of Mr. Clapper follows:]
              Prepared Statement by Hon. James R. Clapper
    Chairman Levin, Ranking Member McCain, and members of the 
committee, thank you for the invitation to offer the Intelligence 
Community's assessment of threats to U.S. national security.
    This statement goes into extensive detail about numerous state and 
non-state actors, crosscutting political, economic, and military 
developments and transnational trends, all of which constitute our 
Nation's strategic and tactical landscape. Although I believe that 
counterterrorism, counterproliferation, and counterintelligence are at 
the immediate forefront of our security concerns, it is virtually 
impossible to rank--in terms of long-term importance-the numerous, 
potential threats to U.S. national security. The United States no 
longer faces--as in the Cold War--one dominant threat Rather, it is the 
multiplicity and interconnectedness of potential threats--and the 
actors behind them--that constitute our biggest challenge. Indeed, even 
the three categories noted above are also inextricably linked, 
reflecting a quickly-changing international environment of rising new 
powers, rapid diffusion of power to non-state actors and ever greater 
access by individuals and small groups to lethal technologies. We in 
the Intelligence Community believe it is our duty to work together as 
an integrated team to understand and master this complexity. By 
providing better strategic and tactical intelligence, we can partner 
more effectively with Government officials at home and abroad to 
protect our vital national interests.
                               terrorism
    Terrorism will remain at the forefront of our national security 
threats over the coming year. Robust counterterrorism (CT) and 
information sharing efforts continue worldwide, and this extensive 
cooperation has stopped a number of potentially tragic events from 
occurring and hindered many others. Moreover, these efforts are 
changing the nature of the threat we face, with clear progress being 
made in some fronts, but new challenges arising elsewhere. The core al 
Qaeda, which we define as the group's Pakistan-based leadership and 
cadre organization, continues to be damaged by ongoing CT efforts on 
the part of the United States and its allies.
al Qaeda Remains Dangerous
    Al Qaeda continues to aspire to spectacular attacks. Over the past 
2 years, core al Qaeda has continued to be committed to high-profile 
attacks against the west, including plans against the United States and 
Europe. Despite setbacks since the 7 July 2005 attacks in London--the 
last successful al Qaeda-backed plot in the west--we have seen the 
group continue to pursue a range of attack methodologies and recruit 
operatives familiar with the West. In light of the loss of experienced 
personnel, we judge it will seek to augment sophisticated plots by 
increasing its operational tempo with smaller, simpler ones to 
demonstrate its continued relevance to the global jihad.
Regional Affiliates Expanding Their Agendas
    Absent more effective and sustained activities to disrupt them, 
some regional affiliates--particularly al Qaeda in the Arabian 
Peninsula (AQAP) and al-Shabaab in Somalia--probably will grow 
stronger. The result may be that regional affiliates conducting most of 
the terrorist attacks and multiple voices will provide inspiration for 
the global jihadist movement.
    These regional affiliates will continue to focus on local agendas, 
but also will pursue international terrorist attacks. These groups have 
been stepping up their propaganda to expand their influence and connect 
with potential recruits outside their traditional areas of operation.
    The Intelligence Community assesses that while AQAP's rhetoric in 
2010 indicates the group is focused on attacks in Yemen and Saudi 
Arabia, it is increasingly devoted to directing and inspiring attacks 
on the U.S. Homeland and other targets in the west, as well as western 
interests in Yemen. Energized by the near success of the 2009 Christmas 
Day airliner plot, AQAP directed the recently intercepted IED shipment 
from Yemen, disguised as printer cartridges.
    We remain vigilant that al-Shahaab may expand its focus from 
fighting to control Somalia to plotting to attack the Homeland. Al-
Shabaab's cadre of westerners includes American converts, some of whom 
have assumed leadership positions, and other fighters of ethnic Somali-
descent.
    Other groups vary in their strategic agenda, external reach. and 
capabilities to conduct anti-U.S. operations, including those against 
the U.S. Homeland. Most al Qaeda in the Lands of the Islamic Maghreb 
(AQIM) operations against western targets have been kidnappings-for-
ransom. The group also has targeted embassies in North Africa and the 
Sahel, executed an American, and is augmenting its operational reach in 
West Africa.
    Tehrik-e-Taliban Pakistan's (TTP) involvement in attacks--such as 
the May 2010 failed car bombing in Times Square, New York, and the 
assault last April on the U.S. Consulate in Peshawar--demonstrate its 
intent and ability to target U.S. interests, including in the homeland. 
TTP will remain heavily engaged in its efforts against the Pakistani 
military and coalition forces in Afghanistan; these actions indicate 
the group also is seeking to expand its international reach.
    Lashkar-e-Tayyiba (LT) remains a significant threat to Indian 
interests in South Asia and an increasing threat to U.S. forces in 
Afghanistan.
    I will discuss al Qaeda in Iraq (AQI) later, as part of my 
assessment of the situation in Iraq.
New Challenges
    Recruitment for the broader movement has been resilient. The 
underlying ideology continues to resonate with a small but active set 
of Sunni extremists across the globe who can replace operatives who are 
killed, arrested, or become disaffected. Ideologues and clerics in the 
movement aggressively exploit issues, such as the presence of U.S. 
forces in Afghanistan and Iraq and U.S.support for Israel, to fuel 
their narrative of a hostile west determined to undermine Islam.
    The appeal of al Qaeda's ideology worldwide has increased the flow 
of western recruits--particularly Europeans and North Americans. Over 
the past 5 years, a small but growing number of Americans have become 
involved in the global jihadist movement. They have occupied a variety 
of roles with extremist groups overseas, such as foot soldiers and 
front line combatants, operational planners, propagandists, attack 
operatives for Homeland plots, and even senior leaders, with some 
American extremists combining multiple roles. American extremists will 
likely remain a small part of the jihad, but play a disproportionately 
large role in the threat to U.S.interests because of their 
understanding of the U.S. Homeland, connections to compatriots back in 
the United States, and relatively easy access to the Homeland and 
potentially to U.S. facilities overseas.
    Disrupted plots and arrests of homegrown violent Sunni extremists 
in the United States last year remained at elevated levels similar to 
2009. Plots disrupted during the past year were unrelated 
operationally, but are indicative of a collective subculture and a 
common cause that rallies independent extremists to want to attack the 
Homeland. Key to this trend has been the development of a U.S.-specific 
narrative that motivates individuals to violence. This Internet-
accessible narrative--a blend of al Qaeda inspiration, perceived 
victimization, and glorification of past homegrown plotting--relates to 
the unique concerns of U.S.-based extremists. However, radicalization 
among U.S.-based extremists remains a unique process based on each 
individual's personal experiences and motivating factors.
    Another key concern is the ability of ideological influencers and 
recruiters to mobilize new recruits in the west by exploiting anti-
Islamic incidents, legislation, and activities, such as threats of 
Koran burning and restrictions on Muslim attire. Individuals like 
Yemen-based Anwar al-Aulaqi demonstrate the appeal of these types of 
western extremist ideologues. These ideologues have also proved adept 
at spreading their messages through the media and Internet-based 
platforms.
    Lastly, we will need to be aware of shifts in the types of attacks 
that terrorists may try to launch against us. Participants in the 
global jihadhad have relied on improvised and scavenged military 
explosives as well as other improvised and conventional weapons. The 
reliability and availability of these materials make it likely that 
they will remain a major part of terrorists' inventory. However, AQAP's 
efforts to employ known IED technologies in innovative ways, and their 
exhortations to followers to conduct small-scale attacks that can still 
have major impact, all suggest we face a complex defensive challenge.
Assessing the Terrorist CBRN Threat
    We continue to monitor the chemical, biological, radiological, and 
nuclear (CBRN) threat closely. Some terror groups remain interested in 
acquiring CBRN materials and threaten to use them. Poorly secured 
stocks of CBRN provide potential source material for terror attacks.
                             proliferation
    Ongoing efforts of nation-states to develop and/or acquire weapons 
of mass destruction (WMD) constitute a major threat to the safety of 
our Nation, our deployed troops, and our allies. The threat and 
destabilizing effect of nuclear proliferation, as well as the threat 
from the proliferation of materials and technologies that could 
contribute to existing and prospective chemical and biological weapons 
programs, are among our top concerns.
    Traditionally biological, chemical, or nuclear weapon use by most 
nation states has been constrained by deterrence and diplomacy, but 
these constraints maybe of less utility in preventing the use of these 
weapons by terrorist groups. Moreover, the time when only a few states 
had access to the most dangerous technologies is well past. Biological 
and chemical materials and technologies, almost always dual-use, move 
easily in our globalized economy, as do the personnel with scientific 
expertise designing and using them. The latest discoveries in the life 
sciences also diffuse globally with astonishing rapidity.
    We assess that many of the countries 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--also may be acquired by states that do not now have such 
programs. Terrorist or insurgent organizations acting alone or through 
middlemen may acquire nuclear, chemical, and/or biological weapons and 
may seek opportunistic networks as service providers. In the context of 
WMD proliferation by nation-states, we have no information of states 
having deliberately provided CBRN assistance to terrorist groups.
Iran
    The Iranian regime continues to flout U.N. Security Council 
restrictions on its nuclear and missile programs. There is a real risk 
that its nuclear program will prompt other countries in the Middle East 
to pursue nuclear options.
    We continue to assess Iran is keeping open the option to develop 
nuclear weapons in part by developing various nuclear capabilities that 
better position it to produce such weapons, should it choose to do so. 
We do not know, however, if Iran will eventually decide to build 
nuclear weapons.
    One of the most important capabilities Iran is developing is 
uranium enrichment, which can be used for either civil or weapons 
purposes. As reported by the International Atomic Energy Agency (IAEA), 
the number of centrifuges installed at Iran's enrichment plant has 
grown significantly from about 3,000 centrifuges in late 2007 to over 
8,000 currently installed. At the same time, the number of operating 
centrifuges that are enriching uranium has grown at a much slower pace 
from about 3,000 centrifuges in late 2007 to about 4,800 in late 2010. 
Iran has used these centrifuges to produce more than 3,000 kilograms of 
low enriched uranium.
    Iran's technical advancement, particularly in uranium enrichment, 
strengthens our assessment that Iran has the scientific, technical, and 
industrial capacity to eventually produce nuclear weapons, making the 
central issue its political will to do so. These advancements 
contribute to our judgment that Iran is technically capable of 
producing enough highly enriched uranium for a weapon in the next few 
years, if it chooses to do so.
    We judge Iran would likely choose missile delivery as its preferred 
method of delivering a nuclear weapon. Iran already has the largest 
inventory of ballistic missiles in the Middle East. It continues to 
expand the scale, reach and sophistication of its ballistic missile 
forces, many of which are inherently capable of carrying a nuclear 
payload.
    We continue to judge Iran's nuclear decisionmaking is guided by a 
cost-benefit approach, which offers the international community 
opportunities to influence Tehran. Iranian leaders undoubtedly consider 
Iran's security, prestige and influence, as well as the international 
political and security environment, when making decisions about its 
nuclear program.
    Iran's growing inventory of ballistic missiles and its acquisition 
and indigenous production of anti-ship cruise missiles (ASCMs) 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 those of the United States. Its ballistic missiles are 
inherently capable of delivering WMD, and if so armed, would fit into 
this same strategy.
    In February 2010, Iran displayed a new rocket engine design that 
Tehran said is for the Simorgh, a large space launch vehicle. It also 
displayed a simulator of the Simorgh. This technology could be used for 
an intercontinental ballistic missile (ICBM)-class vehicle. We are 
watching developments in this area very closely.
North Korea
    Pyongyang's nuclear weapons and missile programs pose a serious 
threat to the security environment in East Asia, a region characterized 
by several great power rivalries and some of the world's largest 
economies. North Korea's export of ballistic missiles and associated 
materials to several countries, including Iran and Syria, and its 
assistance to Syria in the construction of a nuclear reactor, destroyed 
in 2007, illustrate the reach of the North's proliferation activities. 
Despite the October 2007 Six-Party agreement in which North Korea 
reaffirmed its commitment not to transfer nuclear materials, 
technology, or know-how, we remain alert to the possibility North Korea 
could again export nuclear technology.
    We judge North Korea has tested two nuclear devices. The North's 
October 2006 nuclear test is consistent with our longstanding 
assessment that it had produced a nuclear device, although we judge the 
test itself to have been a partial failure. The North's probable 
nuclear test in May 2009 is consistent with our assessment that the 
North continued to develop nuclear weapons, and with a yield of roughly 
two kilotons TNT equivalent, was apparently more successful than the 
2006 test. Although we judge North Korea has tested two nuclear 
devices, we do not know whether the North has produced nuclear weapons, 
but we assess it has the capability to do so.
    In November 2010, North Korean officials told U.S. visitors that 
North Korea is building its own light water reactor (LWR) for 
electricity production. The claimed prototype LWR has a planned power 
of 100 megawatt-thermal and a target completion date of 2012. North 
Korean officials also told the U.S. visitors in November that it had 
constructed and started operating a uranium enrichment facility at 
Yongbyon that they claimed was designed to produce low-enriched uranium 
(LEU) and support fabrication of reactor fuel for the LWR. The U.S. 
visitors were shown a facility at the existing fuel fabrication complex 
in Yongbyon, which North Korea described as a uranium enrichment plant. 
North Korea further claimed the facility contained 2,000 centrifuges 
and was operating and producing LEU that would be used to fuel the 
small LWR. The North's disclosure supports the United States' 
longstanding assessment that the DPRK has pursued a uranium-enrichment 
capability.
    We judge it is not possible the DPRK could have constructed the 
Yongbyon enrichment facility and begun its operation, as North Korean 
officials claim, in such a short period of time--less than 20 months--
without having previously conducted extensive research, development. 
testing, fabrication, and assembly or without receiving outside 
assistance.
    Based on the scale of the facility and the progress the DPRK has 
made in construction, it is likely that North Korea has been pursuing 
enrichment for an extended period of time. If so, there is clear 
prospect that DPRK. has built other uranium enrichment related 
facilities in its territory, including likely research and development 
and centrifuge fabrication facilities, and other enrichment facilities. 
Analysts differ on the likelihood that other production-scale 
facilities may exist elsewhere in North Korea.
    Following the Taepo Dong 1 launch in 1998, North Korea conducted 
launches of the Taepo Dong 2 (TD-2) in 2006 and more recently in April 
2009. Despite the most recent launch's failure in its stated mission of 
orbiting a small communications satellite, it successfully tested many 
technologies associated with an ICBM. Although both TD-2 launches ended 
in failure, the 2009 flight demonstrated a more complete performance 
than the July 2006 launch. North Korea's progress in developing the TD-
2 shows its determination to achieve long-range ballistic missile and 
space launch capabilities. If configured as an ICBM, the TD-2 could 
reach at least portions of the United States; the TD-2 or associated 
technologies also could be exported.
    Because of deficiencies in their conventional military forces, the 
North's leaders are focused on deterrence and defense. The Intelligence 
Community assesses Pyongyang views its nuclear capabilities as intended 
for deterrence, international prestige, and coercive diplomacy. We 
judge that North Korea would consider using nuclear weapons only under 
certain narrow circumstances. We also assess, albeit with low 
confidence, Pyongyang probably would not attempt to use nuclear weapons 
against U.S. forces or territory unless it perceived its regime to be 
on the verge of military defeat and risked an irretrievable loss of 
control.
                           global challenges
South Asia
    Afghanistan
    The Afghan Government will likely continue to make incremental 
progress in governance, security, and development in 2011. The Taliban-
led insurgency, despite tactical defeats and operational setbacks in 
2010, will threaten U.S. and international goals in Afghanistan through 
2011. Insurgents will continue to use propaganda to discredit the 
International Security Assistance Force (ISAF) and the Afghan 
Government. while asserting that the Taliban is the legitimate 
authority in Afghanistan. Taliban propaganda will characterize ISAF as 
an occupation force undermining Afghan culture and religion, while 
portraying Kabul as a corrupt, illegitimate tool of foreign interests.
    The Taliban will use high-profile attacks, assassination of key 
government figures, and efforts to extend shadow governance to 
undermine local perceptions of security and influence segments of the 
population. The insurgents retain the capability and intent to conduct 
high-profile attacks that have had a disproportionate effect on local 
and international perceptions of security. Although the majority of 
these assaults were tactically ineffective, they garnered domestic and 
international media attention and served as strategic communication 
opportunities for the insurgents. Islamabad has assisted in some U.S. 
counterterrorism efforts and has arrested some senior Afghan Taliban 
members.
    Afghan National Security Force Development
    Although the Afghan National Army (ANA) and Afghan National Police 
(ANP) have exceeded their 2010 manpower targets, their development and 
effectiveness are likely to be affected by high-attrition and 
absenteeism. The Afghan National Security Forces (ANSF), which have 
improved their ability to plan and execute operations successfully with 
ISAF support, will continue to rely on ISAF for support and funding 
through 2011. The Afghan forces have been most successful in areas with 
limited insurgent threat or a robust ISAF presence and we judge this 
capability will rise modestly during 2011 as additional ANSF units 
partner with ISAF units. Progress, however, will be uneven.
    The ANSF-led security effort to plan and carry out static security 
operations in support of the 2010 parliamentary elections was a 
significant step forward, despite some command and personnel problems. 
ISAF partnering and mentoring efforts have begun to show signs of 
success at the tactical and ministerial level.
    ANP will depend on ISAF partnering and oversight for success for 
the next 3 years. The Afghan Local Police (ALP) has established a 
modest number of locally raised security forces and offers a new way to 
secure remote areas of Afghanistan without diverting ANSF personnel. We 
judge that the program over time will improve population security and 
boost local confidence where it has been established. ALP units have 
had initial success, securing polling sites for last September's 
elections in remote villages in the west, and fighting the Taliban in 
Bermal District, historicaJly a Taliban stronghold in Paktika Province.
    Afghan Governance Challenges
    Predatory corruption--extortion, land seizures, illegal 
checkpoints, kidnapping, and drug trafficking that threaten local 
communities and authority structures-has fueled the insurgency and is 
detrimental to the Afghan people's perception of their government and 
to the international community's objectives. Since late 2009, President 
Karzai has been willing to endorse some offensive military operations 
to defeat the insurgency. He has focused on promoting reconciliation 
talks with the Taliban and implementing policies he perceives will 
resolve Afghan security issues.
    The Karzai Government had some successes in 2010. While the 
National Assembly election in September was marred by fraud and low 
voter turnout, the administration was able to conduct the election. Tax 
collections were up, and the internationally-attended Kabul Conference 
in July and the June Consultative Peace Jirga took place with few 
problems.
    Status of the Afghan Drug Trade
    Alternative livelihood programs designed to encourage Afghan 
farmers to end poppy cultivation will not significantly discourage 
farmers from planting poppy in 2011, primarily because a lack of 
security impedes their implementation on a large scale; High opium 
prices--a 5-year high due to decreased opium yield in 2010 and the 
increased risk to traffickers posed bycoalition activities--and a lack 
of security and market infrastructure in key poppy-growing regions have 
led many farmers to favor poppy for the fall planting season. In 
addition, wheat-centric programs are unlikely to foster a long-term 
transition away from poppy because wheat is largely a subsistence crop 
that does not compete well economically with opium. Nonetheless, 
Helmand Province's Food Zone program has diminished poppy cultivation 
in targeted areas. Such alternative livelihood efforts continued in 
2010, and the increased security presence and poor poppy harvest in 
areas like central Helmand resulted in more reports of farmers willing 
to risk Taliban threats in exchange for assistance. More broadly, 
Afghan and international efforts to focus on law enforcement activities 
on the opiate trade led to the seizure of 11 metric tons in 2010, 
denying revenue to traffickers and Taliban members who tax and 
otherwise profit from the trade.
    Neighboring States and Afghanistan
    Afghanistan has long served as an arena for competing powers, and 
prospects for enduring Afghan stability will depend significantly on 
the roles played by neighboring states. Afghanistan's neighbors and 
regional powers have lasting strategic interests in Afghan stability, 
transit and trade agreements, and the political situation in Kabul.
    International Support to Afghanistan
    International troop support for Afghanistan improved in 2010; six 
new non-NATO nations' contributed troops and trainers to ISAF or 
Operation Enduring Freedom. Many European governments and India see 
Afghanistan as a foreign policy priority. They continue to support 
broad efforts to stabilize the political system, build the economy, and 
increase security.
Pakistan
    Pakistan-based militant groups and al Qaeda are coordinating their 
attacks inside Pakistan despite their historical differences regarding 
ethnicity, sectarian issues, and strategic priorities. This offensive 
orientation has included greater efforts at making al Qaeda propaganda 
and videos available on Pakistan-focused, Urdu-language sites. We judge 
Pakistani extremists and al Qaeda will try to conduct additional costly 
terrorist attacks against the Pakistan Government and the United States 
and other foreign interests throughout the country. These extremists 
likely view high-impact attacks as a way of draining U.S. and Pakistani 
Government resources, retaliating against U.S. CT actions, deterring 
Pakistani CT and counterinsurgency (COIN) efforts, and causing locals 
to question the value of these efforts and Islamabad's ability to 
maintain security throughout the country. However, according to a 2010 
Pew Global Attitudes Project poll, an overwhelming majority of 
Pakistanis (91 percent) describe terrorism as a very big problem in 
their country, and both the Taliban and al Qaeda draw little public 
support (less than 20 percent favorability).
    Efforts Against Insurgents and Terrorists
    Islamabad has demonstrated determination and persistence in 
combating militants it perceives dangerous to Pakistan's interests, 
particularly those involved in attacks in the settled areas, including 
FATA-based Tehrik-e Taliban Pakistan, al Qaeda, and other associated 
operatives in the settled areas. Islamabad's ability to counter 
extremists in the safehavens is improving although the extremist threat 
has in no sense been contained. Major Pakistani military operations 
have since taken place in six of the seven FATA areas, with North 
Waziristan being the exception, but militants have proven adept at 
evading impending Pakistan military operations and in re-infiltrating 
previously cleared areas.

         The summer 2010 floods adversely impacted combat 
        operations against extremist organizations, due to 
        interruptions of supply lines and poor weather conditions that 
        affected ground and air operations. We assess that the Pakistan 
        army will continue to attempt to stabilize cleared areas of the 
        FATA and Khyber Pakhtunwa and support efforts to build up local 
        tribal ``auxiliary'' police units and expand the Frontier 
        Scouts to attempt to provide a lasting security regime.
         Pakistan's high acquittal rate for individuals accused 
        of terrorism is a cause for concern; empowerment of the 
        country's law enforcement and judicial authorities and better 
        coordination among its intelligence services will be key.
COIN Improvements
    Operations in 2009-2010 reflected lessons the Pakistan Army learned 
from earlier, unsuccessful operations against Tehrik-e Taliban Pakistan 
and affiliated militants. The Pakistan military more effectively 
supported ground operations with fixed and rotary wing assets. 
Specialized training provided to elite Pakistani army units and 
paramilitary Frontier Scouts likely has resulted in improved combat 
capabilities that are important to the COIN fight in the FATA. Tribal 
levies are being expanded and upgraded significantly to allow the 
Frontier Scouts to concentrate on heavier security tasks.
    Political and Economic Outlook
    Tension between Pakistan's military and civilian leadership will 
continue to ebb and flow in the months ahead as both sides attempt to 
safeguard personal priorities, including retaining positions of power, 
and cultivating legacies, with a shared desire to avoid direct military 
intervention in domestic politics. Pakistan's economy is slowly 
recovering after the flooding last summer. Concerns about inflation, 
however, are likely to inhibit Islamabad from fully implementing key 
fiscal reforms sought by the IMF and international lenders. Rising 
inflation remains a concern for the public and higher prices probably 
will delay legislative efforts to reform the tax system. The State Bank 
of Pakistan reports that food prices in November 2010 were 21 percent 
higher than in November 2009. The bank expects prices will remain high 
for months because the flooding disrupted the food supply chain.
India
    India is pursuing a robust foreign policy agenda, working to 
enhance ties to East and Southeast Asian nations, offering reciprocal 
visits with China, and hosting high level engagements in New Delhi by 
the U.S., French, and Russian Presidents in the last months of 2010. 
Government of India officials welcomed, in particular, the U.S. 
endorsement of an eventual seat for India on the U.N.Security Council, 
and U.S. commitment to support Indian membership in the four 
international export control regimes--in a phased manner and consistent 
with maintaining the core principles of these regimes--as India takes 
steps toward full adoption and implementation of the regimes' 
requirements. New Delhi, meanwhile, has been working to deepen its 
engagement with multilateral for a such as the G-20, East Asian Summit, 
and the climate change discussions in Mexico.
    India's ties to Pakistan are largely unchanged. Both sides have 
stated their willingness to put all issues on the table and are 
committed to another round of talks at the foreign minister level at a 
date to be determined. Senior Indian officials continue to call for 
progress in the prosecution of individuals charged with the November 
2008 attacks in Mumbai, and remain concerned at the length of the 
process taking place in Pakistan. New Delhi, nevertheless, continues to 
underscore its desire for peaceful and stable relations with Islamabad.
    Indian officials have welcomed the international community's 
commitment to remain in Afghanistan until the end of 2014. New Delhi 
continues to believe that a stable, friendly Afghanistan is crucial to 
Indian security. Despite successful and attempted attacks on the 
official, commercial, and nongovernmental Indian presence in 
Afghanistan, the government believes it has a mandate, from both the 
Indian and Afghan peoples, to continue civilian assistance programs and 
reconstruction efforts there. India's open assistance programs provide 
only noncombat aid, although the Indian media continues to discuss 
whether the country should also consider various capacity-building 
programs for the Afghan security forces as a means to bolster internal 
security.
    India is closely watching a variety of issues that New Delhi 
believes will be of primary concern in 2011, to include questions about 
whether or how to reconcile Afghan Taliban, U.S., and ISAF views about 
the current and future security situation in Afghanistan, and 
developments in efforts to foster civil society, a solid economy, and 
robust democratic processes. New Delhi is likely to seek dialogue on 
these issues with a variety of interested nations. The Pakistani 
Government, however, remains concerned that India is using its presence 
in Afghanistan and its discussions with the United States and other 
nations to develop policies that may be destabilizing to Pakistan. 
Meanwhile, officials, media commentators. and members of the think-tank 
community in India are discussing the global implications of the 
simultaneous ``emergence of India'' and the ``rise of China.'' While 
underscoring the unique aspect of this twinned emergence of two 
substantial powers on the global political and economic stage, Indians 
have also noted that there is no inevitable clash between the two 
powers.
                               east asia
North Korea
    We assess that North Korea's artillery strike on Yeonpyeong Island 
on 23 November was meant in part to continue burnishing successor-
designate Kim Jong Un's leadership and military credibility among 
regime elites, although other strategic goals were also factors in the 
attack. Kim Jong Il may feel the need to conduct further provocations 
to achieve strategic goals and portray Jong Un as a strong, bold 
leader'' especially if he judges elite loyalty and support are in 
question.
    Kim Jong Il has advanced preparations for his third son to succeed 
him, by anointing him with senior party and military positions, 
promoting probable key supporting characters, and having the younger 
Kim make his first public appearances. These steps strengthened the 
prospects for the 27-year old Jong Un to develop as a credible 
successor, but the succession process is still subject to potential 
vulnerabilities, especially if Kim Jong Il dies before Jong Un 
consolidates his authority.
    The North has signaled it wants to return to a nuclear dialogue. 
The North probably wants to resume nuclear discussions to mitigate 
international sanctions, regain international economic aid, bolster its 
ties with China, restart bilateral negotiations with South Korea and 
the United States, and try to gain tacit international acceptance for 
its status as a nuclear weapons power.
    Since 2009, Pyongyang has made a series of announcements about 
producing enriched uranium fuel for an indigenous light water reactor 
that it is building at its Yongbyon nuclear complex. In mid-November 
2010, the North showed an unofficial U.S. delegation what it claims is 
an operating uranium enrichment facility located in the Yongbyon rod 
core production building.
    North Korea's conventional military capabilities have eroded 
significantly over the past 10 to 15 years due to persistent food 
shortages, poor economic conditions ,inability to replace aging weapons 
inventories, reduced training, and increased diversion of the military 
to infrastructure support. Therefore, Pyongyang increasingly relies on 
its nuclear program to deter external attacks on the state and to its 
regime. Although there are other reasons for the north to pursue its 
nuclear program, redressing conventional weaknesses is a major factor 
and one that Kim and his likely successors will not easily dismiss.
    Nevertheless, the Korean People's Army remains a large and 
formidable force capable of defending the North. Also, as demonstrated 
by North Korean attacks on the South Korean ship Cheonan in March 2010 
and Yeongpyong Island in November. North Korea is capable of conducting 
military operations that could potentially threaten regional stability. 
These operations provide Pyongyang with what the regime may see as a 
means to attain political goals through coercion.
China
    China's rise drew increased international attention over the past 
year, as several episodes of assertive Chinese behavior fueled 
perceptions of Beijing as a more imposing and potentially difficult 
international actor. Regional concerns about China's strategic 
intentions have been prompted by its diplomatic support for Pyongyang 
in the wake of the north's sinking of the Cheonan and its artillery 
attack on Yeongpyong Island; Beijing's efforts to advance its 
territorial claims in the South China Sea; and its efforts to 
intimidate Japan during a confrontation over fishing rights near 
disputed islands last September. Neighboring countries that have long 
pursued constructive relations with China are now more anxious about 
Beijing's motives and plans.
    China's apparent confidence about its growing influence in Asia and 
globally is due, first and foremost, to its sustained economic success, 
and Beijing's perception that this translates into diplomatic clout In 
2010 China continued its relatively rapid recovery from the global 
financial crisis (growing at over 10 percent, compared to 2.5 percent 
in the G-7 developed economies, according to IMF statistics), 
reinforcing its role as a key driver of global economic recovery. In 
2010 China surpassed Japan to become the second largest economy in the 
world. This economic growth facilitated and was complemented by a 
sustained pace for China's military modernization programs.
    In response to international concerns about China's actions, 
President Hu Jintao has affirmed China's commitment to a peaceful and 
pragmatic approach to international relations. This has been reflected 
in authoritative Chinese articles and leadership statements--especially 
during Hu's visit to Washington in January--and in Beijing's recent 
efforts to urge restraint on North Korea's behavior. We remain 
attentive, however, to the possibility that Beijing's perceptions of 
its influence and clout could fuel more assertive Chinese behavior, or 
increase the potential for unintended conflict between China and its 
neighbors, especially in the maritime realm.
    China's external behavior remains inextricably linked to the 
leadership's overarching concern with maintaining economic growth and 
domestic stability. Beijing's active pursuit and strong defense of its 
interests abroad are aimed in part at ensuring access to markets, 
resources, and energy supplies abroad that are vital to sustaining 
economic growth and stability at home. Beijing's persistent fears about 
domestic stability have been reflected in its resistance to external 
pressure on the value or its currency, repression of political dissent, 
and strident reaction to the Nobel Peace Prize for jailed democracy 
advocate Liu Xiaobo.
    China's relationship with Taiwan remained stable and positive in 
2010, with progress marked by an Economic Cooperation Framework 
Agreement between the two sides. However, Strait tensions could return 
if the two sides are unable to sustain progress on economic and 
political dialogue.
    China's ongoing military modernization program began in earnest in 
the late 1990s, after Beijing observed the threat posed by long-range 
precision guided warfare in Operation Desert Storm and the Balkans. 
China's defense policies--initially aimed at creating credible options 
to forcibly bring Taiwan under Beijing's authority and developing the 
corresponding capabilities to prevent US intervention in a cross-Strait 
conflict--led Beijing to invest heavily in short- and medium-range 
ballistic missiles, modern naval platforms, improved air and air 
defense systems, counterspace capabilities, and an Intelligence, 
Surveillance, and Reconnaissance (ISR) system. For example, the Chinese 
have recently conducted the first flight test of what we refer to as a 
fifth-generation fighter, the J-20. We have known about this program 
for a long time and the flight test was not a surprise. We judge that 
this event is another indication of China's aspiration to develop a 
world-class military, and it is a capability we take seriously. But 
this program, like others in China, will have to overcome a number of 
hurdles before reaching its full potential.
                    the middle east and north africa
    Contagious mass uprisings in the Middle East and North Africa 
continue to set in motion changes that will have a long-lasting impact. 
Vivid examples of this include the sudden fall of the Ben Ali regime in 
Tunisia, the resignation of former President Mubarak in Egypt, and the 
recent efforts by Muammar Gaddafi to cling to power in Libya. The 
Intelligence Community has been monitoring these fast-moving events 
closely and has been assessing the underlying political and socio-
economic drivers of instability in this region for some time now, 
including analyses of historical transitions of power, to understand 
future risks to regime stability. However, specific triggers for how 
and when instability will lead to the collapse of various regimes 
cannot always be known or predicted.
    Moreover, economic uncertainty, couple with demographic changes and 
the lack of political expression has fueled unrest in the region. 
Indeed, what is happening in the Middle East and North Africa is yet 
another manifestation of the fact that economic challenges have become 
paramount in our interdependent world, and cannot be underestimated.
Iraq
    Iraq will likely sustain a generally secure path through the end of 
2011, even as U.S. forces continue to draw down in accordance with the 
U.S.-Iraq bilateral security agreement. Despite slow progress on 
political goals, the continuing preference of Iraqi citizens to pursue 
change through the political process rather than violence is the most 
important driver supporting this trend. In addition, an erosion of 
insurgent and terrorist strength. the contributions of the U.S. 
military and diplomatic corps, and the capacity of the Iraqi Government 
to deliver security and basic services for Iraq's citizens also will 
underpin this trend. Other key factors affecting Iraq's political and 
security evolution through 2011 will be its ability to adapt to 
external threats and manage and contain conflict.
    Iraq's security generally remained stable through 2010. Reported 
violence remains relatively steady at the lowest sustained level since 
2003. Despite periodic high-profile attacks, overall population 
security has improved, sectarian tensions are subdued, and Iraq's 
citizens have begun to express guarded optimism about the future.
    Al Qaeda in Iraq (AQI) will be a persistent security problem, 
although AQI's manpower and ability to conduct a sustained campaign of 
attacks are substantially less than at its height in late 2006 and 
early 2007. AQI will almost certainly continue high-profile attacks in 
an attempt to reignite sectarian warfare and discredit the Iraqi 
Government. However, we believe it is unlikely AQI will be able to 
achieve its larger strategic goals of controlling territory from which 
to launch attacks, driving U.S. Forces-Iraq from Iraq before final 
withdrawal in December 2011, and establishing a base for a new 
caliphate. Violence by armed Sunni and Shia groups also remains at the 
lowest levels since 2003.
    Political and Economic Trends
    Protracted government formation negotiations, which were recently 
completed, reflect the dynamism of Iraqi politics and the complexity of 
the constitutionally-mandated institutional changes that Iraqis are 
negotiating. Several key variables will influence Iraq's political, 
economic, and security evolution over the coming year, including:

         The character and competency of the new government, 
        specifically, the extent to which it is inclusive and capable 
        of effective governance and service delivery, and the degree to 
        which it is authoritarian.
         The pace of progress on key outstanding issues such as 
        control of hydrocarbon resources, revenue sharing, and central 
        versus regional control.
         The stability of oil prices, development of Iraq's 
        non-oil private sector, and Baghdad's ability to attract 
        foreign investment by improving the business environment and 
        upgrading critical infrastructure.
         The influence of and interference by Iraq's neighbors, 
        which probably will include some combination of exploiting a 
        perceived power vacuum and cultivating stronger political and 
        economic ties with Baghdad.
         The U.S. drawdown will press the new Iraqi government 
        to prioritize key issues. It also requires continued U.S. 
        support and a renewed official agreement with the United 
        States, and it will define the future U.S.-Iraq relationship.

    Economic trends in Iraq will reinforce the political and security 
gains we anticipate through 2011, as long as oil prices and production 
do not fall substantially below current levels. The contracts signed in 
2009 and 2010 with 11 international consortiums to expand the 
development of some of Iraq's largest oil reserves have the potential 
to create a modest number of jobs over timeand increase national 
income.
Iran
    The public protests and elite infighting that followed the June 
2009 presidential election posed the greatest internal challenge to the 
Islamic Republic since the early 1980s. The election crisis has widened 
splits in the country's political elite and has demonstrated the 
popular willingness to challenge government authority and legitimacy. 
Nevertheless, the Iranian regime has stymied opposition activities and 
should be able to contain new threats from the opposition to its hold 
on power over the near term.
    In reasserting control in the wake of the election, the regime has 
moved Iran in a more authoritarian direction. Decisionmaking on 
domestic issues that affect Supreme Leader Ali Khamenei's hold on power 
will be shaped by ascendant hardliners, including President Mahmoud 
Ahmadi-Nejad and his allies and officials of the Islamic Revolutionary 
Guard Corps (IRGC). The regime is unlikely to compromise with the 
opposition. Since the election Iran has arrested thousands of 
opposition sympathizers, shut down media outlets, and increased 
monitoring and control of telecommunications.

         The regime has sought to pressure and ostracize 
        leaders of the Green Path movement, which emerged in response 
        to perceived election fraud. The movement, although weakened, 
        will continue to pose a low-level challenge to the regime, 
        given its ability to tap into the alienation among the middle 
        classes over the election, the government's subsequent violent 
        crackdown, and restriction of civil liberties.
         The regime's increasing reliance on the IRGC to 
        suppress political dissent will allow the Guard to widen its 
        political and economic influence, which has grown over the past 
        two decades.

    Despite the regime's reassertion of control, it is vulnerable to 
renewed challenges because traditional conservatives have been 
alienated and ideological cleavages between conservatives and hardline 
factions have widened. In fact, Expediency Council Chairman Ali Akbar 
Hashami-Rafsanjani, his moderate allies, and other traditional 
conservatives have responded with increased public criticism of Ahmadi-
Nejad and efforts to block his policies.
    The election crisis and the most recent round of U.N. sanctions 
almost certainly have not altered Iran's long-term foreign policy 
goals--namely Iranian sovereignty, and the projection of power and 
influence in the region and the Muslim world. Iranian leaders probably 
will continue to issue harsh rhetoric and defy the west, but we judge 
that the need to avoid tougher sanctions and maintain commercial 
relationships will likely also temper regime behavior.
    The Intelligence Community judges Tehran will continue to view the 
United States as an existential threat and as partly responsible for 
post-election unrest. Iran will seek to undermine U.S. influence in the 
Middle East by sponsoring opposition to U.S. initiatives, backing 
groups that oppose U.S. and Israeli interests, working to undermine 
cooperation between Washington and moderate Arab allies, and 
strengthening its deterrent capability against threats from the United 
States and Israel.
    Despite Chinese and Russian support for UNSCR 1929 in June 2010, 
Iran will continue to view relations with China and Russia as critical 
to countering Western economic pressure, limiting U.S.influence in the 
region, and obtaining advanced military equipment. Tehran also is 
seeking to develop improved political and economic ties with a range of 
Asian, Latin American, and East European countries to try to offset and 
circumvent the impact of actions.
Yemen
    The Republic of Yemen Government is facing the most serious threat 
to its stability since its 1994 civil war. Confronting myriad 
political, security, and development challenges, President Ali Abdallah 
Salih, as of early February, was attempting to retain control over the 
key levers of power in Yemen. Deterioration of governance will present 
serious challenges to U.S. and regional interests, including leaving 
AQAP better positioned to plan and carry out attacks, exacerbating 
ongoing civil unrest and worsening humanitarian and socio-economic 
problems. Although Yemen's economy has experienced short-term 
improvement because of relatively high oil prices, the outlook remains 
poor for the next decade due to the country's declining oil reserves 
and water resources, lack of economic diversification, widespread 
corruption, rapid population growth, and high rates of poverty, 
illiteracy, and unemployment.
Lebanon
    In Lebanon, political tensions persist over pending indictments 
against Hizballah for the 2005 assassination of former Prime Minister 
Rafik Hariri. Hizballah in January collapsed the government and acted 
quickly to install a new one that would end Lebanon's cooperation with 
the Special Tribunal for Lebanon, a move which prompted Sunnis aligned 
with former Prime Minister Sa'ad Hariri to conduct street protests 
against Hizballah's power play. Adding to these tensions is uncertainty 
about the direction of the next government, the fate of the Tribunal, 
and the potential for localized, small-scale violence to escalate.
    In addition, al Qaeda remains interested in using Sunni extremist 
networks in Lebanon to carry out terrorist operations against U.S., 
Western, and Israeli targets in the Levant and abroad. However, al 
Qaeda remains poorly positioned to establish a foothold in the Levant 
because of organizational shortcomings, disunity among the Lebanon-
based Sunni extremist groups, lack of trusted leaders, and strong 
opposition from local security services.
                                 africa
    Africa in the coming year is likely to continue what is now a 
decade-long trend of economic and political progress. As in the past, 
however, this progress is likely to be uneven and subject to sudden 
reversal. Although Africa has weathered the worldwide economic downturn 
better than some other areas of the world, it continues to fall at the 
bottom of almost all economic and social indicators, a standing 
unlikely to change in the near term. We assess that many African 
nations will continue on a trajectory of becoming more democratic, but 
this process will not be smooth or necessarily lead to political 
stability in all cases. African elections are likely to continue in 
many cases to heighten tensions and intensify conflict. Critical votes 
are scheduled this year in several of Africa's largest and most 
important states: the referendum on southern secession in Sudan, 
national elections in Nigeria, and the Democratic Republic of the 
Congo.
    In Niger, the military junta is promising a democratic renewal 
following a coup d'etat in 2010. Elsewhere, ruling parties and their 
leaders appear intent on squeezing out any serious political 
competition; Zimbabwe, Uganda, Rwanda, and Zambia fall into this 
category. Hotly contested elections in Guinea and Cote d'Ivoire in late 
2010 produced winners, but did not mitigate or defuse highly volatile 
political environments.
Sudan
    Sudan in 2011 likely will face a prolonged period of political 
uncertainty and potential instability. Six years after the signing of 
the Comprehensive Peace Agreement (CPA) that ended decades of civil war 
between northern and southern Sudan, the south overwhelmingly voted to 
break away from Sudan and become Africa's newest independent nation. 
Although the referendum vote proceeded mostly peacefully and Khartoum 
has recognized the results, a large number of issues remain unresolved, 
including how Sudan's oil revenues will be divided, the disposition of 
Sudan's debt burden, citizenship rights, border demarcation, and the 
status of the disputed province of Abyei. While neither side wants to 
return to war, we anticipate periodic episodes of violence along the 
border.
    Almost immediately, a newly independent southern Sudan will face 
serious challenges that threaten to destabilize a fragile, untested, 
and poorly resourced government, which will struggle to provide 
security, manage rampant corruption, and provide basic services. The 
ruling Sudan People's Liberation Movement (SPLM) will have no choice 
but to turn to the international community, and specifically the United 
States, for assistance.
    The government in Khartoum will face challenges as well as it 
adjusts to new political and economic environments. The conflict in 
Sudan's western Darfur region will continue to simmer as a low level 
insurgency through 2011. Khartoum may be in a better position to 
address the issues in Darfur after southern secession. However, as long 
as the north-south tension remains unresolved, we see little prospect 
that the U.N. will be able to draw down its peacekeeping force, or that 
an estimated 2 million displaced people will be able to return home. 
Lengthy talks in Doha have failed to produce an agreement between 
Darfur rebel groups and the Khartoum Government. One relatively bright 
spot in the Darfur conflict is the reconciliation between Sudan and 
Chad.
Somalia
    After 2 decades without a stable, central governing authority, 
Somalia continues to be the quintessential example of a failed state. 
Although the mandate of the current Transitional Federal Government 
(TFG) expires in August, we see no signs Somalia will escape continuing 
weak governance in 2011. The TFG and its successor almost certainly 
will be bogged down by political infighting and corruption. As well, 
the TFG will face persistent attacks from al-Shabaab and remain 
dependent on the presence of approximately 8,000 peacekeepers from the 
African Union Mission in Somalia (AMISOM) to retain control over 
sections of Mogadishu.
    In 2011, most al-Shabaab members will remain focused on fighting 
AMISOM, the TFG, and perceived western interests in Somalia. The July 
2010 twin bombings in Kampala suggest some al-Shabaab leaders intend to 
expand the group's influence in East Africa. We remain concerned that 
the group also aspires to attack the U.S. Homeland.
    Some of al-Shabaab's weaknesses played out publicly in late 2010. 
Its internal rifts were covered widely in the media and the October 
execution of two teenage girls was broadly criticized. Al-Shabaab 
almost certainly will face enduring leadership divisions and public 
dissatisfaction over harsh tactics, but the TFG is not positioned to 
capitalize on these vulnerabilities to gamer public support.
Nigeria
    Nigeria, Africa's most populous nation, will face significant 
challenges in 2011: conducting national elections, stopping sectarian 
violence in its Middle Belt, addressing violent Islamic groups in the 
north, and averting a full-scale return to militancy in its oil region. 
Presidential and gubernatorial elections are in April, and Abuja is 
under considerable pressure to ensure that these elections rise above 
the badly flawed 2007 voting. Political violence has been a significant 
feature of the last three elections, although so far this season, the 
level of violence associated with the upcoming voting appears to be 
lower.
    Nigeria's oil rich Niger Delta is a major source of oil for the 
United States outside of the Middle East. Violence and criminality 
continue to disrupt Nigeria's oil and gas production, albeit at a much 
lower level since the government's amnesty deal for militants in 2009; 
corruption still fosters lawlessness and drains funds from development 
projects. Opportunist and well-armed militias operate as criminal 
syndicates, selling their services as thugs-for-hire to corrupt 
politicians kidnapping oil workers for ransom, and attacking oil 
facilities. Delta militants allegedly set off car bombs in the capital 
last October, killing 10. Complicating the security picture is 
Jama'atul Ahlul Sunnah Lidda'awa Wal Jihad (JASLWJ, aka Boko Haram), 
the northern Muslim extremist group. It is focused on local issues, 
although it may be pursuing interests it shares with AQIM.
    China's engagement with Nigeria is in keeping with China's overall 
Africa policy, though less pronounced than in other countries of the 
region, and focused primarily on the construction and trade sectors, 
and to a lesser extent, oil.
Cote d'Ivoire
    The continuing standoff in Cote d'Ivoire carries a high risk of 
reigniting widespread fighting, both in Abidjan where pro-Gbagbo youth 
gangs are attacking supporters of Alassane Ouattara and throughout the 
country where both sides have sizeable military forces. France, Cote 
d'Ivoire's former colonial power, has military forces stationed in 
country and the U.N. maintains a sizeable peacekeeping force. The 
crisis presents West Africa's premier regional organization, the 
Economic Community of West African States (ECOWAS), with a significant 
challenge; its ability to intervene militarily, should it decide as a 
last resort to do so, will require substantial outside assistance. To 
date, ECOWAS efforts to craft a political solution to the crisis have 
encountered intransigence from Gbagbo. Renewed fighting risks creating 
new humanitarian crises in Cote d'Ivoire and neighboring countries.
The Democratic Republic of the Congo
    President Kabila has been unable to consolidate his control over 
turbulent Eastern Congo because armed groups, and undisciplined 
government security forces have operated largely with impunity for many 
years and have been responsible for numerous acts of violence and human 
rights abuses. In addition, elements of the Congolese Army are are ill-
disciplined and continue to prey on the population.
    In March 2009, a peace agreement ended the fighting between the 
Congolese Army and a Congolese Tutsi rebel group, the National Congress 
for the Defense of the People (CNDP). The CNDP and other militias were 
absorbed into the Congolese Army. However, they were never fully 
integrated and have recently threatened to withdraw, claiming that 
Kinshasa has not fulfilled its promises. In the meantime, the 
Democratic Forces for the Liberation of Rwanda (FDLR), a Hutu rebel 
group dedicated to the overthrow of the Tutsi government, has increased 
attacks on civilians and the Congolese military, primarily in response 
to a series of military operations targeting the group in an attempt to 
regain control of mining areas taken from them during the operations.
    Kinshasa will be hard pressed to cope with these threats, which 
could destabilize the eastern region even further. Meanwhile, in the 
northeast, military operations are underway to eliminate the threat 
posed by a Ugandan-led rebel group known as the Lord's Resistance Army 
(LRA), led by Joseph Kony. which also have attacked villages in the 
Central African Republic and southern Sudan. National elections in 
Congo are scheduled for November 2011. Low-level violence surrounding 
the election may erupt.
West African Transnational Threats
    We judge that al Qaeda in the Lands of the Islamic Maghreb will 
continue to operate and launch limited attacks from isolated safehavens 
in parts of the fragile, underdeveloped nations in West Africa's 
Sahelian region--to include Mauritania, Mali, Burkina Faso, and Niger. 
Although it has only a few hundred men at most in the Sahel, AQIM has 
been forced to shift its focus away from Algeria and to use hit-and-run 
tactics to strike military targets and kidnap hostages for ransom in 
the region. Mauritania's government has waged an aggressive campaign 
against AQIM, including sending troops across the border into Mali for 
extended periods. AQIM relies on kidnapping-for-ransom for most of its 
revenue.
    Drug trafficking continues to be a major problem in Africa. 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 vulnerable 
states in the region. Away from the scrutiny of local and international 
law enforcement, drug traffickers transport tons of cocaine from Latin 
America to Europe through West Africa's porous borders, and co-opt 
government and law enforcement officials.
                           russia and eurasia
Russia
    Last year was marked by significant improvements in U.S.-Russian 
relations. Russia has demonstrated a willingness to cooperate on some 
top priorities that it shares with the United States. such as signing 
the New START treaty, cooperating on transit and counternarcotics in 
Afghanistan, and pursuing the pressure track against Iran's nuclear 
program. Other encouraging signs include Russian interest in discussing 
missile defense (MD) cooperation with the United States and NATO, talks 
on modernizing the Conventional Armed Forces in Europe Treaty, and 
progress on Russian accession to the World Trade Organization (WTO).
    At the same time, policy disagreements persist. Some Russian elites 
still express suspicion that MD is ultimately directed against Russia. 
Russia shows no willingness to discuss the status of--much less 
withdrawal of its troops from--South Ossetia and Abkhazia, contested 
territories inside Georgia's internationally-recognized borders. 
Despite the fact that Russia has moved closer to membership in the WTO, 
some Russian officials and key lobbies have lingering doubts the move 
is in their interests.
    Russia continues to influence domestic politics in other former 
Soviet republics, most recently in Belarus. Russia's concern is not 
with human rights or democracy but rather with the fact that Belarus's 
authoritarian leader Aleksandr Lukashenko routinely resists bending to 
its will. In Ukraine, Russian officials have been eager to engage and 
promote Russian interests through the Moscow-friendly government there.
    The direction of Russian domestic politics is a major unsettled 
question for 2011 and 2012. President Medvedev's call for 
``modernization'' has sparked a debate among the Moscow elite--and on 
the blogosphere--about whether modernization is possible without 
political liberalization. Prime Minister Putin meanwhile has spoken 
forcefully against significant changes in the existing political order. 
In 2010, Russia saw a number of spontaneous protests, in part against 
unpopular government actions but also of a more nationalist bent. 
Opposition parties' popular support remains very weak.
    The Russian economy has recovered from the 2008-2009 crisis and has 
returned to growth. However, the Russian leadership admits it will not 
repeat the rapid growth of the previous decade. The government has 
pledged to undertake new social programs and spend more on 
infrastructure and defense, which will challenge its ability to close 
the non-oil fiscal deficit.
    The Russian Government is approaching the December 2011 Duma and 
March 2012 presidential elections having announced plans to increase 
resources devoted to address domestic problems and deal with the 
persistent security challenge in the North Caucasus. Popular and elite 
support for the existing political order appears strong en6ugh to 
withstand these problems, at least in the short-term.
    Putin and Medvedev indicate that the decision about who will be 
president hinges primarily on an arrangement between them. Both have 
shown interest in running.
Assessing Russia's Military
    Russian military programs are driven largely by Moscow's perception 
that the United States and NATO are Russia's principal strategic 
challenges and greatest potential threat. Russia's nuclear forces 
support deterrence and enhance Moscow's geopolitical clout. Its still-
significant conventional military capabilities, oriented toward Eastern 
Europe, the Caucasus, Central Asia, and the Far East, are intended to 
defend Russia's influence in these regions and serve as a ``safety 
belt'' from where Russian forces can stage a defense of Russian 
territory.
    High-profile but small-scale operations in the Atlantic, Caribbean, 
Mediterranean, and Indian Ocean, in part, represent traditional 
peacetime uses of naval forces to ``show the flag'' and convey that 
Moscow remains a significant military power.
    Russia's ambitious military development plan announced in fall 2008 
aims to field a smaller, more mobile, better trained, and modernized 
force over the next decade. This plan represents a radical break with 
historical Soviet approaches to manpower, force structuring. and 
training.
    Moscow's military development poses both risks and opportunities 
for the United States and the west. Increased Russian capabilities and 
a strategy of asymmetric and rapid response raise the specter of a more 
aggressive Russian reaction to crises perceived to impinge on Moscow's 
vital interests. Moscow's wariness of the potential for western 
involvement on its periphery, concern about conflicts and their 
escalation, and military disadvantages exacerbated by a drawn out 
crisis or conflict place a premium on quick and decisive action. 
However, as the Russian military continues its post-Soviet recovery and 
Moscow feels more comfortable asserting itself internationally, Russian 
leaders may be more inclined to participate in international 
peacekeeping operations.
The Caucasus and Central Asia
    The unresolved conflicts of the Caucasus and the fragility of some 
of the Central Asian states provide the most likely flashpoints in the 
Eurasia region. Moscow's continued military presence in and political-
economic ties to Georgia's separatist regions of South Ossetia and 
Abkhazia account for some of the tensions. Georgia's public efforts to 
engage with various ethnic groups in the Russian North Caucasus could 
contribute to these tensions.
    Georgia's new Constitution strengthens the office of the Prime 
Minister after the 2013 presidential election. President Saakashvili 
has not indicated his future plans but the option is available for him 
under the new Constitution to serve as Prime Minister.
    The frozen Nagorno-Karabakh conflict is also a potential 
flashpoint. The Azerbaijan Government seems satisfied with the stalled 
Turkey-Armenia rapprochement, but President Aliyev is seeking to focus 
western attention on Azerbaijani interests at the expense of Armenia. 
Heightened rhetoric and distrust on both sides and violent incidents 
along the Line of Contact throughout last summer increase the risk that 
minor military exchanges could lead to miscalculations that could 
escalate the situation with little warning.
    As the United States increases reliance on Central Asia to support 
operations in Afghanistan, the region's political and social stability 
is becoming more important. The overthrow of the Kyrgyzstani Government 
last April and the subsequent ethnic violence in the country's south 
attest that instability can come with little warning in parts ofCentral 
Asia. While Kyrgyzstan successfully held a parliamentary election, many 
underlying grievances have not been resolved and the possibility of 
episodic, retaliatory violence cannot be excluded.
    Kyrgyzstan's and Tajikistan's abilities to cope with the challenge 
of Islamic extremism--should it spread from Pakistan and Afghanistan--
represent an additional cause for concern. In 2010, Tajikistan's 
President Rahmon was' forced to negotiate with regional warlords after 
failing to defeat them militarily, an indicator that Dushanbe is 
potentially more vulnerable to an Islamic Movement of Uzbekistan with 
renewed interests in Central Asia.
                                 europe
The Balkans
    Events in the Western Balkans will again pose the principal 
challenges to stability in Europe in 2011. Bosnia-Herzegovina's 
continuing uneasy inter-ethnic condominium and unresolved issues 
regarding Kosovo, including the future of Serb-majority areas in 
northern Kosovo, Belgrade's efforts to re-open the question of Kosovo's 
status, and Pristina's weakness in rule of law and democracy remain 
sources of tension requiring western diplomatic and security 
engagement.
    Bosnia's multi-ethnic state institutions are in disarray. While 
neither widespread violence nor a formal split is likely, we judge that 
ethnic Serb rhetoric about seceding from Bosnia will continue to 
inflame passions. Ethnic agendas still dominate the political process, 
and wrangling among the three main ethnic groups impedes the process of 
building institutions. Renewed U.S.-EU efforts to broker compromises on 
constitutional reforms and other agreements needed to advance Bosnia's 
NATO and EU membership prospects have met with little success. thus 
far.
    More than 70 nations, including 22 of 27 EU members, have 
recognized the state of Kosovo. However, in the coming years Pristina 
will remain dependent on the international community for economic and 
development assistance, as well as for diplomatic and military presence 
to foster further consolidation of its statehood. Kosovo's institutions 
remain weak, and crime and corruption are rampant. Belgrade openly 
supports parallel Kosovo Serb institutions. Serbia has used political 
and diplomatic means to challenge Pristina's independence. NATO's 
presence, although reduced, is still needed to deter violence, and its 
mentoring of the fledgling Kosovo Security Force is crucial to the 
force's effectiveness and democratic development.
    Serbia's leaders espouse aEuropean future and President Tadic 
desires quick progress toward EU membership, but at the same time they 
are unwilling to abandon Belgrade's claim to Kosovo to achieve that 
end. Serbia has increased cooperation with NATO, but maintains it will 
not actively seek membership in the next few years.
                    latin america and the caribbean
    In Latin America, recent positive trends, such as deepening 
democratic principles and economic growth, are challenged in some areas 
by rising narco-violence, populist efforts to limit democratic 
freedoms, and slow recovery from natural disasters. Initiatives to 
strengthen regional integration offer greater opportunities for key 
countries--such as Venezuela and Brazil--to try to limit U.S.influence, 
but are hampered by ideological differences and regional rivalries. 
Relations with Iran offer a few Latin American Governments a means of 
staking out an independent position on a key international issue, while 
also attempting to extract financial aid and investment for economic 
andsocial projects.
    The drug threat to the United States emanates primarily from the 
Western Hemisphere: the overwhelming majority of drugs now consumed in 
the United States are produced in Mexico, Colombia, Canada, and the 
United States. Patterns in drug marketing and trafficking create 
conditions favorable for a continuation of this trend.
    Strong U.S. demand for illicit drugs is the principal driver of the 
flow of foreign-produced drugs to the United States, still the world's 
most significant drug market.
Mexico
    President Calderon's ambitious effort to combat Mexico's powerful 
drug cartels--now in its fifth year--has achieved some important 
successes, but faces enormous challenges. Calderon is pursuing a multi-
faceted strategy to eliminate the cartels' leadership and dismantle 
their networks, reform his country's judicial system, modernize its 
police forces, battle corruption, and address Mexicans' social needs.
    Mexican efforts to grind down the cartels' leadership have produced 
solid results. Since 2009, 4 of the government's top 8 cartel leaders 
have been captured or killed and 18 of the 37 ``most wanted'' 
traffickers, as identified by Mexican officials, have been arrested or 
killed. Elite military and Federal police units are demonstrating 
greater prowess in intelligence-driven operations, which disrupt 
trafficking operations and create fissures in the trafficking groups' 
organizational structures. Mexican security forces are also seizing 
drugs, weapons, and trafficker assets. The authorities' confiscation in 
October 2010 of 134 metric tons of marijuana in October was one of the 
largest seizures on record.
    While there have been improvements in Mexico's overall military and 
police capabilities, challenges remain in order for Mexico to break the 
trafficking organizations and contain criminal violence. President 
Calderon is pressing ahead with institutional reforms to strengthen the 
rule of law, but progress is slow because of resource constraints, 
competing political priorities, and bureaucratic resistance. The 
Mexican Congress recently passed a law to toughen penalties in 
kidnapping cases, and is considering legislation governing military 
activity, and money laundering. Judicial reforms were passed in 2008, 
but they are complex and the law provides an 8-year window for 
implementation.
    Mexico is facing sharp and steady escalation of criminal violence 
as these same powerful drug cartels fight within and among themselves 
for dominance and seek to intimidate the government and population. 
Cartels have sought to lower public confidence in the government and 
demonstrate their contempt for the law by broadcasting more savage acts 
such as beheadings, public executions, and an overall change in 
brutality. According to Mexican Government statistics, drug-related 
murders have risen from 2,489 during 2006--the year Calderon initiated 
his counterdrug policy--to over 15,000 in 2010.
    Most of this violence is a result of inter-cartel violence to 
control smuggling routes within Mexico, to include crossing points 
along the U.S.-Mexican border, and continued rivalry to eliminate 
competitors. Additionally, the effectiveness of Calderon's anti-cartel 
campaign has frustrated cartel leadership, leading to an increase in 
violence directed toward Mexican law enforcement and military units. 
Civilians are increasingly caught in the crossfire. While public 
support for Calderon's crackdown on drug trafficking organizations 
remains strong, rising violence is taking a toll on the public's 
opinion of the government's ability to defeat the trafficking 
organizations.
    We see no signs that trafficker leaders have, as a matter of 
strategy, decided to systematically attack U.S. officials in Mexico. 
The collateral threat to U.S. personnel remains real, however, and the 
threat environment for U.S. personnel in Mexico could worsen if the 
cartels conclude that U.S. assistance is instrumental to any pronounced 
improvement in Mexican counterdrug efforts.
Venezuela
    President Hugo Chavez's hold on power remains secure, despite his 
party's lackluster performance in the National Assembly elections in 
September 2010. Opposition parties picked up enough seats to deny him 
the super majority he sought to maintain his ability to pass some major 
laws and make executive and judicial appointments unimpeded. Yet the 
passage of an ``enabling law'' by the National Assembly in December 
allows him to rule by decree for 18 months. Chavez's mismanagement of 
the Venezuelan economy and spiraling crime rates account at least 
partly for the electoral setback.
    Chavez in the coming year will struggle to improve his country's 
poor economic performance. Venezuela currently suffers from nearly 30 
percent inflation and negative growth. Chavez in early 2010 ordered the 
currency devalued, but the short-term boost in government purchasing 
power has long since dissipated. Consequently, Caracas on 1January 
eliminated a preferential rate used for food and medicine to ease the 
country's budget deficit.
    Facing an energized opposition in the coming year, Chavez may have 
to deal with more popular protests over his continued push to implement 
``21st Century Socialism.'' At the end of the legislature's lame duck 
term, Chavez and his allies passed legislation that gives more 
resources to his loyal community councils, allowing Chavez to claim 
that he is both bolstering participatory democracy and creating new 
means of funneling resources to supporters.
Cuba
    The continued deterioration of Cuba's economy in 2010 has forced 
President Raul Castro to take unprecedented and harsh economic actions 
that could spark public unrest over the coming year. Havana announced 
last September that it will layoff 500,000 government employees by 
spring, with another 500,000 to follow. The government employs about 85 
percent of the total workforce of 5.1 million. In a probable attempt to 
consolidate his reforms, Castro is planning a Party Congress for April, 
the first in 14 years.
    The economic situation is dire. Major sources of foreign revenue 
such as nickel exports and tourism have decreased. Moreover, a decline 
in foreign currency reserves forced dramatic cuts to imports, 
especially food imports. and we have seen increases in the price of 
oil, food, and electricity. As a result, Havana has become even more 
dependent on subsidized oil shipments from Venezuela and earnings from 
over 40,000 health workers, teachers, and advisers in that country. We 
doubt that the Cuban economy can quickly absorb all the dismissed state 
workers given the many bureaucratic and structural hurdles to increased 
private sector employment.
    There is little organized opposition to the Cuban Government and 
Cuba's security forces are capable of suppressing localized public 
protests, although a heavy-handed Cuban putdown of protests could spark 
wider discontent and increased violence which could lead to a level of 
political instability.
Haiti
    Stability in Haiti remains heavily dependent on the support of the 
international community in the wake of the devastating January 2010 
earthquake, the cholera epidemic that began in October 2010, and the 
current political crisis. The Haitian Provisional Electoral Council's 
announcement that the ruling party candidate had barely edged out a 
popular musician for second place during the first round of recent 
Haitian elections sparked additional protests and violence. Prospects 
for more unrest remain in view of the runoff election having been 
delayed, an Organization of American States report suggesting that the 
ruling party candidate did not qualify for the runoff. the recent 
return of former Haitian dictator Jean Claude-Duvalier, subsequent 
press accounts speculating that former President Aristide might also 
return to Haiti, and uncertainty over how Haitian officials will handle 
the constitutionally-mandated February date for transition of power.
    More than a year after the earthquake over 1 million Haitians 
remain in nearly 1,200 temporary settlement camps, mainly around the 
capital Port-au-Prince. Recovery and reconstruction efforts have been 
slow and will take many more years. Haitians for the most part have 
patiently and stoically responded to these challenges, although 
protests have spiked in relation to the referenced elections. Efficient 
and timely investment of the nearly $10 billion in assistance pledged 
by the international community for Haiti's reconstruction efforts over 
the next 5 years will be key to maintaining social and political calm.
Regional Dynamics
    Regional efforts that lessen U.S. influence are gaining some 
traction. Planning proceeds for the creation of a community of Latin 
American and Caribbean States--slated for inauguration in Caracas in 
July--that excludes the United States and Canada. Organizations such as 
the Union of South American Nations (UNASUR) are taking on issues once 
the purview of the OAS. Indeed, South American countries, with one or 
two exceptions, increasingly are turning to the UNASUR to respond to 
disputes or unrest in the region.
    Competing ideologies and regional rivalries will limit the 
effectiveness of these institutions. Moderate leaders in Chile, 
Colombia, and Panama often pursue different policies than Venezuela and 
other like-minded nations, such as Ecuador and Bolivia in these 
organizations. Caracas and the ALBA allies can rally block support to 
stymie consensus within the OAS, but deteriorating economic conditions 
in Venezuela and Chavez's declining popularity at home and abroad have 
limited his ability to exert influence beyond his core group of allies.
    Brazil's economic success and political stability have set it on a 
path of regional leadership. Brasilia is likely to continue to use this 
influence to emphasize UNASUR as the premier security and conflict 
resolution mechanism in the region at the expense of the OAS and of 
bilateral cooperation with the United States. It also will seek to 
leverage the organization to present a common front against Washington 
on regional political and security issues.
Iranian Inroads
    Iran continues to reach out to Latin America as a way to diminish 
its international isolation and bypass international sanctions. So far, 
Iranian relations with Latin America have only developed significantly 
with leftist governments that oppose U.S. leadership in the world, 
particularly Venezuela, Bolivia, and other ALBA members, as well as 
with Brazil. Bilateral cooperation between Iran and Venezuela has 
deepened in the areas of diplomacy and defense and to a more limited 
extent on energy, and trade since Ahmadi-Nejad took office in 2005. 
Most moderate governments have responded coolly to Tehran outreach, 
although an increasing number of Iranian embassies are attempting to 
spread Iranian influence in Latin America. We expect Tehran to continue 
offering economic and other incentives to try to expand its outreach. 
Diplomatic efforts between Brazil and Tehran have dovetailed with an 
expansion of bilateral trade and investment, while Bolivia and Ecuador 
have deepened their relations with Iran in hopes of extracting 
financial aid, investment, and security technology and expertise.
  intelligence threats and threats to u.s. technological and economic 
                               leadership
Intelligence Threats
    It is difficult to overstate the importance of counterintelligence 
to U.S. national security. The United States remains the highest 
priority intelligence target for many foreign intelligence services, 
and we continue to face a wide-range of foreign intelligence threats to 
our political, military, economic, and diplomatic interests at home and 
abroad.
    In addition to the threat posed by state intelligence services, the 
intelligence capabilities and activities of non-state actors are 
increasing in scope and sophistication. The cyber environment provides 
unprecedented opportunities for adversaries to target the United States 
due to our reliance on information systems.
    The spectrum of threats includes espionage, cyber intrusions, 
organized crime, and the unauthorized disclosure of sensitive and 
classified U.S. Government information, a notable recent example being 
the unlawful release of classified U.S. documents by WikiLeaks. While 
the impacts of the WikiLeaks disclosures are still being assessed, we 
are moving aggressively to respond by protecting our information 
networks with improved CI analysis of audit and access controls, 
improving our ability to detect and respond to insider threats--while 
balancing the need to share information--and increasing awareness 
across the U.S. Government to the persistent and wide-ranging nature of 
foreign intelligence threats.
    Far-Reaching Impact of the Cyber Threat
    The national security of the United States, our economic 
prosperity, and the daily functioning of our government depend on a 
dynamic public and private information infrastructure. This 
infrastructure includes computer networks and systems, 
telecommunications and wireless networks and technologies that carry 
data and multimedia communications, along with control systems for our 
power, energy distribution, transportation, manufacturing, and other 
infrastructures. This information structure will also include new 
innovations such as the ``Smart Grid'' for intelligent production, 
distribution, and use of electric power.
    We are also undergoing a phenomenon known as ``convergence,'' which 
amplifies the opportunity for disruptive cyber attacks, including 
against physical infrastructures. This phenomenon means that the same 
networks and devices are processing a full range of data and support a 
full range of applications, from banking to social networking, from 
supply chain management to patient health records. This convergence 
adds much convenience, but it poses new security challenges across a 
swath of our government and economy.
    As we expand our ability to create and share knowledge, maintain 
our society and produce economic goods, we are developing new 
vulnerabilities and enabling those who would steal, corrupt, harm, or 
destroy public and private assets vital to our national interests. In 
the past year, we have seen a dramatic increase in malicious cyber 
activity targeting U.S. computers and networks; almost two-thirds of 
U.S. firms report that they have been the victim of cyber security 
incidents or information breaches, while the volume of malicious 
software (``malware'') on American networks more than tripled from 
2009.

         Industry estimates that the production of malware has 
        reached its highest levels, with an average of 60,000 new 
        pieces identified per day. Almost half of all U.S. computers 
        have been compromised, according to another industry survey. 
        This current environment favors those who desire to exploit our 
        vulnerabilities with the trend likely getting worse over the 
        next 5 years because of the slow adoption of defensive best 
        practices and rapid advances in offensive vulnerability 
        discovery and exploitation.
         In April a large number of routing paths to various 
        Internet Protocol addresses were redirected through networks in 
        China for 17 minutes due to inaccurate information posted by a 
        Chinese Internet Service Provider. This diversion of data would 
        have given the operators of the servers on those networks the 
        ability to read, delete, or edit e-mail and other information 
        sent along those paths. This incident affected traffic to and 
        from U.S. Government and military sites, including sites for 
        the Senate, the Army, the Navy, the Marine Corps, the Air 
        Force, and the office of the Secretary of Defense, as well as a 
        number of Fortune 500 firms.
         The complex, global nature of our information 
        technology supply chain can hide many risks. Such vulnerability 
        was demonstrated by employees at a U.S. firm who were convicted 
        for supplying counterfeit computer hardware to U.S. Government, 
        military, and private sector customers.
         We are seeing a rise in intellectual property theft. 
        Last year some of our largest information technology and 
        defense contractor companies discovered that throughout much of 
        2009 they had been the targets of a systematic effort to 
        penetrate their networks and acquire proprietary information. 
        The intrusions attempted to gain access to and potentially 
        modify the contents of source code repositories, the 
        intellectual `crown jewels' of most of these companies.
         Our identities are increasingly vulnerable. Cyber 
        criminals are stalking prospective victims on social networking 
        sites, acquiring personal information to tailor `spear 
        phishing' emails to gather. more information that can be used 
        to facilitate identity theft. They are intercepting messages 
        exchanged by mobile devices to validate transactions, and 
        masquerading as their victims to steal funds from their bank 
        accounts. Further, the consolidation of data captured in 
        emails, social networks, Internet search engines, and 
        geographic location of mobile service subscribers increases the 
        potential for identification and targeting of government 
        personnel by criminals, or by intelligence organizations.

    In the last year, we have witnessed the emergence of foreign 
military capabilities in cyber space. This formalization of military 
cyber capabilities creates another tool that foreign leaders may use to 
undermine critical infrastructures that were previously assumed secure 
before or during conflict. The IC is reaching out to the private sector 
to ensure current understanding of the dynamic cyber environment. More 
government-private sector and international cooperation is still 
required across the cyber security landscape.
International Organized Crime
    In the last 2 decades, globalization has internationalized once 
regional or local organized crime. International organized crime (IOC) 
quickly has taken advantage of the Internet, cellular telephones, and 
other forms of rapid communication that have revolutionized commerce. 
Many of the Soviet successor states have serious organized crime 
problems. Elsewhere, the nexus between weak and failing states and 
organized crime is growing. Parts of the world with smuggling routes 
ordrug production zones--such as the Balkans, West Africa, the Horn of 
Africa, Southwest and Southeast Asia, Mexico, and other parts of Latin 
America--are prone to high levels of illicit activity.
    In the past, international organized crime groups largely were 
formed around criminal syndicates that featured rigid lines of 
authority and controlled economic or geographic turf. Today, many 
international criminal organizations are loose networks of individuals 
or groups that operateindependently and cooperate on an ad hoc basis 
sharing expertise, skills, and resources. International criminal 
organizations are targeting U.S. businesses, consumers, and government 
programs. IOC is increasing its penetration of legitimate financial and 
commercial markets, threatening U.S. economic interests, and raising 
the risk of damage to the global financial system. Increasingly, 
international organized crime groups are involved in cyber crime, which 
costs consumers billions of dollars annually, while undermining global 
confidence in the international financial system.
    Terrorists and insurgents increasingly will turn to crime to 
generate funding and acquire logistical support from criminals, in part 
because of U.S. and western success in attacking other sources of their 
funding. Terrorists and insurgents prefer to conduct criminal 
activities themselves; when they cannot do so, they turn to outside 
individuals and criminal service providers. Involvement in the drug 
trade by the Taliban and the Revolutionary Armed Forces of Colombia 
(FARC) are critical to the ability of these groups to fund attacks.
    IOC penetration of governments is undermining the rule of law, 
democratic institutions, and transparent business practices. The 
growing reach of IOC networks is pushing them to seek strategic 
alliances with state leaders and foreign intelligence services, 
threatening stability and undermining free markets. The nexus in 
Russian and Eurasian states among some government officials, organized 
crime, intelligence services, and big business figures enhances the 
ability of state or state-allied actors to undermine competition in 
gas, oil, aluminum, and precious metals markets.
Export Controls and Economic Imbalances
    Export Controls
    The United States faces increasing challenges in protecting 
sensitive technology from technologically competent parties, including 
nation-states, terrorists, and international criminal syndicates given 
the pace of technological diffusion across the globe. With the increase 
in technological development overseas, the multilateral export control 
regimes will need to identify and adapt to innovations and 
technological breakthroughs quickly or risk losing control of sensitive 
and potentially dangerous technologies.
    Uneven Economic Recovery
    Potential threats to economic security may result from the large 
imbalances in international trade and investment flows. Outstanding 
disagreements about how to address imbalances may cloud prospects for 
effective cooperation in international trade and finance and may create 
frictions that potentially can impede collaboration on a variety of 
difficult strategic issues.
    Current account imbalances across the globe tended to widen last 
year. Deficits in 2010 grew in the United States and most of the EU, 
while surpluses grew larger in China, Germany, Russia, and Japan. A 
number of countries continued to accumulate large amounts of foreign 
exchange reserves in 2010, including China and Russia, and a number of 
East Asian countries. These market interventions limited the degree of 
rebalancing that could have been facilitated by more significant 
exchange rate adjustments.
    The disparity between robust growth in emerging economies and 
irregular expansion in advanced industrial countries was striking last 
year. China achieved near double-digit growth, with a powerful rebound 
of exports, brisk domestic economic activity, and a sharp climb in 
imports. This activity stimulated output expansion across Asia and to 
export powerhouses like Germany, as well as to commodity producers in 
Latin America and elsewhere. In contrast, economic recovery in major 
industrial countries of Europe and in Japan was well below typical 
rates of growth in prior business cycle upturns. By comparison, for 
emerging markets as a whole, real GDP at the end of 2010 was 7 percent 
higher than a year ago. Only one sizable emerging market, Venezuela, 
registered a drop in real GDP last year.
    The major drag on economic activity in Europe stemmed from a 
sudden, and largely unexpected, financial crisis that made it 
impossible for several European countries to access the capital markets 
to fund government fiscal requirements. The most severely affected 
countries were Greece and Ireland, with partial spillover onto Portugal 
and Spain. As a result, fiscal austerity, including constricted 
military outlays, will be the rule throughout Europe for years to come.
    In the midst of a global financial meltdown and the 2008-2009 
recession, economic policy coordination across a wide spectrum of 
issues was attainable for leaders of the Group of 20 countries. A start 
was made in harmonizing financial regulatory reforms that promise to 
strengthen bank capital and liquidity positions of major financial 
institutions, but many unresolved technical issues remain. The leaders 
of the G20 tasked the IMP to explore ways to identify through objective 
indicators unwelcome imbalances.
    Expansion Centers on the Emerging Markets
    Emerging market financial authorities are disinclined to raise 
domestic interest rates materially. They did not want to encourage even 
greater inflows of foreign capital, which were already putting unwanted 
upward pressure on their exchange rates, potentially eroding export 
competitiveness.
    Most forces behind this massive movement of financial capital are 
generally positive, such as growing investor confidence in emerging 
markets, host government support for private enterprise, and sensible 
fiscal and monetary policies. But if risk assessments turn out to be 
faulty, there could be an abrupt reversal of capital movements that 
would destabilize economies and governments.
    So far, serious inflation pressures have not materialized, but 
consumer prices have started to rise more quickly in China and Brazil, 
among others, suggesting that tightening of monetary and credit 
policies will likely be required in the coming year or two. As domestic 
interest rates turn upward, emerging market countries may impose 
controls on capital inflows to insulate their currencies from market 
forces.
    China has been especially active in using a range of tools to 
influence the economy, beyond recalibrating interest rates. Its credit 
policies, for example, fueled a burst in domestic construction activity 
and a sharp run-up of real estate prices. During 2010, authorities 
responded with steps to prevent a speculative bubble, while maintaining 
an accommodative policy stance. China had strong growth in both exports 
and imports in 2010 and ended the year with a current account surplus 
exceeding 5 percent of GDP. Other countries with strong external 
positions in 2010 included Singapore, Malaysia, Taiwan, and Russia.
    European Debt Crisis
    Government and European Central Bank officials decided that the 
crisis threatened to spread to other euro members (notably Ireland, 
Portugal, and Spain), jeopardizing the viability of the common 
currency. In response, the EU in coordination with the IMF put together 
a eura 750 billion ($1 trillion equivalent) financing facility, the 
European Financial Stability Fund (EFSF), to provide financing to 
countries unable to tap normal sources of credit.
    Greece was the initial recipient. For a time, the introduction of 
the EFSF facility calmed financial market fears of contagion to other 
euro members. Additional pressures came to the forefront last fall, 
when doubts about Ireland's banking system generated heavy selling of 
Irish government securities; While these are relatively small EU 
countries and the cost of the rescue programs was manageable for the 
EU, the financial capacity of the EU would be strained if additional, 
and larger, countries need similar backing.
    Market participants have focused on Portugal as the next country 
that might require support. There are fears that Germany may insist 
that bondholders accept losses as a precondition for German 
participation in future bail-outs under the EFSF. As European unity is 
shaken by different philosophies on how to deal with member-government 
financing problems. the capabilities of the NATO alliance will also 
face strains as deficit countries are compelled to make painful cuts in 
government outlays, including for defense.
Threats to Space Systems
    Growing global use ofspace--along with the effects of structural 
failures. accidents involving space systems. and debris-producing 
destructive antisatellite tests--has increased congestion in space. The 
probability of radio frequency interference has grown as the demand for 
bandwidth increases and more transponders are placed in service. 
Growing space congestion. if unchecked, will increase the probability 
of mishaps and contribute to destabilization of the space environment. 
The IC is supporting interagency efforts to engage the international 
community to address congestion. develop transparency and confidence-
building measures, enhance space situational awareness, and foster 
greater information sharing. We are also working to explore deterrence 
options and assess their effectiveness against potential adversaries, 
as well as protect vital U.S. space capabilities, improve our 
capability to attribute attacks, and provide adequate indications and 
warnings.
                            resource issues
Global Energy Security Challenges
    Global oil and natural gas markets have parted company in the past 
couple of years as a result of structural changes that will likely have 
a profound impact on both producers and consumers for years to come. 
Oil markets came into rough balance during 2010. Natural gas markets 
are continuing to adjust to the combination of a wholesale reassessment 
of medium-term price trends, following the expansion of liquefied 
natural gas capacity and the rapid development of shale gas reserves in 
the United States. These significant domestic shale gas reserve finds 
over the past decade may eliminate the need for the United States to 
import liquid natural gas (LNG) to meet domestic gas demand. Successful 
future exploitation of the shale gas reserves does, however, come with 
a number of caveats. Increasing vocal opposition to hydraulic 
fracturing may lead to a reassessment of permitting domestic shale gas 
extraction and thus force natural gas prices higher over the longer 
term.
    Oil producers are moving forward on some of the projects postponed 
in late 2008 as a result of the expectation that demand for crude oil 
and refined products will continue to expand as a nascent global 
recovery takes hold. It is still unclear if future production levels 
will be able to meet expected demand growth, especially in China and 
other large emerging market economies. We therefore see a continuing 
threat of a return to heightened price volatility throughout the 
remainder of the decade.
    Domestic natural gas production is increasing in many areas with 
existing production. as well as in a number of new or rapidly expanding 
regions. Technological breakthroughs have boosted U.S.production of 
shale gas. allowing LNG intended for the U.S. market to be routed to 
Europe, China,and other net importers of gas. The main obstacle to even 
greater gas supply availability is the lack of pipeline delivery 
capacity from land-locked areas such as Central Asia, particularly in 
Azerbaijan and Turkmenistan.
    Despite Europe's continued dependency on Russian gas supplies, 
lower demand, higher gas storage levels, a growing LNG trade, and new 
pipelines linking national networks are working in the continent's 
favor. Russian exporters have in a few instances been willing to 
liberalize oil-indexation price formulas to retain business. European 
countries continue to work toward longer-term plans to expand pipeline 
connections to gas producers in the Caspian, Middle East, and North 
Africa. Russia has begun construction on a pipeline to bypass Ukraine 
to the north and is working on plans for a southern bypass. However, 
Central and Southeastern Europe remain heavily dependent on Russian 
natural gas supplies, which currently meet about two-thirds of their 
gas needs.
Growing Water Scarcity Issues
    More than 260 river basins are shared by two or more countries. The 
growing pressure generated by growing populations, urbanization, 
economic development, and climate change on shared water resources may 
increase competition and exacerbate existing tensions over these 
resources. Greater cooperation and coordination to manage these shared 
resources will be critical to meeting human and development needs. 
Governing institutions in the developing world often fail to understand 
water challenges or make the necessary difficult political and economic 
decisions to correct deficiencies in water quality and quantity for 
human consumption, agriculture, or industry. Rapidly changing 
environmental conditions (e.g., large scale shifts or increases in 
hydrological variability), political shifts, and/or unilateral 
development increase the likelihood of conflict over shared water 
within a basin. Sound institutions that provide a means for raising and 
addressing concerns reduce the likelihood that disagreements/conflicts 
will become violent These range from local-level water user 
associations to formal intergovernmental basin commissions.
    In the absence of mitigating action, fresh water scarcity at local 
levels will have wide-ranging implications for U.S. national security. 
This scarcity will aggravate existing problems--such as poverty, social 
tensions, environmental degradation, ineffectual leadership, and weak 
political institutions--and thereby threaten state or regional 
stability. A whole-of-government approach--using the best modeling 
expertise from agencies outside the IC--will be needed to assess the 
impact of water and other resource scarcity on state stability.
                        strategic health threats
    It is unlikely that any country will be able to detect cases early 
enough to prevent the spread of another new, highly transmissible virus 
should one emerge during the next 5 years, despite pandemic 
preparedness efforts by the World Health Organization (WHO) and many 
nations over the past decade. Once such a disease has started to 
spread, confining it to the immediate region will be very unlikely. 
Preparedness efforts such as the stockpiling of medical countermeasures 
will be critical to mitigating the impact from a future pandemic. 
Governments in much of Asia; the Americas. and Western Europe perceived 
pandemics as a serious threat, and their preparedness efforts helped 
them lessen the impact of the 2009-H1N1 pandemic. These nations are 
likely to apply the lessons they learned; however, tight budgets over 
the next few years will limit further improvements in preparedness and 
may cause some countries to backslide. In contrast, many countries in 
Sub-Saharan Africa and Eastern Europe did not prepare at all and even 
though they understand the threat, are unlikely to emphasize 
preparedness in the future because of a lack of institutional capacity 
and resources. This is particularly true in Africa.
    Cholera and other diarrheal diseases are easily treatable and 
containable. Yet the epidemics that followed the 2010 earthquake in 
Haiti and the flooding in Pakistan devastated already vulnerable 
populations. Although the United States and many other nations and 
international and nongovernmental organizations (NGOs) answered the 
call for assistance in these cases, the magnitude of the challenges 
during catastrophic disasters initially overwhelmed national response 
capabilities and international support. These events challenge not only 
the lives and livelihood of ordinary citizens, but also the legitimacy 
of governments. They also challenge our ability to coordinate U.S. and 
international responses effectively.
    In general, we have also seen a waning global commitment to 
immunization, resulting in a resurgence of vaccine-preventable 
diseases, particularly polio and measles. This is due in part to the 
deterioration in many developing countries' health systems because of 
lack of funding and shortages of trained healthcare workers. Declining 
health indicators are a harbinger of a nation's inability to protect 
and promote domestic stability and security, and also pose a 
significant security risk oil regional and global levels.
Non-Western Health Diplomacy on the Rise
    In response to catastrophic events and other challenges, we see a 
growing proliferation of state and non-state actors providing medical 
assistance to reduce foreign disease threats to their own populations, 
gamer influence with affected local populations, and project power 
regionally. These efforts frequently complement U.S.-led initiatives 
and improve the health of the targeted population in the short term. 
However, in some cases, countries use health to overtly counter western 
influence, presenting challenges to allies and our policy interests 
abroad over the long run. In other cases, governments have hindered the 
delivery of assistance to their own populations for political reasons.

         Iran in recent years has expanded its sphere of 
        influence by providing health assistance and building hospitals 
        in neighboring Iraq and Tajikistan, as well as a growing list 
        of other countries, including Bolivia, Nicaragua, and Guyana.
         China's deployment or a field hospital and Chinese 
        International Search and Rescue teams to Pakistan, humanitarian 
        assistance and disaster relief operations in Haiti in 2010, and 
        the goodwill mission of China's Peace Ark Medical Ship to East 
        Africa represent the beginning of a more substantial health 
        diplomacy mission to improve its image as a responsible global 
        partner.

    In last year's threat assessment, the IC noted that extremists may 
take advantage of a government's inability to meet the health needs of 
its population, highlighting that HAMAS's and Hizballah's provision of 
health and social services in the Palestinian Territories and Lebanon 
helped to legitimize those organizations as a political force. This 
also has been the case with the Muslim Brotherhood in Egypt.
                               conclusion
    The issues that we consider here confront responsible citizens and 
their governments everywhere. The Intelligence Community is fully 
committed to arming our policymakers, warfighters, and law enforcement 
officers with the best intelligence and analytic insight we can 
provide. This is necessary to enable them to take the actions and make 
the decisions that will protect American lives and American interests, 
here and around the world.

    Chairman Levin. Thank you so much, Director Clapper. Now 
we'll call on General Burgess, and we will follow that course 
of action, if you would like to take some additional time to 
address the questions which we raised in both of our opening 
statements.
    General Burgess.

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

    General Burgess. Chairman Levin, Ranking Member McCain, and 
members of the committee, it is an honor for me to join 
Director Clapper before this committee.
    I would like to comment on a few areas of special focus for 
Defense Intelligence. First is transnational terrorism, DIA 
assesses that al Qaeda continues to adapt in response to our 
counterterrorism efforts. We believe that while core al Qaeda 
is forced to focus more on survivability, it remains resilient, 
continues attack planning, and provides operational guidance to 
regional affiliates.
    Affiliates such as al Qaeda in the Arabian Peninsula and 
al-Shabaab continue recruitment and fundraising efforts in 
support of their own attack planning. Terrorists inspired by 
the al Qaeda ideology also remain a persistent threat, most 
recently exemplified by the attack against U.S. Air Force 
personnel in Frankfurt, Germany.
    Recent and ongoing events in North Africa and the Middle 
East have opened a period of uncertainty across the region, 
elevating risk relative to traditional allies in other nations 
historically opposed to U.S. interests.
    In Afghanistan, we likely will see higher levels of 
violence through this year, due in part to increased 
International Security Assistance Forces (ISAF) presence and 
operations. ISAF has constrained insurgents in some areas, but 
the Taliban in the south have shown a resilience and still 
influence much of the population, particularly outside urban 
areas. In the east, the Taliban and Haqqani network have 
suffered numerous tactical and leadership losses, with no 
apparent degradation in their capacity to fight. Violent 
demonstrations of Taliban influence persist in the north and 
the west.
    The Taliban can sustain operations without al Qaeda, though 
al Qaeda uses its limited involvement to support attacks and 
for propaganda, fundraising, and legitimacy.
    Turning to North Korea, of significant concern is 
decisionmaking relative to the apparent leadership succession 
underway and its implications for additional deliberate 
provocations against the South. The North Korean artillery 
attack against Yeonpyeong Island on November 23, 2010, and 
torpedo attack on the naval corvette Cheonan on March 26, 2010, 
show Pyongyang's willingness to use military force to advance 
its external and internal goals. Miscalculation could lead to 
escalation.
    Elsewhere in Asia, China's leaders have stated their 
intentions and are allocating resources to pursue broadbased 
military transformation. While remaining focused on Taiwan as a 
primary mission, China will, by 2020, lay the foundation for a 
force able to accomplish broader and regional global 
objectives.
    Despite significant improvements, the People's Liberation 
Army (PLA) continues to face deficiencies in interservice 
cooperation and actual experience in joint exercises and combat 
operations. Recognizing these shortcomings, China's leaders 
continue to stress asymmetric strategies to leverage China's 
advantage, while exploiting potential opponents' perceived 
vulnerabilities.
    I'll close with a few words on Iran. At Iran's behest, 
Lebanese Hizballah provides Iraqi insurgents with weapons and 
training to attack U.S. forces. Iran also provides weapons, 
explosives, and munitions to insurgents in Afghanistan. While 
Iran is unlikely to initiate or launch a preemptive attack, it 
could attempt to block the Strait of Hormuz temporarily, 
threaten U.S. forces and regional allies with missiles, and 
employ terrorist surrogates worldwide. Iran's space launch 
missile program demonstrates progress towards technology that 
could eventually be used for an intercontinental ballistic 
missile.
    These are DIA's assessments, and they also reflect our 
close working relationship with our IC partners and close 
allies. While I am proud to represent DIA today, I remain very 
mindful that what we do in the IC is a true team effort. This 
spirit of cooperation and integration has been most evident 
over the last 10 years of deployments by the men and women of 
DIA working in support of counterterrorism and 
counterinsurgency operations in Iraq and Afghanistan, the Horn 
of Africa, and elsewhere. Challenged by very hard targets and 
highly resilient and adaptive adversaries, DIA today is a more 
forward-deployed, capable, and effective agency as it 
approaches its 50th anniversary later this year.
    Sir, thank you for this opportunity. We will now begin the 
responses to your original questions.
    [The prepared statement of General Burgess follows:]
         Prepared Statement by LTG Ronald L. Burgess, Jr., USA
    Good morning, Chairman Levin, Ranking Member McCain, and members of 
the committee. Thank you for this opportunity to testify today and for 
your continued support to the dedicated men and women of DIA, more than 
700 of whom are forward-deployed directly supporting U.S. and allied 
military forces in Afghanistan and Iraq, and supporting missions in 130 
other countries around the world.
    The United States continues to face a complex security environment 
marked by a broad spectrum of dissimilar threats, some emerging from 
nation-states and others from highly adaptive transnational networks. 
This testimony reflects DIA's analysis, derived from the agency's 
worldwide human intelligence, technical intelligence, 
counterintelligence, and document and media exploitation capabilities, 
along with information and intelligence from our Intelligence Community 
partners, coalition partners, and open sources.
    I will begin my testimony with the two regions where we are 
actively supporting the warfighter on the ground: the Afghanistan and 
Pakistan region and Iraq.
    In Afghanistan, Kabul has made incremental progress in the areas of 
governance, development, and security in 2010, but the security 
situation remains fragile and heavily dependent on International 
Security Assistance Force (ISAF) support. The Taliban-Ied insurgency 
remains capable of challenging
    U.S. and international goals despite suffering setbacks in 2010. 
Insurgents are attempting to counter the increase in the number of ISAF 
troops and undermine local and international confidence in the Afghan 
Government by increasing attacks and influencing the Afghan population 
through intimidation and shadow governance efforts.
    Afghanistan will experience record levels of violence through 2011, 
in part due to increased ISAF operations. Security is improving in 
major cities--to include Kandahar City--and the scope of insurgent 
influence has been constrained in some of the areas ISAF efforts are 
focused.
    The Taliban does not require al Qaeda participation to sustain its 
insurgency in Afghanistan. By participating, al Qaeda is able to 
exploit Taliban successes for propaganda, legitimize its ideological 
message, and further its global objectives. This is also a 
vulnerability, since Taliban failures can also appear to be al Qaeda 
failures. Groups like Tehrik-e Taliban Pakistan (TTP) are receptive to 
this message and increasingly are adopting al Qaeda's anti-Western 
rhetoric and agenda. In fact, TIP was behind the May 2010 attempt to 
detonate a car bomb in Times Square, New York.
    In the south, Taliban networks are under more pressure than ever 
before, but have shown resilience. Although they have taken tactical 
losses, they continue to maintain influence over much of the local 
population, particularly outside of urban areas. In the east, the 
Taliban and the Haqqani network have suffered numerous tactical losses, 
including the removal of several key leaders from the battlefield, but 
this does not appear to have affected their operational capacity, which 
included conducting several high-profile attacks against ISAF bases in 
2010. The Taliban is attempting to increase its influence in the north 
and west through increased violence, including the assassination of the 
Kunduz provincial governor last October.
    Although the Taliban have experienced some disruptions and 
encountered some financial constraints as a result of increased ISAF 
presence, they have remained able to sufficiently fund fighters through 
various funding streams. A poppy disease concentrated in southern 
Afghanistan led to a considerable decline in opium production in 2010; 
however, the United Nations Office on Drugs and Crime estimated a 
corresponding increase in the farmers' local price of opium, from $64 
per kilogram in 2009 to $169 per kilogram in 2010, off-setting some 
insurgent losses from decreased opium yields.
    The Taliban have publicly stated they believe the ISAF presence in 
Afghanistan will begin to end in July of this year. The Taliban have 
also stated that they have no intention to negotiate with the Afghan 
Government or ISAF, as they continue to believe in their inevitable 
victory. The Taliban are unlikely to compromise on core goals, such as 
the departure of foreign forces and Taliban control of the government, 
as long as they believe they are in a position of strength.
    Afghanistan's army and police forces met growth targets ahead of 
schedule for 2010; yet achieving qualitative improvements remains a 
challenge. Addressing low Afghan National Army (ANA) retention rates 
will remain critical to the future sustainability of the force. The ANA 
has improved its ability to successfully plan and execute operations 
with ISAF support and now comprises a higher percentage of units 
involved in operations. ANA capability will rise modestly as additional 
ISAF units partner with ANA units. The ANA is generally regarded by the 
populace as a trusted and capable force.
    The Afghan National Police (ANP) remains largely reliant on 
coalition oversight and support, and lags behind the ANA in planning 
and executing operations. The ANP faces the additional challenge of 
acting as a counterinsurgency element in addition to performing law 
enforcement duties, stretching its already thin capabilities. Afghan 
popular support for the ANP is increasing, but the police continue to 
be plagued by endemic corruption and limited capacity of some forces. 
The Afghan Government has initiated programs such as the Afghan Local 
Police to extend security to remote areas, although success will depend 
on the Interior Ministry's ability to provide adequate oversight.
    We believe a concerted effort to strengthen the Afghan Border 
Police has led to an increase in the effectiveness of the force. 
Documented travel through the Afghanistan/Pakistan border has improved. 
The security situation at main transit points is stable, and customs 
revenues have increased in certain regions. However, to build on these 
successes border checkpoints, customs processing and revenue collection 
systems need further improvement, while border forces require expansion 
in terms of both manpower and training.
    The Afghan Government's planning and execution of the September 
2010 parliamentary election improved over the 2009 presidential 
election, but was insufficient to deter pervasive fraud and increased 
violence. Post-election negotiations to select a new speaker reflected 
shifting ethnic balances in parliament and may portend increased ethnic 
political friction over the coming months.
    Afghanistan continues to struggle with corruption--nearly half of 
Afghans have reported that corruption has increased over the last 5 
years. Predatory corruption--including extortion, land seizures, 
illegal checkpoints, kidnapping, and drug trafficking--undermines 
Afghan Government legitimacy and effectiveness and fuels support for 
the insurgency.
    The Afghan Government took several actions to facilitate 
reintegration, but it is too early to assess whether these efforts will 
evolve into a sustained, tangible reintegration program. Reintegration 
efforts have not yet notably degraded insurgent capability, forced 
insurgents to alter their strategy or goals, or created widespread 
interest in negotiations. Prospects for reintegration depend upon 
Kabul's ability to overcome several significant challenges, including 
synchronizing the efforts of over 20 Afghan Government entities, 
provincial reconstruction teams, nongovernment organizations and other 
third-party organizations, and expanding human capital and bureaucratic 
infrastructure.
    Iran continues its efforts to take full advantage of its influence 
along Afghanistan's western border and is using legitimate business and 
humanitarian efforts as cover for deliveries of weapons and logistic 
support to Afghan insurgents. Its covert shipments include explosively 
formed penetrators, rocket propelled grenades, light and medium machine 
guns, mortars, rockets, small arms ammunition, and explosives. Arms 
caches found in Afghanistan reveal substantial amounts of recently 
manufactured Iranian weapons. Tehran also wants to make the most of its 
influence with the Afghan Government and acknowledges providing regular 
payments directly to President Karzai.
    Before moving on from the discussion of Afghanistan, it is fitting 
that I discuss al Qaeda's senior leadership. On Afghanistan's border 
with Pakistan, the Federally Administered Tribal Area (FATA) safe 
havens continue to enable militant groups targeting Pakistan and 
Afghanistan, including the Taliban and al Qaeda. Sustained 
counterterrorism pressure since 2008 has resulted in the deaths of 
dozens of al Qaeda and other militant leaders although the networks 
continue to operate, exploiting unpopular actions by Islamabad through 
targeted propaganda.
    Senior al Qaeda leaders in the FATA are struggling to recover from 
successful counterterrorism pressure that is thinning their ranks and 
restricting their movement. Remaining leaders are assuming greater 
responsibilities, and some less-experienced operatives are filling 
senior roles. North Waziristan is al Qaeda's primary FATA safehaven, 
and the group's strong relationship with the Haqqani Network, a major 
power broker in the area, gives it added protection.
    Despite setbacks, al Qaeda persistently shows it can recruit, 
train, and deploy operatives and stay in contact with external 
networks. It exports its terrorist agenda, and plans, supports, and 
directs attacks against the United States and Europe, in addition to 
broader Western interests. In particular, it is recruiting and 
deploying Western operatives for attacks in Europe. Several terrorists 
arrested in 2010 for seeking to travel abroad to receive terrorist 
training or for planning attacks in the United States identified 
Department of Defense facilities and personnel as targets.
    Senior al Qaeda leaders are strengthening their connections to its 
regional affiliates. These affiliates plan and initiate transnational 
attacks from diverse locations, allowing al Qaeda to convey a 
perception of a unified, worldwide jihad and attempt to take pressure 
off its Pakistan-based leadership.
    Meanwhile, Pakistan continues to struggle with a resilient 
militancy, a feeble economy, political in-fighting and tense civil-
military relations, all of which were compounded by last summer's 
flooding--the worst in the country's 60 year history. Relations between 
the civilian and military leadership remain tenuous Pressing issues--
including economic reform, maintaining public support for 
counterinsurgency operations, and reconstruction of conflict-hit 
areas--have been and will likely continue to be a secondary priority 
for the government. The military will continue to maintain pressure on 
the civilian government to tamp down corruption and focus on service-
delivery. The Army remains dominant in Pakistani national security 
decisionmaking.
    Following the devastating floods in August 2010, Pakistan's 
military led rescue operations, provided relief supplies and built 
temporary infrastructure for refugees. Relief operations eclipsed 
counterinsurgency operations due to the temporary diversion of the 
army's entire fleet of transport helicopters. As flood waters receded, 
the military has resumed low-level clearing operations in the tribal 
areas.
    Pakistan also continues to pursue conventional weapons to offset 
what it perceives as an eroding conventional military balance with its 
traditional foe, India. Pakistan's modernization pursuits include the 
JF-17 multi-role aircraft as well as increasing its inventory of F-22 
Frigates and the al-Khalid Main Battle Tank--weapons systems which are 
better suited to conventional conflict with India than to counter 
militants in mountainous tribal areas.
    Relations between India and Pakistan remain strained despite 
several high level meetings in 2010. India wants future dialogue to 
move slowly and focus on relatively noncontroversial confidence 
building measures, while Islamabad wants discussions to center on 
Kashmir and move quickly. India continues to insist Pakistan takes 
meaningful steps against the perpetrators of the November 2008 
terrorist attacks in Mumbai, but they have agreed to resume talks 
leading to a meeting between foreign ministers this year.
    Kashmir remains the core dispute in the India-Pakistan relationship 
and political violence during the latter half of 2010 contributed to 
ongoing bilateral tension. New Delhi has promised a robust economic 
development package for the state and has offered talks with various 
political parties, but results have so far been modest.
    The persistent India-Pakistan rivalry drives Islamabad to develop 
its nuclear infrastructure, expand nuclear weapon stockpiles which are 
based primarily on highly enriched uranium, and seek more advanced 
nuclear warheads and delivery systems, including cruise missiles. Once 
deployed, these new missile systems, along with its current ballistic 
missile system, will provide Islamabad the ability to strike a variety 
of targets at ranges of 200-2000 km with both conventional and nuclear 
payloads. Pakistan is able to safeguard its nuclear weapons, including 
protecting important segments of its nuclear program in underground 
facilities, although vulnerabilities still exist.
    Iraq has remained on a generally secure path over the last year, 
and overall levels of violence remain at the lowest levels since 2003. 
Attack levels have periodically spiked, but terrorist and insurgent 
groups have not been able to sustain the level of attacks. Al Qaeda in 
Iraq (AQI) remains the most capable Sunni terrorist group in Iraq, 
however its success has been severely limited for three primary 
reasons:

         AQI no longer controls territory or has undisputed 
        safe havens inside Iraq.
         Iraqi society has shown great resilience in the face 
        of AQI attacks.
         The Iraqi Security Forces (ISF) continue to improve 
        their capabilities.

    Successive joint U.S. Forces and Iraqi operations last March and 
April eliminated al Qaeda in Iraq's (AQI) top two leaders Abu Umar ali-
Baghdadi and Abu Ayyub al-Masri and many of their key northern Iraq-
based advisors. These operations resulted in unprecedented losses to 
the group's leadership cadre in 2010. However, AQI has proven resilient 
in the wake of these losses and demonstrated the capability to conduct 
periodic, coordinated attacks across Iraq in support of its long-term 
strategy.
    AQI remains focused on Baghdad, hoping to destabilize the Iraqi 
Government during political negotiations and undermine Iraqi security 
efforts through targeted attacks. Indiscriminate attacks against Shia 
civilians continue as AQI intends to exploit sectarian tensions; 
however, the group is unlikely to reignite widespread sectarian 
violence. AQI could regain strength in a more permissive operating 
environment in 2011 barring maturation of the ISF and improvement of 
Iraq's legal system during the U.S. forces drawdown.
    Sunni Arab nationalist insurgents are transitioning from an anti-
U.S. occupation posture toward increased opposition to the Iraqi 
Government. The insurgents have lost traction in recent years because 
the Iraqi Government has done a better job incorporating Sunni Arab 
elites into the political system and pushing resources to the 
provinces. Leading Sunni Arabs are represented in the current 
government, but greater accommodation leading toward national 
reconciliation has been blocked by a dispute over nominating the 
Defense Minister and other power-sharing issues.
    Muqtada al-Sadr is setting the conditions to increase his influence 
within Iraq following U.S. forces' withdrawal in 2011. The Sadr Trend 
is the only political party in the government still operating an 
illegal militia--the Promised Day Brigade--despite at least two laws 
prohibiting organizations with militias from participating in the 
political process. Sadr continues to authorize the Promised Day Brigade 
to conduct extra-legal attacks on U.S. forces, although these attacks 
have declined.
    Iraq formed a new government in December 2010, 9 months after the 
elections. Parliamentary blocs reached a power sharing agreement 
designed to reduce the potential for a resurgence of violent opposition 
to the central government and constrain the power of the prime 
minister. We do not expect the new government's relationship with the 
United States to differ greatly from the previous government. However, 
we judge the newly-elected parliament will face difficulty addressing 
critical issues, such as the provision of essential services, and the 
status of disputed territories.
    Demand for services continues to outstrip supply, and the 
electricity shortage will worsen over the summer and almost certainly 
fuel rising domestic discontent with local governments and potentially, 
the national government. The Iraqi street, as well as Maliki's 
political rivals are watching public demonstrations occurring in the 
Middle East. Anti-regime forces, such as Iraq's Ba'th Party, as well as 
the legal political opposition are seizing on the government's 
shortcomings, hoping to rally public support and create a larger 
problem for Maliki's Government. However, unlike Tunisia and Egypt, the 
Iraqi Government is broadly representative and most of the protests are 
small and localized, focused on the shortcomings of the local 
government.
    Following the 1 September U.S. change of mission, the ISF have 
taken the lead for security operations throughout Iraq. The ISF now 
conducts the majority of counterinsurgency operations independently, 
although the ISF still requires development of its capabilities in a 
number of areas: logistics, intelligence, surveillance and 
reconnaissance, and tactical communications.
    The ISF has demonstrated an ability to put forces on the street, 
conduct static security of high-profile sites, operate checkpoints--
including joint Kurdish and GoI checkpoints in the disputed 
territories--and increasingly conduct intelligence-driven targeting. 
However, numerous security vulnerabilities remain as a result of 
manning shortages, an overly centralized control of the ISF, and uneven 
enforcement in the security environment.
    Iraq's Ministry of Interior police forces are continually improving 
and beginning preparations to take the lead for internal security. 
Locally recruited police officers have been vulnerable to terrorist 
attacks, intimidation, corruption and competing loyalties, requiring 
further leadership commitment to anti-corruption efforts. The 
transition to police primacy will require significant cooperation 
between provincial police forces and the nationally-controlled Federal 
Police. The Iraqi Army will playa continuing role in internal security 
through 2011, particularly with regard to offensive operations and 
reinforcement of the police in crisis situations.
    Turning to Iranian aims in Iraq, Tehran wants a Shia Islamist-led 
government in Iraq so it can retain influence with Baghdad and 
undermine U.S. interests. Despite points of tension, such as border 
demarcation issues and the disposition of the Mujahideen-e Khalk, Iran 
generally has strong relations with its neighbor. However, over the 
long-term Iran remains concerned a strong Iraq could once again emerge 
as a regional rival and threat to Iranian influence.
    Iran threw its weight behind a second Maliki Government, pushing 
for a Shia religious party-led coalition as the core of the new 
government. Although these parties want to benefit from Iran's support, 
they also seek to balance relations by having good ties to Washington 
too. For its part, Tehran sees competition for influence in Iraq as a 
zero-sum game--for Tehran to win, the United States has to lose. The 
Iranians hope to undermine U.S. interests in Iraq, but all Iraqi 
political parties, except for the Sadrists, see the advantage of a 
close relation with Washington.
    Iran's Islamic Revolutionary Guard Corps (IRGC) IRGC-Qods Force 
oversees the execution ofTehran's policies in Iraq. The Revolutionary 
Guards also posts officers in Iran's diplomatic missions throughout 
Iraq, including Iran's current Ambassador to Iraq, Hassan Dani'far. We 
assess that Tehran approves the rules of engagement that guide the 
targeting of U.S. forces in Iraq.
    The Revolutionary Guards continues to covertly provide money, 
weapons, safe haven and training to select Iraqi Shia militants and 
terrorists. In particular, the Revolutionary Guards supports Kataib 
Hizballah, an Iraqi Shia terrorist group designated a foreign terrorist 
organization on 2 July 2009, that targets U.S. personnel in Iraq. 
Tehran's strategic partner the Lebanese Hizballah has trained Iraqi 
insurgents in Iraq, Iran, and Lebanon, incorporating lessons learned 
from operations in southern Lebanon.
    Although Tehran and Baghdad generally enjoy a positive 
relationship, and we assess Iran remains generally supportive of 
Maliki's Government, the Iranians' subversive activity, as just 
outlined, is an irritant to the relationship.
    Elsewhere in the region, Iran continues efforts to gain regional 
power by countering Western influence, expanding ties with its 
neighbors, and advocating Islamic solidarity. It is undermining U.S. 
efforts by supporting and arming groups in Afghanistan, Iraq, and the 
Levant. The Iranian Islamic Revolutionary Guard Corps (IROC) is 
prominent in protecting the regime from internal unrest. It also trains 
and provides weapons and logistic support to Lebanese Hizballah. In 
turn, Lebanese Hizballah is training Iraqi insurgents at Iran's behest, 
providing them with tactics and technology to attack U.S. interests. 
The Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) may be 
enabling similar training of HAMAS also using Lebanese Hizballah as a 
conduit.
    Outside the region, Iran is cautious about engaging with the west 
and is trying to improve ties with countries in Asia, Latin America, 
Africa, and East Europe both to minimize its international isolation 
and challenge U.S. influence. Tehran has not demonstrated a willingness 
to abandon itsnuclearprogramdespitethepassagein20I0 of UNSCR 1949, the 
toughest international economic sanctions to date against Iran.
    Iran's military defends the regime against more modem external 
adversaries and internal opponents. The ground forces are refining 
their new organization to improve coordination and prepare for both 
external and internal threats. The navy is building bases on the Gulf 
of Oman and expanding bases in the Persian Gulf and Caspian Sea, and is 
adding boats and conducting exercises to improve operations in the 
Persian Gulf. It also is deploying vessels into the Arabian Sea for 
counter-piracy operations, and has, for the first time to sail two navy 
vessels into the Mediterranean Sea.
    During an external crisis, Iran could attempt to block the Strait 
of Hormuz temporarily with its navy, threaten the United States and its 
allies in the region with missiles, and employ terrorist surrogates 
worldwide. However, we assess Iran is unlikely to initiate or 
intentionally provoke a conflict or launch a preemptive attack.
    Iran is making progress in developing ballistic missiles that can 
strike regional adversaries and central Europe. In addition to its 
growing missile and rocket inventories, Iran is boosting the lethality 
and effectiveness of existing systems with accuracy improvements, new 
submunitions, and salvo launches. Iran's Simorgh space launch vehicle 
shows the country's progress toward developing an intercontinental 
ballistic missile.
    International economic sanctions are not stopping Iran's drive to 
enrich uranium and operate its heavy water nuclear reactor. Iran has 
installed nearly 9,000 centrifuges at Natanz and accumulated more than 
enough 3.5 percent enriched uranium for a nuclear weapon, if it further 
enriches and processes the material. It began producing limited amounts 
of 20 percent enriched uranium in February 2010.
    Buried, hardened facilities and improved air defenses are key 
elements of Iran's extensive program to protect its nuclear 
infrastructure from destruction. Iran has major underground nuclear 
facilities at Qom and Natanz. Russian President Medvedev's September 
2010 edict to prohibit delivery of the SA-20 (S-300PMU2 Favorit) set 
back Iran's plans to modernize air defenses, but its goal to obtain 
advanced surface-to-air missiles with automated command, control, and 
communications has not changed., Iran seeks these missiles to protect 
senior leaders and industrial facilities, in addition to its nuclear 
infrastructure.
    I would like to move on to the situation on the Korean peninsula 
which reminds all of us that the threats posed by nation-states and the 
unresolved issues of the last century remain real and dangerous.
    North Korea's primary goal is to preserve its current system of 
government while improving its dismal economy. The Democratic People's 
Republic of Korea (DPRK) pursues nuclear and missile capabilities for 
strategic deterrence and international prestige, as well as for 
economic and political concessions. While North Korea may be willing to 
abandon portions of its nuclear program in exchange for improved 
relations with the United States, Pyongyang is unlikely to eliminate 
its nuclear weapons.
    Kim Jong Il appears to be firmly in control of the DPRK. but shows 
residual physical impairments from his August 2008 stroke. His health 
problems probably explain why the regime has accelerated the succession 
process for Kim's youngest son. Kim Jong Un, thought to be 28 years 
old, received the rank of four-star general and vice chairmanship of 
the Korea Workers' Party Central Military Commission in late September 
2010. We continue to assess that his succession is likely to progress 
smoothly, although the concentration of power on Kim Jong Il poses some 
risk of factionalism and instability, especially if the father dies 
before his son fully consolidates authority.
    North Korea--with strong encouragement from China, and because it 
needs economic help--is signaling it is prepared to return to Six-Party 
Talks. The North may now have several plutonium-based nuclear warheads 
that it can deliver by ballistic missiles and aircraft as well as by 
unconventional means. The DPRK. will try to keep its nuclear weapons 
and gain international recognition as a nuclear state, together with 
security guarantees from Washington and expanded economic assistance.
    North Korea's large, forward-positioned military can attack South 
Korea with little or no strategic warning, but it suffers from logistic 
shortages, aging equipment, and poor training. Pyongyang knows it 
cannot reunite the Korean Peninsula by force and is unlikely to attack 
on a scale that would risk the survival of its regime. It has, however, 
initiated small-scale attacks and maintains the capability for further 
provocations. A multinational Joint Civilian-Military Investigation 
Team concluded that a North Korean midget submarine sank South Korea's 
naval corvette Cheonan on March 26, 2010 near the contentious Northern 
Limit Line in the West Sea, causing the loss of 46 South Korean 
sailors. Then, in the first such attack against a civilian-inhabited 
area since the Korean War, North Korea shelled Yonpyong Island on 
November 23, 2010, killing two South Korean marines and two civilians. 
South Korea's response to these provocative acts was restrained, but 
has strengthened Seoul's resolve to react more forcefully in the 
future.
    Pyongyang is making some efforts to upgrade conventional weapons, 
including modernizing every aspect of its deployed missile forces--
short-, medium-, and intermediate-range systems. It has reinforced 
long-range artillery forces near the DMZ with a substantial number of 
mobile ballistic missiles that could strike South Korea, Japan, and 
U.S. bases in the Pacific with an array of warheads. However, we 
believe the DPRK's emphasis is on using nuclear weapons and missiles to 
defend against technologically superior forces. Given that emphasis, 
North Korea protects important segments of its nuclear programs 
underground.
    We expect the North will continue to test-launch missiles, 
including the TD-2 ICBM/SLV, to refine their performance. With further 
TD-2 tests, North Korea may develop an intercontinental ballistic 
missile capable of reaching the U.S. Homeland. Pyongyang has a long 
history of ballistic missile proliferation and likely will continue to 
market and potentially export missile technologies to countries 
including Iran and Syria.
    Elsewhere in the region, I would now like to discuss China. While 
China's military strategy may be defensive, its doctrine calls for 
seizing the initiative, including possible preemptive acts. China 
continues to field new weapons and test doctrines to counter U.S. 
capabilities. It increasingly can carry out military operations along 
its periphery. Growth in space, cyberspace, electronic warfare, and 
long-range precision strike capabilities could enable Beijing to delay 
or degrade U.S. military forces entering the region during a conflict.
    China-Taiwan relations improved in 2010 as both sides are seeking 
economic and cultural engagement. Beijing seems willing to hold off on 
sensitive political or military talks, and it is showing flexibility by 
allowing Taiwan to participate in the World Health Assembly, which does 
not require sovereign status. Nevertheless, Beijing maintains its 
military presence opposite Taiwan and continues deploying many of 
China's most advanced weapon systems across the Strait. Consistent with 
this approach, the People's Liberation Army (PLA) remains focused on 
Taiwan contingencies.
    We estimate China spent more than $160 billion on military-related 
goods and services in 2010, compared to the $79 billion Beijing 
reported in its official military budget. The published budget omits 
major categories, but does show spending increases for domestic 
military production, foreign acquisitions, and programs to improve 
professionalism and quality of life among military personnel.
    The PLA Air Force continues to acquire precision-strike weapons, 
aircraft with greater ranges, and offensive electronic warfare 
capabilities. PLA Navy progress in aircraft carrier research and 
development could enable China to start building a series of 
domestically produced carriers and associated support ships by 2020.
    China is having moderate success introducing new missiles. The PRC 
currently has fewer than 50 ICBMs that can strike the continental 
United States, but probably will more than double that number by 2025. 
To modernize the nuclear missile force, China is adding more survivable 
systems, such as the road-mobile DF-31A ICBM. China deploys a limited 
but growing number of conventionally armed, medium-range ballistic 
missiles, including the DF-21C, and it likely is nearing deployment of 
a medium-range antiship ballistic missile: It has more than 1,000 CSS-6 
and CSS-7 conventional short-range ballistic missiles opposite Taiwan 
for a variety of precision strike missions. It also is forming more 
missile units, upgrading some older missile systems, and developing 
methods to penetrate missile defenses. China, also a world leader in 
underground construction technology, is putting more of its military 
facilities below ground.
    Realistic and complex training is part of the PLA's modernization 
and professionalization efforts. Mission Action 2010, the past year's 
most comprehensive mobilization training event, involved ground forces 
from three military regions. Greater force diversity now includes 
training for military operations other than war with emphasis on 
counterterrorism, emergency response, disaster relief, and 
international peacekeeping operations. The PLA is seeking bilateral 
training with a diverse set of countries in these areas and combat 
operations as well, and also emphasizing joint training under high-
technology conditions.
    PLA Navy ships routinely operate in the South and East China Seas, 
including patrols near the Spratly and Paracel Islands. Chinese 
military and civilian ships continue to respond to U.S. naval research 
vessels in both areas, but the extent to which Beijing coordinates 
these responses is unclear.
    The space program, including ostensible civil projects, supports 
China's growing ability to deny or degrade the space assets of 
potential adversaries. China operates satellites for communications, 
navigation, earth resources, and intelligence, surveillance, and 
reconnaissance. It has successfully tested a direct ascent ASAT and is 
developing jammers and kinetic and directed-energy weapons for ASAT 
missions. Technologies from its manned and lunar space programs enhance 
China's ability to track and identify satellites, a prerequisite for 
ASAT attacks. Beijing is also increasing the quantity and quality of 
its satellite constellations, enabling space-based intelligence, 
surveillance, and reconnaissance, in addition to navigation and 
communication services. Some Chinese military commentary heavily 
promotes the importance of controlling space, noting the role of space 
in long-distance targeting and other battlefield domains. Beijing, 
however, rarely acknowledges direct military applications of its space 
program and refers to nearly all satellite launches as scientific or 
civil in nature.
    Turning now to Russia, where its leaders are pursuing a more 
cooperative approach to relations with the United States and the west 
and are seeking access to foreign investment, technology, and markets. 
An example of cooperation is Moscow's willingness to permit supplies to 
pass through Russia to Coalition forces in Afghanistan. Russia also 
voted for a fourth round of U.N. Security Council sanctions on Iran and 
canceled Iran's SA-20 contract, but it still opposes unilateral U.S. or 
EU sanctions and will work with Iran in areas not subject to sanctions, 
including support for the nuclear power plant at Bushehr.
    Moscow has concerns about how long the positive trend in U.S.-
Russian relations will last. Moscow sees the New START agreement as a 
key element of the evolving bilateral relationship. However, Moscow 
worries that U.S. policy will become more confrontational. Other 
concerns are U.S. military assistance to Georgia and plans to deploy 
missile defenses in Europe as part of the Phased Adaptive Approach. 
Moscow's foreign policy pronouncements may increasingly reflect 
political posturing in advance of Russia's December 2011 parliamentary 
election and March 2012 presidential election.
    The Russian military's most comprehensive reform since World War II 
continues. The goal is to create more agile, modern, and capable 
forces. General purpose forces will be smaller, more mobile, and combat 
ready. They will be better suited to respond to threats along Russia's 
periphery, win local conflicts, and quickly end regional wars. Russia 
will rely on its robust nuclear arsenal to deter and, if necessary, 
engage in larger regional or worldwide conflicts.
    Russia has moved from division-to brigade-centric ground forces, 
disbanded most of its Soviet-era mobilization Reserve structure, and 
consolidated air force units. To better control general purpose forces 
in regional conflicts, it has formed the first peacetime joint 
strategic commands--West, East, South, and Center.
    Moscow's 10-year modernization plan is a top priority for the Armed 
Forces. Defense-related spending probably will increase in 2011 by 9.2 
percent in real terms to $72.9 billion. The 2011-2020 State Armament 
Program aims to spend about $630 billion with substantial increases for 
new weapons. Currently, the level of modem equipment in service is 10 
percent; Moscow wants to increase it to 30 percent by 2015 and 70 
percent by 2020. We assess that competing demands to sell arms abroad, 
Russia's aging industrial base, lack of resources plus corruption and 
mismanagement most likely will keep modem equipment below those levels.
    New equipment for the general purpose forces will begin to increase 
in 2011, but deliveries will be small and Soviet-era weapons will 
remain the standard. Russia also will buy selected foreign systems, 
such as France's Mistral amphibious assault ship, and will integrate 
foreign technology and sustain joint production programs.
    Russia is upgrading massive underground facilities that provide 
command and control of its strategic nuclear forces as well as 
modernizing strategic nuclear forces as another top priority. Russia 
will field more SS-27/Topol-M road-mobile ICBMs and SS-27 Mod-X-2 (RS-
24) MIRVed ICBMs. It also will continue development of the Dolgorukiy/
SS-NX-32 Bulava SSBN/SLBM and next-generation Air Launched Cruise 
Missiles.
    Russia already has formidable space and counterspace capabilities 
and is improving its navigation, communications, ballistic missile 
launch detection, and intelligence-gathering. satellites. It has 
extensive systems for space surveillance and tracking and others with 
inherent counterspace applications, such as satellite-tracking laser 
rangefinders. Russia is researching or expanding directed-energy and 
signal jamming capabilities that could target satellites.
    Military readiness is generally increasing in Russia's new units, 
but demographic trends will complicate efforts to fill the ranks 
adequately. Programs to build a professional military stalled because 
they are expensive and Moscow's current priority is rearmament.
    We continue to monitor the ongoing events in the Middle East and 
North Africa and the potential for further instability in the region. 
The removal of Tunisian President Zine el-Abidine Ben Ali and Egyptian 
President Hosni Mubarak and ongoing demonstrations and violence in the 
region risk the stability of other states in North Africa and the 
Middle East.
    A changing dynamic throughout the larger region is emerging, as 
oppositionists seek to build on the momentum of successful movements in 
Egypt and Tunisia, while conversely some governments are taking 
proactive steps to forestall similar outbreaks.
    In Egypt, the Supreme Council of the Armed Forces has taken steps 
to quiet the opposition and stem protests since the resignation of 
former President Mohamed Hosni Mubarak on 11 February. While Egypt's 
opposition groups lack a unifying leader and a common platform to 
address political, social, and economic issues, Egypt's Muslim 
Brotherhood--the most organized opposition group--could wield 
disproportionate political influence in post-Mubarak Egypt. Opposition 
groups will likely be satisfied with the Supreme Council's announced 2-
month timeline for a referendum and 6-month timeline for Presidential 
elections. We do not believe simple delays will result in protests 
similar to those seen in early February.
    Following departure of Ben Ali and the establishment of an interim 
government as a result of a popular uprising in Tunisia, the military 
has stabilized the country. The interim government likely will continue 
to distance itself from Ben Ali while working to hold elections. 
However, stability remains fragile.
    This January, Algeria witnessed its most significant unrest in over 
20 years and is faced with ongoing demonstrations. I am watching events 
in Algeria closely, and I am concerned unresolved socio-economic and 
political grievances will continue to serve as a catalyst for 
potentially destabilizing unrest--not only in Algeria but across the 
region.
    In the Arabian Peninsula, two nations currently must deal with 
heightened unrest likely spurred in part by the resignation of leaders 
in Tunisia and Egypt. In Bahrain, members of the Shia community, who 
account for 70 percent of the population, have held demonstrations 
calling for political and economic reform in the capital Manama. These 
demonstrations have led to clashes between government security forces 
and the Shia demonstrators. Likewise, in Yemen, student-led protesters 
calling for President Salih's ouster have held daily protests in the 
Yemeni capital ofSanaa; some of which have included violent 
confrontations with pro-government counter-demonstrators. These 
demonstrations, and protests in other major Yemeni cities, have added 
to existing stresses on the Yemeni Government. Yemen continues to 
combat a Huthi tribal insurgency in the north, increasingly violent but 
fractured southern secessionists, and a growing terrorist challenge 
from al Qaeda in the Arabian Peninsula. These threats, combined with 
dwindling water and oil resources, continue to increase the risk of 
serious instability in Yemen over the next 3 years.
    All Gulf governments remain skeptical of Iraq's Shia-led government 
but have engaged with Baghdad at various levels. The United Arab 
Emirates, Bahrain, and Kuwait now have diplomatic relations with Iraq, 
however Saudi Arabia continues to refuse to send an ambassador largely 
because of security concerns and its distrust of Iraqi Prime Minister 
Maliki.
    Gulf countries share a common fear of Iran, its growing power in 
the region, and its potential to develop nuclear weapons. Most also 
fear Iran's influence on their own marginalized Shia populations. They 
are not united in their response, but some offer public statements of 
support for peaceful nuclear technology in the region.
    Al Qaeda in the Arabian Peninsula (AQAP) plans attacks in the 
United States, as well as attacks against U.S., Western, and local 
government interests in Yemen and likely elsewhere in the Arabian 
Peninsula. It attempted to detonate bombs in cargo holds of aircraft 
bound for the United States in October 2010 and carried out two attacks 
against British Officials' convoys, and plotted to assassinate the 
Saudi Deputy Minister of Interior for Security Affairs. Propaganda in 
AQAP's English-language online magazine, Inspire, encourages followers 
to commit individual acts of terrorism in support of al Qaeda's agenda.
    In the Levant, Israel's northern and southern borders have been 
calm despite brief periods of tension, including an August 2010 
altercation on the Israel-Lebanon border. Both HAMAS and Hizballah are 
applying lessons learned from past conflicts with Israel. Even if 
neither intends to resume fighting, escalation could result from 
miscalculated responses to a provocation or incident.
    In Gaza, HAMAS is preoccupied with internal Palestinian issues and 
is still rearming and rebuilding after Israel's December 2008 Operation 
Cast Lead. It is avoiding provocations that could trigger another major 
conflict with Israel. Increased international cooperation against HAMAS 
and Iranian arms smuggling will hamper the group's rearmament but will 
not affect its ability to control Gaza. We assess that another round of 
fighting in the Gaza Strip is likely in the next 2 to 3 years.
    Hizballah continues to focus on internal Lebanese political issues 
and improving its paramilitary capabilities, which now are stronger 
than when it fought Israel in 2006. Both sides expect and are preparing 
for another round of fighting, but Hizballah appears to have no 
interest in renewing the conflict at this time. Israel's next battle 
with Hizballah is likely to involve more ground forces early in the 
conflict and may extend much deeper into Lebanon.
    Iran funds, instigates, and coordinates most anti-Israel activity 
in the region. Israel is concerned that Iran is giving increasingly 
sophisticated weapons to its enemies, including Hizballah, HAMAS, and 
Palestinian Islamic Jihad. These actions could offset its traditional 
military superiority, erode its deterrent, and lead to war.
    Since it interdicted an international, Turkish-led aid flotilla to 
the Gaza Strip in May 2010, Israel has reaffirmed its intention to 
maintain a naval blockade of Gaza but changed its policy from a list of 
permitted items to a list of prohibited items. This allows entry of 
more food and commercial goods. Israel also has reiterated that it will 
permit international aid shipments to Gaza if they come through 
Israeli-controlled crossing points after unloading in an Israeli or 
Egyptian port.
    Syria's military remains inferior to Israel's, but continues 
upgrading missiles, rockets, antitank weapons, and air defenses. 
Regionally, Syria seeks to strengthen its influence in Lebanon through 
support to Hizballah and other allies.
    Damascus perceives Hizballah as an extension of its defense against 
Israel. It continues to apply lessons learned from the 2006 Israel-
Hizballah conflict, and we expect Syria increasingly will develop 
smaller, infantry-based units armed with advanced, portable antiarmor 
weapons to counter Israel's ground-force superiority. Syria's strategic 
partnership with Iran centers on shared regional objectives that 
include countering Israel by transferring increasingly sophisticated 
arms to Hizballah.
    Damascus is buying air defense equipment from Russia, contracting 
for Russia's medium-range SA-17 system and Bastion coastal defense 
system. These will augment several SA-22 self-propelled short-range gun 
and missile air defense systems it obtained in June 2008. Additionally, 
Syria views ballistic missiles as a strategic deterrent against Israel 
and relies on such systems to offset shortfalls in its conventional 
forces. Its inventory includes older Russian-built SS-21 SRBMs, as well 
as Scud B, Scud C, Scud D, and the Iranian-origin Fateh-110 missiles.
    Syria's well-established chemical warfare program includes a 
stockpile of nerve agent, which can be delivered by aircraft or 
ballistic missiles. Syria continues to seek chemical warfare-related 
precursors and expertise from foreign sources. Some elements of the 
country's biological warfare program may have advanced beyond research 
and development, possibly giving Damascus a potential for limited agent 
production.
    Moving to Africa, al Qaeda in the Lands of the Islamic Maghreb 
(AQIM) continues expanding its operations in North Africa and the Sahel 
despite increased counterterrorism efforts by North African 
Governments. In 2010, AQIM executed a French hostage it held in 
northern Mali, kidnapped five French nationals in Niger, and carried 
out its first vehicle-borne improvised explosive device (VBIED) attacks 
in Mauritania and Niger.
    The Al-Shabaab group seeks to establish an Islamic state in 
Somalia. It is enforcing Sharia, appointing regional officials, and 
taking over media outlets, while also conducting near-daily attacks 
against the Transitional Federal Government and African Union Mission 
in Somalia (AMISOM). Al-Shabaab has been working more closely with al 
Qaeda since both groups publicly vowed in 2009 to support each other. 
The bombing in Kampala, Uganda, in July 2010 was al Shabaab's first 
attack outside Somalia, killing 64 civilians, including a U.S. citizen. 
Al-Shabaab warned of more attacks in Uganda and Burundi if AMISOM does 
not withdraw from Somalia.
    We assess that clan infighting, endemic corruption, and a 
persistent insurgency will keep Somalia unstable. The Transitional 
Federal Government (TFG) is a victim of factional infighting and 
depends on AMISOM for its survival in Mogadishu. Despite a recent 
increase to 7,000 troops, however, AMISOM is unable to expel al-Shabaab 
insurgents from the capital. Al-Shabaab's terrorist actions and growing 
capabilities continue to destabilize the entire country and threatens 
regional stability. Somalia's neighbors--Ethiopia, Kenya, and 
Djibouti--will support the TFG to pursue their respective national 
interests and contain militant Islam.
    Piracy is a symptom of Somalia's poor governance, instability, and 
lack of economic opportunities. Pirate attacks on ships transiting the 
Somali coast have stayed on par with 2009 levels over the past year, 
with a slight reduction of successful hijackings. Final ransom payments 
are substantially higher. Poor weather, coalition anti-piracy patrols, 
and improved defensive measures by merchant vessels have hampered but 
not deterred the pirates.
    I will close my regional review by turning to Latin America. More 
than 28,000 people have died in Mexico's drug-related violence since 
President Calderon declared war on cartels shortly after taking office 
in December 2006. Security forces--the Army, Navy, and police--have 
captured or killed 17 of Mexico's 37 most wanted traffickers on a list 
the attorney general announced in March 2009. Security reforms to 
improve operational effectiveness are awaiting action in the 
legislature.
    President Raul Castro is in firm control of Cuba with his brother 
Fidel's peripheral involvement. His priorities are domestic and focus 
on reforming the island's economy and social system. Cuba's 6th 
Communist Party Congress in April will set the domestic agenda for 
several years. Havana primarily receives its foreign support from 
Venezuela but is trying to reduce that dependence and expand economic 
ties to other countries, especially China and Brazil.
    President Hugo Chavez is trying to shore up voter support leading 
into Venezuela's 2012 elections and will stay focused on domestic 
issues, such as poverty and the country's high crime rate. Chavez 
signed no new arms contracts with Russia in 2010 but did obtain an 
agreement from Russia to help develop a nuclear energy program. The 
Venezuelan military received 18 K-8 fighter trainers from China and is 
waiting for deliveries from Russia that include T-72 tanks and armored 
personnel vehicles. Negotiations are under way to buy air defense 
systems.
    Colombia is in the 46th year of its internal conflict against the 
Marxist-oriented Revolutionary Armed Forces of Colombia (FARC). The 
group maintains a presence and influence in Colombia's coca-growing 
areas but continues to lose its ability to threaten democratic 
institutions. Sustained security force operations have cut FARC 
strength by more than half to about 8,000 personnel, increasing the 
possibility that the group will eventually fragment into several 
criminal organizations and continue their criminal activities.
    I would now like to summarize a few other transnational threats and 
trends.
    First, the proliferation and potential use of weapons of mass 
destruction (WMD) and ballistic missiles against the American people, 
U.S. forces, our allies, and interests remains a grave and enduring 
threat. Securing nuclear weapons and materials is a worldwide 
imperative to prevent both accidents and the potential diversion of 
fissile and radiological materials. Chemical and biological weapons are 
spreading and becoming more technically sophisticated as technology 
proliferates. Al Qaeda and other terrorist organizations are working 
aggressively to acquire and employ chemical, biological, and nuclear 
materials.
    Ballistic missiles continue to become more survivable, reliable, 
and accurate with greater range. Potential adversaries are using denial 
and deception measures and basing more missiles on mobile platforms at 
sea and on land. Technical and operational measures to defeat missile 
defenses also are increasing. China, Iran, and North Korea, for 
example, exercise near simultaneous salvo firings from multiple 
locations to counter missile defenses. Technology is also improving the 
range and accuracy of ballistic missiles. Countries are designing them 
to launch from multiple transporters against a broad array of targets, 
enhancing their mobility and effectiveness on the battlefield. Shorter 
launch-preparation times and smaller footprints are making new systems 
more survivable, and many have measures to defeat missile defenses.
    Theater ballistic missiles already are a formidable threat in the 
Middle East and Asia, and proliferation is expanding their availability 
worldwide. We assess that technology sharing will accelerate the speed 
with which potential adversaries deploy new, more capable ballistic 
missile systems over the next decade. Sophisticated missiles and the 
equipment to produce them are marketed openly. Transfers of complete 
missile-production infrastructures are helping countries rapidly 
develop and field systems that endanger U.S. and allied forces.
    Many advanced nations are cooperating to stop WMD proliferation, 
however some aspects of WMD-related research and technology are beyond 
their direct control, including commercial scientific advances, 
scientists' enthusiasm for sharing their research, and the availability 
of dual-use studies, information, training, and education. Determined 
groups and individuals, as well as the proliferation networks they tie 
into, often sidestep or outpace international detection and export-
control regimes. They supply WMD- and ballistic missile-related 
materials and technologies to countries of concern by regularly 
changing the names of the front companies they use, operating in 
countries with permissive environments or lax enforcement, and avoiding 
international financial institutions.
    Second, governments and commercial enterprises continue to 
proliferate space and counter-space related capabilities, including 
some with direct military applications. Space technologies that have 
both civilian and military uses--in such areas as communications, 
reconnaissance, navigation and targeting--remain relatively easy for 
countries and non-state groups to obtain.
    Russia and China continue developing systems and technologies that 
can interfere with or disable vital U.S. space-based navigation, 
communication, and intelligence collection satellites. Other countries 
and non-state groups rely on denial and deception techniques to defeat 
space-based imagery collection, conduct electronic warfare or signal 
jamming, and possibly attack ground sites for space assets.
    Third, cyber attacks against the United States continue to increase 
and attackers are using more sophisticated methods. Widely available 
advanced technologies for computer attacks, as well as inconsistent 
security policies, help adversaries access U.S. networks and offer 
opportunities to cause major damage and disruptions. We also must be 
alert to new risks from applied technologies--such as biometrics--that 
endanger operations and identities of U.S. intelligence personnel. The 
Department of Defense remains a prime target for collection of 
sensitive but unclassified military information and data on contractor 
research and development. The risks increase when U.S. defense 
communications transit commercial networks operated by foreign 
providers and equipment.
    A fourth transnational threat is a very longstanding one. The 
United States and Department of Defense continue to face a persistent 
and significant intelligence threat posed by numerous countries and a 
few sub-national actors. A few transnational terrorist groups, 
sometimes aided by several foreign intelligence organizations, have 
developed their own increasingly sophisticated intelligence collection 
and counterintelligence capabilities. Effective counterintelligence is 
a significant priority for the DIA, the Military Services, other 
Defense Agencies, and the Department.
    Foreign intelligence services conduct a wide range of intelligence 
activities to degrade U.S. national security interests worldwide. They 
target the U.S. Armed Forces, warfighting and commercial research, 
development and acquisition activities, national intelligence system, 
and national policymakers' perceptions and decision processes. In 
addition, foreign intelligence services and international terrorist 
organizations will continue to seek out and exploit those who could 
betray national interests.
    An emerging threat involves possible foreign compromise of the U.S. 
supply chain in an era of globalized commerce to degrade or defeat 
government information systems or weapons platforms by inserting 
malicious code into or otherwise corrupting key components bound for 
these important warfighting systems.
    Several countries pose a serious challenge, consistently 
demonstrating in the past exceptional persistence in pursuing priority 
U.S. targets and attacking U.S. interests. The United Statesremains a 
top priority intelligence target for Russia as evidenced by the FBI 
arrest in June 2010 of 11 Russian illegals operating covertly in the 
United States. Russian intelligence and security services continue to 
target Department of Defense interests in support of Russian security 
and foreign policy objectives. China in the past has used its 
intelligence services to target U.S.military technology, strategic 
warfighting capabilities, and global command and control information 
systems. In recent years, multiple cases of economic espionage and 
theft of dual-use and military technology have uncovered pervasive 
Chinese collection efforts.
    North Korea maintains a continuing interest in U.S. military 
activities on the Korean peninsula--a top intelligence collection 
priority for Pyongyang. North Korea continues to recruit South Korean 
agents to collect U.S. information-including sensitive war plans-and 
deployed intelligence officers under defector cover to assassinate a 
prominent North Korean defector in Seoul in April 2010. Additionally, a 
North Korean intelligence service has been accused of directing and 
orchestrating attacks against the South Korean naval corvette Cheonan 
in March 2010 and Yonpyong Island in November 2010.
    Iran is a growing foreign intelligence threat to the U.S. military 
and our coalition partners in Iraq and Afghanistan as it tries to gain 
a better understanding of our capabilities and intentions.
    Cuba has traditionally been a foreign intelligence threat to the 
U.S. Government and U.S.Intelligence Community. It has conducted 
espionage activities in the United States--to include inside the DIA--
and anti-U.S. propaganda and influence campaigns throughout the Western 
hemisphere.
    In an era of increasing cyber dependency, globalized commerce and 
rapidly developing regional conflicts, effective Department of Defense 
counterintelligence activities are critical to confronting current and 
potential adversaries, ensuring the integrity of U.S. technical systems 
and weapons, and managing potential threats from insiders who seek to 
steal U.S. secrets or harm Americans.
    The use of underground facilities, a fifth transnational trend, is 
expanding as potential adversaries conceal and protect their most vital 
national security functions and activities. Dozens of heavily 
fortified, deep underground facilities are under construction to 
support command and control, nuclear, and ballistic missile operations. 
They will reduce the U.S. Government's ability to monitor activities, 
in addition to greatly improving survivability. The spread of Western 
tunneling technology and equipment is contributing to a rise in 
construction by countries and organizations that have not previously 
used modern techniques.
    Sixth, unmanned aerial vehicles (UAVs) are revolutionizing air 
forces worldwide as adversaries integrate them not only for 
intelligence, surveillance, and reconnaissance missions, but also for 
air attacks. UAVs are particularly attractive because they offer longer 
endurance, autonomous navigation, and lower costs than typical manned 
aircraft.
    Countries in Europe, Asia, the Middle East, and Africa are leading 
UAV proliferators. Many routinely offer multiple systems for export and 
market UAV technology to countries and organizations with little or no 
previous capabilities. Industry proliferators are mounting weapons on 
UAVs--for example, the Chinese Caihong-3--and touting them as 
economical, low-crew-risk alternatives to strike aircraft. Such UAVs 
threaten U.S. military units and installations, as well as those of our 
allies. UAVs are alternatives for nations and non-state groups that are 
unwilling or unable to field modern manned aircraft.
    Global health security is the final transnational issue that I will 
address. Health care deficiencies hurt stability and growth in 
developing countries, such as Afghanistan. Expanding and improving 
health systems, on the other hand, will boost resiliency in these 
countries and mitigate illness and death from disasters, medical 
emergencies, and potential health effects of climate change. While most 
health aid will be positive, some adversaries, such as Iran and 
transnational terrorist groups, will use health aid to gain regional 
influence. Countries that can medically support their military forces 
abroad, as China can with its hospital ships, likely will be able to 
project influence well beyond their borders.
    Possible emerging pathogens, including severe pandemic influenza, 
are a threat to health systems, populations, and U.S. forces worldwide. 
A highly transmissible virus that causes severe disease could appear 
anywhere, and for at least the next 5 years, most of the world will not 
be able to detect the pathogen early enough to prevent its spread.
    Inadequate global food safety and pharmaceutical controls raise the 
likelihood of mass illness from consumption of contaminated food or 
counterfeit or contaminated drugs. This and other threats--for example, 
an accidental or intentional release of toxic industrial chemicals or 
radioactive materials--could imperil populations and U.S. troops in 
areas where they occur.
    Future abilities to modify human performance for military purposes 
could give foreign adversaries operational advantages. At present, 
however, foreign techniques to modify human performance have 
questionable effectiveness, and new, better approaches are at least 10 
years away from implementation.
                               conclusion
    Today's focus on combat operations against insurgents and 
transnational terrorists does not preclude the potential that other 
threats will come to the fore. In cooperation with the Intelligence 
Community, DIA is strengthening collection and analysis and sharing 
more information across intelligence disciplines and among agencies and 
the Nation's close allies.
    The men and women of DIA have a unique responsibility to the 
American people and take great pride in their work. I am privileged to 
serve with them and present their analysis to you.
    On behalf of the men and women of DIA, thank you for your 
continuing confidence. Your support is vital to us.

    Chairman Levin. Thank you very much, General.
    Let me go back to you, Director.
    Mr. Clapper. Yes, sir. What I propose is, I'll take a cut 
at the issues that you and Senator McCain raised, and then I'll 
ask Ron to jump in and amplify or correct as required.
    First, sir, you brought up about the friction that appears 
to be emerging between Taliban or insurgent elements in 
Afghanistan versus their command hierarchy in sanctuaries in 
Pakistan; and that's true. We are seeing more of that and I 
think that is a direct result of the effects of the surge in 
Afghanistan, as more and more pressure has been put on the 
Taliban. To say, though, that that's going to turn into a 
groundswell and, going to have a lot of Taliban march with 
their feet--I think that remains to be seen. Certainly, the 
interval between now and next spring, as the weather improves 
and combat intensifies, I think we'll have to watch that and 
see if that's a developing trend.
    You asked about the Afghan army and Afghan police, and 
expanding that to approaching 400,000 people. Actually, that 
would be a good thing. I think the issue then will be whether 
the Afghan government can sustain a force of that size, and in 
doing so, reduce the attrition, absences, if you will, that we 
continue to see in both those forces.
    With respect to Pakistani safe havens, I would say this: 
that oftentimes our interests and the Pakistani interests are 
congruent, and other times they're not. The primary threat for 
the Pakistanis continues to be India, and that consumes and 
preoccupies, I think, where their strategic interests lie. It's 
a very complex, delicate relationship with the Pakistanis, and 
we'd be pleased to speak more to that in closed session.
    You spoke very eloquently about this tectonic change--I 
think, and I don't think that's an exaggeration--that's going 
on in the Middle East. It demonstrates, I think, the universal 
hunger that people have for economic improvement, for freedom 
of expression, for the opportunity to participate in and have 
credible, honest elections, and their great aversion, as we've 
seen, to corrupt governments. I think what we've also seen, 
which is a subject of great interest to me as the head of the 
IC, is the impact of social media and our ability to monitor 
that social media and understand what's going on in this 
groundswell.
    I think the outlook generally is, we're in for a bumpy time 
in the Middle East. This is not going to be an equally smooth 
transition from country to country. It's going to vary from 
point to point.
    With respect to the rebels in Libya and whether or not they 
will succeed or not, I think, frankly, they're in for a tough 
row because a very important consideration here for the regime 
is that, by design, Qadhafi intentionally designed the military 
so that those select units loyal to him have had the most, are 
the most, luxuriously equipped and the best trained. That is 
having a telling effect now with the rebels and, I think, 
logistically, the overwhelming power or control that Qadhafi 
has.
    You're quite right. Obviously, there are a range of options 
being considered, of which one is a no-fly zone. I think of 
great interest is the Arab League's apparent interest in and 
support for the conduct of a no-fly zone.
    You asked about the opposition. What appears to have 
emerged is a council of about 31 leaders that are drawn from 
the various towns and cities that are generally held in 
opposition hands. That in turn is led by an executive group of 
three, and the senior appears to be a man named Jalil, who is 
the putative former Minister of Justice.
    I think what has happened in Iraq has been a very 
interesting and encouraging evolution; they're going through a 
very difficult transition into a democracy. Demonstrations have 
taken place widely throughout many cities in Iraq. I personally 
was heartened by the excellent performance of the Iraqi 
security forces who reacted temperately and professionally, for 
the most part, to these demonstrations.
    You brought up the NIE, actually, the Memorandum to 
Holders, which is a revision or update if the original 2007 NIE 
on Iranian nuclear capabilities and intentions. I would 
suggest, sir, that it would be best to discuss this in closed 
session and, as soon as we can get that scheduled, we'll have 
our lead National Intelligence Officer, Andy Gibb, be available 
to brief you on that update.
    With respect to the effect of sanctions, it is having 
effects on the economy of Iran. I don't think there's any 
question about that. We cannot say, however, that it's having 
any direct effect on their nuclear program or their nuclear 
intentions. I think you're quite right to point out the 
incongruity of the Iranian reaction to the unrest in the Middle 
East--demonstrations are good, just not here--which, I think, 
puts them in a very awkward position.
    With respect to prospects for missile defense in Europe in 
cooperation with Russian, the Vice President is in Russia now. 
I'm sure that's one of the topics he'll discuss, as I think the 
standard reaction here would be, the Russians will, as always, 
act in what they think is their best interest. To the extent 
that we can entice them to participate cooperatively in a 
missile defense program, I think that would convey a very 
compelling message to Iran.
    With respect to North Korean intentions, obviously they 
continue to play their nuclear card. That is their single, I 
think, leverage point, or leverage device, they can use to 
attract attention and seek recognition for them as a nuclear 
power. I think personally--and General Burgess, I'm sure, has a 
view on this--that the likelihood of a conventional attack on 
South Korea is frankly rather low.
    Senator McCain, and in turn Senator Levin, expressed 
appreciation for the men and women in our IC. As you've both, 
all of you have visited folks in the field, so you can 
understand the environment they operate in, often at great 
personal risk to themselves. I'm about to go out on a trip to 
the Far East this Saturday, and I will be visiting many of 
these people. In fact, Senator McCain, it'd be the first time 
back to Vietnam for me since I left in 1966. I'm looking 
forward to that.
    As I know General Burgess does, I completely agree with 
your assessment of the world environment. I've been in the 
intelligence business 47 years. I cannot remember or recall a 
time that has had more complex challenges for us as a community 
to face. I appreciate your recognition of that, and I 
appreciate as well, sir, your call for being realistic about 
the expectations. We're not clairvoyant.
    I do agree as well with--and I think Chairman Mullen 
indicated this recently--all the uprisings and demonstrations 
in the Middle East, I think are in fact a respudiation of al 
Qaeda and its ideology.
    I would also agree that we believe that Qadhafi is in this 
for the long haul. I don't think he has any intention--despite 
some of the press speculation to the contrary--of leaving. From 
all the evidence we have, which I'd be prepared to discuss in 
closed session, he appears to be hunkering down for the 
duration.
    With respect to General Tony McPeak, who was Chief of Staff 
when I was in the Air Force, his typical candid view, I would 
just comment that it's really not entirely a military problem. 
From the standpoint of the threat there, the Libyan air defense 
structure on the ground, radars, and surface-to-air missiles 
(SAM), is quite substantial. In fact, it's the second largest 
in the Middle East after Egypt. They have a lot of Russian 
equipment, and there is a certain quality in numbers. Some of 
that equipment has fallen into oppositionist hands. They have 
about 31 or so major SAM sites, a radar complex which is 
focused on protecting the coastline, where 80 or 85 percent of 
the population is.
    They have a large number of manportable air-defense 
systems, that is, manportable SAM, and of course there's great 
concern there about them falling into the wrong hands. Their 
air force has lots and lots of aircraft, but not very many of 
them are operational. Approximately 75 or 80 or about a third 
of those are transports, a third, helicopters, and the 
remainder are fighters. They have used them to some extent in 
attacks on the ground. They're somewhat, though, akin to The 
Gang That Couldn't Shoot Straight, since they're doing this 
visually, and have not caused very many casualties, although 
some physical damage.
    With that, I will turn to General Burgess for any 
commentary he may want to add to those questions.
    Chairman Levin. Thank you very much, Director Clapper.
    General Burgess.
    General Burgess. Sir, I would just add a couple of points 
on to Director Clapper's points.
    Reference the friction that you noted upfront. Actually, I 
think the IC has been reporting on the friction between the 
Taliban inside Afghanistan and those that are back in Pakistan 
since 2002. This has actually been fairly consistent even from 
the mujahideen days in the 1980s, for those that were inside 
the country fighting and those that were back in sanctuary, and 
who was pulling what in terms of fair share. So that friction 
has been there and been reported on. I think it is fair to say 
that we are seeing a heightened level of reporting at this time 
on some of that. But we have not seen any evidence at all yet 
that this friction is superceding the desire of the insurgents 
in Afghanistan to continue to fight. Nor is it contributing at 
this time to what I would call very nascent reintegration 
opportunities that are presenting themselves.
    Reference the Afghan National Army and the Afghan National 
Police. Sir, what I would say on that is, as you all are well 
aware, the Afghan National Police and the Afghan National Army 
have met their targets again for this year, and they continue 
to meet the levels that are set for them.
    For both the army and the police, I think it is a matter of 
balancing what I would call quantitative growth with 
qualitative improvement in figuring out how you bring that. In 
our assessment, the Afghan National Army is ahead of the Afghan 
National Police in that regard at this time. As instruments of 
the central government's power, we need to continue to 
reinforce.
    On Libya, DIA would agree with, as the Director put it, 
Qadhafi does give indication at this time, sir, that he's in 
this for the, as he said, long haul. He put it a different way. 
I generally quote someone, and it was Napoleon who said, ``Mass 
has an inherent quality all of its own.'' He was referring to 
artillery, but clearly Qadhafi has both on the air side and the 
ground side, and the SAMs. He has all of that, and the 
qualitative advantage is in that material that is in the 
western part of the country, as opposed to the eastern, which 
is controlled by Qadhafi. So, right now he seems to have 
staying power, unless some other dynamic changes at this time.
    The only other one that I would add a comment on was 
Director Clapper's reference to North Korea. It is also our 
assessment at this time that there is a low probability of a 
conventional attack by the North upon the South. But as I 
mentioned in my statement, North Korea has shown a proclivity 
for doing sometimes the unexpected. It is the unintended 
consequences of those events that may precipitate something 
else, sir.
    Chairman Levin. Thank you both very much.
    Let's have a first round of 7 minutes.
    General Burgess, when you say there's a low probability of 
a conventional attack by North Korea, I assume that that would 
include a nuclear attack as well, perhaps even lower. Is that 
correct?
    General Burgess. Yes, sir.
    Chairman Levin. Relative to Iran, Director Clapper, you 
mentioned in your statement that the IC does not know if Iran 
will eventually decide to build nuclear weapons. I read into 
that that Iran has not made a decision as of this point to 
restart its nuclear weapons program. Is that correct?
    Mr. Clapper. Yes, sir. I would like, though, to defer a 
more fulsome response to a closed session.
    Chairman Levin. Okay. But, what is the level of confidence 
that you have that as of this time they have not decided to 
restart that program? Is that a high level of confidence?
    Mr. Clapper. Yes, it is.
    Chairman Levin. If Iran made the decision to restart its 
nuclear weapons program, what is the likelihood that we would 
know reasonably shortly thereafter that that decision was made?
    Mr. Clapper. I would prefer to discuss that in closed 
session.
    Chairman Levin. Okay. Are you able to tell us in open 
session what I think has been assessed before openly, but you 
tell us whether you can do it now--if Iran decided to restart 
its nuclear weapons program today, about how long, what range 
of years, would it take for them to have a complete, fully 
assembled nuclear warhead, including the necessary highly 
enriched uranium?
    Mr. Clapper. Again, sir, I would prefer to respond in a 
closed environment.
    Chairman Levin. Okay. We respect that. Would a missile 
still be the most likely delivery vehicle?
    Mr. Clapper. Yes, sir.
    Chairman Levin. Okay. Relative to Afghanistan--and I think 
that you both said this, but I want to be sure that I hear you 
correctly--you both are cautious, but let me just ask you point 
blank then. We had an assessment both from Secretary Gates and 
General Petraeus recently that there has been progress in 
Afghanistan in the last year or so, and in General Petraeus's 
words, ``the momentum of the Taliban has been halted in much of 
the country and reversed in some important areas.'' Would you 
agree with General Petraeus?
    Mr. Clapper. Yes, sir, I do. We had this discussion, 
debate, during the NIE deliberation, and I don't think there's 
any question about the tactical successes that the ISAF forces 
led by General Petraeus have enjoyed, particularly in light of 
the surge.
    I think the issue and the concern that the IC has is after 
that, and the ability of the Afghan Government to pick up their 
responsibility for governance. I think that's what we're going 
to be watching very carefully. But I don't think there's any 
question about the success that ISAF forces have enjoyed. Our 
troops have had great success, as Secretary Gates commented, on 
the battlefield and have made tremendous progress.
    General Burgess. I would agree that we have enjoyed 
tactical defeats and operational successes against the Taliban. 
However, the Taliban does remain resilient and will be able to 
threaten U.S. and international goals in Afghanistan through 
2011.
    Chairman Levin. Thank you. Let me ask both of you, has the 
U.S. Government presented evidence to the Pakistan Government 
about the location of the Quetta Shura and the Haqqani network? 
Do they know where these guys are?
    Mr. Clapper. Generally, yes, sir. They have. But I think 
they are generally aware. We've had those discussions, and 
that's probably all I ought to say in public.
    Chairman Levin. All right. Let me just say that, the reason 
I ask you that is that every time we talk to the Pakistanis 
what they tell us is, give us the evidence about the location. 
Tell us where they are. We've done that, and you confirm it 
here today. So, I don't think that answer from the Pakistanis 
is going to carry any water, and shouldn't carry water. They 
might have other reasons why they're not going after those 
people who are moving so easily into Afghanistan to attack us 
and our Afghan partners and the Afghan people. But it can't be 
that they don't know where the Quetta Shura is. It's obviously 
and openly located in Quetta, and the Haqqani network is 
located in Waziristan, and they know where it is. I'm glad to 
hear you say that because it's important the Pakistanis not 
hide behind that fiction.
    Relative to Iraq, can you give us an assessment about the 
vulnerability of the Government of Iraq to the kinds of 
protests which have, we've seen in other parts of that region? 
Has the Government of Iraq cracked down on peaceful 
demonstration, and could that lead to greater demonstrations?
    Mr. Clapper. Sir, I think the people in Iraq have the same 
aspirations as we're seeing throughout the Middle East, the 
same four factors I indicated. I think the word crackdown, I 
guess that's somewhat of a loaded word. I guess they have 
curtailed, controlled these demonstrations. I think the real 
test is going to be how responsive the Iraqi Government can be 
for things like provision of water and electricity to the 
people. I think it's basic fundamental needs. The Government of 
Iraq, I think, understands that. I think that Prime Minister 
Maliki certainly does, and that he has to deliver. That's going 
to be the test. To the extent that they're not able to do that, 
then I think that frustration will fester more among the Iraqi 
people.
    Chairman Levin. Just to wind that up, what is the Iranian 
influence in the Iraqi Government? What's the extent of it?
    Mr. Clapper. There is a tendency to overstate that. I think 
clearly they're interested, they're going to try to influence 
things in Iraq in a manner that's supportive of their 
interests. I think, though, Prime Minister Maliki, eyes are 
wide open here. He has some background with the Iranians, and I 
think they're very much aware of that, and certainly that's a 
great concern to others in the region.
    Chairman Levin. So, you say it's a limited effect, the 
Iranian influence?
    Mr. Clapper. I wouldn't--I don't know what the right 
characterization is. It is a concern, it's a factor. Certainly 
the Iranians will want to exploit any openings they can, 
whether in Iraq or anywhere else in the region. Some measures, 
in some ways they would like to exploit the situation. But I 
think that that's going to be very problematic for them.
    Chairman Levin. Thank you.
    Senator McCain.
    Senator McCain. Thank you, Mr. Chairman.
    I thank the witnesses again.
    Director Clapper, I hope you enjoy your visit to Vietnam. I 
want you to go to the statue next to the lake where I was shot 
down. I know you'll express to the Vietnamese government that 
we are somewhat disappointed in their lack of progress in human 
rights. In fact, recent crackdowns have been disappointing to 
all of us who supported the normalization of relations between 
our countries.
    Do you believe that in the Middle East there's a perception 
that the United States is in the decline?
    Mr. Clapper. I don't know that, so much in decline as much 
as very unpopular. I think if you look at the polls that we 
take, that, throughout the Middle East, that our image is not 
very good. I don't know that that's a reflection that they 
think we're in decline as much as just an aversion to what they 
believe our interests are, or things we have or haven't pushed. 
I think it has more to do with that. But we're just, I would 
characterize it as, we're very unpopular there.
    Senator McCain. Two of the reasons might be that our 
failure to support the democratic movements within some of 
these countries robustly enough, and the other perhaps could be 
that we have not been able to assist them in the ways that they 
feel are important. I think we all realize that it is the 
economy of these countries, and the lack of opportunity and the 
lack of jobs. What they want is our investment, not so much our 
guidance, but our investment so that we can create jobs. Would 
you agree with that?
    Mr. Clapper. Yes, sir. I think the economic issues are high 
on their mind. You have a very high population of unemployed 
youth. I think in Saudi it runs, for example, around 40 
percent. So you have this huge youth bulge in the Middle East. 
The effect of social media, so, they are aware of what is 
potentially, what's possible.
    I think that has created this huge groundswell of 
frustration for economic betterment. So, probably, yes, they 
would welcome investment as long as we're not telling them what 
to do.
    Senator McCain. The other factor could be the lack of 
progress on the Israeli-Palestinian issue.
    Mr. Clapper. Yes, sir. I think that's quite true. That's an 
issue very prominent in the minds of many.
    Senator McCain. This argues, at least in my mind, a greater 
urgency to make progress on the Israeli-Palestinian peace 
process. Do you agree?
    Mr. Clapper. Yes, sir. I have to say, since I'm not a 
witness to all this, the administration has worked that very 
hard.
    Senator McCain. I wasn't being critical of the 
administration. I just think that the perception out there is 
not helpful to U.S. interests.
    Again, on the issue of the no-fly zone, do you agree--and I 
understand, you talked about their array of defenses and SAMs 
and radars--do you agree with General Odierno's assessment that 
the U.S. military would be able to establish a no-fly zone over 
Libya within a couple of days if the international community 
decided that such a move was needed?
    Mr. Clapper. I'd have to take that under advisement, sir. I 
don't know about 2 days. It may be a little longer than that 
because this would, I believe, involve a suppression of the air 
defense equipment there and sorting out which equipment is in 
the hands of the oppositionists and which isn't and the 
intelligence that would be required to support the imposition 
of the no-fly zone. So, I'm a little reluctant to say 2 days.
    Senator McCain. A relatively short period of time. I must 
say with respect, it think it's fairly obvious where their air 
assets are located and where most of their air defense assets 
are located, and that's around Tripoli. It's obvious, because 
the eastern part of the country is not under their control.
    I noticed with interest that the French Government has 
recognized the provisional government, which you, I think 
accurately, described as in Benghazi. That's bound to be a 
boost to their morale. Should the United States consider 
recognition or let me put it this way: wouldn't it be helpful 
to their morale, which is sagging somewhat right now, if the 
United States recognized the provisional government, 
particularly in light of the fact that the President of the 
United States has announced that Qadhafi must go?
    Mr. Clapper. It probably would raise their morale, sir. 
That's a policy call, and certainly not in my department of 
intelligence.
    Senator McCain. Thank you. I understand that. But, from an 
intelligence standpoint, it would be certainly helpful to have 
them recognized. We've done that in the past in other cases.
    How serious is the damage to your capability to carrying 
out your responsibilities was the WikiLeaks situation?
    Mr. Clapper. From my standpoint, it was quite damaging 
because of the chilling effect it has on people who are willing 
to be recruited and to provide information to us.
    Senator McCain. So, it was a lot more than just 
embarrassing to diplomats who were candid in their assessments?
    Mr. Clapper. Yes, sir. Bear in mind, there are some 
potentially 700,000 documents, that are out there, and there 
have only been about 5,000 publicly revealed, so this could go 
on for quite some time as these revelations are stretched out.
    Senator McCain. It literally puts people's lives in danger 
who were cooperating with us, whose names, identities may be 
revealed in these leaks, is that correct?
    Mr. Clapper. That's possible. But I, frankly, am more 
concerned about the ones we won't get in the future, that we 
can't count, who won't engage with us because of fear of 
revelation.
    Senator McCain. I thank you, Mr. Chairman. I bring that up 
because I'm intrigued by this debate that seems to go on it's, 
we needed to know what our diplomats were saying to each other, 
and we needed these candid--that's not what this is all about 
is it?
    Mr. Clapper. The embarrassment factor, it makes for juicy 
headlines and all that sort of thing. But that's not really 
what the serious impact is. Of course, I should not dismiss 
that. That also is a negative effect on the candor involved in 
diplomatic discourse, diplomatic exchanges.
    I think so and certainly the dialogue I've had with foreign 
interlocutors, while they're not happy about it, I think they 
see that there is a larger interest here in a continued 
relationship with the United States--but from an intelligence 
perspective, there's been some damage.
    Senator McCain. Could I finally say, Mr. Chairman, I agree 
with your assessment about our unpopularity, and it also seems 
to me that this is a window of opportunity for the United 
States of America to declare our assistance to these people, to 
help in their economies. Again, not to interfere. The one 
message that Senator Lieberman and I got from meeting with 
these young revolutionaries was that they don't want our 
interference, but they see the United States as a prime way of 
improving their economy and creating jobs in these countries. I 
know, obviously, you would agree this is a time of challenge, 
but also a time of opportunity for the United States of America 
to return, not our popularity, but our prestige, our ability to 
help people, our image, and frankly, fulfill the mission of 
what our country's supposed to be all about.
    Mr. Clapper. Sir, I agree. I think it's a great testimony, 
even though it is difficult, but it is a great testimony to our 
way of life and the values we stand for. I think what we're 
seeing here is a universal longing for that which has 
manifested itself so dramatically.
    Senator McCain. I thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator McCain.
    Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman.
    Thanks to both of you.
    Just to pick up on that last exchange between Senator 
McCain and you, Director Clapper. I know that as we debate 
here, the debates are going on within the administration and 
allied capitals about how we should relate to what's happening 
in Libya, one of the concerns expressed is that we should not 
get involved in a third Arab country militarily. In the first 
place, nobody here is talking about on-the-ground foreign 
military intervention.
    But more to the point, is it, this one is really different, 
because we're being asked by an escalating chorus of voices 
from within the Arab world to please help the opposition to 
Qadhafi. It starts from the streets that Senator McCain and I 
visited in Tunisia and Egypt, with this new, remarkable 
generation of peaceful democratic revolutionaries in the Arab 
world now who view the opposition to Qadhafi as their allies, 
their brothers and sisters in this peaceful uprising, and 
Qadhafi as typical of the authoritarian regimes against which 
they rebelled, except that he turned his guns on them. So, they 
want to see us support the opposition.
    Now we've had officially the Gulf Cooperation Council, some 
of our closest allies in the Arab world, calling on us to work 
with our allies around the world, really, to impose a no-fly 
zone in support of the opposition. The Arab League, presumably, 
will do the same over the weekend. So, I think there's a 
different context here, and I present that in the sense of a 
kind of second chance, or a new chance for us to link up with 
the aspirations of people in the Arab world. I thank you for 
your answer to that.
    I want to go back to Libya briefly here at the beginning. 
Both of you, Director Clapper and General Burgess, presented 
your assessment that at this point, notwithstanding anything to 
the contrary in the media, Colonel Qadhafi is hunkering down. 
He's not going anywhere, as far as he's concerned.
    I wanted to ask you two, if you would in that context give 
us your best estimate of the military situation on the ground, 
because the media seems to have been suggesting, from people 
there, reporters there over the last couple of days, that the 
momentum has now turned in favor of the Qadhafi government and 
forces against his opposition. Is that your assessment?
    Mr. Clapper. This is a very fluid situation. One of the 
reasons why this is hard to assess is because of the apparent 
tactic of the regime forces to attack, say, a town, go in and 
attack the opposition forces, and then pull back, refit, 
repair, and all that sort of thing. So, these places are 
changing hands. My own view is that I just think the important 
dimension here is logistic.
    Senator Lieberman. Right.
    Mr. Clapper. I think the regime has more logistical 
resources in terms of the equipment they have, first line 
equipment, and, anywhere in Libya that is held by the regime 
forces. There are two special brigades, the 32nd and the 9th, 
which are very loyal to Qadhafi and do his bidding. They are 
the most robustly equipped with Russian equipment, to include 
air defense, artillery, tanks, and mechanized equipment. They 
appear to be much more disciplined about how they treat and 
repair that equipment. I just think from the standpoint of 
attrition that over time, it's a stalemate back and forth. But 
I think over the longer term, that the regime will prevail.
    General Burgess. Sir, I would identify myself with the way 
Director Clapper put it.
    I was going to mention the 32nd and the 9th, which are 
clearly two elements that we're trying to follow.
    The impetus, I think the press had it about right in terms 
of, initially the momentum was with the other side. That has 
started to shift. Whether or not it has fully moved to 
Qadhafi's side at this time in country, I think is not clear at 
this time. But we have now reached a state of equilibrium where 
the initiative, if you will, may actually be on the regime's 
side at this time, but we're watching that in these days right 
now.
    Senator Lieberman. Director Clapper, at the end of your 
answer to my first question you said you were concerned or 
thought that in the long run the regime might actually prevail 
because of its superiority and logistics, weaponry, all the 
rest. Did I hear you correctly?
    Mr. Clapper. Yes, sir.
    Senator Lieberman. That's certainly my concern, that people 
have begun to say that it looks like it's heading to a 
stalemate. But I think if you start to balance the forces on 
both sides, it's not a balance, and that the regime, there's a 
real probability that the regime will prevail against the 
opponents. Then I think we have to ask ourselves as we watch 
this and think about what's at stake, and remember what the 
President has said, which is that Colonel Qadhafi must go--and 
I agree with that totally--whether, unless the world community 
intervenes in some way--either to, beginning with recognition 
of the opponents, the opposition in Benghazi, perhaps a no-fly 
zone, perhaps supplying them with weapons, perhaps using our 
superior intelligence and sharing it with them about the 
movement of the Qadhafi forces, perhaps using our extraordinary 
technological capability to jam communications or intervene 
with telecommunications by the regime--then Qadhafi will not 
only survive, but he will prevail. That's a very bad outcome 
here. I think it calls out to our leadership here in Washington 
and throughout the Arab world and the rest of the world that is 
invested in security in the Middle East. I think invested in 
seeing the peaceful democratic uprisings that have occurred 
succeed, really, it calls on us to act quickly to not let this 
happen.
    Mr. Clapper. Sir, I just would suggest to you that there is 
perhaps another outcome here which would be a reversion to the 
pre-Qadhafi, pre-king history of Libya, in which there were 
three semi-autonomous mini-states.
    Senator Lieberman. Right.
    Mr. Clapper. So, you could end up with a situation where 
Qadhafi would have Tripoli and its environs, and then Benghazi 
and its environs could be under another mini-state, and then 
there was another--and of course, there's a lot of history 
here, and the tribal dynamics would have to be factored in 
here. So, there, you could have an outcome where you'd have 
both parties survive.
    Senator Lieberman. Yes. I agree. To me, that's not a good 
outcome, either. Secretary Clinton said a week or so ago that 
one of the dangers here is that, if this becomes a stalemate or 
breaks into a division of Libya, that it could become fertile 
ground for al Qaeda to both infiltrate into one or another of 
the new separate divisions of Libya, or simply to use Libya, 
parts of Libya as a base of operations because some parts would 
not actually be governed. That's another reason, I think, for 
us to act quickly.
    Mr. Clapper. Or you could end up with a Somalia-like 
situation.
    Senator Lieberman. Exactly. That's the other national 
interests that we have. People say, what is America's interest 
there? Part of it is humanitarian because people are being 
slaughtered. But the other part is that we don't want it to end 
up as a base like Somalia for anti-American Islamist terrorism.
    My time is up, but I just want to say finally that I 
appreciate that President Sarkozy yesterday recognized--or 
maybe earlier today--the opposition government of Benghazi. If 
we're for removing Qadhafi from power, if we feel that he has 
to go, remembering an old adage that we all know from our own 
political careers, you can't beat somebody with nobody. There 
are somebodies there in Benghazi. They're led by reputable 
people.I think we urgently need to give them the credibility 
that comes with recognition at least. I hope that our 
Government and other governments will soon follow the 
leadership example set by President Sarkozy in France.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you, Senator Lieberman.
    Senator Cornyn.
    Senator Cornyn. Thank you, Mr. Chairman.
    Gentlemen, I'd like to direct your attention to violence, 
really, a war occurring right out our back door in Mexico and 
to get some of your observations about that.
    But first, Director Clapper, the Government Accountability 
Office (GAO) has documented that there were 445,000 illegal 
entries into the United States across our southern border in 
fiscal year 2010. The Border Patrol has reported that out of 
those 445,000, about 45,000 are immigrants coming from 
countries other than Mexico. It's more than 100 different 
countries, including at least 4 state sponsors of terrorism, so 
designated by the Department of State (DOS).
    I would like to get your assessment of whether that 
represents a national security threat to the United States, a 
potential nationality security threat.
    Mr. Clapper. Yes sir, it does. I think the issues of narco-
trafficking and the prevalence of the drug cartels in Mexico is 
a matter of national security interest to both countries. I 
think it was recognized and reaffirmed recently with President 
Calderon's visit here with President Obama.
    From an intelligence perspective, I think we've made a lot 
of progress in partnering with the Mexicans. There's some 
excellent work going on down there together which has resulted 
in significant take-downs of high value targets, cartel 
leaders, and the like, and that will continue.
    We're actually following a pattern that was established in 
Colombia. I think Colombia is instructive, since that took a 
long period of time to reach the state we are now. But, 
clearly, the whole situation there is a serious one. I am going 
to be shortly making the rounds to visit El Paso Intelligence 
Center (EPIC) and Border Patrol and other entities down there, 
intelligence entities, that are committed to this problem. But, 
it's a serious one.
    Senator Cornyn. I'm glad to hear that you'll be traveling 
to EPIC. They're doing some very good work down there. But, 
frankly, a lot more needs to be done.
    But, would you agree with me, Director Clapper, that an 
individual with enough money and enough determination can 
penetrate our southwestern border and make their way into the 
United States, anyone with that determination, enough money? 
Does that represent a potential terrorist threat to the United 
States?
    Mr. Clapper. Yes, sir. I don't pretend, and nor do I think 
Secretary Napolitano would pretend, that we have an ironclad, 
perfect system. But, at the same time, I'd be remiss not to 
commend the tremendous work of the Border Patrol and 
Immigration and Customs Enforcement, and others that are 
involved with this problem. But to say that it's ironclad, 
perfect, and somebody could get through, yes, sir.
    Senator Cornyn. I think the GAO would agree with you. In 
fact, they state in a February 15 report that there's still 
1,120 miles of our 2,000-mile southern border that is not under 
the control of the U.S. Government when it comes to border 
security. So, I think we have a lot of work to do. But I agree 
with you, Director Clapper, we need to commend the good work 
that is being done, although it's under-resourced and short-
staffed. We need to do more to secure our borders--not just to 
restore the rule of law, but also to prevent our country from 
suffering terror attacks through that southern portal.
    General Burgess, the former CIA Director, General Mike 
Hayden, after he'd left the government, he said that, as a 
national security challenge that would keep him awake at night, 
is the fact that Mexico has seen the drug-related violence 
increase--some 35,000, roughly, Mexicans killed since 2006, 
about, more than 140 Americans killed in that violence since 
2006--he said that's one of the things that would keep him 
awake at night concerning the proximity of Mexico to the United 
States, the fact that they're our third largest trading 
partner. I would like to know, do you think that the United 
States has a coherent, meaningful strategy in place to deal 
with the escalating violence in Mexico? I worry that once 
President Calderon leaves office, we don't know who his 
successor will be or what their commitment will be to 
continuing that fight. I'd be interested in your assessment of 
that, sir.
    General Burgess. Sir, a couple of points--it probably would 
be inappropriate for me as the Director of DIA to comment on 
whether we as the U.S. Government have a complete, coherent 
strategy vis-a-vis Mexico.
    From an intelligence standpoint, I know from my days in the 
Office of the DIA in a previous life that we have worked with 
our friends in Mexico to ensure that, from an intelligence 
standpoint, we have put the processes and the capabilities in 
place that will enable both of our national interests, in terms 
of following some of the problems you have been identifying, 
and that we have made some progress towards that, though I 
would characterize it as a work in progress as we put it 
together.
    I have been testifying since 2000 during my time--not as 
long as Director Clapper--in terms of doing testimony up here. 
I used to refer to the problem you are somewhat describing, in 
my days at U.S. Southern Command, as beams of light into the 
United States, and that these beams of light--whether it be 
illegal migration or however you want to phrase the term, or 
whether it be the drugs coming across or the weapons that are 
moving back and forth--that all of those are beams of light 
coming across our southern border. It is a national security 
concern because if you can move drugs, if you can move people, 
you can move other things that are of concern to us as a 
nation, so it is something that we need to have an interest in.
    Senator Cornyn. If I could just follow up, one last 
question with Director Clapper.
    You compared what's happening in Mexico, I believe, to our 
experience in Colombia. How would you describe the nature of 
what's happening in Mexico now? At one point, Secretary Clinton 
characterized the situation in Mexico as an insurgency. Others 
seemed to walk back from that characterization. But how would 
you characterize it?
    Mr. Clapper. I just think the whole business of drug 
trafficking is just a very serious national security problem. 
It's one that both countries share in. As President Calderon 
points out, if it weren't for the demand here, that wouldn't 
generate the business down there. It's just a serious national 
security concern to both countries, is the way I'd characterize 
it.
    Senator Cornyn. You do consider it comparable to Colombia?
    Mr. Clapper. Yes, sir, I do. In the context of, what I 
meant by that is that we learned a lot from our cooperation 
with the Colombia Government, particularly with respect to 
intelligence and the tactics, techniques, and procedures that 
were used and developed and honed over a period of 10 or 15 
years in Colombia. We're applying that same approach to the 
extent that the Mexican Government--which is a sovereign 
nation--will permit us to help them. I think we are enjoying 
some success. But, as General Burgess says, this is a work in 
progress.
    Senator Cornyn. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Levin. Thank you very much, Senator Cornyn.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you both for being here, Director Clapper and General 
Burgess.
    You point out in your written testimony and, actually, in 
your comments, Director Clapper, that WMD continue to be a 
major concern because of the proliferation both by nation 
states and because of the potential for terrorists to access a 
nuclear weapon. Can you speak to whether the threat of a WMD-
capable terrorist organization is rising or falling in the 
current environment?
    Mr. Clapper. I'd say it's about the same. What we have 
seen, particularly with al Qaeda, is aspirations for WMD. This 
is something that's of interest to them. This is, obviously, 
something we try to track very carefully. One of the 
organizations I'm responsible for is the National 
Counterproliferation Center, which works closely with another 
organization I'm responsible for, the National Counterterrorism 
Center. One of the things we are very focused on is that 
nexus--WMD--falling into the hands of terrorists--something 
that we track a lot.
    Knock on wood, so far we haven't seen evidence of any such 
materials falling into the hands of the terrorists, at least as 
far as we know now. But, believe me, in the category of things 
that keep you awake at night, that's one of them.
    Senator Shaheen. Are you confident that we're devoting 
enough of our intelligence resources to tracking what's going 
on?
    Mr. Clapper. Ma'am, there's never enough intelligence on 
any given problem, so we could always use more. I think, 
though, in general, particularly since September 11, we have 
profoundly increased the resource allocation to both WMD and 
terrorism, and particularly the nexus of those two. So, I 
think, yes, there have been a lot of resources committed to 
that. Would I like more? Sure. But we have a lot dedicated to 
it.
    Senator Shaheen. One of the countries that's often talked 
about because of what's happened in the past with their nuclear 
program is Pakistan. The Washington Post has run a series of 
reports that suggest that Pakistan may be building a fourth 
plutonium-producing reactor, and that it's expanding its 
nuclear arsenal. Can you comment on what the impact of this has 
regionally? Also, you noted in your prepared assessment that 
Pakistan can protect its nuclear arsenal but that there are 
some vulnerabilities that exist, and can you speak to those 
vulnerabilities and whether we believe Pakistan is taking the 
appropriate steps to address the vulnerabilities?
    Mr. Clapper. I'd be happy to discuss all that with you in a 
closed environment. Yes, ma'am.
    Senator Shaheen. Thank you.
    On Lebanon, to switch to another part of the Middle East, 
there's a new government in Lebanon that many feel is 
controlled by Hizballah. Given this new reality, can you talk 
about the role of the Lebanese Armed Forces (LAF) and how you 
see our support for them in terms of the changes in the 
government there? Either one of you.
    General Burgess. Ma'am, I think a concern that we have 
seen, so far the LAF have proven to be a very good military 
force there in Lebanon. The concern has been continually for 
not only ourselves, but some of our allies, is in terms of the 
LAF and its ability in the southern part of the country to 
exert control over other factions that are in there, such as 
Lebanese Hizballah.
    So, what this means to the future of that is something that 
we're following very closely at this time.
    Senator Shaheen. Should we be continuing to support the 
military in the way that we are?
    Mr. Clapper. That's a policy call, ma'am. I would think, 
though, that to the extent that we can sustain influence and 
insight, and help counterbalance the Hizballah military wing, 
that it would be a good idea. But again, that's a policy thing, 
not intelligence.
    Senator Shaheen. Okay.
    One of the areas that I've been very involved in has been 
the Balkans. I chair the European Affairs Subcommittee of the 
Foreign Relations Committee and have had a chance to travel 
there. I note that you, Director Clapper, point out in your 
written testimony that a stalemate continues in Bosnia. Do you 
have any intelligence that indicates what a continued stalemate 
there might do to destabilize the other emerging countries in 
the region?
    Mr. Clapper. I guess my concern, having visited there 
myself in my last job in the Pentagon, we have the lid on 
there. I think we still have some concerns about the political 
dynamics there. I'm not sure, though, that the situation within 
Kosovo necessarily means spillover, or has some implications 
elsewhere. I'm just concerned about the situation there itself, 
and for that caldron to bubble up again.
    Senator Shaheen. You said Kosovo. Did you mean Bosnia just 
then? I was asking about Bosnia.
    Mr. Clapper. Okay. Bosnia. I thought you said Kosovo. The 
same comment applies.
    Senator Shaheen. Okay. Thank you very much.
    Chairman Levin. Thank you, Senator Shaheen.
    Senator Ayotte.
    Senator Ayotte. Thank you, Director Clapper and General 
Burgess. I want to thank you for your distinguished service to 
our country and for what you're doing to keep us safe.
    I wanted to ask you, Director Clapper, about our national 
debt, and from an intelligence perspective, how does our 
national debt, in your view, present a national security threat 
generally? Then, more specifically, ask you about our 
relationship with China, given that they are a significant 
holder of our bonds, and how does that position us with respect 
to some of their aggression and some of the areas where they 
could assert themselves that we would obviously take a contrary 
position?
    Mr. Clapper. The size of our debt, I think, is a concern to 
all of us, whether intelligence or not. That is certainly a 
factor in our national security, and so, yes, we're concerned 
about it.
    With respect to China, I think this is what's to me one of 
the striking differences. Oftentimes people make the comparison 
between China as a peer competitor versus the former Soviet 
Union. This is a huge difference that exists, because unlike 
with the Soviet Union, where our economies were mutually 
exclusive, they're certainly not with China. Since they hold so 
much of our debt, that obviously has to be a concern.
    Senator Ayotte. Just as a follow-up, it's a concern, at 
this point, have we seen any assertion of that as a way to use 
leverage?
    Mr. Clapper. I haven't. I don't know that we have any 
intelligence on that. It's in the Chinese interest to sustain a 
stable economy in the world just as it is for us, I understand.
    Senator Ayotte. General?
    General Burgess. No, ma'am. I was just going to add, I 
would be in the same place Director Clapper is. I am unaware 
that I have seen any evidence that it has been used as a means 
in terms of leverage from the other side.
    Senator Ayotte. But it certainly, from a common sense 
perspective, remains a concern if we continue to go into debt?
    General Burgess. Yes, ma'am.
    Senator Ayotte. We have a 25 percent recidivism rate from 
detainees who are held at Guantanamo (GTMO), and how much of a 
threat that presents right now with respect to what we're 
trying to accomplish in fighting al Qaeda and other terrorist 
groups?
    Mr. Clapper. Actually, one recidivist is one too many. So, 
it is obviously a concern when someone having been through GTMO 
or anyplace else does, in fact, return to the battlefield. So, 
what we've done, which has been reinforced recently by 
Executive order, is to engage in a very rigorous assessment 
process in which intelligence plays a prominent role in judging 
whether someone is suitable for return or repatriation.
    Of course, part of that evaluation is the ability of the 
host country to track these people and rehabilitate them if 
that's the case, to ensure they don't go back to the 
battlefield. That's precisely what occasioned the President's 
suspension of Yemen, for example, as a place where we will not, 
for now, return any detainees.
    Senator Ayotte. But even with the suspension of certain 
countries, for example, Yemen, by the President, that also, 
when we get an agreement with another country to hold a 
detainee, we also don't have the same level of control, for 
example, we would have at a facility like the GTMO facility.
    Mr. Clapper. That's true. That's why we depend on liaison 
with the countries in question and we also use our own 
intelligence means to try to track these people.
    Senator Ayotte. How well are we tracking those who have 
left GTMO, and how good a sense do we have where all of them 
are?
    Mr. Clapper. It varies. It's certainly a priority for all 
components of the IC that would have some way of tracking them. 
Certainly when we do, and if we see indications of return to 
the battlefield, we certainly convey that to our warfighters.
    Senator Ayotte. Finally, one of the issues that I've become 
deeply concerned about is what we're doing when we were to, for 
example, if tomorrow we were to capture a high value target in 
an area like Yemen, or an area outside of where we're currently 
in battle in Afghanistan, where we would put that individual. 
Do you have any concerns about that? What is our current plan 
of where we would put someone like that?
    Mr. Clapper. Right now it would be probably the facility 
that's at Bagram--Parwan--or perhaps a U.S. military facility.
    I think, though, that this question has come up before. If 
we were to capture luminaries, if I can use that term, like 
Osama bin Laden or Zawahiri, I think that would be a subject of 
intense interagency discussion as to just what would happen and 
how we'd handle them.
    Senator Ayotte. Right. Certainly there would be concerns 
that would arise about necessarily putting somebody of that 
caliber, so to speak, in Bagram, versus a GTMO base situation 
in terms of security and access.
    Mr. Clapper. As I say, all those factors would have to be 
weighed at the time depending on who it was.
    Senator Ayotte. Thank you very much.
    Chairman Levin. Thank you, Senator Ayotte.
    Senator Gillibrand.
    Senator Gillibrand. Thank you, Mr. Chairman, for holding 
this hearing.
    Thank you both for your service, your dedication, and your 
testimony today. I appreciate it very much.
    I want to recognize in particular that I have a staff 
member from DIA who's working as our special assistant, Mitch 
Catazaris. So, thank you for recommending him and offering him 
to our team.
    I'd like to talk a bit about cyber threats. Both of you in 
your testimony went into some detail about the growing increase 
in cyber threats to our national security.
    You've said in your testimony, Mr. Clapper, that there's 
been unprecedented opportunities for our adversaries to target 
the United States due to our reliance on information systems. 
You talk a bit about a phenomenon known as convergence, how we 
are particularly vulnerable because of the nature of our 
physical infrastructure and banking networks and other kinds of 
records that are online. Then you further go into the increase 
in the last year of the amount of malicious cyber activity 
targeting U.S. computers and networks.
    Then you give a particularly concerning example that 
happened in April, where information was delayed in China for 
17 minutes and it affected military sites, U.S. Government 
sites, Army, Navy, Marine Corps, Senate, Air Force, Secretary 
of Defense, and a number of Fortune 500 companies. So, 
obviously this report is particularly alarming and concerning.
    I'd like to get an update from you. Obviously, cyber 
security is an issue that affects both the military, the 
Department of Homeland Security (DHS), and civilian use. I know 
that you are working together in a collaborative effort between 
the military and DHS. How is that partnership going? Do you see 
the need for any new authorities? Is there appropriate 
coordination?
    Mr. Clapper. I think this is another work in progress. I 
think it's actually going very well. I think the standup of the 
U.S. Cyber Command by the Department of Defense (DOD) was a 
major step forward, and I think the notion of dual-hatting the 
Director of the National Security Agency (NSA) in that role, 
was the right course. In fact, I supported that strongly when I 
was in DOD.
    I, as well, think that the emerging partnership with DHS is 
a good news story. I think DHS has a very important role to 
play as the interlocutor with State, local, tribal, private 
sector entities but I think at the same time recognize that the 
Nation's center of excellence for the technical expertise 
resides in, with, within NSA.
    What I see as the growing awareness of the threat here by 
industry is very important, so that they are motivated to help 
work this problem themselves, without necessarily the 
government doing it all on their behalf. What I see is an 
emerging awareness and a coalescence on the part of the role of 
an industry to attack this problem.
    Senator Gillibrand. With regard to the specific military 
threats in the last year, your report says that we've witnessed 
the emergence of foreign military capabilities in cyberspace, 
and this formalization of military cyber capabilities creates 
another tool that foreign leaders may use to undermine critical 
infrastructures and our national defense. I'd like you to 
comment on what you think we need to do to address that, 
whether there is sufficient protocols available on an 
international perspective to address that. I particularly am 
working out a bill with Senator Orrin Hatch on that subject, to 
begin to develop these international protocols for enforcement.
    Mr. Clapper. There are some, as I understand it, 50 
legislative proposals that have been made in both houses, 
dealing with various aspects of cyber and cyber security and 
cyber protection. It's my understanding that the White House is 
evaluating all these proposals, and I believe intends to 
provide back to the Senate leadership an assessment of what the 
administration preference would be. I honestly don't know if 
there is emerging a position with respect to international 
agreements or something of that sort. I'm not up to speed on 
that.
    Senator Gillibrand. General?
    General Burgess. No, ma'am. I would not have anything to 
add. This is an issue that I think actually, progress has been 
made since it was first brought to the fore almost 3\1/2\, 4 
years ago. From a military standpoint, as Director Clapper 
pointed out, with U.S. Cyber Command, we are working and have 
been working consistently to protect those networks that we 
have. Any work that could be done to ensure a standardization 
or protocols and others would be beneficial, because it would 
probably help us point our defenses in a better way. But we are 
taking the steps necessary as we see it now to protect what we 
are, what we call the .mil domain and our own infrastructure.
    Senator Gillibrand. You may not be able to answer this in 
open session, but over the last decade China has developed and 
implemented a very robust cyber warfare capability. A report by 
the U.S.-China Economic and Security Review Commission 
indicated that recent high profile Chinese-based computer 
exploitations continue to suggest some level of state support. 
How do you see the Chinese cyber warfare capabilities evolving, 
and what threat do they pose to U.S. warfighting capabilities?
    Mr. Clapper. The Chinese made a substantial investment in 
this area. They have a very large organization devoted to it. 
They're pretty aggressive, this is just another way in which 
they glean information about us and collect on us for 
technology purposes. So, it's a very formidable concern.
    General Burgess. It's what I was referring to, ma'am, when 
in my opening statement I talked about China and some of this 
asymmetric capability. But it would probably be better if we 
did not go into that in an open hearing.
    Senator Gillibrand. Okay. May I ask just one final 
question?
    I have a concern that these are emerging threats that can 
affect every aspect of our national security or economic 
security. Terrorists could shut down an electric grid in the 
middle of winter, they could corrupt or zero-out bank accounts, 
take down a stock exchange. The amount of disruption and pain 
and death that could be created through many scenarios is 
pretty significant.
    Have we created the ability to recruit all of the best and 
brightest that we will need to be part of our cyber warfighting 
force, our cyber capabilities force--with regard to both 
intelligence and the military?
    Mr. Clapper. I think we, certainly, the civilian agencies, 
there's an unprecedented number of people that--which has been 
the case since September 11--wish to work in the IC in service 
to their country. Certainly we're able to attract, I think, a 
lot of the best and brightest. This is certainly true if you 
have occasion to visit NSA and meet the wonderful people they 
have there.
    With respect to the military, I'll defer to General 
Burgess. I think the issue there is, we get a lot of great 
people who come in. The challenge for the military, of course, 
is retention--keeping these highly capable, technically 
proficient people in for a military career.
    General Burgess. Yes, ma'am, I was going to say, I would 
agree with Director Clapper. From a military standpoint, it 
clearly is a matter of the retention piece of once we get 
someone up to speed or they bring a skill set in, and then 
being able to hold onto them.
    From our civilian workforce--and I would not speak for 
General Keith Alexander at NSA--but as an agency head and, 
again, from my days at DNI, already the amount of authorities 
that Congress and others have given us in terms of our ability 
to hire the people we need from an incentivized standpoint, or 
going after folks with a particular skill set, we have a lot of 
tools in the tool box that you all have made available to us 
that really help us out a lot in this area.
    Senator Gillibrand. Thank you, Mr. Chairman.
    Thank you both for your testimony.
    Chairman Levin. Thank you, Senator Gillibrand.
    Senator Manchin.
    Senator Manchin. Thank you, Mr. Chairman.
    Thanks, both of you, for being here. We appreciate your 
service.
    First of all, Director Clapper, I would just ask, my first 
question would be, in your estimation, which is the greatest 
threat we have in the world against the United States of 
America, whether it be a buildup of their army or their 
defenses or their economic threat they pose or a combination of 
both?
    Mr. Clapper. Are you speaking of a nation state, sir? I'm 
sorry?
    Senator Manchin. Yes. A country.
    Mr. Clapper. Oh, a country. Certainly, the Russians still 
have a very formidable nuclear arsenal, which does pose 
potentially a mortal threat to us. I don't think they have the 
intent to do that.
    Certainly China is growing in its military capabilities. It 
has the full array of, whether conventional or strategic 
forces, that they are building. So, they, too, pose 
potentially, from a capability standpoint, a threat to us, as a 
mortal threat.
    The issue, though, is, which we always have trouble 
gauging, is intent versus the capability.
    Having said all that, my greatest concern, though, does not 
lie with a nation state posing a threat to us, as much as it is 
in the area of terrorism, as I indicated in my opening 
statement.
    Senator Manchin. I notice also I think both of you talked 
about basically the unpopularity of Americans in the Middle 
East. I'd like to have both of your opinions on branding--our 
policy on the money that we spend in these countries and really 
not getting much credit for it.
    Mr. Clapper. Sir, that's a policy thing--how we provide 
security assistance to any of these nations. I'd just comment 
on the indications are that our image is not as good as we'd 
like in the Middle East.
    Senator Manchin. Now, I was privileged enough and honored 
to go over and visit, and we spend so much of the taxpayers' 
dollars trying to build this goodwill and stability around the 
world, and those are decisions made. But I found that, alarming 
to me was that the branding, basically, whether it's water line 
or bridge or anything good, we get very little credit for. Then 
we wonder why our image is so poor. I can't figure out why 
those decisions are being made that we shouldn't take credit 
for every dollar we spend. But, that's a policy decision, as 
you're telling me? Who makes that policy?
    Mr. Clapper. Well, the IC doesn't. That's for sure. 
[Laughter.]
    Senator Manchin. General?
    General Burgess. Yes, sir, I was just going to say, from my 
time, as I've followed through the years, whenever we are 
engaged in the sort of works that you are describing, it would 
be, I think, a fair characterization that that's not what 
people focus on, and we do not get the credit for that in some 
cases. How that's painted is not an intelligence call. I'm not 
even sure that's a policy call. But, I think that would apply 
to any place around the world, just not the Middle East that 
we're talking about now, as I have followed things over time in 
terms of what we receive credit for, in terms of what we do to 
help other nations.
    Senator Manchin. So, it was very disturbing, I will tell 
you that. The billions of dollars that's invested on an annual 
basis, and to have the poor relations that we have, or the 
public opinion by the countries that we're really trying to 
help. That's something we should look at.
    Director, if I could go back to China. There's been a lot 
of comments on China, the amount of money that's being spent. I 
remember back at the end of the Cold War that basically it 
looks like we just spent Russia into oblivion. Do you have 
concerns that China might be trying to do the same to us?
    Mr. Clapper. I don't know that they have a conscious policy 
to try to outspend us. They have their own economic challenges 
and stresses. So, I can't say that that's their intent. I think 
they feel they are a world power, and they want to be 
recognized that way. Certainly the accoutrement of a world 
power is a powerful military, and they're building one.
    Senator Manchin. One final question, in Afghanistan they 
have told us that there has been tremendous deposits of natural 
resources that have been discovered. Why is it that China is 
the only country that's able to extract that, and do it in such 
a turbulent environment, and nobody else seems to be able to 
work in those conditions? Have you all evaluated that? How are 
they able to get that done, with their copper mines and the 
billions of dollars they've invested? They're looking at every 
other resource over there.
    Mr. Clapper. No, sir. I don't think we have. I guess we 
could look at that. I think the Chinese have the same problem 
that any developer in Afghanistan would, which would be the 
actual extraction of these natural resources, which are quite 
profound. But I guess I really haven't done a case study on 
that.
    Senator Manchin. General?
    General Burgess. Sir, I have not seen, from a military 
standpoint, any reporting that would allow me to give you a 
fulsome response.
    Senator Manchin. I know this must be from DOS, but wouldn't 
it be interesting to find out how they're the only country able 
right now that we know on a commercial scale, able to extract 
these resources, and do it in this environment, when we're told 
that we cannot attract any other companies from America that 
have the expertise, whether it's to mine their coal or drill 
for their gas, or do all the extraction that they have been 
able to uncover. But one country's doing it.
    Mr. Clapper. Sir, I have to be smarter on just what the 
Chinese are doing in--you're speaking in Afghanistan, is that--
--
    Senator Manchin. Afghanistan. Right in the heart of it.
    Mr. Clapper. I'll take that for the record and do some 
research on that.
    Senator Manchin. If you could, I'd appreciate it. I really 
would. I've found it to be fascinating, and haven't gotten much 
of an answer yet. I appreciate it. Thank you.
    [The information referred to follows:]

    [Deleted.]

    Chairman Levin. Thank you, Senator Manchin.
    We're going to have a classified meeting of the committee 
immediately following this hearing. It will be in Hart 219. 
There's been a request for it. I don't expect it would last 
long. But we will move directly to Hart 219.
    Senator Manchin asked a question, I was frankly surprised 
by your answer, Director Clapper. He asked a very direct 
question; who represents the greatest threat to the United 
States? Your first answer was Russia, and then you clarified it 
in terms of saying, ``well, that's in terms of capability, but 
they don't have any intent to use that capability.'' But I 
still was kind of surprised by your answer. Then the next one 
was China, who also would have the capability, I guess, but, 
without the intent.
    By that, and you didn't mention Iran or North Korea, which 
would have been the first two countries that I would have 
thought of in response to that question. I was really taken 
aback almost by your answer. I thought it was a very clear 
question.
    Mr. Clapper. I interpreted the question as which country 
is, or countries, would represent a mortal threat to the United 
States.
    Chairman Levin. Could have the potential of being a mortal 
threat?
    Mr. Clapper. Yes.
    Chairman Levin. Okay.
    Mr. Clapper. The two that come to mind are--because of 
their capabilities--Russia and China. Obviously Iran and North 
Korea are of great concern. I don't know that at this point in 
time they pose a direct mortal threat to the continental United 
States.
    Chairman Levin. Does Russia or China at this time represent 
a direct mortal threat to the United States?
    Mr. Clapper. They have the capability because of their 
strategic nuclear weapons.
    Chairman Levin. Right.
    Mr. Clapper. I don't think, intent is low, but they 
certainly have the capability.
    Chairman Levin. By that measure we represent a direct 
mortal threat to both of them, right? We have the capability of 
attack----
    Mr. Clapper. Yes, sir. We do.
    Chairman Levin. So that, you would say, as the DNI, that, 
you wouldn't mind a headline out there in Russian and China 
saying, the United States represents a direct mortal threat to 
Russia or China?
    Mr. Clapper. Each of these countries certainly have the 
capability, and our strategic arsenals----
    Chairman Levin. Vice versa?
    Mr. Clapper. Yes, sir.
    Chairman Levin. Okay. At any rate, I just wanted to let 
you--
    Senator Manchin. Can I----
    Chairman Levin. Please.
    Senator Manchin. Sir, maybe I can clarify. Which country 
represents to you, that has the intent to be our greatest 
adversary? Who has the capabilities--I know you've gone through 
it. But who has the intent?
    Mr. Clapper. Probably China.
    Senator Manchin. China? So, Donald Trump's right.
    Mr. Clapper. If the question is, pick one nation state----
    Senator Manchin. That has the intent.
    Mr. Clapper. No. I said--oh, I, if we didn't, we have a New 
START treaty with the Russians, so I guess I would rank them a 
little lower because of that. We don't have such a treaty with 
the Chinese.
    Chairman Levin. I'm just as surprised by that answer as I 
was by your first answer. You're saying that China now has the 
intent to be a mortal adversary of the United States?
    Mr. Clapper. The question is, who, from my vantage, from 
among the Nation states, would pose potentially a greatest, if 
I have to pick one country--which I am loath to do, because I'm 
more of a mind to consider their capabilities. Both Russia and 
China potentially represent a mortal threat to the United 
States. Now we're getting into gauging intent which I really 
can't do. I don't think either country today has the intent to 
mortally attack us.
    Chairman Levin. Okay. I just want to be real clear. By that 
measure, we represent the greatest potential threat to both 
China and Russia. By that measure.
    Mr. Clapper. From a capability standpoint.
    Chairman Levin. Which is the measure you're using.
    Mr. Clapper. Yes, sir.
    Chairman Levin. Okay. By that measure, we represent the 
greatest intent--the greatest threat, by that measure, to both 
China and Russia.
    Mr. Clapper. I don't think our intent is to be--attack 
them. [Laughter.]
    Chairman Levin. I hope not. [Laughter.]
    I hope that clarifies your answer, Senator Manchin.
    Senator Manchin. Just one----
    Chairman Levin. Please, take your time.
    Senator Manchin. I think to expand on this, is that, 
China--it's been said that basically we know what they're doing 
and we know the jobs that we've lost. We know the economy is, 
we're facing challenges all over the country. It's been said 
that if they're not capable, or they're not able to ruin us 
economically, they'll be prepared militarily. That, I think, is 
the concern that maybe I would have, or my constituents, are, 
through their economic opportunities are they able to prepare 
themselves to be a true military giant?
    Mr. Clapper. They could be. There's no question about that.
    Senator Manchin. That's their intent right now, is, the 
buildup that you're seeing--you all definitely are watching 
their buildup militarily. They're doing it because of their 
economic prowess, if you will, in the position they are, and 
it's done at the backs of Americans. But with that being done, 
we're setting back, and they're building up economically, and 
now militarily, so if one doesn't, they would have capability 
to do the other?
    Mr. Clapper. That's, if they were to make that decision to 
use the economic weapon, my guess, they could do that, and they 
have a lot of capability there, too.
    Chairman Levin. I think it's clear that China has the 
intent to become a military giant. I think that's unquestioned. 
But when you add the word, threat, at that point you're getting 
into an area of intent. I would hope that you would always say, 
in terms of intent, you don't see an intent on the part of 
either Russia or China to be a military threat to us. Although 
they want to be a military giant--they both are--and would be 
in the position to either threaten us or defend themselves. 
Either way. That's the position that they're going to put 
themselves.
    I happen to agree with Senator Manchin in terms of the 
economic giant, and that China intends to be a military giant. 
I happen to agree with you, and that that's something that 
should concern us. I happen to agree with that.
    When the DNI talks about, what are the greatest threats--
unless he starts with capabilities and uses that, and doesn't 
just answer China and Russia the way he did, I was concerned by 
the answer. Because it didn't start with, I'm giving you an 
answer based on capabilities. It started with just the direct--
--
    Mr. Clapper. Yes, sir. I should have answered that way, 
because that was the, precisely the criterion I had in mind 
when the question was posed--which nation or nations 
potentially have the capability to strike a mortal blow to us? 
Those two countries come to mind. I do not believe they have 
the intent to do that.
    Senator Manchin. If I could just----
    Chairman Levin. No, please.
    Senator Manchin. Those of us who can recall the Cold War 
and the superpowers of the Soviet Union and the United States, 
and then we watched the Soviet Union engage in the Afghanistan 
war, it weakened them tremendously. Our economy was 
flourishing. We were able to build on our economy. We were able 
to build on our DOD. We got them in a juggernaut, if you will. 
This is looking at it from afar, not having the ability to see 
what you all see on a day-to-day basis.
    I am absolutely concerned about repeating that, and 
repeating it at the cost of America, not at the cost of the 
Soviets. Just looking at what happened with their engagement in 
Afghanistan where we are--in a much longer war now, and with no 
end in sight, then where Russia was--weakening us economically, 
to be able to be an economic giant. Now you see China coming 
on, taking advantage, basically, of our vulnerability. I'm 
concerned, sir. I'm very much concerned. That's why I thought 
it was so important for you to respond.
    Chairman Levin. Thank you.
    I just have one more question, and this has to do with the 
no-fly zone. General, let me ask you this question. Would the 
imposition of a no-fly zone in Libya--or any other country for 
that matter--which would require the use of military force to 
attack a country's air defense system, for instance, within its 
own sovereign territory without its consent, constitute an act 
of war?
    I have asked the General on this one, before we get to you. 
I was asking General Burgess, but I'll ask you, too. Either 
one. I'll start with you if you'd like, Director Clapper.
    Mr. Clapper. Sir, I guess I'd like to consult with counsel 
on that whether that fits that definition.
    Chairman Levin. Okay. That's fair enough.
    General Burgess, would that in normal usage constitute an 
act of war?
    General Burgess. Sir, I would probably take the same answer 
that Director Clapper did. But, my general understanding--and 
you have Mr. DeBobes, who's a good lawyer sitting there behind 
you, as well, in addition to yourself----
    Chairman Levin. He prepared the question for me.
    General Burgess. Yes, sir. I'm sure Rick did. But my 
understanding is, I studied in my schools that would be 
considered an act of war.
    Chairman Levin. Thank you.
    Are we all set? Okay.
    We will move directly to Hart 219.
    Thank you for a lively session.
    We stand adjourned.
    [Questions for the record with answers supplied follow:]
               Questions Submitted by Senator Carl Levin
                          nuclear armed libya
    1. Senator Levin. Mr. Clapper and General Burgess, with the work of 
the Intelligence Community (IC) and the National Nuclear Security 
Administration (NNSA), the Libyan nuclear weapons program was 
discovered and all elements of that program removed from Libya. While 
there is usually significant attention focused on nuclear weapons and 
materials in the hands of terrorists, the United States has not focused 
much on what could possibly happen to such materials and weapons if a 
government with nuclear weapons and materials fell and chaos resulted. 
If the Libyan weapons program had not been stopped many years ago, but 
had continued, the crisis in Libya would now take a very different 
form. Please discuss how the situation would be different if Libya had 
a nuclear weapons program or nuclear weapons.
    Mr. Clapper and General Burgess. [Deleted.]

    2. Senator Levin. Mr. Clapper and General Burgess, does the current 
situation present any lessons to be learned as to why it is important 
to continue to work with countries like North Korea to give up their 
nuclear programs?
    Mr. Clapper and General Burgess. [Deleted.]

                                 sudan
    3. Senator Levin. Mr. Clapper, in recent days we have seen 
increased violence in Sudan--partly due to regional issues and partly 
due to post referendum issues. What is the IC's current assessment of 
the situation in Sudan?
    Mr. Clapper. [Deleted.]

    4. Senator Levin. Mr. Clapper, how will the protest movements and 
political upheaval in the Middle East and North Africa impact the 
ongoing implementation of the Comprehensive Peace Agreement?
    Mr. Clapper. [Deleted.]

    5. Senator Levin. Mr. Clapper, does the IC anticipate sustained 
levels of violence in North and South Sudan?
    Mr. Clapper. [Deleted.]

         avoiding technology surprise for tomorrow's warfighter
    6. Senator Levin. Mr. Clapper and General Burgess, in 2009, the 
National Academies held a symposium on ``Avoiding Technology Surprise 
for Tomorrow's Warfighter'' aimed at looking at how the scientific and 
technical IC assessed potential future national security threats 
stemming from emerging technologies. Among a number of observations 
produced by the symposium, were two key issues: The scientific and 
technical IC lacks a central point of contact so it is difficult to 
know whom to alert when either an exciting or a worrisome development 
has been detected; and communication gaps exist within the scientific 
and technical IC and with its consumers. How is the IC addressing these 
shortcomings?
    Mr. Clapper and General Burgess. [Deleted.]

    7. Senator Levin. Mr. Clapper and General Burgess, what investments 
is the IC making to improve our scientific and technical intelligence 
capabilities?
    Mr. Clapper and General Burgess. [Deleted.]

    8. Senator Levin. Mr. Clapper, in 2005, Ayman al-Zawahiri, al 
Qaeda's second-in-command, declared that ``We are in a battle, and more 
than half of it is taking place in the battlefield of the media.'' The 
new National Military Strategy lists ``countering violent extremism'' 
as the first National Military Objective and stresses the importance of 
long-term ``whole-of-nation'' approaches to countering extremism beyond 
short-term activities of killing and capturing extremists. However, 
earlier this year, a nonpartisan study highlighted the lack of a U.S. 
strategy to counter radical ideologies that foment violence (e.g. 
Islamism or Salafist-Jihadism). What is the IC's role in supporting 
efforts by the geographic combatant commands to counter the spread of 
violent extremist ideology and the radicalization of vulnerable 
populations?
    Mr. Clapper. [Deleted.]

    9. Senator Levin. Mr. Clapper, to what degree does the IC draw upon 
research conducted by the Department of Defense's (DOD) Minerva and 
Human Social Cultural Behavioral Modeling programs?
    Mr. Clapper. [Deleted.]
                                 ______
                                 
               Questions Submitted by Senator John Cornyn
                           violence in mexico
    10. Senator Cornyn. General Burgess, our troops in Iraq and 
Afghanistan have been battling insurgencies for almost a decade. What 
common threads do you see between the cartel-driven unrest in Mexico 
and the insurgency-driven violence in Iraq and Afghanistan?
    Mr. Clapper. [Deleted.]

    11. Senator Cornyn. Mr. Clapper and General Burgess, retired Army 
General Barry R. McCaffrey, former commander of U.S. Southern Command 
and former Director of the Office of National Drug Control Policy, 
released a report following his December 2008 visit to Mexico to assess 
firsthand the drug war raging there. He predicted that ``before the 
next 8 years are passed--the violent, warring collection of criminal 
drug cartels could overwhelm the institutions of the state and 
establish de facto control over broad regions of northern Mexico.'' Do 
you agree with this assessment?
    Mr. Clapper. I concur with the separate response provided by 
General Burgess.
    General Burgess. [Deleted.]

    12. Senator Cornyn. Mr. Clapper and General Burgess, could Mexico 
become a failed state, and what would that mean for the United States?
    Mr. Clapper. I concur with the separate response provided by 
General Burgess.
    General Burgess. [Deleted.]

    13. Senator Cornyn. Mr. Clapper and General Burgess, what are the 
risks to our own national security if the Mexican drug cartels are not 
defeated?
    Mr. Clapper. I concur with the separate response provided by 
General Burgess.
    General Burgess. [Deleted.]

             national debt as a threat to national security
    14. Senator Cornyn. Mr. Clapper, the Chairman of the Joint Chiefs 
recently testified to this committee that ``our debt is the greatest 
threat to our national security.'' Last Congress, I introduced a bill 
called the ``Foreign-Held Debt Transparency and Threat Assessment 
Act,'' which would have required regular assessments from the 
Government Accountability Office (GAO) on the national security risks 
of the ballooning national debt. In addition to the sheer size of our 
national debt (now more than $14 trillion), I am also deeply concerned 
about our Nation's clear dependence on foreign governments such as 
China to fund our deficit spending, so my bill would also require the 
President to report quarterly to Congress on the national security 
risks posed specifically by foreign holdings of U.S. Government 
securities. Do you agree that this type of risk analysis is important?
    Mr. Clapper. [Deleted.]

    15. Senator Cornyn. Mr. Clapper, our relations with China can be 
fairly rocky at times, yet they hold more U.S. Government securities 
than any other nations--currently over $1.16 trillion, according to the 
Treasury Department. Some Chinese military officials have publicized 
the potential use of U.S. Treasury securities as a means of influencing 
U.S. policy and deterring specific U.S. actions. What risks to our 
national interests are posed by China's extensive holdings of U.S. 
Government securities?
    Mr. Clapper. [Deleted.]

                       iranian influence in iraq
    16. Senator Cornyn. Mr. Clapper and General Burgess, you noted in 
your testimony that Iran has provided money, weapons, safe haven, and 
training to militants and terrorists in Iraq and Afghanistan. Through 
these actions, it is clear that Iran has been waging a war against U.S. 
troops by proxy. In Iraq, how great is the risk that the Iranian regime 
will obtain a significant and destabilizing influence following the 
planned withdrawal of the last U.S. troops by December 2011?
    Mr. Clapper. I concur with the separate response provided by 
General Burgess.
    General Burgess. [Deleted.]

                      iranian ties with venezuela
    17. Senator Cornyn. Mr. Clapper, in your testimony, you briefly 
note that Iran is seeking to develop improved political and economic 
ties with a range of nations, including some in Latin America, to 
offset and circumvent the impact of sanctions. Reports indicate that 
Iran's Islamic Revolutionary Guard-Qods Force has had an increased 
presence in Venezuela in recent years. What is your assessment of the 
current relationship between Iran and Venezuela, and of the risk posed 
by this relationship to U.S. interests in Latin America?
    Mr. Clapper. [Deleted.]

                         iraqi self-sufficiency
    18. Senator Cornyn. Mr. Clapper and General Burgess, several 
military and civilian leaders have expressed serious concern regarding 
the Iraqis' limited military capabilities in the key areas of 
logistics, intelligence, and aviation, and what that will mean once 
U.S. forces withdraw as planned, by December 31, 2011. In light of 
these obstacles, will the Iraqis be able to adequately prevent 
terrorist organizations from taking root and growing in Iraq?
    Mr. Clapper. I concur with the separate response provided by 
General Burgess.
    General Burgess. [Deleted.]

    19. Senator Cornyn. Mr. Clapper and General Burgess, how concerned 
are you about al-Qaeda returning to Iraq following the departure of 
U.S. Armed Forces?
    Mr. Clapper. I concur with the separate response provided by 
General Burgess.
    General Burgess. [Deleted.]

                              afghanistan
    20. Senator Cornyn. Mr. Clapper and General Burgess, prior to 
September 11, we know that Afghanistan was ruled by the fundamentalist 
Taliban and served as a safe haven for al Qaeda terrorists to incubate 
and export radical Islamic terrorism. I remain concerned by this 
administration's insistence on timetables for the future U.S. drawdown 
in Afghanistan. If we withdraw our forces precipitously and the Afghan 
Government fails, we would be left with a failed state not much 
different than the pre-September 11 Afghanistan. If Afghanistan were to 
become a failed state, what is your assessment of the likelihood that 
al Qaeda would reestablish itself there, and what are the implications 
for our own national security?
    Mr. Clapper. I concur with the separate response provided by 
General Burgess.
    General Burgess. [Deleted.]

                        interagency cooperation
    21. Senator Cornyn. Mr. Clapper, the President's 2010 National 
Security Strategy highlights the need for a ``whole-of-government'' 
approach toward strengthening our national security. What steps is the 
IC taking to ensure effective and efficient cooperation with other 
agencies?
    Mr. Clapper. The guiding principal of the ODNI is to lead 
intelligence integration across all 16 IC elements. Intelligence 
integration means synchronizing intelligence collection and analysis to 
ensure we are providing our policymakers and warfighters with timely 
warning, rich insight, and decision advantage. At a tactical level, 
intelligence integration ensures that all IC elements are aligning 
resources and priorities against and coordinating efforts in support of 
the 2010 National Security Strategy.
    In support of the goals and objectives of the National Security 
Strategy, the ODNI is leading the IC in intelligence integration 
largely through the newly implemented National Intelligence Manager 
(NIM) construct and Unifying Intelligence Strategies (UIS). The NIMs 
represent a single intelligence focal point in the community and it is 
their responsibility to deconflict, synchronize, align, and prioritize 
IC collection and analysis to ensure that resulting products provide 
quality intelligence in a timely manner that strengthen our ability to 
counter threats. NIMs also have the responsibility to lead the 
community in the development and implementation of UIS which address 
the Nation's most pressing national security concerns, persistent, and 
emerging threats. UIS prioritize regional and functional issues across 
the community and establish metrics to continually assess progress. 
UISs serve as the process for fostering an environment that encourages, 
enables, and recognizes integration at all levels of the IC.
    The ODNI also supports the intent of the National Security Strategy 
through continued engagement and coordination with all IC elements as 
related directly to policy. Where a national strategy, Presidential 
Decision Directive, Executive Order, Departmental Quadrennial Review, 
or whole-of-government policy or strategy extends beyond the purview of 
a NIM, ADNI for Policy and Strategy (P&S) coordinates the IC response 
with interagency stakeholders. ADNI (P&S) also supports the Strategic 
Planning Interagency Planning Committee in executing the 2010 National 
Security Strategy.

                          chinese j-20 fighter
    22. Senator Cornyn. Mr. Clapper, in January 2011, China 
demonstrated its clear intent to attain a fifth-generation fighter 
aircraft with the first flight of the J-20. This fighter, if news 
reports are accurate, could potentially rival our own fifth-generation 
fighters. You mention in your testimony that ``this program, like 
others in China, will have to overcome a number of hurdles before 
reaching its full potential.'' What is your assessment of how long it 
will be before China develops and reaches initial operational 
capability on a stealthy fifth-generation fighter?
    Mr. Clapper. [Deleted.]
                                 ______
                                 
             Questions Submitted by Senator James M. Inhofe
                                 huawei
    23. Senator Inhofe. Mr. Clapper, what is the IC's role in dealing 
with the threat of foreign companies with close ties to foreign 
governments and foreign militaries and intelligence agencies having a 
significant presence in the supply chain for the networks of U.S. 
telecommunications and information systems?
    Mr. Clapper. [Deleted.]

    24. Senator Inhofe. Mr. Clapper, how does the IC ensure that the 
supply chains of DOD and the IC are free of equipment that is linked to 
such companies?
    Mr. Clapper. [Deleted.]

    25. Senator Inhofe. Mr. Clapper, would you be comfortable with a 
company like Huawei, which was founded with close ties to the People's 
Liberation Army and which continues to receive upwards of $80 billion 
in credit lines and other subsidies from the communist government of 
the People's Republic of China, gaining a significant presence in the 
telecommunications or information systems supply chains of the U.S. 
military or the military intelligence agencies?
    Mr. Clapper. [Deleted.]

    26. Senator Inhofe. Mr. Clapper, what about ZTE Corps, which has 
similar ties to the communist Government of China? If yes, please 
explain. If no, please explain what you intend to do about it.
    Mr. Clapper. I would refer you to my response to your previous 
question.

    27. Senator Inhofe. Mr. Clapper, please explain what you see as the 
IC's role in making sure that its equities on the Committee on Foreign 
Investment in the United States are well-represented.
    Mr. Clapper. [Deleted.]

                            export controls
    28. Senator Inhofe. Mr. Clapper, in view of current proposals for 
the restructuring of export controls, do you believe that the various 
IC agencies should assess the level of risk involved in any export 
control reform proposal to fully understand the potential of the 
diversion of sensitive U.S. military goods and technology and that 
these assessments should be made available to the Senate and Senators, 
if requested?
    Mr. Clapper. [Deleted.]

    [Whereupon, at 11:36 a.m., the committee adjourned.]

                                 
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