[Senate Hearing 112-481]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-481

 
  CURRENT AND PROJECTED NATIONAL SECURITY THREATS TO THE UNITED STATES

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

                                HEARING

                               BEFORE THE

                    SELECT COMMITTEE ON INTELLIGENCE

                                 OF THE

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                       TUESDAY, JANUARY 31, 2012

                               __________

      Printed for the use of the Select Committee on Intelligence


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


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                    SELECT COMMITTEE ON INTELLIGENCE

           [Established by S. Res. 400, 94th Cong., 2d Sess.]

                 DIANNE FEINSTEIN, California, Chairman
                SAXBY CHAMBLISS, Georgia, Vice Chairman

JOHN D. ROCKEFELLER IV, West         OLYMPIA J. SNOWE, Maine
    Virginia                         RICHARD BURR, North Carolina
RON WYDEN, Oregon                    JAMES E. RISCH, Idaho
BARBARA A. MIKULSKI, Maryland        DANIEL COATS, Indiana
BILL NELSON, Florida                 ROY BLUNT, Missouri
KENT CONRAD, North Dakota            MARCO RUBIO, Florida
MARK UDALL, Colorado
MARK WARNER, Virginia
                     HARRY REID, Nevada, Ex Officio
                 MITCH McCONNELL, Kentucky, Ex Officio
                    CARL LEVIN, Michigan, Ex Officio
                    JOHN McCAIN, Arizona, Ex Officio
                              ----------                              
                     David Grannis, Staff Director
            Martha Scott Poindexter, Minority Staff Director
                    Kathleen P. McGhee, Chief Clerk


                                CONTENTS

                              ----------                              

                            JANUARY 31, 2012

                           OPENING STATEMENTS

Feinstein, Hon. Dianne, Chairman, a U.S. Senator from California.     1
Chambliss, Hon. Saxby, Vice Chairman, a U.S. Senator from Georgia    10

                               WITNESSES

Clapper, James R., Director of National Intelligence.............    13
Petraeus, David, Director, Central Intelligence Agency...........    48
Olsen, Matthew, Director, National Counterterrorism Center.......    51
Burgess, Lt. General Ronald, Director, Defense Intelligence 
  Agency.........................................................    52
Mueller, Robert, Director, Federal Bureau of Investigation.......    53
Goldberg, Philip, Assistant Secretary, Bureau of Intelligence and 
  Research, U.S. State Department................................    55
Wagner, Caryn, Under Secretary for Office of Intelligence and 
  Analysis, Department of Homeland Security......................    66

                         SUPPLEMENTAL MATERIAL

List of Counterterrorism Arrests in the U.S. in 2011 and 2012....     2
Prepared Statement for the Record on the Worldwide Threat 
  Assessment of the U.S. Intelligence Community by James R. 
  Clapper........................................................    17


  CURRENT AND PROJECTED NATIONAL SECURITY THREATS TO THE UNITED STATES

                              ----------                              


                       TUESDAY, JANUARY 31, 2012

                                       U.S. Senate,
                          Select Committee on Intelligence,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:05 a.m., in 
Room SH-216, Hart Senate Office Building, the Honorable Dianne 
Feinstein (Chairman of the Committee) presiding.
    Committee Members Present: Senators Feinstein, Chambliss, 
Wyden, Udall of Colorado, Snowe, Rockefeller, Conrad, Mikulski, 
Coats, Risch, Blunt, Warner, McCain, Nelson, and Rubio.

 OPENING STATEMENT OF HON. DIANNE FEINSTEIN, CHAIRMAN, A U.S. 
                    SENATOR FROM CALIFORNIA

    Chairman Feinstein. The Senate Select Committee on 
Intelligence meets today in open session for our annual 
Worldwide Threat Hearing.
    This hearing provides the Intelligence Community with an 
opportunity to present to the nation its views of the threats 
and challenges we face, and for the Committee to ask questions 
of our intelligence leaders in public. Today is also an 
opportunity to take stock of what has happened in the last year 
and what we can expect for 2012.
    Before looking ahead, I want to congratulate the leaders of 
the Intelligence Community before us today, and the tens of 
thousands of civilian and military intelligence professionals 
they represent. Through their efforts, 2011 was a year of 
numerous major intelligence successes, including, first and 
foremost, the operation that located and killed Osama bin 
Laden.
    This past year also saw the removal of top terrorist 
leaders, plotters and recruiters, including Anwar al-Awlaki, in 
Yemen; al-Qa'ida's linchpin in Pakistan, Atiyah Abd al-Rahman; 
and numerous others, resulting in the disruption of specific 
terrorist plots, and casting into disarray al-Qa'ida's senior 
leadership.
    Closer to home, since our hearing last year, there were at 
least twenty individuals arrested in the United States on 
terrorism-related charges in seventeen different 
investigations, which stopped them from carrying out or 
assisting in attacks on the Homeland. In the interest of time, 
I will put a list that describes each of these arrests in the 
record.
    [The List of Counterterrorism Arrests in the U.S. in 2011 
and 2012 follows:]

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    Chairman Feinstein. Arrests like these are the product of 
coordination between the FBI, other intelligence agencies, the 
Department of Homeland Security, and state and local law 
enforcement units throughout the country.
    Also in 2011, the Drug Enforcement Administration, the DEA; 
the Federal Bureau of Investigation, the FBI; the Central 
Intelligence Agency, the CIA; and others combined to identify 
and thwart an Iranian plot to kill the Saudi ambassador to the 
United States, a plot so unusual and amateurish that many 
initially doubted that Iran was responsible. Well, let me state 
for the record, I have no such doubts.
    Finally, the Intelligence Community supported countless 
United States national security and foreign policy actions, 
including the war in Afghanistan, the drawdown in Iraq, the 
NATO-led mission in Libya that removed dictator Muammar 
Gaddafi, the implementation of sanctions on Iran over its 
nuclear program, the interdictions of weapons of mass 
destruction shipments, and many, many others. Despite the 
successes, the threats to our nation remain serious, and in 
many ways, more difficult to understand and even address than 
in years past.
    The Intelligence Community's statement for the record, 
which is posted on the Committee's website and will be 
summarized by Director Clapper, describes these threats at 
length. Let me address just a few points.
    Terrorism: we are all familiar with the continuing threats 
posed by al-Qa'ida affiliates in Yemen and Somalia, AQAP and 
al-Shabaab, as well as that from al-Qa'ida in Iraq, AQI, all 
three of which aspired to conduct attacks outside of their 
borders.
    I want to mention, with special emphasis, the threat posed 
by the al-Qa'ida affiliate in North Africa, which calls itself 
al-Qa'ida in the Lands of the Islamic Maghreb, or AQIM. For the 
past few years, AQIM has been almost an afterthought when 
discussing the terrorist threat. This may be about to change. 
Recent public records point out that AQIM, which has 
traditionally operated in parts of Algeria and Mali, is well 
positioned to exploit instability and pockets of extremism in 
Libya and Nigeria, and to create new safe havens.
    The reports also raised concerns about the tens of millions 
of dollars AQIM has received from ransom payments for hostages 
and other illicit activities.
    I believe the Intelligence Community needs to move now to 
be prepared to address this possible growing threat.
    Then there is Iran and North Korea. While the overall 
terrorist threat may be down, the threat from the proliferation 
of weapons of mass destruction from Iran and North Korea is 
growing. On January 9th, Iran announced that it started 
enriching uranium at its Fordo plant near the city of Qom. 
According to IAEA reports, Iran is enriching uranium to 20 
percent, both there and at Natanz. IAEA inspectors arrived in 
Iran over the weekend, and I believe they must--and should--
have complete access to all Iranian nuclear facilities, and I 
asked that they make their findings public on a regular basis 
so the world will clearly understand what is happening there.
    According to most timelines I've heard, 2012 will be a 
critical year for preventing Iran's development of a nuclear 
weapon. In North Korea, there is now a 28-year-old dictator 
ruling over the country's cache of nuclear weapons and 
ballistic missiles, which should concern us deeply.
    Recently, this Committee received an update from the 
Intelligence Community on the threat North Korea poses, and it 
was quite sobering. I won't go into any details, because 
they're classified, but I strongly believe this will need to be 
an area where the Intelligence Community continues to focus its 
resources and attention.
    I think we all know the threat from Cyber. We all know the 
need to pass some legislation in this regard, and we know that 
the intrusions could be enormous--take down a dam, take down 
our electric grid--and United States companies have cost untold 
billions of dollars annually. China and Russia have both been 
named as aggressive and persistent cyber thieves.
    In Afghanistan, the surge of U.S. forces that began in '09 
has produced meaningful gains. That said, I think we're all 
very concerned about what will happen in 2014 when we reduce 
our troop commitment, and President Karzai's term is up. 
Frankly, I don't see a viable strategy for continuing the level 
of security and stability that we are building after 2014. And 
I'm also concerned by what appears to be a disparity between 
the discussion of Afghanistan in Director Clapper's statement 
for the record, and the bleaker description in the December 
2011 NIE.
    The Director's statement notes modest improvements in the 
challenges that remain. While I'm unable to describe the NIE, 
as it remains a classified document, news reports of the NIE 
describe it as ``sobering'' and ``dire''--those words in 
quotes--and includes phrases like ``mired in stalemate.''
    So I would like to ask the witnesses how they assess how 
stable Afghanistan will be in 2012, as well as 2014 and beyond.
    I also want to note that last week I met with Zarar Ahmad 
Osmani, the Afghan Minister of Counter Narcotics, and I was 
very impressed. I believe he's making good progress in 
Afghanistan, and we should be supportive of his efforts to 
replicate the Helmand food zone in five other provinces to help 
farmers grow alternative crops instead of the heroin poppy.
    Of course, Pakistan remains a huge problem, and I would 
very much appreciate your views on Pakistan's willingness to be 
a partner in our efforts against terrorists and in Afghanistan, 
as well as whether the civilian government can survive in light 
of other political controversies.
    There are a couple of things I want to add, and I'm not 
sure this is a good place, but I'm going to do it anyway.
    In this morning's edition of the Los Angeles Times, there 
was an article asserting that CIA Director David Petraeus has 
been inaccessible and guarded in his interactions with Congress 
and with the intelligence committees, in particular, since 
being sworn in last September. As far as I'm concerned, nothing 
could be farther from the truth. And I believe the Ranking 
Member--the Vice Chairman--would agree with that.
    I spoke to the reporter last Friday and made very clear to 
him that this has not been my experience or, to the best of my 
knowledge, the Members' of this Committee. If it had been, I 
would have heard. Director Petraeus has appeared before us 
every month since becoming Director, and the Vice Chairman and 
I have had several phone calls and other meetings with him. He 
has upheld his obligation to keep the Committee fully and 
currently informed, and I regret that some people felt the need 
to engage in anonymous complaints.
    I would also like to say that once again, this Committee 
has been put in a difficult position of trying to avoid any 
mention of classified matters when various parts of the 
Executive Branch may be doing somewhat the opposite. I ask 
Members to be careful in their questions and statements, and to 
remember that public discussion of some intelligence programs 
and assets can lead to them being compromised.
    On the particular issue of drone strikes, I will only say 
what I was cleared to say in our joint hearing with the House 
Intelligence Committee last September. There's no issue that 
receives more attention and oversight from this Committee than 
the United States counterterrorism efforts going on along the 
Afghanistan-Pakistan border. These efforts are extremely 
precise and carefully executed and are the most effective tools 
we have. Noncombatant casualties are kept to an absolute 
minimum.
    So now, if I may, Mr. Vice Chairman, I want you to know 
it's been a great pleasure for me to work with you. I also want 
the public to know that together, your side and our side have 
been able to pass three Intelligence Authorization Bills by 
unanimous consent in both houses. And it's just been a great 
pleasure for me to work with you. If you have some comments, if 
you would make them now, and then I'll introduce the speakers.

  OPENING STATEMENT OF HON. SAXBY CHAMBLISS, VICE CHAIRMAN, A 
                   U.S. SENATOR FROM GEORGIA

    Vice Chairman Chambliss. Very good. Thanks, Madam Chair. 
And let me just echo the same sentiment to you with respect to 
our working relationship. It has been pretty seamless, both at 
a personal level at the top, as well as with our staff. I thank 
you for the way that you have integrated me into the vice 
chairmanship over this past year, and I look forward to 
continuing to work in a very close way with you. And also, I 
like your California wine, by the way.
    I join the Chairwoman in welcoming our guests today. And 
this is certainly the brain trust of the Intelligence 
Community, and there's an awful lot of experience here. There's 
also an awful lot of talent at the table. But I'll comment more 
on the brave men and women that work for you, and the great job 
that they're doing.
    The Committee holds most all of our meetings in closed 
session, so this annual threat hearing is one of the only 
opportunities we have to discuss in public the threats that 
face our nation.
    It's also one of the few opportunities we do get to extend 
our public thanks to the men and women of the Intelligence 
Community. Because of the hard work of the folks who work for 
each of you, 2011 was a great year for the Intelligence 
Community, a year when we finally saw the realization of a 
decade of work to ensure that Osama bin Laden and Anwar al-
Awlaki will never again threaten this nation. I'm glad to say 
that we will no longer have an annual threat hearing where 
someone asks the question, ``Where is Osama bin Laden?''
    Last year's successes were no small achievement. They 
resulted from transformation and improvement in every IC 
agency. In particular, I am impressed by the work being done by 
CIA's Counterterrorism operators and analysts working together 
to take down terrorists and their network. We have heard from 
these officers in countless briefings that core al-Qa'ida is 
essentially on the ropes, as long as we continue sustained CT 
pressure on the group.
    Director Clapper, this exact same sentiment is expressed in 
your written statement for the record for today's hearing. I 
know I am not alone on this panel in believing that we must 
continue whatever level of pressure it takes to degrade core 
al-Qa'ida once and for all. As we are seeing in Iraq, gains 
that took a decade to achieve can erode quickly if we do not do 
what it takes to protect them.
    I also hope we are learning from other lessons from Iraq. I 
was dismayed by the Administration's decision to hand over 
custody of Hezbollah operative Ali Mussa Daqduq to Iraq last 
year. It is too late now to prevent what I believe will result 
in the ultimate release of a terrorist who killed five American 
soldiers in Iraq. But it is not too late to make sure that the 
same thing does not happen with the hundreds of terrorists 
still in detention in Afghanistan.
    I hope our witnesses can discuss the range of likely 
threats posed by these detainees and the role of the Community 
in providing intelligence and support of planning for any 
handover of detention facilities to Afghans. I understand that 
this is going to be a challenge because the Administration 
still lacks a long-term detention policy, but we just cannot 
keep letting dangerous detainees go free.
    This brings me to my last point. Press reports have 
outlined the Administration's plans to trade prisoners detained 
at Guantanamo Bay to the Taliban as a confidence-building 
measure. It appears from these reports that in exchange for 
transferring detainees who have been determined to be too 
dangerous to transfer by the Administration's own Guantanamo 
Review Task Force, we get little to nothing in return. 
Apparently, the Taliban will not have to stop fighting our 
troops, and won't even have to stop bombing them with IEDs.
    I have also heard nothing from the IC that suggests that 
the assessments on the threat posed by these detainees have 
changed. I want to state publicly, as strongly as I can, that 
we should not transfer these detainees from Guantanamo. 
Moreover, I believe the Community should declassify the 
intelligence assessments on these detainees so that we can have 
a full and open debate without the wisdom of this transfer 
before it takes place.
    Let me conclude with two other comments. First of all, with 
respect to the LA Times article, Madam Chair, I did not see 
that this morning, but I want to again state in an unequivocal 
fashion that Director Petraeus has done an outstanding job in 
service to our country in many capacities, as his service in 
the military would indicate. And during the time that he has 
been the Director of the CIA, you're exactly right--he has 
stayed in constant communication with the two of us, and I know 
with our colleagues on the House side. He has been readily 
available to come to the Committee on a formal and an informal 
basis, as well as being available at any time for us to have a 
conversation with. And I'm surprised that there would be any 
question about that.
    And as we all know, we have the utmost confidence in his 
leadership, along with the leadership of the entire Community. 
And there has been, again, a seamless transition from Director 
Panetta to Director Petraeus, and we're very confident of his 
leadership.
    One other issue that I want to mention is that following 
the event of September 11, as a Member of the House Select 
Committee on Intelligence, Congressman Jane Harman and I 
chaired a subcommittee on the Intel Committee that did a review 
of the facts leading up the events of September 11. And we 
issued the first detailed report on the deficiencies within the 
Intelligence Community that led up to September 11. And we were 
very critical of the Community in one respect, particularly, 
and that was the lack of the sharing of information between our 
various agencies within the Community.
    Director Mueller, you and I have had extensive 
conversations, since you've been here longer than any of the 
rest of the Members here, about that issue. And I just want to 
say that over the past decade, the stovepipes that we alluded 
to in that report have continued to fall. And I would have to 
say that today, without question, while we still have 
improvements to be made, that the sharing of information 
between all of our agencies is at a superior level.
    And Mr. Olsen, I had the privilege, as you know, of 
visiting with your folks at NCTC recently. It was very 
impressive to not only see the improvement from a technology 
standpoint, but just to see every member of the Intelligence 
Community sitting around a table virtually and discussing in 
real-time the issues that face the Community from a CT 
standpoint. It's very impressive. And I commend all of you for 
the great work you've done.
    It's not been easy, and I know sometimes it's very 
difficult to put aside some of the previous relationships that 
might have existed. But boy, have you all ever done a good job 
breaking down those firewalls and really engaging with every 
member of the Intelligence Community to ensure that we disrupt 
and interrupt terrorist activity around the world that's 
directed at America, Americans, as well as other countries and 
allies around the world. So I commend you from that respect.
    I thank you for being here today, and I look forward to 
your testimony. Thank you, Madam Chair.
    Chairman Feinstein. Thank you very much, Mr. Vice Chairman. 
Now I'd like to introduce the distinguished panel before us.
    They are: the Director of National Intelligence, James 
Clapper, who will deliver an opening statement on behalf of the 
entire Intelligence Community; Director of the Central 
Intelligence Agency, David Petraeus; Director of the Defense 
Intelligence Agency, General Ronald Burgess; Director of the 
Federal Bureau of Investigation, Bob Mueller; Director of the 
National Counterterrorism Center, Matthew Olsen; Assistant 
Secretary of State for Intelligence and Research, Philip 
Goldberg; and Under Secretary for Intelligence and Analysis at 
the Department of Homeland Security, Caryn Wagner. Thank you 
all very much for being here.
    We will now take your statement, Director Clapper, and we 
will then go into 10-minute rounds based on the early-bird 
rule.
    Director Clapper, welcome.

      STATEMENT OF JAMES R. CLAPPER, DIRECTOR OF NATIONAL 
                          INTELLIGENCE

    Director Clapper. Thank you, Chairman Feinstein, Vice 
Chairman Chambliss, and distinguished Members of the Committee, 
for inviting us to present the 2012 Worldwide Threat 
Assessment.
    These remarks and our statement for the record reflect the 
collective insights of the extraordinary men and women of the 
United States Intelligence Community, whom it is our privilege 
and honor to lead. And on their behalf, I would thank you both 
for your acknowledgment and recognition of the great work that 
these men and women do all over the world, day in and day out, 
in many cases at some hazard.
    I won't attempt to cover the full scope of the worldwide 
threats in these brief oral remarks, so I'd like to highlight 
just some of the issues we identified for the coming year.
    Never has there been, in my almost-49-year career in 
intelligence, a more complex and interdependent array of 
challenges than we face today. Capabilities, technologies, 
know-how, communications, and environmental forces aren't 
confined by borders and can trigger transnational disruptions 
with astonishing speed, as we have seen.
    Never before has the Intelligence Community been called 
upon to master such complexity on so many issues in such a 
resource-constrained environment. We're rising to the challenge 
by continuing to integrate the Intelligence Community, as you 
both alluded to, taking advantage of new technologies, 
implementing new efficiencies, and, as always, simply working 
hard. But, candidly, maintaining the world's premier 
intelligence enterprise in the face of shrinking budgets will 
be difficult. We'll be accepting and managing risk more so than 
we've had to do in the last decade.
    We begin our threat assessment, as we did last year, with 
the global issues of terrorism and proliferation. The 
Intelligence Community sees the next two to three years as a 
critical transition phase for the terrorist threat, 
particularly for al-Qa'ida and like-minded groups.
    With Osama bin Laden's death, the global jihadist movement 
lost its most iconic and inspirational leader. The new al-
Qa'ida commander is less charismatic, and the death or capture 
of prominent al-Qa'ida figures has shrunk the group's top 
leadership layer. However, even with its degraded capabilities 
and its focus on smaller, simpler plots, al-Qa'ida remains a 
threat. As long as we sustain the pressure on it, we judge that 
core al-Qa'ida will be of largely symbolic importance to the 
global jihadist movement. But regional affiliates, as the ones 
you mentioned, and, to a lesser extent, small cells and 
individuals, will drive the global jihad agenda.
    Proliferation--that is, efforts to develop, acquire, or 
spread weapons of mass destruction--is also a major global 
strategic threat. Among nation states, Iran's technical 
advances, particularly in uranium enrichment, strengthen our 
assessment that Iran is well capable of producing enough 
highly-enriched uranium for a weapon, if its political leaders, 
specifically the Supreme Leader himself, choose to do so.
    North Korea's export of ballistic missiles and associated 
materials to several countries, including Iran and Syria, 
illustrate the reach of the North's proliferation activities. 
We don't expect Kim Jong-Un, North Korea's new young leader, to 
change Pyongyang's policy of attempting to export most of its 
weapons systems.
    I would note that in this year's statement for the record, 
we elevated our discussion of cyber threats to follow terrorism 
and proliferation. The cyber threat is one of the most 
challenging ones we face, as you alluded. We foresee a cyber 
environment in which emerging technologies are developed and 
implemented before security responses can be put in place.
    Among state actors, we're particularly concerned about 
entities within China and Russia conducting intrusions into 
U.S. computer networks and stealing U.S. data. The growing role 
that non-state actors are playing in cyberspace is a great 
example of the easy access to potentially disruptive and even 
lethal technology and know-how by such groups.
    Two of our greatest strategic cyber challenges are, first, 
definitive real-time attribution of cyber attacks--that is, 
knowing who carried out such attacks and where these 
perpetrators are located; and second, managing the enormous 
vulnerabilities within the IT supply chain for U.S. networks.
    Briefly, looking geographically around the world, during 
the past year in Afghanistan, the Taliban lost some ground, but 
that was mainly in places where the International Security 
Assistance Forces, or ISAF, are concentrated. And the Taliban 
senior leaders continue to enjoy safe haven in Pakistan.
    ISAF's efforts to partner with Afghan National Security 
Forces are encouraging, but corruption and governance 
challenges continue to threaten the Afghan forces' operational 
effectiveness. Most provinces have established basic governance 
structures, but they struggle to provide essential services. 
The ISAF and the support of Afghanistan's neighbors, notably 
and particularly Pakistan, will remain essential to sustain the 
gains that have been achieved.
    And although there's broad international political support 
for the Afghan government, there are doubts in many capitals, 
particularly in Europe, about how to fund Afghan initiatives 
after 2014.
    In Iraq, violence and sporadic high-profile attacks 
continue. Prime Minister Maliki's recent aggressive moves 
against Sunni political leaders have heightened political 
tensions. But for now, the Sunnis continue to view the 
political process as the best venue to pursue change.
    Elsewhere across the Mideast and North Africa, those 
pushing for change are confronting ruling elites; sectarian, 
ethnic, and tribal divisions; lack of experience with 
democracy; stalled economic development; military and security 
force resistance; and regional power rivalries. These are fluid 
political environments that offer openings for extremists to 
participate much more assertively in political life. States 
where authoritarian leaders have been toppled, like Tunisia, 
Egypt, and Libya, have to reconstruct their political systems 
through complex negotiations among competing factions.
    In Syria, regime intransigence and social divisions are 
prolonging internal struggles and could potentially turn 
domestic upheavals into regional crises. In Yemen, although a 
political transition is underway, the security situation 
continues to be marred by violence, and fragmentation of the 
country is a real possibility. As the ancient Roman historian 
Tacitus once observed, ``The best day after a bad emperor is 
the first.'' After that, I would add, things get very 
problematic.
    The Intelligence Community is also paying close attention 
to developments across the African continent, throughout the 
Western Hemisphere, Europe, and across Asia. Here, too, few 
issues are self-contained. Virtually every region has a bearing 
on our key concerns of terrorism, proliferation, cyber 
security, and instability. And throughout the globe wherever 
there are environmental stresses on water, food and natural 
resources, as well as health threats, economic crises and 
organized crime, we see ripple effects around the world and 
impacts on U.S. interests.
    Amidst these extraordinary challenges, it's important to 
remind this distinguished body and the American people that in 
all of our work, the U.S. Intelligence Community strives to 
exemplify American values. We carry out our missions with 
respect for the Rule of Law and the protection of Civil 
Liberties and Privacy. And that pledge leads me to a crucial 
recommendation on our highest legislative priority this year, 
and it requires the support of this Committee and both houses 
of Congress.
    The Foreign Intelligence Surveillance Amendments Act, or 
FAA, is set to expire at the end of this year. Title VII of 
FISA allows the Intelligence Community to collect vital 
information about international terrorists and other important 
targets overseas. The law authorizes the surveillance of non-
U.S. persons located overseas who are of foreign intelligence 
importance, meaning they have a connection to, or information 
about, threats such as terrorism or proliferation.
    It also provides for comprehensive oversight by all three 
branches of government to protect the privacy and civil 
liberties of U.S. persons. The Department of Justice and my 
office conduct extensive oversight reviews of these activities 
and we report to Congress on implementation and compliance 
twice a year. Intelligence collection under FISA produces 
crucial intelligence that is vital to protect the nation 
against international terrorism and other threats.
    We're always considering whether there are changes that 
could be made to improve the law, but our first priority is 
reauthorization of these authorities in their current form. We 
look forward to working with you to ensure the speedy enactment 
of legislation to reauthorize the FISA Amendments Act so that 
there's no interruption in our ability to use these authorities 
to protect the American people.
    So I'll end this brief statement where I began. The fiscal 
environment we face as a nation and in our Intelligence 
Community will require careful identification and management of 
the challenges the IC focuses on, and the risks that we must 
mutually assume.
    With that, I thank you and the Members of this Committee 
for your dedication to the security of our nation, your support 
for the men and women of the Intelligence Community, and for 
your attention today. My colleagues and I look forward to your 
questions and our discussion. Thank you.
    [The prepared statement of James R. Clapper, Director of 
National Intelligence, follows:]

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    Chairman Feinstein. Thank you very much, Director Clapper. 
We will begin with 10 minutes and the early-bird rule.
    As I mentioned in my opening statement, I think 2012 is 
going to be a critical year for convincing or preventing Iran 
from developing a nuclear weapon. In Sunday's New York Times 
magazine, Israeli journalist Ronen Bergman wrote, ``After 
speaking with many senior Israeli leaders and chiefs of the 
military, and the intelligence, I have come to believe that 
Israel will indeed strike Iran in 2012.''
    How do you assess that likelihood and the response from 
Iran, if that happens, that might be forthcoming?
    Director Clapper. Well, our hope is that the sanctions, 
particularly those which have been recently implemented, would 
have the effect of inducing a change in the Iranian policy 
towards their apparent pursuit of a nuclear capability. 
Obviously, this is a very sensitive issue right now. We're 
doing a lot with the Israelis, working together with them. And 
of course for them, this is, as they have characterized, an 
existential threat. But this is an area that we are very, very 
concerned about.
    And I would be pleased, because of the sensitivities, to 
discuss that in greater detail in a closed session.
    Chairman Feinstein. Well, the Vice Chairman and I have just 
met this past week with the Director of Mossad, so that is a 
classified meeting, but we do know that. I think--and let me 
ask this of you, Director Petraeus--that the world has to know 
what's happening. It's one of the reasons I believe that the 
IAEA, when they go in--well, they're in Pakistan now, but when 
they go into Fordo--really must make transparent and public 
what they find there, what they see there, so that we know for 
sure what is happening.
    I think the world is entitled to that, particularly when 
you have a situation where one country views this as an 
existential threat. They believe it's their survival. They are 
determined not to let it happen. To really get the correct 
picture on what is happening, I think it's important. Do you 
have a view on this?
    Director Petraeus. I do, Madam Chairman. If I could up 
front, let me also echo Director Clapper's remarks about 
thanking you and the Vice Chairman for your kind words on the 
Members of the Intelligence Committee on the accomplishments of 
this past year, some of which obviously were of enormous 
significance, and thanks to both of you, as well, for your 
comments on the Agency efforts to keep the Committee fully and 
currently informed. We've worked very hard to be accessible to 
you; I have, personally, my deputy and the staff, and we think 
that the facts reflect that.
    We have worked hard, also, to shorten the time frame from 
event to notification when it comes to Congressional 
notifications. And we've also increased those over the last 
five months, as well.
    Like you, I obviously met with the head of Mossad when he 
was here. That is part of an ongoing dialogue that has also 
included conversations that I've had with Prime Minister 
Netanyahu and with Minister Barak; the latter almost on a 
monthly basis in the nearly five months that I've been in the 
job.
    I think it's very important to note, as the article did in 
the New York Times, the growing concerns that Israel has and 
that the countries in the region have--and indeed, all of us 
have--about the continued activities by Iran along a path that 
could, if the decision is made--as Director Clapper noted in 
his opening statement--to pursue the construction of a nuclear 
device.
    As both of you noted, Israel does see this possibility as 
an existential threat to their country. And I think it's very 
important to keep that perspective in mind as, indeed, analysis 
is carried out.
    As you noted, the IAEA inspectors are in Iran right now. I 
believe their past report was a very accurate reflection of the 
reality of the situation on the ground. I think that is the 
authoritative document when it comes to informing the public, 
of all the countries in the world, of the situation there.
    Iran is supposedly, reportedly, trying to be more open this 
particular time, perhaps trying to reassure countries as it 
feels the increased bite of the new sanctions, of the Central 
Bank of Iran sanction and the reduction in the purchase of oil 
from some of its key customers. And so I look forward, as do 
others, obviously, to seeing what that public report will 
provide this time, believing, again, that it will be, again, 
the authoritative open source document on the program that Iran 
is pursuing in the nuclear field.
    Chairman Feinstein. Thank you very much, General Petraeus.
    To me, Pakistan is a very puzzling country. We know that 
thousands of Pakistanis have been killed by terrorists, and we 
suspect that what Pakistan is doing is trying to essentially--
to use a vernacular--walk both sides of the street. I think I 
and most of us believe that having a positive relationship with 
Pakistan, as a nuclear power--a significant nuclear power--is 
very important. The question I have is how do you assess this 
relationship, which certainly had its low in December and may 
or may not be improving; how do you assess it at this time?
    Director Clapper. Well, let me start and I'll ask Director 
Petraeus to add in. Well, clearly, as you allude to, Chairman 
Feinstein, this is a challenging relationship, but it's an 
important one for exactly the reason that you mention, which is 
Pakistan is a nuclear power. Pakistan and our interests are not 
always congruent. Their existential threat continues to be 
India. They have also paid a huge price because of the 
militants that they've had in their country and have suffered 
literally thousands of casualties in that context.
    So sometimes our interests converge, and sometimes they 
differ. But as I would characterize the relationship, it's 
crucial that we have one and have a positive relationship, even 
though we've gone through some trying times.
    Director Petraeus. Well, again, the relationship is very 
important, but the relationship right now is also quite 
strained. The most recent cause of that, of course, is the 26 
November border incident between ISAF and Pakistani forces.
    In the Pakistani Parliament, there is a committee that is 
determining recommendations for the government for the way 
forward with the relationship between the United States and 
Pakistan. I think there's awareness there, as well, that this 
is a critically important relationship, that there are areas of 
considerable mutual concern, mutual objectives, while there are 
also those in which there are diverging interests, as Director 
Clapper noted.
    The activities right now are also complicated, though, 
because of the difficulties in the domestic context there, 
where there's a bit of tension between the Supreme Court, 
between the Army Chief and the ISI Director, and the 
government, the President and the Prime Minister. That may be 
calming a bit. There have been signs of that in recent days.
    It's worth noting, by the way, that the former Pakistani 
ambassador to the United States, Ambassador Haqqani, was 
allowed to leave, and he did arrive in the UAE this morning. 
Nonetheless, the situation, I think as our British colleagues 
might say, is fraught, and it is going to take some time, it's 
going to take a lot of diplomacy, engagement, and so forth, to 
move forward in a relationship that's important to both of our 
countries.
    I should note that, as a general comment, we believe the 
relationship between the intelligence services is generally 
still productive. There is certainly good communication going 
back and forth. And there has been, again, pursuit of important 
mutual objectives between the two services.
    Chairman Feinstein. Thank you both very much. Mr. Vice 
Chairman?
    Vice Chairman Chambliss. Thanks, Madam Chair.
    Director Clapper, press reports--and I emphasize that--
indicate that the United States is prepared to trade five 
Taliban members currently detained at Guantanamo as a 
confidence-building measure in negotiations with the Taliban.
    Now, all five detainees that are named by the press were 
determined by the current Administration to be--and I quote--
``too dangerous to transfer,'' and are being held as enemy 
combatants. Now, as part of the task force, did the 
Intelligence Community concur in the determinations that these 
five detainees were too dangerous to transfer and should be 
held as enemy combatants?
    Director Clapper. Well, I believe that in the original 
assessments, with which NCTC Director Matt Olsen was involved, 
that was the case. I should say, though, that this proposed so-
called trade has actually not been decided yet. There's 
continued consultation with the Congress. In fact, there will 
be a session this afternoon with the Senate leadership on this 
issue.
    And, of course, we are certainly mindful of the provisions 
in the National Defense Authorization Act and the requirement 
for certifications, and I believe, inherent in that, is 
continued consultation with the Congress on whether or not this 
would go forward.
    That said, I think the history has been, in almost every 
case where we've had hostilities, that at some point in time 
there are negotiations. I don't think anyone in the 
Administration harbors any illusions about the potential here. 
And, of course, part and parcel of such a decision, if it were 
finally made, would be the actual determination of where these 
detainees might go and the conditions in which they would be 
controlled or surveilled.
    Vice Chairman Chambliss. Director Olsen, as stated there, 
you did head the Guantanamo review task force that made the 
determination that these five reported named individuals were 
too dangerous to transfer. Have you changed your view with 
respect to these detainees?
    Director Olsen. Vice Chairman, I have not been involved in 
any reviews more recently of those detainees. As you point out, 
they were subject to the review we conducted in 2009 that 
determined that. I believe those were among the 48 who were 
deemed too dangerous to release and who could not be 
prosecuted. But I've done no further review in my current 
capacity at NCTC.
    Vice Chairman Chambliss. So, what you're saying is that the 
Administration has not asked you for any update of your opinion 
relative to these individuals?
    Director Olsen. That's correct.
    Director Clapper. Well, sir, I need to inject here, though, 
that in the interagency deliberations, certainly the IC has 
been asked, and we have provided, assessments of the five that 
are in question. So that has been a part of the discussion.
    Vice Chairman Chambliss. And has there been a change by the 
Community from the categorizing of these individuals as ``too 
dangerous to transfer''?
    Director Clapper. We haven't--no, sir, I don't believe that 
under normal circumstance--in other words, repatriation to 
their point of origin or their country of origin. This is a 
little different. This is a different condition, though, in 
terms of the potential for negotiating some form of confidence-
building measure with the Taliban. And this is very, very 
preliminary. And, again, no final decision has been made.
    Vice Chairman Chambliss. Let me ask you and Director 
Petraeus, who are very familiar with this--are you comfortable 
with transferring these individuals out of Guantanamo?
    Director Clapper. For me, the key would be where they would 
go, the intermediate country where they might be detained, and 
the degree to which they would be surveilled. And that would be 
the key determinant for me.
    Vice Chairman Chambliss. And Director Petraeus?
    Director Petraeus. Very similar, Vice Chairman. In fact, 
our analysts did provide assessments of the five and the risks 
presented by various scenarios by which they could be sent 
somewhere--not back to Afghanistan or Pakistan--and then, based 
on the various mitigating measures that could be implemented, 
to ensure that they cannot return to militant activity.
    Vice Chairman Chambliss. The Intelligence Community 
assesses--and, Director Clapper, your statement for the record 
underscores--that the Taliban remains resilient and capable of 
challenging U.S. and international goals in Afghanistan. The 
Community also assesses that Taliban senior leaders continue to 
enjoy safe havens in Pakistan, which enables them to provide 
strategic direction to the insurgency in Afghanistan without 
fear for their safety.
    Does the Community assess that Taliban reconciliation is 
likely to have a great deal of success, considering that the 
group is resilient, maintains the ability to challenge the 
United States, continues to enjoy sanctuary in Pakistan, and 
knows the timelines under which we plan to withdraw U.S. forces 
from Afghanistan?
    Director Clapper. I think our assessment is pretty much as 
you stated it, sir. The Taliban remains a resilient, determined 
adversary. That said, again, I repeat--and I don't think 
anybody harbors any illusions about it, but I think the 
position is to at least explore the potential for negotiating 
with them as a part of this overall resolution of the situation 
in Afghanistan.
    Vice Chairman Chambliss. I want to be careful how I ask 
this, and hopefully you can respond in some way with respect to 
our relationship with Pakistan. The safe havens that do exist 
have been pretty obvious and well-documented publicly.
    How is our relationship with Pakistan at this point in time 
allowing us to address those safe havens and the cross-border 
activity that's taking place there from a Taliban standpoint?
    Director Clapper. Well, this is obviously part of the 
dialogue and engagement that Director Petraeus and I have 
spoken of. And clearly, this is a point of discussion with the 
Pakistanis, and they are certainly aware of our concerns. But 
this is a good example where our mutual interests don't always 
converge.
    Vice Chairman Chambliss. Director Petraeus, anything you 
want to add to that?
    Director Petraeus. Well, I think, again, the record is 
obviously mixed. There has been progress against some of the 
extremist elements; in the border regions, in particular. That 
would include, obviously, al-Qa'ida. When number one, two, and 
three are removed from the picture in a single year, needless 
to say, that's a pretty significant accomplishment.
    But it's beyond that. It's important to note back in 
October of this past year, for example, four of the Top 20 in a 
single week were either captured or killed. And, again, some of 
this has obviously been undertaken together.
    There has also been progress by our Pakistani partners 
against the elements that have threatened their very existence. 
We should remember that a little over two and a half years ago, 
it looked as if the Tehrik-i-Taliban Pakistani was going to 
continue to march right out of Swat Valley and perhaps into the 
suburbs of Islamabad. They reversed that. They fought very 
hard. They've taken very, very significant casualties, and in 
so doing, they've also gone after some of the other elements 
allied with the TTP in the Federally Administered Tribal Areas.
    On the other hand, obviously there's been insufficient 
pressure on the Haqqani Network and some of the other 
elements--again, the allies of al-Qa'ida, such as the Commander 
Nazir group, the IMU, and some others. And then, needless to 
say, the Afghan Taliban has not been pressured sufficiently in 
the sanctuaries that it enjoys in Baluchistan and in other 
areas, as well.
    Vice Chairman Chambliss. General Burgess, you've also been 
integrally involved in this issue relative to the cross-border 
activity; anything you want to add to this?
    General Burgess. No, sir. In fact, I think Director 
Petraeus laid the line out very well in terms of where things 
are progressing.
    Vice Chairman Chambliss. Okay.
    Director Mueller, a month ago the President signed the 
National Defense Authorization Act and issued a signing 
statement in which he outlined his reservations about certain 
provisions. Regarding Section 1022, which mandates military 
detention for a limited type of non-U.S. citizen terrorist, the 
President stated that he would use his waiver authority for 
entire categories of cases, and would design implementation 
procedures to provide maximum flexibility and clarity to our 
counterterrorism professionals.
    Are you aware of any categories of terrorists for whom the 
President has used, or intends to use, his waiver authority, 
and if so, which ones, and how are the intelligence and law 
enforcement communities implementing Section 1022 of the NDAA?
    Director Mueller. Let me start, Mr. Vice Chairman, by 
saying that at the outset, I had reservations in two areas: one 
was in terms of our continued authority to investigate 
terrorism cases in the United States, and that was resolved by 
the legislation. The other part was what happens at the time of 
the arrest in the United States? And the statute provides for 
the Administration to develop a set of procedures that would be 
applicable to that particular situation.
    Without getting into details, I can say that with the 
Justice Department and White House, they're in the process of 
drafting those procedures. I think it'd be premature to talk 
about any of the specifics because it's on the drafting stages, 
but my hope is that as we go through and develop these 
procedures, the remaining concerns we have as to what happens 
at the time of arrest will be resolved.
    Vice Chairman Chambliss. I thank you for that comment and 
would just say that, as you know, we had extensive 
conversations between DOJ, the White House, and Congress on 
this issue as it went through that drafting, and I would hope 
you would continue to dialogue with us with regard to the 
regulations that are ultimately implemented.
    Director Mueller. Yes, sir.
    Vice Chairman Chambliss. Thanks, Madam Chair.
    Chairman Feinstein. Thank you very much, Mr. Vice Chairman. 
Senator Wyden?
    Senator Wyden. Thank you, Madam Chair. And let me commend 
you, Madam Chair and Vice Chair, for the way in which you put 
the focus in this Committee in a bipartisan way, and I commend 
you for it. And to all our witnesses at the table, I thank you 
for your outstanding service. This has been an extraordinary 
year.
    Let me start with you, if I might, Director Clapper, with 
respect to Iran. I've come to believe that Iran's leaders are 
not going to give up their push for a nuclear weapons 
capability unless they believe it's going to cost them their 
hold on power. Do you share that assessment?
    Director Clapper. Senator Wyden, actually, that comports 
with the Intelligence Community assessment that if the decision 
is made to press on with a nuclear weapon--and there are 
certain things they have not done yet to eventuate that--that 
this would be based on a cost-benefit analysis, starting with 
the Supreme Leader's world view and the extent to which he 
thinks that would benefit the state of Iran or, conversely, not 
benefit.
    So that's, I think, precisely where he is, and it will be 
done on a cost-benefit basis and we don't believe he's made 
that decision yet.
    Senator Wyden. What could convince them, in your view, that 
their hold on power is being undermined by their nuclear 
effort?
    Director Clapper. I think a restive population--because of 
the economic extremis that the country of Iran is incurring. If 
you look at the two indicators that I think are important--the 
plunging value of the rial and the extremely high unemployment 
rate in Iran, I think this could give rise to resentment and 
discontent among the populace. And that's not to say there 
haven't been other examples of that elsewhere in the region.
    Senator Wyden. Now, on another subject, Mr. Director, you 
referenced a recent report that described how foreign spies, 
particularly those in China and Russia, are stealing our 
economic secrets. Can you give us some sense of what types of 
secrets these entities in China and Russia are most interested 
in stealing?
    Director Clapper. Well, the report you refer to is a 
National Counterintelligence Executive Report that was issued 
this fall, which called out Russia and China--particularly 
China--for their wholesale plundering, if you will, of 
intellectual property. And of course, they seem most interested 
in our technology. Obviously, if they can save themselves the 
time and expense of doing R&D on their own and just steal it 
from us, then that works to their benefit.
    So, to the extent that they can penetrate unprotected 
industry networks, which they've done, unfortunately -
    Senator Wyden. Which industry networks, Mr. Director, do 
you think are most vulnerable?
    Director Clapper. I think it's across the board. I think a 
lot of it is driven by what they can get access to. But I think 
it's pretty much carte blanche; obviously, the more high-tech 
for them, the better. And so this is a serious, serious 
problem.
    Senator Wyden. Let me move to a third topic, Mr. Director. 
In your view, could the peaceful revolution in the Arab world 
have happened if repressive governments in the region had been 
successful in censoring Twitter, Facebook, Internet search 
engines, and electronic communications?
    Director Clapper. Well, in some cases they tried to do 
that. I am not sure that the success of these upheavals, if you 
will, was completely dependent on social media. I think the 
basic problems in this region, particularly economic--
repression of political freedoms and all that--would have 
bubbled up anyway. I think the social media simply helped 
fulminate and amplify that resentment when people understood it 
was a large collective.
    So I think the social media certainly facilitated it, but I 
don't think that without it, it would not have happened. Of 
course, some of the governments reacted to that by their 
attempts to suppress such communications.
    Senator Wyden. I won't continue on this because I want to 
ask something of Mr. Goldberg, but I don't know how the word 
would have gotten out. I mean, if you look, for example, at the 
way phones are tapped in the region and a variety of other 
approaches, I don't think the word would have gotten out.
    And that's why I'm going to ask you a question, if I might, 
Mr. Goldberg. As you know, there is discussion now in the 
Congress about whether or not Internet search engines should be 
involved in a censorship approach in terms of dealing with 
intellectual property, specifically.
    Are you concerned that if that is done here, this could be 
a precedent, which could make it harder for the State 
Department to go forward, for example, with Secretary Clinton's 
Internet Freedom Initiative? I've come to feel that at a 
minimum, it would be cited as a precedent, that if it's done 
here, you could have repressive governments around the world 
say, ``Look at what goes on in the United States, and they're 
supposed to be the leader in terms of freedom; now we'll pick 
up on it.''
    Are you concerned that this could possibly be a precedent?
    Director Goldberg. I think that we're always concerned with 
many conflicting strains when policy and legislation is being 
discussed about the Internet and about how to solve various 
problems with the distribution of information, as well as how 
to protect private property, as is going on in the Congress at 
the moment. The Secretary of State, Secretary Clinton, has made 
it very clear that Internet freedom is a very important 
principle and the overriding principle as we approach all of 
these issues.
    And I think when we consider whatever precedent is being 
set, whatever legislation is being considered, that that's the 
primary interest that we need to consider. The Administration 
has spoken about online piracy and how to deal with that very 
serious issue, and that this can be done in a way that protects 
those freedoms, but is also not going to change the 
architecture of the Internet.
    Senator Wyden. Let me wrap up with you, Director Clapper, 
on an issue that I'd asked about before at this open hearing. 
General Petraeus knows about this. This is the question about 
the use of force in a speech that was given by Mr. Harold Koh, 
the State Department lawyer. And let me note at the beginning 
that it's a matter of public record that the Intelligence 
Community sometimes takes direct action against terrorists, and 
this direct action sometimes involves the use of lethal force.
    And as you know, Director Koh gave a speech outlining our 
policy with respect to various terrorist groups. He talked 
about detention, he talked about the use of unmanned drones, 
and he noted that under U.S. law, the use of force against 
terrorist groups is permitted by congressional authorization, 
while under international law, it is permitted by America's 
right to self-defense.
    But in spite of having asked about this on a number of 
occasions--and General Petraeus, you know that I, too, share 
the Chair's view with respect to your working with us here on 
this Committee and your being forthright--I have not been able 
to get an answer to this specific question. And I would like to 
know whether that speech that Mr. Koh gave contained unstated 
exceptions for intelligence agencies?
    Director Clapper. With respect to counterterrorism, it does 
not. So it applies to all components of the government involved 
in counterterrorism, be it military or non-military.
    Senator Wyden. Are there other exceptions other than 
counterterrorist activities?
    Director Clapper. Well, I believe his speech dealt with 
counterterrorism.
    Senator Wyden. So you believe that his speech--the text of 
the speech, because this would be important--applies to all 
agencies? It applies to the Intelligence Community? His entire 
speech, the overall thrust of the speech, applies to all of the 
Intelligence Community?
    Director Clapper. With respect to counterterrorism, yes.
    Senator Wyden. Thank you, Madam Chair.
    Chairman Feinstein. Thank you very much, Senator Wyden. 
Senator Udall?
    Senator Udall. Thank you, Madam Chairman. Good morning. 
Thanks to all of you for the important work you do.
    Let me start by commenting in a follow-on way on the topic 
that Senator Chambliss mentioned, which was the detainee 
provisions in the NDAA. I want to thank all of you for weighing 
in and for sharing, with the Armed Services Committee and the 
Senate at large, your concerns about the detainee provisions as 
they were proposed.
    We had a spirited debate on the Floor of the Senate for a 
number of days. Senator McCain was very involved, as were a 
number of other Senators. I think it was a valuable debate. It 
was a worthwhile debate. I think it was the Senate at its best. 
I'm hopeful that the compromises that were put into the final 
product will work. I'm going to continue to monitor what's 
happening. I think the debate as to whether we ought to be 
prosecuting and delivering justice through the military system 
versus the Article 3 system is an important one.
    Senator Feinstein and I and others have joined to introduce 
the Due Process Guarantee Act, and I think at the heart of our 
concerns and the center of our mission is to ensure that 
Americans will not be indefinitely detained. So again, I just 
want to thank everybody for the engagement and the passion they 
brought to that important debate.
    General Clapper, if I could focus on a particular topic--
commercial imagery. I was glad to see your comments at CSIS 
last week that you're a big believer in commercial imagery. You 
noted that it has the benefit of being unclassified, which is 
great for sharing among our war-fighters at all levels and with 
our coalition partners overseas as well as with non-military 
users.
    In light of those comments, I've become concerned about 
what I've been hearing about the steep reductions in Fiscal 
Year '13 for the Enhanced View Commercial Imagery Program. I 
understand that the White House has requested a requirements 
review for commercial imagery consistent with the new Defense 
Strategy, and that this review may well indicate the need for a 
shift away from the national technical means, given that 
commercial providers can collect imagery at resolutions that 
meet virtually all of the military's needs.
    So here's my question. Do--do you believe that the Fiscal 
Year '13 Enhanced View budget will meet the war-fighters' needs 
for unclassified imagery? How will it affect the safety of our 
war-fighters and our capacity to work with our allies?
    Director Clapper. Senator, as you alluded to, I am a huge 
believer in commercial imagery, going back to when I served as 
then-Director of NIMA and later NGA in the immediate aftermath 
of 9/11, and we used a lot of commercial imagery then. It 
continues to be of great value for exactly the reasons you 
cited. It's unclassified; it can be shared in coalition 
contexts as well as in domestic disaster relief and the like.
    That said, though, we are looking at some pretty steep 
budget cuts across the board in the Intelligence Community. And 
as a consequence, commercial imagery will be considered in that 
broader look at where we may have to take reductions, and I am 
not going to single out commercial imagery as the only one. 
It's my view that not only can we satisfy the military 
requirements, but all the other non-military requirements, as 
well for commercial imagery, at the contemplated level of 
funding.
    I think it is incumbent on the industry to perhaps come up 
with some innovations and business practices and this sort of 
thing that will help us as we look at a more constrained fiscal 
environment.
    Senator Udall. I appreciate your attention to this matter. 
I know many of the other participants today on the panel depend 
on this kind of imagery. My concern, I think--and you share it, 
I hear you implying--is that if you cut too far, you reduce the 
reach of the commercial sector, you may lose skill sets and 
experts that have played an important role, and you create a 
downward spiral that may be hard to reverse if it goes too far.
    Director Clapper. Sir, this is a concern we have across the 
board, not just in the commercial imagery industry. But as we 
make reductions, particularly in intelligence, obviously that's 
going to have some impact on the industrial base across the 
board.
    Senator Udall. Let me turn to the Middle East, and perhaps 
direct this question at General Petraeus and Director Clapper--
and others on the panel, please feel free to weigh in.
    Syria. Do you assess that the fall of the al-Assad regime 
is inevitable at this point, or is it still in question? If the 
regime should fall, how do you assess what a post-Assad Syria 
looks like, both near-term and long-term?
    And then what are your thoughts on how Hezbollah and Iran 
would be affected, should the Assad regime fall?
    Director Clapper. I personally believe it's a question of 
time before Assad falls, but that's the issue. It could be a 
long time. I think two there are factors here. The protraction 
of these demonstrations and the opposition continues to be 
fragmented. But I do not see how he can sustain his rule of 
Syria. And of course, post-Assad would be exactly the issue. 
There is a question about who would emerge in a post-Assad 
situation.
    As far as Iran and Hezbollah, what is transpiring in Syria 
is, of course, of great concern to them. It's why they are both 
expending great effort, in terms of resources and advice and 
this sort of thing, to try to prop up the Assad regime.
    Senator Udall. General Petraeus.
    Director Petraeus. Yeah, I generally subscribe to that as 
well. The opposition is obviously showing a considerable amount 
of resilience and indeed is carrying out an increasing level of 
violence. The fact is that Damascus and Aleppo now, two 
previously relatively safe cities, the two biggest, are now 
seeing violence in their suburbs.
    The initiation of offensive operations by the Bashar al-
Assad's regime to try to push them out of the suburbs has met 
very stiff resistance, and I think it has indeed shown how 
substantial the opposition to the regime is and how it is, in 
fact, growing, and how increasing areas are becoming beyond the 
reach of the regime security forces.
    Post-Assad, one would assume that there would be leadership 
from the Sunni Arab Community of the country, which is 
certainly the majority, as opposed to the Alawi minority that 
is the core of the Bashar al-Assad regime. But that then begs 
the question of what happens to these other elements, to the 
minorities, to the Alawi, to the Druze, to the Kurdish 
minority?
    Senator Udall. The Christian Community as well.
    Director Petraeus. The Druze Christians and other Christian 
sects as well.
    Clearly, the loss of Syria as a logistics platform, a line 
of communication into Lebanon to support Hezbollah would be a 
substantial setback for Iran in its efforts to use Hezbollah as 
a proxy. That is, indeed, why the Revolutionary Guards Corps, 
Qods Force, is so engaged in trying to prop up Bashar al-Assad 
right now.
    Senator Udall. Let me turn to another country in that 
region. General Petraeus, you know better than anyone how much 
we've invested in Iraq--treasure, our reputation, and of 
course, the lives of Americans from all over our country. If 
you were to advise the policymakers sitting here and in the 
Senate and the Congress at large, what would you suggest we 
should be doing as Iraq struggles to find a democratic path 
forward?
    Director Petraeus. I think essentially continuing what we 
are in fact doing, which is engaging Iraqi counterparts at 
various levels, all the way from the top through the diplomatic 
communities, intelligence and security services, working hard 
to help them to resolve the ongoing political crisis--and 
there's no other word for that, although it has perhaps 
diminished it somewhat.
    And it now appears, as of the last 48 hours, that the Sunni 
bloc of the political leadership is going to return to the 
government, albeit with still some hedging of bets. Supporting 
them as they grapple with the security challenges that have 
emerged over the course of the past two months or so, where al-
Qa'ida in Iraq has been a bit more active than it was for quite 
some period, and helping them to develop further their security 
forces and their intelligence services to combat a mutual 
enemy--we do not want to see the resurgence or the regeneration 
of al-Qa'ida in Iraq--and very much in the interests of both 
countries and indeed the region and the world, working together 
to combat it.
    Senator Udall. Thank you. Thank you, Madam Chair.
    Senator Feinstein. Thank you very much, Senator. Senator 
Snowe?
    Senator Snowe. Thank you, Madam Chair. And thank all of you 
for your contributions to our country.
    I want to follow up on a couple of issues with respect to 
Iran. And obviously it's deeply troubling in terms of the 
direction that they're taking. And we predicate a lot, 
obviously, on the report that was issued by the IAEA.
    And I know, General Petraeus, you indicate it's an 
authoritative document.
    They list in page 8 of their report the number of 
activities that are relevant to the development of a nuclear 
explosive device, including procuring nuclear-related and dual-
use equipment, materials, developed undeclared pathways, the 
acquisition of nuclear weapons development information and 
documentation, and work on the development of indigenous design 
of nuclear weapon, including the testing of components.
    I gather we agree with the fact that Iran has not made a 
decision to weaponize at this point. Director Clapper, do you 
agree on that?
    Director Clapper. Yes, but they are certainly moving on 
that path. But we don't believe they've actually made the 
decision to go ahead with a nuclear weapon.
    Senator Snowe. Well, how will we decide that they have 
integrated all of these components in a decision to weaponize; 
at which point?
    Director Clapper. Well, certainly----
    Senator Snowe. What will be our red line?
    Director Clapper. Well, without going into sensitive areas 
here, certainly a key indicator would be enrichment of uranium 
to a 90 percent level. That would be a pretty good indicator of 
their seriousness.
    There are some other things they would need to do--which 
I'd rather not go into in an open session--that we would also 
look for part and apart from whatever we could glean from 
across the Community on an actual decision to go forward.
    Senator Snowe. General Petraeus, do you care to answer, as 
well?
    Director Petraeus. No. I fully subscribe to that. Again, 
the various components--enrichment, weaponization, delivery, 
and what we think would be evident if there is a decision to 
enrich beyond the 20 percent that they are currently enriching 
to--to the weapons grade--would be very significant, and, I 
think, a tell-tale indicator. There's no commercial use for 
that, arguably--in fact, not arguably--I think factually, the 
amount of 20 percent enriched uranium that they have exceeds 
any requirement, for example, for the Tehran Research Reactor 
for the foreseeable future. So there are already concerns just 
with that.
    Senator Snowe. And the IAEA report said much of it is 
dispersed among a number of locations. So, with the inspectors 
being there for however many days, several days, would they be 
able to discern or detect their ability to weaponize at what 
state they're in? What do we hope to glean from the process?
    Director Clapper. Well, as Director Petraeus has alluded, 
the rule of IAEA is extremely important here. And of course, we 
do have to bear in mind that Iran is a signatory to the 
Nonproliferation Treaty. The facilities that they are now 
operating are safeguarded, meaning they are required to be 
inspected by the IAEA.
    So, their presence there, and in fact their extended stay 
there. And it is IAEA's intent, as they said before, to 
hopefully resolve these ambiguities about Iran's program and 
its intent. So, what they have to say is crucial, and of 
course, their continued access is crucial.
    Director Petraeus. And there's continuous monitoring, also, 
by other means that the IAEA has as well.
    Senator Snowe. General Burgess, Iran has issued various 
threats with respect to the Strait of Hormuz. Can you give us 
some analysis of the activities there and what we are doing, in 
addition to--what capabilities does Iran have--or doesn't 
have--with respect to having the potential to close the Straits 
or affect it in any way, in terms of international transit?
    General Burgess. Well, ma'am, what I have said in open 
discussions on this--a lot would have to be taken to closed 
session--but clearly the Iranians have the capability, we 
assess, to temporarily close the Straits of Hormuz. The concern 
becomes, then, defining ``temporarily''. But they clearly have 
that capability. But if we go any further, I'd prefer to go to 
closed session, ma'am.
    Senator Snowe. Do we have a defined time in that respect--
on temporary?
    General Burgess. Ma'am, I'd prefer to go to closed session.
    Senator Snowe. Okay. Thank you. Director Clapper, getting 
back to the issue of Pakistan, there was a senior 
Administration official who was quoted recently in an article 
talking about developing a new normal in terms of relationship 
with Pakistan. So much of what we're doing in Afghanistan is 
predicated on effectively addressing and rooting out the safe 
havens, obviously. And that is the predicate and template for 
the President's policy that he indicated in June, and that 
obviously we need to have that strong relationship with 
Pakistan.
    How is our strategy going forward affected by what's 
developing in Pakistan, especially now, where, as General 
Petraeus indicated, there is a review of our relationship 
that's underway within the Pakistan government, the Parliament?
    And then secondly, they're issuing threats about imposing 
taxes on the transit of our materials, both ours and NATO's, 
from their ports and roads to Afghanistan. So this is deeply 
troubling. And I don't know if this is a new normal, but how 
does that affect our situation in Afghanistan, and how is it 
that ever changes the dynamic in Afghanistan?
    Director Clapper. Well, it obviously has a profound impact 
on Afghanistan and the prospects for successful resolution 
there. And that is a way of emphasizing the importance of a 
positive relationship with the Pakistanis. And this is getting 
into the policy realm now outside of intelligence, but it's 
crucial that our dialogue proceed and that we find some way of 
converging on that issue, as well, particularly with respect to 
safe havens.
    Pakistanis are very proud people, and they felt their 
sovereignty was assaulted in the Abbottabad raid, and of 
course, the regrettable incident in November with the killing 
of the Pakistani troops along the border sort of heightens 
that. That has caused them to collectively reassess the 
relationship.
    But in the end, I believe they realize they need a positive 
partnership with us. And hopefully we'll work through these in 
such a way that we minimize the impact of these safe havens.
    Senator Snowe. General Petraeus, you're obviously in an 
interesting position, being both Commander of the forces and 
the architect of the counterinsurgency strategy in Afghanistan, 
and now being Director of the Central Intelligence Agency.
    Since you've assumed this position, do you view things any 
different in Afghanistan with respect to our Strategy?
    Director Petraeus. No. I can't say that I do.
    Senator Snowe. Even with some of the reports that have been 
issued publicly regarding the assessments of Afghanistan, and 
that it is very difficult to make the gains that are essential, 
precisely because of what is happening with the safe havens in 
Pakistan? These issues are ever thus. I mean, nothing's changed 
in the dynamic, unfortunately, including the corruption, the 
government, and now, of course, the safe havens. These have 
sort of been the dynamics that have been there since the 
beginning.
    Director Petraeus. There is nothing easy about Afghanistan. 
As we used to say, it's all hard all the time, but it's also 
all important all the time. There's a reason we went there in 
the wake of 9/11. We have hugely important national security 
interests there and it's very important to that country, to the 
region, and to the world that we do everything possible to try 
to get that right and to ensure that Afghanistan is never again 
a launch pad for extremist attacks, as it was for the 9/11 
attacks.
    If I could, by the way--you touched on something that 
alluded to the fact that I had a different viewpoint at various 
times than that of the Intelligence Community. And I was pretty 
clear, I think, in my confirmation hearing, that that typically 
resulted from the fact that the Intelligence Community tends to 
stop, if you will, a clock, and then for six to eight weeks do 
the analysis, argue within the Community itself on the ultimate 
position, and then actually provide the NIE or district 
assessment or whatever document is provided to policymakers.
    And typically, in the four times that I have differed with 
the Intelligence Community on Iraq or Afghanistan, the reason 
for it has been that lag in a dynamic situation that we 
continued to make progress or, in a couple of cases, didn't. 
Because in those four cases, twice I thought the assessment was 
too negative by the Intelligence Community, and then once in 
Iraq, once in Afghanistan, two other times, I felt that the 
Community was actually too positive and that we should be more 
guarded in our assessments.
    Senator Snowe. Yeah. I appreciate that. I well recall that. 
And I know there is that sort of, you know, difference, and in 
terms of the culture even, but also the lag time.
    Director Petraeus. Well, what I should note is that 
Director Clapper and all of us have discussed this. And what we 
want to do is dramatically reduce that amount of time when you 
stop the clock for the analysts to start the writing, if you 
will, or to finalize the writing, so that there is not such a 
large gap between the end of the data and the delivery of the 
product to the policymakers, to Congress, and to the rest of 
the Community.
    Senator Snowe. So that probably didn't happen this last 
NIE?
    Director Petraeus. Actually, I'm glad you asked that, 
because I think that's worth clarifying.
    First of all, the most recent NIE in an open session 
addressed the post-2014 period. It was not on the past year or 
how things were going in general in Afghanistan; it was 
assessments by the Intelligence Community analysts about the 
various scenarios. In other words, if you make a certain set of 
assumptions about the level of support and a number of other 
factors in Afghanistan, what will be the likely outcome?
    And there were a series of assumptions, groups of 
assumptions, about that. There was relatively little on the 
state of the insurgency. In fact, in open session it basically 
said, yes, there has been continued progress, but also that the 
Taliban does remain resilient.
    The military's concern in this case was a view that there 
perhaps should have been an additional set or even sets of 
assumptions that could be analyzed; in particular, some 
assumptions that may have implied a greater level of assistance 
than was in those other sets. And that was really the issue.
    So I think that the accounts of this have not, in all 
cases, been completely well informed, shall we say.
    Senator Snowe. I appreciate that. Thank you.
    Director Petraeus. Thanks.
    Senator Feinstein. Thank you very much, Senator Snowe. 
Senator Rockefeller?
    Senator Rockefeller. Thank you, Madam Chairman. I want to 
make a couple of comments. One is I was very pleased to hear 
that you want to proceed with the renewal of FISA. Actually, I 
think FISA has served two roles. One, it created a very 
valuable piece of legislation for us. It was not without 
controversy, but it was a right thing to do.
    And secondly, I think it helped what some of us who have 
been here for some years should point out, that I think it 
helped open up the dialogue between the Intelligence Community 
and this Committee. This Committee went through a long period 
of time when the IC Community treated us very cavalierly. It 
was not interested in sharing. We could only--I guess it was 
Pat Roberts at the time, and myself. We switched one Chair and 
then the other Chair.
    They would talk with the gang of four, the gang of eight, 
but never both committees. They would never share what they 
told us and there were certain circumstances where we could not 
share what they had told us because it was a specific request, 
and for good reason.
    But it was not a good relationship. It was not a good 
relationship. I mean, just as--right after 9/11, the first 
thing that the Congress did was to pass a law saying it was 
okay for the Central Intelligence Agency and the FBI to 
communicate with each other, perhaps even shake hands and 
perhaps even start to work up a little intelligence on the FBI 
side. That was a long process. All of this is long and painful.
    Now, I lead up to this by saying I cannot describe to you 
my own frustration and sense of wonderment how all of our DNI 
directors have come before these meetings and have, at least in 
the past--you referenced today, Director Clapper, that, far and 
away, the most important matter of national security is 
something called cyber security. The President in his State of 
the Union actually used the words ``cyber threat,'' which I 
think is a better way of talking about it because it's more 
sort of stunning, alarming, and less passive. We have made 
virtually no progress on that subject.
    So on the one hand, the Intelligence Community is telling 
us that it's the number one national security threat, not, you 
know, taking three of the top five out or, you know, what's 
going on here or there. But on a sustained basis, national 
security depends upon our ability to form a system wherein 
private companies working with DHS and the government can on 
their own and decide how they want to protect themselves and 
get some help from DHS.
    We do not over-regulate--some have said that--because we've 
made changes. Olympia Snowe and I came up with a bill three 
years ago, and it's wandered through Melissa Hathaway and Mr. 
Schmidt, and nobody seems to get very excited about either it 
or the subject. And I'm very troubled by this, and I want to 
discuss this with you, specifically.
    You're in the IC Community. Cyber security is not in your 
general line of work, General Petraeus, but it's very much in 
Director Clapper's line of work, and therefore, all of your 
lines of work. I don't see, particularly, movement. There were 
some criticisms made of Olympia Snowe's and my bill that it was 
too regulatory. We have interfaced with hundreds of private 
stakeholders and companies over the years, and they're quite 
satisfied with an almost-completed bill, or a virtually 
completed bill that we have.
    And so, our Democratic leader and the President talked 
about--we've got to do this. The President, as I say, did 
mention it in the State of the Union. That is important, but 
nothing has happened. And if it is a national security threat, 
if it is the national security threat, I don't understand why 
we can't get working together on this and get a bill done.
    You know, FISA was hard, but this makes FISA look like a 
piece of cake and it's far more in the long term. No, not in 
the long term; it's probably equal in the long term in terms of 
its importance. But it's been a very bad demonstration on the 
part of the Congress, the Administration and the public, which 
really has no particular interest in cyber security because 
nobody's explaining it to them, because it's abstract. It's not 
pushed by any one group with particular emphasis, and 
therefore, nobody's very excited about it.
    We've worked out a way that the private sector companies 
basically take responsibility for their own cyber safety, cyber 
security. DHS helps them and they're held accountable for it. I 
grew so frustrated by the lack of action on the part of all of 
us--the conclusive action that I went to Mary Schapiro at the 
Securities and Exchange Commission and said, look, I can't do 
legislation evidently right now. Would you please at least post 
on the SEC website where investors go all the time, obviously, 
to figure out if they're going to invest in private companies 
or not, and that private company would have to simply say if 
they had been hacked into, period. That's all they had to say; 
not what subject, but just that they had been hacked into.
    Sort of a desperate measure, but it was a start. It's had 
some effect. People are talking about that effect in 
Washington. That doesn't interest me unless it's headed towards 
a bill.
    So I would like to get your take, General Clapper, and 
perhaps Director Mueller, also, and anybody else who chooses to 
speak on the subject. How can you tell us that it's the 
principal national security threat and we have absolutely no 
bill? We do have a bill, but we have no sort of pervasive push 
to get this accomplished, not just a legislative matter.
    Director Clapper. Well, first of all, I don't think there's 
any question as to the potential here. And there is sort of, I 
think, two dimensions to this. There's what goes on day-in and 
day-out in terms of our intellectual property being stolen from 
us, which is a real threat. Then there is the potential, 
although I think it's less likely, of a massive attack, as some 
have described, that would basically paralyze the country or 
key segments thereof.
    The most likely proponents of that would be a nation-state; 
specifically, China or Russia. That's why I pushed hard to have 
that unclassified report published by the National 
Counterintelligence Executive that highlighted that threat.
    I think that is an important responsibility of the 
Intelligence Community to advise all and sundry--whether it's 
Administration officials, whether it's the Congress, or the 
public--of the nature of that threat.
    I do think the government has a responsibility to provide 
support and advice, as exemplified, in my mind, by the Defense 
Industrial Base Pilot program that was championed by former 
Deputy Secretary Bill Lynn in the Department of Defense, which 
evolved, I think, a very workable formula whereby threat data 
is provided to key companies, particularly those involved in 
the defense or, for that matter, the intelligence business.
    But I think the bigger issue here is how do we protect the 
nation's cyber? And that is an open question, and I'm not sure 
that's completely the responsibility of the Intelligence 
Community. I do not view it that way. I think there needs to be 
a government-private partnership. They have to participate, and 
they have to be open about that, as well.
    As far as championing a bill, I personally have sort of 
deferred to the White House on----
    Senator Rockefeller. Director Clapper, my time is about to 
run out. You cannot--it's not your job to champion a bill. But 
I just--you know, at some point, you start asking, if you and 
your predecessors--Mike McConnell and others--have come up 
and--you know, said this is our number one national security 
threat, and you're in the threat business, to say that I 
don't--this is not necessarily what we do, frankly, I'm just 
using this forum to scream out--who is going to start paying 
attention to this?
    Director Clapper. Well, I think a lot of people are paying 
attention. And certainly, the President's mention of it--
there's a White House coordinator for it who's orchestrating 
this across the board. It involves the Intelligence Community. 
It involves the Department of Defense. It involves, clearly, 
the Department of Homeland Security. And I think that the 
leadership for that has to be in the interagency.
    So I don't know that it's fair to say that, you know, the 
Administration doesn't care. It certainly does.
    Senator Rockefeller. I'm just saying that we have made no 
progress. We have made no progress, and that is embarrassing in 
view of what you and your predecessors have said about the 
nature of the threat.
    Director Mueller, do you have any comments?
    Director Mueller. Yes, Senator. I think it's wrong to say 
we're excited--or somebody should be excited about it. I can 
tell you that we are exceptionally concerned about that threat. 
I do not think that today it is necessarily the number one 
threat, but it will be tomorrow. Counterterrorism and stopping 
terrorist attacks is a present number one priority for the FBI. 
But down the road, the cyber threat, which cuts across all 
programs, will be the number one threat to the country.
    We look at it in three different perspectives. The first 
is, inside the FBI, we have to change our organizational 
structure. In the same way we changed to address terrorism, we 
have to change to address cyber crime. We have to recruit and 
hire and bring on the persons who are capable of doing it. We 
have to understand that our role is to investigate intrusions 
and to thwart further intrusions.
    And secondly, in the same way we had to share intelligence 
in the wake of September 11, we have to share information and 
intelligence between the various entities who address this 
particular threat. At the time of intrusion, you do not know 
whether it is a state actor, a Russia or a China. You don't 
know whether it's an OC, organized crime entity, or the high 
school student down the street.
    And consequently, you can't allocate it to a particular 
agency, which is why we developed the National Cyber 
Investigative Task Force with the FBI, CIA, DIA, NSA, Secret 
Service, all of those who have a role to address this kind of 
threat. And so we have to build up the collective addressing of 
that threat in the same way that we did so and broke down the 
walls in the wake of September 11.
    And lastly, in terms of legislation, we have pushed in the 
legislation two areas that are of concern to us. One is a 
national data breach requirement. There are 47 states that have 
different requirements for reporting data breaches. There has 
to be a national data breach requirement for reporting, and we 
should be recipients of that reporting.
    And secondly, there has to be in the statute, in my mind, 
the ability to share the information indicative of a crime with 
the Bureau and others who have that responsibility. But it is 
something that we as an organization are focusing on as the 
next substantial threat.
    Senator Feinstein. Thank you very much, Senator 
Rockefeller. And I have a data breach law that's been pending 
for some time, so hopefully you'll include it.
    Next is Senator Conrad.
    Senator Conrad. Thank you, Madam Chairman. I want to thank 
you and the Vice Chair of this Committee for conducting this 
Committee in such a thoroughly professional way. I really have 
enjoyed my service on this Committee and in no small measure 
because of the leadership of this Committee. I think it's 
just--it's a very good example for the rest of the Senate.
    I also want to thank all those who are here testifying on 
behalf of the Intelligence Community. Let me just add my voice 
with respect to the press reports reflecting on Director 
Petraeus by these unseen, unnamed sources.
    You know, as far as I am concerned, these people that work 
behind the cloak of anonymity attacking people are cowards. If 
they have something to say about somebody, if they want it to 
have some credibility, they ought to have the courage to stand 
up and say it and put their name behind it. And I'd say to the 
press they ought to quit printing anonymous attacks on people; 
it does not reflect well on them, either.
    So with respect to Director Petraeus, as far as I'm 
concerned, he's a patriot. He's demonstrated that not only in 
his military career, but on taking on this assignment. That 
was, to me, an act of patriotism. It would have been very easy 
for him--he didn't need to do this for his reputation or his 
career. So he deserves our praise, not these nameless, faceless 
attacks that, frankly, have no basis in fact, either.
    And my--my experience is I have been quite pleasantly 
surprised at how open the Intelligence Community has been with 
this Committee, quite to the contrary of this report.
    Director Mueller, thank you for agreeing to serve another 
couple of years. I think that, too, is an act of patriotism. 
It's very much appreciated. At this time of threat to our 
country, for you to agree to take on additional years of 
service deserves our public praise.
    And we thank all of you. I can't neglect mentioning Mr. 
Olsen because his parents are from my home state. I know them 
well; couldn't have finer people. We're very, very fortunate to 
have people of that quality and character serving.
    I'd like to ask each of you in turn, since this is an 
annual meeting--what is your assessment of whether or not we 
have made progress in our ability to handle the terrorist 
threat to this country? Have we made progress? If so, how? Are 
we slipping? What is your assessment of how we have done 
compared to where we were a year ago?
    I'd start with Mr. Goldberg and go right down the line.
    Mr. Goldberg. I think, as it was said earlier, Senator 
Conrad, that progress has been made in various parts of the 
counterterrorism fight, especially against al-Qa'ida senior 
leadership. But there are many other challenges out there, and 
it remains a very, very dangerous part of our work.
    Senator Conrad. Ms. Wagner.
    Ms. Wagner. Senator, I think we have made a lot of 
progress, particularly in a couple of key areas. I think it was 
already mentioned the extent to which many of the stovepipes 
have been broken down in terms of information-sharing between 
the elements of the Community. I think we have made huge 
progress in that realm, and in fact, we operate as a team. And 
I am daily interacting and operating particularly with my 
colleagues at the FBI and at NCTC, looking at the terrorists 
that are abroad as it projects to the Homeland, and then 
dealing with the FBI on the issues that are inside the 
Homeland.
    In the second area, I would just say quickly that where 
we've made a lot of progress, I think, in my own Department, is 
in the ability to which we have been able to harness the 
intelligence from the Intelligence Community to inform our 
instruments, if you will, to keep people out at our borders, to 
make sure that the wrong people are not getting on airplanes at 
last points of departure, and to make sure that people who 
shouldn't get them are not receiving immigration benefits from 
the Department.
    So we've really tightened our ability to take what the 
Community is producing and operationalize that in Homeland 
Security.
    Senator Conrad. Mr. Mueller.
    Director Mueller. The removal of bin Laden and al-Awlaki 
was a huge benefit to the security of the United States, my 
brothers and sisters in the other agencies. By the same token, 
there are still leaders in both Yemen and Afghanistan-Pakistan 
border area that have the capability of launching attacks 
domestically.
    Most of the arrests that we've made over the last year, 
year and a half, had been lone wolves, those individuals who 
have been radicalized, trained on the Internet, and have the 
capability of developing IEDs and other mechanisms on the 
Internet.
    And as we have been relatively successful in addressing 
these particular plots, nonetheless, the ability of persons to 
utilize the Internet, to be both individually radicalized but 
also get the information they need to undertake attacks, has 
increased.
    Senator Conrad. Director Clapper.
    Director Clapper. Sir, just to take perhaps a little longer 
perspective, this is my third job in the Intelligence Community 
in the last 12 years. I started at NIMA two days after 9/11. I 
think we've made tremendous progress.
    The transformation of the FBI into an intelligence-driven 
organization is just one case in point. The maturation of 
Department of Homeland Security, the expansion of the 
Intelligence Community to include both foreign and domestic 
aspects, the sharing at the federal, state, local, tribal, and 
private sector level, I think, demonstrate improvement.
    That's not to say we should rest on our laurels. We always 
have more issues to deal with. And this is not, particularly 
with respect to counterterrorism, it's not a threat that's 
going to go away.
    Senator Conrad. Thank you.
    Director Petraeus. Senator, first of all, thanks for your 
words of support. We have made considerable overall progress 
over the course of the last year. Any time the top three 
leaders of the most significant terrorist organization that 
faces us are taken out, that, needless to say, is really quite 
a banner year. And al-Qa'ida in the Arabian Peninsula, al-
Shabaab, and other organizations have sustained important 
losses as well.
    Having said that, the threat of terrorism remains 
significant and we must sustain the campaign, we must maintain 
the pressure on al-Qa'ida and its affiliates and other violent 
extremist organizations, wherever they may be.
    Beyond that, I also concur with Director Clapper that there 
has been continued important progress in the organizational 
aspects of the war on terror. The counterterrorist campaign has 
benefited enormously from the continued efforts to better 
integrate intelligence for the various elements of the 
Community to work together more effectively and, frankly, even 
within individual agencies to further the progress in the 
integration of efforts between, say, the CIA operators, as well 
as analysts, in bringing together all of the different 
components of our organization and the rest of the Intelligence 
Community, say, in the Counterterrorist Center and some of the 
other centers that we have, as well.
    Senator Conrad. General Burgess.
    General Burgess. Sir, I guess the phrase up here is I would 
like to associate myself with the remarks of those that have 
gone before me. As a plank holder in the Office of the Director 
of National Intelligence, I agree with Director Mueller and 
Director Clapper. We have made great strides in many different 
areas.
    Having said that, we still have work to do and we still 
have challenges remaining.
    Senator Conrad. All right. Mr. Olsen.
    Director Olsen. Consistent with the other comments, the 
bottom line, I think, is that al-Qa'ida is weaker now than it 
has been in the past 10 years. That said, we face a more 
diffuse and decentralized threat from al-Qa'ida's affiliates in 
Yemen and Somalia, as well as the threat from lone actors in 
the United States.
    As Director Clapper said, I think from an organizational 
perspective, in answering your question, our ability to handle 
the threat--we are better positioned, and I think the operative 
word is it's a team approach. We're better positioned to share 
information, as the Vice Chairman commented at the beginning of 
the hearing; we do a better job of integrating that information 
and analyzing it.
    At NCTC we've made improvements in watch listing and in 
providing situational awareness. And overall, again, it's a 
team effort among all of the agencies represented here.
    Senator Conrad. Just in terms of summing this up, what I 
hear is significant progress, serious threats still remain to 
the United States, and that the teamwork in the Intelligence 
Community itself has dramatically improved. I'm hearing that 
quite consistently.
    I think that's very important for the people that we 
represent here, that they understand, yes, we've made progress, 
in some ways very dramatic progress, especially against al-
Qa'ida, but that significant threats remain and that we've got 
to continue to be vigilant, which means we've got to continue 
to put resources to these issues.
    I thank the Chair.
    Senator Mikulski. Good morning, everybody, though it's 
mostly heading into the afternoon. I would like to thank each 
and every one of you for the wonderful work you do every day, 
in every way, protecting our country.
    So much progress has been made since 9/11 in reforming the 
Intelligence Community, making it more effective, making it an 
integrated unit. The fact that all of you are here at the table 
at the same time points to our successes, and probably one of 
our greatest has been what we have done to dismember and 
decapitate al-Qa'ida.
    But I'm going to pick up on the issue that Senator 
Rockefeller raised about Cyber. I've been kind of almost a 
``Johnny-One-Note'' on this issue in what I focus here. I share 
Senator Rockefeller's frustration over a lack of urgency. I 
think it's partly due to the Executive Branch, and also due to 
the Congress itself. My questions are going to go to Clapper, 
Mueller, and Wagner.
    First, just a comment about urgency: it's now been--when we 
get to April, it will be five years since the attack on 
Estonia, in which we thought we were going to trigger Article V 
of NATO for the first cyber war. So we've had five years of 
supposed to being on the edge of our chair on this issue.
    One was--how do we protect dot-mil, and so on? But what 
we've now seen is the issues related to dot-gov and dot-com in 
recent meetings with you, Director Mueller, because of your 
involvement to the Appropriations Committee, and with Ron 
Noble, Interpol, and the Interpol team, it is the protection of 
the dot-com. And he spoke most eloquently about the counterfeit 
and fake drugs coming into European countries, to Canada, and 
to ourselves.
    In a meeting with Dr. Hamburg yesterday at FDA, when we 
were talking about a new regulatory framework to get drugs to 
the market fast and yet safe, one of her biggest challenges is 
protecting the secrets that she has of America's pharmaceutical 
biomedical device community and the supply of the drug chain.
    Right now, there is a bigger criminal penalty for a 
knockoff of a Louis Vuitton handbag than there is for fake 
heparin, which is a blood thinner that came into our country 
that could kill thousands of people.
    So you get what I'm saying here. The growing issues around 
protecting dot-mil in our country, organized crime--Interpol 
says Cyber is the growing crime, and it affects state secrets, 
trade secrets, and then also this other stuff there--the 
corruption, that where there is a weak government there is a 
strong organized crime element.
    So we've got to really move on this. Senator Rockefeller 
has spoken about his frustration with the Executive Branch. I'm 
frustrated with the Legislative Branch. We have turf battles, 
we dither and diddle over policies, and so on. He has a great 
policy, and so on.
    So let me get, though--because to me, there are three 
issues: urgency, foggy policy--particularly on governance, and 
the need for bipartisan camaraderie among ourselves to pass the 
bill.
    So let me get to the governance issue, and it goes to 
Director Clapper, and then Ms. Wagner, and then Director 
Mueller.
    So the question is who's in charge? We all diddle and 
dither over the governance issue. Article 10 and Article 50; 
Homeland Security; is it dot-mil, et cetera. So let's take our 
President. He is at the Democratic Convention and the lights go 
out in San Diego. He said, ``Oh, my God.'' He turns to 
Napolitano and says, ``What is this?'' While he turns to 
Napolitano--and the lights only go out for maybe three hours, 
the lights go out in Boston, et cetera. So he turns to 
Napolitano and says, ``What the hell are we doing here and what 
can we do?''
    My question is, is Napolitano in charge? We know the 
President's in charge. Okay, we know the President's in charge. 
But what is the President in charge of? And I need to know who 
would respond, and so on, because I feel that it is the 
governance issues that are the number one issues, and we 
continue to diddle, dither, and punt.
    Ms. Wagner. I'm just going to jump in here. You know, if 
the lights go off--and we're talking an electrical power grid 
issue--then I would say that, you know, my secretary would be 
the logical person to turn to because we have a clear role.
    Senator Mikulski. And what would she do?
    Ms. Wagner. Well, if I could answer the question I didn't 
get to answer last time, and then I'll get to that.
    Your first question about who's in charge--there's never a 
simple answer to that question, especially in this town, 
because we all have pieces of the pie. But I can tell you that 
where we are, where our responsibilities lie is in securing the 
dot-gov, and then securing the parts of the dot-com that are 
associated with critical infrastructure and key resources, 
including, in your example, the power grid.
    So we would hope that we would have been notified because 
of procedures that we would have already put in place, the 
relationships we would have built, the education we would have 
given, that they had detected some kind of issue or intrusion.
    Senator Mikulski. Have you done this?
    Ms. Wagner. Yes, we have. And we would then turn to our 
partners.
    Senator Mikulski. Well, why don't they feel that?
    Ms. Wagner. I think, ma'am, we still have a ways to go in 
terms of educating and building up this network that we've been 
working on. And we are trying to bring a sense of urgency to 
that.
    We then turn to our partners in the FBI and NSA, because, 
as Director Mueller mentioned earlier, you never quite know 
what the genesis of these attacks are. It could be crime. It 
could be a state actor. It could be an accident. It could be a 
disgruntled former employee.
    So we work this as a triad. We make sure that we're 
bringing to bear the appropriate technologies to bring things 
back on line as quickly as possible, and we ensure that we have 
an investigation going to try to determine the source and the 
attribution.
    Senator Mikulski. Ms. Wagner, first of all, my job--I don't 
want to harangue you, so just know that. But I don't believe 
this. I mean, I really have----
    Director Clapper, what do you think here? So there you are. 
Is the President going to call you? You're the DNI.
    Director Mueller. Well, the President calls us. I mean, the 
fact of the matter is this happens a fair amount now. DHS is 
responsible for the infrastructure. But when it comes to 
attribution, identifying the attribution of a particular 
domestic intrusion, it generally falls to us. And what we 
currently do is we get ourselves and DHS at the table and we 
will put a team out. As soon as we got the word, there would be 
a team. Generally, we would lead that team, but we'd have DHS 
there because of the infrastructure. And wherever the outages 
are, wherever the investigation leads us, we would have a team 
of ourselves, DHS, and, if it goes overseas or if we need 
expertise, we'd have NSA and others from the Community in 
there. And we do this as a matter of course now when we get a 
substantial intrusion that needs immediate investigation.
    Senator Mikulski. Director Clapper.
    Director Clapper. Well, I think what Director Mueller has 
described kind of captures the essence of what I believe is the 
Intelligence Community's responsibility, which is the detection 
and attribution of an attack writ large, whether foreign or 
domestic.
    I just might mention that it just so happens that the 
Administration is sending a senior-level team to brief the 
entire Senate on cyber security tomorrow on the threat and what 
needs to be done about it. Secretary Napolitano, I'm told, will 
be there, my Deputy, John Brennan from the White House, the 
Deputy Secretary----
    Senator Mikulski. There are 11 coming. There are 11 coming. 
So that means that there are 11. But I'll come back not only--I 
mean, it's great that they're going to come and brief us. It's 
great that the National Security Council has come to this 
issue.
    But my question is still, going back to the Rockefeller and 
the sense of urgency, do you feel that the current authorities 
related to Title 10 and Title 50, and then the issues around 
Homeland Security--we're not talking about the current 
situation, our proposed goal, or the way it ought to be when 
the repository of knowledge inside rests in a military agency 
at the National Security Agency.
    Director Clapper. I would say that there probably could be 
more done to take advantage of that technical expertise that 
you recognize that resides in NSA. You know, the Department of 
Defense's response to that was to establish Cyber Command as a 
war-fighting headquarters, but smartly, though, having the 
Director of NSA dual-hatted as the Commander of Cyber Command 
for military application.
    I think there is a debate, frankly, that maybe perhaps the 
responsibility of DoD is bigger than just to defend itself. 
This would be a good topic to bring up at this session 
tomorrow.
    Director Mueller. If I may just interject, we have built up 
a substantial expertise in this arena over a period of time; 
not only domestically, but internationally. We have agents that 
are positioned overseas to work closely with, embedded with our 
counterparts in a number of countries. And so we have, over a 
period of time, built up an expertise. That is not to say that 
NSA doesn't have a substantial expertise, also, understanding 
where it's located----
    Senator Mikulski. But it's a different kind.
    Director Mueller. Well, no, much of it is the same kind. 
Much is the same kind. In terms of power, I think NSA has more 
power in the sense of capabilities. In terms of expertise, I 
would not sell ourselves short.
    Senator Mikulski. We wouldn't sell you short, either.
    Ms. Wagner. And ma'am, I'd like to add that we're committed 
to leveraging NSA's expertise in technology to bring to bear 
for the sectors where we have responsibility. And we think 
we've made a lot of progress in that regard.
    Senator Mikulski. Well, my time is up, but I think, Senator 
Feinstein, this shows that some of the issues are here. We 
can--we can't stop the threat. We can only stop ourselves. This 
is why I think we need to have a robust new legislative 
framework and we have to de-conflict these issues. And instead, 
we just remain foggy and keep punting.
    Senator Feinstein. I thank you; you headed our Cyber Task 
Force. I thank Senator Rockefeller for his interest. I think 
you both are absolutely correct. I think we need to get 
cracking on it. My own view is that there's, kind of, one 
overwhelming issue where there's a difference of opinion, and 
that's whether the standards mean something or whether they're 
purely voluntary in the dot-com area. This needs to get 
resolved and we need to move.
    So I thank you both for the work you've done. As Chairman 
of Commerce and as our Task Force Chairman, thank you very, 
very much.
    Senator Mikulski. Thank you.
    Senator Feinstein. Let me move on and give you the list, as 
it remains, because it's going to take us close to one o'clock. 
We have Senator Coats, Senator Risch, Senator Nelson, and 
Senator Rubio. So it would be my intention, unless there's 
objection, not to do a second round, but to complete this 
round.
    Senator Coats.
    Senator Coats. Madam Chairman, thank you. I'd like to 
pursue an issue that you brought up in your opening, Chairman, 
Madam Chairman, relative to the situation as it exists with 
Iran and its pursuit of nuclearization and the potential 
Israeli response.
    And I think based on what was said earlier, if there's any 
dispute to the fact that sanctions to date have not brought 
about results that we would hope for--and I think, Director 
Clapper, you indicated in your statement, ``We hope that 
sanctions will prevent the necessity for an Israeli response.''
    I don't think--I think the evidence is clear unless there's 
hard evidence to the contrary that we are not aware of, that 
sanctions to this point have not made any kind of difference 
with the regime in Iran. Does anybody dispute that?
    Director Clapper. No, sir, Senator Coats. That is precisely 
the Intelligence Community view or assessment that to this 
point, the sanctions, as imposed so far, have not caused them 
to change their behavior or their policy.
    Senator Coats. And secondly, Director Clapper, you said, 
``We judge Iran would likely choose missile delivery''--no, I'm 
sorry--``We judge Iran's nuclear decision-making is guided by a 
cost-benefit approach. Iranian leaders undoubtedly consider 
Iran's security, prestige and influence, as well as 
international political and security environment when making 
decisions about its nuclear program.''
    Is there any indication that sanctions to date have changed 
their view relative from a cost-benefit standpoint?
    Director Clapper. Well, I think it's fair to say, and we 
could go into this in more depth in a closed environment, that 
there is dissension and debate in the political hierarchy of 
Iran. So there is not unanimity about this. And I do think that 
to the extent that the international community is united on 
this, with U.S. leadership, I do think they pay attention to 
international opinion and what others think of them.
    And certainly if there are impacts on their oil exports and 
to the extent that that would affect their financial situation, 
that could have, I think, a profound impact on their decision-
making calculus in terms of, as we said, the cost-benefit.
    Senator Coats. But that's more of a hope and a wish than it 
is a hard reality, from what I understand.
    Director Clapper. As I said, to this point, the sanctions 
have not caused that calculus to change, apparently. But as the 
pressure ratchets up, there is the prospect that they could 
change.
    Senator Coats. Would a dramatic decrease in oil prices have 
a bearing there? But what is the likelihood of that, given the 
world demand for oil energy sources?
    Director Clapper. Well, it could, and that's what we'll 
have to see how this plays out. And this, in turn, is dependent 
on the willingness of the main customers of Iran to support 
that position.
    Senator Coats. But to date, those main customers are not 
supporting these sanctions.
    Director Clapper. I wouldn't say that. Again, we can 
discuss this in closed session, as to who is and who isn't.
    Senator Coats. Okay. We can discuss that in closed session. 
I don't see any public acknowledgement that China, India, some 
of the fast-growing Asian nations, have joined us in supporting 
rejecting any kind of export.
    Director Petraeus. If I could, Senator, actually publicly, 
it is well known that China reduced its imports of Iranian oil 
in the purchases. I mean, these are matters of public record. 
It remains to be seen whether that continues. It appears that 
Saudi Arabian production is ramping up and can fill some of the 
demand that might have been met by Iranian exports now that 
there are the sanctions on the Central Bank of Iran.
    Senator Coats. Thank you, Director. But aren't we in a 
situation where the clock is ticking?
    Director Petraeus. Certainly.
    Senator Coats. The clock is ticking on the side of the 
Iranian pursuit of nuclearization and perhaps weaponization of 
nuclear capability. And it has been for some time.
    My own view is that it's going to take tougher sanctions 
than currently exist in order to beat that clock that's ticking 
toward a nuclear Iran. And so--but also, we're--you know, we 
see how difficult it is to ratchet up that next level of 
sanctions and get the world community's support. I mean, it 
took us a long time to get European support for the current 
level of sanctions. We don't have Chinese or Russian support 
for it. It's unlikely that we would, unless something changes 
that I'm not aware of.
    And when you put that in the context of what the Israelis 
must be thinking--and everybody acknowledges that it's an 
existential question for them, we've got a time factor here. 
And I just want to be realistic about the fact that the hope 
that sanctions--it's been described as the hope that 
sanctions--can bring about the desired results that we all 
want, both from the Iranian standpoint and from the Israeli 
standpoint. I don't know if any--you'd like to comment?
    Director Clapper. Well, sir, I think you've very accurately 
captured the gravity of the situation and what's at stake here 
and particularly for what's at stake for the Israelis.
    Senator Coats. Would a naval blockade--which I guess would 
be an act of war--naval blockade achieve the kind of cost-
benefit ratio that would give them real pause about changing 
their attitudes?
    Director Clapper. Well, I don't know, sir. We'd have to 
take that one under advisement, but perhaps to air out the 
possibilities there in a closed session.
    Certainly, that would have impact on their calculus. 
Whether it would move in the direction of a positive outcome or 
a negative outcome is hard to say.
    Senator Coats. Well, of course, the outcome we want is 
trending very strongly toward a negative--I mean, the outcome 
that seems to be taking place is trending strongly toward a 
negative outcome. And the outcome that we want seems to be 
diminishing.
    And I hope I'm wrong on this, but it just seems to me that 
we've had years and years and years of sanctions. It's very 
difficult to ratchet those up and tighten them to the point 
where we see a decided change in the Iranian supreme leadership 
decisions on this. The recent movement of uranium to Qom and 
enrichment and the defiance in terms of public statements that 
come out of Iran all indicate that, so far--I mean, maybe 
they're disputing this internally, but so far we have not seen 
positive results from that.
    And when you're viewing it from the Israeli standpoint, it 
clearly, I think, reaches the level of perhaps the number one 
challenge of 2012, as the Chairman has indicated. General?
    Director Petraeus. Well, I do think it's . . .
    Senator Coats. Excuse me--Director. Director General.
    Director Petraeus. The latest round of sanctions, of 
course, is really just being felt, and it will take a number of 
months. But as you note, there is a clock ticking during that 
time, and there is the inexorable progress, if you will, and 
the refinement of additional uranium to 3 percent, then 20 
percent, and a variety of other activities that are ongoing.
    And again, the IAEA has laid these out very accurately and 
effectively. But the fact is that the Iranian currency has lost 
considerable value recently. There are runs on the bank in 
recent weeks that have been seen as the Iranian citizenry tries 
to get its money out of their own domestic currency and into 
anything that will hold its value better as inflation also 
takes off. Director Clapper talked about problems of 
unemployment as well. But the overall situation is one in which 
the sanctions have been biting much, much more literally in 
recent weeks than they have until this time.
    So I think what we have to see now is how does that play 
out and what is the level of popular discontent inside Iran? 
Does that influence the strategic decision-making of the 
Supreme Leader and the--and the regime, keeping in mind that 
the regime's paramount goal in all that they do is their 
regime's survival?
    Senator Coats. I have additional questions to pursue, 
particularly regarding the Israelis' perception of the impact 
of this, but I think that's better left for closed session.
    Thank you, Madam Chairman.
    Chairman Feinstein. Thank you very much, Senator. 
Appreciate it. Senator Nelson?
    Senator Nelson. Thank you, Madam Chairman. Senator Coats, 
in response, I think it's instructive to remember what the 
policy is on this, as stated by the President in the State of 
the Union. And he said, quote, ``America is determined to 
prevent Iran from getting a nuclear weapon, and I will take no 
options off the table to achieve that goal.''
    And then the Secretary of Defense was interviewed on 60 
Minutes and said, ``The U.S. and the President's made this 
clear. It does not want Iran to develop a nuclear weapon. 
That's a redline for us, and it's a redline, obviously, for the 
Israelis, so we share a common goal here. If we have to do it, 
we will do it.''
    Questioner: ``What is 'it'?'' And this is the secretary--
``If they proceed, and we get intelligence that they're 
proceeding with developing a nuclear weapon, then we will take 
whatever steps are necessary to stop it.''
    Question: ``Including military steps?''
    Answer: ``There are no options that are off the table.''
    Senator Coats. Would the senator yield just for a quick 
response?
    Senator Nelson. Of course. Of course.
    Senator Coats. In a previous life, I served here and I 
heard much the same rhetoric regarding North Korea. And now we 
know that North Korea, despite all of our rhetoric, possesses 
nuclear weapons capability. And I just hope we don't have to 
talk ourselves into a situation where we're not able to back up 
what we say. We didn't do it before, and so it raises some 
skepticism on my part by statements made by both Republican and 
Democrat leadership relative to what you indicated and quoted. 
But we've been down this road before.
    Senator Nelson. Well, let's ask General Clapper. Is that 
the policy?
    Director Clapper. I read it just as you do, sir. It's not 
policies as much as it's execution. And in the case of the 
North Koreans, our policy was just words, not action.
    Senator Nelson. Well, I believe--this senator believes the 
stakes are so high that the policy will be executed.
    What I wanted to do was I wanted to give an example from an 
earlier discussion of how we are meeting the terrorist threat. 
And I want to particularly congratulate you, Mr. FBI Director, 
because we just had a plot in Florida, in Tampa, to have 
several truck bombs go off downtown to kill a lot of people. 
And the FBI was all over this, in coordination with the U.S. 
Attorney, in coordination, bringing in local law enforcement, 
the sheriff's office, the Tampa police department.
    But what is also instructive is help with intelligence out 
of the Muslim Community to identify the potential perpetrator 
and to stop him before he did the act. And I think it's another 
example of how all of these different stovepipes that weren't 
interacting before are beginning to. So I congratulate you.
    Director Mueller. Thank you, Senator. It was, as I want to 
use the word here, a team effort of particularly state and 
local law enforcement and the other federal authorities working 
together over a substantial period of time.
    But I particularly want to single out the Muslim Community 
for its recognizing a threat and bringing it to the 
authorities. And I will tell you, over a period of time, many 
of our cases--most of our cases have come with individuals from 
the Muslim Community or the neighborhood who have brought to 
our attention concerns about the potential threat in which we 
have run and ultimately have resulted in a disruption of a 
plot.
    Senator Nelson. Madam Chairman, thank you.
    Chairman Feinstein. And I thank you, Senator Nelson, for 
your patience.
    Senator Rubio.
    Senator Rubio. Thank you. Thank you all. For the panelists, 
I think this is kind of a general question. I don't know who 
will handle it. It has to do with Iran's intentions in the 
Western Hemisphere.
    I think it's generally accepted, I think it's fact that 
Iran is willing to sponsor and use terrorism as a tool of its 
foreign policy and its statecraft around the world. And so it's 
with alarm that I view, having been on this Committee only a 
year, but that I view a recent trip through Latin America, a 
four-nation trip, Ahmadinejad to Latin America--now, part of it 
probably is just an effort, I think, to show that he's not 
isolated, that there are countries that will actually meet with 
him and talk to him, and part of it is that.
    And I think mutually important, some of these leaders, 
particularly the one in Venezuela, have these weird illusions 
that he's some sort of global figure and that, and on that 
stage he's actually a relevant individual.
    But beyond that is something else that I may be concerned 
about. And maybe, in this open source, you can comment a little 
bit about what else is behind there.
    I mean, a couple things that are concerning is, for 
example, the Venezuelan banking system is a significant banking 
system where billions of dollars flow through there. Could it 
not be used as a place to evade sanctions, for example?
    We also know that I guess they opened up what is called 
Banco Internationale del Desarrollo. I guess it's the 
International Bank of Development. And I think the largest 
stakeholder in that is a bank by the name of--it's an Iranian 
bank--Saderat, if I'm not mistaken, which we know is used to 
funnel funds to Hezbollah and other groups like that.
    So we're concerned about that. Obviously, the resources, 
uranium mining, et cetera, is an issue, and then, you know, any 
other kind of asymmetrical capabilities that that may be 
establishing in the region.
    So, kind of on a global--kind of looking at that, how 
serious a threat is it? How focused are we on it? Obviously, 
you know, relatively speaking, it's not what we confront in the 
Middle East yet, but what's the state of that? Because there's 
not a lot of conversations about Iran's intentions in this 
hemisphere.
    Director Clapper. Well, we are concerned about it. We do 
follow it. And I think you're quite right and I appreciate your 
highlighting that, Senator Rubio, because in this day and age, 
the Iranians are looking anywhere for a friendly hand. 
Ahmadinejad's trip was not all that successful.
    Obviously, we are very concerned about the connection with 
Venezuela. And of course, the most obvious manifestation of 
this outreach is the plot uncovered to assassinate the Saudi 
ambassador here in Washington, which was uncovered in Mexico--
with the cooperation, by the way, of the Mexican authorities.
    So there is more to unfold here. I think they are, 
consistent with their outreach elsewhere, trying as well to 
penetrate and engage in this hemisphere.
    We'll have to--I would like to research a little bit these 
financial banking, potential financial banking connections. I'm 
not current on that specifically. But I think that if there is, 
that's indicative of their attempts to, again, evade sanctions, 
which they have worked very assiduously at in the past.
    Senator Rubio. Just as a follow-up to that, and I 
appreciate it, is--and obviously we're limited in what we can 
talk about in this setting, nor would I ask you to opine on 
specific, you know, policy decisions that have to be made--but 
I would just encourage, whether privately or otherwise, for the 
Administration and those in the Intelligence/security Community 
to think about--I hate to use the word red lines, it's been 
discussed--but certainly things we're not going to tolerate in 
the region. Because I think there's potentially always the risk 
that some may think we're so distracted in other parts of the 
world that there are certain things they may be able to get 
away with in terms of capability building that we're somehow 
not going to respond to.
    So I don't think we should necessarily be out looking for 
conflicts, but I certainly think there are things that we 
should not allow and that we should consider that as a matter 
of policy expressing that, privately or publicly, whatever, you 
know, fits the--the needs of the Community.
    My last question is about Mexico and just your--any 
assessment that we have with regards to drug violence in that 
country posing a threat to governance and to the government, 
particularly in such an important year where these key 
elections are going on in that country.
    Director Clapper. Director Petraeus just returned from a 
very successful trip to Mexico, so I'll ask him to address 
that.
    Director Petraeus. Well, thanks. I did indeed just visit 
there. There's no question about the magnitude of the 
challenges there to the rule of law. In certain areas it does 
not exist.
    But there's also no question about the determination of the 
government of Mexico and indeed the progress that they have 
made in a variety of different ways, both in terms of results 
in taking key leaders of the criminal gangs, the narcotic--
illegal narcotics gangs out of action, very substantial results 
in that in the last two or three years in particular, but also 
in their organizing for this effort and in the building of 
institutions.
    Indeed, I think that the legacy of the current president 
will be the institutions that he has built during his time in 
terms of, for example, the national police, in coming to grips 
with some of the judicial challenges, the opening up of--or 
soon to open, for example, more than five additional 
corrections institutes, and indeed the comprehensive approach 
that they are taking to this effort in truly a civil, military, 
law enforcement approach, because that is, obviously, what it 
takes to retrieve certain areas that have gotten away from the 
grip of the government and the writ of law, if you will.
    That's the impression that I took away from this. And 
clearly the fact that this is going to be--continue to be a 
very tough fight. But my sense that the government knows what 
needs to be done, has been building, again, these critical 
institutions that are necessary to carry out this comprehensive 
campaign that they recognize is necessary.
    Needless to say, all of the different elements of the U.S. 
government are partnering with their respective elements of the 
Mexican structures. The integration of intelligence that we've 
tried to achieve here in the United States is something that 
they're also trying to achieve in Mexico and it's something 
with which we're involved in trying to support.
    Chairman Feinstein. Thank you very much, Senator Rubio.
    Senator Wyden has one last question.
    Senator Wyden.
    Senator Wyden. Madam Chair, thank you for your courtesy.
    Director Clapper, as you know, the Supreme Court ruled last 
week that it was unconstitutional for federal agents to attach 
a GPS tracking device to an individual's car and monitor their 
movements 24/7 without a warrant. Because the Chair is being 
very gracious, I want to just do this briefly.
    Can you tell me, as of now, what you believe this means for 
the Intelligence Community, number one, and two, would you be 
willing to commit this morning to giving me an unclassified 
response with respect to what you believe the law authorizes?
    This goes to the point that you and I have talked, sir, 
about----
    Director Clapper. Yes, sir.
    Senator Wyden [continuing]. In the past, the question of 
secret law, as you know. I strongly feel that laws and their 
interpretations must be public and that of course the important 
work that all of you are doing, we very often have to keep that 
classified in order to protect secrets and the well-being of 
your capable staff.
    So just two parts: One, what you think the law means as of 
now, and will you commit to giving me an unclassified answer on 
the point of what you believe the law actually authorizes.
    Director Clapper. Sir, the judgment rendered, as you 
stated, was in a law enforcement context. We are now examining, 
as are the lawyers, what the potential implications for 
intelligence are, foreign or domestic. So that reading is of 
great interest to us and I am sure we can share it with you.
    One more point I need to make, though. In all of this, we 
have and will continue to abide by the Fourth Amendment.
    Senator Wyden. Okay. Thank you, Madam Chair.
    Chairman Feinstein. Thank you very much. And I'd like to 
end this by thanking all of you. I think it's been a positive 
year, as much as one can say anything is a positive year in 
this area.
    I just was looking at the list of the twenty plots that had 
been prevented this past year, and it's really consequential, 
the work that has been done to protect the Homeland, as well as 
the work that's been done abroad.
    So I think we really have a very important intelligence 
team together, and I think it's really progressing. And I know 
on behalf of the Vice Chairman and myself, we are very grateful 
to you, and I know that includes the whole Committee as well.
    So thank you very much for your dedication, for your 
talent, and for your extraordinary service.
    [Whereupon, at 12:30 p.m., the Committee adjourned.]
  

                                  
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