[Congressional Record Volume 140, Number 83 (Monday, June 27, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 27, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
   STATEMENT OF THE HONORABLE R. JAMES WOOLSEY, DIRECTOR OF CENTRAL 
  INTELLIGENCE, ON INTERNATIONAL ORGANIZED CRIME AND NUCLEAR SECURITY

                                 ______


                            HON. TOM LANTOS

                             of california

                    in the house of representatives

                         Monday, June 27, 1994

  Mr. LANTOS. Mr. Speaker, with the current preoccupation of the 
America media over the O.J. Simpson affair, it is useful and important 
for the American people to realize that there are other issues with an 
impatience that transcends the chase of the white Bronco on the Los 
Angeles freeways or the latest legal maneuvering of O.J. Simpson's 
high-powered defense team.
  Today at a hearing on International Organized Crime and Nuclear 
Security, R. James Woolsey, the Director of Central Intelligence, 
presented a serious and very sobering statement on the threats now 
facing the international community.
  Mr. Speaker, in view of the importance of this issue and its urgent 
threat to the security of the United States and other nations, I ask 
that Director Woolsey's statement be placed in the Congressional 
Record. I ask my colleagues to read and thoughtfully consider this 
critical statement.

                     Statement by R. James Woolsey

       Mr. Chairman, I welcome the opportunity to address the 
     members of this committee on the subject of Russian organized 
     crime. Today, I will describe the activity and nature of 
     Russian organized crime, its growing influence in all levels 
     of Russian institutions and society, and the danger it poses 
     to the stability of Russia and US national security 
     interests. I will also address the potential for Russian 
     organized crime involvement in the acquisition and transport 
     of weapons of mass destruction, particularly nuclear weapons 
     and materials. Then I will address the role of intelligence 
     to understand, and to help thwart, these criminal 
     organizations.
       With me this afternoon are Tony Williams, Deputy Chief of 
     the Russian Affairs Division of the Office of Slavic and 
     Eurasian Analysis; and Bryan Soderholm, Coordinator for 
     International Organized Crime for the Directorate of 
     Intelligence. After I finish my statement to your 
     subcommittee, I will ask them to join me, and together we 
     will endeavor to answer your question about these important 
     issues.
       In testimony before the Terrorism, and International 
     Operations Subcommittee of the Senate Foreign Relations 
     Committee in April, I discussed the world-wide threat posed 
     by international crime. I described how powerful crime 
     organizations were built upon narcotics trafficking, alien 
     smuggling, and financial and bank fraud. With the huge 
     resources derived from such activities, organized crime 
     groups are able to forge international links and develop 
     sophisticated technical and marketing expertise to further 
     enhance their wealth and influence. Operating outside the law 
     with a strong proclivity for violence to impose their will, 
     international crime organizations work to undermine the 
     authority of governments, disrupt local economies, and 
     exponentially drive up the rate of violent crime.
       There is a major difference between the challenge posed by 
     organized crime and that posed by nations who have been our 
     adversaries. As a rule, nations do not exist in a constant 
     state of conflict. Even during the long struggle of the cold 
     war, when cooperation was not feasible, communication was 
     possible. From quiet diplomacy to public demarches. From 
     hotlines to summitry, the means could be found to limit or 
     settle disputes.
       With organized crime, there is no possibility for 
     diplomacy, demarches, hotlines, or summits. These tools have 
     no meaning to groups whose business is the criminal 
     exploitation of individuals and even governments through 
     threats, intimidation, and murder. When the sheer size and 
     power of international organized crime can endanger the 
     stability of nations, the issues are far from being 
     exclusively in the realm of law enforcement--they also become 
     a matter of national security.
       Russian organized crime is a unique subset of international 
     organized crime that requires a special focus.
       First, Russia is a country of enormous strategic interest 
     to the United States, not the least because of its huge 
     arsenal of weapons of mass destruction and significant 
     inventory of weapons grade materials.
       Second, we have a major stake in the outcome of Russia's 
     painful effort to effect a transition from communism to 
     democracy and a market economy, and therefore a significant 
     interest in factors that could undermine stability, weaken 
     civil institutions, and impede reform efforts.
       Third, Russian organized crime has quickly become an 
     international menace, conducting operations far beyond 
     Russian borders and reaching even our own shores. For these 
     reasons, we need to understand the complex role of Russian 
     organized crime, the strength of its capabilities, and the 
     extent of its influence on the evolution and development of 
     public life and institutions.
       Organized crime is not a new phenomenon in Russia or Soviet 
     history. During the Soviet era, criminal groups and the black 
     market often functioned as an extension of the Communist 
     party and the KGB. In fact, the Communist party and KGB used 
     criminal groups and the black market as a second, parallel 
     economy to further their own goals and enrich their own 
     organizations. They had their own codes, traditions, and 
     loyalties.
       In the late 1980's, we saw strong indications that state 
     control had begun to wane. Many of these criminal 
     organizations outlived the state which fostered them and took 
     on a life of their own. This ``old guard,'' however, has been 
     severely challenged by a surge of upstarts.
       Since the breakup of the Soviet Union, we have seen a 
     dramatic rise in new criminal groups that operate 
     independently without regard for whatever ground rules for 
     criminal activity that might have existed before. The ``new 
     Mafia,'' as it if often referred to, does not abide by the 
     old customs established by the traditional Russian 
     underworld.
       The diffuse nature of criminal activity in Russia and the 
     other former Soviet republics presents a difficult adversary 
     to track. The absence of readily identifiable or consistent 
     profiles makes these Russian-style ``Mafias'' harder to 
     define or categorize than their more tightly knit western 
     counterparts. But taken together, they are often just as 
     powerful, influential, and dangerous.
       Complicating the problem for Russian law enforcement is the 
     involvement of former KGB and military officers in organized 
     crime. With their KGB and military background, special 
     training, and contacts with former colleagues, these 
     individuals offer valuable skills and access that can 
     increase the power and influences of Russian criminal groups 
     who tap into them.
       To generate money, Russian organized crime groups are 
     actively engaged in the illegal transport and sale of 
     narcotics, weapons, antiques, icons, raw materials, stolen 
     vehicles and some radioactive materials, and the transport of 
     illegal immigrants. They are also targeting the financial 
     sector, particularly the acquisition of banks in order to 
     launder profits as well as fraudulently obtain government 
     loans. They also engage in large scale extortion and brutally 
     enforce their demands through deadly violence.
       Recently, in fact, a national parliamentarian who had 
     publicly exposed organized crime leaders was gunned down. 
     This was not an isolated incident. Several city and 
     provincial officials have also been assassinated by organized 
     crime groups.
       While these activities provide the cash that criminal 
     organizations need to operate and build their empires, their 
     ability to carry on such transactions is dependent in large 
     part on co-opting or recruiting corrupt government officials. 
     The low pay of public officials, the economic hardship they 
     must endure, and the inherent uncertainty of the political 
     system appear to have made some of these individuals quite 
     vulnerable to cooperating with organized crime.
       The growing strength and ability of Russian organized crime 
     is evident. In his February address to the Russian 
     Parliament, President Yeltsin stated that organized crime is 
     now the number one problem facing Russia. Last month, in an 
     address to members of the Russian Federation 
     Counterintelligence Service. President Yeltsin warned that, 
     ``The criminalization of society is continuing.'' The 
     statistics bear him out.
       Of the 2000 banks in Russia today, a majority are 
     controlled by organized crime, according to the Ministry of 
     Internal Affairs. The Ministry says there are roughly 5,700 
     organized crime groups in Russia, with an additional 1,000 in 
     the other former republics. To keep this in perspective, I 
     want to point out that many of these organizations are 
     actually small, local groups of petty thieves. They would not 
     fit the Western definition of organized crime. However, of 
     the 5,700, approximately 200 are large, sophisticated 
     criminal groups engaged in criminal activity throughout the 
     former Soviet Union and in 29 other countries, including the 
     United States.
       The perception of the power of organized crime among the 
     citizens of Russia was made clear in a poll in March of this 
     year. In response to the question, ``Who controls Russia?'' A 
     plurality of 23 percent responded with ``the Mafia.'' 22 
     percent responded with, ``no one.'' 19 percent responded, ``I 
     don't know.'' And just 14 percent responded, ``President 
     Yeltsin.''
       The ramifications of the rapid growth of organized crime in 
     Russia and elsewhere in the former Soviet Union are enormous. 
     For Russia itself, there is a real threat that the surge in 
     crime will sour the Russian people on President Yeltsin's 
     reform program and drive them into the arms of Russia's hard-
     line political forces. Public fear of crime has been cited as 
     the primary motivation for about three-fourths of those who 
     voted for Vladimir Zhirinovskiy in last year's legislative 
     elections.
       The threat of organized crime to civil society has become 
     so great, in fact, that President Yeltsin issued a decree 
     last month giving sweeping powers to law enforcement 
     officials to investigate and detain suspected criminals. This 
     far reaching decree has just now begun to be implemented in 
     Moscow and St. Petersburg and, we believe, could lead to 
     declarations of states-of-emergency in some cities and 
     regions. Even the Russian military has been authorized to 
     assist in the crackdown effort.
       The decree has been challenged by the Russian 
     Parliamentarians and other officials who warn that it 
     contradicts the constitution and violates human rights. But 
     this has not stopped the crackdown from going forward. If 
     this effort is to have any real effect, however, it will have 
     to attack corruption within the government. Otherwise, it 
     will become simply a crackdown on low-level criminal gangs, 
     while more sophisticated, better organized, and well-
     connected criminal groups survive virtually unscatched.
       Substantial corruption within the government, especially 
     within the law enforcement and security services, would, of 
     course, seriously complicate our cooperative efforts with the 
     government on matters of interest to the corrupting criminal 
     groups.
       The impact of President Yeltsin's decree will not be known 
     for some time, but the strong influence of organized crime in 
     all aspects of social, economic, and political life in 
     Russia, as well as many of the former Soviet republics, 
     suggests a difficult and agonizing future. It is not 
     unreasonable to imagine a Darwinian process of survival of 
     the fittest, with many of these criminal groups eventually 
     eliminated or absorbed by stronger rivals. Those groups left 
     could be very large, sophisticated, and influential. And they 
     will pose a long-term threat to Russia--and to the 
     international community.
       When the security of weapons of mass destruction--nuclear, 
     chemical, biological, advanced conventional, as well as 
     nuclear materials such as highly enriched uranium and 
     plutonium--is factored into the equation, the stakes can 
     become dangerously high for Russia itself and for the U.S.
       Russian criminal organizations have created an extensive 
     infrastructure consisting of front companies and 
     international smuggling networks. This infrastructure, built 
     on ties to corrupt military, political, and law enforcement 
     officials, could be used to facilitate the transfer and sale 
     of these weapons and materials.
       In addition, organized crime groups certainly have the 
     resources to bribe or threaten nuclear weapons handlers or 
     employees at facilities with weapons grade nuclear material. 
     In many cases, employees at such institutes are poorly paid, 
     or not even paid at all, for months on end.
       Some of our traditional intelligence tools for monitoring 
     nuclear weapons and the command and control infrastructure in 
     the former Soviet Union are quite relevant. Also relevant are 
     new intelligence techniques which we are continually 
     developing on many types of proliferation problems. We use 
     them and other techniques to piece together potential 
     international webs of communications and transportation, 
     front companies, and the like. Proliferation is among the 
     most difficult of intelligence tasks, requiring all aspects 
     of our world-wide intelligence networks--human intelligence, 
     communications intelligence, and imagery from reconnaissance 
     satellites.
       But let me point out that despite considerable press 
     speculation to the contrary, trading in nuclear weapons and 
     materials is not the primary or even secondary business of 
     organized crime groups in Russia today. The usual extortion, 
     weapons and narcotics trafficking, and financial fraud 
     activities currently are too lucrative to be abandoned for 
     the high profile and risky acquisition weapons of mass 
     destruction. But we can ill afford to assume that because 
     brokering such transactions has not yet been an activity of 
     consequence, we can relax our guard and be confident that 
     such a contingency will not develop in the future.
       Specifically, we cannot rule out the possibility that 
     organized crime groups will be able to obtain and sell 
     nuclear weapons or weapons grade materials as a target of 
     opportunity. We are especially concerned that hostile states 
     such as Iran, Libya, and North Korea may try to accelerate or 
     enhance their own weapons development programs by attempting 
     to acquire weapons of mass destruction or weapons grade 
     material through organized crime groups.
       While organized crime groups appear to be the logical 
     brokers or purveyors of nuclear weapons and materials, 
     individual criminal acts in this field must also be 
     considered. Indeed, most of the cases of nuclear related 
     smuggling that we are aware of involve desperate individuals 
     or small groups, with no apparent links to organized crime, 
     simply trying to make fast money. A disgruntled military 
     officer where a nuclear weapon is stored, or an employee at a 
     research institute with access to weapons grade nuclear 
     materials are also in a position to steal and pass on the 
     deadly contraband.
       Earlier this month, Russian Counterintelligence Service 
     officials announced the arrest of three men who were found to 
     have in their possession three kilograms of enriched 
     uranium. A janitor at an unspecified facility near Moscow 
     apparently smuggled the material out of the plant where it 
     was stored.
       The Russian government has made it clear that they want to 
     prevent the proliferation of all weapons of mass destruction 
     and materials. President Yeltsin has said that, ``The 
     proliferation of nuclear and other categories of weapons of 
     mass destruction within the country and beyond cannot be 
     allowed.''
       We welcome the efforts of the Russian government, including 
     particularly its security services, to play a key role in 
     non-proliferation, and we support the priority they give to 
     this effort. They face a daunting task: not only are 
     political and economic pressures undercutting the ability of 
     the central government to implement export guidelines and 
     properly secure the facilities with nuclear weapons and 
     materials, but the Russian law enforcement and security 
     services must themselves battle with increasing difficulty 
     against corruption.
       To date, we have not detected any nuclear warheads or 
     significant quantities of weapons-grade materials being 
     smuggled out of the former Soviet Union. There are, however, 
     numerous cases in which low-enriched uranium, medical and 
     other radioactive isotopes, and scam materials, notably red 
     mercury and osmium, have been offered for sale on the black 
     market. Press reports routinely assert that Russian organized 
     crime groups are intimately involved in some of these 
     activities.
       We cannot take these stories lightly even though the 
     transactions in low grade nuclear materials and radioactive 
     isotopes do not pose a proliferation threat per se because 
     they cannot be used to make nuclear weapons. However, some of 
     these materials and isotopes could be a terrorist tool if 
     combined with a conventional bomb to produce low level, but 
     still lethal, radioactive contamination.
       Last Summer when I testified before this committee, I 
     discussed by concerns about proliferation of weapons of mass 
     destruction to rogue or hostile regimes. In my testimony, I 
     noted that we must also anticipate the possibility that 
     hostile groups, specifically terrorist groups, might also 
     acquire these weapons with or without state sponsors. The 
     bombing of the New York World Trade Center certainly 
     heightened our sensitivity to the possibility that a 
     terrorist incident could involve such weapons.
       We have no evidence that Russian organized crime groups are 
     supplying or even attempting to supply terrorist groups with 
     highly destructive weapons. Nonetheless, we should not rule 
     out the prospect that organized crime could become an avenue 
     for terrorists to acquire a destructive weapon.
       In sum, Mr. Chairman, the possibility of organized crime 
     groups gaining access to nuclear weapons and materials has 
     profound national security implications for the United 
     States. The inherent difficulties of dealing with an 
     essentially criminal target that affects our national 
     security interests are compounded in Russia--a country that 
     is still undergoing a radical transformation as it comes to 
     grips with the staggering problems left in the wake of over 
     70 years of communism.
       Russia's wrenching reform is a long-term problem, and we 
     applaud the efforts being made by the Russian government to 
     make meaningful change. But during this tumultuous time of 
     change and uncertainty for Russia, and all of the republics 
     of the former Soviet Union, it is essential that we continue 
     to increase our efforts to collect and analyze intelligence 
     that can help us understand and thwart the threat of 
     organized crime.
       Mr. Chairman, the intelligence community has been actively 
     collecting information on international organized crime since 
     the 1980's. Even prior to the breakup of the Soviet Union, we 
     were particularly watchful of Russian organized crime. Let me 
     now address the ways in which we are meeting the challenges 
     posed by Russian organized crime.
       To bring more resources to bear upon this problem, I have 
     established in the National Intelligence Council the position 
     of national intelligence officer for global and multilateral 
     affairs. In this position, Dr. Enid Schoettle will be doing a 
     strategic review of this issue and oversee estimates on 
     organized crime. Our National Intelligence Officer for 
     Strategic Programs, Keith Hansen, facilitates important 
     analysis of nuclear security in the former Soviet Union for 
     the whole intelligence community.
       We are also devoting more resources to organized crime 
     issues within the intelligence community, as well as to 
     tracking of proliferation of weapons of mass destruction. The 
     Nonproliferation Center, for example, works closely with the 
     National Intelligence Council and elements of the Directorate 
     of Intelligence and Directorate of Operations supporting new 
     collection and analytic efforts. We have also formed several 
     working groups in the intelligence community to pool and 
     coordinate both collection and analytic resources on 
     organized crime. These groups systematically brief and 
     provide intelligence to the FBI as well as other agencies and 
     policymakers. I intend continually to review our resource 
     commitments to this important set of issues.
       There is no one body of expertise that will win the battle 
     against organized crime. Because of the complexity and 
     diffuse nature of this problem, it will take the combined 
     efforts of historians and sociologists, many of them with 
     Russian and other language skills, to study these groups. It 
     will take financial analysts and economists to understand and 
     expose the transactions and money laundering schemes of these 
     criminals. It will take technical experts to track efforts by 
     organized crime to circumvent safeguards against 
     proliferation of weapons of mass destruction. It will take 
     political analysts and regional specialists to assess the 
     impact of organized crime on political and economic stability 
     in the former Soviet Union. And because of the transnational 
     nature of this threat, it will take cooperation with law 
     enforcement bodies, both here and abroad, including the FBI, 
     Customs, Immigration, and foreign security services.
       Let me conclude with a final point. Our battle against 
     international organized crime will not be like wars we have 
     fought against nations. The adversaries in this struggle are 
     criminal enterprises that wear no uniforms and have no 
     patriotic ideals. They feed off of societies' weaknesses, 
     corrupting the normal course of life, and destroying civic 
     culture. Their quest for profit mocks all laws, mores, and 
     values. They erode what hope is left in nations newly emerged 
     from totalitarianism that are desperately struggling toward 
     stability, democracy, and a better life.
       In what threatens to follow the Era of the Cold War--we 
     may, sadly, come to call it the Era of Anarchic 
     Proliferation--the danger of breakdown of legitimate 
     authorities in many nations becomes even more alarming. The 
     specter of these enormously destructive tools of war in the 
     hands of criminal groups with the capability of passing them 
     on to hostile powers compels our vigilance and commitment.
       Winning this war will not be easy nor will it be quick. 
     Victory will not be seen in decisive events, but will come in 
     increments. In the end, I am confident we can prevail if we 
     persist and work together on these new and very troubling 
     problems.
       Thank you, Mr. Chairman.

                          ____________________