[Senate Report 105-1]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                                 SENATE

 1st Session                                                      105-1
_______________________________________________________________________


 
                         COMMITTEE ACTIVITIES

                               __________

                             SPECIAL REPORT

                                 of the

                    SELECT COMMITTEE ON INTELLIGENCE
                          UNITED STATES SENATE

                   JANUARY 4, 1995 TO OCTOBER 3, 1996




                January 22, 1997.--Ordered to be printed


                    SELECT COMMITTEE ON INTELLIGENCE

   RICHARD C. SHELBY, Alabama, 
             Chairman
 J. ROBERT KERREY, Nebraska, Vice 
             Chairman
JOHN GLENN, Ohio                     JOHN H. CHAFEE, Rhode Island
RICHARD H. BRYAN, Nevada             RICHARD G. LUGAR, Indiana
BOB GRAHAM, Florida                  MIKE DEWINE, Ohio
JOHN F. KERRY, Massachusetts         JON KYL, Arizona
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
CHARLES S. ROBB, Virginia            ORRIN G. HATCH, Utah
FRANK R. LAUTENBERG, New Jersey      PAT ROBERTS, Kansas
CARL LEVIN, Michigan                 WAYNE ALLARD, Colorado
                                     DAN COATS, Indiana
   TRENT LOTT, Mississippi, Ex 
              Officio
 THOMAS A. DASCHLE, South Dakota, 
            Ex Officio
                                 ------                                
Taylor W. Lawrence, Staff Director
 Christopher C. Straub, Minority 
          Staff Director
  Kathleen P. McGhee, Chief Clerk


                         LETTER OF TRANSMITTAL

                              ----------                              

                                       U.S. Senate,
                          Select Committee on Intelligence,
                                  Washington, DC, January 22, 1997.
    Dear Mr. President: As Chairman and Vice Chairman of the 
Select Committee on Intelligence, we submit to the Senate the 
Report of the Senate Select Committee on Intelligence of its 
activities during the 104th Congress from January 4, 1995 to 
October 4, 1996 under the Chairmanship of Senator Arlen Specter 
and the Vice Chairmanship of Senator Bob Kerrey. The Committee 
is charged by the Senate with the responsibility of carrying 
out oversight of the intelligence activities of the United 
States. While the majority of its work is of necessity 
conducted it secrecy, the Committee believes that intelligence 
activities should be as accountable as possible to the public. 
This public report to the Senate is intended to contribute to 
that requirement.
            Sincerely,
                                   Richard Shelby,
                                           Chairman.
                                   J. Robert Kerrey,
                                           Vice-Chairman.


                            C O N T E N T S

                              ----------                              

                                PREFACE

                                                                   Page
  I. Introduction.....................................................1
 II. Legislation......................................................4
        Intelligence Budget......................................     4
        S. 922 Intelligence Authorization Act for Fiscal Year 
            1996.................................................     5
        S. 1718 Intelligence Authorization Act for Fiscal Year 
            1997.................................................     5
        Intelligence Renewal and Reform Act of 1996..............     6
        The National Imagery and Mapping Agency..................     7
III. Arms Control.....................................................8
        Chemical Weapons Convention..............................     8
        START II Treaty..........................................     9
 IV. Counterintelligence.............................................10
        The Aldrich Ames Espionage Case..........................    10
        French Flap..............................................    11
        Economic Espionage.......................................    12
        Foreign Intelligence Surveillance Act....................    13
  V. Counterterrorism................................................13
        Terrorism Threat Overview................................    13
        Khubar Towers and OPM-SANG Bombings......................    14
 VI. Counterproliferation............................................15
        Non-Proliferation........................................    15
        North Korean Weapons of Mass Destruction Programs........    16
        Long-Range Missile Threat................................    16
VII. Oversight Activities............................................17
        National Security Threats to the United States...........    17
        Intelligence Support to U.S. Efforts in Bosnia...........    18
        Inquiry into U.S. Actions Regarding Iranian and Other 
            Arms Transfers to the Bosnian Army...................    18
        Congressional Notification of Foreign Policy Decisions...    21
        Persian Gulf Syndrome....................................    22
        Zona Rosa................................................    22
        Vietnamese Commandos.....................................    23
        CIA/Contra/Cocaine Link..................................    23
        CIA Use of Journalists, Clergy, and Peace Corps 
            Volunteers in Intelligence Operations................    24
        Guatemala................................................    24
        Intelligence Support to Law Enforcement..................    25
        Congressional Notifications of Intelligence Activities...    25
        Airborne Reconnaissance..................................    26
        National Reconnaissance Office Carry Forward.............    26
        Small Satellites.........................................    27
        Convert Action...........................................    27
        Encryption Export Policy.................................    27
        Security of the U.S. Information Infrastructure..........    28
        Jane Doe Thompson Case...................................    29
        Oversight of the Intelligence Community Inspectors 
            General..............................................    29
        Organized Crime in the Former Soviet Union...............    30
        Program Review and Audit Staff...........................    30
VIII.Foreign Intelligence............................................31

        North Korea..............................................    31
        Iraq.....................................................    32
        Russia...................................................    32
        China....................................................    32
        Mexico...................................................    32
        Economic Espionage.......................................    33
        Environmental and Demographic Intelligence...............    33
        Intelligence Sharing with the United Nations.............    34
 IX. Confirmations...................................................35
        DCI John M. Deutch.......................................    35
        DDCI George J. Tenet.....................................    35
  X. Committee Internal Reforms and Enhancements.....................35
        End of the Designee System...............................    35
        Term Limits..............................................    36
        PolicyNet................................................    36
Appendix.........................................................    39
        Summary of Committee Activities..........................    39
            Number of Meetings...................................    39
            Bills and Resolutions Originated by the Committee....    39
            Bills Referred to the Committee......................    39
            Committee Publications...............................    39
            Memorandum of Agreement Regarding TIARA and JMIP.....    40



105th Congress                                                   Report
                                 SENATE

 1st Session                                                      105-1
_______________________________________________________________________



                          COMMITTEE ACTIVITIES

                                _______
                                

               January  22, 1997.--Ordered to be printed

_______________________________________________________________________


 Mr. Shelby, from the Select Committee on Intelligence, submitted the 
                               following

                             SPECIAL REPORT

                            I. Introduction

    May 19, 1996 marked the twentieth anniversary of the 
creation of the Senate Select Committee on Intelligence. The 
Committee was established in 1976 by Senate Resolution 400 of 
the 94th Congress in order to strengthen congressional 
oversight of the programs and activities of U.S. intelligence 
agencies. Throughout its twenty-year history, the Committee has 
attempted to carry out its oversight responsibilities in a 
genuinely bipartisan fashion. During the 104th Congress, the 
Committee continued this bipartisan tradition in crafting 
important intelligence reform legislation, conducting several 
inquiries into intelligence community issues, and by providing 
funding for and oversight of a wide array of U.S. intelligence 
activities.
    As part of its oversight responsibilities, the Committee 
performs an annual review of the budget and prepares 
legislation authorizing appropriations for the various civil 
and military agencies and departments comprising the 
Intelligence Community. The Committee also conducts periodic 
audits, investigations, and inspections of intelligence 
activities and programs with the goal of assuring that the 
appropriate departments and agencies of the United States 
provide informed and timely intelligence necessary for the 
executive and legislative branches to make sound decisions 
affecting the national security interests of the nation and 
that U.S. military commanders have dominant awareness of any 
potential battle environment. More importantly, the Committee's 
oversight seeks to ensure that intelligence activities and 
programs conform with the Constitution and laws of the United 
States of America.
    The Intelligence Community developed after World War II 
with a central focus of providing United States civilian and 
military leadership with the intelligence necessary to conduct 
national security policy in our relationship with the Soviet 
Union. With the dissolution of the U.S.S.R., and the 
accompanying loss of this overriding intelligence focus, the 
agencies and departments within the Intelligence Community have 
begun to redirect their efforts to the national security issues 
now confronting the United States or which may develop in the 
coming years. Further, the emergence and growth of 
transnational threats such as terrorism, narcotics trafficking, 
international criminal organizations, and the proliferation of 
weapons of mass destruction present our nation and the 
Intelligence Community with challenges requiring different 
doctrine, policy, and programs. With these new challenges and 
threats confronting our nation comes an increasing need for the 
oversight provided by the Committee to ensure our nation's 
leaders have the intelligence necessary to make informed 
national security decisions.
    To address the intelligence challenges of the post-Cold War 
world, the Select Committee on Intelligence made intelligence 
reform legislation a major focus in the Fiscal Year 1997 
Intelligence Authorization bill. The Intelligence Renewal and 
Reform Act of 1996 included a number of substantial provisions 
which will make the Intelligence Community more effective, more 
efficient, and more accountable for its actions. The Committee 
succeeded in including these provisions in the authorization 
bill passed by Congress, and President Clinton signed these 
reforms into law on October 11, 1996.
    These reforms included the creation of two new committees 
of the National Security Council, the Committee on Foreign 
Intelligence and the Committee on Transnational Threats; the 
establishment of a new Senate-confirmed Deputy Director of 
Central Intelligence for Community Management and three new 
Assistant Directors of Central Intelligence to assist the DCI 
in managing the Intelligence Community; new authority for the 
Director of Central Intelligence to concur to be consulted with 
respect to the appointments of the heads of the principal 
National Foreign Intelligence Program (NFIP) agencies; 
strengthening the ability of the Director of Central 
Intelligence to manage the Intelligence Community by codifying 
his authority to participate in the development of the budgets 
for defense-wide and tactical intelligence; giving the DCI a 
database of all intelligence activities and requiring all NFIP 
elements to submit periodic budget execution reports; 
clarifying that U.S. law enforcement agencies may ``task'' 
intelligence collection agencies to collect intelligence about 
non-U.S. persons outside the United States to enable CIA, NSA, 
and other collection agencies to better support law enforcement 
efforts; and the requirement that the DCI submit to the 
Committee on Foreign Intelligence and the appropriate 
congressional committees an evaluation of the performance and 
responsiveness of the NSA, NRO, and NIMA in meeting their 
national missions.
    During the 104th Congress, the Committee continued its 
investigation into the Aldrich Ames espionage case by reviewing 
reports and holding hearings and briefings regarding 
assessments on the damage done to U.S. national security 
interests by Ames's activities. The Committee identified the 
failure of the CIA to validate information received from 
Russian sources, especially after the execution of several 
Russian assets Ames had compromised. As a result, the CIA has 
improved its counterintelligence efforts, is engaged in 
additional damage assessment efforts, and has revamped its 
procedures for dissemination of reporting from sensitive 
assets. The Committee also convinced the Department of Defense 
and the Department of State to conduct their own damage 
assessments. While preliminary damage assessments of the 
reports from tainted sources have been received from the 
Department of State and Defense, the Committee continues to 
monitor new findings on how the Ames case has affected U.S. 
intelligence and counterintelligence efforts.
    The conflict in Bosnia and U.S. policy in the region were 
the focus of substantial Committee activity during the 104th 
Congress. The Committee held numerous hearings and briefings on 
intelligence community support to the deployed Americans forces 
and the investigation into war crimes in Bosnia. with the 
signing of the Dayton Peace Accords and the introduction of 
U.S. ground troops into Bosnia as part of the Implementation 
Force (IFOR), the Committee conducted an extensive review of 
intelligence support to U.S. military forces in Bosnian 
theater. This effort supplemented the Committee's continuing 
oversight of the adequacy of intelligence support to U.S. 
government efforts in the former Yugoslavia.
    The Committee in early 1996 began an inquiry into U.S. 
actions regarding Iranian and other arms shipments to the 
Bosnian Army after press reports revealed that the Clinton 
Administration had secretly decided not to intervene against 
these violations of the arms embargo. The Committee held three 
public hearings, four closed hearings, and six informal 
sessions on this subject. While it did not reach a conclusion 
as to whether the actions of U.S. officials constituted covert 
action, the Committee did find that the Clinton Administration 
should have communicated such a significant policy change to 
Congress. The Committee also found three areas in which 
administrative or legislative actions appeared to be required.
    During the 104th Congress, the Committee conducted an 
investigation of CIA activities in Guatemala, focusing on the 
1990 murder of American citizen Michael DeVine and the death of 
Guatemala guerrilla Efrain Bamaca Velasquez. This review 
focused on allegations of CIA misconduct in the events 
surrounding the DeVine murder and the fate of Efrain Bamaca. 
The Committee also looked at accusations that the CIA funded 
intelligence programs in Guatemala in contravention of U.S. 
policy. In 1995, the CIA Inspector General completed an 
investigation into CIA operations in Guatemala. As a result of 
these inquiries, DCI John Deutch disciplined a number of CIA 
personnel involved with operations in Guatemala.
    The Committee held a number of briefings regarding proposed 
legislation liberalizing the export of encryption products and 
its likely impact on national security interests. To provide 
the Senate with further information on this legislation, the 
Committee took the lead in arranging a classified briefing that 
provided all interested Senators the opportunity to directly 
question the DCI, the Director of the FBI, and the Deputy 
Attorney General, all of whom play pivotal roles in the 
development and implementation of Administration encryption 
export policy. As the Administration's encryption policy 
continues to develop, the Committee will continue to assess how 
changes will affect the collection and protection of national 
security information.
    The Committee held a total of 131 hearings or on-the-record 
briefings, including thirty open hearings, seventy-nine 
oversight hearings, eighteen legislative hearings, five 
nomination hearings, seventeen Committee business or 
legislative mark-up meetings, and twelve on-the-record 
briefings. The unprecedented number of hearings, meetings, and 
briefings held by the Committee reflects its charter to oversee 
the wide range of national security issues confronting our 
nation. Further, by holding thirty open hearings, the Committee 
more than ever before has provided the American public a 
greater awareness of the role of intelligence in the formation 
of our national security policy and the role of congressional 
oversight of this process while, in the process, protecting 
intelligence sources and methods.

                            II. Legislation

                         a. intelligence budget

    The Committee conducted annual reviews of the fiscal year 
1996 and fiscal year 1997 budget requests for the DCI's 
National Foreign Intelligence Program (NFIP). These reviews 
included taking testimony from senior Intelligence Community 
officials and evaluating detailed budget justification 
documents and numerous Intelligence Community responses to 
specific questions raised by the Committee. As a result of 
these reviews, the Committee made recommendations, approved by 
the Senate, that resulted in net reductions to the 
Administration's funding requests for national intelligence.
    During this period the Committee also took action to reduce 
excess authorized and appropriated funds that had accumulated 
in the budget of the National Reconnaissance Office (NRO). The 
Committee concurred with an initiative by the Defense 
Subcommittee of the Appropriations Committee in fiscal year 
1996 to reduce available NRO funds by $1.2 billion, and with a 
later Administration request to rescind $820 million of NRO 
funds to pay for Bosnia operations.
    As a result, when the $2 billion excess NRO forward funds 
that were rescinded or reprogrammed are taken into account, 
NFIP funding is now 13% lower in real terms than it was in 
fiscal year 1990, and at its lowest level since fiscal year 
1985.
    The Committee also reviewed the Administration's fiscal 
year 1996 and fiscal year 1997 requests for Tactical 
Intelligence and Related Activities (TIARA) and a new 
intelligence funding category, the Joint Military Intelligence 
Program (JMIP). The Committee's review of TIARA, which falls 
under the jurisdiction of the Armed Services Committee, has 
been in the form of separate letter-recommendations to that 
committee for consideration in the Defense Authorization bill. 
However, the new intelligence program--JMIP--contained 
activities that formerly had been funded in NFIP as well as 
TIARA, resulting in a jurisdictional dispute between the two 
committees. Discussions resulted in an April 29, 1996 
Memorandum of Agreement (see Appendix D) between the two 
committees which allows for a defined and formal role for the 
intelligence committee in the oversight of TIARA and JMIP while 
acknowledging that the Armed Services Committee has 
authorization jurisdiction over both programs.

     B. S. 922 intelligence authorization act for fiscal year 1996

    On June 14, 1995, the Committee reported out S. 922, the 
Intelligence Authorization Act for Fiscal Year 1996. In 
addition to providing the annual authorization for 
appropriations for intelligence activities, the bill, inter 
alia, authorized the President to delay imposing sanctions 
against countries engaged in weapons proliferation in order to 
protect intelligence sources and methods; provided for 
forfeiture of the Government's contribution to an employee's 
Thrift Savings Plan for those employees convicted of national 
security offenses; amended the Hatch Act to allow intelligence 
community employees to participate more actively in certain 
local elections; and amended the Fair Credit Reporting Act to 
permit the FBI to obtain consumer credit records necessary in 
foreign counterintelligence investigations.
    The Senate passed S. 922 on September 29, 1995 and agreed 
to the conference report on the House counterpart bill on 
December 21, 1995. The President signed the legislation as 
Public Law 104-93 on January 6, 1996.

     C. S. 1718 intelligence authorization act for fiscal year 1997

    The Committee reported out S. 1718, the Intelligence 
Authorization Act for Fiscal Year 1997, on April 30, 1996. The 
full Senate passed the bill on September 17 and approved the 
conference report on the legislation on September 25. The 
authorization act was signed by the President as Public Law 
104-293 on October 11, 1996.
    The Fiscal Year 1997 Authorization Act included a number of 
significant legislative provisions in addition to the annual 
authorization of appropriations. In particular, Title VIII of 
the Act, short-titled the ``Intelligence Renewal and Reform Act 
of 1996,'' contained provisions (described below) intended to 
improve the operation of the Intelligence Community in the 
post-Cold War world.
    Other provisions in the Fiscal Year 1997 Act provided for 
expedited naturalization for families of U.S. intelligence 
assets killed as a result of unauthorized disclosures by U.S. 
officials (such as convicted spy Aldrich Ames); placed 
restrictions on intelligence-sharing with the United Nations so 
as to protect against unauthorized disclosure of such 
information; provided that it is U.S. policy not to use U.S. 
journalists as intelligence assets unless the President or DCI 
waives this policy in a particular case and notifies the 
intelligence committees of Congress; required the DCI to issue 
guidelines prohibiting some former CIA employees from working 
for a foreign government for a period of three years after 
leaving the CIA; and created a commission to study the 
organization of the federal government to combat proliferation 
of weapons of mass destruction.

             D. intelligence renewal and reform act of 1996

    During the second session of the 104th Congress, the 
Committee focused much of its attention on consideration and 
passage of legislation to make the Intelligence Community 
operate more efficiently, more effectively, and more 
accountably in the post-Cold War world. Begun in the early 
1990s, these efforts were spurred by a perception among many 
members of Congress and the public that the thirteen-agency 
Community had lost its focus after the Cold War and needed 
better guidance and direction.
    The Committee held six hearings and three member-level 
briefings on intelligence reorganization and reform proposals. 
The twenty-six witnesses included former DCIs Webster, Turner, 
and Woolsey; former Committee Chairmen Durenberger, Deconcini, 
and Moynihan; and a broad array of intelligence consumers and 
academic observers. Committee staff also conducted numerous 
interviews with current and former intelligence professionals 
and other knowledgeable individuals.
    On March 1, 1996, the Committee received the report of the 
Commission on the Roles and Capabilities of the U.S. 
Intelligence Community, the 17-member independent commission 
that Congress had created in 1994 to study the Intelligence 
Community. On March 6, after receiving testimony from the 
Commission's Chairman, Harold Brown, Chairman Specter and Vice 
Chairman Kerrey introduced S. 1593, which contained the 
legislative recommendations of the Commission.
    The Committee included its own renewal and reform 
legislation as part of the Intelligence Authorization Act for 
Fiscal Year 1997. The Committee's legislation built on the 
recommendations of the Brown Commission but went further in a 
number of significant respects.
    A number of the provisions in the Committee's bill that 
would have enhanced the authorities of the Director of Central 
Intelligence were resisted strongly by the Department of 
Defense, which viewed these provisions as reducing the 
Secretary of Defense's control over defense intelligence 
agencies. After extended discussions with the Senate Armed 
Services Committee, the Committee agreed to drop or modify 
several of these measures.
    In its final form, the legislation provided the DCI new 
authorities and a new management structure to manage the 
Intelligence Community. The legislation amended the National 
Security Act of 1947 to create a new Senate-confirmed Deputy 
Director of Central Intelligence for Community Management and 
three new Senate-confirmed Assistant Directors of Central 
Intelligence to oversee collection, analysis, and 
administrative functions across the Community. In addition, the 
Secretary of Defense will be required to secure the DCI's 
concurrence in the appointments of the heads of the NSA, NRO, 
and the new National Imagery and Mapping Agency (NIMA) or to 
inform the President of the DCI's non-concurrence when 
recommending persons for appointment to those positions, and to 
be consulted regarding the appointments of the heads of the 
principal departmental intelligence units. He will also submit 
to the Committee on Foreign Intelligence and the appropriate 
congressional committees an evaluation of the performance and 
responsiveness of the NSA, NRO, and NIMA in meeting the needs 
of national policymakers.
    A number of provisions were included to help improve 
budgetary controls throughout the Intelligence Community. By 
codifying his authority to participate in the development of 
the budgets for defense-wide and tactical intelligence, this 
Act strengthens the ability of the Director of Central 
Intelligence to manage the Intelligence Community's resources. 
Other provisions call for the creation of a budget database of 
all intelligence activities and require that all NFIP elements 
submit periodic budget execution reports to improve financial 
oversight.
    In response to the growing transnational threat to the 
national security, the Act contained a provision clarifying the 
authority of U.S. law enforcement agencies to task intelligence 
collection agencies to collect information about non-U.S. 
persons outside the United States. This provision will enable 
the CIA, NSA, and other collection agencies to better support 
law enforcement efforts.
    The legislation also established two new cabinet-level 
committees of the National Security Council: a Committee on 
Foreign Intelligence to provide overall policy and resource 
guidance for the Intelligence Community; and a Committee on 
Transnational Threats to direct the various activities of the 
federal government in fighting terrorism, international 
narcotics trafficking, and other global crimes.
    Although the final legislation did not include all of the 
provisions the Committee would have liked to have enacted, the 
Committee believes that the DCI has been given important new 
tools to help manage the Intelligence Community more 
efficiently and more effectively.

               E. THE NATIONAL IMAGERY AND MAPPING AGENCY

    In December 1995, the DCI, the Secretary of Defense, and 
the Chairman of the Joint Chiefs of Staff proposed the 
establishment of a new National Imagery and Mapping Agency 
(NIMA) within the Department of Defense. NIMA was created to 
provide an agency with broad authorities for the tasking, 
collection, and dissemination of imagery and imagery products; 
production and dissemination of imagery intelligence and 
geospatial information; programming and budgeting; the conduct 
of associated research and development; and, the acquisition of 
common systems. The Central Imagery Office, the Defense Mapping 
Agency, the National Photographic Interpretation Center, the 
DIA's imagery exploitation element, the Air Force's Defense 
Dissemination Program Office (DDPO), and several other imagery-
related offices have now all been consolidated into NIMA.
    NIMA will have over 9,000 employees and manage 
approximately 25 percent of the imagery and geospatial 
information activities contained in the U.S. Defense and 
Intelligence programs. It will also review the plans, budgets, 
and acquisitions for the remaining 75 percent of the U.S. 
imagery system to assure compliance with policy and data 
standards and architectures.
    The Committee included legislative provisions to establish 
NIMA in the Fiscal Year 1997 Intelligence Authorization bill. A 
more comprehensive legislative framework was subsequently 
included by the Armed Services Committee in the Fiscal Year 
1997 National Defense Authorization bill, and accordingly the 
Committee agreed to delete the provisions relating to NIMA from 
its bill. At the same time, the Committee amended provisions in 
the Defense bill to ensure that the interests of national 
policymakers are served by NIMA. The Committee's amendments 
codified the DCI's tasking authority over national imagery 
assets, provided that the Director of NIMA could be either a 
civilian or an military officer, stipulated the Secretary of 
Defense must obtain the concurrence of the DCI, or note the 
DCI's lack of concurrence, before making a nomination 
recommendation to the President, and included language in the 
National Security Act, Title 50 of the U.S. Code, stating 
NIMA's responsibility to provide intelligence for the national 
policymaker. The legislation creating the National Imagery and 
Mapping Agency was signed into law by President Clinton on 
September 23, 1996.

                           III. Arms Control

                     A. Chemical Weapons Convention

    In order to assist the full Senate in its consideration of 
whether to advise and consent to the ratification of the 
Convention on the Prohibition of the Development, Production, 
Stockpiling and Use of Chemical Weapons and on their 
Destruction (CWC), the Committee in 1994 undertook a thorough 
review of the ability of the U.S. Intelligence Community to 
monitor compliance by states party to the CWC.
    In particular, the Committee examined issues surrounding 
the monitoring effectiveness of the U.S. Government's 
unilateral resources and the CWC's on-site inspection regime; 
the interpretation and implementation of the CWC, including its 
three annexes; the counterintelligence and security 
implications of the CWC; and the implications of the CWC for 
private companies, in light of the obligations imposed on such 
companies to provide data declarations and to host on-site 
inspections.
    The Intelligence Community told the Committee in 1994 that 
the CWC will provide another tool in the U.S. inventory of 
means to circumscribe and stem the worldwide expansion of 
chemical weapons capabilities and to assist in monitoring 
chemical weapons programs worldwide. This point has been 
reiterated to the Committee during additional staff briefings 
on the CWC during the 104th Congress.
    The Committee's public report to the Senate (Senate Report 
103-390) was approved by a vote of sixteen members in favor and 
none opposed. The Committee's report was provided to the Senate 
in anticipation of action on the CWC. However, no Senate action 
was taken with regard to the CWC in the 103rd Congress.
    In anticipation of Senate consideration of the CWC during 
the second session of the 104th Congress, the Committee staff 
reviewed developments over the last two years to determine 
whether any changes or updating of the Committee's 1994 report 
were in order, and determined that its findings and 
recommendations in the 1994 report with respect to the ability 
of U.S. intelligence to monitor compliance by states party to 
the CWC remained substantially valid, and, thus, no new report 
was in order.
    The 1994 Committee report to the Senate contained fourteen 
recommendations. In recommendations 1, 6, and 7, the Committee 
proposed that certain conditions and declarations be 
incorporated in the resolution of ratification and the CWC 
implementing legislation. Recommendations 2, 3, and 10 were put 
forward as the basis for additional declarations in the 
resolution of ratification. The great majority of those 
recommendations were incorporated in the resolution of 
ratification reported favorably by the Committee on Foreign 
Relations to the Senate in April 1996. However, the 104th 
Congress adjourned without acting on the Chemical Weapons 
Convention. The Committee will continue to review the CWC and 
issues surrounding the treaty in anticipation of its 
consideration during the 105th Congress.

                           B. Start II Treaty

    The Committee prepared an unclassified as well as a 
classified report totalling over 100 pages during the 104th 
Congress to provide the Senate its assessment of the arms 
control monitoring and counterintelligence issues raised by the 
START II Treaty.
    This report was the culmination of the Committee's work 
over some thirteen years monitoring the progress of the START 
negotiations. The Committee routinely reviewed START progress 
and addressed START monitoring capabilities in its annual 
Intelligence Authorization Acts. Committee members and staff 
met numerous times with U.S. negotiators, in both Washington 
and Geneva. The Committee expressed its views on verification 
issues to the negotiators and to other senior level officials 
both formally and informally.
    In preparation for the Senate vote on advice and consent to 
ratification of the START II Treaty, Committee staff held 
numerous staff briefings; reviewed hundreds of documents, 
including National Intelligence Estimates of U.S. capabilities 
to monitor compliance with START provisions and written 
statements from the Director and Deputy Director of Central 
Intelligence; and asked numerous formal questions for the 
record. Committee staff also travelled to intelligence 
collection sites to gain a more detailed, first-hand knowledge 
of how the Intelligence Community collects, and how its 
analysts use, information bearing upon other countries' 
compliance with arms control agreements signed by the United 
States.
    On May 12, 1993, the Committee held a closed hearing on the 
START II Treaty, its implementation and its counterintelligence 
and security implications. Testimony was taken at this hearing 
from the Honorable Linton Brooks, U.S. Negotiator for Strategic 
Offensive Arms; Major General Gary Curtin, USAF, Deputy 
Director for International Negotiations, J-5, the Joint Staff; 
and Dr. Lawrence Gershwin, National Intelligence Officer for 
Strategic Programs.
    On March 1, 1995, the Committee held a closed hearing on 
U.S. monitoring capabilities and the risks and implications of 
violations by the other party to the Treaty. At this hearing, 
the Committee took testimony from Mr. Douglas MacEachin, Deputy 
Director for Intelligence, Central Intelligence Agency; 
Ambassador Linton Brooks, Chief U.S. START Negotiator; and Dr. 
Amy Sands, Assistant Director, Bureau of Intelligence, 
Verification and Information Support, U.S. Arms Control and 
Disarmament Agency.
    The Committee also received numerous responses to questions 
for the record that were submitted to the Executive branch 
after these hearings, and the results of these inquiries were 
integrated into its report. Throughout the Committee's efforts, 
experts in the U.S. Intelligence Community produced a detailed 
and honest analysis of the strengths and limitations of U.S. 
monitoring capabilities, in 1993, and an update of this and a 
related analysis in 1995. The Committee was especially pleased 
to find in these analyses a straightforward discussion of the 
differences between agencies on some major issues.
    As is the case with START I monitoring, the United States 
will rely upon a combination of capabilities--including 
imagery, signals intelligence, human intelligence, open-source 
information and the verification provisions of the START I and 
START II Treaties--to monitor compliance with the provisions of 
START II. Those verification provisions include on-site 
inspections, exhibitions of equipment for either on-site or 
satellite-based observation, perimeter and portal continuous 
monitoring (PPCM), notifications, unencrypted telemetry, and 
exchanges of data, including telemetry. The Intelligence 
Community assesses a high probability of detecting questionable 
activity that might be contrary to the Treaty.
    The Committee agreed with the Intelligence Community that 
U.S. reconnaissance assets are generally sufficient to monitor 
compliance with both START Treaties. Congress endeavored to 
maintain and enhance those capabilities in the intelligence 
budget for Fiscal Year 1996, as well as in past years. The 
Committee is concerned, however, that U.S. capabilities could 
be insufficient if competition for scarce collection and 
analytic resources were intense and if Russian practices were 
to change in ways designed to impede U.S. monitoring. The 
Committee recommended that the President be required to certify 
the sufficiency of U.S. monitoring capabilities regarding those 
START II provisions relating to ICBM and SLBM capabilities and 
to report to Congress on how such sufficiency will be assured. 
The Committee also urged the Executive branch to pursue a firm 
policy regarding Russian actions that may violate the terms of 
START I or START II, including the verification provisions of 
those Treaties. The majority of the Committee's recommendations 
were incorporated into the resolution of ratification 
accompanying the Treaty.
    The Senate ratified the START II Treaty by a vote of 87-4 
on January 26, 1996.

                        IV. Counterintelligence

                   A. The Aldrich Ames Espionage Case

    During the 104th Congress, the Committee continued its 
inquiry into the Aldrich Ames espionage case. The Committee 
held five hearings to review the Intelligence Community's 
continuing investigation into this case and its assessment of 
damage caused by Mr. Ames' actions. Although the true damage 
resulting from Ames' disclosures may not be known for years and 
may in fact never be known, the analysis completed to date 
suggests that the Russians and perhaps other countries' 
intelligence agencies know detailed information about United 
States intelligence gathering, analysis, dissemination, and 
decision-making structure, and that for years the KGB/SVR 
controlled raw information that flowed to the CIA and that was 
passed on to high-level U.S. consumers at the policy level, 
including President Bush and President-elect Clinton.
    As part of the CIA's responsibility to keep the 
intelligence committees ``fully and currently informed of * * * 
any significant intelligence failure,'' CIA Inspector General 
Fred Hitz completed an investigation on the assessment of 
damage caused by the Aldrich Ames espionage case in October 
1995. This investigation revealed the failure of the CIA to 
validate information received from Russian sources, even after 
the execution of several Russian assets compromised by Ames. 
The CIA appears to have done little to verify whether or not 
the information being provided by Soviet/Russian sources was 
truthful or part of a Russian perception management campaign. 
Further, the CIA Directorate of Operations either failed to 
inform or misinformed consumers and policymakers about 
reporting known or suspected to be under hostile control. This 
failure to inform was carried out despite CIA suspicions 
regarding tainted sources as early as 1986 when the Soviet 
agents identified by Ames were being arrested and executed, and 
despite a March 1991 report on the Soviet/East European (SE) 
Division in which the CIA Inspector General (IG) made a number 
of important comments and suggestions regarding SE Division 
counterintelligence shortcomings.
    As a result of the CIA IG investigation and its revelations 
of tainted intelligence reporting, the Department of State and 
the Department of Defense completed preliminary studies which 
concluded these reports had played no significant role in any 
policy, doctrinal, or budgetary decisions. The Committee will 
continue to investigate the ramifications of Ames's treason as 
other evidence comes to light and further analysis is 
completed.

                             B. french flap

    In early 1995, French officials made detailed allegations 
regarding CIA intelligence activities in France. Although the 
timing and nature of these allegations were possibly the result 
of French internal political considerations, the resulting 
uproar led the Committee to conduct a review covering a wide-
range of issues related to counterintelligence and economic 
intelligence. As part of this review, the Committee requested 
that the CIA Inspector General (IG) conduct an investigation 
into what became known as the ``French Flap,'' and provide 
recommendations for corrective measures, if appropriate.
    The Committee received the CIA Inspector General Report in 
March 1996. Shortly after this report was received by the 
Committee, DCI John Deutch provided the Committee a list of his 
actions to correct the operational and management deficiencies 
identified in the IG Report. In April 1996, the DCI provided 
the Committee a letter summarizing his actions related to 
issues of individual accountability connected to the report's 
findings. These actions included disciplinary action against 
involved CIA officials and the formulation of guidelines 
regarding economic intelligence. The Committee is continuing to 
monitor the implementation of the DCI's actions.

                         c. economic espionage

    Due to the importance attached to maintaining U.S. economic 
competitiveness, current U.S. policy is to treat foreign 
threats to our economic well-being as a national security 
issue. In this regard, the February 1995 White House National 
Security Strategy focused on economic security as a national 
security priority and identified economic revitalization as one 
of the three central goals of the United States. Secretary of 
State Warren Christopher has stated in testimony before the 
Senate Foreign Relations Committee that, ``In the post-Cold War 
world, our national security is inseparable from our economic 
security.''
    Economic espionage by foreign governments targeting U.S. 
industry and innovation is an issue of tremendous importance to 
our national security and is one the Committee has been 
examining for some time. The Committee held a number of 
hearings and briefings during the 104th Congress which 
addressed this issue and has met extensively with the 
intelligence and law enforcement communities during this time. 
In 1992, then-Director of Central Intelligence Robert M. Gates 
told the committee: ``We know that some foreign intelligence 
services have turned from politics to economics and that the 
United States is their prime target.'' According to the CIA, in 
written response to additional questions from the Committee's 
February 22, 1996 hearing on Current and Projected National 
Security Threats to the United States and its Interests Abroad 
(S. Hrg. 104-510),

        CIC [the Intelligence Community's Counterintelligence 
        Center] has narrowly defined economic espionage to 
        include a government-directed or orchestrated 
        clandestine effort to collect U.S. economic secrets or 
        proprietary information. We do not characterize as 
        economic espionage legitimate information gathering 
        activities by a foreign government or foreign 
        corporation, even if carried out aggressively and 
        skillfully. We see government-orchestrated theft of 
        U.S. corporate S&T data as the type of espionage that 
        poses the greatest threat to U.S. economic 
        competitiveness. We have only identified about a half 
        dozen governments that we believe have extensively 
        engaged in economic espionage as we define it. These 
        governments include France, Israel, China, Russia, 
        Iran, and Cuba.

    In order to address this growing threat, the Committee was 
instrumental in passing legislation to criminalize foreign 
government-sponsored economic espionage. Working closely on a 
bipartisan basis with the Administration and the House and 
Senate Judiciary Committees, as well as with industry, 
academia, and others, the Committee was able to forge a 
consensus on this important legislative measure after a year 
and half of discussions and negotiations.
    Provisions criminalizing foreign government-sponsored 
economic espionage were originally included in the Fiscal Year 
1997 Intelligence Authorization bill, reported by the Committee 
in April 1996. They were subsequently dropped from the 
authorization bill and included as part of the broader Economic 
Espionage Act of 1996, which covers theft of trade secrets by 
any person as well as foreign-sponsored economic espionage.
    The final version of the economic espionage legislation 
makes it a federal crime (to be codified at 18 U.S.C. 1831) to 
steal, alter, or misappropriate a trade secret knowing that 
such offense will benefit a foreign government, 
instrumentality, or foreign agent. Individuals convicted of 
economic espionage may be imprisoned for up to 15 years and/or 
fined up to $500,000; organizations may be fined up to 
$10,000,000.
    The President signed the Economic Espionage Act of 1996 
into law on October 11, 1996.

                d. foreign intelligence surveillance act

    During the 104th Congress, the Committee conducted a 
comprehensive review of the Intelligence Community's policy on 
electronic surveillance and physical search for intelligence 
and counterintelligence within the United States and its 
implementation of these guidelines. The Foreign Intelligence 
Surveillance Act of 1978 (``FISA''), 50 United States Code 
Sec. 1801 et seq., established comprehensive legal standards 
and procedures for the use of electronic surveillance to 
collect foreign intelligence and counter-intelligence within 
the United States. The Act provided the first legislative 
authorization for wiretapping and other forms of electronic 
surveillance for intelligence purposes against foreign powers 
and foreign agents in this country. It created the Foreign 
Intelligence Surveillance Court (``FISC''), composed of seven 
federal district judges, to review and approve surveillance 
capable of monitoring United States persons who are in the 
United States. As the Act was amended in 1994 to provide for 
limited physical search authority, the Committee's study placed 
special emphasis upon the use of the new authority to conduct 
physical searches.
    The Committee review included travel to key FBI field sites 
to review actual use of the FISA authority, as well as tracking 
of the FISA process through the budget cycle to ascertain the 
sustained attention that certain relevant budgetary issues 
receive. While interviews were undertaken with the Chief Judge 
of the FISC and with the United States Attorney General 
credited with assuring passage of the original FISA legislation 
in 1978, and briefing were conducted with the Justice 
Department and other key participants in the process, the 
review was focused almost entirely upon actual cases. The cases 
reviewed were traced from their inception as 
counterintelligence matters, with attention placed upon the 
sufficiency of review and upon issues of fundamental fairness 
toward targets of the FISA coverage. The review was still being 
undertaken at the conclusion of the 104th Congress and will 
likely be completed during the 105th Congress.

                          V. Counterterrorism:

                      a. terrorism threat overview

    In 1995 and 1996 the people of the United States were 
shocked by bombings in Oklahoma City and at Atlanta's 
Centennial Olympic Park, and by attacks against U.S. diplomats 
in Pakistan and U.S. military personnel in Saudi Arabia. In the 
104th Congress the Committee held eight hearings, both open and 
closed, on terrorism. The Committee has given special attention 
to the terrorist threat in Saudi Arabia and intelligence 
support to the military deployed in the Middle East. The 
Committee received testimony from Secretary of Defense William 
J. Perry, DCI John Deutch, FBI Director Louis Freeh, numerous 
other Administration officials, academicians and other experts.
    Through these hearings the Committee received an assessment 
of the worldwide terrorist threat and the particular threat in 
the Middle East, including an analysis of the size, 
organization, capabilities, state sponsorship and interlocking 
ties of terrorist groups. These hearings also explored the 
collection posture of the U.S. Intelligence Community vis-a-vis 
international terrorism and the adequacy of existing resources.
    In the wake of the bombings in Saudi Arabia, Secretary of 
Defense William Perry testified before the Committee regarding 
the situation in Saudi Arabia. These tragedies and his 
testimony concentrated the Committee's attention on the issue 
of intelligence support to the military for force protection. 
The Committee continues to evaluate how well the relationship 
between the Intelligence Community and the military commanders 
is working and what the Intelligence Community can do to better 
support this critical requirement.
    Shortly before the 104th Congress completed its work, the 
Administration asked for an increase in authorized funds and 
personnel for fiscal year 1997 for Intelligence Community 
counterterrorism programs. These increases were sought as part 
of a larger Administration initiative to enhance U.S. 
Government counterterrorism capabilities. The Committee 
supported this request by modifying the Schedule of 
Authorization contained in the report of the Committee of 
Conference for the Intelligence Authorization Act for Fiscal 
Year 1997 to reflect the requested increases in dollars and 
civilian positions.
    The Committee will continue to search for ways to enhance 
the capability of the Intelligence Community to collect against 
terrorist groups and to ensure the adequacy of the resources 
devoted to this target.

                 b. khubar towers and opm-sang bombings

    On June 25, 1996, at approximately 10:00 p.m. local time, 
an explosion shook the Khubar Towers housing compound in 
Dhahran, Saudi Arabia. The blast killed 19 American military 
service personnel and at least one Saudi civilian, wounded more 
than 200 Americans and injured hundreds of other civilians. At 
the time, the Khubar Towers complex was home for the airmen of 
the U.S. Air Force's 4404th Fighter Wing (Provisional), under 
the operational command of U.S. Central Command (USCENTCOM), 
who were participating in the United Nations effort to enforce 
the ``no-fly'' zone in southern Iraq. The attack at Khubar 
Towers was the second major terrorist incident directed at U.S. 
interests, and U.S. military presence specifically, in Saudi 
Arabia in less than a year. On November 13, 1995, a car bomb 
containing approximately 250 pounds of explosives detonated 
outside the headquarters of the Office of the Program Manager 
of the Saudi Arabian National Guard (OPM-SANG) in Riyadh. The 
building was used by American military forces as a training 
facility for Saudi military personnel. Five Americans died and 
34 were wounded in this attack.
    The staff of the Senate Select Committee on Intelligence 
conducted a preliminary inquiry into the adequacy of the 
Intelligence Community's collection, analysis and dissemination 
of intelligence concerning terrorist threats in Saudi Arabia 
prior to the OPM-SANG and Khubar Towers bombings to determine 
whether a significant intelligence failure had occurred. The 
Committee staff reviewed intelligence reporting produced from 
late 1994 through June 1996. These products included reports 
from the Central Intelligence Agency, the Defense Intelligence 
Agency, the National Security Agency, the State Department and 
others. During the inquiry, Committee staff also interviewed 
field commanders and military personnel who played a critical 
force protection and security role just prior to and 
immediately after the blast. The staff also interviewed the FBI 
lead investigator on the scene in Dhahran, as well as top-
ranking Intelligence Community personnel.
    As part of this inquiry, Chairman Arlen Specter and staff 
traveled to Dhahran, Riyadh, and Jeddah, Saudi Arabia and other 
Middle East countries in August 1996. During this trip the 
Committee interviewed individuals in the Intelligence 
Community, the Defense Department, and the State Department. 
Senator Specter and staff also met with Saudi Crown Prince 
Abdullah and Defense Minister Sultan while in Jeddah, as well 
as with other Middle East leaders with unique insight into 
terrorist activity in the region such as Prime Minister 
Netanyahu of Israel, President Assad of Syria, and President 
Arafat of the Palestinian Authority.
    The Committee held several hearings focusing on terrorism, 
the situation in Saudi Arabia, and intelligence support to the 
military in the region. The available information led Chairman 
Specter to issue a report stating that the U.S. Intelligence 
Community provided sufficient information not only to suggest 
active terrorist targeting of U.S. personnel and facilities, 
but also to predict likely terrorist targets (of which OPM-SANG 
and Khubar Towers were among the most probable). Further, 
having concluded that the DCI was fully cognizant of and 
attentive to the force protection issues in the Eastern 
Province prior to the June 25 attack, and that consecutive DCIs 
ensured that this force protection information was disseminated 
to proper Defense Department recipients, Chairman Specter 
concluded that an intelligence failure did not occur.

                        VI. Counterproliferation

                          a. non-proliferation

    The Committee continued in the 104th Congress the high 
priority that it has accorded over the years to the need to 
counter the proliferation of weapons of mass destruction (WMD). 
The Committee's concern extends to nuclear, chemical and 
biological weapons, as well as long-range delivery systems for 
such weapons. In the 104th Congress, as in past years, the 
Committee added funds to the intelligence budget to better 
equip U.S. policy makers to understand and combat this major 
threat to U.S. national security.
    The Committee held a closed hearing in 1995 on the 
capability of U.S. intelligence to meet policy makers' needs in 
this field. Another closed hearing in 1995 focused on Iran, 
including the status of that country's WMD programs. On March 
13, 1996, the Committee held a public hearing on the threat 
that weapons of mass destruction might be used in terrorist 
attacks in the United States or against U.S. interests 
(especially in light of the Aum Shinrikyo group's release of 
lethal chemical agents in the Tokyo subway). Also in 1996, the 
Committee received closed briefings on Chinese involvement in 
weapons proliferation, notably including its sales to Pakistan 
of ring magnets that could be used in a uranium enrichment 
process and its actions in providing long-range missiles to 
Pakistan. Another issue of concern to the Committee has been 
the status and control of nuclear weapons and weapons-grade 
materials in other countries, especially the former Soviet 
Union.

          b. north korean weapons of mass destruction programs

    The U.S.-North Korean nuclear framework agreement, which 
had become a matter of concern to the Committee in 1994, 
continued to be a topic in closed briefings and hearings in 
1995. The Committee was particularly concerned, during the 
104th Congress, about reports of North Korean misuse of the 
first tranche of oil provided by the United States and about 
U.S. capabilities to ensure that any further shipments would be 
used only in accord with the agreement's provisions.
    At the Committee's public hearing of January 10, 1995, on 
world-wide threats to U.S. interests, both DCI James Woolsey 
and DIA Director James Clapper discussed North Korea's long-
range missile program, which was seen as more likely than any 
other countries' programs to result eventually in a new thereat 
to U.S. territory. On February 22, 1995, the Committee held a 
closed hearing to examine more closely the issue of prospective 
ballistic and cruise missile threats to the United States.

                      c. long-range missile threat

    In early 1996, some members of the Senate expressed concern 
regarding a National Intelligence Estimate (NIE) of the long-
range missile threat to the United States, which they feared 
might have been influenced by political or policy 
considerations. These expressions of concern led the Staff 
Director to undertake a staff inquiry into the estimative 
process and the intelligence information and analysis that 
formed the basis for those estimates.
    On December 4, 1996, the Committee held an open hearing to 
review these intelligence estimates. Witnesses included John E. 
McLaughlin, Vice Chairman, National Intelligence Council; 
Richard Davis, Director, National Security Affairs, General 
Accounting Office; R. James Woolsey, former Director of Central 
Intelligence, 1993-1995; Robert M. Gates, former Director of 
Central Intelligence, 1991-1993 and chairman of a panel of 
independent experts appointed by DCI Deutch to review the 
intelligence estimate pursuant to the National Defense 
Authorization Act for Fiscal Year 1997; and David J. Osias, 
National Intelligence Officer for Strategic Programs and 
Nuclear Proliferation.
    At this hearing, former DCI Gates stated that the review 
panel found no evidence that the intelligence estimate had been 
politicized. However, the Gates Panel did find faults of 
process and presentation in the NIE. The Panel found in 
particular that the NIE omitted needed back-up information and 
analysis underlying its main judgment (which paralleled the 
GAO's observation that previous estimates had included more 
analysis) and that it gave too little attention to such 
significant, although less probable, outcomes as the use of 
cruise or shipborne ballistic missiles, breakdown of the 
Missile Technology Control Regime or unauthorized launch of 
Russian missiles. The Panel also seconded former DCI Woolsey's 
concern that the NIE gave much too little attention to the 
threat to Alaska and Hawaii. Nonetheless, the review panel 
found sound technical reasons to support the Intelligence 
Community's view that the United States is unlikely to face an 
indigenously developed and tested ICBM threat from the Third 
World before 2010, even taking into account possible 
acquisition of foreign hardware and technical assistance.

                       VII. Oversight Activities

           a. national security threats to the united states

    For a number of years, the Committee has begun each new 
session of the Congress with an open hearing reviewing the 
Intelligence Community's assessment of the current and 
projected national security threats to the United States. The 
Intelligence Community's assessment of the national security 
threat to the United States plays a critical role in defining 
our country's foreign policy and forms the foundation for our 
military planning. It is therefore essential that the 
Intelligence Community provide our nation's policymakers with 
the most accurate and timely assessment of these threats 
possible. The hearings on the national security threat are held 
in open session not only to inform the Committee, but to 
enlighten the American public about the threats facing our 
country.
    Among the many issues addressed by these hearings have been 
the military capabilities of the former Soviet Union, the 
ballistic missile threat, China's proliferation activity, the 
stability of the North Korean regime, Intelligence Community 
support to U.S. military operations in Bosnia, the stability of 
the Cuban regime, and economic espionage against the U.S.
    Continuing this tradition, on January 10, 1995, the 
Committee held an open hearing on the current and projected 
national security threats to the U.S. Testifying before the 
Committee were then-DCI R. James Woolsey, Lt. General James R. 
Clapper, Jr., USAF, then Director of the Defense Intelligence 
Agency (DIA), and Toby Gati, Assistant Secretary of State for 
Intelligence and Research (INR). On February 22, 1996, the 
Committee held a similar hearing, and testifying before the 
Committee were DCI John M. Deutch, DIA Director Lt. General 
Patrick M. Hughes, USA, and Toby Gati.
    The transcripts for the Committee's January 10, 1995 
hearing, ``Worldwide Intelligence Review'' [S. Hrg. 104-15], 
and the Committee's February 22, 1996 hearing, ``Current and 
Projected National Security Threats to the United States and 
its Interests Abroad'' [S. Hrg. 104-510], which include the 
responses to a large number of questions-for-the-record (QFRs) 
covering a broad spectrum of national security issues, were 
printed and made available to the public.
    Additionally, the Committee held an open hearing with DCI 
Deutch on December 18, 1996 to discuss issues confronting the 
United States Intelligence Community.

           b. intelligence support to u.s. efforts in bosnia

    Throughout the 104th Congress, the Committee continued to 
focus on the conflict in the Republic of Bosnia-Herzegovina and 
to monitor intelligence community support for policy makers and 
U.S. and U.N. forces deployed on peacekeeping missions in the 
region. During the summer of 1995, the Committee held four 
hearings to consider the evolving military and diplomatic 
situations, the likelihood that U.S. troops would be sent to 
the region either as peacekeepers or to assist in a withdrawal 
of UNPROFOR troops, and the capability of U.S. intelligence to 
support the needs of U.S. policy makers and military 
commanders. The issue of intelligence support to U.S. military 
forces was of particular attention as a result of the incident 
in which a U.S. F-15 aircraft was shot down by a Serbian 
missile and its pilot was stranded for several days before he 
could be located and rescued. Also, the Committee held a joint 
open hearing with the Senate Foreign Relations Committee on 
August 9, 1996 (S. Hrg. 104-448) to review intelligence support 
to the war crimes investigation in the former Yugoslavia.
    With the signing of the Dayton Peace Accords by the Federal 
Republic of Yugoslavia, the Republic of Croatia, and the 
Republic of Bosnia & Herzegovina in November 1995, which 
brought the fighting among Bosnian Serbs, Bosnian Croats and 
Bosnian Muslims in the disputed Bosnia-Herzegovina area to a 
halt, and the subsequent deployment of U.S. troops into Bosnia 
as part of the Implementation Force (IFOR), the Committee began 
an extensive review of intelligence support to U.S. military 
forces in the Bosnian theater. The Committee received regular 
briefings from the DCI's Balkan Task Force, tasked to monitor 
compliance with the accords, and conducted three hearings on 
the viability of a time-limited deployment of U.S. 
implementation forces and the lifting of the arms embargo for 
all involved parties. The Committee also held numerous closed 
hearings and briefings to determine the effectiveness of 
collection, analysis and dissemination of U.S. intelligence to 
support deployed forces in the field. Several members and staff 
traveled to the former Yugoslavia to meet with U.S. military 
commanders and intelligence officials to evaluate first hand 
the effectiveness of U.S. intelligence operations in support of 
Operation Joint Endeavor. The Intelligence Community continues 
to monitor the intelligence situation in Bosnia with regular 
updates from the Intelligence Community.

C. Inquiry Into U.S. Actions Regarding Iranian and Other Arms Transfers 
                          to the Bosnian Army

    On April 5, 1996, the Los Angeles Times reported that 
``President Clinton secretly gave a green light to covert 
Iranian arms shipments into Bosnia in 1994 despite a United 
Nations arms embargo that the United States was pledged to 
uphold and the administration's own policy of isolating Tehran 
globally as a supporter of terrorism.'' The Committee began an 
inquiry into the matter on April 7, 1996.
    The Committee held three public hearings, four closed 
hearings and six informal sessions on this matter. Testimony 
was taken from: DCI John M. Deutch; former DCI R. James 
Woolsey; Deputy Secretary of State Strobe Talbott; former 
Assistant Secretary of State Richard Holbrooke; the Honorable 
Charles E. Redman (U.S. Ambassador to Germany and former 
Special Envoy to the Former Yugoslavia); the Honorable Peter W. 
Galbraith (U.S. Ambassador to Croatia); three other persons who 
served in the U.S. Embassy in Zagreb in 1994-1995; and legal 
officials from the Department of State and Department of 
Defense. Informal sessions were held with some of the above 
persons and with: Dr. William Perry, Secretary of Defense; 
General John Shalikashvili, Chairman of the Joint Chiefs of 
Staff; Dr. Anthony S. Harrington, Chairman, President's 
Intelligence Oversight Board (IOB). Formal and informal staff 
interviews were held with Department of State, Department of 
Defense and intelligence personnel, and with the chairman and 
staff of the IOB.
    The Committee's staff reviewed substantial material 
provided by the CIA and the NSA and smaller, but significant, 
amounts of material provided by the Department of State and 
Department of Defense (including finished intelligence products 
of the Defense Intelligence Agency), as well as some National 
Security Council (NSC) documents. The Chairman and Vice 
Chairman were also briefed by NSC staff personnel on some 
documents that the Executive branch refused to show to 
Committee staff.
    On November 7, 1996, the Committee issued a public report 
summarizing its findings and recommendations in this matter. 
The report's findings included the following:
          The decision to let Croatia transship Iranian and 
        other arms to the Bosnian Muslims was made by the 
        President and was implemented largely by Department of 
        State and NSC personnel. Unusual steps were taken to 
        keep this action secret, such as refraining from filing 
        cables on it or from mentioning it at NSC meetings. 
        These steps kept knowledge of this significant policy 
        change from other agencies, including the Department of 
        Defense and the CIA.
          Although the executive branch did inform appropriate 
        committees of intelligence information on the arms 
        flows, it did not inform Congress of the decision to 
        let Croatia transship Iranian and other arms to the 
        Bosnian Muslims. This action left Congress dangerously 
        ignorant of U.S. policy, even as it debated and voted 
        on legislation regarding enforcement of the arms 
        embargo.
          CIA officials became attentive to actions that might 
        constitute an illegal covert action activity, which CIA 
        personnel feared was under way. CIA's concerns may have 
        been overwrought, but so are the allegations that CIA 
        was ``spying on'' Department of State personnel.
          Much confusion might have been averted if Deputy 
        Secretary Talbott or other State Department officials 
        had adequately explained to DCI Woolsey the new policy 
        and their intent that Iranian arms be permitted to flow 
        to Bosnia and Croatia. It would also have helped if 
        State Department Headquarters had provided clearer 
        instructions to Ambassador Galbraith.
          The decision to let Croatia transship Iranian and 
        other arms to the Bosnian Muslims achieved its purpose 
        of affecting the balance of forces in the former 
        Yugoslavia without prompting European actions that the 
        United States had feared would breed a wider and 
        bloodier war. But Iran maintained and probably 
        increased its influence in Bosnia as a result of its 
        resumed role as Bosnia's major arms supplier. In 
        addition, Croatian officials for a time found it hard 
        to reconcile U.S. support of Iranian arms flows to 
        Bosnia with continued U.S. support for other United 
        Nations arms embargoes (such as that against Libya) and 
        opposition to Iranian support for terrorism.
          Ambassador Redman may not have intervened with 
        Croatian officials to secure release of a Bosnian 
        convoy in May 1994, contrary to the IOB's conclusion 
        that he probably did so.
          Executive branch personnel in senior overseas 
        positions did not always understand the law and 
        regulations governing covert action programs.
          Covert action options were prepared by Executive 
        branch agencies in 1994 and 1995, but no covert action 
        program for Bosnia was approved by the Executive 
        branch. CIA consistently opposed undertaking such a 
        program.
          Some Executive branch officials made statements to 
        Bosnian and/or Croatian officials in the summer and 
        fall of 1994 that suggested support for increased 
        covert shipments of arms to the Bosnian Muslims.
          The Committee could not determine whether U.S. 
        officials offered either support in implementing a 
        larger arms pipeline or a quid pro quo to Croatia for 
        agreeing to such increased arms shipments. The 
        Committee found no evidence that the United States ever 
        provided such support or any quid pro quo to Croatia, 
        or encouraged any country other than Croatia to provide 
        arms or military assistance in violation of the arms 
        embargo.
          In early 1995, one U.S. official told a Croatian 
        official that the United States did not want Croatia to 
        discontinue a military resupply effort in Bosnia.
          In the summer of 1995, U.S. personnel inspected 
        rockets bound for Bosnia; the Committee could not 
        determine whether this activity was undertaken for the 
        purpose of encouraging Croatia to continue the covert 
        arms shipments.
          The Committee could not agree on whether the actions 
        of U.S. officials constituted covert action under 
        section 503(e) of the National Security Act of 1947. It 
        did conclude, however, that the interchange between the 
        United States Ambassador to Croatia and the President 
        of Croatia in April 1994 did not constitute traditional 
        diplomatic activity, at least as that term is 
        understood by most Americans. The Committee disagreed, 
        moreover, with the Executive branch view that 
        diplomatic requests to third parties to conduct covert 
        action are not covered by the definition of covert 
        action. It also noted that any encouragement of 
        promotion of arms shipments to Bosnia could violate 
        Executive Order 12846, 58 FR 25771 (April 25, 1993) on 
        sanctions against the former Yugoslavia.
          Allegations regarding U.S. military or CIA 
        involvement in the arms flow or in logistical support 
        to the Bosnian Army appear to be false.
          The Committee found three areas in which 
        administrative or legislative actions appear to be 
        required:
          Recommendation No. 1: The Executive branch, 
        especially the White House and the Department of State, 
        should make a written record of every significant 
        foreign policy decision, and especially of those 
        decisions that reflect a change in policy; and it 
        should ensure that adequate mechanisms are in place to 
        generate and protect communications that are 
        particularly sensitive.
          Recommendation No. 2: The Executive branch should 
        keep the Committee ``fully and currently informed'' of 
        the substantive content of intelligence that is 
        collected or analyzed by U.S. intelligence agencies.
          Recommendation No. 3: The Executive branch should 
        inform Congress of significant secret changes in U.S. 
        foreign policy.

       D. CONGRESSIONAL NOTIFICATION OF FOREIGN POLICY DECISIONS

    As an outgrowth of its inquiry into the Iranian arms to 
Bosnia matter, on September 5, 1996, the Committee held a 
hearing on the desirability of legislation to require the 
Executive Branch to notify Congress of secret changes in the 
overt foreign policy of the United States. The Committee 
received testimony from DCI John Deutch; former White House 
Counsel Lloyd Cutler; former NSC official and American Civil 
Liberties Union Washington Office Director Morton Halperin; 
Acting State Department Legal Adviser Michael Matheson; and 
Defense Department Deputy General Counsel Whit Peters.
    During the hearing, members of the Committee expressed 
concern that Congress had not been informed of the 
Administration's decision to acquiesce in Iranian arms 
shipments through Croatia into Bosnia. Members questioned 
whether the actions of Administration officials constituted a 
``covert action'' for purposes of Title V of the National 
Security Act and, if not, whether Title V should be amended or 
separate legislation should be enacted to require notice in 
similar circumstances. While noting the need for improved 
communication between the executive branch and Congress on 
foreign policy matters, Mr. Cutler and Mr. Halperin questioned 
whether legislation requiring notification of foreign policy 
decisions was the appropriate means to accomplish this goal. 
Further, Administration witnesses raised concerns regarding how 
such a statutory requirement would work on a practical level. 
The Committee ultimately decided not to introduce legislation 
in the 104th Congress but discussed its concerns in greater 
detail in its report on the arms to Bosnia matter.

                        e. persian gulf syndrome

    Shortly after the end of the Persian Gulf War in February 
of 1991, U.S. military personnel, both active duty and reserve, 
began to complain about unexplained illnesses. Symptoms 
included: fatigue, watery eyes, itchy skin, diarrhea, 
headaches, nausea, sleep disorder and memory loss. Exposure of 
U.S. personnel to nerve agents or mustard agents had been cited 
as one of many possible causes of what has come to be known as 
``Persian Gulf Syndrome.''
    The Committee questioned Dr. John Deutch about his 
knowledge and involvement in this issue during his confirmation 
hearing on April 26, 1995. On September 25, 1996 the Committee 
held a public hearing to receive intelligence assessments on 
the possibility of exposure of U.S. military personnel to 
chemical warfare agents during Operation Desert Storm. 
Witnesses included: Mr. John McLaughlin, Vice Chairman for 
Estimates, National Intelligence Council; Dr. Stephen Joseph, 
Assistant Secretary of Defense, Health Affairs; and Dr. Robert 
Kizer, Undersecretary for Health, Department of Veterans 
Affairs. Intelligence reports dating back to 1991, which had 
been discovered by the CIA during a review of this issue, 
determined that U.S. troops may have been exposed to sarin 
nerve gas when they destroyed an ammunition dump at al-
Khamisiyah in southern Iraq in March 1991. The Department of 
Defense has estimated that up to 20,000 U.S. troops could have 
been exposed to low levels of sarin gas as a result of the 
destruction of the rockets in Khamisiyah.

                              f. zona rosa

    On June 19, 1985, four U.S. Marines and two American 
businessmen were shot and killed while they were seated at a 
sidewalk cafe in the Zona Rosa district of San Salvador, 
reportedly by a faction of the communist FMLN movement during 
El Salvador's civil war. In mid-1995, the television show ``60 
Minutes'' claimed that the mastermind behind the incident went 
unpunished and was living in the United States. The Committee 
asked DCI John Deutch to investigate the allegations.
    In October 1995, officials from the Central Intelligence 
Agency, the Department of State, and the Department of Justice 
indicated that a preliminary review of available data indicated 
that the Department of State had assisted in the entry into the 
United States of a person believed to have some involvement 
with the ``Zona Rosa'' murders. Therefore, the Committee asked 
the Secretary of State to direct his Inspector General to 
conduct a review. The review was expanded in February 1996 to 
include the CIA, the Department of Defense, and Department of 
Justice's Inspector Generals to determine if they had been any 
government wrongdoing, and if prosecution or deportation was 
appropriate for those responsible for the June 1985 terrorist 
attack.
    In October 1996, the Committee held a closed briefing on 
the Inspector General (IG) investigations into the Zona Rosa 
case. During the course of its investigation, the Committee 
received information from the IG reports which suggested that 
State Department and possibly CIA officials may have acted 
improperly in this case. At the time this report was written, 
the Committee was preparing a consolidated report for release 
to the public.

                        g. Vietnamese commandos

    The Committee held a hearing on June 19, 1996, to hear 
testimony regarding a Vietnam-era covert action program. This 
operation, funded and supported by the United States, sent 
several hundred Vietnamese commandos into North Vietnam on 
espionage and sabotage missions. Nearly all of these commandos 
were killed or captured by the North Vietnamese. Those who were 
captured were not released in 1973 following the Paris peace 
agreement and spent as long as twenty years in North Vietnamese 
jails. Recently declassified documents and statements made by 
individuals involved with this program suggested that in 1964 
U.S. officials directing the operation began declaring these 
men as killed-in-action so that the captured commandos could be 
dropped from the program's payroll. In a case in the U.S. Court 
of Claims, 281 of these commandos sought payment from the U.S. 
Government for the time they spend in prison.
    After the Committee's hearing, Senators John Kerry and John 
McCain offered an amendment to the Defense Authorization Bill 
to provide these men, or their heirs, with compensation. The 
Administration, without reference to any outstanding legal 
issues, supported the Kerry-McCain amendment. This provision 
was included in the National Defense Authorization Act for 
Fiscal Year 1997 signed by President Clinton. The Department of 
Defense Appropriations Conference Report contained identical 
language and provided up to $20 million for payment of the 
claims.

                       H. CIA/CONTRA/COCAINE LINK

    Beginning August 18, 1996, the San Jose Mercury News ran a 
three-day series of articles purporting to trace the origins of 
the crack coccaine epidemic to a pair of Nicaraguan drug 
traffickers with connections to the U.S. backed Contras. The 
series, ``Dark Alliance: The Story Behind the Crack Explosion, 
A Mercury News Special Report,'' focused on the activities of 
two Nicaraguans and a Los Angeles drug dealer and made veiled 
references to possible CIA involvement in drug trafficking and/
or interference in the investigation and prosecution of the 
Nicaraguan traffickers.
    Since the series ran in late August, various Members of 
Congress have called for an investigation. The Director of the 
Office of National Drug Control Policy, General Barry 
McCaffrey, has also called for a review of the matter. On 
September 4, 1996 DCI John Deutch, noting the seriousness of 
the charges, notified the Committee that he had asked the CIA 
Inspector General to conduct an immediate and thorough review 
of all the allegations. Director Deutch stated that a 
preliminary review found no signs of CIA involvement in such 
activity. The Justice Department Inspector General has also 
started an investigation.
    On October 23, 1996, the Committee held an open hearing to 
begin an independent evaluation of the allegations. The 
witnesses included CIA Inspector General Fred Hitz, Department 
of Justice Inspector General Michael R. Bromwich, and former 
special counsel to the Subcommittee on Terrorism, Narcotics and 
International Operations of the Senate Foreign Relations 
Committee Jack Blum. The hearing included a review of a 
previous Senate inquiry into similar accusations and an update 
on planned executive branch actions. The Inspectors General 
from the CIA and Justice Department testified regarding the 
scope of their investigations.
    On November 26, 1996, the Committee held an open hearing to 
investigate alleged ties between the Contra organizations and 
drug trafficking. The witnesses included former Contra leader 
Adolfo Calero, and southern front leader Eden Pastora. The 
witnesses at this hearing stated that, although the Contras may 
have received some donations from Nicaraguans involved in 
narcotics trafficking, the CIA had no direct involvement with 
the drug traffickers.

    I. CIA USE OF JOURNALISTS, CLERGY AND PEACE CORPS VOLUNTEERS IN 
                        INTELLIGENCE OPERATIONS

    The Committee first raised this issue with the Director of 
Central Intelligence during a public hearing on February 22, 
1996 after discovering that a pending Council of Foreign 
Relations Task Force report concerning Intelligence Community 
reform had recommended that current policy prohibiting the use 
of journalists, members of the clergy and Peace Corps 
volunteers be reexamined. In the ensuring debate it was pointed 
out that the Director of Central Intelligence has the authority 
under current regulation to waive any prohibitions. That waiver 
authority also applies to the clergy and, to a more limited 
extent, Peace Corps volunteers.
    The Committee held a hearing on July 17, 1996 on this 
issue. Testifying before the Committee were Senator Paul 
Coverdell (R-GA); DCI John Deutch; Kenneth L. Adelman, 
journalist and former U.S. official; Terry Anderson, 
journalist; Ted Koppel, anchorman, ABC News ``Nightline''; 
Mortimer B. Zuckerman, Chairman and Editor-in-Chief, ``US News 
and World Report''; Dr. Don Argue, President, National 
association of Evangelicals; Dr.. John Orme, Executive 
Director, International Foreign Mission Association; Sister 
Claudette La Verdiere, President, Maryknoll Sisters; and Dr. 
Rodney Page, Deputy General Secretary, Church World Service and 
Witness Unit, National Council of Churches.
    The Fiscal Year 1997 Intelligence Authorization conference 
report provided, in section 309, as policy of the Untied 
states, that the Intelligence Community would not use as an 
agent or asset for intelligence collection purposes any 
individual who is a member of the news media. However, the 
conference report allowed the President or the Director of 
Central Intelligence to waive the prohibition in a particular 
case if he or she determines in writing that the waiver is 
necessary to address the overriding national security interests 
of the Untied States. The congressional intelligence committees 
are to be notified of any waivers of section 309.

                              J. GUATEMALA

    During 1995 and 1996, the Committee inquired extensively 
into CIA activities in Guatemala, focusing on the 1990 murder 
of American citizen Michael DeVine and the death of Guatemala 
guerrilla Efrain Bamaca Velasquez. The Committee conducted one 
public hearing, two closed hearings and eight on-the-record 
briefings. Committee Members and staff also traveled to 
Guatemala to conduct further inquiries on two separate 
occasions.
    The Committee's open hearing on April 5, 1995, focused on 
allegations regarding CIA's conduct in the events surrounding 
the DeVine murder and the fate of Efrain Bamaca as well as 
accusations that the CIF funded intelligence programs in 
Guatemala in contravention of U.S. policy. Testimony was 
received from Admiral William Studeman, Acting Director of 
Central Intelligence; Alexander Watson, Assistant Secretary for 
Inter-American Affairs, Department of State; Col. Allen 
Cornell, former Defense Attache, U.S. Embassy, Guatemala; John 
Barrett, Counselor to the Inspector General, Department of 
Justice; and Carol DeVine and Jennifer Harbury, widows of Mr. 
DeVine and Mr. Bamaca, respectively. The Committee's hearing 
transcript, ``Hearing on Guatemala,'' [S. Hrg. 104-161] was 
printed and is available to the public.
    The Committee also conducted two closed hearings in 1995--
on August 8 and September 29--receiving testimony from a number 
of officials of the CIA and Justice Department. As part of its 
inquiry, the Committee also met with former U.S. Ambassador to 
Guatemala Thomas Stroock; Sister Dianna Ortiz, a victim of 
human rights violations in Guatemala; various family members 
and representatives of a number of other Americans subjected to 
human rights violations in Guatemala; and representatives of 
human rights organizations.
    A CIA Inspector General investigation into the Guatemala 
cases led to a report issued in July 1995. As a result of the 
CIA IG report and the Committee's inquiry into this matter, DCI 
Deutch in September 1995 took disciplinary action against a 
number of personnel for their actions while stationed in or 
overseeing the CIA operations in Guatemala. At the time this 
biennial report was written, the Committee's inquiry into this 
matter was still underway.

               k. intelligence support to law enforcement

    On October 25, 1995 the Committee held an open hearing on 
intelligence support to law enforcement, receiving testimony 
from Deputy Attorney General Jamie Gorelick and CIA General 
Counsel Jeffrey Smith. The witnesses discussed the evolving 
relationship between law enforcement and intelligence, the 
level of cooperation between the law enforcement and 
intelligence communities and the impact of that cooperation on 
combatting terrorism, narcotics trafficking, alien smuggling 
and the smuggling of nuclear material.

       l. congressional notifications of intelligence activities

    During the 104th Congress, the Committee continued its 
oversight of the Intelligence Community and received nearly 300 
notifications of significant intelligence activities in 1995 
and another 136 between January and September 1996. In order to 
exercise its oversight responsibilities more effectively and to 
preserve a comprehensive record over a longer period of time, 
the Committee in 1995 requested that all congressional 
notifications be made in writing. In addition, the Committee 
receives numerous briefings and updates on selected 
notifications and current intelligence issues.

                       m. airborne reconnaissance

    The Committee continued its strong support for both the 
manned and unmanned airborne reconnaissance programs of the 
Department of Defense in the 104th Congress. The Committee 
believes that it is vital to maintain a robust airborne 
reconnaissance force that is capable of collection satisfying 
priority intelligence requirements in peacetime, crisis, and 
war.
    In the area of manned reconnaissance, the Committee has 
been concerned with the high operational tempo rates of our 
manned airborne reconnaissance platforms. Because of these high 
operational rates, the Committee initiated a program to re-
engine the RC-135 speciality aircraft fleet. This engine 
upgrade will significantly improve the performance of the RC-
135 fleet and decrease operations and maintenance costs. The 
Committee has also been concerned that the appropriate level of 
resources has not been programmed to update the sensor 
capabilities on several manned reconnaissance platforms. The 
Committee views these sensor upgrades to be essential in order 
to provide mission-capable forces to the regional Commanders-
in-Chief (CINCs). Therefore, the Committee made increased 
funding for additional sensors a priority in the 104th 
Congress. The Committee will continue to ensure that manned 
platforms receive the required funding for sensors to fulfill 
their reconnaissance missions in the future.
    The Committee remains concerned that the Defense Department 
has initiated more Unmanned Aerial Vehicle (UAV) programs than 
can be supported in the future years Defense budget. While the 
Committee was unsuccessful in terminating one of the UAV 
programs, the Defense Department did restructure the current 
family of UAVs under development from five programs to four. 
The Committee continues to support the development of UAVs, but 
remains concerned over the outyear budget implications of the 
various UAV programs as they transition from research and 
development into procurement.
    The Committee continued its strong support for the Defense 
Airborne Reconnaissance Office (DARO). While the Committee has 
supported increases to the DARO budget, the Committee has also 
become concerned over the ability of the DARO to fully execute 
its programs. The Committee will continue to work with the 
leadership of the DARO to closely monitor program execution.

            n. national reconnaissance office carry forward

    In July 1995, Congress discovered the National 
Reconnaissance Office (NRO) had funding available grossly in 
excess of its fiscal year 1995 requirements. This condition was 
created largely by NRO program delays and by poor internal 
controls within the National Reconnaissance Office. In 
response, the Committee recommended, and the Senate approved, 
significant reductions in the President's budget requests for 
the National Reconnaissance Program in fiscal years 1996 and 
1997. It also directed the CIA and Defense Department 
Inspectors General to conduct reviews of the status of funding 
within the National Reconnaissance Office and selected programs 
of the Department of Defense. Learning of no misuse of 
Government funds during the intense executive branch and 
legislative branch reviews of the NRO's financial status, the 
Committee recommended, and the Senate approved, new financial 
management practices for the National Reconnaissance Office in 
the report accompanying the Fiscal Year 1997 Intelligence 
Authorization Act.

                          o. small satellites

    As part of the fiscal year 1996 intelligence authorization 
process, a heated executive branch, legislative branch and 
public debate developed concerning the next generation of 
reconnaissance satellites. To help resolve the issue, the 
Director of Central Intelligence formed a panel of experts 
outside of the Government on reconnaissance satellites under 
Dr. Robert Hermann, a former director of the NRO and senior 
Defense Department official. Although the panel's report is 
classified, an unclassified version was publicly released, 
recommending the next generation of satellites should be 
smaller vehicles than the current class. It further recommended 
moving forward expeditiously with this initiative. In the 
conference report to the fiscal year 1997 Intelligence 
Authorization Act, the Committee used the Hermann panel's 
vision as a component of many of its recommendations.

                            p. covert action

    Covert action funding continued to comprise a small 
proportion of the intelligence budget throughout the 104th 
Congress. Nevertheless, the Committee continues to conduct 
rigorous oversight of covert action programs, helping to ensure 
that such programs serve an agreed foreign policy objective and 
are conducted in accordance with American laws and values.

                      q. encryption export policy

    The introduction of legislation in the 104th Congress to 
liberalize the export of encryption products spurred the 
Committee to undertake a series of briefings to assess the 
potential impact of such legislation on U.S. national security 
interests. Due to the many equities involved, including those 
of business and law enforcement as well as the Intelligence 
Community, the Committee sought the views of numerous 
individuals from both the public and private sectors and 
interviewed the authors of the National Research Council (NRC) 
report entitled, ``Cryptography's Role in Securing the 
Information Society.''
    Due to the sensitivity of some issues associated with 
encryption policies, and the interest the topic engendered on 
the part of a number of different Senators and committees, the 
Committee took the lead in arranging a classified briefing that 
provided all interested members the opportunity to directly 
question the DCI, the Director of the FBI, and the Deputy 
Attorney General, all of whom play pivotal roles in the 
development and implementation of Administration encryption 
export policy. As a result of this and other Intelligence 
Community briefings, as well as the seeming progress of 
Industry-Administration negotiations on the encryption export 
issue, the Chairman and Vice Chairman of the Committee 
concluded, as the authors of the NRC report had, that it would 
be premature to enact legislation to establish a statutory 
framework for U.S. encryption export policy.
    Shortly before the adjournment of the 104th Congress, the 
Administration announced the parameters of a new encryption 
export policy. Pursuant to this policy, corporations willing to 
commit to the development of key escrow encryption products--
systems that would accommodate the needs of law enforcement for 
court-authorized access to electronic communications--will be 
permitted for up to two years to export 56 bit encryption 
technologies. This policy is certain to renew interest in the 
encryption issue in the 105th Congress and will remain a topic 
of concern for the Intelligence Committee.

           r. security of the u.s. information infrastructure

    During its review of the fiscal year 1996 request for the 
Department of Defense Information Systems Security Program 
(ISSP), the Committee became concerned over the lack of a 
national strategy for dealing with threats to the U.S. 
information infrastructure. This infrastructure includes the 
enormous variety of public and private communication and 
information systems that today control everything from 
telephone switching to routine financial transactions and 
airport traffic control. These systems are the functional 
equivalent of a national central nervous system, and threats to 
their operation could have grave ramifications for U.S. 
national security. An estimated 95% of Defense Department 
communications are carried on the public switch network (PSN) 
operated by private telecommunications vendors. Further, even 
with the Administration's requested budget increases in 1996 
and 1997, overall information security spending and manpower 
are still far below the levels of the late 1980s, 
notwithstanding an increased Defense Department reliance on 
information systems to achieve ``dominant battlespace 
awareness'' in future conflicts.
    To address these concerns, in June 1995 the Committee 
requested a report from the Secretary of Defense and the 
Director of Central Intelligence on the threats to the U.S. 
information infrastructure as well as a comprehensive strategy 
for ameliorating such threats. The report was to have been 
received by the Committee not later than March 1, 1996.
    In response to this request, the committee received a 
letter dated January 3, 1996, from the DCI expressing agreement 
with the need for a comprehensive threat assessment. The DCI's 
letter, however, also indicated that it would be impossible to 
meet the Committee's deadline. The Department of Defense has 
still not provided a written response, although the Committee 
has been orally notified that a reply will soon be forthcoming.
    Due to the concerns expressed by the Committee and the 
vigorous, independent efforts of Senators John Kyl (R-AZ) and 
Sam Nunn (D-GA), the Administration has established a 
Presidential Commission with a broad mandate to assess the 
issues raised by the committee in 1995. The Committee intends 
to maintain its scrutiny of this important issue and will 
carefully evaluate the findings and recommendations of the 
Presidential Commission.

                       s. jane doe thompson case

    During the 104th Congress the Committee continued to follow 
the progress of the Jane Doe Thompson case. Jane Doe Thompson 
is a pseudonym for a female CIA Directorate of Operations 
officer who in July 1994 filed a lawsuit against the CIA 
alleging, among other things, sexual discrimination in terms of 
her assignments and promotions and unfair treatment by the CIA 
Inspector General (IG).
    Thompson was the subject of an IG investigation which began 
in 1991 and was completed the following year. The IG 
recommended disciplinary actions be levied against Ms. 
Thompson, who filed suit against the CIA IG and other CIA 
personnel in July 1994 in the U.S. District Court for the 
Eastern District of Virginia. The lawsuit alleged that the CIA 
IG's investigation of her had been improper and discriminated 
against her as a woman; and that she had been the victim of 
discrimination with respect to her assignments and promotions 
within the CIA Directorate of Operations. On December 22, 1994, 
prior to the case being tried, an agreement was reached between 
Ms. Thompson and the CIA wherein, among other things, Ms. 
Thompson agreed to accept immediate voluntary retirement and 
was paid a lump sum payment of $385,000 by the CIA.
    In March 1995 CIA IG Fred Hitz appeared as the sole witness 
before a closed session of the Committee to discuss the 
Thompson case and other IG matters.

     t. oversight of the intelligence community inspectors general

    Senate Resolution 400, 94th Congress, established the 
Select Committee to oversee and make continuing studies of the 
intelligence activities and programs of the United Stats 
Government, and to provide ``vigilant legislative oversight 
over the intelligence activities of the United States.'' An 
important part of the Committee's oversight has been close 
monitoring of the activities of the Inspectors General (IGs) of 
the Intelligence Community, and review of IG products.
    During the 104th Congress the Committee held five hearings 
and briefings with various IGs on intelligence issues, and 
reviewed nearly 200 IG reports. The Committee also arranged 
numerous briefings with Community program and IG personnel in 
order to follow up on the findings and recommendations from a 
variety of IG products. Examples include NRO financial 
practices, CIA administration of bank accounts, employee 
grievances, CIA and NRO employee and applicant investigation 
procedures, and sensitive DIA program. Staff also meets with 
the IGs on a regular basis to address administrative issues 
such as IG quality control, staffing and budgets. In addition, 
staff attended two Intelligence Community IG conferences and 
participated as guest speakers at three IG conferences. The 
Committee's Audit Staff is currently engaged in a detailed 
review of internal controls and procedures for the CIA IG.
    On December 21, 1995, special recognition was given to Fred 
Hitz, the first CIA statutory Inspector General, on his five 
year anniversary in that office. Senate Resolution 201 (104th 
Congress, 1st Session) commended the CIA IG and acknowledged 
the important role of the statutory Inspector General's Office 
on their role in the oversight of that agency.
    The Committee also recognized that the Intelligence 
Community agencies are becoming increasingly interconnected 
and, as a result, Intelligence Community IGs must work closely 
with each other on a growing number of interrelated issues. In 
language accompanying the Committee's fiscal year 1997 
authorization bill, the IGs form CIA, Central Imagery Office, 
Defense Intelligence Agency, Department of Defense, Department 
of Energy, the Military Services, National Reconnaissance 
Office, National Security Agency, and the Departments of State, 
Treasury and Justice were directed to provide by January 15, 
1997 a report to the Committee describing the reviews involving 
intelligence issues they have cooperated on since January 1, 
1994. In addition, the Committee language asked each of the IGs 
to make any recommendations they deem appropriate for improving 
coordination and communication between the IGs, as well as 
individual IG assessments of the feasibility and desirability 
of creating an IG for the Intelligence Community to coordinate 
all joint intelligence efforts.

               Organized Crime in the Former Soviet Union

    The crime problem facing Russia and the other states of the 
former Soviet Union is staggering. The conversion to a market 
economy has impoverished many people, causing some to turn to 
crime for survival. And a legal system without basic laws on 
corruption, conflict of interest, or racketeering is matched by 
law enforcement agencies that may themselves be tainted. The 
endemic crime and corruption threatens not only the transition 
to a market-oriented society, but also the nascent democracies 
in these nations.
    This situation hinders the ability of the West to help the 
transition by discouraging investment and causing nations to 
question the efficacy of their foreign aid. The extortion and 
protection rackets have targeted foreign concerns as well as 
indigenous businesses. A poll of business executives rated 
Russia as the worst place in the world to do business, largely 
on the basis of the crime problem.
    Organized crime in the former Soviet Union has a direct 
effect on U.S. interests. These groups have spread quickly and 
made connections with other international criminal 
organizations. In many cases they are already operating in the 
United States and Europe. They also have ties to Chinese, 
Japanese, and Israeli criminal organizations, as well as the 
Italian mafia and the South American drug cartels.
    On March 15, 1996, the Committee held a hearing to examine 
the Administration's response to this problem. The State 
Department, the FBI, and intelligence agencies described their 
attempts to help former Soviet states deal with the organized 
crime problem and their efforts to better coordinate their 
activities. The Committee has attempted to encourage 
cooperation between intelligence an law enforcement agencies 
and will continue to pursue this goal.

                   V. Program Review and Audit Staff

    The Audit Staff was created in 1988 by the Committee to 
provide ``a credible independent arm for Committee review of 
covert action programs and other specific Intelligence 
Community functions and issues.'' During the 104th Congress the 
Audit Staff was increased from two to three persons. The 
Program Review and Audit Staff either led or provided 
significant support to numerous Committee reviews and oversight 
activities. In addition, the Audit Staff conducted four in-
depth reviews, including one of a covert action program. These 
reviews included the following:
    Covert Action Review.--The Audit Staff conducted an 
extensive review of a covert action program. Thirteen 
recommendations were made to improve the effectiveness and 
efficiency of the program.
    Intelligence Community Budget Execution.--One of the most 
noteworthy unclassified projects undertaken by the Program 
Review and Audit Staff was a review of Intelligence Community 
(IC) Budget Execution. The review was prompted by revelations 
about the financial management practices at the National 
Reconnaissance Office (NRO) resulting in the NRO's financial 
position being inaccurately reported to the Congress, and NRO 
management being unaware that forward funding levels had 
reached $3.7 billion as of 30 September 1995.
    The staff review Intelligence Community budget execution 
monitoring with particular emphasis on the effectiveness on 
internal controls which would prevent the accumulation of 
excess forward funding at other Intelligence Community 
organizations. As the review progressed, staff learned that 
until recently only limited oversight existed for the execution 
of many of the IC budgets.
    The staff found that prior to the 1995 revelations 
regarding the NRO's excess forward funding, NFIP budget 
execution monitoring had not been done in any significant way 
by any office outside the individual agency comptrollers. For 
example, neither the Office of Management and Budget (OMB), 
Office of the Secretary of Defense (OSD), nor Community 
Management Staff (CMS) participated in substantive reviews of 
NFIP budget execution.
    The NRO forward funding issue caused OMB, OSD and CMS to 
rethink their oversight responsibilities and their capability 
to monitor NFIP funds. During the last year the three 
organizations have begun working together to increase their 
individual, as well as their combined, efforts to provide 
budget formulation and execution oversight of the NFIP 
programs.

                       VIII. Foreign Intelligence

                             a. north korea

    Since North Korea's accession to the Treaty on the Non-
Proliferation of Nuclear Weapons (NPT) in 1985, it has been a 
main objective of U.S. diplomacy to secure North Korea's full 
compliance with the NPT. On October 21, 1994, the United States 
and the Democratic People's Republic of Korea issued an 
``Agreed Framework'' for resolution of the North Korean nuclear 
problem. In early 1995 the Committee held a hearing to review 
the agreement and to assess the ability of the Intelligence 
Community to monitor the agreement over its phased life. The 
hearing also reviewed North Korea's record on proliferation of 
weapons of mass destruction.
    The Committee continued to monitor the still tense 
situation on the Korean peninsula and received an on the record 
briefing in December 1995. This briefing addressed questions on 
the status of North Korea's military preparedness and an 
evaluation of the Intelligence Community's warning capability. 
The witnesses provided both a short- and medium-term overview 
of the likely evolution of the North Korean political and 
economic situation, and of the regional political and economic 
context in which it will take place. The deteriorating economic 
situation, with the possibility of severe food shortages, adds 
to an already unstable environment and the Committee will 
continue to monitor the situation closely.

                                b. iraq

    The Committee held hearings and briefings on the situation 
in Iraq during the 104th Congress. After Saddam Hussein 
intervened in the Kurdish areas of northern Iraq, Director of 
Central Intelligence John Deutch testified on September 19, 
1996 before the Committee in open session on internal 
developments in Iraq in the wake of U.S. military action 
against that country. At that hearing, Director Deutch stated 
that Saddam Hussein's hold on power had become stronger as a 
result of the intervention in the fighting between Kurdish 
factions.

                               c. russia

    The political leadership, military situation, and ongoing 
economic transition in Russia were of continued interest to the 
Committee during 1995 and 1996. The Committee held a number of 
closed briefings which focused upon Russia and the adequacy of 
intelligence assessments of that country. The Committee also 
reviewed the Intelligence Community's views on how the 
political situation in Russia could influence acceptance of the 
Chemical Weapons Convention and START II treaty by the Russian 
legislature.

                                D. CHINA

    The evolving relationship between the United States and 
China is critical for strategic and economic reasons. During 
the 104th Congress the Committee received testimony from 
representatives of CIA, DIA, NSA and the State Department on a 
variety of issues affecting this relationship. This testimony 
centered on the tensions between China and Taiwan in the time 
leading up to the Taiwanese Presidential election in March 
1996.
    The witnesses also discussed China's involvement in 
proliferation activities such as the publicly reported transfer 
of nuclear technology and ballistic missiles to Pakistan. 
Finally the Intelligence Community provided the Committee with 
an assessment of the impact of China's economic reform program 
and the evolving leadership transition as Deng Xiaoping fades 
from the scene.

                               E. MEXICO

    In the aftermath of the December 1994 Mexican peso crisis, 
the Committee reviewed the Intelligence Community's prior 
assessment of this situation. In a letter to the Washington 
Post printed on the February 28, 1995, the Committee stated 
that the CIA analyses did cover crucial economic and political 
factors in the months leading up to the crisis and made clear 
that a large, delayed devaluation of the peso would have 
significant ramifications for Mexico's economy and political 
situation. The Committee conducted a closed briefing on March 
22, 1995 to assess political, economic and social trends in 
Mexico, with a particular focus on the country's banking 
crisis.

                        F. ECONOMIC INTELLIGENCE

    During the last two years, the Intelligence Community has 
continued to refine and clarify its role in the collection of 
economic information. As a part of the Committee's Worldwide 
Intelligence Review hearing on January 10, 1995, then-DCI 
Woolsey defined what he called the ``permissible side'' of 
economic intelligence, which included helping U.S. policymakers 
understand general economic forces, foreign positions and 
practices towards international agreements, and how foreign 
governments or firms are violating laws, breaking international 
agreements, or behaving outside the norm. DCI Woolsey stated 
that the United States does not spy on foreign companies for 
the purpose of providing information to U.S. firms, report 
information that is openly available in the public sector, or 
focus on any economic issue that is not directly responsive to 
policymaker interests and needs
    On November 7, 1995, the Committee held a closed briefing 
to develop a better understanding of the many issues 
surrounding the collection of economic intelligence. 
Specifically, the briefing provided information on what 
economic information is targeted by the Intelligence Community, 
what sources and methods are used, how the risks of collection 
are considered, and how valuable and unique the economic 
intelligence information is to consumers.
    As a part of the Committee's February 22, 1996 hearing on 
Current and Projected National Security Threats to the United 
States and Its Interests Abroad, DCI Deutch described in 
greater detail the types of economic intelligence that have 
been most useful to intelligence consumers. This list included 
work done on key economies such as Russia, China, Eastern 
Europe and large emerging markets; intelligence support for 
bilateral and multilateral negotiations; monitoring of foreign 
compliance with economic sanctions against Iraq, Libya, and 
Serbia; and information to help policymakers better understand 
how foreign governments have worked to undermine the efforts of 
U.S. business to secure overseas contracts.

             G. ENVIRONMENTAL AND DEMOGRAPHIC INTELLIGENCE

    The Committee has continued its support for efforts to use 
intelligence sensors and data to assist environmental 
scientists and federal agencies with an environmental mission. 
While funding for this program through the Intelligence 
Community has remained relatively steady, the program has 
expanded due to the willingness of other federal agencies to 
contribute resources to the effort.
    The core of the environmental program is a group of 
scientists from a variety of environmental backgrounds 
representing government and academia who are sponsored by the 
Intelligence Community. This group is called MEDEA, and the 
scientists have received security clearances enabling them to 
fully analyze and use intelligence data for environmental 
purposes. The MEDEA scientists continue to be in high demand by 
a number of federal agencies for their expertise and the unique 
resources they bring to bear on environmental questions. MEDEA 
has conducted a number of experiments to provide a baseline of 
knowledge regarding how intelligence sensors can be used to 
benefit environmental research and federal agencies with an 
environmental mission.
    On December 12, 1995, the Committee held a closed briefing 
for members to explore the importance of ecological and 
demographic information in intelligence analysis, and how 
ecological and demographic factors may effect the stability of 
nations. Dr. Murray Feshbach of Georgetown University testified 
regarding the environmental devastation in Russia. Dr. Jack 
Goldstone of the University of California, Davis provided 
testimony regarding the demographics of China, and how 
population pressures will affect China's future. In addition, 
the Committee heard testimony from Dr. Richard Cooper, the 
Chairman of the National Intelligence Council, regarding the 
extent to which the Intelligence Community takes into account 
ecological and demographic information when producing 
intelligence estimates.

            h. intelligence sharing with the united nations

    In March 1995, the Committee learned of the discovery of 
several boxes of classified U.S. intelligence documents left 
unsecured in a vacant United Nations office in Somalia. This 
discovery led not only to questions regarding the security of 
U.S. classified information given to the U.N. Peacekeeping 
Forces in Somalia (UNOSOM), but also to broader questions 
regarding U.S. intelligence sharing with the U.N.
    The Committee held a closed briefing for members on this 
issue on March 23, 1995, and received testimony from the State 
Department, the Department of Defense, and staff of the 
Director of Central Intelligence (DCI). In addition, the 
Committee requested an investigation by the Department of 
Defense, including a damage assessment, of what happened in 
Somalia, how it happened, and what procedural improvements are 
needed to ensure this type of situation does not recur.
    A classified report summarizing the findings of the 
Department of State, the Department of Defense and the DCI on 
this issue was produced by the DCI's staff and sent to the 
Committee on June 6, 1995. This report included recommendations 
for both institutional and operational changes to improve 
United Nations information security practices. The Committee 
has continued to monitor the implementation of these 
recommendations closely. This issue is particularly important 
given the increasing frequency of United States participation 
in multilateral efforts overseas.
    To further address these concerns, the Committee included 
provisions in the Fiscal Year 1997 Intelligence Authorization 
Act requiring the President to certify that proper procedures 
to ensure the security of classified information have been 
established and are being implemented by United Nations. 
Additionally, the President is required to submit semiannual 
reports to Congress on intelligence sharing with the United 
Nations and to reports to Congress any unauthorized disclosure 
of intelligence provided by the United States to the U.N.

                           IX. Confirmations

                         a. dci john m. deutch

    On April 26, 1996, the Committee held a public hearing on 
the nomination of John M. Deutch to be Director of Central 
Intelligence. Since March of 1994, Mr. Deutch had served as the 
Deputy Secretary of Defense and earlier served as Under 
Secretary of Defense for Acquisition and Technology. A former 
professor and dean at the Massachusetts Institute of 
Technology, Mr. Deutch had previously served in the Department 
of Energy as Director of Energy Research, Acting Assistant 
Secretary for Energy Technology, and Under Secretary of the 
Department. Mr. Deutch holds a B.A. in history and economics 
from Amherst College, and a B.S. in chemical engineering and a 
Ph.D. in physical chemistry from M.I.T.
    Mr. Deutch testified on his own behalf at the confirmation 
hearing. There were no other witnesses.
    On May 3, 1996 the Committee reported Mr. Deutch's 
nomination to the Senate by a vote of 17-0. The nomination was 
confirmed by the Senate by a vote of 98-0 on May 9, 1996.

                        b. ddci george j. tenet

    On June 14, 1996, the Committee held a public hearing on 
the nomination of George J. Tenet to be Deputy Director of 
Central Intelligence. Mr. Tenet previously served as Special 
Assistant to the President and Senior Director for Intelligence 
Programs at the National Security Council. He also served as 
Staff Director for the Senate Select Committee on Intelligence 
from 1988 to 1992. Mr. Tenet holds a B.S.F.S. from the School 
of Foreign Service at Georgetown University and an M.I.A. from 
the School of International Affairs at Columbia University.
    On June 21, 1996, the Committee reported Mr. Tenet's 
nomination to the Senate by a vote of 17-0. The Senate approved 
his nomination in executive session on June 26, 1996.

             X. Committee Internal Reforms and Enhancements

                     a. end of the designee system

    At the beginning of the 104th Congress, the Committee 
sought to enhance the effectiveness and nonpartisan nature of 
the Committee staff by ending the Committee staff designee 
system and has since relied on a cadre of non-partisan 
professional staff directly accountable to both the Chairman 
and the Vice Chairman. This change was effected because of a 
combination of growing budgetary constraints (S. Res. 400 
stipulates that the Committee should be limited to 15 Members 
but the Senate leadership expanded the Committee to 17 Members 
without providing additional resources for more staff), as well 
as the need to more effectively manage the Committee's work.
    Since the Committee's inception in 1976, Members of the 
Committee were allowed to nominate an individual staff member 
to be placed on the Committee's payroll and staff the 
sponsoring Member on Committee issues. Designees understandably 
felt a greater sense of loyalty to their sponsoring Member 
rather than to the Committee as an institution. Accordingly, a 
number of designees spent a large proportion of their time 
working for their sponsoring Member on issues unrelated to the 
Committee's intelligence oversight responsibility. Inevitably, 
this created management problems on the Committee, with the 
Committee leadership being able to regularly rely only on a 
small proportion of the professional staff to focus on the work 
of the Committee.
    With the termination of individual designee personnel at 
the beginning of the first session of the 104th Congress, 
Committee staff were assigned to work with specific Members to 
assist them in their Committee work. Also, an intelligence 
oversight orientation was provided to the new Members appointed 
to the Committee in the 104th Congress, including: 
individualized briefings for Members; briefings on the 
Committee's work for the personal staff of new Committee 
Members; a Committee off-site with presentations provided by 
senior Intelligence Community officials; and a series of 
intelligence-related technical displays to update Members on 
the unique technical capabilities of the Intelligence 
Community.

                             b. term limits

    In the context of its examination of the Intelligence 
Community's organization, the Committee unanimously recommended 
deleting Section 2(b) of Senate Resolution 400 which prohibits 
members of the Committee from serving continuously for more 
than eight years. Regrettably, while this provision was 
reported out of the Committee as part of the Fiscal Year 1997 
Intelligence Authorization Bill, it was removed prior to the 
full Senate taking up this legislation.
    The Committee believes that limiting tenure on the Senate 
Select Committee on Intelligence limits Member experience and 
expertise, thereby detrimentally affecting the quality of 
oversight. Across the Senate, Senators with the most extensive 
service on committees have proved capable of the most 
meaningful legislation. As stated in the report of the 
Commission Roles and Capabilities of the U.S. Intelligence 
Community (the ``Brown Commission''), `` * * * because of the 
fixed tenure rule, Members often have to rotate off the [House 
and Senate intelligence oversight] committees at the very time 
they have begun to master the complex subject matter. Indeed, 
knowing their tenure is limited, some put their time in on 
other committees. As a consequence, in the view of many 
Commission witnesses, an unfortunate loss of expertise and 
continuity occurs, weakening the effectiveness of the 
committees.''
    Both the Brown Commission and the Council on Foreign 
Relations task force on the future of U.S. intelligence 
recommended ending Member term limits on the Committee as a 
means of increasing Member expertise in intelligence oversight. 
In addition, former Directors of Central Intelligence Robert 
Gates and R. James Woolsey have advocated the termination of 
Committee term limits, as have Committee hearing witnesses 
Harold Brown and former Committee Members Warren Rudman and 
Howard Baker.

                              c. policynet

    In the Fiscal Year 1995 Intelligence Authorization Act, 
funds were set aside for the establishment of a secure computer 
network, referred to as PolicyNet, to connect the Intelligence 
Community with the legislative branch in an effort to provide 
timely notification and access to intelligence products 
generated by the executive branch.
    In March 1995, Committee staff met with representatives of 
the Intelligence Community to establish the priorities and to 
lay the ground work for the project. During both sessions of 
the 104th Congress, the CIA has worked closely with the 
Committee to introduce this new computer network and to bring 
the legislative branch ``on-line'' with the Intelligence 
Community.
    PolicyNet is the CIA's Automated Information System that 
provides classified intelligence products, maps, charts, video, 
imagery, etc. to the Congress and other Executive Branch 
agencies involved with intelligence collection, analysis, and 
dissemination. In addition, the network's secure video 
conferencing feature provides the DCI, as well as other senior 
intelligence officials, with the ability to communicate ``face-
to-face'' with Members of the Intelligence Committee on 
extremely sensitive issues of national importance. This feature 
also provides for timely briefings of sensitive late breaking 
events in areas of importance, and can save hundreds of 
personnel hours otherwise spent traveling to Capitol Hill to 
brief Members.
    Although it is not yet fully operational, PolicyNet 
provides a vehicle that will greatly assist the Committee's 
oversight responsibilities by providing timely intelligence in 
``near-real time'' rather than requiring Members and staff to 
wade through thousands of paper documents delivered by courier. 
The secure video conferencing will benefit the Congressional 
Oversight Committees, as well as the Intelligence Community, by 
providing a capability to brief both the House and Senate 
simultaneously on sensitive intelligence matters rather than 
briefing each Committee separately. Also, with the migration 
and publication of intelligence reports in softcopy on this 
network--and the elimination of large quantities of paper 
documents, transportation to deliver those reports, and the 
requirements to securely store such material--PolicyNet will 
help to decrease use of these resources.
    The funds authorized in 1995 also allowed the Office of 
Senate Security to provide non-Committee Members and their 
appropriately cleared staff greater access to intelligence 
related material on a variety of issues.
                            A P P E N D I X

                              ----------                              


                   I. Summary of Committee Activities

                         a. number of meetings

    During the 104th Congress the Committee held a total of 131 
hearings or on-the-record briefings. Of these, seventy-nine 
were oversight hearings, eighteen were legislative hearings, 
and five were nomination hearings. There were seventeen 
Committee business or legislative mark-up meetings. Also, the 
Committee held twelve on-the-record briefings.

          b. bills and resolutions originated by the committee

    S. Res. 43--An original resolution authorizing expenditures 
by the Select Committee on Intelligence.
    S. Res. 256--To authorize the production of records by the 
Select Committee on Intelligence.
    S. 922--Intelligence Authorization Act, Fiscal Year 1996. 
Enacted under H.R. 1655, Public Law 104-93.
    S. 1718--Intelligence Authorization Act, Fiscal Year 1997. 
Enacted under H.R. 3259, Public Law 104-293.

                   c. bills referred to the committee

    S. 1326--Abolition of the Central Intelligence Agency Act 
of 1995.
    S. 1557--Economic Security Act of 1996.
    S. 1593--Intelligence Organization Act of 1996.
    S. 1681--Combatting Proliferation of Weapons of Mass 
Destruction Act of 1996.
    S. 1745--The Department of Defense Authorization Act, 
Fiscal Year 1997.

                       d. committee publications

    Senate Report 104-4--Special Report--Committee Activities 
of the Senate Select Committee on Intelligence January 4, 1993-
December 1, 1994.
    Senate Hearing 104-15--Hearing before the Senate Select 
Committee on Intelligence--World Wide Intelligence Review.
    Senate Print 104-13--Rules of Procedures for the Senate 
Select Committee in Intelligence.
    Senate Report 104-97--Authorizing Appropriations for fiscal 
year 1996. (To accompany S. 922)
    Senate Hearing 104-156--Director of Central Intelligence 30 
Day Report.
    Senate Hearing 104-160--Nomination of John M. Deutch to be 
Director of Central Intelligence.
    Senate Hearing 104-161--Hearing on Guatemala.
    Senate Hearing 104-203--Hearing on the Nomination of George 
J. Tenet to be Deputy Director of Central Intelligence.
    Senate Print 103-122--Legislative Calendar One Hundred 
Third Congress.
    Public Law 104-93--To Authorize Appropriations for fiscal 
year 1996.
    Senate Report 104-246--Capability of the United States to 
Monitor Compliance with the Start II Treaty.
    Senate Report 104-258--Authorizing Appropriations for 
fiscal year 1997 for the Intelligence Activities of the U.S. 
Government and the CIA Retirement and Disability System and for 
other purposes. (To accompany S. 1718)
    Senate Hearing 104-448--War Crimes in the Balkans--Joint 
Hearing Senate Select Committee on Intelligence and Committee 
on Foreign Relations. (Wednesday, August 9, 1995)
    Senate Report 104-278--Department of Defense Authorization 
for fiscal year 1997 to accompany S. 1745. (June 11, 1996 
ordered to be printed)
    Senate Hearing 104-510--Current and Projected National 
Security Threats to the U.S. and Interests Aboard. (February 
22, 1996)
    Senate Hearing 104-499--Joint Hearing on Economic 
Espionage. (February 28, 1996)

          d. memorandum of agreement regarding tiara and jmip

   Memorandum of agreement--April 29, 1996, between the Senate Armed 
     Services Committee (SASC) and the Senate Select Committee on 
   Intelligence (SSCI), Relating to the Joint Military Intelligence 
Program (JMIP) and Tactical Intelligence and Related Activities (TIARA)

    The Chairman and Ranking Member of the SASC and the 
Chairman and Vice Chairman of the SSCI agree to the following 
arrangements for the review and authorization of TIARA and 
JMIP:
          (1) The SSCI will consider TIARA and the JMIP in its 
        markup and will include a recommendation for TIARA and 
        the JMIP in its formal committee report on the annual 
        Intelligence Authorization Act. The SSCI's bill and 
        report, however, will make clear that the only schedule 
        of authorizations the SSCI is recommending to the 
        Senate is the schedule for the National Foreign 
        Intelligence Program (NFIP), and that the SSCI is only 
        making a recommendation for TIARA and the JMIP to the 
        SASC;
          (2) The committee staffs will work together and the 
        SSCI staff may attend staff-level conference meetings 
        on the annual Department of Defense Authorization bill 
        in which matters related to TIARA and JMIP are 
        considered; and
          (3) Before a TIARA or JMIP issue is finally closed 
        out in the Defense Authorization conference in a manner 
        with which they disagree, the SSCI Chairman and Vice 
        Chairman will have an opportunity to consult on the 
        issue with the SASC Chairman and Ranking Member.

                                   Strom Thurmond,
                                           SASC Chairman.
                                   Sam Nunn,
                                           SASC Ranking Member.
                                   Arlen Specter,
                                           SSCI Chairman.
                                   J. Robert Kerrey,
                                                SSCI Vice Chairman.

                                
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