Director of Central Intelligence
Senate Select Committee on Intelligence
"Worldwide Threat 2001: National Security in a Changing World"
(as prepared for delivery)
As I reflect this
year, Mr. Chairman, on the threats to American security, what strikes me
most forcefully is the accelerating pace of change in so many
arenas that affect our nation’s interests. Numerous examples come to mind:
new communications technology that enables the efforts of terrorists and
narcotraffickers as surely as it aids law enforcement and intelligence,
rapid global population growth that will create new strains in parts of
the world least able to cope, the weakening internal bonds in a number of
states whose cohesion can no longer be taken for granted, the breaking
down of old barriers to change in places like the Koreas and Iran, the
accelerating growth in missile capabilities in so many parts of the
world—to name just a few.
Never in my
experience, Mr. Chairman, has American intelligence had to deal with such
a dynamic set of concerns affecting such a broad range of US interests.
Never have we had to deal with such a high quotient of uncertainty. With
so many things on our plate, it is important always to establish
priorities. For me, the highest priority must invariably be on those
things that threaten the lives of Americans or the physical security of
the United States. With that in mind, let me turn first to the challenges
posed by international terrorism.
We have made
considerable progress on terrorism against US interests and facilities,
Mr. Chairman, but it persists. The most dramatic and recent evidence, of
course, is the loss of 17 of our men and women on the USS Cole at the
hands of terrorists.
The threat from
terrorism is real, it is immediate, and it is evolving. State sponsored
terrorism appears to have declined over the past five years, but
transnational groups—with decentralized leadership that makes them harder
to identify and disrupt—are emerging. We are seeing fewer centrally
controlled operations, and more acts initiated and executed at lower
Terrorists are also
becoming more operationally adept and more technically sophisticated in
order to defeat counterterrorism measures. For example, as we have
increased security around government and military facilities, terrorists
are seeking out "softer" targets that provide opportunities for mass
casualties. Employing increasingly advanced devices and using strategies
such as simultaneous attacks, the number of people killed or injured in
international terrorist attacks rose dramatically in the 1990s, despite a
general decline in the number of incidents. Approximately one-third of
these incidents involved US interests.
Usama bin Ladin and
his global network of lieutenants and associates remain the most immediate
and serious threat. Since 1998, Bin Ladin has declared all US citizens
legitimate targets of attack. As shown by the bombing of our Embassies in
Africa in 1998 and his Millennium plots last year, he is capable of
planning multiple attacks with little or no warning.
His organization is
continuing to place emphasis on developing surrogates to carry out attacks
in an effort to avoid detection, blame, and retaliation. As a result it is
often difficult to attribute terrorist incidents to his group, Al Qa’ida.
Beyond Bin Ladin, the
terrorist threat to Israel and to participants in the Middle East peace
negotiations has increased in the midst of continuing Palestinian-Israeli
violence. Palestinian rejectionists—including HAMAS and the Palestine
Islamic Jihad (PIJ)—have stepped up violent attacks against Israeli
interests since October. The terrorist threat to US interests, because of
our friendship with Israel has also increased.
At the same time,
Islamic militancy is expanding, and the worldwide pool of potential
recruits for terrorist networks is growing. In central Asia, the Middle
East, and South Asia, Islamic terrorist organizations are trying to
attract new recruits, including under the banner of anti-Americanism.
terrorist networks have used the explosion in information technology to
advance their capabilities. The same technologies that allow individual
consumers in the United States to search out and buy books in Australia or
India also enable terrorists to raise money, spread their dogma, find
recruits, and plan operations far afield. Some groups are acquiring
rudimentary cyberattack tools. Terrorist groups are actively searching the
internet to acquire information and capabilities for chemical, biological,
radiological, and even nuclear attacks. Many of the 29 officially
designated terrorist organizations have an interest in unconventional
weapons, and Usama bin Ladin in 1998 even declared their
acquisition a "religious duty."
Nevertheless, we and
our Allies have scored some important successes against terrorist groups
and their plans, which I would like to discuss with you in closed session
later today. Here, in an open session, let me assure you that
the Intelligence Community has designed a robust counterterrorism
program that has preempted, disrupted, and defeated international
terrorists and their activities. In most instances, we have kept
terrorists off-balance, forcing them to worry about their own security and
degrading their ability to plan and conduct operations.
I would like to turn
now to proliferation. A variety of states and groups continue to
seek to acquire weapons of mass destruction and the means to deliver them.
First, let me discuss
the continuing and growing threat posed to us by ICBMs.
We continue to face
ballistic missile threats from a variety of actors beyond Russia and
China--specifically, North Korea, probably Iran, and
possibly Iraq. In some cases, their programs are the result of
indigenous technological development, and in other cases, they are the
beneficiaries of direct foreign assistance. And while these emerging
programs involve far fewer missiles with less accuracy, yield,
survivability, and reliability than those we faced during the Cold War,
they still pose a threat to US interests.
For example, more than
two years ago North Korea tested a space launch vehicle, the Taepo
Dong-1, which it could theoretically convert into an ICBM. This missile
would be capable of delivering a small biological or chemical weapon to
the United States, although with significant targeting inaccuracies.
Moreover, North Korea has retained the ability to test its follow-on Taepo
Dong-2 missile, which could deliver a nuclear-sized payload to the
has one of the largest and most capable ballistic missile programs in
the Middle East. Its public statements suggest that it plans to develop
longer-range rockets for use in a space-launch program, but Tehran could
follow the North Korean pattern and test an ICBM capable of delivering a
light payload to the United States in the next few years.
- And given the
likelihood that Iraq continues its missile development work, we
think that it too could develop an ICBM capability sometime in the next
decade assuming it received foreign assistance.
As worrying as the
ICBM threat will be, Mr. Chairman, the threat to US interests and forces
from short- and medium-range ballistic missiles is here and now. The
proliferation of MRBMs—driven largely though not exclusively by North
Korean No Dong sales—is altering strategic balances in the Middle East and
Asia. These missiles include Iran’s Shahab-3, Pakistan’s Ghauri and the
Indian Agni II.
Mr. Chairman, I cannot
underestimate the catalytic role that foreign assistance has played in
advancing these missile and WMD programs, shortening their development
times and aiding production. The three major suppliers of missile or
WMD-related technologies continue to be Russia, China, and North
Korea. Again, many details of their activities need to remain
classified, but let me quickly summarize the areas of our greatest
state-run defense and nuclear industries are still strapped for funds, and
Moscow looks to them to acquire badly needed foreign exchange through
exports. We remain concerned about the proliferation implications of such
sales in several areas.
entities last year continued to supply a variety of ballistic
missile-related goods and technical know-how to countries such as
Iran, India, China, and Libya. Indeed, the transfer of ballistic missile
technology from Russia to Iran was substantial last year, and in our
judgment will continue to accelerate Iranian efforts to develop new
missiles and to become self-sufficient in production.
- Russia also
remained a key supplier for a variety of civilian Iranian nuclear
programs, which could be used to advance its weapons programs as
entities are a significant source of dual-use biotechnology,
chemicals, production technology, and equipment for Iran. Russian
biological and chemical expertise is sought by Iranians and others
seeking information and training on BW and CW-agent production
missile-related technical assistance to foreign countries also has been
significant over the years. Chinese help has enabled Pakistan to move
rapidly toward serial production of solid-propellant missiles. In addition
to Pakistan, firms in China provided missile-related items, raw materials,
or other help to several countries of proliferation concern, including
Iran, North Korea, and Libya.
Last November, the
Chinese Foreign Ministry issued a statement that committed China not to
assist other countries in the development of ballistic missiles that can
be used to deliver nuclear weapons. Based on what we know about China’s
past proliferation behavior, Mr. Chairman, we are watching and analyzing
carefully for any sign that Chinese entities may be acting against that
commitment. We are worried, for example, that Pakistan’s continued
development of the two-stage Shaheen-II MRBM will require additional
On the nuclear
front, Chinese entities have provided extensive support in the past to
Pakistan’s safeguarded and unsafeguarded nuclear programs. In May 1996,
Beijing pledged that it would not provide assistance to unsafeguarded
nuclear facilities in Pakistan; we cannot yet be certain, however, that
contacts have ended. With regard to Iran, China confirmed that work
associated with two nuclear projects would continue until the projects
were completed. Again, as with Russian help, our concern is that Iran
could use the expertise and technology it gets—even if the cooperation
appears civilian—for its weapons program.
With regard to
North Korea, our main concern is P’yongyang’s continued exports of
ballistic missile-related equipment and missile components, materials, and
technical expertise. North Korean customers are countries in the Middle
East, South Asia, and North Africa. P’yongyang attaches a high priority to
the development and sale of ballistic missiles, equipment, and related
technology because these sales are a major source of hard
Mr. Chairman, the
missile and WMD proliferation problem continues to change in ways that
make it harder to monitor and control, increasing the risk of substantial
surprise. Among these developments are greater proficiency in the use of
denial and deception and the growing availability of dual-use
technologies—not just for missiles, but for chemical and biological agents
as well. There is also great potential of "secondary proliferation" from
maturing state-sponsored programs such as those in Pakistan, Iran,
and India. Add to this group the private companies, scientists, and
engineers in Russia, China, and India who may be increasing their
involvement in these activities, taking advantage of weak or unenforceable
national export controls and the growing availability of technologies.
These trends have continued and, in some cases, have accelerated over the
OPERATIONS AND SPACE
Mr. Chairman, I want
to reemphasize the concerns I raised last year about our nation’s
vulnerability to attacks on our critical information infrastructure. No
country in the world rivals the US in its reliance, dependence, and
dominance of information systems. The great advantage we derive from this
also presents us with unique vulnerabilities.
computer-based information operations could provide our adversaries with
an asymmetric response to US military superiority by giving them the
potential to degrade or circumvent our advantage in conventional
- Attacks on
our military, economic, or telecommunications infrastructure can be
launched from anywhere in the world, and they can be used to transport
the problems of a distant conflict directly to America’s heartland.
- Likewise, our
adversaries well understand US strategic dependence on access to space.
Operations to disrupt, degrade, or defeat US space assets will be
attractive options for those seeking to counter US strategic military
superiority. Moreover, we know that foreign countries are interested in
or experimenting with a variety of technologies that could be used to
develop counterspace capabilities.
Mr. Chairman, we are
in a race with technology itself. We are creating relations with the
private sector and academia to help us keep pace with ever-changing
technology. Last year I established the Information Operations Center
within CIA to bring together our best and brightest to ensure that we had
a strategy for dealing with the cyber threat.
Along with partners in
the Departments of Justice, Energy, and Defense we will work diligently to
protect critical US information assets. Let me also say that we must view
our space systems and capabilities as part of the same critical
infrastructure that needs protection.
Mr. Chairman, drug
traffickers are also making themselves more capable and efficient. The
growing diversification of trafficking organizations—with smaller groups
interacting with one another to transfer cocaine from source to market—and
the diversification of routes and methods pose major challenges for our
counterdrug programs. Changing production patterns and the development of
new markets will make further headway against the drug trade difficult.
Colombia, Bolivia, and
Peru continue to supply all of the cocaine consumed worldwide including in
the United States. Colombia is the linchpin of the global cocaine industry
as it is home to the largest coca-growing, coca-processing, and
trafficking operations in the world. With regard to heroin, nearly all of
the world's opium production is concentrated in Afghanistan and
Burma. Production in Afghanistan has been exploding, accounting for 72
percent of illicit global opium production in 2000.
The drug threat is
increasingly intertwined with other threats. For example, the Taliban
regime in Afghanistan, which allows Bin Ladin and other terrorists to
operate on its territory, encourages and profits from the drug trade. Some
Islamic extremists view drug trafficking as a weapon against the West and
a source of revenue to fund their operations.
No country has been
more vulnerable to the ramifications of the drug trade than Colombia.
President Pastrana is using the additional resources available to him
under Plan Colombia to launch a major antidrug effort that features
measures to curb expanding coca cultivation. He is also cooperating with
the US on other important bilateral counternarcotics initiatives, such as
A key impediment to
President Pastrana’s progress on drugs is the challenge from Colombia’s
largest insurgent group—the Revolutionary Armed Forces of Colombia or
FARC—which earns millions of dollars from taxation and other involvement
in the drug trade. Founded more than 35 years ago as a ragtag movement
committed to land reform, the FARC has developed into a well-funded,
capable fighting force known more for its brutal tactics than its
Marxist-Leninist-influenced political program.
The FARC vehemently
opposes Plan Colombia for obvious reasons. It has gone so far as to
threaten to walk away from the peace process with Bogota to protest the
Plan. It appears prepared to oppose Plan activities with force. The FARC
could, for example, push back on Pastrana by stepping up attacks against
spray and interdiction operations. US involvement is also a key FARC
worry. Indeed, in early October FARC leaders declared that US soldiers
located in combat areas are legitimate "military targets."
The country’s other
major insurgent group, the National Liberation Army or ELN, is also
contributing to mounting instability. Together with the FARC, the ELN has
stepped up its attacks on Colombia’s economic infrastructure. This has
soured the country’s investment climate and complicated government efforts
to promote economic recovery, following a major recession in 1999.
Moreover, the insurgent violence has fueled the rapid growth of illegal
paramilitary groups, which are increasingly vying with the FARC and ELN
for control over drug-growing zones and other strategic areas of rural
Colombia. Like the FARC, the paramilitaries rely heavily on narcotics
revenue and have intensified their attacks against noncombatants in recent
months. Paramilitary massacres and insurgent kidnappings are likely to
increase this year, as both groups move to strengthen their financial
positions and expand their areas of influence.
As for Mexico, Mr.
Chairman, President Fox is also trying to attack the power of Mexican drug
traffickers, whose activities had made Mexico a transit point for cocaine
shipments into the US and a source of heroin and methamphetamine for the
US drug market. He faces great challenges in doing so and has
simultaneously launched high-profile initiatives to strengthen rule of law
and reduce government corruption, including among Mexican law enforcement
Mr. Chairman, I would
like to turn now to the Middle East. We are all aware of the violence
between the Israelis and the Palestinians, and the uncertainty it has cast
on the prospects for a near-term peace agreement. So let me take this time
to look at the less obvious trends in the region—such as population
pressures, growing public access to information, and the limited prospects
for economic development—that will have a profound effect on the future of
the Middle East.
The recent popular
demonstrations in several Arab countries—including Egypt, Saudi Arabia,
Oman, and Jordan—in support of the Palestinian intifada demonstrate
the changing nature of activism of the Arab street. In many
places in the Arab world, Mr. Chairman, average citizens are becoming
increasingly restive and getting louder. Recent events show that the right
catalyst—such as the outbreak of Israeli-Palestinian violence—can move
people to act. Through access to the Internet and other means of
communication, a restive public is increasingly capable of taking action
without any identifiable leadership or organizational
Mr. Chairman, balanced
against an energized street is a new generation of leaders, such as
Bashar al Asad in Syria. These new leaders will have their mettle tested
both by populations demanding change and by entrenched bureaucracies
willing to fight hard to maintain the status quo.
challenge for these leaders are the persistent economic problems
throughout the region that prevent them from providing adequately for the
economic welfare of many of their citizens. The region’s legacy of statist
economic policies and an inadequate investment climate in most countries
present big obstacles. Over the past 25 years, Middle Eastern economies
have averaged only 2.8 percent GDP growth—far less than Asia and only
slightly more than sub-Saharan Africa. The region has accounted for a
steadily shrinking share of world GDP, trade, and foreign direct
investment since the mid-1970s, and real wages and labor productivity
today are about the same as 30 years ago. As the region falls behind in
competitive terms, governments will find it hard over the next 5 to 10
years to maintain levels of state sector employment and government
services that have been key elements of their strategy for domestic
Adding to this is the
challenge of demographics. Many of the countries of the Middle East
still have population growth rates among the highest in the world,
significantly exceeding 3 percent—compare that with 0.85 percent in the
United States and 0.2 percent in Japan. Job markets will be severely
challenged to create openings for the large mass of young people entering
the labor force each year.
- One-fourth of
Jordanians, for example, are unemployed, and annual economic growth is
well below the level needed to absorb some 60,000 new labor market
entrants each year.
- In Egypt the
disproportionately young population adds 600,000 new job applicants a
year in a country where unemployment is already near 20 percent.
Mr. Chairman, the
inability of traditional sources of income such as oil, foreign aid, and
worker remittances to fund an increasingly costly system of subsidies,
education, health care, and housing for rapidly growing populations has
motivated governments to implement economic reforms. The question is
whether these reforms will go far enough for the long term. Reform thus
far has been deliberately gradual and slow, to avoid making harsh economic
choices that could lead to short term spikes in high unemployment.
Arab governments will
soon face the dilemma of choosing between a path of gradual reform that is
unlikely to close the region’s widening gap with the rest of the world,
and the path of comprehensive change that risks fueling independent
political activity. Choosing the former risks building tension among a
younger, poorer, and more politically assertive population.
Mr. Chairman, in
Iraq Saddam Hussein has grown more confident in his ability to hold
on to his power. He maintains a tight handle on internal unrest, despite
the erosion of his overall military capabilities. Saddam’s confidence has
been buoyed by his success in quieting the Shia insurgency in the south,
which last year had reached a level unprecedented since the domestic
uprising in 1991. Through brutal suppression, Saddam’s multilayered
security apparatus has continued to enforce his authority and cultivate a
domestic image of invincibility.
High oil prices and
Saddam’s use of the oil-for-food program have helped him manage domestic
pressure. The program has helped meet the basic food and medicine needs of
the population. High oil prices buttressed by substantial illicit oil
revenues have helped Saddam ensure the loyalty of the regime’s security
apparatus operating and the few thousand politically important tribal and
family groups loyal.
There are still
constraints on Saddam’s power. His economic infrastructure is in long-term
decline, and his ability to project power outside Iraq’s borders is
severely limited, largely because of the effectiveness and enforcement of
the No-Fly Zones. His military is roughly half the size it was during the
Gulf War and remains under a tight arms embargo. He has trouble
efficiently moving forces and supplies—a direct result of sanctions. These
difficulties were demonstrated most recently by his deployment of troops
to western Iraq last fall, which were hindered by a shortage of spare
parts and transport capability.
problems, we are likely to see greater assertiveness—largely on the
diplomatic front—over the next year. Saddam already senses improved
prospects for better relations with other Arab states. One of his key
goals is to sidestep the 10-year-old economic sanctions regime by making
violations a routine occurrence for which he pays no penalty.
Saddam has had some
success in ending Iraq’s international isolation. Since August, nearly 40
aircraft have flown to Baghdad without obtaining UN approval, further
widening fissures in the UN air embargo. Moreover, several countries have
begun to upgrade their diplomatic relations with Iraq. The number of Iraqi
diplomatic missions abroad are approaching pre-Gulf War levels, and among
the states of the Gulf Cooperation Council, only Kuwait and Saudi Arabia
have not reestablished ties.
Our most serious
concern with Saddam Hussein must be the likelihood that he will seek a
renewed WMD capability both for credibility and because every other strong
regime in the region either has it or is pursuing it. For example, the
Iraqis have rebuilt key portions of their chemical production
infrastructure for industrial and commercial use. The plants he is
rebuilding were used to make chemical weapons precursors before the Gulf
War and their capacity exceeds Iraq’s needs to satisfy its civilian
- We have
similar concerns about other dual-use research, development, and
production in the biological weapons and ballistic missile fields;
indeed, Saddam has rebuilt several critical missile production
Turning now to Iraq’s
neighbor: events of the past year have been discouraging for positive
change in Iran. Several years of reformist gains in national elections
and a strong populist current for political change all threaten the
political and economic privileges that authoritarian interests have
enjoyed for years under the Islamic Republic—and they have begun to push
back hard against the reformers.
near-term political reform are now fading. Opponents of reform have not
only muzzled the open press, they have also arrested prominent activists
and blunted the legislature’s powers. Over the Summer, Supreme Leader
Khamenei ordered the new legislature not to ease press restrictions, a key
reformist pursuit. This signaled the narrow borders within which he would
allow the legislature to operate.
The reformist movement
is still young, however, and it reflects on the deep sentiments of the
Iranian people. Although frustrated and in part muzzled, the reformers
have persisted in their demands for change. And the Iranian people will
have another opportunity to demonstrate their support for reform in the
presidential election scheduled for June. Although Khatami has not
announced his candidacy, and has voiced frustration with the limitations
placed on his office, opinion polls published in Iran show him to remain
by far the most popular potential candidate for president.
The short-term gains
made by shutting down the proreform press and prosecuting some of its most
outspoken members is not a formula for long-term success. A strategy of
suppressing the demands of the new generation coming of age risks a
political explosion down the road. Some advocates of the status quo are
beginning to recognize this danger as more conservatives—to include
Khamenei—have endorsed the principle, if not the substance, of
uncertain domestic prospects, Mr. Chairman, it is clear that Khatami’s
appeal and promise of reform thus far, as well as the changing world
economy, have contributed to a run of successes for Iran in the foreign
arena over the past year. Some Western ambassadors have returned to
Tehran, and Iranian relations with EU countries and Saudi Arabia are at
their highest point since the revolution in 1979. Higher oil prices,
meanwhile, have temporarily eased the government’s need to address
difficult and politically controversial economic problems. They have also
taken more of the sting out of US sanctions. Iran’s desire to end its
isolation has not resulted in a decline in its willingness to use
terrorism to pursue strategic foreign policy agendas—Tehran, in fact, has
increased its support to terrorist groups opposed to the peace process
over the past two years.
I would like to shift
gears to North Korea. P’yongyang’s bold diplomatic outreach to the
international community and engagement with South Korea reflect a
significant change in strategy. This strategy is designed to assure the
continued survival of Kim Chong-il’s regime by ending P’yongyang’s
political isolation and fixing the North’s failing economy by attracting
more aid. We do not know how far Kim will go in opening the North, but I
can report to you that we have not yet seen a significant diminution of
the threat from the North to American and South Korean interests.
believes that a strong military, capable of projecting power in the
region, is an essential element of national power. P’yongyang’s declared
"military first" policy requires massive investment in the armed forces,
even at the expense of other national objectives. North Korea maintains
the world’s fifth largest armed forces consisting of over one million
active-duty personnel, with another five million reserves. While Allied
forces still have the qualitative edge, the North Korean military appears
for now to have halted its near-decade-long slide in military
capabilities. In addition to the North’s longer-range missile threat to
us, P’yongyang is also expanding its short and medium range missile
inventory, putting our Allies at greater risk.
On the economic front,
there are few signs of real systemic domestic reform. Kim has recently
shown interest in practical measures to redress economic problems, most
notably with his trip to Shanghai. To date, however, Kim has only tinkered
with the economic system.
External assistance is
essential to the recovery of North Korea’s domestic economy. Only massive
food aid deliveries since 1997 have enabled the country to escape a
recurrence of the famine from the middle of the last decade. Industrial
operations remain low. The economy is hampered by an industrial base that
is falling to pieces, as well as shortages of materials and a lack of new
investment. Chronic energy shortages pose the most significant challenge.
Aid and investment
from the South bring with them increased foreign influences and outside
information that will contradict propaganda from the regime. Economic
engagement also can spawn expectations for improvement that will outrace
the rebuilding process. The risk for Kim is that if he overestimates his
control of the security services and loses elite support, or if societal
stresses reach a critical point, his regime and personal grip on power
could be weakened. As with other authoritarian regimes, sudden, radical
change remains a real possibility in North Korea.
Mr. Chairman, let me
now turn to China, whose drive for recognition as a Great Power is one of
the toughest challenges we face. Beijing’s goal of becoming a key world
player and especially more powerful in East Asia has come sharply into
focus. It is pursuing these goals through an ambitious economic reform
agenda, military modernization, and a complex web of initiatives aimed at
expanding China’s international influence—especially relative to the
Chinese leaders view
solid relations with Washington as vital to achieving their ambitions. It
is a two-edged sword for them, Mr. Chairman. China’s development remains
heavily reliant on access to Western markets and technology. But they also
view Washington as their primary obstacle because they perceive the US as
bent on keeping China from becoming a great power.
Perhaps the toughest
issue between Beijing and Washington remains Taiwan. While Beijing has
stopped its saber rattling—reducing the immediate tensions—the
unprecedented developments on Taiwan have complicated cross-strait
relations. The election last March of President Chen ushered in a divided
government with highly polarized views on relations with Beijing. Profound
mutual distrust makes it difficult to restart the on-again off-again
bilateral political dialogue. In the longer term, Mr. Chairman,
cross-strait relations can be even more volatile because of Beijing’s
military modernization program. China’s military buildup is also aimed at
deterring US intervention in support of Taiwan.
Russian arms are a key
component of this buildup. Arms sales are only one element of a burgeoning
Sino-Russian relationship. Moscow and Beijing plan to sign a "friendship
treaty" later this year, highlighting common interests and willingness to
cooperate diplomatically against US policies that they see as unfriendly
to their interests—especially NMD.
On China’s domestic
scene, the Chinese Communist leadership wants to protect its legitimacy
and authority against any and all domestic challenges. Over the next few
years, however, Chinese leaders will have to manage a difficult balancing
act between the requirements of reform and the requirements of staying in
China’s leaders regard
their ability to sustain economic prosperity as the key to remaining in
power; for that reason, they are eager to join the WTO. Beijing views WTO
accession as a lever to accelerate domestic economic reform, a catalyst
for greater foreign investment, and a way to force Chinese state-owned
enterprises to compete more effectively with foreign companies.
But Beijing may slow
the pace of WTO-related reforms if the leadership perceives a rise in
social unrest that could threaten regime stability. Chinese leaders
already see disturbing trends in this regard. Their crackdown on
Falungong, underground Christians, and other spiritual and religious
groups reflects growing alarm about challenges to the Party’s legitimacy.
All of these
challenges will test the unity of the leadership in Beijing during a
critical period in the succession process. The 16th Communist
Party Congress next year will be an extremely important event, as it will
portend a large-scale transfer of authority to the next generation of
Communist Chinese leaders. The political jockeying has already begun, and
Chinese leaders will view every domestic and foreign policy decision they
face through the prism of the succession contest.
Mr. Chairman, yet
another state driving for recognition as a Great Power is Russia. Let me
be perfectly candid. There can be little doubt that President Putin wants
to restore some aspects of the Soviet past—status as a great power, strong
central authority, and a stable and predictable society—sometimes at the
expense of neighboring states or the civil rights of individual Russians.
- Putin has
begun to reconstitute the upper house of the parliament, with an eye to
depriving regional governors of their ex officio membership by 2002. He
also created a system of seven "super districts" where Presidential
"plenipotentiaries" now oversee the governors within their
- He has moved
forcefully against Russian independent media including one of Russia’s
most prominent oligarchs, Vladimir Gusinskiy, pressing him to give up
his independent television station and thereby minimize critical media.
Moscow also may be
resurrecting the Soviet-era zero-sum approach to foreign policy. As I
noted earlier, Moscow continues to value arms and technology sales as a
major source of funds. It increasingly is using them as a tool to improve
ties to its regional partners China, India, and Iran. Moscow also sees
these relationships as a way to limit US influence globally. At the same
time Putin is making efforts to check US influence in the other former
Soviet states and reestablish Russia as the premier power in the region.
He has increased pressure on his neighbors to pay their energy debts, is
dragging his feet on treaty-mandated withdrawals of forces from Moldova,
and is using a range of pressure tactics against Georgia.
Putin has also
increased funding for the military, although years of increases would be
needed to deal with the backlog of problems that built up in the armed
forces under Yeltsin. The war in Chechnya is eroding morale and thus the
effectiveness of the military. Despite its overwhelming force, Moscow is
in a military stalemate with the rebels, facing constant guerrilla
attacks. An end does not appear close. There are thousands of Russian
casualties in Chechnya, and Russian forces have been cited for their
brutality to the civilian population. Increasingly, the Russian public
disapproves of the war. Because Putin rode into office on a wave of
popular support, resolution of the conflict is an issue of personal
prestige for him. Recently, Putin transferred command in Chechnya to the
Federal Security Service, demonstrating his affinity for the intelligence
services from which he came.
Despite Putin’s Soviet
nostalgia, he knows Russia must embrace markets and integrate into the
global economy and that he needs foreigners to invest. Plus, public
expectations are rising. Putin is avoiding hard policy decisions because
Russia enjoyed an economic upturn last year, buoyed by high oil prices and
a cheap ruble. But Putin cannot count on these trends to last permanently.
He must take on several key challenges if Russia is to sustain economic
growth and political stability over the longer term.
- Without debt
restructuring, for example, he will face harsh choices through 2003.
Russia will owe nearly $48 billion spread over the next three
- Domestic and
foreign investment is crucial to sustained growth. Moscow recently
announced that capital flight last year increased to $25 billion. Putin
will need to demonstrate his seriousness about reducing corruption and
pushing ahead with corporate tax reform and measures to protect
Mr. Chairman, the
Caucasus and Central Asia are parts of the world that have the potential
to become more volatile as they become more important to the United
States. The strategic location of the Caucasus and Central Asia—squeezed
between Russia, Turkey, Iran, Afghanistan, and China—make the stability of
these countries critical to the future of Eurasia. Here corruption,
poverty, and other social ills are providing fertile ground for Islamic
extremism, terrorist networking, and drug and weapons trafficking that
will have impact in Russia, Europe, and beyond. Central Asian leaders,
seeking to fend off threats to their security from terrorists and drug
traffickers, are looking increasingly to the West for support.
- We are
becoming increasingly concerned about the activities of the Islamic
Movement of Uzbekistan, an extremist insurgent and terrorist group whose
annual incursions into Uzbekistan have become bloodier and more
significant every year.
In addition, US
companies have a significant stake in Caspian energy development. As you
know, the United States supports the construction of pipelines that will
bring the Caspian’s energy resources to Western markets. One oil pipeline
is expected to pass through both Georgia and Azerbaijan. Western companies
are pursuing the construction of a gas pipeline under the Caspian Sea from
Turkmenistan through Azerbaijan and Georgia en route to Turkey. Although
many of the leaders in the region through which the pipelines will flow
view the United States as a friend, regime stability there remains
Mr. Chairman, let me
now turn to another important region: the Balkans. It is an open question
when Balkan states will be able to stand on their own. The Balkans
continue to be fraught with turmoil, and the coming year promises more
was a victory for the Serbian people and the United States. America was a
strong force in helping to depose this indicted war criminal who was a
major obstacle to progress. Milosevic’s fall through election and popular
rebellion gives Serbia and what is left of Yugoslavia a chance to remake
its politics and to begin to recover. It also means that Serbia can be
reintegrated into Europe.
will have a hard time cleaning up the mess he left. Milosevic, his family,
and cronies stole much of what had value, ran down industries, and wasted
whatever resources were left. From the ashes, newly elected President
Vojislav Kostunica is trying to create a legal, transparent, and effective
government. Meanwhile, the Serbian economy has contracted 50 percent since
Kostunica will also face problems holding his country together.
Montenegro’s drive for independence presents a simmering crisis.
Montenegrin President Djukanovic remains committed to negotiating a new,
decentralized relationship with Belgrade. Events in the rest of Yugoslavia
will have impact on Kosovo as well. Ethnic Albanians from across the
political spectrum in Kosovo still insist on independence.
There are signs that
Kosovo’s troubles are spilling over into southern Serbia where both ethnic
Albanians and Serbs live in close proximity. Most ethnic Albanians in this
region seek only greater civil rights within Serbia, but militants are
fighting to join the region to an independent Kosovo. This is a dangerous
flashpoint, Mr. Chairman, with the potential for escalation. In short, Mr.
Chairman, we are still not at the point where we look confidently ahead to
a Balkans without violence.
With regard to Bosnia,
none of the three formerly warring factions—Muslims, Serbs, or
Croats—wants to begin fighting again. Refugee returns continued at a brisk
pace last year as in 1999, the most encouraging development since the end
of the war. Disarmament of the warring factions has been generally
successful, and positive developments in Croatia and Serbia have removed
some sources of earlier nationalist sentiment. But there has been little
progress in achieving a common vision of a unified, multiethnic Bosnia
capable of standing on its own.
At this point, Mr.
Chairman, let me draw your attention to the potentially destabilizing
competition in South Asia. I must report that relations between
India and Pakistan remain volatile, making the risk of war between the two
nuclear-armed adversaries unacceptably high. The military balance in which
India enjoys advantages over Pakistan in most areas of conventional
defense preparedness remains the same. This includes a decisive advantage
in fighter aircraft, almost twice as many men under arms, and a much
larger economy to support defense expenditures. As a result, Pakistan
relies heavily on its nuclear weapons for deterrence. Their deep-seated
rivalry, frequent artillery exchanges in Kashmir, and short flight times
for nuclear-capable ballistic missiles and aircraft all contribute to an
unstable nuclear deterrence.
If any issue has the
potential to bring both sides to full-scale war, it is Kashmir. Kashmir is
at the center of the dispute between the two countries. Nuclear deterrence
and the likelihood that a conventional war would bog down both sides argue
against a decision to go to war. But both sides seem quite willing to take
risks over Kashmir in particular, and this—along with their deep animosity
and distrust—could lead to decisions that escalate tensions.
The two states
narrowly averted a full-scale war in Kashmir in 1999. The conflict that
did occur undermined a fledgling peace process begun by the two prime
ministers. Now, for the first time since then, the two sides are finally
taking tentative steps to reduce tension. Recent statements by Indian and
Pakistani leaders have left the door open for high-level talks. And just
last week [2 Feb 2001], Vajpayee and Musharraf conversed by phone perhaps
for the first time ever, to discuss the earthquake disaster.
The process is
fragile, however. Neither side has yet agreed to direct, unconditional
talks. Tension can easily flare once winter ends or by New Delhi or
Islamabad maneuvering for an edge in the negotiations. Leadership changes
in either country also could add to tensions.
groups opposed to peace could also stoke problems. India has been trying
to engage selected militants and separatists, but militant groups have
kept up their attacks through India’s most recent cease-fire. In addition,
the Kashmir state government’s decision to conduct local elections—the
first in more than 20 years—will provoke violence from militants who see
the move as designed to cement the status quo.
problems—especially the economy—complicate the situation and further
threaten what maneuvering room Musharraf may have. Musharraf’s domestic
popularity has been threatened by a series of unpopular policies that he
promulgated last year. At the same time, he is being forced to contend
with increasingly active Islamic extremists.
Mr. Chairman, a word
on proliferation. Last year I told you I worried about the proliferation
and development of missiles and weapons of mass destruction in South Asia.
The competition, predictably, extends here as well and there is no
sign that the situation has improved. We still believe there is a good
prospect of another round of nuclear tests. On the missile front, India
decided to test another Agni MRBM last month, reflecting its determination
to improve its nuclear weapons delivery capability. Pakistan may respond
The final point that I
would like to discuss today is the growing in potential for state
fragmentation and failure that we have observed this past year.
Afghanistan obviously falls into this category. The Afghan civil
war will continue into the foreseeable future, leaving the country
fragmented and unstable. The Taliban remains determined to impose its
radical form of Islam on all of Afghanistan, even in the face of
resistance from other ethnic groups and the Shia minority.
Mr. Chairman, what we
have in Afghanistan is a stark example of the potential dangers of
allowing states—even those far from the US—to fail. The chaos here is
providing an incubator for narcotics traffickers and militant Islamic
groups operating in such places as Kashmir, Chechnya, and Central Asia.
Meanwhile the Taliban shows no sign of relinquishing terrorist Usama Bin
Ladin, despite strengthened UN sanctions and prospects that Bin Ladin’s
terrorist operations could lead to retaliatory strikes against
Afghanistan. The Taliban and Bin Ladin have a symbiotic relationship—Bin
Ladin gets safe haven and in return, he gives the Taliban help in fighting
its civil war.
Mr. Chairman, events
of the last few years in Indonesia paint a vivid picture of a state
struggling to regain stability. Last year I described the difficult
political transition that Indonesian President Wahid was trying to manage.
He has managed to stay one step ahead of his opponents, mostly because
they are unable to work together. He has survived several confrontations
with the legislature, but efforts to impeach him on corruption charges
Separatist violence is
rampant in Aceh and rising in two other key provinces. Muslim-Christian
violence continues, and resulted in several thousand deaths last year. The
country’s security forces are poorly equipped, and either back away from
challenges or respond too forcefully.
Indonesia’s problems are worrying neighboring countries that have long
considered it as the pillar of regional stability. Some Southeast Asian
leaders fear a power vacuum in Indonesia would create fertile ground for
international terrorist groups and Islamic activists, drug trafficking,
and organized crime.
My final case study,
Mr. Chairman, is Africa, a land of chronic turbulence and crises
that are among the most brutal and intractable in the world. Left behind
by globalization and plagued by ethnic conflicts, several African states
appear to be the first of the wave of failed nations predicted by the
Global Trends 2015 Report.
We are especially
concerned because hotspots often set off chain reactions across the
region. The brutal civil war in Sierra Leone, for example, started as an
offshoot of fighting in Liberia and has now spread into Guinea. These
waves of violent instability bring even worse woes in their wake,
including the ethnically-based killings that are now routine in the wars
in Sudan, Congo (Kinshasa), and Burundi. Coping with this unrest depletes
the scant resources available to the region’s governments for fighting
HIV/AIDS and other epidemics.
challenge in Africa, Mr. Chairman, is the protection of US diplomats,
military personnel, citizens, and other interests in the region. Violent
unrest has necessitated a half-dozen evacuations of Embassy employees,
other citizens, and Allied nationals in recent years.
Mr. Chairman, I
have spoken at some length about the threats we face to our national
security. It is inevitable given our position as the world’s sole
superpower that we would attract the opposition of those who do not share
our vision or our goals, and those who feel intimidated by our strength.
Many of the threats I’ve outlined are familiar to you. Many of the trends
I’ve described are not new. The complexity, intricacy, and confluence of
these threats, however, is necessitating a fundamental change in the way
we, in the Intelligence Community, do our business. To keep pace with
- We must
aggressively challenge our analytic assumptions, avoid old-think, and
embrace alternate analysis and viewpoints.
- We must
constantly push the envelope on collection beyond the traditional to
exploit new systems and operational opportunities to gain the
intelligence needed by our senior policymakers.
- And we must
continue to stay ahead on the technology and information fronts by
seeking new partnerships with private industry as demonstrated by our
Our goal is simple. It
is to ensure that our nation has the intelligence it needs to anticipate
and counter threats I have discussed here today.
Thank you Mr.
Chairman, I would welcome any questions you and your fellow Senators may
have for me.