It is a pleasure to appear before this Committee, especially as a private citizen. I want to review briefly the security challenges our country faces and to highlight a few Defense and Intelligence programs that I believe deserve the Committeeís support.

1. Russia continues to be our top security concern, even without the adversarial relationship of the Cold War, because Russia still possesses 20,000+ nuclear weapons. Widespread corruption and the absence of honest and accountable internal governmental administrative functions threaten Russiaís slow and erratic evolution towards democracy and a market economy. Thus, internal political developments must be followed closely. So must Russian foreign policy activity, for example, relations with Iran, which is an indicator and a test of official Russian attitudes toward the U.S. and the West.

U.S. cooperative threat reduction efforts, most of which are funded in the Department of Defense budget are of continuing importance. The objective of these efforts is to lower the risk of ìloose nukesî by reducing the number of active nuclear weapons, and the strengthening of Russiaís capacity to manage, control and account for its nuclear stockpile and strategic nuclear materials.

2. China has adopted a strategy of economic liberalization while maintaining political control. Whether this strategy is viable over the long term remains to be seen. For example, will China successfully re-engineer its vast state-owned enterprises? But, for the next decade, one should have modest expectations about our ability to influence China on those issues that are important to us but not as important to them: trade, non-proliferation, human rights, and environment.

It is unclear whether in the long run the direction of U.S.-China relations will evolve toward strategic competition or a relationship such as we have with a democracy, France, just to choose an example. Accordingly, it is of paramount importance for the U.S. to maintain a strong presence in the Pacific region and strong alliance relationships, most particularly with Japan. The uncertain future of the Korean peninsula and the situation of Taiwan reinforces this need.

3. Iraq, Iran and other rogue nations

The past two Administrations have adopted a dual containment policy towards Iran and Iraq. For differing reasons, I do not judge either policy to be a smashing success.

In the case of Iraq, while Saddam is increasingly militarily constrained by the U.S. and its coalition partners, he continues to be a major threat to security in the region and the cause of the misery of the Iraqi people. Finding an alternative to Saddam should remain a high priority. Because Saddam continues to frustrate international inspections, there is good reason to believe that our allies and coalition partners will assist in this effort to thwart production of weapons of mass destruction. On the other hand, Saddam enjoys considerable sympathy in the Middle East and elsewhere; he remains politically strong because of his skill at balancing competing political interests in the region.

The situation with Iran is quite different. Despite a clear record of sponsoring terrorism and advocating extremist Islamic separatist policies, our European allies, Japan, Russia and others, have shown progressively less willingness to attempt to influence Iranian behavior by the use of sanctions, especially as opportunities to do business with Iran loom larger.

Without denying either the record of Iran or the character of Iranian policy, I believe it is time to explore replacing the current policy of containment with a policy of measured engagement whereby step-by-step political and economic normalization would accompany verifiable progress on key issues: cessation of state sponsored terrorism, cessation of work on weapons of mass destruction, support for the Middle East peace process, and greater respect for the individual. There is some indication of as yet uncertain value that Iran is receptive to an alternative approach. We shall see.

While there are significant differences between those nations that we classify as ìrogue statesî -- Iraq, Iran, Libya, North Korea -- none of them have abandoned the effort to acquire greater nuclear, chemical or biological capability. Accordingly, I urge this Committee to continue to support the counter-proliferation programs of the Department of Defense.

4. Terrorism is a growing threat to our governmental infrastructure, to international businesses, and to citizens at home and abroad. The new character of this threat is (1) the possibility that terrorists will use weapons of mass destruction, (2) the growing international scope of terrorist organizations, and (3) the increased vulnerability of critical governmental infrastructure and the telecommunications and computer control systems that regulate everyday life.

While there is widespread awareness of the foreign terrorist threat and some progress in marshaling efforts to protect us against them, much remains to be done. The roles of the different government agencies involved in combating terrorism -- Defense, Intelligence, and Law Enforcement -- must be better defined, and effective counter-terrorism programs must be put into place. But, this Committee should make no mistake about it: foreign terrorism is a national security threat and not simply a law enforcement matter.