Mr. Chairman, Members of the Committee, it is an honor to be invited to testify before you again this year.

I will limit these introductory remarks to the salient threats, as I see them, to the security of the United States in the most fundamental sense -- i.e. risk of war, or damage to the country of a degree of seriousness such that would be caused by a major war. There are many other interesting and important subjects such as international organized crime, narcotics trafficking, and economic issues that deserve comment, and I am of course prepared to discuss those in response to questions.

One preliminary matter. During the cold war, we became accustomed to responding only to "threats" or even (suggesting a formal Pentagon stamp of authenticity) "validated threats". This was possible, indeed useful, because the Soviets in particular proceeded in a fairly methodical way with respect to development, deployment, and doctrine, and we could not afford to respond to everything that they might in theory undertake. Our intelligence systems were closely focused on the key points of Soviet decision making and, although the intelligence community did make mistakes, on the whole its record of assessing Soviet military capabilities and plans was quite good. So we generally tried to respond only to reasonable extrapolations of what we in fact had seen in intelligence collection.

This approach needs to be substantially modified for the post cold-war era. Rulers such as Kim Jong Il and Saddam Hussein are far more unpredictable and irrational than the Soviet leaders ever were. As Saddam showed us with his highly inefficient and quite covert use of a very old and (in our eyes) discredited method of producing fissionable material prior to the Gulf War, it is possible to accomplish things in ways that we would never imagine for ourselves or, for that matter, for any other reasonable government. Consequently it is quite dangerous to assume that military developments or military operations under regimes such as his will occur in a predictable manner, based on an extrapolation of what we observe. I've said on a number of occasions (so often that, when I was DCI my staff would wince when they heard it): it is as if we were struggling with a large dragon for 45 years, killed it, and then found ourselves in a jungle full of poisonous snakes -- and the snakes are much harder to keep track of than the dragon ever was. Snakes mean that we have to assess what might happen, not just what is likely. Justice Holmes once said that, to understand the law, you have to look at it as a bad man would. Similarly, to understand the threats of the post-cold war era, you have to put yourself, insofar as possible, into the bizarre mentality of a Saddam Hussein or a Kim Jong Il -- and this is far harder for most of us to do than to put ourselves even into the shoes of, say, a Soviet bureaucrat.

Russia and China

We should always begin, I believe, with the only two countries that, still, could destroy the United States within the 30-minute flight time of an ICBM: Russia and China. Certainly the intentions of each regarding the U.S. are far less hostile than during the depths of the cold war. Indeed I would say that, objectively, in the post-cold war world we need have no major strategic differences with Russia, and the one major difference -- Taiwan -- that we are likely to have for some time with China should be manageable. Nonetheless, neither Russia nor China is close to having the same sort of fundamentally positive relationship with us as, e.g., France -- another nuclear power with whom we have important disagreements from time to time. The basic reason, in my view, is that there are two important similarities between Russia and China: both nations are in considerable political and economic flux, and neither has yet established the rule of law. Hence the future of each, in different ways, is highly uncertain.

Russia

Russia is now an embryonic democracy and has elements of a free economy, but the degree of corruption and the extent of organized crime influence is a very serious problem. Much of the corruption has centered around the privatization of the assets of the Soviet state. It is important to note that there are honest government officials and businessmen in Russia who are working hard to bring the rule of law to that country and to operate within it, but the struggle is intense and the outcome is as uncertain as is the condition of the Russian stock market . One offshoot of this uncertainty is the weak financial condition of the Russian state and the consequent weakness and poor morale of the armed forces -- demonstrated so vividly in Chechnya.

The current situation in Russia produces an increased risk of two types of threats to the security of the U.S.

First, the disorganization and poor morale that is endemic to much of the armed forces has, to some degree, reached the Strategic Rocket Forces. Moreover, the parlous state of its conventional forces has been one factor in leading Russia to adopt a policy of greater reliance on its nuclear forces, including the possibility of a first use of nuclear weapons. This is doubly unfortunate given the gaps in early warning that the Russians now have -- some of the Soviet-era early warning radars, for example, are not in Russia. It is very troubling to contemplate what might happen if some combination of factors produced a belief on the part of senior Russian leaders that they were under attack. Suppose, for example, that there were a time of tension between us analogous to that which occurred in late 1983 and that, during such a period, either an unexpected Norwegian sounding rocket were launched, a Russian military command exercise were mistaken for a real event, or a computer failure occurred (nearly forty years ago part of our own air defense warning system, when first activated, tracked the rising of the moon as a flight of incoming Soviet ICBM's). These conditions seem to me, Mr. Chairman, to call for two things: negotiated arrangements with Russia to reduce the likelihood of tragedy, and ballistic missile defenses for the United States.

Second, many of those who managed the USSR's security establishment -- in technology, in intelligence, in military expertise -- are now for hire on both the white and black markets. This makes Russia a very serious source, I would say the world's most serious source, of proliferation -- both in material, possibly even fissionable material, and in expert personnel and advice. We now know, for example, that Russian firms have been quite helpful in advancing the Iranian ballistic missile program. A recent series in Izvestia has described the assistance provided by former senior Russian military to Aum Shinrikyu prior to Aum's chemical attack in the Tokyo subway system. The proliferation problem suggests to me the importance of our being willing to press the Russian government very hard, harder than we normally have, to bring this situation under control.

China

China presents a case of a dictatorship (although one that does, now, hold some democratic local elections) that has successfully begun a major economic modernization and that seeks a major place in the international sun, as did imperial Germany at the beginning of this century. China's substantial economic growth rate for the last fifteen years has drawn much attention, of course, but as it moves to privatize its many huge and highly inefficient state-owned enterprises it may well face a period of severe unemployment, labor unrest, and even regional reaction against Beijing, especially in the less-prosperous interior and northern portions of the country. This could be substantially worsened if China's banking system goes the way of South Korea's, Thailand's, and Indonesia's. China's human rights abuses, suppression of religion, and brutality against Tibet and minorities in Sinkiang will continue to produce internal tension as well as major issues of dispute between it and the United States.

With respect to the command of its nuclear forces, its degree of reliance on them, and the doctrine for their use China presents a more stable picture than Russia. But China's growing wealth, its vigorous search for new technology -- including, especially, militarily useful technology -- and the prominent position of its military in both the nation's decision making and in the economy all suggest that China will be modernizing its forces steadily and impressively for a long time.

In proliferation, principally of missile technology, China remains a serious concern -- although to some extent what it can provide to others is derivative of what has been sold to it by Russia.

The one issue which might cause a major rupture between China and the United States is Taiwan. After we demonstrated weakness and vacillation for several years, I believe that the Chinese were genuinely surprised nearly two years ago when they launched ballistic missiles into the waters near Taiwan and the United States responded by sending two aircraft carriers. It is dangerous to give China reason to doubt our resolve, as we had done before that incident. Wars can result, and have resulted, from such miscalculations. Beijing must be quite clear that we insist that there be only a peaceful settlement of the Taiwan issue. Taiwan's healthy democracy is, in a sense, an affront to the dictators in Beijing, and the affront will be doubly galling to Beijing if China begins to have severe economic problems and Taiwan continues to prosper. Taiwan could thus easily become the focus for the nationalistic fervor which Chinese leaders may be tempted to stir up in order to distract the Chinese people from political oppression and economic disruption. A Chinese invasion of Taiwan itself is not militarily feasible for many years, but the seizure of one or more of the offshore islands, such as Quemoy, or a ballistic missile attack against key targets on Taiwan using conventional warheads with high accuracy (e.g. by using GPS guidance) could bring us into a serious military confrontation with China.


Rogue Governments

There are several governments that, although they may not directly threaten American territory, qualify as very dangerous to important American interests: North Korea, Iraq, and Iran are front and center with Libya, Sudan, and Syria close behind. I will address here the first three.

North Korea

Except during periodic crises in the Middle East, the Korean DMZ remains the most likely place in the world where the United States could get involved in a land war. There are several factors that create a serious risk that the North might expect some early successes in such a war and the North Koreans' assessment of these factors, in turn, could conceivably lead Kim Jong Il to try a wild throw of the dice. At least two-thirds of the North's million-man army is deployed within 60 miles of the DMZ. Since a substantial majority of South Korea's population and industry is located just south of the DMZ, a surprise attack could wreak substantial devastation. South Korea, augmented by our own forces, has a very fine military capability, especially once reserves are mobilized -- but mobilization cannot be instantaneous.

Moreover, the South Koreans have not come close to matching the North Korean investment in artillery; nor have they acquired sufficient amounts of counter-battery radar. Both could be extremely important in the event of a quick attack across the DMZ. Our own air power would be likely to weigh heavily in the balance in many circumstances, but attacking North Korean artillery that shoots and scoots back into caves and tunnels is not a simple task, especially in bad weather. If the North Koreans decided to attack they could call upon the world's largest special forces, some of them moveable by sea and some of them equipped with rudimentary but effective air transport; they would probably use ballistic missiles equipped with chemical and/or bacteriological weapons against South Korean and U.S. bases and forces. The No Dong missile could also give them such a capability against U.S. bases in Japan.

We have seen our military force structure erode since the Gulf War, although there have been some important improvements in such capabilities as smart weapons. Nonetheless, our capacity to fight two major regional wars successfully and simultaneously must be said to be in doubt. If we are engaged, at some point, in hostilities in the Mid-East, doubtless Kim Jong Il will notice and would know that we would consequently face substantially greater difficulties in prosecuting a war successfully and quickly on the Korean peninsula because we would be stretched very thin. Thus when assessing the two regional war standard that we have used in the post-cold-war period to plan our military forces, it is important to note that the existence of one war could make the other more likely. This could work in both directions. Saddam, e.g., would doubtless notice if we were engaged in a war in Korea.

In addition, if the Taepo Dong 2 missile has been developed and deployed by the time of a crisis or a war involving North Korea, the situation could be grave indeed because it would probably be able to reach at least some cities in Alaska. With a bacteriological warhead or even a nuclear warhead -- if the North Koreans were able by that time to turn the small amount of fissionable material that they have probably been able to acquire from the earlier operation of their reactor into one or two nuclear weapons -- they would then have a blackmail threat against the United States itself.

So although in a war of any duration the decrepit nation of North Korea could not prevail against the combined forces of the U.S. and South Korea, the threat of a quick grab of the northern part of South Korea is a serious one as long as the North Korean state and military hold together. And in the event of a simultaneous Mid-East crisis or the deployment of the Taepo Dong 2, the situation could be extremely dangerous.

As if the above were not enough, North Korea remains a very dangerous proliferator, especially of ballistic missile technology.

I believe that theater, and national, ballistic missile defense for the U.S. and several important improvements to South Korea's defenses, especially artillery, are important in order to reduce the likelihood of North Korea's being able to contemplate any degree of success from a sudden attack.

Iraq

Certainly Saddam has proven his willingness to take risks, his ruthlessness, his lack of feeling for his own people, and his stubbornness on many occasions. The two fundamental problems are: (1) that Iraq sits on and near a huge share of the world's oil -- in the late summer of 1990 Saddam was about 100 miles away from controlling over half of the world's proven reserves -- and (2) that Saddam doubtless holds at least some stocks of chemical and bacteriological weapons and the means to deliver them against our friends and allies, and against U.S. forces in the region.

The problem is seriously complicated by the fact that there are no easy fixes to this situation, by a short bombing campaign or any other means. Even in the unlikely event that Saddam agreed to full and complete UN inspections, and even if his supplies of chemical and bacteriological weapons, his capacity to produce them, and his ballistic missiles were destroyed by inspectors or air attacks, he would still be able shortly to begin to buy what was necessary to equip himself again and would soon be capable of wreaking some degree of devastation. SCUD's, for example, are available many places in the world, especially to a country that has billions of dollars of oil revenue annually. And it is only a little harder to make anthrax than it is to run a small microbrewery -- indeed the processes and the necessary size of the facilities rather resemble one another. Moreover, bacteriological and chemical weapons and the manufacturing equipment to produce them can be dispersed and hidden from inspectors and from intelligence collection, perhaps in deep bunkers that even advanced and accurate conventional weapons could not destroy.

The problem has been made worse by our flaccid responses in 1994 to the Iraqi Intelligence Service's attempt to assassinate former President Bush and in 1996 to Saddam's murderous assault against the North. He has doubtless concluded that, almost no matter what he does, he will only have to endure air strikes for a limited period of time and that he can use those to rally support, especially in the Arab world.

Thus in my judgment it will do little good only to try to use air strikes to delay and disrupt the Iraqi capability to manufacture and use weapons of mass destruction. Air attacks may show some success to that end, but Saddam will doubtless force innocent civilians to be placed at likely attack points, or kill them himself and claim that U.S. air strikes were responsible. In a few months there will be a new crisis. The fundamental problem is the Ba'athist regime which Saddam heads, and it is that problem that we must confront.

As a shorthand, we often speak of "Saddam" as the problem, and this focus on the individual can even lead to such proposals as that made by former senior Clinton administration adviser George Stephanopoulos in December -- that the U.S. provide "direct support" for an "inside job" to assassinate Saddam. In addition to being illegal under the current governing executive order, impractical, and destructive of much of what we try to stand for in the world, such an effort, even if successful, would be quite likely to give us another Ba'ath Nationalist of Saddam's stripe.

Instead we need a solid program, in my view, to break the power of Saddam's regime. Some elements of that program could include air strikes. But we should try to maintain our forces in the region for a sustained period of time in a condition to attack so that we can achieve some surprise at some point. An attack now against what are doubtless dispersed weapons stockpiles would be less likely to be effective. The Republican Guard is also now probably dispersed to help make air attack against it less effective, and we would want to make sure that we attack in such a way as to cause it maximum damage, since it is much of the source of the regime's power. Yet as I understand the current position of the Administration, it suggests that only attacks against weapons stockpiles are now being contemplated. In my view such limited strikes, especially if executed at a time Saddam expects them, would succeed in doing very little that is useful -- if air strikes occur within the next few weeks, this may be the most telegraphed punch in military history.

There are other important components to a program to break the power of the Iraqi regime, and some might be undertaken promptly. They might well include destroying the Iraqi air defense system and then establishing and maintaining a no-fly zone over the entire country, a step which would make it much harder for the regime to move Republican Guard forces quickly by helicopter to counter rebellions by dissident regular forces, such as have occurred in the past. They might also include recognizing a government in exile, and providing vigorous air protection for the Kurds in the North and the Shia in the South against the regime.

It will be said by some that many members of our once-effective Gulf War coalition would not support such steps. But it seems to me that the United States has more success in building coalitions when it takes a firm, clear, sustainable position than when it plays for short-term publicity or "sending signals" with military forces. It is aggravating in the extreme that the Saudis will apparently not permit us to conduct air attacks from Saudi territory. But the Saudis, or anyone else in the region for that matter, cannot reasonably be expected to support pin prick air attacks, such as in 1994 and 1996, or even longer bombing campaigns that merely retard Saddam's program for weapons of mass destruction. They must then continue to live next to an angered viper, while we are free to withdraw thousands of miles away. A decisive and coherent long-term program to bring down the Ba'athist regime in Iraq, of which air strikes from time to time may well be an important part, seems to me to be the only course of action at this point that has any chance of success.

Iran

Unlike the case with the Iraqi regime, I believe that the threats that are potentially posed by Iran may plausibly be ameliorated by peaceful means. This is far from certain, but it is much more likely now that the reigning radical clergy, centered around Ayatollah Khamenei, has seen the dramatic rejection of their candidate for President and the overwhelming vote of the Iranian people for President Khatami in the last election. President Khatami has very little formal power, especially over the military and the instruments of state power, such as the Iranian intelligence service, which provides substantial aid to Hezbollah and other terrorist groups. Nevertheless, in spite of the rule of those in the clergy who support terror at home and abroad, there are important forces in Iran who want better relations with the West, even with the U.S., and there is something there for us to work with.

It is a major mistake in my view to blame Islam, or Shia Islam, for the state of affairs in Iran today. Ayatollah Khomeini's theory of the walayat al-faqih (state of the jurists), or rule by supposedly enlightened clergy, is a major break with Shia tradition. The problem is rather that a few men, in the government and among Iranian clerics, have chosen themselves to rule and have also chosen terror to be a major tool of the Iranian State. Just as it would be unfair to tar the entire Catholic Church of the time with the outrages of the fifteenth century Spanish Inquisition under Tomas de Torquemada and some of his fellow Dominicans (whose close partnership with Ferdinand and Isabella has some parallel to the collaboration today between the Iranian government and a portion of Iran's clerics), so it would be most unfair to blame the majority of Iran's Shia clerics for the outrages of those who have brought about and who implement the policy of terror.

In her fine recent book, God Has Ninety-nine Names, Judith Miller clearly describes the widespread resentment in Iran today against those who sponsor terror both at home and abroad and the courageous resistance of important clerics and other public figures. Prestigious Ayatollahs, heads of Islamic Institutes in Qum, academics, and others are calling for those clerics who manage and support the government's terror apparatus to abandon that path and to "return to Qum", to the traditional role of advising and providing moral guidance to the people and the government. These people are sometimes attacked, beaten, and imprisoned, but President Khatami's election has given them new hope.

In the meantime, the Iranian government continues to be engaged in the sponsorship of terror and in the development of ballistic missiles and weapons of mass destruction. Russian assistance has substantially aided their ballistic missile programs. These developments heighten the importance, in my judgment, of vigorous intelligence collection against these aspects of Iranian behavior and the development and deployment of the most effective theater ballistic missile defenses of which we are capable. It is especially important to avoid constraints on these theater defense programs deriving from Russian attempts to get us to limit them under the ABM Treaty. In my view, whatever we decide to do about the ABM Treaty, we should not even be discussing limitation on theater systems with the Russians.

Terrorism

The risk that terrorists may use weapons of mass destruction constitutes, in my view, the number one threat to our national security. Much attention has been focused on fissionable material and small stolen nuclear weapons, both in government planning and in the media. Countering this threat deserves much effort, and I particularly applaud the Congress for the leadership it has shown on Nunn-Lugar and other such steps to help get control of weapons and fissionable material in the former Soviet Union.

But the most troubling threat, in my judgment, is biological weapons. They may be quite small, much more easily constructed than even a crude nuclear weapon, and the raw material for some of the most fearsome ones -- such as anthrax -- is readily available, unlike fissionable material.

Biological (or chemical) weapon terrorism could be undertaken by purely domestic sources -- such as another Timothy McVeigh or a group with similar views. It could be undertaken by a group inside the U.S. that is inspired by individuals from abroad, such as in the attack on the World Trade Center and the thwarted attack on other targets in New York. It could be undertaken pursuant to covert encouragement by a foreign government through an intermediary organization, such as Iran working through Hezbollah. It could be undertaken directly by a foreign intelligence service, possibly as part of a "false flag" operation -- e.g. Iranians masquerading as Iraqis or vice versa. It could be undertaken by special military forces of a foreign country -- e.g. a diesel submarine covertly launching land-attack cruise missiles, or a freighter launching a SCUD.

Each of these types of terrorism, whether using biological weapons or some other, requires different responses. For example, for purely domestic and many foreign-inspired domestic terrorist threats, the FBI's ability to penetrate such groups with informants is the first line of defense. For operations planned and launched from abroad, espionage managed by the CIA, or acquired through the CIA's intelligence sharing with friendly intelligence services, is really the only likely source of advance warning. In the case of biological weapons, once an attack has been launched, the availability of sensors to detect it promptly and medication that can be administered quickly to large numbers of people could mean the difference between, say, hundreds of casualties and hundreds of thousands of casualties.

Today there are unfortunately a number of terrorist groups, both domestic and foreign, who -- for ideological or religious reasons -- are not seeking a place at the table, but are seeking to blow up the table and kill everyone sitting there. It is important for us to realize that the nature of some of these groups -- Aum Shinrikyu is only one example -- and the wide-spread information about terrorist techniques on the Internet and otherwise creates a radically new terrorist situation in contrast to even the recent past. There is no silver bullet that will stop terrorism, but there is a major need for a thorough and coordinated approach to the problem that I believe is still lacking in the U.S. Government.


A Final Word About Oil

I am struck by the fact that although there are several individual circumstances that might pose serious threats to the United States -- confusion in the command and control of Russian nuclear weapons, a confrontation with China over Taiwan, a war on the Korean peninsula, a terrorist attack by a domestic group -- a number of the near- and long-term threats are centered in the Mid-East.

The importance of the Mid-East is, in turn, heavily driven by two facts. First, if the reserves of the Caspian Basin are added to those of the Persian Gulf, close to three-fourths of the world's oil, over the long term, will come from this region -- and second, the states that control the bulk of this oil are either governed by psychopathic predators or vulnerable autocrats. Moreover, for historical reasons dating back to the period after World War I and earlier, there is much resentment in the region of the West in general and, now, of the U.S. and Israel in particular. The region is also a pot pourri of religious extremist movements, economic stagnation, and large populations of unemployed youth. Some wealthy individuals, Usima ben Laden is the most famous, are free-lance sponsors of terrorism and work on weapons of mass destruction. They use American presence in the region to focus the anger in Mid-East societies which arises from many causes.

Further, even with its current economic difficulties, Asia is likely -- through economic growth and urbanization -- to increase substantially the world's demand for oil as we move into the 21st century. One projection, two years ago in Fortune magazine, calculated that once China and India alone reach what is today South Korea's level of energy consumption per capita (which will take a few decades, almost certainly), those two countries alone will require almost 120 million barrels of oil daily. The whole world today uses just over 70 million barrels. Something will certainly disrupt this huge growth in oil consumption, but the point is, as we move into the 21st century we are headed toward a massive transfer of the world's resources -- hundreds of billions ranging toward trillions of dollars -- into this volatile region. Those funds will support much governmental and private activity that is not in the U.S. interest, to put it mildly. Not as a matter of promoting autarky in the United States, but as a matter of world stability, I can think of no more important long-term strategic issue than this. And I can think of no single step that would be more likely to reduce the risk of war into which the United States might be drawn than for the world to begin to move decisively and promptly away from dependence on Mid-East oil.

Thank you, Mr. Chairman.