> 6 February Mr. Chairman, I appear before you this year under circumstances
> that are extraordinary and historic for reasons I need not recount. Never
> before has the subject of this annual threat briefing had more immediate
> resonance. Never before have the dangers been more clear or more present.
> September 11 brought together and brought home-literally-several vital
> threats to the United States and its interests that we have long been
> aware of. It is the convergence of these threats that I want to emphasize
> with you today: the connection between terrorists and other enemies of
> this country; the weapons of mass destruction they seek to use against us;
> and the social, economic, and political tensions across the world that
> they exploit in mobilizing their followers. September 11 demonstrated the
> dangers that arise when these threats converge-and it reminds us that we
> overlook at our own peril the impact of crises in remote parts of the
> world. This convergence of threats has created the world I will present to
> you today-a world in which dangers exist not only in those places where we
> have most often focused our attention, but also in other areas that demand
> it: In places like Somalia, where the absence of a national government has
> created an environment in which groups sympathetic to al-Qa'ida have
> offered terrorists an operational base and potential haven.  In places
> like Indonesia, where political instability, separatist and ethnic
> tensions, and protracted violence are hampering economic recovery and
> fueling Islamic extremism.  In places like Colombia, where leftist
> insurgents who make much of their money from drug trafficking are
> escalating their assault on the government-further undermining economic
> prospects and fueling a cycle of violence.  And finally, Mr. Chairman, in
> places like Connecticut, where the death of a 94-year-old woman in her own
> home of anthrax poisoning can arouse our worst fears about what our
> enemies might try to do to us.  These threats demand our utmost response.
> The United States has clearly demonstrated since September 11 that it is
> up to the challenge. But make no mistake: despite the battles we have won
> in Afghanistan, we remain a nation at war. TERRORISM Last year I told you
> that Usama Bin Ladin and the al-Qa'ida network were the most immediate and
> serious threat this country faced. This remains true today despite the
> progress we have made in Afghanistan and in disrupting the network
> elsewhere. We assess that Al-Qa'ida and other terrorist groups will
> continue to plan to attack this country and its interests abroad. Their
> modus operandi is to have multiple attack plans in the works
> simultaneously, and to have al-Qa'ida cells in place to conduct them. We
> know that terrorists have considered attacks in the US against
> high-profile government or private facilities, famous landmarks, and US
> infrastructure nodes such as airports, bridges, harbors, and dams. High
> profile events such as the Olympics or last weekend's Super Bowl also fit
> the terrorists' interest in striking another blow within the United States
> that would command worldwide media attention.  Al-Qa'ida also has plans to
> strike against US and allied targets in Europe, the Middle East, Africa,
> and Southeast Asia. American diplomatic and military installations are at
> high risk-especially in East Africa, Israel, Saudi Arabia, and Turkey.
> Operations against US targets could be launched by al-Qa'ida cells already
> in place in major cities in Europe and the Middle East. Al-Qa'ida can also
> exploit its presence or connections to other groups in such countries as
> Somalia, Yemen, Indonesia, and the Philippines.  Although the September 11
> attacks suggest that al-Qa'ida and other terrorists will continue to use
> conventional weapons, one of our highest concerns is their stated
> readiness to attempt unconventional attacks against us. As early as 1998,
> Bin Ladin publicly declared that acquiring unconventional weapons was "a
> religious duty."  Terrorist groups worldwide have ready access to
> information on chemical, biological, and even nuclear weapons via the
> Internet, and we know that al-Qa'ida was working to acquire some of the
> most dangerous chemical agents and toxins. Documents recovered from
> al-Qa'ida facilities in Afghanistan show that Bin Ladin was pursuing a
> sophisticated biological weapons research program.  We also believe that
> Bin Ladin was seeking to acquire or develop a nuclear device. Al-Qa'ida
> may be pursuing a radioactive dispersal device-what some call a "dirty
> bomb."   Alternatively, al-Qa'ida or other terrorist groups might also try
> to launch conventional attacks against the chemical or nuclear industrial
> infrastructure of the United States to cause widespread toxic or
> radiological damage.  We are also alert to the possibility of cyber
> warfare attack by terrorists. September 11 demonstrated our dependence on
> critical infrastructure systems that rely on electronic and computer
> networks. Attacks of this nature will become an increasingly viable option
> for terrorists as they and other foreign adversaries become more familiar
> with these targets, and the technologies required to attack them. The
> terrorist threat goes well beyond al-Qa'ida. The situation in the Middle
> East continues to fuel terrorism and anti-US sentiment worldwide. Groups
> like the Palestine Islamic Jihad (PIJ) and HAMAS have escalated their
> violence against Israel, and the intifada has rejuvenated once-dormant
> groups like the Popular Front for the Liberation of Palestine. If these
> groups feel that US actions are threatening their existence, they may
> begin targeting Americans directly-as Hizballah's terrorist wing already
> does. The terrorist threat also goes beyond Islamic extremists and the
> Muslim world. The Revolutionary Armed Forces of Colombia (FARC) poses a
> serious threat to US interests in Latin America because it associates us
> with the government it is fighting against.  The same is true in Turkey,
> where the Revolutionary People's Liberation Party/Front has publicly
> criticized the United States and our operations in Afghanistan.  We are
> also watching states like Iran and Iraq that continue to support terrorist
> groups.  Iran continues to provide support-including arms transfers-to
> Palestinian rejectionist groups and Hizballah. Tehran has also failed to
> move decisively against al-Qa'ida members who have relocated to Iran from
> Afghanistan.  Iraq has a long history of supporting terrorists, including
> giving sanctuary to Abu Nidal.  The war on terrorism has dealt severe
> blows to al-Qa'ida and its leadership. The group has been denied its
> safehaven and strategic command center in Afghanistan. Drawing on both our
> own assets and increased cooperation from allies around the world, we are
> uncovering terrorists' plans and breaking up their cells. These efforts
> have yielded the arrest of nearly 1,000 al-Qa'ida operatives in over 60
> countries, and have disrupted terrorist operations and potential terrorist
> attacks. Mr. Chairman, Bin Ladin did not believe that we would invade his
> sanctuary. He saw the United States as soft, impatient, unprepared, and
> fearful of a long, bloody war of attrition. He did not count on the fact
> that we had lined up allies that could help us overcome barriers of
> terrain and culture. He did not know about the collection and operational
> initiatives that would allow us to strike-with great accuracy-at the heart
> of the Taliban and al-Qa'ida. He underestimated our capabilities, our
> readiness, and our resolve. That said, I must repeat that al-Qa'ida has
> not yet been destroyed. It and other like-minded groups remain willing and
> able to strike us. Al-Qa'ida leaders still at large are working to
> reconstitute the organization and to resume its terrorist operations. We
> must eradicate these organizations by denying them their sources of
> financing and eliminating their ability to hijack charitable organizations
> for their terrorist purposes. We must be prepared for a long war, and we
> must not falter. Mr. Chairman, we must also look beyond the immediate
> danger of terrorist attacks to the conditions that allow terrorism to take
> root around the world. These conditions are no less threatening to US
> national security than terrorism itself. The problems that terrorists
> exploit-poverty, alienation, and ethnic tensions-will grow more acute over
> the next decade. This will especially be the case in those parts of the
> world that have served as the most fertile recruiting grounds for Islamic
> extremist groups. We have already seen-in Afghanistan and elsewhere-that
> domestic unrest and conflict in weak states is one of the factors that
> create an environment conducive to terrorism.  More importantly,
> demographic trends tell us that the world's poorest and most politically
> unstable regions-which include parts of the Middle East and Sub-Saharan
> Africa-will have the largest youth populations in the world over the next
> two decades and beyond. Most of these countries will lack the economic
> institutions or resources to effectively integrate these youth into
> society.  THE MUSLIM WORLD All of these challenges come together in parts
> of the Muslim world, and let me give you just one example. One of the
> places where they converge that has the greatest long-term impact on any
> society is its educational system. Primary and secondary education in
> parts of the Muslim world is often dominated by an interpretation of Islam
> that teaches intolerance and hatred. The graduates of these
> schools-"madrasas"-provide the foot soldiers for many of the Islamic
> militant groups that operate throughout the Muslim world. Let me
> underscore what the President has affirmed: Islam itself is neither an
> enemy nor a threat to the United States. But the increasing anger toward
> the West-and toward governments friendly to us-among Islamic extremists
> and their sympathizers clearly is a threat to us. We have seen-and
> continue to see-these dynamics play out across the Muslim world. Let me
> briefly address their manifestation in several key countries. Our campaign
> in Afghanistan has made great progress, but the road ahead is fraught with
> challenges. The Afghan people, with international assistance, are working
> to overcome a traditionally weak central government, a devastated
> infrastructure, a grave humanitarian crisis, and ethnic divisions that
> deepened over the last 20 years of conflict. The next few months will be
> an especially fragile period. Interim authority chief Hamid Karzai will
> have to play a delicate balancing game domestically. Remaining al Qai'da
> fighters in the eastern provinces, and ongoing power struggles among
> Pashtun leaders there underscore the volatility of tribal and personal
> relations that Karzai must navigate.  Taliban elements still at large and
> remaining pockets of Arab fighters could also threaten the security of
> those involved in reconstruction and humanitarian operations. Some leaders
> in the new political order may allow the continuation of opium cultivation
> to secure advantages against their rivals for power.  Let me move next to
> Pakistan. September 11 and the US response to it were the most profound
> external events for Pakistan since the Soviet invasion of Afghanistan in
> 1979, and the US response to that. The Musharraf government's alignment
> with the US-and its abandonment of nearly a decade of support for the
> Taliban-represent a fundamental political shift with inherent political
> risks because of the militant Islamic and anti-American sentiments that
> exist within Pakistan.  President Musharraf's intention to establish a
> moderate, tolerant Islamic state-as outlined in his 12 January speech-is
> being welcomed by most Pakistanis, but he will still have to confront
> major vested interests. The speech is energizing debate across the Muslim
> world about which vision of Islam is the right one for the future of the
> Islamic community.  Musharaff established a clear and forceful distinction
> between a narrow, intolerant, and conflict-ridden vision of the past and
> an inclusive, tolerant, and peace-oriented vision of the future.   The
> speech also addressed the jihad issue by citing the distinction the
> Prophet Muhammad made between the "smaller jihad" involving violence and
> the "greater jihad" that focuses on eliminating poverty and helping the
> needy.  Although September 11 highlighted the challenges that
> India-Pakistan relations pose for US policy, the attack on the Indian
> parliament on December 13 was even more destabilizing-resulting as it did
> in new calls for military action against Pakistan, and subsequent
> mobilization on both sides. The chance of war between these two
> nuclear-armed states is higher than at any point since 1971. If India were
> to conduct large scale offensive operations into Pakistani Kashmir,
> Pakistan might retaliate with strikes of its own in the belief that its
> nuclear deterrent would limit the scope of an Indian counterattack. Both
> India and Pakistan are publicly downplaying the risks of nuclear conflict
> in the current crisis. We are deeply concerned, however, that a
> conventional war-once begun-could escalate into a nuclear confrontation.
> Let me turn now to Iraq. Saddam has responded to our progress in
> Afghanistan with a political and diplomatic charm offensive to make it
> appear that Baghdad is becoming more flexible on UN sanctions and
> inspections issues. Last month he sent Deputy Prime Minister Tariq Aziz to
> Moscow and Beijing to profess Iraq's new openness to meet its UN
> obligations and to seek their support. Baghdad's international isolation
> is also decreasing as support for the sanctions regime erodes among other
> states in the region. Saddam has carefully cultivated neighboring states,
> drawing them into economically dependent relationships in hopes of further
> undermining their support for the sanctions. The profits he gains from
> these relationships provide him the means to reward key supporters and,
> more importantly, to fund his pursuit of WMD. His calculus is never about
> bettering or helping the Iraqi people. Let me be clear: Saddam remains a
> threat. He is determined to thwart UN sanctions, press ahead with weapons
> of mass destruction, and resurrect the military force he had before the
> Gulf war. Today, he maintains his vise grip on the levers of power through
> a pervasive intelligence and security apparatus, and even his reduced
> military force-which is less than half its pre-war size-remains capable of
> defeating more poorly armed internal opposition groups and threatening
> Iraq's neighbors. As I said earlier, we continue to watch Iraq's
> involvement in terrorist activities. Baghdad has a long history of
> supporting terrorism, altering its targets to reflect changing priorities
> and goals. It has also had contacts with al-Qa'ida. Their ties may be
> limited by divergent ideologies, but the two sides' mutual antipathy
> toward the United States and the Saudi royal family suggests that tactical
> cooperation between them is possible-even though Saddam is well aware that
> such activity would carry serious consequences. In Iran, we are concerned
> that the reform movement may be losing its momentum. For almost five
> years, President Khatami and his reformist supporters have been stymied by
> Supreme Leader Khamenei and the hardliners. The hardliners have
> systematically used the unelected institutions they control-the security
> forces, the judiciary, and the Guardian's Council-to block reforms that
> challenge their entrenched interests. They have closed newspapers, forced
> members of Khatami's cabinet from office, and arrested those who have
> dared to speak out against their tactics.  Discontent with the current
> domestic situation is widespread and cuts across the social spectrum.
> Complaints focus on the lack of pluralism and government accountability,
> social restrictions, and poor economic performance. Frustrations are
> growing as the populace sees elected institutions such as the Majles and
> the Presidency unable to break the hardliners' hold on power.  The
> hardline regime appears secure for now because security forces have easily
> contained dissenters and arrested potential opposition leaders. No one has
> emerged to rally reformers into a forceful movement for change, and the
> Iranian public appears to prefer gradual reform to another revolution. But
> the equilibrium is fragile and could be upset by a miscalculation by
> either the reformers or the hardline clerics. For all of this, reform is
> not dead. We must remember that the people of Iran have demonstrated in
> four national elections since 1997 that they want change and have grown
> disillusioned with the promises of the revolution. Social, intellectual,
> and political developments are proceeding, civil institutions are growing,
> and new newspapers open as others are closed.  The initial signs of
> Tehran's cooperation and common cause with us in Afghanistan are being
> eclipsed by Iranian efforts to undermine US influence there. While Iran's
> officials express a shared interest in a stable government in Afghanistan,
> its security forces appear bent on countering the US presence. This
> seeming contradiction in behavior reflects deep-seated suspicions among
> Tehran's clerics that the United States is committed to encircling and
> overthrowing them-a fear that could quickly erupt in attacks against our
> interests. We have seen little sign of a reduction in Iran's support for
> terrorism in the past year. Its participation in the attempt to transfer
> arms to the Palestinian Authority via the Karine-A probably was intended
> to escalate the violence of the intifada and strengthen the position of
> Palestinian elements that prefer armed conflict with Israel.  The current
> conflict between Israel and the Palestinians has been raging for almost a
> year and a half, and it continues to deteriorate. The violence has
> hardened the public's positions on both sides and increased the
> longstanding animosity between Israeli Prime Minister Sharon and
> Palestinian leader Arafat. Although many Israelis and Palestinians say
> they believe that ultimately the conflict can only be resolved through
> negotiations, the absence of any meaningful security cooperation between
> Israel and the Palestinian Authority-and the escalating and uncontrolled
> activities of the Palestine Islamic Jihad and HAMAS-make any progress
> extremely difficult. We are concerned that this environment creates
> opportunities for any number of players-most notably Iran-to take steps
> that will result in further escalation of violence by radical Palestinian
> groups.  At the same time, the continued violence threatens to weaken the
> political center in the Arab world, and increases the challenge for our
> Arab allies to balance their support for us against the demands of their
> publics.  PROLIFERATION I turn now to the subject of proliferation. I
> would like to start by drawing your attention to several disturbing trends
> in this important area. WMD programs are becoming more advanced and
> effective as they mature, and as countries of concern become more
> aggressive in pursuing them. This is exacerbated by the diffusion of
> technology over time-which enables proliferators to draw on the experience
> of others and to develop more advanced weapons more quickly than they
> could otherwise. Proliferators are also becoming more self-sufficient. And
> they are taking advantage of the dual-use nature of WMD- and
> missile-related technologies to establish advanced production capabilities
> and to conduct WMD- and missile-related research under the guise of
> legitimate commercial or scientific activity. Let me address in turn the
> primary categories of WMD proliferation, starting with chemical and
> biological weapons. The CBW threat continues to grow for a variety of
> reasons, and to present us with monitoring challenges. The dual-use nature
> of many CW and BW agents complicates our assessment of offensive programs.
> Many CW and BW production capabilities are hidden in plants that are
> virtually indistinguishable from genuine commercial facilities. And the
> technology behind CW and BW agents is spreading. We assess there is a
> significant risk within the next few years that we could confront an
> adversary-either terrorists or a rogue state-who possesses them. On the
> nuclear side, we are concerned about the possibility of significant
> nuclear technology transfers going undetected. This reinforces our need to
> more closely examine emerging nuclear programs for sudden leaps in
> capability. Factors working against us include the difficulty of
> monitoring and controlling technology transfers, the emergence of new
> suppliers to covert nuclear weapons programs, and the possibility of
> illicitly acquiring fissile material. All of these can shorten timelines
> and increase the chances of proliferation surprise. On the missile side,
> the proliferation of ICBM and cruise missile designs and technology has
> raised the threat to the US from WMD delivery systems to a critical
> threshold. As outlined in our recent National Intelligence Estimate on the
> subject, most Intelligence Community agencies project that by 2015 the US
> most likely will face ICBM threats from North Korea and Iran, and possibly
> from Iraq. This is in addition to the longstanding missile forces of
> Russia and China. Short- and medium-range ballistic missiles pose a
> significant threat now. Several countries of concern are also increasingly
> interested in acquiring a land-attack cruise missile (LACM) capability. By
> the end of the decade, LACMs could pose a serious threat to not only our
> deployed forces, but possibly even the US mainland.  Russian entities
> continue to provide other countries with technology and expertise
> applicable to CW, BW, nuclear, and ballistic and cruise missile projects.
> Russia appears to be the first choice of proliferant states seeking the
> most advanced technology and training. These sales are a major source of
> funds for Russian commercial and defense industries and military R&D.
> Russia continues to supply significant assistance on nearly all aspects of
> Tehran's nuclear program. It is also providing Iran assistance on
> long-range ballistic missile programs.  Chinese firms remain key suppliers
> of missile-related technologies to Pakistan, Iran, and several other
> countries. This is in spite of Beijing's November 2000 missile pledge not
> to assist in any way countries seeking to develop nuclear-capable
> ballistic missiles. Most of China's efforts involve solid-propellant
> ballistic missile development for countries that are largely dependent on
> Chinese expertise and materials, but it has also sold cruise missiles to
> countries of concern such as Iran. We are closely watching Beijing's
> compliance with its bilateral commitment in 1996 not to assist
> unsafeguarded nuclear facilities, and its pledge in 1997 not to provide
> any new nuclear cooperation to Iran.  Chinese firms have in the past
> supplied dual-use CW-related production equipment and technology to Iran.
> We remain concerned that they may try to circumvent the CW-related export
> controls that Beijing has promulgated since acceding to the CWC and the
> nuclear Nonproliferation Treaty.  North Korea continues to export complete
> ballistic missiles and production capabilities along with related raw
> materials, components, and expertise. Profits from these sales help
> P'yongyang to support its missile-and probably other WMD-development
> programs, and in turn generate new products to offer to its
> customers-primarily Iran, Libya, Syria, and Egypt. North Korea continues
> to comply with the terms of the Agreed Framework that are directly related
> to the freeze on its reactor program, but P'yongyang has warned that it is
> prepared to walk away from the agreement if it concluded that the United
> States was not living up to its end of the deal. Iraq continues to build
> and expand an infrastructure capable of producing WMD. Baghdad is
> expanding its civilian chemical industry in ways that could be diverted
> quickly to CW production. We believe it also maintains an active and
> capable BW program; Iraq told UNSCOM it had worked with several BW agents.
> We believe Baghdad continues to pursue ballistic missile capabilities that
> exceed the restrictions imposed by UN resolutions. With substantial
> foreign assistance, it could flight-test a longer-range ballistic missile
> within the next five years. It may also have retained the capability to
> deliver BW or CW agents using modified aircraft or other unmanned aerial
> vehicles.   We believe Saddam never abandoned his nuclear weapons program.
> Iraq retains a significant number of nuclear scientists, program
> documentation, and probably some dual-use manufacturing infrastructure
> that could support a reinvigorated nuclear weapons program. Baghdad's
> access to foreign expertise could support a rejuvenated program, but our
> major near-term concern is the possibility that Saddam might gain access
> to fissile material.  Iran remains a serious concern because of its
> across-the-board pursuit of WMD and missile capabilities. Tehran may be
> able to indigenously produce enough fissile material for a nuclear weapon
> by late this decade. Obtaining material from outside could cut years from
> this estimate. Iran may also flight-test an ICBM later this decade, using
> either Russian or North Korean assistance. Having already deployed several
> types of UAVs-including some in an attack role-Iran may seek to develop or
> otherwise acquire more sophisticated LACMs. It also continues to pursue
> dual-use equipment and expertise that could help to expand its BW arsenal,
> and to maintain a large CW stockpile. Both India and Pakistan are working
> on the doctrine and tactics for more advanced nuclear weapons, producing
> fissile material, and increasing their nuclear stockpiles. We have
> continuing concerns that both sides may not be done with nuclear testing.
> Nor can we rule out the possibility that either country could deploy their
> most advanced nuclear weapons without additional testing. Both countries
> also continue development of long-range nuclear-capable ballistic
> missiles, and plan to field cruise missiles with a land-attack capability.
> As I have mentioned in years past, we face several unique challenges in
> trying to detect WMD acquisition by proliferant states and non-state
> actors. Their use of denial and deception tactics, and their access to a
> tremendous amount of information in open sources about WMD production,
> complicate our efforts. So does their exploitation of space. The unique
> spaceborne advantage that the US has enjoyed over the past few decades is
> eroding as more countries-including China and India-field increasingly
> sophisticated reconnaissance satellites. Today there are three commercial
> satellites collecting high-resolution imagery, much of it openly marketed.
> Foreign military, intelligence, and terrorist organizations are exploiting
> this-along with commercially available navigation and communications
> services-to enhance the planning and conduct of their operations. Let me
> mention here another danger that is closely related to proliferation: the
> changing character of warfare itself. As demonstrated by September 11, we
> increasingly are facing real or potential adversaries whose main goal is
> to cause the United States pain and suffering, rather than to achieve
> traditional military objectives. Their inability to match US military
> power is driving some to invest in "asymmetric" niche capabilities. We
> must remain alert to indications that our adversaries are pursuing such
> capabilities against us. RUSSIA Mr. Chairman, let me turn now to other
> areas of the world where the US has key interests, beginning with Russia.
> The most striking development regarding Russia over the past year has been
> Moscow's greater engagement with the United States. Even before September
> 11, President Putin had moved to engage the US as part of a broader effort
> to integrate Russia more fully into the West, modernize its economy, and
> regain international status and influence. This strategic shift away from
> a zero-sum view of relations with the United States is consistent with
> Putin's stated desire to address the many socioeconomic problems that
> cloud Russia's future. During his second year in office, Putin moved
> strongly to advance his policy agenda. He pushed the Duma to pass key
> economic legislation on budget reform, legitimizing urban property sales,
> flattening and simplifying tax rates, and reducing red tape for small
> businesses. His support for his economic team and its fiscal rigor
> positioned Russia to pay back wages and pensions to state workers, amass a
> post-Soviet high of almost $39 billion in reserves, and meet the major
> foreign debt coming due this year (about $14 billion) and next (about $16
> billion). He reinvigorated military reform by placing his top lieutenant
> atop the Defense Ministry and increasing military spending for the second
> straight year-even as he forced tough decisions on de-emphasizing
> strategic forces, and pushing for a leaner, better-equipped conventional
> military force.  This progress is promising, and Putin is trying to build
> a strong Presidency that can ensure these reforms are implemented across
> Russia-while managing a fragmented bureaucracy beset by informal networks
> that serve private interests. In his quest to build a strong state,
> however, he is trying to establish parameters within which political
> forces must operate. This "managed democracy" is illustrated by his
> continuing moves against independent national television companies. On the
> economic front, Putin will have to take on bank reform, overhaul of
> Russia's entrenched monopolies, and judicial reform to move the country
> closer to a Western-style market economy and attract much-needed foreign
> investment.  Putin has made no headway in Chechnya. Despite his hint in
> September of a possible dialogue with Chechen moderates, the fighting has
> intensified in recent months, and thousands of Chechen guerrillas-and
> their fellow Arab mujahedeen fighters-remain. Moscow seems unwilling to
> consider the compromises necessary to reach a settlement, while divisions
> among the Chechens make it hard to find a representative interlocutor. The
> war, meanwhile, threatens to spill over into neighboring Georgia.  After
> September 11, Putin emphatically chose to join us in the fight against
> terrorism. The Kremlin blames Islamic radicalism for the conflict in
> Chechnya and believes it to be a serious threat to Russia. Moscow sees the
> US-led counterterrorism effort-particularly the demise of the Taliban
> regime-as an important gain in countering the radical Islamic threat to
> Russia and Central Asia.  So far, Putin's outreach to the United States
> has incurred little political damage, largely because of his strong
> domestic standing. Recent Russian media polls show his public approval
> ratings at around 80 percent. The depth of support within key elites,
> however, is unclear-particularly within the military and security
> services. Public comments by some senior military officers indicate that
> elements of the military doubt that the international situation has
> changed sufficiently to overcome deeply rooted suspicions of US
> intentions.  Moscow retains fundamental differences with Washington on key
> issues, and suspicion about US motives persists among Russian
> conservatives-especially within the military and security services. Putin
> has called the intended US withdrawal from the ABM treaty a "mistake," but
> has downplayed its impact on Russia. At the same time, Moscow is likely to
> pursue a variety of countermeasures and new weapons systems to defeat a
> deployed US missile defense. CHINA I turn next to China. Last year I told
> you that China's drive to become a great power was coming more sharply
> into focus. The challenge, I said, was that Beijing saw the United States
> as the primary obstacle to its realization of that goal. This was in spite
> of the fact that Chinese leaders at the same time judged that they needed
> to maintain good ties with Washington. A lot has happened in US-China
> relations over the past year, from the tenseness of the EP-3 episode in
> April to the positive image of President Bush and Jiang Zemin standing
> together in Shanghai last fall, highlighting our shared fight against
> terrorism. September 11 changed the context of China's approach to us, but
> it did not change the fundamentals. China is developing an increasingly
> competitive economy and building a modern military force with the ultimate
> objective of asserting itself as a great power in East Asia. And although
> Beijing joined the coalition against terrorism, it remains deeply
> skeptical of US intentions in Central and South Asia. It fears that we are
> gaining regional influence at China's expense, and it views our
> encouragement of a Japanese military role in counterterrorism as support
> for Japanese rearmament-something the Chinese firmly oppose. As always,
> Beijing's approach to the United States must be viewed against the
> backdrop of China's domestic politics. I told you last year that the
> approach of a major leadership transition and China's accession to WTO
> would soon be coloring all of Beijing's actions. Both of those benchmarks
> are now upon us. The 16th Communist Party Congress will be held this fall,
> and China is now confronting the obligations of WTO membership. On the
> leadership side, Beijing is likely to be preoccupied this year with
> succession jockeying, as top leaders decide who will get what
> positions-and who will retire-at the Party Congress and in the changeover
> in government positions that will follow next spring. This preoccupation
> is likely to translate into a cautious and defensive approach on most
> policy issues. It probably also translates into a persistently nationalist
> foreign policy, as each of the contenders in the succession contest will
> be obliged to avoid any hint of being "soft" on the United States. China's
> entry into the WTO underscores the trepidation the succession contenders
> will have about maintaining internal stability. WTO membership is a major
> challenge to Chinese stability because the economic requirements of
> accession will upset already disaffected sectors of the population and
> increase unemployment. If China's leaders stumble in WTO
> implementation-and even if they succeed-they will face rising
> socioeconomic tensions at a time when the stakes in the succession contest
> are pushing them toward a cautious response to problems. In the case of
> social unrest, that response is more likely to be harsh than accommodative
> toward the population at large. The Taiwan issue remains central.
> Cross-strait relations remain at a stalemate, but there are competing
> trend lines behind that. Chinese leaders seemed somewhat complacent last
> year that the growing economic integration across the Taiwan Strait was
> boosting Beijing's long-term leverage. The results of Taiwan's legislative
> elections in December, however, strengthened President Chen's hand
> domestically. Although Beijing's latest policy statement-inviting members
> of Chen's party to visit the mainland-was designed as a conciliatory
> gesture, Beijing might resume a more confrontational stance if it suspects
> him of using his electoral mandate to move toward independence. Taiwan
> also remains the focus of China's military modernization programs. Over
> the past year, Beijing's military training exercises have taken on an
> increasingly real-world focus, emphasizing rigorous practice in
> operational capabilities and improving the military's actual ability to
> use force. This is aimed not only at Taiwan but also at increasing the
> risk to the United States itself in any future Taiwan contingency. China
> also continues to upgrade and expand the conventional short-range
> ballistic missile force it has arrayed against Taiwan.  Beijing also
> continues to make progress towards fielding its first generation of road
> mobile strategic missiles-the DF-31. A longer-range version capable of
> reaching targets in the US will become operational later in the decade.
> NORTH KOREA Staying within East Asia for a moment, let me update you on
> North Korea. The suspension last year of engagement between P'yongyang,
> Seoul, and Washington reinforced the concerns I cited last year about Kim
> Chong-il's intentions toward us and our allies in Northeast Asia. Kim's
> reluctance to pursue constructive dialogue with the South or to undertake
> meaningful reforms suggests that he remains focused on maintaining
> internal control-at the expense of addressing the fundamental economic
> failures that keep the North mired in poverty and pose a long-term threat
> to the country's stability. North Korea's large standing army continues to
> be a priority claimant on scarce resources, and we have seen no evidence
> that P'yongyang has abandoned its goal of eventual reunification of the
> Peninsula under the North's control. The cumulative effects of prolonged
> economic mismanagement have left the country increasingly susceptible to
> the possibility of state failure. North Korea faces deepening economic
> deprivation and the return of famine in the absence of fundamental
> economic reforms and the large-scale international humanitarian assistance
> it receives-an annual average of 1 million metric tons of food aid over
> the last five years. It has ignored international efforts to address the
> systemic agricultural problems that exacerbate the North's chronic food
> shortages. Grain production appears to have roughly stabilized, but it
> still falls far short of the level required to meet minimum nutritional
> needs for the population. Large numbers of North Koreans face long-term
> health damage as a result of prolonged malnutrition and collapse of the
> public health network.  LATIN AMERICA Other important regions of the
> developing world are test cases for many of the political, social, and
> demographic trends I identified earlier-trends that pose latent or growing
> challenges to US interests, and sometimes fuel terrorists. I have already
> mentioned Southeast Asia in this respect, citing the rise of Islamic
> extremism in Indonesia and terrorist links in the Philippines. Latin
> America is becoming increasingly volatile as the potential for instability
> there grows. The region has been whipsawed by five economic crises in as
> many years, and the economic impact of September 11 worsened an already
> bleak outlook for regional economies as the global slump reduces demand
> for exports.  In this context, I am particularly concerned about
> Venezuela, our third largest supplier of petroleum. Domestic unhappiness
> with President Chavez's "Bolivarian revolution" is growing, economic
> conditions have deteriorated with the fall in oil prices, and the crisis
> atmosphere is likely to worsen. In Argentina, President Duhalde is trying
> to maintain public order while putting into place the groundwork for
> recovery from economic collapse, but his support base is thin. Colombia
> too remains highly volatile. The peace process there faces many obstacles,
> and a significant increase in violence-especially from the FARC-may be in
> the offing. Colombia's tenuous security situation is taking a toll on the
> economy and increasing the dangers for US military advisers in the
> country. Together, the difficult security and economic conditions have
> hampered Bogota's ability to implement Plan Colombia's counterdrug and
> social programs. Colombia remains the cornerstone of the world's cocaine
> trade, and the largest source of heroin for the US market.  AFRICA The
> chronic problems of Sub-Saharan Africa make it, too, fertile ground for
> direct and indirect threats to US interests. Governments without
> accountability and natural disasters have left Africa with the highest
> concentration of human misery in the world. It is the only region where
> average incomes have declined since 1970, and Africans have the world's
> lowest life expectancy at birth. These problems have been compounded by
> the HIV/AIDS pandemic, which will kill more than 2 million Africans this
> year, making it the leading source of mortality in the region. Given these
> grim facts, the risk of state failures in Sub-Saharan Africa will remain
> high. In the past decade, the collapse of governments in Somalia, Liberia,
> Rwanda, Congo-Kinshasa, and elsewhere has led the United States and other
> international partners to provide hundreds of millions of dollars worth of
> aid, and to deploy thousands of peacekeepers. A number of other African
> states-including Zimbabwe and Liberia-are poised to follow the same
> downward spiral. In Zimbabwe, President Mugabe's attempts to rig the
> presidential election scheduled for next month increases the chances of a
> collapse in law and order that could spill over into South Africa and
> other neighbors. The UN-monitored truce between Ethiopia and Eritrea also
> remains fragile. BALKANS Finally, let me briefly mention the Balkans, the
> importance of which is underlined by the continuing US military presence
> there. International peacekeeping troops, with a crucial core from NATO,
> are key to maintaining stability in the region. In Macedonia, the
> Framework Agreement brokered by the United States and the EU has eased
> tensions by increasing the ethnic Albanians' political role, but it
> remains fragile and most of the agreement has yet to be implemented.
> Ethnic Slavs are worried about losing their dominance in the country. If
> they obstruct implementation of the accord, many Albanians could decide
> that the Slav-dominated government-and by extension the international
> community-cannot be trusted. US and other international forces are most at
> risk in Bosnia, where Islamic extremists from outside the region played an
> important role in the ethnic conflicts of the 1990s. There is considerable
> sympathy for international Islamic causes among the Muslim community in
> Bosnia. Some of the mujahedin who fought in the Bosnian wars of the early
> 1990s stayed there. These factors combine with others present throughout
> the Balkans-weak border controls, large amounts of weapons, and pervasive
> corruption and organized crime-to sustain an ongoing threat to US forces
> there.  CONCLUSION Mr. Chairman, I want to end my presentation by
> reaffirming what the President has said on many occasions regarding the
> threats we face from terrorists and other adversaries. We cannot-and will
> not-relax our guard against these enemies. If we did so, the terrorists
> would have won. And that will not happen. The terrorists, rather, should
> stand warned that we will not falter in our efforts, and in our
> commitment, until the threat they pose to us has been eliminated. Thank
> you, Mr. Chairman. I welcome any questions you and your colleagues have
> for me.    [Speeches and Testimony Page
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