GLOBAL SECURITY ASSESSMENT:
FOR THE HOUSE ARMED
SERVICES COMMITTEE

July 11, 2007

Dr. Thomas Fingar

Deputy Director for Analysis

Infosearch:
By Armando F. Mastrapa 3d
Director
Department of Research
La Nueva Cuba
July 13, 2007


Information as of

July 11, 2007

HOUSE ARMED SERVICES COMMITTEE

GLOBAL SECURITY ASSESSMENT

STATEMENT FOR THE RECORD

INTRODUCTION

Chairman Skelton, Ranking Member Hunter, Members of
the Committee, thank you for the invitation to offer my
assessment of threats to our nation.

I am joined today by John Kringen, Director for
Intelligence, Central Intelligence Agency, and Robert Cardillo,
Deputy Director for Analysis, DIA.

REFORMS PROMOTE
INFORMATION SHARING,
SENSE OF COMMUNITY

The judgments I will offer the Committee are based on the
efforts of thousands of patriotic, highly skilled professionals,
many of whom serve in harm’s way. I am proud to be part of
the world’s best Intelligence Community and pleased to report
that it is even better than it was last year as a result of reforms
mandated by the President and the Congress. These reforms
promote better information sharing, the highest standards of
analytic rigor, the most innovative techniques of acquiring
information, and a stronger sense of community across our
sixteen agencies.


DIVERSITY OF
THREATS/GLOBALIZATION
MANDATE GLOBAL
COVERAGE

We know that the nation requires more from our
Intelligence Community than ever before because America
confronts a greater diversity of threats and challenges than ever
before. Globalization, the defining characteristic of our age,
mandates global intelligence coverage. Globalization is not a
threat in and of itself; it has more positive than negative
characteristics. But globalization does facilitate the terrorist
threat, increases the danger of WMD proliferation, and
contributes to regional instability and reconfigurations of power
and influence—especially through competition for energy.
Globalization also exposes the United States to mounting
counterintelligence challenges. Our comparative advantage in
some areas of technical intelligence, where we have been
dominant in the past, is being eroded. Several nonstate actors,
including international terrorist groups, conduct intelligence
activities as effectively as capable state intelligence services. A
significant number of states also conduct economic espionage.
China and Russia’s foreign intelligence services are among the
most aggressive in collecting against sensitive and protected US
targets.

NONSTATE ACTORS AND
HOSTILE STATES ASSAULT
INTERNATIONAL ORDER

TERRORIST THREATS—THE
PRE-EMINENT CHALLENGE

This array of challenges to our national security is shaped
by dramatic advances in telecommunications, technology, new
centers of economic growth, and the consequences of crises
within traditional cultures.

As a result of these and other challenges exacerbated by
globalization, many nation states are unable to provide good
governance and sustain the rule of law within their borders.
This enables nonstate actors and hostile states to assault these
fundamental building blocks of international order, creating
failed states, proxy states, terrorist safehavens, and ungoverned
regions that endanger the international community and its
citizens. More to the point, it threatens our national security
and support for freedom and democracy, notably in Iraq and
Afghanistan, where our troops and those of our allies are
helping to defend freely elected governments and sovereign
peoples against determined insurgents and terrorists.

Terrorist threats to the Homeland, to our national security
interests, and to our allies remain the pre-eminent challenge to
the Intelligence Community, operationally and analytically.
Working closely with our international partners, we have scored
remarkable successes and disrupted terrorist plots aimed at
murdering thousands of US and allied citizens. Despite these

AL-QA’IDA—THE
GREATEST THREAT

CONVENTIONAL
EXPLOSIVES MOST
PROBABLE AL-QA’IDA
ATTACK

LONDON PLOTS

successes, we must maintain maximum vigilance, flexibility,
and operational aggressiveness to counter the constant evolution
and adaptive capability of our enemies. To support these
efforts, we must understand the enemy, his intentions, and his
capabilities. Much of what the Intelligence Community has
learned in the past year cooroborates its previous judgments, but
we now have a deeper understanding of the enemy we face.

Al-Qa’ida is the terrorist organization that poses the
greatest threat to US interests, including to the Homeland. We
have captured or killed numerous senior al-Qa’ida operatives,
but we also have seen that al-Qa’ida’s core elements are
resilient. They continue to plot attacks against our Homeland
and other targets with the objective of inflicting mass casualties.
They continue to maintain active connections and relationships
that radiate outward from their leaders hiding in Pakistan to
affiliates throughout the Middle East, North and East Africa,
and Europe.

Use of conventional explosives continues to be the most
probable al-Qa’ida attack scenario. The thwarted UK aviation
plot last summer and the other major threat reports that we have
been tracking all involve conventional bombs. Nevertheless,
we receive reports indicating that al-Qa’ida and other groups are
attempting to acquire chemical, biological, radiological, and
nuclear weapons or materials.

Recent events in London highlight the morphing threat that
we face. While investigations have yet to uncover signs that the
plotters were under the control of al-Qa'ida, they certainly
appear to have been inspired by Usama Bin Ladin's message
and used known al-Qa'ida tactics. The plotters, most of whom
had been in the UK only for a short-time, constructed
homemade bombs from widely available components, and
hoped to inflict large-scale civilian casualties via multiple
attacks against popular gathering spots and major
transportation. While these particular attackers were mostly
unsuccessful, their intent, commitment, and ability to obtain
bomb-making material (similar to what we saw in several
disrupted Western homegrown terrorists cells in 2006) are
warning signs of what al-Qa'ida-inspired terrorists aim to
achieve. All members of the IC are supporting the UK's
investigation and running down any possible links between the
UK plotters and the United States.


HIZBALLAH THREAT

INTERNATIONAL
COOPERATION

MAJOR
ACCOMPLISHMENTS

It is important to note our shared successes, with a focus,
not on taking credit, but on demonstrating results. I will
highlight four major accomplishments.

• In the U.K., as noted earlier, a plot to perpetrate the worst
terrorist slaughter of innocent civilians since 9/11 was
thwarted.

• And in Pakistan Abd al-Rahman al-Muhajir and Abu Bakr al-
Suri, two of al-Qai’da’s top bomb makers were killed in
April 2006.

• We eliminated al-Qa’ida-in-Iraq’s murderous leader, Abu
Musab al’Zarqawi in June 2006.

• Also in Iraq, we have severely damaged Ansar al Sunna’s
leadership and operational capacity.

IRAQ, AFGHANISTAN, AND

In addition to al-Qa’ida, its networks and affiliates, I must
mention the terrorist threat from Hizballah, which is backed by
Iran and Syria. As a result of last summer’s hostilities,
Hizballah’s self-confidence and hostility toward the US as a
supporter of Israel could cause the group to increase its
contingency planning against US interests.

We know from experience since 9/11 that countering
terrorism depends on unprecedented levels of international
cooperation. Our successes so far against al-Qa’ida and other
jihadists—and our ability to prevent attacks abroad and at
home—have been aided considerably by the cooperation of
foreign governments, among them Iraq, the U.K., Saudi Arabia,
Turkey, Pakistan, Afghanistan, and many others. They, too, are
targets of terror. As illustrated by al-Qa’ida’s plots in the U.K.,
Kurdish separatist attacks in Turkey, and the recent bombings in
Algeria, terror is a worldwide scourge.

Again, let us emphasize that we, the United States, do not
and could not accomplish our counterterrorism mission
unilaterally. Our role varies from situation to situation. What
does not vary is our requirement for good intelligence and
committed partners, which we have in all parts of the world—
because terrorists have killed far more non-Americans than
Americans and far more Muslims than non-Muslims.

The two countries where the United States military is


PAKISTAN

IRAQ—SECTARIAN
DIVISIONS, SECURITY
FORCES

In Iraq, Coalition and Iraqi forces are taking part in the
Baghdad Security Plan to reduce violence, combat terrorism,
and create an environment conducive to national reconciliation.
The multiparty government of Nuri al-Maliki continues halting
efforts to bridge the divisions and restore commitment to a
unified country, and it has made limited progress on key
legislation, most notably in reaching some compromises on
draft hydrocarbon legislation. The Prime Minister and
President jointly submitted a draft de-Bathification reform law
to the legislature at the end of March, but it has not yet come up
for consideration. Another important first step was taken to
prepare for local elections when the government established an
independent electoral commission to begin the planning
process.

IRAQ AT A PRECARIOUS
JUNCTURE

Despite these positive developments, communal violence
and scant common ground between Shias, Sunnis, and Kurds
continues to polarize politics.

Prime Minister Maliki’s national reconciliation agenda is
still only at its initial stages. As the Intelligence Community
(IC) noted in the National Intelligence Estimate (NIE) published
in January, even if violence is diminished, given the current
winner-take-all attitude and sectarian animosities infecting the
political scene, Iraqi leaders will be hard pressed to achieve
sustained political reconciliation.

The religious Shia foundation of Maliki’s government—the
Unified Iraqi Alliance—does not present a unified front. It is
split over the creation of federal regions, and the two largest
factions—loyal to the Supreme Iraqi Islamic Council and
Muqtada al-Sadr respectively—are bitter rivals. One Shia
party, the Fadila Party, has left the coalition.

Provision of essential public services remains inadequate; oil
output is below pre-war levels; hours of electrical power

engaged in combat—Iraq and Afghanistan—face challenges
that are significantly exacerbated by terrorism. And Pakistan,
despite its ongoing efforts, continues to face terrorism’s many
challenges, while that country also raises other concerns for us.

Iraqi security forces —especially the Iraqi Army— have
become more numerous and more capable than last year at this
time. Nine Iraqi Army divisions, 31 brigades, and 95 battalions
are in the operational lead for their areas of responsibility.


available have declined and remain far below demand; and
inflationary pressures have grown since last year.

IRAQ—PROSPECTS FOR
STABILITY AND KEY
ISSUES

The IC stated in the most recent Iraq NIE that the current
security and political trends in Iraq are moving in a negative
direction. It is too early to assess whether the new strategy
being implemented in Iraq will allow lasting improvements to
the situation.

If violence is reduced and a window for political
compromise is created, increased stability in Iraq will depend
on how several issues evolve. As we outlined in January, these
issues include:

• The ability of the Iraqi government to establish and nurture
effective national institutions that are based on national
rather than religious or ethnic interests; and within this
context, the willingness of the security forces to pursue
extremist elements of all kinds.

• The extent to which the Shia feel sufficiently secure in their
political position: despite their recent electoral victories
and overall political ascendancy, the Shia at present remain
deeply insecure about their hold on power. This insecurity
is manifested in the Shias’ refusal to make real concessions
to the Sunnis on a range of issues, such as easing of de-
Bathification and clamping down on radical Shia militias.

• The extent to which Arab Sunnis develop trust and
participate in the new political order: now, many remain
unwilling to accept their minority status, continue to resist
violently this new political order, and distrust the Shia-led
government and its commitment to their security.

• The extent to which divisions within the Shia and the Sunni
are addressed: profound intra-group divisions among the
Shia and Sunnis complicate the situation, because no single
leader can speak for or exert control over these groups.

With political reconciliation showing few appreciable gains,
we have noted that Iraqis increasingly resort to violence. The
struggle among and within Iraqi communities over national
identity and the distribution of power has eclipsed attacks by
Iraqis against the Coalition Forces as the greatest impediment to
Iraq’s future as a peaceful, democratic, and unified state.


• The extent to which extremists—most notably al-Qa’ida in
Iraq (AQI)—are suppressed: these groups continue to
conduct high-profile, often mass casualty attacks that are
effective accelerants for the self-sustaining sectarian
struggle between Shia and Sunnis.

IRAQ AND REGIONAL
CONCERNS

AFGHANISTAN—
RESURGENCE OF THE
TALIBAN; DRUG TRADE;
CORRUPTION

This year is difficult for Afghanistan. Afghan leaders must
build central and provincial government capacity, confront
pervasive drug cultivation and trafficking, and, with the United
States, NATO, and other allies, arrest the resurgence of the
Taliban. The insurgency probably does not directly threaten the
government, but it continues to deter economic development
and undermine popular support for President Karzai.

Afghan leaders continue to face critical challenges in
building central and provincial government capacity and in
confronting pervasive drug cultivation and trafficking. The
country faces a chronic shortage of resources and of qualified
and motivated government officials, while the drug trade
contributes to endemic corruption at all levels of government.
We have noted the dangerous nexus that exists between drugs
and the insurgents and warlords who derive funds from
cultivation and trafficking.

And lastly, the extent to which Iraq’s neighbors can be
persuaded to stop the flow of militants and munitions across
their borders: Iran’s lethal support for select groups of Iraqi
Shia militants clearly exacerbates the conflict in Iraq, as does
Syria’s continued provision of safehaven for expatriate Iraqi
Bathists and its inability or unwillingness to stop the flow of
foreign jihadists into Iraq.

Friends of the United States in the region are concerned
about the consequences of growing instability in Iraq. Many are
increasingly apprehensive about Iraqi ethnosectarian strife
agitating their populations and all of our allies in the region are
nervous about the growing role of radical Islamists, the
spreading of Iranian influence, and refugee flows.

Lastly, diminishing the safehaven that the Taliban and
other extremists have found in Pakistan continues to be a
necessary but insufficient condition for ending the insurgency in
Afghanistan.


PAKISTAN’S CHALLENGES

Which brings me to Pakistan, where aggressive military
action against extremists has been costly for that country’s
security forces and has caused the government concern over the
potential for tribal rebellion and a backlash by sympathetic
Islamic political parties. With tribal opposition to the US
military presence in Afghanistan and Iraq widespread and
elections expected later this year, the situation will become even
more challenging—for President Musharraf and for the US.

PAKISTAN’S RELATIONS
WITH INDIA

The three-year peace process between Pakistan and India
has reduced tensions in the region and both sides appear
committed to improving the bilateral relationship. The Mumbai
train bombings last year disrupted, but ultimately did not derail,
the composite dialogue and a mechanism for exchanging
information on terrorist attacks has been established.

PROLIFERATION: STATES
OF KEY CONCERN

TRACKING DANGEROUS
TECHNOLOGIES

The time when only a few states had access to the most
dangerous technologies has been over for many years. Dual-use
technologies circulate easily in our globalized economy, as do
the scientific personnel who design and use them. As a
consequence, it is more difficult for us to track efforts to
acquire, for nefarious purposes, these widely available
components and technologies.

IRAN ASSESSED AS
DETERMINED TO DEVELOP

• Moreover, democracy has not been fully restored since the
Army took power in 1999 and Musharraf’s suspension of
Pakistan’s Chief Justice in March has brought thousands of
protesters into the streets and increased public demand for a
fully democratic system.

Nonetheless, New Delhi’s concern about terrorist attacks
on Indian soil remains a dominant theme in relations, and risks
derailing rapprochement. Although both New Delhi and
Islamabad are fielding a more mature strategic nuclear
capability, they do not appear to be engaged in a Cold War-style
arms race based on a quest for numerical superiority.

After terrorism, the ongoing efforts of nation-states and
terrorists to develop and/or acquire dangerous weapons and
delivery systems constitute the second major threat to the safety
of our nation, our deployed troops, and our friends.

Iran and North Korea are the states of most concern to us.
The United States’ concerns about Iran are shared by many


NUCLEAR WEAPONS

NORTH KOREAN THREAT

North Korea’s threat to international security remains
grave. Last July, Pyongyang flight-tested missiles and in
October it tested a nuclear device. We remain concerned that it
could proliferate these weapons abroad. Indeed, Pyongyang has
a long history of selling ballistic missiles, including to several
Middle Eastern countries. Its nuclear weapon and missile
programs also threaten to destabilize Northeast Asia, a region
that has experienced several great power conflicts over the last
one hundred years and now includes some of the world’s largest
economies.

REGIONAL CONFLICTS,
INSTABILITY, AND
RECONFIGURATIONS OF
POWER AND INFLUENCE

THE MIDDLE EAST: AN
EMBOLDENED IRAN

Iran’s influence is rising in ways that go beyond the potential
threat posed by its nuclear program. The fall of the Taliban and

nations, including many of Iran’s neighbors. Iran is continuing
to pursue uranium enrichment and has shown more interest in
protracting negotiations and working to delay and diminish the
impact of UNSC sanctions than in reaching an acceptable
diplomatic solution. We assess that Tehran is determined to
develop nuclear weapons—despite its international obligations
and international pressure. This is a grave concern to the other
countries in the region whose security would be threatened
should Iran acquire nuclear weapons.

On 13 February, the Six-Party Talks in Beijing produced an
agreement on steps intended to lead to a declaration of all
DPRK nuclear programs and a disablement of all existing
nuclear facilities. The agreement is the initial step in the
denuclearization process, but its implementation has been
delayed by procedural obstacles that were overcome last month.
We will look closely for signs of progress.

As noted at the outset of this statement, globalization is
contributing to conflicts, instability, and reconfigurations of
power and influence. These consequences of globalization
manifest themselves most clearly at the regional level, although
at times we can see the effects across regions. Again, the
attempt by states or non-state actors to co-opt, dominate, turn
into proxies, or destroy other nation states is our primary
concern. This is the explicitly stated goal of al-Qa’ida’s
leadership vis-à-vis Iraq and the Levant, and it is an accurate
appraisal of the foreign policy aims of states like Iran. However
they occur, violent conflicts in a given state—as we see in
Africa today—can swiftly lead to massive humanitarian
tragedies and, potentially, regional wars.


Saddam, increased oil revenues, HAMAS control of Gaza, and
Hizballah’s perceived success last summer in fighting against
Israel embolden Iran in the region. Our Arab allies fear Iran’s
increasing influence, are concerned about worsening tensions
between Shia and Sunni Muslims, and face domestic criticism
for maintaining their decades-old strategic partnerships with
Washington.

Iran’s growing influence has coincided with a shift to a
more hard-line government. Iranian President Ahmadi-Nejad’s
administration—staffed in large part by hardliners imbued with
revolutionary ideology and deeply distrustful of the US—has
stepped up the use of more assertive and offensive tactics to
achieve Iran’s longstanding goals.

However, Ahmadi-Nejad’s supporters suffered setbacks in
last year’s Assembly of Experts and local council elections and
elite criticism of Ahmadi-Nejad’s policies—especially his
management of the Iranian economy— and hardline rhetoric
remains. Ethnic tensions in Iran’s Baloch, Kurdish, Arab, and,
to a lesser extent, Azeri areas continue to fester, creating
concern in Tehran about the potential for broader ethnic unrest.
However, we see no viable opposition movement. While record
oil revenues and manageable debt suggest that Iran is capable,
for now, of weathering shocks to the economy, inflationary
pressures, exacerbated by Ahmadi-Nejad’s expansionary fiscal
and monetary policies, are harming Iran’s consumer and
investment climates and causing employment opportunities to
decline. A substantial decline in oil prices could create broader
economic problems for the regime.

IRAN—ACTIVE IN IRAQ

Iran continues to be active in Iraq, seeking to influence
political, economic, religious, and cultural developments to
ensure a non-threatening, cooperative, and Shia-dominated
regime to its west. Tehran also seeks to ensure the US bears
increasing costs for its presence in Iraq, experiencing setbacks
that could drive a US decision to depart and dissuade the US
from attacking Iran.

Iran uses radio, television, and print media to influence
Iraqi public opinion and help promote pro-Iranian individuals in
the Iraqi government at all levels. It has offered financial and
other support to its political allies in the Unified Iraqi Alliance.

IRAN—ETHNIC UNREST

We assess that the Qods Force—a special element of Iran’s

IRAN—MILITARY POWER

IRAN—TERRORISM AND
HIZBALLAH

We assess that Iran regards its ability to conduct terrorist
operations abroad as a key element of its national security
strategy: it considers this capability as helping to safeguard the
regime by deterring US or Israeli attacks, distracting and
weakening Israel, as enhancing Iran’s regional influence
through intimidation, and as helping to drive the US from the
region.

SYRIA’S REGIONAL
POLICIES

Islamic Revolutionary Guards Corps—is involved in providing
lethal support to select groups of Shia militants in Iraq. This
support comes in the form of weapons and weapons
components traced to Iran as well as military training to include
the use of these weapons. Support from the Qods Force helps
enable Iraqi Shia groups to attack Coalition forces.

Iranian conventional military power would threaten Persian
Gulf states and challenge US interests during a time of crisis.
Iran is enhancing its ability to project its military power—
primarily with ballistic missiles and naval power—to deter
potential adversaries and achieve hegemony in the Gulf. It
seeks the removal of US forces based in the region by
alternately cajoling and trying to intimidate regional allies into
withholding support for US policy, and by raising the political,
financial, and human costs to the US and our allies of our
presence in Iraq. Tehran views its growing inventory of
ballistic missiles (it already has among the largest inventory of
these missiles in the Middle East), as an integral part of its
strategy to deter—and if necessary retaliate against—forces in
the region, including US forces.

At the center of Iran’s terrorism strategy is Lebanese
Hizballah, which relies on Tehran for a substantial portion of its
annual budget, military equipment, and specialized training.
Hizballah is focused on its agenda in Lebanon and supporting
anti-Israeli Palestinian terrorists, but, as indicated earlier, it has
in the past made contingency plans to conduct attacks against
US interests in the event it feels its survival—or that of Iran—is
threatened. Tehran also leverages Hizballah to provide training
and guidance to JAM Special Groups conducting attacks against
Coalition targets in Iraq.

Syria has strengthened longstanding ties with Iran and
grown more confident about its regional policies, largely due to
what it sees as vindication of its support to Hizballah and its
perceptions of its success in overcoming international attempts

PALESTINIAN
TERRITORIES/HAMAS

CONFLICT AND CRISIS IN
SUB-SAHARAN AFRICA

In Sub-Saharan Africa, the picture is mixed. We see the
consolidation of democracy in such countries as Senegal, Mali,
Mauritania, and Kenya, and the persistence of political crises
and violent conflict in others. Many of Africa’s past and
present crises have occurred in countries run by entrenched
regimes with little to no real democratic foundations and weak
control of areas outside the capital; Sudan and Somalia are
cases in point. While violent conflict has abated somewhat
since the early 2000s in West and Central Africa, turmoil and
conflict threaten large portions of the sub-Saharan region,
especially in the Horn of Africa.

DARFUR KILLING DOWN,
DISPLACEMENTS UP

to isolate the regime. Damascus has failed to crack down
consistently on militant infiltration into Iraq and continues to
attempt to reassert control over Lebanon. Lebanon remains in a
politically dangerous situation as Damascus, Hizballah, and
other pro-Syrian groups attempt to topple the government of
Prime Minister Siniora.

In the Palestinian territories, the situation is precarious as
forces loyal to HAMAS and Fatah remain poised to renew
fighting and HAMAS and Fatah political leaders spar publicly
over which Palestinian government legitimately represents all
Palestinians. HAMAS’ routing of Fatah security forces in Gaza
have resulted in the de facto creation of rival governments, with
a Gaza-based HAMAS government and a West Bank-based
Fatah government under President Abbas. Tensions are likely
to remain high as HAMAS leaders publicly have rejected the
Abbas-appointed emergency government headed by Salam
Fayyad, saying that the former government continues to
function as the legitimate one.

Although the large-scale killing and organized massacres so
common in Darfur in 2003-04 have ended, continuing violence
and instability have boosted the number of refugees and
internally displaced persons (IDPs) to unprecedented levels.
Some 2.1 million IDPs now reside in Darfur, about 400,000 of
whom have been displaced since the signature of the Darfur
Peace Agreement (DPA) in May 2006. In addition, 235,000
Darfur refugees have fled to neighboring Chad. The conflict—-
which has claimed some 200,000 lives since early 2003—also
has become more complex in the last two years, complicating
prospects for a political solution. On the rebel side, since 2005
insurgents have sub-divided from two main groups into more

DARFUR DIPLOMACY

SOMALIA TURMOIL

The rapid collapse of the Council of Islamic Courts (CIC) in
the face of Ethiopia's December 2006 intervention and the
arrival in Mogadishu of the Transitional Federal Government
(TFG) radically altered the political dynamics in southern
Somalia. Though the CIC has been destroyed as an
organization, some of those affiliated with it—clan elements
and certain radical Islamists, some affiliated with al-Qa'ida—
violently oppose the TFG. TFG, Ethiopian, and African Union
Forces in Mogadishu have faced almost daily attacks this
spring, including multiple suicide attacks in and around the

than a dozen, which, along with bandits, are now responsible for
most attacks against civilians, peacekeeping forces, and
humanitarian workers. On the government side, tensions have
been growing between Khartoum and some of the "Arab"
militias on which it relied to carry out its scorched-earth
counter-insurgency. Though an expected dry season offensive
by the government did not occur this year, Sudan's air force
repeatedly bombed the site of a rebel unification conference.
The Darfur conflict has also increasingly spilled over into
neighboring Chad and, to a lesser extent, Central African
Republic. With the governments of Chad and Sudan supporting
each others' rebels, the fighting in Chad has created some
180,000 IDPs, 90,000 since the beginning of this year, and
caused 20,000 Chadian refugees to flee into Darfur.

Already facing the prospect that its southern region will
choose to secede in a referendum scheduled for 2011, Khartoum
fears additional concessions to the Darfur rebels and
deployment of UN peacekeepers to the region would lead to the
disintegration of Sudan. Nonetheless, under pressure from
various quarters including its major economic partner, China,
Khartoum has grudgingly agreed to allow deployment of a joint
AU-UN "hybrid force" of about 20,000 that would replace the
current undermanned and overstretched 7,000-person AU
peacekeeping force. Khartoum's continued foot-dragging and
numerous political and logistical obstacles will complicate full
deployment of the hybrid force and probably delay it past the
new year, but the new force could increase the security of
civilian populations. Similarly, a proposal by the Sarkozy
government in France to deploy a UN-authorized military and
police mission to provide security inside Chad for populations
near the Sudan border could encourage implementation of a
Saudi-brokered agreement in early May by which N'djamena
and Khartoum agreed not to support each others' rebels.


capital since March. TFG efforts to establish a viable national
government are also hampered by many of the same obstacles
that have kept any single group from establishing a viable
government in Somalia since the country collapsed in 1991.
Notably, in a society divided into numerous clans and sub-
clans, each of which is reluctant to see one group rise above the
others, the TFG leadership has been unable or unwilling to
expand its clan base. A proposed National Reconcilation
Congress has been postponed four times since April for political
and security reasons, and TFG efforts to limit participation and
control the conference agenda limit the liklihood that it can be
used to bring more Somalis under the TFG umbrella. Moreover,
the TFG is widely perceived by Somalis to be little more than a
pawn of Ethiopia, yet its continued survival, certainly in
Mogadishu, remains dependent on the support provided by the
Ethiopian military. Continued turmoil, incited in part by those,
like Eritrea, who are supporting the TFG's enemies as a way of
punishing Ethiopia, could enable extremists to regain their
footing and heightens interstate tensions throughout the region.
An effort to replace the temporary Ethiopian presence with a
Somali-supported international force remains limited to an
undermanned 1,600-man Ugandan force affiliated with the
African Union.

NIGERIA’S UNCERTAIN
FUTURE

LATIN AMERICA—

Gradual consolidation of democracy has remained the

Nigeria’s national elections in April were marred by some of
the worst vote rigging and mismanagement in the country’s
history and undermined the country’s already tenuous
democratic transition. Newly installed President Yar’adua will
need to overcome his lack of legitimacy and perceived political
weakness to address colossal economic and security challenges.
The Nigerian population is increasingly demoralized from
worsening living conditions in the face of much publicized
improvements in the country’s macroeconomic indicators in
recent years. Insecurity continues to shut in at least 600,000 b/d
in oil-production and could take more off line with little
advance warning. Many other parts of the country also suffer
from rampant crime, political gangsterism, and ethnic and
religious cleavages. The likelihood of a political crisis and
major unrest will increase if Yar’adua is unable to consolidate
his power and implement comprehensive political and economic
reforms that alleviate public frustrations. Instability in Nigeria
would threaten other countries in the region.


GRADUAL CONSOLIDATION
OF DEMOCRACY

prevailing tendency in Latin America, despite the challenge to
democratic tenets in a few countries. Moderate leftists who
promote macroeconomic stability, poverty alleviation, and the
consolidation of democratic institutions continue to fare well, as
do able conservative leaders. Indeed, the overall health of Latin
American democracy is reflected in the results of a survey by a
reputable Latin America polling survey: fifty-eight percent of
the respondents said that democracy is the best system of
government. This number is up five percentage points,
compared to results from the same poll in 2005.

STRONG SHOWING OF
LEFTIST CANDIDATES

VENEZUELA—STRUGGLE
AGAINST US
“IMPERIALISM”

Democracy is most at risk in Venezuela and Bolivia. In
both countries, the elected presidents, Chavez and Morales, are
taking advantage of their popularity to undercut the opposition
and eliminate checks on their authority.

At the same time, individuals who are critical of free
market economics and have friendly relations with Venezuela’s
President Chavez won the presidency late last year in two of
Latin America’s poorest countries, Ecuador and Nicaragua—
both after Evo Morales’ victory in Bolivia in December 2005.

The strong showing of presidential candidates with leftist
populist views in several other countries during the elections of
2006 speaks to the growing impatience of national electorates
with corruption—real and perceived—and the failure of
incumbent governments to improve the living standards of large
elements of the population. Public dissatisfaction with the way
democracy is working is especially troubling in the Andes.

In Venezuela, Chavez reacted to his sweeping victory last
December by increasing efforts to deepen his self-described
Bolivarian Revolution while maintaining the struggle against
US “imperialism.” He revoked the broadcasting license of a
leading opposition television station, on 28 May, and has
nationalized the country’s main telecommunications enterprise
and largest private electric power company. He has forced US
and other foreign petroleum companies to enter into joint
ventures with the Venezuelan national petroleum company or
face nationalization. Negotiations on compensation and the
autonomy remaining to the companies that have chosen to stay
in Venezuela are pending. Chavez is among the most stridently
anti-American leaders anywhere in the world and will continue
to try to undercut US influence in Venezuela, the rest of Latin
America, and elsewhere internationally. He is attempting to

CHAVEZ’S WEAPONS
PURCHASES

Chavez’s effort to politicize the Venezuelan Armed Forces
and to create a large and well-armed military reserve force are
signs that he is breaking with the trend in the region toward
more professional and apolitical militaries. He has purchased
modern military equipment from Russia, including 24 SU-30
multi-role fighters, which can perform air-to-air, strike, and
anti-ship roles, and is moving toward upgrading other force
projection capabilities. These weapons purchases increasingly
worry his neighbors and could fuel defense spending by his
neighbors.

Cuba remains Venezuela’s closest ally. Fidel Castro’s
protracted convalescence leaves the day-to-day governing
responsibilities to his brother Raul. Key drivers in influencing
events in post-Fidel Cuba will be elite cohesion in the absence
of Cuba’s iconic leader and Raul Castro’s ability to manage
what we assume to be high public expectations for improved
living conditions. This year may mark the end of Fidel Castro’s
domination of Cuba; but significant, positive political change is
unlikely immediately. Although Raul Castro has solidified his
own position as successor, it is too soon to tell what policy
course he will take once Fidel has left the scene.

In Mexico, President Felipe Calderon’s public security
initiatives, early efforts to address poverty, and quick handling
of political controversies have been highly popular and have put
to rest attempts to question the legitimacy of his presidency.
His government is taking steps to address problems that affect
both Mexican and US security concerns, including drug
smuggling, human trafficking, and associated violence.

CROSS-CURRENTS IN ASIA

establish relationships with nations such as Iran, China, and
Russia that will lessen his country’s longstanding economic ties
to the US.

MEXICO—PRESIDENT
CALDERON’S DYNAMISM

The rise of China and economic prosperity more
generally—except for North Korea—are changing Northeast
Asia in unprecedented ways. Trade and investment, driven by
China’s successful integration into the world economy through
the World Trade Organization framework, is rapidly bringing
the countries of this region closer together; but Asia still lacks
mature, integrating security mechanisms, beyond the US
security treaties with Japan and South Korea.


CHINA—BEIJING’S FOREIGN
POLICY

In 2006, Chinese leaders increasingly moved to align
Beijing’s foreign policy with the needs of domestic
development, identifying opportunities to strengthen economic
growth, gain access to new sources of energy, and mitigate what
they see as potential external threats to social stability. These
Chinese priorities are motivating Beijing’s engagement with
problematic regimes like those in Sudan and Iran. At the same
time, China places a priority on positive relations with the
United States while strengthening ties to the other major
powers, especially the EU and Russia.

CHINA—RAPID MILITARY
MODERNIZATION

CHINA—MAINTAINING
DOMESTIC STABILITY AND
ECONOMIC GROWTH

Maintaining domestic stability remains one of Beijing’s top
priorities. Rural discontent, which has frequently erupted in an
increasing number of local demonstrations and riots, could
undermine continued rapid economic growth if not addressed.
Hu Jintao’s “harmonious society” program is an attempt to
address these concerns by enhancing environmental protection,
social service, and rule of law, while strengthening the
Communist Party’s position. The 11th Five-Year Plan enacted
in 2006 seeks to put economic growth on a more secure footing
by attempting to address rural complaints and extending
economic prosperity to more disadvantaged segments of

PRC leaders continue to emphasize development of
friendly relations with the states on China’s periphery to assure
peaceful borders. In the past year, China achieved notable
success in improving relations with Japan under newly elected
Prime Minister Abe. In addition to establishing strong bilateral
ties, Beijing actively engages with many multilateral
organizations, including ASEAN.

Beijing continues its rapid rate of military modernization,
initiated in 1999. Although this reinforces concerns about
Chinese intentions toward Taiwan, we assess that China’s
aspirations for great power status, threat perceptions, and
security strategy would drive its modernization effort even if the
Taiwan problem were resolved, but military priorities probably
would shift from preparations for a potential conflict to
programs designed to enhance China’s status. The Chinese are
developing more capable long-range conventional strike
systems and short- and medium-range ballistic missiles with
terminally guided maneuverable warheads able to attack US
carriers and airbases. Moreover, in January the Chinese tested a
direct ascent counterspace weapon that successfully intercepted
and destroyed a Chinese weather satellite.


Chinese society. Implementation of this program would require
a major shift of resources to the countryside, greater
accountability of provincial leaders to Beijing, and stronger
efforts to root out local corruption.

INDIA—ECONOMIC
GROWTH AND REGIONAL
ROLE

We expect that India’s growing confidence on the world
stage as a result of its sustained high rates of economic growth
will make New Delhi a more effective partner for the United
States but also a more formidable interlocutor in areas of
disagreement, particularly in the WTO.

EURASIA IN FLUX

Fifteen years after the dissolution of the USSR, post-Soviet
Eurasia remains in a state of flux—more so even than a year
ago—but increasingly subject to Russian assertiveness

RUSSIA—SUCCESSION
MANEUVERING

As Russia moves toward a presidential election in March
2008, succession maneuvering has intensified and increasingly
dominates Russian domestic and foreign policy. Against that
backdrop, the last year has seen expanded Kremlin efforts to
stifle political opposition and widen state control over strategic
sectors of the economy. Those trends are likely to deepen as the
succession draws closer.

Lastly, some aspects of China’s financial system are
unhealthy, with state-owned banks maintaining large balances
of non-performing loans. We nevertheless see a low risk of
severe financial crisis over the next five years; China is
introducing market measures to the financial sector, and has
massive foreign exchange reserves, current and capital account
surpluses, and low exposure to short-term foreign currency
debt.

New Delhi seeks to play a role in fostering democracy in
the region, especially in Nepal and Bangladesh, and will
continue to be a reliable ally against global terrorism, given the
fact that India is a major target for Islamic extremists, in part
because of the insurgency in Kashmir.

Meanwhile, high energy prices and abundant oil and gas
reserves continue to fan Kremlin aspirations for Russia to
become an energy superpower. A flush economy and perceived
policy successes at home and abroad have bolstered Russian
confidence, enabled increased defense spending, and
emboldened the Kremlin to pursue foreign policy goals that are

RUSSIA’S RELATIONSHIP
WITH THE US AND WORLD

GEORGIA

OTHER EURASIAN STATES:

Ukraine’s political situation remains unsettled. The Orange
Revolution brought lasting changes, including greater media
freedom and a strengthened role for civil society. Though
improvements to the political process resulted in free and fair
parliamentary elections in March 2006, the long-standing power
struggle between President Yushchenko and Prime Minister
Yanukovych continues to buffet Ukrainian politics and national
policy. This rivalry has led to the recent dissolution of
Parliament and the calling of new legislative elections for
September. Political-economic reform efforts and attempts to
integrate further with the West have suffered due to this
extended period of political uncertainty.

CENTRAL ASIA—
AMERICAN INTERESTS

American interests in Central Asia face increasing
challenges that could provide fertile soil for the development of
radical Islamic sentiment and movements. Furthermore,
cooperation on democratization efforts has been limited.

not always consistent with those of Western institutions.
Indeed, Russia is attempting to exploit the leverage afforded it
by high energy prices, increasingly using strong-arm tactics
against neighboring countries.

Russian assertiveness will continue to inject elements of
rivalry and antagonism into US dealings with Moscow,
particularly our interactions in the former Soviet Union, and
will affect our ability to cooperate with Russia on issues ranging
from counterterrorism and nonproliferation to energy and
democracy promotion in the Middle East. The steady
accumulation of problems and irritants threatens to harm
Russia’s relations with the West more broadly.

Future developments in Georgia may become intertwined
with events outside the region, particularly in Kosovo. If
Kosovo gains independence without a negotiated settlement
over the next year, Russia has suggested that it might respond
by recognizing breakaway regions in Georgia, a risky step.

UKRAINE

• There is no guarantee that elite and societal turmoil across
Central Asia would stay within the confines of existing
autocratic systems. In the worst, but not implausible case,
central authority in one or more of these states could be
challenged, leading to potential for increased terrorist and
criminal activities.

ENERGY SECURITY AND
COMPETITION FOR
SUPPLIES

Energy resources have long been a critical element of
national security, but globalization, unprecedented increases in
demand, and the interactive effects of energy and other issues
have both magnified and broadened the significance of
developments in the global energy system. We have entered a
new era in which energy security has become an increasing
priority not only for the US and the West, but also rapidly
developing economies such as China and India, which are
becoming major energy consumers.

INTELLIGENCE READINESS
AND GLOBAL COVERAGE

INTELLIGENCE
TRANSFORMATION
EXAMPLES

NCTC

The first example is a strengthened National
Counterterrorism Center, which in last two years has fully
assumed its central role in our nation’s efforts against global
terrorism worldwide.

• The key agencies involved are physically present and
integrated into NCTC’s work.

This means that developments in the energy arena,
narrowly defined, have significant and often multiple
consequences in other areas. For example, high and surging
demand for oil and gas fueled by five years of unusually robust
world economic growth have resulted in higher hydrocarbon
prices and windfall profits for producers. Producer nations are
benefiting from higher prices and several countries hostile to
US interests are reaping the potential political, economic, and
even military advantages that such resources bring.

Each of these national security challenges is affected by the
accelerating change and transnational interplay that are the
hallmarks of 21st century globalization. Globalization has
transformed the way we communicate and conduct business, but
it also has transformed the way we think about challenges and
opportunities and in the way we define and confront our foes.
Indeed, it is not too much of a stretch to say that events
anywhere can—and often do—affect our interests and the
security of our nation and our people. As a result, the
Intelligence Community must maintain global coverage and the
highest level of readiness to anticipate challenges and respond
to them.

Therefore, I offer a few examples that demonstrate the
extent to which the Intelligence Community is transforming the
way we work with one another and are achieving a higher level
of intelligence readiness than was the case before 9/11.

• NCTC draws on 30 different networks in performing its
analytic and information-sharing functions.

INFORMATION SHARING

The second improved readiness example is the impact of
our information sharing reform initiatives. Nothing improves
intelligence readiness faster than information sharing with the
right authorities, friends, and allies. Under the Senate-
confirmed Chief Information Officer and the Program Manager
for the Information Sharing Environment, we have:

• Implemented a classified information sharing initiative with
key US allies.

• Established the Unified Cross Domain Management office
with DoD to oversee development and implementation of
common technologies that enable highly classified
networks to share information with users and systems that
have lower or no clearances;

• Developed and rolled out “blue pages” that provide contact
information for all agencies with counterterrorism
responsibilities in the US Government;

• Released the Information Sharing Environment
Implementation Plan and Privacy Guidelines, which
provide the vision and road map for better information
sharing within the Intelligence Community and with our
fellow Federal, State, local, and tribal counterparts, as well
as with foreign governments and the private sector; and

COVERAGE OF SUDDEN
FLARE-UPS, EMERGING
CRISES

A third example of our intelligence readiness addresses the
critical question of global coverage and dealing with sudden
flare-ups. We have developed a new model for assessing and
then tasking IC organizations to “lift and shift” collection
resources in response to emerging crises.

• NCTC convenes all the key players in our CT intelligence
mission three times a day to ensure complete coordination
and face-to-face communication.

• We are nearing completion of a significant simplification of
“Sensitive but Unclassified” rules for the US Government,
which should further improve information sharing with
state and local partners.

• Application of this process in support of intelligence efforts
against the summer 2006 Lebanon/Hizballah/Israel crisis
proved very effective in focusing Community efforts.

MISSION MANAGERS—
ACTING ACROSS THE IC

CONCLUSION

This requirement for readiness and global coverage does
not mean that all places and problems are equally important at a
given point in time. We must and do accord greater attention to
those that are most dangerous, most difficult, and most
important to the policymakers, warfighters, and first responders
who depend on information and insights from the Intelligence
Community. The challenge we face is not catching up to
globalization or getting ahead of globalization—it is
recognizing the degree to which our national security is
inextricably woven into the fabric of globalization.

• The same model is being used against the ongoing Darfur
crisis and in Somalia.

Finally, we have the Mission Managers for Terrorism, Iran,
North Korea, Counterproliferation, Counterintelligence, and
Cuba and Venezuela. These are senior executives, empowered
to act across the IC, to achieve full coordination, synergy, and
cooperation. In two cases noted earlier—Iraq and China—
where the United States has, justifiably, the largest intelligence
investment, I join our most senior IC members in being deeply
and directly engaged as a team.

In intelligence, our focus on the military, foreign,
counterintelligence, and domestic dimensions of the threat must
be all of a piece, seamlessly integrated to thwart attacks, prevent
surprises, and provide policymakers with the time and insight
they need to make decisions that will keep Americans safe.