1996 Congressional Hearings
Intelligence and Security

DCI Q&A Session 2/22/96

Question and Answer Session following the Worldwide Threat Assessment brief to the Permanent Subcommittee on Investigations of the Senate Committee on Government Affairs by the DCI, John M. Deutch.

The following is the actual dialog of the Question and Answer Session:

SENATOR SPECTER: Thank you very much, Director Deutch.

We will proceed now to ten minute rounds of questions.

Director Deutch, I begin with the issue of the use by the intelligence community, alleged use by the intelligence community, of newspaper reporters, representatives of the media. There had been a generalized view that the intelligence community was not using newsmen, newswomen for intelligence-gathering operations. Recently an issue was raised in the media about an exception to that general rule where there were some extraordinary circumstances.

The concern has been articulated that if the newspapers and media generally are to retain their unique status with the protection of the First Amendment freedom of speech, freedom of press, that those kinds of activities ought not to be engaged in.

A counter-argument has appeared publicly, the weight of it I do not know, that some circumstances are so extraordinary as to warrant an exception to that generalized rule.

We would be interested to know, first of all, whether there has been a rule that the intelligence community would not use newspaper and media personnel generally for intelligence operations. If that rule has been in existence, are there exceptions? If so, what are they? And your view as Director as to the philosophy behind it and whether any circumstance might be so extraordinary as to warrant an exception to that rule.

Now I've asked you a series of questions because they're inter-related, and customarily the best procedure is to ask questions one at a time. But I give you that composite picture and ask you to address it.

DR. DEUTCH: Thank you very much, Mr. Chairman.

Let me begin by saying that my sympathy on this matter is very, very much with the journalistic community. I absolutely appreciate and understand the reasons that lead them to urge no interference or no cooperation with espionage services. I understand the relationship to the special character of the newspapers and other media according to the First Amendment. And frankly, as a former provost, I understand the similar kinds of concerns that academics have about potential use by the intelligence community of academics in intelligence matters.

But I hope, Mr. Chairman, that you and the citizens of this country can appreciate that Directors of Central Intelligence have to also concern themselves with perhaps very unique and special threats to national security where American lives are at risk; where very important unique access can be given to protect American interests abroad; where it would be necessary to consider the use of an American journalist in an intelligence operation...

SENATOR SPECTER: So you're saying there are some extraordinary circumstances where the U.S. intelligence community would call upon journalists?

DR. DEUTCH: That's correct, Mr. Chairman. Let me make a remark about our policy that has been in existence since 1977. I believe when that policy was adopted that it was publicly announced, so it's not been a secret policy. The policy says that we will not use American journalists except under very, very rare circumstances where...

SENATOR SPECTER: How would you define those "rare" circumstances, as you articulate it?

DR. DEUTCH: Those rare circumstances are defined by considerations by the Director of Central Intelligence or the Deputy Director of Central Intelligence where they would consider the information to be of such importance, or the access to be of such tremendous importance, to the interests of the United States and to American citizens, that they would waive consideration and use an American journalist.

SENATOR SPECTER: That's a fairly generalized statement, Director Deutch, the interests of the American people. Can you be more specific? Perhaps even illustrate that policy, if possible, without disclosing methods, sources, or something that is sufficiently far in the past not to compromise any ongoing matter?

DR. DEUTCH: Let me try to respond this way.

SENATOR SPECTER: Obviously this is a matter of great importance, and this is something that this committee, I know, will want to evaluate, and I'm not prepared to say one way or another. This is something which is of sufficient seriousness that we ought to think it through. But I do believe we need a little more specification as to under what circumstances the Director of CIA thinks the rule ought to be excepted.

DR. DEUTCH: I'd be happy to try and give you two hypothetical examples. One would be where you had a journalist involved in a situation where terrorists were holding U.S. hostages, where that journalist might have tremendously unique access in such a situation, or where there was particular access to a nation or a group who had an ability to use weapons of mass destruction against the U.S. These are the kinds of circumstances where I think it would be very difficult not to take advantage of every possible way of defending American lives.

SENATOR SPECTER: Well then would you define the exception as circumstances where there's an imminent risk to the lives of American citizens or the lives of others?

DR. DEUTCH: Well I'm not prepared at the present time to lay out a set of criteria for when these exceptions might be granted, but I'd be happy to work on that and to consider that. But that's the kind of situation where I believe that exceptions would be legitimate.

Now I want to say again, sir. I do understand and stress that our general rule is we do not use American journalists, we do not use American news organizations. That is our general policy. It is only in very rare circumstances that we would consider exceptions, when there are particular situations which involve risk to American lives or particular questions of absolute access on matters of important or critical national security matters. We would not do it as a matter of policy, in general, to gain foreign intelligence. And I want to say again, that my sympathy is very much with those groups who are concerned about their integrity being compromised in some way by this kind of covert involvement.

SENATOR SPECTER: Well you have carefully articulated in the disjunctive circumstances where American lives were at risk or lives of other were at risk, or circumstances where there were particular national security interests involved. And there is a fair distance between those two categories.

What we would ask you to do would be to consider a more precise definition of the second category. If you have hostages or if you have an imminent threat of use of weapons of mass destruction, that's understandable. If you talk about the generalized national security interests, that can have a pretty broad sweep. So we would ask you to be more definitive on that.

DR. DEUTCH: And I would be very comfortable doing that. My intention here is not to leave a very broad category, but indeed, to narrow it as much as possible. So we would be happy to do that. And what I'd like to do is give you a written statement of what I propose those criteria to be.

SENATOR SPECTER: Would it be realistic to further limit the authority to the Director himself or herself as opposed to the Deputy Director, unless the Director was incapacitated?

DR. DEUTCH: Frankly, my strong view about management is that a Director and his Deputy have got to be alter egos, and so I think that as it is stated now is exactly appropriate. I think the current criteria is proper.

SENATOR SPECTER: As a possible additional safeguard, if that is to be the policy of the CIA, and I'm not saying that I agree that it ought to be, would it be appropriate to further condition that on consultation notice or perhaps concurrence with the Chairman and Vice Chairman of the respective intelligence committees? Or does that diffuse the power too much?

DR. DEUTCH: I certainly would resist concurrence, but I do believe that the current practice is and has been since the beginning, that there is notice given when it occurs.

SENATOR SPECTER: Well that's a pretty good sign, because no notice has been given to this Chairman.

DR. DEUTCH: We don't want to talk about that, though, sir, I don't think.

SENATOR SPECTER: Well, the absence of notice I think you can talk about.

Director Deutch, let me broach the next item on my agenda of questions while the yellow light is on, and that is the issue of terrorism in the Mideast. You've touched upon it with respect to a number of countries there. The United States has made substantial commitments, as have other countries of the world, to the PLO to rebuild the PLO territories, conditioned on a couple of factors -- the PLO renouncing the destruction of Israel, and the PLO renouncing terrorism and doing everything within its power to avoid terrorism.

In your judgment, has the PLO and its Chairman, Yasser Arafat, made every conceivable, realistic, practical effort to stop terrorism against Israel?

DR. DEUTCH: My general impression is that the PLO has ceased to sponsor terrorism, and I would like to provide a more detailed classified answer to that, but my answer would be in the affirmative as a general impression.

SENATOR SPECTER: Well I understand your use of the word sponsor, but that has a considerable gulf between affirmative action in every possible way. But we'll await...

DR. DEUTCH: On that point I would have to inform myself before giving you a reply, and I would want to do it later if that's possible, Mr. Chairman.

SENATOR SPECTER: All right. Thank you very much.

Senator Kerrey?

SENATOR KERREY: Thank you very much, Mr. Chairman.

Director Deutch, given the way that we've lined this up, I may have referenced some of the testimony that will come after you if you don't mind, but I'd like to engage you at the start in a more general discussion.

It seems to me that it's fair and accurate to say that every military action, since Desert Storm, taken by the United States of America has been in response to the deterioration of some nation state. As a consequence of that deterioration there is a political military problem that either becomes of humanitarian interest or of vital national interest to the United States, the most recent one being in the former Yugoslavia where we led a negotiation in Dayton and then followed that negotiation with a deployment of U.S. forces as a part of IFOR.

Is that the way you see the world? It seems to me your testimony, Ms. Gati's testimony, as well as General Hughes' testimony implies that what we're likely to see out there in the future, even in the case of North Korea, the implication is, the possibility is that the greatest threat may not be military, but could in fact be the implosion and the deterioration of that nation state and what consequences that might bring would become a threat to the United States. Is that...

DR. DEUTCH: Exactly, Senator Kerrey. My message is that's the kind of military situations we'll face. And the other message I bring with it is there's lots of them.

SENATOR KERREY: Does that imply that we are going to see an increasing importance of what you might call preventative diplomatic economic efforts?

DR. DEUTCH: Absolutely.

SENATOR KERREY: In other words, deterring threats to the United States through our own military efforts may not be as easy as it had been in the past?

DR. DEUTCH: The threats are not only to the United States. The threats are to peace and stability in regions of the world. But in general I think that the military as a military activity only, by itself, is not going to be a unique instrument for dealing with these problems, like Bosnia, for example.

SENATOR KERREY: But it is fair to say though, is it not, that we're not going to be able simply through... And I'm not suggesting, by the way, that I've reached a conclusion that we ought to disassemble our military. I'm just saying that we are going to be frustrated if we have an expectation that the strength of our own military is going to, on its own, provide us with the kind of security that we've expected it to do in the past.

DR. DEUTCH: Actually, Senator, I turn that around and I say that we have to be prepared now as a country to meld together the diplomatic, military, and economic, humanitarian support instruments that we have in the foreign policy...

SENATOR KERREY: Let me take an entire continent. Africa, at the moment, where it's hard to pick up a newspaper and read a report of some country in Africa and not pull the word, as General Hughes has done in his testimony, "chaos." That we're apt to see chaotic situations where our military will have no impact at all. I mean the kind of investments that we make, the kind of training that we do and so forth in our military is not apt to have much of an impact upon events in Africa, though you could describe a scenario where we may have to deploy as a consequence of that chaos, as we have done in Bosnia. In other words, the strength of our military in Yugoslavia had no impact upon the deterioration of Yugoslavia. It deteriorated independent of our military capability. Our military capability was required and we had to deploy our military capability, and I believe wisely so, inside the NATO deployment as a consequence of the deterioration of the nation state.

DR. DEUTCH: Absolutely.

SENATOR KERREY: And it is fair to say that, as I listen to the debate about what happened in Yugoslavia, many are of the opinion that there might have been something that we could have done had we been wiser, more prophetic, in anticipating the events, let's say, of 1989, '90, '91, in that era. I mean, there's some suggestion that perhaps diplomatic efforts might have headed that off.

I'm not asking for a response, I'm just saying... Let me tie it back to Congress. We're going to turn over in the United States Senate 14 members, there will be 14 new members under the minimal circumstances; there may be more new members entirely. And we're aware that statements that we make can have an impact upon what's going on in the rest of the world.

So it occurs to me that one of the things that we need to be thinking about as a country is preparing ourselves to take stronger diplomatic roles than we have in the past. Is that a fair...

DR. DEUTCH: Absolutely, sir. I cannot tell you how important it is from our perspective to have strong and effective and certain American foreign policy leadership in all these areas that I mentioned in the beginning of my testimony -- in India, in China, everywhere.

SENATOR KERREY: Let me see if I can take another cut at this, Director Deutch. What I'm saying in general terms is that throughout most of the Cold War, we depended upon our military to protect us. We had diplomats who were engaged in efforts, and we had intelligence efforts that were contributing to the military's capability, but we had this balance of power between ourselves and the Soviet Union, between the Western world and the Soviet Union, between NATO and the Soviet forces. It seems to me that in the post-Cold War era that we're not going to be able to depend as much on the military. I mean after we've made a decision what the threats are and what kind of military capability is necessary to meet those threats -- and they're still considerable -- I'm not suggesting that they're not considerable, I'm just saying that increasingly, it's going to fall not just to the people's representatives, but the people of this country themselves to understand what's going on out there in the world, in order to be able to figure out in some, hopefully coherent fashion, what we need to do to make the world safer.

DR. DEUTCH: Well Senator, I believe that I'm in agreement with you. I would say that the foreign policy of the United States is going to be successful, largely because of our diplomatic efforts. We are in a massively fortunate time in our history where our military is strong and our military is able to protect our interests against all the adversaries that we can see for the future. And I don't think it's a choice of either/or. But I do agree with you that at the present time the diplomatic efforts, the diplomatic strength is what is tremendously important in avoiding some of these deteriorating conflict situations that you point to.

SENATOR KERREY: Briefly stated, it seems to me that one of the things that would alarm me, were I in your shoes, would be a willingness on the part of the people still to presume that somehow the military is going to bail us out of all of these problems, as opposed to investments in the United Nations, as opposed to investments in State Department efforts, as opposed to investments in the people's understanding of what's going on in the world.

If we elect, let's say 14 new members of the United States Senate who don't understand what our policy has been with China since 1949, it's possible for us -- particularly since the Shanghai Accords of 1972 -- it's possible for the United States Senate, for example, to make some rather stupid moves. In fact it may be possible for us even without 14 new members to make rather stupid moves.

DR. DEUTCH: Of course I could not agree with that comment, Senator. (Laughter)

SENATOR KERREY: It may seem to some in humorous moments that we members of the Senate have arrived here from outer space, but we've not. We've arrived here from the country. We can only be as good as the country itself. And one of the concerns that I guess I would have, in a world that's becoming increasingly chaotic, in a world where power is being diffused away from central governments, in a world where there is a possibility of asymmetric attacks upon our interests using weapons of mass destruction or using some other terrorist effort, that if we don't understand and if we aren't making a full scale effort to not only educate and prepare our citizens -- whether they're serving us here or whether they're serving merely in the capacity of trying to decide which presidential candidate to select it seems to me that the United States could arrive at a point where once again we've got to send our soldiers to do something that we should have been able to prevent in the first place.

I'm not suggesting that we could have been able to prevent Bosnia or the deterioration of that particular nation state, but I am suggesting that it's not coincidental that U.S. forces have been sent since Desert Storm every single time to take action as a consequence of deterioration of a nation state. And of all the things that alarm me, our own citizen capacity to be able to answer questions about what's going on in the world is perhaps the most alarming of all.

Let me ask you, Director Deutch, what your confidence level is of being able to identify nuclear programs and to, in a preventive fashion, be able to tell whether or not someone has the capacity to develop and use nuclear weapons.

DR. DEUTCH: That's, of course, a very central concern that we have. I would say that we are more confident on nuclear programs than we are on chemical or biological programs, because it's easier to start those kinds of weapons of mass destruction programs with dual-use technology. Nuclear programs have the unique signature of highly enriched uranium or plutonium, which makes it somewhat easier to track them and identify them.

The experience of Iraq before Desert Shield, when we found that there was a tremendous and huge program which had not been known really and internalized by the intelligence community, gives us some humility in this. But we have redoubled our efforts, and I would say that I am relatively confident but not secure that we can track nuclear weapons programs throughout the world. I would be much less confident with chemical or biological programs.

SENATOR KERREY: So you would state that you feel confident today that you can detect a nuclear missile program prior to its use in a military situation.

DR. DEUTCH: You said nuclear missile. Now those are two different things. A nuclear weapons program I'd say I'm reasonably confident, and a nuclear missile -- a missile program -- I would say there I'm also reasonably confident. Reasonably confident.

SENATOR KERREY: Thank you.

SENATOR SPECTER: Thank you, Senator Kerrey.

Senator Robb?

SENATOR ROBB: Thank you, Mr. Chairman.

Dr. Deutch, I don't want to beat a dead horse here, but I'm concerned about the colloquy between yourself and the Chairman with respect to his first question, and it may be that there is some confusion that we should clear up here in open session, because I think the failure to do so leaves an ambiguity that may place journalists and others at unnecessary risk.

Is there a distinction to be made between interrogating a journalist who may happen to have come into the possession of information that might be useful, as you would interrogate any other potential source of intelligence information, and a determination before any intelligence is gathered, to place someone who is either in the employment of the federal government as an agent of the government or with non-official cover, whatever the case may be? It seems to me that's the distinction that would, at least to me, be very troubling if it's not one that you can make a fairly clean break.

If I may preface it, certainly if we can say so that journalists and others who are working in an objective, non-aligned capacity would not be subjected to unnecessary suspicion and perhaps other tactics that would make their job more difficult, that we are not putting anyone in the field with that cover, but might take the opportunity to inquire from journalists and anyone else about information that might be relevant to the whole intelligence-gathering process. Is that a fair distinction, or am I off base?

DR. DEUTCH: I think the distinction is a good distinction. But I think that what is at issue here has to do with the policy of either using an individual U.S. journalist as a witting agent, or having a U.S. intelligence asset use U.S. journalistic cover. Those are the two points that are at issue, sir, the latter two points.

SENATOR ROBB: Well I think this is a matter that we as a committee want to address in greater detail, and I don't think this is the appropriate place to do it. I understand...

DR. DEUTCH: Senator, again, I want to come back and say I'm pleased to hear your concern and the committee's concern on this issue. I want to say again that I am not interested in advocating broad areas here. I think that the journalists have a tremendously important and effective argument and one of substance and merit. My problem is that my responsibility is also to imagine those rare cases where our interests or our people may be at risk, their lives may be at risk. So I have to continue to say that I favor continuing our current, publicly-known policy since 1977 on this matter, and I think that upon reflection, many Americans would agree with that exception. Properly drawn and narrowly drawn, sir.

SENATOR ROBB: Again I don't believe there's anything more that I could inquire about in open session that would be useful, but I do think that the distinction is one that ought to be examined, and we can do so at a later time.

DR. DEUTCH: Yes, sir.

SENATOR ROBB: Let me shift. You gave us quite a smorgasbord of areas in the world where intelligence-gathering is of critical importance to policymakers here in this country. I happen to have just returned from a very brief visit to the Middle East in pursuit of additional information about the peace process. The very small group, including another member of this committee, Senator Inhofe, and I had occasion to get briefings from some of the official U.S. personnel in the intelligence community, and for that I am grateful.

Another U.S. national made a more recent trip to that region, and his visits were not confined to the current participants in the peace process, if you will. Minister Farrakhan has, at least according to news media, visited several of the heads of state and others in that particular region.

The only question I would ask you at this point is how you believe the various countries that were visited interpreted that particular visit.

DR. DEUTCH: Senator Robb, I have no comment on that. I don't think it's appropriate for me to comment on the travels of an American citizen abroad. I don't have any comment, and I have not really reflected on it either, sir.

SENATOR ROBB: All right, I'll pursue that in a different forum then.

Let me ask you a question about China. You described very briefly the concerns in that area, and there are many, and the relationships with the reversion of Hong Kong, with the missile technology, with the control of -- with the export of various items that are certainly destabilizing, in the very least, some more assertive actions in and around the Spratleys, South China Sea, etc., and certainly the relationship with Taiwan at this point.

I wonder if you could characterize your view or the intelligence community's view of the understanding on the part of the current leadership in China with respect to miscalculation about intentions of either the United States or any of the other regional participants. Do you think their understanding of what would fall within the scope of permitted self interests in terms of security and other matters is sufficient to give us some assurance that an irrational decision would not be made with respect to any particular activity that might take place in the arena?

DR. DEUTCH: Senator, my own view is that the current Chinese leadership is almost completely preoccupied with two questions. The first is the leadership transition which is taking place after Deng Xiaoping; and the second is how to maintain political control of that enormous country during a time of economic opening, maintain still very strict and tight political control. All their actions, I believe, have to be interpreted with respect to those, through those two vantage points. So when we talk about the Spratleys and we talk about Taiwan, we should assess them, first of all, not in terms of bilateral from the Chinese perspective, U.S.-Chinese relations, but rather with respect to how the Chinese interpret these things from the point of view of their internal political dynamic. Therefore, I would say to you that we do not have an adequate common understanding with the Chinese on these matters. Because I'm approaching it from a different point of view, I do not believe that we have an adequate common understanding of these issues that are dividing us.

SENATOR ROBB: But is it fair to say that you believe that the struggle that you just indicated in terms of the top two preoccupations of China at the moment would reasonably foreclose any miscalculation that would create difficulties beyond those two particular problems that they're attempting to deal with?

DR. DEUTCH: Not at all, sir, and let me give you a particular example.

We do anticipate having exercises in the Taiwan Straits across from Taiwan by the Chinese before the upcoming election. A miscalculation or an accident, unintended, could lead to some very, very serious hostilities there. It's a particular example of where a miscalculation could lead to a very serious consequence.

SENATOR ROBB: Let me move just east of that area, generally speaking, to North Korea. Recently a decision was made to provide $2 million worth of emergency supplies in terms of the famine and floods and whatever have been declared by the leadership, in a somewhat unusual expression to the outside world that some assistance was needed. There have been a number of mixed signals.

Based on the economic intelligence that we have, how would you characterize the situation with respect to the severity of the drought, potential famine, flood damage, etc. in North Korea and their ability to respond to that need internally?

DR. DEUTCH: The answer there is quite clear. We think that the economic conditions are worsening and worsening quite dramatically, and that they have very little capability to reverse the consequences of that in terms of starvation and further deprivation of their people.

SENATOR ROBB: With respect to the response that they gave initially to offers of help from the South -- the South Koreans and other regional entities -- would you characterize the basis upon which that less than positive response was made?

DR. DEUTCH: It's very difficult for me to do so because we do not have, and I do not have, a satisfactory understanding of what is governing the North Korean leadership's thinking process during this time of tremendous economic hardship. So I cannot give you what I would consider a confident answer to what is dominating their replies -- their response to some of these offers of assistance. I just don't have, we do not have a good enough understanding of the inner workings of North Korea to give you a confident answer to that.

You mentioned the leadership. Would you care to address the reason for not vesting two of the three titles held by his father, in Kim Jung Il?

DR. DEUTCH: I don't. I personally do not believe that there is tremendous significance to that. The tensions that we see, or the indications that we see, are that he is compiling power in his own hands there similar to what his father had. Especially with the military.

SENATOR ROBB: Would it be reasonable to assume that the second anniversary of his father's death might be an appropriate time to vest those particular...

DR. DEUTCH: We'll have to watch, sir. I can't. I don't have any information on that.

SENATOR ROBB: My time is up, Director Deutch, and I thank you.

DR. DEUTCH: Thank you, Senator.

SENATOR ROBB: Thank you, Mr. Chairman.

SENATOR SPECTER: Thank you very much, Senator Robb.

Director Deutch, I know you are well aware of the fact that if any of the questions go beyond what you feel comfortable with, we can reserve them for a closed session, but I think it appropriate to comment for the record that we're aware on this side of the podium of that limitation.

I now want to take up with you questions of the national reconnaissance, the NRO, and the concerns about the NRO having so much more money available than this committee and the Congress generally understood them to have.

This ties into the overall issue as to how much secrecy is necessary for the U.S. intelligence community. Not too long ago the Senate passed, by a slim margin, an amendment to make public the total figure of the intelligence community. That was changed in a conference report. I believe that you have testified, or perhaps let me just ask you, what is your view about the propriety of making public the bottom line figure of what the appropriations are for the U.S. intelligence community?

DR. DEUTCH: Mr. Chairman, I am well aware of this debate, and it's happened in the past. I am looking forward to the recommendation of Harold Brown's panel on this question. I think a group of outside Americans of great probity, including some members of Congress, have served on that commission, and my intent would be to allow my thinking to be influenced on what their recommendation is on this point. I believe that they will be making a recommendation, and I'm inclined to go with it. We should know what their recommendation is here on March 1st when their report is made public.

So if I could, sir, I would say to you that that is going to heavily influence my position.

SENATOR SPECTER: You have some thinking on the subject at the moment don't you, Dr. Deutch?

DR. DEUTCH: I have testified on the subject. I think the way I've testified on the subject is that I do not believe there is any great loss by making the top line of the Defense Department's budget public, but there has been some heated questioning from members of your committee about the ability to hold the line there and not have additional information on sub-categories of the budget also made public, and at that point, I think one would run very serious risks of revealing sources and methods which would not be helpful for the country's national interests. So the top line, yes; below that, no. The overall budget...

SENATOR SPECTER: The overall budget for the U.S. intelligence community?

DR. DEUTCH: Yes, sir. Yes. And then going below that, no, has been what I've testified to in the past, and I've received very heated questions from members of this committee about whether that's plausible that one could maintain such a position, but I would leave that to Congress' judgment.

SENATOR SPECTER: Why do you say that a disclosure of figures for the national intelligence community would be involved in sources and methods? We have a very serious issue with the NRO, and it is illustrative with the problem of secrecy. If there is a reason for secrecy, then we ought to observe it; but I believe we're going to have to do more than simply generalize on sources and methods. But perhaps the best way to approach this subject within the confines of our time restrictions today is to talk about the NRO.

Is there any reason why the public should not know how much the National Reconnaissance Organization had in its account that was excessive?

DR. DEUTCH: Mr. Chairman, first of all, I could not agree with you more that secrecy is not -- cannot -- be used as a cover for poor management and for poor financial management, in particular. But there is a very good reason why the National Reconnaissance Office budget has been maintained secret from year to year, and that is by tracking that budget over time, it would be possible, depending upon what level of detail, but even in the top line, the number of national reconnaissance satellites that are launched. That is not a subject which I think should be publicly-known -- the number or types of satellites that are launched.

So I want to absolutely associate myself with you and with the members of this committee, the minority member especially, that financial -- lack of financial quality management is not permissible because a program is secret. But I also believe that going below the top line will begin to, getting finer and finer in detail, give information about the kinds of intelligence efforts that we have underway that will not benefit our national security.

SENATOR SPECTER: That's a marvelous answer, Dr. Deutch, fit for the Manchester debates in New Hampshire or the ones coming up in Arizona, but I don't think you've come near my question.

My question is, is there any reason to conceal the excessive amounts the NRO had. Now I'm not talking to you about mismanagement...

DR. DEUTCH: The excessive amounts...

SENATOR SPECTER: Excuse me, excuse me. I'm not talking to you about mismanagement, and I'm not talking to you about their overall budget which might give some insights into the numbers of satellites launched, which I want to pursue with you because I don't see a necessary connection. Let me candidly state to you that too often when we get into these discussions we come up with sources and methods and we come up with items about satellites launched, and we come up with generalized national security issues. But we have seen in a free society when the facts and figures are on the table, there are many people who take a look at it. It's available under the Freedom of Information Act so that citizens can take a look at it; it's available for investigative reporting; it's more available for congressional inquiry. There's simply not enough inspectors general or members of oversight committees or directors, even as competent as directors are, to take a look at all of this.

Now coming back to my question, how they had excessive funds, the NRO did. Is there any reason why the American people should not know the figure of the excessive funds? There's been a lot in the newspapers. Any reason why we shouldn't tell the American people how much excessive funds the NRO had?

DR. DEUTCH: The reason that one should not do that, Mr. Chairman, is that by itself -- by itself -- that single figure does not place in perspective what the size of the program is and how that program is financed and how that event occurred, as inappropriate as it was.

SENATOR SPECTER: But you're saying that...

DR. DEUTCH: So, the American people will not have the correct impression of the National Reconnaissance Office from only revealing that single figure. That figure has to be seen in context to understand how it happened, where the money built up, what has been done about it, because it has been -- by the Department of Defense and my myself -- put back and given back to Congress when it was not needed and placed back in a program where it was needed. And to give you more...

SENATOR SPECTER: Director Deutch, I don't want to interrupt you unduly, but we're not getting to the point.

DR. DEUTCH: Yes, sir.

SENATOR SPECTER: We're not on the point about what you've done or what the Department of Defense has done. I'm on the point as to why the American people shouldn't know what the excessive amount was.

Now you've said the total budget of the NRO ought not to be known because it might have some indication as to the number of satellites set off. I don't know why that is and we'll come back to it. But then I say how about the number in itself and you say well, we shouldn't disclose that because without knowing what the overall budget of the NRO was, we shouldn't say what the excess was. I don't understand that answer at all.

But suppose it were a trillion dollars. Suppose it is so excessive, which I believe it to be, and has independent standing all by itself. I haven't asked you yet what the figures is, and I haven't decided whether I'm going to ask you what the figure is...

DR. DEUTCH: I'm thinking.

SENATOR SPECTER: ...because I want to hear for the record what your reasons are that the total figure ought not to be announced.

Now if you say you shouldn't announce it because you can't -- it doesn't have any understanding in the absence of knowing what their budget is, and then you can't tell us the budget because of the perhaps disclosures of satellite launchings, what you're saying is you can't say anything.

DR. DEUTCH: Mr. Chairman, I will be very candid with you. I think you can't tell a story with one sentence. You can't just say that...

SENATOR SPECTER: We haven't asked you to do that.

DR. DEUTCH: My point is, Mr. Chairman, that that number by itself will provide a misleading impression to the American people. Your judgment has to be do you want to tell them everything about the National Reconnaissance Office, not just one isolated fact, I must say, a fact which is very damaging and not something that I condone. But the question is do you give a full impression or one number? I would argue to you you have to make the decision to give them a full story, but one number alone is misleading. That's my position...

SENATOR SPECTER: What's the damage to national security if someone knows how many satellites have been launched?

(Pause)

DR. DEUTCH: I think that there is an answer that I would want to give in a classified setting. But let me tell you, that knowledge of where satellites are and how many there are allow people to take actions to deny or deceive those satellite operations. So there's great merit to not having people know the nature of the satellites, where they are, or how many there are. Because...

SENATOR SPECTER: The nature and where they are are totally different from how many there are.

DR. DEUTCH: No, but the point is, all three variables are important.

SENATOR SPECTER: The budget doesn't necessarily tell you where they are. It tells you... How does it even tell you how many there are?

DR. DEUTCH: Estimates can be made, and it is the variations in the budget that will tell you about launch rates and the like. Again, it depends on how much you know.

SENATOR SPECTER: How likely is it that somebody is going to figure it out, and how likely is it that that's going to harm national security, compared to a live example of the NRO having flagrantly excessive amounts of money which have been accumulated because of our rules on secrecy?

Dr. Deutch, my red light is on and I'm going to stop, but I think that you and the intelligence community and this committee have got to do a much better job in coming to grips with the hard reasons for this security, if they exist. And if they exist, I'm prepared to help you defend them. But I don't see that they exist. I don't think they have been articulated or explained. And as you know in this hearing there was a suggestion that we ought to have the NRO people in here because the consequences of having the NRO secrete a tremendous sum of money are minimal.

Has there been any shakeup in the leadership of the NRO so far?

DR. DEUTCH: No.

SENATOR SPECTER: What has happened... Well, I'll get into this in the next round as to what has happened in the NRO. But one of the therapeutic qualities of the hearing process is for oversight hearings to come in, bring people in, and say what happened, and why did it happen, and explain about it on C-SPAN. Then other people who might have similar inclinations might want to avoid explaining about it on C-SPAN. And when the light shines in, it's the best therapy of all about having it avoided. I personally am very dissatisfied with what little the public knows about the NRO. I even wonder how much I know about the NRO. I won't go so far as to say I wonder how much you know about the NRO, but I would go so far as to say that we found out the NRO didn't know very much about the NRO.

DR. DEUTCH: I should tell you, sir, that I am very concerned about what I knew about the NRO, because I would have expected to have been told more -- either as Deputy Secretary of Defense or as Director of Central Intelligence. I think...

SENATOR SPECTER: Did the NRO itself even know how much money it had squirreled away?

DR. DEUTCH: Well, they certainly knew the size of these accounts. They certainly did, as was reported to Congress on every occasion. They reported to Congress. The problem was that they did not propose actions consistent with these large balances.

Let's remember, these balances were reported every year to Congress. The issue was did they draw significance when they were asking for new appropriation to the existence of these large balances, these excessive balances.

SENATOR SPECTER: How about to the DCI? They were reported to the DCI too, weren't they?

DR. DEUTCH: They absolutely were, and they should have been reported to the Deputy Secretary of Defense. They were not. Or they were not...

SENATOR SPECTER: They weren't reported to...

DR. DEUTCH: Sorry, let me put it differently. We certainly did not see them. We did not act on it.

SENATOR SPECTER: Well, they had good reason not to report them to the Deputy Secretary of Defense.

Senator Kerrey, your turn.

SENATOR KERREY: Dr. Deutch, actually I've been interested in getting to the couple of witnesses that are going to follow you. I would concur in much of what the Chairman has just said. I do, myself, believe not only the top line but several of the other lines of the budget not only could but should, for the purpose of giving taxpayer citizens confidence that their money's being well spent. Indeed, I've spoken with you and I've spoken to the citizens at home about the remarkable success of the Corona project. Now that we know what Corona has done, it's easy for us to see the connection between those early electrical-optical efforts and the policymakers' ability to be able, for example, to conclude that preemptory nuclear attacks were unnecessary, that the Soviet nuclear program is smaller than what we had initially thought. In other words, that there is a connection between the intelligence and our efforts, and that very often those connections aren't seen as a consequence of the secrecy that unquestionably is needed in many cases.

But I do think, and particularly in the post-Cold War era, that increasingly we're going to have to justify these expenditures to taxpayers. And I think it's getting harder and harder to do it. The stories about the NRO have largely used phrases such as "slush fund" and "money wasted" and so forth. We know that money wasn't spent. We know that in fact repeatedly, over the past couple of years, there have been public disclosures of instances where the efforts of the NRO, whether it's the identification of the North Korean nuclear program or the identification of Saddam Hussein's violation of the sanctions -- violation of the Security Council's agreement, or providing our diplomats with the information they needed to get a good agreement at Dayton, that time and time again, or for that matter, whether it's providing you with the information that you need and that others need to come to us and say, in an open session, here's what we think the threats are.

So I think that the look at this Corona project in an open way has, at least for me, enabled me to do a better job of going home and saying okay, this is open now. Look at what it did for the period of time in the 1960s and '70s when it was operating, look what it did for your safety and your security, look at the lives that it saved, look at the dollars that it saved, and so forth. You can show it in an open fashion and it gives people confidence. Whereas in an environment of excessive secrecy, and I just think it's very difficult to make the case, and you're not making the case that the overall budget should be withheld from the American people, I think it's increasingly difficult to withhold other lines.

If we have a case to make that sources and methods need to be protected, I'm 100 percent with you. Let's protect sources and methods. Let's not reveal something that's going to make it counterproductive and difficult for us to carry out the missions of your agencies or other intelligence agencies.

Mr. Deutch, I don't want you to respond to it right now, because I do want to get to the other witnesses, and I know you would like to leave as well. But I am very much concerned about your views, and I've gotten them privately and would like to get them on the record prior to the recommendations of the Brown Commission as to what additional powers you think you need.

I do think that President Clinton has provided the nation with an historic opportunity, given your relationship with the Secretary of Defense, given your understanding and knowledge of the technology, I think the President has given the country an historic opportunity to change our laws so that in the future, given that we are a nation of laws not of people, not of personalities, that if we change our laws today, that we might be able to provide future DCIs with the kind of authority and power that they need in order to be able to do the sorts of things that you're identifying need to be done in your testimony.

DR. DEUTCH: Senator Kerrey, I look forward to that discussion with you and other members of the committee. I'd like to say something to you and to Senator Specter.

I am perfectly happy to enter into a discussion about how much of these activities should become declassified, these financial programs. That is an absolutely legitimate question for you to pose. As usual, Mr. Chairman, and Senator, you make your case on this very well, and I will be happy to discuss that with you. Perhaps we should move more in that direction, and I look forward to continuing discussions on this point of how much of the program should become unclassified.

I also appreciate, Senator, your remarks about the NRO. They have done tremendous things for the country. The only thing you left off your list is they also have shown ethnic cleansing in Bosnia from their efforts from satellite photography. So it's a great organization, but I look forward to discussing with you and the Chairman how far one should go here. I take your point, Mr. Chairman and Senator.

SENATOR SPECTER: Senator Robb?

SENATOR ROBB: Thank you, Mr. Chairman. I, too, will be brief because I'm looking forward to hearing the other witnesses, and I do thank you.

Just a couple of items that I think are appropriate for discussion in open forum. We talked a little bit about the situation in China. I don't believe we've made specific reference to the relationship, between Russia and China at this point, the warming of that relationship and what that portends. Could you comment briefly on where you believe that is headed and what implications it may have for U.S. policymakers?

DR. DEUTCH: Well, I will just mention two. I think you're correct to note a warming of political relationships. There is also an increase in trade, military armament supplies from Russia to China, and I think that is probably the most significant aspect of the warming of those relations. I don't see them taking place in the near term or for the foreseeable future in a way that would really lead to a strategic realignment, but they are providing the Chinese with advanced conventional weapons such as modern fighter aircraft that they couldn't have access to elsewhere.

SENATOR ROBB: Let me ask you one other question, speaking about the analysis of Russia. It reminds me there was a fair amount of criticism of the intelligence community's economic analysis generally speaking, but specifically pertaining to the former Soviet Union. One of our colleagues not on the intelligence panel has had more than a little to say about the accuracy and usefulness of some of the economic intelligence activities, and certainly the analytical portion.

Is it your sense at this point that the community has the kinds of resource-gathering agents, entities, at its disposal to give a fairly accurate economic analysis of virtually any of the areas or countries or regions in the world, or do we need to think about some other means of obtaining some of that information, much of it, obviously, available in a public forum on a regular basis?

DR. DEUTCH: Well, our analytic capability and economic analysis of nations is completely dependent on how open they are and how well they conform to international standards of statistics production. Little of it, but sometimes important parts of it, are influenced by clandestine intelligence-collecting. So our efforts to, for example, monitor economic change in Russia is much improved by the fact that they're a more open society. But there are countries in the world where we still have very important absence of information which we would need to make the kinds of economic assessments that we would...

SENATOR ROBB: Could it be summarized as "trust but verify," a term that is familiar from that recent past period?

DR. DEUTCH: Yes, I think that's an interesting way of putting it. The more that it's in the public, the better off we are in our estimates. Occasionally we have some clandestine information in particular circumstances which are important. But trust plus verify is a good way of putting it, Senator.

SENATOR ROBB: One last little matter, it's not a little matter, but one specific item, that with respect to the presence and strength of the Iranian Republican Guard in Bosnia, there have been newspaper reports on that topic. What can you tell us in open forum about that situation and how it is progressing, given the fact that under the terms of the Dayton Agreement they were all supposed to be out mid January.

DR. DEUTCH: Senator, that's exactly right. Under the terms of the Dayton Accord, the Bosnian government had the responsibility for getting rid of the Iranian Republican Guards which are there in Bosnia. We continue, I continue to be absolutely concerned about this matter. Not a day goes by that I don't discuss the progress that is being made with at least the Secretary of Defense and the Secretary of State. So I consider this still a very, very important matter with respect to the safety of our troops and the IFOR troops in Bosnia.

SENATOR ROBB: How confident are you of our ability to monitor that situation accurately?

DR. DEUTCH: I'd rather take a pass on that, sir.

SENATOR ROBB: I understand and I think I won't pursue any other questions at this time.

Mr. Chairman, thank you.

SENATOR SPECTER: Thank you very much, Senator Robb.

Director Deutch, turning to the War Crimes Tribunal in the Netherlands, at the outset on this subject, I thank you for your cooperation.

Senator Shelby, who is the presumptive Chairman next year, if we have a Republican Majority, and I had occasion to travel together recently, and the final stop on our trip was in the Netherlands at the Hague to talk to the prosecutors on the War Crimes Tribunal.

There is the potential, I think, for an enormous achievement in establishing a War Crimes Tribunal as a prelude to having an international criminal court, which institutionally could be the event of the century, if we're able to carry it through. A good bit of the success is going to depend upon the ability of the U.S. intelligence community to provide key evidence, which may be usable against some very key people.

I wrote to you on January 18th after we had had a chance to talk on January 5th, which was just a day after the day I got back, having had a meeting just the day before, on January 4th. And it is a very touchy situation internationally, because to carry out the Dayton Accords there has to be cooperation from Serbia and there has to be cooperation from the Bosnian Serbs, and there's a very unusual situation where the President of the Bosnian Serbs, Radovan Karadzic, is under indictment, as is the military leader of the Bosnian Serbs, Ratko Mladic. The current arrangement is a curious one where the Dayton Agreement provides that the NATO forces will not seek out these individuals under indictment, but if the NATO forces come upon them, they will be taken into custody and turned over to the War Crimes Tribunal.

Recently there was an international incident where two men were turned over to the War Crimes Tribunal not under indictment, with the conclusion being that if the War Crimes Tribunal had them under indictment they could be turned over. That, of course, has an enormous potential impact on the cooperation of the Bosnian Serbs and Serbia generally.

My question to you, before getting into the intelligence aspect, is a broader one, and that is, what is our overall capability to gather intelligence in support of indictments already issued against these two top Bosnian Serbian leaders? So there's already sufficient evidence for an indictment, but the prosecution team there wants to have what they call a Rule 61 hearing for the international criminal court, and that takes more evidence.

Could you comment on that issue?

DR. DEUTCH: First, Mr. Chairman, as I've mentioned to you and it's certainly the policy of our government, the assistance that we can provide to the War Crimes Tribunal from intelligence is going to be given. That is something that I've stressed and I think is very important for the same reasons that you do.

I do not believe that it is likely that we would find, and we have looked, or could collect material which would be compelling in a legal proceeding. That is not the kind of information that we would normally be able to get. Were we to come across it, we would provide it.

SENATOR SPECTER: It would be corroborative evidence when you talk about the grave sites far removed from the battle lines, so that there's no question about those deaths having been inflicted in combat.

DR. DEUTCH: We are perfectly in a position to provide that information and we, as far as I know, and I've spoken to Justice Goldstone just a couple of weeks ago, I think that this is not only being provided in a way that they find useful for their investigatory efforts, but also we have a process in place which would allow them to use that information in a legal proceeding in a way that is appropriate for them. So I think this is on track. If we've had information about Karadzic or Mladic or we had corroborative information and they requested it, or we thought it would be useful, we would hand it over to them.

SENATOR SPECTER: I thank you for your statements, and I think it is very important that the international community, including the parties to the Dayton Agreement, understand the determination of the United States in pursuing these prosecutions with the War Crimes Tribunal so that justice will be done against these atrocities and the acts of genocide.

President Clinton called me before the vote on the resolutions on Bosnia to talk about Senate support, and I had occasion to talk to him about the War Crimes Tribunal, and he is four square behind them from what he said to me privately, and what he has also said publicly. I believe that the likelihood for congressional support for what is going on today will be enhanced by vigorous prosecution of these cases. It is my hope that some members of the intelligence committee will have an opportunity to visit Bosnia. There's an effort to limit the number of trips there so as not to interfere with the military operations, but this committee has already been active in supporting the prosecutions, and we intend to pursue it and we appreciate your cooperation.

Let me move quickly to a number of other subjects, because there is so much to talk about and so limited an amount of time. I want to pick up the question of China, our intelligence-gathering facilities, the issue as to what's happening with China and Taiwan.

Last summer the People's Republic of China test-fired short-range ballistic missiles near Taiwan, and last fall it conducted military exercises which had every indication of being directed to intimidate Taiwan right before their parliamentary elections.

We have the issue of China's having agreed to abide by the provisions of the missile technology control regime, yet last year Secretary of State Christopher commented publicly about a large body of evidence that China had sold M-11 missiles to Pakistan. Now there are reports of China selling missiles to Iran and transferring nuclear weapon technology to Pakistan.

Picking up on the Taiwan question first, I believe it is very important that the People's Republic of China not misunderstand U.S. resolve that Taiwan not be militarily attacked or intimidated. What is your assessment, to the extent you can disclose it publicly, about the intentions of the People's Republic of China with respect to their belligerent activities toward Taiwan?

DR. DEUTCH: Mr. Chairman, there's been a military buildup in the area. We follow it and monitor it extremely closely. I am not only concerned about Chinese intentions against Taiwan or some of the smaller Taiwanese-held islands in the area, but I'm also very concerned that in their process of carrying out exercises in the area before the Taiwanese election, that by accident or miscalculation an event occurs that could bring hostilities.

So I would just say to you this is a matter which the community is following on an interagency basis, extremely closely on a minute-by-minute basis.

SENATOR SPECTER: Because of the sensitivity of that subject I will not pursue it further, but I think it's important to have that public statement about U.S. concern and about U.S. following it very, very, very closely.

Then you have the proliferation issue. What is happening there, again, Director Deutch, to the extent that you can publicly say? Because if the reports are accurate, it seems to me that we ought to be taking very stiff sanctions against China. It's a tough issue, given their psychology and the nuances of international relations, but if we don't show them we mean business about the laws on sanctions which the Congress has enacted, then it's open season on the proliferation of nuclear technology. What do you think?

DR. DEUTCH: Mr. Chairman, the intelligence community continues to get accurate and timely information on Chinese activities that involve inappropriate weapons and military technology assistance to other countries--nuclear technology to Pakistan, M-11 missiles to Pakistan, cruise missiles to Iran. Our job is to obtain this information and provide it to our policymakers in this country to make a determination on what policy actions should be taken. I would say that the community is doing its duty here and doing it well and clearly.

SENATOR SPECTER: Director Deutch, I turn now to some reports we've had about espionage by foreign governments which are inspired by ethnic considerations and by relying on ethnic groups in the United States.

By letter dated January 31st of this year, Senator Kerrey and I wrote to Defense Secretary Perry calling his attention to a DOD memorandum which states, quote: "The strong ethnic ties to Israel present in the United States, coupled with aggressive and extremely competent intelligence personnel, has resulted in a very productive collection effort."

The memo goes on to say, quote: "Many of our military friends are our economic industrial threat. Some of these countries we deal with on a day to day basis" and then parenthesis, referencing France, Italy, Israel, Japan, Germany, United Kingdom, etc.

There are six incidents cited in the memorandum related to Israel, which strongly suggest that it is more than a casual memorandum, although the Department of Defense issued a generalized disclaimer saying that it was the view of somebody fairly far down the line... No incidents specified as to France, Italy, Japan, Germany, the United Kingdom or any other country.

My question to you is... Well, I'd like your comments about the situation generally. We're still awaiting an answer from the Secretary of Defense. I would have thought that on a matter of this urgency we'd have one within three weeks, but since we don't, I'd like your comments on it.

DR. DEUTCH: First, I want to say, Senator, that this memorandum did not come from any part of the intelligence community. It came from another organization in the Department of Defense, I believe industrial security, if I have the correct reference in mind.

SENATOR SPECTER: Were you the Deputy Secretary of Defense at the time the memorandum was issued? I ask that only because of your disclaimer.

DR. DEUTCH: No. Probably. (Laughter) Probably.

SENATOR SPECTER: Well let's not focus too heavily on lines of command.

DR. DEUTCH: But it is a terrible document, simply put. It is a terrible document because it makes assumptions about how individual Americans might act, which I think is inappropriate. I think that the response you will get from the Department of Defense will be of the same nature.

It is also true that we do have a counterintelligence responsibility to monitor what other countries actually do in this country to try and inappropriately penetrate our national security effort, facilities or our national security operations, and we do take that very seriously. But the kind of counterintelligence assessment that we would give you is of a quite different nature than is contained in this memorandum.

SENATOR SPECTER: Senator Kerrey and Senator Robb are anxious to question others. I wonder if I might ask just two more questions, and let the Director go, or do you want to proceed now by...

SENATOR KERREY: Well, Mr. Chairman, one of the things... I appreciate Director Deutch, your wanting to lead off and take responsibility, as you always do, but what I find, particularly in reading General Hughes' testimony, is some very provocative suggestions that I think are important. Now maybe General Hughes is wrong. It would be the first time that he's wrong. But he's done exactly what I was hoping would occur on repeated opportunities to get an assessment of threats, which is to sort of say, okay, this is the way we've done it in the past, but the world's changing on us, and if we're trying to not just figure out what are the threats today and discuss current events, but what are the threats going to be 10 to 20 years from now, which is what we're going to be facing with the kinds of investments we're making today, we're basically building tomorrow's technology today and developing tomorrow's people today. That's been said enough times and it doesn't need to be repeated. But it's tomorrow's threats that are as big an issue as today's, it seems to me, as we try to decide what our budget's going to be and how we're going to appropriate money and all those kinds of things that we're going to be doing follow-on this year.

I see in his testimony, for example, some things I'd like to ask you about as to whether or not you see the world the same way, as opposed to merely following on and hitting General Hughes with the questions.

For example, repeatedly throughout here in the testimony, there are -- and I presume you've read it. Am I on safe ground here? And I'm not trying to get a battle going. I'm merely trying to inform myself. I'm trying to get a sufficient discussion going here that I can make good judgments.

As I read this, for example, one of the things that I hear myself saying is that I should direct an increasing amount of attention to economic issues, and to the whole question of what our foreign aid looks like, as opposed to merely trying to figure out what kind of satellite to build or what kind of authorization to give you throughout all the intelligence agencies. I hear myself saying, for example on page 17 of the testimony, I think a rather remarkable beginning under terrorism, "Defining terrorism in the future is going to prove increasingly difficult." That's how it starts off on page 17. And follow-on on page 18 it says, "As a result of increased economic disparity, we can expect to see increasing alienation and a growth in related terrorist activities."

That seems to be positing a cause here. I don't want to get into a discussion as to whether or not that's the only cause, but do you, Director Deutch, see economic, in the future, as you look into the future, do you see this kind of diffusion of power that General Hughes is suggesting, this kind of possibility that chaotic events that we currently don't even have on our radar screen, could emerge on our radar screen in the future and produce problems for warfighters that may have to go in after the fact? That's what I was suggesting earlier with Bosnia.

Nobody in 1990 had Bosnia on the screen, or at least very few people. I doubt that it was part of the threat assessment at the time, and yet we've got 20,000 troops over there today.

So do you...

DR. DEUTCH: First of all, we are enormously fortunate to have General Pat Hughes as the new Director of the Defense Intelligence Agency. I have the highest regard for him, and I, with you, have found him rarely, if ever, wrong on any subject. So we should listen to him with the greatest of attention. He not only has practical background, he does have this ability to cast things in important ways. That's the first thing I want to say.

The second thing, and right on the point that you were mentioning, I've been absolutely, I think, consistent with Pat Hughes on the kinds of threats that we're going to have in the future, of which the terrorism that you mention is one and it's certainly something that I've been very vocal about, that terrorism is a growing threat to the international community, not just to the United States.

I don't believe that the source of that terrorism comes only from economic forces. It comes from other forces as well -- ideological and extremist ideological trends.

But I also believe that when our military forces are used, as we've seen in Haiti, as we saw originally in Somalia, and as we've seen in Bosnia, they are coming in a situation, as I've said here and publicly elsewhere, not just military force alone, but coming together with the need to provide economic and humanitarian assistance and diplomatic efforts as well. I think that we are giving a consistent message here from all parts of the Administration, whether it's the intelligence community or the military or the Department of State on these issues.

SENATOR KERREY: Let me follow on two additional questions. I apologize to General Hughes for asking you about his testimony, but it is very provocative testimony. I'm hoping to get this kind of testimony offered today.

General Hughes says on page seven, "There are those who speak of China as a future peer competitor of the United States. In our view, this would be possible only in the very distant future, certainly beyond 2010. At best, China is going to enter the new millennium with relatively small but key portions of its force equipped with late generation equipment. Much of the force will still be very old. It remains to be seen how successful this military will be in the assimilation of newer technology."

That suggests a sizing of China's problems is largely a political problem. Perhaps a miscalculation in regards to Taiwan, perhaps provoked by us. That's why I suggested earlier that if members of Congress don't understand what our policy towards China is, what's in the Shanghai agreement specifically, it's possible for us to take action that could provoke China, that could create the very thing that we're describing that we want to try to avoid.

So if this sizing of the threat is accurate, then it seems to me that we need to be talking about China in different terms than sometimes is done.

I mean I've heard China described as a threat to the United States. Do you think that China is a threat to the United States?

DR. DEUTCH: A military threat to the United States?

SENATOR KERREY: A military threat to the United States.

DR. DEUTCH: It certainly has missile systems which can be a threat to the United States, but in terms of conventional military power, no it is not.

SENATOR KERREY: So you think that it's military capability is not a threat to the United States; it's missile capability could potentially be a threat to the United States; but in general terms, do you think it's much more of a political threat to the United States...

DR. DEUTCH: Yes, that's what I think I testified to in providing you a range of situations -- other than that China is not a threat to the United States. It's a threat to world stability, though -- running through what are the concerns that we see about China. They range from providing assistance to other countries and gaining weapons of mass destruction...

SENATOR KERREY: In another piece in here, General Hughes says that "the prospects for the existence of a viable, unitary Bosnia beyond the life of IFOR are dim." And then goes on to list a number of problems that are in here.

He does not suggest by that that IFOR won't still be a success. He does not suggest by that statement that IFOR is a waste of U.S. effort. It most unquestionably, in my mind, will not be a waste of effort, simply because the statement that the prospect for Bosnia beyond the life of IFOR, as he states in here, are dim.

Is that your own view, that the American people should not expect, given the current situation on the ground, that Bosnia as a unitary, viable nation will survive?

DR. DEUTCH: I don't know enough, Senator, to reach that conclusion today. I would not express it that way, no, sir. But I think it depends on what happens between now and when IFOR goes a year from now.

SENATOR KERREY: Certainly it's a goal of the President and the United States to have Bosnia survive as a...

DR. DEUTCH: That's correct, and we would hope that our political and economic efforts would make that, as well as the good will, if you can call it that, of the people of former Yugoslavia, that we would influence that, yes, sir.

SENATOR KERREY: Do you believe that the list of things that have been identified in General Hughes' testimony comports with the sorts of things that we ought to be concerned about, if we as a Congress want to support the Administration's effort and NATO's efforts to achieve a viable, unitary nation state in Bosnia? The efforts of the Muslim-led government to assert authority over the whole of Bosnia will be aggressively resisted, which we're obviously seeing in the suburbs now with the evacuation, and the Bosnian Serbs' decision to evacuate, and to urge the Bosnian Serbs to leave the suburbs... Are these the sorts of things that you think that we should be...

DR. DEUTCH: Absolutely, sir. We are seamless in our views on what is of concern in Bosnia.

SENATOR KERREY: On page 16 of the testimony, again, there's what I consider to be a very provocative statement, and I personally think an accurate statement, but one that I'm tempted to follow along as well. It's easy to have someone get up and describe a threat, and the next thing you know, the audience is saying gosh, that sounds pretty good, they've got their facts right, they sound pretty good, they seem to be getting it right, maybe we ought to spend 4 or 5 or whatever billions of dollars in order to defend against that threat. That's part of the problem in the post-Cold War era, is that threats aren't as clear as they used to be.

But in the testimony, he said, "I would recommend the committee be leery of anyone who appears to be emphasizing a particular Russian system or appears confident that that system will be fielded in militarily significant numbers." Again, General Hughes does not say that Russia is not a threat. He's simply describing in this particular context their capability, their economic capability, of being able to develop any particular weapon system. In the testimony he said that "Russia will stay in START I." DIA's public assessment is that they're not even sure economically if "Russia can build what is necessary to meet the requirements of START II even if START II is not ratified by the Duma."

So even if START II is not ratified by the Duma, the question is whether or not Russia's got the capacity to build and maintain the level that would be required under START II, and thus, in that context, one of the conclusions is that the committee should be leery of those who would take a particular weapons system that could be a threat to the United States, if that's all they were building, if that's the only thing they were working on. But in the context of their general economic condition and their general inability to train and so forth, that we should be leery of someone who would take a particular weapon system and build that up as a threat to the United States. Would you agree with that?

DR. DEUTCH: Yes.

SENATOR KERREY: One statement that was made in regards to North Korea earlier on page five that I've got some questions about, is that the "military posture in North Korea remains very dangerous." I've got some questions as to whether or not the military of North Korea is very dangerous. Do you agree with that statement, and if so, why?

DR. DEUTCH: There's no question that I agree with that statement. But I want to make a very important point here about the North Korean military posture which I believe my friend Pat Hughes would fully subscribe to. We traditionally think of the military threat from North Korea as being an all-out invasion of the South. But that's not the only military incursion that could take place. Because of the growing instability and uncertainty in that country, one could find the North Koreans taking actions that were short of a major invasion of the South, which would present us with a tremendous problem but be short of an all-out invasion of the South. We have to be prepared to deal with those kinds of situations as well. And they can do so very quickly. That is, we would not have a lot of warning before such an event took place.

SENATOR KERREY: Dr. Deutch, I would indulge the Chairman just to give a 60-second editorial which you've heard before. My first round of questioning that I was engaged in with you suggests something that you and I have discussed before, which is that I believe that democracy functions the best when the citizens are informed, as a fundamental principle; and secondly, I tend to be pretty aggressive when it comes to informing the citizens; and thirdly, I am deeply concerned about our capacity to make foreign policy decisions -- not only if we do not use the technologies that we have that enable us to inform the citizens, but if we don't come to the citizen aggressively and say don't count on your military defending you. The military is strong, we're going to keep it strong, we're going to keep it well-trained, we're going to fund it, we're going to build and supply it with the best technology that we possibly can. But the first line of defense is an informed citizen. As I look at the array of things, particularly the transitional difficulties that we face today, it falls upon the people of this country to make the effort, rather than merely trusting that somehow members of Congress or our military are going to get the job done for them.

DR. DEUTCH: I understand, sir.

SENATOR SPECTER: Thank you, Senator Kerrey.

Senator Robb?

SENATOR ROBB: Thank you, Mr. Chairman.

So as not to make the testimony of General Hughes and Secretary Gati anticlimactic, I will not interrogate you about their testimony at this time. I have constraints, and I look forward to hearing you.

A follow-up to the question that was posed by the Chairman relating to M-11 and Pakistan and China -- there has been a great deal of public comment on this question. You indicated you had provided very detailed, precise information, or that you were capable of monitoring it, whatever the case may be. You didn't respond to the ultimate question. I'm not even going to ask you the ultimate question, but may I ask you, have you provided specific information to the executive branch on that question?

DR. DEUTCH: Yes.

SENATOR ROBB: Is there any ambiguity in the information that you have provided to the executive branch?

DR. DEUTCH: There's always some ambiguity, sir. There's always some ambiguity, but not terribly much in this case, I would judge.

SENATOR ROBB: I think that's where I'll leave that one.

Mr. Chairman, I thank you. I look forward to the testimony. I thank Dr. Deutch for his testimony, and I know that he visited with each member of the committee and gave us an opportunity to explore a number of other matters in greater detail, and for that I want to add my thanks as well.

DR. DEUTCH: Thank you, Senator Robb.

SENATOR SPECTER: Director Deutch, you testified in response to questions from Senator Kerrey that you were reasonably confident that the U.S. intelligence community could detect nuclear weapons in foreign hands?

DR. DEUTCH: The development programs for nuclear weapons, sir. I thought I was...

SENATOR SPECTER: The development of programs?

DR. DEUTCH: Development of nuclear weapons programs by other countries is the question I thought I was addressing, sir.

SENATOR SPECTER: And that you were also reasonably confident that you could detect ballistic missile development.

DR. DEUTCH: Programs. Yes, sir.

SENATOR SPECTER: Well, does that leave anything out then? Do you have a reasonable level of confidence that at least that area of weapon of mass destruction you're able to detect?

DR. DEUTCH: Yes. It leaves out chemical and biological weapon programs, development programs.

SENATOR SPECTER: What is our level of ability to monitor and detect biological weapons, chemical weapons?

DR. DEUTCH: It's a lot more uncertain, sir, because of the fact that much of the technology used in those programs is dual-use. So the equipment and the technology can be procured for another purpose and then be diverted. It's hard to track it. It doesn't require large facilities. It doesn't require special nuclear materials. It doesn't require tremendous electricity or other signatures. So it's much more a matter where we have to have the ingenuity of our intelligence, mostly human intelligence services, discover it.

SENATOR SPECTER: Director Deutch, you identified the Indian subcontinent as being the most volatile hot spot in the world?

DR. DEUTCH: Yes, sir.

SENATOR SPECTER: Some time ago Senator Brown and I had occasion to visit in both India and Pakistan. We talked to Indian Prime Minister Rao, who expressed his hope that the subcontinent could become nuclear free. We later had a chance to talk to Pakistan's Prime Minister, Benazir Bhutto, who was surprised to hear that. She even asked if we had it in writing. I was surprised to hear that the prime ministers of India and Pakistan do not communicate with each other.

What would your sense be about, this may be a little bit out of strictly the intelligence-gathering line, but perhaps your intelligence-gathering does bear on it, for an initiative to try and bring together the officials of India and Pakistan, very much the way the United States has brought together the officials in the Mideast? It might be that a morning in the Oval Office, an invitation that few can resist, could have some very dramatic effects of bringing those two countries to talk to each other.

DR. DEUTCH: I think I'll take, if I can, sir, a pass on that. I think that's really a question about what is the way we want to carry out our policy on the Indian subcontinent, and I don't think that I'm really in a position or the right person to address that question, sir.

SENATOR SPECTER: Are you still a member of the President's Cabinet?

DR. DEUTCH: That's correct, sir.

SENATOR SPECTER: We had a long discussion about that when you became a Cabinet officer. I thought that opened the door to questions like that, Director Deutch.

DR. DEUTCH: It certainly opened the door, but not to the right answer, sir. I try very hard, as you know, not to allow myself as the principal intelligence officer to get involved in policy-formulation.

SENATOR SPECTER: Okay. It does open the door, subject to being closed.

DR. DEUTCH: Thank you, sir.

SENATOR SPECTER: On the intelligence line, what is the threat assessment as to Pakistan's development of nuclear weapons, the current strained relations, the likelihood of some military action between those two powers?

DR. DEUTCH: I think that the tensions between those two countries, the animosity that exists, the problems that are present in Kashmir all point to a very, very tense situation and one that we watch very closely. And hostilities there certainly are a possibility.

SENATOR SPECTER: Director Deutch, you commented that the United States intelligence community ought not to take activity to give any company an economic advantage in international trade. There is a collateral concern about economic espionage and the ability of the U.S. intelligence community to protect -- not a sword, but a shield -- to protect U.S. competitive interests. How serious a problem is economic espionage today in its potential adverse effects against U.S. companies?

DR. DEUTCH: I would have drawn the most serious concern to be from foreign corrupt practices, in particular negotiations which may take place abroad in commercial contracts, as being the most serious threat to unleveling a competitive playing field. I think the economic espionage against U.S. companies or U.S. firms or individuals is much less prevalent, but something that we try and assess, we do assess, and inform policymakers when we find that something is going on.

SENATOR SPECTER: If you find a U.S. company is the victim of economic espionage, do you pass that information on to the company?

DR. DEUTCH: No, sir. We would not do that. We would pass it on to a policymaker to make the judgment about the manner and way to...

SENATOR SPECTER: When you say a policymaker...

DR. DEUTCH: The Secretary of Commerce, the Secretary of State, depending on the circumstances.

SENATOR SPECTER: I had intended to ask you next, and will now, about the subject that you broach, and that is corrupt practices. We have a foreign corrupt practice act which properly prevent U.S. companies from bribing public officials, but other nations do not.

DR. DEUTCH: Correct.

SENATOR SPECTER: Senator Bennett Johnston, a member of this committee, and I have been talking -- really his initiative and his idea -- to introduce legislation which would impose a sanction on such a company in a foreign country, and perhaps impose a sanction on a country itself for not taking steps to stop those corrupt practices. What's your view of that?

DR. DEUTCH: I'm not sure. I'd have to see the legislation and think it through. It's certainly, again, not an intelligence matter what legislation is adopted.

I will say to you that I think the intelligence community should be monitoring parts of the world where corrupt practices do lead to an unfair marketplace for American business.

SENATOR SPECTER: Those corrupt practices do come to the attention of the U.S. intelligence community, do they not?

DR. DEUTCH: Yes, they do.

SENATOR SPECTER: How do you handle those? Pass them on to policymakers?

DR. DEUTCH: That's correct. Yes, sir. And I think it's important that we do that.

SENATOR SPECTER: Do you know what the practice of the policymakers then is by way of notifying the U.S. companies?

DR. DEUTCH: I think they're aggressive in that, but we can get you a more complete answer. I'm not prepared to do that now. I'm literally not prepared.

SENATOR SPECTER: With respect to our relations with Mexico, Director Deutch, just how serious is the narcotics trade out of Mexico? We have not adopted a policy of sanctions against our very close neighbor, but how serious is the drug traffic coming out of Mexico?

DR. DEUTCH: I think the Mexican government and we are of a single mind on this, and that is that it is very serious indeed, that there is a growing passage of drugs through Mexico, a growing manufacture of certain kinds of drugs in Mexico. It's very serious for the American people. It's very serious for the Mexican people. I think our two governments are quite together on the difficulty that this poses for us.

SENATOR SPECTER: In addition to being of a single mind on it, how effective is the Mexican government in acting against the drug traffic?

DR. DEUTCH: We are working with them through our law enforcement cooperative agreements, through the embassy down in Mexico City, through the State Department, to help them in their efforts to fight drugs. I would say that they are not as strong as we would like them to be.

SENATOR SPECTER: Well, that's not... I understand the limitations of your response, but that's not a very precise response. It seems to me we really... I see you furrowing your brow. Do you want to supplement that or disagree with me?

DR. DEUTCH: I would be happy to be very much more precise in closed session, sir.

SENATOR SPECTER: Well, is the Mexican government really serious about stopping the drug traffic?

DR. DEUTCH: I think the Mexican government and President Zedillo is very serious about it, yes sir. They're...

SENATOR SPECTER: Are they effective at all on it?

DR. DEUTCH: Not as effective as they should be, sir.

SENATOR SPECTER: Well, this is going to be my final round. There are some further questions I have as to Iran and Iraq, and perhaps I could pose a question and ask you to respond in writing, not to take any more of your time.

I would be interested in your assessment as to the level of cooperation with our allies on sanctions against Iran. We have adopted a policy of sanctions against Iran and we are undertaking no discussion with them to try to isolate them. From my observations I do not see that as very successful because our allies are not supporting us in that. I would be interested in a written response on that subject if you could provide it.

DR. DEUTCH: Absolutely, Senator. Absolutely.

SENATOR SPECTER: And on the question of Iraq, I'd be interested in an updating as to your assessment as to how strong Saddam Hussein is at the present time, and what the implications are of his welcoming back, or at least the public reports about his sons-in-law returning.

DR. DEUTCH: I'd be happy to do that, sir.

SENATOR SPECTER: And I've been advised by my staff, and we want to pursue this further, but I want to put this issue to you publicly, that staff advises that the NRO did not know the aggregate carry-forward, and did not make those disclosures, and that that's demonstrated by the NRO now changing its policy on the amount in this account. And also staff advises that the NRO did not report to Congress these balances every year.

What I'd like you to do is to take a look at those factual matters and let us know. And to the extent that you can provide those responses in an unclassified form, we would appreciate it so that it can be publicly disseminated.

DR. DEUTCH: Yes, Mr. Chairman.

SENATOR SPECTER: Senator Kerrey?

SENATOR KERREY: I have no other questions.

SENATOR SPECTER: Senator Robb?

SENATOR ROBB: I look forward to the next witnesses.

Thank you, Mr. Chairman.

DR. DEUTCH: Thank you, Mr. Chairman.

SENATOR SPECTER: Thank you very much, Director Deutch. If you would wait just a moment, I'd like to talk to you privately.