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The Worldwide Threat 2004:  Challenges in a Changing Global Context
Testimony of Director of Central Intelligence
George J. Tenet
before the
Senate Select Committee on Intelligence


24 February 2004

(as prepared for delivery)

Good morning, Mr. Chairman, Mr. Vice Chairman, Members of the Committee. 

Mr. Chairman, last year I described a national security environment that was significantly more complex than at any time during my tenure as Director of Central Intelligence.  The world I will discuss today is equally, if not more, complicated and fraught with dangers for United States interests, but one that also holds great opportunity for positive change.

TERRORISM

I'll begin today on terrorism, with a stark bottom-line: 

Now let me tell you about the war we've waged against the al-Qa`ida organization and its leadership. 

Al-Qa`ida depends on leaders who not only direct terrorist attacks but who carry out the day-to-day tasks that support operations.  Over the past 18 months, we have killed or captured key al-Qa`ida leaders in every significant operational area—logistics, planning, finance, training—and have eroded the key pillars of the organization, such as the leadership in Pakistani urban areas and operational cells in the al-Qa`ida heartland of Saudi Arabia and Yemen. 

The list of al-Qa`ida leaders and associates who will never again threaten the American people includes: 

We are creating large and growing gaps in the al-Qa`ida hierarchy.

And, unquestionably, bringing these key operators to ground disrupted plots that would otherwise have killed Americans.

Meanwhile, al-Qa`ida central continues to lose operational safehavens, and Bin Ladin has gone deep underground.  We are hunting him in some of the most unfriendly regions on earth.  We follow every lead. 

Al-Qa`ida's finances are also being squeezed.  This is due in part to takedowns of key moneymen in the past year, particularly the Gulf, Southwest Asia, and even Iraq.

And we are receiving a broad array of help from our coalition partners, who have been central to our effort against al-Qa`ida. 

So we have made notable strides.  But do not misunderstand me.  I am not suggesting al-Qa`ida is defeated.  It is not.  We are still at war.  This is a learning organization that remains committed to attacking the United States, its friends and allies. 

Successive blows to al-Qa`ida's central leadership have transformed the organization into a loose collection of regional networks that operate more autonomously.  These regional components have demonstrated their operational prowess in the past year. 

You should not take the fact that these attacks occurred abroad to mean the threat to the US homeland has waned.  As al-Qa`ida and associated groups undertook these attacks overseas, detainees consistently talk about the importance the group still attaches to striking the main enemy:  the United States.  Across the operational spectrum—air, maritime, special weapons—we have time and again uncovered plots that are chilling. 

So far, I have been talking only about al-Qa`ida.  But al-Qa`ida is not the limit of terrorist threat worldwide.  Al-Qa`ida has infected others with its ideology, which depicts the United States as Islam's greatest foeMr. Chairman, what I want to say to you now may be the most important thing I tell you today. 

The steady growth of Usama bin Ladin's anti-US sentiment through the wider Sunni extremist movement and the broad dissemination of al-Qa`ida's destructive expertise ensure that a serious threat will remain for the foreseeable future—with or without al-Qa`ida in the picture.

A decade ago, bin Ladin had a vision of rousing Islamic terrorists worldwide to attack the United States.  He created al-Qa`ida to indoctrinate a worldwide movement in global jihad, with America as the enemy—an enemy to be attacked with every means at hand.

And so, even as al-Qa`ida reels from our blows, other extremist groups within the movement it influenced have become the next wave of the terrorist threat.  Dozens of such groups exist.  Let me offer a few thoughts on how to understand this challenge. 

These far-flung groups increasingly set the agenda, and are redefining the threat we face. They are not all creatures of Bin Ladin, and so their fate is not tied to his.  They have autonomous leadership, they pick their own targets, they plan their own attacks.

Beyond these groups are the so-called "foreign jihadists"—individuals ready to fight anywhere they believe Muslim lands are under attack by what they see as "infidel invaders."  They draw on broad support networks, have wide appeal, and enjoy a growing sense of support from Muslims are not necessarily supporters of terrorism.  The foreign jihadists see Iraq as a golden opportunity. 

Let me repeat:  for the growing number of jihadists interested in attacking the United States, a spectacular attack on the US Homeland is the "brass ring" that many strive for—with or without encouragement by al-Qa`ida's central leadership.

To detect and ultimately defeat these forces, we will continually need to watch hotspots, present or potential battlegrounds, places where these terrorist networks converge.  Iraq is of course one major locus of concern.  Southeast Asia is another.  But so are the backyards of our closest allies.  Even Western Europe is an area where terrorists recruit, train, and target.

Mr. Chairman, I have consistently warned this committee of al-Qa`ida's interest in chemical, biological, radiological and nuclear weapons.  Acquiring these remains a "religious obligation" in Bin Ladin's eyes, and al-Qa`ida and more than two dozen other terrorist groups are pursuing CBRN materials.

Over the last year, we've also seen an increase in the threat of more sophisticated CBRN.  For this reason we take very seriously the threat of a CBRN attack. 

I've focused, and rightly so, on al-Qa`ida and related groups.  But other terrorist organizations also threaten US interests.  Palestinian terrorist groups in Israel, the West Bank, and Gaza remain a formidable threat and continue to use terrorism to undermine prospects for peace. 

Lebanese Hizballah cooperates with these groups and appears to be increasing its support.  It is also working with Iran and surrogate groups in Iraq and would likely react to an attack against it, Syria, or Iran with attacks against US and Israeli targets worldwide.

Iran and Syria continue to support terrorist groups, and their links into Iraq have become problematic to our efforts there.

Although Islamic extremists comprise the most pressing threat to US interests, we cannot ignore nominally leftist groups in Latin America and Europe.  The Revolutionary Armed Forces of Colombia, or FARC and the National Liberation Army (ELN), Colombia's second largest leftist insurgent group have shown a willingness to attack US targets.  So has the Revolutionary People's Liberation Party/Front—a Turkish group that has killed two US citizens and targeted US interests in Turkey. 

Finally, cyber vulnerabilities are another of our concerns, with not only terrorists but foreign governments, hackers, crime groups, and industrial spies attempting to obtain information from our computer networks.

IRAQ

Mr. Chairman, we are making significant strides against the insurgency and terrorism, but former regime elements and foreign jihadists continue to pose a serious threat to Iraq's new institutions and to our own forces.

Meanwhile, Mr. Chairman, the important work of the Iraqi Survey Group and the hunt for Iraqi weapons of mass destruction continues.  We must explore every avenue in our quest to understand Iraq's programs out of concern for the possibility that materials, weapons, or expertise might fall into the hands of insurgents, foreign states, or terrorists.  As you know, I'll talk about this at length next week.

Despite progress in Iraq, the overall security picture continues to concern me.  Saddam is in prison, and the Coalition has killed or apprehended all but 10 of his 54 key cronies.  And Iraqis are taking an increasing role in their own defense, with many now serving in the various new police, military, and security forces. 

The insurgency we face in Iraq comprises multiple groups with different motivations but with the same goal:  driving the US and our Coalition partners from Iraq.  Saddam's capture was a psychological blow that took some of the less-committed Ba'thists out of the fight, but a hard core of former regime elements—Ba'th Party officials, military, intelligence, and security officers—are still organizing and carrying out attacks. 

US military and Intelligence Community efforts to round up former regime figures have disrupted some insurgent plans to carry out additional anti-Coalition attacks.  But we know these Ba'thist cells are intentionally decentralized to avoid easy penetration and to prevent the roll-up of whole networks.  Arms, funding, and military experience remain readily available.

Mr. Chairman, the situation as I've described it—both our victories and our challenges—indicates we have damaged, but not yet defeated, the insurgents.

The security situation is further complicated by the involvement of terrorists—including Ansar al-Islam (AI) and al-Zarqawi—and foreign jihadists coming to Iraq to wage jihad.  Their goal is clear.  They intend to inspire an Islamic extremist insurgency that would threaten Coalition forces and put a halt to the long-term process of building democratic institutions and governance in Iraq.  They hope for a Taliban-like enclave in Iraq's Sunni heartland that could be a jihadist safehaven. 

Stopping the foreign extremists from turning Iraq into their most important jihad yet rests in part on preventing loosely connected extremists from coalescing into a cohesive terrorist organization. 

And we're also concerned that foreign jihadists and former regime elements might coalesce.  This would link local knowledge and military training with jihadist fervor and lethal tactics.  At this point, we've seen a few signs of such cooperation at the tactical or local level.

Ultimately, the Iraqi people themselves must provide the fundamental solutions.  As you well know, the insurgents are incessantly and violently targeting Iraqi police and security forces precisely because they fear the prospect of Iraqis securing their own interests.  Success depends on broadening the role of the local security forces. 

It is hard to overestimate the importance of greater security for Iraqis particularly as we turn to the momentous political events slated for 2004.

Iraqi Arabs—and many Iraqi Kurds—possess a strong Iraqi identity, forged over a tumultuous 80 year history and especially during the nearly decade-long war with Iran.  Unfortunately, Saddam's divide and rule policy and his favored treatment of the Sunni minority aggravated tensions to the point where the key to governance in Iraq today is managing these competing sectional interests. 

Here's a readout on where these groups stand:

I should qualify what I've just said:  no society, and surely not Iraq's complex tapestry, is so simple as to be captured in three or four categories.  Kurds.  Shia.  Sunni.  In reality, Iraqi society is filled with more cleavages, and more connections, than a simple typology can suggest.  We seldom hear about the strong tribal alliances that have long existed between Sunni and Shia, or the religious commonalities between the Sunni Kurd and Arab communities, or the moderate secularism that spans Iraqi groups. 

The social and political interplay is further complicated by Iran, especially in the south, where Tehran pursues its own interests and hopes to maximize its influence among Iraqi Shia after 1 July.  Organizations supported by Iran—Supreme Council for the Islamic Revolution in Iraq (SCIRI) and its Badr Organization militia—have gained positions within the Iraqi police and control media outlets in Basrah that tout a pro-Iran viewpoint. 

The most immediate political challenge for the Iraqis is to choose the transitional government that will rule their country while they write their permanent constitution.  The Shia cleric Grand Ayatollah Muhammad Ali al-Sistani has made this selection process the centerpiece of his effort to ensure that Iraqis will decide their own future and choose the first sovereign post-Saddam government.

Once the issues involving the selection of an transitional government are settled, Iraq's permanent constitution will begin to take shape.  Here the Iraqi government and the framers of the constitution will have to address three urgent concerns:  integrating the Sunni minority into the political mainstream, managing Kurdish autonomy in a federal structure, and determining the role of Islam in the Iraqi state.

The Sunni.  Sunnis are at least a fifth of the population, inhabit the country's strategic heartland, and comprise a sizable share of Iraq's professional and middle classes.  The Sunni are disaffected as a deposed ruling minority, but some are beginning to recognize that boycotting the emerging political process will weaken their community.  Their political isolation may be breaking down in parts of the Sunni triangle, where some Sunni Arabs have begun to engage the Coalition and assume local leadership roles.  And in the past three months we have also seen the founding of national-level Sunni umbrella organizations to deal with the Coalition and the Governing Council on questions like Sunni participation in choosing the transitional government. 

Federalism.  The Transitional Administrative Law is just now being completed, and the way it deals with the relationship between the political center and Iraq's diverse ethnic and religious communities will frame the future constitutional debate.  To make a federal arrangement stick, Kurdish and Arab Iraq leaders will need to explain convincingly that a federal structure benefits all Iraqis and not just the Kurds.  And even so, a host of difficult issues—control over oil and security being perhaps the most significant—may provoke tension between Kurdish and central Iraqi authorities.

Islam.  The current draft of the Transitional Administrative Law makes Islam Iraq's official creed but protects religious freedom.  It also creates an Iraqi legal system that is a mix of traditions, including Islamic law—but as only one legal element among many.  This compromise is already under fire by Sunni Islamists who want Islam to be the sole source of law.

I don't want to allow the important security and political stories to crowd out others we should also be telling, including the often neglected one about Iraq's sizable economic potential.  It's true that rebuilding will go on for years—the Saddam regime left in its wake a devastated, antiquated, underfunded infrastructure.  But reconstruction progress and Iraq's own considerable assets—its natural resources and its educated populace—should enable the Iraqis to see important improvement in 2004 in their infrastructure and their quality of life.

The recovery of Iraqi oil production will help.  Production is on track to approach 3.0 million barrels per day by the end of this year.  Iraq hasn't produced this much oil since before the 1991 Gulf war.  By next year, revenues from oil exports should cover the cost of basic government operations and contribute several billion dollars toward reconstruction.  It is essential, however, that the Iraq-Turkey pipeline be reopened and oil facilities be well protected from insurgent sabotage.

Much more needs to be done.  Key public services such as water, sewage, and transportation will have difficulty reaching prewar levels by July and won't meet the higher target of total Iraqi demand.  

PROLIFERATION

Mr. Chairman, I'll turn now to worldwide trends in proliferation.  This picture is changing before our eyes—changing at a rate I have not seen since the end of the Cold War.  Some of it is good news—I'll talk about the Libya and AQ Khan breakthroughs, for example—and some of it is disturbing.  Some of it shows our years of work paying off, and some of it shows the work ahead is harder.

We are watching countries of proliferation concern choose different paths as they calculate the risks versus gains of pursuing WMD.

I'll start with LIBYA, which appears to be moving toward strategic disarmament.  For years Qadhafi had been chafing under international pariah status.  In March 2003, he made a strategic decision and reached out through British intelligence with an offer to abandon his pursuit of WMD. 

That launched nine months of delicate negotiations where we moved the Libyans from a stated willingness to renounce WMD to an explicit and public commitment to expose and dismantle their WMD programs.  The leverage was intelligence.  Our picture of Libya's WMD programs allowed CIA officers and their British colleagues to press the Libyans on the right questions, to expose inconsistencies, and to convince them that holding back was counterproductive.  We repeatedly surprised them with the depth of our knowledge.

By the end of the December visit, the Libyans:

From the very outset of negotiations, Qadhafi requested the participation of international organizations to help certify Libyan compliance.  Tripoli has agreed to inspections by the IAEA and the Organization for the Prohibition of Chemical Weapons (OPCW) and to abide by the range limitations of the Missile Technology Control Regime (MTCR).  We have briefed information on Tripoli's programs to various international monitoring organizations.  IAEA and OPCW officials have already followed up with visits to Libya.  Some discrepancies remain, but we will continue to collect additional information and closely monitor Libya's adherence to the commitments it has made.

In contrast to Libya, NORTH KOREA is trying to leverage its nuclear programs into international legitimacy and bargaining power, announcing its withdrawal from the Nonproliferation Treaty and openly proclaiming that it has a nuclear deterrent.

Since December 2002, Pyongyang has announced its withdrawal from the Nonproliferation Treaty and expelled IAEA inspectors.  Last year Pyongyang claimed to have finished reprocessing the 8,000 fuel rods that had been sealed by US and North Korean technicians and stored under IAEA monitoring since 1994.

We also believe Pyongyang is pursuing a production-scale uranium enrichment program based on technology provided by AQ Khan, which would give North Korea an alternative route to nuclear weapons.

Of course, we are concerned about more than just North Korea's nuclear program.  North Korea has longstanding CW and BW capabilities and is enhancing its BW potential as it builds its legitimate biotechnology infrastructure.  Pyongyang is sending individuals abroad and is seeking dual-use expertise and technology.

North Korea also continues to advance its missile programs.  North Korea is nearly self-sufficient in ballistic missiles, and has continued procurement of raw materials and components for its extensive ballistic missile programs from various foreign sources.  The North also has demonstrated a willingness to sell complete systems and components that have enabled other states to acquire longer-range capabilities and a basis for domestic development efforts earlier than would otherwise have been possible.

IRAN is taking yet a different path, acknowledging work on a covert nuclear fuel cycle while trying to preserve its WMD options. I'll start with the good news: Tehran acknowledged more than a decade of covert nuclear activity and agreed to open itself to an enhanced inspection regime.  Iran for the first time acknowledged many of its nuclear fuel cycle development activities—including a large-scale gas centrifuge uranium enrichment effort.  Iran claims its centrifuge program is designed to produce low-enriched uranium, to support Iran's civil nuclear power program.  This is permitted under the Nonproliferation Treaty, but—and here's the downside—the same technology can be used to build a military program as well.

Finally, Iran's missile program is both a regional threat and a proliferation concern.  Iran's ballistic missile inventory is among the largest in the Middle Eastand includes the 1300-km range Shahab-3 MRBM as well as a few hundred SRBMs.  Iran has announced production of the Shahab-3 and publicly acknowledged development of follow-on versions.  During 2003, Iran continued R&D on its longer-range ballistic missile programs, and publicly reiterated its intention to develop space launch vehicles (SLVs)—and SLVs contain most of the key building blocks for an ICBM.  Iran could begin flight-testing these systems in the mid- to latter-part of the decade.

Let me turn now to a different aspect of the evolving WMD threat.  I want to focus on how countries and groups are increasingly trying to get the materials they need for WMD.  I'll focus on two important stories:

As I pointed out last year, Mr. Chairman, WMD technologies are no longer the sole province of nation-states.  They might also come about as a result of business decisions made by private entrepreneurs and firms. 

As you now know, those comments were my way of referring to AQ Khan without mentioning his name in open session.  Until recently, Khan, popularly known as the "father of the Pakistani bomb," was the most dangerous WMD entrepreneur.  For 25 years Khan directed Pakistan's uranium enrichment program.  He built an international network of suppliers to support uranium enrichment efforts in Pakistan that also supported similar efforts in other countries.

The actions taken against Khan's network—like the example of Libya I laid out earlier—were largely the result of intelligence. 

But every public success we enjoy can be used by people like Khan to adjust, adapt, and evade.  Proliferators hiding among legitimate businesses, and countries hiding their WMD programs inside legitimate dual-use industries, combine to make private entrepreneurs dealing in lethal goods one of our most difficult intelligence challenges.

In support of these WMD programs, new procurement strategies continue to hamper our ability to assess and warn on covert WMD programs.  Acquisitions for such programs aren't the work of secret criminal networks that skirt international law.  They're done by businessmen, in the open, in what seems to be legal trade in high-technology.

The dual-use challenge is especially applicable to countries hiding biological and chemical warfare programs.  With dual-use technology and civilian industrial infrastructure, countries can develop BW and CW capabilities.  Biotechnology is especially dual-edged:  Medical programs and technology could easily support a weapons program, because nearly every technology required for biological weapons also has a legitimate application.

Now I'll turn to a brief run-down of some significant missile programs apart from those I've already discussed. 

China continues an aggressive missile modernization program that will improve its ability to conduct a wide range of military options against Taiwan supported by both cruise and ballistic missiles.  Expected technical improvements will give Beijing a more accurate and lethal missile force.  China is also moving on with its first generation of mobile strategic missiles. 

South Asian ballistic missile development continues apace.  Both India and Pakistan are pressing ahead with development and testing of longer-range ballistic missiles and are inducting additional SRBMs into missile units.  Both countries are testing missiles that will enable them to deliver nuclear warheads to greater distances.

Last year Syria continued to seek help from abroad to establish a solid-propellant rocket motor development and production capability.  Syria's liquid-propellant ballistic missile program continued to depend on essential foreign equipment and assistance, primarily from North Korean entities.  Syria is developing longer-range missile programs, such as a Scud D and possibly other variants, with assistance from North Korea and Iran.

Many countries remain interested in developing or acquiring land-attack cruise missiles, which are almost always significantly more accurate than ballistic missiles and complicate missile defense systems.  Unmanned aerial vehicles are also of growing concern.

To conclude my comments on proliferation, I'll briefly run through some WMD programs I have not yet discussed, beginning with Syria.

Syria is an NPT signatory with full-scope IAEA safeguards and has a nuclear research center at Dayr Al Hajar.  Russia and Syria have continued their long-standing agreements on cooperation regarding nuclear energy, although specific assistance has not yet materialized.  Broader access to foreign expertise provides opportunities to expand its indigenous capabilities and we are closely monitoring Syrian nuclear intentions.  Meanwhile, Damascus has an active CW development and testing program that relies on foreign suppliers for key controlled chemicals suitable for producing CW.

Finally, we remain alert to the vulnerability of Russian WMD materials and technology to theft or diversion.  We are also concerned by the continued eagerness of Russia's cash-strapped defense, biotechnology, chemical, aerospace, and nuclear industries to raise funds via exports and transfers—which makes Russian expertise an attractive target for countries and groups seeking WMD and missile-related assistance.

PIVOTAL STATES

I'm going to comment now on three countries we obviously pay a great deal of attention to:  North Korea, China, and Russia. 

The NORTH KOREAN regime continues to threaten a range of US, regional, and global security interests.  As I've noted earlier, Pyongyang is pursuing its nuclear weapons program and nuclear-capable delivery systems.  It continues to build its missile forces, which can now reach all of South Korea and Japan, and to develop longer-range missiles that could threaten the United States. 

The North also exports complete ballistic missiles and production capabilities, along with related components and expertise.  It continues to export narcotics and other contraband across the globe. 

Moreover, the forward-deployed posture of North Korea's armed forces remains a near-term threat to South Korea and to the 37,000 US troops stationed there.  Recall that early last year as tensions over the nuclear program were building, Pyongyang intercepted a US reconnaissance aircraft in international airspace.

Kim Chong-il continues to exert a tight grip on North Korea as supreme leader.  The regime's militarized, Soviet-style command economy is failing to meet the population's food and economic needs.  Indeed, the economy has faltered to the point that Kim has permitted some new economic initiatives, including more latitude for farmers' markets, but these changes are a far cry from the systemic economic reform needed to revitalize the economy.  The accumulated effect of years of deprivation and repression places significant stresses on North Korean society. 

Mr. Chairman, CHINA continues to emerge as a great power and expand its profile in regional and international politics—but Beijing has cooperated with Washington on some key strategic issues.

Beijing is making progress in asserting its influence in East Asia.  Its activist diplomacy in the neighborhood is paying off, fueled in large part by China's robust economy.  China's growth continues to outpace all others in the region, and its imports of goods from other East Asian countries are soaring.  As a result, Beijing is better positioned to sell its neighbors on the idea that what is good for the Chinese economy is good for Asia. 

Our greatest concern remains China's military buildup, which continues to accelerate.  Last year, Beijing reached new benchmarks in its production or acquisition from Russia of missiles, submarines, other naval combatants, and advanced fighter aircraft.  China also is downsizing and restructuring its military forces with an eye toward enhancing its capabilities for the modern battlefield.  All of these steps will over time make China a formidable challenger if Beijing perceived that its interests were being thwarted in the region.

Chinese leadership politics—especially the incomplete leadership transition—will influence how Beijing deals with the Taiwan issue this year and beyond.  President and Communist Party leader Hu Jintao still shares power with his predecessor in those positions, Jiang Zemin, who retains the powerful chairmanship of the Party's Central Military Commission.  

In RUSSIA, the trend I highlighted last year—President Putin's re-centralization of power in the Kremlin—has become more pronounced, especially over the past several months.  We see this in the recent Duma elections and the lopsided United Russia party victory engineered by the Kremlin and in the Kremlin's domination of the Russian media. 

Putin has nevertheless recorded some notable achievements.  His economic record—even discounting the continuing strength of high world oil prices—is impressive, both in terms of GDP growth and progress on market reforms.  He has brought a sense of stability to the Russian political scene after years of chaos, and he restored Russians' pride in their country's place in the world.

That said, Putin now dominates the Duma, and the strong showing of nationalist parties plus the shutout of liberal parties may bolster trends toward limits on civil society, state interference in big business, and greater assertiveness in the former Soviet Union.  And the Kremlin's recent efforts to strengthen the state's role in the oil sector could discourage investors and hamper energy cooperation with the West.

He shows no signs of softening his tough stance on Russia's war in Chechnya.  Russian counterinsurgency operations have had some success.  Putin's prime innovation is the process of turning more authority over to the Chechen under the new government of Akhmad Kadyrov, and empowering his security forces to lead the counter-insurgency.

Moscow has already become more assertive in its approach to the neighboring states of the former Soviet Union, such as Georgia, Ukraine, and Moldova.  Russian companies—primarily for commercial motives, but in line with the Kremlin's agenda—are increasing their stakes in neighboring countries, particularly in the energy sector. 

The Kremlin's increasing assertiveness is partly grounded in a growing confidence in its military capabilities.  Although still a fraction of their former capabilities, Russian military forces are beginning to rebound from the 1990s nadir.  Training rates are up—including some high-profile exercises—along with defense spending. 

Even so, we see Moscow's aims as limited.  Russia is using primarily economic incentives and levers of "soft" power, like shared history and culture, to rebuild lost power and influence. And Putin has a stake in relative stability on Russia's borders—not least to maintain positive relations with the US and Europeans. 

Russian relations with the US continue to contain elements of both cooperation and competition.  On balance, they remain more cooperative than not, but the coming year will present serious challenges.  For example, Russia remains supportive of US deployments in Central Asia for Afghanistan—but is also wary of US presence in what Russia considers to be its own back yard. 

Let me turn now to AFGHANISTAN, where the Afghan people are on their way to having their first legitimate, democratically elected government in more than a generation.

The ratification of a new constitution at the Constitutional Loya Jirga in January is a significant milepost.  It provides the legal framework and legitimacy for several initiatives, including elections, scheduled for later this year.

Even if the date of elections slips—the Bonn Agreement requires a June date—the central government is extending its writ and legitimate political processes are developing nationwide through other means.  Regional "warlords" are disruptive but disunited—and appear to realize the Bonn process and elections are the only way to avoid relapsing into civil war.

Meanwhile, the infusion of $2 billion in international aid has propelled Afghan economic performance.  The IMF estimates GDP grew—from an admittedly low base—by 29 percent last year.  The completion of the Kabul to Kandahar road in December was a success, but the international community will need to ensure that funds are channeled toward projects that make the most impact and are balanced among the regions and ethnic groups.

Last year's most worrisome events were the continued attacks by the Afghan Transitional Authority's enemies—particularly the Taliban, along with al-Qa`ida and followers of Afghan extremist Hikmatyar—who want to disrupt routine life and the reconstruction effort in the south and east.  This is still a problem, because none of these groups has abandoned the ultimate goal of derailing the process by which legitimate democratic government and the rule of law will be established in Afghanistan. 

I don't want to overstate the Taliban's strength.  It is far from having sufficient political and military might to challenge the Karzai Government.  It is, however, still able to interfere with the political, economic, and social reconstruction of the country by fomenting insecurity and thereby undermining public confidence in Kabul.

In IRAN, Mr. Chairman, I'll begin with a sobering bottom line: 

The concerns I voiced last year are unabated.  The recent defeats will have further alienated a youthful population anxious for change.  Abroad, Tehran faces an altered regional landscape in the destruction of radical anti-Western regimes in Afghanistan and Iraq and growing international concern about nuclear proliferation. 

The current setback is the latest in a series of contests in which authoritarian rule has prevailed over reformist challengers.  The reformists—President Khatami in particular—are in no small part to blame.  Their refusal to back bold promises with equally bold actions exhausted their initially enthusiastic popular support. 

When the new Majles convenes in June, the Iranian government will be even more firmly controlled by the forces of authoritarianism.  In the recent election, clerical authorities disqualified more than 2500 candidates, mostly reformists, and returned control of the legislature to hardliners.  The new Majles will focus on economic reform, with little or no attention to political liberalization.

Although greater repression is likely to be the most immediate consequence, this will only further deepen the discontent with clerical rule, which is now discredited and publicly criticized as never before.  In the past year several unprecedented open letters, including one signed by nearly half the parliament, were published calling for an end to the clergy's absolute rule.

The uncertainty surrounding Iran's internal politics comes as Tehran adjusts to the regional changes of a post-Saddam Iraq.  Because Khamenei and his allies have kept close rein on foreign policy, we do not expect the defeat of the reformists to lead to a sudden change in Iranian policy.  Tehran will continue to use multiple avenues—including media influence, humanitarian and reconstruction aid, diplomatic maneuvering, and clandestine activity—to advance its interests and counter US influence in Iraq.

In INDONESIA, the world's most populous Muslim country, authorities have arrested more than 100 Jemaah Islamiya (JI) suspects linked to the terrorist attacks in Bali in October 2002 and the Jakarta Marriott Hotel last year. However, coming presidential and legislative elections appear to have blunted the government's efforts to root out JI.

Megawati remains the presidential frontrunner, but continuing criticism of her leadership and the growing prospect that her party will lose seats in the legislative election increase the likelihood of a wide-open race. The secular-nationalist Golkar—the former ruling party of Soeharto, now riding a wave of public nostalgia for his bygone era—could overtake Megawati's party to win the plurality of legislature seats. Most local polls suggest that the Islamic parties are unlikely to improve their percentage of the vote.

Vocal religious extremists, however, are challenging Indonesia's dominant moderate Muslim groups. A growing number of Indonesian Muslims now advocate the adoption of Islamic law, and dozens of provincial and district governments around the archipelago are taking advantage of the devolution of authority since 1998 to begin enforcing elements of Islamic civil law and customs. 

Let me turn briefly to SOUTH ASIA.  When I commented on the situation there last year, I warned that, despite a lessening of tensions between India and Pakistan, we remained concerned a dramatic provocation might spark another crisis.                     

This year I'm pleased to note that the normalization of relations between India and Pakistan has made steady progress.  Building on Prime Minister Vajpayee's April 2003 "hand of friendship" initiative, the leaders in New Delhi and Islamabad have begun to lay a promising foundation for resolving their differences through peaceful dialogue. 

Further progress will hinge largely on the extent to which each side judges that the other is sincere about improving India-Pakistan relations.  For example, India is watching carefully to see whether the level of militant infiltration across the Line of Control (LOC) increases this spring after the snows melt in the mountain passes. 

In this hemisphere, President Uribe of COLOMBIA is making great strides militarily and economically.  Colombia's military is making steady progress against the illegal armed groups, particularly around Bogotá; last year the Army decimated several FARC military units.  In the last two months, Colombian officials have apprehended the two most senior FARC leaders ever captured.        

But some of Uribe's hardest work awaits him.  The military has successfully cleared much of the insurgent-held territory, but the next stage of Uribe's "clear-and-hold" strategy is securing the gains thus far.  That entails building the state presence—schools, police stations, medical clinics, roads, bridges, and social infrastructure—where it has scarcely existed before.

Finally, we should bear in mind that Uribe's opponents will adjust their strategies, as well.  The FARC may increasingly seek to target US persons and interests in Colombia, particularly if key leaders are killed, captured, or extradited to the United States.

And in HAITI, the situation is, of course, extremely fluid at this moment.  What continues to concern us is the possibility that the increasing violence will lead to a humanitarian disaster or mass migration.  Forces opposed to the government control key cities in northern Haiti and they have identified Port-au-Prince as their next target.  Those forces include armed gangs, former Haitian Army officers, and members of irregular forces who allegedly killed Aristide supporters during his exile.

In SUB-SAHARAN AFRICA, progress in continuing peace processes requires further careful Western cultivation and African regional cooperation. 

THE OTHER TRANSNATIONAL ISSUES

Let me conclude my comments this morning by briefly considering some important transnational concerns that touch on the war against terrorism. 

We're used to thinking of that fight as a sustained worldwide effort to get the perpetrators and would-be perpetrator off the street.  This is an important preoccupation, and we will never lose sight of it.  

But places that combine desperate social and economic circumstances with a failure of government to police its own territory can often provide nurturing environments for terrorist groups, and for insurgents and criminals.  The failure of governments to control their own territory creates potential power vacuums that open opportunities for those who hate. 

As the war on terrorism progresses, terrorists will be driven from their safe havens to seek new hideouts where they can undertake training, planning, and staging without interference from government authorities.  The prime candidates for new "no man's lands" are remote, rugged regions where central governments have no consistent reach and where socioeconomic problems are rife. 

Many factors play into the struggle to eradicate stateless zones and dry up the wellsprings of disaffection. 

And I'll take this opportunity to remind you, Mr. Chairman, of the continued threat the global narcotics industry poses to the United States.

And that, Mr. Chairman, concludes my formal remarks.  I welcome any questions or comments you and the members may have for me.


Source: CIA