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Mr. Chairman, I appear before you this year under circumstances that are extraordinary and historic for reasons I need not recount. Never before has the subject of this annual threat briefing had more immediate resonance. Never before have the dangers been more clear or more present.

September 11 brought together and brought home-literally-several vital threats to the United States and its interests that we have long been aware of. It is the convergence of these threats that I want to emphasize with you today: the connection between terrorists and other enemies of this country; the weapons of mass destruction they seek to use against us; and the social, economic, and political tensions across the world that they exploit in mobilizing their followers. September 11 demonstrated the dangers that arise when these threats converge-and it reminds us that we overlook at our own peril the impact of crises in remote parts of the world.

This convergence of threats has created the world I will present to you today-a world in which dangers exist not only in those places where we have most often focused our attention, but also in other areas that demand it:

• In places like Somalia, where the absence of a national government has created an environment in which groups sympathetic to al-Qa'ida have offered terrorists an operational base and potential haven.

• In places like Indonesia, where political instability, separatist and ethnic tensions, and protracted violence are hampering economic recovery and fueling Islamic extremism.

• In places like Colombia, where leftist insurgents who make much of their money from drug trafficking are escalating their assault on the government-further undermining economic prospects and fueling a cycle of violence.

• And finally, Mr. Chairman, in places like Connecticut, where the death of a 94-year-old woman in her own home of anthrax poisoning can arouse our worst fears about what our enemies might try to do to us.

These threats demand our utmost response. The United States has clearly demonstrated since September 11 that it is up to the challenge. But make no mistake: despite the battles we have won in Afghanistan, we remain a nation at war.

TERRORISM

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In Iran, we are concerned that the reform movement may be losing its momentum. For almost five years, President Khatami and his reformist supporters have been stymied by Supreme Leader Khamenei and the hardliners.

• The hardliners have systematically used the unelected institutions they control-the security forces, the judiciary, and the Guardian's Council-to block reforms that challenge their entrenched interests. They have closed newspapers, forced members of Khatami's cabinet from office, and arrested those who have dared to speak out against their tactics.

• Discontent with the current domestic situation is widespread and cuts across the social spectrum. Complaints focus on the lack of pluralism and government accountability, social restrictions, and poor economic performance. Frustrations are growing as the populace sees elected institutions such as the Majles and the Presidency unable to break the hardliners' hold on power.

The hardline regime appears secure for now because security forces have easily contained dissenters and arrested potential opposition leaders. No one has emerged to rally reformers into a forceful movement for change, and the Iranian public appears to prefer gradual reform to another revolution. But the equilibrium is fragile and could be upset by a miscalculation by either the reformers or the hardline clerics.

For all of this, reform is not dead. We must remember that the people of Iran have demonstrated in four national elections since 1997 that they want change and have grown disillusioned with the promises of the revolution. Social, intellectual, and political developments are proceeding, civil institutions are growing, and new newspapers open as others are closed.

The initial signs of Tehran's cooperation and common cause with us in Afghanistan are being eclipsed by Iranian efforts to undermine US influence there. While Iran's officials express a shared interest in a stable government in Afghanistan, its security forces appear bent on countering the US presence. This seeming contradiction in behavior reflects deep-seated suspicions among Tehran's clerics that the United States is committed to encircling and overthrowing them-a fear that could quickly erupt in attacks against our interests.

• We have seen little sign of a reduction in Iran's support for terrorism in the past year. Its participation in the attempt to transfer arms to the Palestinian Authority via the Karine-A probably was intended to escalate the violence of the intifada and strengthen the position of Palestinian elements that prefer armed conflict with Israel.

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PROLIFERATION

I turn now to the subject of proliferation. I would like to start by drawing your attention to several disturbing trends in this important area. WMD programs are becoming more advanced and effective as they mature, and as countries of concern become more aggressive in pursuing them. This is exacerbated by the diffusion of technology over time-which enables proliferators to draw on the experience of others and to develop more advanced weapons more quickly than they could otherwise. Proliferators are also becoming more self-sufficient. And they are taking advantage of the dual-use nature of WMD- and missile-related technologies to establish advanced production capabilities and to conduct WMD- and missile-related research under the guise of legitimate commercial or scientific activity.

Let me address in turn the primary categories of WMD proliferation, starting with chemical and biological weapons. The CBW threat continues to grow for a variety of reasons, and to present us with monitoring challenges. The dual-use nature of many CW and BW agents complicates our assessment of offensive programs. Many CW and BW production capabilities are hidden in plants that are virtually indistinguishable from genuine commercial facilities. And the technology behind CW and BW agents is spreading. We assess there is a significant risk within the next few years that we could confront an adversary-either terrorists or a rogue state-who possesses them.

On the nuclear side, we are concerned about the possibility of significant nuclear technology transfers going undetected. This reinforces our need to more closely examine emerging nuclear programs for sudden leaps in capability. Factors working against us include the difficulty of monitoring and controlling technology transfers, the emergence of new suppliers to covert nuclear weapons programs, and the possibility of illicitly acquiring fissile material. All of these can shorten timelines and increase the chances of proliferation surprise.

On the missile side, the proliferation of ICBM and cruise missile designs and technology has raised the threat to the US from WMD delivery systems to a critical threshold. As outlined in our recent National Intelligence Estimate on the subject, most Intelligence Community agencies project that by 2015 the US most likely will face ICBM threats from North Korea and Iran, and possibly from Iraq. This is in addition to the longstanding missile forces of Russia and China. Short- and medium-range ballistic missiles pose a significant threat now.

• Several countries of concern are also increasingly interested in acquiring a land-attack cruise missile (LACM) capability. By the end of the decade, LACMs could pose a serious threat to not only our deployed forces, but possibly even the US mainland.

Russian entities continue to provide other countries with technology and expertise applicable to CW, BW, nuclear, and ballistic and cruise missile projects. Russia appears to be the first choice of proliferant states seeking the most advanced technology and training. These sales are a major source of funds for Russian commercial and defense industries and military R&D.

• Russia continues to supply significant assistance on nearly all aspects of Tehran's nuclear program. It is also providing Iran assistance on long-range ballistic missile programs.

Chinese firms remain key suppliers of missile-related technologies to Pakistan, Iran, and several other countries. This is in spite of Beijing's November 2000 missile pledge not to assist in any way countries seeking to develop nuclear-capable ballistic missiles. Most of China's efforts involve solid-propellant ballistic missile development for countries that are largely dependent on Chinese expertise and materials, but it has also sold cruise missiles to countries of concern such as Iran.

• We are closely watching Beijing's compliance with its bilateral commitment in 1996 not to assist unsafeguarded nuclear facilities, and its pledge in 1997 not to provide any new nuclear cooperation to Iran.

• Chinese firms have in the past supplied dual-use CW-related production equipment and technology to Iran. We remain concerned that they may try to circumvent the CW-related export controls that Beijing has promulgated since acceding to the CWC and the nuclear Nonproliferation Treaty.

North Korea continues to export complete ballistic missiles and production capabilities along with related raw materials, components, and expertise. Profits from these sales help P'yongyang to support its missile-and probably other WMD-development programs, and in turn generate new products to offer to its customers-primarily Iran, Libya, Syria, and Egypt. North Korea continues to comply with the terms of the Agreed Framework that are directly related to the freeze on its reactor program, but P'yongyang has warned that it is prepared to walk away from the agreement if it concluded that the United States was not living up to its end of the deal.

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Iran remains a serious concern because of its across-the-board pursuit of WMD and missile capabilities. Tehran may be able to indigenously produce enough fissile material for a nuclear weapon by late this decade. Obtaining material from outside could cut years from this estimate. Iran may also flight-test an ICBM later this decade, using either Russian or North Korean assistance. Having already deployed several types of UAVs-including some in an attack role-Iran may seek to develop or otherwise acquire more sophisticated LACMs. It also continues to pursue dual-use equipment and expertise that could help to expand its BW arsenal, and to maintain a large CW stockpile.

Both India and Pakistan are working on the doctrine and tactics for more advanced nuclear weapons, producing fissile material, and increasing their nuclear stockpiles. We have continuing concerns that both sides may not be done with nuclear testing. Nor can we rule out the possibility that either country could deploy their most advanced nuclear weapons without additional testing. Both countries also continue development of long-range nuclear-capable ballistic missiles, and plan to field cruise missiles with a land-attack capability.

As I have mentioned in years past, we face several unique challenges in trying to detect WMD acquisition by proliferant states and non-state actors. Their use of denial and deception tactics, and their access to a tremendous amount of information in open sources about WMD production, complicate our efforts. So does their exploitation of space. The unique spaceborne advantage that the US has enjoyed over the past few decades is eroding as more countries-including China and India-field increasingly sophisticated reconnaissance satellites. Today there are three commercial satellites collecting high-resolution imagery, much of it openly marketed. Foreign military, intelligence, and terrorist organizations are exploiting this-along with commercially available navigation and communications services-to enhance the planning and conduct of their operations.

Let me mention here another danger that is closely related to proliferation: the changing character of warfare itself. As demonstrated by September 11, we increasingly are facing real or potential adversaries whose main goal is to cause the United States pain and suffering, rather than to achieve traditional military objectives. Their inability to match US military power is driving some to invest in "asymmetric" niche capabilities. We must remain alert to indications that our adversaries are pursuing such capabilities against us.

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CONCLUSION

Mr. Chairman, I want to end my presentation by reaffirming what the President has said on many occasions regarding the threats we face from terrorists and other adversaries. We cannot-and will not-relax our guard against these enemies. If we did so, the terrorists would have won. And that will not happen. The terrorists, rather, should stand warned that we will not falter in our efforts, and in our commitment, until the threat they pose to us has been eliminated.

Thank you, Mr. Chairman. I welcome any questions you and your colleagues have for me.