Excerpts

Mr. Chairman, last year-in the wake of the September 11 attack on our country-I focused my remarks on the clear and present danger posed by terrorists who seek to destroy who we are and what we stand for. The national security environment that exists today is significantly more complex than that of a year ago.

• I can tell you that the threat from al-Qa'ida remains, even though we have made important strides in the war against terrorism.

• Secretary of State Powell clearly outlined last week the continuing threats posed by Iraq's weapons of mass destruction, its efforts to deceive UN inspectors, and the safehaven that Baghdad has allowed for terrorists in Iraq.

• North Korea's recent admission that it has a highly enriched uranium program, intends to end the freeze on its plutonium production facilities, and has stated its intention to withdraw from the Nonproliferation Treaty raised serious new challenges for the region and the world.

At the same time we cannot lose sight of those national security challenges that, while not occupying space on the front pages, demand a constant level of scrutiny.

• Challenges such as the world's vast stretches of ungoverned areas-lawless zones, veritable "no man's lands" like some areas along the Afghan-Pakistani border-where extremist movements find shelter and can win the breathing space to grow.

• Challenges such as the numbers of societies and peoples excluded from the benefits of an expanding global economy, where the daily lot is hunger, disease, and displacement-and that produce large populations of disaffected youth who are prime recruits for our extremist foes.

TERRORISM

. . .

Although state sponsors of terrorism assume a lower profile today than a decade ago, they remain a concern. Iran and Syria continue to support the most active Palestinian terrorist groups, HAMAS and the Palestine Islamic Jihad. Iran also sponsors Lebanese Hizballah. I'll talk about Iraq's support to terrorism in a moment.

Terrorism directed at US interests goes beyond Middle Eastern or religious extremist groups. In our own hemisphere, the Revolutionary Armed Forces of Colombia, or FARC, has shown a new willingness to inflict casualties on US nationals.

. . .

PROLIFERATION

Mr. Chairman, what I just summarized for you on Iraq's WMD programs underscores our broader concerns about proliferation. More has changed on nuclear proliferation over the past year than on any other issue. For 60 years, weapon-design information and technologies for producing fissile material-the key hurdles for nuclear weapons production-have been the domain of only a few states. These states, though a variety of self-regulating and treaty based regimes, generally limited the spread of these data and technologies.

In my view, we have entered a new world of proliferation. In the vanguard of this new world are knowledgeable non-state purveyors of WMD materials and technology. Such non-state outlets are increasingly capable of providing technology and equipment that previously could only be supplied by countries with established capabilities.

This is taking place side by side with the continued weakening of the international nonproliferation consensus. Control regimes like the Non-Proliferation Treaty are being battered by developments such as North Korea's withdrawal from the NPT and its open repudiation of other agreements.

• The example of new nuclear states that seem able to deter threats from more powerful states, simply by brandishing nuclear weaponry, will resonate deeply among other countries that want to enter the nuclear weapons club.

Demand creates the market. The desire for nuclear weapons is on the upsurge. Additional countries may decide to seek nuclear weapons as it becomes clear their neighbors and regional rivals are already doing so. The "domino theory" of the 21^st century may well be nuclear.

• With the assistance of proliferators, a potentially wider range of countries may be able to develop nuclear weapons by "leapfrogging" the incremental pace of weapons programs in other countries.

Let me now briefly review, sector by sector, the range on non-nuclear proliferation threats.

In biological warfare (BW) and chemical warfare (CW), maturing programs in countries of concern are becoming less reliant on foreign suppliers-which complicates our ability to monitor programs via their acquisition activities. BW programs have become more technically sophisticated as a result of rapid growth in the field of biotechnology research and the wide dissemination of this knowledge. Almost anyone with limited skills can create BW agents. The rise of such capabilities also means we now have to be concerned about a myriad of new agents.

• Countries are more and more tightly integrating both their BW and CW production capabilities into apparently legitimate commercial infrastructures, further concealing them from scrutiny.

The United States and its interests remain at risk from increasingly advanced and lethal ballistic and cruise missiles and UAVs. In addition to the longstanding threats from Russian and Chinese missile forces, the United States faces a near-term ICBM threat from North Korea. And over the next several years, we could face a similar threat from Iran and possibly Iraq.

• Short- and medium-range missiles already pose a significant threat to US interests, military forces, and allies as emerging missile states increase the range, reliability, and accuracy of the missile systems in their inventories.

And several countries of concern remain 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.

. . .

China vowed in November 2000 to refrain from assisting countries seeking to develop nuclear-capable ballistic missiles, and last August Beijing promulgated new missile-related export controls. Despite such steps, Mr. Chairman, Chinese firms remain key suppliers of ballistic- and cruise missile-related technologies to Pakistan, Iran, and several other countries.

• And Chinese firms may be backing away from Beijing's 1997 bilateral commitment to forego any new nuclear cooperation with Iran. We are monitoring this closely.

We are also monitoring Russian transfers of technology and expertise. Russian entities have cooperated on projects-many of them dual-use-that we assess can contribute to BW, CW, nuclear, or ballistic- and cruise- missile programs in several countries of concern, including Iran. Moscow has, however, reexamined at least some aspects of military-technical cooperation with some countries and has cut back its sensitive nuclear fuel-cycle assistance to Iran.

• We remain alert to the vulnerability of Russian WMD materials and technology to theft or diversion. Russia has the largest inventory of nuclear materials that-unless stored securely-might be fashioned into weapons that threaten US persons, facilities, or interests.

• Iran is continuing to pursue development of a nuclear fuel cycle for civil and nuclear weapons purposes. The loss of some Russian assistance has impeded this effort. It is also moving toward self-sufficiency in its BW and CW programs.

• Tehran is seeking to enlist foreign assistance in building entire production plants for commercial chemicals that would also be capable of producing nerve agents and their precursors.

• As a supplier, Iran in 2002 pursued new missile-related deals with several countries and publicly advertises its artillery rockets, ballistic missiles, and related technologies.

I should also note, Mr. Chairman, that India and Pakistan continue to develop and produce nuclear weapons and the means to deliver them.

. . .

IRAN

We watch unfolding events in Iran with considerable interest, Mr. Chairman, because despite its antagonism to the United States, developments there hold some promise as well. Iranian reformers seeking to implement change have become increasingly frustrated by conservatives efforts to block all innovation. We see the dueling factions as heading for a showdown that seems likely to determine the pace and direction of political change in Iran. Within the next several weeks a key test will come as reformers try to advance two pieces of legislation-bills that would reform the electoral process and significantly expand presidential powers-they claim will benchmark their ability to achieve evolutionary change within the system.

• Some reformist legislators have threatened to resign from government if conservatives block the legislation. Others have argued for holding a referendum on reform if opponents kill the bills.

• Comments from the hardline camp show little flexibility-and indeed some opponents of reform are pressing hard to dismantle the parties that advocate political change.

As feuding among political elites continues, demographic and societal pressures continue to mount. Iran's overwhelmingly young population-65 percent of Iran's population is under 30 years old-is coming of age and facing bleak economic prospects and limited social and political freedoms. Strikes and other peaceful labor unrest are increasingly common. These problems-and the establishment's inflexibility in responding to them-drive widespread frustration with the regime.

• Weary of strife and cowed by the security forces, Iranians show little eagerness to take to the streets in support of change. The student protests last fall drew only 5,000 students out of a student population of more than one million.

• But more and more courageous voices in Iran are publicly challenging the right of the political clergy to suppress the popular will--and they are gaining an audience.

Given these developments, we take the prospect of sudden, regime threatening unrest seriously and continue to watch events in Iran with that in mind. For now, our bottom line analysis is that the Iranian regime is secure, but increasingly fragile. The reluctance of reformist leaders to take their demands for change to the street, coupled with the willingness of conservatives to repress dissent, keeps the population disengaged and maintains stability.

• We are currently unable to identify a leader, organization, or issue capable of uniting the widespread desire for change into a coherent political movement that could challenge the regime.

• In addition, we see little indication of a loss of nerve among the opponents of reform, who have publicly argued in favor of using deadly force if necessary to crush the popular demand for greater freedom.

Although a crisis for the regime might come about were reformers to abandon the government or hardliners to initiate a broad suppression on leading advocates of change, the resulting disorder would do little to alleviate US concern over Iran's international behavior. Conservatives already control the more aggressive aspects of Iranian foreign policy, such as sponsoring violent opposition to Middle East peace.

• No Iranian government, regardless of its ideological leanings, is likely to willingly abandon WMD programs that are seen as guaranteeing Iran's security.

. . .