Sissy Chrissy won't get it until a 67 year old or older vet (Adm J Denton would do just fine) is on with him and telling of the horrors and when Sissy Chrissy starts poo-pooing it gets a knuckle sandwich that puts his butt on the floor from the vet.
To download: http://www.goexcelglobal.com/NJ_DefenseForce/rep105-1.pdf
U.S. GOVERNMENT PRINTING OFFICEWASHINGTON : 139010SENATE"!105THCONGRESS1st SessionREPORT19971051COMMITTEE ACTIVITIESSPECIAL REPORTOF THESELECT COMMITTEE ON INTELLIGENCEUNITED STATES SENATEJANUARY 4, 1995 TO OCTOBER 3, 1996JANUARY22, 1997.Ordered to be printed
(II)SELECT COMMITTEE ON INTELLIGENCE RICHARD C. SHELBY, Alabama, Chairman J. ROBERT KERREY, Nebraska, Vice Chairman JOHN H. CHAFEE, Rhode IslandRICHARD G. LUGAR, Indiana MIKE DEWINE, Ohio JON KYL, ArizonaJAMES M. INHOFE, Oklahoma ORRIN G. HATCH, Utah PAT ROBERTS, Kansas WAYNE ALLARD, Colorado DAN COATS, Indiana JOHN GLENN, OhioRICHARD H. BRYAN, Nevada BOB GRAHAM, Florida JOHN F. KERRY, Massachusetts MAX BAUCUS, Montana CHARLES S. ROBB, Virginia FRANK R. LAUTENBERG, New Jersey CARL LEVIN, Michigan TRENT LOTT, Mississippi, Ex Officio THOMAS A. DASCHLE, South Dakota, Ex Officio TAYLORW. LAWRENCE, Staff Director CHRISTOPHERC. STRAUB, Minority Staff Director KATHLEEN P. MCGHEE, Chief Clerk
105THCONGRESSREPORT"!SENATE1st Session1051COMMITTEE ACTIVITIESJANUARY22, 1997.Ordered to be printedMr. SHELBY, from the Select Committee on Intelligence,submitted the followingSPECIAL REPORTI. INTRODUCTIONMay 19, 1996 marked the twentieth anniversary of the creationof the Senate Select Committee on Intelligence. The Committeewas established in 1976 by Senate Resolution 400 of the 94th Con-gress in order to strengthen congressional oversight of the pro-grams and activities of U.S. intelligence agencies. Throughout itstwenty-year history, the Committee has attempted to carry out itsoversight responsibilities in a genuinely bipartisan fashion. Duringthe 104th Congress, the Committee continued this bipartisan tradi-tion in crafting important intelligence reform legislation, conduct-ing several inquiries into intelligence community issues, and byproviding funding for and oversight of a wide array of U.S. intel-ligence activities.As part of its oversight responsibilities, the Committee performsan annual review of the budget and prepares legislation authoriz-ing appropriations for the various civil and military agencies anddepartments comprising the Intelligence Community. The Commit-tee also conducts periodic audits, investigations, and inspections ofintelligence activities and programs with the goal of assuring thatthe appropriate departments and agencies of the United States pro-vide informed and timely intelligence necessary for the executiveand legislative branches to make sound decisions affecting the na-tional security interests of the nation and that U.S. military com-manders have dominant awareness of any potential battle environ-ment. More importantly, the Committees oversight seeks to ensurethat intelligence activities and programs conform with the Con-stitution and laws of the United States of America.The Intelligence Community developed after World War II witha central focus of providing United States civilian and militaryleadership with the intelligence necessary to conduct national secu-rity policy in our relationship with the Soviet Union. With the dis-
2solution of the U.S.S.R., and the accompanying loss of this over-riding intelligence focus, the agencies and departments within theIntelligence Community have begun to redirect their efforts to thenational security issues now confronting the United States orwhich may develop in the coming years. Further, the emergenceand growth of transnational threats such as terrorism, narcoticstrafficking, international criminal organizations, and the prolifera-tion of weapons of mass destruction present our nation and the In-telligence Community with challenges requiring different doctrine,policy, and programs. With these new challenges and threats con-fronting our nation comes an increasing need for the oversight pro-vided by the Committee to ensure our nations leaders have the in-telligence necessary to make informed national security decisions.To address the intelligence challenges of the post-Cold Warworld, the Select Committee on Intelligence made intelligence re-form legislation a major focus in the Fiscal Year 1997 IntelligenceAuthorization bill. The Intelligence Renewal and Reform Act of1996 included a number of substantial provisions which will makethe Intelligence Community more effective, more efficient, andmore accountable for its actions. The Committee succeeded in in-cluding these provisions in the authorization bill passed by Con-gress, and President Clinton signed these reforms into law on Octo-ber 11, 1996.These reforms included the creation of two new committees ofthe National Security Council, the Committee on Foreign Intel-ligence and the Committee on Transnational Threats; the estab-lishment of a new Senate-confirmed Deputy Director of Central In-telligence for Community Management and three new Assistant Di-rectors of Central Intelligence to assist the DCI in managing theIntelligence Community; new authority for the Director of CentralIntelligence to concur to be consulted with respect to the appoint-ments of the heads of the principal National Foreign IntelligenceProgram (NFIP) agencies; strengthening the ability of the Directorof Central Intelligence to manage the Intelligence Community bycodifying his authority to participate in the development of thebudgets for defense-wide and tactical intelligence; giving the DCIa database of all intelligence activities and requiring all NFIP ele-ments to submit periodic budget execution reports; clarifying thatU.S. law enforcement agencies may task intelligence collectionagencies to collect intelligence about non-U.S. persons outside theUnited States to enable CIA, NSA, and other collection agencies tobetter support law enforcement efforts; and the requirement thatthe DCI submit to the Committee on Foreign Intelligence and theappropriate congressional committees an evaluation of the perform-ance and responsiveness of the NSA, NRO, and NIMA in meetingtheir national missions.During the 104th Congress, the Committee continued its inves-tigation into the Aldrich Ames espionage case by reviewing reportsand holding hearings and briefings regarding assessments on thedamage done to U.S. national security interests by Amess activi-ties. The Committee identified the failure of the CIA to validate in-formation received from Russian sources, especially after the execu-tion of several Russian assets Ames had compromised. As a result,the CIA has improved its counterintelligence efforts, is engaged in
3additional damage assessment efforts, and has revamped its proce-dures for dissemination of reporting from sensitive assets. TheCommittee also convinced the Department of Defense and the De-partment of State to conduct their own damage assessments. Whilepreliminary damage assessments of the reports from taintedsources have been received from the Department of State and De-fense, the Committee continues to monitor new findings on how theAmes case has affected U.S. intelligence and counterintelligence ef-forts.The conflict in Bosnia and U.S. policy in the region were thefocus of substantial Committee activity during the 104th Congress.The Committee held numerous hearings and briefings on intel-ligence community support to the deployed Americans forces andthe investigation into war crimes in Bosnia. with the signing of theDayton Peace Accords and the introduction of U.S. ground troopsinto Bosnia as part of the Implementation Force (IFOR), the Com-mittee conducted an extensive review of intelligence support toU.S. military forces in Bosnian theater. This effort supplementedthe Committees continuing oversight of the adequacy of intel-ligence support to U.S. government efforts in the former Yugo-slavia.The Committee in early 1996 began an inquiry into U.S. actionsregarding Iranian and other arms shipments to the Bosnian Armyafter press reports revealed that the Clinton Administration hadsecretly decided not to intervene against these violations of thearms embargo. The Committee held three public hearings, fourclosed hearings, and six informal sessions on this subject. While itdid not reach a conclusion as to whether the actions of U.S. officialsconstituted covert action, the Committee did find that the ClintonAdministration should have communicated such a significant policychange to Congress. The Committee also found three areas inwhich administrative or legislative actions appeared to be required.During the 104th Congress, the Committee conducted an inves-tigation of CIA activities in Guatemala, focusing on the 1990 mur-der of American citizen Michael DeVine and the death of Guate-mala guerrilla Efrain Bamaca Velasquez. This review focused onallegations of CIA misconduct in the events surrounding theDeVine murder and the fate of Efrain Bamaca. The Committee alsolooked at accusations that the CIA funded intelligence programs inGuatemala in contravention of U.S. policy. In 1995, the CIA Inspec-tor General completed an investigation into CIA operations in Gua-temala. As a result of these inquiries, DCI John Deutch disciplineda number of CIA personnel involved with operations in Guatemala.The Committee held a number of briefings regarding proposedlegislation liberalizing the export of encryption products and itslikely impact on national security interests. To provide the Senatewith further information on this legislation, the Committee tookthe lead in arranging a classified briefing that provided all inter-ested Senators the opportunity to directly question the DCI, the Di-rector of the FBI, and the Deputy Attorney General, all of whomplay pivotal roles in the development and implementation of Ad-ministration encryption export policy. As the Administrationsencryption policy continues to develop, the Committee will continue
4to assess how changes will affect the collection and protection ofnational security information.The Committee held a total of 131 hearings or on-the-recordbriefings, including thirty open hearings, seventy-nine oversighthearings, eighteen legislative hearings, five nomination hearings,seventeen Committee business or legislative mark-up meetings,and twelve on-the-record briefings. The unprecedented number ofhearings, meetings, and briefings held by the Committee reflectsits charter to oversee the wide range of national security issuesconfronting our nation. Further, by holding thirty open hearings,the Committee more than ever before has provided the Americanpublic a greater awareness of the role of intelligence in the forma-tion of our national security policy and the role of congressionaloversight of this process while, in the process, protecting intel-ligence sources and methods.II. LEGISLATIONA. INTELLIGENCE BUDGETThe Committee conducted annual reviews of the fiscal year 1996and fiscal year 1997 budget requests for the DCIs National ForeignIntelligence Program (NFIP). These reviews included taking testi-mony from senior Intelligence Community officials and evaluatingdetailed budget justification documents and numerous IntelligenceCommunity responses to specific questions raised by the Commit-tee. As a result of these reviews, the Committee made rec-ommendations, approved by the Senate, that resulted in net reduc-tions to the Administrations funding requests for national intel-ligence.During this period the Committee also took action to reduce ex-cess authorized and appropriated funds that had accumulated inthe budget of the National Reconnaissance Office (NRO). The Com-mittee concurred with an initiative by the Defense Subcommitteeof the Appropriations Committee in fiscal year 1996 to reduceavailable NRO funds by $1.2 billion, and with a later Administra-tion request to rescind $820 million of NRO funds to pay for Bosniaoperations.As a result, when the $2 billion excess NRO forward funds thatwere rescinded or reprogrammed are taken into account, NFIPfunding is now 13% lower in real terms than it was in fiscal year1990, and at its lowest level since fiscal year 1985.The Committee also reviewed the Administrations fiscal year1996 and fiscal year 1997 requests for Tactical Intelligence and Re-lated Activities (TIARA) and a new intelligence funding category,the Joint Military Intelligence Program (JMIP). The Committeesreview of TIARA, which falls under the jurisdiction of the ArmedServices Committee, has been in the form of separate letter-rec-ommendations to that committee for consideration in the DefenseAuthorization bill. However, the new intelligence programJMIPcontained activities that formerly had been funded in NFIPas well as TIARA, resulting in a jurisdictional dispute between thetwo committees. Discussions resulted in an April 29, 1996 Memo-randum of Agreement (see Appendix D) between the two commit-tees which allows for a defined and formal role for the intelligence
5committee in the oversight of TIARA and JMIP while acknowledg-ing that the Armed Services Committee has authorization jurisdic-tion over both programs.B. S. 922 INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1996On June 14, 1995, the Committee reported out S. 922, the Intel-ligence Authorization Act for Fiscal Year 1996. In addition to pro-viding the annual authorization for appropriations for intelligenceactivities, the bill, inter alia, authorized the President to delay im-posing sanctions against countries engaged in weapons prolifera-tion in order to protect intelligence sources and methods; providedfor forfeiture of the Governments contribution to an employeesThrift Savings Plan for those employees convicted of national secu-rity offenses; amended the Hatch Act to allow intelligence commu-nity employees to participate more actively in certain local elec-tions; and amended the Fair Credit Reporting Act to permit theFBI to obtain consumer credit records necessary in foreign counter-intelligence investigations.The Senate passed S. 922 on September 29, 1995 and agreed tothe conference report on the House counterpart bill on December21, 1995. The President signed the legislation as Public Law 10493 on January 6, 1996.C. S. 1718 INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1997The Committee reported out S. 1718, the Intelligence Authoriza-tion Act for Fiscal Year 1997, on April 30, 1996. The full Senatepassed the bill on September 17 and approved the conference re-port on the legislation on September 25. The authorization act wassigned by the President as Public Law 104293 on October 11,1996.The Fiscal Year 1997 Authorization Act included a number ofsignificant legislative provisions in addition to the annual author-ization of appropriations. In particular, Title VIII of the Act, short-titled the Intelligence Renewal and Reform Act of 1996, containedprovisions (described below) intended to improve the operation ofthe Intelligence Community in the post-Cold War world.Other provisions in the Fiscal Year 1997 Act provided for expe-dited naturalization for families of U.S. intelligence assets killed asa result of unauthorized disclosures by U.S. officials (such as con-victed spy Aldrich Ames); placed restrictions on intelligence-shar-ing with the United Nations so as to protect against unauthorizeddisclosure of such information; provided that it is U.S. policy notto use U.S. journalists as intelligence assets unless the Presidentor DCI waives this policy in a particular case and notifies the intel-ligence committees of Congress; required the DCI to issue guide-lines prohibiting some former CIA employees from working for aforeign government for a period of three years after leaving theCIA; and created a commission to study the organization of the fed-eral government to combat proliferation of weapons of mass de-struction.
6D. INTELLIGENCE RENEWAL AND REFORM ACT OF 1996During the second session of the 104th Congress, the Committeefocused much of its attention on consideration and passage of legis-lation to make the Intelligence Community operate more effi-ciently, more effectively, and more accountably in the post-ColdWar world. Begun in the early 1990s, these efforts were spurred bya perception among many members of Congress and the public thatthe thirteen-agency Community had lost its focus after the ColdWar and needed better guidance and direction.The Committee held six hearings and three member-level brief-ings on intelligence reorganization and reform proposals. The twen-ty-six witnesses included former DCIs Webster, Turner, and Wool-sey; former Committee Chairmen Durenberger, Deconcini, andMoynihan; and a broad array of intelligence consumers and aca-demic observers. Committee staff also conducted numerous inter-views with current and former intelligence professionals and otherknowledgeable individuals.On March 1, 1996, the Committee received the report of theCommission on the Roles and Capabilities of the U.S. IntelligenceCommunity, the 17-member independent commission that Congresshad created in 1994 to study the Intelligence Community. OnMarch 6, after receiving testimony from the Commissions Chair-man, Harold Brown, Chairman Specter and Vice Chairman Kerreyintroduced S. 1593, which contained the legislative recommenda-tions of the Commission.The Committee included its own renewal and reform legislationas part of the Intelligence Authorization Act for Fiscal Year 1997.The Committees legislation built on the recommendations of theBrown Commission but went further in a number of significant re-spects.A number of the provisions in the Committees bill that wouldhave enhanced the authorities of the Director of Central Intel-ligence were resisted strongly by the Department of Defense, whichviewed these provisions as reducing the Secretary of Defenses con-trol over defense intelligence agencies. After extended discussionswith the Senate Armed Services Committee, the Committee agreedto drop or modify several of these measures.In its final form, the legislation provided the DCI new authoritiesand a new management structure to manage the Intelligence Com-munity. The legislation amended the National Security Act of 1947to create a new Senate-confirmed Deputy Director of Central Intel-ligence for Community Management and three new Senate-con-firmed Assistant Directors of Central Intelligence to oversee collec-tion, analysis, and administrative functions across the Community.In addition, the Secretary of Defense will be required to secure theDCIs concurrence in the appointments of the heads of the NSA,NRO, and the new National Imagery and Mapping Agency (NIMA)or to inform the President of the DCIs non-concurrence when rec-ommending persons for appointment to those positions, and to beconsulted regarding the appointments of the heads of the principaldepartmental intelligence units. He will also submit to the Com-mittee on Foreign Intelligence and the appropriate congressionalcommittees an evaluation of the performance and responsiveness of
7the NSA, NRO, and NIMA in meeting the needs of national policy-makers.A number of provisions were included to help improve budgetarycontrols throughout the Intelligence Community. By codifying hisauthority to participate in the development of the budgets for de-fense-wide and tactical intelligence, this Act strengthens the abilityof the Director of Central Intelligence to manage the IntelligenceCommunitys resources. Other provisions call for the creation of abudget database of all intelligence activities and require that allNFIP elements submit periodic budget execution reports to improvefinancial oversight.In response to the growing transnational threat to the nationalsecurity, the Act contained a provision clarifying the authority ofU.S. law enforcement agencies to task intelligence collection agen-cies to collect information about non-U.S. persons outside the Unit-ed States. This provision will enable the CIA, NSA, and other col-lection agencies to better support law enforcement efforts.The legislation also established two new cabinet-level committeesof the National Security Council: a Committee on Foreign Intel-ligence to provide overall policy and resource guidance for the In-telligence Community; and a Committee on Transnational Threatsto direct the various activities of the federal government in fightingterrorism, international narcotics trafficking, and other globalcrimes.Although the final legislation did not include all of the provisionsthe Committee would have liked to have enacted, the Committeebelieves that the DCI has been given important new tools to helpmanage the Intelligence Community more efficiently and more ef-fectively.E. THE NATIONAL IMAGERY AND MAPPING AGENCYIn December 1995, the DCI, the Secretary of Defense, and theChairman of the Joint Chiefs of Staff proposed the establishmentof a new National Imagery and Mapping Agency (NIMA) within theDepartment of Defense. NIMA was created to provide an agencywith broad authorities for the tasking, collection, and dissemina-tion of imagery and imagery products; production and dissemina-tion of imagery intelligence and geospatial information; program-ming and budgeting; the conduct of associated research and devel-opment; and, the acquisition of common systems. The Central Im-agery Office, the Defense Mapping Agency, the National Photo-graphic Interpretation Center, the DIAs imagery exploitation ele-ment, the Air Forces Defense Dissemination Program Office(DDPO), and several other imagery-related offices have now allbeen consolidated into NIMA.NIMA will have over 9,000 employees and manage approximately25 percent of the imagery and geospatial information activities con-tained in the U.S. Defense and Intelligence programs. It will alsoreview the plans, budgets, and acquisitions for the remaining 75percent of the U.S. imagery system to assure compliance with pol-icy and data standards and architectures.The Committee included legislative provisions to establish NIMAin the Fiscal Year 1997 Intelligence Authorization bill. A more com-prehensive legislative framework was subsequently included by the
8Armed Services Committee in the Fiscal Year 1997 National De-fense Authorization bill, and accordingly the Committee agreed todelete the provisions relating to NIMA from its bill. At the sametime, the Committee amended provisions in the Defense bill to en-sure that the interests of national policymakers are served byNIMA. The Committees amendments codified the DCIs taskingauthority over national imagery assets, provided that the Directorof NIMA could be either a civilian or an military officer, stipulatedthe Secretary of Defense must obtain the concurrence of the DCI,or note the DCIs lack of concurrence, before making a nominationrecommendation to the President, and included language in theNational Security Act, Title 50 of the U.S. Code, stating NIMAs re-sponsibility to provide intelligence for the national policymaker.The legislation creating the National Imagery and Mapping Agencywas signed into law by President Clinton on September 23, 1996.
III. ARMSCONTROLA. CHEMICAL WEAPONS CONVENTION
In order to assist the full Senate in its consideration of whetherto advise and consent to the ratification of the Convention on theProhibition of the Development, Production, Stockpiling and Use ofChemical Weapons and on their Destruction (CWC), the Committeein 1994 undertook a thorough review of the ability of the U.S. In-telligence Community to monitor compliance by states party to theCWC.In particular, the Committee examined issues surrounding themonitoring effectiveness of the U.S. Governments unilateral re-sources and the CWCs on-site inspection regime; the interpretationand implementation of the CWC, including its three annexes; thecounterintelligence and security implications of the CWC; and theimplications of the CWC for private companies, in light of the obli-gations imposed on such companies to provide data declarationsand to host on-site inspections.The Intelligence Community told the Committee in 1994 that theCWC will provide another tool in the U.S. inventory of means tocircumscribe and stem the worldwide expansion of chemical weap-ons capabilities and to assist in monitoring chemical weapons pro-grams worldwide. This point has been reiterated to the Committeeduring additional staff briefings on the CWC during the 104th Con-gress.The Committees public report to the Senate (Senate Report 103390) was approved by a vote of sixteen members in favor and noneopposed. The Committees report was provided to the Senate in an-ticipation of action on the CWC. However, no Senate action wastaken with regard to the CWC in the 103rd Congress.In anticipation of Senate consideration of the CWC during thesecond session of the 104th Congress, the Committee staff revieweddevelopments over the last two years to determine whether anychanges or updating of the Committees 1994 report were in order,and determined that its findings and recommendations in the 1994report with respect to the ability of U.S. intelligence to monitorcompliance by states party to the CWC remained substantiallyvalid, and, thus, no new report was in order.
9The 1994 Committee report to the Senate contained fourteen rec-ommendations. In recommendations 1, 6, and 7, the Committeeproposed that certain conditions and declarations be incorporatedin the resolution of ratification and the CWC implementing legisla-tion. Recommendations 2, 3, and 10 were put forward as the basisfor additional declarations in the resolution of ratification. Thegreat majority of those recommendations were incorporated in theresolution of ratification reported favorably by the Committee onForeign Relations to the Senate in April 1996. However, the 104thCongress adjourned without acting on the Chemical Weapons Con-vention. The Committee will continue to review the CWC and is-sues surrounding the treaty in anticipation of its consideration dur-ing the 105th Congress.B. START II TREATYThe Committee prepared an unclassified as well as a classifiedreport totalling over 100 pages during the 104th Congress to pro-vide the Senate its assessment of the arms control monitoring andcounterintelligence issues raised by the START II Treaty.This report was the culmination of the Committees work oversome thirteen years monitoring the progress of the START negotia-tions. The Committee routinely reviewed START progress and ad-dressed START monitoring capabilities in its annual IntelligenceAuthorization Acts. Committee members and staff met numeroustimes with U.S. negotiators, in both Washington and Geneva. TheCommittee expressed its views on verification issues to the nego-tiators and to other senior level officials both formally and infor-mally.In preparation for the Senate vote on advice and consent to rati-fication of the START II Treaty, Committee staff held numerousstaff briefings; reviewed hundreds of documents, including NationalIntelligence Estimates of U.S. capabilities to monitor compliancewith START provisions and written statements from the Directorand Deputy Director of Central Intelligence; and asked numerousformal questions for the record. Committee staff also travelled tointelligence collection sites to gain a more detailed, first-handknowledge of how the Intelligence Community collects, and how itsanalysts use, information bearing upon other countries compliancewith arms control agreements signed by the United States.On May 12, 1993, the Committee held a closed hearing on theSTART II Treaty, its implementation and its counterintelligenceand security implications. Testimony was taken at this hearingfrom the Honorable Linton Brooks, U.S. Negotiator for StrategicOffensive Arms; Major General Gary Curtin, USAF, Deputy Direc-tor for International Negotiations, J5, the Joint Staff; and Dr.Lawrence Gershwin, National Intelligence Officer for Strategic Pro-grams.On March 1, 1995, the Committee held a closed hearing on U.S.monitoring capabilities and the risks and implications of violationsby the other party to the Treaty. At this hearing, the Committeetook testimony from Mr. Douglas MacEachin, Deputy Director forIntelligence, Central Intelligence Agency; Ambassador LintonBrooks, Chief U.S. START Negotiator; and Dr. Amy Sands, Assist-
10ant Director, Bureau of Intelligence, Verification and InformationSupport, U.S. Arms Control and Disarmament Agency.The Committee also received numerous responses to questionsfor the record that were submitted to the Executive branch afterthese hearings, and the results of these inquiries were integratedinto its report. Throughout the Committees efforts, experts in theU.S. Intelligence Community produced a detailed and honest analy-sis of the strengths and limitations of U.S. monitoring capabilities,in 1993, and an update of this and a related analysis in 1995. TheCommittee was especially pleased to find in these analyses astraightforward discussion of the differences between agencies onsome major issues.As is the case with START I monitoring, the United States willrely upon a combination of capabilitiesincluding imagery, signalsintelligence, human intelligence, open-source information and theverification provisions of the START I and START II Treatiestomonitor compliance with the provisions of START II. Those ver-ification provisions include on-site inspections, exhibitions of equip-ment for either on-site or satellite-based observation, perimeter andportal continuous monitoring (PPCM), notifications, unencryptedtelemetry, and exchanges of data, including telemetry. The Intel-ligence Community assesses a high probability of detecting ques-tionable activity that might be contrary to the Treaty.The Committee agreed with the Intelligence Community thatU.S. reconnaissance assets are generally sufficient to monitor com-pliance with both START Treaties. Congress endeavored to main-tain and enhance those capabilities in the intelligence budget forFiscal Year 1996, as well as in past years. The Committee is con-cerned, however, that U.S. capabilities could be insufficient if com-petition for scarce collection and analytic resources were intenseand if Russian practices were to change in ways designed to im-pede U.S. monitoring. The Committee recommended that the Presi-dent be required to certify the sufficiency of U.S. monitoring capa-bilities regarding those START II provisions relating to ICBM andSLBM capabilities and to report to Congress on how such suffi-ciency will be assured. The Committee also urged the Executivebranch to pursue a firm policy regarding Russian actions that mayviolate the terms of START I or START II, including the verifica-tion provisions of those Treaties. The majority of the Committeesrecommendations were incorporated into the resolution of ratifica-tion accompanying the Treaty.The Senate ratified the START II Treaty by a vote of 874 onJanuary 26, 1996.IV. COUNTERINTELLIGENCEA. THE ALDRICH AMES ESPIONAGE CASEDuring the 104th Congress, the Committee continued its inquiryinto the Aldrich Ames espionage case. The Committee held fivehearings to review the Intelligence Communitys continuing inves-tigation into this case and its assessment of damage caused by Mr.Ames actions. Although the true damage resulting from Ames dis-closures may not be known for years and may in fact never beknown, the analysis completed to date suggests that the Russians
11and perhaps other countries intelligence agencies know detailed in-formation about United States intelligence gathering, analysis, dis-semination, and decision-making structure, and that for years the KGB/SVR controlled raw information that flowed to the CIA andthat was passed on to high-level U.S. consumers at the policy level,including President Bush and President-elect Clinton.As part of the CIAs responsibility to keep the intelligence com-mittees fully and currently informed of * * * any significant intel-ligence failure, CIA Inspector General Fred Hitz completed an in-vestigation on the assessment of damage caused by the AldrichAmes espionage case in October 1995. This investigation revealedthe failure of the CIA to validate information received from Rus-sian sources, even after the execution of several Russian assetscompromised by Ames. The CIA appears to have done little to ver-ify whether or not the information being provided by Soviet/Rus-sian sources was truthful or part of a Russian perception manage-ment campaign. Further, the CIA Directorate of Operations eitherfailed to inform or misinformed consumers and policymakers aboutreporting known or suspected to be under hostile control. This fail-ure to inform was carried out despite CIA suspicions regardingtainted sources as early as 1986 when the Soviet agents identifiedby Ames were being arrested and executed, and despite a March1991 report on the Soviet/East European (SE) Division in whichthe CIA Inspector General (IG) made a number of important com-ments and suggestions regarding SE Division counterintelligence shortcomings.As a result of the CIA IG investigation and its revelations oftainted intelligence reporting, the Department of State and the De-partment of Defense completed preliminary studies which con-cluded these reports had played no significant role in any policy,doctrinal, or budgetary decisions. The Committee will continue toinvestigate the ramifications of Amess treason as other evidencecomes to light and further analysis is completed.B. FRENCH FLAPIn early 1995, French officials made detailed allegations regard-ing CIA intelligence activities in France. Although the timing andnature of these allegations were possibly the result of French inter-nal political considerations, the resulting uproar led the Committeeto conduct a review covering a wide-range of issues related to coun-terintelligence and economic intelligence. As part of this review,the Committee requested that the CIA Inspector General (IG) con-duct an investigation into what became known as the FrenchFlap, and provide recommendations for corrective measures, if ap-propriate.The Committee received the CIA Inspector General Report inMarch 1996. Shortly after this report was received by the Commit-tee, DCI John Deutch provided the Committee a list of his actionsto correct the operational and management deficiencies identifiedin the IG Report. In April 1996, the DCI provided the Committeea letter summarizing his actions related to issues of individual ac-countability connected to the reports findings. These actions in-cluded disciplinary action against involved CIA officials and theformulation of guidelines regarding economic intelligence. The
12Committee is continuing to monitor the implementation of theDCIs actions.C. ECONOMIC ESPIONAGE Due to the importance attached to maintaining U.S. economiccompetitiveness, current U.S. policy is to treat foreign threats toour economic well-being as a national security issue. In this regard,the February 1995 White House National Security Strategy focusedon economic security as a national security priority and identifiedeconomic revitalization as one of the three central goals of theUnited States. Secretary of State Warren Christopher has stated intestimony before the Senate Foreign Relations Committee that, Inthe post-Cold War world, our national security is inseparable fromour economic security.Economic espionage by foreign governments targeting U.S. industry and innovation is an issue of tremendous importance to our national security and is one the Committee has been examining forsome time. The Committee held a number of hearings and briefings during the 104th Congress which addressed this issue and has metextensively with the intelligence and law enforcement communities during this time. In 1992, then-Director of Central IntelligenceRobert M. Gates told the committee: We know that some foreign intelligence services have turned from politics to economics andthat the United States is their prime target. According to the CIA,in written response to additional questions from the Committees February 22, 1996 hearing on Current and Projected National Security Threats to the United States and its Interests Abroad (S. Hrg. 104510),CIC [the Intelligence Communitys Counterintelligence Center] has narrowly defined economic espionage to include a government-directed or orchestrated clandestine effort to collect U.S. economic secrets or proprietary information. We do not characterize as economic espionage legitimate information gathering activities by a foreign govern-ment or foreign corporation, even if carried out aggressively and skillfully. We see government-orchestrated theft of U.S. corporate S&T data as the type of espionage thatposes the greatest threat to U.S. economic competitiveness.We have only identified about a half dozen governmentsthat we believe have extensively engaged in economic espi-onage as we define it. These governments include France,Israel, China, Russia, Iran, and Cuba. In order to address this growing threat, the Committee was instrumental in passing legislation to criminalize foreign govern-ment-sponsored economic espionage. Working closely on a bipartisan basis with the Administration and the House and Senate Judiciary Committees, as well as with industry, academia, and others,the Committee was able to forge a consensus on this important leg-islative measure after a year and half of discussions and negotiations.Provisions criminalizing foreign government-sponsored economic espionage were originally included in the Fiscal Year 1997 Intelligence Authorization bill, reported by the Committee in April
13 1996. They were subsequently dropped from the authorization billand included as part of the broader Economic Espionage Act of 1996, which covers theft of trade secrets by any person as well asforeign-sponsored economic espionage.The final version of the economic espionage legislation makes ita federal crime (to be codified at 18 U.S.C. 1831) to steal, alter, ormisappropriate a trade secret knowing that such offense will benefit a foreign government, instrumentality, or foreign agent. Individuals convicted of economic espionage may be imprisoned for up to15 years and/or fined up to $500,000; organizations may be finedup to $10,000,000. The President signed the Economic Espionage Act of 1996 into law on October 11, 1996.
D. FOREIGN INTELLIGENCE SURVEILLANCE ACT During the 104th Congress, the Committee conducted a comprehensive review of the Intelligence Communitys policy on electronic surveillance and physical search for intelligence and counter-intelligence within the United States and its implementation ofthese guidelines. The Foreign Intelligence Surveillance Act of 1978(FISA), 50 United States Code § 1801 et seq., established com-prehensive legal standards and procedures for the use of electronicsurveillance to collect foreign intelligence and counter-intelligencewithin the United States. The Act provided the first legislative au-thorization for wiretapping and other forms of electronic surveil-lance for intelligence purposes against foreign powers and foreignagents in this country. It created the Foreign Intelligence Surveil-lance Court (FISC), composed of seven federal district judges, toreview and approve surveillance capable of monitoring UnitedStates persons who are in the United States. As the Act wasamended in 1994 to provide for limited physical search authority,the Committees study placed special emphasis upon the use of thenew authority to conduct physical searches.The Committee review included travel to key FBI field sites toreview actual use of the FISA authority, as well as tracking of theFISA process through the budget cycle to ascertain the sustainedattention that certain relevant budgetary issues receive. Whileinterviews were undertaken with the Chief Judge of the FISC andwith the United States Attorney General credited with assuringpassage of the original FISA legislation in 1978, and briefing wereconducted with the Justice Department and other key participantsin the process, the review was focused almost entirely upon actualcases. The cases reviewed were traced from their inception as coun-terintelligence matters, with attention placed upon the sufficiencyof review and upon issues of fundamental fairness toward targetsof the FISA coverage. The review was still being undertaken at theconclusion of the 104th Congress and will likely be completed dur-ing the 105th Congress.
V. COUNTERTERRORISM:A. TERRORISM THREAT OVERVIEWIn 1995 and 1996 the people of the United States were shockedby bombings in Oklahoma City and at Atlantas Centennial Olym-
14 pic Park, and by attacks against U.S. diplomats in Pakistan and U.S. military personnel in Saudi Arabia. In the 104th Congress theCommittee held eight hearings, both open and closed, on terrorism.The Committee has given special attention to the terrorist threatin Saudi Arabia and intelligence support to the military deployedin the Middle East. The Committee received testimony from Secretary of Defense William J. Perry, DCI John Deutch, FBI Director Louis Freeh, numerous other Administration officials, academiciansand other experts.Through these hearings the Committee received an assessmentof the worldwide terrorist threat and the particular threat in theMiddle East, including an analysis of the size, organization, capabilities, state sponsorship and interlocking ties of terrorist groups. These hearings also explored the collection posture of the U.S. Intelligence Community vis-a-vis international terrorism and the adequacy of existing resources. In the wake of the bombings in Saudi Arabia, Secretary of Defense William Perry testified before the Committee regarding thesituation in Saudi Arabia. These tragedies and his testimony con-centrated the Committees attention on the issue of intelligencesupport to the military for force protection. The Committee contin-ues to evaluate how well the relationship between the Intelligence Community and the military commanders is working and what theIntelligence Community can do to better support this critical re-quirement.Shortly before the 104th Congress completed its work, the Ad-ministration asked for an increase in authorized funds and person-nel for fiscal year 1997 for Intelligence Communitycounterterrorism programs. These increases were sought as part of a larger Administration initiative to enhance U.S. Governmentcounterterrorism capabilities. The Committee supported this re-quest by modifying the Schedule of Authorization contained in thereport of the Committee of Conference for the Intelligence Author-ization Act for Fiscal Year 1997 to reflect the requested increasesin dollars and civilian positions.The Committee will continue to search for ways to enhance thecapability of the Intelligence Community to collect against terroristgroups and to ensure the adequacy of the resources devoted to thistarget.
B. KHUBAR TOWERS AND OPM-SANG BOMBINGS On June 25, 1996, at approximately 10:00 p.m. local time, an explosion shook the Khubar Towers housing compound in Dhahran, Saudi Arabia. The blast killed 19 American military service personnel and at least one Saudi civilian, wounded more than 200 Americans and injured hundreds of other civilians. At the time, theKhubar Towers complex was home for the airmen of the U.S. AirForces 4404th Fighter Wing (Provisional), under the operationalcommand of U.S. Central Command (USCENTCOM), who wereparticipating in the United Nations effort to enforce the no-flyzone in southern Iraq. The attack at Khubar Towers was the sec-ond major terrorist incident directed at U.S. interests, and U.S.military presence specifically, in Saudi Arabia in less than a year.On November 13, 1995, a car bomb containing approximately 250
15 pounds of explosives detonated outside the headquarters of the Office of the Program Manager of the Saudi Arabian National Guard(OPMSANG) in Riyadh. The building was used by American military forces as a training facility for Saudi military personnel. Five Americans died and 34 were wounded in this attack.The staff of the Senate Select Committee on Intelligence conducted a preliminary inquiry into the adequacy of the Intelligence Communitys collection, analysis and dissemination of intelligenceconcerning terrorist threats in Saudi Arabia prior to the OPMSANG and Khubar Towers bombings to determine whether a significant intelligence failure had occurred. The Committee staff reviewed intelligence reporting produced from late 1994 throughJune 1996. These products included reports from the Central Intel-ligence Agency, the Defense Intelligence Agency, the National Security Agency, the State Department and others. During the inquiry, Committee staff also interviewed field commanders and military personnel who played a critical force protection and security role just prior to and immediately after the blast. The staff also interviewed the FBI lead investigator on the scene in Dhahran, as well as top-ranking Intelligence Community personnel. As part of this inquiry, Chairman Arlen Specter and staff traveled to Dhahran, Riyadh, and Jeddah, Saudi Arabia and other Middle East countries in August 1996. During this trip the Committee interviewed individuals in the Intelligence Community, the DefenseDepartment, and the State Department. Senator Specter and staffalso met with Saudi Crown Prince Abdullah and Defense Minister Sultan while in Jeddah, as well as with other Middle East leaderswith unique insight into terrorist activity in the region such asPrime Minister Netanyahu of Israel, President Assad of Syria, and President Arafat of the Palestinian Authority. The Committee held several hearings focusing on terrorism, thesituation in Saudi Arabia, and intelligence support to the militaryin the region. The available information led Chairman Specter to issue a report stating that the U.S. Intelligence Community provided sufficient information not only to suggest active terroristtargeting of U.S. personnel and facilities, but also to predict likely terrorist targets (of which OPMSANG and Khubar Towers were among the most probable). Further, having concluded that the DCI was fully cognizant of and attentive to the force protection issuesin the Eastern Province prior to the June 25 attack, and that con-secutive DCIs ensured that this force protection information wasdisseminated to proper Defense Department recipients, ChairmanSpecter concluded that an intelligence failure did not occur.
VI. COUNTERPROLIFERATIONA. NON-PROLIFERATION The Committee continued in the 104th Congress the high prior-ity that it has accorded over the years to the need to counter theproliferation of weapons of mass destruction (WMD). The Commit-tees concern extends to nuclear, chemical and biological weapons,as well as long-range delivery systems for such weapons. In the104th Congress, as in past years, the Committee added funds to
16 the intelligence budget to better equip U.S. policy makers to understand and combat this major threat to U.S. national security.The Committee held a closed hearing in 1995 on the capability of U.S. intelligence to meet policy makers needs in this field. An-other closed hearing in 1995 focused on Iran, including the statusof that countrys WMD programs. On March 13, 1996, the Committee held a public hearing on the threat that weapons of mass de-struction might be used in terrorist attacks in the United Statesor against U.S. interests (especially in light of the Aum Shinrikyo groups release of lethal chemical agents in the Tokyo subway).Also in 1996, the Committee received closed briefings on Chinese involvement in weapons proliferation, notably including its sales toPakistan of ring magnets that could be used in a uranium enrich-ment process and its actions in providing long-range missiles toPakistan. Another issue of concern to the Committee has been thestatus and control of nuclear weapons and weapons-grade mate-rials in other countries, especially the former Soviet Union.
B. NORTH KOREAN WEAPONS OF MASS DESTRUCTION PROGRAMS The U.S.-North Korean nuclear framework agreement, which hadbecome a matter of concern to the Committee in 1994, continuedto be a topic in closed briefings and hearings in 1995. The Commit-tee was particularly concerned, during the 104th Congress, aboutreports of North Korean misuse of the first tranche of oil providedby the United States and about U.S. capabilities to ensure that any further shipments would be used only in accord with the agreements provisions.At the Committees public hearing of January 10, 1995, on world-wide threats to U.S. interests, both DCI James Woolsey and DIA Director James Clapper discussed North Koreas long-range missile program, which was seen as more likely than any other countriesprograms to result eventually in a new thereat to U.S. territory. On February 22, 1995, the Committee held a closed hearing to examine more closely the issue of prospective ballistic and cruise missilethreats to the United States.C. LONG-RANGE MISSILE THREATIn early 1996, some members of the Senate expressed concern re-garding a National Intelligence Estimate (NIE) of the long-rangemissile threat to the United States, which they feared might havebeen influenced by political or policy considerations. These expres-sions of concern led the Staff Director to undertake a staff inquiryinto the estimative process and the intelligence information andanalysis that formed the basis for those estimates.On December 4, 1996, the Committee held an open hearing to re-view these intelligence estimates. Witnesses included John E.McLaughlin, Vice Chairman, National Intelligence Council; Richard Davis, Director, National Security Affairs, General Accounting Office; R. James Woolsey, former Director of Central Intelligence,19931995; Robert M. Gates, former Director of Central Intel-ligence, 19911993 and chairman of a panel of independent expertsappointed by DCI Deutch to review the intelligence estimate pursuant to the National Defense Authorization Act for Fiscal Year 1997;
17and David J. Osias, National Intelligence Officer for Strategic Pro-grams and Nuclear Proliferation.At this hearing, former DCI Gates stated that the review panelfound no evidence that the intelligence estimate had been politi-cized. However, the Gates Panel did find faults of process and pres-entation in the NIE. The Panel found in particular that the NIEomitted needed back-up information and analysis underlying itsmain judgment (which paralleled the GAOs observation that pre-vious estimates had included more analysis) and that it gave toolittle attention to such significant, although less probable, outcomesas the use of cruise or shipborne ballistic missiles, breakdown ofthe Missile Technology Control Regime or unauthorized launch ofRussian missiles. The Panel also seconded former DCI Woolseysconcern that the NIE gave much too little attention to the threatto Alaska and Hawaii. Nonetheless, the review panel found soundtechnical reasons to support the Intelligence Communitys viewthat the United States is unlikely to face an indigenously developedand tested ICBM threat from the Third World before 2010, eventaking into account possible acquisition of foreign hardware andtechnical assistance.
VII. OVERSIGHT ACTIVITIES A. NATIONAL SECURITY THREATS TO THE UNITED STATESFor a number of years, the Committee has begun each new session of the Congress with an open hearing reviewing the Intel-ligence Communitys assessment of the current and projected na-tional security threats to the United States. The Intelligence Com-munitys assessment of the national security threat to the UnitedStates plays a critical role in defining our countrys foreign policyand forms the foundation for our military planning. It is thereforeessential that the Intelligence Community provide our nations policy makers with the most accurate and timely assessment of thesethreats possible. The hearings on the national security threat areheld in open session not only to inform the Committee, but to en-lighten the American public about the threats facing our country.Among the many issues addressed by these hearings have been the military capabilities of the former Soviet Union, the ballisticmissile threat, Chinas proliferation activity, the stability of theNorth Korean regime, Intelligence Community support to U.S. mili-tary operations in Bosnia, the stability of the Cuban regime, andeconomic espionage against the U.S.Continuing this tradition, on January 10, 1995, the Committeeheld an open hearing on the current and projected national securitythreats to the U.S. Testifying before the Committee were then-DCIR. James Woolsey, Lt. General James R. Clapper, Jr., USAF, thenDirector of the Defense Intelligence Agency (DIA), and Toby Gati,Assistant Secretary of State for Intelligence and Research (INR).On February 22, 1996, the Committee held a similar hearing, andtestifying before the Committee were DCI John M. Deutch, DIA Di-rector Lt. General Patrick M. Hughes, USA, and Toby Gati.The transcripts for the Committees January 10, 1995 hearing,Worldwide Intelligence Review [S. Hrg. 10415], and the Commit-tees February 22, 1996 hearing, Current and Projected National
18Security Threats to the United States and its Interests Abroad [S.Hrg. 104510], which include the responses to a large number ofquestions-for-the-record (QFRs) covering a broad spectrum of national security issues, were printed and made available to the public. Additionally, the Committee held an open hearing with DCI Deutch on December 18, 1996 to discuss issues confronting the United States Intelligence Community.
B. INTELLIGENCE SUPPORT TO U.S. EFFORTS IN BOSNIA Throughout the 104th Congress, the Committee continued tofocus on the conflict in the Republic of Bosnia-Herzegovina and tomonitor intelligence community support for policy makers and U.S.and U.N. forces deployed on peacekeeping missions in the region.During the summer of 1995, the Committee held four hearings toconsider the evolving military and diplomatic situations, the likeli-hood that U.S. troops would be sent to the region either as peace-keepers or to assist in a withdrawal of UNPROFOR troops, and thecapability of U.S. intelligence to support the needs of U.S. policymakers and military commanders. The issue of intelligence supportto U.S. military forces was of particular attention as a result of theincident in which a U.S. F15 aircraft was shot down by a Serbianmissile and its pilot was stranded for several days before he couldbe located and rescued. Also, the Committee held a joint open hear-ing with the Senate Foreign Relations Committee on August 9,1996 (S. Hrg. 104448) to review intelligence support to the warcrimes investigation in the former Yugoslavia.With the signing of the Dayton Peace Accords by the Federal Re-public of Yugoslavia, the Republic of Croatia, and the Republic ofBosnia & Herzegovina in November 1995, which brought the fight-ing among Bosnian Serbs, Bosnian Croats and Bosnian Muslims inthe disputed Bosnia-Herzegovina area to a halt, and the subse-quent deployment of U.S. troops into Bosnia as part of the Imple-mentation Force (IFOR), the Committee began an extensive reviewof intelligence support to U.S. military forces in the Bosnian thea-ter. The Committee received regular briefings from the DCIs Bal-kan Task Force, tasked to monitor compliance with the accords,and conducted three hearings on the viability of a time-limited de-ployment of U.S. implementation forces and the lifting of the armsembargo for all involved parties. The Committee also held numer-ous closed hearings and briefings to determine the effectiveness ofcollection, analysis and dissemination of U.S. intelligence to sup-port deployed forces in the field. Several members and staff trav-eled to the former Yugoslavia to meet with U.S. military commanders and intelligence officials to evaluate first hand the effectivenessof U.S. intelligence operations in support of Operation Joint En-deavor. The Intelligence Community continues to monitor the intel-ligence situation in Bosnia with regular updates from the Intel-ligence Community.
C. INQUIRY INTO U.S. ACTIONS REGARDING IRANIAN AND OTHER ARMSTRANSFERS TO THE BOSNIAN ARMYOn April 5, 1996, the Los Angeles Times reported that President Clinton secretly gave a green light to covert Iranian arms ship-
19ments into Bosnia in 1994 despite a United Nations arms embargothat the United States was pledged to uphold and the administra-tions own policy of isolating Tehran globally as a supporter of ter-rorism. The Committee began an inquiry into the matter on April7, 1996.The Committee held three public hearings, four closed hearingsand six informal sessions on this matter. Testimony was takenfrom: DCI John M. Deutch; former DCI R. James Woolsey; DeputySecretary of State Strobe Talbott; former Assistant Secretary ofState Richard Holbrooke; the Honorable Charles E. Redman (U.S.Ambassador to Germany and former Special Envoy to the FormerYugoslavia); the Honorable Peter W. Galbraith (U.S. Ambassadorto Croatia); three other persons who served in the U.S. Embassyin Zagreb in 19941995; and legal officials from the Department ofState and Department of Defense. Informal sessions were held withsome of the above persons and with: Dr. William Perry, Secretaryof Defense; General John Shalikashvili, Chairman of the JointChiefs of Staff; Dr. Anthony S. Harrington, Chairman, Presidents Intelligence Oversight Board (IOB). Formal and informal staffinterviews were held with Department of State, Department of De-fense and intelligence personnel, and with the chairman and staffof the IOB.The Committees staff reviewed substantial material provided bythe CIA and the NSA and smaller, but significant, amounts of ma-terial provided by the Department of State and Department of De-fense (including finished intelligence products of the Defense Intel-ligence Agency), as well as some National Security Council (NSC)documents. The Chairman and Vice Chairman were also briefed byNSC staff personnel on some documents that the Executive branchrefused to show to Committee staff.On November 7, 1996, the Committee issued a public report sum-marizing its findings and recommendations in this matter. The re-ports findings included the following:The decision to let Croatia transship Iranian and other armsto the Bosnian Muslims was made by the President and wasimplemented largely by Department of State and NSC person-nel. Unusual steps were taken to keep this action secret, suchas refraining from filing cables on it or from mentioning it atNSC meetings. These steps kept knowledge of this significantpolicy change from other agencies, including the Department ofDefense and the CIA. Although the executive branch did inform appropriate com-mittees of intelligence information on the arms flows, it did notinform Congress of the decision to let Croatia transship Ira-nian and other arms to the Bosnian Muslims. This action leftCongress dangerously ignorant of U.S. policy, even as it de-bated and voted on legislation regarding enforcement of thearms embargo.CIA officials became attentive to actions that might con-stitute an illegal covert action activity, which CIA personnelfeared was under way. CIAs concerns may have been over-wrought, but so are the allegations that CIA was spying onDepartment of State personnel.
20 Much confusion might have been averted if Deputy Secretary Talbott or other State Department officials had adequately ex-plained to DCI Woolsey the new policy and their intent thatIranian arms be permitted to flow to Bosnia and Croatia. It would also have helped if State Department Headquarters hadprovided clearer instructions to Ambassador Galbraith. The decision to let Croatia transship Iranian and other arms to the Bosnian Muslims achieved its purpose of affecting thebalance of forces in the former Yugoslavia without promptingEuropean actions that the United States had feared wouldbreed a wider and bloodier war. But Iran maintained and prob-ably increased its influence in Bosnia as a result of its resumedrole as Bosnias major arms supplier. In addition, Croatian offi-cials for a time found it hard to reconcile U.S. support of Ira-nian arms flows to Bosnia with continued U.S. support forother United Nations arms embargoes (such as that againstLibya) and opposition to Iranian support for terrorism.Ambassador Redman may not have intervened with Croatianofficials to secure release of a Bosnian convoy in May 1994,contrary to the IOBs conclusion that he probably did so.Executive branch personnel in senior overseas positions didnot always understand the law and regulations governing cov-ert action programs.Covert action options were prepared by Executive branchagencies in 1994 and 1995, but no covert action program forBosnia was approved by the Executive branch. CIA consistently opposed undertaking such a program. Some Executive branch officials made statements to Bosnian and/or Croatian officials in the summer and fall of 1994 that suggested support for increased covert shipments of arms tothe Bosnian Muslims.The Committee could not determine whether U.S. officials of-fered either support in implementing a larger arms pipeline ora quid pro quo to Croatia for agreeing to such increased armsshipments. The Committee found no evidence that the UnitedStates ever provided such support or any quid pro quo to Cro-atia, or encouraged any country other than Croatia to providearms or military assistance in violation of the arms embargo.In early 1995, one U.S. official told a Croatian official thatthe United States did not want Croatia to discontinue a military resupply effort in Bosnia. In the summer of 1995, U.S. personnel inspected rocketsbound for Bosnia; the Committee could not determine whetherthis activity was undertaken for the purpose of encouragingCroatia to continue the covert arms shipments. The Committee could not agree on whether the actions of U.S. officials constituted covert action under section 503(e) ofthe National Security Act of 1947. It did conclude, however,that the interchange between the United States Ambassador to Croatia and the President of Croatia in April 1994 did not con-stitute traditional diplomatic activity, at least as that term isunderstood by most Americans. The Committee disagreed, moreover, with the Executive branch view that diplomatic re-quests to third parties to conduct covert action are not covered
21 by the definition of covert action. It also noted that any encour-agement of promotion of arms shipments to Bosnia could vio-late Executive Order 12846, 58 FR 25771 (April 25, 1993) onsanctions against the former Yugoslavia. Allegations regarding U.S. military or CIA involvement inthe arms flow or in logistical support to the Bosnian Army ap-pear to be false.The Committee found three areas in which administrative orlegislative actions appear to be required:Recommendation No. 1: The Executive branch, especially theWhite House and the Department of State, should make awritten record of every significant foreign policy decision, andespecially of those decisions that reflect a change in policy; andit should ensure that adequate mechanisms are in place togenerate and protect communications that are particularly sensitive. Recommendation No. 2: The Executive branch should keepthe Committee fully and currently informed of the sub-stantive content of intelligence that is collected or analyzed byU.S. intelligence agencies.Recommendation No. 3: The Executive branch should informCongress of significant secret changes in U.S. foreign policy.
D. CONGRESSIONAL NOTIFICATION OF FOREIGN POLICY DECISIONSAs an outgrowth of its inquiry into the Iranian arms to Bosniamatter, on September 5, 1996, the Committee held a hearing onthe desirability of legislation to require the Executive Branch to no-tify Congress of secret changes in the overt foreign policy of theUnited States. The Committee received testimony from DCI John Deutch; former White House Counsel Lloyd Cutler; former NSC of-ficial and American Civil Liberties Union Washington Office Director Morton Halperin; Acting State Department Legal Adviser Michael Matheson; and Defense Department Deputy General CounselWhit Peters.During the hearing, members of the Committee expressed con-cern that Congress had not been informed of the Administrations decision to acquiesce in Iranian arms shipments through Croatia into Bosnia. Members questioned whether the actions of Adminis-tration officials constituted a covert action for purposes of Title V of the National Security Act and, if not, whether Title V shouldbe amended or separate legislation should be enacted to require no-tice in similar circumstances. While noting the need for improvedcommunication between the executive branch and Congress on for-eign policy matters, Mr. Cutler and Mr. Halperin questionedwhether legislation requiring notification of foreign policy decisionswas the appropriate means to accomplish this goal. Further, Ad-ministration witnesses raised concerns regarding how such a statu-tory requirement would work on a practical level. The Committeeultimately decided not to introduce legislation in the 104th Con-gress but discussed its concerns in greater detail in its report onthe arms to Bosnia matter.
E. PERSIAN GULF SYNDROME Shortly after the end of the Persian Gulf War in February of1991, U.S. military personnel, both active duty and reserve, beganto complain about unexplained illnesses. Symptoms included: fa-tigue, watery eyes, itchy skin, diarrhea, headaches, nausea, sleepdisorder and memory loss. Exposure of U.S. personnel to nerveagents or mustard agents had been cited as one of many possiblecauses of what has come to be known as Persian Gulf Syndrome.The Committee questioned Dr. John Deutch about his knowledgeand involvement in this issue during his confirmation hearing onApril 26, 1995. On September 25, 1996 the Committee held a pub-lic hearing to receive intelligence assessments on the possibility ofexposure of U.S. military personnel to chemical warfare agents dur-ing Operation Desert Storm. Witnesses included: Mr. John McLaughlin, Vice Chairman for Estimates, National IntelligenceCouncil; Dr. Stephen Joseph, Assistant Secretary of Defense,Health Affairs; and Dr. Robert Kizer, Undersecretary for Health,Department of Veterans Affairs. Intelligence reports dating back to1991, which had been discovered by the CIA during a review of thisissue, determined that U.S. troops may have been exposed to sarinnerve gas when they destroyed an ammunition dump at al-Khamisiyah in southern Iraq in March 1991. The Department ofDefense has estimated that up to 20,000 U.S. troops could havebeen exposed to low levels of sarin gas as a result of the destruc-tion of the rockets in Khamisiyah.F. ZONA ROSAOn June 19, 1985, four U.S. Marines and two American business-men were shot and killed while they were seated at a sidewalk cafein the Zona Rosa district of San Salvador, reportedly by a factionof the communist FMLN movement during El Salvadors civil war.In mid-1995, the television show 60 Minutes claimed that themastermind behind the incident went unpunished and was livingin the United States. The Committee asked DCI John Deutch to investigate the allegations.In October 1995, officials from the Central Intelligence Agency,the Department of State, and the Department of Justice indicatedthat a preliminary review of available data indicated that the Department of State had assisted in the entry into the United Statesof a person believed to have some involvement with the ZonaRosa murders. Therefore, the Committee asked the Secretary of State to direct his Inspector General to conduct a review. The re-view was expanded in February 1996 to include the CIA, the De-partment of Defense, and Department of Justices Inspector Generals to determine if they had been any government wrong doing,and if prosecution or deportation was appropriate for those respon-sible for the June 1985 terrorist attack.In October 1996, the Committee held a closed briefing on the In-spector General (IG) investigations into the Zona Rosa case. During the course of its investigation, the Committee received information from the IG reports which suggested that State Department andpossibly CIA officials may have acted improperly in this case. At the time this report was written, the Committee was preparing aconsolidated report for release to the public.
G. VIETNAMESE COMMANDOS The Committee held a hearing on June 19, 1996, to hear testi-mony regarding a Vietnam-era covert action program. This oper-ation, funded and supported by the United States, sent severalhundred Vietnamese commandos into North Vietnam on espionageand sabotage missions. Nearly all of these commandos were killedor captured by the North Vietnamese. Those who were capturedwere not released in 1973 following the Paris peace agreement andspent as long as twenty years in North Vietnamese jails. Recentlydeclassified documents and statements made by individuals in-volved with this program suggested that in 1964 U.S. officials di-recting the operation began declaring these men as killed-in-actionso that the captured commandos could be dropped from the pro-grams payroll. In a case in the U.S. Court of Claims, 281 of thesecommandos sought payment from the U.S. Government for thetime they spend in prison.After the Committees hearing, Senators John Kerry and JohnMcCain offered an amendment to the Defense Authorization Bill toprovide these men, or their heirs, with compensation. The Adminis-tration, without reference to any outstanding legal issues, sup-ported the Kerry-McCain amendment. This provision was includedin the National Defense Authorization Act for Fiscal Year 1997signed by President Clinton. The Department of Defense Appro-priations Conference Report contained identical language and pro-vided up to $20 million for payment of the claims.
H. CIA/CONTRA/COCAINE LINK Beginning August 18, 1996, the San Jose Mercury News ran athree-day series of articles purporting to trace the origins of thecrack coccaine epidemic to a pair of Nicaraguan drug traffickerswith connections to the U.S. backed Contras. The series, Dark Al-liance: The Story Behind the Crack Explosion, A Mercury NewsSpecial Report, focused on the activities of two Nicaraguans and a Los Angeles drug dealer and made veiled references to possible CIA involvement in drug trafficking and/or interference in the investigation and prosecution of the Nicaraguan traffickers. Since the series ran in late August, various Members of Congresshave called for an investigation. The Director of the Office of National Drug Control Policy, General Barry McCaffrey, has also called for a review of the matter. On September 4, 1996 DCI JohnDeutch, noting the seriousness of the charges, notified the Commit-tee that he had asked the CIA Inspector General to conduct an im-mediate and thorough review of all the allegations. Director Deutchstated that a preliminary review found no signs of CIA involvementin such activity. The Justice Department Inspector General hasalso started an investigation. On October 23, 1996, the Committee held an open hearing tobegin an independent evaluation of the allegations. The witnessesincluded CIA Inspector General Fred Hitz, Department of Justice Inspector General Michael R. Bromwich, and former special counselto the Subcommittee on Terrorism, Narcotics and International Operations of the Senate Foreign Relations Committee Jack Blum. The hearing included a review of a previous Senate inquiry intosimilar accusations and an update on planned executive branch ac-tions. The Inspectors General from the CIA and Justice Depart-ment testified regarding the scope of their investigations.On November 26, 1996, the Committee held an open hearing toinvestigate alleged ties between the Contra organizations and drug trafficking. The witnesses included former Contra leader AdolfoCalero, and southern front leader Eden Pastora. The witnesses atthis hearing stated that, although the Contras may have receivedsome donations from Nicaraguans involved in narcotics trafficking,the CIA had no direct involvement with the drug traffickers.
I. CIA USE OF JOURNALISTS, CLERGY AND PEACE CORPS VOLUNTEERSIN INTELLIGENCE OPERATIONS The Committee first raised this issue with the Director of Central Intelligence during a public hearing on February 22, 1996 after discovering that a pending Council of Foreign Relations TaskForce report concerning Intelligence Community reform had rec-ommended that current policy prohibiting the use of journalists, members of the clergy and Peace Corps volunteers be reexamined.In the ensuring debate it was pointed out that the Director of Central Intelligence has the authority under current regulation towaive any prohibitions. That waiver authority also applies to theclergy and, to a more limited extent, Peace Corps volunteers.The Committee held a hearing on July 17, 1996 on this issue.Testifying before the Committee were Senator Paul Coverdell (RGA); DCI John Deutch; Kenneth L. Adelman, journalist and formerU.S. official; Terry Anderson, journalist; Ted Koppel, anchorman,ABC News Nightline; Mortimer B. Zuckerman, Chairman andEditor-in-Chief, US News and World Report; Dr. Don Argue,President, National association of Evangelicals; Dr.. John Orme,Executive Director, International Foreign Mission Association; Sis-ter Claudette La Verdiere, President, Maryknoll Sisters; and Dr.Rodney Page, Deputy General Secretary, Church World Serviceand Witness Unit, National Council of Churches.The Fiscal Year 1997 Intelligence Authorization conference re-port provided, in section 309, as policy of the Untied states, thatthe Intelligence Community would not use as an agent or asset forintelligence collection purposes any individual who is a member ofthe news media. However, the conference report allowed the Presi-dent or the Director of Central Intelligence to waive the prohibitionin a particular case if he or she determines in writing that thewaiver is necessary to address the overriding national security in-terests of the Untied States. The congressional intelligence commit-tees are to be notified of any waivers of section 309.
J. GUATEMALA During 1995 and 1996, the Committee inquired extensively intoCIA activities in Guatemala, focusing on the 1990 murder of Amer-ican citizen Michael DeVine and the death of Guatemala guerrillaEfrain Bamaca Velasquez. The Committee conducted one publichearing, two closed hearings and eight on-the-record briefings.
25 Committee Members and staff also traveled to Guatemala to con-duct further inquiries on two separate occasions.The Committees open hearing on April 5, 1995, focused on alle-gations regarding CIAs conduct in the events surrounding theDeVine murder and the fate of Efrain Bamaca as well as accusa-tions that the CIF funded intelligence programs in Guatemala incontravention of U.S. policy. Testimony was received from Admiral William Studeman, Acting Director of Central Intelligence; Alexan-der Watson, Assistant Secretary for Inter-American Affairs, De-partment of State; Col. Allen Cornell, former Defense Attache, U.S. Embassy, Guatemala; John Barrett, Counselor to the Inspector General, Department of Justice; and Carol DeVine and Jennifer Harbury, widows of Mr. DeVine and Mr. Bamaca, respectively. TheCommittees hearing transcript, Hearing on Guatemala, [S. Hrg.104161] was printed and is available to the public.The Committee also conducted two closed hearings in 1995onAugust 8 and September 29receiving testimony from a numberof officials of the CIA and Justice Department. As part of its in-quiry, the Committee also met with former U.S. Ambassador toGuatemala Thomas Stroock; Sister Dianna Ortiz, a victim ofhuman rights violations in Guatemala; various family membersand representatives of a number of other Americans subjected tohuman rights violations in Guatemala; and representatives ofhuman rights organizations. A CIA Inspector General investigation into the Guatemala casesled to a report issued in July 1995. As a result of the CIA IG reportand the Committees inquiry into this matter, DCI Deutch in Sep-tember 1995 took disciplinary action against a number of personnelfor their actions while stationed in or overseeing the CIA oper-ations in Guatemala. At the time this biennial report was written,the Committees inquiry into this matter was still underway.
K. INTELLIGENCE SUPPORT TO LAW ENFORCEMENTOn October 25, 1995 the Committee held an open hearing on in-telligence support to law enforcement, receiving testimony fromDeputy Attorney General Jamie Gorelick and CIA General CounselJeffrey Smith. The witnesses discussed the evolving relationshipbetween law enforcement and intelligence, the level of cooperationbetween the law enforcement and intelligence communities and theimpact of that cooperation on combatting terrorism, narcotics traf-ficking, alien smuggling and the smuggling of nuclear material.
L. CONGRESSIONAL NOTIFICATIONS OF INTELLIGENCE ACTIVITIESDuring the 104th Congress, the Committee continued its over-sight of the Intelligence Community and received nearly 300 notifi-cations of significant intelligence activities in 1995 and another 136between January and September 1996. In order to exercise its over-sight responsibilities more effectively and to preserve a comprehen-sive record over a longer period of time, the Committee in 1995 re-quested that all congressional notifications be made in writing. Inaddition, the Committee receives numerous briefings and updateson selected notifications and current intelligence issues.
M. AIRBORNE RECONNAISSANCE The Committee continued its strong support for both the mannedand unmanned airborne reconnaissance programs of the Depart-ment of Defense in the 104th Congress. The Committee believesthat it is vital to maintain a robust airborne reconnaissance forcethat is capable of collection satisfying priority intelligence require-ments in peacetime, crisis, and war.In the area of manned reconnaissance, the Committee has beenconcerned with the high operational tempo rates of our mannedairborne reconnaissance platforms. Because of these high oper-ational rates, the Committee initiated a program to re-engine theRC135 speciality aircraft fleet. This engine upgrade will signifi-cantly improve the performance of the RC135 fleet and decreaseoperations and maintenance costs. The Committee has also beenconcerned that the appropriate level of resources has not been pro-grammed to update the sensor capabilities on several manned re-connaissance platforms. The Committee views these sensor up-grades to be essential in order to provide mission-capable forces tothe regional Commanders-in-Chief (CINCs). Therefore, the Com-mittee made increased funding for additional sensors a priority inthe 104th Congress. The Committee will continue to ensure thatmanned platforms receive the required funding for sensors to fulfilltheir reconnaissance missions in the future.The Committee remains concerned that the Defense Departmenthas initiated more Unmanned Aerial Vehicle (UAV) programs thancan be supported in the future years Defense budget. While theCommittee was unsuccessful in terminating one of the UAV pro-grams, the Defense Department did restructure the current familyof UAVs under development from five programs to four. The Com-mittee continues to support the development of UAVs, but remainsconcerned over the outyear budget implications of the various UAVprograms as they transition from research and development intoprocurement.The Committee continued its strong support for the Defense Air-borne Reconnaissance Office (DARO). While the Committee hassupported increases to the DARO budget, the Committee has alsobecome concerned over the ability of the DARO to fully execute itsprograms. The Committee will continue to work with the leader-ship of the DARO to closely monitor program execution.
N. NATIONAL RECONNAISSANCE OFFICE CARRY FORWARD In July 1995, Congress discovered the National ReconnaissanceOffice (NRO) had funding available grossly in excess of its fiscalyear 1995 requirements. This condition was created largely byNRO program delays and by poor internal controls within the Na-tional Reconnaissance Office. In response, the Committee rec-ommended, and the Senate approved, significant reductions in thePresidents budget requests for the National Reconnaissance Pro-gram in fiscal years 1996 and 1997. It also directed the CIA andDefense Department Inspectors General to conduct reviews of thestatus of funding within the National Reconnaissance Office andselected programs of the Department of Defense. Learning of nomisuse of Government funds during the intense executive branch
27and legislative branch reviews of the NROs financial status, theCommittee recommended, and the Senate approved, new financialmanagement practices for the National Reconnaissance Office inthe report accompanying the Fiscal Year 1997 Intelligence Author-ization Act.
O. SMALL SATELLITES As part of the fiscal year 1996 intelligence authorization process, a heated executive branch, legislative branch and public debate de-veloped concerning the next generation of reconnaissance satellites.To help resolve the issue, the Director of Central Intelligenceformed a panel of experts outside of the Government on reconnais-sance satellites under Dr. Robert Hermann, a former director of the NRO and senior Defense Department official. Although the panelsreport is classified, an unclassified version was publicly released,recommending the next generation of satellites should be smallervehicles than the current class. It further recommended movingforward expeditiously with this initiative. In the conference reportto the fiscal year 1997 Intelligence Authorization Act, the Commit-tee used the Hermann panels vision as a component of many of itsrecommendations.
P. COVERT ACTION Covert action funding continued to comprise a small proportion of the intelligence budget throughout the 104th Congress. Never-theless, the Committee continues to conduct rigorous oversight ofcovert action programs, helping to ensure that such programs servean agreed foreign policy objective and are conducted in accordancewith American laws and values.
Q. ENCRYPTION EXPORT POLICY The introduction of legislation in the 104th Congress to liberalizethe export of encryption products spurred the Committee to under-take a series of briefings to assess the potential impact of such leg-islation on U.S. national security interests. Due to the many equi-ties involved, including those of business and law enforcement aswell as the Intelligence Community, the Committee sought theviews of numerous individuals from both the public and privatesectors and interviewed the authors of the National ResearchCouncil (NRC) report entitled, Cryptographys Role in Securingthe Information Society.Due to the sensitivity of some issues associated with encryptionpolicies, and the interest the topic engendered on the part of anumber of different Senators and committees, the Committee tookthe lead in arranging a classified briefing that provided all inter-ested members the opportunity to directly question the DCI, theDirector of the FBI, and the Deputy Attorney General, all of whomplay pivotal roles in the development and implementation of Ad-ministration encryption export policy. As a result of this and otherIntelligence Community briefings, as well as the seeming progressof Industry-Administration negotiations on the encryption exportissue, the Chairman and Vice Chairman of the Committee con-cluded, as the authors of the NRC report had, that it would be premature to enact legislation to establish a statutory framework forU.S. encryption export policy.Shortly before the adjournment of the 104th Congress, the Ad-ministration announced the parameters of a new encryption exportpolicy. Pursuant to this policy, corporations willing to commit tothe development of key escrow encryption productssystems that would accommodate the needs of law enforcement for court-author-ized access to electronic communicationswill be permitted for upto two years to export 56 bit encryption technologies. This policyis certain to renew interest in the encryption issue in the 105thCongress and will remain a topic of concern for the IntelligenceCommittee.
R. SECURITY OF THE U.S. INFORMATION INFRASTRUCTURE During its review of the fiscal year 1996 request for the Depart-ment of Defense Information Systems Security Program (ISSP), theCommittee became concerned over the lack of a national strategyfor dealing with threats to the U.S. information infrastructure.This infrastructure includes the enormous variety of public and pri-vate communication and information systems that today control ev-erything from telephone switching to routine financial transactionsand airport traffic control. These systems are the functional equiva-lent of a national central nervous system, and threats to their oper-ation could have grave ramifications for U.S. national security. Anestimated 95% of Defense Department communications are carriedon the public switch network (PSN) operated by private tele-communications vendors. Further, even with the Administrationsrequested budget increases in 1996 and 1997, overall informationsecurity spending and manpower are still far below the levels ofthe late 1980s, notwithstanding an increased Defense Departmentreliance on information systems to achieve dominant battlespaceawareness in future conflicts.To address these concerns, in June 1995 the Committee re-quested a report from the Secretary of Defense and the Director ofCentral Intelligence on the threats to the U.S. information infra-structure as well as a comprehensive strategy for ameliorating suchthreats. The report was to have been received by the Committeenot later than March 1, 1996.In response to this request, the committee received a letter dated January 3, 1996, from the DCI expressing agreement with the needfor a comprehensive threat assessment. The DCIs letter, however,also indicated that it would be impossible to meet the Committeesdeadline. The Department of Defense has still not provided a writ-ten response, although the Committee has been orally notified thata reply will soon be forthcoming.Due to the concerns expressed by the Committee and the vigor-ous, independent efforts of Senators John Kyl (RAZ) and SamNunn (DGA), the Administration has established a PresidentialCommission with a broad mandate to assess the issues raised bythe committee in 1995. The Committee intends to maintain itsscrutiny of this important issue and will carefully evaluate thefindings and recommendations of the Presidential Commission.
S. JANE DOE THOMPSON CASE During the 104th Congress the Committee continued to follow the progress of the Jane Doe Thompson case. Jane Doe Thompsonis a pseudonym for a female CIA Directorate of Operations officer who in July 1994 filed a lawsuit against the CIA alleging, among other things, sexual discrimination in terms of her assignmentsand promotions and unfair treatment by the CIA Inspector General(IG). Thompson was the subject of an IG investigation which began in 1991 and was completed the following year. The IG recommended disciplinary actions be levied against Ms. Thompson, who filed suit against the CIA IG and other CIA personnel in July 1994 in the U.S. District Court for the Eastern District of Virginia. The law suit alleged that the CIA IGs investigation of her had been improper and discriminated against her as a woman; and that she had been the victim of discrimination with respect to her assignments and promotions within the CIA Directorate of Operations. On December 22, 1994, prior to the case being tried, an agreement was reached between Ms. Thompson and the CIA wherein, among other things, Ms. Thompson agreed to accept immediate voluntary retirement and was paid a lump sum payment of $385,000 by the CIA. In March 1995 CIA IG Fred Hitz appeared as the sole witness before a closed session of the Committee to discuss the Thompsoncase and other IG matters.
T. OVERSIGHT OF THE INTELLIGENCE COMMUNITY INSPECTORS GENERAL Senate Resolution 400, 94th Congress, established the SelectCommittee to oversee and make continuing studies of the intel-ligence activities and programs of the United Stats Government,and to provide vigilant legislative oversight over the intelligenceactivities of the United States. An important part of the Commit-tees oversight has been close monitoring of the activities of the In-spectors General (IGs) of the Intelligence Community, and reviewof IG products.During the 104th Congress the Committee held five hearings andbriefings with various IGs on intelligence issues, and reviewednearly 200 IG reports. The Committee also arranged numerousbriefings with Community program and IG personnel in order tofollow up on the findings and recommendations from a variety ofIG products. Examples include NRO financial practices, CIA ad-ministration of bank accounts, employee grievances, CIA and NROemployee and applicant investigation procedures, and sensitiveDIA program. Staff also meets with the IGs on a regular basis toaddress administrative issues such as IG quality control, staffingand budgets. In addition, staff attended two Intelligence Commu-nity IG conferences and participated as guest speakers at three IGconferences. The Committees Audit Staff is currently engaged in adetailed review of internal controls and procedures for the CIA IG.On December 21, 1995, special recognition was given to FredHitz, the first CIA statutory Inspector General, on his five year an-niversary in that office. Senate Resolution 201 (104th Congress, 1st Session) commended the CIA IG and acknowledged the important role of the statutory Inspector Generals Office on their role in theoversight of that agency.The Committee also recognized that the Intelligence Communityagencies are becoming increasingly interconnected and, as a result,Intelligence Community IGs must work closely with each other ona growing number of interrelated issues. In language accompany-ing the Committees fiscal year 1997 authorization bill, the IGsform CIA, Central Imagery Office, Defense Intelligence Agency, De-partment of Defense, Department of Energy, the Military Services, National Reconnaissance Office, National Security Agency, and the Departments of State, Treasury and Justice were directed to pro-vide by January 15, 1997 a report to the Committee describing the reviews involving intelligence issues they have cooperated on since January 1, 1994. In addition, the Committee language asked each of the IGs to make any recommendations they deem appropriate for improving coordination and communication between the IGs, aswell as individual IG assessments of the feasibility and desirabilityof creating an IG for the Intelligence Community to coordinate alljoint intelligence efforts.
ORGANIZED CRIME IN THE FORMER SOVIET UNION The crime problem facing Russia and the other states of the former Soviet Union is staggering. The conversion to a market economy has impoverished many people, causing some to turn to crime for survival. And a legal system without basic laws on cor-ruption, conflict of interest, or racketeering is matched by law en-forcement agencies that may themselves be tainted. The endemiccrime and corruption threatens not only the transition to a market-oriented society, but also the nascent democracies in these nations.This situation hinders the ability of the West to help the transi-tion by discouraging investment and causing nations to questionthe efficacy of their foreign aid. The extortion and protection rack-ets have targeted foreign concerns as well as indigenous busi-nesses. A poll of business executives rated Russia as the worstplace in the world to do business, largely on the basis of the crimeproblem. Organized crime in the former Soviet Union has a direct effecton U.S. interests. These groups have spread quickly and made con-nections with other international criminal organizations. In manycases they are already operating in the United States and Europe.They also have ties to Chinese, Japanese, and Israeli criminal orga-nizations, as well as the Italian mafia and the South Americandrug cartels.On March 15, 1996, the Committee held a hearing to examinethe Administrations response to this problem. The State Depart-ment, the FBI, and intelligence agencies described their attemptsto help former Soviet states deal with the organized crime problemand their efforts to better coordinate their activities. The Commit-tee has attempted to encourage cooperation between intelligence anlaw enforcement agencies and will continue to pursue this goal.V. PROGRAM REVIEW AND AUDIT STAFFThe Audit Staff was created in 1988 by the Committee to providea credible independent arm for Committee review of covert action programs and other specific Intelligence Community functions andissues. During the 104th Congress the Audit Staff was increasedfrom two to three persons. The Program Review and Audit Staff ei-ther led or provided significant support to numerous Committee re-views and oversight activities. In addition, the Audit Staff conducted four in-depth reviews, including one of a covert action pro-gram. These reviews included the following:
Covert Action Review.
The Audit Staff conducted an extensivereview of a covert action program. Thirteen recommendations weremade to improve the effectiveness and efficiency of the program. Intelligence Community Budget Execution.One of the mostnoteworthy unclassified projects undertaken by the Program Review and Audit Staff was a review of Intelligence Community (IC) Budget Execution. The review was prompted by revelations aboutthe financial management practices at the National Reconnais-sance Office (NRO) resulting in the NROs financial position beinginaccurately reported to the Congress, and NRO managementbeing unaware that forward funding levels had reached $3.7 billionas of 30 September 1995.The staff review Intelligence Community budget execution monitoring with particular emphasis on the effectiveness on internal controls which would prevent the accumulation of excess forward funding at other Intelligence Community organizations. As the review progressed, staff learned that until recently only limited over-sight existed for the execution of many of the IC budgets. The staff found that prior to the 1995 revelations regarding the NROs excess forward funding, NFIP budget execution monitoringhad not been done in any significant way by any office outside theindividual agency comptrollers. For example, neither the Office ofManagement and Budget (OMB), Office of the Secretary of Defense(OSD), nor Community Management Staff (CMS) participated insubstantive reviews of NFIP budget execution.The NRO forward funding issue caused OMB, OSD and CMS torethink their oversight responsibilities and their capability to mon-itor NFIP funds. During the last year the three organizations havebegun working together to increase their individual, as well astheir combined, efforts to provide budget formulation and executionoversight of the NFIP programs.
VIII. FOREIGN INTELLIGENCE A. NORTH KOREA Since North Koreas accession to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) in 1985, it has been a main objective of U.S. diplomacy to secure North Koreas full compliance withthe NPT. On October 21, 1994, the United States and the Demo-cratic Peoples Republic of Korea issued an Agreed Framework forresolution of the North Korean nuclear problem. In early 1995 theCommittee held a hearing to review the agreement and to assessthe ability of the Intelligence Community to monitor the agreementover its phased life. The hearing also reviewed North Koreasrecord on proliferation of weapons of mass destruction.The Committee continued to monitor the still tense situation onthe Korean peninsula and received an on the record briefing in December 1995. This briefing addressed questions on the status of North Koreas military preparedness and an evaluation of the Intelligence Communitys warning capability. The witnesses provided both a short- and medium-term overview of the likely evolution ofthe North Korean political and economic situation, and of the re-gional political and economic context in which it will take place.The deteriorating economic situation, with the possibility of severefood shortages, adds to an already unstable environment and theCommittee will continue to monitor the situation closely.
B. IRAQ The Committee held hearings and briefings on the situation in Iraq during the 104th Congress. After Saddam Hussein intervened in the Kurdish areas of northern Iraq, Director of Central Intelligence John Deutch testified on September 19, 1996 before theCommittee in open session on internal developments in Iraq in the wake of U.S. military action against that country. At that hearing,Director Deutch stated that Saddam Husseins hold on power hadbecome stronger as a result of the intervention in the fighting between Kurdish factions.
C. RUSSIA The political leadership, military situation, and ongoing economictransition in Russia were of continued interest to the Committeeduring 1995 and 1996. The Committee held a number of closedbriefings which focused upon Russia and the adequacy of intelligence assessments of that country. The Committee also reviewedthe Intelligence Communitys views on how the political situationin Russia could influence acceptance of the Chemical Weapons Con-vention and START II treaty by the Russian legislature.
D. CHINA The evolving relationship between the United States and Chinais critical for strategic and economic reasons. During the 104th Congress the Committee received testimony from representatives of CIA, DIA, NSA and the State Department on a variety of issuesaffecting this relationship. This testimony centered on the tensions between China and Taiwan in the time leading up to the Taiwan-ese Presidential election in March 1996. The witnesses also discussed Chinas involvement in proliferationactivities such as the publicly reported transfer of nuclear tech-nology and ballistic missiles to Pakistan. Finally the IntelligenceCommunity provided the Committee with an assessment of the im-pact of Chinas economic reform program and the evolving leader-ship transition as Deng Xiaoping fades from the scene.
E. MEXICO In the aftermath of the December 1994 Mexican peso crisis, theCommittee reviewed the Intelligence Communitys prior assess-ment of this situation. In a letter to the Washington Post printedon the February 28, 1995, the Committee stated that the CIA anal-yses did cover crucial economic and political factors in the monthsleading up to the crisis and made clear that a large, delayed devaluation of the peso would have significant ramifications for Mexicos economy and political situation. The Committee conducted aclosed briefing on March 22, 1995 to assess political, economic andsocial trends in Mexico, with a particular focus on the countrysbanking crisis.
F. ECONOMIC INTELLIGENCE During the last two years, the Intelligence Community has continued to refine and clarify its role in the collection of economic in-formation. As a part of the Committees Worldwide Intelligence Re-view hearing on January 10, 1995, then-DCI Woolsey defined whathe called the permissible side of economic intelligence, which in-cluded helping U.S. policymakers understand general economicforces, foreign positions and practices towards international agree-ments, and how foreign governments or firms are violating laws,breaking international agreements, or behaving outside the norm.DCI Woolsey stated that the United States does not spy on foreigncompanies for the purpose of providing information to U.S. firms,report information that is openly available in the public sector, orfocus on any economic issue that is not directly responsive to policy maker interests and needsOn November 7, 1995, the Committee held a closed briefing todevelop a better understanding of the many issues surrounding thecollection of economic intelligence. Specifically, the briefing pro-vided information on what economic information is targeted by the Intelligence Community, what sources and methods are used, howthe risks of collection are considered, and how valuable and uniquethe economic intelligence information is to consumers.As a part of the Committees February 22, 1996 hearing on Cur-rent and Projected National Security Threats to the United Statesand Its Interests Abroad, DCI Deutch described in greater detailthe types of economic intelligence that have been most useful to in-telligence consumers. This list included work done on key econo-mies such as Russia, China, Eastern Europe and large emergingmarkets; intelligence support for bilateral and multilateral negotiations; monitoring of foreign compliance with economic sanctionsagainst Iraq, Libya, and Serbia; and information to help policy-makers better understand how foreign governments have worked toundermine the efforts of U.S. business to secure overseas contracts.
G. ENVIRONMENTAL AND DEMOGRAPHIC INTELLIGENCE The Committee has continued its support for efforts to use intel-ligence sensors and data to assist environmental scientists and fed-eral agencies with an environmental mission. While funding forthis program through the Intelligence Community has remainedrelatively steady, the program has expanded due to the willingnessof other federal agencies to contribute resources to the effort.The core of the environmental program is a group of scientistsfrom a variety of environmental backgrounds representing govern-ment and academia who are sponsored by the Intelligence Commu-nity. This group is called MEDEA, and the scientists have receivedsecurity clearances enabling them to fully analyze and use intel-ligence data for environmental purposes. The MEDEA scientistscontinue to be in high demand by a number of federal agencies for their expertise and the unique resources they bring to bear on envi-ronmental questions. MEDEA has conducted a number of experi-ments to provide a baseline of knowledge regarding how intelligence sensors can be used to benefit environmental research andfederal agencies with an environmental mission.On December 12, 1995, the Committee held a closed briefing formembers to explore the importance of ecological and demographic information in intelligence analysis, and how ecological and demo-graphic factors may effect the stability of nations. Dr. Murray Feshbach of Georgetown University testified regarding the environ-mental devastation in Russia. Dr. Jack Goldstone of the Universityof California, Davis provided testimony regarding the demographics of China, and how population pressures will affect Chinas future.In addition, the Committee heard testimony from Dr. Richard Coo-per, the Chairman of the National Intelligence Council, regardingthe extent to which the Intelligence Community takes into accountecological and demographic information when producing intel-ligence estimates.
H. INTELLIGENCE SHARING WITH THE UNITED NATIONS In March 1995, the Committee learned of the discovery of several boxes of classified U.S. intelligence documents left unsecured in avacant United Nations office in Somalia. This discovery led notonly to questions regarding the security of U.S. classified informa-tion given to the U.N. Peacekeeping Forces in Somalia (UNOSOM),but also to broader questions regarding U.S. intelligence sharingwith the U.N.The Committee held a closed briefing for members on this issueon March 23, 1995, and received testimony from the State Depart-ment, the Department of Defense, and staff of the Director ofCentral Intelligence (DCI). In addition, the Committee requestedan investigation by the Department of Defense, including a damage assessment, of what happened in Somalia, how it happened, and what procedural improvements are needed to ensure this type of situation does not recur.A classified report summarizing the findings of the Departmentof State, the Department of Defense and the DCI on this issue wasproduced by the DCIs staff and sent to the Committee on June 6,1995. This report included recommendations for both institutionaland operational changes to improve United Nations information se-curity practices. The Committee has continued to monitor the im-plementation of these recommendations closely. This issue is par-ticularly important given the increasing frequency of United Statesparticipation in multilateral efforts overseas.To further address these concerns, the Committee included provi-sions in the Fiscal Year 1997 Intelligence Authorization Act requiring the President to certify that proper procedures to ensure the se-curity of classified information have been established and are being implemented by United Nations. Additionally, the President is required to submit semiannual reports to Congress on intelligence sharing with the United Nations and to reports to Congress any unauthorized disclosure of intelligence provided by the UnitedStates to the U.N.
IX. CONFIRMATIONSA. DCI JOHN M. DEUTCH On April 26, 1996, the Committee held a public hearing on thenomination of John M. Deutch to be Director of Central Intel-ligence. Since March of 1994, Mr. Deutch had served as the DeputySecretary of Defense and earlier served as Under Secretary of De-fense for Acquisition and Technology. A former professor and deanat the Massachusetts Institute of Technology, Mr. Deutch had pre-viously served in the Department of Energy as Director of EnergyResearch, Acting Assistant Secretary for Energy Technology, andUnder Secretary of the Department. Mr. Deutch holds a B.A. inhistory and economics from Amherst College, and a B.S. in chemi-cal engineering and a Ph.D. in physical chemistry from M.I.T.Mr. Deutch testified on his own behalf at the confirmation hear-ing. There were no other witnesses.On May 3, 1996 the Committee reported Mr. Deutchs nomina-tion to the Senate by a vote of 170. The nomination was confirmedby the Senate by a vote of 980 on May 9, 1996.
B. DDCI GEORGE J. TENET On June 14, 1996, the Committee held a public hearing on thenomination of George J. Tenet to be Deputy Director of Central In-telligence. Mr. Tenet previously served as Special Assistant to thePresident and Senior Director for Intelligence Programs at the Na-tional Security Council. He also served as Staff Director for theSenate Select Committee on Intelligence from 1988 to 1992. Mr.Tenet holds a B.S.F.S. from the School of Foreign Service atGeorgetown University and an M.I.A. from the School of Inter-national Affairs at Columbia University.On June 21, 1996, the Committee reported Mr. Tenets nomina-tion to the Senate by a vote of 170. The Senate approved his nom-ination in executive session on June 26, 1996.
X. COMMITTEE INTERNAL REFORMS ANDENHANCEMENTS
A. END OF THE DESIGNEE SYSTEM At the beginning of the 104th Congress, the Committee soughtto enhance the effectiveness and nonpartisan nature of the Com-mittee staff by ending the Committee staff designee system andhas since relied on a cadre of non-partisan professional staff di-rectly accountable to both the Chairman and the Vice Chairman.This change was effected because of a combination of growingbudgetary constraints (S. Res. 400 stipulates that the Committeeshould be limited to 15 Members but the Senate leadership ex-panded the Committee to 17 Members without providing additionalresources for more staff), as well as the need to more effectively manage the Committees work. Since the Committees inception in 1976, Members of the Com-mittee were allowed to nominate an individual staff member to beplaced on the Committees payroll and staff the sponsoring Memberon Committee issues. Designees understandably felt a greatersense of loyalty to their sponsoring Member rather than to theCommittee as an institution. Accordingly, a number of designees spent a large proportion of their time working for their sponsoring Member on issues unrelated to the Committees intelligence over-sight responsibility. Inevitably, this created management problemson the Committee, with the Committee leadership being able toregularly rely only on a small proportion of the professional staffto focus on the work of the Committee.With the termination of individual designee personnel at the be-ginning of the first session of the 104th Congress, Committee staffwere assigned to work with specific Members to assist them intheir Committee work. Also, an intelligence oversight orientationwas provided to the new Members appointed to the Committee inthe 104th Congress, including: individualized briefings for Mem-bers; briefings on the Committees work for the personal staff ofnew Committee Members; a Committee off-site with presentationsprovided by senior Intelligence Community officials; and a series ofintelligence-related technical displays to update Members on theunique technical capabilities of the Intelligence Community.
B. TERM LIMITS In the context of its examination of the Intelligence Communitysorganization, the Committee unanimously recommended deletingSection 2(b) of Senate Resolution 400 which prohibits members ofthe Committee from serving continuously for more than eightyears. Regrettably, while this provision was reported out of theCommittee as part of the Fiscal Year 1997 Intelligence Authoriza-tion Bill, it was removed prior to the full Senate taking up this leg-islation. The Committee believes that limiting tenure on the Senate SelectCommittee on Intelligence limits Member experience and expertise,thereby detrimentally affecting the quality of oversight. Across theSenate, Senators with the most extensive service on committeeshave proved capable of the most meaningful legislation. As statedin the report of the Commission Roles and Capabilities of the U.S.Intelligence Community (the Brown Commission), * * * becauseof the fixed tenure rule, Members often have to rotate off the[House and Senate intelligence oversight] committees at the verytime they have begun to master the complex subject matter. In-deed, knowing their tenure is limited, some put their time in onother committees. As a consequence, in the view of many Commis-sion witnesses, an unfortunate loss of expertise and continuity oc-curs, weakening the effectiveness of the committees.Both the Brown Commission and the Council on Foreign Rela-tions task force on the future of U.S. intelligence recommendedending Member term limits on the Committee as a means of in-creasing Member expertise in intelligence oversight. In addition,former Directors of Central Intelligence Robert Gates and R. JamesWoolsey have advocated the termination of Committee term limits,as have Committee hearing witnesses Harold Brown and formerCommittee Members Warren Rudman and Howard Baker.
C. POLICYNET In the Fiscal Year 1995 Intelligence Authorization Act, fundswere set aside for the establishment of a secure computer network,referred to as PolicyNet, to connect the Intelligence Community with the legislative branch in an effort to provide timely notifica-tion and access to intelligence products generated by the executivebranch.In March 1995, Committee staff met with representatives of theIntelligence Community to establish the priorities and to lay theground work for the project. During both sessions of the 104th Con-gress, the CIA has worked closely with the Committee to introducethis new computer network and to bring the legislative branch on-line with the Intelligence Community.PolicyNet is the CIAs Automated Information System that pro-vides classified intelligence products, maps, charts, video, imagery,etc. to the Congress and other Executive Branch agencies involvedwith intelligence collection, analysis, and dissemination. In addi-tion, the networks secure video conferencing feature provides theDCI, as well as other senior intelligence officials, with the abilityto communicate face-to-face with Members of the IntelligenceCommittee on extremely sensitive issues of national importance.This feature also provides for timely briefings of sensitive latebreaking events in areas of importance, and can save hundreds ofpersonnel hours otherwise spent traveling to Capitol Hill to briefMembers.Although it is not yet fully operational, PolicyNet provides a ve-hicle that will greatly assist the Committees oversight responsibil-ities by providing timely intelligence in near-real time ratherthan requiring Members and staff to wade through thousands ofpaper documents delivered by courier. The secure video conferenc-ing will benefit the Congressional Oversight Committees, as well asthe Intelligence Community, by providing a capability to brief boththe House and Senate simultaneously on sensitive intelligence mat-ters rather than briefing each Committee separately. Also, with themigration and publication of intelligence reports in softcopy on thisnetworkand the elimination of large quantities of paper docu-ments, transportation to deliver those reports, and the require-ments to securely store such materialPolicyNet will help to de-crease use of these resources.The funds authorized in 1995 also allowed the Office of SenateSecurity to provide non-Committee Members and their appro-priately cleared staff greater access to intelligence related materialon a variety of issues.