It is a pleasure to meet with you this morning. The Director of Central Intelligence, George Tenet, regrets that prior commitments prevented him from being here, and I convey to you his best wishes. I feel privileged to be able to substitute for George, given the long and distinguished list of American, Israeli, and international leaders with whom you have met and given the Conference's longstanding commitment to strengthening the US-Israeli relationship. We appreciate your concern about issues of vital interest to both our countries, including the Arab-Israeli peace process, human rights, international terrorism, and the proliferation of weapons of mass destruction.

I am Chairman of the National Intelligence Council, which is charged with producing national intelligence estimates. These documents contain the Director of Central Intelligence's most authoritative written judgments on key national security issues. The Estimate--or NIE, as its called--develops consensus within the Intelligence Community and seeks to help the policymaker think beyond today into the mid-term future, usually a couple of years down the road. As you would appreciate, our National Intelligence Officer for Near East South Asia is among the busiest of our dozen NIOs.

In addition to conveying a bigger picture, the NIC also plays a pivotal role in the policy community's efforts to tackle the growing challenges of the post-cold war era. Our NIOs are substantive experts from inside or outside the Intelligence Community who, in addition to estimates, produce an array of short-fuse interagency assessments, brief senior policymakers-- in some cases on a daily basis--and actively seek views from academia and the corporate world to gain a unique perspective on intelligence issues. The NIC also evaluates the Intelligence Community's performance in meeting the concerns and requirements of senior decisionmakers.

This is the role of the NIC: to advise, coordinate, and bridge the policy and intelligence communities on issues of strategic concern to the United States.

The NIC's Outlook on Critical Issues

DCI George Tenet, in his testimony to the Senate Select Committee on Intelligence earlier this year, summarized some of the daunting challenges the Intelligence Community faces in supporting our leaders at a time when security threats are multiplying. Of the five challenges that Mr. Tenet listed, four have direct bearing on the security of Israel and the various tracks of the peace process. These challenges include:

• Rogue states like Iraq and Iran whose hostile policies can undermine regional stability;

   

• Transnational issues like terrorism, proliferation of weapons of mass destruction (WMD), and the growth of international organized crime;

   

• Regional hotspots that carry a high potential for conflict, with the Middle East topping the list;

   

• and crises stemming from ethnic and civil conflict.

 

 

 

I was heartened to read in your letter, Mr. Salberg, about the Conference's priority issues, and am happy to affirm that we share them: to support the Middle East peace process; enhance regional stability and security; and limit the danger posed by the proliferation of weapons of mass destruction and dual-use technologies. Add to these issues Russia, China, and a few rogue states and you have the complete "short list" of issues that preoccupy every senior policymaker and most of the considerable resources of the Intelligence Community.

Let me make a few points about problems facing the Middle East peace process today: terrorism and security cooperation; the status of talks on interim steps; and our efforts to revive talks on sensitive final status issues. Developments over the last year--some coming within this last week--show that despite progress on may fronts, we still have a long way to go to achieve peace, security, and stability in the Middle East.

During the last two years, we have seen successive terrorist attacks on innocent civilians in Israel--which so often in the past have destroyed trust and increased polarization--for the express purpose of undermining the peace process. The political process has faltered because of such security breaches, because of deepening mistrust between the parties, and because of an inability--sometimes unwillingness--to resolve differences over interim steps and get on with the most crucial issues of the final settlement such as borders, the size and the status of the Palestinian entity, and Jerusalem.

One bright spot among the tragedies and tensions of the last year has been the contribution made by the United States in working with the parties--individually and together--to facilitate dialogue and security cooperation between the Israeli and Palestinian security services, and especially to move the Palestinians to meet their security obligations, at a time when mutual suspicion and recriminations were hamstringing the political process.

These facilitation efforts have helped speed the investigations into the recent bombings in Jerusalem, aided the uncovering of additional HAMAS and Islamic Jihad operations in the West Bank and Gaza Strip, and held the Palestinian services accountable to an agreed-upon plan of action to increase cooperation with their Israeli counterparts.

The threat of more terrorist attacks remains high, especially since key HAMAS terrorists from recently uncovered cells remain at large. Nonetheless, security cooperation is improving and has resulted in a number of unsung successes in the last few months.

There is reason for hope on the political side as well. Now, make no mistake, we are still at the beginning stages of reviving a process that, to put it mildly, has suffered numerous setbacks--some would say serious or irreparable damage. Overcoming the hurdles of a "time out" in settlement construction and further Israeli redeployments in the West Bank will be key to accelerating final status talks. The channels between senior leaders are beginning to reopen and the revival of interim talks--as contentious as they may be at times--provides us with another mechanism to rebuild confidence.

At the completion of the trilateral and committee meetings last week here in Washington, Secretary Albright concluded that, although no agreements were completed, there had been substantive progress on the issues of safe passage, the Gaza industrial estate, and the Gaza airport and seaport.

Secretary Albright's separate meetings with Prime Minister Netanyahu and Chairman Arafat in the coming days will provide another opportunity to seal the progress made last week, obtain commitments from the leaders to keep the committees moving quickly toward agreements, and to build on last week's extensive discussions on the more politically sensitive issues--which the Secretary refers to as the "four-part agenda": continued security cooperation, further redeployments, a time out in unilateral steps, and acceleration of permanent status talks. The Secretary will try to get the two leaders to address the concerns of the other and to begin closing the gaps.

Let me say a few words about Israel's neighborhoods; a particularly dangerous neighborhood. Iran also is at the center of our analytical efforts, particularly its support for international terrorism, its efforts to develop a weapons of mass destruction program, and its obstruction of the peace process. We are carefully studying the moves of the new Iranian President Khatami. His focus, we expect, will be on the domestic issues that were at the heart of his campaign: less restrictive policies on social and cultural issues important to his constituencies of youth and women. We recognize that Khatami represents a change for the Iranians, but we cannot lose sight of our key concerns about continuity in Iranian policy abroad, particularly its backing of Hizballah and Islamic Jihad and its WMD programs.

Entrenched conservatives in Iran have a major influence over foreign and security policy. We will be watching Khatami, his government, and his security services to determine whether the new government tries to engage the conservatives on the regime's longstanding support for radical Islamic groups.

. . . On the Iraq-UN Crisis

Let me say a few words about another neighbor and issue that has been on our minds these past few weeks: the Iraq-UN confrontation. I stress Iraq-UN, because despite the persistent attempts by Iraqi leaders and Saddam Husayn's propaganda apparatus to portray this as an Iraq-US confrontation, the crux of the issue, as UNSCOM Chairman Butler has said, is "disarmament, not national origin." Saddam miscalculated in believing he could divide the UN Security Council over its commitment to the UNSCOM mission in Iraq.

When you peel away all the Iraqi charges about unbalanced inspection teams bent on trampling Iraqi sovereignty, US control of UNSCOM and the Security Council, and the alleged US intent to keep Iraq under UN sanctions indefinitely, you discover that the core is this: Iraq's rulers are pursuing the same goals they always have: to circumvent Iraq's obligations to the international community--laid out in a long chain of UN resolutions--to destroy its arsenal of weapons of mass destruction. They continue to deceive and bully UN oversight and monitoring bodies in an effort to close the files on its programs, and to blame anyone--especially "Western imperialists and Zionists"--except Saddam Husayn for the continuation of Iraq's humanitarian and economic hardships.

The genesis of this latest crisis was Saddam's frustration over the perpetuation of sanctions, his dashed expectations for a more positive UNSCOM report, and the imposition of new sanctions in the form of UN Resolutions 1134 and 1137, the latter passed yesterday. Saddam's strategic goals are to spur the international community to establish a timetable for completing inspections and to negotiate a list of remaining Iraqi obligations to speed the lifting of sanctions, which he promised the Iraqi people would be ended this year.

Failing this, Saddam has several tactical objectives: to disrupt UNSCOM activities and alter the inspection and monitoring modalities, to deepen the perceived rift in the Security Council, and to attract high-level mediation aimed at a face-saving compromise or breakthrough in the sanctions review process.

The movements of the Iraqi military, Baghdad's threats against UNSCOM inspectors and the U-2 surveillance aircraft, and Saddam's confrontational rhetoric show that the Iraqi leader expects--and we think wants--a military response, which he would then use to garner international support and sympathy and hopefully use to isolate the United States.

The unanimous passage of the Security Council resolution yesterday condemning Iraq's actions and warning of further measures if it fails to comply shows the Council's determination not to let Iraqi threats and brinkmanship weaken its resolve to implement all relevant resolutions. Saddam Husayn has again badly miscalculated!

The resolution of this crisis, whether solely diplomatic or including a military response, will require close and constant coordination between the intelligence and policy communities. Making progress in our other efforts to enhance regional stability and security in the Middle East will require and receive the same high level of support and coordination.

In conclusion, let me cite, more broadly, a few strategic questions about the Middle East that will occupy us over the next several years:

• Leadership succession: Both Arafat and Netanyahu walk political tightropes. Will they be in power in a year or two? But succession is a central question across the region from Syria, to Jordan, to Saudi Arabia, to Iraq. How will new leadership affect the movement toward peace over the next decade? Will transitions be peaceful in these non-democratic societies? Will we see increased popular participation in the political process?

   

• Terrorism: Will the state sponsors of terrorism in the region change their behavior? Will a single act of terrorism continue to have the potential to derail the peace process. How effective will the Palestinian Authority be--or be perceived to be--in containing the terrorist threat? This is as critical for concrete progress toward peace as is Arafat's ability to deliver on the provision of the Oslo accords. In the near term, what role will HAMAS play in the wake of Israel's release of Shaykh Yasin?

   

• Geo-economics of oil: Global supply-and-demand patterns for oil will change dramatically in the coming decade. China will become a major importer of Persian Gulf oil. Caspian Sea oil reserves, meanwhile, will be exploited, and perhaps change the way the world views its dependence on the Gulf's reserves.

   

• Demographics: We need to assess the implications of high growth rates among Arab populations inside and outside Israel and of the projected increase in the size of Orthodox vs. secular Jews in Israel itself. Will numbers yield political power and/or problems for future governments of the region?

 

 

 

The Middle East peace process, however these particular issues develop, will remain a centerpiece of US foreign policy and a top priority for US intelligence. US interests far beyond Israel are at stake, and so are the interests of the people of the Middle East. For the vast region from the Maghreb through the Persian Gulf, the achievement of political stability and economic prosperity depend on a lasting resolution of the Arab-Israeli conflict.

Thank you very much. I would be glad to questions--or, more important, hear your views--about my remarks or other issues of concern.