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S. Hrg. 104-156 

DIRECTOR OF CENTRAL INTELLIGENCE 
30-DAY REPORT 



Y 4, IN 8/19: S, HRG. 104-156 

Director of Central Intelligence 30... 

HEARING 

BEFORE THE 

SELECT COMMITTEE ON INTELLIGENCE 

OF THE 

UNITED STATES SENATE 

ONE HUNDRED FOURTH CONGRESS 

FIRST SESSION 

ON 

DIRECTOR OF CENTRAL INTELLIGENCE 30-DAY REPORT 



WEDNESDAY, JUNE 21, 1995 



Printed for the use of the Select Committee on Intelligence 







U.S. GOVERNMENT PRINTING OFFICE 
93-388 WASHINGTON : 1995 



For sale by the U.S. Government Printing Office 
Superintendent of Documents, Congressional Sales Office. Washington. DC 20402 
ISBN 0-16-047626-7 



S. Hrg. 104-156 

DIRECTOR OF CENTRAL INTELLIGENCE 
30-DAY REPORT 



Y 4, IN 8/19: S, HRG. 104-156 

Director of Central Intelligence 30... 

HEARING 

BEFORE THE 

SELECT COMMITTEE ON INTELLIGENCE 

OF THE 

UNITED STATES SENATE 

ONE HUNDRED FOURTH CONGRESS 

FIRST SESSION 

ON 

DIRECTOR OF CENTRAL INTELLIGENCE 30-DAY REPORT 



WEDNESDAY, JUNE 21, 1995 



Printed for the use of the Select Committee on Intelligence 







U.S. GOVERNMENT PRINTING OFFICE 
93_388 WASHINGTON : 1995 



For sale by the U.S. Government Printing OtTice 
Superintendent of Documents. Congressional Sales Office. Washington. DC 20402 
ISBN 0-16-047626-7 



SELECT COMMITTEE ON INTELLIGENCE 

ARLEN SPECTER, Pennsylvania, Chairman 
J. ROBERT KERREY, Nebraska, Vice Chairman 
RICHARD G. LUGAR, Indiana JOHN GLENN, Ohio 

RICHARD C. SHELBY, Alabama RICHARD H. BRYAN, Nevada 

MIKE DeWINE, Ohio BOB GRAHAM, Florida 

JOHN KYL, Arizona JOHN F. KERRY, Massachusetts 

JAMES M. INHOFE, Oklahoma MAX BAUCUS, Montana 

KAY BAILEY HUTCHISON, Texas J. BENNETT JOHNSTON, Louisiana 

CONNIE MACK, Florida CHARLES S. ROBB, Virginia 

WILLIAM S. COHEN, Maine 

ROBERT DOLE, Kansas, Ex Officio 
THOMAS A. DASCHLE, South Dakota, Ex Officio 



Charles Battaglia, Staff Director 

Christopher C. Straub, Minority Staff Director 

Kathleen P. McGhee, Chief Clerk 

ai) 



CONTENTS 



Hearing held in Washington, DC: Page 

Wednesday, June 21, 1995 1 

Statement of : 

Cohen, Hon. William S., a U.S. Senator from the State of Maine 15 

Deutch, Hon. John M., Director of Central Intelligence 2 

Glenn, Hon. John, a U.S. Senator from the State of Ohio 21 

Graham, Hon. Bob, a U.S. Senator from the State of Florida 26 

Kerrey, Hon. J. Robert, a U.S. Senator from the State of Nebraska 13 

Lugar, Hon. Richard G., a U.S. Senator from the State of Indiana 20 

Robb, Hon. Charles S., a U.S. Senator from the Commonwealth of Vir- 
ginia 24 

Shelby, Hon. Richard C, a U.S. Senator from the State of Alabama 23 

Specter, Hon. Arlen, a U.S. Senator from the Commonwealth of Penn- 
sylvania 1 

Testimony of: 

Deutch, Hon. John M., Director of Central Intelligence 6 

Supplemental materials, letters, articles, etc.: 

New York Times, article dated May 21, 1995 17 

Seattle Post Intelligencer, article dated June 15, 1995 18 

Boston Globe, article dated June 16, 1995 18 

(III) 



DCrS 30-DAY REPORT 



WEDNESDAY, JUNE 21, 1995 

U.S. Senate, 
Select Committee on Intelligence, 

Washington, DC. 

The Select Committee met, pursuant to notice, at 2:32 p.m., in 
room SD-106, Dirksen Senate Office Building, the Honorable Arlen 
Specter (chairman of the committee) presiding. 

Present: Senators Specter, Lugar, Shelby, Inhofe, Cohen, Kerrey 
of Nebraska, Glenn, Bryan, Graham of Florida and Robb. 

Also present: Charles Battaglia, staff director; Chris Straub, mi- 
nority staff director; Suzanne Spaulding, chief counsel; and Kath- 
leen McGhee, chief clerk. 

Chairman Specter. The hearing of the Senate Intelligence Com- 
mittee will commence. We have been delayed slightly. The vote on 
Dr. Foster was delayed this morning and we have just finished a 
vote in the Senate, so we will proceed at this time with the first 
public report from the new Director of Central Intelligence, Mr. 
John Deutch. 

We appreciate your coming in, Mr. Deutch, at a very early stage. 
Your confirmation occurred on May 3, so it is an early report, but 
the Committee felt it important to have some public comment on 
your progress to date. The Committee knows of your very extended 
activities because of matters which have come to our attention, but 
in light of the public concern over the reorganization and recon- 
stitution of the Central Intelligence Agency, we thought it very use- 
ful to have your report at this time. 

You have taken over at a time of real problems within the Agen- 
cy, as all have recognized in the wake of the Aldrich Ames issue. 
You have moved with dispatch to proceed on personnel changes. 
When we concluded the hearings, we asked that you report on a 
number of specific items which I think it worthwhile to review 
briefly at this time to set the parameters for today's hearing. 

First, to report on any needed changes to the DCI authorities. 

Second, on improving the Intelligence Community's fulfillment of 
its obligations to keep Congress fully and currently informed. 

Third, the need for reorganization within the Intelligence Com- 
munity. 

Fourth, proposed changes in personnel. 

Fifth, the proposal for how to achieve downsizing in a way that 
creates headroom, weeds out poor performers and leaves the Intel- 
ligence Community with an appropriate mix of required skills. 

(1) 



Next, intelligence reassessment of the possibility that U.S. forces 
were exposed to chemical or biological agents during Desert Storm, 
if in fact there is any basis for that. 

Next, actions taken in response to the events in Guatemala. 

And finally, improving coordination with law enforcement. 

And now I am delighted to yield to our distinguished Vice Chair- 
man, Senator Kerrey. 

Vice Chairman Kerrey. Mr. Chairman, I have no opening re- 
marks, I look forward to the testimony. 

Chairman Specter. The floor is yours, Mr. Deutch. 

Director Deutch. Thank you very much, Mr. Chairman. 

I am pleased to be here to respond to the eight issues that the 
Committee raised at my confirmation hearing and that you have 
just summarized once again. 

With your permission, what I would like to do is to submit my 
prepared statement for the record and briefly summarize the high- 
lights. 

Chairman Specter. It will be made a part of the record and we 
appreciate the summary so that we have the maximum time for 
dialogue. 

[The prepared statement of Director Deutch follows:] 

Statement of Director of Central Intelligence John Deutch 

Good afternoon Mr. Chairman and Members of the Committee. I appreciate this 
opportunity to appear before you today to report on a number of issues that you 
asked me to pursue subsequent to my confirmation. 

I want to begin by stating that my general assessment of my first six weeks as 
DCI is positive. I beheve we are well along in the process of installing the new lead- 
ership team for the Intelligence Community and CIA. I have also spent a good deal 
of time in the last month or so to begin the process of improving morale and meet- 
ing with as many people as possible in CIA and in the Intelligence Community. 
These meetings have helped me determine and put into place a series of actions to 
address important outstanding issues. 

At my confirmation hearing, Mr. Chairman, you enumerated a list of key issues 
in your closing remarks, and asked that I report back to you in 30 days or so. With 
your concurrence, I would now propose simply to go down the list of topics and give 
you a status report on what I have learned, what I have decided, and what I am 
continuing to study. 

DCI authorities 

The first issue you raised is the question of any needed changes to DCI authori- 
ties. This is, as you know, a complex topic — and one that engages the equities of 
a number of Executive Branch departments. To sort through these equities and to 
frame my study of this issue, I have settled on three questions that I believe encom- 
pass the significant points. 

The first question centers on whether the DCI has sufficient budget authorities 
to assure the preparation and execution of an effective national intelligence pro- 
gram. In this regard, I have been struck by the relative lack of executive authority 
that the DCI has over the elements of the Intelligence Community and the budget 
for the National Foreign Intelligence Program (NFIP). 

Existing statutes give the DCI the authority to develop and approve the budgets 
that make up the NFIP. In practice, though, the DCI shares these authorities with 
the Secretaries of the Departments that host intelligence programs. The DCI, in 
consequence, has great influence over the composition and execution of the NFIP, 
but little direct authority, except for the CIA Program and the Community Manage- 
ment Account. This is due in part to an inevitable tension between vesting authority 
in "line" managers of the various agencies as opposed to vesting authority in func- 
tional management of intelligence that cuts across Departments and disciplines. On 
this question, I would note, though, that the present process works fairly well with 
the Department of Defense, but not well with respect to other agencies that are part 
of the NFIP. 



The second question in my analysis concerns the degree to which the DCI should 
have line authority over the NFIP's program managers. Among these managers, the 
DCI at present appoints only the Executive Director for CIA and the Executive Di- 
rector for Intelligence Community Affairs (the DCI has a voice, but not appointment 
authority, for certain other positions). The fact is that most NFIP program man- 
agers wear dual organizational hats and report through dual chains of command. 
This situation is in some respects analogous to the budget relationship I just dis- 
cussed. 

The final question I have formulated is somewhat narrower and focuses on the 
issue of whether the DCI should have expanded authority to reprogram NFIP funds 
within and between programs. Current authorities enable such transfers, but only 
with approvals from the Office of Management and Budget, the Congressional over- 
sight committees, and, notably, the Departments that are affected. 

I am confident that my understanding of the authorities issue — as reflected in 
these three questions — is relatively complete. I am not prepared as yet, however, to 
recommend solutions or options to pursue. I will say that I believe that arguable 
options range from maintenance of the status quo through significant changes in ex- 
isting authorities — with several middle avenues also possible. On the question of 
budget authorities, for example, a solution could range from keeping existing ar- 
rangements intact to requesting the creation of a separately appropriated intel- 
ligence budget. Options between these extremes might include ideas such as fencing 
the intelligence budget within the Defense appropriation. 

I would note here that my experience as Deputy Secretary of Defense tells me 
that there are strong arguments against certain steps at the outer boundaries of 
change. For that reason, I do not advocate them now. I would want to consider very 
carefully the effects that any new budget arrangements would have on intelligence 
consumers — creation of a separate budget, for example, would place such consumers 
at a considerable distance from intelligence resource decisions, thereby decreasing 
their voice in intelligence investment strategies. I do think, though, that my analy- 
sis does illustrate that the authority of the DCI over intelligence is limited. 

CONGRESSIONAL NOTIFICATION 

I turn now to the second issue you asked me to address, which involves improve- 
ments in the Intelligence Community's fulfillment of its obligations to keep Congress 
fully and currently informed. Mr. Chairman, I want to begin by reiterating the com- 
mitment on this point that I made to the Congress in my confirmation hearing — 
a commitment echoed by George Tenet in his own confirmation hearing last week. 
Notification issues go to the heart of our relationship with the Congress and intel- 
ligence satisfaction of this obligation must be seen as a fundamental requirement. 
Both the Deputy Director of Central Intelligence and I want to be sure that this 
matter routinely receives management attention at the highest level. 

There is no question in my mind that notification problems, as evidenced by the 
Guatemala case, demand such attention. It is clear to me that whatever action I 
take must affect both institutional understanding — culture or mindset, if you will — 
and institutional procedures. I have asked for, and will shortly receive, rec- 
ommendations on steps to address shortcomings in both areas. I should say here 
that thinking on this problem has been greatly aided by work set in motion earlier 
this spring by Admiral Studeman in his capacity as Acting DCI. 

On the basis of that work, I will issue a specific policy statement that underscores 
accountability and I will then follow that up with changes in education, training, 
and procedures. Those changes will certainly include a requirement for written reg- 
ulations and instructions illustrated by example — was well as a clearly delineated 
process to identify notification issues. It is also evident to me that requirements for 
much better documentation — and far more easily retrievable records — will have to 
be a part of the solution to this problem. 

I will act on the recommendations that reach my desk expeditiously. I do not 
mean to indicate, though, that nothing is being done pending my decisions. I can 
report, in fact, that improvement is already occurring. For the last two to three 
months, CIA has been carrying out an expanded notification process that has pro- 
vided substantial information to the oversight committees through the staff direc- 
tors. I believe this process has been valuable and has certainly given us a founda- 
tion on which to build. In sum, what's needed here is to establish procedures to fol- 
low the rules, not to change the rules. 

REORGANIZATION 

The third issue you asked me to address is the need for reorganization within the 
Intelligence Community. Again, this is an area where I have begun to lay out my 



views, and have not reached final conclusions about what Community reorganiza- 
tion may be desirable. Nonetheless, I have taken initial steps that will lead to long 
term change that I believe will improve the performance and efficiency of the Com- 
munity. I discussed some of my views with you during my confirmation hearings — 
particularly my intention to unify the management of imagery efforts and move to- 
wards integrating the management of Defense and intelligence space programs. 

On the issue of imagery, in consultation with the Secretary of Defense I have set- 
tled on terms of reference for a study that will determine the most effective way 
to manage imagery collection, processing, exploitation, analysis, and distribution. A 
steering group for this study — led by Admiral Bill Owens, Vice Chairman of the 
Joint Chiefs of Staff and Keith Hall, my Executive Director for the Intelligence 
Community — has just begun its work and will provide material for decisions later 
this year that I will make in concert with the Secretary of Defense. 

On the issue of integrating management of the Defense and Intelligence space 
programs, the Secretary of Defense and I will soon sign a directive establishing a 
Joint Space Management Board. The Board will be composed of Senior officials from 
the Defense and Intelligence Communities. It will be charged with coordinating the 
direction of military and intelligence space system acquisition efforts. 

In addition to these steps, I am putting into place, as Co-chairman of the Security 
Policy Board, interagency working groups to examine questions related to "informa- 
tion warfare." I wish to better understand, for example, any organizational implica- 
tions of measures needed to ensure the security of commercial and governmental 
telecommunications and computer networks. 

I would also note that there are several external reviews underway that bear on 
intelligence mission, structure, and organization. We will cooperate with these ef- 
forts, including, for example, the work that this Committee is undertaking to exam- 
ine the critical issues facing intelligence. We are also responding to IC 21 — the simi- 
lar inquiry being conducted by the Permanent Select Committee on Intelhgence in 
the House. Finally on this point, we are continuing to stay in touch with the work 
of the Aspin Commission. 

Mr. Chairman, I would pause here to note once again my sadness at the death 
of Chairman Aspin and to regret that the Commission can no longer benefit from 
his insights. I am convinced, though, that the Commission's report will prove to be 
a fitting memorial to Mr. Aspin and I will ensure that we continue to cooperate with 
its inquiries — I have made this a particular responsibility of Admiral Blair, the As- 
sociate DCI for Military Support. I expect, Mr. Chairman that our work with the 
Aspin Commission, as well as the various Congressional efforts, will lead to signifi- 
cant additional thinking and recommendations on organizational issues. 

CHANGES IN PERSONNEL 

The fourth issue you asked me to address concerns changes in personnel. My re- 
marks on this point will be brief as I know that you are already aware of the senior 
appointments I made in my first days in office. Most of the changes I expected to 
make are now complete and, as I said at the beginning, I think the new team is 
functioning smoothly. With respect to additional changes that are forthcoming, I ex- 
pect to appoint new Deputy Directors for Operations and Intelligence in the near 
future and a new Deputy for Science and Technology later in the year. I am not 
yet ready to announce these appointments, but I will say that I am pleased by the 
efforts of the search committee I asked to identify candidates for the DDO slot. I 
have spoken frequently with John McMahon, who is chairing this effort, and I ex- 
pect the group to wrap up its work shortly. I will also say that what I have learned 
about counterintelligence in the course of my first month at the Agency has led me 
to conclude that greater managerial focus is needed in this area, and I will be back 
to report to you in short order on changes I propose to make. 

PERSONNEL POLICIES AND PRACTICES 

Personnel concerns are also the focus of the fifth issue you asked me to report 
on — specifically, the issue of how to manage personnel matters in this downsizing 
era in a way that leaves the Intelligence Community with the resources necessary 
to accomplish its mission. 

In commenting on this issue, I would like to say that I believe that strengthening 
the personnel system in the Intelligence Community, and in CIA in particular, is 
perhaps the single most important action that can be taken to strengthen US intel- 
ligence capability in the long run. In strengthening this system, it is also vitally im- 
portant that we ensure that the workplace permits every individual to advance ac- 
cording to performance without regard to gender or race. I have invested — and will 
continue to invest — a great deal of my time and effort in this area. 



We need a modern personnel system focused on recruiting and retaining the most 
qualified individuals. This system must include all aspects of the personnel develop- 
ment process — from recruitment through professional development through retire- 
ment. It is also clear to me that downsizing will continue and we will need to make 
adjustments to our personnel policies to enable a system that will provide the mix 
of skills and head room required to accomplish the intelligence mission. 

To deal with such issues at CIA, I have established a Human Resources Oversight 
Council that is chaired by Nora Slatkin, the Agency's Executive Director. This 
group, which also includes the Agency's senior managers, will oversee, integrate, 
and direct human resources planning, policies, and practices. I have given the Coun- 
cil a broad charter, but I anticipate in the near term that its work will focus on 
six key areas: 

Personnel Planning. — Emphasizing how the Agency will reconcile workforce needs 
with changes in mission, structure, and organization. 

The Skills Mix. — Focusing on a better understanding of the skills mix equation, 
which is quite complex and is directly related to the Agency's substantive missions. 

"Glass Ceiling" Issues. — Overseeing efforts to expand and implement measures 
that will remove barriers to career advancement for women and minorities. 

Performance Management. — Implementing changes in the areas of performance 
appraisal, compensation and promotion, training, screening, monitoring, and inter- 
vention. 

Career Development. — Overseeing the design and implementation of assignment 
and selection processes that emphasize employee development in the context of fair- 
ness and equity. 

Accountability. — Evaluating and implementing measures to ensure that managers 
are accountable for human resource decisions. 

CIA, of course, is but one element of the Intelligence Community. Each of the 
Community's organizations faces similar issues of planning and personnel manage- 
ment. A Community task force led by Christopher Jehn, former Assistant Secretary 
of Defense, has been examining the matter of personnel reform since early spring, 
and is now finalizing its recommendations. These recommendations will address key 
elements of personnel and performance management and career development in the 
context of a revised human resource system — a system that applies common prac- 
tices and policies — Community-wide where possible. 

I look forward to receiving the task force's report and studying its recommenda- 
tions. I expect that its work, together with the ongoing effort of CIA's Human Re- 
sources Council, will provide the basis for decisions that will increase personnel ac- 
countability at all levels of management and give us the tools and better under- 
standing necessary to deal with skills and other problems. 

chemical/biological agent exposure in desert storm 

The sixth issue you asked me to address concerns a reassessment of the possibil- 
ity that US forces were exposed to chemical or biological agents during Desert 
Storm. 

Since my confirmation hearings, both CIA and the Defense Department have con- 
tinued their separate inquiries into this matter. To date, nothing has surfaced in 
CIA's independent review to change the view that there was no standard chemical 
or biological weapons use. However, CIA's Office of Scientific and Weapons Research 
is continuing to focus on intelligence data relevant to whether troops were exposed 
to chemical or biological weapons. Again, my understanding is that, to date, CIA has 
found no intelligence evidence of low-level exposure that is deemed convincing. On 
this point, I should also note that the Defense Department has been very coopera- 
tive with the Agency's analytic efforts. We are continuing those efforts, Mr. Chair- 
man, and I remain aware that on this matter the absence of evidence cannot be ac- 
cepted absolutely. 

Although I have nothing new to report on this subject, I do want to say that we 
continue to look for information that will shed light on the cause of Gulf War ill- 
nesses that are afflicting some veterans of that conflict. I would also note that I wel- 
come the establishment of an independent external advisory panel announced by the 
President to examine all aspects of the efforts the government is making to treat 
those individuals who are ill, and to examine all possible causes of their affliction. 

GUATEMALA 

The seventh issue you asked me to discuss involves actions taken in response to 
events in Guatemala. We have been seized by the issues raised by Guatemala and 
its implications, Mr. Chairman, but I ask that you allow me to defer a complete re- 
port pending completion of the review being carried out by CIA's Inspector General, 



a report that I do not expect to receive for four to six weeks. In particular, I do not 
wish to reach conclusions or consider possible disciplinary action until I have stud- 
ied the IG's report, which I am assured will be complete and thorough. 

On the Guatemala case in general, I will say that I am especially concerned by 
the four following allegations: 

Complicity in human rights abuses. 

Payment to assets implicated in human rights abuses. 

Actions in violation of government policy. 

Failure to notify Congress of significant developments. 

I will review these allegations in the light of CIA's IG report and in the light of 
similar reports being prepared by other elements of the Intelligence Community. In 
determining what transpired and what remedial action is warranted, I also expect 
to consider findings in the inquiry being conducted by the Office of the Secretary 
of Defense (that I commissioned when I was Deputy Secretary) as well as the in- 
quiry being conducted by the Intelligence Oversight Board. 

There are two broad areas on which I believe I can comment briefly. The first is 
the general issue of Congressional notification, and I have already discussed — ear- 
lier in this statement — steps to improve notification procedures and practices. The 
second area concerns the question of human rights abuses and guidelines for dealing 
with potential problems. Here, I can say that our policy is to carefully review and 
monitor operational relationships for potential human rights abuses and examine 
each on a case-by-case basis. We have undertaken a comprehensive review of exist- 
ing guidelines that deal with assets who raise issues involving human rights. I have 
asked for new guidelines that offer clear guidance on this subject beyond previous 
directives. I will provide a copy of these guidelines to the Committee as soon as they 
are issued. 

INTELLIGENCE AND LAW ENFORCEMENT 

The final issue on which you asked for a report is the question of improving intel- 
ligence coordination with law enforcement. 

To begin, I want to say that, as I indicated in my confirmation hearing, I consider 
this an extremely important issue and I am committed to improving coordination 
in the areas of international terrorism, dings, and crime. To that end, I have met 
with the Attorney General, the Deputy Attorney General, and the Director of the 
FBI to discuss efforts underway to enhance cooperation between the Intelligence 
and Law Enforcement Communities. I will meet with the Attorney General monthly 
to continue that cooperation. In addition, several other steps are ongoing to improve 
coordination with law enforcement organizations. These include: 

Biweekly meetings between the Deputy Attorney General and the Deputy Director 
of Central Intelligence. 

The recent establishment of a Law Enforcement-Intelligence Board, which will 
meet bimonthly. 

The creation of two working groups — the Joint Intelligence Community-Law En- 
forcement Working Group, and the Special Task Force on Overseas Coordination — 
to seek solutions to problems that impair coordination between the two commu- 
nities. 

I have also asked my General Counsel to serve as the focal point within the Intel- 
ligence Community on cooperation with law enforcement and, in particular, to as- 
sume responsibility for coordinating policy on this matter among the DCI's Crime 
and Narcotics Center, the Counterterrorist Center, the Nonproliferation Center, and 
the Counterintelligence Center. 

I believe that these efforts will provide the mechanisms needed to address issues 
as they arise. I also believe that their combined effect will be a clearer understand- 
ing of the Intelligence Community's role and responsibilities with respect to law en- 
forcement. 

Mr. Chairman, this concludes my formal statement on the issues you asked me 
to address. I thank you for your time and I would be pleased to answer your ques- 
tions. 

STATEMENT OF JOHN DEUTCH, DIRECTOR OF CENTRAL 
INTELLIGENCE 

Director Deutch. Thank you very much, Mr. Chairman. 

Let me begin by saying that my own personal assessment of the 
results of the approximately 40 days that I have served as Director 
of Central Intelligence is quite positive. I believe we are well along 



in the process of installing a new leadership team in the Intel- 
ligence Community and in the Central Intelligence Agency. I have 
made considerable effort to meet with as many people in the com- 
munity as possible, especially in the CIA. And I have taken a 
sounding on morale and things which can be done to improve mo- 
rale of the dedicated, loyal and effective workforce that make up 
our Intelligence Community. 

In addition, the series of meetings that I have held has helped 
me put in place a series of actions to address important outstand- 
ing issues which confront the CIA and the Intelligence Community, 
some of which I will be reporting on to you here today. 

Let me first of all start with your first question, DCI authorities. 
I have been struck by the relative lack of executive authority that 
the Director of Central Intelligence has over elements of the Intel- 
ligence Community budget and the National Foreign Intelligence 
budget, other than that of the CIA. 

In part, this is due to an inevitable tension between vesting au- 
thority in line managers of the various agencies that are respon- 
sible for program execution and vesting authority in the functional 
management of the Director of Central Intelligence who has re- 
sponsibilities that cut across departments and different depart- 
mental responsibilities. 

I am not prepared here today to give you recommendations about 
how the authorities of the DCI might be strengthened, but I no- 
ticed some options. More authority for the Director over the Na- 
tional Foreign Intelligence Budget is a possibility. The present 
process works fairly well with the Department of Defense, but not 
at all with respect to other agencies that are part of the NFIP pro- 
gram. 

Number two. Another possibility is to increase the authority of 
the Director of Central Intelligence to evaluate and appoint prin- 
cipal National Foreign Intelligence Program managers, such as the 
head of the National Reconnaissance Office, the Central Imagery 
Office, the Director of the Defense Intelligence Agency, or the Di- 
rector of the National Security Agency. 

Third, greater authority for the director to transfer funds and 
personnel between National Foreign Intelligence Programs. The Di- 
rector of Central Intelligence could be given greater authority, sub- 
ject to 0MB and Congressional approval, but remove the require- 
ment for agency concurrence to move personnel and funds between 
National Foreign Intelligence accounts. 

There are strong arguments against each one of these proposals. 
I know from my own experience as Deputy Secretary of Defense the 
arguments against each of these steps, and that is why I do not ad- 
vocate them now. But I do want to illustrate to the Committee the 
range of authority that the Director of Central Intelligence does 
and does not have over execution and executive authority for the 
intelligence programs of the country. 

Perhaps the most important of the questions that I have been 
asked to address concerns the actions that have been taken to keep 
Congress fully and currently informed of all intelligence activities. 

In my confirmation hearings and the confirmation hearings of 
George Tenet, nominee to be Deputy Director of Central Intel- 
ligence, we both committed to keeping Congress fully and currently 



8 

informed on all intelligence matters. We have several actions un- 
derway to assure that this will happen. 

First, we intend to issue a Director of Central Intelligence Policy 
Statement describing Agency notification obligation in simple and 
comprehensive terms to our entire field operation so that they 
know what their obligations are. Prior — many, many prior instruc- 
tions have been issued to the field in the past. We believe that it 
is timely to have one simple comprehensive document which pro- 
vides information and guidelines to the field. 

We are preparing written procedures to describe the process that 
should be followed to identify and forward notification matters, so 
in addition to the general statement of obligations, there will be 
procedures to be followed when an item comes up for notification. 

Third, we intend to document in each case those instances where 
notification has been made so a full and complete record is avail- 
able. 

I have asked the Deputy Director of Central Intelligence to be 
the principal focus for assuring that this notification process works 
well with Congress. Currently that responsibility is in Admiral 
Studeman's hands, and should George Tenet be confirmed by the 
Senate, I will ask him to pay particular attention and give priority 
to this important area. 

What I believe needs to be done here is to establish procedures 
and follow the rules. I don't see that there is a need for brand new 
rules. It is that the rules must be understood and procedures must 
be put into place to assure that the rules are followed. 

Let me next return to your third issue, Mr. Chairman, the need 
for reorganization within the Intelligence Community. 

I have not reached final conclusions about the extent of reorga- 
nization within the Intelligence Community that may be desirable. 
However, I have put into place a number of study activities that 
will lead to organizational change that will improve both the per- 
formance and the efficiency of the Intelligence Community. 

First, we have established a terms of reference for a study to de- 
sign a new National Imagery Agency. This study will be co-chaired 
by Keith Hall, the Executive Director of the Community Manage- 
ment Staff, and Admiral Bill Owens, the Vice Chairman of the 
Joint Chiefs of Staff. The study terms of reference are available to 
the Committee for their comment and observation, but we have un- 
derway a study to — involving all elements of the community that 
have an interest in the National Imagery Agency to assure that 
this new agency will be designed so as to provide the customer 
with needed imagery intelligence in the most efficient way possible 
at the lowest possible cost. 

Second, Bill Perry and I, I expect, will shortly sign a directive es- 
tablishing a Joint Space Management Board, to assure that there 
is coordinated direction of both military and intelligence space sys- 
tem acquisition efforts. 

Third, as co-chairman of the Security Policy Board, I am putting 
into place interagency working groups to examine the important 
area of information warfare. For example, to determine the meas- 
ures that are needed to assure the security of both our commercial 
and governmental telecommunications and computer network sys- 
tems. 



Fourth. Through Admiral Denny Blair, we are staying in close 
touch with the work of the Aspin Commission and its work taking 
place to review the needs for roles and missions in the Intelligence 
Community in the future. 

The fourth issue, Mr. Chairman, concerns personnel changes. I 
have reported to the Committee about the major personnel actions 
that I intended to make in both the Central Intelligence Agency 
and in the Intelligence Community. Most of these changes are al- 
ready in place, and I believe the new team is functioning smoothly 
and in an effective manner. 

As you know, I asked an external group be established to provide 
advice to me under the chairmanship of John McMahon to advise 
me on the selection of a new Deputy Director for Operations. This 
committee, chaired by John McMahon, includes Nora Slatkin, the 
Executive Director of Central Intelligence, Jim Lilley, Norbert Gar- 
rett and Brent Scowcroft. They are close to the end of their delib- 
erations, and I hope to make an announcement about a new Dep- 
uty Director for Operations in the near future, including some 
changes in the organization of the Deputy Directorate of Oper- 
ations to assure it is more accountable and effective in the future. 

The positions of Deputy Director for Intelligence and Deputy Di- 
rector for Science and Technology will be filled as soon as possible, 
but I would expect it no later than the next 60 days. 

Fifth, I would like to make a few comments as you have asked 
about changes to the community personnel system. 

Strengthening the personnel system in the CIA and in the Intel- 
ligence Community, in particular — Central Intelligence Agency in 
particular — is perhaps the single most important action that can be 
undertaken to strengthen the US intelligence capability in the long 
run. If I have been struck by one matter since I became Director 
of Central Intelligence, it is the need to put into place a modern 
personnel system which is focused on recruiting and retaining the 
most qualified individuals for a career of public service in the intel- 
ligence field. This new system must include all aspects of personnel 
development, from recruitment, through professional development, 
through assignment and promotion, all the way through to a retire- 
ment system. 

While downsizing will continue, and we need to make adjust- 
ments to our personnel policies to permit a system that will provide 
for the mix in skills and the headroom required to accomplish the 
Intelligence Community mission in the future, I believe that the 
creation of a modern, effective personnel system is of critical impor- 
tance for the community. 

I have also asked the Executive Director of the Central Intel- 
ligence Agency, Nora Slatkin, to chair a new Human Resources 
Oversight Council, which includes membership of the leaders of all 
the directorates to give direction to all aspects of the CIA personnel 
system. An especially important responsibility of this council will 
be to assure that the CIA workplace permits every individual to ad- 
vance according to performance without regard to gender or race. 

The sixth issue you asked me to comment on, Mr. Chairman, 
concerned the possibility of whether US forces were exposed to 
chemical or biological agents during Desert Storm. I have nothing 
new to report on this subject. We continue to look for information 



10 

that will shed light on the cause of Gulf War illness that is afflict- 
ing some veterans of the Gulf V/ar. 

I note and welcome the establishment of an independent external 
advisory panel announced by the President to examine all aspects 
of the effort that has been underway to treat those individuals who 
are ill from their service in the Gulf, and to examine all possible 
causes for this affliction. 

The seventh issue concerns the actions we have taken in re- 
sponse to events in Guatemala. Let me say that we are seized by 
the various aspects of this issue and the questions involving CIA 
in Guatemala. I am awaiting the report of CIA Inspector General 
Fred Hitz on Guatemala, which the IG, the Inspector General, 
assures me will be complete by the middle of next month before 
reaching any conclusions or taking disciplinary action. 

I am especially concerned, in my review of this matter, with the 
following four allegations: 

One. Knowledge and reporting on human rights abuses, whether 
that was handled in a proper manner. 

Second. Imperfect evaluation of agent performance and conduct. 
Whether there was any imperfect evaluation of agent performance 
or conduct. 

Third. Whether any actions taken by the CIA were in violation 
of government policy. 

And fourth, whether there were failures to notify Congress of sig- 
nificant developments as they occurred in Guatemala. 

I will await reaching final conclusions on this matter until I have 
the Inspector General's report available, which, as I mentioned, 
should be in the middle of next month. 

At the same time, I will review the Inspector General reports 
from other aspects of the Community: the National Security Agen- 
cy, the Army, the Department of State, and the Office of the Sec- 
retary of Defense, the review that I commissioned when I was Dep- 
uty Secretary of Defense, as well as the independent oversight 
board of the President which is undertaking, as you know, under 
the chairmanship of Tony Harrington, a review of this entire mat- 
ter. 

Finally, Mr. Chairman, the final issue you asked me to address 
is improving cooperation with law enforcement. I believe that this 
is an important and continuing subject. I am committed to improv- 
ing coordination with the law enforcement community in the areas 
of international terrorism, drugs, and crime. Each one of these 
areas involved complex matters of Agency jurisdiction, and ways of 
designing effective programs and coordinating mechanisms. 

I have met with Louis Freeh, the head of the FBI, Deputy Attor- 
ney General Jamie Gorelick, and Attorney General Janet Reno, to 
discuss how to proceed on these matters. We, Janet Reno and my- 
self, intend to build on the Memorandum of Understanding that 
was signed between the Community and the Attorney General, de- 
scribing how we intend to do our coordinating activities. There is 
a set of bi-weekly meetings which is taking place, co-chaired by the 
Deputy Director of Central Intelligence and the Deputy Attorney 
General, which will examine issues on an orderly basis, one by one, 
and resolve them as needed. 



11 

There will be established a law enforcement intelligence working 
group to do the staff work necessary to prepare these issues for res- 
olution. 

I believe that these groups will provide the mechanism to ad- 
dress issues as they arise. Janet Reno and I intend to deal — to 
meet monthly to deal with any matters that cannot be resolved. 

In conclusion, Mr. Chairman, I believe that the first 40 days or 
so of my tour as Director of Central Intelligence has proceeded sat- 
isfactorily. This Committee, both corporately and individual Mem- 
bers, have been of tremendous help to me in these early days, and 
I want to thank Members for their support and for their interest. 
I continue to believe that we will make significant progress to 
strengthen the Intelligence Community of this nation. 

Thank you very much for your attention, Mr. Chairman. 

Chairman SPECTER. Thank you very much. Director Deutch. 

If you would stand now, we would like to put you under oath be- 
fore we begin the questions. 

Will you stand please. 

Do you solemnly swear that the testimony you will give here will 
be the truth, the whole truth, and nothing but the truth, so help 
you God? 

Director Deutch. I do. 

Chairman SPECTER. Thank you very much. 

Director Deutch, with respect to the incident involving Captain 
O'Grady, the information received was to the effect that the Intel- 
ligence Community had provided information about the presence of 
missiles with the capability to down Captain O'Grady's plane, but 
that such information had not in fact been transmitted to Captain 
O'Grady. 

Can you shed any light on precisely what happened in that situa- 
tion? 

Director DEUTCH. Mr. Chairman, we have a careful study under- 
way which Bill Perry and I have asked be undertaken by both the 
Joint Chiefs of Staff and the Intelligence Community. We expect 
that a thorough reporting on the facts on all aspects of the intel- 
ligence and operational parts of the F-16 mission will be available 
by the end of this month. 

My own view, having reviewed the preliminary assessments of 
the precise conduct of all the different systems involved in detect- 
ing the SA-6 radar and providing information to the pilot, the so 
to speak, the ultimate customer, is that when this is all looked at 
we will not find anything which could be called an intelligence fail- 
ure in here. But we will find ways that matters could have gone 
better. That is what always happens in the unfortunate event that 
an airplane is shot down. 

Chairman Specter. Well, Mr. Deutch, what is so complicated 
about it? Did Captain O'Grady know that there were missiles in 
the vicinity which could down his plane? 

Director Deutch. I am not sure what Captain O'Grady knew. 
The point I want to make is, it is a tremendously complicated mat- 
ter to find a mobile missile system which sets its radar up and 
searches only for a couple of minutes before it fires its missiles at 
an airplane. So it is a tremendously complicated matter. There are 
many different systems which are looking to detect the radar and 



12 

then there is the process of reporting it from national or tactical 
collection assets back through the air operations center and getting 
it into the cockpit so that the pilot can take appropriate action. 

I 

Chairman Specter. Well, is it complicated to make a factual de- 
termination of what happened 

Director Deutch. It's not complicated 

Chairman Specter [continuing]. With Captain O'Grady, as to 
whether he should have known about the missile threat? 

Director Deutch. No, it's not at all complicated. I think, though, 
that reconstructing, with precision and with accuracy, all the dif- 
ferent matters that took place in those key 45 or so minutes while 
his airplane was up over southern Bosnia, and then eventually shot 
down, I think requires careful and prudent going through the 
record and establishing it so that the facts were all known and ver- 
ifiable. 

I am quite confident that when that comes down, when those 
facts are known, that we will see that while it was unfortunate 
that an interceptor was allowed to destroy a US airplane and bring 
down the pilot and put that pilot at risk, that the operational and 
intelligence matters were not negligent or did not involve any seri- 
ous breach. 

Of course it is always possible to imagine other circumstances 
where the pilot could have avoided being shot down, but that is al- 
ways the case in matters where you go in harm's way. 

Chairman Specter. When do you expect to have the final report 
so that the Committee will know what in fact did happen? 

Director Deutch. End of June, sir. That is when General Shall 
has promised it to Secretary Perry and myself. 

Chairman Specter. Mr. Deutch, the case involving Aldrich 
Ames, of course, is a matter which continues to overhang the 
Central Intelligence Agency and intelligence operations generally. 
What can you tell us, if anything, as to what has been accom- 
plished during your tenure to date to prevent the recurrence of the 
Ames situation? 

Director Deutch. Mr. Chairman, I have devoted considerable 
time to this particular matter. As you know there is a damage as- 
sessment being carried out by the community, not just the CIA, the 
community, on all adverse aspects that occurred as a result of the 
espionage carried out by Ames. I believe that that assessment will 
be carried out, will be completed towards the end of the summer, 
late August. As I have mentioned to you, sir, I intend to bring that 
to you. It will be a very, very complete and authoritative damage 
assessment. It will be accompanied by specific steps that I believe 
are necessary to put in place to assure that these events are not — 
that kind of damage is not sustained to the country in the future. 

Chairman SPECTER. Mr. Deutch, since your confirmation hearing, 
there was a determination on June 9th by a Judge in the United 
States District Court for the Eastern District of Virginia, approving 
a settlement reached by the Central Intelligence Agency with a 
number of women in a class action suit. Among other things, the 
judge found that there were significant legal issues that may have 
jeopardized the plaintiffs prospects for success in the case. But the 
settlement was in fact made. 



13 

And my question to you is what impact has that Htigation had 
on the practices within the Central IntelHgence Agency and did 
that Htigation indicate to you a real problem within the Agency on 
sex discrimination? 

Director Deutch. Mr. Chairman, the Agency will absolutely 
abide by the — that agreement which was entered into — which was 
entered by the judge. We think that is an agreement that we will 
fulfill in all of its respects. 

My own view is that the issues of fairness in the workplace, lack 
of sexual harassment, opportunity for women and others to ad- 
vance according to their accomplishments, is a major challenge for 
the Agency, and we will be putting into place, myself, George Tenet 
if he is confirmed, Nora Slatkin, managerial procedures will assure 
and I believe will go beyond the requirements of that agreement in 
order to assure that there is opportunity for women who are per- 
forming for advancement in the Central Intelligence Agency. 

Chairman Specter. Well, Mr. Deutch, I am not going to proceed, 
because the light went on in the middle of your answer, but I want 
to return to that. I don't think you have really dealt with the sub- 
stance of my question as to whether that suit indicated the exist- 
ence of sexual discrimination and what, if anything, have you 
learned about it. 

Director Deutch. If I just may say, my information here comes 
from my own observation rather than from a study of the suit. I 
believe that there is significant progress that can be made for the 
opportunities for women in the Central Intelligence Agency. That 
comes from my own observation, not based on the suit, sir. 

Chairman Specter. Well, I will come back to the suit in the sec- 
ond round, if we get that far. 

The Director has a commitment at the White House at 4:30 and 
must leave at 4:15, so we will limit the opening round to five min- 
utes. 

Senator Kerrey. 

Vice Chairman Kerrey. Thank you, Mr. Chairman. 

Dr. Deutch, I appreciate and I agree with the high priority that 
you're placing on personnel changes as well as personnel policies, 
from the impact that high personnel costs have on our R&D capac- 
ity all the way to the counterintelligence problems posed by an un- 
happy employee, through just the normal execution of the missions 
that we lay before men and women who sign up for us. I mean, I 
appreciate the attention that you place on that. 

My own experience on the Committee thus far has taken me to 
visit a number of locations, remote to Washington. I am impressed 
by the quality of people that are out there in the field. And I am 
interested to know if you have got an evaluation of the kinds of 
people that you're looking for? What qualities do people need to 
possess in order to be candidates for hiring and what is there about 
our current personnel system that appears to be good? I mean, 
there must be something in our personnel system that is working 
to attract these kinds of individuals. And I am curious as to wheth- 
er or not you have identified some things that need to be retained 
in the current personnel system in order to be able to continue to 
do that. 



93-388 - 95 - 2 



14 

Director Deutch. Thank you very much, Senator. That is a very 
cogent observation. 

This morning I had the opportunity to walk by the Bosnian Task 
Force, that is, the interagency group of people who have been in 
place for four years on a schedule that varies from 20 to 24 hours 
a day and rotating duty, to keep policymakers informed of all 
events that are known in Bosnia. Their capability and their dedica- 
tion is just outstanding, and I was there not only to say thank you 
on behalf of their production of really quality intelligence analysis 
and information for policymakers — it doesn't make the policy 
choices easier. It does make it more secure that we have the kind 
of information in the hands of the policymakers that are needed, 
and also to tell them that they were actually working too hard. 
They are absolutely qualified, absolutely dedicated, come from all 
different possible backgrounds. The Intelligence Community is still 
finding tremendously qualified recruits, and the people who enter 
into the community are dedicated, capable, and very knowledge- 
able. 

Our challenge is to provide a human resources structure which 
maximizes the potential of those individuals and assures that they 
are having the most professionally fulfilling and personally ade- 
quate life in what is a really challenging profession for them. 

But I couldn't appreciate your remark more, sir, about their mo- 
rale in the field is high, and their commitment. 

Vice Chairman Kerrey. I appreciate this is a brief moment to 
discuss this sort of thing. I know Senator Glenn has a long stand- 
ing interest in it and I pledge to you my interest and willingness 
to work with you to make sure these personnel issues are ad- 
dressed. 

What's your initial sensing of R&D in intelligence? 

Director Deutch. Well, throughout the whole community, as you 
know, there are significant differences between the National Secu- 
rity Agency 

Vice Chairman Kerrey. Do you have a sense of the adequacy 
after 37 days? 

Director Deutch. Quite frankly, I would say the status, the level 
of our technology and our ability to exploit it is not one of the main 
issues that I am concerned with. We do need to keep the funding 
to keep the programs in place that we have for the development of 
next generation systems, but generally speaking, technology is 
high. 

I would like to exploit technology better in the backend process 
of intelligence, that is, in the analysis and distribution of signals 
intelligence and imagery — we can do more there — but generally 
speaking, the technology is high. 

Vice Chairman Kerrey. Have you seen the CDC report, prelimi- 
nary report on research results showing significant higher inci- 
dence of physical problems with Gulf War veterans? 

Director Deutch. I have not. 

Vice Chairman Kerrey. Have you seen that report? 

Director Deutch. No, sir. 

Vice Chairman Kerrey. I would appreciate you looking at the re- 
port and commenting as to whether or not you believe that neces- 
sitates any kind of follow up. I mean, it is a preliminary report and 



15 

it seems to indicate substantially higher incidences of a variety of 
physical problems. All I have done thus far is seen a summary of 
that report. I have not 

Director Deutch. I will take a look at it, Senator. 

Vice Chairman Kerrey. Are you satisfied that our — that the In- 
telligence Community is playing an appropriate role in 
counternarcotics efforts? 

Director Deutch. I think that what we are doing in 
counternarcotics is spectacularly successful on the supply side. I 
think the recent and publicly noted arrest of one of the Call Cartel 
leaders in Colombia was due to cooperation between the Agency 
and DEA and Colombian authorities. 

Vice Chairman Kerrey. You disagree with those who are sug- 
gesting that DEA and Customs can handle this and that we should 
not be assisting 

Director Deutch. Well, I'm only involved with foreign intel- 
ligence aspects of this. And I would say that our challenge — we can 
do more, we will do more, and one of the matters that I have made 
very clear to Attorney General Reno is all that she or Louis Freeh 
or Constantine, the head of the DEA, have to do is to tell us what 
their foreign intelligence requirements are, and we will try and do 
better and devote more resources more intelligently to satisfying 
the foreign intelligence aspect of this mission. That's what we do. 

Vice Chairman Kerrey. If I can just pin you down on one point 
though. Some people have suggested that DEA and Customs and 
FBI — I'm talking about foreign now — that they should be only en- 
gaged in the intelligence effort and the Intelligence Community 
should be pulled out of that counternarcotics effort. 

Director Deutch. I would — my general reaction to that would be 
negative. I would not think that would be a smart use of United 
States assets, investments. 

Vice Chairman Kerrey. Thank you. 

Chairman Specter. Thank you, Senator Kerrey. 

Senator Inhofe. 

Senator Cohen. 

Senator COHEN. Thank you, Mr. Chairman. 

Mr. Director, can you tell us whether or not foreign governments 
have their intelligence services engaged in industrial espionage in 
the United States? 

Director Deutch. Senator, that's a question that I would only 
wish to address in a closed session, sir. 

Senator COHEN. Well, as you know, last year we passed an 
amendment to the Authorization Bill that requires a report of the 
extent to which foreign governments engage in industrial espionage 
here. That report was due in April and it's two months overdue at 
this point. Do you expect to have the full report before the Commit- 
tee soon? 

Director Deutch. Next week. 

Senator COHEN. Next week? 

And are you prepared to discuss it in a closed session prior to 
next week? 

Director DEUTCH. I am prepared to discuss it in a closed session 
next week. 

Senator COHEN. All right. 



16 

The second question I have is can you tell us whether or not Ser- 
bia has been supporting the Bosnian Serbs or the Krajina Serbs? 

Director Deutch. That is another question that I would have to 
address with you in closed session, sir. 

Senator Cohen. You've got information one way or the other on 
that? 

Director Deutch. I would answer that question in closed session, 
too, sir. 

Senator Cohen. So you can't tell us whether you have informa- 
tion that either supports or disagrees with that? 

Director Deutch. I can tell you, but only in closed session. 

Senator COHEN. I guess we'll have to stick around for the closed 
session. [General laughter.l 

Am I correct in interpreting your response to Senator Specter 
that while the investigation has yet to be completed, it is your pre- 
liminary assessment that there was no intelligence failure as far as 
the shootdown of the F-16 over Bosnia? 

Director Deutch. That's correct, sir. 

Senator COHEN. Are you aware of the — by the way, with respect 
to the foreign governments using their services to conduct indus- 
trial espionage, I have a couple of articles, Mr. Chairman, I would 
like to submit for the record, that appeared in the New York 
Times. 

Chairman Specter. They will be made a part of the record as 
requested, without objection. 

[Copies of the articles referred to follow:] 



17 



Engineer Says 
He Stole Secrets 
Of Chip Makers 

By CALVIN SIMS 

BUENOS AIRES. May 21 — In a bizarre 
tale of industrial espionage, an Argentine 
engineer says he stole a wide range of 
technical secrets from two leading com- 
puter chip makers In the United States and 
provided the information to China. Cuba 
and Iran. 

The technical information, he said, in- 
cluded computer chip designs and step-by- 
step instructions on how to manufacture 
the 386, 486 and Pentium chips that power 
most of the personal computers in use 
today. 

The engineer. Bill Gaede. said in an 
interview that he had taken the informa- 
tion from Advanced Micro Devices Inc. 
from 1983 to 1993 and from the Intel Corpo- 
ration in 1993 and 1994, when he worked for 
the companies. He said he was Initially 
motivated by a love of communism but 
that later he stole for personal gain. 

Mr Gaede said the data he provided to 
Cuban representatives was passed to the 
Soviet Union and East Germany in the last 
years of the cold war He also said that at 
one point he had turned himself in to 
Federal authonties and cooperated with 
an mvestigation by the F.B.I. 

Much of the detail that Mr. Gaede pro- 
vides Is corroborated, but his account of 
his Involvement with foreign governments 
and the FBI. could not be confirmed 

Spokesman for the FBI. would say only 
that the bureau would have no comment on 
Mr. Gaede's story. Other law-enforcement 
officials said they were aware of Mr, 
Gaede and his activities but that he had 
not been a Government Informant 

Becauw none of the nations cited by Mr. 
Gaede (pronouncad GAY-dee) have so- 
phisticated chip-making operations, 
the stolen data would not damage 
the American companies any time 
soon. But experts said the informa- 
tion might reduce the time needed to 
become competitive. 

If nothing else. Mr. Gaede's tale of 
high-tech robbery raises questions 
about the vulnerability of corpora- 
tions to industrial espionage and 
theft and how adequate their safe- 
guards are. Although Mr, Gaede 
lacked a valid visa to work In the 
United States, he obtained highly 
sensitive Jobs at the nation's two 
leading semiconductor makers. 

Mr. Gaede, 42, said he had decided 
to go public because his telephone 
was being upped here, he Is being 
followed and he Is afraid of being 
hurt No charges have been filed 
against him and he Is not a fugitive. 



At Advanced Micro Devices in 
Sunnyvale. Calif,, Peter Costner. 
chief of security, said Mr. Gaede had 
stolen a "a significant amount of 
Intellectual property" and given it to 
Cuba, which In turn passed the Infor- 
mation on to the Soviet Union and 
East Germany. Advanced Micro of- 
ficials said they had not pressed 
charges against Mr. Gaede, who left 
the company voluntarily, because 
they have no corroborating evidence 
to prove that he stole the intellectual 
property. "He certainly was In a 
position to do It. and we believe what 
he says Is true," said Charles Mal- 
loy, a company spokesman. 

At Intel. John Thompson, a spokes- 
man, confirmed that Mr. Gaede had 
worked for the company but de- 
clined to describe the circum- 
stances of his departure. "We are 
not commenting at all on this Issue," 
Mr, Thompson said. Mr. Gaede pro- 
vided a copy of a letter to him on 
Intel stationery, dated May 31. 1994. 
saying his employment had been ter- 
minated "due to your refusal to co- 
operate in a reasonable security in- 
vestigation." Intel decllifed to com- 
ment on the letter. 

Mr, Gaede provided The New 
York Times with dates. Umes and 
places he says he met with Cuban 
representatives In Mexico, as well as 
what he says are tape recordings of. 
conversations with F.B.I. agcQta and 
a list of the agents he says he spoke 
with. The F.B.I., provided wjlb (tut 
list, declined to comraei^fr 00 

Technical expertas -'•<'*'^ 
competitors, partlc 
and China, might be^ 
chip designs and manufacturing 
techniques that Intel and A.M.D. 

spent billions of dollars developing to 
begin producing chips, narrowing 
the technological lead of the United 
States. "The Chinese and Iranians 
are having a field day and are learn- 
ing a lot about American manufac- 
turing." Mr. Gaede said. 

The experts said the benefits to 
foreign competitors would not be ev- 
ident for many years because the 
technology of the semiconductor In- 
dustry advances so rapidly that de- 
signs and manufacturing techniques 
quickly become outmoded. 

Mr, Gaede. who had been working 
for Intel In Chandler. Ariz., said he 
returned to Argentina in September, 
after Intel uncovered the theft and 
dismissed him. He said he had used a 
computer Intel had given him to 
allow him to work from his home to 
get access to the company's data 
base. Using his video camera, he 
would then tape chip specifications 
from the computer screen. 

"The technique allowed me to 
work undetected, store greater 
amounts of Information In a smaller 
medium and make copies quicker 
for Interested parties." he said. 

Michael Slater, publisher of 
MIcroprtKtessor Report, an Industry 
newsletter, said In a telephone Inter- 



view that he found that part of Mr. 
Gaede's story difficult to believe, 
because he doubted that Intel would 
allow an employee access to propria* 
tary Information about Its lateit 
chips through a home computer mo- 
dem. "It sounds fishy to me becauM 
I suspect that Intel's security la a lot 
tighter than that" Mr. Slater said. 

Mr. Gaede said he had Joined the 
Communist Party in Buenos Aires In 
1673 and in the mld-70's was part of 
"a subversive cell" that opposed Ar- 
gentina's repressive mlllury re- 
gime. He and his wife. Vlera. entered 
the United States with tourist visas 
in 1977, he said, and stayed 16 years. 
The couple settled in Rochelle, 111., 
he said, where he worked with Illegal 
aliens who taught him how to obtain 
false papers. He got a Job at the 
Dukane Corporation, a communica- 
tions equipment maker In St 
Charles. III., while his wife obtained 
working papers using Mr. Gaede's 
mother's Social Security number. 
Mr. Gaede had lived In the United 
Sutes from 1958 to 1965. 

In .1979, Mr. Gaede and his wife 
moved to California, he said, where 
he began work for Advanced Micro 
Devices and took courses at Foothill 
■ College In Los Altos Hills. 
J " In 1 986, we moved to Austin, Tex., 
r>vhere I continued to work as an 
- engineer at Advanced Micro De- 
vices," Mr. Gaede said In a written 

A chip'Ond-dagger 
plot that could give 
fledgling foreigners 
a head start. 



account he provided to The Times. 
"I completed my BA. In computer 
systems at Southwest Texas Sute In 
San Marcos and became an expert In 
computer systems," In July 1993, he 
said, he was "promoted from senior 
engineer to facilitator, wtkere I was 
in charge of a whofe shffl of opera- 
tors, maintenance lecfas and engi- 
ne continued: "After the Cubans 
recruited me as an industrial spy In 
the mid-80's, I began to transfer 
A M D specs, designs. 'Blue Books," 
masks, wafers and even small meas- 
uring devices" to Cuba. 

Mr Gaede said he sold some infor- 
mation directly to China and Iran for 
large sums, though he would not say 
how much. He also said he had regu- 
larly traveled to Mexico to hand 
information to Cuban represenatlves 
and was invited to Cuba to visit Fidel 
Castro 

The visits to the island, however, 
served to destroy what little was left 
of my socialist dreams," he said. 

At that pomt. Mr. Gaede said, he 
turned himself In to the Central In- 
telligence Agency, which put him in 
^ touch with the F.B.I., which encour- 
aged him to malnuin his conucts 



I 
with Cuban agents. Mr. Gaede gavet 
The Times lengthy, detailed ac> 
counts of his meetings with various 
F.B.I, agents, whom he named 

Mr, Gaede said he resigned from 
Advanced Micro In 1993 after he 
realized that the company would 
eventually detect his theft 

Later that year, he Joined Intel' 
and again began stealing technical 
Information, which he sold to China 
and Iran. He said he was being paid 
by the two countries to show them 
how to use the Information In their 
semiconductor Industries. "I did 
what I thought I had to do to survive 
in this world, and I don't feel bad 
selling this stuff to the Chinese or the 
Iranians," Mr, Gaede said. 

Advanced Micro confirmed that . 
Mr Gaede had worked there 14 
years, beginning In 1979, and had 
been considered an exemplary em- 
ployee. It learned that Mr. Gaede 
was an industrial spy only after he 
and his wife, who also had worked 
for the company, did not show up for 
work for several weeks. 

Colleagues asked the company t 
investigate. When Investigators ar- 
rived at the Gaede home, they found 
two cars In the driveway and what 
appeared to be people sleeping In the 
bedroom. The investigators discov- 
ered, however, that the beds con- 
tained stuffing, and they learned that 
the Gaedes had taken a renul car i 
the airport for a flight to Mexico. 

Asked how Mr. Gaede could be 
hired and promoted without any- 
one's checking his background and 
determining that he was an Illegal 
alien, Mr Malloy of Advanced Micro 
said, "He Joined the company before 
these safeguards were put in place, 
and he was a good employee and we 
had no reason to suspect him." 

He added, "In the 16 years since 
Gaede Joined the company, A.M.D. 
has taken extraordinary steps to do 
belter background checks," 

Mr. Gaede said he met with an 
Intel security investigator. Steve 
Lund, on May 14 in Buenos Aires to 
discuss his case, and he provided 
The Times with a photograph of him- 
self and another man. whom he said 
was Mr. Lund, sltung in a res 
rant Intel declined to comment on 
whether Mr. Lund had flown to Bue- 
nos Aires, or to say whether the man 
in the photograph was Mr Lund 

Mr, Gaede said he began acquir- 
ing Intel data after realizing that the 
FBI, "was not going to let me 
the hook for my dealings with Cuba 
nor were they going to prosecute 
me; they Just wanted lo use me," 

The trade secrets were a securi- 
ty blanket" Mr Gaede said, that 
allowed him to return lo Argentina 
and still make a living. 

Mr. Gaede said that his wife and 
two of their three children still live in 
the United States in an undisclosed 
location. His 16-year-old son lives 
with him In Buenos Aires 

-I'm Just afraid now," Mr Gaede 
said, "that the FB I or the Argen- 
tine Intelligence service might try lo 
do something lo me because of the 
way they keep harassing me," 



T-lt- -- -4-.'- 



18 



MONDAY, June 19, 199b 



elMS Stllllt Poil-lnlilliiin 



Tlw Air font tnotpon pluu, Iti 
winbffwB hiKkjd oul kndad hw^ on 
io u uua ixd ruBwvj lomawtwri In 
CaHnTAnMnci iflv in ughl-boir 
n«hi from m* YiUn* Tnionf Ca- 
ter in cHunJ Wutiiaguo mn. 

T)M C-IX) luml (kivly tack Io 
Ua had of ihc ilnuip uu) Idlid la 
nfma « tb« imr cup nmp cuiu 
torn. Hm. moiaun ind ilu shiua 



former Ranger tells of raid 
to destroy terrorist camp 



of thi four turtoenp so. 

itao Fan Uwi* tUacr iquad m a 
Dtntan disiMd down. piUwd tot ■ 
■eas bulk m i wcun «ir. 

Tlu Rutfui •«n ma br thiw 
mntar men in dvilm aoihat who 
pnpered Ihen for • omiMl aalpi- 
loani tlai ihi Ptniifsa lui n«v« 
publidr •cksowtedfU. 

Ths (I (he tcDOUTU of one ex* 
lUnvv of the nonen lo icauo/ • 
lenonit uimlai cmm; in tiw liu 
lummer of 19tS. The itulanon wu 
Ufikid to tjte ilaytot of lix Ametldi^ 
in B Sitwlot wtelo earlier. Other 
■ourcee ilio heve ooofifmeO the cxii- 
» of thii rajd. 

The eoldier wa coe of e huui- 
picked (rata oTRinien frem the Fen 
[ewli-boea 2st Roger BetnUoo ei- 
■ignedtotla mloloa 

3ecncT wu the owrhdinA £aHDr 
the ll-nao unit prepared Ac the 
opereilon, he iejd. The men w«r» 
iepemed frxn the benelioc for weeU 
end *ve eliowed to kl tneir beir 
iniw otn eamth to enee the iUnaen' 
teU-teJe ihort beimuti. 

"Ii'i eU 'neod to know.'" the 
eoidler leld, rc^nlnf to e aecuitiy 
policy In wW* peniapeiui ere pven 
only enough informenoD to ellow 
theis to cerrr out their leeiL 

' *Ve didnt etk. The aaif thiot we 
wtf* told wii thei this ouifii hid 
(been Invohied) ifaloB the United 
Sioo. Ther didn't {ive ui herd 
InformaiioQ. 

'Ail of ue wtri ojnous where we 
were lom^" the Ren^r md. ba lu 
one e\xr told them. "We eU hed 
compeMee, end we heeded loinh for e 
nod loot wfule.* 

Ai the much eimnp, the Renien 
wete e>vcn e brufiag by the trirae 
aviUeoe. "We didn't knirw wben tiiey 
ceme rrem. but they weient pen of 
the ectual lesenlt teem,' the loldier 
leia 

The fir* orter to the Reaftn «u 
to nnp to the lim theo lo ieiect new 
ciothlnt fnxo e pile of "eenlUied* 
meienei. he Mjd. The lecond oi^er 
WW IP turn m their Amny-^wed 
weeponl end to Kica ftnm i ceebe of 
■ ■ei itt nflee ixkd other Uffit weejionl 
lojved of rem or innsnie, eetfi 
>old«r wie (iven e bn^ purple cloth 
to wear ee an idenlifyin( gterker 'I 
"ed mine around my beed lo a 



lifmeiel" the aoldkr leld. 

—H wia fetUr anitfeifcnnni. 
They mit Theie'e e iti0LWfi^- 
naely 73 B 15 psaBaeL Tben are 
IS be no eermoce," be aid. Tbe 
Bldiea enn loU ooly Ihel their 
taifal wm e tmUary eDcenpfneoL 
Tbef wen 001 fl«ea the UaiSliy of the 
fuertfUe fbRe nor the tieaa lor the 
nid. They blew oolr ih> ther wue ai 
a bat 'i iie wh e re in Cenml Amen- 
a* fu ftom eny -'■■«'—< ent 

T)m aJ^lea didel make the em- 
■aoion between ttaeii mvan asd the 
Sea Salndoc mack tuull aflacwinl 
beeaid. _ ^ 

Ouvm Oa 2* boon beltn the 
OKk. ila ioUieii naed, dened ead 
■■•flnd their eafinni. and waned. 

At atou ] ajn. on the day 
fbUowfat ihor arrtnl in Cemral 
AmeiicB, e (lent CH-S] uen^nn 
taelieapiar a pti e eml at the airstrip. 
Eaoorad by the ihiw enrtUaoe, the 
uoaptJiiobcA in end bnoed fbr a 
henvwtng, Idw^IxkI HlfB to the 
tarfei. The piioi and oo^Qot wore 
nifht-fliion (oola. 

The toldar lael be witched the 



SEATTLE POST - 

INTELLIGENCER 
June 15, 1995 



dart jungle naXag paa a they Hew 
fbr neertr thiea hooo. 

The Bkt wa i<K gnwliif Ughi 
wiaa the iteaaen got a Ovw^DlauB 
witniag aooua tligta daA 

Suddenly they wen bsucnog over 
e ckering tn tbe jungle, and the 
belicopttr pike wa ordering them oat 

The Reagen ueed e techniqta 
oaJled faauupi ag* to diaemberk. A 
thidc ina ie attached to en overhead 
Smn Juat ouieide the teer fbaelage 
door aiaj dropped toward tbe pound 
a the helicopter hooen. Inaiaed of 
comrolllng deecent uftng a nppeUing 
hanaa, vldlen dacend on the rapa 
by amply holdloi on wth their handa 
and ileling. Thick leeiber Hone pro- 
loa them ^m fncnoD buma 

"Fajtropin* ttappcnj k felt, it'i 
;u« thon cf I fiee &11," the loldKr 
aid. *We dropped 90 reel nghi mio 
the roidtUa of the compotred." which 
coToaied of ana exude huu sinouod. 
ed by e bejbad-edn Ibooe. 

Six camp 0ienis enn ewaka a 
the Rengen iljd down the topee, ai^ 
Sinfiie arupced immidleiely. the ml- 



dier aeid. On the graund. the Res^n 
fbnned late nell flee teefla, with 
aab teem •""^^ e pie alMiad 
i;oL The aqued poured on e high 
yotawM of iuotue to ptevcm e 



It fit piesy baity for e while, but 
we didnl lave eay re^oc nai a lii ee,' 
tia BOkUer aeid. When the aboodag 
■opped aboot U minaia laar then 
wen O bodia Biewa ibioi^ the 
antji, nchi^age d^ean — '^'"^ 

One of the thrw dvilien nahed 
aroutid die cmp pthentig pepen 
■nrf ^oQimeas and ^"^^^ tfaeat into 
a laiga pouch. A iraup of Raagea 
mflrrtert aU of the enemy weapooi 
and ei^laatva into a pile end blew 

aiverriad e gitaly laek thai beapoke 
Da |nalligmr»^theniig pan of the 
mteeloa Eech of tta fucmlle maa 
wa carefully fiagatpraeed. 

The [fUigetytlatingJ pada unn 
leim' the aeldier aaid. "nrou Jsai p« 
the whole bead on It. We dU right 
baada only." 

The riidiag Ifanw taft the mined 
piemlle cemp on t6oL lor eoou ttnee 
milee. The CK-S3 beboopter teamed 
and Bok the loldleia beck lo their 
baa cainpL AAcr 41 boun of debrief- 
ing and "chilling out" at the hea 
camp, the Rangan got backontlaC. 
130 and leoinad to Yakuna. 



BOSTON GLOBE 



June 16, 1995 



Pg. 13 



US reportedly killed 83 guerrillas 
in El Salvador in '85 retaliation 



SEATTLE - US • 
(\o< kjlled 83 leftist ^emlla£ ii 
Salvador in l^io m a secret nud 
ned out m retaliation for the m: 
ere of SL\ .\niencans. the Seattle 
Po5t-lntelliBencer reported yester 
day 

The nud. earned out by 11 Rang 
ers from Foil Leuis near Tacoma 
«'*s kept secret because the Reagan 
administration feared backlash at 
home and embarrassmeni for the 
SiKadoran government, the news- 
paper quoted sources as sa>nng, 

.^.iked about the story at a ne«s 
bnefiny yesteiiby. Ken Bacon, chief 

checked this allegation uith the US 
Southern Command in Panama, »ith 
the Special Operations Command in 
Fonda. \ve find no infurmation to 
substantiate the report."" 

The newspaper said it based its 
rrport on accounts from a former 
Ringrr wfio took part, a former 
Amiv special operatjons officer and 
a former jrovernmeni official in- 



volved in e5;tablislung the military 
ability to counter terronsts. 

The raid apparently was in re- 
sponse to a June 19. 1985. attack in 
uhich as many as 10 gunmen 
sprayed two sidewalk cafes in San 
Salvadoh killing four ofT-duty US 
Marines and two US cmlians. 

.Meus reports at the Ume sajd the 
mxssacre was commiUed by the Ur- 
ban Guerrillas-Mardoqueo Cruz. 
That group was afTiliated with the 
Revolutionary Party of Central 
Amencan Workers, a splinter faction 
of the Farabundo Marti National 
Liberation Front, which was battling 
the Salvadoran govemmenL 

The Rangers were flown from 
Washington state to a Central 
American runway where they were 
briefed by three people in civilian 
Clothes, the former Ranger said. 

We didn't know where they 
came from, but they weren't part of 
the actjal assault team," he said. "It 
*aa really straightforward. They 
siid There s a target, approximate- 
l;- ") to So personnel There are to 



3 



A hebcopter took them to the 
rebels' remote training camp, where 
the soldier? dropped do«Ti a repe 
into a compound of nine crude huts 
surrounded by a barbed-wire fence, 
the former Ranger said Gunfire 
enipted immediately, he said 

"It got pretty hairy for a *hile. 
but we didn't have any major casual 
ties," he said. 

After less than 15 minutes, th* 
camp was strewn with S3 bodies, in 
eluding a dozen women ciad in iht 
same uniforms as the male gueml 
las, he said 

The three civilians. *ho Kid ac 
companied the Rangers, gatherei 
documents and supervised the sol 
diers as they fingerprinted th 
corpses, he said 

On July 31. 1985. Defense Secrt 
tary Caspar W Weinberger said Lh 
Salvadoran govemmenL "^tith ol 
assistance, has taken care of - in on 
way or another, uken prisoner c 
killed a number of tne peop- 

who participated" in the San Saiv 
dor atuck. 



19 

Senator Cohen, Are you familiar with the story about a former 
Ranger who allegedly was part of an Army Ranger team that went 
into El Salvador in 1985 and attacked a guerrilla encampment al- 
legedly resulting in the death of some 85 Salvadorans? 

Director Deutch. I am not. 

Senator COHEN. You have not seen any of the reporting? 

Director Deutch. No, sir. 

Senator Cohen. All right. 

Well, I am going to give you copies of several articles that ap- 
peared that indicated that this individual claimed to be part of an 
11 man unit that was dropped in by helicopter to take out some 
85 individuals. I think that we need to have some examination of 
this as to whether or not it would have been a paramilitary oper- 
ation, if it in fact occurred, or something under the aegis of the 
Agency, and if so, whether a report would have been required to 
have been filed pursuant to the covert action notification require- 
ment. 

Director DEUTCH. If you will provide me with the information, 
Senator, I will be glad to look into it and report back to you and 
the Committee. 

Senator Cohen. All right. 

Can you tell us what the CIA policy is regarding background 
briefings for members of the press? How many do you give, who 
gives them? 

Director Deutch. I think generally speaking we are — we have, 
for some period of time the Agency has tried, and I certainly would 
encourage the sensible background briefings to the press for major 
international events, especially when this country is involved in an 
international meeting or something. So I would think that there 
are reasonable background briefings that should be presented to 
the press, not as a way of introducing specific points of view, but 
essentially help the press fulfill their job. 

Senator Cohen. Yes. My understanding is that the CIA does 
about, I think about 200 briefings per year, DIA about 100, and my 
understanding also is that obviously these are at the unclassified 
level. The DIA briefings are approved by President's appointees in 
OSD. Does that sound right? 

Director Deutch. I don't — I — that would surprise me a bit about 
DIA. But I would think the 200 and 100 would not be unreasonable 
over a whole year period. 

Senator Cohen. Okay. 

Final question. The House Intelligence Bill includes a provision 
to waive the 2% penalty for early retirement for NSA employees in 
order to accelerate their attrition rate, avoiding the necessity of 
RIFs. What is your view of the House proposal? 

Director Deutch. I believe I am for it, sir. [General laughter.] 

Senator Cohen. Is there a reason why you turned around to look 
at the first echelon behind you? 

Director Deutch. I won't — but I think — I am quite sure I am for 
it, sir. I may get in trouble for having said that; that's what both- 
ers me. 

Senator Cohen. We'll take it up in a classified session. [General 
laughter.] 



20 

Director Deutch. No, no, no, no. This is a question about — ^but 
I am quite sure I am for it, sir. 

Senator COHEN. That's all I have, Mr. Chairman. 

Chairman Specter. Thank you very much. Senator Cohen. 

Senator Lugar. 

Senator LuGAR. Thank you very much, Mr. Chairman. 

Mr. Deutch, at the time of your confirmation hearing I com- 
mented that the scope of your presentation was very impressive in 
trying to build confidence in the Intelligence Community and in 
lajdng out a plan of action to guide your activities as DCI. I really 
commend you, as others have, on the answers to the eight ques- 
tions we presented to you for this hearing. 

Your answer to the eighth question leads me to ask you to think 
through with us the issue of intelligence coordination with law en- 
forcement activities in a broader context. 

There are many who believe that the narcotics problem and the 
terrorism problem, when combined with the proliferation difficul- 
ties occasioned by the residue of nuclear, biological, chemical weap- 
ons, after the end of the Cold War, are problems for which our gov- 
ernment is not well prepared to deal. On occasion we have defined 
the drug problem as a law enforcement problem, as a problem of 
crime in our cities, or with state authorities, or even the FBI. Obvi- 
ously working the narcotics issue through the Upper Huallaga Val- 
ley in Peru is a foreign problem. We coordinate what is occurring 
abroad with law enforcement at home, but some would say, and I 
tend to agree, that we are not organized in a sufficient fashion to 
meet the literal armies of people who are arrayed against govern- 
ments in the narcotics war. 

That may be true increasingly with terrorism as well; nation 
states are not necessarily the perpetrators of these deeds, but rath- 
er small sects of people with religious and political agendas. Some 
may be domestic, some may be foreign in origin, we don't know 
which groups may strike or with what materials. And increasingly 
those materials are more dangerous and disastrous. 

Now the coordination you have described here today is very en- 
couraging. But have you ever tried to think through the overall 
problem. If we were really serious about a war on drugs, in a com- 
prehensive way — internationally, domestic, locally, how would we 
organize our government for that fight? Or increasingly, if we are 
serious about acts of terrorism that might take out a good number 
of American buildings and people and involve extraordinarily dan- 
gerous and volatile material, how do we organize to fight that men- 
ace? It just occurs to me that the demarcation lines between law 
enforcement and intelligence, between domestic and foreign activi- 
ties, between vigilance on behalf of and defense of civil liberties for 
Americans, between the roles of the military and police forces in 
combatting these problems, may not be appropriate given the enor- 
mity of these dilemmas. 

Director Deutch. Well, Senator, I think that that is a tremen- 
dously astute observation. If I was to lay down for you the real 
things that bothered me conceptually since I have been Director of 
CentrEil Intelligence, the first one I'd mention is this personnel sys- 
tem. The second one is the boundary line on how to think about 
law enforcement and foreign intelligence, and I might add, diplo- 



21 

macy as well, because there is a very important role in these for- 
eign activities of the Department of State that has traditionally 
been the authority who was responsible for coordinating all of or 
foreign activities in a foreign country. And I do have some initial 
views about it. 

First of all, I don't believe that we can find a single organization 
system that will optimize for addressing the drug problem or opti- 
mize for addressing the terrorism problem or the still considerable 
problem of countries which have inimical interests to the United 
States. So we have to develop greater flexibility to use pieces of 
each one of our departments to address questions in a problem 
solving, directed way, in order to get the best out of the assets that 
we have. 

I Eilso want to say that technology has something to do with this, 
because the distinction, the historical distinction between domestic 
and foreign is just going away, it is just disappearing before your 
own eyes. So I believe that all of these push for reassessment. 

But we should never confuse the difference between who the cus- 
tomer is here and who the performer is. I am a performer of foreign 
intelligence for a customer. The customer that I work for is either 
the Attorney General, or the head of the FBI or the head of the 
Drug Enforcement Agency, who needs to have foreign intelligence 
for a purpose that they are going to have in law enforcement or 
something else. And I really in this way want to distinguish be- 
tween saying we have to do a better job of organizing the customer 
to say what they need and organizing performers to do the work 
that is required. It is a very complicated subject, much more com- 
plicated than when we talk about imagery or SIGNIT or things like 
that. This is one of the key intelligence issues for the future. Not 
many of the others that are discussed much more extensively. 

And I thank you for the question, it's a very good one. I hope I 
haven't gone on too long about this. 

Senator LUGAR. Are you working — you are working on it? 

Director Deutch. Yes, I am; yes, I am. 

Senator LuGAR. And will share with us the evolution of your 
planning? 

Director Deutch. Absolutely, sir. 

Senator LuGAR. I thank you. 

Chairman SPECTER. Thank you, Senator Lugar. 

Senator Bryan. 

Senator Glenn. 

Senator Glenn. Thank you. Mr. Chairman. 

We have talked before about the greater importance of HUMINT, 
human intelligence, because some of the problems we face inter- 
nationally these days involve terrorists, religious groups, and eth- 
nic groups that that aren't easily surveilled by satellites. Which 
means then that we have a greater personnel problem than we've 
had in the past in recruiting people for that purpose. That's tough 
and it takes years to develop human assets — it's not like just put- 
ting up a new satellite and getting your answers a week or so later. 

Do these human assets come under NFIP, National Foreign In- 
telligence Program? 

Director DEUTCH. They do. 

Senator GLENN. Okay. 



22 

Well then, that gives me a lot of concern, because on page one 
of your statement, you addressed three questions with regard to 
NFIP in particular. First was that you don't have adequate control 
over the budget on the NFIP programs. You have little direct au- 
thority over NFIP directly. The present process works fairly well 
within the Department of Defense but not with respect to other 
agencies that are part of NFIP. 

Another is on the issue of whether the DCI should have ex- 
panded authority to reprogram NFIP funds within the program. 
This would indicate that maybe the DCI does not have the author- 
ity you should have to manage what I think is going to be one of 
the major thrusts in the whole intelligence effort for the coming 
years. Am I wrong to be so concerned or are you concerned, too? 

Director Deutch. Well, if I had not been concerned, I wouldn't 
have written it. But let me give you two points that should make 
you feel better. The first is that with respect to the CIA human in- 
telligence function, I do have complete authority and executive con- 
trol, because it's in CIA and CIA is part of the NFIP program. But 
other human intelligence activities, for example, those run by the 
Department of Defense, I do it really at the sufferance of the Sec- 
retary of Defense, or if I may say, the Deputy Secretary. 

Senator Glenn. Would you say you are one among equals, then, 
rather than the one running the program, is that correct? 

Director Deutch. No. They control the purse strings. 

Now while I say that, I want to say that having been Deputy 
Secretary of Defense I can promptly give you the answers, the ar- 
guments why that's a good way of doing it. They have responsibil- 
ity for these agencies, the Defense Intelligence Agency, the Army 
and the Navy and the Air Force. So there is a reason why matters 
are as they are, and I can defend them eloquently having been on 
the other side of the fence as Deputy Secretary. 

The point I want to make is, you cannot look to a Director of 
Central Intelligence as being an executive with executive manage- 
ment control over these programs. There are certain other depart- 
ments which have NFIP dollars that don't even bother to check in 
with me, or any Director of Central Intelligence. 

Senator Glenn. Well, I know you say in a subsequent paragraph, 
"I am not prepared as yet, however, to recommend solutions or op- 
tions to pursue." But I would think this is something we ought to 
get ironed out pretty quick as to the increasing importance of 
HUMINT, whether we have direct enough control, and who's going 
to control. Is it going to be run by a committee or is it going to be 
somebody really in tight control? Because we're not going to have 
unlimited resources, and this is going to be one of the most impor- 
tant parts of the budget. 

Director Deutch. That's correct, and it's a similar question can 
be said about international terrorism, drugs, and the like. And 
these are issues that are of concern to me and that is why I have 
put them out. But I am not prepared to say you ought to do it a 
different way, because I know the argument on the side of the 
agency that is responsible for 

Senator Glenn. Okay. 

Back to the Gulf War syndrome. I was talking with some of the 
veterans from the war the other day, and they said they are con- 



23 

vinced it all came from the shots they got before they went, it 
wasn't something they got over there. Has anybody looked into 
that? 

Director Deutch. There were different kinds of medication given 
to those veterans. Incidentally, I must say, Mr. Chairman, I have 
to be — this is not a DCI responsibility, I am going back now to my 
other world — there were different medications given and in each 
one of those cases, pjrridostigmine being one of the principal can- 
didates, there are medical studies under way to determine whether 
there is any possibility of these being side effects or in combination 
with other matters having led to the Gulf War illnesses. 

Senator Glenn. From the shots there were given before? 

Director Deutch. That's correct, yes sir. 

Senator Glenn. Okay, thank you. My time is almost up. 

Let me ask one more question here. 

Maybe you can't answer this in open session, but I'll ask it any- 
way. Can you give us any information on the press reports that the 
M-11 missile or technology is being given to Iran by the People's 
Republic of China? 

Director Deutch. Can't do it in open session. Senator. 

Senator Glenn. Okay thank you. 

Chairman Specter. Thank you very much. Senator Glenn. 

Senator Shelby. 

Senator Shelby. Thank you, Mr. Chairman. 

Dr. Deutch, we're glad to have you here. As you said, you would 
come back, and we all appreciate your candor and your 
insightfullness. 

You mentioned changes in personnel in your opening statement. 
You said, "most of the changes," and I am quoting you here in the 
record, "are now complete." And as I said at the beginning, I think 
the new team is functioning smoothly and so forth. 

Now, aren't you going to have to get into the depth, into the 
structure of the Central Intelligence Agency when dealing in per- 
sonnel changes? I assume you were referring to changes at the top 
that you work with to give leadership in certain areas. 

Director Deutch. That's exactly right sir. I think that there was 
a concern that a new Director would come in and, as happens 
sometimes in the past with other Directors, would fire, terminate, 
hundreds of people. That is not my way of doing things and not 
what I intended to do. 

Senator Shelby. Probably would not be wise. You have got to do 
it in a systematic, knowledgeable way, haven't you? 

Director DEUTCH. I think the approach that I am trying to take 
is there have been a few changes, they have been announced, 
maybe one more. But what is really important is to go through the 
hard work of putting in place a personnel system that will, in or- 
derly fashion, evaluate, promote and assign people according to 
their performance and according to the needs of the country. And 
that is not going to happen in a day or two. It is a long process. 

Senator Shelby. But it is important that that does happen, 
though. 

Director Deutch. I believe that if there is anything that I can 
accomplish as Director of Central Intelligence, it is carrying out 
that task. 



24 

Senator Shelby. And perhaps focusing in new directions, looking 
at the 21st Century and our needs of intelhgence as they change. 

Director Deutch. The issue of priorities and how we allocate our 
intelligence capabilities to different areas is a second question. But 
unless you have the people, unless you have the motivated people 
who are properly harnessed and properly developed throughout 
their careers, you are not going to be as effective in the second part 
of that unless you have the right personnel system. 

Senator Shelby. Dr. Deutch, I want to get into something else. 
On June the 20th I wrote you a letter. The inquiry dealt with the 
killing, the murdering in 1985 of four Marine embassy guards and 
two American businessmen in San Salvador. I understand that sev- 
eral weeks ago CBS aired a segment that said that the leader of 
the assassination squad, the murder squad, is now living in San 
Francisco, that he was on television — I haven't seen this program — 
and I was asking in the letter and I will ask you publicly now, to 
furnish any information that you might have, the CIA dealing with 
this Gilberto Asario — I'll give you a copy of this in a few minutes — 
and his entry into the United States. Does the Intelligence Commu- 
nity have any information regarding this man, who, I understand, 
said he planned the killing of these unarmed Marines and two 
American businessmen in 1985, and if he is in fact living in the 
United States, how did he get in the US, when did he get in, did 
the Intelligence Committee have anything to do with bringing him 
into the US, and can you dig up any information that would be 
helpful to this community and this country regarding his presence 
here. I think it's very important. 

There've been some allegations made by some of the surviving 
family members, including the mother of one of the Marines from 
my home state of Alabama, that the CIA knew about this and 
helped him get into the US. I don't know that at all. I am not say- 
ing you, but when we let, under some kind of a program, immigra- 
tion or otherwise, a known murderer, who admits on television that 
he did, in fact, kill four Marines, legally in the United States, 
something is wrong with out immigration policy and something is 
wrong with our Justice Department not to seize this man and to 
prosecute him. 

Director Deutch. Senator, I will look into the matter. I do not 
know the case. 

Senator Shelby. I know you don't. 

Director Deutch. And I will report back to you as soon as we 
have a 

Senator SHELBY. Do you think this is an important matter? 

Director Deutch. Yes, sir. 

Senator SHELBY. I do, too. 

Thank you, Mr. Chairman. 

Chairman Specter. Thank you. Senator Shelby. 

Senator Robb. 

Senator Robb. Thank you, Mr. Chairman. 

I think as the Director has recognized the questions from Senator 
Cohen and Senator Shelby related to the same series of events, 
they have been widely publicized in the regular press, and I think 
that some of the information might be available. 



25 

I recognize the difficulty in pursuing questions that would be bet- 
ter handled in closed session. Some of the things I wanted to ask, 
I think particularly in view of your earlier responses I will save 
until such time as we have that type of an opportunity. 

One of the questions, though, that is appropriate I think for open 
session, has to do with personnel policies, not at the levels that you 
were suggesting a few moments ago when you talked about some 
of the changes you made, but for people who are career personnel 
in the intelligence field, particularly for those who might be mem- 
bers of the Directorate of Operations, and in terms of the pro- 
motion policies, if you will. In the military and the Foreign Service 
there is an up or out policy that is pretty widely used to make sure 
that you continue to turn over and that we make additional career 
advancement opportunities available and there is also some special 
retirement benefit that is available to those who do not happen to 
be promoted at a particular time. 

The intelligence service, obviously, has some special difficulties. 
Indeed the people involved would not even be permitted to tell a 
future employer what they did, much less describe anything that 
related to it. And it might be quite difficult in several other areas. 

I wonder if you could comment on that particular element of per- 
sonnel policy, whether or not any attempt is being made to utilize 
an up or out policy and if so, are there any special applications or 
special concessions that might have to be made for intelligence per- 
sonnel given the very specialized nature of their work. 

Director Deutch. Senator, you make the case very well. All orga- 
nizations, as they become — as people spend a greater deal of time 
and get to higher seniority, will get to a situation where the funnel 
gets smaller and individuals have got to leave the system and a 
method has to be found for dealing with them fairly and in con- 
fidence with the very special circumstances in which they work. 
And I am not familiar with whether specific provisions exist today 
for that purpose, but I will say to you that it is very much on our 
mind as we move towards a, what I would call a more effective and 
focused personnel system, to look at techniques for fairly develop- 
ing a sequence of progression of promotions and thereby some peo- 
ple who would not get promoted, and giving those who want to exit 
the system the kind of reasonable retirement support, if you like, 
and pay support, so that they can go on to alternative careers con- 
sistent with the fact that they have served in the intelligence serv- 
ice. Separation from an intelligence service is something which has 
to be done carefully and with a knowledge of the specific — the very 
special requirements of what that career service has been. 

So the kind of issue that you raise is precisely the sort of ele- 
ments that have to be part of a more comprehensive personnel sys- 
tem that I was advocating in my earlier remarks here today, sir. 

Senator ROBB. Thank you. 

Let me just ask one other general question. When George 
Tenet — and I think he met with every Member of the Committee 
individually and had a very good confirmation hearing, as you 
could probably realize simply from the unanimous vote for this ap- 
proval here a few minutes ago — he seemed to be a little bit cau- 
tious in projecting a complete turn around for some of the chal- 
lenges that the Agency and the Intelligence Community in general 



26 

face in the near term. He spoke in terms of several years to com- 
pletely reposition — I don't remember the precise words — so that we 
would be in position to provide all of the kinds of intelligence that 
we believe that we are going to need in the end of this Century and 
the beginning of the 21st Century. 

Do you have some sense of a time line as to when you would be 
able to say that under new management, if you will, and cognizant 
of the difficulties that the Agency has encountered in recent years 
in each of the areas that have been discussed as part of your con- 
firmation process, and the questions to date, when we could say 
that we are — when we expect to be as sufficiently changed or modi- 
fied so that we are operating with an effective new team that is 
fully capable? 

Director Deutch. I think years is the right time scale for things 
like putting in a personnel system that will work with the con- 
fidence of all the people who are involved. So I do not think that 
some of these subjects — working out, for example, the issue with 
respect to law enforcement is going to be done in weeks or months, 
but it is going to take a great deal of time. Very important issues, 
putting in a planning system that assures that resources are allo- 
cated to intelligence priorities, is not something that can be done 
overnight. It can be started this year. But some of these are tasks 
that are going to take something on the order years, not on the 
order of weeks of months. 

Senator Robb. Thank you, Dr. Deutch. 

Mr. Chairman, my time has expired, and I thank you. 

Chairman Specter. Thank you. Senator Robb. 

Senator Graham. 

Senator Graham of Florida. Thank you, Mr. Chairman. 

Welcome. 

John, a few days ago I was listening to National Public Radio 
and I heard you from, I believe, Amherst, in your reunion, and you 
were commenting during the segment of the program that I heard, 
about some of the culture that you had experienced in the Defense 
Department and its degree of professionalism and its heavy com- 
mitment to maintaining the growth of its personnel. And you went 
on to observe that you felt that it was because of that that the De- 
fense Department was able, culturally, to make a relatively smooth 
transition from a Cold War to a post-Cold War mentality. I hope 
I have properly 

Director Deutch. The uniformed military. 

Senator Graham of Florida. The uniformed military. 

One of the concerns that many of us have had has been the issue 
of the culture of the Intelligence Community. In areas such as the 
Aldrich Ames case and Guatemala, there seemed to be a culture of, 
you know, close ranks around a difficult situation, and a reticence 
to disclose and to deal with issues that were unpleasant. 

I wonder if you could comment about some of the transferability 
of the experience of the uniformed personnel and what that has 
meant in terms of the adaptability of the military to new conditions 
to dealing with the cultural circumstances within the Intelligence 
Community. 



27 

Director Deutch. Senator, first of all, I would like to go back to 
the comment- -the question and the answer that I gave to Senator 
Kerrey earlier. 

In addition to problems, there is a remarkable degree of com- 
petence and dedication of individuals in this organization. I men- 
tioned individuals working in the Bosnian Task Force which they 
have been doing for four years, they've been doing it a system of 
20 hours a day, with incredibly high performance and I might say, 
tremendously high morale. So I have found no — no unwillingness 
to share with me the operations of the Agency. There's been tre- 
mendous forthcoming about the most awkward kinds of problems 
that exist. There has not been what I had heard, that, you know, 
it would be hard to get the Directorate of Operations people to talk 
to you. They love talking to you. 

So I think the problem is not a culture which says we're not 
going to tell you what's going on. What the problem is, is to put 
into place, through hard work and long time, a new approach to 
what has been a system which, in the personnel area, why there 
have been some modifications, obviously needs some — needs some 
major readjustment in the planning area with respect to resource 
allocation. 

So the point I would like to make is when we talk about chang- 
ing the culture, I don't think that this is a set of people who are 
either unmotivated or not capable of, resistant to talking about 
what they are doing. They are very open. What is important is to 
put into place those mechanisms, and it takes time in a large orga- 
nization to do that, a new personnel system which over time will 
allow the employees themselves, these dedicated professionals, to 
be empowered to change the culture themselves and adapt to new 
circumstances. 

So the important point is that putting in a new personnel system 
that goes from recruiting all the way through to retirement, if it 
is done right, will allow professionals to adapt to changes as they 
are called upon and it will lead to the change in culture that we 
are seeking. 

Senator Graham of Florida. I would like to ask a second area of 
concern which also relates to some of the changes that have oc- 
curred in the last half dozen or so years. And that is the relation- 
ship between public information and clandestine information. We 
now have much greater access to and capability of processing pub- 
licly available information. 

To what degree is that going to affect the priorities for clandes- 
tine information? As clandestine information, it would seem to me, 
becomes more a filling in smaller blanks as we are able to fill in 
the larger picture with properly processed information that is avail- 
able to the general public. 

Director Deutch. I think you are exactly right. There is an ex- 
plosion of public information and also with the techniques to ana- 
lyze it. And so the collection problem and the analyst's problem is 
to use clandestinely collected information selectively. You don't 
have to cover everything if you can read it in the newspaper in 
some foreign capital. Ajnd it is much easier to deal with open 
sources, open reporting, and I think that we are doing much bet- 
ter — the community is doing much better — of analysts understand- 



28 

ing and of the requirements system being cognizant of selective in- 
formation that is needed of a clandestine nature and making use 
of open source material. 

Senator Graham of Florida. Thank you, Mr. Chairman. 

Chairman SPECTER. Thank you, Senator Graham. 

Director Deutch, on a second round, I would like to inquire on 
some broader issues of interest. 

The recent events in Russia raise many material questions as to 
the military strength, the capability of Russia, and how we assess 
the future as to our defense budget, which we are looking at, and 
an evaluation of Russian leadership as well as materiel capability. 
I would be interested in your assessment, to the extent you can 
give it in an open session, as to what light, if any, the recent events 
in Russia, the hostage taking and the concession by the Russian 
national government, what implications there are or indicators 
there are of basic Russian military strength. 

Director Deutch. I am not sure that I can provide any signifi- 
cant new information here, except to say that both the political de- 
velopments in Russia and states of the Former Soviet Union, and 
the military strength of Russia and it performance, its potential for 
its capabilities, remain a very high priority for both our collection 
and our analysis. 

Chairman SPECTER. Were you surprised by the recent events 
which suggest real weakness in the Russian military establish- 
ment? 

Director Deutch. I was not surprised by it, no, sir. 

Chairman Specter. Since you testified last, there have been a 
series of reports publicly disclosed about US negotiations with 
North Korea on the so-called Statement of Agreed Principles. We 
talked a bit about whether it really is an Executive agreement or 
whether it really is a treaty which requires ratification by the Sen- 
ate. It appears that those discussions are now more on track. 

Are you able to comment as to the security issue as to what is 
happening with North Korea or whether the window of lack of in- 
spection raises any significant security problem for the United 
States? 

Director Deutch. Well, let me first of all say that the community 
has an estimate which I think I signed out yesterday on just this 
subject, and I will make sure that you get a copy of it, which gives 
our best judgment on this issue of developments in North Korea. 

If I could give you two summary remarks about it. We don't 
know as much as we should to make fully informed judgments. 
That won't be a surprise. And that it was 

Chairman SPECTER. That's a pretty good generalized answer. 

Director Deutch. No, no. It's also a statement of importance, it 
seems to me. This is a society — let me leave aside the issue of the 
nuclear weapons program where we are, in my mind, remarkably 
ill informed and it is important for us as a country to be better in- 
formed about what is going on there. But secondly, I would say to 
you that North Korea remains one of the really tremendously 
major security challenges for the country. That is the second point 
I would leave with you. 

Chairman Specter. Are you confident that we are on track about 
being able to accurately assess that security threat? 



29 

Director Deutch. On the military security side, I am fairly con- 
fident, yes, sir. 

Chairman SPECTER. How about on the intelligence side? 

Director Deutch. Well, I meant on intelligence on military mat- 
ters, the answer is yes, sir. 

Chairman Specter. My orange light is on, so I will ask only one 
more question. 

There have been some recent public disclosures about greater ca- 
pability of Iraq on weapons of mass destruction, and my question 
to you, to the extent you can comment publicly, what is going on 
in Iraq at the present time with respect to their capability with 
weapons of mass destruction and the reports we hear about inter- 
nal dissension and Saddam Hussein again apparently successfully 
quelling internal dissension. 

Director Deutch. I cannot comment on these matters in public, 
sir. It's because both I am not in a position either to reveal my wis- 
dom or my ignorance on them, but 

Chairman Specter. Is that an "I don't know?" 

Director Deutch. No, no. I would be happy to discuss these mat- 
ters with you. 

Chairman Specter. Well, all right. 

I raise those questions and I know that there is a limited amount 
that can be commented upon, but there is enormous public interest 
and concern about the three subjects that I just broached and I 
broach them in a context fully understanding the limitations as to 
what the Director of Central Intelligence can comment in public, 
and perhaps it would be a good idea if we confer privately about 
what might be said, because there is a great deal of public concern 
about what is happening in Russia, what's happening in North 
Korea, what's happening in Iraq, and many other places. 

But when we're buffeted at all times by media reports which may 
be accurate or may leave some points untouched, and the extent to 
which there could be some comment by the CIA on those subjects, 
I think it would be very good for the public to have whatever assur- 
ances or information could be provided in an official way. 

Director Deutch. Yes, Mr. Chairman. 

Chairman SPECTER. Senator Kerrey. 

Vice Chairman Kerrey. Thank you very much, Mr. Chairman. 

Mr. Deutch, I was either impressively inattentive or sufficiently 
bored that I, too, listened to the radio address at Amherst, and I 
guess it was an honest mistake rather than a Freudian slip when 
you said that your job was to produce secrets rather than to protect 
them. 

But there is a suspicion in the land that that is part of our busi- 
ness, to protect and sometimes produce secrets. And I think that 
comes, if I was to guess, comes as a consequence of the political 
tendency of us — we elected politicians, to get drug along in the 
dumb current of whatever it is at the moment that's of interest to 
cameras or whatever is of interest at the moment to the media and 
the American people as a consequence of that attention. And I 
know that you understand that I feel very strongly that we have 
to be very careful that if the threat is a negative editorial to a poli- 
tician versus the threat of sending somebody in harm's way, that 
to address a threat that in fact isn't a threat to the United States, 



30 

or at least isn't on our priorities, that we must have the strength 
of character to resist and perhaps suffer the negative editorials as 
a consequence. 

What I am very impressed with, Director Deutch, is your willing- 
ness early on in this window of infancy that you have as the Direc- 
tor of the Central Intelligence Agency, to take a clean slate ap- 
proach, to say, I know this is the way it's always been done, but 
we need to do it differently. I am very impressed with your dedica- 
tion to that task. 

And I am interested to know if you feel as if you have the liberty 
to do and perform in a similar fashion when it comes to fundamen- 
tal policy, where we may in fact be in a tunnel of no return, I 
mean, where we may have made a political decision which is essen- 
tially what the intelligence is all about. It is very easy for us with 
Captain O'Grady to see what good intelligence both does for us and 
may not do for us if it is missing. It is very impressive in a military 
situation, the intelligence — I marvel at the kind of technology and 
the human support for our warfighters in preparing them. But 
when you are dealing with a political threat, such as the one Sen- 
ator Lugar was referencing earlier, with narcotics, or the ones that 
the Chairman was referencing earlier with Russian and North 
Korea and Iraq, you are talking about a human judgment being 
made by we policymakers, amd there is sometimes, it seems to me, 
a tunnel that we get into. 

And I am thinlang, for example, of Iran. I mean, I read the last 
couple of days accounts that we basically got slam dunked at the 
Gr-7. None of the G-7, our G— 7 colleagues are supporting our policy 
in Iran. OPEC is going to stiff us on a policy in Iran. Shell is going 
to pick up where Conoco left off. The question is, did it produce 
anything. 

I could just as easily use other examples where we politicians 
make a decision and say this is the way we want to go and you 
may, in your own intelligence evaluations, say geez, I hate to em- 
barrass you. Senator Kerrey, but it isn't working. What you have 
decided was a good decision based upon what we knew at the time, 
but we are now looking at the impact of that decision and we don't 
really see that it has accomplished what it is that you stated that 
you're trying to accomplish. 

Do you feel at liberty. Dr. Deutch, to bring to the attention of the 
Commander in Chief or to this Committee, conclusions that might 
be at odds with decisions that we have previously made? 

Director Deutch. Very much so. I understand exactly the point 
that you're making and one of the matters which I am quite com- 
fortable on is that the top policymakers of the country, the Presi- 
dent, the Vice President, the Secretary of Defense, Secretary of 
State, have the opportunity to hear from me when I think the intel- 
ligence estimates are, to the best of the ability of what we know 
and the best of our judgment, what things work and don't work, 
including some of the examples that you have mentioned, sir. 

Vice Chairman KERREY. Well, let me give you a specific example. 

I recently took a tour starting in Panama, to Colombia, Peru and 
to Bolivia and one of the questions I had in that whole tour began 
in Panama and ended in Panama and that was whether or not 
SOUTHCOM's authority is sufficient to be able to control the entire 



31 

area. They do not appear to have, for example, control over the 
Naval forces. And I am wondering, is that the kind of situation — 
you may not be aware of that particular situation, but is that the 
kind of situation where you would not feel any shyness in getting 
involved if you decided that General McCaffrey needed the author- 
ity to — and that authority needed to be modified, you wouldn't be 
shy in making that recommendation. 

Director Deutch. First of all, I guess I wouldn't be shy in that 
case because I was Deputy Secretary of Defense and know it well. 
But the fact of the matter is, that's not a good example. I don't 
think the chief intelligence officer of this country should be talking 
about General McCaffrey and how we do the AOR's between him 
and USACOM and lots of other people, although I know the prob- 
lem very well, but that's because I was Deputy Secretary of De- 
fense and have a good deal of sympathy with General McCaffrey. 

Where I do think that I have the responsibility that you men- 
tioned is where I see some policy taking place in a foreign country, 
whether it's our policy or someone else's policy, and the results are 
going in a certain direction which are not what's intended, that has 
to be brought to light. And it is not so to speak, talking about 
the 

Vice Chairman Kerrey. So if your intelligence causes you to con- 
clude that our policy towards Cuba was wrong, you would not feel 
shy in bringing the information to our attention that in spite of the 
interest of Jorge Mas Canosa, you would not be shy in bringing us 
an evaluation that perhaps we ought to change course. I am not 
suggesting that that is the situation. I am just picking a very con- 
troversial political issue to make the point. 

Director Deutch. In that particular case, it wouldn't be that I 
would say it's right or wrong, I would say that our intelligence tells 
us that the policy that we have adopted is not leading to the re- 
sults we intended it to have — slightly different point, but that's the 
way I would express it, and have done so. 

Vice Chairman Kerrey. Thank you. 

Chairman Specter. Thank you very much, Senator Kerrey. 

Senator Graham. 

A vote has been started, so we do have a time limitation. 

Senator Graham of Florida. Thank you very much, Mr. Chair- 
man. I am pleased that Senator Kerrey concluded with that last 
question, because that is where I would like to start, and that is 
to ask some questions about Cuba. 

Mr. Deutch, what is your assessment of our intelligence capabili- 
ties to understand what is happening inside Cuba and what those 
events might mean in terms of US policy? 

Director Deutch. If I could address this in a slightly oblique 
way, let me just say that I think that we — that Cuba is a tremen- 
dously important intelligence priority for a variety of reasons, £ind 
that it needs more attention by the community, if I could answer 
it a little bit elliptically in that way. Senator. You know better than 
anyone else that there's many different ways we can use to gather 
information about the developments in Cuba, and I have already 
taken some steps to assure that we focus more effort on Cuba. 

Senator Graham of Florida. You mentioned in some of your ear- 
lier questions about the changed circumstances in the world are re- 



32 

quiring a reprioritization of the activities of the Intelligence Com- 
munity and the types of resources that the community needs and 
will apply to those new priorities. Is Cuba an example of such an 
area? 

Director Deutch. Yes, it is. And it follows, also, from the Presi- 
dent's directive on what our intelligence priorities are as well. So 
this isn't just one agency doing it, this is part of a reassessment 
of what our priorities are generally, and Cuba is certainly higher 
on the list. 

Senator GRAHAM of Florida. If I could ask about three specific 
Cuba related items. 

One, the economy. There have been reports within the last few 
days that the sugar crop in Cuba this year will be one of the lowest 
in the last half century. There are reports about large numbers of 
lay offs in the publicly owned enterprises. Are you able to comment 
about what the community feels the impact of those and other eco- 
nomic factors might be on the future, the stability of the govern- 
ment of Cuba? 

Director Deutch. I am not informed on the issue. I would have 
to go back and inform myself. Senator. I will be happy to do that 
and get back to you, sir. 

Senator GRAHAM of Florida. The same answer may apply to the 
next two questions. 

The next one relates to Mr. Vesco. There was a lot of speculation 
when Mr. Vesco was arrested that that might represent a change 
in Cuban policy relative to harboring fugitives and extradition. 
Now it appears as if the Cuban government is not going to extra- 
dite Mr. Vesco, at least that is what CNN was told. Do you have 
any assessment of what this series of actions relative to Vesco 
means in terms of Cuban policy? 

Director Deutch. I do not. Senator. 

Senator Graham of Florida. And the third question relates to the 
nuclear power plant in Cuba which has caused a considerable 
amount 

Director Deutch. Yes. 

Senator Graham of Florida. Of concern and apprehension. What 
are you able to say about that? 

Director Deutch. Senator, the last time I looked, I don't think 
there was any significant activity going on there. That is my cur- 
rent impression. But I can get back to you on it if there is any 
change in that. 

Senator Graham of Florida. Finally, I understand tomorrow 
there is going to be a report delivered to the Defense department 
which the Defense Department had requested and funded on the 
security status of Cuba, such as what is the capability of its cur- 
rent military. I'd be interested if you could have that reviewed from 
the perspective of your insights on Cuba and comment at an appro- 
priate time and under appropriate circumstances as to what your 
assessment is of the security capabilities of Cuba. 

Director Deutch. I will be happy to do that. Senator. 

Senator Graham of Florida. Good; fine. Thank you. 

Thank you, Mr. Chairman. 

Chairman Specter. Mr. Deutch, we are very close to being out 
of time on the vote, but I want to ask you one more question, and 



33 

we'll have to pick this up at a later time, and just about time for 
you to have to go, too. And this is on Guatemala and I understand 
that you are awaiting the Inspector General's report. But this ques- 
tion relates to some action that perhaps should be taken in ad- 
vance of the Inspector General's report. And one of the factors that 
made the failure to inform Congress on the events in Guatemala 
so troubling was that it involved the Congressionally directed semi- 
annual human rights reports. 

Now, other than the on-going development of guidelines for re- 
cruitment of assets, what steps have you taken or do you intend 
to take to emphasize to the Intelligence Community, particularly 
the Directorate of Operations, the importance of the requirement 
that our activities are fully consistent with protection of human 
rights and that we don't sanction or become involved, directly or in- 
directly, with any people who there is reason to believe are in- 
volved in violating human rights. Because that is an issue which 
requires action, if not yesterday, at least by this afternoon. 

Director Deutch. We are carefully going through a procedure to 
make sure that every station understands that they are there, es- 
pecially in Latin America, working on improving human rights and 
democratization in that area. So we try to make sure that that 
message gets through as a high priority and I think there is some 
success on that. 

Chairman SPECTER. And you are pushing that message at the 
present time. 

Director Deutch. Yes, I think even some of our critics would 
argue that in certain places we are a force in that direction today. 
And it is a very important point and we should continue to be 
pressed on it, sir. 

Chairman Specter. Well, thank you very much. Director Deutch. 
This has been very informative. We will be returning to some of 
these questions again. 

That concludes the hearing. 

[Thereupon, at 4:01 o'clock p.m., the hearing was concluded.] 

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