Michelle Van Cleave is the National Counterintelligence Executive and, as such, she is the country's top counterintelligence official and is charged with integrating and providing strategic guidance for counterintelligence activities across Government. She reports directly to the Director of National Intelligence, John Negroponte, the President's principal intelligence advisor. In the 105th Congress, Ms. Van Cleave was Chief Counsel for the Senate Judiciary Subcommittee on Technology, Terrorism and Government Information. In 1989, she served on the House Science Committee staff and was later Assistant Director in the White House Office of Science and Technology Policy. She has also held senior positions at the Department of Defense and is a graduate of the University of Southern California Law School. Dr. Larry Wortzel has been at the Heritage Foundation since 1989 and has served as Asia Studies Director. He is a former Marine, Army Airborne Ranger and Army Colonel, and has worked for the Under Secretary of Defense for Policy to develop counterintelligence programs. In 1970, he served in the U.S. Army intercepting Chinese military communications in Vietnam and Laos. Later, his career took him to areas throughout Asia under U.S. Pacific Command and as U.S. Army Attache at U.S. Embassy Beijing during the Tiananmen massacre, and in 1995. Dr. Wortzel is the author of numerous books on Chinese military strategy and received his Ph.D. at the University of Hawaii. Mr. Maynard Anderson is President of Arcadia Group Worldwide, Incorporated. He has served in Government as Deputy Under Secretary of Defense for Security Policy with the responsibility of setting disclosure policy. In 1988, he served as Assistant Deputy Under Secretary of Counterintelligence of the Department of Defense, setting security policy and providing day-to-day oversight. Mr. Anderson also chaired the National Foreign Disclosure Policy Committee. Privately, he served as Chairman of the National Intellectual Property Law Institute Board of Directors. Mr. Anderson is a graduate of Luther College in Iowa and the Federal Executive Institute. William Wulf is President of the National Academy of Engineering and Vice Chair of the National Research Council. He is on leave from the University of Virginia, where he is AT&T Professor of Engineering and Applied Sciences. Mr. Wulf has served as Assistant Director of the National Science Foundation and Chief Executive Director of Tartan Laboratories, Inc., in Pittsburgh. He was also a Professor of Science at Carnegie Mellon University. He has authored more than 100 technical reports, has written three books and holds two U.S. patents. At this time, will the witnesses please rise to take the oath. [Witnesses sworn.] Mr. HOSTETTLER. Thank you. You may be seated. Please let the record show that each of the witnesses answered in the affirmative. Ms. Van Cleave, you are recognized for purposes of an opening statement. TESTIMONY OF THE HONORABLE MICHELLE VAN CLEAVE, NATIONAL COUNTERINTELLIGENCE EXECUTIVE, OFFICE OF THE DIRECTOR OF NATIONAL INTELLIGENCE Ms. VAN CLEAVE. Thank you, Mr. Chairman. I do have a prepared statement I would like to submit for the record. Mr. HOSTETTLER. Without objection. Ms. VAN CLEAVE. Please let me summarize a few points. I appreciate very much the opportunity to appear before you today to discuss foreign intelligence threats to U.S. national intelligence security and our economic well-being. Since some of the Members of the Subcommittee may not be familiar with my office, I would like to take a moment to describe my duties. In the post-Cold War world, the U.S. confronts intelligence challenges from a broad array of foreign nations. The singular global Soviet threat of decades gone by has been succeeded by a diverse set of adversaries, many of whom have become highly skilled in using their intelligence services, especially their human collectors, to acquire U.S. national security secrets. These include the technological and engineering secrets that give our Armed Forces the qualitative edge they may need to prevail in a dangerous world. While the threats against us are strategic, historically the U.S. counterintelligence community has not been organized or integrated to accomplish a national strategic mission. On the contrary, the various counterintelligence elements have long been part of a loose confederation of independent organizations with different jurisdictions and capabilities and no one in charge of the enterprise. CI operations and investigations have tended to focus on individual cases with little appreciation of synergy or their larger strategic implications. This structural flaw has undercut our ability to connect the dots of intelligence anomalies or effectively coordinate the different CI arms of our Government. To help remedy this situation, the Congress created the position of the National Counterintelligence Executive, or the NCIX. The law directs that the NCIX shall serve as the head of counterintelligence for the U.S. Government, subject to the direction and control of the Director of National Intelligence. I am the first NCIX appointed by the President. It is my job to provide strategic direction to our Nation's counterintelligence efforts and to assure the integration of the disparate CI activities of our Government. It also includes the counterintelligence dimension to broad national security concerns such as the protection of our Nation's critical technologies. The primary focus of counterintelligence is to defeat the efforts of foreign intelligence services to acquire U.S. national security secrets. It is also our job to supply ĈI insights and options to the President and his national security leadership. This includes supporting the overall national effort to stem the outflow of sensitive technologies, including export controls, diplomatic measures, controls on foreign investments in sensitive sectors of the U.S. economy and industrial security agreements. I want to emphasize that by far the vast majority of foreign acquisition of U.S. technology is open and lawful, as are the transactions of individuals and businesses involved in international com merce, as well as the free exchange of ideas in scientific and academic forums. But let me turn to the cases that fall outside the bounds of what is open and lawful. Last year, the counterintelligence community tracked efforts by foreign businessmen, scientists, academics, students and government entities from almost 100 countries to acquire sensitive U.S. technologies protected by export laws or other means. Of those, the top 10 countries accounted for about 60 percent of the suspicious foreign collection efforts against cleared defense contractors. Two of the countries that always rank near the top of the list are, of course, Russia and China, who have particularized interests, especially in dual-use technologies with military applications. But the top 10 also include some of our close allies, as you noted, Mr. Chairman. These allies may exploit their easy access to push the envelope into areas where they have not been invited. In the majority of cases, foreign collectors simply ask. By e-mail or phone calls or faxes or letters or in person they ask for the information or technology that they are interested in. Or they may exploit visits to U.S. businesses or military bases, national laboratories and private defense suppliers to extract protected information. U.S. businessmen and scientists and academics traveling abroad provide another valuable source of information for foreign countries, as do foreign students, scientists and other experts who to come to the U.S. to work or attend conferences. One indirect method used to acquire technology is for foreign firms to offer their services or technology, particularly IT-related support, to firms who have access to sensitive items. On this point, I should note that the use of cyber tools, as a collection technique, is of growing concern. As you know, cyber exploitation is inherently difficult to detect, as cyber intruders from one country will typically cover their tracks by mounting their attacks through compromised computers in other countries. Finally, state-directed espionage: State-directed espionage remains the central threat to our most sensitive national security technology secrets. While the Chinese, for example, are very aggressive in business and good at solicitation and good at positioning themselves for strategic investments, and they are adept at exploiting front companies, they also have very capable intelligence services that target U.S. national security secrets. As the Cox Commission report made clear over a decade ago, the Chinese did not acquire the most sensitive secret U.S. nuclear weapons designs by spending late nights at the library. It is one thing to describe these threats to you; it is quite another to describe what we need to do about them. We will never have leak-proof technology controls, just as we will never have enough security to protect us against all the threats all the time. Nor would we want to exchange the vast blessings of our free society for a security state. In my view, good security is not the answer alone. We also must have good counterintelligence, meaning that we must be more proactive in identifying, assessing and degrading foreign intelligence operations against us. We need to prioritize our efforts against the most serious threats to U.S. national security and our vital defense and foreign policy objectives. Now, in March of this year, President Bush approved the first national counterintelligence strategy of the United States, which I would like to submit for the record, if I may, Mr. Chairman. Mr. HOSTETTLER. Without objection. Ms. VAN CLEAVE. It is the first mission statement of counterintelligence as an instrument of U.S. national security policy. This is a very different concept of counterintelligence than the common perception of catching spies and putting them in jail. Counterintelligence encompasses all activities to identify, assess and degrade foreign intelligence threats to U.S. national security and our foreign policy objectives. And central to the President's strategy is the call for U.S. counterintelligence to be proactive. Now, this Committee has jurisdiction over America's single greatest resource for encountering intelligence threats, the Federal Bureau of Investigation. In the months to come, the FBI will be standing up a new national security branch that will span its responsibilities for counterterrorism, intelligence, and counterintelligence. Building on Director Mueller's efforts to date, the full integration of these disciplines should enable the FBI to recruit, train and develop a new generation of agents and support personnel dedicated to its core national security mission. And more complete integration of the FBI with sister counterintelligence agencies will augment our nation's ability to protect against the most serious foreign intelligence threats. In closing, Mr. Chairman, I would like to thank you very much for this timely hearing, and I welcome your questions. Mr. HOSTETTLER. Thank you, Ms. Van Cleave. [The prepared statement of Ms. Van Cleave follows:] PREPARED STATEMENT OF THE HONORABLE MICHELLE VAN CLEAVE UNCLASSIFIED STATEMENT FOR THE RECORD House Judiciary Subcommittee on Immigration, Border Security & Claims Hearing on Sources and Methods of Foreign Nationals Mr. Chairman and members of the committee, thank you for the opportunity to testify today on the subject of foreign intelligence threats to America's vital military and other sensitive technologies. Let me begin by telling you a little about my office, the National Counterintelligence Executive (NCIX), which was created in the wake of a series of debilitating spy scandals that rocked our nation over the past decade and a half. You will no doubt remember Aldrich Ames, a former CIA counterintelligence (CI) officer, who was arrested in 1994. He spied for the Russians for nearly a decade, during which period some 30 operations against the Soviets were compromised, and at least 10 Russians and East Europeans were executed as a result of his espionage. Indeed, as the Senate Intelligence Committee reported, Ames was responsible for the loss of virtually all of CIA's human intelligence assets targeted at the Soviet Union at the height of the Cold War. At the time, it was believed that Ames was the most damaging spy in U.S. history, but, in fact, there were others also spying at that time who would vie for that title. FBI Agent Robert Hanssen, arrested in 2001, spent at least 21 years serving the same master as Ames. He compromised sensitive programs and intelligence capabilities that cost the U.S. Government more than $22 billion. Also hard at work for another country, Cuba, was the lesser known, but potentially no less damaging spy, DIA analyst Ana Montes. She spent 17 years betraying our country. The losses that these and scores of other spies inflicted resulted in grave damage and danger during peacetime; they could have had catastrophic consequences had we found ourselves at war. Now we are at war with terrorists and facing continuing threats from other adversaries, and the potential consequences of intelligence failure are far more immediate, putting in jeopardy deployed forces, ongoing operations, and the lives of troops abroad as well as Americans at home. Indeed, each of the major challenges confronting the nation's security today-defeating global terrorism, countering weapons of mass destruction, ensuring the security of the homeland, transforming defense capabilities, fostering cooperation with other global powers, and promoting global economic growth has an embedded counterintelligence imperative. We must protect |