AFIO - Association of Former Intelligence Officers

Weekly Intelligence Notes
26 May 2000

  AFIO members - this is a birthday WIN, for I   have been privileged to be on this earth for 73 years this day. It is also the 120th WIN composed and disseminated since 1998. May I request you help me celebrate -- by sponsoring a new member?                       

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SECTION I - CURRENT INTELLIGENCE

HOUSE ACTION ON INTELLIGENCE AUTHORIZATION --
The HPSCI reported the FY 2001 intelligence bill to the full house on May 19. In their presentation (as seen on C-Span), they said that the President's request for 2001 was 6.6% (probably about $2B) above this year's spending and that the Committee had increased that amount slightly. Also, the committee moved funds (presumably from collection systems), changing the President's requested priorities, to fund increases for NSA and NIMA -- NSA to help that agency with their "information revolution problem" and NIMA to help with imagery 'Tasking, Processing, Exploitation and Dissemination' systems (TPED). The House adjourned on the 19th without voting on the bill, HR 4392.  The Report starts with considerable criticism regarding the state of US intelligence.

Taken as a whole, the Committee's budgetary actions and general provisions reflect the Committee's concern that the United States is placing undue risks on its armed forces and its national security interests by not redressing the many crucial problems facing the Intelligence Community.

In the Human Intelligence (HUMINT) arena, poor planning, infrastructure problems, extended requirements for military force protection, and unexpected contingency operations have all worked to take money from the "front line" field officers, thus limiting our efforts to rebuild our "eyes and ears" around the globe.

In the area of imagery intelligence (IMINT), despite the oversight committees' exhortations, we are still faced with totally inadequate systems planning and investment for the tasking, processing, exploitation, and dissemination (TPED) of the imagery collection capabilities we are building, let alone the capabilities of other future collectors.

In the area of space-based collection, unanticipated technical problems with some satellite programs in development will likely cause scheduling delays and cost increases. Moreover, an insufficient priority on developing cutting-edge technologies ensures that the core mission of space intelligence--to collect secrets--will continue to languish and become increasing limited.

In the area of Intelligence, Surveillance and Reconnaissance (ISR) assets, we continue to see extensive over-utilization of very limited but critical airborne assets, with little relief in sight. While planning for deployment of new ISR airborne capabilities into the theaters, the Department of Defense has taken money from existing, supposedly complementary, platforms to pay for future capabilities. The result: our overall ISR capabilities and resources are decreasing at a time when our military forces are relying on them more and more.

The most serious, immediate problem is with signals intelligence (SIGINT) resources. The January "crash" of National Security Agency (NSA) computers was not the result of a terrorist attack or hacker gamesmanship. The problem resulted from NSA's lack of resources for new infrastructure needs, the mismanagement of outdated Information Technology (IT) resources, and the lack of sufficient acquisition processes and expertise. This should have come as a surprise to no one. Indeed, the Committee has, for at least three years, warned NSA and the Intelligence Community of concerns in these areas. The Director of NSA has begun efforts to address these issues, and his efforts have the Committee's support. Likewise, the Committee has taken specific actions within this bill to begin to address these issues.

The Committee's review of this year's budget request included testimony from the Director of Central Intelligence (DCI), his senior leadership and the managers of individual programs and agencies, as well as leaders from the Department of Defense and the military services who use and rely on intelligence systems and information on a daily basis. Their message has been unanimous and crystal clear: there are not enough intelligence resources to meet the immediate needs of national security, let alone future needs.
http://www.fas.org/irp/congress/2000_rpt/hr106-620.html  (Macartney) See also: (Cong. Quarterly 20 May 2000.)

PHONY SECURITY CREDENTIALS POSE SECURITY PROBLEM -- Posing as plainclothes law enforcement personnel from the New York Police Department or the U.S. Drug Enforcement Agency, undercover GAO agents flashed phony credentials and were waved around metal detectors at several top security government buildings including the FBI, CIA, State Department, Justice Department and Pentagon. At some locations, such as the CIA building, escorts were required when the agents visited, but elsewhere -- at places such as the Energy Department and NASA -- the impostors were able to move about the buildings freely. They were able to reach -- but did not enter -- the head office of every agency except the CIA. The agents also avoided detection at Reagan National Airport in Washington and Orlando International Airport in Florida. Although the impostors said they were armed, they actually carried no weapons.

Their briefcases were not searched, meaning the "undercover agents ... could have carried in weapons, listening devices, explosives, (and) chemical/biological agents," the GAO report said. Their counterfeit identification was created with easily available computer software. "If you held (the fake IDs) beside the real ones, you can't tell the difference," said a Pentagon official who asked not to be identified.

Attorney General Janet Reno, whose suite of offices at the U.S. Department of Justice was visited by the impostors, commented that fulfilling security needs at government buildings while still allowing public access is a difficult issue to resolve. "It is one of the great balances for a democratic society, and one that we are going to ... take steps to see that we address, in terms of security, while at the same time giving people appropriate access." The Pentagon, FBI and Justice Department all said they had tightened security based on the GAO findings and recommendations

The House committee planned further hearings on the issue.
http://cnn.com/CNN/anchors_reporters/thomas.pierre.html 
AP www.interactive_legal.html#AP; Wash Post 25May00; CNN) (courtesy T. Swystun) (Jonkers)

EXPANDED CONCEPT OF INTELLIGENCE WARNING -- The "lovebug" virus which struck two weeks ago and caused some $10 Billion in damage started in Manila, went to Hong Kong spreading to Europe, and a day later hit the US. Although it could see it coming, the FBI's National Infrastructure Protection Center (NIPC) did not issue a warning until 11pm on May 4th, fifteen hours after it brought down thousands of east coast American computer systems and more than 35 hours after Europe was pulverized.

Why? Partly because at US intelligence watch centers, both in this country and Europe, the watchstanders watched as the lovebug created chaos on CNN but for one reason or another did not sound an alarm -- most likely because they are primed to look for coups and terrorist conspiracies and such or because it took too much time to verify the phenomenon. That mindset has been changed, as have NIPC's procedures. Warning was much more timely regarding the May 19 "NewLove" virus. http://washingtonpost.com/wp-dyn/articles/A31353-2000May18.html 
http://washingtonpost.com/wp-dyn/articles/A37433-2000May19.html  (Macartney

POSSIBLE PENETRATION OF WHITE HOUSE EMAIL BY ISRAELI AGENTS -- Citing Israeli sources, the London Sunday Times reports that Israeli agents have been able to hack into the White House email system and recover information being sent from the president to senior staff in the National Security Council and outside government departments. The report states that intelligence agents were successfully able to infiltrate Telrad, a subcontractor of Nortel, the telecommunications company that helped to develop the White House system. According to the report, chips installed during the development process enables data to be shunted to a secret Israeli computer in Washington. The information was then transferred to Tel Aviv several times a week.

The FBI has previously investigated claims that Israeli intelligence has been able to penetrate White House security. Earlier this month, Insight magazine reported that Israeli agents used a software company in Missouri to intercept telephone calls from the White House, State Department and other departments. (See WINs #19 and 20.) As noted, the FBI case is reported to be open but "inactive."

The latest report on email intercepts are also interesting in that they assert that internet vulnerability and manipulation starts at the chip manufacturing stage. (Sunday Times, London, 21 May 2000)
http://www.Sundaytimes.co.uk/news/pages/sti/2000/05/21/stignusa02003.html   (Courtesy Reinhart) (Jonkers)

DEUTCH COMPUTER CASE -- (cont'd) CIA announced May 25th that General John Gordon's inquiry into the seemingly excessive procrastination of CIA's investigation of the computer security violation case of former Director John Deutch has been completed. Three CIA officials, former executive director Nora Slatkin, former general counsel Michael O'Neil and former inspector general Frederick Hitz received a letter of reprimand. Two other, unnamed officials were given a letter of admonishment, and one received a verbal admonishment. None of these included a loss of pay or promotional opportunity, but they could influence future assignments. CIA took no action against Deutch and reported the security violation to the Justice Department after a whistle-blower complained to the CIA inspector general more than a year after Deutch's departure. (WashPost 26May2000,. p. A33) (Jonkers)

CIA SAYS BIN LADEN'S DEATH COULD SPARK TERRORISM --Amid talk that the accused terrorist mastermind Osama bin Laden is gravely ill in Afghanistan, the CIA is reportedly telling the administration that his death could spark a dangerous leadership struggle among his deputies. CIA analysts believe factions in his loose-knit organization, al Qaeda, might launch terrorist attacks to try to prove their own strength. (Macartney) http://interactive.wsj.com/documents/search.htm

DSS SECURITY INVESTIGATIONS -- (continued)
ManTech Solutions and Technologies, Fairfax, Va., will perform security background investigations for the Defense Department to help clear up the backlog of some 600,000 cases referred to in a previous WIN. On May 1st ManTech was awarded a $25 million (maximum) indefinite-delivery/ indefinite-quantity contract to provide for end-to-end personnel security investigations services through December 2001 in support of the Defense Security Service. The contractor will perform security background investigations of government and contractor personnel and will compile and provide appropriate reports of investigation to the government. (courtesy D. McBlain) (Defense Daily, 9 May 2000) (Jonkers)

SECTION II - CONTEXT AND PRECEDENCE

G8 COOPERATION ON CYBERCRIME -- The G8 group of nations, representing the world's leading industrialized countries and Russia, agreed today to increase cooperation to fight cybercrime at the conclusion of their Paris meeting. Prompted by global concern over the growing threat of cybercrime, including the success of viruses like "I LOVE YOU" wreaking havoc across the Internet, the member governments agreed rapidly to extend an existing network of early warning contact points to cover cases of cybercrime and to mandate Interpol, the international police network, to supervise this network.
http://www.idg.com.hk/cw/readstory.asp?aid=20000518005
(Rlevine 05/18 Newsbits) (Jonkers)

UK E-MAIL SURVEILLANCE & TECH ASSISTANCE CENTER -- MI5, the UK's secret security service, is developing an e-mail surveillance center that, when deployed, will be capable of monitoring Internet messages sent and received in Britain. Claiming the recent growth of the Net has made it extraordinarily difficult to read all material transmitted across it, the government has announced that it intends to require all ISPs to establish direct links to MI5 through which they will download all materials that passes through their servers and scour them for the nefarious e-mails used to run illegal prostitution rings and drug cartels.
http://www.sunday-times.co.uk/news/pages/sti/2000/04/30/stinwenws01034.html
http://www.sjmercury.com/svtech/news/breaking/internet/docs/481988l.htm  (Levine Newsbits ) (Jonkers)

FBI FAULTED IN WEN HO LEE ESPIONAGE CASE -- According to "sources," a classified Justice Department report concludes that the FBI could have moved on Lee and others sooner if its agents had shared information with the bureau's own counterespionage experts. The FBI also reportedly failed to commit sufficient resources to the case early in the investigation of alleged theft of nuclear secrets by China, and prematurely focused on Lee as the prime suspect, to the exclusion of others. The review concludes that investigators did not need a court order to search Lee's computer because he had signed a privacy waiver granting permission for a search. Had Lee's computer been searched in 1997 without a warrant, Lee's downloads would have been discovered years earlier. The review also concludes that attorneys at the Justice Department improperly applied a law governing the granting of secret warrants to conduct electronic surveillance, demanding too much evidence instead of determining that probable cause existed. In this, as in all things, hindsight is infallible.
http://www.washingtonpost.com/wp-dyn/articles/A30958-2000May18.html 
http://thomas.loc.gov/cgi-bin/bdquery/z?d106:HR04392:@@@J  (Macartney)

CHINA AND INDIA UPGRADE NAVAL AND MISSILE ARMAMENTS --The focus of political, defense and intelligence concentration may well shift to East Asia over the next decade. The following three articles reflect a slow upgrading of Chinese and Indian weapons systems, aided by arms exports from Russia and Israel. In context, it should be noted that the US is by far the world's largest arms exporter.

On May 18th, Pentagon officials confirmed recent reports that the Russian Federation has delivered to the PRC the first shipment of cruise missiles for deployment on the new Chinese Sovremenny-class guided missile destroyers. A second delivery of the missiles, for shipboard deployment, is expected in the next several months. The SSN-22 "Sunburn" anti-ship cruise missile, which is also know as the Moskit, will be the most advanced attack system in the generally backward PLA Navy arsenal. The supersonic missile has a range of 161 km and can deliver a 200-kiloton warhead in under two minutes. The first of two Russian-built Sovremenny-class destroyers purchased by the PLA Navy, the 'Hangzhou,' arrived in the PRC in late February; the second is reportedly still under construction in St. Petersburg. The destroyers, which reportedly cost US$ 800 million each, have an individual complement of 24 SSN-22 Sunburn missiles.

The Russians are also known to be assisting the PLA in assembling the Su-27 fighter-bomber, and recent reports indicate that discussions are underway regarding sale of the air-launched version of the Moskit to the PRC .
http://www.washtimes.com/national/default2000519231533.htm
http://www.emraldesigns.com/matchup/newnavy.htm 
http://web3.asia1.com.sg/archive/st/2/analysis/cpe2_0215_prt.html 
http://thomas.loc.gov/cgibin/query/z?c106:h.r.4022  (Courtesy Reinhart) (Jonkers)

ISRAEL TO EXPORT AIR BATTLE CONTROL SYSTEM TO CHINA -- The Washington Times, citing US intelligence sources, reported on 19 May 2000 that Israel has resumed work on, and will shortly deliver, a high technology AWACS platform to China. The aircraft, a modified Russian IL-76 transport, is the first of several AWACS being produced for China by Israel and will contain the advanced Israeli Phalcon radar system. The Phalcon equipment will significantly enhance the PRC's ability to target enemy forces over-the-horizon. The first aircraft is scheduled for delivery in late June and it is believed that the PRC will purchase between three and seven additional aircraft at a price of US $250 million each. The AWACS represent a major enhancement to the PRC's command and control capability. It follows the deployment, earlier this year, of the first in a series of satellites for a new command and control system known as Qu Dian.
http://www.washtimes.com/national/default-2000519223399.htm  (courtesy Rheinhart) (Jonkers)

INDIA PLANS EXPANDED CARRIER FORCE AND NAVAL OPERATIONS -- India intends to hold a series of bilateral and unilateral naval exercises in the South China Sea in October and November 2000, according to government sources cited by the Hindustan Times, April 24. India's navy intends to hold bilateral exercises with South Korea and Vietnam in October and November 2000. Following these exercises, four or five Indian vessels will remain in the South China Sea to be joined by an Indian Kilo-class submarine and reconnaissance aircraft for unilateral naval exercises. India's spreading naval reach is, in part, to counter the growing threat of piracy on both sides of the Strait of Malacca. In November 1999, Indian navy and coast guard vessels recaptured a hijacked Japanese cargo ship after a 12-hour chase. The hijacking prompted Japan to consider increased financial, and possibly naval, support to patrol the areas around the Strait in cooperation with China, India, Indonesia, Malaysia, Singapore and South Korea.

At the same time that India is expanding its naval reach into the South China Sea, it is expanding its force structure as well. The 2000-2001 defense budget includes $940 million for the Navy, up from $835 million the previous year. Of this, 60 percent has been allotted to acquisition of weapons and modernization programs. While India's single operational aircraft carrier, the INS Viraat, is under refit, there are plans to build a domestic carrier and acquire the re-fit Russian Kiev-class Admiral Gorshkov. Prior to the recent launch of the INS Brahmaputra, India also commissioned its third fleet tanker, adding to its blue-water capabilities.

There are plans to launch six more warships in 2000. India's naval expansion also includes buying several Russian MiG-29 Ks to add to its naval air force.

India is also preparing to launch a Kilo-class submarine capable of ballistic missile launches, according to the Hindu. On April 10, India tested the Dhanush ship-launched ballistic missile, and there are plans to fit some of India's Kilo-class submarines with Russian Klub-class ballistic missiles.

By extending its area of operation firmly into the South China Sea, for whatever good reasons, India also presents an indirect challenge to China that may boost the latter's will to build a blue-water navy. (STRATFOR Global Intelligence Update 26 April 2000, http://www.stratfor.com) (Jonkers)

SECTION - III BOOKS

SECRET MESSAGES -- Codebreaking and American Diplomacy, 1930-1945, by David Alvarez, University Press of Kansas, Spring 2000, ISBN 0-7006-1013-8, with bibliography and index.  Professor Alvarez provides a comprehensive analysis of the impact of decoding radio messages on American foreign policy and strategy from 1930-1945, and particularly covers the activities and troubles of the Army's Signal Intelligence Service (SIS) - a precursor to today's NSA. SIS, operating from Arlington Hall, grew from four novice codebreakers to over 10,000 people stationed around the globe. He shows both successes and limitations. The impact of special intelligence on US diplomacy during this period was limited by indifference in the White House, constraints within the program itself, and rivalries with other agencies such as the FBI. But with interesting revelations (e.g. the intercepts of Vatican communications) and personal anecdotes (e.g. Friedman refusing to submit to an examination, but being needed, hired anyway), this book is easy to read, interesting and recommended. (Jonkers)

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WINs contain intelligence-related newsbriefs and commentaries based on open sources, produced and edited by Roy Jonkers for AFIO members and WIN subscribers. Associate editors RADM (ret) Don Harvey and Professor (ret) John Macartney contribute articles to the WINs. Each of the editors has over 50 years of experience in intelligence.

WIN back issues are posted on the AFIO Website www.afio.com  with a two-month delay. A search engine is available for retrieval and study purposes.

WINs are protected by copyright laws and may not be reproduced except with the permission of the producer/editor afio@afio.com.

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