DCI'S ANNUAL REPORT TO THE CONGRESS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88G01116R001202440001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 48
• Document Creation Date: December 22, 2016
• Document Release Date: May 24, 2011
• Sequence Number: 1
• Publication Date: March 18, 1986
• Content Type: MEMO

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DCI/ICS 86-4271
18 March 1986
MEMORANDUM FOR: Director of Central Intelligence
VIA: Deputy Director of Central Intelligence
FROM:
Director, Intelligence Community Staff
SUBJECT: DCI's Annual Report to the Congress
1. Attached for your approval are the final page proofs of your Annual
Report to the Congress for 1985. Since your last review of the draft report,
material has been added to the section on Major Issues and Challenges to cover
the topics of "Survivability" and "Funding Constraints." You had approved
these additions in principle before your TDY. A paragraph on HUMINT has also
been added to "The Changing Intelligence Environment" and a paragraph on UoD
counterintelligence and secu ity has been worked into the "Security and
Integrity..." section
2. Also attached for your signature are cover letters to forward the
report to the President, the Vice President, and the appropriate Congressional
Chairmen (six recipients).
3. If you a rove the report, we will proceed with final printing and
distribution.
Attachments:
A. Page Proofs
B. Letters for Signature
Transmitting Annual Report
(DCI/ICS 86-4268/A-H)
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SUBJECT: DCI's Annual Report to the Congress
DISTRIBUTION: (DCI/ICS 86-4271 w/atts DCI/ICS 86-4268/A-H an
Copy 1 - DCI
Copy 2 - DDCI (ER file)
Copy 3 - D/ICS
Copy 4 - AD/PPS
Copy 5 - PPS Chrono
Copy 6 - PPS
Copy 7 - IC Registry
DCI/ICS/PPS
17 Mar 86)
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The Director of Central Intelligence
20 March 1986
The Vice President
The White House
Washington, D.C. 205UU
Dear Mr. Vice President:
Enclosed is a copy of my Annual Report to the Congress on the Intelligence
Community for calendar year 1985. This is the tenth such report prepared for
Congress as required by Senate Resolution 400 and House Resolution 658. (U)
For the last two years I have used the occasion of the report as a means
to discuss the progress that has been made in rebuilding intelligence
capabilities. I have altered my emphasis slightly tnis year and focused on a
set of intelligence issues and challenges, as well as on steps taken in
anticipation of or response to significant events of the year. I did this
because I believe it is imperative for the Congress to have a clear
understanding of the difficult questions that face the Intelligence
Community. (U)
Through its discussion of substantive issues and developments, the report
provides a reasonable measure of our abilities, and implies a sense of the
value that the nation receives from its intelligence activities. As 1 pointea
out in my forwarding letter to the Congress, there is much that intelligence
will be asked to do in the coming years, as the importance of informed
decisionmaking rises in a period of fiscal constraints. The Community will
also face very complex problems, nowever, and its continued effectiveness will
depend on sustained resource support. (U)
Respectfully yours,
Enclosure:
As Stated
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I L'VI.l-1
The Director of Central Intelligence
20 March 1986
The Honorable Lee H. Hamilton, Chairman
Permanent Select Committee on Intelligence
House of Representatives
Washington, D.C. 20515
Enclosed is a copy of my 1985 Annual Report to the Congress. The report
provides a clear sense of the difficult issues and challenges that the
Intelligence Community faces each day. It also surveys the events and
developments that were of principal interest to the Community in 1985, and
reviews the significant steps taken in anticipation or response. (U)
With the strong support of the Administration and the Congress, the
Intelligence Community in recent years has been able to build a solid core of
capabilities as it prepares for the problems of the future. The complexitiy
of the challenges that lie ahead should not be underestimated, however, and it
is clear that exacting problems confront us. There is much that intelligence
will be asked to do, as the importance of informed decisionmaking rises in a
period of limited resources. (U)
In an environment of fiscal constraints, our strategy will be to preserve
and enrich our existing capabilities. This means that hard choices must be
made, and we will not be able to deal with the problems ahead without
sustained resources. The continued support of the Congress will be essential
if we are to continue to provide the best information possible to those who
need it. (U)
Sincerely,
Enclosure:
As Stated
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~rcci
The Director of Central Intelligence
20 March 1986
The Honorable Dave Durenberger, Chairman
Select Committee on Intelligence
United States Senate
Washington, D.C. 20510
Enclosed is a copy of my 1985 Annual Report to the Congress. The report
provides a clear sense of the difficult issues and challenges that the
Intelligence Community faces each day. It also surveys the events and
developments that were of principal interest to the Community in 198b, and
reviews the significant steps taken in anticipation or response. (U)
With the strong support of the Administration and the Congress, the
Intelligence Community in recent years has been able to build a solid core of
capabilities as it prepares for the problems of the future. The complexitiy
of the challenges tnat lie ahead should not be underestimated, however, and it
is clear that exacting problems confront us. There is much that intelligence
will be asked to do, as the importance of informed decisionmaking rises in a
period of limited resources. (U)
In an environment of fiscal constraints, our strategy will oe to preserve
and enrich our existing capabilities. This means that hard choices must be
made, and we will not be able to deal with the problems ahead without
sustained resources. The continued support of the Congress will be essential
if we are to continue to provide the best information possible to those who
need it. (U)
Sincerely,
Enclosure:
As Stated
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QP- RET
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The Director of Central Intelligence
20 March 1986
The Honorable Jamie Whitten, Chairman
Committee on Appropriations
House of Representatives
Washington, D.C. 20515
Enclosed is a copy of my 1985 Annual Report to the Congress. The report
provides a clear sense of the difficult issues and challenges that the
Intelligence Community faces each day. It also surveys the events and
developments that were of principal interest to the Community in 1985, anu
reviews the significant steps taken in anticipation or response. (U)
With the strong support of the Administration and the Congress, the
Intelligence Community in recent years has been able to build a solid core of
capabilities as it prepares for the problems of the future. The complexitiy
of the challenges that lie ahead should not be underestimated, however, and it
is clear that exacting problems confront us. There is much that intelligence
will be asked to do, as the importance of informed decisionmaking rises in a
period of limited resources. (U)
In an environment of fiscal constraints, our strategy will be to preserve
and enrich our existing capabilities. This means that hard choices must be
made, and we will not be able to deal with the problems ahead without
sustained resources. The continued support of the Congress will be essential
if we are to continue to provide the best information possible to those wno
need it. (U)
Sincerely,
Enclosure:
As Stated
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IU'i21Cl.K1~ I
The Director of Central Intelligence
Washington, D.C. 20505
The Honorable Mark 0. Hatfield, Chairman
Committee on Appropriations
United States Senate
Washington, D.C. 2U510
Enclosed is a copy of my 1965 Annual Report to the Congress. The report
provides a clear sense of the difficult issues and challenges that the
Intelligence Community faces each day. It also surveys the events and
developments that were of principal interest to the Community in 1985, and
reviews the significant steps taken in anticipation or response. (U)
With the strong support of the Administration and the Congress, the
Intelligence Community in recent years has been able to build a solid core of
capabilities as it prepares for the problems of the future. The complexitiy
of the challenges that lie ahead should not be underestimated, nowever, and it
is clear that exacting problems confront us. There is much that intelligence
will be asked to do, as the importance of informed decisionmaking rises in a
period of limited resources. (U)
In an environment of fiscal constraints, our strategy will oe to preserve
and enrich our existing capabilities. This means that hard cnoices must be
made, and we will not be able to deal with the problems ahead without
sustained resources. The continued support of the Congress will oe essential
if we are to continue to provide the best information possible to those who
need it. (U)
Enclosure:
As Stated
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The Director of Central Intelligence
The Honorable Joseph P. Addaubo, Chairman
Subcommittee on Defense
Committee on Appropriations
House of Reperesentatives
Washington, D.C. 20515
Enclosed is a copy of my 1985 Annual Report to the Congress. The report
provides a clear sense of the difficult issues and challenges that the
Intelligence Community faces each day. It also surveys the events and
developments that were of principal interest to the Community in 1985, and
reviews the significant steps taken in anticipation or response. (U)
With the strong support of the Administration and the Congress, the
Intelligence Community in recent years has been able to buila a solid core of
capabilities as it prepares for the problems of the future. The complexitiy
of the challenges that lie ahead should not be underestimated, however, and it
is clear that exacting problems confront us. There is much that intelligence
will be asked to do, as the importance of informed decisionmaking rises in a
period of limited resources. (U)
In an environment of fiscal constraints, our strategy will be to preserve
and enrich our existing capabilities. This means that hard choices must be
made, and we will not be able to deal with the problems ahead without
sustained resources. The continued support of the Congress will be essential
if we are to continue to provide the best information possible to those who
need it. (U)
Sincerely,
Enclosure:
As Stated
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~JGI,K : I
The Director of Central Intelligence
Washington, D.C. 20505
20 March 1986
The Honorable Ted,,Stevens, Chairman
Subcommittee on Defense
Committee on Appropriations
United States Senate
Washington, D.C. 20510
Enclosed is a copy of my 1985 Annual Report to the Congress. The report
provides a clear sense of the difficult issues and challenges tnat the
Intelligence Community faces each day. It also surveys the events and
developments that were of principal interest to the Community in 1985, and
reviews the significant steps taken in anticipation or response. (U)
With the strong support of the Administration and the Congress, the
Intelligence Community in recent years has been able to build a solid core of
capabilities as it prepares for the problems of the future. The complexitiy
of the challenges that lie ahead should not be underestimated, however, and it
is clear that exacting problems confront us. There is much that intelligence
will be asked to do, as the importance of informed decisionmaking rises in a
period of limited resources. (U)
In an environment of fiscal constraints, our strategy will oe to preserve
and enrich our existing capabilities. This means that hard choices must be
made, and we will not be able to deal with the problems ahead without
sustained resources. The continued support of the Congress will be essential
if we are to continue to provide the best information possible to those who
need it. (U)
Enclosure:
As Stated
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TOP -,'W RET
Director
Intelligence Community Staff
Washington, D.C. 20505
DCI/ICS 86-4276/I
1 April 1986
SUBJECT: DCI's Annual Report to the Congress
Attached is a copy of the DCI's Annual Report to the Congress on the
Intelligence Community for calendar year 1985. Copies also are being sent to
the President, Vice President, and the appropriate committees in both nouses
of Congress.
Attachment:
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Secret
ANNUAL REPORT OF
THE DIRECTOR OF CENTRAL INTELLIGENCE
TO THE CONGRESS
1985
arc
copy
Uri
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ANNUAL REPORT OF
THE DIRECTOR OF CENTRAL INTELLIGENCE
TO THE CONGRESS
1985
William J. Casey
Director of Central Intelligence
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CONTENTS
Page
INTRODUCTION ...................................................................................................... 1
SIGNIFICANT EVENTS OF 1985 .......................................................................... 2
DEMANDS ON INTELLIGENCE ............................................................................ 7
THE INTELLIGENCE RESPONSE ........................................................................ 9
THE SOVIET UNION ............................................................................................ 9
EUROPE .................................................................................................................. 12
MIDDLE EAST AND SOUTH ASIA .................................................................. 13
LATIN AMERICA .................................................................................................. 13
EAST ASIA .............................................................................................................. 14
CHINA ...................................................................................................................... 14
AFRICA .................................................................................................................... 15
OTHER TOPICS ...................................................................................................... 16
Counterintelligence and Security ...................................................................... 16
Denial/Deception Analysis and Active Measures ............................................ 17
Early Warning ...................................................................................................... 17
International Terrorism ...................................................................................... 18
Chemical Weapons Proliferation ...................................................................... 19
Technology Transfer ............................................................................................ 20
Narcotics .............................................................................................................. 20
International Economics and Trade .................................................................. 21
Support for Operational Forces ........................................................................ 21
MAJOR ISSUES AND CHALLENGES .................................................................. 24
PEOPLE .................................................................................................................... 24
THE INFORMATION EXPLOSION .................................................................. 24
THE CHANGING INTELLIGENCE ENVIRONMENT .................................. 26
SURVIVABILITY .................................................................................................. 28
SECURITY AND INTEGRITY OF INTELLIGENCE ACTIVITIES ............ 29
FUNDING CONSTRAINTS ...........................................
iii
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INTRODUCTION
This is my fifth annual report to the Congress as Director of Central Intelligence.
In past years I have used this occasion as an opportunity to discuss the substantial prog-
ress that has been made in rebuilding intelligence capabilities, progress that has only
been possible with the cooperation and strong support of the Congress. My focus in this
year's report, however, is slightly different. I have chosen to accent the difficult issues
and problems that face the Intelligence Community, and to highlight the intelligence re-
sponse to those problems and to the significant events of the past year. By so doing I
hope to provide as clear an understanding as possible of what the Intelligence
Community is about. I also believe that the discussion conveys an implicit measure of
our abilities and a sense of the value that the nation receives from its intelligence activi-
ties]
The increased resources allotted to the Intelligence Community have been carefully
applied and the advances enabled by them have been essential. Impetus and force have
been restored to capabilities that had atrophied, and a balance has been sought to help
prepare the way for the challenges of the future. The Community's ability to answer
consumer requirements has been strengthened, and in consequence its responsiveness
to most requirements has been outstanding. As I pointed out last year, however, many
gaps remain and the rebuilding job is not yet complete, a judgment that is borne out by
even an elementary understanding of the complex environment in which intelligence
must operate in the coming years=
The difficulty of meeting the future, though, has been compounded by the
straitened fiscal and funding circumstances that lie ahead. The choices that must be
made are not easy. To help define the road that we will be obliged to take, I have re-
cently completed work on a National Foreign Intelligence Strategy, copies of which
have been provided to the appropriate Committees of Congress. The Strategy is
intended to supply the strategic guidance needed to impart direction and priorities to
intelligence programs. Without a sound and stable financial base, however, even the
best strategy for intelligence will be unable to assure our ability to meet our nation's in-
telligence needs. To secure that base, a heightened appreciation of the importance of in-
telligence to the achievement of national objectives is necessary. This report, I believe,
provides the kind of comprehensive awareness that should lead to such an apprecia-
tion. When the nation has fewer resources to allocate, they must be allocated the more
wisely. In great part that wisdom can be obtained through intelligence
The report is organized along the following lines:
- A review of the significant events of 1985.
- A brief consideration of the demands on intelligence.
- A discussion of the intelligence response.
- A discussion of major issues and challenges
The Congressional Budget Justification Books, which have been forwarded sepa-
rately, address the Community's resource needs and progra
1
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SIGNIFICANT EVENTS OF 1985
Everyday, the Intelligence Community faces questions and problems that are
posed in diverse contexts. World events, politics, personalities, economics, science and
technology, military capabilities; these and other issues are all addressed in the effort to
reduce uncertainty and meet the needs of decisionmakers. This section reviews the
events of major interest to the United States during 1985 that had to be anticipated or
responded to by the Intelligence Community; it illustrates, both the scope and the
complexity of the demands placed on the Community
THE SOVIET UNION
The accession of Mikhail Gorbachev was the most far-reaching event of the past
year. A leader finally came to power in the Soviet Union whose tenure probably will be
measured in years, not months. He has proven to be vigorous and imaginative on many
fronts. Domestically, he has quickly consolidated his political base and taken various
steps to revitalize an economy that has seriously weakened in recent years. He has
sought to improve productivity by launching campaigns against alcoholism and lack of
discipline in the work force, and corruption among government officials. The newest
five-year plan calls for major new resource allocations directed at renovating Soviet in-
dustrial capacity and transforming the society through massive infusions of high
technology. Gorbachev has also brought new style and vigor to Soviet foreign policies.
No major Soviet foreign policy positions have basically changed, but he accelerated the
dialogue with the United States begun under Chernenko and decided quickly on a
summit with President Reagan. Meanwhile, Gorbachev has caused Soviet policy to
play all the more to world opinion, to try to get the United States to compromise on the
Strategic Defense Initiative (SDI), and to strongly support Marxist-Leninist and other
clients in the Third World
Strategic Weapons
In 1985, the Soviets began to deploy their first mobile ICBM, the road-mobile
SS-25. This represents a major step in the Soviet program to replace by the mid-1990s
almost all currently deployed intercontinental nuclear attack forces with new and
improved systems. The Soviets also continued flight-testing of the SS-X-24 from its
rail-mobile launcher and conducted follow-on programs for the SS-25, SS-X-24, and
SS-18 ICBMs, all of which should have improved accurac reater throw weight
potential, and possibly more warhead
In strategic naval forces, the Soviets began initial deployment of the Delta IV
submarine, which carries the new and unique SS-N-23 missile, and will soon begin
testing of an improved version of the SS-N-20 SLBM. These programs, combined with
the strategic cruise missile programs (SS-NX-21 and SS-NX-24), will eventually result
in a significantly improved submarine-based strategic strike force. These weapons
developments are of even greater importance as the Soviets have registered improve-
ments in submarine quieting. This and other submarine modernization programs will
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eventually result in replacement of the entire MIRVed Soviet SLBM force and
deployment of much better nuclear-powered ballistic missile submarines
In their air arm, the Soviets continued to make progress on the first major
modernization since the 1960s of their heavy bomber force. With a new bomber and
new land-attack cruise missiles, which are also in production, the Soviets will be able by
the 1990s to increase substantially the number of warheads deliverable by aircraft.
Strategic Defense and Counter-SDI Weapons
During 1985 the Soviets introduced a new air defense fighter (the FLANKER) and
a more mobile version of the SA- 10 strategic surface-to-air missile. They will soon put
an Airborne Warning and Control System into operation, and they have made progress
in developing the technology they need for their own stealth (low observable) offensive
and defensive capabilities. In other activity, the Soviets worked to replace operational
ABM defenses around Moscow and continued construction on the new Large Phased-
Array Radar network, including the radar at Kransnoyarsk. We believe this radar is in-
tended for ballistic missile detection and tracking, not primarily for space tracking as
the Soviets contend. Construction was continued on two large facilities at Dushanbe
and Storozhevaya which, among other possibilities, could be ground-based laser
antisatellite systems
Conventional Weapons
The Soviets remained attentive to their conventional forces. They continued to
modernize their already formidable Central Front forces, supplying precision-guided
munitions, improved mobility, and increased sustainability; launched the first of a new
class of large aircraft carriers and two new kinds of attack submarines; and increased
deployed forces at their overseas base at Cam Ranh, Vietnam. The continuing Soviet
presence in Afehanistan nrovided a window into the effectiveness of the Soviet
military
The selection of a dynamic new leader in Moscow raised both hopes and fears in
Eastern Europe that the Soviets will attempt to assert control more vigorously there,
pushing for more effective use of resources and for leadership changes. Gorbachev's ac-
cession to power also created concern in Western Europe that the image he is
attempting to project of a man who understands and is sympathetic to that region's
problems may succeed in driving new wedges between Western Europe and the United
States. During the months prior to the November summit, Moscow made considerable
effort to cultivate European support for its arms control policies, particularly its
attempt to undermine the SDI. Nonetheless, by the end of the year the Soviets still had
not overcome the effects of their failed war scare propaganda regarding intermediate
nuclear forces (INF); and the Belgian Government, one of the major Soviet anti-INF
targets, did not falter in its commitment to deploy GLCMs
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Among other major developments of intelligence consequence in Europe last year
was the mixed reception of SDI among West European allies. The allies are slowly com-
ing around to participate in SDI research, but a number of West Europeans still harbor
grave reservations about the project or oppose it outright. Increased terrorism was also
a principal concern. The December massacres by Middle Eastern terrorists at the
Vienna and Rome airports were but the latest manifestations of this problem. Also wor-
risome were new indications of cooperation among terrorist groups based in West
Germany, France, and Belgium. A final item of note was the reelection of Papandreou
in Greece. Relations with the United States continued to be difficult, but economic and
strategic considerations prompted Papandreou to become somewhat more cooperative
and less anti-US in his rhetoric and action~_7
CHINA
China's momentous "Second Revolution" continued as Deng Xiaoping made
leadership changes in the Politburo and Central Committee that enhance prospects that
the ambitious modernization programs will continue after he leaves the scene. The pace
of reforms did slow somewhat during the year, however, as Deng coped with a large
trade deficit and criticisms that modernization was contributing to high-level corrup-
tion in China
THE THIRD WORLD
The most significant development for the United States in the Third World was the
continuing deterioration of the situation in the Philippines, as political, economic, and
security conditions, exacerbated by President Marcos' declining health and various
political manipulations, continued to worse
In the Middle East, Libya's Qadhafi created sharply increasing troubles for
Western interests. He raised tensions with the United States; actively supported
international terrorist groups; and tried to subvert the post-Numeiri regime in Sudan,
the Bourguiba regime in Tunisia, and President Mubarak in Egypt. Meanwhile, the
Israeli-Arab peace process foundered, in part due to successful Syrian efforts to
heighten the political risk for any potential Arab participant in real negotiations. In Su-
dan, the regime brought to poWer by a coup was less supportive of US interests and
more open to Libyan influence
The Iran-Iraq war remained stalemated. Iraqi attacks on Iran's oil exporting
facilities increased prospects, however, that the Iranians might eventually feel threat-
ened enough to attempt widening the war by mounting air or terrorist attacks against
those Persian Gulf states they perceived to be supporting Iraq. The US decision not to
sell F-15 aircraft to Saudi Arabia adversely affected our ties with the Saudis, while
Oman and the United Arab Emirates established diplomatic relations with the Soviet
Union, op ..ty that Bahrain, Qatar, and possibly Saudi Arabia might
follow suit.
A rising cycle of violence developed in South Africa. The slow pace of reforms and
the government's harsh response to the violence triggered economic sanctions by the
United States and other Western nations, and led to growing international isolation of
the Botha regime
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In India, the sweeping election victory of Rajiv Gandhi ushered in an era of
renewed optimism and the possibility of closer ties with the West
oreover, if Pakistan tests a device or produces weapons, India probably will respond
in kind, creating the prospect of a nuclear arms race in South Asia
In Central America, the Sandinista government in Nicaragua continued to
consolidate power domestically with substantial military and economic support from
Cuba, the Soviet Bloc, and radical Arab states. At the same time fighting between the
Sandinistas and the insurgents escalated, with neither side gaining significant advan-
tage. Revolutionary violence in South America rose as Ecuador, Peru, Chile, and
Colombia all suffered significant incidents of insurgency or terrorism. Some expanded
cooperation among insurgent groups in different countries may be occurring, and some
of the groups are receiving aid from such countries as Cuba and Libya. However,
democracy in Latin America received a boost in March when, after two decades of mili-
tary rule, a civilian president took office in Brazi
In a final Third World development of significance, the Soviets attempted to
buttress client regimes-especially in Angola and Ethiopia-against increasingly effec-
tive insurgencies. Soviet weapon shipments were massive, and Soviet military advisers
played an increasingly prominent role in counterinsurgency campaigns in these two
countries
Terrorism. International terrorism intensified and remained a major concern.
Iranian-sponsored or -encouraged Shia terrorism was coupled with a renewal of
spectacular terrorist acts by radical Palestinians, encouraged by Libya and perhaps by
Syria. US relations with Egypt, Tunisia, and other Arab states were harmed, at least
temporarily, by Israel's strike on PLO headquarters in Tunis and by the forceful US re-
sponse to the Achille Lauro affair
Nuclear Proliferation. Although Pakistan moved closer to being able to produce a
nuclear weapon, several positive events also occurred. The 1985 Non-Proliferation
Treaty Review Conference reaffirmed the value of the Treaty, North Korea (a country
of proliferation concern) signed the Treaty, and Argentina and Brazil began discussions
about possible regional controls on nuclear technology
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Chemical Weapons Proliferation. The ability of several countries to produce
chemical weapons expanded and their use became more prevalent. During the year,
Iraq became }b F-+ -puntry in history to use nerve agents against conventional
military force
Narcotics. Although some countries, such as Colombia, made at least temporary
progress in curbing the production of home-grown narcotics, tremendous amounts of
heroin, cocaine, and marijuana were trafficked last year internationally and into the
United States. Narcotics money increasingly corrupted high-level officials in several
governments (such as Mexico, Bolivia, Colombia, and Peru) and was used to under-
mine the social, economic, and political fabric of othe
Economics. OPEC's efforts to hold the line on oil prices virtually collapsed.
However, the "debt crisis" among LDCs deepened as the gains in trade evident in 1984
generally were reversed and political leadership favoring austerity weakened in Mexico
and Brazil. The politics and economics of US-Japanese trade relations also remained a
significant concern.
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DEMANDS ON INTELLIGENCE
The role of intelligence is to support those charged with making decisions. The is-
sues that concern decisionmakers and policymakers embrace a range of questions on
topics as diverse as foreign policy, military capabilities, trade and agricultural policy,
and military plans and operations; major demands stem from the need to be adequately
informed about the meaning of events
Certain issues immediately engage the attention of policymakers. This is typically
the case in areas of current or impending crisis, such as Central America or the
Philippines. It is also the case during the planning and implementation of major new
initiatives, such as the resumption of nuclear and space talks. Moreover, in a world rid-
dled with terrorist activities, political instability, threats of force, and civil or regional
armed conflict, officials increasingly expect instant reporting and analysis of dynamic
and potentially dangerous ev tq fn rt military plans and operations and crisis
management policy decision
All intelligence disciplines have been affected by the demands of consumers for ad
ditional, more timely, and more detailed direct support to operations.
Another trend is the tendency of consumers to demand ever more detailed
information and analysis in support of issues involving international negotiations or
programs such as the SDI. This tendency is strengthened by the growing interrelation-
ship of events, which has fostered conditions where foreign policy issues and actions,
for example, frequently have economic and technical dimensions and consequences.
One result is an expansion of the burden on analysts; another is the requirement for
more coordinated production across analytical units
Increasingly, policymakers also ask for assessments of intentions-such as those of
the South African Government concerning apartheid-or for hard evidence of linkages
that are suspected but difficult to establish-such as precise links between organiza-
tions or nations and terrorist attacks, or the identity of a specific Soviet service
responsible for a particular forgery or other active in e. The result is that analysts
demand more and more from collection systems
Other demands placed on the Community proceed rom the serious threats posed
by activities such as terrorism and espionage. At a time when the presence and
activities of hostile intelligence personnel are increasing and terrorist incidents and
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threats against Americans have escalated, counterintelligence and counterterrorism
programs require considerable resources to identify and neutralize hostile actions.
Real-time support for such incidents as the Achille Lauro is required to protect US per-
sonnel and facilities, deflect potential incidents Ian counter operations, and make
informed decisions on commitments of US force
In my last report I discussed some significant challenges that lie ahead. These
challenges remain the source of compelling claims on the Community's attention. The
need for collection systems to be responsive to competing priorities; the importance of
applying new technologies to intelligence systems; the spread of technology worldwide,
especially to communication systems; the efforts of the Soviets to deny us information;
the evolving signals environment; and the opportunities and burdens of the informa-
tion explosion are but a few examples of developments that demand creative and
workable solutions. These solutions, moreover, must be sought in a fiscal and funding
climate that is uncertain at besj
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THE INTELLIGENCE RESPONSE
This section discusses significant Intelligence Community actions taken in re-
sponse to the major events of 1985. The word "response," though, is misleading, as
many of the studies, briefings, and reports produced were actually done in anticipation
of events. Where appropriate, comments have been included on the attention which
certain topics continue to receive, as well as on possible implications for the near term.
Important shortfalls and deficiencies are also noted
THE SOVIET UNION
Prior to and in the wake of the death of General Secretary Chernenko, the
Intelligence Community was called on to assess the prospects of a succession, the
nature of the process, who might be chosen, and what his likely future course would be.
The Community further sought to provide analysis of the major issues facing Soviet
leaders, their domestic and international options, and the policies they most likely
would adopt
Many national estimates and staff papers were produced in response to these and
other questions. Two major National Intelligence Estimates (NIEs) focused on domes-
tic stresses on the Soviet system and Soviet strategic and political objectives in arms
control in 1985. Other NIEs examined future prospects in Sino-Soviet relations, and
Soviet policies in Afghanistan, southern Africa, the Middle East, and Central America.
The Intelligence Community anticipated accurately that Gorbachev would succeed
Chernenko. Moreover, his policies toward the US and in major regional arenas were
broadly anticipated, as was his more activist approach; there were no Soviet policy
shocks or major surprises adverse to US interests. The Community could not antici ate
the precise time of Chernenko's death We
also did not initially appreciate the speed with which Gorbachev would be able to act in
replacing personnel and otherwise consolidating his position. With regard to future
analysis, we have data and perspectives on a number of other key issues about which we
remain uncertain. These include how much Gorbachev will actually be able to get out
of the Soviet economy without major reform of the system, what paths he will take if
his economic approach essentially fails, what the relationships will be between Soviet
policies toward the United States and Soviet economic policies and other internal
developments, how much Moscow will get out of its allies in support of its economic
goals, and the particular tactics down the road that Moscow will adopt in the
superpower competition and toward key regional actor
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In the areas of Soviet strategic weapons evolution and developments in Soviet
science and technology, the major focus this last year has been on examining the
potential for the Soviets to produce military systems that could change the balance of
power. During 1985, we published an important NIE on Soviet space programs, as well
as an annual edition of Soviet Capabilities for Strategic Nuclear Conflict Through the
Mid-1990s. Three major Interagency Intelligence Memoranda were produced on the
subjects of Soviet civil defense, Soviet planning and capability for protracted nuclear
war, and air defense of the USSR. In addition, a DCI Special Assessment on the Soviet
ballistic missile defense program was prepared, and work was published on the
significance of Soviet/Warsaw Pact military exercises
The deployment of the first Soviet land-based mobile ICBM, the SS-25, opened an
era of greater emphasis on survivability and mobility that will mean significantly more
difficulties in estimating the size and effectiveness of Soviet strategic forces and in
monitoring Soviet compliance with treaty limitations
Soviet agreement early in the year to return to strategic arms talks with the US led
to increasing demands for analysis and policy support, culminating in the support
required for the President's November meeting with Gorbachev. Numerous back-
ground papers were provided in advance of the summit, as well as quick analyses of
current events that might affect it. We also used data bases and methodologies
developed over the past few years to predict accurately the terms of the Soviet proposal
for a 50-percent reduction in offensive forces and to assess its military implications. We
continued to rely on virtually all collection systems to support analysis of these and
other questions involving Soviet strategic systems.
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In the year to come, four science and technology (S&T) areas will command
priority attention:
-Strategic Defense and Counter-SDI Programs.
- Antisubmarine Warfare.
- Space Programs.
Another subject of S&T interest is industrial modernization. To monitor progress
here, we must continue to collect and analyze data on Soviet acquisition of technology
in the areas of computers, microelectronics design and production, high-quality
precision test equipment, and sensors (large optical and infrared array). The burgeoning
availability of advanced technology for transfer to Communist countries will stretch
our ability to monitor transfers of critical technologies)
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Substantial production also occurred during the year on Soviet general purpose
forces. During 1985, the National Intelligence Council (NIC) completed its analysis of
the global impact of Warsaw Pact theater forces capabilities and vulnerabilities. A
series of regional threat assessments included an estimate of the threat opposite NATO
and a companion interagency memorandum on Warsaw Pact theater forces, and
estimates on the threat in the Persian Gulf and in the Far East. A study was published
on Soviet strategy and capabilities for multitheater war, while our comprehensive
review of Soviet naval strategy and programs was completely updated. Finally, five
significant assessments were begun this winter: Soviet Military Production; The Soviet
Response to a Conventional Defense Initiative; Soviet Foreign Military Assistance;
Moscow's Home Front; and The Threat to US Mobilization. In their totality, these
Community studies have had an important effect on the Joint Strategic Planning
System, and all of those begun this winter are expected to have a significant impact on
both policymaking and defense appropriations considerations
Also completed was an extremely important assessment of Soviet tank programs
and most of the work on a companion piece on Soviet antiarmor programs to be
published in 1986. In addition, a Special National Intelligence Estimate (SNIE) on
Soviet submarine warfare developments was produced. All these weaponry-related
assessments have serious implications for US tactics, organizations, and future weap-
nns svstums aenuisition_ Many collection systems contributed to these assessments
Finally, a great deal of effort was expended on Communist arms transfers with im-
portant results. For example, the support we provided policymakers in warning about
and assessing the progress of recent Soviet deliveries of long-range SA-5 surface-to-air
missiles to Libya typifies the kind of critical current intelligence needed on this subject.
Our analysts also assessed the broader military and political impact of the large
quantities of Soviet and other Communist and non-Communist arms delivered to
Third World countries, and they have been increasingly called on to detect and provide
timely information to help interdict the smuggling of arms to insurgent and terrorist
groups.
EUROPE
The majority of 1985 production focused on European reactions to changes in the
Soviet Union and on developments in Eastern Europe. For example, one 1985 NIE was
Major NATO Allies: Perspectives on the Soviet Union. Another important paper now un-
der way is on Soviet-East European relations. In 1986, estimates will also be produced
on several individual East European countries (Hungary, Poland, and Yugoslavia) that
are facing important, problems during the early phase of the Gorbachev er
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Two events in the USSR-Gorbachev's accession to power and revived attention
to economic reform-have potentially large implications for Eastern Europe. To assess
these implications, CIA, for example, established a task force to examine Soviet-East
European economic relationships, and continued efforts to develop standardized data
bases on both economics and social elites, which should aid the identification of
potential successors to aging East European leaders. However, limitations on our
information about the detailed workings of East European political and economic
systems forced us once again to make heavy use of outside sources
Other areas of production concerned Allied reaction to the SDI (Allied Science and
Technology for the Strategic Defense Initiative), US-Greek relations in the wake of
Papandreou's reelection, and Ceausesecu's problems in Romania. The Intelligence
Community has also been at the forefront in developing good information about
terrorist groups in Europe and in creating international links to combat terrorist
activity. In 1986, two NIEs, one on the evolution of Italian foreign policy and another
on Malta (which will look at its relationship with Libya), will examine the impact of ter-
rorisrr~
MIDDLE EAST AND SOUTH ASIA
In 1985, the Intelligence Community devoted many collection and analytical assets
to tracking the Middle Fact neare process, and a SNIE was produced on Syrian
opposition to the process
Two national estimates on Nicaragua provided timely information on Sandinista
assistance to leftist groups in Latin America and assessed Sandinista strategies for
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establishing a Marxist-Leninist state. But as Nicaragua has become increasingly hostile
and the Cuban/Soviet presence there has increased, we have had to step up our
collection and analytical effort. We have been partially successful, but still have a need
for more information, especially with regard to tactical military intelligence on the
Sandinista-Contra conflict. Clandestine reporting on Nicaragua improved in 1985, but
we still need more and better reporting on internal developments. Cuban and
Nicaraguan support of leftist revolutionary groups elsewhere in Central and South
America has been difficult to trace, and we have found only a few cases of clear-cut evi-
dence of their role, despite a considerable expenditure of intelligence resources to find
such data
In the case of expanding revolutionary violence in South America, we still have
major intelligence gaps, particularly on the degree to which Cuba and Libya may be
supporting or encouraging the insurgent groups involved or whether it is essentially an
independent, completely domestic phenomenon. We acquired some evidence that
insurgents may be attempting to establish expanded contacts with narcotics traffickers.
The growing Communist insurgency in the Philippines and President Marcos's
decision late in the year to call for a snap election on 7 February 1986 required us to
provide extensive current support to policymakers and has dramatically increased our
need for in-depth knowledge. The demand for analysis on the Philippines was such that
an interagency consultative group was formed to coordinate collection priorities and
roduction goals. In addition, DIA and CIA separately created Philippine task forces.
An in-depth assessment of the organization, goals, an tactics o the
Communist Party of the Philippines/New People's Army; a SNIE on insurgent
capabilities; and a case study of Communist infiltration tactics and government
counterinsurgency efforts were produced. The succession to Marcos was also examined
in detail, and several assessments and a SNIE were published.
Increased collection and analytical resources clearly will be needed in the future to
track and understand the magnitude and implications of China's modernization effort.
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In particular, China will require a healthy R&D program supported by an ability to ac-
quire and assimilate foreign technology if modernization is to succeed. We will seek a
clear view of the progress of reform in China and measures of the potential for
successful developments in Chinese science and technology over the next 10-15 years.
Also at issue will be the role of technology transfer in Chinese progress and the factors
that will influence the development of US policy in this critical area
The increase in Soviet military and political involvement in Angola and Ethio-
pia-an example of an apparent Soviet attempt to apply the "Brezhnev Doctrine" to
Africa-is a high-priority item for rnllertinn and nnnh7cic hi, thA T?to11:,.0 r
pity.
resources to tollowing South Africa's involvement in the government-insurgent conflict
in Angola. The possibility of a clash frican and Soviet/Cuban forces is
a particularly important subject.
Government attitudes toward reducing apartheid, the pace of reforms, and the
scope of domestic violence were additional South African subjects given close attention
by the Intelligence Community. Continuing violence in South Africa has made that
country's internal development and international actions a US national security issue
and has led to a sharp rise in consumer requirements for both sophisticated research
projects and current intelligence analysis. CIA, for example, reorganized its Africa
Division to increase the resources devoted to southern African issues and increased its
funding of external research projects and conferences. A comprehensive national
estimate was also published detailing the prospects for stability, reform, and violence,
while the internal strife affecting South Africa was addressed in three major studies that
focused on such issues as black unity, rightwing strength, and the effect of the econ
realities on political choices
In Sudan, we were occupied with the degree to which political changes there
threaten US regional interests and the identification of opportunities opening up for
subversion and terrorism by Libya
Estimates were produced on Mozambique, Sudan, the Soviets in southern Africa
and in Angola, African famine, and South Africa in response to high-level policy debate
and review. An estimate published on the Southwest Indian Ocean supported a policy
paper, and an estimate on Liberia dealt with issues of intense policy interest at the bur-
eau/regional level. The enormity of Africa's economic crisis was and continues to be a
key intelligence issue. We have followed particularly the manner in which African
regimes dispose of US aid and whether their use of the aid supports or undercuts our
interests in the region
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1985 also saw major Department of State and CIA conferences on
South Africa and a conference on Sudan: these sessions facilitated an exchange of views
with academics and business people
OTHER TOPICS
Counterintelligence and Security. Actions to improve our capacity for safeguarding
national security information and for identifying, neutralizing, or exploiting foreign
intelligence collection activities accelerated in 1985. For example, in the counterintelli-
Security countermeasures have also been consistently examined based upon
experiences, study recommendations, or other authoritative direction. During 1985,
these actions led to a variety of improvements. For example
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Beginning in October, representatives of the counterintelligence and security
elements of all the Community's agencies and departments participated in a series of
hearings, sponsored by the SSCI, to determine how we might cope even more
effectively with the hostile intelligence threat. A full report on the results of these
hearings will be provided in the near future.
Denial/Deception Analysis and Active Measures. The Intelligence Community
continued in 1985 to increase response to both National Security Council and
Congressional requirements for more analytical attention to the areas of intelligence
denial and deception and Soviet active measures
Early Warning. The National Intelligence Officer for Warning fostered the
development of new warning methodologies and programs with various US agencies
and friendly foreign services. These programs are specifically directed at USCINC-
EUR's continuing requirement for early viet/Warsaw Pact intentions to
launch an attack against Western Europe 7 To take advantage of new innovations in warning, the NIO/Warning also worked
with various US agencies and foreign intelligence services to establish programs that
will identify political and economic indicators of impending crises. To date the
following programs have been initiated:
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International Terrorism. The surge in international terrorism in 1985-particu ar y
in the Middle East-posed new challenges for intelligence analysts ing
products of maximum utility to US officials responsible for countering it
- Numerous analyses of terrorist issues were provided to the State Department's
Office for Combating Terrorism and Emergency Planning. Many of them,
particularly on the role of Libya and Iran and the threat posed by the Abu Niqat
group and the Hizballah were prepared to be passed to government official
to support US
initiatives for more international cooperation in counterterrorist measures.
Within State, INR established a new office of terrorism and narcotics analysis
to concentrate more efforts on the global issues and the increasing connection
between the two.
- Dispersal of Flashboard communications terminals and the DESIST informa-
tion and communications system throughout the intelligence and policy com-
munities has accelerated the process of sharing and evaluating terrorism
information and the dissemination of analysis to a multitude of consumers
during crises
- Defense intelligence expanded terrorism analysis and production to develop
counterterrorism options and support material; carried out antiterrorism and
vulnerability studies of military installations worldwide; and increased physical
security improvements awareness programs, especially for personnel as-
signed overseas~ 7
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- In terms of prevention, we issued over 70 alerts of terrorist threats to US
interests that resulted in deterrent action being taken. This is testimony to the
extensive collection program maintained in 1985, and to the fact that liaison
services have been increasingly responsive and are cooperating more than ever
in technical and other operations
The terrorist target, however, remains an extremely difficult collection and analysis
problem. Because of the nature of the target and the finite limits of our personnel
strength, and notwithstanding planned increases in collection coverage, we cannot
provide complete and comprehensive collection on the total terrorist threat. Our
human collection capability is limited to selected incidents and concentration on highly
active terrorist groups. We have continued to improve our data bases and the
understanding and capability of selected foreign governments to defend against
terrorist attacks. But indications of planning for specific operations, while more
frequently obtained, are never comprehensive enough to deflect all planned operations,
and key sponsoring groups remain elusive targets. Access for US sources is also
extremely difficult to secure, and so we often cannot independently confirm the
human-source information provided by friendly liaison services that make up the bulk
of our reporting on terrorist plans
Chemical Weapons Proliferation. The topic of chemical weapons proliferation
increased in importance over the past year. This is evident both from the perspective of
increased Intelligence Community attention and devotion of analytical resources, as
well as from an expansion of the interest Congress has shown on this high-priority is-
sue. One indication of the prominence of the issue is the increased requirement for the
production of national-level intelligence. To meet interest and demands for informa-
tion, the National Intelligence Council produced an estimate, The Implications of
Chemical Weapons Proliferation, that details the prospect for consummation of an
effective global ban on chemical weapons, while identifying the nations which have or
are developing an offensive chemical weapons capability
Intelligence Community organizations produced other timely and relevant studies,
including a report on worldwide chemical warfare proliferation, an analytical perspec-
tive on the Iraqi chemical weapons program, and an engineering analysis and estimate
of Iraqi chemical warfare agent production ca
Drawing on intelligence analysis, US Military Commands were also briefed on the
possible chemical weapons threat to forces that might participate in any operation in
the Middle East. Special forces and related groups were made aware of the seriousness
of operating in a contaminated environment the degradation to efficiency that
would result if exposed to chemical agent
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Technology Transfer. Growing international awareness of the Soviet program to
acquire illicitly and apply Western technology in military programs radically increased
demands for intelligence support. We continued to improve our ability to collect
intelligence on Soviet efforts to acquire high technology. As a result of our collection
operations, demarches were made to several West European governments on their
plans to sell such technology to the Soviet Bloc. In 1985, our special center dealing with
this issue delivered almost 50 briefings to foreign officials, briefed major US defense
contractors and foreign companies, and provided technical support for COCOM and
bilateral negotiations. As a result of these efforts, liaison services became more
cooperative, and, in several cases, unilaterally stopped diversions to the Soviets; US
firms prow' ck on l diverters as well as on possible KGB and GRU
operatives;
The FBI, through its program to cieveiop counterintelligence awareness, contacted
more than 3,000 defense contractors in 1985 to alert them to the threat posed by hostile
intelligence services, including the problems of illegal technology transfer. The overall
problems posed by technology transfer, however, are such that additional resources are
necessary to cope with the demands of maintaining and exploiting the data bases that
make possible successful analysis and interdiction efforts
Narcotics. A national estimate was produced last year on the implications of the
drug trade for US security. The NIC also initiated the development of narcotics
intelligence collection strategies for Brazil and Belize, and formed an interagency
working group to analyze financial intelligence on several key trafficking organizations.
CIA was asked by policymakers to step up the number of narcotics crop estimates done
each year, and responded by planning and conducting surveys in 14 countries in 1985;
l- r , oQI estimates had focused mainly on Mexico and the Golden Triangle
Increasing national concern over the drug
problem also led to increasing o involvement in antinarcotics efforts. In the past
year Defense intelligence entities began providing direct support to those efforts
There are serious gaps in our knowledge of the infrastructure of major trafficking
networks, however, and several questions remain concerning countries of recent but
growing importance in the drug trade such as India and the island nations of the eastern
Caribbean. Collection and analysis on the linkages between narcotics and insurgents
and terrorists remain a high priority
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inese improvements, collection o narcotics intelligence has been
hampered by the growing sophistication of smuggling organizations, their family-
dominated nature, and their tendency to operate in remote areas
International Economics and Trade. The Community responded to the crisis in
OPEC with an estimate dealing with the impact of lower oil prices and looking at the
political ramifications for oil-producing countries as well as the positive effects on
world growth. As real oil prices continue to slide, the potential for political problems
among producing countries will increase, making it important that we allocate
resources in the future to be able to recognize potentially negative trends at an early
stag
Weak commodity prices and subpar growth in the industrial countries were factors
in the reemergence of the "debt crisis" as a major issue in 1985. These elements,
coupled with the failure of many debtor countries to make economic adjustments at
home, portend increasing difficulty for most debtors in keeping current with interest
payments and providing for future growth in incomes. The Community completed an
estimate in 1985 of the difficulties these countries face. The potential of these economic
problems to spill over into the domestic political scene in countries such as Mexico will
increase as the crisis drags on. Here, too, we are making sure that the sources
are in place to detect signs of trouble that would affect US interest
Industrial developments in foreign countries were additional areas that increased
in importance, as they have had a significant impact on US competitive positions,
particularly in the areas of biochemical engineering, optoelectronics, advanced materi-
als, robotics, and semiconductors. Competition in commercial space services has also
continued to increase, and near-term concerns have remained centered on launch
services, satellite systems for communications, and. remote sensing. It is expected that
the need to apply added resources to such developments will grow in step with their in-
creasing military and economic consequences
A final area that has grown in importance and that will bear new scrutiny is the role
of international technology transfer in determining future technology levels and
competition. One of the most important and least predictable factors influencing
comparative technology levels and transfers will be the increased importance of
corporate alliances, which may lead to a decline in technology gaps. Joint ventures of
this kind are expected to extend into areas such as data processing and telecommunica-
tions, in addition to longstanding joint programs in aerospace and nuclear technologies,
with potentially significant implications for US positions
Support for Operational Forces. Support to operating forces continued to receive
high priority, and a notable success occurred in the case of the Achille Lauro hijacking
and the US response. However, significant work remains to be done, ranging from the
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need to deal with new analytical problems to a requirement for greater improvements
in our ability to move intelligence to users in a timely fashion. At stake is the capacity
to support war planning, war fighting, and special operation
Tailored Intelligence Support. Steps were taken to improve the concentration
Efforts were also begun to upgrade significantly the quality and timeliness of target in-
telligence support for the 1990
In response to a directive from the Secretary of Defense, a multiyear effort was
launched to improve contingency war-fighting capabilities on behalf of the US
Southern Command, and a 20-man Caribbean Joint Intelligence Center was established
in Key West to support the US Forces Caribbean (USFORCARIB). The Center will
provide assistance in support of a variety of the Command's planning and operational
missions. Additional intelligence support projects were approved for funding in the
next fiscal year and beyond. which will further improve intelligence collection
capabilities in the region
Considerable resources were expended to provide personnel and support to US
Navy forces deployed in the Mediterranean Sea and Indian Ocean in support of
ongoin JCS contin enc Tannin
Intelligence Data Bases. Growth in the Defense intelligence analytic data base
and infrastructure in 1985, coupled with internal realignments, allowed broader and
more sophisticated production. Particular emphasis was devoted to developing ade-
quate data bases to support analyses at each level of military command. Automated
data bases and analytical coverage associated with the Third World were improved and
most core requirements of top-priority countries have now been filled.
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The Joint National Intelligence Development Staff (JNIDS). The JNIDS serves
as Intelligence Community focal point for application of advanced ADP technology to
intelligence processing and analysis. The program focuses on emerging ADP technol-
ogies and innovative techniques to be applied to existing intelligence problems and
systems. During 1985 JNIDS began work on:
- Feasibility studies and proof-of-principles demonstrations of technology that
can be applied to intelligence processing.
- Applying JNIDS techniques to the Soviet submarine-launched ballistic missile
threat to improve indications and warning.
- Consolidating data bases and communications between the Naval Intelligence
Command and the Strategic Air Command. Linkage between Pacific Fleet
submarine analysts in Hawaii and the Navy Operational Intelligence Center in
the Washington, D.C. area was also completed
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MAJOR ISSUES AND CHALLENGES
There are other challenges and demands placed on the Intelligence Community
that occur outside the context of significant or specific events. These generally involve
questions that cut across the missions of individual Community agencies and that focus
on matters of process or critical needs. Taken together they make up an agenda of issues
and problems that must be considered as the Community acts to meet the nation's in-
telligence needs. This section discusses the most important of these issue
PEOPLE
The Intelligence Community does not exist apart from the men and women who do
its work. In last year's report I noted the trends that will affect the Community's ability
to fulfill its personnel requirements. The demand for highly skilled professionals in the
context of competitive recruiting and retention circumstances has not lessened, but the
constraints on our ability to offer the benefits necessary to compete continue to suggest
a pessimistic outlook. The spread of technology throughout the world, the acquisition
of complex collection systems, and the advent of more sophisticated analytical
requirements and methodologies ensure that personnel pressures will remain a major
There is wide Community concern over the possible effects of proposed changes in
federal employment benefits. Given the lack of practical intelligence experience that
characterizes those newly hired into the Community, the need to retain skilled
personnel assumes great importance.
THE INFORMATION EXPLOSION
The "information explosion" has become a common expression in the intelligence
vocabulary and is in danger of being relegated to a stock phrase. But the problems it
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symbolizes and the implications it conveys remain very real. As I noted in my report
last year, the key to solving those problems lies in improving our ability to derive intel-
ligence from the vast amounts of data that are collected each day. The increases in
available data stem from our creative use of technology; the improvements necessary to
exploit that data will also be found in technology. We have made some progress, but
have a very long way to go to develop the advanced processing techniques, ex ert
automated systems, and sophisticated information handling necessary to do the jot
The challenges associated with this problem do not rise from the acquisition of
technologically complex collectors alone. Analytical requirements have also become
more complex, and the collection environment itself has, hi an nltarr rl
Volume management is a major problem now and will intensify. As the numbers of
images acquired and signals on the air increase, selection of those with the highest po-
tential for intelligence value becomes more difficult and more critical. Saturation of
follow-on processing systems will result ithout fro -end selection and filtering of
extremely high-volume collection systems.
Some gains have been made.
we nave also made changes to processing that have increased our efficiency and
continued modernization of collection systems worldwi
equipment to bear in especially thorny areas.
The FBI has also been faced with the need to deal with dramatic increases in the
amount of available information, and is convinced that long-term improvement is
possible through creative efforts to automate the process that feeds data into the
system. The FBI has also combined into one data base various types of information in
an effort that has led to an improved ability to handle information management needs
in the field in the event of terrorist incidents or snecial events such as the Olympics, a
'
world
s fair, or a major political convention
In the area of open-source information, we have brought together through the
HUMINT Committee the many elements in the Community that work on collection,
translation, processing, and distribution of such material. As a result, we have a long-
term program for better coordination and exploitation through fuller use of modern in-
formation handling, processing, and delivery technologies. We now must devote the
resources to implement the Community commitment to t
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THE CHANGING INTELLIGENCE ENVIRONMENT
The pace of technological innovation and the demands placed on intelligence to
broaden its coverage-in terms of both geography and topics of concern-have created
an intelligence environment that is both complex and dynamic. This trend has been
spurred by the increasing need for intelligence to be available on a near-instantaneous
basis. The challenges that result reach to every_ aof intelligence-collection,
processing, analysis, production, and dissemination
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SECURITY AND INTEGRITY OF INTELLIGENCE ACTIVITIES
The spate of espionage cases in 1985 brought mounting recognition of the highly
hostile human and technical penetration threat. It also served to reemphasize the
inherent importance of security countermeasures in the defense of our nation's secrets,
and underscored the value of strict compartmentation of sensitive information to
mitigate losses. Security is a bedrock concern that demands unflagging awareness, strict
attention to protective security disciplines, and aggressive counterintelligence efforts.
Actions to improve our foreign counterintelligence program in recent years
yielded significant success
As previously noted, we have also taken steps to improve awareness of physical se-
curity needs. For example, in 1985, in the area of physical security, the Defense
Department conducted vulnerability assessments and surveys of Security Assistance
Offices, Defense Attache Offices, and the Joint Special Operations Command Head-
quarters. In another major step, use of the polygraph as a tool to improve personnel se-
curity was extended. We will patiently continue efforts to try to develop greater
understanding and acceptance of the polygraph as a means of detecting and deterring
those who might jeopardize vital intelligence sources and methods. A new technical se-
curity policy was approved for the conduct and coordination of technical surveillance
countermeasures in federal departments and agencies. The importance of technical
security was underscored by a Community Security Committee study of the last
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In spite of initiatives to improve various facets of our defensive posture, we
continue to face formidable challenges to protect our interests from the activities of
hostile intelligence services. Among the most effective ways to meet these challenges is
to control the presence, travel, and activities of hostile intelligence officers in the
United States. There are over 4,000 diplomatic and commercial officials from
Communist countries currently posted in the United States. The Soviet Union and its
East European allies account for over 2,500 of these officials.
n a ition
to these officials, we can expect to see more than 15,000 students-and approximately
90,000 visitors from Communist countries each year. The trend over the past 10 years
has been for these numbers to increas
Accordingly, the President, in NSDD-196 and other directives, has approved a
range of measures to exercise improved control over these individuals and their
activities, as well as to reduce the presence of foreign service nationals present in our
diplomatic facilities overseas. Moreover, measures have been directed to increase the
awareness of government employees to the hostile intelligence threat. NSDD-197 now
requires each government agency to develop security awareness programs and to
develop procedures fnr re of employee contacts with foreign nationals from
specified countries
An NSC-chaired interagency task force has been formed to oversee the method,
timing, and procedures for implementing these measures, as well as other counterintel-
ligence and security improvements developed and forwarded through the SIG-I system.
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The SIG-I and its subordinate interagency groups for counterintelligence (IG/CI) and
countermeasures (IG/CM) will continue to develop and coordinate the policy actions
necessary to ensure the security and integrity of sensitive national activities
The several espionage cases in 1985 also showed that we need to tighten our
personnel security procedures and to explore new methods to help identify potential
spies and the behavioral factors that contribute to their actions. In this regard, the
Community Security Committee sponsored a behavioral sciences symposium series for
Community officers to discuss and refine proposals for research to enhance personnel
security screening and selection. We also moved to provide advanced training to over
200 Community and contractor security officers in adjudication of investigative data,
construction and maintenance of secure facilities for sensitive information, and
security education.
Finally, the public compromise of classified intelligence continued unabated in
1985. Seventy-four published unauthorized disclosures of intelligence sources and
methods data were reported to the Security Committee, including disclosures of
HUMINT, COMINT, ELINT, and imagery. Community officers briefed the Secretary
of Defense, the Joint Chiefs of Staff, and the House Permanent Select Committee on
Intelligence about the damaging effect of the compromises. We pressed for vigorous in-
vestigation of these disclosures, but more remains to be done to stop the hemorrhage
that is damaging our ability to collect and produce information essential to our national
securit
FUNDING CONSTRAINTS
After several years of markedly increased annual budgets that provided funds for
much needed reconstruction of intelligence capabilities, the Community is moving into
what gives every indication of being an era of very tight fiscal constraints. In real terms,
the total NFIP Budget (after Gramm-Rudman-Hollings) declined by 1.6 percent from
FY 1985 to FY 1986. And the President's NFIP budget request for FY 1987 is just un-
der 3 percent above funding requested for FY 1986. Even without Gramm-Rudman-
Hollings-the impact of which is still too early to assess completely-it appears
inevitable that the Community is going to be faced with some very hard funding
Fortunately, some of the very important and expensive collection and processing
systems that the Community requires are already fully funded. Other important
projects, however, are only partially funded or not yet funded at al
The National Foreign Intelligence Strategy recently provided to the Congress sets
forth the basic course I believe we must follow:
"Overall, we believe that the best course of action is a strategy that
preserves and enriches existing Community capabilities at the expense of
undertaking new requirements. The Intelligence Community must be pre-
pared to stop doing some things and not to take on others.'
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It is recognized that adapting to such a strategy will be far from easy. The world
changes, new situations are created, new intelligence problems arise, and senior
officials of our government expect intelligence support. But since the Community must
adapt to what are expected to be severe limitations on new resources, it will have to as-
sess its priorities carefully and focus its attention on what intelligence is truly important
to US national security interests
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