1977 DIRECTOR OF CENTRAL INTELLIGENCE REPORT ON THE INTELLIGENCE COMMUNITY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82M00311R000200030001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: December 15, 2016
• Document Release Date: November 26, 2003
• Sequence Number: 1
• Publication Date: March 1, 1977
• Content Type: REPORT

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Director of Central Intelligence
Report bn
The Intelligence Community
'P'repared by the Intelligence Co.rnrnun ity Starf
for the Director of Central In ellrgence
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Warning Notice
Sensitive Intelligence Sources and Methods Involved
(WNINTEL)
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
DISSEMINATION CONTROL ABBREVIATIONS
NOFORN- Not Releasable to Foreign Nationals
NOCONTRACT- Not Releasable to Contractors or
Contractor/ Consultants
PROPIN- Caution-Proprietary Information Involved
NFIBONLY- NFIB Departments Only
ORCON- Dissemination and Extraction of Information
Controlled by Originator
REL - This Information has been Authorized for
Release to .. .
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1977
DIRECTOR OF CENTRAL INTELLIGENCE
REPORT ON
THE INTELLIGENCE COMMUNITY
DCI/IC 77-4657 SECRET
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Contents
Page
INTRODUCTION ............................................ 1
A. Purpose of the Report ................................... 1
B. The Purpose of US Foreign ,Intelligence ................... 1
C. The Contemporary Perspective ............................ 1
COMMUNITY MANAGEMENT AND RECENT
ACCOMPLISHMENTS ................................... 5
A. The State of the Community ............................ 5
B. The Committee on Foreign Intelligence .................. 6
C. The National Foreign Intelligence Board ................. 7
D. The DCI Committee System ............................ 7
E. The National Intelligence Officers ........................ 8
F. Major Accomplishments ................................. 8
FY 1977 AND BEYOND: PROBLEMS AND PROSPECTS ....... 17
A. Intelligence Management ................................. 17
B. The Changing Intelligence Environment .................. 20
C. Collection .............................................. 22
D. Production .............................................. 24
E. Covert Action ........................................... 26
F. Counterintelligence ....................................... 27
G. Support Activities ....................................... 28
H. Oversight ............................................... 29
A FINAL WORD ............................................. 33
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INTRODUCTION
A. Purpose of the Report
This is the first comprehensive report * on the
Intelligence Community presented to the Presi-
dent and the Congress by the Director of Central
Intelligence. It is designed to provide an over-
view of the context, significant trends and major
challenges confronting the United States national
foreign intelligence effort from the DCI's per-
spective on the Intelligence Community as a
whole.** (U)
As a summing up of the year past, both
problems and accomplishments, and more par-
ticularly a projection of what lies ahead, it
reflects my view of the new or evolving chal-
lenges and requirements stemming from econom-
ic, political, technological and other changes in
the environment. It is intended to inform the
President, the Congress, and other interested
agencies of the Government of both the sub-
stance and the philosophy and outlook of my
stewardship as Director of Central Intelligence. I
view this report as also responding to Congres-
sional needs for general information in fulfill-
ment of its oversight responsibilities and to needs
of the Executive Branch in ensuring control and
coordination of intelligence activities. (U)
* The original report, published in January 1977, was classified
Top Secret. This version is being published at the Secret level to
make the report available to a wider readership.
** The term "intelligence," wherever used in this report, should
be taken to mean foreign intelligence unless otherwise specified,
Executive Order 11905 dated 19 February 1976 defined the
Intelligence Community as consisting of the following elements: the
Central Intelligence Agency, the National Security Agency, the
Defense Intelligence Agency, special offices within the Department
of Defense for the collection of intelligence through reconnaissance
programs, intelligence elements of the military services, and
intelligence elements of the Departments of State and Treasury, of
the Federal Bureau of Investigation, and of the Energy Research
and Development Administration. (U)
The report is being issued in conjunction with
the presentation of the National Foreign Intelli-
gence Program (NFIP) to the Congress to
complement the proposed national foreign intel-
ligence budget itself and the efforts of Com-
munity managers in the NFIP development
process, and to serve as a point of departure for
the budget and oversight hearings to follow. (U)
B. The Purpose of United States Foreign
Intelligence
Our national foreign intelligence purpose * is
clear and enduring. It is, quite simply:
To meet the requirements of United States
Government policy makers for comprehen-
sive, timely and accurate intelligence on the
whole range of current and projected foreign
military, economic, political, psychological
and geographical factors which are signifi-
cant for policy formulation,
To provide intelligence support for the
conduct of international negotiations, and
To provide intelligence input for operational
decisions relating to national security and
the national welfare. (U)
C. The Contemporary Perspective
In the midst of the Community's efforts to
achieve this purpose, a particular aspect of the
endeavor has concerned us greatly over the past
year. I am referring to the critical elements which
tie together what we seek to do and its
* For further explication of the purpose of United States foreign
intelligence, see the publication "Goals and Objectives of the
Director of Central Intelligence for Fiscal Year 1977." (U)
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achievement, Several things stand out in my
mind:
- The realities of the contemporary world,
while they may be known in general outline
to a substantial portion of the American
people, are not appreciated in detail by a
large number. There is not, in the absence
of overt hostilities directly involving the
United States, broad understanding of the
critical importance of intelligence to the
national security. This is particularly the
case with regard to intelligence on other
than military matters. (U)
- At the same time, paradoxically, intelli-
gence plays a more important and creative
role than ever before in maintaining peace
as well as national security. This is especial-
ly apparent in the verification of compli-
ance with arms control pacts and similar
international agreements, such as those
governing nonproliferation of nuclear weap-
ons. Without confidence that we could rely
upon good intelligence in such matters, in
fact, the United States would literally be
unable to enter into agreements of this kind.
(U)
- In an era in which international economic
factors may represent threats to the national
security as grave as those posed by some
military factors, popular attitudes may
impact on decisions regarding what infor-
mation is to be collected, how it should be
collected, how it should be used once
obtained, and the extent to which it should
be kept secret. (U)
- Public attitudes toward secrecy are sharpen-
ing these problems. There is a persistent
tension which results from our national style
and preference for openness and straightfor-
wardness in all dealings of the Government.
(U)
While it is generally recognized that secrecy
has a legitimate place in intelligence operations,
in implementing the national foreign intelligence
program we must deal with a number of difficult
problems:
- Demonstrating to the satisfaction of the
American people, through the President and
the Congress, that the national foreign
intelligence program is necessary and suffi-
cient, and that it meets acceptable stan-
dards of legality, propriety and efficiency.
(U)
- Meeting the needs of those charged with
intelligence oversight responsibilities in both
Executive and Legislative Branches for
substantive and procedural information,
and doing this without compromising neces-
sary security. (U)
- Protecting intelligence sources and methods
as I am charged to do by law. (U)
These concerns with effectiveness, legitimacy
and secrecy have commanded a great deal of my
energies and attention over much of the last year,
as they have those of many other concerned
leaders in the Congress, the Executive Branch,
and throughout the Intelligence Community.
But I have also been much involved with another
equally difficult and persistent problem, that of
gauging the adequacy of the resources and efforts
we devote to our intelligence mission, (U)
The management of intelligence entails prob-
lems similar to those regarding military forces,
but with some additional complexities. The
narrow base of knowledge and understanding of
intelligence operations, and the limitations im-
posed by necessary secrecy on providing informa-
tion to those not officially involved, make
rationalization more difficult. In brief, the
additional complexities are:
- Shortfalls in intelligence are difficult to
perceive and to measure. The only way to
tell what exists is to look, and without
looking it is hard to know what risks are
entailed in not doing so. (U)
- The value of negative intelligence is hard to
gauge. The lookout who rouses the sleeping
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camp in time to repel an enemy's pre-dawn
attack proves his worth. The value of
national systems which monitor vast areas
in which no significant adversary activity is
taking place is more abstract and more
difficult to estimate and to appreciate. (C)
- Shortfalls in intelligence have second and
third order consequences which are difficult
to foresee and which may be compounding.
Military force sizing depends heavily on
accurate and timely intelligence. Shortfalls
in intelligence performance which undercut
the input into force planning have poten-
tially disastrous effects. (U)
- Reliance upon adequate intelligence is most
pronounced, and probably more crucial, in
policy planning. The absence of needed
intelligence could lead to decisions estab-
lishing objectives which are unrealistic or
which are unsuitable in that they are either
more ambitious or more conservative than
they ought to be. (U)
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COMMUNITY MANAGEMENT AND RECENT ACCOMPLISHMENTS
A. The State of the Community
A crucial concern of mine has been to reverse
those unfavorable attitudes toward the Intelli-
gence Community which I felt were unjustified.
While the reform movement was needed and
constructive, the attitudes it engendered inevi-
tably had a dispiriting effect on the many able
and dedicated people throughout the Communi-
ty who had consistently been doing an effective
and praiseworthy job, (U)
During the past year these attitudes have
moved toward a more proper perspective. This
has been accomplished not as a result of a public
relations campaign or a lobbying effort, but
rather through demonstrated willingness to meet
the criticisms of the past in a forthright way, and
to devise and wholeheartedly implement safe-
guards which would ensure that future perfor-
mance would meet the highest standards of
propriety and legality. Representatives of the
Community have been candid and forthcoming
in their interaction with members of the Congress
and their staffs, as they have been with Executive
Branch elements having both managerial and
oversight responsibilities. Increased attention has
been given to those elements which provide
oversight capabilities within the Community
itself. (U)
The improvement in attitudes toward the
Intelligence Community, which reflects increased
confidence in the essentiality and effectiveness of
its activities, manifests itself in a number of ways.
One of the most important is in the relationship
of the DCI with the President and with the
Congress, a relationship characterized by direct
access and trust with regard to the President and
by frequent interchange and a spirit of cooper-
ative endeavor with members of the Congress.
(U)
When I first joined the Intelligence Communi-
ty I found that my able predecessor, Bill Colby,
had formulated and issued a comprehensive set
of guidelines to guarantee that the Central
Intelligence Agency and the Intelligence Com-
munity would faithfully adhere to the highest
standards of circumspection and accountability.
The list was both thorough and fully in keeping
with the spirit of the President's Executive Order
which was issued after I became DCI. (U)
Soon after accepting stewardship as Director of
Central Intelligence I set forth a number of
guiding principles which expressed my philos-
ophy of how we ought to go about our business. I
believe we have as a Community had substantial
success in living up to these principles, which are
the following:
- Total objectivity is the hallmark of all
intelligence reports and estimates.
- Strongly held dissents and differing judg-
ments within the Intelligence Community
on substantive intelligence will be carefully
noted in Community-coordinated products
forwarded to policy making levels of the
government.
- Representatives of every Community or-
ganization must have the right to be heard
and to have their ideas and views given
serious consideration.
- The freest possible flow of information,
both within and among the organizations of
the Community and with the users of
intelligence; is the constant goal. To assure
that the fullest data is available, cooper-
ative arrangements must be maintained
with all government agencies working in the
foreign affairs field.
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- We have an obligation to provide as much
information as possible on an unclassified
basis, but without derogation of the neces-
sity to protect sensitive sources and methods
and to protect information which truly
requires sensitive treatment.
- Dependable intelligence is an essential base
for the formulation of national policy, so
intelligence collection and production must
give priority to topics of major policy
concern. Our role is to provide information
and professional judgments on foreign de-
velopments, without coloration by policy
considerations.
- The concept of an Intelligence Community
must be strengthened. We will be judged on
Community accomplishments and on the
effectiveness of our interaction in Commu-
nity problems as well as on our substantive
end products.
- Continuing attention will be given to
improving the interface between national
and tactical intelligence capabilities, seek-
ing to capitalize on the potentiality of
inputs to national intelligence needs from
tactical resources in peacetime and the
capabilities of national resources to provide
intelligence of import to both peacetime
force readiness and wartime operations.
- The Community must be action oriented
and responsive. Papers must move quickly,
deadlines must be met, decisions must be
reached and results must be demonstrated.
- The limitation and restrictions on intelli-
gence activities already set by the President
will be rigidly observed and have the full
support of all intelligence personnel, in
spirit as well as act.
- Improvement of the public perception of
U.S. intelligence will be given continuing
attention. Intelligence is a profession in
which pride can be taken and that pride
should be demonstrated. Within the con-
straints of legitimate security requirements,
the intelligence Community should strive to
better public understanding of our mission
and of our product.
- The Intelligence Community should be as
responsive as possible to Congressional
inquiries, Congressional support is essential
to sustain the effectiveness of the U.S.
intelligence effort, and our cooperation is
essential to such support. (U)
B. The Committee on Foreign Intelligence
The President's Executive Order 11905 of 19
February 1976 was issued to establish policies to
improve the quality of intelligence needed for
national security, to clarify the authority and
responsibilities of the intelligence departments
and agencies, and to establish effective oversight
to assure legal compliance in the management
and direction of intelligence organizations. A
particularly important provision of the order was
the creation of the Committee on Foreign
Intelligence (CFI), which I chair, and which has
as its other members the Deputy Secretary of
Defense responsible for intelligence matters and
the Deputy Assistant to the President for Na-
tional Security Affairs. This Committee has, for
the first time, given the Intelligence Community
a means of effecting resource control over all
elements of the National Foreign Intelligence
Program. (U)
The CFI receives guidance on the formulation
of national intelligence policies from the Na-
tional Security Council, and is empowered to
control budget preparation and resource alloca-
tion for the National Foreign Intelligence Pro-
gram. The CFI is a decision-making mechanism
which rules on resource questions. Since its
inception last February, the CFI has successfully
organized to carry out this fundamental role.
Beginning last July, the CFI identified issues
regarding the National Foreign Intelligence
Program for further consideration during the fall
budget review, This detailed process of identifi-
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cation, study, and negotiation of resource issues
was a major improvement over previous more
fragmented practices in the development of the
proposed budget for the National Foreign Intelli-
gence Program. (U)
The Executive Order also charged the Intelli-
gence Community Staff to provide staff support
to the CFI. Under the direction of the Deputy to
the DCI for the Intelligence Community, the
Intelligence Community Staff supports the DCI
in his Community role in four areas: resources
management (CFI support), collection assess-
ment, product evaluation and improvement, and
coordination and planning. The Intelligence
Community Staff includes the executive secretary
to the CFI, who also serves as executive secretary
for the National Foreign Intelligence Board
(NFIB). (U)
C. The National Foreign Intelligence Board
The NFIB, which I chair, functions as an
advisory body to me in the production of
national intelligence. NFIB members include the
Deputy to the DCI for the Intelligence Commu-
nity (vice chairman); the Deputy Director of
Central Intelligence; the Directors of the Na-
tional Security Agency and the Defense Intelli-
gence Agency; the Director of the State Depart-
ment's Bureau of Intelligence and Research; and
the senior foreign intelligence representatives of
the Department of the Treasury, the Energy
Research and Development Administration, and
the Federal Bureau of Investigation. Chiefs of the
intelligence elements of each military service are
designated observers, and play an active role in
the discussions and exchange of views. (U)
The NFIB is successor to the United States
Intelligence Board, which was terminated by the
President's Executive Order. As the chief operat-
ing officers of line elements of the Community,
the NFIB members bring to this body a diversity
of views and concerns that ensures comprehen-
sive coverage of all aspects of critical intelligence
estimates. An important ingredient of this is the
inclusion of dissenting views expressed by an
NFIB member when coordinated intelligence
estimates are published, thereby ensuring that
policy makers are aware of uncertainties and
differences of interpretation in the judgments
they receive. (U)
D. The DCI Committee System
DCI Committees have been established to
coordinate Community intelligence activities in
several areas of specific concern dealing with
collection, production, and support. Each of the
twelve committees is designed to coordinate
Community intelligence activities in a given
field. DCI Committee chairmen are appointed
by me with the advice of the NFIB. Committee
membership includes representatives of all inter-
ested agencies, both from within the Intelligence
Community and from elsewhere in the govern-
ment. The chairmen of five of the Committees
are currently integrated into the Intelligence
Community Staff, The Deputy to the DCI for
the Intelligence Community meets routinely with
all DCI Committee chairmen. Hence, the DCI
Committees, although still supportive of NFIB
tasking, have taken on a true Intelligence
Community flavor by becoming directly respon-
sible to me and the Community Staff,* (U)
Broadly speaking, four of these committees are
concerned with collection means (signals intelli-
gence, imagery, human resources, and defectors),
four with production matters (those dealing with
* Prior to February 1976, the DCI Committees were considered
to be working groups subordinate to the United States Intelligence
Board (USIB), the advisory body to the Director of Central
Intelligence comprised of the senior members of those agencies and
departmental elements which make up the Intelligence Communi-
ty. While the USIB was formally terminated with the issuance of
the President's Executive Order on U.S. Foreign Intelligence
Activities on 19 February 1976, it was reconstituted shortly
thereafter as the National Foreign Intelligence Board (NFIB); it is
still an advisory body to the DCI on substantive intelligence
matters, and still under the chairmanship of the DCI. But the
Deputy to the DCI for the Intelligence Community (D/DCI/IC)
was established as the NFIB- vice chairman and a full voting
member. This important change formalized the relationship of the
NFIB to the Intelligence Community Staff, which is directed by the
D/DCI/IC and which supports the DCI in his Community role.
(U)
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atomic energy, weapon systems, science and
technology, and economics), and four with
elements of support and other specialized prob-
lems (security, information handling, exchanges,
and critical collection problems). (C)
E. The National Intelligence Officers,
The National Intelligence Officers (NIOs),
under supervision of the Deputy to the DCI for
National Intelligence, provide substantive sup-
port in the production of all national intelligence
except current intelligence (which is a CIA
responsibility). Individual NIOs have responsibil-
ity for such production in their assigned fields,
either geographical (the Soviet Union and East-
ern Europe; Western Europe; the Near East and
South Asia; Africa; China; East Asia/Pacific;
Latin America) or topical (strategic programs,
conventional forces, economics). The ten NIOs
are empowered to draw on the full resources of
the Community to meet the intelligence needs of
policy makers. Their products range from formal
National Intelligence Estimates, prepared jointly
by several agencies and extensively coordinated,
to special studies and assessments which respond
specifically to the needs of a particular senior
policy officer. A particularly important function
of the NIOs is to serve as a link among
consumers, producers, collectors and experts from
outside the government. (C)
Among the steps taken recently to improve the
intelligence product-ion process were these:
- To better reconcile the demands for intera-
gency finished intelligence with the re-
sources available, a National Intelligence
Steering Group was organized last June.
One of its particular achievements has been
the commissioning of a working group
under the NIO for the Middle East to
explore ways of building on the improve-
ment in methodologies used to assess the
Middle East military balance in this year's
estimate so as to minimize the subjective
element in the judgments rendered. (C)
- To attempt to deal with criticism of past
estimates of Soviet strategic capabilities, this
year I commissioned an experiment in
competitive analysis, Managed by the NIO
for strategic programs, it entailed having
parallel teams produce estimates regarding
three different aspects of Soviet strategic
capabilities; one team was composed of
professional intelligence officers, while the
other was drawn from the ranks of private
defense research organizations. While the
value of this experiment was somewhat
diminished by the fact that selective pieces
of information were leaked to the press, we
did learn from the process. I do not feel,
however, that this type of approach should
be institutionalized as part of the regular
estimating process. (C)
- To help improve the quality of National
Intelligence Estimates in general, I decided
to organize an Estimates Advisory Panel for
the DCI. To be made up of some three
dozen of the most capable and knowl-
edgeable people outside of government,
the panel will take a fresh look at
each estimate; when an estimate has been
drafted to the satisfaction of the responsible
NIO, several members of the panel will be
asked to review it for coherence, compre-
hensiveness, and relevance before it enters
the formal coordination process. (C)
Even before most of these improvements could
be made, the NIOs made major contributions to
the accomplishments of the Intelligence Commu-
nity by their management of national intelli-
gence production. Many of the accomplishments
cited in the following section of this paper
occurred under the leadership of the National
Intelligence Officers. (U)
F. Major Accomplishments
The Intelligence Community responded well to
the needs of 1976, in terms of both management
and output. Executive Order 11905 required
institutional changes that affected directly a
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number of established procedures. The Commit-
tee on Foreign Intelligence established an en-
tirely new way of developing a Community
budget; the relationship of the DCI to the CIA
and the Intelligence Community was altered; the
Intelligence Community Staff was significantly
strengthened; and a reorganization within the
Department of Defense restructured the lines of
control over Defense intelligence. By year's end
the Community was operating effectively within
the guidelines of the Executive Order and the
new procedures effected by it. Moreover, the IC
Staff had produced an evaluation of the quality
and timeliness of intelligence products for the
first semiannual NSC review of intelligence as
directed by the Executive Order. (U)
Soviet Union and Eastern Europe. The Soviet
Union-its development and intentions-has
continued to be the major concern of the
Intelligence Community. During 1976 the Com-
munity tracked the development of Soviet
strategic forces in a number of publications.
Soviet capabilities are better understood, and
developments affecting the SALT I agreement
and SALT II negotiations have been conscien-
tiously monitored throughout the year. (S)
As a result of intensive work on a Community
basis, producers are now better equipped to deal
with a number of Soviet activities that merit
concern, particularly the purpose and extent of
Soviet civil defense programs, Soviet efforts to
conceal certain types of weapons developmental
and deployment activity, and their thoughts and
doctrine concerning limited nuclear war. The
Community has placed much emphasis on the
study of Soviet intentions worldwide. A recent
assessment of Soviet developments is especially
noteworthy: NIE 11-3/8-76, Soviet Forces for
Intercontinental Conflict Through the Mid-
1980s. The NIE is a comprehensive analysis of
Soviet current strategic capabilities and future
potential. An Interagency Intelligence Memoran-
dum, completed at the close of 1976, assessed the
likelihood of Soviet interference with US national
technical means for verifying arms control
agreements. This study and other supporting
data analyzed during 1976 respond to the
uneasiness and uncertainty among administrative
and military principals concerning Soviet pos-
ture, strategy and intentions. (S)
The Community continues to expend approxi-
mately fifty percent of its overall collection,
processing, and production resources on matters
pertaining to the USSR and Eastern Europe. The
quality and timeliness of current intelligence
reporting remain adequate to meet the increasing
demands of an expanding number of intelligence
users. The past year has seen steady improve-
ments in descriptive reporting on the orders of
battle and weapon systems of the Soviet/Warsaw
Pact strategic and general purpose forces. For
example, to assist users' understanding of devel-
opments in this substantive area, a recent
Interagency Intelligence Memorandum, Trends
in Soviet Military Programs (October 1976),
provided a broad overview of recent trends in the
evolution of Soviet military forces, weapon
systems, missions, and operations. In addition,
particular note should be taken of the excellent
support the Community has provided both the
SALT and MBFR negotiators in terms of timely,
high-quality current intelligence; detailed inputs
to SALT/MBFR policy papers; the periodic
Monitoring Report prepared for the Verification
Panel; and the significant progress toward devel-
oping agreed, credible Soviet/Warsaw Pact force-
level estimates in the NATO Guidelines Area for
MBFR. (S)
On the other hand, the Community is mindful
of the pressing requirement for enhanced analyt-
ical sophistication in treating Soviet/Warsaw
Pact matters in the future and is actively seeking
ways to achieve better analyses of the complex
qualitative issues surrounding understanding of
overall Soviet/Warsaw Pact war-making poten-
tial and doctrine. As an important step in this
regard, a National Intelligence Estimate on
Warning in Europe is currently under develop-
ment. The Community also recognizes the
importance to the users of intelligence of
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Community disagreements and uncertainty con-
cerning such vital questions as the continuing
improvements in Soviet strategic capabilities.*
(S)
During 1976 the Community also completed a
significant review of Soviet civil defense pro-
grams (JIM, Soviet Civil Defense, November
1976) which concluded, inter alias, that the
overall Soviet program is more extensive and
better developed than was previously believed.
Improving Community understanding of the
effectiveness of this Soviet program is a priority
goal for the coming year. (S)
The Community has as its highest priority the
continuing collection and examination of evi-
dence bearing on the critical question of Soviet
strategic objectives and policies, and the many
sub-questions that attend them. The Community
recently produced the first NIE since 1.972 which
analyzes how Soviet leaders perceive the USSR's
position and prospects in the world and what
objectives underlie their foreign and military
policies (NIE 11-4-76, Soviet Strategic Objec-
tives, December 1976). The NIE reveals Commu??
nity agreement on a wide range of Soviet
objectives. There are differing views, however,
regarding Soviet intentions for establishing mili-.
tary superiority over the West. There are basic
differences among intelligence producers regard-
ing the Soviet leaders' perception of the feasibil-
ity of achieving such superiority and, if it is
considered feasible, when that condition could be
attained. NIE 11-10-76, Soviet Military Policy in
* NIE I.1-3/8-76 itself is this year a very comprehensive
treatment of Soviet offensive and defensive forces for intercontinen-
tal nuclear conflict through the mid-1980s, drawing upon the
findings of other recent Community assessments such as: Intera-
gency Intelligence Memorandum (IIM), Prospects for Improvement
in Soviet Low-Altitude Air Defense, dated March 1976; IIM, Soviet
Approaches to Defense Against Ballistic Missile Submarines and
Prospects' for Success, dated March 1976; Weapons and Space
Systems Intelligence Committee (WSSIC), Low Altitude Air
Defense Capabilities of Soviet Nuclear-Equipped SAMs, dated
August 1976; WSSIC, Soviet ICBM Silo Hardness Estimates, dated
November 1976; and Scientific and Technical Intelligence Com-
mittee (STIC), Soviet R&D Related to Particle Beam Weapons,
dated October 1976. (S)
the Third World (October 1976), was an exten-
sive treatment of another aspect of Soviet
objectives. (S)
Considerable attention is also being given to
enhancing our understanding of vital economic
issues pertaining to the USSR and Eastern
Europe, particularly in the areas of Soviet
defense expenditures and technology transfer.
The Community is accelerating its research
efforts on the myriad of questions involved in
analyzing Soviet defense spending, guided by
periodic reviews by the DCI's Military Economic
Advisory Panel. Improvements in estimates will
be reflected in revised reports by CIA's Office of
Strategic Research in 1977, as well as in several
specialized studies being undertaken in response
to requests from OSD's Director of Net Assess-
ment. To provide a framework for a comprehen-
sive analysis of technology transfer issues in 1977-
1978, several case studies of individual industries
are being prepared and a major interagency
reexamination of the Soviet economy is under
way. Additionally, the Community is seeking to
improve production of other broad-gauged esti-
mates that treat the political, economic, military,
and social effects of current or prospective
internal developments in the USSR and Eastern
Europe. SNIE 11-6-76, Implications of the 1975
Soviet Harvest, is a recent example of such a
product that has been well received. (S)
The ability to analyze basic aspects of the
Soviet and Eastern European economies on the
foregoing subjects-as well as to support the
more detailed requirements of military planners
for targetting US strategic forces-depends in
large measure on the ability to improve develop-
ment and maintenance of necessary data bases
and expertise on the Soviet economy, while at the
same time supporting the expanding require-
ments of users concerned with other international
economic issues. (C)
Middle East. The Arab-Israeli equation con-
tinued to dominate US intelligence priorities in
the Middle East throughout 1976 in terms of
both requirements and resources. The lessening of
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earlier tensions between the confrontation states
and the concomitant reduction in the likelihood
of hostilities allowed the Intelligence Community
to shift more attention and support to other
important issues:
- The development of an intelligence report-
ing system and warning notification proce-
dures on behalf of the Sinai Support
Mission and the Sinai Field Mission.
- The Lebanon crisis, beginning with the
deteriorating situation in January, and
thereafter with especially effective coverage
of the evacuation of US civilians, the
impact of Syria's military actions, the civil
war period and the Riyadh Accord.
- The role of the Palestinian movement in the
context of Middle East stability-
- Egyptian-Libyan border tensions which
appeared to presage a military showdown.
(S)
The Intelligence Community has continued to
monitor closely the transfer of arms to Arab
countries, particularly to the confrontation states
(Egypt, Syria, Jordan), provided by the USSR
and East European arms producers. The results
of these efforts contributed significantly in the
preparation of an NIE (35/36-1-76) which
outlined a five-year (1976-1981) projection of the
Arab-Israeli military balance in the Middle East.
The results of this comprehensive and well-
integrated NIE were useful to senior-level policy
makers because of far-reaching, realistic judg-
ments. Important ongoing efforts, collateral to
the Arab-Israeli issue, provide senior-level con-
sumers with a wide range of reports covering the
Golan disengagement area, non-military devel-
opments in the Syrian-Israeli disengagement
area, and on-site activities of the Sinai Field
Mission resulting from the Sinai II agreement.
Currently under way is an assessment of potential
Egyptian strategies and policy options affecting
Arab-Israeli negotiations in 1977 in light of the
pressures and constraints on Egypt's leadership.
(S)
Support to US foreign policy interests in
helping to bring about a negotiated peace
settlement in the Middle East serves to guide
Intelligence Community efforts in the coming
year. Additional attention to qualitative human
factors is needed in order to improve US
assessments dealing with Arab military capabili-
ties. Activities of the Arab members of OPEC,
and the impacts which their oil pricing have on
US international and domestic economic policies,
are of increasing importance and deserve increas-
ing attention by the Community. Persian Gulf
state economic and monetary policies, financial
investments abroad, internal political dynam-
ics-all are candidates for closer scrutiny. (S)
Africa. The Intelligence Community displayed
laudable flexibility in its ability to rapidly shift
collection and analytical attention to events in
Sub-Saharan Africa. Prior to the issue of Angola,
Africa did not enjoy high priority in foreign
policy action, a fact reflected in the Com-
munity's priority planning documents. For exam-
ple, in FY 1975 there was no Key Intelligence
Question relating to Africa. Once evidence of
increased Soviet and Cuban interest in Angola
was noted, an NIO was given responsibility for
following African developments and a KIQ was
added to focus collection and analytic efforts on
the most critical issues. Over the past year, the
Intelligence Community has provided countless
analyses of political, economic, and military
activities in Angola, including assessments of
Soviet, Cuban and PRC involvement. (S)
The Community was particularly responsive in
respect to the thorny Rhodesian question, and
provided effective support to the Secretary of
State for his meetings with the Prime Ministers of
South Africa and Rhodesia. On very short notice,
the Community provided to the Secretary coordi-
nated intelligence assessments of political, eco-
nomic and military situations, and of the future
outlook for those countries. These were acknowl-
edged as valuable inputs to critical negotiations.
Complementing the major studies, the Commu-
nity provided daily support to the negotiations
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with finished intelligence on specific questions
and with clandestine source reporting on signifi-
cant events. At this time, a new estimate on
Rhodesia is undergoing final review. This will
address the latest developments and continuing
problems. (S)
Other areas and issues of significant foreign
policy impact to the US have also been
addressed. For example, the Community pre-
pared an assessment of the military' threat to
Zaire that helped put into context Zairan requests
for US aid. A Special National Intelligence
Estimate on the prospects for conflict in the Horn
of Africa flagged the intelligence Community's
concern over open conflict between Ethiopia and
Somalia to policy makers. It has been a valuable
input to the NSSM concerning future US foreign
policy toward the countries in that area. (S)
As we enter the new year, the Community is
better prepared to cover developments on the
issues discussed above. In October 1976 the DCI
issued a special set of national intelligence
requirements on Sub-Saharan Africa for FY 1977.
These requirements will insure that collection,
processing, and analytical resources are focused
on those issues and countries of national-level
concern. (S)
Far East. The People's Republic of China
(PRC) continues to be of priority interest.
Militarily, the People's Liberation Army has
improved its capabilities somewhat, but intelli-
gence analysis and evaluation of military training
and production trends indicate a slow, evolution-
ary road to force modernization, even though this
is still believed to be a high priority in Peking.
Political and economic pressures, as well as the
existing threat perception of the PRC, will
continue to influence the direction and pace of
force modernization. Although there are several
gaps in intelligence coverage of Chinese military
capabilities, the Community does not expect to
be surprised by any rapid improvements in the
ability of the PRC to attack the US mainland
with strategic weapons. (S)
During 1976 both DIA and CIA provided
useful military assessments of the PRC, The most
significant coordinated study was NIE 13-76,
PRC Defense Policy and Armed Forces, which
presented the first comprehensive picture of the
direction and content of China's defense policy
by the Intelligence Community since 1972. The
inner struggle for power and influence in Peking
was a priority interest throughout 1976, and
remains so. Given the nature of the intelligence
collection problem and the unpredictability of
Chinese domestic affairs, recent intelligence
reporting and analysis on internal Chinese
developments has been timely and generally
accurate. (S)
It continues to be difficult to accurately predict
the twists and turns of China's internal leader-
ship changes, however. While ]: believe we
predict as well as any other country, these are the
kinds of changes which are inherently difficult to
anticipate, and which remind us of the inescap-
able uncertainties and shortfalls which are in the
nature of the intelligence endeavor. (C)
The Community is also responding to the
continuing need for thorough analysis of the
attitude of ;Peking toward Moscow and Washing-
ton, and the level of effort the PRC; is willing to
place on economic and technological develop-
ments, part:iculfarly the trade policies which they
adopt to support indigenous programs in this
regard. PRC intentions toward Taiwan also
remain a priority intelligence target. (S)
The North Korean-South Korean situation has
the potential for a major crisis within the next
year. Intelligence reporting and analysis on the
military balance have been a priority focus of the
Intelligence Community throughout 1976. The
more useful analytical contributions included an
NIO Memorandum, Recent North Korean Mili-
tary Developments, January 1976; DIA's North
Korean vs. South Korean Military Capabilities
and Vulnerability: A Net Assessment, 15
February 1976; and USIB Memorandum D-
28.1/20, Indications and Warning;, Korea, 27
February 1976. Although intelligence gaps still
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exist on military capabilities and dispositions of
troops, these assessments served to highlight
North Korean military developments and the
difficulty of warning against a North Korean
surprise military attack. (S)
Our knowledge of North Korean internal
political developments and foreign policy inten-
tions is less than adequate and will probably
remain so, given the nature of the intelligence
collection environment. Of potential major inter-
est is the impact of possible US force posture
changes in South Korea-what this would mean
for the military balance, for foreign and domestic
Korean policy, for proliferation of nuclear weap-
ons in Northeast Asia, and for key nations in East
Asia. (S)
One of the more useful studies during 1976
addressing US policy for East Asia was National
Intelligence Analytical Memorandum (NIAM)
40-11-1-76, Regional Perceptions of Soviet Ac-
tivities in the Pacific. This addressed Soviet
interests, expansion, and initiatives in the East
Asia/Pacific area and the impact of these Soviet
activities on leading Pacific countries. Addition-
ally, Japanese economic issues and internal
developments demanded considerable attention
and were well covered in both current analyses
and clandestine reporting. (S)
Terrorism, Nuclear Proliferation, and Tech-
nology Transfer. Three areas-international ter-
rorism, nuclear proliferation, and technology
transfer-not only are important policy issues,
but also share characteristics which make the
intelligence effort against them difficult. Each
involves a large number of government depart-
ments and agencies with varying concerns and
policy responsibilities. The requirements for
comprehensive and sophisticated intelligence
products have arisen only in the relatively recent
past, and these requirements differ. Moreover, it
is sometimes difficult to evaluate the effective-
ness of the support which the Community
provides on a routine basis. (C)
Terrorism. The Community is actively en-
gaged in several aspects of this complex problem,
and there is general satisfaction with the products
and support. Direct support for national-level
users is effected through the Cabinet Committee
to Combat Terrorism (CCCT) and its 24-member
Working Group. Efforts currently are under way
to improve and streamline the CCCT and the
structures and procedures by which the Commu-
nity supports it. I recently appointed a new
special assistant on international terrorism for
liaison with the Department of State and the
CCCT. (S)
Success is difficult to recognize where preven-
tion of actions inimical to US citizens and
interests is the primary concern. Warning regard-
ing possible or potential threats is the daily
responsibility of the Intelligence Community,
and the fact that actual incidents are few is silent
credit to this support. For example, a carefully
coordinated program was implemented during
1976 to prevent terrorist operations against
participants in the Olympic Games. As part of
this program, Treasury published a special issue
of its unclassified Terrorist Intelligence Bulletin
which was extremely useful during the incident-
free games in Canada. (S)
Nuclear Proliferation. The Intelligence Com-
munity's efforts to provide nuclear proliferation
intelligence have increased sharply over the past
few years. Support is now given to arms control
negotiations, nuclear technology and material
licensing deliberations, and sensitive diplomatic
negotiations among the US, other nuclear sup-
pliers, and third countries desiring nuclear
technology. For example, State, ERDA, and the
NSC have used the Community's intelligence
products recently in negotiations with India,
Brazil, Pakistan, Taiwan, South Korea, France
and West Germany. Nuclear technology suppli-
ers' conferences are backstopped with Intelli-
gence Community support. (S)
The Community perceives that, as the US
formulates a strong national policy regarding
nuclear proliferation, there will be an increased
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demand for high quality, "issue-driven" intelli-
gence products. The Community is now involved
in reorganizing its efforts and setting up informa-
tion exchange forums to get a clearer definition
of user requirements with respect to major policy
issues. To date, these actions include a reorgani-
zation within CIA to facilitate multi-disciplinary
analyses to deal more effectively with (among
others) the intelligence needs of the policy
makers concerned with aspects of nuclear prolif-
eration, The NFIB has recently agreed to the
establishment of a focal point at the DCI level to
help coordinate Community actions, Several
steps are under way that should substantially
improve support to policy concerns over the next
several months. (S)
Technology Transfer. The Intelligence Com-
munity provides a wide range of support to the
Departments of Commerce, State, and Treasury,
the major agencies charged with control of the
export of US technology. Lengthy, formal studies
have been produced on the economic impact on
the USSR of technology transfer and on upgrad-
ing of Soviet military capabilities by the transfer
of specific technologies. Also provided is back-
ground information on the consignees of US
technologies, the stated and likely uses of the
technology, and the USSR's technology base in
those areas where sales are being negotiated. (S)
Technology transfer to the USSR is being given
increased attention by all intelligence organiza-
tions concerned. The major difficulties for the
Community to tackle in a comprehensive inte-
grated analysis of the technology transfer issue
include the dearth of intelligence information on
how technology is absorbed into the Soviet
economy, the need for a comprehensive re-
examination of the Soviet economy itself, and the
inadequate data base to implement such a
review. (S)
The National Intelligence Officer for Econom-
ics has taken the complex issues of technology
transfer as a major area of his responsibilities, and
steps are currently being taken to overcome the
above difficulties. Several case studies of individ-
ual industries are now under way to shed further
light regarding the impact of technology transfer
on Soviet production of machine tools, com-
puters,. and other equipment and on Soviet
military capabilities. In addition, a major inter-
agency reexamination of the Soviet economy is
planned. It is expected that these efforts will
provide a framework for an even more compre-
hensive study of technology transfer issues in
1977-1978. (S)
Economics. The Community has recognized
and responded to the increasing intelligence
needs of US foreign economic policy makers.
There is generally a good working relationship
between the producers and consumers of eco-
nomic intelligence, and policy makers increas-
ingly are alerting intelligence to the policy and
negotiating issues requiring intelligence support.
The results have been noteworthy and the
Community received excellent marks for its
performance in this regard over the past year. (S)
In November I attended a special meeting of
the Economic Policy Board to discuss intelligence
support. The Board members confirmed that they
were being well supported by the Intelligence
Community. Other intelligence officials and I
joined with Board members in assessing the
broad range of policy needs and the adequacy of
the intelligence response. It was agreed that the
interface between users and producers of eco-
nomic intelligence has vastly improved in the
past two or three years and that the economic
intelligence being provided is relevant and
timely. (S)
Among major foreign economic policy issues to
which intelligence recently has made significant
contributions are the impact of rising petroleum
prices on both industrial countries and non-oil-
producing less developed countries; the differ-
ences between industrial and less developed
countries on commodity price supports; the
economic problems of the United Kingdom and
Italy; the effects of changes in the structure of
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exchange rates; and the implications of rapidly
rising debt burdens for many less developed
countries and certain industrial countries. In this
regard, assessments of the credit-worthiness of the
USSR and Eastern European countries have been
particularly useful. Intelligence assessments of
Soviet grain production, OPEC country invest-
ment, import and oil price plans, and Mexican
policies under its new President have also been
helpful to policy makers.* Two periodic CIA
publications widely used within the govern-
* Typical economic reporting during 1976, all by CIA's Office of
Economic Research, included: The World Copper Market: Recent
Trends and Prospects, The Next OPEC Price Rise: Economic
Impact and Implications, OPEC Countries: Current Account
Trends, 1975-76, and Non-OPEC LDCs: Coping with Balance-of-
Payments Problems. (S)
ment's economic community are the Economic
Intelligence Weekly and the biweekly Interna-
tional Oil Developments. Topics in both these
publications are well-received because of their
relationship to the daily policy issues faced by
decision makers. (S)
CIA, as well as the Bureau of Intelligence and
Research in State on a more limited basis,
continues to respond to a great many specific
requests for current economic intelligence in
connection with the preparation of briefing and
background papers for top officials. Examples
include support for the two economic summit
meetings (in France and Puerto Rico) and for
trips during 1976 by the Secretary of the Treasury
to the Middle East, Latin America and Eastern
Europe. (C)
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FY 1977 AND BEYOND: PROBLEMS AND PROSPECTS
A. Intelligence Management
Organization for Better Management. Al-
though I am not convinced that major organiza-
tional changes are needed, I believe we can and
must continue to analyze our management
structure in the attempt to achieve better
management. As the PFIAB and others have
pointed out, better management does not mean
increased management layering. Our primary
problems in this area appear to be those of
affixing clear-cut authority and responsibility. As
we look ahead to this year and beyond, it is
appropriate to address not only the progress we
have made, but the prospects for continuing it in
the future, and the problems which must be
resolved if we are to do so. (U)
As leader of the Intelligence Community, the
DCI has a number of key responsibilities. These
include his role as the primary advisor to the
President on foreign intelligence, serving as the
executive head of the CIA and of the Intelligence
Community Staff, acting as principal spokesman
to the Congress for the Community, protecting
intelligence sources and methods, and ensuring
preparation and submission of a national intelli-
gence budget each year. (U)
I want to reemphasize the necessity for the
DCI to have adequate security safeguards avail-
able if the Intelligence Community is to success-
fully accomplish its many tasks. Although the
National Security Act of 1947 assigned the DCI
responsibility for protecting intelligence sources
and methods from unauthorized disclosure, it
provided no specific sanctions to enable him to
carry out this responsibility. In the absence of
supplementary legislation, such as HR 12006
which was introduced in the second session of the
94th Congress, but not enacted, and which
provided for criminal and civil sanctions against
persons who willfully and wrongfully reveal
sensitive intelligence information, our ability to
maintain an effective worldwide foreign intelli-
gence program is seriously jeopardized. I also
support the early passage of legislation providing
for obtaining court-ordered warrants for the
conduct of electronic surveillance, where appro-
priate, to aid in investigations of domestic
security cases. Such legislation would be fully
consistent with the provisions of Executive Order
11905 concerning intelligence activities in terms
of protecting the rights of our citizens. The
Intelligence Community continues to explore the
best way to implement a system requiring all
Executive Branch personnel to execute security
agreements as a precondition of granting them
access to classified intelligence information. We
hope to have such a system in operation in the
very near future. (U)
DCI Authority and Responsibility. A year ago
my predecessor reported that both he and his two
predecessors had tried to reconcile the responsi-
bility assigned them (in the Presidential directive
of 5 November 1971*) for recommending the
appropriate allocation of resources for all intelli-
gence programs and activities with the statutory
responsibility of the Secretary of Defense and the
military departments for sizing, organizing and
equipping military forces. He observed that they
had found it impracticable for the DCI to make
resource recommendations on force support intel-
ligence assets or to judge their efficiency or
effectiveness, and stated the need for a more
definitive statement of the division of intelligence
resource responsibilities between the Director of
* Presidential Memorandum, Organization and Management of
the U.S. Foreign Intelligence Community. (U)
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Central Intelligence and the Secretary of De-
fense. (C)
Under the Executive Order, we have been able
to develop arrangements for joint review in the
CFI of those portions of the NFIP included in the
proposed Department of Defense budget. I
described earlier the detailed consideration of
resource issues undertaken by the CFI. Through
this process of identification and negotiation of
issues, I have been able to meet my responsibil-
ities for the overall NFIP budget. (U)
Intra-Governmental Relationships. The DCI
is responsible for the overall direction and
coordination of a variety of intelligence organiza-
tions located in a number of executive depart-
ments. To fulfill this responsibility, and his role
in the CFI, it is essential that he be provided with
explicit authority to communicate directly with
the program managers throughout the National
Foreign Intelligence Program on matters of
budget and resource allocation. (U)
Management of Scarce Resources. Our most
critical challenge is the effective and efficient
management of scarce resources. The history of
United States intelligence is one of very gradual
centralization of policy planning. Lagging be-
hind that has been the effort to centralize
program and budget guidance. During the course
of the last year, relying upon the authority and
tasking provided in Executive Order 11905, we
have made progress in centrally reviewing and
rationalizing a consolidated national foreign
intelligence program budget. (C)
There is increasing need to introduce more
specific policy and planning guidance into the
planning, programming and budgeting process in
a meaningful way before the fact, so that the
programs subsequently developed can benefit
from useful and coherent guidance reflecting a
Community perspective. (U)
Our efforts to realize this capability are
centered in the Intelligence Community Plan-
ning System, which consists of short-range, mid-
range, and long-range elements. The short-range
element provides both substantive and resource
management guidance for operators concerned
with the employment of existing assets. The mid-
range element provides similar guidance for
planning and programming purposes. The long-
range element looks beyond the program period
(five years) out to twenty years in the future to
identify likely environmental factors impacting
on the entire intelligence process. The planning
system, which provides identification of require-
ments and priorities, and the anticipated strategy
for dealing with the demands of the future, is
designed to be compatible with the government
planning-programming-budgeting system, and
hence of direct utility to the CFI in fulfilling its
responsibilities for provision of timely resource
guidance to program managers. (C)
A particularly important aspect of developing
better management and responsiveness to con-
sumer needs, as well as resources application,
centers on the Community's ability to plan more
aggressively for the longer term (five to twenty
years into the future). In terms of resource
planning and development, we need to know, for
example, whether or not certain of our operating
systems and technologies are likely to be appro-
priate to situations in the intelligence world five
to twenty years hence, and what the mix of
intelligence systems should be. We cannot begin
multiyear investment in highly sophisticated
technologies that cannot be made operational in
fewer than six to eight years without a convincing
concept of their probable utility in the long term.
(S)
A pilot project has been undertaken within the
Intelligence Community Staff to explore possi-
bilities in this area. While the initial effort is
based on a task force approach, I expect that
momentum will build toward a more ambitious
effort in the future. (C)
User-Producer Partnership. We recognize the
need for a closer cooperative partnership between
users and producers of intelligence. This is a
critical consideration in developing better criteria
for the CFI to apply in determining resource
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allocations. Spearheading this effort, my Na-
tional Intelligence officers, along with the
Intelligence Community Staff, are exploiting
opportunities to solicit and anticipate the most
important needs for intelligence input at the
highest echelons of United States foreign policy
formulation, and also to engender a more
responsive user evaluation of the quality and
utility of intelligence products. The widespread
interaction between intelligence producers and
users that took place during our first semiannual
review of intelligence, which was carried out for
the NSC in accordance with Executive Order
11905, was in itself very useful in enhancing the
partnership. Such efforts also provide important
criteria for use by the National Foreign Intelli-
gence Board in its continuing deliberations on
the kinds and amounts of intelligence that must
be collected and produced across the board in the
national effort. (C)
We also find, in the user-producer dialogues in
which we engage, increasing requests for com-
parative evaluations, rather than the nearly
exclusive focus on foreign target data which has
traditionally characterized intelligence reporting.
The distinction between intelligence and what
we now know as net assessment has diminished.
My strong feeling is that the role of intelligence is
to provide input to such assessments, not to
produce them. Intelligence can help by supply-
ing needed data on foreign capabilities, assisting
in developing assumptions about them in the
absence of hard data, and generally playing a
supporting role, (C)
National/Tactical Intelligence Interface.
Considerable attention has recently been devoted
to problems related to the conflicting demands of
national and tactical needs for intelligence
derived from national systems, particularly over-
head reconnaissance systems. In reality the
y,
mo
problem is three-tiered, involving the needs of
national, departmental and field consumers.
Each element has needs and missions which are
unique, and which differ in important respects
from those of the others. The nature of some of
these differing needs is such that certain collec-
tion systems cannot be optimized for one
consumer without serious degradation of their
utility to others. Tradeoffs are required, and must
be made from a national perspective. (S)
The current mission of most national intelli-
gence collection resources is the timely and
continuing support of national-level decision
makers involved in policy formulation, interna-
tional negotiations, and crisis control. These
systems are designed to operate in an essentially
benign environment. If we were to redesign our
national intelligence capabilities to operate effec-
tively in both benign and conflict environments,
we would have to make a major investment in
system survivability and the tactical communica-
tion and dissemination links and subsystems. We
would also have to consider the impacts of such a
step in terms of effects on aspects of our foreign
policy (such as the Open Skies Agreement, SALT
verification, etc.) and on the overall intelligence
budget, including national, departmental, and
intelligence-related* programs. (S)
In effect, we are faced with the dilemma of
trading off our capabilities to support war
avoidance and crisis control and our capabilities
to provide tactical intelligence from hardened
national systems at such time as our military
forces may be committed. In reality, the viability
of national intelligence systems as wartime assets
remains to be proven. It needs to be tested in
more joint exercises and war games. Such
evaluations would demonstrate the relative capa-
bilities of national and tactical intelligence assets
for support of combat operations, as well as of
the National Command Authority. We must
ascertain what can be accomplished effectively
with the systems now in being, both national and
tactical, before we venture into a massive
redesign which would be expensive in terms of
time and capabilities. (S)
ne
* Intelligence-related programs are those programs which, while
not part of the National Foreign Intelligence Program, are closely
related to it; included are such things as tactical warning, airborne
reconnaissance, ocean surveillance, and certain training. (C)
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The recent recommendation for a, national--
level study to provide the basis for a Presidential
decision is the first step. Planning for more joint
exercises involving national systems is underway
and should establish what we can effectively do
now. Simultaneously, the capability of tactical
systems to provide information to the National
Command Authority will be tested. On the basis
of what we learn from these initiatives, we can
make informed judgments as to how to proceed
in resolving the interface problem. (S)
As intelligence-related assets become more
expensive, complex, and interrelated with na-
tional intelligence assets, it becomes even more
crucial that central control be exercised to
prevent overlap and unnecessary duplication.
The Congress has stressed this point and E.O.
11905 has emphasized the same theme. There
must be the necessary concept, doctrine, policy,
and strategy to assure that we are moving in the
right direction. (U)
Evaluating Intelligence Performance. Cer-
tainly we are faced with the necessity to do better
in evaluating how well the Intelligence Commu-
nity does its job, especially in terms of specific
identifiable and measurable goals and objectives.
In an enterprise like intelligence, where the tasks
are both difficult and complicated, the assess-
ments are likely to be keyed to identifying
shortfalls rather than complete successes. Follow-
ing such assessments, decisions must be made on
whether to continue programs which have not
succeeded, to provide them with more assets
when those assets have in the main to be drawn
from other programs rather than from new
resources, or to terminate them, (U)
Effecting Meaningful Change. Modification
of the planning and programming process of so
complex and diverse an entity as the Intelligence
Community is of course far more than merely
issuing directives or establishing mechanisms.
There is a process that takes place over time of
modifying attitudes and expectations so that
those responsible for formulating individual
programs and program elements come to antici-
pate the Community-level planning guidance,
and take it into account in a meaningful way in
their own work. There is developing confidence
among members of the Community that the
central coordinating process is based on a viable
plan, that it will produce useful and coherent
guidance in time to provide for deliberate
reaction, that the forum for discussion and
reclama ;provides real rather than pro forma
opportunities for interaction, and that good will
and a spirit of cooperation characterize the
process. (U)
These may be thought by some to be
unrealistic and idealistic aspirations for a bu-
reaucracy, Perhaps they are in the absolute, Yet
they are, and must be, the goals we establish for
ourselves in so critical an endeavor as the
development of adequate intelligence in a
difficult and dangerous world. I am personally
convinced that the events of recent months have
not only strengthened and energized our over-
sight and management functions, but have also
given elements of the Intelligence Community an
increased sense of their own interdependence and
the necessity for working cooperatively if we are
to get the job done within the assets available.
The development of what we might call a
Community perspective on the! part of its
constituent members is an evolutionary process,
but it is one that is underway and will, I believe,
pay important dividends in the future, (U)
B. The Changing Intelligence Environment
During 1976 events of significance to the
Intelligence Community ranged in scope and
kind from issuance of the President's Executive
Order 11905 in February through exploitation of
a Soviet MIG-25 Foxbat interceptor aircraft in
early autumn. The problems with which we
sought to deal were equally diverse, including
responding to Congressional and Executive
Branch oversight, devising organizational and
procedural means for fulfilling the responsibilities
assigned the Director of Central Intelligence in
the Executive Order, and planning and providing
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for technical and human assets to maintain our
capacity to get the job done in the face of a
rapidly changing world environment. (U)
It is becoming commonplace to cite change as
the distinguishing characteristic of our age, and
not only the amount of change, but the
continuing acceleration of the pace of that
change. More nations, more events, more actors,
more interdependence, more communica-
tions-all add up to a virtual blizzard of action
and information. Not only must the intelligence
professional, in common with many others, seek
to obtain information of important events, to
separate out that which is significant from the
much larger mass of that which is not, and to
place accurate information in an historical and
analytical context which will make it meaningful
to the policy maker he serves; he must also do
this rapidly enough, and communicate it to
intelligence consumers clearly and quickly
enough, so that they have time to make use of
the product in ways that make a difference. The
accelerating pace of change compounds this
challenge. And in the midst of change intelli-
gence must seek to identify not only meaningful
change, but also significant continuities, and the
implications of both for the future. (U)
Two things stand out most clearly in assessing
the changing intelligence environment:
- There are more things about which we need
intelligence data.
- There is the prospect that intelligence may
become harder to obtain. (U)
Our intelligence efforts have historically been
heavily oriented toward the military aspects of
world events, and remain so today. But while
military considerations remain vitally important,
our need for economic and political intelligence,
particularly as it impacts on our national
security, is increasing. This is a central feature of
the contemporary environment: the emergence of
new or enlarged intelligence requirements which
are in addition to, rather than instead of, more
traditional categories of intelligence. Earlier I
discussed some of the accomplishments of the
recent past. In thinking about the challenges
ahead, we have observed:
- United States initiatives in seeking to bring
peace to such areas as the Middle East rely
on detailed knowledge of the interests,
negotiating options, domestic factions, po-
litical stability and good faith of the parties
involved. (C)
- International negotiations, including those
dealing with arms control, monetary policy,
commodities and other economic issues, and
use of the oceans, generate requirements to
support United States delegations with
analyses of foreign developments, bio-
graphic sketches of foreign participants, and
political and economic estimates. (C)
- Dependence of the developed world on oil
supplies makes detailed knowledge of the
sources, availability and costs of oil ex-
tremely important. (C)
- Nuclear proliferation is a political as well as
a military problem, and one which involves
extremely demanding requirements for in-
telligence. (U)
- Decisions regarding such problems as pro-
posed transfers of technology require highly
integrated political-military-economic-sci-
entific intelligence assessments. (C)
- In southern Africa, support for U.S. peace
initiatives has meant requirements for what
amounts to a whole new realm of political
intelligence. (C)
Threats differing from the traditional military
type continue to concern us, and to require
unique kinds of intelligence which overlap
boundaries between economic, political, military
and scientific fields. Terrorism is one such threat.
The information we seek ranges from the
identity, organization, location, targets, methods,
and sources of support of terrorist groups to
attitudes of other nations toward specific terrorist
organizations and toward the phenomenon in
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general, and the resultant implications for pos-
sible international cooperation in dealing with
the problem. Clearly, it is a problem of enormous
complexity, made all the more so by the diverse
and sometimes ambiguous sources of the threat,
and one which places great demands on our
intelligence capabilities. (S)
Other realms of current or potential signifi-
cance also present interdisciplinary intelligence
challenges, Conventional arms transfers and the
worldwide traffic in illicit drugs are among them.
So is the whole phenomenon of the use of
security assistance as a means of projecting
power, which means we need to detect and
understand the implications of the military and
economic assistance programs, grants and sales,
training and advisory agreements, base rights and
exchange programs which can be used to extend
the reach and influence of adversary nations. (S)
Predicting the future is an inherently risky task.
But if there is one thing about the future that
seems clear to me from my present perspective, it
is that economic and political intelligence have
become increasingly important, and that this
trend will continue sharply upward in the years
ahead. In an environment of constrained re-
sources this would require difficult reallocations
of assets. (U)
What will make such decisions particularly
agonizing is that the proliferation of new and
expanding, intelligence requirements has not been
accompanied by diminished needs for traditional
military intelligence. Quite the opposite is in fact
the case: the requirements for military intelli-
gence are themselves becoming more diverse and
more demanding. In part this is due to simple
expansion of the activities to be monitored: more
signals, more telemetry, more deployments, more
testing. (C)
The management of intelligence, like that of
other governmental functions, involves the appli-
cation of limited resources to critical needs while
trying to minimize the risk resulting from
shortfalls. Thus the management problem is one
of constant reassessment of priorities. What is
unique about intelligence is that one can never
be sure of what is missed when collection and
surveillance opportunities are passed up, and
thus the risks in doing so can seldom be
rigorously evaluated, (U)
Collection difficulties result from greater num-
bers of targets and rapidly unfolding events.
Some of these difficulties are due to the nature of
the targets themselves and constraints on our
access to them, One key aspect of the latter
difficulty is the diminishing availability of
intelligence bases overseas. We are at times hard
pressed to find alternatives to formerly produc-
tive sites overseas, Relocation of equipment is
expensive and time-consuming, even when an
alternate site permitting access to the same
targets can be obtained. In other cases, we must
resort to offshore or overhead means of collection,
or to human intelligence when it can serve as a
partial substitute. (S)
Meanwhile, intelligence targets themselves are
in many cases becoming more difficult to collect
against. Advances in the sophistication of foreign
nations, reflected especially in their communica-
tions technology, make us work harder and spend
more just to acquire the same information we
obtained more easily and cheaply in the past.
Some emerging technologies are inherently more
difficult to detect and to assess. Non-military
intelligence targets of increasing interest are by
their nature more difficult to observe and to
evaluate than many military factors. And the
increasing :importance of intelligence targets in
the developing world presents an array that is
often more changeable and challenging to
monitor than more stable environments else-
where. (S)
C. Collection
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H. Oversight
Role of Oversight in Reestablishing Commu-
nity Standing. As indicated earlier in this report,
I am particularly gratified by the degree to which
we have been able, during the past year, to help
reestablish the standing of the Intelligence
Community as a dedicated and effective arm of
the government. This success has been due in
large measure to the implementation of ex-
tremely effective oversight at several levels: in the
Congress, within the Executive Branch, and
within the Intelligence Community itself. (U)
The Congressional Contribution. The Con-
gressional committees which held extended hear-
ings into the organization and practices of
United States intelligence agencies made clear
the necessity for improved oversight mechanisms.
But they also provided a very useful and active
component of the improved oversight capacity
which has since developed. The adversary rela-
tionship which existed between the Intelligence
Community and the Congress during the most
sensationalized parts of the hearings has given
way almost entirely to a more constructive type
of oversight. The Senate Select Committee on
Intelligence, as well as Committees in both
houses with longstanding interest in and responsi-
bility for intelligence matters, has demonstrated a
creative concern for both the management and
substance of our intelligence effort. The useful-
ness of this contribution has been reinforced by
the assembly of substantial staff support for these
committees, and by a continuous and open
exchange of views between members of the
Congressional Committees and their staffs on the
one hand and members of the various intelli-
gence agencies at many levels on the other.
Nevertheless, we are reporting to too many
committees. I believe both the efficiency and the
effectiveness of Congressional oversight of intelli-
gence activities would be enhanced by consolida-
tion of responsibility in a single committee, or at
most in one committee in each House, a situation
I hope we can look forward to in the future. (U)
Executive Branch Oversight Improvement.
Several mechanisms have contributed to im-
provement of oversight activities within the
Executive Branch. Perhaps most prominent,
because of the sensitivity and potential for abuse
of covert action, is the Operations Advisory
Group. Not only does it consider and develop a
policy recommendation for the President in
advance of his decision on every proposed covert
action operation, but it also periodically reviews
those operations it has previously approved. The
composition of the Operations Advisory Group
ensures that no staff-generated proposals will be
forwarded for decision without consideration by
the President's principal foreign policy advisors,
and the provision for periodic review of ongoing
operations helps to ascertain that only those
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activities with enduring viability and justifica-
tion are continued. (C)
The Intelligence Oversight Board, composed of
three persons from outside the government and
appointed by the President, provides a mech-
anism from outside the Intelligence Community
for monitoring possible illegalities or impropri-
eties. The Inspectors General ;and General Coun-
sels of intelligence agencies tire tasked to report
suspected questionable activities to the Board.,
and without regard to interference by intervening
levels of authority. The Board in turn is charged
with periodically inquiring into the practices of
the various agencies to discover and report
activities of questionable legality or propriety.
(U)
The National Security Council is now conduct-
ing semiannual reviews of intelligence policies to
determine, among other things, the continued
appropriateness of special activities in support of
national foreign policy objectives. (U)
Oversight within the Intelligence Communi-
ty. The Community itself has developed im-
proved and more pervasive oversight mech-
anisms. These include General Counsel and
Inspector General activities which interact with
the Intelligence Oversight Board. (U)
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A FINAL WORD
Responsibilities. Our responsibilities as a
Community are three-fold:
- To serve the intelligence consumer.
- To adapt to the changing international
intelligence environment.
- To manage constrained resources effec-
tively. (U)
Adequacy of Resources. I believe the Nation-
al Foreign Intelligence Program budget proposed
for FY 1978 is adequate to enable us to meet
these responsibilities. The provisions for out-year
expenditures are such that we can make an
orderly transition and preparation demanded by
the changing environment. (U)
Understanding Risk. In this presentation I
have not relied upon expectation of major
additional resources for intelligence activities
during the foreseeable future. The proposed
budget is not without risks, however, and I hope
we have made clear both the extent of those risks
and the degree of uncertainty involved in
estimating them. The foregoing has been an
attempt to articulate the means by which we
could operate effectively at least risk. (U)
It is imperative that we find better ways to
understand what that risk is, and to articulate the
risk effectively to those who have the responsi-
bility of providing resources. Only in that way
can we have confidence that the assignment of
resources to the intelligence mission will be
adequate to the circumstances, (U)
Intelligence and America's Leadership Role.
The United States no longer enjoys the military
and economic dominance of global affairs which
it exercised throughout much of the post-World
War lI period. It is therefore much less in a
position to resort to force should other means of
protecting its interests fail, and much more
dependent upon negotiation, cooperation and
persuasion to attain its ends. The intelligence
requirements of this position are demanding:
prior knowledge of the objectives, alliances,
schemes and intentions of foreign powers be-
comes invaluable. (S)
It is clear that the United States intends to
continue to play a major role in world affairs, a
role that is creative in the sense of seeking to take
the lead in resolution of continuing sources of
conflict such as exist in the Middle East and
Southern Africa, and in such long-term global
problems as modernization in the underdevel-
oped nations and adequacy of food supplies and
their distribution. This is a role that Americans
can be proud of and unite to support. It is also a
role that is heavily dependent for success on
adequate intelligence, much of it intelligence of
a new kind. Economic and political intelligence
are becoming more crucial every day, not only
for use by policy makers concerned with United
States security, but also ,for guiding and inform-
ing United States actions in seeking to shape a
better world. (U)
A lesson of the recent past has been that
political and economic developments, even in
small nations which have little capacity to
militarily affect the security of the United States,
can impact greatly on our well-being and that of
our allies, considering the interdependent and
vulnerable contemporary world in which we live.
The implication for intelligence is that there is
very little that goes on in the world that is not of
interest to United States policy makers, and the
demands for increasing amounts of intelligence
have been matched only by those for increasing
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sophistication and depth of the finished product,
and for an expanding range of clients. And it is
especially important to recognize that war
avoidance, peacekeeping, arms control, and
creative leadership in international economics
and politics, as well as war fighting or war
preparedness, require the best intelligence sup-
port we can provide. (U)
In the military realm, we have tended to focus
upon the quantitative aspects of forces and
weapons, and we have done it well. But it is now
clear that in the future we will need to know
much more about the combinations, contingency
plans, capabilities for projection, and contem-
plated uses of military forces in being and under
development by foreign powers. We are still in
the infancy of learning to appreciate and assess
qualitative factors, the far more amorphous and
changeable qualities, such as leadership, morale,
discipline and training, that are critical attributes
of military forces. In other realms, such as
economic and political intelligence, qualitative
factors play the dominant role, and here it is even
more critical that we learn more about how to
identify, evaluate, and utilize our knowledge of
such aspects of foreign capabilities. (S)
These are not problems that will be completely
resolved in the short term; indeed, in a literal
sense they are not susceptible to complete
solution. What we have a right to expect is
continuing progress toward closer approximation
of solutions, and reasonable anticipation of
future problems in time to plan for dealing with
them. Our commitment to the American people
is to give our best effort in search of that progress,
and to do so with scrupulous regard for the spirit
and the letter of the statutes and regulations
which govern intelligence activities of the United
States. (U)
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