SPEAKER:
CHAIRMAN

LOCATION: WASHINGTON, D.C.

WITNESSES:

PAUL WOLFOWITZ, DEPUTY SECRETARY OF DEFENSE
RICHARD ARMITAGE, DEPUTY SECRETARY OF STATE

BODY:

HOUSE AND SENATE INTELLIGENCE COMMITTEES HOLD JOINT HEARING ON
IRAQ (MORNING SESSION)

SEPTEMBER 19, 2002

SPEAKERS:
HOUSE SELECT COMMITTEE ON INTELLIGENCE
U.S. REPRESENTATIVE PORTER J. GOSS (R-FL)
CHAIRMAN
U.S. REPRESENTATIVE DOUG BEREUTER (R-NE)
U.S. REPRESENTATIVE MICHAEL N. CASTLE (R-DE)
U.S. REPRESENTATIVE SHERWOOD L. BOEHLERT (R-NY)
U.S. REPRESENTATIVE JIM GIBBONS (R-NV)
U.S. REPRESENTATIVE RAY LAHOOD (R-IL)
U.S. REPRESENTATIVE RANDY "DUKE" CUNNINGHAM (R-CA)
U.S. REPRESENTATIVE PETER HOEKSTRA (R-MI)
U.S. REPRESENTATIVE RICHARD BURR (R-NC)
U.S. REPRESENTATIVE SAXBY CHAMBLISS (R-GA)
U.S. REPRESENTATIVE TERRY EVERETT (R-AL)

U.S. REPRESENTATIVE NANCY PELOSI (D-CA)
RANKING MEMBER
U.S. REPRESENTATIVE SANFORD BISHOP JR. (D-GA)
U.S. REPRESENTATIVE JANE HARMAN (D-CA)
U.S. REPRESENTATIVE GARY CONDIT (D-CA)
U.S. REPRESENTATIVE TIM ROEMER (D-IN)
U.S. REPRESENTATIVE SILVESTRE REYES (D-TX)
U.S. REPRESENTATIVE LEONARD BOSWELL (D-IA)
U.S. REPRESENTATIVE COLLIN PETERSON (D-MN)
U.S. REPRESENTATIVE BUD CRAMER (D-AL)

SENATE SELECT COMMITTEE ON INTELLIGENCE
U.S. SENATOR BOB GRAHAM (D-FL)
CHAIRMAN
U.S. SENATOR CARL LEVIN (D-MI)
U.S. SENATOR JOHN D. ROCKEFELLER IV (D-WV)
U.S. SENATOR DIANE FEINSTEIN (D-CA)
U.S. SENATOR RON WYDEN (D-OR)
U.S. SENATOR RICHARD DURBIN (D-IL)
U.S. SENATOR EVAN BAYH (D-IN)
U.S. SENATOR JOHN EDWARDS (D-NC)
U.S. SENATOR BARBARA MIKULSKI (D-MD)

U.S. SENATOR RICHARD C. SHELBY (R-AL)
RANKING MEMBER
U.S. SENATOR JON KYL (R-AZ)
U.S. SENATOR JAMES M. INHOFE (R-OK)
U.S. SENATOR ORRIN G. HATCH (R-UT)
U.S. SENATOR PAT ROBERTS (R-KS)
U.S. SENATOR MIKE DEWINE (R-OH)
U.S. SENATOR FRED THOMPSON (R-TN)
U.S. SENATOR RICHARD LUGAR (R-IN)

*

GRAHAM: Call the hearing to order.

Welcome to this second public hearing by the joint inquiry committee into the intelligence community's performance before, during and since the attacks of September the 11th. At the onset, I would like to make an announcement about tomorrow. We will have a hearing, and it will probably include a 10:00 morning and a 2 or 2:30 afternoon session. The subject will be the Malaysia hijackers.

We will have a staff report, which is available to be read in both the Hart offices of the Senate Committee and in the Capitol offices of the House committee. It is in the process of being declassified. As of 10:00, that process had not been completed, but the classified version is available now and has been for the past two weeks. The declassified version hopefully will be available shortly.

We will have three witnesses representing the CIA and the FBI. Each of them had a particular role in the events that surround the Malaysia hijacking aspect of the September 11 tragedy. We will have designated questioners for that hearing. The designated Senate Democratic questioner will be Senator Levin. At this time, I do not know who the other three questioners will be.

Are there any questions relative to tomorrow's schedule?

I again would like to express our joint appreciation for the excellent presentations that were made at yesterday's hearings by representatives of the families of the victims of September 11. Their powerful testimony and probing questions underscored the reasons for this inquiry: to assure that our government is better prepared to fight the threat of terrorism and to avoid a repetition of last year's tragedies at the World Trade Center, the Pentagon and that field in Pennsylvania.

We remain at risk for the very same terrorist organizations. It is our responsibility, as well as other important parts of the federal, state and local governments, to reduce their threat to our homeland.

I would also like to express my appreciation for the outstanding presentation made yesterday by our professional staff under the leadership of Ms. Eleanor Hill. Ms. Hill's compelling presentation of the early findings of our inquiry raised many questions, some of which will be posed to witnesses today.

Among those questions: How much of a priority has been given within our government to fighting terrorism, particularly since the end of the Cold War? Why was there not more attention to the possibility of a terrorist attack on the homeland of America? Did the United States government understand the gravity of the threat of terrorism? And did the intelligence community provide adequate warnings to policymakers? Based on these assessments, what reforms to the intelligence community would you recommend?

These are a few of the important questions of our inquiry. We will be addressing these at this and future hearings.

Today we will hear from two panels of distinguished witnesses who can describe for us how well the intelligence community has discharged its duty to support senior policymakers. As active consumers of intelligence, these individuals are uniquely qualified to help us determine whether senior policymakers have been well served by the intelligence community. In other words, are the senior leaders of our government receiving timely and relevant information, particularly regarding terrorism?

We will also seek to learn from these individuals about the overall direction of the United States government's effort against terrorism and the efforts that have been undertaken by the current and former administration to assure that the intelligence community has had the leadership and resources necessary to focus on this escalating threat.

Deputy Secretary of State Richard Armitage and Deputy Secretary of Defense Paul Wolfowitz will testify before the committee this morning, and we welcome them. This afternoon, the committee will hear from three former national security advisers to the president, General Brent Scowcroft, who was national security adviser in the Ford and first Bush administration; Dr. Anthony Lake, national security adviser during the first term of the Clinton administration; Mr. Sandy Berger, national security adviser in the second term of the Clinton administration.

Three lead questioners, one from the Senate and two from the House, will ask questions of the witnesses. Senator Rockefeller will take the lead from the Senate side; Representatives Boswell and Bereuter will take the lead from the House side. Other members will be recognized to ask questions in the order in which they have arrived at the hearing.

We must conclude the first panel by 1 p.m., so some questions may need to wait until this afternoon's session.

Before calling upon our witnesses, I would ask if there are any opening statements from our co-chair, Congressman Goss, or from Congresswoman Pelosi.

GOSS: No, thank you, Mr. Chairman.

PELOSI: No, thank you, Mr. Chairman.

GRAHAM: Fine. Thank you.

We are honored to have with us this morning Deputy Secretary of State Richard Armitage and Deputy Secretary of Defense Paul Wolfowitz.

Mr. Armitage was sworn in as deputy secretary of state on March 26, 2001. He previously served our country in senior positions in the Department of State and the Department of Defense and on the staff of our former colleague, Senator Bob Dole of Kansas. From 1993 until his return to government service last year, he headed his own business and public policy consulting firm.

Dr. Wolfowitz was sworn in on March 2, 2001, as the 28th deputy secretary of defense. This is his third tour of duty in the Pentagon. He also served in the State Department and was our nation's ambassador to Indonesia. For the seven years prior to his return to government service in 2001, Dr. Wolfowitz was dean of the Paul H. Nitze School of Advanced International Studies at the Johns Hopkins University.

Each of our committees has adopted a supplemental rule for this joint inquiry that all witnesses will be sworn. I would ask the witnesses to rise at this time.

Please raise your right hand. Do you solemnly swear that the testimony that you will give before the committee will be the truth, the whole truth and nothing but the truth, so help you God?

[Witnesses sworn in.]

GRAHAM: Mr. Armitage, welcome, and we look forward to your testimony.

ARMITAGE: Thank you, Mr. Chairman. If you'll allow me just to submit my testimony for the record. The purpose of this hearing is for you all to ask questions, the public wants questions asked. We're going to do our best to give you some answers. So I'd just like to make three points, if I might.

The first is one that is a question that is not asked in the letter that you kindly sent to Secretary Powell and Secretary Rumsfeld, and that is: Are we satisfied that we did everything we could do to prevent 9/11 from happening? It's implicit in these hearings, but the question I want to pose explicitly.

And the answer to that is: When you see 3,000 of your brothers and sisters die, when you witness the compelling testimony yesterday, people sitting in the audience holding pictures of their loved one, no one can say they were satisfied, no matter how splendidly any individual think they were doing their job and no matter that thus far I have not been able to ascertain a single point of failure in the system.

This is not to say that we just sat back for the nine months or so from the time the administration came in until this tragedy occurred. I'll speak obviously from the Department of State's point of view. As was noted yesterday by Ms. Hill, the strategic intelligence was not bad. In fact, it was good enough for us to take several steps.

ARMITAGE: We issued, between January and September, nine separate warnings -- five of them global -- because of the threat information we were receiving from the intelligence agencies. And in the summer, when George Tenet was around town, literally pounding on desks saying, "Something's happening and this is an unprecedented level of threat information." He didn't know where it was going to happen, but he knew it was coming. The strategic information was sufficient to allow us to go out to four specific posts with warning.

And let me be clear. This does not mean we tell our people in the embassy to button-up. We are required because of our no-dual- standard or policy to inform every American who's going to travel to x-country and every American that we have registered in that country by e-mail, by counselor, telephonic notification, by bulletins in hotels, et cetera. And I make this point because it behooves all travelers to make sure they do what we long requested that they do, that is check-in with the U.S. Embassy, whether you're a permanent resident, and most of them do, or whether you're a visitor.

Second, the administration, I think as you'll see through your questions, in their, I believe, first deputy's meeting after Paul and I were both confirmed, set off against Al Qaida. And as you'll see in the questionings today, we didn't just want to roll back. We realized that we were in a war. And you'll see that through the testimony.

Finally, it's something that I don't quite know how to verbalize, and it's this. I mentioned that we were able to warn some of our embassies. We did it again last week, as you saw, particularly in Southeast Asia because of specific and we believe credible information. And in some cases we buttoned them up, we closed them, we kept people at home. Did we save any lives? I don't know. I hope so. Last summer when we did the same thing, did we save any lives? I don't know. I hope so.

And the point I want to make is, for the Department of State, the metric to define success in many aspects of this war is in things that didn't happen, things that were avoided. So I guess another way of saying that is that, your administration and successive administrations have to be right every time, every single time. The terrorists only have to be right once.

Thank you, Mr. Chairman.

GRAHAM: Thank you, Mr. Secretary.

Secretary Wolfowitz?

WOLFOWITZ: Chairman Graham, Chairman Goss, members of this committee, you have long provided our country strong leadership and bipartisan support, especially now as we wage this war against terrorism. You demonstrate by example that America's security transcends party or politics.

I appreciate the opportunity to discuss with you today some Defense Department perspectives on the very important role of intelligence. I'll keep my comments brief as I believe my primary purpose today is to respond to your particular questions.

Let me first say that our thoughts and prayers are with the families of the victims of last September's attacks. Last week, on the anniversary of the Pentagon attack, I was privileged to take part in a ceremony honoring those men and women who labored so diligently and tirelessly over the last year to rebuild the Pentagon.

I was able on that occasion to meet with some of the family members of the victims. And while they, too, rejoiced in the outward healing that has taken place in the Pentagon since that day, it was all too evident that there's a hole in their hearts and many others, a hole that will never heal, and we grieve with them at their loss.

But seeing those family members whose lives were so fundamentally changed one year ago, served also to renew the commitment of each person who works in the Pentagon, military and civilian, to carry out our department's mission in this war that we wage to prevent future acts of terrorism.

Yesterday, before a different committee in the Congress, Secretary Rumsfeld addressed a dimension of this war against terrorism, referring to valuable intelligence information we already possess. He referred to President Bush, who said last week at the United Nations, and I quote, "We know that Saddam Hussein pursued weapons of mass murder, even when inspectors were in his country. Are we to assume that they stopped when he left?" The secretary concluded to the contrary, "Knowing what we know about Iraq's history, no conclusion is possible except that they have and are accelerating their WMD programs."

Secretary Rumsfeld went on to observe that there are many now who are asking hundreds of questions about what happened on September 11. Pouring over thousands of pages of documents and asking who knew what, when and why they didn't prevent that tragedy. And he concluded, and I quote, "I suspect that in retrospect most of those investigating September 11 would have supported preventative action to preempt that threat if it had been possible to see it coming."

He went on to make the point that if one were to compare the scraps of information that the government had before September 11 to the volumes that we have today about Iraq's pursuit of weapons of mass destruction, its history of aggression and hostility toward the United States and factor in our country's demonstrated vulnerability after September 11, the case that the president made should be clear.

And the secretary then added, "We cannot go back in time to stop the September 11 attack, but we can take actions now to prevent some future threats." And of course, that is precisely why we are here today to examine how we can all work together to prevent future threats to our nation.

From the beginning, President Bush emphasized that the United States would fight this war using every element of national power from diplomatic and law enforcement to intelligence and military elements. And certainly one of the most important elements of national power, one that we rely on every day now to help us in this war on terrorism is the U.S. intelligence community. As evidenced by this hearing, these committees are well aware of the fundamental importance of intelligence to our national security and have long been dedicated to providing bipartisan support for critical intelligence programs.

Four years ago I was privileged to serve on the Rumsfeld commission, which was charged with reporting to Congress on its assessment of the ballistic missile threat to the United States. One of the underlying focuses of our study was, of course, intelligence. When the commission released its report in 1998, its nine commissioners, which were an almost even mix of Democrats and Republicans holding a very wide range of views on policy, unanimously concluded that U.S. analyses, and I quote, "Practices and policies that depend on expectations of extended warning of deployment be reviewed and as appropriate revised to reflect the reality of an environment in which there may be little or no warning," end quote.

WOLFOWITZ: While, that conclusion came out of an assessment came out of an assessment geared toward the ballistic missile threat, it was understood by each commissioner that the conclusion was applicable to all intelligence-related issues.

This is an understanding, I think, shared by those to whom we've presented our findings, since members of Congress subsequently requested an intelligence side letter that elaborated on the commission's concerns and recommended some -- had some recommendations for change.

First, according to side letter, it was evident to all the commissioners that resources for intelligence have been cut too deeply and that the United States was entering a period in which the intelligence community was going to be seriously challenged to meet its foremost task: preventing surprise.

Second, one of the primary weapons in the endless struggle against surprise, is knowing what our enemies don't want us to know. U.S. intelligence capabilities that needed to succeed ,and this task letter concluded, were not as robust as they needed to be.

Third, when there is more ambiguity in the intelligence material, the system becomes more dependent on analytic resources to discern the potential for surprise. The letter highlighted that in methodological approach, analytic depth and presentation to users, the intelligence community was in a degraded situation.

Following those conclusions, Congress responded with a significant increase in funding for intelligence in the fiscal year 1999 budget. Despite the best efforts of this committee, however, those increases were not sustained in fiscal years 2000 or 2001. At the time of the attacks last September, the Defense Department was preparing a significant increase for intelligence in the fiscal year '03 budget. And after the attacks, this figure was doubled was present proposal.

Mr. Chairman, members of the committee, in my prepared statement, which I would encourage you to read, I have a very prescient passage from Thomas Schelling forward to Roberta Wohlstetter's superb book about Pearl Harbor, Warning in Surprise. And it underscores that some of the difficulties that we are analyzing today about our ability to discern intelligence, to find signals and noise, to deal with our -- projecting our own assumptions about rationality on enemies that have different assumptions about rationality.

Our problem would go back in practically every comparable incident in history and will probably be endemic to the intelligence process. We can work at reducing them, but we can't eliminate them.

One of the most telling lines from Schelling is that the danger, he said, is in the poverty of expectations, a routine obsession with a few dangers that may be familiar, rather than likely.

The expectation of the familiar must not guide us, as we move forward, rather the unfamiliar and the unlikely must be our new guides. With this in mind, let me discuss briefly some lessons from September 11th.

First, for the past 50 years, U.S. intelligence has concentrated on defeating external nation-state threats. It is now clear that we must apply the same level of effort to non-state actors and threats that emanate from within our borders.

Second, when people threaten openly to kill Americans, we should take them very seriously. That is true of Osama bin Laden and it is true of the regime in Baghdad. We must not assume that our enemies share our views about what is rational or irrational.

Third, we should not underestimate the skill of our enemies or the determination to conceal their activities and deceive us. They understand how we collect intelligence, how we are organized and how we analyze information. Just like them, our intelligence services must constantly adapt and innovate.

Thus, we have aggressive efforts underway to find new ways to discern most terrorist signals from the background noise of our society. But we must also recognize that enemies will deliberate create noise in our system, in order to conceal their real signals.

Fourth, we need to adapt our intelligence system to the information age. Old stove pipes are being broken down and must be broken down. The culture of compartmentation (ph) is be reconsidered and must be reconsidered. In all that we do, we must emphasize speed of exchange and networking to push information out to people who need it, when they need it, wherever they are.

Fifth, while we must always work to improve our intelligence, we should never allow ourselves to believe that we can rely exclusively upon intelligence for our security. We should expect surprise and have capabilities that do not depend on perfect to intelligence to defend the nation.

As Secretary Rumsfeld observed yesterday, we have had numerous gaps of two, four, six or eight years between the time a country is concerned (ph) first developed the weapons of mass destruction capability and the time we finally learned about it.

Efforts are underway that will ultimately result in the transformation of our intelligence posture. Our current sources and methods depreciated badly over the last decade, and sorely needed investments were postponed. Our budget have been substantially increase, but we are playing catch-up. There is no question that we need to recapitalize and introduce new sources of intelligence and novel methods of collecting and analyzing information.

But our intelligence source's methods have also been devaluated by a pattern of leaks from the executive and legislative branch of the government and through a number of well-known espionage cases.

Leaks and espionage have provided our adversaries, over time, with an unfortunately good picture of what we know and how we know it. One well-known incident involves the unauthorized disclosure of information that led Osama bin Laden to stop using a satellite phone that we had been monitoring. Once that information was out in public, we never heard again from that satellite phone.

Culture and doctrine: A culture of excessive compartmentation will hinder our ability to defeat new threats. We need to facilitate greater sharing of information and collaboration with and between intelligence agencies, including law enforcement agencies and analysts and collectors. At the same time, it is true that compartmentation is necessary to prevent compromise of sources and methods.

Global terrorism now forces domestic and foreign intelligence systems to link together to prevent the enemy from finding a hiding place in the seam between our disciplines. It means that we have to work together between the executive and legislative branches, within the executive branch, with foreign intelligence service to redefine the relationships and the rules. And we must also accelerate the speed with which information is passed to policymakers and operators.

Finally, we need to avoid the mistake of thinking that intelligence estimates reached by consensus should routinely trump those of a lone, dissenting voice; they do not.

WOLFOWITZ: During World War II, the U.S. and Britain assembled our best minds to crack the German code. Those code breakers, assembled in England at a place called Bletchley Park, defied the odds, accomplishing their vital mission faster than anyone expected. In so doing, they hastened the demise of Nazi Germany and the end of the war. As we seek to defeat terrorism and its supporters, our intelligence culture must renew that sense of urgency in collecting and minding and analyzing intelligence.

With respect to organization, we need to continue to update a Cold War intelligence structure to better address 21st century threats. We are already taking steps to get our Defense Department house in order, and have proposed to the Congress the creation of an undersecretary of defense for intelligence to streamline and integrate dispirit DOD intelligence activities. That undersecretary is intended to provide the department with a single staff office to oversee the various intelligence programs and will support the existing relationship between the director of Central Intelligence and senior DOD officials and provide a focal point for securing timely and effective support for the DCI from the defense intelligence establishment.

This change will permit us to accelerate a large number of actions that are already underway. As members of this committee know, many of them are very highly classified, but there are a number that are mentioned in my statement and that is there for the record.

We also need to address a relatively new problem, what I would call information discovery. Many agencies collect intelligence and lots of agencies analyze intelligence, but no one is responsible for the bridge between collection and analysis; for tagging, cataloguing, indexing, storing, retrieving and correlating data or facilitating collaboration involving many different agencies. Given the volume of information that we must sift through to separate signals from noise, this function is now critical.

There is much that we can do to exploit the full benefits of new information technologies; such as data-minding and change detection, as well as the steadily decreasing cost of data storage. But partly because of the inescapable need for security of information, the intelligence world lags behind the private sector in its ability to tag and store massive amounts of data and to mind that information to determine patterns.

And one more issue we must consider is how we consider need-to- know. We have to break down the accessed information so that those who need it get access to it. It is interesting to recall that before Pearl Harbor, the ultra-secret code breaking operation, called Magic, one of the most remarkable achievements in American intelligence history, had unlocked the most secret Japanese communications. But that operation was considered so secret and so vulnerable to compromise that the distribution of its product was restricted to the point that our field commanders in Pearl Harbor didn't make the need- to-know list. But it is easy to say in hindsight that this information should have been shared more widely. If it had been, and if it had been compromised as a result, we would have been asking ourselves, why it was shared so widely?

In closing, I'd like to emphasize three points:

First, as I had mentioned, the president has said that the United States would fight this war using every element of national power, from diplomatic and law enforcement to intelligence and military elements, with America's military power by no means necessarily the first option, but one of a vast array of national resources with which to fight. Certainly, one of the most important elements in fighting this war of the shadows involves the U.S. intelligence community and its extraordinary capabilities. Whatever is done to reform and improve our intelligence community should not do harm to its contribution to the current war effort.

Second, no matter how good intelligence can be, we will not win this war simply by going after individual terrorists. We must not only capture and kill terrorists and break up individual plots, but we must drain the swamp in which terrorists breed. In February of 1998 Osama bin Laden published a Fatwa declaring his intent to kill Americans, a fact which leads to my third conclusion.

When our professed enemies declare that they intend to kill us, we should take them at their word and prepare accordingly. We must avoid the temptation of believing that the truth can only be found through classified sources. To do otherwise, despite warnings and signs, would, indeed, constitute a grave intelligence failure.

Secretary Rumsfeld testified yesterday to some of the signs and signals that now abound, saying that we are on notice. "Let there be no doubt," he said, "an attack will be attempted. The only question is when and by what technique. It could be months, a year or several years, but it will happen. If the worst were to happen, not one of us here today will be able to honestly say it was a surprise because it will not be a surprise." "We have connected the dots," he said, "as much as it is humanly possible before the fact."

WOLFOWITZ: Only by waiting until after the event could we have proof positive. The dots are there for all to see. The dots are there for all to connect. If they aren't good enough, rest assured they will only be good enough after another disaster, a disaster of still greater proportion, and by then it will be too late. We cannot afford to wait, the secretary put it, until we have a smoking gun, for a gun smokes only after it's been fired.

We appreciate this committee's dedication to accomplish meaningful, positive and constructive measures with regard to America's intelligence community. We appreciate your continued bipartisan leadership and guidance. And we look forward to working with you in your important task of looking to the future to improve America's intelligence capability.

Thank you.

GRAHAM: Thank you, Mr. Wolfowitz and Armitage. Excellent statements. We appreciate the significant contribution that you have and are making to our nation's security.

I would like to call upon Senator Rockefeller for the first round of questions.

Senator Rockefeller?

ROCKEFELLER: Thank you, Mr. Chairman.

Thank you, Secretary Armitage and Secretary Wolfowitz, for being here.

Let me just say at the beginning what Eleanor Hill said yesterday, and that is it was not our intelligence community, it was not the FBI, it was not anybody else that did the killing at the World Trade Center, the Pentagon and in Pennsylvania other than the terrorists. That rules.

Having said that, I'd like to talk a little bit about perceived threats and ask some questions.

According to the Department of State publication, "Patterns of Global Terrorism," there were 274 international terrorist attacks in 1998 alone, reflecting that the number of attacks, in fact, had been decreasing and were in fact at their lowest point since 1971.

If we measure the threat of terrorism by the number of Americans killed, and of course even one death is too much, if we include the attacks on our African embassies, 12 U.S. citizens died in 1998, 54 were killed in the preceding five years, 1999 five more Americans died, in 2000 another 19 died, 17 on the USS Cole, these numbers are both tragic, but they show a fairly persistent pattern over the past decade.

Even with this consistent pattern of activity, George Tenet -- who by most Americans, I think, is considered to be the person who runs intelligence in this country -- we know that not to be true (inaudible) going to discuss that -- but, you know, the director of central intelligence kind of evokes and image of real control -- he was concerned enough, as both of you mentioned, particularly Secretary Wolfowitz, to mention in 1998 and tell his deputies, and then it was broadly disseminated within the intelligence community -- doesn't say beyond that in our report -- that we are at war with Al Qaida.

So my first question is: What did you think that meant, either or both of you, what did you think that meant, and what should have happened at that point, in your judgment?

The reason I ask that question, Secretary Wolfowitz, you talk a lot about things that must happen, things that cannot happen again, we should be, we must do, we must make sure that such and such doesn't happen again, but specifically, what did that mean, we are at war, to you, as you came into office? And what should have happened at that point, in your judgment?

WOLFOWITZ: Let me go first, then Secretary Armitage can add.

I think it means that you plan for war, and in fact over the course of -- from the time Secretary Armitage was sworn in, which I think was late March of 2001, which was when we finally had two deputies and could have a deputies committee, in fact prior to that I believe even National Security Adviser Dr. Rice had tasked her staff to begin preparing options for what this would mean.

And as you started to look at it, you realized that war against Al Qaida is something different from going after individual acts of terrorism or retaliating against individual acts of terrorism, that it really does involve all the elements of national power, that it's not just something for the intelligence community alone, that in fact you can't go to war against Al Qaida without recognizing the role that the government of Afghanistan is playing, you can't go after the government of Afghanistan without recognizing the problems in your relationship particularly with Pakistan, but with other neighboring countries, and you can't get serious about this without looking at military options. And when you start to look at military options, you have to think about something more than a one-off retaliation for an attack.

And that is the process that we were engaged in over the course of basically the summer of 2001, and ironically enough, it led to principals' committee meeting in early September, before the attacks, that produced a recommendation that was not far off from what we ultimately implemented after September 11.

ROCKEFELLER: I have 12 questions...

WOLFOWITZ: Let me emphasize one other point, and that is...

ROCKEFELLER: I have 12 questions in 20 minutes, so...

(CROSSTALK)

WOLFOWITZ: OK.

ROCKEFELLER: ... to the extent possible.

ARMITAGE: I'll only add that I think our story is pretty good on going after Al Qaida from April 30 on, after the first deputies meeting. However, where we went wrong, I think where we made a mistake, was that we didn't have the, first of all, a necessary baseline from intelligence on the global aspects and global possibilities of Al Qaida, number one.

ARMITAGE: And number two, although many of us, including members of Congress, were saying the right words. I don't think that we really had made the leap in our mind that we're no longer safe behind these two great oceans. And even though we had the World Trade Center attack of 1993.

ROCKEFELLER: When you came into office, did you both think/know that we were at war with Al Qaida?

ARMITAGE: I was briefed in January and February leading to my hearings in March before the U.S. Senate. The terms "at war" was to my knowledge or my remembrance not used, that there was not question though that we were in a struggle with Al Qaida and Al Qaida was the very first thing that the administration took on at the deputy's level.

ROCKEFELLER: But you were aware that the DCI thought we were at war?

ARMITAGE: I was aware of his comments.

ROCKEFELLER: Yes, and did the intelligence community clearly warn you what Al Qaida was capable of doing, and that it sought to carry out a mass casualty on U.S. soil? Did you know that? Had you been informed of that by the intelligence community?

ARMITAGE: Yes. The intelligence community, as I recall, informed me; one, that we might have an explosion in Kenya from and explosive laden aircraft. I did not specifically remember a mass casualty event. However, there were discussions in INR and the State Department from information gleaned (ph) from the intelligence community, that there was a possibility of a chem-bio attack. No location, no time. But that was being discussed.

ROCKEFELLER: What did you two gentlemen perceive the threat to be?

ARMITAGE: I, in general, perceived the threat to be at our interest overseas, primarily in the Gulf, some in Southeast Asia, and most definitely in Israel. And that's from my point of view in the Department of State.

WOLFOWITZ: I would say near term we perceived the threat to be overseas, as Secretary Armitage says. In the mid to longer term, we perceived the threat to be mass casualties in the United States as a result of chemical or biological or conceivably a nuclear attack. And that's why, in the course of developing the Quadrennial Defense Review over the summer of 2001, we identified homeland security as the top priority for transformation.

ROCKEFELLER: Did you take any steps with respect to reacting to these threats that the Clinton administration has not taken at their point in time? Because the 1998 thought was that Lieutenant warning came out in '98.

ARMITAGE: We increased in INR the number of analysts. And we have 14 in general that look at terrorism and crime. We increase the number to 80. It has since been increased after 9/11 to 10. So that's a specific answer.

WOLFOWITZ: We undertook a number of steps in our development of the defense program to increase our capability to detect or respond to weapons of mass destruction attacks. And I believe there were a number of classified actions taken by other agencies...

ROCKEFELLER: Is there anything specific you can tell us? Unclassified?

WOLFOWITZ: No. Not with respect to classified actions. Specifics on what we did with respect to developing our own capabilities to respond, I can give you lots of details for the record.

ROCKEFELLER: Please do that. Who in fact is responsible for assessing the risk of terrorist attack in the United States of America? And was any strategic assessment or other kind of assessment done when you came into office? Both of you.

WOLFOWITZ: I think what you're putting your finger on, I think to some extent is that we have certain divisions of responsibility between what the FBI and domestic law enforcement is responsible for, and what the CIA is responsible for, and indeed limitations on what the CIA is allowed to do and collect domestically, which I think members of this committee are very familiar with. So there is a problem of where the responsibility is assigned. I'm not aware of any specific assessment of what the threat was domestically.

ARMITAGE: I agree sir.

ROCKEFELLER: All right. Obviously, we'd had the 1993 World Trade Center incident and then a whole series of other things which on the Hill delineated yesterday. So there are things going on in this country over a long period of time. The question was, were they individually aggregated and taken to a higher level where they reached policy makers and said oh, this is not just a matter of the international, but this is a matter of domestic? So America's perception of the threat as here as opposed to overseas was not, you are saying, fully formed when you gentlemen took office?

ARMITAGE: I think that's a fair statement, but I'd like to accompany it with the notation and the notice that when Mr. Bush was a candidate, he specifically spoke about homeland security, and he was drawing on a report that was actually commissioned by the U.S. Congress, the national -- the trans-panel (ph) report which spoke about homeland security being a new missionary. And the Pentagon is on top of that, as far as I can see. And second, that we recognize that we couldn't have a policy, certainly in South Asia, as early and more broadly as early as the end of April when we had a deputies meeting and made decisions and gave instructions to not just roll back Al Qaida, but to go after and eliminate them.

ROCKEFELLER: Thank you. The intelligence community -- this is sort of about what you were talking about, Secretary Wolfowitz -- collects, analyzes and disseminates one kind of intelligence for civilian policy makers, and another -- a different kind for the defense needs to shape our military forces and plan and execute military operations.

ROCKEFELLER: Many of our intelligence collection systems used to collect both kinds of intelligence. I mean, there's an overlap. And it is well-known -- no, in fact, it is well-known generally out there in the country, but it is a fact that 85 percent of the money of the budget is within or controlled by the Department of Defense. So it's important to understand the different needs how they overlap and how they do not and what happens when there is a conflict between the civilian policy needs and military needs.

And to that, I would just give you something to lap (ph) on. If Director Tenet foresaw a requirement to make a change that he needed to have something happen, but that was not under his budget authority, would he have the ability to go into the Department of Defense and take something that he needed in the way of money? Or is it the unwritten law that the director of central intelligence, thought to be the controller of intelligence by most of our country, in fact, usually loses when he goes up against the secretary of defense.

WOLFOWITZ: I don't think that describes the relationship. In fact, I think Secretary Rumsfeld and Director Tenet have a closer relationship than any previous secretary of defense and the DCI. And when these issues have come up -- this was true before September 11 doubly...

ROCKEFELLER: Not interested in personal relationships. That's not the question I asked.

WOLFOWITZ: It's not a personal matter. It is a working relationship. It is a professional relationship. They meet regularly. These problems get resolved. We have frequently moved resources to address their needs.

But I think a fundamental point, too, here, Senator, related to a lot of these questions is, this is not a game we will ever win on defense. We'll only win it on offense. And I believe that recognition came very early in this administration. And the recognition that going on offense was something that would be a very substantial exercise.

ROCKEFELLER: Thank you.

Mr. Secretary?

ARMITAGE: Absolutely.

ROCKEFELLER: OK. Under the current structure, I think it's fair to say that the director of Central Intelligence, thought by the American people to sort of control intelligence, doesn't. And I'm not arguing that point. I don't think there have been any recent Central Intelligence directors who have really wanted to venture beyond their budget authority. And their budget authority is fundamentally 15 percent of the intelligence budget, so that it raises all kinds of questions about the relationship between the DCI and the DOD, which you say is very good.

And, you know, I've been at the meetings when people have had their arms around each other, were working very well together. But it doesn't seem to work out necessarily to the best coordination of intelligence activities. It seems to me, in fact, that any DCI lacks that authority is not necessarily willing to take on a secretary of defense who controls budgets and personnel. And if there is any truth in either of your minds in this, does that, in your judgment, hinder the fight against terrorism?

WOLFOWITZ: Senator, I don't think it's a matter of taking on the secretary of defense. I think there are times when it would be helpful. And this is why we've proposed an undersecretary of defense for intelligence when the director has a problem or when his subordinates have a problem to be able to come to somebody below the level of a secretary and get these problems sorted out.

When problems are elevated, my experience has been they have been resolved. And I don't think there are basic problems here that flow from inability of the director of central intelligence to get from the Department of Defense what they need.

But a basic point, which I think the American people also expect is that, these vast intelligence resources of ours will be made available to permit our military to win wars when they fight them. And the intelligence resources of the Defense Department have been absolutely critical in this campaign against terrorism.

ROCKEFELLER: And I agree with what you've said. And I also note that in your testimony you talked about stovepiping and you talked about the, you know, the proposed new secretary for intelligence. And I'd like to ask you a question, how do you think that this is going to help bring clarity, succinctness, precision, sequential accuracy to the variety of, you know, 10 or 11 different intelligence agencies which exists, but which have no sort of central command, even though the American people think it's that way? How will this proposed new secretary be able to bring clarity to the process of the gathering, dissemination assessment, strategic assessment of that intelligence?

WOLFOWITZ: I think the key to breaking down stovepipes is to bring them together at levels below the very top level of the government. And when the only place they come together is at the Cabinet-level, then inevitably they're going to be walls and compartments that busy Cabinet officers don't have the time to breakdown. Having an undersecretary for intelligence whose sole responsibility is overseeing those agencies and precisely looking at those compartments and stovepipes, I think is a key to doing it.

In the Rumsfeld commission, looking at the ballistic missile threat, nine of us working part-time were able to do an enormous amount of breaking down stovepipes, but it requires people who are focused on that issue and not distracted by many other things. That's what an undersecretary of defense for intelligence will be able to do.

ROCKEFELLER: Talking about stovepipes is something that the intelligence community and committees have done for a very, very long time and we've seen not much progress. So when you say getting people together at a lower level, I'm pleased to hear that. Could you elaborate a little bit on how you really break down a culture of noncommunication of individual campuses spread around within a three to six mile radius of Congress, which all have their own cultures, their own memorial gardens, their own cafeterias, their own, you know, set of histories.

ROCKEFELLER: I mean, it's an easy thing to talk about; a hard thing to do. What do you think about -- I mean, how do you think this should be made to happen, Secretary Wolfowitz?

WOLFOWITZ: Let me try to split it into two different problems. I think, first of all, before you get into the culture problem, there's just simple problems of compartmentation. One reason that the Rumsfeld Commission was able to break down a lot of stove-pipes is that we had the authority to go into every compartment, and we could see that information in one compartment was something that people in another compartment needed to have and weren't getting. And that's not a culture issue; that is somebody with the oversight, the ability and the time to look into those compartments that can break them down.

UA's (ph) a bigger question, which is culture. You don't change those things overnight, nor do you want to change them entirely. I mean, you need organizations with specialized capabilities. I think, though, we've seen a lot, over just the last 12 months, of agencies, including agencies that do not traditionally work together -- the FBI, for example, have brought CIA analysts into the FBI. That's a rather radical change. How much it's changing the FBI, you'd have to ask the FBI director or the CIA director.

ROCKEFELLER: Let me use that statement to go into my final question. Regarding the FBI, from my point of view, I really question and I'd like both of your responses on this, whether the FBI ought to be heavily involved in the intelligence business. They're trained differently. Their skill sets are totally different. Their habits are different. Everything is different about them. They do a superb job at prosecuting, putting people in jail, finding them. But the intelligence thing on a domestic basis, which raises, you know, serious questions of what would an alternative be, which is what we need to discuss, is something that I worry about a lot.

You indicated the FBI reported to you, but was the FBI really monitoring some of these domestic groups in a way which was satisfactory to you? Did they have the minds, skill set to do that?

ARMITAGE: I'm going to give you two answers. One is the perspective, Senator.

I was involved in the setting up of the CTC in the mid-'80s, and there's been light years' difference between the FBI now and the FBI then. But the direct answer to your question is, absolutely the FBI must be more than an investigation and prosecutorial arm who comes in after an event. they have to be involved in the investigation and in the monitoring. There is no way around it, nor should there be.

ROCKEFELLER: My time is up. I thank you gentlemen.

GRAHAM: Thank you, Senator Rockefeller.

Congressman Bereuter?

BEREUTER: Thank you, Mr. Chairman.

Gentlemen, good morning. Thank you for your initial statements and your responses thus far.

Because of a change in the committee's schedule yesterday, I was not able to be here for a part of it that I expected to be, and I want to take a minute or two of my valuable questioning time to say something.

And it is that I am concerned about the total preoccupation on intelligence failures. That's the headlines, of course, and that's what was the theme of all day yesterday and in general. Of course, there are inadequacies and gaps and deficiencies in intelligence- collection analysis. We all understand that very well. But what is not being focused upon are the failures in the law enforcement agencies and the other entities that would have averted a terrorist attack and their need to avert future terrorist acts.

I have been amazed thus far to find that there seems to have been no place in the federal government where there was a responsibility for examining all the potential terrorist scenarios, and then taking plans to avoid them with the domestic agencies. I think most citizens would have assumed that capacity existed. I certainly, with some knowledge of the federal structure, would have expected existed. It apparently didn't.

It doesn't take too much imagination, it seems to me, to imagine that a commercial airliner would be used as a flying bomb. And we know from the committee's report yesterday there were many indications that this was being considered by Al Qaida. Tom Clancy had it as a part of one of his books with an airliner being crashed into the Capitol Dome. And if it wasn't specifically assigned to an entity or an interagency group, it looks like it would have been done in the National Security Council. Now we have a homeland security director, and we know where the responsibility is placed and will be developed.

Gentlemen, I want to focus first on, I guess, you first, Secretary Armitage. I'm generally aware of the recommendations for changes of the intelligence agencies within the Department of Defense. But looking at the State Department's own internal intelligence capacity, the INR, how do you think it interfaces? How has it interfaced, in fact, with the other collectors and analytical capabilities of the federal government? And what changes have been made or would you contemplate -- would you recommend, Secretary Armitage?

ARMITAGE: Thank you.

In INR we are primarily and almost exclusively involved in analysis and not in going out and gleaning intelligence. And I believe your own excellent staff of this committee has determined that much of the analysis in INR was pretty damn good, number one.

Number two, that means that primarily it's limited by the information in. So one might contemplate whether State itself wants to have a larger, sort of more active role in the gleaning of intelligence. Now, primarily, the intelligence we get is an open source or from comments of one embassy officer with some host country official or another, and the other is gleaned from open sources and Paul was careful, and I think right to draw our attention to that.

We have put both INR and DS, Diplomatic Security, agents with the counterterrorism center. This is good at breaking down the culture. It also helps us a bit. We have had before 9/11, and continue now, to have FBI officers who serve in our counterterrorism center.

ARMITAGE: So I think, in the main, I've got to do a little more with budget for INR, because, as I said, we've now got 10 analysts strictly devoted to terrorism, which is up from before, but it's clearly not sufficient, but the analysis they've given was they judged by (inaudible) to be pretty much on the mark, sir.

BEREUTER: Thank you.

Secretary Wolfowitz, you generally quote the president in the conclusions of your testimony this morning as saying that every element of national power must be used against the terrorists and military, law enforcement, diplomatic, intelligence. And I don't think anyone would dispute that.

Looking back at the small boat attack on the USS Cole -- in the previous administration -- but looking back at it and determining what was done at that point or what was not done, why -- well, first of all, was there a military response planned to respond to the attack on the USS Cole, and if not, why not?

Was there an expectation that the problems of Al Qaida and the Taliban would be handled by the intelligence agencies or covert operations? Why was there no attack, and was there any military planning to attack, respond to the USS Cole attack?

WOLFOWITZ: Congressman, I can't tell you what happened in the immediate aftermath of the attack. I can tell you that, six months later, when we came into office or when Secretary Armitage and I came into office, it was clear that terrorism had to be dealt with a different way. It was not a -- it's not a law enforcement problem, and it can't be dealt with simply by retaliating against individual acts of terrorism.

As we said earlier, we understood that this was an entity that was at war with us and that taking them on involved something more than an individual retaliatory response that wasn't going to stop the problem.

You, I think, expressed your puzzlement and undoubtedly the puzzlement of many Americans at why the FBI didn't provide some of this information. In fairness to FBI, it ought to be pointed out that, for very good, substantial reasons, they are not supposed to report information on Americans to intelligence agencies.

This is an issue we've got to confront now, but they weren't -- it's not that they were stupid. They're there under a different set of rules, rules that require people to be very careful about information that can be prosecuted.

But if I could, just two points: We're not going to win this war on defense, no matter how good our intelligence is. We've got to go on offense, and offense does not just mean a one-off military retaliation. It means the kind of campaign that we're conducting now against terrorism; it means a war.

BEREUTER: Secretary Wolfowitz, we're well aware of the limitations imposed upon the Federal Bureau of Investigation. Yet there is no excuse whatsoever for the failure to communicate what the agents in the Phoenix office had uncovered which, therefore, caused a failure to respond properly to the agents in the Minneapolis. There is an absolute failure in that bureaucracy, and an information technology failure to say the least.

So it's important we don't...

WOLFOWITZ: Fair enough.

BEREUTER: ... divert by telling us that this is not in their area of responsibility from their real failures in this instance.

And of course, yesterday, the family witnesses pointed out to us about the 11 minutes or perhaps 12 minutes that seemed to have taken place in FAA control of New York after they knew that the second airline was headed for the second tower but no alert was given to the port authority.

I would like, Secretary Armitage, if you would respond to this question: Do you feel that U.S. foreign policy in the Middle East has contributed to the rise of Al Qaida?

ARMITAGE: No, senator.

BEREUTER: I would say to you that many people believe that it does, and many people in the Middle East more importantly believe that it does...

ARMITAGE: That's a different question.

BEREUTER: And then, in light of this attitude of so many people living in the Middle East -- and indeed, some of our citizens -- what is the State Department's role to correct errors in perception -- I guess I'll put it that way -- or to change their attitude about the United States and their attitude about the terrorists?

ARMITAGE: I know you understand this explicitly, but I want to make the point that Osama bin Laden was planning these attacks at a time when the Israeli-Palestinian question was in a much more benign state, when our president was meeting here at Camp David and they were very close to a resolution.

So I do not buy the argument that our policy in the Middle East is responsible for Al Qaida or Osama bin Laden. And it was only laterally, it was only these World Trade Center attacks that Osama bin Laden could even say the word Palestinian out loud, publicly.

Now, the question of what should we do to fix that, I think we are trying to work a very difficult equation, to address the humanitarian situation, particularly with -- in the occupied territories -- to work with our closest ally, the government of Israel, who even today suffered yet again from terrorism and, finally, to have a political change in the Palestinian Authority that will allow the Palestinians to be government by the type of government the people deserve. And that's all ongoing, and that was the subject of Secretary Powell's meeting yesterday in New York -- two days ago with the quartet.

BEREUTER: Secretary Armitage, would you speak to the role of public diplomacy that would have an impact upon the attitudes of the population of the Middle East, particularly the Arab countries.

ARMITAGE: Yes, this is an area where we've done, historically -- we know now -- a bad job, and the secretary brought in Charlotte Beers to try to really address this, and I'm delighted, particularly, Frank Wolf's Appropriations Committee in the first instance has been so supportive to give us the resources for this.

But we had to learn what the questions to ask were before we could start addressing them, and I think Charlotte Beers has done that, and we're off and running in the Middle East.

And I think, over time, you'll be able to judge whether we've been effective or not.

I don't think I can judge that today.

BEREUTER: It's an important priority. We wish you well in this respect, and much success.

I'd like to ask both of you if you would give us your own observations about the weaknesses that you have observed with regard to intelligence collection and analysis.

BEREUTER: And let me just stipulate: We all seem to agree that there's an inadequacy of human intelligence and a risk-aversion, perhaps, in some of the people involved in HUMIT, which we're trying to address.

But setting that aside, what other kinds of weaknesses have you seen in your experience in government, going back over some years now and continuing to this day in the intelligence collection analysis function of the federal government? And of course, I'm talking about foreign intelligence collection.

ARMITAGE: I think the questions of human intelligence and agents and all of that, of this committee, both the House and the Senate have delved into it at great length. But the point that's always bothered me was alluded to by Paul, and that is that in the intelligence community and the analysis business, which is where I am -- I'm the consumer -- it's very rare that we get the one-all voice or the dissident voice that Paul was talking about.

For a policy-maker, a dissident voice is very helpful either to confirm what you're already thinking or to really open up a new area. And this is not generally done. And if I had to say the one biggest weakness in the analysis area, I would say that's it. Second, it's the way analysis in the intelligence community is generally put forth, and it's related, and that is consensus.

BEREUTER: We found, for example, a dissident voice in the DIA that seemed to be discouraged from being able to present his viewpoints. And I would guess that's a common problem, so you bring up an interesting point; how do we protect that? How do we make sure that those dissident voices that sometimes have part of the answer or the answer are heard?

ARMITAGE: I must say, I remember when Director Gates was the deputy director. I remember vividly -- I was in the Pentagon -- he sent down something on Africa, and it had to do with a community view on AIDS, HIV-AIDS in Africa. And he said, I want to give you the view of one analysis, it is not a community product, which was dramatically different. And by the way, dramatically correct, as we've seen by the virulence of the spread of AIDS. And that's the kind of thing that just has to be encouraged.

BEREUTER: Secretary Wolfowitz, would you like to focus in on your observations on any weaknesses, other than HUMIT, which we can probably agree on?

WOLFOWITZ: I really would just reinforce this observation about the need to get alternative views up, because almost everything that's important here is shrouded in ambiguity and uncertainty. There's nothing that's flat, black and white. And there is, I think, a tendency to want to get things scrubbed out to get the differences eliminated.

I remember the first national intelligence estimate I ever read, which I'm embarrassed to say was nearly 30 years ago, in which it was on the critical issue of Soviet strategic capabilities. And I believe it was the director of Central Intelligence in forwarding the report said very proudly, what a great job these people had done in producing a report on such an important subject without a single footnote. In other words, without a single voice of disagreement. And I was just appalled. I mean, I thought how can you possibly address a subject of that importance without differences.

So I think, get those differences up on the table, get the raw information up a little bit faster. Understandably, some it's going to be wrong and you don't want people rushing off and taking precipitous actions based on raw intelligence. But I think there's a tendency to hoard stuff too long and to keep it in compartments.

BEREUTER: Thank you.

I would ask both of you, are there any groups capable of -- any groups other than Al Qaida -- capable of or seriously considering attacking the United States today, and I'm talking about the homeland?

ARMITAGE: I think in terms of capability and virulence, Hezbollah certainly is capable. They have thus far confined themselves in the main to central South America and, of course, the Middle East. But capability, they could do it.

WOLFOWITZ: That's absolutely right. And intentions are one of those things that if you want any precision on, you'll almost never get it. If you reject the evidence that comes from overt expressions of hostility, then you'll be taken by surprise every time.

BEREUTER: Is there any other entity you would suggest other than Hezbollah at this point? Or make general reference to if you don't wish to...

ARMITAGE: No, other than to make the obvious point that there are a number of groups in the so-called network, that is Al Qaida, whose intentions are clearly to harm Americans. They've said it. They do it. They write it. Whether it's Jamiat, Islam or any others. So I don't have direct information that they're targeting the United States, but they certainly intend on targeting U.S. interests.

WOLFOWITZ: Congressman, we don't have that kind of precise information about what groups are there. This group that calls itself the Islamic Movement for Change that sent a threatening to our embassy in Saudi Arabia in the spring of 1995 and then claimed credit for the attack in Riyadh in the fall of 1995 has never been identified. We don't know what countries or what groups have sleeper cells buried around the world now. We know what people have capabilities and we know what people have declared hostile intentions toward us.

I go back to Secretary Rumsfeld's point, those are the dots. And if you want to wait until they're connected, you're going to wait until something terrible happens.

BEREUTER: Both of you have experience beyond your current capacity in the previous roles in the administrations, both of you have held important roles in the Department of Defense and one continues today, of course. What do you think the state of affairs is with respect to our allies and their ability to provide intelligence to us? Is there progress yet to be made in that respect?

ARMITAGE: Well, first of all, the difference between September 10 and September 12 in this regard is night and day, and that includes more than just intelligence, it's also in the terrorist financing. We stood up the terrorist financing back in May -- the tracking center. But after the tragedy people came aboard.

Is there more work to be done? Absolutely. And I say that with complete assurance, because we don't know what we don't know from these countries. And we sometimes find it very surprising that we have some information which turns out to be true. And we take it those countries and they say, "Well, oh, yeah. Well, we knew about that. We neglected to tell you. We forgot to tell you." So there's a lot of work still to be done.

WOLFOWITZ: I just add very briefly. Our cooperation with our allies improved dramatically after September 11. Our cooperation with unfriendly countries improved dramatically after the fall of the Taliban.

BEREUTER: Thank you, Mr. Chairman.

I think we're called for a vote, and so I'll just terminate at this point.

GRAHAM: Thank you, Congressman Bereuter.

BEREUTER: Thank you, gentlemen.

GRAHAM: Congressman Boswell, would you like to do your questioning now or wait until after...

BOSWELL: I've just shared with your co-chair, and he's got a solution I definitely want to share in this questioning. So I think we're going to go vote. And he's got a suggestion about letting the senators continue their five minutes.

GRAHAM: CHAIRMAN: Yes. And when you return, you will be called upon for your 20 minutes.

BOSWELL: And I'm ready. Thank you, Mr. Chairman.

GRAHAM: The House members will be tending to their voting for approximately the next 20 to 30 minutes, but we are going to continue with questions from senators, and I would just like to ask two questions.

Mr. Wolfowitz, you said in your prepared statement that our goal should be to drain the swamp of terrorists, and that the primary method of doing so was going to be to win on the offense, that is to go after the terrorist, not play defense.

GRAHAM: In a previous hearing we had high officials in the intelligence community when asked the question, what was the biggest mistake that we made in the 1990s relative to Al Qaida? Answer, the failure to aggressively assault the training camps of Al Qaida, which at one time were producing on average 100 terrorists per week who then were subsequently placed around the world, including as we know, in the United States.

In light of that, I've been surprised that our current war on terrorism has not, at least apparently, targeted the training camps where the current generation of -- or the next generation of terrorists -- and I'm speaking specifically to training camps outside of Afghanistan -- are producing the next group that will likely be equipped to attack us.

Is that based on intelligence that the community is getting to the effect that the training camps are not as significant today as they were four or five years ago? Or what is the reason why in a campaign on the offensive to drain the swamps, the place that the alligators are being prepared are not being targeted?

WOLFOWITZ: I'm not sure if we can get into this in open session. I'm not sure which training camps you're referring to.

GRAHAM: Primarily the ones, as I say, outside of Afghanistan. And I would not mention the specific countries, although they are fairly well known.

WOLFOWITZ: There are countries like Yemen and Georgia, where we know there are active terrorists, not just training camps. Training camps, yes, but also people plotting and doing plots. And we are working actively in different ways with both of those governments to get actionable intelligence, number one. And number two, to improve their capabilities to go after these problems. But if we have actionable intelligence and they're not prepared to act, then we'll have to figure out ourselves. In the cases that I'm aware of, we are aware that there are problems, but we don't have the kind of precision that told us about Tornak farms or specific things in Afghanistan.

And just one last point. I don't want to get in an argument with the people who talked to you earlier about training camps, but it does seem to me that even worse than the training camps was the training that took place here in the United States and the planning that took place in Germany. The donkeys, if we can call them that, that took over the airplanes may have been trained in Afghanistan. The pilots were clearly training elsewhere.

GRAHAM: The second question. In your opening statement, Mr. Wolfowitz, you commented about the importance of us not being seduced by the status quo, the way things have been, and to be prepared to think creatively as to the nature of the threat and the nature of our vulnerability. Based on what has happened, September 11 and before and since, what recommendations would you have in terms of personnel policy, organizational policies as to how we can inject a greater degree of creativity within our intelligence agencies?

WOLFOWITZ: Well, some of the things that we've done already are, in fact, enumerated in my statement. I do think organizationally, from within the Department of Defense, we believe very strongly that having this single focal point for intelligence -- the undersecretary of defense for intelligence -- would contribute enormously to dealing with two problems. One is breaking down compartmentation within the department. And number two, giving the director of Central Intelligence a focal point that he can go to to solve problems when they occur.

With respect to the issue about culture, I think there are a lot of things that come to mind, but I can't think of anything that would be more important than finding ways to reward those lone voices that do defend, to perhaps send back intelligence estimates that have no footnotes in them. And to praise the ones that come forward that indicate with some clarity what we know and what we don't know and what we may not even be aware that we don't know.

GRAHAM: Thank you.

The questioners will be Senator DeWine, Senator Lugar, Senator Inhofe, Senator Feinstein, Senator Kyl.

Senator DeWine?

DEWINE: Thank you, Mr. Chairman.

Mr. Secretary and Mr. Secretary, thank you both for being here. You've been very, very helpful. We all have a great deal of respect for both of you.

It's clear that George Tenet was, as Secretary Armitage said, was pounding on the table. It's clear that you both were very concerned and were working hard on the issue of terrorism. And it's also a concern that there were a lot of good people not just in the administration, but down in the trenches who were doing a lot of good, hard work. And I think that we should make it very clear to the American people that our investigation has shown that, that while there is an intelligence failure, we have seen that there were an awful lot of good people doing very, very good, good work every single day.

I really have two questions. One, was there a strategy for fighting terrorism where all the different instruments of national power were coordinated and applied together? Off the top of my head, these would include cavort action, the use of foreign countries, disruption by foreign governments, use of the Justice Department, prosecution, jailing the terrorists when we catch them, military obviously, trying to freeze economic assets. Were all of those being coordinated together?

DEWINE: And second, and probably more important, if the answer to the first question is yes, who is driving this? George Tenet talked about a war against Osama bin Laden. He's the man who talks to the president every day. He is the man who the public looks to, frankly, in regard to the effort against terrorism.

I believe that, you know, in spite of that fact, in spite of you wouldn't find anyone who is more driven than George Tenet about this issue during that period of time, it didn't seem at all that all the things got pulled together.

And I wonder if you could reflect a little bit on that, and talk to me a little bit about structural changes that need to be made so that this -- there's a focus that can be applied, so that there is the coordination that is needed.

Because I agree with you, Mr. Secretary. The cooperation does exist at the top level. The question is how you drive it down, and how you make sure that someone who is in the field who works directly under the Defense Department, candidly, gets the priority that information, things need to flow somewhere else, when they're tasked to do that. And that is the real difficulty that we face. I don't want to go into any more into details on that. But that is the difficulty I think that we face.

So, if the two you could reflect on those two questions. One was us coming together, did you have a plan, coordinating everybody; and two, who is driving it?

ARMITAGE: The National Security Council was driving it. It started in March when they called for new proposals on a strategy that would be more aggressive against Al Qaida. The first deputies' meeting which is the sort of decision -- first decision-making body in the administration, met on the 30th of April, and set off a trail of initiatives, to include financing, getting at financing, to get at increased authorities for the Central Intelligence Agency. There are some sharp-end things that the military was asked to do. The attorney general was wrapped into it.

The point on this is that it's not something that takes place at one meeting and happens, because there are many considerations, from privacy considerations to budgetary ones. And so from March through about August, we were preparing a national security presidential directive, and it was distributed on August 13th to the principals for their final comments. And then, of course, we had the events of September 11th.

So the answer was, "Yes, we're on that track." It's not something that take place overnight.

DEWINE: Mr. Secretary, and I would just say to the public, Mr. Secretary, I understand what you said, but to the public, that sounds like a hell of a long time. In hindsight, sounds like a long time.

WOLFOWITZ: Well, and the truth is that these people were embedded in our country -- the pilots two years ago, and people carrying out the hijackings last spring. I mean, they were way ahead of us.

And that's something I think one has to bear in mind in saying, "Where's the evidence of imminent threat?" By the time threats are imminent, first of all, you probably won't have the perfect intelligence, and if you do, it may be too late to do anything about it.

I think organizationally, there are many things that can be done, that are being done, some of them not yet being done. But I think nothing is as important as what the president has proposed with the new Department of Homeland Security. The clear deficiency before was that we didn't have anyone with the responsibility for dealing precisely with that problem. And I don't think it's an exaggeration to say, as has been said, that this proposal which the Congress is wrestling with right now is as important to restructuring our government for this new security era as the 1947 National Security Act was structuring the government for the Cold War.

It's not a magic solution, and there's still going to be work to be done, but I do think it's very clear that we need a -- having a single official who has that responsibility doesn't mean that it'll work by themselves, but will focus a great deal of effort in thought and intelligence.

CHAIRMAN: Thank you, Senator DeWine.

Senator Lugar?

LUGAR: Thank you, Mr. Chairman.

During all of the committee's analysis of what occurred, we've come back again and again to a couple of thoughts which you've expressed again today, and that there is that there are vast powers of collection out there, and hopefully we will do better with analysis.

I'm hopeful -- and there's no way you can answer this question definitely -- that in the course of all of our discussions, that we have computer power or some additional abilities to parse this huge mass of collection. I'm impressed, as I'm certain you are, with how much somebody has listened and heard somewhere, and how difficult it is to find for the policy-maker or for the analyst, maybe prior to that time, what of all of this has any relevance whatsoever. I just think technically, we need fixes here. I hope that there are genius levels in America that are providing this, and maybe you can offer some assurance to progress.

The second thought is, even if we do, it has to be translated -- the language skills that are required to deal with all of the things we're now talking about simply aren't there. This is a crash program that has to happen; I hope is occurring. I'm not sure I've seen evidence that gives confidence levels there, so that if we did have the nuggets we'd get it in at least the language we can understand, and get it to the analysts.

Now, having said all of that, what you've said today is interesting that the synthesis of all of this, the desire for consensus may lead to the policy maker finally getting something that doesn't have the dissent, or even on a Supreme Court decision, there are dissenting justices. My guess is that probably we would better served if there are at this point too. We don't want to confuse the president, or the secretary of state or defense, but on the other hand, having several different points of view that can be weighed at this point, I think would be of the essence.

And let me just conclude, at least this statement, preceding your questions or comments, by saying that we have also been discussing in this committee, but outside of this committee, this whole business of preemption: preemption in the sense of new FBI powers; the idea that something other than prosecuting the case, but going after the malefactors. I don't want to veer off into the Iraq issue, because that's something, but clearly that is being talked about with regard to Iraq and other threats of that variety.

Now this is something that is very new, or at least new in terms of a big public policy issue, of how we do this in a free society, and in a world of nations that also have rights. But clearly of the essence, if what we're talking about today is to happen, that we have to have the ability to be on the offensive, to pounce upon it.

Now, these are big issues that I hope these hearings and these reports will get to. Because clearly whatever we found the deficiencies prior to September the 11th, the things we're talking about now are huge, in terms of having any hope at least in the world subsequently.

I queried Secretary Wolfowitz as to this Defense Department move on undersecretary of defense. And you've suggested, Mr. Armitage, that maybe State ought to have that too. I don't know. Maybe you need that in order to consolidate within the departments.

But somehow or other, the secretary, or Mr. Tenet, or somebody has to be in charge it seems to me of intelligence. It's been an old saw in intelligence a long time, and I'm not certain it's getting worked out. It maybe more complex.

Do either of you have any comments about all of this within the period that I have allotted?

ARMITAGE: Thank you. Senator, there's something seriously out of sync, when you have policy-makers who -- even good friends like Paul and I who can disagree almost violently without being disagreeable I think on policy issues as we discuss them, and yet it doesn't seem to be the case in the intelligence community that that kind of disagreement is allowed to flourish. So there's something out of sync.

The meetings in front of the president: It's not a state secret that he welcomes different views, he requires them, to make the right decision. I think we need it too.

I can't give you any satisfaction on the other question of the interconnectivity of our information and all of that. We're dealing with a Department of State who, thanks to the goodness of Congress for the last two years, is finally coming into the 1980s. We almost have -- almost have all of our posts wired for e-mail. Not to mention secure.

LUGAR: Now if the technical revolution, just to the essence in State (inaudible) out in the field...

WOLFOWITZ: Senator, I think one of the real lessons, and it's not just with respect to terrorism, is we now have technological capacities that allow us to have a pull system for intelligence, rather than push. And let me take an example that's not in the terrorism area.

When it comes to satellite photography, our traditional way of doing it is the photo interpreters at a central location pour over it, they figure out what's really good, and they distribute it to a user. We now have capacity to distribute stuff that a user out in the field to may not be the world's best photo interpreter, but he knows that's a guy shooting at him from over the hill that he needs a photograph of can pull it out, and the data can distribute it. And we need more of that.

And that, by the way, is the opposite of this tendency which is every problem's going to be solved by centralizing. I think on the whole, we get huge advantages from more decentralization.

The other point is, I hope that people understand, no matter how good our intelligence gets -- and obviously it could be improved, and obviously we can identify things that could have been done better -- it will never be good enough that we can simply wait and head off every attack when it's imminent.

WOLFOWITZ: We got to act preventively. And that isn't only by military means, or even only by intelligence means. But we can no longer say that it's somehow acceptable -- maybe acceptable was never quite the right word -- but that countries sponsor terrorism and we put them on a terrorism list and we don't sell them Boeing aircraft and that's good enough.

I think we've seen on September 11th a glimpse of how terrible the world will be when those kinds of capabilities are magnified by weapons of mass destruction. And I think what we came to somehow live with over the last 20 years we can't live with anymore. And no matter how good our intelligence is, we will not be able to live with it.

GRAHAM: Thank you, Senator Lugar.

Senator Inhofe?

INHOFE: Thank you, Mr. Chairman. I'm going to cover three things that I don't believe have been covered.

First of all -- and I think it's appropriate, even though it's into within the scope of specifically what we're supposed to be talking about here, but Senator Lugar said something about the abilities -- the ability that we have.

I don't think we can isolate and leave out of this discussion what is happening to our capability militarily. We've seen several articles recently, an one as recently as Monday in the Wall Street Journal, in terms of the attention that we're paying to the defense of this country, that through the 20th century we've spent about -- averaged 5.7 percent of our gross domestic product on defense during peacetime; during wartime, 13.3 percent on defense. It has been, prior to this last budget, under 3 percent of our gross domestic product.

I think this is a very critical thing, and I believe that it was, in one of the early hearings that we had in this administration, Secretary Rumsfeld said we're going to have to face it and get it up to or exceed 4 percent of our gross domestic product. I'd like to have each one of you just, kind of, respond to that and see if you have any thoughts on that.

WOLFOWITZ: You're not going to get a strong argument from me. We're getting substantial increases in resources thanks to the budget increases that the president approved actually prior to September 11th.

INHOFE: Except the current budget is only at 3.1 percent, and I'd like to, kind of, look...

WOLFOWITZ: I think the other point I'd make, Senator, is we need to make truly efficient use of what we have. And it's not simply a matter of -- though it's not a trivial matter -- to make good use of the taxpayers' dollars, but I think sometimes we find that we need structures that are quicker and more agile and communicate with one another better, and sometimes that's a smaller, leaner structure, rather than a bigger one.

INHOFE: OK. Let me get to point two. I think I would agree with that.

There seems to be an attitude here or several public statements have been made that talk about this administration and the mess that we got. You know, I always think of the two skeletons in the closet, one rattled to the other one, "How'd we get in there?" And the other one said, "If we had any guts, we'd get out." Well, I think we have an administration now that has the guts to get out.

I'm a little disturbed, though, the first thing that happened during the past administration, take the energy labs, for example, they did away with color-coded ID badges, they did away with wire checks -- or background checks and reinstated some people who had already been shown to have leaks. And I think that -- I remember going through what I call the hand-wringing phase of Osama bin Laden, starting with the World Trade Center and with the -- his actually taking credit for the first Yemen threat that was out there, Somalia, then of course Tanzania and Yemen. All this happened, and then you guys came in office.

Now, I think you said, Secretary Armitage, that by the time you got your national security team in place and were able to do something, it was -- your first meeting was in March?

ARMITAGE: In April, sir.

INHOFE: In April. So -- and then this comes along just a few months later. And I would just ask you the question for a real brief answer as to what do you think you really had time to do, in terms of getting a real handle on all the access to the information that there and getting it properly interpreted to your satisfaction?

ARMITAGE: I'm not sure how to satisfactorily answer it for you, Senator Inhofe. I know that within a month, we felt that we had enough information to decide that we had to aggressively go after Al Qaida. And that was within a month. So, I mean, we learned a lot more as we moved on down the path, but that was a decision of April 30th. I've been in office five weeks, and Paul about seven.

INHOFE: I think in your testimony, Secretary Wolfowitz, the key paragraph, and I'm going to repeat it again here to make sure everyone heard it. "The president has made it clear we will not wait until it's too late, and that the one option we don't have is doing nothing. We can not afford to wait, as the secretary put it so well, until we have a smoking gun for a gun smokes after it's been fire."

I see the hand-wringing now coming from this side of the table, as opposed to the administration, quite frankly. Because when we talk about all the things that have to be done, and all the things that have to be in place, I'm hoping that you folks realize that, and you do realize, and the whole country needs to realize that you have the authority in the event the president sees imminent danger to an American city to go ahead and take the necessary action. That doesn't require a response.

Lastly, my predecessor, David Boren, was the chairman of the Senate Select Intelligence Committee. He and I talked in 1994, when I took his place and he became president of Oklahoma University, about the problems that we have in our intelligence community, talking to each other. We're talking about NSA, and you know -- it's, kind of, turf battle that's going on.

In terms of the undersecretary of defense for intelligence, which I strongly support, recognizing this doesn't take all of the intelligence community into effect, only the DOD portion of it, do you think this is going to go a long ways into ending the turf battle in our intelligence system?

WOLFOWITZ: I hope it goes a long way towards dealing with turf battles within that large chunk of the intelligence system that's in the Department of Defense.

By the way, I think turf battles is a little -- yes, they're turf battle; we're all aware of them. They're also legitimate reasons why one agency is concerned about overly wide dissemination of information. These problems don't arise just because people are defending turf.

But I think within that large area that is under the secretary of defense's purview, I think this will go a long way. It's not a magic cure, there is no single magic cure, but it will be a major step forward.

Thank you for supporting it.

INHOFE: Thank you.

ARMITAGE: May I take advantage of your initial question, Senator, to make a point?

INHOFE: Yes, of course. You certainly may.

ARMITAGE: Any support for the defense budget is welcome. I think it should be welcome by every citizen. I'll just make the department of State's budget is one tenth of one percent -- one tenth of one percent.

INHOFE: Well, I only mention that because I chair the Senate Armed Services Committee on Readiness, and it's -- we're at a point where, when you look at readiness, modernization, national missile defense, all these things that we have to do, there's no longer one area that you can rob money. We're going to have to do something about the bottom line, in my opinion.

INHOFE: Thank you.

GRAHAM: Thank you, Senator Inhofe.

Senator Feinstein?

FEINSTEIN: Thank you very much, Mr. Chairman.

Gentlemen, welcome, and thank you.

What has come through to me so far is that, although George Tenet declared war, either no one heard that declaration or not many people heeded it. And although the intelligence community warned that Al Qaida sought to attack the United States and was capable of inflicting mass casualties, really insufficient attention was devoted to the risk of an attack at home. Gaps in intelligence coverage were not filled, defending the homeland should have been the number one priority. But instead, attention really was focused on attacks overseas and no real effort was made to harden the homeland to reduce the chances of attack.

Did the intelligence community -- and I recognize that there's a shift of administrations, and I recognize the time it takes to get up and running, and I'm not intending to ask these questions purporting any blame whatsoever, but did the intelligence community clearly warn you that Al Qaida was capable of and sought to carry out a mass casualty attack on the United States?

ARMITAGE: Senator, thank you.

I recall being told by the intelligence community about the efforts of Al Qaida to develop chemical, bio and radiological weapons. I do not recall, and I'm sure I didn't get any information that said they had this capability that they were intent on developing. I remember that.

FEINSTEIN: Mr. Wolfowitz, do you want to respond?

WOLFOWITZ: I don't recall any warning of the possibility of a mass casualty attack using civilian airliners or any information that would have led us to contemplate the possibility of our shooting down a civilian airliner. I do recall a lot of information suggesting the danger of mass casualty attacks from chemical, biological, nuclear weapons, and we undertook a -- I mean, I disagree with the statement that nothing was done to protect the homeland. We put a major focus on what needed to be done to deal with particularly those kinds of mass casualty contingencies.

We included a number of measures in our '02 budget proposal and, as I said earlier, when we did the Quadrennial Defense Review, some considerable time before September 11th, we identified homeland defense as the number one priority for the Defense Department for our transformation efforts.

FEINSTEIN: Thank you, and that's certainly correct.

Since you've mentioned Iraq and you mentioned it in your written statement as well, what do you see as the connection between Al Qaida and Iraq? And have you received any information which is specific enough to let you be convinced that there was a meeting between Mohamed Atta and Iraqi intelligence in Prague or anywhere else?

WOLFOWITZ: Senator, this gets into a lot of classified areas which I believe Director Tenet addressed.

FEINSTEIN: I'm not asking for the information, just what you...

WOLFOWITZ: Well, I'm sorry, one can't get into it without getting into the information.

One of the things that we said earlier is these are not issues where there is categorical lists of the case or that is the case. Almost everything we know or everything we think didn't happen has some uncertainty attached to it.

But the point I was trying to make, the point secretary of defense is trying to make, is about more than just one country. It's about the fact that there are people out there, a number of them, with horrible capabilities and with hostile intentions. And if we insist on waiting until we have the kind of precise intelligence that allows us to say there is an imminent threat, we will wait too long.

In fact, when one thinks about September 11th and the kinds of actions that might or might not have been taken in a war against Al Qaida, it's worth remembering that the September 11th plot was clearly put into motion as early as the beginning of the year 2000; that the entire group of hijackers was in this country by the spring of last year. And that if we had succeeded in closing one door to them, they might very well have examined others. We know that Mohamed Atta, for example, was investigating the possibility of crop dusters, presumably to distribute biological weapons.

So we can't defeat terrorism by defense, by closing every door we can find. We're only going to defeat terrorism when we put these organizations out of business.

FEINSTEIN: Thank you.

GRAHAM: Thank you, Senator.

Senator Kyl?

KYL: Thank you, Mr. Chairman.

I just wanted to begin -- I've been reading this August Time magazine piece that tells all with absolute accuracy, I'm sure. And by way of introducing our two panelists today, they come out very well as enthusiastic supporters of doing something about terrorism: "Richard Armitage, the barrel-chested deputy secretary of state, Paul Wolfowitz, the scholarly hawk from the Pentagon."

WOLFOWITZ: I resent that comment.

(LAUGHTER)

KYL: No, you should be very pleased with it in the context of the article, which says there were those who weren't quite as anxious to move forward on terrorism and that you all were very enthusiastic, and I have noted that in everything that you've been doing.

GRAHAM: And I will also note that Mr. Armitage did not reject his description of barrel-chested.

KYL: Indeed.

WOLFOWITZ: And I didn't say which part of mine I was objecting to.

(LAUGHTER)

KYL: Well, in your testimony, Secretary Wolfowitz, you talk about your service on the Rumsfeld commission and the issuance of the report back in 1998. I just wanted to quote, because this was not quoted during your oral presentation.

You talk about your service on that commission and the fact that, because of the significant need for good intelligence, Congress subsequently requested an intelligence side letter to the report, which was provided. And then I quote partially from your testimony here.

"First, according to the side letter, it was evident to all commissioners that resources for intelligence had been cut too deeply and that the United States was entering a period in which the intelligence community was going to be seriously challenged to meet its foremost task: preventing surprise."

You go on to say that, "U.S. intelligence capabilities needed to succeed in this task," the letter concluded, "were not as robust as they needed to be."

And to go on to conclude, the letter highlighted that, "in methodological approach, analytical depth and presentation to users, the intelligence community was in a degraded situation."

And then your testimony notes that, partly as a result of this, Congress responded with a significant increase in funding for intelligence in the fiscal '99 budget. "But," and I quote your testimony, "despite the best efforts of this committee, however, the increases were not sustained in fiscal years 2000 or 2001."

And then you conclude by noting that at literally the time of the attacks last September, the department was preparing a significant increase for intelligence in the FY 2003 budget. And you note that immediately after the attacks, it was doubled.

So I take your point, and have been urging for some time that we focus on the resources part of the problem; that many of the deficiencies that people have been able to point to here can be traced back to a requirement that we compromise some intelligence because of inadequate resource.

And my first question to you is, without citing any specifics unless you'd like to and can in an open session, are you aware, generally in other words, of situations where intelligence compromises had to be made because of inadequate resources?

WOLFOWITZ: Yes, generally, but I'm not aware of ones that I would directly connect to the September 11th events.

KYL: Does it, secondly, make any sense to fix the intelligence budget as a specific, arbitrary percentage of the defense budget, given especially the kinds of things you've been trying to do in terms of transition and the increasing requirements for good intelligence as a component of the new kind of war that we fight?

WOLFOWITZ: I don't think so. I'm reluctant to have arbitrary targets, although it's maybe good to keep them in mind as a, kind of, benchmark to ask yourself the question.

But we went through -- to give you an example of how I think it needs to be done, we went through a major exercise last fall in putting the budget together in looking at transformational technologies that hadn't made it into the service budgets, and a lot of those were in the intelligence area. And then we sat down, program by program, with Director Tenet and with his people and decided where there were overlaps and redundancies or where there were gaps that needed to be filled.

And I don't think there's any substitute for doing the detail work, and we did it and we need to keep doing it.

KYL: This time has gone far too quickly. I wanted to give Secretary Armitage just a opportunity to talk, too, about the need for enhancements in the budget with respect to the State Department, significant responsibilities, especially with regard to terrorists coming into the country, the visa programs, the new requirements that I think we have properly placed with the State Department in the border security bill.

And I guess, therefore, before the yellow light goes off...

WOLFOWITZ: Before he answers can I just say I'm supportive?

(LAUGHTER)

ARMITAGE: We've, in the first two years I must say the Congress, in relative terms, has been generous to us. The requirements of the Patriot Act and further in the homeland security bill, which we gladly accept, will definitely require more consular affairs officers, more training in consular affairs, which is exactly what you all want.

This does not mean, however, that even in the State budget that, other than for planning purposes, I would welcome a fixed percentage of the GNP devoted to the State budget. Because it's what you do with the money that's so much more important than some arbitrary number.

But for planning purposes, having a general range would be very helpful, I think, for guys who have to make budget decisions.

KYLE: Thank you.

Thank you, Mr. Secretary.

CHAIRMAN: Thank you, Senator Kyl.

Senator Hatch?

HATCH: Well, I want to welcome both of you here, and we appreciate the service both of you've given through all these years to our country. It's been extraordinary service and, of course, I'm aware of a lot of it and I just personally have high regard for both of you.

Dr. Wolfowitz, to your knowledge, did the Defense Department ever do any kind of after-action study of the lessons learned following the USS Cole incident?

And let me just add one other question to that. Did it ever attempt to reform intelligence collection or analysis in ways designed to prevent future such attacks?

WOLFOWITZ: There was a very careful after-action study on the Cole incident. I believe it was done, actually, at the request of the House Armed Services Committee. And understandably -- or maybe not understandably, but I think understandably, it focused very heavily on force-protection deficiencies and what we needed to do to close that particular door in the future.

And we are pretty good at closing the barn door after that particular horse is out. And at the risk of repeating myself, I think the message there is we're not going to win this game on defense. We've got to go on offense, and we are on offense now.

HATCH: For both of you, in February 2001, the director of central intelligence testified before the Senate Intelligence Committee that he believed that Al Qaida was the most immediate threat faced by the United States.

Before September 11th, did anybody in your respective departments receive periodic reports from the intelligence community on Al Qaida and the threat that it posed?

ARMITAGE: Yes, absolutely. In the State Department we had almost a weekly update on Al Qaida, Senator.

HATCH: OK. Were you aware that, despite what the DCI said about Al Qaida being our number one threat, the CIA's Counter-Terrorist Center had only five persons working full-time on intelligence analysis related to Osama bin Laden? And the FBI only had one.

ARMITAGE: No, I was not, sir.

HATCH: OK. Would you have less confidence in the strength of the products you were getting if you had known how little effort the intelligence community had actually devoted to analytical work on this type of a product?

ARMITAGE: Well, we had our own analysts looking at it and sometimes they came to slightly different opinions on this or that. And I had a fair amount of confidence that I was, between the two, getting it pretty right. I had no idea of the numbers involved in the agencies.

HATCH: Just one last question. You, Mr. Wolfowitz, you could comment on either of those questions I just asked, if you care to.

WOLFOWITZ: No, I'd basically give you the same answer as Secretary Armitage.

HATCH: OK. When you arrived at the Defense Department in this new administration, were you briefed on any serious contingency planning for using military personnel in the fight against terrorism?

WOLFOWITZ: We certainly talked about contingency planning for the use of the military in dealing with a mass casualty event in the United States. But one of our observations was that that contingency planning was in the very most primitive stages, and it's one of the considerations that led us to saying, in the Quadrennial Defense Review, that this had to be the number one priority for DOD transformation.

HATCH: At the time you arrived at the Defense Department what degree of effort and resources did the Department of Defense devote to fighting terrorism as distinct from force-protection measures?

WOLFOWITZ: I'm not sure I can make that distinction very well. We were spending billions of dollars on force protection. I guess to say what were we spending on the offensive piece, that would mostly be in -- there really is an accounting problem here.

WOLFOWITZ: There would be a lot in the intelligence world. And then the question would be, how do you count the various capabilities that we were developing that we later used in Afghanistan? We were not actively using our military against terrorism at that particular stage, but we obviously were developing capabilities that proved to be crucial.

HATCH: Well one last question to either or both of you: Does the FBI currently have the freedom necessary to penetrate radical cells within our country? And we know there are radical cells in our country.

WOLFOWITZ: I don't know the answer to that.

ARMITAGE: I don't know the answer.

HATCH: You don't know the answer.

CHAIRMAN: Thank you, Senator Hatch.

HATCH: Thank you.

CHAIRMAN: Senator Levin?

LEVIN: Thank you, Mr. Chairman.

Let me add my welcome to our witnesses. Let me ask both of you, in August of 1998, in the aftermath of the East African embassy bombings, the United States launched cruise missiles at Al Qaida targets in Afghanistan. Is it your understanding that bin Laden was an intended target of that attack?

Let me start with you, Mr. Wolfowitz.

WOLFOWITZ: I don't know what the intentions were at that time, Senator. I've read that it -- that he was, but that it was considered a valuable target, whether or not he was there.

ARMITAGE: I agree.

LEVIN: All right. Were we not, in any event, after that attack, in effect, at war with bin Laden and Al Qaida at that point three years ago?

WOLFOWITZ: I would say, Senator Levin, that we were probably at war with Al Qaida in February of that year when bin Laden issued his famous fatwa declaring war on us in effect, or possibly earlier.

One of the basic problems we have here is we're not dealing with a traditional enemy where there's a clear transition from being at war -- or being at peace to being at war. But surely that fatwa was something that was pretty chilling.

LEVIN: Let me ask you about intelligence reporting from the FBI that you've received, and as to whether or not the reporting from the FBI on threat of foreign terrorism has changed since September 11th?

Mr. Armitage, why don't I start with you?

ARMITAGE: Yes, Senator. From our point of view at State it has. The FBI is a very active participant in the secure video teleconference that we have at least twice a week, simply in the counter-terrorism arena. I asked the very question to our fellows this morning, and that's the answer I got.

LEVIN: That was not the case before September 11th?

ARMITAGE: No, I believe that it was not the case. And general sharing of information from law enforcement agencies was a real shortfall.

LEVIN: OK.

Mr. Wolfowitz?

WOLFOWITZ: I think there's definitely been a change since September 11th. I think there are still big issues that people wrestle with about civil liberties considerations involved in sharing information that may be directly related to a prosecution. And I think there are concerns that the FBI has, like every other agency, that if they share their information with someone else, it may get compromised.

So there are still issues there, and there's no magic solution, but there's definitely a change since September 11th.

LEVIN: Be specific: What changes have occurred since September 11th?

WOLFOWITZ: I measure it in terms of the quantity of information that I get, either...

LEVIN: How would you measure it? Twice as much? Four times?

WOLFOWITZ: Enormously more. I mean, just threat reporting every morning that -- and by the way, it isn't always clear when something has come from the FBI or from another intelligence source. But I'm making guesses that a lot of this is coming from FBI investigations.

LEVIN: And you're looking at the quantity of reporting every morning on threats?

WOLFOWITZ: Basically, yes.

LEVIN: Was that reporting available every morning prior to 9/11, but there wasn't as much each morning? Or it was sporadic as to whether it was every morning or not?

WOLFOWITZ: I think it's two things. I don't think there was nearly as much. I mean, remember all these people that the FBI has detained and interrogated around the world including in this country have produced a huge volume of information we didn't have before. But I also think there's a much greater willingness to share what they have.

LEVIN: Yesterday the joint inquiry staff reported that a closely held intelligence report was prepared in August of 2001 for senior government officials, and that it included information that bin Laden had wanted to conduct attacks in the United States since 1997, as well as information acquired in May of 2001 that indicated that a group of bin Laden supporters was planning attacks in the United States with explosives. Can you tell me who within the administration received that report, and what action was taken in response, if any, to the warnings in response to that specific intelligence report of August 2001 for senior government officials?

Mr. Armitage, let me start with you.

ARMITAGE: I recall that general topic in the senior executive intelligence brief. I can't tell you who got it. I know I got that one I think a day or two after some other people saw it. But I saw that. And it talked about a hijacking possibility.

LEVIN: Thank you.

And Mr. Wolfowitz?

WOLFOWITZ: I have to confess, I wasn't aware of it until I read about it much later. And maybe that's because it came in August, and I think during a time when I was on leave.

I think we were generally aware of the fact that Al Qaida attacks could take place in the United States as well as abroad, and put a lot of emphasis on heightened force protection levels. In July of last year, when we got an exceptionally large volume of threat reporting, we went on a worldwide alert, including at our facilities here in the United States.

LEVIN: Would you let the -- for the record, let these committees know who in the Defense Department then, if any, received that August 2001 intelligence report that I've referred to?

WOLFOWITZ: I will try to check for the record, yes, sir.

LEVIN: Thank you.

Thank you, Mr. Chairman.

GRAHAM: Thank you, Senator Levin.

Congressman Boswell?

A designated questioner has now returned. Congressman?

BOSWELL: I have returned. Thank you, Mr. Chairman, and thank you, Chairman Goss, for your hard work in trying to bring this resolve.

And I would like to address our two secretaries just a moment before I ask questions.

Mr. Armitage, you and I have a little history together. And I suppose you probably know where that was: in Southeast Asia and the Vietnam situation. And I might make reference to that in a moment. But I appreciate the fact you said some things didn't happen as we refer to what's going on in this talk today. And I refer to them as prevents that we can't talk about that have happened, and I appreciate that.

But I think we owe it to these families from yesterday. I mean, it was a soul-searching day yesterday as we talked to them. And I would guess