SECTION I – CURRENT INTELLIGENCE

ECONOMIC SPIES UNDERMINE U.S. MILITARY ADVANTAGES, REPORT FINDS - Spies from nearly 100 countries sought sensitive U.S. technology last year, and technology losses undermined U.S. military advantages, according to an annual counterintelligence report, the Washington Times reported on 1 June.
www.washingtontimes.com/national/20050531-110044-9888r.htm
            "The U.S. counterintelligence community judges that the technology lost as a result of these efforts has imposed a significant, but difficult to quantify, cost on the United States," according to the report drawn up and sent to Congress by the Office of the National Counterintelligence Executive, a unit recently placed under DNI Negroponte. "Foreign access to sensitive dual-use and military technology has eroded the U.S. military advantage, degraded the U.S. intelligence community's ability to provide information to policymakers and undercut U.S. industry," it says.
            The report did not identify the countries involved but said they include those that perennially top the counterintelligence community's list of most aggressive collectors.  A senior FBI counterintelligence official, however, identified some of the countries as China, India, Pakistan, Iran, Russia, Japan, France and Israel.
            In one case, the Chinese stole the technology for an advanced metal used in U.S. military systems from a university laboratory in Iowa. "Before the U.S. military could get it licensed, classified and manufactured, the Chinese had stolen it, stolen the marketing strategies, the customer list, and were manufacturing and selling it back to the United States," the official said.
            The report said most corporate trade secrets and technology theft took place without direct intervention by state actors, though most foreign governments involved have not discouraged such theft and themselves often benefited from the transfers.
            Economic spies were able to obtain data by making direct requests to naive U.S. companies, in many cases by simply asking via e-mail, phone call, facsimile, letter or in person for the sensitive information, the report said.
            High-technology targets included information systems, sensors, aeronautics, electronics, armaments and explosives. The report said the United States remains the primary source of most of the world's advanced technology used for foreign militaries. Foreign governments also use stolen U.S. technology to help make their domestic businesses more competitive.
            "The counterintelligence community expects no decline in foreign demand for sensitive U.S.  technologies over the next few years," the report said. (Don H. DKR)

DOD ORDERS MORE SHARING OF CLASSIFIED INFO WITH ALLIES - DoD Undersecretary for Intelligence Stephen Cambone has ordered all U.S. military officials to be more forthcoming in sharing classified information with allies, saying overly restrictive caveats on intelligence reports have hindered America's ability to work with coalition partners, the Financial Times reported on 3 June.
news.ft.com/cms/s/03b2c382-d3cd-11d9-ad4b-00000e2511c8.html
            In a memorandum sent two weeks ago to senior Pentagon officials, Cambone said classifying documents as Noforn (meaning 'Not releasable to foreign nationals') has been excessive. "For intelligence under the purview of the DoD, originators shall use the 'Releasable to' marking . . . to the maximum extent possible," he wrote.
            "It is an implicit acknowledgement that allies have been improperly cut out of the loop," said Stephen Aftergood, a defense and intelligence analyst at the Federation of American Scientists. "If there is a problem in sharing classified defense information, it is not a problem with Uganda. It is a problem with someone we are supposed to be sharing with, and the UK is first and foremost among those."
            According to officials, British Foreign Secretary Jack Straw, on a visit to Washington last month, told U.S. officials the Noforn classifications on weapons systems, in particular the Joint Strike Fighter being built in Texas for the United States and Britain, were greater than British officials had expected.
A section of the Cambone memo forbids foreign restrictions on all non-intelligence information, except nuclear propulsion secrets used for U.S. navy ships and information specifically limited in the DoD National Disclosure Policy, which is classified.
            Aftergood said it was unclear what instigated the Cambone memo, but noted that the JSF dispute could have prompted it. "Something triggered it," he said. "It is not the kind of memo that is sent for no reason." (DKR)

SECTION II – CONTEXT AND PRECEDENCE

INTERAGENCY TEAM SEEKS TO CURB NORTH KOREA'S TRADE IN COUNTERFEITS - An interagency team, including CIA, DoD, Treasury and Secret Service officials, is working with East Asian governments to curb what U.S. officials say is North Korea's booming trade in counterfeit cigarettes, pharmaceuticals and currency. The team, called the North Korea Working Group, has been run from State's Bureau of East Asian and Pacific Affairs, the Wall Street Journal online reported on 1 June.
online.wsj.com/article/0,,SB111756528456047297,00.html  [requires subscription]
            Larry Wilkerson, chief of staff for Colin Powell when he was Secretary of State, told the WSJ the effort, named the Illicit Activities Initiative, was launched in support of a wider Bush-administration effort to choke off the global trade in weapons of mass destruction. Raphael Perl, a senior analyst at the Congressional Research Service, who tracks the activities of the North Korea Working Group, hard-currency profits are funding Pyongyang's  nuclear program.
            Perl estimates North Korea earns $500 million annually from sales of counterfeit products. That is $100 million more than before 9/11.
            During the past nine months, customs agents in South Korea and Taiwan, who are receiving intelligence from the United States, have seized shipments of counterfeit cigarettes valued in the millions of dollars, according to officials in these countries. In many cases, North Korea isn't believed to be making the cigarettes but probably is allowing criminal syndicates to produce fake Marlboro, Mild Seven and State Express 555 inside its borders as a new source of income as revenue from ballistic-missile exports dwindles.
            U.S. officials working with the interagency team say Washington is focused on cutting off Pyongyang's remaining illicit hard-currency earnings. In recent days, this initiative has grown in importance, they say, as talks between the U.S. and North Korea show few signs of progress. (EB, DKR)

AUSSIES GET NEW COUNTER-ESPIONAGE UNIT - The Australian Security and Intelligence Organization has set up a new counter-espionage unit to boost its surveillance of foreign spies, notably Chinese and Russian, seeking to plunder Australia's military secrets, the daily The Australian (Sydney) reported on 2 June.
www.theaustralian.news.com.au/common/story_page/0,5744,15481768%255E31477,00.html
            With senior government sources reporting that foreign spies are as numerous in Australia today as they were during the Cold War, ASIO's move reflects concern that Australia remains a priority espionage target, in particular for China, which is seeking information on military-related technology and strategic policy.
            Objects of espionage were likely to include the Australian Defense Science and Technology Organization, the government-owned ASC, which built the Collins-class submarines and is to build the Australian navy's air warfare destroyers and Pine Gap, a major SIGINT ground station staffed, according to the Australian, by the CIA and NRO. Two of its ground antenna are part of the U.S. Defense Satellite Communications System.
            Last year, ASIO requested and received funding to set up the new unit. The organization's traditional counterespionage role had suffered from a shift onto counterterrorism after 9/11 and the Bali bombings in October 2002 in which nearly 200 people died, more than 30 of them Australians.
            Other countries pursuing espionage in Australia are Indonesia and Israel. In March, an Israeli diplomat, Amir Lati, was recalled following ASIO reports on his activities. (DKR)

'DEEP THROAT' FESSES UP - W. Mark Felt, then FBI Associate Director, has admitted to being "Deep Throat," who exposed key details of the Watergate scandal to The Washington Post, the Washington Times reported on 1 June.
www.washingtontimes.com/national/20050601-121822-8656r.htm
            Felt, now 91, came forward and claimed to be the source of information used to bring down President Nixon, according to an article to be published in the July issue of Vanity Fair magazine, the Times said.
            The Post confirmed the Vanity Fair claim on 31 May, saying Felt supplied reporters Carl Bernstein and Bob Woodward with details of a break-in at Democratic National Committee Headquarters in the Watergate Hotel on 17 June 1972 and the subsequent cover-up. Those involved in the break-in were working on behalf of the campaign to re-elect Nixon. The President was obliged to resign from office two years later.
            Accounts in The Post and elsewhere said Felt, bureau associate director until 1973, was moved to blow the whistle on the Watergate break-in because Nixon had passed him over for FBI Director. Other reports said he opposed Nixon’s efforts to take control of the bureau for political purposes. Felt’s grandson, Nick Jones, said Felt was "a great American hero who went well and above the call of duty at much risk to himself to save his country from a terrible injustice."
            In 1978, DoJ indicted and eventually convicted Felt for approving the use of illegal wiretaps on people with connections to the Weather Underground, an American Leftist terrorist organization. President Reagan pardoned him while the case was under appeal in 1981. (DKR)

SECTION III – CYBER INTELLIGENCE

DOD GIVES CONGRESS DATABASE ON MILITARY BASES WORLDWIDE - On 2 June, DoD sent Congress an unprecedented classified database on every military base worldwide that could be a handbook for future attacks if it fell into the hands of al-Qa'ida or other terror groups, the Washington Times reported USG and congressional officials as saying.
www.washingtontimes.com/national/20050603-123934-3401r.htm
            The Pentagon sent the data after 21 senators, including Maine's two Republicans, Susan Collins and Olympia J. Snowe, complained to President Bush. The lawmakers said they needed an extensive information base to defend 33 major bases and 147 smaller installations from DoD plans to close them. A commission, led by former Veterans Affairs Secretary Anthony J. Principi, is holding hearings on the Pentagon's list and will make recommendations in September.
            Collins said the new data are not helpful because they are classified. "This means that the documents cannot be used at public hearings, public meetings, or at meetings that are not held in a classified facility by people with security clearances," she said. But U.S. officials and congressional sources said DoD would be able to declassify parts of the data in time for public hearings.
            The Maine senators are seeking to vitiate DoD recommendations to close the Portsmouth Naval Shipyard, which would affect 201 military jobs and 4,032 civilian positions, the Times said.
            Once the commission settles on its list of bases, Congress can only reject or accept the entire list. If there is no such vote, the list becomes final.
            The database is so sensitive that the Pentagon carried out a red team exercise in which DoD personnel played the role of terrorists. The result of the exercise was to make some national security officials uneasy. It found that the information was so detailed that, in the wrong hands, it could be a handbook for al-Qa'ida. (DKR)

NORTH KOREAN HACKER CAPACITY SAID TO EQUAL CIA’S - North Korea’s computer hackers have a capacity equal to that of the CIA, Dr. Byeon Jae-jeong of the South Korean Defense Ministry's Agency for Defense Development said on 2 March, the Chosun Ilbo newspaper reported.
english.chosun.com/w21data/html/news/200506/200506020014.html
            North Korea operates some 39 bugging and surveillance posts from which it eavesdrops on communications and signals across South Korea. Byeon spoke at the 2005 Defense Information Protection Conference, held at Korea University under the joint auspices of the Defense Security Command, Korea University and Korea Information Security Agency.
            "Simulations on North Korea's information warfare capabilities," he said, "reveal that Pyongyang could damage the command and control center of U.S. Pacific Command and the power grid of the U.S. mainland."
            Pyongyang employs 500 to 600 hackers tasked with hacking into computer networks and disabling enemy command and communication systems. North Korea researches hacking techniques at Mirim Automation College that has been turning out about 100 cyber warfare specialists a year since 1981. (DKR)

CIA’S VENTURE CAPITALIST SEEKS NEW IT FOR IC - As CEO of In-Q-Tel, Gilman Louie has the job of operating as a venture capitalist charged with helping to deliver new IT to the CIA and the rest of the IC. "At the end of the day, the mission is to find technologies that can protect lives," Louis told CNET News.com in a lengthy interview.
news.com.com/The+secret+behind+the+CIAs+venture+capital+arm/2008-1082_3-5728548.html
            In-Q-Tel, based in Silicon Valley, is a publicly funded operation, bound by the usual requirements governing conflict of interest familiar to other government agencies. It also has to keep quiet about much of its activities.
            Earlier this year the New York Post raised the question of a conflict of interest after some employees sold stock in a company In-Q-Tel had invested in. Louie commented that his company had designed a compensation scheme that would attract the kind of qualified people it needs from the private sector but not overly compensate them.
            “We have an agreement with the government that says after the moment a stock becomes available, you have a short period of time where you're expected to liquidate those resources. We tie the employee funds in the same way. You don't get to choose; we choose for you.” (DKR)

‘GLASS BOX’ PROVIDES NSA WITH ANSWERS – NSA is teasing intelligence information out of massive federal databases via its Glass Box program that uses innovative methods to discover hidden results and improve analyst performance, GCN.com reported on 1 June.
www.gcn.com/vol1_no1/daily-updates/35953-1.html
            The program uses unclassified, open-source information to produce information used by the Novel Intelligence from Massive Data program, according to contractor Battelle Memorial Institute of Columbus, OH. NSA recently awarded Battelle a $1.507-million contract to continue its Glass Box work from last January through June 2006.
            According to contract documents, Glass Box is designed to evaluate intelligence algorithms developed by other NIMD activities and also to develop the Glass Box Analytic Environment, a hub task of the NIMD project. The contract documents describe NIMD as a research and development project intended to last for several years to discover the novel intelligence that lurks undetected in the intelligence community's databases.
            Novel intelligence falls in the category of information that causes intelligence analysts to gain new understanding of previously unappreciated or misunderstood threats, according to the contract documents. (DKR)

SECTION IV -- BOOKS, SOURCES, AND ISSUES

BOOKS  

A BUNGLED OCCUPATION? - Larry Diamond, Squandered Victory: The American Occupation and the Bungled Efforts to Bring Democracy to Iraq (Times Books, 384 pp. $25)
            Diamond, a senior fellow at the Hoover Institution who is an authority on the relationship between democracy, governance, and development, opposed going to war but supported building the peace. So when the national security adviser, his former Stanford colleague, Condoleezza Rice, asked him to advise the Iraqis on writing and implementing a democratic constitution, he accepted and spent the first quarter of 2004 in Baghdad. What he witnessed there was not encouraging.
            Diamond accuses the occupation authorities of criminal negligence in what he saw as their refusal to deal honestly with worsening conditions, especially the growing insurgency. The American viceroy in Baghdad, Paul Bremer, comes out very poorly in Diamond's account of miscalculations, missed opportunities and ideological blindness. (DKR)

JIHAD AS THE PATH TO WORLD DOMINATION - David Cook, Understanding Jihad (University of California Press, 288 pp. hardback $50, paperback $19.95)
            Cook examines a range of sources from Islamic texts to modern interpretations in his study of what is meant by jihad in theory and in practice.
            He sheds light on legal developments relevant to fighting and warfare and on jihad as an internal, spiritual effort. He shows that from the days of the Prophet Muhammad down to Usama bin Ladin, jihad primarily has meant spiritually significant warfare. As Cook observes, during the early centuries of Islam, the interpretation of jihad was unabashedly aggressive and expansive.
            Later Sufi notions of jihad as self-improvement developed without eclipsing its war-making significance, eventually applied to the correction of fellow Muslims found to be impure and, in the 20th century, as the way to achieving world domination. (DKR)

AFIO MEMBER SPINS TALE OF POST 9/11 INTRIGUE - Pete Earley, Lethal Secrets (Forge, 336 pp. $24.95)
            In Earley’s story, Deputy U.S. Marshal Wyatt Conway is assigned to guard Sergey Pudin, a Russian Mafiosi. A Russian intel officer, Colonel Khrenkov, has been blackmailed into murdering Pudin before he can testify against crime bosses.
            In distant Chechnya, Movladi "The Viper" Islamov, once a student of Conway's, has become an international terrorist and discovered that Stalin had a thermonuclear sleeper bomb built and hidden in the basement of the Russian embassy in Washington.
            Kimberly Lodge, a shapely CIA counterterrorism officer, is enamored of Conway, an old-fashioned he-man kind of guy. He gets himself taken into an agency investigation and proceeds to outshine everybody else, whether American or Russian.
            Earley works complex true details about everything from government bureaucracy to weapons technology into his tale of wild adventure. (DKR)

ISSUES

RICE PRAISES PROLIFERATION SECURITY INITIATIVE SUCCESSES – Secretary Rice has declared the Proliferation Security Initiative has helped decrease missile sales and shipments of WMD materials around the world in the two years of its existence, the Washington Times reported on 1 June.
www.washingtontimes.com/world/20050531-094212-2737r.htm
            Rice told foreign ambassadors the results of the two-year old program have been impressive. "In the last nine months alone, the United States and 10 of our PSI partners have quietly cooperated on 11 successful efforts," she said. "For example, PSI cooperation stopped the transshipment of material and equipment bound for ballistic missile programs in countries of concern, including Iran."
            State's spokesman, Richard Boucher, later cited two operations that prevented North Korea from receiving materials used in making chemical weapons and blocked the transfer to North Korea of a material useful in its nuclear programs. He said he would not be more specific because of intelligence concerns.
            The only specific example of a success Rice mentioned was the interdiction of centrifuge components bound for Libya on the German-flagged ship BBC China in the fall of 2003, for which she said the PSI provided the framework.
            President Bush set up the PSI in mid-2003. Today it has grown from 11 participating countries to more than 60 around the world. (Elizabeth B., DKR)

COFER BLACK SEES ISLAMIST TERRORIST CHANGING WEST'S WAY OF LIFE - "I predict that the quality of all our lives will change to a certain extent, as measures previously considered needed in forward areas will increasingly be ... adopted in our home countries," Cofer Black, former State Department counterterrorism coordinator, told counterterrorism officials meeting in Florence, Italy, UPI reported on 3 June.
www.washingtontimes.com/world/20050603-121948-4879r.htm
            Despite U.S. successes in killing or capturing foreign insurgents, the capabilities the survivors are acquiring are changing the odds, Black told the conference. "Not many have to get past you when they are trained so well in explosives." Protection against such a threat might entail significant changes in ways of life, Black said.
            European officials said they are facing a new, more dangerous generation of Islamic extremists. They are younger and more radical than their elders and in some cases trained and battle-hardened in Iraq, UPI said.
            Spain's Balthazar Garzon, the investigating magistrate leading Madrid's effort to prosecute Islamic terrorists, said there is now a second generation, some as young as 16 and in many cases with no history of affiliation with al-Qa'ida or other established terror groups. He described the terrorists who carried out the Madrid railway bombings last year as a whole network based on personal contact, where a single person was a kind of catalyst.
            Garzon’s comments echoed wider European concerns over terror cells formed by the offspring of Muslim immigrants, recruited in jails or over the Internet.  As such young people often have no history of connection to extremist groups, intelligence and law-enforcement agencies are not aware of their existence, Garzon said.
            Recent investigations by authorities in several European countries have discovered networks of Islamic extremists recruiting and making travel arrangements for young radicals, who want to go to fight the U.S. military in Iraq. (DKR)

SECTION V -- CAREERS, NOTES, LETTERS, QUERIES AND AUTHORS SEEKING ASSISTANCE, CORRECTIONS, OBITUARIES, COMING EVENTS
[IMPORTANT: AFIO does not "vet" nor endorse these inquiries or offers. Reasonable-sounding inquiries and career offerings are published as a service to our members, and for researchers, educators, and subscribers. You are urged to exercise your usual caution and good judgment when responding or supplying any information.]