Section I - INTELLIGENCE HIGHLIGHTS

Israeli Intelligence Warns on Internet Use. Israel's domestic intelligence agency issued a rare public warning on Monday that terror groups were using popular social networking Web sites like Facebook to recruit, and possibly kidnap, Israeli citizens.

The Shin Bet security service said in its statement it had "received many reports of terror groups approaching Israelis on the Internet offering to recruit them - and possibly kidnap them".

The statement mentioned one incident in which an Israeli citizen had been approached on Facebook by a man who described himself as a Lebanese merchant and then offered to pay for classified information.

The Shin Bet said that in the past several years a number of Israeli citizens and residents were arrested after being recruited by terror groups over the internet. [Reuters/18May2009] 

Canadian Spy Agency Gets New Secret Rule Book. The federal government has laid down new rules for Canada's spy agency following high-profile scandals in which Canadians were tortured overseas.

The ministerial directions to the Canadian Security Intelligence Service also come as the agency takes on more foreign operations in hotspots like Afghanistan.

But human rights activists say so much of the classified instructions remain under wraps that it's impossible to tell whether they will lead to greater accountability.

The latest directions - essentially a government-penned rulebook for CSIS - cover fundamental principles, human sources, operational activities outside Canada and domestic and foreign liaison arrangements.

Heavily censored copies of the guidelines, issued to the spy service last year, were recently obtained by The Canadian Press under the Access to Information Act.

Much of the language mirrors past directions but large portions remain secret due to provisions of the Access Act that allow the government to conceal information concerning international affairs, investigations and advice from officials.

A direction outlining the government's "intelligence priorities" for 2008-09 was completely withheld from release - even though such task lists have been disclosed in the past, broadly covering CSIS efforts in areas such as counter-terrorism, security screening and deterring creation of weapons of mass destruction.

The deletions make it impossible to pinpoint changes to the CSIS rulebook of ministerial directions following two hard-hitting commissions of inquiry into the role of Canadian officials in the cases of Arab-Canadians tortured in Syrian prisons. [CanadianPress/20May2009] 

Lebanon Accuses Israel of Espionage. Lebanon filed a complaint to the United Nations after uncovering what it claimed was an Israeli spy network, leading to the arrest of 18 alleged agents accused of spying on Hizbollah.

In an unfolding story that reads like a John Le Carr� novel, Lebanese security forces have found listening devices hidden in cars, cans of motor oil and even in a water cooler, while two suspects have escaped across the Israeli border.

The office of Fouad Siniora, the prime minister, said yesterday said that Israel had violated Lebanese sovereignty by "setting up on its territory spy rings that were uncovered by the Lebanese army and security services".

Lebanon has charged 18 people with espionage since January, including a retired general, his wife, a butcher and a mobile phone salesman. Twelve are in custody and six are at large, two of whom escaped to Israel.

"The suspects arrested were part of different cells, each numbering three people at the most, and were not connected," General Ashraf Rifi, head of internal security forces, said. "We managed to uncover a technological secret which allowed us to put together the puzzle."

One cell was apparently collecting information on Hizbollah, the armed Shia movement that showed surprising military might during the 2006 war with Israel, which lasted 34 days.

Nasser Nader, the mobile phone salesman, is seen as a key catch. "He is the most important suspect among the detained members of the Israeli-linked spying network," Gen Rifi told the As-Safir newspaper, which is close to Hizbollah.

The discovery of the alleged network has led to a slew of theories in Lebanon, ranging from suggestions that Hizbollah had uncovered the network to show that Israel remained a threat to Lebanon, giving support to its fiery anti-Israeli rhetoric ahead of parliamentary elections on June 7.

People convicted of spying for Israel could face the death penalty if their actions were shown to have led to Lebanese deaths. [Fifield/FinancialTimes/22May2009] 

Satellites Zoom In On Crime At Border. A relatively obscure U.S. intelligence agency has begun using satellite photographs to help authorities bust drug runners along the nation's Southwest border.

R. Scott Zikmanis, a deputy director of operations with the National Geospatial-Intelligence Agency, said pictures from space can be used along with other intelligence to pinpoint Mexican narcotics operations and anticipate smuggling forays into the United States.

An eye in space adds one more tool to an ever-expanding technological arsenal aimed at defending the border from narcotics traffickers, human smugglers and terrorists.

If, for example, phone surveillance by the National Security Agency were to intercept cartel conversations in Mexico about a planned marijuana shipment, Zikmanis said, a satellite could be directed to photograph the staging operation, and pictures could be transmitted to U.S. agents along the border.

The American authorities could then alert Mexican counterparts to the stash-house location or use the intelligence to calculate when and where loads may come across the border, he said.

The National Geospatial-Intelligence Agency focuses on surveillance on foreign soil for the Pentagon, though it also has assisted emergency responders in domestic disasters such as wildfires and Hurricane Katrina.

The use of satellite imagery for border security, however, has been limited because of concerns about a military agency assisting domestic law enforcement, Zikmanis said.

A federal law, the Posse Comitatus Act, strictly limits U.S. military operations on American soil unless such operations are authorized by Congress

The NGA and NSA are agencies belonging to the Department of Defense.

Border-security surveillance will be done over Mexico, not the United States, Zikmanis said.

His agency uses both military and commercial satellites.

Because the military photographs may be classified, he said, the agency is wrestling with legal questions about what can be shared with law enforcement.

The new border operation will deliver more focused and immediate information, Zikmanis said. Although satellite images are not available for real-time surveillance, he said, analysts will be able to combine pictures with other data to target smuggling operations. [Wagner/ArizonaRepublic/18May2009] 

MI5 Came Close to Identifying 7/7 Bomber Mohammad Sidique Khan. MI5 was unwittingly on the point of identifying the suspect who went on to launch the worst terrorist attack committed in the United Kingdom.

The security service began a surveillance operation on April 12, 2005, to identify a suspected terrorist named by a detainee as "Ibrahim". By June 21, 2005, it was "optimistic" that it was going to be able to pinpoint who the suspect was. But 16 days later Ibrahim, subsequently identified as Mohammad Sidique Khan, led a suicide bomb cell that killed 52 innocent people on the Underground and on a bus.

Details of how close MI5 was to exposing Khan were revealed by the parliamentary Intelligence and Security Committee (ISC).

MI5 had been following leads arising from the successful 2004 Operation Crevice fertiliser bomb case, in which "Ibrahim" had played a minor role. The detainee said that Ibrahim had been to Pakistan in 2003 and had met the Crevice plotters. But MI5 did not discover who Ibrahim was until after Khan, a teaching assistant from Dewsbury, West Yorkshire, and three others detonated their bombs in London.

The ISC published a report, Could 7/7 Have Been Prevented? , and concluded, as it did in an earlier report in 2006, that MI5 had neither the resources nor the evidence to exposed the suicide plotters.

Details about the way MI5 worked and the scale of the terrorist threat that it was trying to combat between 2003 and 2005 has revealed missed opportunities to unmask at least two of the July 7 bombers - Khan and Shezhad Tanweer, both of whom had been spotted, although unidentified, in contact with the fertilizer bomb plotters.

MI5 admitted to the ISC that it could "easily" have identified Khan, the leader of the July 7 bombers, at least a year before the terrorist attack in London but did not attempt to do so because it assessed him to be a "small-time fraudster".

According to the ISC, which started its second inquiry into the July 7 bombings because of the evidence on Khan and Tanweer that emerged in the Crevice trial, Khan appeared on MI5 and police radars six times between February 2003 and January 2005. This included checks on a Honda Civic seen with Omar Khyam, the fertiliser plot leader, in February 2004, which showed that it was registered to a "Sidique Khan", and linked to three properties, one of them in Dewsbury.

"Prior to 7/7, Mohammad Sidique Khan's name had appeared on a number of occasions in different versions, linked to different addresses, telephone numbers and vehicles, on various databases and in connection with separate incidents... but at the time they were not connected," the ISC said.

The ISC revealed that a clear photo of Khan was available in 2001 from surveillance of a camping expedition by 40 people. But none of the intelligence sources who were shown the photo recognised the bearded man.

The ISC said that had MI5 put Khan and Tanweer under surveillance over the 15 months leading up to the July 7 bombing, "it is very possible that they would have heard them talking about their plan to bomb London and they could have stopped them. But for MI5 to have carried out consistent surveillance on the very large numbers who fell into the same category it would have needed to be a very different organisation, both in terms of its size and how it operates... hundreds of thousands of surveillance officers, as opposed to their current 3,500."

MI5 said that at that time it had enough resources only to give "reasonable" coverage to 6 per cent of the overall known threat. More than 30 per cent of suspects were given coverage that had significant gaps, and more than 60 per cent had coverage described as "inadequate" or "none" because of the priority choices it had to make. Fifty-two "essential" targets had no coverage at all. "These are astounding figures," the ISC said.

Jonathan Evans, the Director-General of MI5, said that even today, with more resources including a tripling of his budget since 2001, he could only "hit the crocodiles nearest the boat". [O'Neil/TimesOnline/22May2009] 

CIA Said Worried Rules Will Hurt Efforts. Leaders of the U.S. Central Intelligence Agency are worried new rules on interrogations could hamstring their effectiveness, intelligence sources say.

Citing unnamed senior intelligence officials, The Washington Post reported Tuesday CIA members are also concerned an array of other secret efforts to counter al-Qaida and other terrorist groups will come under scrutiny in the wake of outrage over its use of interrogation techniques on detainees that many equate with torture.

The agency and its current director, Leon Panetta, are on the defensive because they feel they are being made to take the blame for policies dictated by elected officials who have now fallen out of political favor, the sources said.

Some agency officials told the newspaper a directive from U.S. President Barack Obama to strictly follow the Army Field Manual in interrogations - which bars waterboarding and other harsh techniques authorized for the CIA by the Bush administration - will result in confusion and hurt its ability to gain information from terror suspects.

The Post said the manual, for instance, bans "violence, threats, or impermissible or unlawful physical contact," but doesn't specify what is sanctioned. [UPO/19May2009] 

Germany Is Growing Target of Foreign Espionage, Ministry Says. Germany is increasingly the target of foreign spies - particularly from Russia and China - seeking advanced technology and scientific know-how, the German Interior Ministry said.

While spies, often under cover of diplomats or journalists, continue to collect information on politics and weapons, those from less developed countries seek technological expertise to avoid research-and-development costs and, in some cases, license fees, the ministry said in an annual report.

Germany, Europe's largest economy, offers a wealth of desirable information because of its central role in the European Union and the North Atlantic Treaty Organization, the ministry said. Countries in the Middle East, Far East and North Africa have spies who are active in Germany, it said.

Increasing instances of so-called cyber-attacks on large companies and government agencies, which entail hacking into computer systems, "very probably" bear the hallmark of involvement by foreign intelligence agencies.

More advanced countries seek information on product development, complex production technology and market strategies, the ministry said. [Donahue/Bloomberg/10May2009] 

Pakistan, India And U.S. Begin Sharing Intelligence. Pakistan and India have begun sharing intelligence on Islamic extremists, with the prodding of the U.S., in an arrangement that represents unprecedented cooperation between the two nuclear-armed South Asian nations.

Washington hopes the cooperation will get a lift from last week's Indian elections, in which the incumbent Congress Party won by a wide margin over a Hindu nationalist party traditionally more hostile to Pakistan.

The Central Intelligence Agency arranged for Pakistan and India to share information on Lashkar-e-Taiba, the group widely blamed for last November's terrorist attack on Mumbai, as well as on Taliban commanders who are leading the insurgency against Pakistan's government, said U.S. officials.

The U.S. is stressing to Indian and Pakistani leaders that they face a common threat in Pakistan-based militant groups. Washington hopes that when India sees the intelligence and evidence that Islamabad is seriously fighting the militants in some areas, it will ease its deployments against Pakistan - which in turn would prompt Islamabad to put even more focus on the battle at home.

India and Pakistan traded military threats across their border in the wake of the Mumbai attacks, in which terrorists left more than 170 people dead. The CIA and U.S. diplomats tried to ease the tension, urging Pakistan to crack down on the sources of the attack. Pakistan banned Lashkar and detained six people in connection with the attack, partially mollifying Indian outrage.

Intelligence sharing on Mumbai has led to a somewhat more frequent exchange of information, U.S. and Pakistani officials said. India and Pakistan have shared "a lot" of information with each other about the Mumbai attack, said an official at Pakistan's Inter-Services Intelligence spy agency. He said the CIA was initially used as a conduit but the two countries now work directly with each other, while keeping the CIA in the loop.

A U.S. official said Washington isn't "under any illusions" about the difficulty of erasing decades-old suspicions between India and Pakistan, but sees some progress. U.S. officials hope that a calming of tensions can allow India's Congress Party government, strengthened by its election victory, to resume peace talks with Pakistan over the disputed Himalayan region of Kashmir. Some U.S. officials believe Lashkar-e-Taiba orchestrated the assault specifically to undermine the peace process.

The Obama administration has been concerned that Lashkar could carry out a second strike on India in a bid to stoke a war. President Barack Obama came into office pledging to craft a regional solution to the instability in Afghanistan and Pakistan.

The CIA and other intelligence agencies are stepping up efforts in the Pakistani tribal areas, tapping and tracking the location of the cellphones of Taliban commanders as well as taking pictures and collecting information in their training camps, according to a person familiar with the efforts. The U.S. shares this information with Pakistan, and sometimes with India, to reinforce the U.S. argument that the Taliban threat to Pakistan is greater than the Indian threat.

The U.S. also sometimes brings intelligence on Pakistan's efforts to combat militants to India's attention, with Pakistan's consent, this person said. Examples include showing Indian officials evidence of progress against militants in the Pakistani regions of Bajaur, Swat, and Buner.

U.S. intelligence officers have been able to track the whereabouts of key Pakistani Taliban leaders, such as Baitullah Mehsud, accused of orchestrating the murder of former Pakistani Prime Minister Benazir Bhutto, said this person. Sufi Muhammad and Maulana Qazi Fazlullah, leaders of a militant group aligned with Mr. Mehsud, are also tracked, according to the person familiar with the efforts. Mr. Muhammad brokered the now-defunct deal between the Pakistani government and the Taliban to enforce Islamic Sharia law in the Swat region in Pakistan.

The government of Pakistani President Asif Ali Zardari is hoping that Congress's victory can also provide the Indian government with the political cover to move one or two divisions away from the Pakistan border in coming months, according to an official briefed on the diplomacy.

But Indian officials say they aren't ready to do so. An Indian government official said New Delhi has documented an escalation of cross-border infiltrations by Pakistani militants into Kashmir. [Solomon&Gorman/WallStreetJournal/21May2009] 

Iranian-Canadian Spy Convicted in Germany for Aiding Iran. An Iranian-Canadian businessman who had spied for Germany for more than a decade has been convicted of supporting Tehran's missile program.

News weekly Der Spiegel said the man, who was codenamed Sinbad and seen as an important source on the Iranian arms program by Germany's intelligence service, the BND, was sentenced by Berlin's superior court of justice to three years in prison.

No one at the court could be reached for comment.

Der Spiegel said Sinbad had received more than US$1.4 million over the years from the BND for his services but was at the same time selling high-tech equipment to a company believed to be helping Tehran produce Shahab missiles.

He was arrested last October. Der Spiegel said that German justice officials, the defendant and the BND agreed to wrap up the trial quickly and discreetly.

In return, Sinbad has been ordered to leave Germany and serve his sentence abroad.

Der Spiegel said German intelligence experts were still unsure if he had been working as a double agent and delivering information to Germany with the knowledge of the Iranian government. [NationalPost/24May2009] 

Pakistani Intelligence Bureau trying to Catch Multilingual Terrorist Chatter. The premier civilian Pakistan spy agency, Intelligence Bureau (IB), may be equipped with the latest apparatus for automatic conversion of secretly recorded conversations into different languages.

A proposal being mulled at the official level relates to acquiring these devices from China or some other country, an official told The News. He said during his visit to China, which was unpublicised as such trips were always kept secret, the outgoing IB chief Shoaib Suddle had observed the Chinese technology and had been impressed with it.

The official said at the time of relinquishing the charge last week, the chief spymaster had briefed his predecessor, Javed Noor, about his visit to China and the new equipment that suited to the requirements of the intelligence outfit.

He said the new IB director-general showed equal interest in the modern conversion tools for his establishment. He said the proposal has been brought to the notice of senior officials concerned of the federal government for approval.

Despite efforts and sending an SMS by this correspondent, Interior Minister Rehman Malik was not available for comments. However, the official explained the device was so designed that when made operational it would automatically convert a taped dialogue into any language desired by its operator.

Relevant intelligence officials will have to go through the transcript to examine any misreading by the apparatus of any portion of the monitored chat. However, he said this was done to exercise utmost care so that the result was absolutely perfect and there was no wrong adaptation.

Officials say the IB needs new tools to translate into English or Urdu or any other different languages that the terrorists and other criminal elements speak to carry out their illegal activities and which the intelligence officers cannot immediately understand and comprehend.

They point out during all the military rules, the civilian spy agency always received a step-motherly treatment and no attention was ever paid to make it a worthwhile information gathering organization.

During these extended eras, the military intelligence agencies perennially got every preference and credence. According to these officials, the civilian rulers attached extraordinary importance to the IB and tended to equip it with sophisticated devices and provide it generous funding.

They are inclined to rely on its reports more than those of the other intelligence agencies from where, they believe, they don't get the accurate picture of an episode or the overall situation. During their tenures, Nawaz Sharif and Benazir Bhutto each had tremendously strengthened the IB by providing it modern devices and massive money.  [TheNews/25May2009] 

Section II - CONTEXT & PRECEDENCE

Trial of CIA, Italian Agents Provides Rare Look at Intelligence Work. Testimony about the alleged 'rendition' of Egyptian Abu Omar features feuds and rogue conduct in a case that has apparently made and crushed careers.

Robert Seldon Lady, the CIA station chief in Milan, and Col. Stefano D'Ambrosio, the local head of the SISMI, Italy's intelligence agency, shared pride in their fight against terrorism and disdain for self-serving bosses.

The two spies were allies and kindred spirits.

On a fall day in 2002, the American made an explosive revelation. He told D'Ambrosio that, over his objections, a CIA team was in Milan doing reconnaissance for the "rendition" of an Egyptian extremist ideologue. The American was worried that the risky operation would ruin his carefully built alliances, D'Ambrosio testified years later, and could even lead to a shootout between the Americans and the Italians if things went awry on the street.

With an urgent look, spy to spy, Lady said: "Talk to your people."

D'Ambrosio recalled that he got the unspoken message: "In other words, he says . . . 'This whole thing is so crazy that if . . . two operational chiefs in the field, who know the area, who work in this territory, say that an action is completely crazy, probably they will back off.' "

Four months after the conversation in Milan, the CIA allegedly abducted the cleric and flew him to Egypt, where he was tortured for months. An international scandal ensued: The accused abductors left a sloppy trail of phone activity, credit card charges and photo IDs that allowed Milan authorities to prosecute 26 Americans (in absentia), including the now-retired Lady, and seven Italian officials.

The brazen nature of the alleged rendition has gotten much attention. But the trial has also revealed how the Bush administration's drastic tactics shook up the secret world of U.S. intelligence work overseas. Testimony has featured remarkable allegations about feuds and rogue conduct. The case apparently made and crushed careers and spread betrayal and suspicion among U.S. and Italian anti-terrorism officials.

On the witness stand in October, D'Ambrosio summed it up: "We were between the tragic and the ridiculous."

The case arose from an extrajudicial practice known as "extraordinary rendition," in which U.S. intelligence officials have secretly abducted terrorism suspects and transported them to secret detention facilities or to countries that subject the suspects to harsh interrogation and, sometimes, torture.

Unless otherwise noted, the following account is based on testimony during the trial, which has slogged on almost two years.

Lady seems a rather tragic figure at the heart of the case: a veteran spy who, after the Sept. 11 attacks, established himself as a point man in the shadows of the battle against the Islamic extremist underworld. Although he took risks to try to stop the abduction, in the end he allegedly became one of its dutiful architects.

The bearded, curly-haired Lady, now 55, spoke excellent Italian. He thrived in the convivial culture of Italian law enforcement, doing business over espresso and long lunches, hosting barbecues. He cultivated bonds with anti-terrorism units of agencies that are wary of one another: the SISMI spy service, the paramilitary Carabinieri and the national police. He passed along valuable leads from U.S. intercepts and offered cash and high-tech equipment for costly stakeouts.

"We all had excellent relationships with him because this was a very affable and professionally accessible person," testified Luciano Pironi, a Carabinieri lieutenant who confessed to a hands-on role in the abduction. "I think he had given CIA souvenirs to half of Milan."

Lady also developed his own agents at a mosque that was a European hub for Al Qaeda, targeting a network suspected of sending militants to training camps in northern Iraq. He helped Milan anti-terrorism police build a case against the rendition target, Abu Omar, regarded as a vehement ideologue in the group.

At a discreet sit-down with D'Ambrosio in October 2002, however, Lady said that his CIA bosses had decided to circumvent the police and abduct Abu Omar, supposedly hoping to force him to become an informant. As a result, Lady was embroiled in a feud in his own agency. The American told D'Ambrosio that he had an "awful" relationship with the CIA's Rome station chief, who resented Lady's criticisms of the planned rendition and had sent a tough deputy to Milan to make sure he followed orders.

D'Ambrosio was dumbfounded. When Lady told him that the SISMI had dispatched Italian agents to help a team from the CIA's paramilitary "special operations group" stalk the Egyptian, D'Ambrosio realized that his own bosses were keeping him in the dark about the plan.

Lady said he warned higher-ups that the idea was a colossal mistake.

He said "it would eliminate from the area a subject who was known to counter-terrorism forces," D'Ambrosio said. "We knew what [Abu Omar] did, who he met, where he met them. . . . It would cause grave harm, because at the moment Abu Omar was substituted in his post, we would have to start all over again, with the risk that terrorist projects perhaps in the initial stage could be executed. . . . The subject they wanted to abduct was not certainly a subject who posed an imminent danger. Abu Omar did not go around with an AK-47 ready to shoot children."

CIA bosses dismissed objections and got clearance from top officials in Washington. D'Ambrosio testified: "I'll tell you my impression. . . . The only motive was career advancement. That is, to show Washington that [the Rome station chief] was a tough enough and skilled enough person to pull it off."

D'Ambrosio said he hurried to Bologna to urge his boss, Marco Mancini, to abort "an action in my territory . . . [that] was not only wrong but extremely dangerous. I expressed complete dissent."

Mancini seemed surprised only that the American had confided in D'Ambrosio. A few weeks later, Mancini ordered D'Ambrosio's transfer to Rome. Commiserating in Milan, Lady told his friend that the CIA chief in Rome had demanded D'Ambrosio's head. And Lady made a startling disclosure about Mancini, who soon became the No. 2 chief of the Italian spy agency.

"He told me that Mancini had offered himself to the CIA as a double agent," D'Ambrosio recalled. "And he said the CIA had made a negative response to the offer. . . . An analysis done by CIA psychologists based on conversations with Mancini had revealed according to them that Mancini had an extremely venal character."

Mancini and other Italian officials deny that allegation. In addition to the Abu Omar case, Mancini has been charged with criminal conspiracy in a corruption scandal involving illegal wiretaps and an Italian telephone company.

Despite Lady's initial objections, he is accused of setting up the abduction on Feb. 17, 2003. He allegedly recruited Pironi, the Carabinieri lieutenant, who confessed to using his badge to stop Abu Omar before masked men dragged him into a van. Pironi testified that Lady rewarded him with a paid six-day trip to the United States featuring a visit to CIA headquarters, where two top officials for European operations thanked him.

Meanwhile, the CIA's former Rome station chief - a defendant in the Milan trial - was promoted after the rendition, Italian investigators said.

American and Italian spymasters have been accused of efforts at a cover-up. Two weeks after the disappearance, the CIA allegedly sent Italian agencies a false report indicating that Abu Omar had gone to the Balkans.

It took a year until Abu Omar was freed from prison in Egypt and resurfaced. The official story began to unravel. But Lady's hard-won alliances and friendships with Italian police had already fallen apart amid suspicion and silence.

The U.S. government has refused to comment. The Italian government has tried to scuttle the prosecution in the name of state secrecy laws. Responding to a high court decision on a government appeal, the judge here will decide Wednesday whether the trial can continue and what evidence can be used. [Rotella/LATimes/19May2009] 

U.S. Relies More on Aid of Allies in Terror Cases. The United States is now relying heavily on foreign intelligence services to capture, interrogate and detain all but the highest-level terrorist suspects seized outside the battlefields of Iraq and Afghanistan, according to current and former American government officials.

The change represents a significant loosening of the reins for the United States, which has worked closely with allies to combat violent extremism since the 9/11 attacks but is now pushing that cooperation to new limits.

In the past 10 months, for example, about a half-dozen midlevel financiers and logistics experts working with Al Qaeda have been captured and are being held by intelligence services in four Middle Eastern countries after the United States provided information that led to their arrests by local security services, a former American counterterrorism official said.

In addition, Pakistan's intelligence and security services captured a Saudi suspect and a Yemeni suspect this year with the help of American intelligence and logistical support, a Pakistani official said. The two are the highest-ranking Qaeda operatives captured since President Obama took office, but they are still being held by Pakistan, which has shared information from their interrogations with the United States, the official said.

The current approach, which began in the last two years of the Bush administration and has gained momentum under Mr. Obama, is driven in part by court rulings and policy changes that have closed the secret prisons run by the Central Intelligence Agency, and all but ended the transfer of prisoners from outside Iraq and Afghanistan to American military prisons.

Human rights advocates say that relying on foreign governments to hold and question terrorist suspects could carry significant risks. It could increase the potential for abuse at the hands of foreign interrogators and could also yield bad intelligence, they say.

The fate of many terrorist suspects whom the Bush administration sent to foreign countries remains uncertain. One suspect, Ibn al-Shaykh al-Libi, who was captured by the C.I.A. in late 2001 and sent to Libya, was recently reported to have died there in Libyan custody.

"As a practical matter you have to rely on partner governments, so the focus should be on pressing and assisting those governments to handle those cases professionally," said Tom Malinowski, Washington advocacy director for Human Rights Watch.

The United States itself has not detained any high-level terrorist suspects outside Iraq and Afghanistan since Mr. Obama took office, and the question of where to detain the most senior terrorist suspects on a long-term basis is being debated within the new administration. Even deciding where the two Qaeda suspects in Pakistani custody will be kept over the long term is "extremely, extremely sensitive right now," a senior American military official said, adding, "They're both bad dudes. The issue is: where do they get parked so they stay parked?"

How the United States is dealing with terrorism suspects beyond those already in the prison at Guant�namo Bay, Cuba, was a question Mr. Obama did not address in the speech he gave Thursday about his antiterrorism policies. While he said he might seek to create a new system that would allow preventive detention inside the United States, the government currently has no obvious long-term detention center for imprisoning terrorism suspects without court oversight.

Mr. Obama has said he still intends to close the Guant�namo prison by January, despite misgivings in Congress, and the Supreme Court has ruled that inmates there may challenge their detention before federal judges. Some suspects are being imprisoned without charges at a United States air base in Afghanistan, but a federal court has ruled that at least some of them may also file habeas corpus lawsuits to challenge their detentions.

American officials say that in the last years of the Bush administration and now on Mr. Obama's watch, the balance has shifted toward leaving all but the most high-level terrorist suspects in foreign rather than American custody. The United States has repatriated hundreds of detainees held at prisons in Cuba, Iraq and Afghanistan, but the current approach is different because it seeks to keep the prisoners out of American custody altogether.

How the United States deals with terrorism suspects remains a contentious issue in Congress.

Leon E. Panetta, the director of the C.I.A., said in February that the agency might continue its program of extraordinary rendition, in which captured terrorism suspects are transferred to other countries without extradition proceedings.

He said the C.I.A. would be likely to continue to transfer detainees from their place of capture to other countries, either their home countries or nations that intended to bring charges against them.

As a safeguard against torture, Mr. Panetta said, the United States would rely on diplomatic assurances of good treatment. The Bush administration sought the same assurances, which critics say are ineffective.

A half-dozen current and former American intelligence and counterterrorism officials and allied officials were interviewed for this article, but all spoke on the condition of anonymity because the detention and interrogation programs are classified.

Officials say the United States has learned so much about Al Qaeda and other militant groups since the 9/11 attacks that it can safely rely on foreign partners to detain and question more suspects. "It's the preferred method now," one former counterterrorism official said.

The Obama administration's policies will probably become clearer after two task forces the president created in January report to him in July on detainee policy, interrogation techniques and extraordinary rendition.

In many instances now, allies are using information provided by the United States to pick up terrorism suspects on their own territory - including the two suspects seized in Pakistan this year.

The Saudi militant, Zabi al-Taifi, was picked up by Pakistani commandos in a dawn raid at a safe house outside Peshawar on Jan. 22, an operation conducted with the help of the C.I.A.

A Pakistani official said the Yemeni suspect, Abu Sufyan al-Yemeni, was a Qaeda paramilitary commander who was on C.I.A. and Pakistani lists of the top 20 Qaeda operatives. He was believed to be a conduit for communications between Qaeda leaders in Pakistan and cells in East Africa, Iran, Yemen and elsewhere. American and Pakistani intelligence officials say they believe that Mr. Yemeni, who was arrested Feb. 24 by Pakistani authorities in Quetta, helped arrange travel and training for Qaeda operatives from various parts of the Muslim world to the Pakistani tribal areas.

He is now in the custody of Pakistan's main spy agency, the Directorate for Inter-Services Intelligence, but his fate is unclear. The Pakistani official said that he would remain in Pakistani hands, but that it would be difficult to try him because the evidence against him came from informers.

American officials said the United States would still take custody of the most senior Qaeda operatives captured in the future. As a model, they cited the case of Abd al-Hadi al-Iraqi, an Iraqi Kurd who is said to have joined Al Qaeda in the late 1990s and risen to become a top aide to Osama bin Laden, and who was captured by a foreign security service in 2006. He was handed over to the C.I.A., which transferred him to Guant�namo Bay in April 2007. He was one of the last detainees shipped there.   [Schmitt&Mazzetti/NYTimes/24May2009] 

Analysis: CIA's Panetta Tries to Bolster Spy Agency While Keeping Lines Open to Congress. If Leon Panetta was hired to lead the CIA because of his deft touch with Congress, he's been earning his paycheck.

Relations between the CIA and Capitol Hill are never easy because of the spy agency's inherent secrecy. But they reached a boiling point by the end of the Bush era, and that heat is still burning off.

Panetta took command in February, acknowledging that one of his primary tasks will be to repair relations with Congress.

Those relations have taken a sharp downward turn in recent weeks with House Speaker Nancy Pelosi's public tiff with the CIA over her remarks that agency briefers had lied to her about the use of waterboarding, an interrogation technique that simulates drowning, on a terrorist suspect.

Panetta, a former Democratic congressman from California and a longtime Washington presence - appears to have navigated carefully, and with some success, between supporting his CIA employees and keeping lines open to power players in Congress.

But his release of a list aimed at documenting the CIA's classified briefings on harsh interrogations may have backfired, possibly irritating longtime political ally Pelosi and raising questions about the agency's record-keeping accuracy.

Pelosi, D-Calif., first insisted that the CIA had not told her that waterboarding had been used on a prisoner, then claimed the CIA had lied to her during a classified 2002 briefing.

Pelosi's remarks were spurred by Republican charges that she had been told about the interrogation method seven years ago but didn't object. Pelosi said she was told only that it had been deemed legal by the Bush administration.

It is into this partisan tit for tat that Panetta waded, seeking a way to both protect the interests of the agency while not fanning the flames on the Hill.

He tried to thread that needle last week when he sent a message to agency employees - rather than Pelosi herself - called "Turning Down the Volume." In the message, he was careful not to call out Pelosi by name, but he said the CIA had been truthful in the Bush-era briefings and indicated he would not allow the agency to be a political football for either side.

He told agency employees to keep their heads down, do their work and not be distracted by the noise. "Keep it up," he wrote. "Our national security depends on it."

One of those applauding Panetta's performance so far is Mark Lowenthal, a former assistant director of the CIA and now president of the Intelligence and Security Academy.

"I think he's actually doing quite well overall," Lowenthal said. "I think he has made it clear to the CIA that he's not there to clean up Dodge, name names and put people on report. He's there to help the agency move forward, which is exactly what the staff wanted to hear."

Lowenthal said Panetta understands that his job is to pacify, but not bow to, Congress. "One of the things that's unique about CIA is that this is the president's agency," he said. "They don't work for anybody else. If they are not effective, the person who gets hurt here is the big guy."

Another veteran who spent 30 years at the agency on both the analysis and operations side, Dick Coffman, said he is impressed with Panetta's "skill and guts in taking on the speaker of the House in order to protect his very fragile agency."

"CIA - and the country - are often hurt when the agency becomes entangled in Washington politics," he said. "My guess is that Panetta, who is a smart and experienced Washington hand, has the quiet backing of the White House and knows it."

Last week, in a speech in Los Angeles, Panetta referred to his time in Congress to publicly remind those serving there now that he understands the lingering frustrations and disappointments about the last eight years.

But he said he was "most concerned about is that this stuff doesn't become the kind of political issue that everything else becomes in Washington, D.C., where it becomes so divisive that it begins to interfere with the ability of these intelligence agencies to do our primary job, which is to focus on the threats that face us today and tomorrow." Panetta's management of the issue hasn't been spotless. The leaked CIA list that he had provided to Congress to settle the question of who had been given classified briefings became an issue of its own. It turned out that the list had errors, causing both Republicans and Democrats to call for a full release of classified CIA records to clear up remaining ambiguity.

And agency officials say Panetta was also on the losing side of an internal battle over whether to withhold classified Bush-era "torture memos" that the Obama administration ultimately released. Panetta had argued the memos should not be made public, and when that argument was overruled, he lost a second time, pressing for heavy redactions. The memos were released with only light edits. [Hess/AP/22May2009] 

Section III - COMMENTARY

Intelligence: It's a Battlefield Out There, by Morn� Le Roux. The longest-running and most successful intelligence system in history can be found in the military field - and the principles laid down hundreds of years ago are still applicable in the modern business environment. Conversely, advances in business information techniques are such that even the military is finding value in applying corporate data gathering and analysis techniques to its benefit.

A good example of early military intelligence can be found in the approach taken by French emperor Napoleon Bonaparte. His intelligence about enemy forces was compiled by the head of his statistical office, and organised into a resume with a detailed report. All legations had secret instructions to record troop movements that they observed or heard about. Data was compiled and forwarded in a special bulletin to Napoleon, who kept a book of detailed information about every army in Europe.

On campaign this information was constantly updated, enabling Napoleon to know as much of the composition of foreign armies as his own. He studied the French muster rolls, spending a few hours each day digesting the facts recorded in 20 folio volumes. This enabled him to know the condition and position of all his units - no easy task with armies numbering several hundred thousand men. "I ... read them in detail and to note any changes in them," he explained. "If a commander cannot place all of the units in his army," he contended, "then you haven't got an army."

Today, business intelligence (BI) professionals will find the Wikipedia definition of military intelligence (MI) familiar: Military intelligence is a service that uses intelligence gathering disciplines which informs the commander's decision-making process by providing analysis of available data from a wide range of sources including forecast environmental changes, and opposing force intentions. To provide that informed analysis, the commander's information requirements are identified and input to a process of gathering, analysis, protection, and dissemination of information about the operational environment.

In the military, intelligence officers index vulnerabilities and make this information available to advisors and line intelligence personnel; they in turn package the information for policy-makers and war fighters. A good intelligence officer will stay close to the policy-maker, anticipating information requirements, and tailoring the information needed. A good intelligence officer will ask many questions to help anticipate needs, perhaps even to the point of annoying the principal.

Where else are the stakes higher than on the battlefield? Arguably in business.

I worked in the Total Quality Management team at a German vehicle plant outside Pretoria and was tasked to gather the information related to defects in the cars. Each defect was captured with a relevant description on the production quality management system. Cognos reports were automatically exported to Excel files which would dynamically build charts. Measures to expose trends include defects per unit or minutes per unit.

Plant management, lead by the technical director, would meet every week to review production quality. Where initially there would be finger-pointing to assign blame for defects, leading to some interesting debates, soon the various departments amended their approach. The 'Right First Time' cars which left the plant without requiring any rework were occasionally celebrated. These achievements induced a unity and a type of fellowship similar to the brotherhood between soldiers in the military. An approach of 'Let's fight the defects instead of each other' was adopted. Defects were the enemy.

The 'Six Sigma' business management strategy can be applied in a manner similar to the 'intelligence process' used by MI. The five steps in the Six Sigma DMAIC method are define, measure, analyse, improve and control. These steps are applied to improve an existing business process.

By comparison, the MI process comprises collection, analysis, processing and dissemination. Affirming the veracity of a BI process for MI, the United States Armed Services recently adopted 'Six Sigma' with the goal of: "Making the business side of the Army as efficient as the war-fighting side is effective."

That's a great vote of confidence in the techniques which are being applied in the corporate world - and it highlights the contention that the business and military worlds have parallels and can learn much from each other. [leRoux/ITWeb/18May2009] 

Panetta Wants Everyone to Take a Deep Breath, by Spencer Ackerman. Congratulations, Leon Panetta. When you decided, unexpectedly, to become President Obama's CIA director, did you anticipate spending one of your first major addresses defusing an escalation in congressional-CIA acrimony? His message to a Los Angeles foreign policy group became the second part of his response to Rep. Nancy Pelosi (D-Calif.), who last week accused the intelligence agency of misrepresenting briefings she received in 2002 about the Bush-era "enhanced interrogation" regime. Part one, directed to his employees, was about bolstering agency morale. This is about repairing the breach with Congress, according to Siobhan Gorman's coverage:

He vowed to improve the broken relationship between the CIA and Congress, noting that he plans tomorrow morning to have coffee with a group of lawmakers outside the public spotlight. He said that, "as a creature of Congress" he believes Congress should try to learn the lessons of the past, but not to the point of diverting the attention of CIA officers.

Something he didn't say but might have thought: during the Bush era, when the politicization of intelligence ran high, Democratic members of Congress embraced the CIA as a reality-based bastion against the Bush agenda. That was fairly easy to do, especially when Bush appointed Porter Goss, the chairman of the House intelligence committee, to the directorship of the agency and Goss began firing people presumed to be insufficiently loyal to Bush administration prerogatives. Congressional Democrats, led by Jane Harman (D-Calif.), made a point of distinguishing between the agency's Bush-loyalist top management and the agency's career personnel. And there the alignment remained, roughly, through Michael Hayden's tenure as CIA director. Criticisms of the agency - on torture, for instance - were directed at policymakers, not implementers. Obviously, the Democrats were more comfortable with the agency's intelligence analysts than with case officers charged with the more morally compromising work of espionage, but there weren't many Democrats of note who issued broad indictments of the agency.

Pelosi is the first to collapse the distinction. Her accusation, in context, didn't blame CIA case officers or line analysts for lying to her. But by not sharpening her charge, it's understandable that agency employees - who labor in a culture that believes itself under constant siege from politicians - would take it personally, and that's what Panetta's message on Friday was about. Congressional Republicans are right to see an opportunity to repair their iffy relationship with an agency that the party used as a whipping boy during the previous administration, even if they're not going to defenestrate Pelosi.  [Ackerman/WashingtonIndependent/22May2009] 

Section IV - COMING EVENTS

COMING EVENTS