david major, is a founding board member -- our speaker this

evening, david major, is a founding board member of the international spy museum. he told me i cannot say he is an esteemed a board member, because that would make him sound old. he is not old. but he is a retired supervisory special agent and director of counterintelligence and security programs for the nse under reagan. he is founder of the center that provides counterintelligence, security studies, and trading. -- training. without further ado, i will turn it over to david major. you are in for a dazzling evening, and i hope your heads are clear and are ready to absorb an intense and exciting amount of information. [applause] >> that is a heck of a start.

first of all, thank you for coming out on a rainy night like today. it is difficult to drive in washington at any time, especially in weather like this. what we want to do is show you the reality of the world today. this is sponsored by the international spy museum, a database that keeps track of what is happening in the entire world in the world of espionage and terrorism. my own background -- i have been doing this blogger than most of you have been alive, but i look out and i see people with white hair and i feel comfortable when i see demographics like that. i did notice the black and white picture, the fbi photograph when i joined the bureau. i spent my entire career doing counterintelligence and counterterrorism. i eventually worked in the

national security council for ronald reagan as the director of counterintelligence programs. first time they ever put counterintelligence on the policy table. it was an interesting experience, because the first time i walked into the oval office to shake hands with ronald reagan, he said to me, "you know, i was an informant for the fbi." my answer was, "of course, we are proud of that fact," lying blatantly, because i did not know he had been an informant for the fbi. how come i spent my entire career doing this i do not know that part, that during the 1940's he was an informant for the bureau when he was president of actors guild? it made me think about we need a center of excellence to look at this important discipline called counterintelligence, and that is how the cia centere -- the ci center came to be.

we are going to look at the world. we are going to look at a variety of ways. we are going to look at what intelligence agencies and operatives around the world, l are like. i will probably run out of time before i run out of cases. it turns out that every year is a big year. we are going to look today -- it was not a good year for some intelligence chiefs around the world. we are going to try to define what is this thing of espionage we talk about, because every nation has a different definition of what espionage is paid at that we will turn to the united states and say who was sentenced in 2011, who committed the crime earlier in 2011 and finally had the case finalized in 2011? we will look at what you cases surfaced in -- new cases surfaced in 2011.

we are going to look at a couple of cases that took place in europe which have been very interesting. then we will turn to the great spy wars going on in asia, and remarkable i have tried to be selective around the world. why listen to this lecture? espionage "trial, collecting intelligence covertly is still happening. it is a timeless reality and it has been going on and it will go on regardless of international relations. internationally, espionage is viewed as a political crime and as a result, it is a non- extraditable no nation will extradite you back for that particular crime.

partly because espionage is used by some regimes as a way to suppress people. it is not used like we do in the united states. it is often used by nations as an excuse to suppress political dissent. we see that going on right now. it has the potential for major international security implications when one of these cases services. my experience has been that often it is discounted by some, many in the media, look at it as unimportant as it relates to world events. you can take courses in international relations and world events and i look at what is the role of intelligence and counterintelligence and espionage and often is forgotten your. have learned happy history. if you learn real history, you realize that over and over again, intelligence and loss of

information or the acquisition of information has been the defining factor in world events. espionage is not an unimportant factor. it is huge. this has not been a good year for some intelligence agencies around the world. who has fallen on hard times? we must first look at libya. it did not go so well for the head of their intelligence service. after libya fell, he and the one surviving son of moammar khaddafi were captured in the southwest corner of libya. the sun was captured and he will go on trial but the chief of intelligence has fallen from view. he was captured in november of this year and he is reported to be held in a secret location. have been no photographs of him and no reports of him since he was arrested on november 20 and there is speculation as to what

has happened to him. that would be simply to watch because it may not go well for him. i don't think he was loved by the new regime ver. we look at egypt. as you may recall, the head of their intelligence service, he specialized in torture and other things listed there. i was in egypt when it fell. i arrived on the 24th and the revolution started on the 25th and i had to escape in a flight that took us out thatluxor and into aman and then into israel. it was a story unto itself it was not a safe place when it had to get out on the 30th. what is going to happen is yet

to be determined in egypt. the chief of intelligence when mubarak resigned, he took over the presidency and he announced the resignation and he fell from view. he withdrew from the political scene. he was not seen again but after he left in february until he appeared in court in september of 2011. he testified against mubarak. one thing he said is mubarak can never say he did not know what is going on. he has not been arrested. he has not been prosecuted. what will happen to him as this unfolds in agent is yet to be seen. he has tried to maintain a low profile so he fell from power.

syria, the director general is still in power. the united states has tried to make it as difficult as they can for the director of the syrian intelligence service may be because of the oppression that is been taking place there. his assets were frozen as for the assets of the syrian general intelligence service. his personal assets were frozen, the intelligence service as of four frozen and so were those of the brother of the president who was a brigadier general. that is how we responded. it appears he is still in power reported, the head of their intelligence service, and we will see what transpires in syria depending on what will happen this year. south africa is where most people don't watch but it is an interesting turn of events. the head of their service was called the south african minister for state security and runs the three major

intelligence services. he got very upset in september of 2011 and fire that had of their intelligence service because he said he did not provide protection for my wife was under investigation for drug smuggling. his wife was convicted of drugs -- drug smuggling. the results of that is that the three officials objected to providing secret service protection for his wife during her trial in may of 2011. she was convicted and he is still in power, by the way, as is the government there. it appears the real conflict and not have been as much as it relates to the wife of ahead of their intelligence service as it was that the president wanted the intelligence services to begin on authorized operations

on cabinet ministers. that means it looks like they're trying to devote their entire book is -- intelligence service for political reasons. they said they would not do that and as a result, he fired. ahead is close to the president of south never go who still holds power. if you'd better -- if you take on the king, you better win. the chief of the national intelligence agency of south africa is the domestic intelligence and counterintelligence service and that would be like the fbi in the united states. it would be like mi5 would be like in england. c they are ci service and the first one to

resign was in october. this started in september and he resigned in october of 2011. he was probably forced to resign because the guy wanted to fire him. that had of their state security agency responsible for civilian intelligence operations was forced to retire in december of this year. he was forced to resign in december and it looks like he was paid off or there was money that was exchanged for him to leave office. that took place just last month in december and ahead of their for intelligence service which is an organization of about 7000 people, the equivalent of their cia or mi6, for the south africans -- he has resigned and resigned this year and he is being replaced by a person who is not an intelligence professional.

south african intelligence services have fallen on hard times. something recently happened in russia that you may or may not have been aware of. it took place during the christmas holiday. the head of the gru who was there from 2009-2011, which is a short period of time to be the chief of the gru, he resigned on christmas eve. there is a lot of controversy as to whether he resigned because it was time for him to retire which is what you say international or he was forced to. he leaves christmas eve and he leaves the gru -- for years, those of us heard about the co of the gru. they describe it to the senate looks like a bad man signal.

makkah -- batman symbol. it is batman. they say we control the night. they talked about the new model. he left and the new chief was appointed a day after christmas and i have the brand new facility that they opened up in moscow. you are looking at two symbols of the gru. the one on the right it was there until 2009 and the other one is an exploding bomb. reportedly, this came out of the russian media that it is the largest intelligence service. we know that they fsb svr have 4000 intelligence officers and

the have half the population that had during the cold war. the population of the soviet union was 296 million people when they were collapsing. in 2011, the population has dropped about 140,000 russians which is half the population -- 140 million russians which is half the population. that is a 20% drop in the size of the service. they talk about the fact that

they gru has more people overseas doing for intelligence. it is a spy organization. it does not have a domestic mission. the russians said there was six times as many as the fsb and the svr. it was never touched by the collapse of the soviet union. it has continued on. there has been some changes in intelligence services this year. espionage, acquiring information, is a time as reality. at the international spy museum we talk about the school for spies. i used to teach a course on the secret history of history. sliverust looking at a as we go perot this review of

2011. the development of legal tools in the united states is what we struggle with. when someone is arrested in the united states, an awful lot of ever goes into it. it is never used in a political standpoint. thereclosed society, are controls that are bigger than the crime of espionage. in the united states, we have many controls because repair a police state or counterintelligence state. it can always tell the power of a society by looking at how they come to power. if you look at a nation state and you ask if they were granted power by the people, the government does not fear the

people. our government is granted power by the people in the united states. in other societies, they fear the people because they use airpower from the people and therefore they have very, very large intelligence organizations and usually there counterintelligence service is bigger than their intelligence service. counterintelligence states are china, russia, north korea because they usurped the power from the people. there's always a balance between civil liberties and a collection strategies used to deal with that. i like to say is all about values. i love this quote --

i take exception to his view of that. however, it is a tongue-in-cheek way -- with sometimes fierce spy catchers. we say there are no real spies but there really are and they exist. >> after six months in power, the vast party is toppled. we had sent would be coups in 10 years. >> in 1968, the party reclines power. it is the final coup. this time the role with an iron grip and no tolerance for dissent.

taking command, the new president appoints his cousin as vice president, saddam hussein. >> nobody took him seriously. you are surprised to see this young civilian standing next to the general who led the coup. saddam is head of the mukhabarat, the secret police. he stassen with loyal members of his drug and launches a systematic campaign of terror designed to limit the opposition and intimidate the population. >> he created a second layer of

government. in every single ministry, there is a desk that reported directly to saddam hussein. >> [spaeking farsi] >> all the security personnel were his people. the money he gave them and the cars and prestige and power. people had never had any of that. >> in early january of 1969, a scene starke reminiscent of nazi germany, saddam her as a public event to demonstrate the policies of the new regime.

thousands court part -- thousands graduated in liberation square. >> that is the point -- condemned the spies. you want to say there is an external enemy, you said despise the the problem therefore i have to suppress and implement certain policies. you see that around the world in a variety of counter intelligence states using has been us as an excuse to suppress dissidents and establish power. some of us may not know that saddam hussein was the head of their counterintelligence effort. he was falsely accusing people of being spies. we don't have to go very far in history to see that happening today. we look of a powder keg of american intelligence and we look at the cases that surfaced on december 15 is the young man

from arizona whose family lives in michigan whose father is a college professor who was working for a company that did contract work for the u.s. marine corps, was visiting his grandmother in august-september of this year and he had dual citizenship and went back to visit his grandmother but dual citizenship is not recognized by iran. soon after arriving, within three weeks he was arrested. he fell from view in the fall and on the december 15, confesseds a individual saying he was a cia operative. that took place on december 15. you have probably been watching this in the news. >> a man was accused of trying to infiltrate iran for the cia.

the prosecutors said he entered to the department three times. but he could be punished with the death penalty on a military bases. he repeated a confession on state tv on december 80. his lawyer rejected the accusation. new dates for the next court hearing were not released. >> the story appears that he volunteered to the military intelligence, volunteered at least three times, was arrested and they said they had observed them in afghanistan and day observed of having contact with americans which he did that because it was a contract for the military, arrested, and he confessed. to our great surprise on january

9, he was sentenced to death and had 20 days to appeal. this is ongoing today. this is a perfect sample of administration, a regime, that is using this issue to crack down on this individual. what is interesting is that he had dual citizenship and went back there and went back there at a time when iran is concerned about people coming into iran because they have had a series of assassinations like the one that took place today in iran. he walked into this situation and now he faces the death penalty barry just after the, the white house made a statement where they said is not connect with american intelligence. and that is not always done around the world would someone who was arrested.

this will be a big issue for us. there's very little i think we can do about this. watch that one very carefully. we were talking about spying but this is a terrorism case. it relates to iran and it has to do with the plot to kill the saudi arabian ambassador here in washington, d.c. using a cousin of the kudzforce. they have huge power in iran. some people say it does not make sense we teach a 10-day course

on the iranian culture and the iranian intelligence service. they are a very important national security issue. they like to use family. it makes all the sense in the world that a member of their intelligence service would reject a cousin down in texas who happens to be a car dealer and sacred to find someone in a mexican cartels to conduct an assassination in washington. if that had been successful, which they were not, because there were attached to a dea informant, if they had been successful, you can imagine what would have happened if there had been a bombing or an assassination here in washington with the saudi ambassador. we would start an investigation and would track and back to mexico and no one would have said that the iranians did that. the iranians are very careful to protect themselves.

they never claimed responsibility for kobar towers. they had been at war with this since 1979. are we going to war, from and that iranian standpoint they already are. this makes all the sense in the world and it will be interesting to watch it unfold. it is remarkable that we were surprised by it. it was very north korean-like but it is also iranian-allied. how big is the terrorism threat? students tosk my stay as county people have been arrested in the united states for terrorist-related plotzed cents 9/11 derie. we track that every single day. we have a case page every single day when a new case breaks. we have an understanding of how big this problem is. if you were to say how many

plots have been uncovered and how many people have been arrested and you ask yourself what that number is, how many would come up with the right number? the right number is at least one-third 19 people who have been charged with terrorist- related crime since 9/11 very the blue line is number of plots and the bread line is the number of individuals. about 50% of the plots are singular and the other 50 percent are multiple-people plus. the average number in a plot have been about five over the 119 + that we looked at. the average is five. or don't find large networks five -- or five networks of five people to do it. we just had two arrests this week and terrorism. as the most recent information on how big the terrorism issue has been. when you hear that in 2011, which just found out about

homegrown terrorism, but it attracted which we have been doing: a look at the numbers. we have the cases and the legal documents and everyone of these cases. we are always surprised we see some statements made about terrorism. treachery is no more rare than we thought it would be. it is not as rare as we think it is. we run a red little red schoolhouse and the training and try to track this. we had our first case 501 which is a fire-day course. since that time, we have had 54 different courses in all sorts of different areas. we had to come up with a mechanism to make our case is relevant to we did speak with some authority on was happening.

we started collecting this information. for the last 15 years. some of you may have taken our course. we can now give credit to that course. that goes back to 1995. let's talk about as big a t,he law. people talk about as big not but they don't know what law is. that played out in june, 2010, when we have when we had the ten russian

illegals who were arrested in the united states and the pundits say this is done nothing case. why does the arrestees people for espionage? they didn't understand the law of espionage. if you know what the law of espionage is you never would have written in any of editorial or made any comment like there's nothing to this case. this was a great correction capability case. i am talking about the russian illegals. long-term operations which intelligence services run, one man since 1976 deep void to penetrate the united states. think about the commitment that would take. what is local law? >> want an attorney! i have right to an attorney! do we really know him? at universal studios -- we ask people if they know their rights and they know basic legal terms you hear on tv shows all the time. ♪

>> what do you do? >> i am a student. >> a you going to college? what you doing? in the fall? what will you major in? >> i don't know. i will decide soon. >> so many young people get in trouble with the law. everybody knows their rights. what does it mean to pass the bar? >> like lawyers. >> what is like lawyers? >> passive like go to school. [talking over each other] >> what do you do? >> i want to see what you know about your rights. you have the d u r.

what is perjury? >> when they ask if you were drinking what do you say? >> yes. >> perjury would be lying. how many beers? >> two or three. >> how many did you have? >> 12, 18. >> what does it mean to perjure one's self? >> purging? i don't know. >> what do you do? what are you studying? >> business. >> someone commits bigamy what the you think? you are a bigamist. >> is that your wedding ring? >> it is. >> why is it not on your finger? >> i'm a basketball official.

>> basketball official. [talking over each other] >> what is bigamy? >> you have more than one wife. >> with the punishment? >> getting caught by equal rights. >> a sense of humor about the law. what is espionage? very specific crime. it is always different in every country. they don't all have the same definition. when we talk about espionage we have a sense we're talking about big traders and people getting information covertly but from a legal standpoint it is a very specific thing. in the united states and in other societies there is great expectation when an espionage case surfaces often when it is an important case is on the front page. was it happens there's an expectation for the media to show something and if they don't and it doesn't go well, i will

really be you up in the media. we refer to with as super bowl prosecution. when i was in the bureau and started a program just to conduct the espionage interview because it is deployed of evidence because there is supposed to be no evidence that it took place. we still can fashion and build cases of espionage. so once again this is forgotten by many of the commentators about the russian illegals it is a very specific thing. in the united states does it require the passage of classified information? the answer is what is the law that authorized the united states to classified information to there is no law that authorizes classified information. we don't have that like great britain does. under what authority can you classify the information? interesting question. last time you have a cocktail party ask someone that. the answer is authority is invested in the president of the united states because in the constitution is the chief

diplomat and chief war fighter. the conduct of foreign affairs. the chief diplomat and chief war fighter the president of the united states can restrict information from the people who own the information which is the public who bought it because the public who we by taxes we by the information supplied by the intelligence community but to protect the citizenry it is prevented. he protects it but the president does it so that is the authority that we set up presidential executive orders or procedures to protect information. so when we say something unclassified what does it really mean? if it means no fair telling the. you can't tell that to anybody. when you pick up is controversial, top-secret. means you can't tell that. it is restricted information. 4 or less than that and the espionage was not speak of espionage generation. their use multiple times.

there is little espionage and big espionage. little espionage is unauthorized transmittal of national defense information to a person authorized to receive it within tend to possess or transmit. this is the individual that takes the information and retain it and is prepared to pass it on. it is a lesser offense of big espionage and almost everybody convicted of espionage is charged with this crime. that is a little espionage. biggest fear nudges unauthorized transmittal of national defense information to for nation or power with intent to aid that power. that is what big espionage is. the example, the law says you have to have unauthorized transmittal, national defense information to individual authorized to receive it. those verification of 40s,

heinie had a huge impact on espionage today. he was a german who emigrated to the united states. the german operative in d.c. was the fourth intelligence service leading up to world war ii. nothing -- it was not the gestapo. they instructed him to go to the library in new york with this information. national defense information. numbers of employees and obtained -- wrote it up and pass it on. that was uncovered by the fbi as a result of the investigation. and charged -- pharma was found guilty of espionage in forfeiture -- appealed his conviction. has the national defense information and getting to the public library. the impression he was guilty--determined not to be

guilty of espionage because the interpretation of the law, national defense information that is protected. that is the nature of the information you have to protect for espionage and we do that through classification. big espionage, the big one is the unauthorized transmittal of national defense information that is protected. that is the legal standard to a foreign power or agent with intent to injure the united states or aid a foreign power. you go to jail the rest of your life or can be executed for of that one. little espionage preparatory acts ten years you can get for that. punishment can be death or life imprisonment. no statute of limitations on that espionage or little espionage. protect national defense information and get ten years. finding people who are arrested are often charged with both.

in federal prosecution decides it is national defense information? that is a decision made by the jury, not the judge. most people in espionage are charged with conspiracy because conspiracy is not a crime by itself. it is conspiracy to commit espionage. when two more people conduct illegal act and take one or more over steps in pursuant to that information that is conspiracy and that is the definition of that. most people charged with conspiracy to commit espionage because the most difficult thing to prove is transmittal of information. information related to national defense communicated to unauthorized with intent into the united states or reform power. the same crime. court martial or federal crime. in espionage statute title 19

section 84. unauthorized transmittal is a difficult thing to prove that you see the transmittal. almost everybody is charged with conspiracy to commit espionage. not and, if you leave indictment to look at the conspiracy even if they're real spy. we track every one of these cases and put all the legal documents in to them. it is because cases you find we is the crime of pharma--fara legal it says if you are an agent of a foreign power, if you our lawyer, if you are an advertiser, you do anything for a foreign power, go to the department of justice with and ten days and register that i am looking for this foreign power under any capacity. if you don't do it, most people who are spies will not come to

the department of justice and say recruited as a spy, if i find out you are an agent of a foreign power and haven't gone to the department of justice you will get ten years. that is the one used for the russian illegals. they never had access to national defense information. they were agents of foreign power. ten years in june of 2010. there's a great lawyer is in the espionage world called section 101. a law enforcement officer like prudential carrying fbi agents you can't lie to me whether you are old or not. if you lie to me, five years for every law. if lot went to interview somebody and i started the interview and they lied to me and i say stop. you just committed a felony and you go to jail for five years. we start all over again.

you don't want to lie to me. lie to a federal officer for every lot you get five years. in spy cases they almost never confess when you talk to them at least initially and charge them with 1,001. it is a great law. don't ever live to a federal officer. if you live you committed a felony and teach law is five years. the modern day today what do we see going on. a special program of 40% discount if you're interested in doing it. we build agents every day and have every single one of these cases. if you stand up, adam con is on my staff. he does this every day. he has a staff of people who update this information every single day. everything i am about to tell you comes from speights via - p

--spyped --spypedia. in the past 66 years, the cases i want to show you a based on foreign nationals who were arrested, individuals who defected and espionage related crimes which is fara or economic espionage or fewer individuals before they were arrested. before i start looking at those, how damaging has espionage been and who is the most damaging spy? i always say there are ten people in my top ten. 20 people in my top ten list. i have 20 people in my top ten list. some of you -- i talked about bob hansen but i believe he is the most damaging spy in history. would despise look like? they look like you and i.

have ethnicity. everyone is a story behind themselves. everyone is an individual who choose to become a be trader. how many have there been? the department of defense in the study they did came up with 173. of a asked you how many were arrested from 1945 to today the answer is 423 people and everyone is a story to themselves. 6.23 per year and if you look at any of these cases you have to look at it two way is. any case related to espionage you have to say is this a betrayal case for a collector case? the russian illegals last year were collectors, not the traders. they didn't pass national defense information or have security clearance. they were collected case. collectors meet and communicate with agents. agent provide the secrets and collectors receive the secret. you look espionage and got to figure out what am i looking at

and be traders pass secrets and have no protection and support collection operations in other ways. any time you look at any case you say what am i looking at? be trader case for a collector case? you get different answers to that. here is where we stand today. if we started tracking from 1945 to right now you notice on the right hand side the numbers are going higher and higher. we are having a flood of espionage cases to the united states. it is as if it is happening below the conscious level. if we look at economic espionage cases a law was passed in 1996 on economic espionage. there have been 125 people at least who have been arrested for economic espionage and keep the trend line and going up. you see more of those cases targeting the private sector. not having access to national defense information but having access to proprietary or trade secret information and some of

that turned out to be investment information. in two cases on want to highlight which are very interesting and very new, where do we stand today? in the last four years, until 2011, 94 people have been arrested for espionage related crimes. agents of foreign powers. 22.2% of all the arrests for espionage in the last 66 years have taken place in the last four years. if you don't monitor that you don't see that. we see an explosion of this. does that mean more collection are better counterintelligence? my answer would be yes and yes. we see a more aggressive chinese collection activity and more people working in counterintelligent than we did before. how many countries have been involved? in 1992 the federal government counterintelligence program change its strategy. it went from looking only at people who are enemies of america to anybody who collected against a whole new strategy

called a massive security threat list. 31 countries have been identified as being involved with recruiting somebody who was trying to beat for a what they had. committing espionage. here's what the numbers look like. if you can't read them in the back clippers little top numbers are russia and the u.s.s.r.. oo that is the prc. that we go down and have business to business spying and cuba and iraq and and and taiwan and czechoslovakian at, israel down at number 10. several of the expect from the old days during the cold war but no longer spy against as. we had 341 cases of filing agents working for a foreign enemy. 40 cases involving economic espionage with no government involvement and 32 and 4 of attempted espionage with no country identified. peter the government doesn't identify who the collector was or a collector had not been

identified by the time the person is arrested. for the government keeps secret to their spying for. if you look at numbers you start saying that it is carrying this around. it is true to say that china is than coming up fast on the outside. it is a 2001 phenomenon. the first chinese arrest was made in 1985. since that time you can see the numbers exploding. be fast majority of these take place in the private sector. there have been some governmental cases. one thing that is interesting from a security standpoint is if you look at every single one of the cases in the last five years every single one of them has been digital death. we do everything digitally. even though we live in the digital age espionage continues as it did before. in the past someone may have

taken a document or photograph the document. today they digitally give the document but in every single one of the cases the insider -- let me talk about that for a moment. if you look at the problem of collection you have to look at yourself like a ford. if this is our fourth you have a lot of electronic collection where they try to pay and get it out of your system. if you set up a security system on the wall you can deal with that kind of external attack against you. that is one of the problems. we try to track this. everyone of the cyberattacks and try to identify whether they're for and related. then you have the other problem. that is a spy on the inside. the person -- bose naphtha get through the firewall.

in every one of these they acquire the information and get it out two ways. features a e-mail it or have an external hard drive and copy it out. pretty simple if you have the right system to detect those two things. some organizations are doing great job on the commitment to understand the insider threat. today a lot of discussions about the insider threat. nothing about the insider threat. but suggesting the different media. start looking at chinese cases. 67 agents of the prc arrested since 1945. this is where we are today. i talk about china exploiting cases and russia exploiting cases. this shows you russia is in red. of the cases are in blue, and prc is in greek. not level was historically. if we are saying what is the employment status?

individuals have been arrested, you can see coming out of the private sector because of the economic cases and for national, collectors with the amount of protection and go down to the army contractor's air force. the navy had the very aggressive counterespionage program. one of the best in the government. they made a serious commitment to catching spies as a result more than any other government agency. if you build it you will find it and they have aggressive program. that is where spies are coming from who are doing it. the level of espionage we have against it takes our breath away. let me digress as i show you the current numbers and look at -- during this timeframe there were 540 one spies in the u.s. government or the private sector during world war ii. you won't find that number a anywhere else because it

includes where every government agency was penetrated by our allies. during that timeframe was very significant. how do we know this? we know it through the russian codes and we got 99 and this wonderful book which i highly recommend to you call spies, rise and fall of the kgb in america. we take those documents and we said where are the spies? we list them in this web page. and a vote program, these archives which have put that together and what you find is this is where these people were. the the the penetrations we had. 540 one by name and by organization. everyplace the united states was penetrated. if you don't invest in this is like getting cancer. it will spread like a virus. that is what we have during that timeframe. when i show you numbers today we

have the numbers are less but it still goes on. continuing problem. even the media, 38 spies in the media were agents in this timeframe. in many of them we have their names. you won't find that list any place else. spent a lot of time trying to think how big is the problem? in 2011, let me talk about the cases sentenced in 2011. there is one that is interesting. an israeli state case. arrested in 2010, sentenced dec. eleventh. has to do with the elliott, massachusetts, very unhappy with his wife. worked in an internet delivery system and send e-mail to the israelis to their confluence in israel in new england, general counsel and he says i know you are always looking for information. i am offering the little i have and he volunteered by e-mail. that is one way you do it. the israelis said what is this

about? they passed it to the fbi. we are not buying in boston and you might want to look at this guy. they did. this is what he writes. i made jewish-american in boston. i know you are always looking for information. the go -- volunteers he wants to spy for israel because he is jewish. he does it by e-mail. are you aware the fbi responds, they begin to correspond, our homeland and our war against our enemies. he talks about his ex-wife. not real happy with the former mrs.. he asks for a little money to support that. anything to help heard my wife which is interesting. there is a series of debt drops between the fbi -- that he thinks is the israeli intelligence service and they do this 62 times that he passes the

information. these are corporate information relating to computer systems. so he is arrested and in august of this year he pled guilty to one count of economic espionage providing trade secrets and wire fraud and faces 15 years. that was august of this year for doing that. he got it december 19th. six months of home confinement and a quarter of a million dollars. the government wanted him to get 36 months for his activity. this is another case that took place at prc having to do with a remarkable one and a new trend we had never seen before. glen duffy shriver. >> a former tennyson and hung up in international intrigue and taking tens of thousands of dollars from chinese intelligence and now charged with lying for the c r a.

digging into this, here is what he is learning. >> neighbors say you can see in the men's several years. >> i saw him occasionally getting in his car and leaving and going to school. >> glenn shriver, former state university student with his mom in a quiet neighborhood, at least he used to. the last neighbors heard he was living in california trying to give up jobs in law enforcement. shocked to learn the indictment released in detroit. >> scary. >> the interview is interesting. they're not sure and never thought he was a spot. normally they tell them these are -- very responsive to that. he is going to grand valley state college. they have a big international program. he goes to china. they have 24,000 students. he studies abroad in shanghai. he likes china. they put 4,000 students overseas

which often foreign students are targeted by nations. i can assure you of one thing without beating anything in to this case. anything he said about china was very anti taiwan. i will show you that as an example. he studies his junior year and came back in 2004 and returned to study mandarin and look for work. during that time if there was an advertisement in english offering to pay someone who would write a paper for east asian studies to write a political paper. he responds -- the woman who responded was, and up who hired him and paid $200 and his relations with north korea and taiwan. he was anti taiwan. that is a betting issue. that is the key issue between china and the prc and as a result amanda sets up a meeting with people from the chinese intelligence service. they suggested maybe he would be

interested in working for the state department or the cia. that is the setup of a signal to me. he says he would be interested in doing that. you do that maybe you get secret documents given to us and he says that sounds like a good plan. that will send another signal but he said he was more than willing to do that and he did so he applies the state department. got on the internet and as you may or may not know difficult task and he failed. but they gave him $10,000 for trying for his friendship. we have never seen that before. $10,000 for failing attest. what happens next? a year later he takes the test again a second time and failed again. they pay him $20,000 for making it the second time. he has $30,000 for failing the foreign service officers test. after that he submits an online

application to the cia, clandestine officer. does that in 2007 and he then flies to shanghai two weeks and meets with the prc officer during that time and they pay $40,000 for having made the application to the cia. he has $70,000 in his pocket and he hasn't been hired by anybody yet. is very rare in the spy business for anybody to be paid for future. almost always after the fact. we have never seen this from china before. that is a very telling program. december he is advised the reports in c r a for final employment processing. you know what that means? final employment processing means taking a polygraph. in february he fills out his best f 86 and fails to put information relating to mr. wu or mr. tank. when he fills out that form has

he committed a crime? crime of what? lying in an official document. he flies towards 5 years for submitting that. he sits down and takes seven days with a polygraph and get the. the to that moment he could have been a hero. up to that moment he could have said guess what happened to me. the chinese did this to me and he would never be charged with anything. he tried to do what they did and towards june he had a criminal indictment. last interview with the fourteenth of june and indicted by the twenty-third. what is the indicted for? 1,001 which is lying five times. if you live 5 times how much times see facing? 25 years. so he is facing 25 years. now they sit down and have career counseling with him. would you like to go to jail for 25 years for this or would you like to cooperate? he chooses to cooperate and plead guilty to 793 which is preparatory acts which is little

espionage which is ten years and plead guilty to that. an end of last year, beginning of this year he goes 48 months and is a convicted felon for four years beginning in january of this year. remarkable case actually. there is another case that took place at the end of 2010 that left -- had to do with brian martin, at navy reservist in fort bragg. he is defense dia agent and he does the following. >> dusting operation to arrest martinet three different hotels. two in spring lake. details about that part of the story and reaction to this espionage arrests. >> this will get returned. >> that is the reaction we got from a lot of folks here around

fort bragg. sp ahmad is an unthinkable word. >> breaks my heart. >> brian martin delivered top-secret military files several times. the first was the lobby of this hampton in in the spring lake. martin thought it was meeting and, the officer and at that meeting he talked about his access to military computer systems and top-secret information. he told the agency was seeking, quote, long-term financial reimbursement. later martin was given $1,500 cash after handing over several files marked secret or top-secret. on november 19th martin met the government agent again at this holiday inn express in spring lake. this time he handed over 51 pages of documents marked secret or top-secret and again was paid $1,500. both times he wore his navy uniform. like a lot of other americans in and out of uniform he had a hard

time putting his feelings into anger. >> imagine being in fort bragg and being interviewed about someone who turned out to be a spy. not what you want to walk into. he was 22 years old. he was arrested by nci as and the fbi. the past 51 pages of secret and top secret. none were passed to foreign nationals. he was charged with 794. big espionage but did it in a court martial setting and he said i want a long-term financial reimbursement is what he said during the sting operation. what are you spying? this comes from mexico and new york. that ends last year. this year in may of this year he pled guilty to 11 counts of attempted espionage for tried to sell the classified material and 48 years and 14 years in a pretrial agreement which means damage assessment. he is facing 34 years of federal charges in fort leavenworth.

he says my soul was blinded by greed. i am filled with remorse and self loathing. he is facing 34 years of federal time. what is a parole basis in federal time? there is no parole for federal time. 34 years is 34 years. you never want to get charged federal. go local because there is parole. 10 is 10. yesterday a young man in pd county got convicted by the fed. he got 100 years for multiple counts of pd counting. 100 years federal time. that is 100 years federal time. he got 34 years federal time for doing that. another one, david was another man trying to volunteer to the israelis. he did this in 2009. he was caught when he was tried to volunteer -- pled guilty to

794. that is big espionage. he got 13 years. he spoke in 2009 and 513 years in jail federal time. the new case in 2011. this is a very interesting case. remarkable that it went to trial. is fara case for and activity from 1990 to 2001 and broke into july of this year in washington d.c.. when this organization which is a nonprofit at the kashmir american council in washington d.c. down a road where we are, this man was running this organization turned out to be working for the pakistani and i s. i and had been so since 1990. he had over 5,000 meetings with them and he was funneling money from the pakistanis to this organization and he handled more than 4,000 times what i as i intelligence officers in washington d.c. and the result

was this. ♪ >> suspected ira as i agent pleaded guilty to charges of spying for pakistan intelligence agency the i s i. the activist admitted to receiving $3.5 million from the i s r between 1990 and 2001 for 11 years for pakistan and groups. to influence u.s. policy and sentencing is for march of 2012. he will remain under house arrest until then. >> that is an interesting one. he will probably get ten years for fara. another one broke in fall of this year by brian underwood. a contract guard in a consulate in china. he tried to spot for the prc in china between december and march of this year. he sent letters to the prc

offering to provide information on photographs he took inside the consulate. this is what this council will look like. he gets arrested twice in september because the first arrest he is questioned by the fbi concerning the content of the letter and the photograph for the chinese officials and what did he do? he lied about it. he committed 1,001. he is arrested on two counts of making a false statement. violation of 1,001 on september 1st. he is supposed to appear in court at the same month in september and he flees. he is a fugitive 1,001 spy and they arrested in l.a. and brought him back and now they charged him with theft 794. big espionage and he is facing life in prison and for espionage if convicted of that. that took place in september in

washington d.c.. this is a remarkable case as current as the news is today. he is arrested in october of 2011 and an agent of the sea intelligence service. what do they have him doing? >> in virginia, residents on thomasville road watch as federal agents raided his home yesterday. according to neighbors mohammad is -- his wives and children the last two years. no one used them very well. >> a lot of vehicles on a wrote. obviously with frantic materials and that kind of thing. >> he also -- told federal judges hired his own attorney. he will remain in federal custody. it is 15 page indictment the

u.s. government, people protesting against the syrian government. it could be used to silence them. the indictment even describes a recent trip to syria. a meeting and an e-mail to the syrian embassy in washington d.c.. >> we knew something was going on. >> this is a photo taken from his twitter page. there are only five wes. sources say he worked at a variety of car dealerships across the virginia. >> typical answers. interesting case. >> demonstrations have been taking place since the crackdown in syria. there are two groups that are pro and anti-government forces. videotaping and -- on the anti

syrian protestors and eventually does that in syria. he provides this to the syrian intelligence service. that information is used to intimidate families back in syria to quiet them. and network of individuals help him collect information to demonstrators in the united states. it provides information to the syrian intelligence service which is used back there. these are the targets of the demonstration. [shouting] >> these demonstrations have been going on. maybe you missed them but the information is passed to and unidentified co-conspirator who is providing his reports by e-mail in in to the syrian embassy in washington d.c..

20 audio require -- provides links to web pages and protests in the united states. he has access to that and reports and he goes and talks to them lists of who is missing or dead and demonstrations -- telephone numbers and e-mails and protests. the kind of information that could be of great value to crackdown which they did. and he travels to meet the president in june of 2,011. a good example of this is a positive effect. this was the syrian composer and pianist in washington. he was demonstrating for the protesters in july. then they went into his house. this is what they did his mother and his father and with the syrian security service said. this is what you said when your son demonstrates against the government. a lesson to teach you how to raise your children. this is what they did.

they have come back to the united states and they are still alive. not true for everybody but that is the cause and effect for what he was doing here. this is what he said was justified. holds of protestors was justified and should be used to deal with protestors. these are his words as to what he is doing what he is doing. he is charged with fara and 1,001. he is acting as an agent of the syrian intelligence service and when the fbi goes to talk to him he lives so he is facing 40 years. his plea-bargain should be this year. i bet he plead doubt this year. 15 years for firearms purchase which he also made falsifying his records called piling on. two charges of one thousand one. he is facing 40 years for what he was doing in 2011. he must be held until trial.

first trial didn't quite understand the case and they let him out on bond and the federal government with time out. and they -- brought him and. in may of 2012 watch this case. here is another case that broke in october. >> the fbi says young american soldier stay in the alaska has been charged with espionage. 20-year-old william l.a. as a military policeman from kentucky. at a joint army air force base in anchorage. >> so this case broke in anchorage and was quiet when it started. he is a military police officer. he was an air force army base in alaska. he volunteers to an unidentified country. his group is called the arctic gladiators and this company is the arctic and forces.

appears he may have done this because he was left behind, unclear. not that much has come on this case other than he is under arrest for this. he had access to and classified information in the course of his normal duties but could be used to the advantage of a foreign power which he said when he volunteered and tried to transmit and classified national defense information to a person he thought was a foreign agent. one of his downfalls is he tried to give classified information. not uncommon. every so often you see that surface where someone tries to get a sub agent but that was the fall of this year. this is his home in kentucky. he had been in iraq previously and signed up in alaska in may of this year and was arrested in fall of this year. he is charged in november of this year and attempted espionage the additional failure to obey general orders which means contact with foreign

official, soliciting of statements and communicating defense information. the military has more flexibility. he will be court-martialed because he is in uniform. interesting to watch how this case unfolds. being investigated, the case by the air force and by the fbi. the three are working this case. that is what we had a national security cases in 2011. we had five economic espionage cases with nine people involved in the united states in economic espionage cases. a couple of them are particularly interesting to highlight. these were two chinese prc nationals who did not have diplomatic immunity and come to the united states to violate the arms control act by supporting munitions they couldn't send that were designed for several years. they were here on an acquisition process try to get this information.

they work for space science and technology department and represented that company in the united states. they were eventually arrested in hungary but it was an export case so it was extraditable. arrested in 2010 in september but they returned to the united states in april of 2011. these are chinese nationals arrested here. in june they pled guilty to smuggling hardened microchips to companies controlled by beijing in an effort to harden the u.s. arms embargo. they pled guilty and got to be sentenced. time will see but there are 4 nationals here. the other case of these three individuals who were conspiring in new york and washington to give information to iran. transfer technology information but they were shipping computer information they couldn't stand to iran but senate to dubai to mask the final delivery into

iran which is the divergent case from online microsoft and the affidavit says they reusing it to purchase millions of dollars of laptop computers that were being diverted. way we found out about this from the agent in the bar who was arrested himself in this case and gave a. they were sending $3,000 worth of computers every month. and not just one time. that is pending trial in the united states. another case, noncriminal but economic case. a man and his father were working for a packing company to compete against armour packing and using confidential information to compete against them. they're taking a civil suit against them. that is in may of this year. this is interesting because of what he had access to. here is the chinese, ethnic chinese in the united states. she was a senior software

engineer. 49 years old. national. not clear to me whether he is a nationalized american or born american. ph.d.. he works for a company that is commodity trading. in this area he was working on this program and was arrested this year and two chinese nationals referred to a business plan with him. they want to set up another company to commodity trading in china and he was getting the methodology used by another company to take that to the company's labor setting up in china. he was going to give it to them. what did he do? he got the information. he down loaded thousands of files on his thumb drive he brought into the system, transferred the stolen documents to a personal computer so got them out of the company in a some drive and sent them to

china. so fees were source codes and proprietary information. he was going to go to china in july on the seventh of july and was arrested on the first of july and faces 20 years for this economic espionage case. an interesting case, this man from columbia, very bright was involved in citadel investment. we're talking proprietary information, criminally charged and federally charged. >> the case that sound like a spy novel. along with charges of corporate espionage with scuba drivers, intelligence court involved in a 24-year-old ivy league financial we. >> tell us about this.

tonight he is that the federal lockup preparing to bond out in a paper that would rival the -- anything in mission impossible way it has been described. the process is 24 years out of cornell. all the makings of a real-life thriller. with billions in assets citadel is one of the world's largest hedge fund managers. in chicago headquarters the firm goes to great life to secure the computer network to make investments, especially the secret trading codes. according to federal charges once trusted technology employee who went by the name of ben coo --pu but as the internet security protocol and transferred files to external devices. when questioned by his superiors claimed he was downloading academic papers and music files. but citadel officials didn't buy it and they determined he was

stealing trade secrets. the fbi says after he was caught an associate of his told the company and federal agents that a 24-year-old computer whiz had dumped some of the evidence into a sanitary canal. authorities say divers considered -- discovered computer equipment that contained in citadel's alphas, the building blocks of the firm's success. >> one more case of want to move past and move overseas. if i might let me go overseas to talk about examples taking place there. if we look at what happened, two european cases. there is one that was in the netherlands and it broke in march of this last year when a 37-year-old pilot the personal jet pilot was charged with spying for belarus for the belarus kgb.

he was actually arrested in march, was made public in april of 2008. this capt. was arrested by the secret service as he was trying to pass state secrets to the belarus kgb. as the case began to unfold he realized he had been working for this royal naval air force, no longer working for the service. acquired information when he was there. this is a man who had financial problems as a pilot. he worked for the defense fought for 13 years and was resigned and he had been on bombing raids in kosovo and afghanistan. he had been a war fighter for them. he wanted to business with a president of belarus and resigned to be in contact with a colonel from the belarus kgb. still call it the kgb. hasn't changed its name. there was a close relationship between belarus and today's

russia but it turns out it was not a belarus' case. it was a g r u case. he was arrested during a meeting with that defense attache for the military. the russian g r officer, not russian kgb officer was p n ged out of the netherlands and it seems in august it surfaced that he had more secret than they thought at a time that they wanted to use them. they didn't say he had this much when he was first arrested and eventually discovered he had hidden this in a container that was shipped to the united arab emirates. this is where his material was in files and cd roms. more than it originally appeared to be. he tested -- attempted to pass the information. he wanted $5,000 euro, $750,000 american depending on the exchange rate. he was convicted this december.

he got five years in prison. if it were an american case he would have gone five years. european spy cases are only about 1-third the american effort what they get. are taught to europeans. you're still sensitive to espionage. we are more sophisticated than that. had some great debates about that. he gets five years in prison for this case. there is nothing like that spine scandal. great britain loves them. great britain had won this year. they have to have one occasionally and they bought the anna chairman case. they had a big one. all this year starting in december of last year there was a story about this katrina and she was working for a man who was in the parliament. it was a big issue in england. >> the officials in london allowed to contact the young

woman arrested almost all week ago on suspicion of spying. she faces deportation. she worked as an assistant to british champion mike hancock and was gathering information on nuclear facilities. the russian council is awaiting official permission for a meeting. london refused to provide moscow with any information about the arrest and had initially blocked access to the woman or southwestern media from relishing bond style scandal. >> a blonde bombshell and a russian spy working at the heart of british government. originally issues from pakistan. her family moved to another part of southern russia to escape

convict. then she attended specialist language school and like many good students kept in touch with her teacher, sending her foes from trips and mementos. >> she was very hard working. i didn't believe it was about content. >> unfortunately this is the kind of story the british press loves. picking up every titillating detail about a young woman who colleagues say wore short skirts and high heels and was often seen lungeing with mike hancock. but forces report another sought all together. >> we attended the same institute and one program was the international -- that is what she is. a bright young woman who has education and knowledge and loves her country but is ready to go abroad and share that

experience and also gain more experience. >> she had limited access to e-mail despite the attention -- detention facility where she is held. she has been in touch asking to be released but so far nothing. the deportation order -- >> she was held. they were going to deport her. it was the news all through this year. she was arrested christmas of last year until december this year when they had a deportation hearing. [inaudible] >> she remains in the u.k.. today in a historic judgment immigration appeals commission has exonerate did katia and rescinded the deportation order. they found on the balance of probability that she is not and never was a russian spy. the court did not reach that conclusion by a narrow margin.

the security -- it was found to be one of thing at every stage. many of the factors relied upon security assessment until the conclusion. >> best have been disappointing. you were waiting with great anticipation and it turns out to be released according to this hearing nothing behind it. but that is not true of the other one that want to talk about. the ongoing spy war going on in asia. i don't know if you follow asia but i like to talk about the thailand and cambodia and korean spy wars. if you get involved in working on the china issue and have anything to do with taiwan you will surface the chinese intelligence service. we are still engaged -- these are his words--a war without gunfire. if you look at what is going on he is absolutely right. looking at taiwanese intelligence service which operate in the united states there are three of them.

national security branch which is like the foreign intelligence service. the military intelligence bureau which is exactly what it says it is and the ministry of justice investigation bureau is there counterintelligence bureau similar to the fbi. that constitutes the taiwanese intelligence service. national security bureau has 36 divisions. this operates overseas. this one has a presence in the united states. they are aggressive. they aggressively target prc students in the united states and around the world. it is a big part of what this particular service and national security branch does. ministry of justice investigation bureau is the one and countering internal disorder. it does counterintelligence within taiwan and the military intelligence, collect military intelligence information once again a big deal in china.

in 1999 what you find when you study the spot business, the cases did not stand alone. each case be gets another case and that is what we see happening here. the prc court-martial executed two of its own officers, a major general and senior colonel. these were successfully pressed for the taiwan intelligence service. the 58-year-old major-general was executed at this 56-year-old senior colonel spying for taiwan 1999. that is 1999. they had been providing information on missiles. they were talking about the capability, and information, did not carry warheads at some times. missiles over taiwan has caused a lot of concern for taiwan. a good book to read on this is "assessing the threat."

it is out a lot more detail than i have time to talk to about. there have been 14 a very high- profile spies for the prc. look at these individuals, look at their rank, that it would they work. a retired colonel, petty officer, retired colonel from the military intelligence branch, civilian high-tech organization, mib, in essence of the organization of their intelligence services penetrated, leading up to a case this year. it was almost like a crescendo. in september, a captain and his wife for capturing intelligence for the prc. he is arrested in 2002. they had recorded their son as a decoder for the navy and used

them also. this is a family affair, if you would. they used their information to email. son would pass to dad, passes it to prc. the petty officer, when he was arrested for espionage, he got a life sentence. father was arrested on smuggling, released after allegedly agreeing to spy for china. that is how he became a prc spy. now he is working back against them. he took over $10,000 hong kong, a month. you don't find a lot of money exchanges in prc cases in the united states. you see economic cases i talked

about, but you don't see the kinds of high-cost things. but you do in this spy war that's going on. military bank officers were arrested. one was a colonel passing information, the other was a lieutenant colonel passing information. these were the men were compromised the officers that i told you were executed in 1999. these were the sources. it led to these two officers being killed. this is a high-tech spy case. 2003. espionage scandals -- one of the biggest espionage of scandals ever in the island. he was released, and he never went to trial for smuggling for the prc. he got away with it. primary research and development institute for the defense and

armament range. -- branch. announced that it came to 24 taiwanese -- it had detained 24 taiwanese, and they at all confessed during the same time, high-profile individuals or arrested. this particular one was arrested in 2005, went to trial in 2007, sentenced to death. he, along with his co- conspirator, who was in china, prc national, who wo had recruited to work for them, they were both executed in 2008. he had graduated from medical school in 1981, said on a scholarship to germany, and he was living in germany, he got his medical degree, retained austrian citizenship, and began to visit the prc on a regular

basis. in 1989, he was recruited by the military intelligence branch, soviet natural access to -- so he had natural access to the prc. this was as early as 1989. he developed a network of the main man, spent about $300,000 with his wife setting up a restaurant. it was an important source for taiwan military intelligence penetrating the prc. he finds the man he knew was a relative of his, and he recruited him. a missile technology expert, and he provided information on strategic missiles. the question became how did they get a compromise. one member of the service made this comment, which i don't necessarily buy into, but he

said that the sars outbreak of 2002 was a biological warfare for lemula by the prc. i don't buy that at all, but it is the kind of comment going on between them. who compromised these individuals? this colonel -- he passed the information, and another lieutenant colonel. but military intelligence. they were the sources of these two men who were executed then you have the counterintelligence service. he retired in 1997, and then recruited a friend of his who was still in the service. not un, and in these chinese cases. the -- were arrested in -- not uncommon in these tiny spaces. they were arrested in 2007. he became a businessman in

china. there he was recruited by the prc, went back and recruited one of his friends. this goes on over and over again, people who go back and forth between the prc and china. this one was a section chief of the military intelligence bridge. he went back to china to do business, record once again. we are seeing it over and over again. is his motivation. china recruited him, saying who do you know in the organization. high level penetration. here is one who worked for the legislative arm, and the one that i find interesting, the adviser, the office of the president was recruited as a source, a former senior adviser to the office of the president.

you can imagine what would happen if that was in the united states. the prc has been very successful in penetrating taiwan in this spy war going on, and they had this high level access. >> a high-ranking military official arrested on monday for supplying intelligence to the chinese regime. prosecutors believe this began in 2007. it is the highest case of espionage in taiwan in 20 years. arrested on charges of supplying intelligence to the chinese regime. the colonel is in charge of building taiwan's spy network in china and the intelligence bureau. he was recruited in 2004 to serve as a source in china. he told prosecutors -- [unintelligible]

he returned to taiwan to get information from the colonel. they say trachinese intelligence paid as much as one order thousand u.s. dollars. -- 100,000 u.s. dollars. >> the minister of national defence and covered it. this has been handed it to prosecutors. mib is doing damage control based on the situation. >> despite the major-general's reassurance, some consider these spies a serious danger. >> that was in the beginning -- end of 2010.

the colonel was recruited by his agent. he had been one of his agents. he was part of a network. he had worked for the colonel in 2003, 2005. eventually, the taiwanese thought he might be controlled. paid him off $50,000 for doing it they dropped him as a spy. in july 2006, they went back and recruited him and asked him to redeem himself, because he is living in china, contact his handler who was in taiwan, which he did. they say they were using the reception operation also. interestingly, because he was paid $46,000 by the prc, what was the end result?

the couple posted classified information 12 times, paid $100,000 for his action. he used the information to get himself promoted in his own organization. he ended up getting sentenced to life plus 21 years. it led them to the big one, and this is the big one that took place this year. >> taiwan detained a major general for allegedly spying for china. officials say he was promoted to general in 2008 but was recruited by china in 2004. >> i taiwanese major general has been detained for handing over military information to china. officials's military confirmed this on a wednesday. he spied for china for at least six years. >> the general was posted

overseas from 2000 to-- from 2002 to 2005. he was recruited by china in 2004. >> he says the military court searched his residence last month and detained a major general to provide the risk of him escaping, destroying evidence, or threatening military security. >> at that end of october last year, 2010, the defense ministry and national security department cooperated to obtain leads in the investigations. >> the defense ministry says that all should be cautious of china's intentions, even with the apparent warming of cross straight ties. taiwan officials say beijing has

about 1900 missiles aimed at the island, just 100 miles away. the major-general is the highest-ranking military official to be charged with espionage activities. >> this has been quite a remarkable case, because he had been providing information in 2004, he was a major general since 2008 . hhe turned on information on apache sales made by boeing, and the optical cable network, which we built for them, was compromised by him. it was in bangkok that he gets recorded by t -- recruited by the prc. in what appears to be a love relationship, he recruits this woman, and his last job, as you

can see, is military, electronic, and information department. he had intimate knowledge and privileged access to management systems, electronic codes, crucial military secrets. very significant for the defense of that area. he also had access to joint electronic warfare communications, as well as a special project on technology for encrypting communications with the island. part of the system was built by lockheed martin. all this information he could compromise. he was recruit -- he recruited a woman, initially pretended to be working in import-export trade, he met her and was recruited as a prc agenet. -- agent. paid as much as a million

dollars. china does not pay that kind of money except as it relates to china. he maintained contact with this woman even after he left taiwan, and there was some reporting that she had come to the united states to meet him when he was here. he was not assigned here, but the woman was a high-ranking chinese aged to was station and had contact with him. that is un and aerospace confirmed. in april of this year, -- he got u -- that is unconfirmed. in april of this year, he got life in prison. in june, another high-tech case -- prc tasking him for information related to military secrets also. >> i taiwanese software engineer has been sentenced to jail for a year-and-a-half after he was caught spying for the chinese regime. we spoke to one at a time when

he's lawmaker who said that the prison sentence is too light -- one taiwanese lawmaker who said that the prison sentence is too light. >> the taiwan-cambodia border war -- you may not be aware that this is going on. there is a contentious border that exists between them. in february, a high-profile activist in taiwan's network, and his secretary, entered into cambodia from thailand, arrested,, unlawful entry, going to a military base, and espionage. he got eight years, she got six months. another one was right on the border, where these three nationals -- thai, cambodia, vietnamese -- got caught spying on the border.

there handler, a colonel, apparently was not arrested. the three got two years in jail in september of this year ganother spy war going on. they were providing information that they saw. just military operation. it culminated this year. i want to talk about the spy wars up north and south korea. nobody espies and does things like the north koreans. two in july, 2010 -- two north koreans who had come into the south were sentenced by the court to 10 years for attempting to assassinate the former secretary of the north korean ruling communist party. this is a man in charge of their communist organization. he himself had defected to the

south in 1997. this has been a real problem for north korea. and they said an assassination team to track him down and to kill him. two of them were arrested in july 2010. this particular colonel, a career reconnaissance bureau, was in charge of the assassination operation, and they cut his head off. they are not pleased with him. a third career and was jailed and given 10 years for plotting to assassinate -- third korean was jailed and given 10 years for plotting to assassinate hthe same man. multiple accounts to track down the head of the communist party and assassinate him.

another one took place in september of this year. with the arab spring in bloom, south koreans said that this is something that the north korean- controlled society should know about. the south korean national intelligence service up tdetaind a man on a platform. ark, the main in the photograph, was himself in north korean defector, he defected in 2000. he is a member of an organization called fighters for a free north korea. there were some 20 members who were sending him helium baloons into the north with propaganda leaflets concerning the arab spring, along with dollar bills and radios. they wanted the north to know what was going on in the world,

because the north is so isolated. obviously, the north is getting these plans, and this man was -- getting these baloons, and this man was a defector, so what do they do? they sent an assassination team. he was supposed to meet him at a transition, subway platform, and he was interdicted and arrested. when they arrested him, he was where didoison t, and the assassin come from? the assassin is also a defector. he had also defected to the south. the north contacted him and said that if you don't carry out this assassination attempt, we are going to kill your family. what am i supposed to do? they are going to kill my family.

he was arrested trying to commit this assassination. only in korea would use these kinds of things unfolding. he was trying to carry this out before he was arrested. there was another defector, head of a christian group, they were trying to assassinate. another man with free north korean radio they were trying to assassinate. another man was part of the education center for unification that they were trying to assassinate. assassination is alive and well. north. defections have been an issue for some time. 22,000 north koreans have been at defected, 200 have been returned. you normally don't see that and other parts of the world, but you do see that there. one last black male case of this

year that i want to tell you a -- about. -- one last blackmail case of this year i want to tell you about. he was in bangladesh for a conference in october. he got involved with a woman. they approached him to recruit him. all indications are that he did not work with the pakistanis, but he turned himself in. he went back to india, and they are deciding whether to prosecute him or not. it became public just before christmas, and it is being done by the best whitby road -- is being done by the investigative bureau for in the ipad espionage is alive and well -- the investigative bureau for india. espionage is alive and well. there is two hours of the beginning of espionage for 2011.

i am open to any questions you have in the time have. yes, please. >> who do you think is killing the iranian scientists? >> ok, i have no inside knowledge on that whatsoever. but who has the capability and motivation for doing that? only one organization i think that would have the capability of doing that, the israeli intelligence service. i do not believe that there would be any americans involved, contrary to what the iranians are saying. it could be iranian dissident organizations who are also upset. they may have been agents acting on their own, or with the support of israelis. i have not seen any evidence to pinpoint a particular country. that would be my educated guess at this point. i retain the opportunity to

change my mind. but no one else has the capability or the willingness to do that. when they get you may find interesting -- last year there was an assassination that took place in dubai, and it had all the earmarks of how israel operates. they did the assassinations, and two of them, when they flew out of dubai, flew to iran. that is like say i can come into your country, leaving our country, and you don't even know. i am. -- and you don't even know i'm doing it. that is my educated guess at this time, with no inside knowledge whatsoever. any other questions you have? >> going back to your definition

of espionage, little espionage, big espionage, is a man from what we think we know in the public domain -- assuming what we know in the public domain is true about julian assange and wikileaks, could a case be made against him for espionage? he is not an american, did not commit these acts in the u.s. on the other hand, he released this protected information to foreign powers. looking from espionage one of you, julian assange, want to sort of riff on that. >> assange and manning -- bradley is going to be charged in a court martial. they just at hearings on that -- article 34 review of the case. i think is going to go to trial. assange is another problem,

because even if you wanted to charge him, how would you get him here? theft of government property? he did not steal it, he received it. it also has a huge political dimension to it. that is always a consideration in these cases. tactically, technically, if he was in the united states and he received that information, he could and charged with 793, retention of information. you have the legal arguments, and if you follow closely, which i am sure you have, the documents that were made in the preliminary hearings, is the case or the following closely in the united states. in practical terms, i do not see him being charged in the united states, because i don't see any way you could practically do anything with the case because it is not in the united states. you have to talk to the department of justice about

whether they want to take that case, anyway, because of all the political dimensions. yes, please. >[unintelligible] >> to i think what? do i believe state-owned companies -- >> is there potential there? a potential for state-owned companies, say they hire a lawyer -- >> oh, those people to register. those people acting for the government -- you have to register. a french company and not related to the government, they do not have to register. there is many people who come to

the department of justice and minister. -- and register. lawyers and businessmen of all types and to register. within 10 days you go out and register as an agent of a foreign power. remember jimmy carter's brother billy acting for the libyans? he did not go and register when he was working with the libyans. it was a bit of a snafu. if it is a state-owned company, you are acting for the state and you have to register. naturally, i would go to my attorney for the final answer. [laughter] how about that? any other questions? >> if i remember correctly, the iranians have a u.s. stealth

drone. what are they going to do with that? >> i don't know. what you think? the matter of time you -- of can you spoof it -- i don't think it is a big deal. it. use technology, then you can jus -- you lose technology, then you can change the technology. yes, it is interesting, and we had a great debate here on what is the difference between selling or getting a drone and getting a fighter pilot? you can make it cheaper, which is one of the issues. but i don't think that is as big a deal in the long term. but that is my personal opinion, don't hold me to. >> thank you so much.

it has been a wonderful evening. i think we are all >> i hope you at least believe that espionage is tbowng on. [inaudible conversations]

[inaudible conversations] >> we are live this morning at the brookings institution here in washington. the think tank is hosting an all-day discussion on the economy, jobs and global competition. you'll hear from commerce secretary john bryson, former deputy secretary of state strobe talbott, and former treasury secretary robert rubin. also the heads of dupont, alcoa and a number of other corporations. again, an all-day discussion on the economy and jobs about to get under way here from the brookings institution in a moment. [inaudible conversations]

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>> we'd like to get started on it. i'm strobe talbott, and it's my honor to work here at the brookings institution and to be associated with a number of terrific projects including the one that we're going to hear a little bit about in the course of today. this is the fourth forum of what we call our growth through innovation project or initiative. it's the second one with that we are conducting in public. and i want to give you just a little bit of background before we get started with the program itself on how growth through

innovation fits into the agenda of the work that we do here at brookings. brookings is a fairly big outfit with well over a hundred scholars who work in a variety of different disciplines, bring to their work a number of very different professional experiences and perspectives, and we have come up with four what we call all brookings priorities under which we cluster much of the work that we do here. and one of those priorities is growth through innovation. those three words almost explain themselves, but me friend, colleague and trustee glenn hutchins, in just a moment, will tell you a little more about what lies behind the concept and what the purpose of that particular priority is and the project that we are carrying out

under its auspices. but just to put it into context, let me mention what the other three all brookings priorities are. one is energy and climate policy, another is how to improve opportunity and well being for not just all americans, but all citizens of the world. and the third is managing global change. the way in which we are going to proceed here is as we have done in the three previous forums, we've brought together -- as is apparent from those here in the room today -- brookings experts, public officials who will be joining us during the course of the proceedings, leaders of the private sector such as andrew liveris of dow, opinion leaders, and we're going to have focused

discussions among those. and those discussions will be in many ways based on research work done by brookings scholars and the discussions themselves will be led and guided by brookings scholars such as alice rivlin and gary burtless from whom you will be hearing very shortly. we will today also be releasing four papers, all on the broad subject of the jobs crisis in this country. and the authors of those papers will be participating into today's panels. let me stress that growth through innovation like the other three brookings priorities is very consciously interdisciplinary both in the work that's done and in the leadership here within the

institution that guides those projects. we are reaching out to a number of our research programs. for example, growth through innovation is led by a troika of daryl west, the vice president and director of our government studies program, bruce katz, vice president and director and the founding director of our metropolitan policy program, and martin baily of our economic studies program. the whole project is very much a partnership between brookings scholars and management and brookings trustees. and we're very glad to have with us today and participating in the proceedings three of those trustees who have been so important to this project, glenn hutchins whom you'll be hearing from next, klaus kleinfeld and dominic barton. so with that, i will turn it over to glenn.

>> thank you, strobe. i was reminded as i was listening that you're just a wonderful leader for this organization. thank you for everything you do. today in the united states our gdp has gotten about back to its peak level of third quarter 2007, and we employ slightly more than six million less people to do that. today. by all measures today's jobs crisis is deep and complex and probably much more durable than we would like it to be, and it's perhaps one of the most important problems our nation has faced, and it's to that problem that we turn our attention today. what you're going to see today reflects a resolution by the executives at brookings and the board to focus the resources of brookings as bill clinton used to say like a laser on what we can do to help. i think that brookings is uniquely equipped to make a contribution and perhaps quite an important one to this, to the understanding of this problem as

reflected by four elements of what we're going to do today. first, you'll see today and stands out and, i think, always uniquely impresses and pleases me at brookings is the quality of the work of our scholars. we have very important papers that are going to to be released today that examine key aspects of the crisis and offer paths forward. the authors will be on our panels today, and they will be joined by others who are more distinguished scholars, and you'll see brookings intellectual throw away on parade today. second is the broad scope of what brookings does. you'll get a glimpse of the range of issues, geographies and disciplines across which brookings scholars work. we're going to explore a broad range of business sectors from manufacturing to high-tech and look at the perspective from both national policy questions and state initiatives. third is brookings' engagement with the real world, something we call impact.

our work today is shot going to be a sterile academic exercise, but one which is deeply informed by dialogue and exchange of views with important leaders and business and government who you'll hear from today, and i want to thank them in advance for their participation, making effort to come today. and finally, fourth, is our leadership. in addition to our institutional role as a thought leader, brookings' leadership itself has made a profound commitment to disentangling the knotty problems we're going to discuss today. three of our program leaders, as strobe mentioned earlier, have made huge contributions to today's event and the underlying initiative, and i want to thank them personally, martin bailey, daryl west and bruce katz, gentlemen, thank you very much for what you done. our seniormost leadership has worked and endorsed on this, our chairman and john thornton. our board has been deeply engaged, klaus kleinfeld and dominic barton, thank you,

gentlemen, very much for that work, as well as ann fudge and steve denning who have been dynamos behind us. collectively, our leadership has resolved to put the resources of brookings at work today on behalf of the 13 million americans who are unemployed. and so let's get started. um, the first panel is led by one of brookings' great luminaries who certainly needs no introduction on this stage, alice rivlin. thank you, alice, for coming today. and one of our other scholars, gary burtless, who's produced one of the papers which i'd recommend that you'd read. our own klaus kleinfeld, ceo of alcoa, and a very special guest, andrew liveris of dow. thank you very much for coming, and i know we're all looking forward to your panel. [background sounds]

>> good morning. we're going to hear a lot today about ideas for strategies for making the u.s. economy more competitive and creating more jobs. but we have to start from where we are. and where we are is a difficult spot as all of you know. we have to start from a realistic look at why the economy is struggling, why do we have 8.5% unemployment and be a lot higher -- and a lot higher number if you include all the people who are either looking for work and have gotten discouraged or who have a job but would like a better job or

to work more hours. and why has unemployment stayed so high for so long, what is standing in the way of a more rapid recovery. so the job of this panel is to focus on why we are where we are and where we might be going. one thing that you may be very glad of is you're not going to hear any political blame game today. [laughter] you will hear no references to it's all the fault of the democrats, it's all the the fault of the republicans. you will hear no politics, but a sober analysis of what the situation is and what can be done. but that's not to say it won't be controversial.

it's a very uncertain situation, and you will hear different views of what is happening and what might happen. to start us off, we have my colleague, gary burtless, one of my favorite colleagues. you can always count on gary to know what the numbers show, to have dug deeply into subjects like unemployment or unemployment compensation or what is -- what really is happening to the distribution of income, what's happening now that we've had welfare reform for ten years. gary applies his very considerable skills to those kinds of topics. and he will summarize for you the main points of the background paper which he and

his colleague adam loony have written and which i hope you will read. it is available. and then we will turn to the ceos of two major global companies to see how they see the markets and u.s. competitiveness. so, gary, you and adam loony did what i thought was an excellent job of laying out the current dismal state of the labor market and how we got here, the high unemployment and the slow growth since the recession ended. that the recession precipitated by the crisis of 2008. we've had stagnant wages for a long time. there isn't a lot of good news in your paper. we've had inadequate consumer demand, and all of this has been especially influenced by the

plunge in household net worth as a result of the catastrophe in the housing market. and you and adam have also explored hypotheses about why the economy hasn't come roaring back. so i hope you will tell us about what you found, and in a few minutes for those who have not read the paper summarize what you think the situation is and why it isn't better. >> well, this is the first session of the day, so i think it would be worthwhile to talk about what got us to the current fix and then what are the explanations for why unemployment has remained so persistently high over the last 24 months. most everybody in the room recognizes that the great recession was connected to a big

runup in house prices and then a collapse in those house prices. with fallout for the financial institutions that held all kinds of financial instruments that are backed by home loans. the spectacular decline in the value of houses, which directly hurt consumers' buying power, translated into an equally spectacular fall in the value of a lot of the financial products that are backed by home loans. and that collapse in those critical values brought the financial system of the country very near to collapse. fed action, treasury action, the t.a.r.p. legislation played critical roles in keeping that financial catastrophe from occurring, so the financial system of the united states

continued to function, but there was a huge falloff in the value of, first of all, the financial institutions and, second, all of the nonfinancial institutions that are selling goods and services to the american public. between 2007 and the beginning of 2009, the net worth of u.s. households fell by more than a quarter. that erased $19 trillion worth of wealth in the united states measured in today's prices. the stock and bond markets have partly recovered, so there has been a rebound in some of the asset prices, but we've still seen about a $15 trillion disappearance in the wealth that households had before the recession began. there has been, essentially, no rebound whatsoever in home prices. they fell sharply, and they're

still very low. now, if households spend about 3% of the value of the as is ets that they own -- assets that they own, the drop in that household net worth would translate into consumption falling by about $400 billion a year. that means without the crash in asset prices the flow of household consumption would be about 4 or 4.5% higher than it was in the last quarter. now, a lot of the lost wealth was in housing which is a very widely-owned asset in the united states, and there's a lot of evidence from the last 20 years that, in fact, households spend more than 3% of the improvements in wealth that they have in their homes. they may spend as much as 5% of it. and this suggests that household consumption might be $750 billion higher without the

erasure of so much household wealth. but whatever estimate you prefer, the house price collapse and the ensuing asset price decline removed a whole lot of consumer spending power from the economy. the drop in consumer spending can be expected to reduce business demand for workers which has another impact on consumer buying power when people lose their jobs, they lose the wages that those jobs give to them. in short, the direct and the indirect effects of this financial crisis, the run -- the big, spectacular decline in home values has created a huge shortfall in aggregate demand in the unite. the united states. the fed's action, the t.a.r.p. legislation, a variety of stimulus programs have all offset part of this loss, but not all of it. interest rates have fallen in the short run for safe assets to 0%, so there's not much more the

federal reserve can do through traditional monetary policy tools. the drop in the economy directly reduced the market incomes of american households. those fell 10% compared with their peak levels before the recession began. all of the federal countercyclical measures tended to reduce that decline, that 10% decline in what the market gives us as household income to just a 3% loss. we pay less taxes than we did before the recession, we receive more direct government benefits mostly in the form of unemployment benefits, but still there's been a decline in disposable income in the united states which also reduced consumption. so there's been a huge loss in household wealth which still depresses consumer demand for a wide range of the goods and services that are produced here in the united states.

we are emerging from the slump slowly, and way too slowly most people would say. the gap between what the economy does produce and what it could produce is about a trillion dollars or roughly 6% of what the potential output of the united states is. now, there's a very straightforward explanation for why we are where we are with 8.5% unemployment, with an employment population ratio that has dropped five points, five percentage points since the beginning of the recession, and we have a 6% gap between potential and actual gdp, and the explanation that fits the facts is that there's just too little ago regate demand in the united states -- aggregate demand in the united states. using conventional monetary policy tools, there is little more that the fed can do. it has reduced interest rates in the short run to as low as they can go. it cut short-term interest rates on safe assets to zero early in the slump, and that's where they have remained. l the usual policy remedy when

you've exhausted monetary policy tools is to rely on fiscal policy. some of you may be saying, well, we tried that, and it didn't work. there is no evidence that the fiscal policy failed. none. six months after the onset of the biggest stimulus package that we had in the slump, the economy stopped falling like a rock and started to grow again. within a few months, private sector employment began to grow slowly, but it began to grow, and it's grown ever since. about a fifth of the growth in the private sector employment since the low point has been offset by declines in the number of people on public payrolls; state and local governments face harsh fiscal realities, and they are reducing your payrolls, offsetting some of the gains in the private sector. i estimate we would need about ten and possibly eleven million

more jobs today in order to reach full employment. last year we haded 1.6 million -- we added 1.6 million jobs. that, at last year's pace, we would need about six and a half years to generate ten million more jobs, and during that six and a half years, the population of working age is going to grow, so we'll need millions more jobs beside that. what is tragic is that much of the excess unemployment is unnecessary. there are a lot of useful things that say two or three million more employed americans could do if they were put on mix or private payroll -- public or private payrolls to improve the country that we live in. there are millions of savers eager to offer the united states government their savings by purchasing united states government debt, in other words, to lend funds to the government at historically low interest rates so that the government can put those funds to use.

if households and businesses are unwilling to spend their cash reserves on consumption or on investment, the federal government can certainly identify, it can organize, and it can complete useful projects with the money that households and businesses are willing to offer to the federal government for that purpose. so the first thing we can do to boost aggregate demand is to build or to improve the nation's public infrastructure. we can also offer direct incentives to businesses to add to their payrolls this year or next year. for example, we can exempt businesses that expand the number of people on their payrolls from paying, making payroll tax payments on those additional workers. this makes it cheaper for companies to expand their businesses this year and next, in comparison to expanding them three or four years down the road. so what are some of the other explanations for why we're in such a persistently terrible state as far as the labor market is concerned?

well, one is that there's a skills mismatch. today's unemployed simply lack the skills that the expanding businesses and occupations need. and consequently, this mismatch means that there are unnecessary unemployment which could be fixed the we retooled the skills of unemployed workers which could be fixed if we paid businesses that are expanding to train workers in those skills. a second theory is that the social protection in the united states has become much more generous, and this slump compared with all of the previous slumps since world war ii. now, it's certainly true that the united states has been more generous to its unemployed this time than it was in earlier recessions. that may have added two-tenths of a point to the current unemployment rate. some economists say it's added eight-tenths of a point the current unemployment rate. still, the fact is that the unemployment rate even if we