budgets. we have@@@@!c operations coming as a result. so we look quite closely to see if there are countries that are fragile states, that could require an american security response.

so far there has been no major government that is toppled the to the recession. there have been peaceful changes of government. there have been reactions, strong reactions within countries to economic events. durbin policy changes within countries but we really haven't seen anything yet for example like the fall of this the part of government in the late 90's which was caused by the asian financial crisis. nonetheless, the recession continues, it's the worldwide gdp goes down the way it is predicted to next year and a trade continues to decline, protectionism raises barriers we can already see pressure countries coming under greater pressure that might result in internal instability and be subject to meddling from outside. that is the kind of thing that could trigger an american response or a coalition response that we might be a part of, so we are watching these sorts of dfcs pretty keenly. when you analyze which countries it is that are affected by economic problems, the ones that are well-established democracies

seemed to be able to handle it. dave odell dealed government in the next election, bring in the new one and give them a try for a while. in other words some of that syndrome happened in our own country recently. on the other hand countries that have really strong, authoritarian regimes handle it by turning down the screws on the claims. if things get works economically it does not matter because the police and armed forces are so powerful and certainly north korea is in that category. although, north korea seems to be staying fairly busy these days mapping out the sea bed in the pacific with missile probst so they seem to have other things going on. but, it is the countries that have a combination of some of their-- authoritarian features and at least populist not democratic that seemed the most susceptible to change and loss of stability due to tough economic conditions.

the new democracies of central and eastern europe are examples. ukraine in particular is under a great deal of political pressure due to difficult economic conditions. except for and yet many questions of south asia are similarly under pressure. virtually all the ander developed countries, especially africa, under the under greater siege because of the economic assistance drop, the further deterioration of their own economic situations and other factors that are important such as tribal or ethnic conflict and violence nearby. the intelligence community analysis and modeling shows that really the duration of the recession is the key factor in the strength of its effect. while the current recession is the worst since the 1930's so far does not have the political impact of the great depression which had the longer time run, however another year or two might bring a different and worse story. so, this area of the economic,

the effects of the economic recession is one that we are watching in a new way. if there is a geographic region of the world that we are looking at most closely it is the area from turki down to the eastern border of pakistan. that seems to be were the most american and western security concerns like. as this administration has undertaken its initial round of policy refuse the interconnected issues of iraq and afghanistan and pakistan, israel, palestine at commanded most of the attention. transnational isu's extremism, the proliferation of nuclear weapons, and trying to sort out the reality on the ground of all of these intersecting both national and transnational and multinational effects, identifying trends, trying to predict their effects. those have been a steady challenge for the intelligence

community. as ellen mentioned i just returned from a trip to pakistan and afghanistan so let me report on some of the developments that are going on there. in pakistan, the primary security event is this offensive in the swat valley that is being pursued by the pakistan army. we have seen these operations in recent years, but i think there is some interesting and important changes to what is going on this year. in the first place, for the first time, the pakistan army operations in that part of the world have support of the government and of the public. there was a parliamentary solution, which occurs. defences takes place. there been statements of support by the government, and more public support and this is really different from the past

when the army went up and there was little backing from the public come a little backing from the government. as we all know who served in the armed forces, when you are up there making sacrifices and nobody back, seems to be caring or supporting you, it is not something that you push hard. it is not something that maintains that intensity. another difference now is that, and this is something the leaders of pakistan talked about when i was there, is realizing that the key to stability is not so much military operations but the security and governance and economic matters after the fighting ends. we can see in the measures that pakistan with the help of the international community is taking to support the internally displaced persons, the plans they are making for taking them

back, and providing basic security and governance when they are there is important, and i think different and new in this period. i think partly in tribute to the effectiveness of what is now going on, we are seeing this wave of retaliatory bombings by the pakistan-- by the taliban and they settled and urban parts of pakistan, and it is quite savage. there were bombs began bashar and locore when i was there, when i was there last week, and i think these are having the effect of driving home to pakistani public the seriousness of the threat coming from that part of the country insofar is solidifying his support for the operations that are taking place there. overall, i think there are new possibilities opening for

pakistan-american cooperation in this common fight against the common enemy, but it is true that there is a long legacy of distrust between pakistan and the united states that we have to overcome as we have moved forward, and i think that it can be done. those i talked to were optimistic about their ability to handle the situation. they seem willing to work with the united states in ways that had not been previously possible, so i think there are signs there that point us in a positive direction. in afghanistan, it is no secret that the trends have been going in the wrong direction recently in terms of government loss of control of provinces, in terms of the insurgents strength and now we are into the new fighting season, and when i was there last week there are an average

of 25 some auto a run the country every -day, with a number of deaths resulting from them. as a result of the decisions made by president obama, a very strong u.s. effort is coming in to help afghanistan and there is international support on a lesser scale but certainly welcome and important. it is also the right thing. military forces are coming into areas that were previously basically ceded to the insurgents. a great deal of emphasis on the provincial reconstruction teams and other economic assistance. heavy emphasis on training of the afghani security forces, both the army and especially the police. so i think the elements of a strong support to afghanistan are coming and certainly are recognized by the development there. when i talked to those who have

been in and out of pakistan over the years, despite the violence that is going on now, they pointed to two areas of progress. up in the jalalabad area, roads are open. a certain amount of commerce is bringing to light and there are signs of vibrancy in that part of the world. in march, there was a raid into helmand province, the home of the poppy crop, the opm, the heroine section of afghanistan. it was really the first time a raid on that scale head taken off the street a huge amount of drugs, along with a bunch of weapons and explosives, so we can see the security forces pushing back into areas that had been basically seated

previously. so, there are some signs there that progress can be made, however the intricate tessa bringing security, a good governance, economic development and then making sure sure that it is able to be turned over to the afghans themselves for sustainment over the long term is a task that can't be underrated but i think it is doable and their resources are going to be able to do it. the intelligence community is making strong contributions to the average over there, supporting not only military operations but also putting heavy emphasis on supporting this the law operations, the provincial reconstruction teams, which are the key to long-term solutions in that country. so, let me turn from these areas that we are watching whether they be the effects of the world economic recession, this area, the middle east which seems to be the locus of a bunch of

national security concerns and let me turn to the intelligence community itself. the way we are doing business in this new era of irrigated and complex security concerns, both rats and opportunities, and the involvement in overseas operations when the united states and allies and partners decide to act. there really are three basic functions that were performing as an intelligence community. >> first one is the standing of the international landscape so that we can warned policy-makers about transcom impending actions that might affect u.s. interests and again. opportunities that might be rising. that can really set the foundation for wise national security policy. we keep an eye and individual countries on the transnational trends. i mentioned the economy is one area and another one that was quite-- the h1n1 virus.

as we all know, it popped up fairly quickly and as the director of national intelligence, i thought this was the primary responsibility of health and human services, the cdc, that they were the experts but it turned out there was a pretty strong role for the intelligence community in keeping an eye on that situation as it developed and it is still developing. for one thing, it was up to us to check whether some of the information that was being reported by different countries was in fact a record not and that is a fairly familiar function for the intelligence community. another piece of it was the predictive analysis using epidemiological models, looking at history, trying to project what might be. as this virus developed. so, i found in the intelligence committee we played a

non-traditional but very important role in trying to inform the u.s. response to the u.s. response to the h1n1 flew phenomenon, which we don't know the final story of yet us so, this business of standing the environment, looking for threats and opportunities trying to project trends is sort of the day-to-day business that we do. the second broad area that we pursue it is, when the united states moves in an area, makes a policy, make strategic choices in terms of what is going to do to deal with the region or a situation. in that case, our responsibility in the intelligence community is to portray a fundamental understanding of what is really going on in the ground in the area were talking about. at least to my personal experience the united states is made many of its mistakes and

national security by having a misguided understanding of the real situation on@@@@@@@@@ @ @ ú$ situation that followed, the capture of the country and the way that would develop. sally it is really, with the united states turns to an area that is going to take action, make policy it is our responsibility to be realistic and tell people what the

situation is on the ground. most of the public to-- policymakers we work with say we are somewhere between negative and cynical. it is very important for the united states when it is making these decisions that involve spending a great deal of money, putting our soldiers and civil officials into harm's way, to get it right. it is not just about passing on a worst-case scenario. we want policymakers to know what is really going on, what the likely effects of their actions are so they can make realistic policies. and i say that, in these recent policy deliberations that this is administration has been involved then, it is then, i have noticed there is a hunger to know what the situation is on the ground so policies can be effective. it has been easy to be a part of this national security team and to try to help fashion those policies, which were playing

out. so, then our third function, once the united states commits to action, once we decide to do something, then our major part of our responsibility in the intelligence community is to support that action. we need to insure the civilian officials or in the field have the fine grain actionable intelligence that will insure success. the mustin fordham action that the united states is taking right now is the action against violent extremists, al qaeda's and the groups like that. it involves hard work by the central intelligence agency, by military units and these actions so far have been successful in putting al qaeda back on its heels. their strength has been whittled down. they have been put on the defensive, and that has been the result of a great deal of hard work supported by a good intelligence. there is also the aspect of the

campaign against, by countering radicalism as an ideology. you heard the president's speech last week, an important step in that event and again it is important to inform that with intelligence so that it can be done in a smart way. as frs regional actions are going on, we are supporting field units and continue to support field units in iraq as our presence there is being drawn down and shifting our emphasis to afghanistan and pakistan where the effort is ramping up now. last week, during my trip, i was checking on intelligence support both for military and the civil units we have there. we sent analysts, we have increased card collection, we have thick in the communications network and the objective is to give a fine grain understanding of both the physical and human terrain in order to enable success for the military and

civil units that are there. but, at the same time that we are focusing a great deal at the tactical level to success, we are also in the business of assessing how that policy is doing. so, for example, when the decisions were made by president obama on the iraq policy, the withdrawal of forces there, the further shipped to iraq, taking over the responsibilities there, there are a number of things during that transition that we were concerned about, sectarian violence, some of the outside influences and so on. our job is to keep an eye on that and warned policy-makers with the predictions that they made when they took those policies that are happening or whether something else is coming up and there have to be adjustments to be made. so, at the same time that we are working as hard as we can to

make the policies succeed we are also trying to step back and take an approach as to whether it is succeeding or not, what is changing, what needs to be done. that third two-part role is another very important responsibility. we do quarterly assessments on the rack, our secretary intentions causing problems, what about the violence we have been saying recently? is that a spy or a trend going the wrong direction? we oh good strong answers on all of those sorts of questions. so, it is what we do a round the world and a very fine balance between telling the truth to power or being the skunk at the picnic, but that is the line we have to tread and we are not doing our job if we don't do it well. let me mention one other subject important to the intelligence community and that is the business of cybersecurity, the defense of our networks.

the national security agency has the responsibility to protect intelligence networks that we use. as many in the audience know better than i do the intertwining of private and public and government networks is a reality in the way that we run our communications these days. we use a lot of the same tables, the same internet service provider, same switches so what we are finding it increasingly is we are working closely with the semantics, the microsoft, in order to protect this common structure that we use. and, that all sounds fine. this audience understands that and realize is that it works pretty well, however, there is a deep suspicion by many about the government particularly the intelligence community been involved in private networks, being that close to these forms

of indications that americans are using all of the time for the part of it is the fundamental american stay out of my business attitude. another part of it is what was portrayed by some as illegal wiretapping than in 2003 and 2004 as part of the global war on terror. in fact it wasn't illegal but the idea big organization like the national security agency, connections to private networks is up information about americans, which is not happening by the way, is a very powerful one. so as we go forward into this important work in protecting our networks but the ones we use in government and helping to protect those that are used for important things like the power grids, the financial infrastructure. as we move forward we have to convince americans, those concerned with civil liberties and privacy that we can do this job ofrotecting them, that we can cooperate with the company's that we need to cooperate with but we can do it in a way that

protect civil liberties, that is properly supervised and is being done right. i think that is going to be a big job and the future. of the president announced the results of the 60 day review. pointed at the importance of striking that balance and now is the hard part of working out the details. i think it is important for the country. we have spent a great deal of money making the national security agency the premier and government and we should be able to use them to the best possible benefit for americans, using their tax dollars that we need to do it in a way that does not cause problems and give people even the impression that we are spying on them. i mentioned that in the intelligence community we are not just about threats and bad news a we to look for opportunities as well as warning and it is in the opportunity category that i would put the work we are doing right now with

mexico. the news on the surface of it seems that with a lot of drug-related violence, 8,000 deaths last year and on top of it all, swine flu as if mexico did not have enough problems than. but i think if you look believe the service, one of the things mexico-- the government has taken the offensive against these drug cartels who previously had not felt the full force of american-- mexican government response. what we have seen is a positive development. the mexican government tried to submit fibulae reform its police organization, gigi sharry system which a been suggest-- subjected to huge amounts of drug money and the effects were so great that the mexicans could not rely on them to perform the functions of sidey. now they are responding to the challenges of the belove lauper cav the other thing is important that we of scene that is important to us is the extent to which the mexican government once a close partnership with the united states, they said

let's work together, let's help each other on this and for those of you who of dealt with xican-american relations over the years, that is pretty remarkable. i think it is a great opportunity for the united states to develop a strong partnership to address some of the problems that really are in the american interests as well as in the mexican interest. we in the intelligence community are doing our part along with many other departments of the american government to try to assist mexico in this common problem. i see great possibilities for working together on this problem with mexico and i hope in future years the same spirit can work on other issues in u.s.-mexican relations with its baby immigration, how the border is handled, economic relations that are still left over from nafta. i think we are an edge of potentially a new era in mexican american relations that is very much in the interest of both countries to pursue them.

so, if you decide-- mertz green missiles or the crisis than iran it has been a pretty dull for months that i have been at the dni but i must tell you when we talk to the president about these things and the way it usually works is there is a group of us in the office talking about national security and wheat come out and then the group that comes in and talks about economic relations, the president tells us with a laugh that we are the good part of his -day. dealing with banks and our companies is really that tough part. but, he does seem to feel that in the national security area he has got some good tools to work with and sometimes it is even more manageable than dealing with the financial crisis. i am sure he says the same thing to tim geithner and larry summers when they come as the room and we have left. we are all trying to keep our eye on a lot of things.

so, let me stop there and turn the lecture into a discussion, but those are the sorts of things that i have been working on in terms of issues. they are the way we are trying to think of our primary function as an intelligence committee to contribute to this country's national security and i would be remiss if i did not acknowledge the partnership of many of you personally and certainly many of their companies in helping us to this important work, so thank you very much and i look forward to the questions. [applause] >> if you have a question raise your hand. questions? oh, come on. >> admiral, something that the

sine qua non of your metrics is what the president being pleased with what the intelligence committee delivers. i am curious what your internal metric says the ceo of the intelligence committee are for how the community is doing on a day-to-day, quarter to quarter, year to year basis? >> well, we are where we are and if we can do better tomorrow and better the -day after and better after that i think i would be happy. i would tell you the last time i was closely involved in, a closely involved in this business and a number of you and the audience were there with me, was in the mid-90s, when i was the associate dci for military support and i can tell you in the time since then there has been tremendous, tremendous improvements in capability by the intelligence community. we are able to do things we were

only dreaming about that then so i think the trajectory is in the right direction and they think the key is to come at the key is to keep it moving back there, back in that direction. i think some of the things that will make a difference are some of the unglamorous things, not some razzle dazzle new satellite, but i think it is people and if we can continue to recruit and retain the really good people who are doing it for the right reason-- right now 50% of the workforce in the intelligence community has come in since 9/11. they all came in for the right reasons, and that is good. many of them are brilliant. it needs some seasoning, needs to be moved around so they get a wide use of what goes on in different parts of the intelligence