in san francisco and i myself being out here paid little attention to those terrorist attacks that were occurring overseas. today, our world can change in the blink of an eye. the effects of that change are felt more rapidly and more broadly than ever before. consider the current economic climate. when companies fail to recognize and adapt to change, they can go out of business almost overnight. law enforcement and the intelligence community face a similar challenge. if we in the fbi failed to recognize how the world is changing, the consequences can be devastating. lives can be lost. our national security can be threatened, and the balance of power can tip toward our adversaries. terrorism, espionage, and cyber attacks are now the fbi's top priorities.

terrorists, spies, and hackers are always thinking of new ways to harm us. today, i want to discuss how these threats are evolving and what to share with you what the fbi is doing to stay one step ahead to keep our nation safe, prosperous, and free. let's begin with the terrorist threat. during the past decade, we have weakened al qaeda, due to the coordinated efforts of our military, the intelligence community, law enforcement, and our international partners. we have captured or killed many al qaeda leaders and operatives, including osama bin laden. we have shut down terrorist training camps, frozen their finances, disrupted their communications and, most importantly, we have uncovered dozens of cells and prevented terrorist attacks. yet, core al qaeda, operating out of pakistan, remains committed to high-profile attacks against the west.

we confirmed this with records seized from osama bin laden's compaq after his death. we saw this with the plot to bomb the new york subway system in 2009. meanwhile, al qaeda affiliate's have emerged as significant threats. al qaeda in the arabian peninsula operating in yemen has attended several attacks on the united states, including the failed christmas day airline bombing in 2009 and the attempted bombing of u.s.-bound cargo planes in october 2010. most recently, we have a growing concern about the threat from homegrown violent extremists. these individuals have no typical profile. their experiences and motives are often distinct, but they are increasingly savvy and willing to act alone, which makes them difficult to find and stop.

in 2009, smadi was a 19-year-old jordanian citizen living in texas, and although he espoused loyal to -- loyalty to al qaeda and some of the modern, he was not affiliated with any groups that would become terrorists. he had become radicalized on his own on the internet. when he expressed clear interest in attacking a dallas skyscraper, the fbi used undercover agents to set up a sting, and three agents who spoke arabic began talking with him, first online and later in prison. he believed he had found an al qaeda sleeper sell to assist him. after months of planning, he parked what he believed was a truck bomb underneath a skyscraper and dialed a cell phone number he sought would detonate the bomb. the bomb was a fake supplied by our undercover agents, and the

call signaled the agents to make the arrest. last year, he was convicted and sentenced to 24 years in prison. intelligence led us to him and the combined efforts of our federal, state, and local partners help us stop him before he could do any harm. in the face of this threat, we and the bureau will continue to enhance our intelligence capabilities to get the right information to the right people at the right time, and we will continue to build strong partnerships, for these tools have been the foundation for our success against terrorism over the past 10 years. we must keep adapting to these changing terrorist threats to stay one step ahead of those who would do was harm, and we must do all of this while respecting the role of law and the safeguards guaranteed by the constitution -- stay one step ahead of those who would do us harm. let us turn from terrorists to

spies. many people assume the end of the cold war made the world of cloak and dagger obsolete, but unfortunately, a spinoff is still very much with us. nations will always try to learn one another's secrets to gain political, military, or economic advantage. the bar of intelligence presence operating in the united states is roughly the same as it was during the cold war. we still confront traditional espionage, such as spies working under diplomatic cover, or even posing as ordinary citizens. consider the arrest last year of 10 agents of the russian foreign intelligence service. many of you may have seen tv news stories and videos covering the techniques we use in our investigation. it did feature the stuff from a john le carre novel.

apart from the more traditional types of espionage, today's spies are just as often students, researchers, business people, or operators of front companies. they seek not only state secrets, but trade secrets from corporations and universities, such as research and development, intellectual property, and insider information. consider the recent case of a naturalized u.s. citizen from india. for 18 years, he was an engineer at no. 0 grumman, the defense contractor that built the stealth bomber, one of our nation's most important strategic assets -- an engineer at no. full grumman -- nor folk -- norfolk grumman. he sold highly classified information about the stealth technology to several nations, including china, and also made

six covert trips to china to assist them in development of stealth technology for their cruise missiles. partnerships again were essential in finding and stopping him before he could further damage national security. together with the air force, u.s. customs, irs, and other agencies will build a strong case against him, and this past january, he was sentenced to 32 years in prison. foreign spies know that military superiority is merely one factor that determines the world's balance of power. just as important is the kind of economic innovation we find here in the bay area. so it is no surprise that spies also target the most valuable secrets of american companies. as well as universities. they hope that stealing the fruits of american innovation will give their nation's a shortcut to economic pre- eminence. an example of the cost of this type of espionage -- a former

scientist for two of america's largest agricultural companies pled guilty to charges that he sent trade secrets to his native china. he became a research leader in biotechnology and the development of organic pesticides. although he had signed non- disclosure agreements, he transferred stolen trade secrets from both companies to persons in germany and china, and his criminal conduct cost millions of dollars. these two cases illustrate the growing scope of what we call the insider threat where employers use their legitimate access to steal secrets for the benefit of another company or another country. so much sensitive data is now stored on computer networks. our adversaries often find it as

effective or even more effective to steal secrets through several conclusions -- cyber intrusions. foreign spies had increased their skill at infiltrating our computer networks and once inside, they can take government secrets as well as valuable intellectual property, information that can improve the competitive advantage of state- owned companies. earlier this month, the intelligence community issued a report to congress, stating that cyber-based economic espionage is increasingly pervasive, and their report confirms that several nations are using cyber capabilities to collect sensitive american technology as well as economic secrets. while state-sponsored cyber espionage is a growing problem, it is but one aspect of the threat. the number and sophistication of computer intrusions have increased dramatically in recent

years. american companies are using billions of dollars -- losing billions of dollars worth of intellectual property, research and development, as well as trade secrets. outside attackers of borrow and to company networks, remain undiscovered for months or even years. it is much like having termites in your house. often by the time you discover them, the damage is done. now, activist groups are pioneering their own forms of digital anarchy. in the bay area, you witnessed their work firsthand when individuals have the bark website and released personal data of customers -- and individuals -- when individuals hacked the bart website. the anonymity of the internet makes it difficult to discern the identity, motives, and locations of an intruder, and a proliferation of portable

devices that connect to the internet only increases the opportunity to steal vital information. we in the fbi cannot merely react to computer intrusions. hackers will seek to exploit every vulnerability, and we must be able to anticipate their moves. i share one example which he appeared in april, the fbi brought down an international network of fibers-infected computers controlled remotely by an attacker. the bureau took control of 5 servers the hackers had used to effect some 200 computers with malware, which allowed them to steal personal and financial information by recording user keystrokes. we not only shut down the servers, we took another unprecedented step.

with court approval, the fbi responded to signals sent from infected computers in the united states. we sent those computers a command that stopped teh malw -- stopped the malware. you will see the surveying today's threats is somewhat like peering into a kaleidoscope with even the slightest rotation presents new patterns of color and light and just when it seems you understand a threat, the world turns and the threat has changed. as tom friedman has described in his book, "the world is flat," advances in technology, travel, commerce, communication, and broken down barriers between nations and individuals, globalization has had a flattening effect, leveling the playing field for all of us. this hyper connectivity is in powering engaging people around the world, both friend and foe alike.

how do we stay ahead of terrorists, spies, and hackers? intelligence will continue to drive our investigations. we must ask ourselves -- what do we know about these threats? what are the gaps in our intelligence? what human sources can we develop to cultivate to fill these gaps? each of us, government leaders and everyday citizens alike, must ask ourselves what vulnerabilities we may have overlooked. we must also place even greater emphasis on partnerships and information sharing. no single agency, no single company, no single nation can defeat these complex global threats alone. in these days of tight budgets, working together is essential. it is the only way to work. finally, we need the right tools to address shifting threats. for example, the foreign language skills and advanced

cyber capabilities we used. another critical tool is the fbi's ability to accept electronic communications. many social networking conduit's, in contrast to traditional communications carriers, are not able now to produce the electronic communications we seek in response to a court order. when investigators cannot collect communications pursuant to a court order in near real- time, they may not be able to act quickly enough to disrupt threats to protect public safety. laws covering this area have not been updated since 1994, a lifetime ago in the internet age. we are working with congress, the courts, our law enforcement partners and the private sector to ensure that our ability to intercept communications is not eroded by advances in technology. one last but very important

point -- the fbi has always adapted to meet new threats. we must continue to evolve because terrorists, spies, and hackers certainly will, but our values can never change. regardless of emerging threats, the impact of globalization or changing technology, the rule of law will remain the fbi's guiding principle. in the end, we know we will be judged not only by our ability to keep americans safe but also by what we safeguard the liberties for which we are fighting and maintain the trust of the american people. yes, our adversaries are persistent. they are clever. the pressures of globalization and technology are ever-present. change is a constant in today's world and we must prepare for it. yet, change is just one constant. the other is the american

people's resolve. the same resolve drives the fbi every day, and together, we can and we will keep our country say from harm. thank you again for having me here today. i certainly will be happy to answer whatever questions you might have. [applause] >> thanks to director muller. i direct the stanford center for international security and cooperation and i am a professor at stanford law school, and i am on it to be your to moderate our question and answer session. i am also very glad that i am not the one to have to answer the questions. director, i wonder if we could start with a pair of questions about 9/11. there were many questions from the audience about 9/11, and i will just pair these two

together. "on the day itself, as you recall what you and your team went through, what did you learn about the fbi that you did not know before?" the second part is much more of a retrospective, asking, "looking back now, how do the at buy it -- fbi and cia relate to each other differently than before?" >> i had started, as mason pointed out, the week before. i could barely find my office on september 11. but the fbi has a history of over 100 years, and it kicked in, as it always does in a disaster such as you saw on september 11, and i was along for the right, but they did a phenomenal job. the deputy ran the show. we were up and running within minutes, certainly hours of what happened on the morning of september 11.

the operation, even though it was the most extensive in the history of the bureau, ran exceptionally smoothly. the key point came -- i did get a call from the president that day, as i recall, saying, "we cannot let this happen again." perhaps the most formative moment cave -- came days later when i was briefing the president for one of the first times and i started off the briefing by saying we have set up command centers at the pentagon and in new york and we were tracking the individuals who were responsible for this. we had identified a number by the seats on the plates and i was about two minutes in and the president stopped me and said, "what you are telling me is what i expect the bureau to do. that is investigate after the fact. you have been doing it for 100 years. i expect you to accomplish that. what i want to know today is

what you and the fbi are doing to prevent the next terror attacks. for us in the bureau who are used to being reactive and doing cases, myself as a prosecutor is used to getting a case, prosecuting, and putting people away. the mission to prevent a terrorist attack was something new, which gave rise to the development of an intelligence capacity, breaking down of the walls between ourselves and cia, nsa, and the intelligence community, but i think always in the back of our mind, everyone at the bureau knew we could not let this happen again. on that day, i felt like that high school student who got the wrong assignment when the president asked that question, but it has been in the back of my mind since then. each president, for most on their mind is protecting the american public from another attack. >> we have a number of questions that deal with mission areas you did not mention specifically, given the importance of cyber

security and espionage and counterterrorism. i wonder if you could say a little bit about two things, one being your sense of where the country is in respect to drug policy. the fbi is involved with drug policy along with other law- enforcement agencies, but more generally, how you approach the challenge of managing this broad range of responsibilities that the fbi has to continue to attend to, while at the same time prioritizing the missions you mentioned. >> actually, it is the last word that you use, which is prioritization. we early on realized that we needed a set of priorities and needed to focus on those priorities. the priorities we talked about today -- terrorism, counter- terrorism, counterespionage, and cyber -- are the three national security priorities. if the fbi did not address the

priorities, they often would not be addressed. transnational, international organized crime because organized crime cuts across various jurisdictions and became the third criminal priority. white collar crime. that is number four. five was violent crime. you will see left off that list are a number of things, including the drug cases we have traditionally done previously. but when we say priority, we meant priority. you have to address priorities in order. i moved almost 2000 agents from the criminal programs to counter terrorism and national security because that was the priority. we have, since september 11, then run according to a set of priorities that we continuously review, but precludes us from doing things we have traditionally done, we all enjoyed doing, but is not as necessary as the priorities we

have identified, and we were fairly rigorous when it comes to budget, when it comes to personnel. we adhere to those priorities. in a tighter budget, those are the things that save you because you go down the priorities and are able to make the decisions somewhat better than you otherwise would. we are not doing as much in the war on drugs that we did before. it is a continuous battle. we do participate in a number of ways as a war and a battle worth fighting. >> we have a number of questions about cyber security. question that emerges in the minds of many people is how the fbi might approach the challenge of balancing the security- related imperatives it has with concerns about privacy and civil liberty. wonder if you could speak to that in the cyber context, but also may be what you think americans should be thinking about as they ask the question of what their government should be prepared to do in terms of offensive operations in cyberspace.

>> let me first of all define the fbi's role. generally, we do investigate. our primary function is when we are called in, we investigate. we have a debt investigators who have been doing this for time here the problem with a cyber intrusion attack is you have no idea whether it is another government-sponsored attack or an organized criminal attack originated in russia or romania or wherever by an organized crime group for the high-school student down the block in his room undertaking the cyber attack. consequently, the way we divide up our work -- espionage or terrorism or fraud -- does not really help us when you have an attrition, particularly if it is intrusion by a foreign government, which falls under the purview of foreign intelligence agencies. what we have found is we have

had to adjust our organizational structure to develop the relationships, and i put together a task force when there is a cyber intrusion, that includes individuals from across the community because you do not know where that case will end up and you want to make certain you do not miss anything. whether it be offensive or defensive, we are generally defensive in the sense that operating domestically and the investigative authority within the united states. we would be helpless if we did not work with dhs, cia, nsa, and the rest of the intelligence community. if there is one substantial change that has made the biggest difference, i would say breaking down the traditional walls between the intelligence community and the domestic law enforcement community because information flows very easily over borders now, and you cannot just see one piece of the puzzle without getting the other piece. it has made a tremendous difference and given rise to the

approach from all of us that says we want to work together in a task force context. >> for our radio listeners, you are listening to the commonwealth club of california radio program. our guest today is fbi director robert muller discussing security threats concerning the united states. we would like to ask you a little bit about the national security implications of our energy policy, an issue of much concern in the news and certainly here in silicon valley. what might you say about the relationship between energy policy and some of the national security challenges that the fbi is addressing? >> one of the nice things about my job is i generally stay away from policy, but when it comes to energy resources and the like, there are a number of -- you can look at it from the geopolitical perspective, which is not something that really bears on what we do day in and day out. if you put in context the potential cyber attacks and the concerns we have about cyber attacks on our infrastructure,

there is an intersection between the vulnerabilities we have and our energy and electrical grids and the like from cyber attacks, which keep all of us busy. i would just go back to one other thing that i did not address in the question before, and that is the balance between privacy interests, civil rights interests, and the like, and the necessity to address these threats. every day, there is a balance between what we need to undertake to do our job and to prevent the results of a substantial terrorist attack, but every one of us understand it is a balance. particularly the bureau over the years has understood that in conducting investigations, you need revocation. you need start, and you build up a vacation before you take the next investigative step that may further intrude on one's privacy and the like. i will tell you that our agents are inculcated with the understanding that they are given a great deal power, a

great deal of ability to affect persons lives. understanding the necessity of operating within the constitution, within the applicable statutes of the attorney general guidelines is drilled into all of our new agents. as i indicated before, my predecessor set up a process whereby every one of our agents goes to the holocaust museum to make certain that they understand they understand what happens when a law enforcement or intelligence agency gets off the tracks. >> you addressed one of my upcoming questions, but there was a variation on it that i thought would be interesting to share with you. it says, cassette and what recourse do ordinary citizens have to hold government officials accountable?" internally, we have our own inspection divisions that monitor what we do and take complaints outside and inside and review it, and we have a

privacy officer. i will tell you that congress is not shy in exercising its oversight of the fbi and other federal agencies. it is not as if we are not scrutinized, and persons who have complaints -- there are a number of opportunities, a number of offices that will handle those, whether it be inside the fbi come inside the department of justice, the inspector general's office, or the hill -- inside the fbi, inside the department of justice, the inspector general's office, or the hill. >> if i had a dollar for each question that mentions the word occupy, i would be a rich man. i appreciate the time people have put into these questions. i know we are short on time, so i will combine them when i can. some of the questions are about occupy san francisco, how police should deal with in canada. i'm guessing you will stay away without one. >> one thing you learn after 10

years is how to duck a question. i think you have got a very good police force here. very competent person a hand -- at hand, and they do a very good job. >> i will follow up by asking you the more general question. the protests, of course, have been going on in several cities and have garnered a great deal of attention from any number of sources. i guess the general question would be -- what is your impression of what is happening, the challenges that might be represented there, not only for law enforcement, but for the country? >> i'm not going to wait too deep in these waters, but it presents very difficult issues. on the one hand, expressing first amendment rights. on the other hand, the right for ordinary citizens to have the ability to access the venues in