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 their city. it has worked out, reading as you do from the newspapers, worked out somewhat differently, depending on the city and the circumstances. >> now, for something much easier, let's talk about pakistan. [laughter] >> that is a law professor thinking that is easier.

go ahead. >> a number of our questioners note that it seems to be public record that there have been some challenges in the relationship between our government and pakistan and, yet, pakistan continues to be an important strategic partner, and allied in a very complicated region. i would love to hear you speak a little bit about how you see that relationship with respect to our law enforcement activities and what you think we might expect in that relationship going forward. >> it is interesting. in today's world of globalization -- when i started as a united states attorney back in the late 1970's, i probably had one case that had some ramifications outside of this district. now, i would say it is probably the reverse. nine out of 10 cases intersect with persons in other jurisdictions, whether it be within the united states or internationally. what happens is, regardless of whether it is pakistan or a

number of countries you could mention where we have diverging interests, there are also interests that pull us together. in pakistan, we have got good relationships at a number of levels. it is a much more difficult relationship that perhaps the highest levels, but we still have good relationships with certain counterparts over there, as we do with a number of countries. i cannot praise and of the work that has been done by our sister agencies in addressing the threat of terrorism worldwide. we are safer today as a country because of efforts that have been undertaken by those entities, whether it be in pakistan, afghanistan, and other areas around the world. >> there has been a lot of attention both inside and outside government involving -- with respect to the issue of what might be done about the motivations of people who engage in terrorist activity or are recruited by terrorist

organizations. i wonder if you could speak a little bit as to whether you see efforts to do something about this to be promising in terms of outreach or better relations with particular communities -- what questions you think are important for us to answer to be able to better get a handle on what motivations people have for engaging in terrorist action. >> i would say that the landscape has shifted over the last four or five years. four or five years ago, our greatest concern would be radicalization from individuals in pakistan or yemen and other individuals or acolytes in the united states who would reach out and touch somebody and recruit them to go to human -- yen in -- yemen or pakistan. what has happened is the self- radicalization over the internet. today, individuals do not have

to travel to pakistan to understand the literature, be exposed to the literature, and to gain some of the information and knowledge on how you undertake a tax. it can be all done on the internet. increasingly, we see those individuals are radicalize, self-radicalized as being a huge problem for us. in the united states, there are a variety of ways that people become radicalized. particularly after september 11, for the four or five years after that. it really is, to a large extent, the muslim american community itself, if you are talking about international terrorism, who has alerted us to persons who we need to look further at and has understood that the worst thing that could happen to

the muslim american community in the united states is another terrorist attack. yes, we have our reach. every one of our field officers has substantial out reach with and has since september 11 with the muslim communities. but in addition to the relationships that we establish, the education that we do jointly, it is in large part attributable to the muslim community itself that local radicalization is somewhat diminished and, really, it is on the internet where we face our biggest challenge now. >> director, several government officials have raised questions about the relationship between contractors and the federal government, and this is an issue that indicates perhaps not only the department of defense, the state department, and many other government agencies, but also to some degree, our law enforcement agencies. what is your take on -- what would be the philosophy of the fbi when it comes to the use of

contractors? >> there are certain roles a contractor needs to play. it may be an area of expertise we need. on the one hand, you need contractors in discrete areas. on the other hand, you do not want to over use them because they are far more expensive, bottom line. one of the problems for a time in the bureau was without fbi agents could do anything. does not make any difference whether you are human-resources or information technology agents, they can do all it, but the fact of it is, if you have to put it in a new computer system, you may need someone who is a specialist on it. you may want them for that particular project but not for a number of years. in topeka areas, there is a role for them. they can be of use and can be overused. all of us who are facing now the budget crunch are looking very closely at the use of contractors and making certain that you use them when you

really need them as opposed to it being the easier way to go. >> you mentioned earlier the relationship between the fbi and congress, a very important relationship. i wanted to ask you about the relationship between the justice department and the white house, but in very general terms, so let me preface by saying that there has been attention to some of the drama surrounding conflict between the former deputy attorney general and other senior justice department officials in the bush white house, involving an nsa program from the previous administration. i would note that the fbi is in a very interesting position in our government. it is undoubtedly an executive agency in article two of the constitution. on the other hand, it is designed to be somewhat insulated from day-to-day interference from people engaged in the political affairs of the nation. how would you describe the relationship or what you would

say is the ideal relationship between the president and an agency like the fbi? >> it is an interesting question. i would say that one of the great things about my job is i have to be aggressively apolitical, which is wonderful. as an agency, we need to trust the american people in the work that we do an understanding that whatever we do in terms of investigations, whatever we do as the bureau is done without regard to party or politics or what have you, that we are independent. it was somewhat easier prior to september 11 where you had a criminal cases on the one hand and national security was something that was handled elsewhere by the cia, duty, and state department -- the cia, dod, and state department here there was very little interaction with the white house prior to september 11. back to the matters the president is respole