U.S. intelligence faces "belt-tightening"

WASHINGTON Thu Feb 10, 2011 2:41pm EST

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WASHINGTON (Reuters) - The United States faces cuts in intelligence spending despite threats ranging from al Qaeda in Yemen and Somalia to nuclear programs in Iran and North Korea, the top U.S. intelligence official said on Thursday.

With newly powerful Republicans in Congress eager to slash spending on many fronts, senior intelligence officials faced questions about the future of U.S. spycraft even as Washington tries to gauge the impact of turmoil in the Middle East.

"We all understand that we're going to be in for some belt tightening," Director of National Intelligence James Clapper told a House of Representatives Intelligence Committee hearing.

Last year, the U.S. government disclosed it spent just more than $80 billion on intelligence in fiscal year 2010, double the amount in 2001 -- the year of the September 11 attacks on the United States by al Qaeda militants.

Much of the increase came during the eight-year presidency of Republican George W. Bush as the United States went to war in Afghanistan and Iraq and stepped up security at home. President Barack Obama, a Democrat, took office in 2009.

"We must see greater efficiencies in your existing budgets to either fund new or expanded intelligence programs or return those savings to the American people," Representative Mike Rogers, the new Republican chairman of the intelligence committee, said in his opening statement.

Clapper, repeating warnings made by Secretary of State Hillary Clinton, said the massive U.S. deficit was weakening the U.S. position against potential rivals including China, which owns about $900 billion in U.S. Treasury debt.

"The debt does pose a potential threat to our national security ... The financial relationship we have with China is illustrative of that," he said.

NUCLEAR AND CYBER SECURITY

Clapper, in his written statement, said al Qaeda, under heavy U.S. pressure in Afghanistan and Pakistan, was shifting more focus to affiliates in Yemen and Somalia that could grow stronger without a more sustained effort to disrupt them.

"The result may be that regional affiliates conducting most of the terrorist attacks and multiple voices will provide inspiration for the global jihadist movement," he said.

Clapper said the threat of cyber warfare was increasing and that its impact was difficult to overstate, while CIA chief Leon Panetta said the Internet was "the battleground of the future" that the United States must be prepared to win.

Underscoring the threat, hackers in China broke into the computer systems of five multinational energy companies to steal bidding plans and other critical information, computer security firm McAfee said.

Nuclear programs in North Korea and Iran remain a serious concern despite global efforts to halt them. Tehran is keeping the option open to build a nuclear weapon, while Pyongyang is already capable of building one, Clapper told the panel.

"North Korea would consider using nuclear weapons only under certain narrow circumstances," he said. "We also assess, albeit with low confidence, Pyongyang probably would not attempt to use nuclear weapons against U.S. forces or territory unless it perceived its regime to be on the verge of military defeat and risked an irretrievable loss of control."

North Korea probably had additional uranium enrichment facilities beyond the known Yongbyon nuclear complex, Clapper said.

(Writing by Andrew Quinn; Editing by John O'Callaghan and David Storey)

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