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MR. NEGROPONTE: (Applause.) Thank you. Thank you very much, Mr. Glen Lewy. Beats the introduction I got at the National Press Club the other day. (Laughter.)

Abe Foxman, my good friend and partner. It says here, partner in opposing one-sided anti-Israel resolutions when I was ambassador at the U.N., but it goes much beyond that. We were very good friends. We consulted on a whole range of issues concerning the posture of the United States at the United Nations. And I just found Abe -- he was always there when I needed him, and he was a source of invaluable counsel as we carried out those very challenging assignments up there in New York. And I'm sure that you continue to watch those issues with a great, great deal of interest, as do I. Ms. Barbara Balser, Ms. Ginny McDowell.

It's a honor to be here with you for the 28th Annual National Leadership Conference of the Anti-Defamation League. The principles of tolerance and justice the ADL stands for are critical to the world of the 21st century. And from tolerance and injustice, it is a short journey to respect and compassion, a pretty good formula for peace. So before I say anything else, let me encourage you and ADL's members everywhere to continue to give voice to your convictions and to your conscience. Believe me, you are heard, and that is a great benefit to us all.

Today, as Mr. Lewy noted, I am speaking to you in my role as director of National Intelligence. What you hear from me will not be classified, but I hope it will be informative and thought provoking, nonetheless. I want to share with you an inventory of concerns that broadly responds to the following questions: Why does the United States have an intelligence community, and why should 16 federal agencies -- that is to say, the CIA plus 15 others -- occupy themselves with intelligence gathering and analysis?

If there were no threats to American security, to American lives and to American values, there would be no good answer to those questions. Unfortunately, such threats do exist. First and foremost, we are engaged in an unprecedented war on terror, and our adversary, the global terrorist movement, menaces United States interests at home and abroad.

Nine-eleven was not the first attack on the United States, nor do al Qaeda, its affiliates and other jihadist groups want it to be the last. A substantial portion of our intelligence effort is directed at thwarting these intentions. We seek to stop terrorists wherever they intend to strike. We especially want to stop them where they aspire to take over or destabilize entire nations, as in Iraq or Afghanistan, and where they aspire to empower themselves through the acquisition of weapons of mass destruction. We cannot permit that, nor can we permit efforts by rogue nation-states to evade international law and threaten international stability through deceptive programs in weapons of mass destruction development.

Iran and North Korea fit that bill. The role of intelligence lies in unmasking these deceptions and providing policymakers with as clear a picture as possible of the challenges they face in securing the peace.

But it is not only force that concerns us when we look out on the international scene. Fragility can be problematic as well. The potential for state failure is a priority for United States intelligence. When all is said and done, nation-states remain the building blocks of the world order. So in the Middle East, in Africa, in Asia or in Latin America, we need to keep watch on countries that might be dissolving into disorder.

Major nations -- major nation-states like Russia, China and India also rank high on our list of priorities. This is not because we assume they will collapse, as Afghanistan once did, or fall prey to a populous demagogue, as in the case -- as is the case in Venezuela, but because they represent burgeoning geopolitical and economic interests that are going to grow in the 21st century.

Large states have a large leadership role to play in addressing issues that are inherently transnational in nature. Think of the common challenges and threats that we all face: HIV/AIDS, potential pandemics deriving from viruses like avian flu, and the pervasive menace I spoke of first and foremost, terror, which I would now like to examine with you more closely; sharing some important findings that our intelligence community has developed through careful analysis and assessment.

To begin with, a large complex question: What exactly is the terrorist threat, and who is our enemy?

Now, in reply to that question, let me say this. Essentially, today's terrorist threat stems from the growth and spread of an exclusionist, radical ideology espoused by militants that inflames commonly-held grievances among Muslim majority communities. This ideology purports to justify violence in its most heinous forms. By distorting religious interpretation and exploiting an overwhelming desire for changes in the political systems of the Middle East, these militants aspire to create a repressive regional regime similar to the deposed Taliban in Afghanistan.

Proponents of this ideology veil their extremist political agenda for good reason: It has no broad appeal. Al Qaeda is the primary proponent of this ideology, but its geographic dispersion, added by global telecommunications, has allowed other voices and actors to play prominent roles in pushing it. The result is that we are facing a range of groups espousing al Qaeda's ideology and attempting to carry out its anti-Western agenda.

Another important question about terror is why do they want to attack us? The answer is that we are a very useful adversary for a small group of determined political extremists whose central objective may be less to drive America out than to provoke mainstream Muslims into buying into their political ideology by fueling an image of the West as being against Islam. They believe they can win support within the Muslim world country by country.

In saying this, I don't want to minimize anger and resentment in the Muslim world towards United States policies. The terrorists take advantage of these sentiments to sell their solution of blaming the West for every problem the region faces today.

To spell these points out in a little greater detail, unemployment, few opportunities for economic advancement, state systems that provide limited outlet for political action or chances to improve social conditions, and racism in diaspora communities around the world are everyday experiences for many Muslims. The terrorists tap these frustrations and attempt to sell a solution that would prevent pluralism and free elections, undermine protection of minorities, centralize economies, curb free enterprise, prohibit free speech, and prevent the practice of any faith that deviated from their own extremist interpretations.

The United States and its allies are well known for promoting an entirely different kind of world, a world in which freedom of speech, congregation, and worship are protected by the law; a world that respects the rights of all peoples, regardless of their race, religion, gender, and regardless of where they live. What we promote in the Middle East and around the world is threatening to the terrorists' vision. The terrorists especially feel that United States influence and presence within the Middle East is an affront to their religion and culture. They cast all we do as an attack on Islam. This propaganda sounds improbable, but we cannot be complacent in the view that no one would accept it.

This leads me to a question that I believe is on the minds of many. If there is so much resentment towards the United States in the region, can the Muslim world be our ally in this war? The short answer to this question is yes. But we should not think of the Muslim world as one thing -- it is not. The Muslim world is vast and various, and its political life is full of complexity. Taking this into account, we must focus on engaging with a broad cross-section of mainstream Muslim opinion-makers, including clerics and their affiliated organizations, to ensure that we all actively defend values that counter the terrorists' ideology. If we do so, there is reason for hope. In the longer term, the cycle of jihadist recruitment can only be broken by undermining the legitimacy of the message as well as the messengers, and by supporting a feedback loop within Muslim communities around the world that rejects violent extremism and embraces constructive and peaceful political processes.

To answer another vexing question: Why is there still a threat, given the many disruptions of al Qaeda and all the security measures that we have adopted? Perhaps it makes sense to refer very carefully to our experience during the Cold War. I say "very carefully" because, as I suggested earlier, it would be just as undesirable to underestimate the appeal of the militant jihadists as it would be to overestimate it. Communism was ostensibly a universalist ideology. That was a political strength that made it more challenging. The extreme ideology the militant jihadists represent purports to be universalist, but it is in fact exclusionist. This means that it is built with limits in mind, although these very limits can be appealing to deeply alienated individuals, wherever they may reside.

In addition, militant jihadism is not backed by an enormous military machine, as was communism. Nonetheless, it will take a long time to expose the empty promises of a better life that the militant jihadists are touting.

Turning the tide of an ideology that has been hardened in conflict after conflict, adding places like Chechnya, Indonesia and Somalia to the list of over a dozen so-called jihads since Afghanistan, will take time and sustained commitment.

So finally we ask, "Then how do we win the war?" To this, I think the answer is that we will win the war against terror by virtue of Muslims and non-Muslims alike understanding the problem more fully, realizing it will take the work of a generation to fix and embracing the fact that this is a global problem. All civilized states have a critical role in countering terrorism.

By promoting pluralism, reform, and democracy in parts of the world where all three are too little present, we can ultimately undermine the terrorists' ideology and engage a very broad coalition as partners against them. By understanding that al Qaeda and bin Laden and terrorists like him seek to divide Americans, isolate us from our allies, and prevent universal ideals of democracy from resonating among majority Muslim communities, we can all be part of undermining the terrorists' agenda. By contributing to efforts to improve the lives of the economically disadvantaged, no matter their race, religion, ethnicity or location, we succeed where the terrorists fail. By ignoring the insults lobbed at us by jihadist propagandists, refusing to change the way we go about our daily lives, and most importantly, by choosing not to be afraid, we can make sure that the terrorists lose.

Judging when that day comes will be difficult, but not impossible. There are some potentially good metrics for strategic success against terrorists. I'm thinking of the emergence of more pluralistic practices in the Middle East, North Africa and South Asia; the sustained engagement of mainstream Muslim leaders and communities in denouncing the jihadist ideology; evidence that the terrorists are experiencing recruitment problems, and the increased willingness of other governments to work against extremists on their own because that is what their people want.

All of this represents a lot of work, but we are at a critical juncture in the confrontation with militant jihadism, and we are starting to hear more voices among Muslims challenge the jihadist message of ignorance and hate.

I am convinced that an ideology that perverts a great religion and calls for death of all who oppose it cannot prevail. Through tolerance, justice, respect and compassion, Muslims and non-Muslims alike will achieve a better world than that.

In closing, let me say that as director of National Intelligence, my primary job is to help identify the right questions about subjects like terror and then ensure that our intelligence community is properly organized, resourced and integrated to answer them accurately, objectively and comprehensively.

We cannot deploy the resources of our great country to maximum effect in preserving our national security without good intelligence. In that regard, we've made a great deal of progress in the first year of the Office of the Director of National Intelligence, although a year is a short time and much obviously remains to be done.

So having said those few words, I would now be happy to talk about intelligence reform or other topics on which you think I might be able to shed light in response to any questions. But thank you very, very much for this opportunity. (Applause.)

ABRAHAM FOXMAN (national director and chairman, the Anti- Defamation League of B'nai B'rith): Ambassador, Director, friend, John, thank you for your continued friendship, and thank you for finding the time to come to be here and share with us your perspective.

Those of you who know you and your work know that the assignment was a reward and not a punishment -- (soft laughter) -- for your years of service, and America is truly lucky that President Bush was able to convince you to assume -- to continue to serve this country, democracy and freedom and take the helm of the responsibility of gathering intelligence for the purpose of providing for our safety and our security.

I guess, in a way, it's a commentary on our time that the director of National Intelligence needs to ask the question: Why does the United States need an intelligence effort? But we are delighted that you are the one that answers the question, as you did this afternoon for us.

John, before we open the floor to questions, God bless for your success is our greater safety and security, and this country and democracy is so well served knowing that you spend the sleepless nights worrying about us, our children and our grandchildren.

God bless. Thank you very, very much. (Applause.)

MODERATOR: Thank you.

Ambassador Negroponte has agreed to take questions, but as Ginny said earlier, the procedure will be a little bit different in that there are file cards at your table. If people would write down questions, then Jennifer Carpenter (sp) and -- Jennifer and Jamie (sp) will go around and collect them. I'll kind of synthesize and try to put them together and ask a couple of collected questions.

While that's happening, though, I'll take the prerogative of asking the first question.

Given -- (to staff/speakers) -- whatever is convenient -- given the importance of intelligence, all of the efforts in intelligence efforts with respect to al Qaeda, some have suggested that the American efforts in Iraq are a distraction from that, rather than something in support of that, and that's been a debate that's gone on.

Would you elaborate for us as to how you see Iraq fitting into that intelligence-gathering effort? And is that supportive or distractive of that effort?

MR. NEGROPONTE: I think that at this point one would have to say that we're talking really about two facets of what one might view as the same problem, especially since the leader of the terrorist movement in Iraq, Abu Masaab Zarqawi, has pledged fealty and allegiance to Osama bin Laden, and you can see in all the propaganda, the output -- I think I'm thinking notably of a letter that bin Laden's deputy sent to Zarqawi back last July, where he talks about the importance of Iraq as a stepping stone to a realization of a global caliphate, talking about wanting to succeed in Iraq first, and then they would spread to the rest of the Lavant, Syria, Lebanon, Jordan and so forth, and then see that as a springboard to realizing their other ambitions.

So at this stage, I think these issues are almost of a piece, and they all have to be dealt with. And I don't think dealing with one detracts from the other. They've all got to be dealt with.

MODERATOR: A second question -- and maybe I'll broaden (it here ?) just a little bit -- can you talk a bit about the -- how we view intelligence-gathering processes in relation to the difference between citizens and non-citizens, foreign threats and domestic threats, and all of the discussion that's gone on recently about the tapping of phone calls involving foreign calls?

MR. NEGROPONTE: Yes. Well, first of all, most of the intelligence, though by no means all, that we collect with respect to the international terrorist threat is part of our foreign intelligence program, and for the very most part is collected abroad. There have been activities, and there are activities that involve collection with respect to terrorist threats that might be materializing here in our homeland. And some, as you alluded to, have received quite a bit of publicity, including the NSA's terrorist surveillance program, which involves monitoring telephone calls -- international telephone calls -- these are not domestic phone calls -- calls at which -- where at least one end of the phone communication takes place outside the United States with respect to possible al Qaeda plotting inside of our country. And when that kind of intelligence is collected, and where the names or identities of American persons might come up, then the handling of that information is governed by very well-established rules under Executive Order 12333, which is the sort of charter executive order governing the work of the intelligence community that was promulgated in the early 1980s, and it has very, very specific rules about how the names and identities of American citizens and American persons are handled in a way that has full regard for their rights and their civil liberties.

The other thing I'd like to stress, while I have the opportunity, is that these kinds of programs are about combatting international terrorism. They are not about invading the privacy of American citizens. And nobody is more mindful of that than the individuals and people responsible for the execution of these programs within the intelligence communities. And there are very, very rigorous safeguards and oversight that are built into the execution of these programs to ensure that that remains exactly the case.

MODERATOR: Thank you.

Several questions have come in in the same theme, which is that after the report of the 9/11 commission about reforming the intelligence processes and the intelligence bureaucracy, that one of the -- that your position reflects, some would say, additional bureaucracy rather than a reduction in bureaucracy.

Would you talk a little bit about how it is that kind of adding a layer on top of the layers that already existed is in fact going to streamline and improve intelligence gathering? And what else is being done within the bureaucracy to streamline it and make it more efficient?

MR. NEGROPONTE: Right. Thank you for that.

I think the first point to make here is that under the previous arrangement, the head of the CIA, the D-CIA, Director of the CIA was also the DCI, the Director of Central Intelligence. So in the first capacity, he directed the day-to-day operations of the Central Intelligence Agency.

In the second capacity, the DCI capacity, he was the manager of the intelligence community as a whole; that is, to say the other 15 -- now 16 agencies that came under his oversight or purview.

As it turned out over time -- and I think any former DCI/D-CIA will tell you -- given the myriad responsibilities -- operational responsibilities involved in running the CIA from day-to-day with its far-flung activities proved to be more than a full-time job, and therefore the community management responsibilities of that position suffered.

So, if you will, one of the purposes of this legislation was to take that community management function and give it to me, and in that sense, that's not a new layer. That's not added bureaucracy or anything else. It's taking an existing function, moving it to a different organization but charging us with the responsibility of giving it the high-level attention which it deserves.

So I think that you might say that I am the first high-ranking official -- and indeed, my position is designated at the Cabinet level position -- to have as his primary responsibility the management of the intelligence community as a whole.

And so as to not make the answer to this question too long, the one other point that I would make is that our hope and our intention through the Office of the Director of National Intelligence is to actually try to work to break down the stovepipes, make sure that information sharing and the movement -- the flow of information takes place horizontally across the community from left to right; work to develop various personnel, analytical standards, tradecraft standards to get them adopted across the community as a whole so that we will, over time, I think, be able to leverage our intelligence community even better than it is leveraged now as it emerges from its past tradition of having operated a little bit more in the mode of stovepipes.

And I think we've already made some -- taken some important steps in that direction during the past year, and we plan to do a heck of a lot more. So in the end, I would think that we're going to see a net gain; we're going to see the overall management function, hopefully, carried out better than it was previously, with a higher level attention being paid to that part of the question, and then adopting policies and programs and strategies across the community as a whole that is going to empower each and every one of the component agencies to truly operate to the best of their abilities.

MODERATOR: Last question, then. So let me try to connect a couple of them into one question, then.

To what extent is the Iranian support for Hezbollah, together with the emergence of Hamas and them getting support from Iran, and bin Laden's latest tape, in which he tries to urge his supporters to fight in the Sudan, and so on, to what extent is our enemy here, this terrorist network, becoming a single enemy with multiple tentacles? Or is this just a bunch of individual efforts who are seeing an opportunity to make public relations support for each other, where possible?

MR. NEGROPONTE: I guess you did have to try to bring several questions in -- (laughs; laughter) -- into one! So maybe I better answer two or three questions here!

But the first, I would say, is -- and as I said in my remarks to start with, the principal threat we see in terms of the threat to the United States homeland and to our interests abroad is al Qaeda and their affiliates.

I think one of the interesting things over the past several years is that while al Qaeda had a sanctuary, of course, when it operated from Afghanistan, is now, I think, organizationally a somewhat weakened organization. They still plot against our homeland, and bin Laden and Zawahiri are still alive, his deputy, but they've suffered a lot of losses in their high command. And if anything, I think that rather than directing many different operations around the world, I think they are more in the mode of serving as an inspiration for some of these terroristically inclined groups elsewhere in -- (end of available audio).