Thank you to The Heritage Foundation for inviting me to speak at this symposium on the role of intelligence.[1]

When I was the Chairman of the House Intelligence Committee, we assembled some of the most able national security people in this town and in this country. Any success that I had was due, in part, to my staff director and the able team that he put together. I was always honored to call them colleagues and friends. We had very serious coursework and we tried to get the intelligence business right.

And I also want to point out that the quickest “yes” I ever gave to an invitation to speak was when David Shedd called me and asked if I would participate in today’s symposium. He is a guy whose integrity is impeccable. I had the great privilege to work with him the entire time I served on the Intelligence Committee.

David, it was a loss when you left, and believe me there is still a hole there that is yet to be filled with your experience and your intellect that you applied both at the CIA and the DIA. For that service I want to say thank you very, very much. Well done.

The Biggest Threat We Face: Miscalculation

The other day I was at an event with former Secretary of Defense Leon Panetta. Somebody asked us, “What is the biggest threat facing us today?” You have to stop and pause and you look at the world which has certainly changed. The security structure of the world has changed. Just in the last few years, the threat matrix has changed significantly.

So I thought about it for a second. The one issue, the one thing that scares me more than all of the land, air, sea, cyber, space threats that we now face, in ways we couldn’t even contemplate 15 or 20 years ago, is miscalculation.

What if we get it wrong on North Korea? What if we get it wrong on some maritime kind of conflict—small conflict—in the South China Sea? What if we get it wrong on the new Iranian missile testing program that they’re very proud to show the rest of the world?

What if we get it wrong?

What if one of our allies gets it wrong and they make a mistake? You know the Japanese are very eager to push back on the Chinese in the South China Sea. When we were having meetings in Japan, they were very aggressive about wanting to show that they could push back against Chinese aggression, with the United States’ help, but they wanted to lead that charge.

Imagine you have some kind of a conflict—even a small conflict. We already see Chinese planes brushing up against our allies’ planes, our planes, our ships. What if that miscalculation can’t be put back in the bottle, and you have a conflict that rages out of control?

Why Intelligence Is Necessary

I give cyber talks all over the country, and normally my job—apparently—is to scare people with what’s coming at them and how bad it’s getting. The United States has an ability to leverage away from that miscalculation: first, with an aggressive diplomatic core that is engaged everywhere in the world, all the time; and second, with good intelligence.

In the last couple of years, the intelligence community has certainly taken a beating by reputation—and it is completely undeserving. Think about where we are and what kinds of problems have been caused.

I think when nation-states decide that intelligence services are bad, that is troubling. I argue that Europe is suffering over the hangover of World War II. They have geared their laws toward the activities of their intelligence services based on what they witnessed and suffered under intelligence services whose business it was to oppress their populations. So you can’t blame them. You can’t blame how they got there.

When you look at what happened in Brussels, or Paris, or even the United Kingdom, you can see where those rules, those laws, those restrictions are pushing in on the strategic value of intelligence services, preventing them from protecting their population. They are based on the fundamental building block that intelligence services are bad.

Well, that’s not going to work.

I recently looked at a great example. Belgicom is a major telecommunications company in Brussels. And Brussels, candidly, was leading that charge in many ways on restricting the ability for law enforcement and intelligence to do the kind of operations they needed to do to maintain safety and to get the information on counterterrorism threats. As a result, European nations—and their intelligence services—decided that there were lots of threats. Folks were coming through Great Britain—according to public reports—and going to other places across Europe. They needed information on these individuals as they travelled across Europe. So they decided one way—according to public reports—that they were going to get that information was to try and get their communications and follow those individuals across Europe. They would do so by going to one of the telecommunications companies that had lots of access to those kinds of target sets, and that company was Belgicom.

Then the Snowden leaks came out, and people became worried and thought the intelligence service—Great Britain—was spying on Europe. They were thinking “how awful” and “how terrible” and decided to gear themselves to closing it down.

But the United Kingdom was collecting and dispersing valuable information which they gave to Brussels intelligence services and police agencies. In essence, the United Kingdom said to Brussels, “You have a problem which you don’t know about, but here is the raw intelligence to back it up.” They could go to places like Paris and say, “You have a problem, and by the way, here it is.” They could go to places like Germany and say, “You have a problem: here it is.”

That activity, nevertheless, went away. The European Union decided, through big investigations, to target the intelligence services’ ability to collect information. That ability had been lawful and appropriate under their nations’ laws and collection standards. They did so to protect both their country as well as the benefit for the entire European Union.

Think about the debate in that time period. This was exposed in about 2014, and during that same time period, there was this huge ramp-up of fake passports. The Thai police made an arrest in late 2015 of an Iranian individual who had travelled to Thailand on a fake passport and stayed in Thailand for about 20 years. His sole purpose in Thailand was to engage in the production of fake passports. His number one clientele were Middle Eastern clients who were seeking passports to get into Europe.

It was a fluke how they arrested him. It was gumshoe detective work, not some big intelligence operation.

During a random inspection at a customs house, somebody found a case of residency stickers. So they went to the address on the box of the case. The guy had been there for 20 years. When they entered his place they found 1,000 passports that were ready to go. One hundred and seventy-three fake passports had fake names and identifications. Some of those had visa stamps! These fake passports were exceptionally good—exceptionally good.

Let me give you another example. Government agencies broke up a Pakistani ring which had been operating in Greece for about the last five years. They got that information the same way as in the Thailand example. Somebody in Syria was mad at the competition because someone was sending a case of these detailed, accurate resident stickers. These stickers were immaculate: all you had to do was take one out of the box and stick it in your passport and you are ready to go. You are now legal in Greece, and if you’re legal in Greece, as you know, you can go other places as well.

The reason the authorities caught onto this operation, again, wasn’t this great intelligence network with people actually trying to figure out what bad things were going to happen to these countries. Somebody got jealous because another ring had opened up, and in Syria a guy called and said, “Hey I’ve got one for you, there’s a big case coming in to Greece, you ought to take a look at where that goes,” and then hung up the phone. We used to love those cases in the FBI. It’s great because you want that kind of cooperation. But that is no way to protect your nation when you’re under siege.

Strategic intelligence can help you do that. Unleashing the power of these intelligence services to actually find out what they can do versus all the time and energy we spend trying to tell them what they cannot do. If we don’t unleash that power, we have missed the boat.

We saw the same thing a little bit here in the United States. The President issued a Directive that restricted certain collection activities in the United States. We’re going to pay a price for that, and I argue in many ways we have already paid a price for that, because of that restriction. Again, the debate here, the political debate, was, “How do we restrict these big, bad intelligence agencies from doing something really bad and awful?”

Now, they never found anything big, bad, and awful. Everything was legal and appropriate. Even the President’s review teams—and all were external—found that they were legal and appropriate. Congressional investigations found that they were legal and appropriate. Now, you might not have liked what they were doing—that’s a different topic—but there was nothing illegal about it.

But in that debate, in that NSA contractor leak of massive amounts of information, we got a hangover. We decided our intelligence agencies were bad.

Current Threats: Russia

Step back and think about the threats and about what is going on today.

The Russians are certainly on the march. Russia’s change in the way they have used their cyber policy will give you a bead of sweat. They have fundamentally changed where they are coming at us. We are going to miscalculate somewhere. They have gone into a place like Ukraine and have shut down its electric grid. Now, the good news about Ukraine is that it wasn’t connected the way our electric grid is connected. So they just basically went back—as I joked before—to pulling the lawnmower start button on their transfer stations and brought them back up. They just man them and they are up and running. They got their power on in a really short order after this massive attack.

Guess what: We could not do that. It would take a very long time. When you start to see Russian policy change by being more aggressive in cyber in ways that we have never seen before, especially when it comes to destructive attacks overseas and doing activities in the United States where it’s clear that they don’t mind that their signatures are being found, that tells you we had better pay attention. We have a strategic problem now in cyberspace.

Speaking of the Russians, they have launched very sophisticated nuclear submarines. They’re talking about making more runs up to the Arctic. We announce that we are going to cut our standing Army by 40,000 troops. They announce—about four months later— that they’re sending 40,000 troops on a training exercise in the Arctic. I’m sure that number—40,000 Russian troops—was just a coincidence!

Strategically, we need to understand what the world is thinking. That’s how you avoid miscalculation.

Current Threats: China

What are the Chinese thinking? For the first time in their history they have decided to allow Chinese troops outside of their defensive region. Why? This year they announced they’re sending troops to Djibouti. The first time ever the Chinese have military components outside of their defensive region.

The Chinese have increased their silent submarine force. That is very disturbing. They have invested in militarization of space to try and take away a strategic advantage for the United States of America. They have developed missiles, counter-ship missiles that make our Navy—if you talk to any of our Navy folks—very, very nervous. Why?

They are basing their strength on our strength. In other words, they’re trying to go after our Achilles’ heel. GPS is a great example. It’s concerning how Russia and China have militarized space in a way that could disrupt our ability for GPS.

America’s Strategic Advantage

Think of the strategic advantage of the United States of America. There is an advantage because we have smart weapons, smart ships, and smart aircraft, and everything else that’s pretty “smart.”

We have come to rely on “smart” things so much that every new naval officer, after the class of 2017, has to learn how to use the sextant, because our Navy is very concerned about what happens when that GPS goes out. And if our Navy is worried about that, you ought to be worried about it too.

Now I know what many of you are thinking regarding GPS. How do I get to the nearest Starbucks? Can you imagine 30 million, very cranky, non-caffeinated Americans in the morning? We’re going to have a problem.

When you look at those strategic threats and how that tilt has happened, you realize America’s loss of strategic advantage in the world. Some would argue it’s a little; some would argue it’s a lot. Some say it is 10 years out, 15 years out, 20 years out, but our adversaries are working on getting better every day while we don’t. Every day they will be engaging in strategic espionage while we aren’t.

The CIA director recently said that the CIA does not steal secrets. I don’t know about the rest of you, but that scared me to death. As a former FBI agent, I can tell you that you don’t want your FBI agents stealing secrets. But you sure want your CIA stealing secrets. That tells you that there might be a little bit of a strategic problem in how we’re approaching strategic intelligence.

If you are not stealing secrets, how on God’s green earth do you know what the Chinese military leadership’s intentions are? When they show up in Djibouti, we need to know what their intentions are. You do that to avoid miscalculation.

Sometimes people get upset that maybe we were looking at our good friends and allies on occasion. In the intelligence business you do that because sometimes your allies can get you in more trouble than you can get in yourself.

Think of the defense pacts we have around the world. What if Japan decides they want to be aggressive with a Chinese convoy? We ought to know that.

What if the Filipinos decide they’re going to be aggressive on pushing back without coordination with the United States? We have a defense pact with the Philippines. Shouldn’t we know that?

Shouldn’t we know that Germany had relationships with Iran prior to the Iran deal? I argue we probably should know that. Shouldn’t we know what they’re thinking after the Iran deal? I would argue that I would like to know that.

If I’m a policymaker, whose finger is on that button, I need to decide how to use our strategic intelligence to avoid trouble. We need to be as aggressive as we can in accordance with the law.

A State of Self-Restriction

I believe we are in a hangover period today. The FBI beats up Apple, Apple beats up the FBI. It is completely inappropriate in my mind, and we should have handled that behind closed doors. There is no path forward and all that needs to happen now is that they find a solution that doesn’t mean going to court. All of those policy discussions are going to have to happen. And this is what worries me most about our strategic alliances in the world, and the value of the intelligence collection we get.

Self-restriction of intelligence collection is a big problem in the United States. And we really don’t have great reasons for doing so. We haven’t restricted ourselves because we were doing something illegal, but because it didn’t feel right. This is not great for our strategic value in trying to avoid miscalculation.

But when you look at the alliances of economics and security in the world, some of them are starting to part. For example, why does Apple say they are for encryption and don’t care that they have a way to get into the phone that might have information to save other American lives and lead to the full investigation of the death of 14 Americans? It’s because their economics have not aligned with our national security. They need to sell these devices in Europe, they need to sell these devices in China, Asia, and so the security and economics of that problem did not align.

Look at some of the changes in world demographics. One of our staunchest allies in Asia is Australia. About 25 percent of their GDP is related to exports to China. So now every time you have a national security discussion with Australia about how we’re going to push back the Chinese in the South China Sea, they pause for a minute. Now, they’re still one of our greatest allies and they’re not going anywhere, but you can imagine the challenge now of trying to get to a place where we have a common decision matrix on how to push back either militarily or on intelligence, when 25 percent of their GDP comes from the nation-state that’s at question.

The national security posture and our economics didn’t quite align and so I argue strategic intelligence and an aggressive intelligence posture is important. We ought to go through every line and every personal and presidential directive when we get the opportunity and ask, do these serve the interests of the United States or the world’s interest?

We should stop apologizing for helping Europe because we had an aggressive intelligence campaign. That campaign may have found a culprit, a new cell, or someone who was able to get fake passports used in Thailand to transit people through Syria to Europe. We call that a good day’s work in the intelligence business. But none of that happened because of self-imposed restrictions by either the Europeans or us.

When you look at the case of Belgicom, we took a major resource of finding bad guys travelling through Europe, and we took it off the table in 2014. How many in Belgium today would like to have the ability to get an intelligence share sheet that says, “Hey, you’ve got a problem brewing in Belgium; we found them because they’re talking to people in France, who are talking to people in Great Britain, who are talking to people in Syria”? We lost that and for no appreciable reason.

It caused a lot of problems, big investigations, spending a lot of time beating up the intelligence services and not a lot of time catching folks with fake passports. The resident permits case was pretty fascinating. It just gives you a sense of the magnitude of the fraud. It is important that we stop beating ourselves up and looking at what we’re not doing right and instead look at the things that we need to do right as we work through this process.

I will tell you another great example: Huawei. We had pretty good information that the Chinese were engaged in a nation-state craft, espionage craft, of trying to get a Chinese company into markets where they could collect information. So it was one of the largest operations to collect information against targets that were in Asia, Europe, and Africa. They were very, very aggressive.

That House Intelligence Committee report freed up some of our intelligence services to be more aggressive in their investigation. Recently, the Commerce Department put ZTE on the entities list because of a very complicated conspiracy to violate export rules in every country you don’t want things going on: North Korea, Somalia, Iran, and other places around the globe. That investigation was interesting, and you can find these papers on the Department of Commerce website. ZTE, the Chinese company, was working with a code name of another particular company. In these documents it’s called F7. They were working with F7 to further this conspiracy on trying to get these units into places where they own the pipes—and when you own the pipes you get to look at everything in it.

They were trying to do this in the United States very aggressively. They were successful in a small way in the United Kingdom, and they were trying to do it in Australia and Canada. I’m sure you find these interesting countries of target, New Zealand, all “Five Eye” nations.

They found out through this investigation that F7 was Huawei; so much for the denial that these weren’t intelligence operation platforms trying to get into the United States of America. Without aggressive intelligence and strategic thought in how we apply our resources we are going to get behind the eight ball.

There are more spies in the United States today from foreign nation-states than at any time in our history, including the Cold War. And they’re stealing everything. If it’s not bolted down, it’s gone; and if it’s bolted down, give them about an hour, they’ll figure out how to get that too. They’re doing it through human operations. They’re doing it through cyber operations. They are stealing intellectual property and government secrets at a breathtaking rate.

Anyone look at the recent Chinese fighter? I think it is called the J-31. It looks a lot like an F-35 to me. In fact, one of the great FBI cases in the last couple of years was when we caught the Chinese trying to steal silent technology on submarines. We caught them trying to export that material through a long-term spy operation on the West coast. Go to the FBI website to read about it. They have a lot of these listed in these cases.

Conclusion: Knowledge Is Crucial

The Chinese are aggressively using their espionage networks against the United States. Think about the debate we have had in the United States during the last six months. It goes something like this: “The government is bad.” I think Judge Mukasey said it best; he said it is pretty interesting that we think these private companies are going to handle your information better than your government. I find that interesting.

We always joked in the intelligence space that we would love to get one-tenth of what Google has on you—unbelievable. I think the fight has been in the wrong direction.

How do we appropriately protect privacy? You can do that—it’s called the Fourth Amendment. They’ve been doing it since we’ve been a nation. It tells you how to move forward, but now is not the time to curtail our strategic value in intelligence if you want to avoid miscalculation.

We had better know what ZTE is doing. We had better know what Russian front companies are doing. We had better understand what they’re trying to do in the Arctic. We had better understand what Putin is trying to do in Syria—not just from where his troops are on a map, but what are his short-term and long-term intentions?

What are the Iranians trying to do and how far will they push the United Nations on missile testing?

We had better know that. We all had better know that. Or we are going to pay a horrible national security price.

Thanks for having me.