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08 January 2003

Text: New CIA Report Documents Weapons Proliferation Trends

(Threat from terrorists using advanced weapons is rising) (6390)

An unclassified report to the U.S. Congress by the Central
Intelligence Agency (CIA) indicates that some key foreign weapons of
mass destruction (WMD) and missile programs are becoming more advanced
and effective.

The arms proliferation report, sent to Congress January 7, also
indicates that countries of concern to the United States are becoming
more aggressive in pursuing a range of advanced technologies. The
report looks at WMD and advanced conventional weapons programs
associated with Iran, Iraq, North Korea, Libya, Syria, Sudan, India,
and Pakistan.

It also examines the threats posed by chemical, biological,
radiological, and nuclear (CBRN) terrorism. And the CIA report --
covering the period from July 1 to December 31, 2001 -- cites Russia,
China, and North Korea as being key suppliers of various technologies
and weapons expertise.

"Key WMD proliferators are taking steps toward becoming more
self-sufficient," the CIA report said. "They are better able to shield
their programs against interdiction and disruption. To this end, they
are seeking greater indigenous capabilities, including more advanced
production technologies."

In addition, the report said that many WMD and missile proliferators
are becoming adept at denial and deception efforts.

"For example, they are pursuing dual-use materials and technologies
with WMD as well as legitimate applications that can be incorporated
into commercial facilities and converted to WMD uses fairly quickly,"
the CIA report said.

The CIA also said that the threat from terrorists using CBRN materials
appears to be rising.

"Several of the 30 designated foreign terrorist organizations and
other nonstate actors worldwide have expressed interest in CBRN --
although terrorists probably will continue to favor proven
conventional tactics such as bombings and shootings," the report said.
"In addition, unmanned aerial vehicles (UAVs) and other types of
cruise missiles present a serious and growing threat as potential WMD
delivery vehicles."

Following is the text of the CIA report:

(begin text)

Unclassified Report to Congress on the Acquisition of Technology
Relating to Weapons of Mass Destruction and Advanced Conventional
Munitions,

1 July Through 31 December 2001

Scope Note

Acquisition by Country:

Iran
Iraq
North Korea
Libya
Syria
Sudan
India
Pakistan

Chemical, Biological, Radiological, and Nuclear Terrorism:

Key Suppliers:

Russia
North Korea
China
Western Countries

Trends

Scope Note

The Director of Central Intelligence (DCI) hereby submits this report
in response to a congressionally directed action in Section 721 of the
FY [fiscal year] '97 Intelligence Authorization Act, which requires:

"(a) Not later than six months after the date of the enactment of this
Act, and every six months thereafter, the Director of Central
Intelligence shall submit to Congress a report on

(1) the acquisition by foreign countries during the preceding six
months of dual-use and other technology useful for the development or
production of weapons of mass destruction (including nuclear weapons,
chemical weapons, and biological weapons) and advanced conventional
munitions; and

(2) trends in the acquisition of such technology by such countries."

At the DCI's request, the DCI Weapons Intelligence, Nonproliferation,
and Arms Control Center (WINPAC) drafted this report and coordinated
it throughout the Intelligence Community. As directed by Section 721,
subsection (b) of the Act, it is unclassified. As such, the report
does not present the details of the Intelligence Community's
assessments of weapons of mass destruction and advanced conventional
munitions programs that are available in other classified reports and
briefings for the Congress.

Acquisition by Country

As required by Section 721 of the FY '97 Intelligence Authorization
Act, the following are summaries by country of acquisition activities
(solicitations, negotiations, contracts, and deliveries) related to
weapons of mass destruction (WMD) and advanced conventional weapons
(ACW) that occurred from 1 July through 31 December 2001. We have
excluded countries that already have substantial WMD programs, such as
China and Russia, as well as countries that demonstrated little WMD
acquisition activity of concern.

Iran

Iran is vigorously pursuing programs to produce indigenous WMD --
nuclear, chemical, and biological -- and their delivery systems as
well as ACW. To this end, it seeks foreign materials, training,
equipment, and know-how that have enabled it to produce some complete
weapon systems, with their means of delivery, and components of other
weapons. During the reporting period, Iran focused particularly on
entities in Russia, China, North Korea, and Europe.

Despite Iran's status in the Treaty on the Non-Proliferation of
Nuclear Weapons (NPT), the United States is convinced Tehran is
pursuing a nuclear weapons program. To bolster its efforts to
establish domestic nuclear fuel-cycle capabilities, Iran has sought
assorted foreign fissile materials and technology. Such capabilities
also can support fissile material production for Tehran's overall
nuclear weapons program.

Despite Bushehr being put under IAEA safeguards, Russia's provision of
expertise and manufacturing assistance has enabled Iran to develop its
nuclear technology infrastructure -- which, in turn, can benefit
directly Tehran's nuclear weapons R&D (research and development)
program. In addition, Russian entities continued associations with
Iranian research centers on other nuclear fuel-cycle activities.

Iran has attempted to use its civilian nuclear energy program, which
is quite modest in scope, to justify its efforts to establish
domestically or otherwise acquire assorted nuclear fuel -- cycle
capabilities. Such capabilities, however, are well suited to support
fissile material production for a weapons program, and we believe it
is this objective that drives Iran's efforts to acquire relevant
facilities. For example, Iran has sought to obtain turnkey facilities,
such as a uranium conversion facility (UCF), that ostensibly would be
used to support fuel production for the Bushehr power plant. But the
UCF could be used in any number of ways to support fissile material
production needed for a nuclear weapon -- specifically, production of
uranium hexafluoride for use as a feedstock for uranium enrichment
operations and production of uranium compounds suitable for use as
fuel in a plutonium production reactor. In addition, we suspect that
Tehran is interested in acquiring foreign fissile material and
technology for weapons development as part of its overall nuclear
weapons program.

Facing economic pressures, some Russian entities have shown a
willingness to provide assistance to Iran's nuclear projects by
circumventing their country's export laws. Enforcement of export
control laws has been inconsistent and ineffective, but the U.S.
government continues to engage the Russian government in a cooperative
export control dialogue. For example, an institute subordinate to the
Russian Ministry of Atomic Energy (MINATOM) had agreed to deliver in
late 2000 equipment that was clearly intended for atomic vapor laser
isotope separation, a technology capable of producing weapons-grade
uranium. As a result of U.S. protests the Russian government halted
the delivery of some of this equipment to Iran, and as of the end of
the reporting period, these shipments remained suspended.

China is completing assistance on two Iranian nuclear projects: a
small research reactor and a zirconium production facility at Esfahan
that will enable Iran to produce cladding for reactor fuel.[1] As a
party to the NPT, Iran is required to accept IAEA [International
Atomic Energy Agency] safeguards on its nuclear material. The IAEA's
Additional Protocol requires states to declare production of zirconium
fuel cladding and gives the IAEA the right of access to resolve
questions or inconsistencies related to the declarations, but Iran has
made no moves to bring the Additional Protocol into force. Zirconium
production, other than production of fuel cladding, is not subject to
declaration or inspection.

Ballistic missile-related cooperation from entities in the former
Soviet Union, North Korea, and China over the years has helped Iran
move toward its goal of becoming self-sufficient in the production of
ballistic missiles. Such assistance during the reporting period has
included equipment, technology, and expertise. Iran, already producing
Scud short-range ballistic missiles (SRBMs), is in the late stages of
developing the Shahab-3 medium-range ballistic missile (MRBM). In
addition, Iran publicly has acknowledged the development of follow-on
versions of the Shahab-3. It originally said that another version, the
Shahab-4, is a more capable ballistic missile than its predecessor but
later characterized it as solely a space launch vehicle with no
military applications. Iran's Defense Minister has also publicly
mentioned a "Shahab-5." Such statements strongly suggest that Tehran
intends to develop a longer-range ballistic missile capability.

Iran is a party to the Chemical Weapons Convention (CWC).
Nevertheless, during the reporting period it continued to seek
chemicals, production technology, training, and expertise from
entities in Russia and China that could further efforts at achieving
an indigenous capability to produce nerve agents. Iran already has
stockpiled blister, blood, and choking agents -- and the bombs and
artillery shells to deliver them -- which it previously has
manufactured. It probably also has made some nerve agents.

Foreign dual-use biotechnical materials, equipment, and expertise,
primarily, but not exclusively, from entities in Russia and Eastern
Europe, continued to feature prominently in Iran's procurement
efforts. Such materials have legitimate uses, but Iran's biological
warfare (BW) program also could benefit from them.

Iran continues to seek and acquire conventional weapons and production
technologies, primarily from Russia, China, and North Korea. Since
Russia announced in November 2000 that it was abrogating the
Gore-Chernomyrdin Agreement, the Russian and Iranian Governments and
firms have engaged in high-level discussions on a wide variety of
military services and equipment -- including air defense, naval, air
and ground weapons, and technologies. In October 2001, Tehran and
Moscow signed a new military-technical cooperation agreement, which
laid the groundwork for negotiations and created a commission for
future arms sales, but did not itself include sales contracts.

Contract negotiations, which can take years to complete, continued in
the following months but only one sale -- apparently for helicopters
-- was concluded. Various Russian officials and academicians have
suggested that sales under this new agreement could, in the next few
years, make Iran Russia's third-largest arms customer, after China and
India. Until that agreement is concluded, Russia will continue to
deliver on existing contracts, but few new weapons contracts are
likely to be completed. Iran and Russia have agreed on the transfer of
additional Mi-8, Mi-17, and Mi-171 transport helicopters. Estimates of
conventional arms sales to Iran of $300 million per year would put
Iran's share of Russian sales worldwide at roughly 10 percent,
compared to more than 50 percent going to China and India.

To facilitate new arms agreements, Russian oil enterprises entered an
agreement with the Russian state arms trading firm Rosoboronexport to
promote arms exports. Russian and Iranian arms dealers are to include
such firms as Lukoil to coordinate "commercial conditions" and
participate in projects proposed by the customer.

Outside the Russian market, Iran's search for conventional weapons is
global and continues to meet with results. In particular, Iran
capitalizes on the specialized weapons services and lower prices China
and North Korea have to offer. Elsewhere, Iran seeks out products,
particularly weapons components and dual-use items, that are superior
in quality to those available from Russia or that have proven
difficult to acquire through normal government channels.

Iraq

Baghdad has refused since December 1998 to allow U.N. inspectors into
Iraq as required by Security Council Resolution 687 and subsequent
Council resolutions, and no U.N. inspections have occurred during this
reporting period. Moreover, the automated video monitoring systems
installed by the U.N. at known and suspect WMD facilities in Iraq are
not operating. Furthermore, Iraq has engaged in extensive concealment
efforts and has probably used the period since it refused inspections
to attempt to reconstitute prohibited programs. Without U.N.-mandated
inspectors in Iraq, assessing the current state of Iraq's WMD and
missile programs is difficult.

Saddam's repeated publicized exhortations to his "Nuclear Mujahidin"
to "defeat the enemy" added to our concerns that since the Gulf War
Iraq has continued research and development [R&D] work associated with
its nuclear program. A sufficient source of fissile material remains
Iraq's most significant obstacle to being able to produce a nuclear
weapon. The Intelligence Community is concerned that Baghdad is
attempting to acquire materials that could aid in reconstituting its
nuclear weapons program.

Iraq continues to develop short-range ballistic missile (SRBM) systems
that are not prohibited by the United Nations and is expanding to
longer-range systems. Pursuit of U.N.-permitted ballistic missiles
allows Baghdad to improve technology and infrastructure that could be
applied to a longer-range missile program. The appearance of four Al
Samoud SRBM transporter-erector-launchers (TELs) with airframes at the
31 December 2000, Al Aqsa parade indicates that this liquid-propellant
missile program is nearing deployment. Two new solid-propellant
"mixing" buildings at the al-Mamoun plant -- the site originally
intended to produce Badr-2000 (that is Condor) solid-propellant
missiles -- appear especially suited to house large, U.N.-prohibited
mixers of the type acquired for the Badr-2000 program. In fact, we can
find no logical explanation for the size and configuration of these
mixing buildings other than an Iraqi intention to develop longer
range, prohibited missiles (that is, to mix solid propellant
exclusively geared for such missiles). In addition, Iraq has begun
reconstructing the "cast and cure" building at al-Mamoun, which
contains large and deep casting pits that were specifically designed
to produce now-proscribed missile motors.

If economic sanctions against Iraq were lifted, Baghdad probably would
increase its attempts to acquire missile-related items from foreign
sources, regardless of any future U.N. monitoring and continuing
restrictions on long-range ballistic missile programs. With
substantial foreign assistance and an accommodating political
environment, Baghdad could flight-test an MRBM by mid-decade. In
addition, Iraq probably retains a small, covert force of Scud
ballistic missiles, launchers, and conventional, chemical, and
biological warheads. We assess that, since December 1998, Iraq has
increased its capability to pursue chemical warfare (CW) programs.
After both the Gulf War and Operation Desert Fox in December 1998,
Iraq rebuilt key portions of its chemical production infrastructure
for industrial and commercial use, as well as former dual-use CW
production facilities and missile production facilities. Iraq has
attempted to purchase numerous dual-use items for, or under the guise
of, legitimate civilian use. Since the suspension of U.N. inspections
in December 1998, the risk of diversion of such equipment has
increased. In addition, Iraq appears to be installing or repairing
dual-use equipment at CW-related facilities. Some of these facilities
could be converted fairly quickly for production of CW agents.

UNSCOM reported to the Security Council in December 1998 that Iraq
also continued to withhold information related to its CW program. For
example, Baghdad seized from UNSCOM inspectors an Iraqi Air Force
document discovered by UNSCOM that indicated that Iraq had not
consumed as many CW munitions during the Iran-Iraq war in the 1980s as
had been declared by Baghdad. This discrepancy indicates that Iraq may
have hidden an additional 6,000 CW munitions.

During this reporting period, Baghdad continued to pursue a BW
program. Iraq in 1995 admitted to having an offensive BW program, but
UNSCOM was unable to verify the full scope and nature of Iraq's
efforts. UNSCOM assessed that Iraq was maintaining a knowledge base
and industrial infrastructure that could be used to produce quickly a
large amount of BW agents at any time. In addition, Iraq has continued
dual-use research that could improve BW agent R&D capabilities. In
light of Iraq's growing industrial self-sufficiency and the likely
availability of mobile or covert facilities, we are concerned that
Iraq may again be producing BW agents.

Iraq is pursuing an unmanned aerial vehicle (UAV) program that
converts L?29 jet trainer aircraft originally acquired from Eastern
Europe. In the past, Iraq has conducted flights of the L-29, possibly
to test system improvements or to train new pilots. We suspect that
these refurbished trainer aircraft have been modified for delivery of
chemical or, more likely, biological warfare agents.

Iraq aggressively continues to seek advanced conventional warfare
(ACW) equipment and technology. A thriving gray arms market and porous
borders have allowed Baghdad to acquire smaller arms and components
for larger arms, such as spare parts for aircraft, air defense
systems, and armored vehicles. Iraq also acquires some dual-use and
production items that have applications in the ACW arena through the
Oil-For-Food program.

North Korea

During this time frame, P'yongyang has continued attempts to procure
technology worldwide that could have applications in its nuclear
program. The North has been seeking centrifuge-related materials in
large quantities to support a uranium enrichment program. It also
obtained equipment suitable for use in uranium feed and withdrawal
systems.

North Korea probably has produced enough plutonium for at least one,
and possibly two, nuclear weapons. Spent fuel rods canned in
accordance with the 1994 Agreed Framework contain enough plutonium for
several more weapons.

North Korea also has continued procurement of raw materials and
components for its ballistic missile programs from various foreign
sources, especially through North Korean firms based in China. North
Korea continues to abide by its voluntary moratorium on flight tests,
which it has said it would observe until at least 2003.

In April 2001, P'yongyang signed a Defense Industry and
Military-Technical Cooperation Agreement with Russia, laying the
groundwork for potential arms sales and transfers to North Korea.
Weapons sales and deliveries will remain dependent on P'yongyang's
ability to pay.

Libya

An NPT party with full-scope IAEA safeguards, Libya continues to
develop its nuclear infrastructure. The suspension of U.N. sanctions
has provided Libya the means to enhance its nuclear infrastructure
through foreign cooperation and procurement efforts. Tripoli and
Moscow continued talks on cooperation at the Tajura Nuclear Research
Center and a potential power reactor deal. Such civil-sector work
could present Libya with opportunities to pursue technologies that
also would be suitable for military purposes. In addition, Libya
participated in various technical exchanges through which it could try
to obtain dual-use equipment and technology that could enhance its
overall technical capabilities in the nuclear area. In 2001, Libya and
other countries reportedly used their secret services to try to obtain
technical information on the development of weapons of mass
destruction, including nuclear weapons. Although Libya is making
political overtures to the West in an attempt to strengthen relations,
Libya's continuing interest in nuclear weapons and ongoing nuclear
infrastructure upgrades raise concerns.

The suspension of U.N. sanctions in 1999 has allowed Libya to expand
its efforts to obtain ballistic missile-related equipment, materials,
technology, and expertise from foreign sources. Outside assistance --
particularly from Serbian, Indian, Iranian, North Korean, and Chinese
entities -- has been critical to its ballistic missile development
programs. Libya's capability probably remains limited to its Scud-B
missiles but with continued foreign assistance it will probably
achieve an MRBM capability -- a long-desired goal -- or extended-range
Scud capability.

Libya remains heavily dependent on foreign suppliers for CW precursor
chemicals and other key related equipment. Following the suspension of
U.N. sanctions, Tripoli reestablished contacts, primarily in Western
Europe, with sources of expertise, parts, and precursor chemicals
abroad. Tripoli still appears to be working toward an offensive CW
capability and eventually indigenous production. Evidence suggests
that Libya also is seeking to acquire the capability to develop and
produce BW agents.

Following the suspension of U.N. sanctions, Libyan and Russian firms
have completed contracts for conventional weapons, munitions, and
upgrades and refurbishment for Libya's existing inventory of
Soviet-era weapons.

Syria

Syria -- an NPT signatory with full-scope IAEA safeguards -- has a
nuclear research center at Dayr Al Hajar. Russia and Syria have
approved a draft cooperative program on cooperation on civil nuclear
power. In principle, broader access to Russian expertise provides
opportunities for Syria to expand its indigenous capabilities, should
it decide to pursue nuclear weapons. During the second half of 2001,
Damascus continued to receive help from abroad on establishing a
solid-propellant rocket motor development and production capability.
Syria's liquid-propellant missile program has and will continue to
depend on essential foreign equipment and assistance -- primarily from
North Korean entities and Russian firms. Damascus also continued its
efforts to assemble -- probably with considerable North Korean
assistance -- liquid-fueled Scud-C missiles.

Syria sought CW-related precursors and expertise from foreign sources
during the reporting period. Damascus already holds a stockpile of the
nerve agent sarin but apparently is trying to develop more toxic and
persistent nerve agents. Syria remains dependent on foreign sources
for key elements of its CW program, including precursor chemicals and
key production equipment. It is highly probable that Syria also is
developing an offensive BW capability.

Syria continues to acquire relatively small quantities of ACW --
mainly from Russia and other former Soviet-bloc suppliers. But
Damascus' outstanding debt to Russia and inability to fund large
purchases have hampered negotiations for the large quantity of
equipment Syria needs to revitalize its aging defense forces. Damascus
is interested in acquiring Russian SA-10 and SA-11 air defense
systems, MiG-29 and Su-27 fighters, and T-80 or T-90 main battle
tanks, as well as upgrades for the aircraft, armored weapons, and air
defense systems already in its inventory. No breakthroughs in the
sales or debt issue have been noted since Syria's Defense Minister met
with high-level Russian officials in Moscow in May 2001, although
high-level delegations continued to discuss weapons trade.

Sudan

Sudan, a party to the CWC, has been developing the capability to
produce chemical weapons for many years. It historically has obtained
help from foreign entities, principally in Iraq. Sudan may be
interested in a BW program as well.

During the reporting period, Sudan sought to acquire a variety of
military equipment from various sources. In the long-running civil
war, Khartoum is seeking older, less expensive ACW and conventional
weapons that nonetheless offer more advanced capabilities than the
weapons of its opponents and their supporters in neighboring
countries. We remain concerned that Sudan may seek a ballistic missile
capability in the future.

India

The underground nuclear tests in May 1998 were a significant milestone
in India's continuing nuclear weapons development program. Since the
1998 tests, New Delhi has continued efforts intended to lead to the
development of more sophisticated nuclear weapons. During this
reporting period, India continued to obtain foreign assistance for its
civilian nuclear power program, primarily from Russia.

India still lacks engineering or production expertise in some key
missile technologies. Entities in Russia and Western Europe remained
the primary conduits of missile-related and dual-use technology
transfers during 2001. During the reporting period, India
flight-tested the Dhanush ballistic missile, continued work with the
Russians on the Brahmos cruise missile, and moved nuclear-capable
Prithvi missiles and launchers together within range of Pakistan as
part of its military mobilization.

ACW acquisitions, primarily from Russia, continue to play an important
role in India's across-the-board modernization of its armed forces.
Many key programs have been plagued by delays, but New Delhi has
received two MiG-21-93 fighter aircraft, with Hindustan Aeronautics,
Limited, beginning the licensed upgrade of 123 more aircraft. In 2001,
New Delhi concluded an $800 million contract with Russia for 310 T-90S
main battle tanks and a smaller contract for KA-31 helicopters. India
is in negotiations with Russia for nuclear submarines and an aircraft
carrier. India also continues to explore options for leasing or
purchasing several airborne early warning systems. In addition to
purchasing the Green Pine radar from Israel, New Delhi also signed a
$270 million contract with Tel Aviv for the Barak-1 missile defense
system. The Indian Air Force has reopened the competition for jet
trainer aircraft and is considering bids from the Czech Republic,
France, Italy, Russia, and the United Kingdom.

Israel is also seeking to expand its defense cooperation with India.
In recent months, India and Israel have engaged in negotiations for
the sale of the Arrow-2 anti-tactical-ballistic missile. Negotiations
are also underway regarding the proposed sale of the three PHALCON
airborne early warning (AEW) aircraft for approximately $1 billion
[$1,000 million]. India has already taken delivery of the Israeli
Greenpine radar for installation at a ground site for use as an early
warning platform. The Greenpine radar is a component of the PHALCON
AEW aircraft. Israel has also reportedly sold the Harpy unmanned
aerial vehicle (UAV) to India.

Pakistan

Pakistan's nuclear weapons tests in late May 1998 demonstrated its
well-developed nuclear weapons program. During the reporting period,
it continued to acquire nuclear-related equipment, some of it dual
use, and materials from various sources -- principally in Western
Europe. If Pakistan chooses to develop more advanced nuclear weapons,
seeking such goods will remain important. China provided extensive
support in the past to Islamabad's nuclear weapons and ballistic
missile programs, but in May 1996 it pledged not to provide assistance
to unsafeguarded nuclear facilities in any state, including Pakistan.
We cannot rule out, however, the possibility of continued contacts
between Chinese and Pakistani entities on Pakistani nuclear weapons
development.

Pakistan's ballistic missile program continued to benefit from
significant Chinese entity assistance during the reporting period.
With Chinese entity assistance, Pakistan is moving toward serial
production of solid-propellant SRBMs, such as the Shaheen-I and
Haider-I. Although Pakistan last conducted ballistic missile flight
tests in 1999, it plans to flight-test the Haider-I ballistic missile
in 2002. Successful development of the two-stage Shaheen-II MRBM will
require continued assistance from Chinese entities or other potential
sources.

Pakistan continues to rely on China and France for its ACW
requirements. Islamabad received delivery of upgraded Mirage IIIs from
France and negotiated to purchase 40 additional F-7 fighters from
China.

Chemical, Biological, Radiological, and Nuclear Terrorism

The threat of terrorists using chemical, biological, radiological, and
nuclear (CBRN), materials appears to be rising -- particularly since
the 11 September attacks. Several of the 30 designated foreign
terrorist organizations and other nonstate actors worldwide have
expressed interest in CBRN -- although terrorists probably will
continue to favor proven conventional tactics such as bombings and
shootings. In addition, unmanned aerial vehicles (UAVs) and other
types of cruise missiles present a serious and growing threat as
potential WMD delivery vehicles.

CBRN information and technology is more widely available, especially
from sources like the Internet, scientific publications, and
conferences.

Increased publicity surrounding the anthrax incidents since the
September 11 attacks has highlighted the vulnerability of civilian and
government targets to CBRN attacks.

Although the September 11 attacks suggest that al-Qaeda and other
terrorists will continue to use conventional weapons, one of our
highest concerns is their stated readiness to attempt unconventional
attacks against us. As early as 1998, Bin Laden publicly declared that
acquiring unconventional weapons was "a religious duty."

Terrorist groups worldwide have ready access to information on
chemical and biological, and to some extent, even nuclear weapons, via
the Internet, publicly available scientific literature, and scientific
conferences, and we know that al-Qaeda was working to acquire some of
the most dangerous chemical agents and toxins. A senior Bin Laden
associate on trial in Egypt in 1999 claimed his group had chemical and
biological weapons. Documents and equipment recovered from al-Qa'ida
facilities in Afghanistan show that Bin Laden has a more sophisticated
biological weapons research program than previously discovered.

We also know that al-Qaeda has ambitions to acquire or develop nuclear
weapons and has been receptive to any outside nuclear assistance that
might become available. In February 2001, during the trial on the
al-Qaeda bombings of the American Embassies in Tanzania and Kenya, a
government witness -- Jamal Ahmad Fadl -- testified that al-Qaeda
pursued the sale of a quantity of purported enriched uranium (which in
fact probably was scam material) in Sudan in the early 1990s.

We assess terrorist use of radiological dispersal devices to be a
highly credible threat. In addition, we must be alert to the
possibility that al-Qaeda or other terrorist groups might also try to
launch conventional attacks against the chemical or nuclear industrial
infrastructure of the United States to cause panic and economic
disruption.

Key Suppliers:

Russia

Russia's cash-strapped defense, biotechnology, chemical, aerospace,
and nuclear industries are eager to raise funds via exports and
transfers. In addition, some Russian universities and scientific
institutes have shown a willingness to earn much-needed funds by
providing WMD or missile-related teaching and training for foreign
students. Given the large potential proliferation impact of such
exports, transfers, and training, monitoring the activities of
specific entities as well as the overall effectiveness of the Russian
Government's nonproliferation regime remains a high priority.

Russia has played a key role in supporting civilian nuclear programs
in Iran, primarily the Bushehr Nuclear Power Plant project. Even
though the ostensible purpose of Russian assistance to Iran's nuclear
infrastructure is for civilian applications, we assess that such
support enhances Tehran's ability to support a nuclear weapons
development effort. The Intelligence Community closely monitors
Moscow's nuclear cooperation with Tehran for any direct assistance in
support of nuclear weapons efforts.

President Putin in May 2000 amended the presidential decree on nuclear
exports to allow Russia in exceptional cases to export nuclear
materials, technology, and equipment to countries that do not have
full-scope IAEA safeguards. The move cleared the way for expanding
nuclear exports to certain countries that do not have full-scope
safeguards, For example, Russia supplied India with material for its
civilian nuclear program in 2001.

Russian entities during the reporting period continued to supply a
variety of ballistic missile-related goods and technical know-how to
countries such as Iran, India, and China. Iran's earlier success in
gaining technology and materials from Russian entities has helped to
accelerate Iranian development of the Shahab-3 MRBM, and continuing
Russian entity assistance most likely supports Iranian efforts to
develop new missiles and increase Tehran's self-sufficiency in missile
production.

During 2001, Russian entities remained a significant source of
dual-use biotechnology, chemicals, production technology, and
equipment for Iran. Russia's biological and chemical expertise makes
it an attractive target for Iranians seeking technical information and
training on BW and CW agent production processes.

Russia continues to be a major supplier of conventional arms.
Following Moscow's abrogation of the Gore-Chernomyrdin agreement in
November 2000, Russian officials stated that they see Iran as a
significant source of potential revenue from arms sales and believe
that Tehran can become Russia's third-largest conventional arms
customer after China and India. In 2001, Russia was the primary source
of ACW for China, Iran, Libya, and Sudan, and one of the largest
sources for India.

Russia continues to be the main supplier of technology and equipment
to India's and China's naval nuclear propulsion programs. In addition,
Russia has discussed leasing nuclear-powered attack submarines to
India.

The Duma enacted new export control legislation in 1999, and Putin in
2000 reorganized the export control bureaucracy. In August 2001, Putin
signed into effect several of the new law's implementing decrees,
which updated export control lists for biological pathogens,
chemicals, missiles, and related dual-use technologies and equipment.

Despite progress in creating a legal and bureaucratic framework for
Russia's export controls, lax enforcement and insufficient penalties
for violations remain a serious concern. To reduce the outward flow of
WMD and missile-related materials, technology, and expertise, top
officials must make a sustained effort to convince exporting entities
-- as well as the bureaucracy whose job it is to oversee them -- that
nonproliferation is a top priority and that those who violate the law
will be prosecuted.

North Korea

Throughout the second half of 2001, North Korea continued to export
significant ballistic missile-related equipment, components,
materials, and technical expertise to the Middle East, South Asia, and
North Africa. P'yongyang attaches high priority to the development and
sale of ballistic missiles, equipment, and related technology. Exports
of ballistic missiles and related technology are one of the North's
major sources of hard currency, which fuel continued missile
development and production.

China

During this reporting period, Beijing continued to narrowly interpret
its bilateral nonproliferation commitments with the United States. In
the nuclear area, China has made bilateral pledges to the United
States that go beyond its 1992 NPT commitment not to assist any
country in the acquisition or development of nuclear weapons. For
example, in May 1996, Beijing pledged that it would not provide
assistance to unsafeguarded nuclear facilities. We cannot rule out,
however, some continued contacts subsequent to the pledge between
Chinese entities, perhaps acting without Beijing's knowledge or
permission, and entities associated with Pakistan's nuclear weapons
program.

In October 1997, China gave the United States assurances regarding its
nuclear cooperation with Iran. China agreed to end cooperation with
Iran on supplying a uranium conversion facility (UCF) and to undertake
no new cooperation with Iran after completion of two existing
projects. We are concerned that some interactions between Chinese and
Iranian entities may run counter to Beijing's bilateral commitments to
the United States.

In the missile-related area, Beijing on several occasions has pledged
not to sell Missile Technology Control Regime (MTCR) Category I
systems but has not recognized the regime's key technology annex.
China is not a member of the MTCR.

In November 2000, China committed not to assist, in any way, any
country in the development of ballistic missiles that could be used to
deliver nuclear weapons, and to enact at an early date a comprehensive
missile-related export control system. Chinese entities provided
Pakistan with missile-related technical assistance during the
reporting period. Pakistan has been moving toward domestic serial
production of solid-propellant SRBMs with Chinese entity help.
Pakistan also needs continued Chinese entity assistance to support
development of the two-stage Shaheen-II MRBM. In addition, firms in
China have provided dual-use missile-related items, raw materials,
and/or assistance to several other countries of proliferation concern
-- such as Iran, North Korea, and Libya.

Chinese firms are supplying dual-use CW-related production equipment
and technology to Iran. The U.S. sanctions imposed in May 1997 on
seven Chinese entities for knowingly and materially contributing to
Iran's CW program remain in effect. Evidence during the current
reporting period shows that Iran continues to seek such assistance
from Chinese entities.

China is a primary supplier of advanced conventional weapons to
Pakistan and Iran, among others. Beijing and Islamabad also have
negotiated the sale of an additional 40 F-7 fighters for delivery to
Pakistan.

Western Countries

Western European countries maintain rigorous and effective export
controls on WMD and missile-related goods and materials. Iran and
Libya continued to approach entities in Western Europe to provide
needed acquisitions for their WMD and missile programs but had little
success. Proliferators and associated networks nonetheless continue to
seek machine tools, spare parts for dual-use equipment, and widely
available materials, scientific equipment, and specialty metals. In
addition, several Western countries announced their willingness to
negotiate ACW sales to Libya.

Western countries are an important source for the proliferation of WMD
related information and training. The relatively advanced research of
western institutes, the availability of relevant dual-use studies and
information, the enthusiasm of scientists for sharing their research,
and the availability of dual-use training programs and education may
have shortened development time for some WMD programs, particularly
those of terrorist organizations.

Trends

Some key WMD and missile programs are becoming more advanced and
effective as they mature and as countries of concern become more
aggressive in pursuing a range of technologies.

Key WMD proliferators are taking steps toward becoming more
self-sufficient. They are better able to shield their programs against
interdiction and disruption. To this end, they are seeking greater
indigenous capabilities, including more advanced production
technologies. Such domestic capabilities may not always be a good
substitute for foreign imports, but in many cases they may prove to be
adequate.

Furthermore, many WMD and missile proliferators are becoming more
adept at denial and deception efforts, including hiding transactions
and using dual-use technology and underground facilities in indigenous
developments. For example, they are pursuing dual-use materials and
technologies with WMD as well as legitimate applications that can be
incorporated into commercial facilities and converted to WMD uses
fairly quickly.

Under economic pressure, the need for lucrative foreign sales is a
strong incentive to supplying entities, particularly in the case of
dual-use items and technology. Weak export-control enforcement in some
countries such as Russia and China encourages this trend. Furthermore,
some traditional recipients of WMD and missile-related technology,
particularly maturing state-sponsored programs, are beginning to
supply technology and expertise to other proliferators. Such
"secondary proliferators" as India, Iran, North Korea, and Pakistan
are not members of control regimes like the Nuclear Suppliers Group,
Australia Group, and Missile Technology Control Regime and do not
adhere to their export constraints.

Nuclear, chemical, biological, and ballistic missile-applicable
technology and expertise continues to gradually disperse worldwide.
Nuclear fuel-cycle and weapons-related technologies have spread to the
point that from a technical standpoint, additional proliferators may
be able to produce sufficient fissile material for a weapon and to
develop the capability to weaponize it. On the other hand, important
political disincentives to nuclear weapon development will remain in
place for most countries. As developing countries expand their
chemical industries into pesticide production, they also are advancing
toward at least latent chemical warfare capability. Likewise,
additional nonstate actors are becoming more interested in the
potential of using biological warfare as a relatively inexpensive way
to inflict serious damage. The proliferation of increasingly capable
ballistic missile designs and technology poses the threat of more
countries of concern eventually breaching the 1,000-km range of SRBMs
and posing greater risks to regional stability.

Finally, most countries of proliferation concern are continuing
efforts to develop indigenous designs for advanced conventional
weapons and to expand production capabilities, although most of these
programs usually rely heavily on foreign technical assistance. Many of
these countries -- unable to obtain newer or more advanced arms -- are
pursuing upgrade programs for existing inventories. In addition, some
of the recipient countries, such as Iran, have in turn become
suppliers to those countries and entities that are unable to purchase
weapons elsewhere.

[1] See pages 13 and 14 for a further discussion of possible
interaction between Chinese and Iranian entities with regard to
China's pledge to halt assistance to Iran's nuclear programs after
these projects are complete.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)