Following are abbreviations and acronyms used in the text:

-- ICBM: intercontinental ballistic missile.
-- SRBM: short-range ballistic missile.
-- WMD: weapon of mass destruction.

Following is the text of McLaughlin's remarks as delivered, which were made available in Washington:

Remarks of the Deputy Director of Central Intelligence John E. McLaughlin
at the 4th Annual Space and Missile Defense Conference
Huntsville, Alabama

21 August 2001

I want to thank you for inviting me to speak here today. For this conference, which brings together leaders in national defense from the public and private sectors, deals with a danger that affects all Americans: the accelerating growth of missile capabilities around the world.

This danger is not developing in a vacuum. As we examine all the things that influence our security, we encounter again and again the quickening pace of technological change, surely the principal hallmark of our age.

The missile threat is magnified, for example, by new communications technologies, which now emerge at dizzying speeds. As surely as they aid law enforcement and intelligence, they also give powerful capabilities to proliferators, terrorists, and drug traffickers.

Meanwhile, change has begun to touch places that once resisted it, places as different as Iran and North Korea. And -- as headlines from the Balkans to the Middle East remind us with depressing frequency -- change can also mean a deadly aggravation of old conflicts.

And the geopolitics of our age, still very much in flux after the Cold War, contribute to an atmosphere in which many states see missiles -- and the military and diplomatic reach they provide -- as a way of establishing their power credentials and protecting their interests.

The world our country leads is one of both promise and peril. Neither is static. Never in my experience has U.S. Intelligence faced such a dynamic set of concerns with such a high quotient of uncertainty. With so many issues in play, priorities become critical. As always, the highest priority for U.S. intelligence remains those things that endanger American lives and the physical security of the United States. That means the missile threat is clearly near the top.

Two important bottom lines that need to be stressed right up front: the short- and medium-range missile threat is here and now, and, as other speakers may have noted, a number of countries hostile to us are on a path that seems likely to expose the United States to an increased intercontinental threat as well.

In the next few minutes, I will touch on several aspects of the threat -- one that we in the Intelligence Community grapple with every day. They include: the allure of the ballistic missile; the immediate danger that I just alluded to from short- and medium-range missiles; the status of foreign ICBMs; missile programs in North Korea, Iran, and Iraq; alternative means of delivering weapons of mass destruction; and finally, the proliferation problem.

The defining reality for all of us is the simple yet chilling fact that ballistic missiles are a central element in arsenals around the globe. Countries seek them for a host of reasons. For some, they are war-fighting tools to augment conventional forces. For others, they are weapons of blackmail, deterrence, and prestige.

At the expense of other needs, governments willingly devote often-scarce resources to acquire ballistic missiles. And they actively pursue foreign technologies, materials, and specialists to compensate for domestic shortfalls and to gain expertise.

The willingness of some to make these technologies available -- for a price, to be sure -- has enabled emerging missile states to accelerate their current programs and to lay the groundwork for future systems with greater capabilities and longer ranges.

North Korea illustrates the problem. Its sales of components and complete systems have allowed other states to acquire longer-range capabilities more quickly than would have otherwise been possible-a case in point being the transfer to Pakistan of the No Dong missile, with its range of 1,300 km. North Korean technology has also been the basis of domestic development efforts in places like Iran, where the medium-range Shahab-3 is a direct descendant of the No Dong.

As I mentioned a few minutes ago, short- and medium-range ballistic missiles, with their potential to carry weapons of mass destruction, already present a serious and growing danger to U.S. forces, allies, and interests overseas.

A decade ago, the primary missile threat to U.S. forces abroad was the SRBM -- primarily the Scud and its variants. As we all remember, that threat turned lethal during the Gulf War, when Iraq launched some 90 ballistic missiles at targets in Saudi Arabia, Israel, and the Gulf States. For American forces, a single Scud missile caused the greatest loss of life during the war; 28 soldiers were killed and 99 wounded.

The spread of medium-range missiles is altering strategic balances in the Middle East and Asia, placing more targets in jeopardy. Emerging ballistic missile states continue to increase the range, reliability, and accuracy of their systems -- posing greater risks to U.S. forces, allies, and interests.

When you combine the availability of expertise and technology with the evident ambitions of emerging missile states to improve the capability and performance of their systems, you cannot ignore the fact that some among them have already decided to go beyond medium-range weapons and develop ICBMs -- and the prospect that others will decide to follow them.

They cannot get there by will alone. The road to possession of ICBMs is neither short nor straight. Most of the aspiring states are highly dependent on foreign assistance. And the complexities of the associated technology are virtual guarantees of delay and frustration. But those obstacles are by no means permanent; we assess that aspiring missile states are likely to overcome them.

The Intelligence Community continues to project that as we progress through the next 15 years, our country most likely will face ICBM threats from North Korea, probably from Iran, and possibly from Iraq-barring significant changes in their political orientations.

This is, of course, in addition to the longstanding, but changing arsenals of Russia and China. As you know, Russia is significantly reducing its strategic forces, which currently total about 4,000 warheads. But China is modernizing its strategic missile force -- shifting from primary reliance on about 20 silo-based ICBMs to the development and deployment of mobile ICBMs. We project that Beijing is already on a course to increase its strategic warheads several-fold by 2015, though to levels still well below those of the United States or Russia.

The new threats confronting the United States are of course far different from the old Soviet ones, which involved large numbers of relatively accurate, survivable, and reliable missiles. By contrast, the emerging missile threats from countries like North Korea, Iran, and Iraq will be not only fewer in number, but lower in terms of accuracy, yield, survivability, reliability, and range-payload capability. That said, these new systems will represent a real threat.

Many of the countries developing longer-range missiles probably believe that the very possibility of their use would complicate American decision making in a crisis, and could -- as a form of blackmail -- prevent us from coming to the aid of our friends and allies.

Indeed, some may see little need for a full-blown test of a long-range ballistic missile. For them, it may be enough to demonstrate their capabilities in the form of a space launch vehicle -- a strategy that could achieve the twin goals of deterrence and prestige without the political and economic costs that a long-range ballistic missile test might bring.

Countries that want ICBMs are likely to view their small stockpiles as tools of coercive diplomacy, deterrence and blackmail. In some cases, a government may see one or two long-range missiles as sufficient to project a credible threat. Here, the strategic value of ICBMs would come chiefly from their mere possession and from the very possibility of their use. To be sure, the actual use of an ICBM might bring devastating consequences-a reality no foreign government can ignore.

Now, I would like to talk briefly about missile programs in three states -- North Korea, Iran, and Iraq.

Though a failure, North Korea's attempt in 1998 to use a three-stage Taepo Dong-1 as a space launch vehicle provided dramatic proof that the new long-range missile threat has moved from the hypothetical to the real. If the system were flown successfully on an ICBM trajectory, it would have been able to deliver a small biological or chemical weapon to American soil.

Since then, the North Koreans appear to have moved on to a more capable system-the Taepo-Dong 2. A two-stage version of the yet-to-be-flight-tested Taepo Dong-2 could reach parts of the United States with a nuclear-sized payload, while the three-stage version could reach anywhere in Europe or the United States.

As you know, the North Koreans are currently observing a self-imposed flight test moratorium. They have announced, however, that they intend to end this moratorium in 2003. Pyongyang could of course end the moratorium at any time of its choosing. In the meantime, the Taepo Dong program remains very much alive, and the North Koreans have the ability to resume tests with very little warning and deploy the missiles shortly thereafter.

Turning to the Middle East -- a place where virtually everything I worry about intersects -- we find in Iran one of the region's largest and most capable ballistic missile programs. There, the inventory includes hundreds of short-range missiles capable of hitting most of Iraq as well as targets -- including U.S. forces -- in the Persian Gulf.

The Iranians will soon field the 1,300-km-range Shahab-3, which is based -- as I mentioned -- on the North Korean No Dong. The Shahab-3 will reach Israel, most of Saudi Arabia, and Turkey.

Tehran's public statements indicate plans to develop longer-range systems. Most analysts believe Iran is likely sometime in the next 10 -- 15 years to test an ICBM that could hit the United States; they further believe such a test could come as early as 2005, although that is less likely given the ground Iran must still cover.

But I must repeat-and emphasize -- that the increasing availability of technology, foreign assistance, and cross-fertilization of proliferant programs is making it harder to project timelines. Thus, our analysts must assess both when they expect a country to test an ICBM as well as when they believe it would be technologically possible for the country to do so.

As for Iraq, UN sanctions have hampered Saddam Hussein's efforts to reconstitute the missile capability he had before the Gulf War. But he is doing all he can to push the limits set by sanctions in a clear effort to bolster his arsenal. The Iraqi missiles allowed under UN constraints can target Kuwait, but not Tehran, Riyadh, or Manama. These could easily be upgraded to greater ranges, however.

We also believe that Saddam is hiding a small force of Al Hussein SRBMs, with a range of 650 kilometers, capable of targeting Israel, Iran, Saudi Arabia, and Turkey.

Finally, Iraq has rebuilt several critical missile production sites. Given the likelihood that missile development work is still going on in Iraq, we think that it, too, could develop an ICBM capability sometime in the next 15 years with foreign assistance.

There are other countries that are just a few years behind these three in attaining medium-range missiles, and -- eventually, perhaps -- even longer-range systems.

The picture I have painted points to one conclusion: the possibility that a missile bearing a weapon of mass destruction will be used against U.S. forces or interests is higher today than it was during most of the Cold War. And it will continue to rise as the weapons and missile capabilities of potential adversaries mature.

The number of countries with longer-range missiles is growing, as is the number of missiles itself. Ranges are increasing, along with payload options, including WMD. Indeed, while the warheads on missiles used against the U.S. during the Gulf War were conventional, they need not have been. For Iraq had warheads containing biological and chemical agents produced and ready to go.

Long-range ballistic missiles, of course, are not the only way to deliver weapons of mass destruction to the United States. ICBMs are a point on a spectrum of means that include cruise missiles, aircraft, short-range missiles on ships, and truck-delivered and suitcase weapons. Some of these means are cheaper, lower in profile, and perhaps more accurate. Unlike the ballistic missile, some of these means -- such as a crude suitcase weapon -- are not the preserve of states. They are more the instruments of pure terror than of deterrence or coercive diplomacy.

And there are terrorist organizations in the world actively seeking chemical, biological, radiological, and nuclear materials. They can move with relative stealth, free of the constraints and thoughts of retaliation that intrude upon the plans and calculations of even the most hostile state or government. They are exceptionally difficult to discover, dissect, and disrupt.

But here is a key point: the U.S. Intelligence Community does not have the luxury of viewing these two threats-ballistic missiles vs. other means of delivery -- as an either/or proposition. They must each be monitored, deterred, and defended against through different mechanisms, for the reality is that they both exist. And that reality compels the Intelligence Community to work against them both -- for one decisive reason: whether the delivery system involves a missile or not, the United States and its people -- as well as our allies -- remain the target.

Unlike a terrorist who recruits over the Internet or builds bombs in a shack, most states with missile programs are deeply reliant on international help. I cannot overestimate the catalytic role that assistance plays in shortening development times and aiding production.

State-run defense and nuclear industries in Russia, for instance, are still strapped for funds, and the government looks to them to acquire badly needed foreign exchange through exports. Some of those sales have had a serious impact on proliferation. Last year, Russian entities continued to supply ballistic missile-related goods and technical know-how to countries like Iran, China, and Libya.

The transfer of ballistic missile technology to Iran -- to cite just one case -- was substantial. And we believe it will permit Iran to further accelerate its missile development programs and to move ever closer toward self-sufficiency in production.

China has been another significant source of missile-related assistance. With Chinese help, Pakistan has moved rapidly toward serial production of solid-propellant missiles and the development of longer-range systems. In addition to Pakistan, firms in China over the years have provided missile-related items, raw materials, or other help to several countries of proliferation concern, including Iran, Libya, and North Korea.

And for their part, the North Koreans are still selling ballistic missile-related equipment, components, materials, and technical expertise. They have found customers in the Middle East, South Asia, and North Africa. More than a major source of hard currency, the missile trade has helped put Pyongyang on the geopolitical map, commanding the attention of the outside world.

Missile proliferation is a changing business, and the changes are making it harder to track and control, increasing the risk of unpleasant surprise. More players are proficient at the use of denial and deception. They have been aided by continued leaks and disclosures of information revealing the Intelligence Community's sources and methods and helping states involved in proliferation to conceal their activities.

The growing availability of dual-use technologies is another major complication. Then there is the rising risk of "secondary proliferation" from maturing state-sponsored programs such as those in Pakistan and Iran. Add to this group the private companies, scientists, and engineers in Russia, China, and others who may be increasing their involvement in these activities, taking advantage of weak or unenforceable export controls and the growing availability of technologies. These trends have continued and, in some cases, accelerated over the past year.

For the Intelligence Community, the challenge is one of both collection and analysis. We are devoting fresh resources to proliferation targets, but, ultimately, our success lies not in how hard we work, but in how smart we work.

In collection, that means making the best possible use of innovative technical systems and of hard-won, well-placed human sources. It also means safeguarding those sources from leaks and disclosure. In analysis, it means questioning assumptions, being open to alternative views, playing devil's advocate when we become too confident, and applying the highest standards of research and rigor. It also means that we need more integration of technical and regional analysis. Missile proliferation is a technical problem, but it will continue to require a fine-grained understanding of regional political and economic dynamics.

The challenge could not be greater. The stakes could not be higher. And our goal -- like the goal of this conference -- could not be clearer: to do everything we can to give our nation the information and the tools it needs to anticipate and counter the threat of foreign ballistic missiles.

Thank you very much.