Al Qaeda hurt
U.S. intelligence analysts are putting the finishing touches on the annual threat briefing for Congress that will report that the al Qaeda terrorist group remains dangerous but is no longer the same organization that so devastatingly attacked the United States nearly eight years ago.

The annual briefings to the House and Senate intelligence committees on the national security threats facing the country will be presented in testimony by the new director of national intelligence, Dennis Blair, and other intelligence leaders in the next several weeks.

According to U.S. officials, the briefing will reveal that al Qaeda has been damaged by U.S. military and intelligence operations, including the capture and killing of many of its leaders and the pursuit of those remaining.

"Al Qaeda is hurt and hurt badly," said one intelligence official familiar with national security reports. "But it is still out there." He spoke on the condition that he not be named because of the sensitivity of the topic.

Intelligence agencies do not have detailed knowledge of al Qaeda plans for mass casualty attacks. The terrorist organization is far less centralized today than when it held large swaths of territory in Afghanistan before the U.S. military intervened there in October 2001 and toppled the Taliban government.

The main redoubt for the group remains in small areas of Pakistan's ungoverned border regions. Other bases are in Saudi Arabia, Yemen, Somalia and the North African desert.

Other strategic threats remain in Iran, where nuclear "breakout" could occur; in Iraq, where a fragile stability is emerging; and in Afghanistan, where a major troop surge is planned to deal with a resurgent Taliban. North Korea also remains high on the threat list with indications that the regime in Pyongyang could carry out a series of saber-rattling missile tests, or even a second nuclear test, this year.

One new threat to be discussed in the briefing will be the deadly drug wars in Mexico that last year claimed more than 6,700 lives, and the rise of leftist, anti-U.S. regimes in South America.

China's military buildup and the failure of the Beijing government to explain the buildup's goal will be addressed, along with the prospect that China is facing numerous domestic problems that could be heightened by the global economic recession.

Intelligence leaders also are expected to address the impact of climate change, which is a major preoccupation for the Obama administration and many governments around the world.

Iran missile threat
The Pentagon regards Iran's launch Tuesday of its first satellite as a troubling development that is increasing the threat of Tehran's long-range missile program.

"This is obviously a cause for real concern," Pentagon press secretary Geoff Morrell told Inside the Ring. "Not just for us but for our allies. The fact is that the technology used to get this satellite into space is dual-purpose technology that can also be used to advance their ballistic missile program and in particular their long-range ballistic missiles."

Iran's leaders have stated that they plan to develop intercontinental ballistic missiles, but so far, most of their long-range missile tests have been failures, Mr. Morrell said.

"But they are clearly determined to develop that capability," he said.

Iran's missile programs "represent a real threat to certainly everyone in the region and certainly to Europe," he said. The satellite launch indicates that the threat from Iran's missiles "may be growing," he noted.

Mr. Morrell said that in response to Iran's space and missile program, the United States is developing defenses and also continuing to try to deter Iran from building long-range missiles.

"A space launch may seem innocent enough, but not when it is done by a country with designs on a long-range ballistic missile that threatens its neighbors," he said.

Although the technology used by Iran appears to be relatively unsophisticated, Mr. Morrell said the real danger is that the technology used to launch the satellite can easily be used to develop more capable and longer-range ballistic missiles.

The satellite launch also could build momentum for a third U.S. missile-defense interceptor site in Poland and Czech Republic, although the Obama administration has not made its intentions regarding missile defense clear.

"NATO has unanimously endorsed the development of a third site in Europe, and we continue to work with the Czechs and the Poles in bringing that to life," Mr. Morrell said.

Rick Lehner of the Pentagon's Missile Defense Agency said some experts who sought to play down the significance of the satellite launch missed the point of the Safir-2 rocket launch. "The fact that Iran can demonstrate rocket motor staging for acceleration and increased range; guidance and control; solid propellant and payload deployment represents a technological leap that is of great concern, since they can grow an ICBM capability from the Safir-2 technology," he said.

Chinese spy ring
A new book on the Chi Mak spy case presents new information on the case of a family ring that provided defense information to China. "Snake Fish: The Chi Mak Spy Ring," by lawyer and intelligence specialist Edward M. Roche, is based on trial documents and other records.

It discloses that during the Mak trial, the FBI produced a translation of a letter written by Gu Wei Hao, an agent of the Chinese Ministry of Aviation, to former Boeing engineer Greg Chung, asking Mr. Chung to collect data on commercial airliners and the U.S. space shuttle and give the information to Chi Mak, who would then send it to China.

According to the book, Mr. Gu was related to Chi Mak's wife and supplied her with letters to Mak, who was convicted in May 2007 of conspiracy to provide China with embargoed defense technology and is serving a 24-year prison term.

Mr. Chung, a naturalized U.S. citizen from China, was arrested in February 2008 and charged with economic espionage for China. His trial is scheduled for May in Southern California.

"By making linkages between the work of Chung at Boeing and the aerospace documents found at Chi Mak's house, the prosecution had confirmed an important linkage in their theory of the espionage ring," Mr. Roche stated. "The perception given to the jury no doubt was that Chi Mak was acting as a conduit for aerospace information flowing from the United States to China."

Another detail disclosed in the book is that the U.S. government may have detected a 2004 telephone call inside China from Mak to his Chinese handler, Pu Pei Liang, who was identified in the book as a Chinese intelligence official. Mr. Roche stated that the phone call was used by prosecutors to bolster the conspiracy charges against Mak, his brother and three other family members.

The book also states that prosecutors suspected, but could not prove, that Mak passed classified information to China about the Navy's next generation destroyer, called the DDX.

"A DDX document which contained detailed specifications about the DDX destroyer was found encrypted and deleted on Tai Mak's computer," he wrote. Tai Mak is Chi Mak's brother and pleaded guilty to conspiracy to violate export law as part of the ring.

A Chinese Foreign Ministry spokesman, Liu Jianchao, told reporters in Beijing last year that the spying charges against Mr. Chung were "baseless" and the result of the U.S. government's "Cold War thinking."

China export agreement
The Commerce Department's Bureau of Industry and Security last month concluded an agreement with the Chinese government that will ease U.S. export controls on strategic goods to China.

The agreement implementing the so-called Validated End-User program makes it easier for five companies with joint Chinese and foreign ownership in China to obtain militarily useful technology from the United States.

"We are pleased to have reached this milestone agreement with China, one of our nationīs most important trading partners," said outgoing Undersecretary of Commerce Mario Mancuso in a Jan. 13 statement, adding that the agreement aims to "streamline" exports by eliminating licensing requirements for the five companies.

The easing of controls comes at a time when U.S. security agencies say China's efforts to covertly obtain U.S. technology with military applications is at an all-time high.

A counterintelligence report on foreign economic espionage stated that China was one of the main collectors involved in some of the 2,600 export-control investigations carried out in 2007. Chinese technology theft cases included the targeting of U.S. night-vision technology, warship information, microwave circuits and radar know-how.

The Commerce Department had threatened to end the Validated End User program last month because China had refused to permit on-site inspections of the companies involved.

According to a U.S. government official close to the issue, Commerce officials acceded to Chinese demands.

A Commerce Department official could not be reached for comment.

Two of the five companies were linked in the past to illicit Chinese technology acquisition, according to report by the private Wisconsin Project on Nuclear Arms Control.

"This program was ill-conceived and badly administered, and for it to be rescued now by the Commerce Department, there would have to be a lot more safeguards and assurances from the Chinese than we probably received," said Gary Milhollin, director of the Wisconsin Project and a critic of the program.

A Chinese Embassy spokesman has said that easing export controls on China through the end-user program is in the mutual interest of both countries.