THE DCI'S ANNUAL REPORT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80M00596A000100040002-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 19, 2016
• Document Release Date: August 4, 2006
• Sequence Number: 2
• Publication Date: January 4, 1979
• Content Type: MF

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NATIONAL FOREIGN INTELLIGENCE BOARD
NFIB-6.1 /11
FROM:
Deputy to the I for Resource Management
SUBJECT: The DCI's Annual Report
4 +1NN JJ/9
1. Your cooperative responses and thoughtful individual inputs for
the DCI's calendar 1978 Annual Report are very much appreciated. In
many cases it has not been possible or appropriate to use all of your
informative material for this Annual Report, which is a selective wrap-up
of major 1978 intelligence developments and issues preoccupying the
DCI and his key Executive and Congressional audiences. We will make
additional distribution and use, as app te, of input portions
of value for other DCI staff purposes. I
2. Attached is a complete draft. Most sections of major input or
interest to various of you have already been reviewed at working levels
of your organizations. The DCI has also given us general guidance and
reactions to an earlier draft, although it is this present draft that
he will review in detail. He and I would appreciate review of this
full draft by your staffs for accuracy and appropriateness (including
the classification of individual-paragraphs within your expertise)~an~
would value any overall comments you personally may wish to make. I I
3. The report is due to the Congress on 25 January. In order to
meet a tight DCI sign-off and printing schedule, we will need
M staff point of contact isiI
I __J L-1
1ITORT
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4 January 1979
TABLE OF CONTENTS 2ND WORKING COPY
Page
DCI'S INTRODUCTION ................................................. 1
1. 1978 IN INTELLIGENCE ........................................... 3
PRINCIPAL ACCOMPLISHMENTS AND SUCCESSES ........................ 3
IMPLEMENTATION OF THE EXECUTIVE ORDER AND OTHER
ORGANIZATIONAL MATTERS ........................................ 8
The Policy Review Committee (Intelligence) ............... 9
Resources: Experience with DCI's Budget Authority....... 11
The National Intelligence Tasking Center ................. 12
The DDCI ................................................. 13
The National Foreign Intelligence Board (NFIB)........... 15
Intelligence and Warning ................................. 17
NEW OR ALTERED EMPHASES IN ANALYSIS ............................ 21
The Strategic Balance and Perceptions About It........... 21
New Directions in China .................................. 23
The Uncertainties of Energy Analysis ..................... 24
Managing the Global Economy .............................. 26
New Approaches in Africa ................................. 26
Shifts in Regional Emphases .............................. 27
Proliferating Arms Control Talks ......................... 29
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COLLECTION TASKING ............................................ 32
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PRODUCTION .................................................... 36
NFAC's First Full Year ................................... 36
DIA ...................................................... 37
INR ...................................................... 40
SECURITY AND COUNTERINTELLIGENCE PROBLEMS ..................... 48
INTELLIGENCE AND THE CONGRESS ................................. 54
OTHER LEGAL AND PROPRIETY ISSUES .............................. 59
COVERT ACTION ................................................. 65
INTELLIGENCE AND THE PUBLIC ................................... 69
II. KEY ISSUES OF PARTICULAR CONCERN ..............................
QUALITY OF ANALYSIS AND POLICY SUPPORT ........................ 91
SECURITY AND COUNTERINTELLIGENCE PROGRAMS ..................... 104
AUTOMATIC DATA PROCESSING ..................................... 119
NATIONAL/TACTICAL INTERFACE.. ............................... 126
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DCI'S INTRODUCTION
The United States Intelligenece Community is challenged today to
provide information on a wider range of topics and more inclusive
geography than ever before. The forces which are broadening Intelligence
Community responsibility include:
- the present combination of new parity in strategic weaponary,
continuing Soviet military force improvements and an activist
US arms limitation policy;
- increasing global economic interdependence, including
competition for resources, with social, economic and
political consequences for the United States; and
- an expanding number of regions which involve US interests in
ways that need continuous intelligence monitoring and frequent
policy attention (e.g., sub-Sahara Africa and China).
These new intelligence requirements have not been accompanied by a
let-up in traditional requirements. Requirements for military intelligence
are more rigorous than ever before. Technology is changing both the
nature of targets and our capabilities against them. More broadly, as
US power to shape-world events lessens relative to that of others, policy
choices become more constrained and difficult. Decisions become more
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dependent on good intelligence. The message to intelligence is to cast
That imperative exists in a national environment of severe resource
stringency. The implications for intelligence include:
- an additional impetus to Community teamwork;
- a heightened need to elicit the best of available people;
- difficult trade-offs between future technical collection
needs, system flexibility, and cost.
Underlying these factors is the American people.'s need for explicit
demonstrations of their government's integrity and effectiveness. The
implications for intelligence here include:
- a need to sustain national support through demonstrated
quality performance, including making the products of
intelligence available more widely in the Goverment and
also to the public where possible;
- continuing difficulty in protecting secrets from exposure
through more intense media attention and some erosion in
the discipline of intelligence professionals.
For this, my second Annual Report as DCI to the President and the
Congress, I have chosen a selective rather than comprehensive approach,
omitting many important ongoing intelligence activities and instead
highlighting major developments in intelligence in 1978 in Part I, and
then discussing several issues confronting intelligence of special
concern to myself, the Executive and the Congress in Part II.
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I. 1978 in Intelligence
PRINCIPAL ACCOMPLISHMENTS AND SUCCESSES
During the past year, important progress has been made toward
strengthening the capability of the Intelligence Community and ensuring
that its activities conform to the values and the laws of the United
States. While these are not single year goals, initiatives undertaken
within the Intelligence Community, within the Government and outside
the Government in 1978 have all accelerated the Intelligence Community's
movement toward their fulfillment.
Within the Intelligence Community
Substantial progress has been made toward increasing Intelligence
Community cohesiveness through new mechanisms aimed at more
comprehensive, integrated and rational planning/assessment for
national intelligence. This effort has focused in two places: first,
in the National Security Council's Policy-Review Committee on
Intelligeegnce (PRC[I]) where national user needs are delineated in
the form of National Intelligence Topics (NITs) and their priorities
established; and second, in the process of implementing the DCI's
new program and budget authority. Differences in missions, priorities,
and perspectives remain, of course, but we now have better tools to
channel disagreements toward resolution.
Other specific initiatives include:
- establishment of a National Intelligence Tasking Center
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(discussed elsewhere) where the use of all the Community's
collection assets can be orchestrated to assure the best
combination of assets is assigned to each problem.
- greatly improved cooperation with the Federal Bureau of
Investigation in the CIA/FBI joint effort of
counterintelligence..
Within the Rest of the Government
Special efffort has been made to improve the dialogue between the
Intelligence Community and both present and potential consumers.
While the Community has always served the President and the Departments
.of State and Defense, support to other Executive Branch departments
and agencies and the Congress has been sporadic and generally reactive.
During 1978, we have looked for areas of intelligence collection and
analysis which might coincide with issues or concerns in both the
Executive and Legislative Branches; opened lines of communications
where they did not otherwise exist; and solicited suggestions for
particular problems or issues where we might be able to provide
assistance. This has been a fruitful endeavor and has permitted the
Community to serve a wider, more diversified group of government
consumers.
I am particularly proud of occasions this past year when users
have told me that intelligence made a real contribution to especially
important policy decisions through:
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o Support to negotiations:
- anticipated US ability to verify proposed SALT II
provisions with specific levels of confidence and
their strategic implications;
- close, continuing support to Middle East peace
negotiations;
o Data/perceptions illuminating broad foreign and defense
policy decisions:
- in defense posture, communication of strategic
balance trends through development of more concise
and meaningful measures of force capabilities and
trends;
- in energy, supply and demand projections which have
led the field and which are becoming increasingly
recognized as of high validity.
o Understanding/background on.areas of growing policy
concern such as:
- China, by analysis of her economic modernization and
leadership priorities/politics;
-.international trade, with comprehensive computer
based statistics published regularly.
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o Other specific initiatives include:
- continued evolution of accountability procedures
with the two select intelligence committees of
the Congress (discussed elsewhere).
- progress toward charter legislation which will
assure the citizen that the Intelligence Community
is operating within acceptable boundaries of law
and propriety, yet, at the same time, will not
prevent the Community from effectively carrying
out its mandate.
Outside the Government
The Intelligence Community cannot function effectively if denied
an exchange of ideas and information with the public and an awareness
of their concerns. Much valuable foreign intelligence information
is available openly in the United States. It would be foolish and
wasteful to use expensive. and, in some cases, high-risk collection
means to obtain this same information overseas. Every opportunity
must be taken to learn what other Americans know of. the rest of the
world if they are willing to share that information with their
government.
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The American academic and business communities are the locus of
invaluable knowledge and understanding on the rest of the world.
For the President and other government decisionmakers to receive the
best analysis possible, there must be a continuous exchange of ideas,
a testing of hypotheses, and a questioning of assumptions whenever an
analysis is made. This cannot be the case if the Intelligence
Community analyst is estranged from his counterpart in either the
academic or business communities. Likewise, the academic soon
becomes sterile if he is denied primary source information on how
governments are actually operating in the real world; the businessman
-fails to benefit from the economic analysis--much of it
unclassified--which could help him make better decisions. Their
access to the Intelligence Community permits them to temper theory
by what is actually happening. Every effort has been made during
1978 to widen this natural and quite proper dialogue so that all
three communities and ultimately the Government decisionmaker may
A policy of greater openness by the Intelligence Community has
made the intelligence product more accessible to the public and may
in time improve our ability to protect classified information.
During the past year, every analytic effort has been examined to
determine if it could be declassified. Generally, the criterion has
been to see, after all sensitive information has been removed, if
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adequate substance remains to support the study's conclusions and provide
a valuable contribution to the public's understanding of an issue. If
so, it is published. By moving as much information as possible into the
public domain, the corpus of classified information is reduced. That
reduced corpus should be better respected because it will have been
purged of marginally classified information which breeds disrespect
for classification labels. And, because there is less of it, it should
,be easier to protect.
Other specific initiatives include:
- being more responsive to specific questions and requests
for information fjrom the public and the media.
- agency representatives agreeing to speak on intelligence
issues in public fora.
- greater participation by Intelligence Community analysts
and scientists in professional meetings.
- submission of scientific and academic papers to
professional journals, etc.
IMPLEMENTATION OF THE EXECUTIVE ORDER AND OTHER ORGANIZATIONAL MATTERS
Following the President's signing on 24 January 1978 of Executive
Order 12036 on Intelligence, substantial implementation occurred,
I J,
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especially in development of national intelligence requirements and
priorities, in implementation of the DCI's full and exclusive authority
over the national foreign intelligence budget, and in establishment
of the National Intelligence Tasking Center.
The Policy Review Committee (Intelligence)
The National Security Council's Policy Review Committee on
Intelligence (PRC[I]) which the DCI chairs includes the principal
Executive Branch users of intelligence and is now the authoritative
source of national intelligence requirements. This year the PRC(I)
has established its governing long-term and current requirements
and associated priorities in the National Intelligence Topics (NITs).
Comprehensive in scope, these statements of national interest
cluster into principal intelligence missions which start with the
fundamentals of warning of attack and support for crisis management,
and go on to include:
- anticipating political trends in areas of the world where
US interests are significantly involved, including
allowance for discontinuities (particularly those which
may be less likely but would carry severe consequences
and warning in time for policy action to avoid or
mitigate actual crisis;
- projecting, understanding the implication of, and
communicating significant trends in the strategic and
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conventional military balance (includes guarding against
significant technological surprise);
- monitoring treaties to verify compliance (primarily arms
limitation but also other; e.g., Middle East);
- projecting major economic trends worldwide, economic
prospects and interrelationships for key countries, and
r
the implications for the United States;
- supporting military theater commanders where US and Allied
Forces may be engaged.
The NITs serve as guides for national intelligence production
-strategies and will be the basis for collection tasking, the NFIP, and
the budget. Promulgation of NITs places intelligence users in a
position to guide and direct national foreign intelligence community
activities for the first time. The NITs are reviewed about three
times a year permitting adjustments in production, collection, and
resource management priorities and providing the PRC(I) with a
continuing assessment of the Intelligence Community's performance.
Although no separate mechanism for relating the NITs to specific
budget decisions has been established, the relevance of user
requirements to the NFIP structure is recognized as an integral part
of the program and budget process. A PRC(I) Working Group headed
by my Deputy.for Resource Management is preparing Intelligence
Community performance assessments for consideration by the PRC(I).
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The Working Group has also been charged with proposing a formal schedule
to ensure appropriate consultation with the PRC(I) as the NFIP moves
through its annual cycle. Thus translation of the NITs into the
ultimate guides for production, collection, and resource management is
under way. Its completion will have my priority attention.
Resources: Experience with DCI's Budget Authority
This year we have completed the transition to NFIP budget development
under E.O. 12036 provisions. These provisions give me exclusive
authority to develop the NFIP budget and present it to the President,
and to approve reprogramming of funds from Congressionally approved
budgets; responsibility for presenting the budget to the Congress;
and authority for monitoring program implementation. A cooperative
and professional spirit has characterized the almost daily contact
between my staff and the program managers and their staffs in building
a common program and budget. I appreciate the constructive counsel and
frank sharing of concerns that program managers have given me
personally, in the NFIB, and in the PRC(I). In particular, my regular
conversations with Secretary of Defense Brown on program and budget
issues, as well as on other national security matters of mutual
concern to us both, have been very useful.
It is both natural and healthy that program managers have different
perspectives and priorities on some individual issues. Some procedural
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rough spots also remain, of course. The combined transition to new
NFIP management procedures and Zero Base Budgeting has in some cases
resulted in heavy workloads to develop the detailed presentations
both new sets of procedures have required. While I am convinced
the interim results are impressive, we will continue to refine and
streamline this large effort. The proposed FY 1980 NFIP which I
submitted to the President as a result of this Intelligence Community
effort is an unprecendentedly well vetted, integrated and balanced
US national intelligence effort which is responsive to both national
security needs and current fiscal stringencies.
My first step toward developing an even sounder FY 1981 program
and budget has been to issue early guidance that attempts to spell
out a philosophical rationale for NFIP development, and gives specific
guidance to individual program managers on what I see as priority issues,
directions and emphases in their programs. This year I also want to
explore approaches to further define the PRC(I)'s role in program
monitoring and budget implementation.
The National Intelligence Tasking Center
Once Congressional reprogramming approval for the National
Intelligence Tasking Center (NITC) established by E.O. 12036 was
obtained in late September, the Deputy for Collection Tasking named
National Intelligence Tasking Officers (NITOs) for the Soviet Union
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and Eastern Europe; for the People's Republic of China and the Far
East; for Western Europe, Africa, Latin America and the Near East; and
for Intelligence and Warning and Crisis Management. Supported by
associates with regional expertise and collection specialists these
NITOs are beginning to develop collection strategies on NITs. The
NITO teams are also responsible for developing ad hoc collection
strategies to cover crises or significant shifting situations and
trends.
Additionally, a Tasking Architecture Office (TAO) has been established
to address future collection needs from the dual perspectives of information
-needs and collection systems design. As a step toward developing a
means for systematic interdisciplinary evaluation of collection tasking
performance, TAO will first develop measures of system utility in terms
of customer product satisfaction.
The Deputy for Collection Tasking has also assumed responsibility
for the three Community collection committees, using their existing mechanisms
to manage requirements and to address and resolve issues arising within
the PHOTINT, SIGINT and HUMINT collection disciplines.
The DDCI
Ambassador Prank Carlucci was nominated as DDCI by the President,
in December 1977 and confirmed by the Senate and sworn in last February.
Building on broad experience in-the Foreign Service the Department of
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Health, Education and Welfare, the Office of Management and Budget and
the Office of Economic Opportunity, he has contributed importantly on
a wide range of issues and concerns. As my statutory Deputy, he fills
in for me in all capacities whenever I so designate, and in this
connection understudies my concerns and responsibilities on a
continuing basis. As Vice Chairman of the National Foreign Intelligence
Board (NFIB), he participates fully in Intelligence Community business.
Much of his day-to-day effort goes into management of the Central
Intelligence Agency. His effectiveness here permits me to devote
more time to my full range of duties as DCI. He has given special
attention as well to several important projects during this year.
The most significant of these has been an evaluation of the CIA
Personnel Management system leading to recommendations for a more
equitable, uniform and personalized personnel policy. The goal of this
project is to develop officers and managers with a broad enough range
experience to relate their own specialized activity to Agency-wide
concerns and community-wide missions, and to apply their talents and
experience to new disciplines. n
Frank Carlucci has also taken.a personal interest in intelligence
charter legislation, the reexamination of CIA security concepts and
programs, and, planning for a future CIA structure relevant to changing
and broadening demands. F-1
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