(Sees role in improving economic security)  (370)

By Paul Malamud

USIA Staff Writer

1ashington -- The new director of Central Intelligence, James Woolsey,

urged members of Congress March 9 to proceed slowly with intelligence

budget cuts, warning that the United States still needs a first-rate

intelligence capacity to survive in an increasingly fragmented world.

"It is important (to) warn of threats" including threats to "important

aspects of our economic well-being," he emphasized, stressing that "the

intelligence community has something to offer in terms of improving our

economic security."

While "the risk of a full-scale nuclear exchange with one

effectively gone" due to the end of the Cold War, in a "number of

ways...our safety and security may be endangered (by) a more demanding

problem for intelligence than existed before" due to the complexity of the

post-Cold War world, Woolsey said.  "The situation now," he noted "is much

less predictable."

In response to questions by members of the House Intelligence Committee

following his prepared statement, Woolsey conceded that the CIA does not

need to do "things that can be done efficiently and effectively" by other

government agencies.  But he stressed that the United States still needs

"human resources...signals intelligence (and) imagery" information to warn

policymakers of impending trouble and to provide input for an effective

foreign policy.

Woolsey told the legislators that the intelligence community will attempt to

streamline operations by using "satellite resources" more efficiently, by

simplifying the "classification and security system" and by consolidating

physical facilities where possible.

Asked whether the United States, under the Clinton administration, will

engage in industrial espionage, Woolsey said that that practice is "fraught

with legal and foreign policy difficulties."

Woolsey emphasized that the "existing policy" is "not to conduct industrial

espionage on behalf of American corporations."  However, he added that

"economic intelligence broadly described is very important to the United

States" in such areas as "general economic trends...effectiveness of

sanctions" and the examination of "new technologies" that have both

civilian and military potential.

Woolsey noted that some "friends and allies of the United States" engage in

outright industrial espionage against U.S. corporations and in addition

bribe third parties to award them -- rather than U.S. firms -- with

valuable contracts.  Woolsey said the United States was "relatively gentle

about this" during the Cold War, but he added that if the Clinton

administration decides the time has come to be "considerably more forceful

and effective" in combating these practices, "I will approach that subject

with particular vigor."

Woolsey commented that the CIA is "increasingly involved" in tracking

worldwide the flow of illicit funds used by terrorists and drug

traffickers.  He added that "We are working very hard on the international

aspects" of the World Trade Center bombing.