VZCZCXYZ0000
PP RUEHWEB

DE RUEHBY #1157/01 3190703
ZNY SSSSS ZZH
P 140703Z NOV 08
FM AMEMBASSY CANBERRA
TO RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 0522

S E C R E T CANBERRA 001157 
 
SENSITIVE 
NOFORN 
SIPDIS 
 
DEPARTMENT FOR INR AND EAP/ANP 
 
E.O. 12958: DECL: 11/15/2018 
TAGS: PINR PREL AS
SUBJECT: 2008 ANNUAL INR-ONA INTELLIGENCE EXCHANGE 
 
Classified By: Political Counselor James F. Cole for reasons 1.4(a), (b 
), (c) and (d) 
 
¶1.  (S//NF) Summary:  The 2008 intelligence exchange between 
the Department of State Bureau of Intelligence and Research 
(INR) and the Australian Office of National Assessments (ONA) 
was held in Canberra, Australia on Tuesday, 14 October 2008. 
The ONA-hosted event covered a wide range of countries and 
themes, including Iran, Pakistan, Afghanistan, Japan, the 
Koreas, China, Russia, Indonesia and the Philippines.  A/S 
Randall Fort led the INR delegation, with INR analysts 
providing opening remarks in the discussions of Iran and 
Russia and responding to ONA presentations on South and 
Northeast Asia. 
 
---------- 
Courtesy Call with D/DIO 
---------- 
 
¶2.  (S//NF)  A/S Fort and POLOF on Monday, 13 October, met 
with Major General Maurie McNarn, Director of the Australian 
Defence Intelligence Organization (DIO) and his deputy, Mr. 
Michael Shoebridge at DIO HQ.  The group discussed the 
capabilities of Japanese intelligence service interlocutors, 
comparing views based on the INR delegation's recent exchange 
in Tokyo and those of DIO seniors' and analysts' 
similar interactions.  McNarn agreed that there were signs of 
progress within the senior levels of the Japanese IC 
regarding trilateral US-AUS-JPN efforts against countries of 
mutual concern-particularly within the defense intelligence 
establishment against such themes as North Korean WMD and 
China's naval capabilities-but noted that incompatible 
security standards continued to be a major hindrance 
precluding more robust collaboration.  McNarn and Shoebridge 
were particularly interested in A/S Fort's comments on INR's 
role in leading US Intelligence Community efforts within the 
Comprehensive National Cybersecurity Initiative (CNCI), 
noting that the Australian intelligence community was "hard 
pressed" to understand the full extent of the threat, let 
alone serve in a position to lead the coordination of any 
interagency mitigation efforts.  McNarn said the Defense 
Signals Directorate (DSD) had "the lead" for Australia in 
tackling the issue but was more focused on traditional 
intelligence collection/counterintelligence themes, and that 
Australian intelligence would need to stay engaged with its 
US counterparts to share lessons learned in the cyber arena. 
 
---------- 
Courtesy Call with DG/ONA 
---------- 
 
¶3.  (S//NF)  A/S Fort and POLOF on Tuesday, 14 October, met 
with Peter Varghese, Director General of the Australian 
Office of National Assessments, in his office prior to the 
kickoff of the formal intelligence exchange at ONA 
headquarters.  Varghese made comments similar to those of 
D/DIO regarding the strengths, weaknesses, and personalities 
of ONA's Japanese intelligence counterparts.  The 
conversation segued into a discussion of the evolving role of 
all-source analysis in an environment where senior government 
officials and other customers had much greater access to 
information electronically and were increasingly focused on 
informing, analyzing, and shaping policy options. 
Varghese asserted that this created an important challenge 
for ONA and other intelligence services, with relevance in 
the information age-where "once-secret information was 
increasingly available through open sources"- determined by 
the speed and efficiency by which analysts can sift through 
the volume to highlight "what is important" and put it into 
context for decision makers. 
 
---------- 
Global Overview 
---------- 
 
¶4.  (S//NF) The official intelligence exchange began with 
Q4.  (S//NF) The official intelligence exchange began with 
each head of delegation providing general introductions of 
their respective participants and short opening remarks, 
followed by a "Global Overview" presentation by DG/ONA of 
Australia's perspective of its security situation and the 
role of intelligence in informing Australian policymakers in 
the coming years. 
 
¶5.  (S//NF) Varghese said that ONA was outlining to its 
customers in the Australian policymaking community a world 
out to 2030 in which the strategic and economic "Balance of 
power" was shifting, with the US remaining the preeminent 
global entity, but facing increasing challenges, especially 
from emerging or reemerging states like China, Russia, and 
India.  Varghese described the rise of China as the most 
notable development over the last decade, with an economy on 
track to become the world's largest by 2020, a rapidly 
modernizing military that could pose a direct challenge to 
the US within the region, and an increasingly assertive 
foreign policy.  Varghese described India as "moving from a 
rhetorical to an interest-based approach" in its 
international relations-noting that many countries looked to 
Delhi as the "best option" to serve as a counterweight to 
Beijing-but cautioned that India's internal social, 
political, and economic divisions were the greatest 
impediments to achieving this strategic potential.  Varghese 
said that ONA viewed the US-Japan-China triangular 
relationship as paramount to the security of Northeast Asia, 
both in regard to China's rise and the dangers posed by North 
Korea.  Varghese described ONA's "line" on Southeast Asia as 
"generally doing better than many had expected, but with 
danger signs in Thailand."  In the Middle East, Iran clearly 
represented the greatest challenge to regional stability-and 
ONA was focusing most of its attention on Tehran because of 
it.  Varghese asserted that worldwide "Nonproliferation is 
under stress," citing North Korea, Iran, and Syria as the 
most recent examples, but terrorism was "a good news story 
that is getting better, with the violent Islamist threat 
receding."   He concluded with his views on the changing role 
of international institutions, predicting that as "bilateral 
approaches reach their limits and multilateralism shows 
itself unworkable, new institutions that reflect a 
'plurilateral' approach will emerge." 
 
¶6.  (S//NF) When pressed on ONA's assessment of terrorism in 
the Asia-Pacific region, Varghese answered that the growth of 
Islamic extremism-based movements is constrained, thanks in 
part to ongoing successes in combined counterterrorism 
efforts, but more because of societal factors in Southeast 
Asia that reject the middle-eastern Jihadist model.  Varghese 
and his analysts assessed that Indonesia Islam was "returning 
to its main course following a detour" driven by personal 
linkages to the Global Jihad that were formed in Afghanistan 
in the 1980s.  ONA assessed that al-Qa'ida ultimately has 
failed to achieve the strategic leadership role it sought 
within the Islamic world. 
 
---------- 
Iran 
---------- 
 
¶7.  (S//NF) ONA analysts thanked the INR Iran analyst for his 
opening comments, which they described as "unconventional," 
"provocative," and "worthy of further discussion." 
 
¶8.  (S//NF) ONA analysts assessed that Tehran "knows" about 
its lack of certain capabilities, but plays "beyond its hand" 
very skillfully.  ONA analysts commented that Iran's Persian 
culture was a key factor in understanding its strategic 
behavior, commenting that a "mixture of hubris and paranoia" 
pervades Iranian attitudes that in turn shape Tehran's threat 
perceptions and policies.  ONA judged that Iran's activities 
in Iraq - both overt and covert-represented an extreme 
manifestation of Iranian strategic calculus, designed to 
"outflank" the US in the region.  ONA asserted that-twenty 
years of hostility and associated rhetoric aside-regime 
attitudes "have fairly shallow roots," and the most effective 
means by which Tehran could ensure its national security 
would be a strategic relationship with the US via some "grand 
bargain." ONA viewed Tehran's nuclear program within the 
paradigm of "the laws of deterrence," 
noting that Iran's ability to produce a weapon may be 
"enough" to meet its security objectives.  Nevertheless, 
Q"enough" to meet its security objectives.  Nevertheless, 
Australian intelligence viewed Tehran's pursuit of full 
self-sufficiency in the nuclear fuel cycle, long-standing 
covert weapons program, and continued work on delivery 
systems as strong indicators that Tehran's preferred end 
state included a nuclear arsenal.  According to ONA, they are 
not alone in this assessment, asserting "while China and 
Russia remain opposed to it, they view Iran's acquisition of 
nuclear weapons as inevitable." Varghese concluded the 
discussion, commenting ONA is telling its customers "It's a 
mistake to think of Iran as a 'Rogue State'." 
 
¶9.  (S//NF) ONA seniors and analysts were particularly 
interested in A/S Fort and INR's assessments on Israeli "red 
lines" on Iran's nuclear program and the likelihood of an 
Israeli strike against Iranian nuclear facilities. 
 
---------- 
Pakistan-Afghanistan 
---------- 
¶10.  (S//NF) ONA analysts led the discussion of Afghanistan 
and Pakistan, asserting that Afghan President Karzai's 
description of the two countries as "conjoined twins" may be 
accurate in the fact that "illness in one body affects the 
other," but his tendency to blame Pakistan for all of 
Afghanistan's problems ignores reality.  ONA assesses that 
the Taliban is not only resilient-but gaining momentum-and 
"the insurgents think they are winning."  ONA analysts 
emphasized intelligence trends in cross-border activities, 
safehavens, and divisions within Pakistani security services 
that highlight their growing concerns about Pakistan, saying 
that while it is unlikely to fail, it is becoming more 
fractured and in danger of breakdowns in central control 
where the security of Islamabad's nuclear weapons could come 
under threat.  According to ONA, Pakistan's economic downturn 
threatens its ability to focus on counterterrorism, mass 
unrest, and territorial governance.  On a positive note, ONA 
assessed that "opportunities exist at the tribal level, where 
the state is unwilling or unable to achieve and/or sustain 
presence" to engage on common security concerns-noting that 
while Pakistan's tribal areas were not directly comparable to 
those in Iraq, some "lessons learned" could be 
applied in winning the support of the local populace.   ONA 
concluded its presentation by posing an open question of the 
degree to which the Taliban will have some role in 
Afghanistan's future, given Karzai's outreach under the 
rubric of "reconciliation." 
 
¶11.  (S//NF) Varghese commented that in personal meetings and 
intelligence exchanges with ONA and other Australian 
services, Pakistani General Kayani continually comes across 
as ambivalent on the issues of counterterrorism and 
counterinsurgency, reiterating that India remains the core 
mission-and priority-of the Pakistan defense and intelligence 
establishment.  ONA assesses that Pakistan's military and 
security elite view this as "an American war," 
which combined with a very hard sense of anti-Americanism 
combines into "a very dangerous cocktail." 
 
---------- 
Northeast Asia 
---------- 
 
¶12.  (S//NF) ONA analysts led the discussion of Northeast 
Asia during a working lunch, providing a regional overview 
that included China, Japan, Taiwan, the Koreas, Russia, and 
India.  ONA assessed that China, clearly rising to be the 
region's preeminent power, was focused on a perception 
management campaign to contain any notions of a "China 
threat," while Japan was "divided internally" on such basic 
issues as defining "its own place" in Asia and the modern 
world-despite its push for a seat on the UN Security Council. 
 ONA viewed the management of the US-Japan alliance as the 
single most important factor shaping the security of 
Northeast Asia, whether to balance China, prevent a conflict 
on the Taiwan Strait, or deter North Korea.  ONA viewed the 
Taiwan Strait situation as "cooling," but stated that the 
long-term trajectory was negative-especially as Chinese 
military capabilities grow rapidly in parallel with unmet 
expectations for a KMT-led government in Taipei "to deliver" 
on improved ties to the mainland. 
 
¶13.  (S//NF) ONA highlighted India as the strategic 
power-once firmly ensconced in the non-aligned movement-being 
courted by the US and its allies to balance China's rise, but 
noted India's social system and economic disparities posed 
unaddressed sources of internal instability that ultimately 
undermined its near-term effectiveness and long-term 
potential.  ONA assessed that Japan would continue to push 
Qpotential.  ONA assessed that Japan would continue to push 
for increased engagement and investment in India, but 
asserted that Japanese cultural chauvanism continued to be an 
underlying issue that hindered improved economic and security 
ties with India.  ONA argued that China's ability to acquire 
"strategic depth" was limited by geography, and that 
this-combined with an export driven economy that demanded 
access to international energy, resources, and trade 
networks-constrained its ability to exert an uncontested 
sphere of influence akin to the US or Soviet Union during the 
Cold War. 
 
---------- 
Russia 
---------- 
 
¶14.  (S//NF) ONA analysts concurred with INR analysts' 
comments on Russia, describing Russia as both "A rising power 
and a declining state," with a resurgent determination to 
leverage military force to protect its interests even as 
demographic trends indicated a diminishing population base 
from which to support a large-scale military buildup.  ONA 
asserted that demographics were "starting to bite this year," 
especially in labor sources, and posited that the negative 
trends in Russia's long-term sustainability were exacerbated 
by its over-reliance on energy exports for revenues and 
compounded by increasing economic interdependence with the 
west.  ONA acknowledged that much of its 
analysis of Russian intent was linked to its focus on the 
accumulation of power of the former President and the 
"securicrats," commenting that ONA had "gotten to know Putin 
very well over the last few years" and that he "set the tone" 
for Russia's actions at home and abroad. 
 
¶15.  (S//NF) ONA described the Baltic states and Ukraine as 
"countries that are in Russia's sights," with the dangerous 
similarities in Moscow's view of the ethnically Russian 
population and strategic geography of Crimea to those which 
motivated its recent actions against Georgia. 
 
---------- 
Southeast Asia 
---------- 
 
¶16.  (S//NF) ONA analysts described their outlook for 
Southeast Asia as "fairly benign," as the region was 
generally stable and its states were unlikely to come in to 
conflict with one another in the near term.  ONA flagged 
Thailand's 
ongoing political crisis as the most troublesome development, 
observing that current events were driving the country to a 
boiling point and that it would "will have to make a choice" 
between democracy-warts and all-and a coup culture 
reliant upon the of an increasingly fragile monarchy for 
unity and legitimacy.  ONA assessed that the PAD's 
objectives-to force the government from power via the 
military and monarchy-are grounded in a widely-shared view 
that 
democratically elected officials cannot resist corruption 
within the current system, suggesting a cycle of dysfunction 
with no signs of improvement short of royal intervention or 
revolutionary change.  The political climate in Bangkok 
was a major distraction for Thailand's military and elites, 
which bodes poorly for the prospects of containing and 
defeating the southern insurgency, which was increasingly 
demonstrating a sophisticated cell structure and lethal, 
well-coordinated terror tactics. 
 
¶17.  (S//NF) Turning briefly to Malaysia, the Australians 
said that Singapore's intelligence services and Lee Kuan Yew 
have told ONA in their exchanges that opposition leader Anwar 
"did indeed commit the acts for which he is currently 
indicted," citing unshared technical intelligence.  ONA 
assessed, and their Singapore counterparts concurred, "it was 
a set up job-and he probably knew that, but walked into it 
anyway." 
 
¶18.  (S//NF) ONA analysts assess "the tide has turned" on 
Jemaah Islamiyah in Indonesia, noting that its leadership has 
been devastated-with most seniors killed, captured, or on the 
run-and that it has lost its local support networks 
and funding.  ONA judged JI was shifting near term goals to 
its local, vice global/anti-western, interests while 
otherwise "creeping back to the shadows" and focusing on 
survival.  JI would endure and regenerate over the long term, 
albeit as a more localized terrorist threat.  ONA and the 
National Threat Assessment Center (NTAC) of the Australian 
Security Intelligence Organization (ASIO) agreed that the 
impending execution of the Bali bombers probably would 
not precipitate retaliatory terrorist attacks against Western 
interests, but small scale operations within and against 
Indonesian government and security were more likely. 
 
¶19.  (S//NF) ONA asserted that the success of CT efforts in 
Q19.  (S//NF) ONA asserted that the success of CT efforts in 
Indonesia were a "study in contrast" to the ongoing downward 
slide in the Philippines, where the collapse of the peace 
process in the South threatened to make this area "the new 
regional incubator of terrorist Jihadis."  ONA terrorism 
specialists noted signals and human intelligence that JI 
"structuralists" embedded with the Moro Islamic Liberation 
Front (MILF) were rethinking plans to return to Indonesia, 
while JI "freelancers" were becoming more active and better 
linked with Abu Sayyaf Group operatives.  ONA judged that the 
Southern Philippines increasingly contained "all the 
ingredients of al Qa'ida's favored tilling ground." 
 
---------- 
Dinner 
---------- 
¶20.  (C//NF) ONA hosted an official dinner at the Ottoman 
Restaurant for A/S Fort and his team of INR analysts.  Peter 
Varghese used the dinner as a chance to prompt further 
discussions on several themes from the exchange, including 
the likelihood of an Israeli strike on Iran and the long-term 
impact of Russia's recent military action against Georgia. 
 
 
 
¶21.  (C//NF) ONA Attendees/Interlocutors: 
 
Peter Varghese DG/ONA 
Brendon Hammer DDG/ONA 
Heather Smith  DDG/ONA 
John Besemeres ADG, Americas and Europe Branch 
Harry Genn  ADG, North and South Asia Branch 
Peter McDonald ADG, Oceana Branch 
Russ Swinnerton Acting ADG, Southeast Asia Branch 
Ian Parmeter  ADG, Middle East and Africa Branch 
Ashton Robinson ADG, Transnational Issues Branch 
Carolyn Patteson ADG, Executive and Foreign Intelligence 
Coordination Branch 
Aldo Borgu  Senior Analyst, Strategic Issue Branch 
Neil Hawkins  Senior Analyst, Middle East and Africa Branch 
Jacinta Sanders Senior Analyst, Middle East and Africa Branch 
Derek Lundy  Senior Analyst, Strategic Analysis Branch 
Bruce Luckham Senior Analyst, International Economy Branch 
Graehame Carroll Senior Analyst, North and South Asia Branch 
Mike Hillman  Consultant, North and South Asia Branch 
Julia Dixon  Senior Analyst, Transnational Issue Branch 
Bruce Luckham Senior Analyst, International Economy Branch 
John Phipps  Senior Analyst, North and South Asia Branch 
Bill Wise  Senior Analyst, North and South Asia Branch 
Roger Hodgkins Senior Analyst, North and South Asia Branch 
Luke Yeaman  Senior Analyst, International Economy Branch 
Kyle Wilson  Senior Analyst, Americas and Europe Branch 
David Wall  Senior Analyst, Americas and Europe Branch 
Susan Creighton Senior Analyst, International Economy Branch 
Christopher Collier Senior Analyst, Southeast Asia Branch 
Marcus Lumb  Senior Analyst, Southeast Asia Branch 
Simone Alesich Senior Analyst, Southeast Asia Branch 
Kevin Smith  Senior Analyst, International Economy Branch 
 
MCCALLUM